8I Holdings
Annual Report 2015

Plain-text annual report

A NEW BEGINNING ANNUAL REPORT 2015 For personal use only“Clarity is power, and power is the ability to do more. Through the 3R Model, you will gain clarity on the WHY, WHAT, WHO, WHERE and HOW of the business.” - Ken Chee T H E 3R MODEL Right Management Right Business Model Right Financials 2 3 For personal use only“Don’t tell me the sky’s the limit when there are footprints on the moon.” Paul Brandt CONTENTS Chairman’s Message Right Business Model Operations Review Corporate Highlights Group Structure Financial Highlights Milestones Right Management Mission and Core Values Board of Directors & Key Management Corporate Governance Right Financials General Information Directors’ Report Statement by Directors Independent Auditor’s Report Consolidated Statement of Comprehensive Income Statements of Financial Position Statements of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Additional Information 6 16 22 24 25 26 30 32 35 44 45 48 49 51 52 53 55 57 96 4 5 For personal use only “Most importantly, we want to empower our strategic partners and grow with them instead of treating them as a commodity to be sold.” CHAIRMAN’S MESSAGE Dear Valuable Partners, This marks my maiden letter to you. I hope to earn my right as your Chairman and steward of your funds so that I can continue writing to you for many years to come. I started working at the age of 13 to help clear the debts with my elder brother. Later on, I witnessed more financial disasters that people got themselves into because of financial ignorance. As fate would have it, I was offered a place for a Diploma in Banking and Finance (my first love was bio-science but I was rejected due to partial colour blindness). I went on and graduated with a Degree in Business Management followed by a corporate stint in the Financial Information industry. Mrs. Lim, my English teacher from Yusof Ishak Secondary School, would be proud to know that her former student who failed his English so badly back then, is now addressing many through a Public Company that is listed on the Australian Securities Exchange (ASX). It was in year 2000 when I discovered my role model in investing, Warren Buffett. It felt like love at first sight once I understood the underlying meaning of his famous quote, “Price is what you pay, value is what you get”. Later on, I gained finer distinctions that “Value” Investing is to evolve oneself to be a better being with sustainable values. As this is my first letter to you, I would like to outline a structure on how you can understand your company better after reading this report. It will follow the 3R Model advocated in our flagship education programme: Right Business Model, Right Management and Right Financials. In the process, you will gain clarity on the WHY, WHAT, WHO, WHERE and HOW of the business. Clarity is power, and power is the ability to do more. You will then decide whether this business is aligned with your values and investment objectives going forward. I was compounding very well with my own money. Then in 2006, I met my good friend and business partner, Clive Tan, who is also my alter ego and a savvy value investor himself. We formed a mastermind group to study our favourite subject which most major business schools did not teach – Value Investing. Although our characters and temperaments differ greatly, we share the same life values and eye for good wives, companies and cars. In 2008, the Subprime Crisis caused many people to lose their hard earned money. But what upset me most was witnessing various financial institutions misalign their clients’ interests, enriching their own corporate pockets instead of taking good care of their investors. It is also important to note that my letter is written with utmost frankness as I don’t know a better way to express myself to you. That was what triggered the start of this business. My late grandmother always reminded me to be grateful and never bite the hand that feeds you. Business Model (Why and What) I had my first taste of financial hardship in 1985 when I was nine and a half years old. My father got his fingers burnt badly doing contra and margin trading in the stock market during the Pan Electric Crisis. The family’s financial situation spiralled downwards quickly and we were burdened with heavy debts. While setting up the business, we also noticed the lack of good financial programmes that are based on in-depth fundamentals and practical approaches. That was when Clive, our good friend Sean Lim and I decided to share with the public what we thought was common sense in investing, which in actual fact was not common for many people. 6 7 For personal use onlyCHAIRMAN’S MESSAGE CHAIRMAN’S MESSAGE 8 Investment and the Millionaire Investor ProgramTM was born during one of the worst financial crises with zero capital and no angel funding, venture capital or investment bankers. But we are rich in our vision – to Empower Growth and Inspire 100 million lives through education, investment and business. Why am I sharing all these with you? Some analysts may scratch their heads when determining our business model because we do not seem to be your typical Investment Holding or Asset Management company. In fact, a self-proclaimed savvy investor from Australia even wrote a piece of “analysis” on our company’s business model using only the Net Asset Value-based valuation model. I am quite sure he spent only minimal time and effort in his “analysis” because we did not receive any email or call asking for clarification. So to help anyone who is looking to understand the business better, allow me to shed some light in a broader scope and for Clive to go into details on the company’s growth plans. We have two core businesses: education and investment. Both are intertwined in a very powerful ecosystem which I believe will create a unique moat for the business for the next five to ten years. The education business generates healthy cash flow which easily covers the running cost of our business. In fact, as 100% of the programme fee is collected upfront, this deposit becomes our free float at no capital cost. As of 31 March 2015, we have collected S$1.9 million in programme, subscription, event management and service fee deposits upfront (unearned revenue). This free float should continue to increase if we expand our education and event management business properly. Warren Buffett has his insurance businesses to provide a continuous capital base. We will have to make do with our educational business for now while looking for another powerful annuity generator. However, many investors cannot see the most amazing value of the education business besides personal fulfilment, which is our high quality database, network and deal pipelines. All of our full-time staff are our programme graduates. We get to pick some of the best people in our programmes to serve in different roles within the team. I must be one of the luckiest business owners in Singapore as many of my peers are pulling their hair out due to hiring woes. In this era, great human capital is the deciding factor between an annualised rate of five percent or twenty five percent for Return on Equity. Next, the network connectivity generated from our pool of regional graduates is mindboggling. You can view it like a business network hub of over 4,000 graduates who are mainly PMETs and business owners. This exclusive platform allows us access to first-hand information from different industries, free character assessment and acquisition opportunities. Although the education business contributes only about 15%-20% to the Group’s earnings, it is a small yet significant gear that enables bigger gears in this compounding machinery. As such, please support us as a shareholder by attending or recommending your families and friends to the Millionaire Investor ProgramTM or any of our wealth creation workshops. You can find out more about our workshops on www.millionaireinvestor.com or www.valuegrowthworkshop.com. That’s the education business. Now let’s look at the investment business. It comes in three forms: A. Listed Securities B. Private Businesses C. Co-Property Developments You will see how these three sub-segments provide a powerful growth engine for your business. We will take a lion’s share in good publicly listed businesses, especially when Mr. Market crashes. Basically, we like to buy a dollar bill for half the price. But what happens when Mr. Market is in the Bull Run like now? Most traditional Value Funds will wait patiently for deep bargains to appear or hunt around in other unfamiliar markets. However, this causes them to move out of their circle of competence, hurt their returns and waste time waiting. Hence, we ask ourselves, how can we capitalise and create massive sustainable value in both the Bull and Bear markets? The answer lies in the second sub-segment of our investing activities – invest significantly in good growing private businesses, use our network and capital platform to help them grow, and support them towards public listing when their business models are ready and their valuation is reasonable. At the moment, we are only investing in small to mid-sized private companies that fall below the S$100 million market capitalisation because we do not want to bite off more than we can chew, such as Hemus Pacific and CPA Academy. Hemus Pacific Private Limited is a property and events management business with access to retail properties and mass transit interchanges with high foot traffic, as well as future co-property development and investment opportunities with prominent real estate and property developers. In addition for being a successful provider of training courses on online lead generation marketing, CPA Academy Pte Ltd also conducts online lead generation on behalf of various clients. Besides providing additional course offerings for our Education division, CPA’s plans to develop an online advertising platform would transform it to a provider of internet advertising platform. CPA Academy intends to pursue a listing on a recognised stock exchange this year, through a newly incorporated public limited company, after improving its business model and strengthening its management team through corporate restructuring and bolt-on acquisitions. Hence, we sold some of our initial stake in CPA Academy for three reasons: 1. To cover our initial investment costs 2. To prepare for its public listing’s expenses instead of tapping into funds that have already been allocated for other purposes or raising more funds from shareholders 3. To generate a profit from the sale I would like to stress that we will continue to retain a meaningful stake in the businesses that we have helped to list because it will build up our net asset value as the businesses grow, and we anticipate dividends will be paid out over time. 8 9 For personal use onlyCHAIRMAN’S MESSAGE CHAIRMAN’S MESSAGE Most importantly, we want to empower our strategic partners and grow with them instead of treating them as a commodity to be sold. The Co-Property Developments segment will provide a strong asset base that generates recurring income for the business apart from our education business. The strategy is straight forward. We co-invest with boutique developers that have strong track records and gain intimate domain knowledge on the local property market, and we will retain our profit in the development projects in the form of good property assets. This allows us to be more tax efficient with recurring income in the long run. This plan is taking place in Brisbane with our intended stake in Velocity Holdings Pty Ltd, a boutique property development company which specialises in cosmopolitan developments throughout South-East Queensland. Velocity currently has three ongoing small-scale developments, which are expected to be complete by mid-2016. We are also actively scouting for more of such opportunities with capable managers. It is important to note that there are bound to be learning experiences in the course of implementing our business model. The key is to ensure our margin of safety when doing deals and the ability to correct ourselves quickly without invalidation of others and self. This is the path towards Personal Mastery and you can be sure that I will be the first to own up on my learning experiences. In summary of this portion, I have attached a diagram to illustrate our current business model. PRIVATE EQUITY Invest in Private Companies for IPO h F l o w f r s a s E I T s , R n a g C r t i e e c e R r i n p o r r u P n , t i o s . d a n c e u d o m E d D i v i d VALUE INVESTING Invest in Public Listed Companies that are Undervalued. Management (Who we are, How we manage the business and Who does what) Clive and I see little changes in our lifestyles after listing the company, except that both of us, with our own money, changed our cars from one three-pointed logo to another from the same car dealer, to celebrate and mark a new milestone in our lives. (Even Warren Buffett has a private jet named “Indefensible” which was later renamed “Indispensable”). In fact, I still kick myself for not buying Jardine Cycle & Carriage shares when I established my first purchase relationship with them in 2009; I missed out on a five bagger! I still live in a public apartment in Singapore because both my wife and I wanted our two young daughters to grow up knowing how most Singaporeans live daily. It is important to instil simple living habits from young because bad life habits can be a chain too heavy to break once formed in life. I am more than happy to eat our local delights at a local hawker centre. I have also made it known to my wife that our wealth has little to do with our children because I don’t believe in giving too much money to our children. If they are capable, they won’t need your money. If they are not, giving them too much will harm them. History has shown that many descendants of rich and powerful families did not manage their inheritance well, especially after the second generation. William K. Vanderbilt, one of the grandsons of the once great Vanderbilt family in the US, said it best, “Inherited wealth is a real handicap to happiness. It is as certain a death to ambition as cocaine is to morality.” I see the same frugal traits and values in Clive and our wives. In a nutshell, we have no pressure to make quick money to meet our personal or family lifestyle demands. This is important as it allows us to be focused on creating long-term sustainable value by making sound capital allocation decision. It also empowers us to ensure our interests are totally aligned with yours even when we encounter potential conflict of interest. We have only 20 full-time staff in our Singapore headquarters. We also have head count from other acquired businesses, but they do not report directly to us. We believe in decentralised management, just like how Warren Buffett runs Berkshire Hathaway. We are blessed with good business managers with integrity, street-smart intelligence and energy. Many have become our family friends because we only want to be partners with people we like, respect and admire. Jenny Seah (and Jimmy Lim) from Hemus Pacific was working on the maternity bed when I visited her one day after her delivery. Ivan Ong and his team from CPA Academy is working tirelessly to launch their new traffic platform while striving to increase their education results. Brendon Ansell and Philip Raff from Velocity Holdings would know the number of trees in Bulimba, Brisbane after taking countless walks and drives in the neighbourhood. Furthermore, Brendon lives in Bulimba. Hence, investing in a property in Bulimba developed by Velocity Holdings comes with a watchful neighbour for free too! Visit http://velocitypropertyqld.com.au to view their developments. I tell all our strategic partners, our phone lines are always open if they need any support, and integrity is the key to long-term success. In fact, most business unit managers own significant shares in 8I Holdings relative to their own net worth to ensure their long-term alignment with you. Internally, we have a capable operational and marketing team that runs the education business. The team is headed by Pauline Teo who has more than 10 years’ experience in the Singapore Public Service. She has organised and conducted training and development courses for civil servants in Singapore. We have to thank her and her former department for training an efficient and effective public servant. In fact, one of Pauline’s and her team’s key objectives is to make Clive and I “redundant” from our current education division. However, I would still like to speak at key events and stay connected with what is happening on the ground. 10 11 For personal use onlyCHAIRMAN’S MESSAGE CHAIRMAN’S MESSAGE We also have a team of young, capable and smart analysts led by Jackson Yeow and Richard Sim for Value Investing in listed securities. ST Engineering and Ernst & Young must have hated me for recruiting one of their best network engineers and senior auditors, both scoring distinctions in their work commitment, to be part of a fun team that serves humanity with passion and value investing knowledge. They have been doing a decent job in the midst of current bullish market with 12% returns (based on a S$12 million capital invested) over the last year. The Finance and Human Capital team reports to Louis Chua, our capable and suave Chief Financial Officer who has yet to change his wardrobe of business attires. The team had quite a shock when he turned up with a tie on his first day. I had to pull him aside to tell him that I go for meetings in golf shirts, bermudas and sneakers. He got the hint and went without the tie thereafter. Finally Clive, myself and a special “A” team are heavily involved in many deal-making processes. I am grateful to have Clive handling most of the detailed work with two capable special project executives, Cherie Lim and Lynne Chai. I have it best; I get to eat most of the time. Financials (Where we are now) At the point of writing (7 May 2015), our company’s market capitalisation is at A$357 million. When we first got listed on 17 December 2014, our company’s market capitalisation was at A$71 million. That is exactly a five-fold jump in less than five months. Clive, myself and the Board of Directors are awed and humbled by the strong faith and support of the shareholders. Luckily we are able to return your strong support with a 63.7% increase in revenue and 55% increase in net earnings before tax with a Net Asset Value of S$36.5 million (of which S$21.7 million is in Cash; note that we had only slightly more than three months to work with the enlarged capital base) for FY 2015. I am therefore pleased to declare our intention to pay out S$0.01 per share as final dividend, subject to shareholder approval at the Annual General Meeting, even though it was stated clearly in our communications that you should not expect dividends early on. Thank you so much for your continuous support. I am truly grateful and look forward to grow with you! CHEE KUAN TAT, KEN EXECUTIVE CHAIRMAN 7 May 2015 12 I believe that if we act in the best interest of our clients, strategic partners, staff, regulators, suppliers and associates, our shareholders’ interests will naturally be well taken care of. In fact, our vision is to become the “Berkshire Hathaway + BlackRock of Asia”. 13 For personal use only“Look at the sky. We are not alone. The whole universe is friendly to us and conspires only to give the best to those who dream and work.” A. P. J. Abdul Kalam RIGHT BUSINESS MODEL 14 15 For personal use onlyOPERATIONS REVIEW Overview Our programme sales breakdown are as follows: “Our strategy of combining our education segment with our investment segment has paid off and will continue to do so as we seek to improve our offerings and scale up our businesses in Asia.” Our consolidated revenue and profit before tax for the financial period from date of incorporation of 8I Holdings Ltd on 17 May 2014 to 31 March 2015 is in excess of S$10.669 million and S$5.728 million, respectively. This represents an increase in revenue and profit before tax of 63.7% and 55.0%, respectively, as compared to our group pro-forma numbers for the financial year ended 31 March 2014 (the consolidated revenue and profit before tax as stated in our prospectus were $6.518 million and $3.697 million, respectively). This increase is attributable to the overall credible performance of all business segments and the selfless contributions from our team members. Our strategy of combining our education segment with our investment segment has paid off and will continue to do so as we seek to improve our offerings and scale up our businesses in Asia. This will take time as we lay the groundwork and get our human capital ready. We are also increasing our corporate activities in investing in private companies. You will begin to see 8I Holdings evolve into a unique investment company, one that you will be proud to be a shareholder and partner of. Business Segment Report Education Our education segment has increased its revenue to S$5,285,329 in the financial period reported, with a segmental profit of S$921,605. This is our best year since its inception and we continue to be amazed at our team members’ energy and passion for marketing, selling and executing the many events, seminars and programmes that we run. All figures include those of the operations in Malaysia. As clearly seen, the number of participant in all of our programmes has been increasing, with the exception of Brand Mastery. The support from our participants has played a huge part in this. Besides our constant efforts in marketing our offerings, we also rely on our participants to spread the good word, which is why delivering quality offerings is key. 16 17 For personal use onlyOPERATIONS REVIEW OPERATIONS REVIEW Investment • Listed securities Our listed securities segment registered a segmental profit of S$1,218,660 for the financial period reported. Going forward, it is possible that the contribution from the investment segment may be lumpy due to the nature of the capital markets. You should be aware that the performance for this segment will fluctuate. But on a positive note, it is during the worst of times that the best opportunities present themselves. We will continue to increase our efforts in investing in various public entities – good companies that we can acquire at an undervalued or reasonable price. We could go at a faster pace, but given the increasing market prices we are reluctant to deploy in more funds until appropriately valued investment opportunities arise. To mitigate this issue, we are looking towards increasing our interest earnings securely while the funds sit idle in the bank. Bonds are not exactly our forte and frankly, we see plenty of risks in the bond market due to certain structural changes. As we review the performance of this segment, it is also important to bear in mind the recent large percentage increase in our assets as a result of the IPO on 17 December 2014. As at 31 March 2015, much of the funds from IPO has not been allocated. • Private Companies As mentioned in the Chairman’s statement, our corporate strategy is to operate in Private Equity. We will continue to look for various companies and businesses with solid track records and management that we can acquire at a reasonable or even undervalued price. Most importantly, the businesses that we acquire must have the potential for tremendous growth and future listing. As at 31 March 2015, we own a stake of 51% in Hemus Pacific and 31% in CPA Academy. We are also in the process of working through the acquisition of Velocity in accordance to our MOU dated 1 April 2015. On 31 March 2015, the Group disposed 39.2% of its holding in CPA Academy Pte Ltd (CPAA), a subsidiary, at a price of S$4,500,000. The Disposal Consideration was fully settled in cash. The sale reduced the Group’s stake in CPAA from 51% to 31%. In accordance with the disposal, CPAA ceased to be a subsidiary and became an associate company of the Group. Preparing the companies for listing is not a walk in the park by any measure. We assess our private investments based on the 3R framework, similar to how we assess public listed companies. Furthermore, the fundamentals of the business must be sound and sustainable. This is an important factor in our consideration. Because in our opinion, there is no point going for an IPO if the shareholders of the company to be listed are not going to benefit in the long run. • Property Projects After the previous sale of various properties, we only have one property in our portfolio. However, we are entering this segment in a much bigger way with our upcoming collaboration with Velocity Holdings Pty Ltd (“Velocity”) in Australia. Velocity will carry out various development projects and will aim to hold suitable properties to be leased out for rental income. To carry out this strategy, we will be working through the various items stated in our MOU with Velocity. As property development projects are capital-intensive by nature we expect Velocity to be able to take on more projects when they have the financial backing and generate more returns to the Group and you, our shareholders. 18 19 For personal use onlyOPERATIONS REVIEW • Business Associates We have worked with many business associates who have enabled us to do what we do. They have supported us in various endeavours, ranging from the mundane such as office maintenance, design and printing services, event organisations, to the sophisticated corporate advisory services needed for our listing. To all these parties, I extend my sincerest gratitude. CLIVE TAN EXECUTIVE DIRECTOR 14 May 2015 OPERATIONS REVIEW Financial Position General Our financial position continues to grow stronger. Since the inception of the Company, we have decided that it should be run in a way, where its financial position is accorded higher priority than the founders’ remuneration and benefits. Both Ken and I recognise this is as a critical building block to ensure the Company’s long-term sustainability. We have intentionally designed 8I Holdings Ltd to hold more cash than needed. We do not want to be at the mercy of financial institutions and circumstances. While we recognise that this will present a drag on certain management metrics such as Return on Equity, we seek to emulate Berkshire Hathaway in terms of their financial strength in all circumstances. Human Capital • Board of Directors Ken and I have been the Company’s Directors since its inception. Zane and Yiowmin joined as Non-Executive Directors when we were preparing for our company’s listing in September 2014. Both brought with them vast experiences and valuable contacts in their respective fields, and have been invaluable in providing us with the necessary advice and course of action needed to go forward. • Leadership and Management Ken and I have been leading and managing the Company since its inception. Our leadership team grew when Pauline joined us in July 2011 as General Manager, and Louis in April 2015 as Chief Financial Officer. In the past, Ken and I have had many learning experiences (a positive way of looking at our mistakes!) in hiring, retaining and managing our valuable human capital. We are very blessed that despite it all, the Company grew fast. Pauline has been instrumental in planning, executing and scaling up our education segment. Thanks to her, we have run many successful programmes. This outstanding, driven and versatile lady has undertaken many roles in the Company. She also has the intelligence and energy to lead her team well. Louis has just joined us as Chief Financial Officer in April 2015 and he was thrown right into the deep end with the preparation of the Annual Report. Though new in the Company, he has done a fantastic job and I am excited to see more from him as the Company progresses. He will be involved in more strategic matters in coming years. • Team Our team members are the bedrock of our human capital. You will discover in your interaction with them that they are some the most fantastic people that you would want in your company. Many of our participants and people who have interacted with our company have commended this capable team of ours. The Company would not be what it is today without them. Many evenings and weekends were sacrificed as our team members gave their utmost effort and time to ensure that the Company’s operations and investments do well. If anyone should be thanked for the Company’s outstanding business results, it’s them! To have a highly capable and passionate team that serves the Company with all their hearts requires intensive training and personal development. We have a training policy that I believe serves the Company’s purpose of empowering growth. In order for us to empower others, we have to first empower our team. Do expect increased training expenditure to expand our team’s capability. 20 21 For personal use onlyMarch, 31st Market capitalisation in excess of A$185,714,984 February Completion of Acquisition of CPA Academy Pte Ltd 2015 January • Acquisition of Hemus Pacific Pte Ltd • Acquisition of CPA Academy Pte Ltd • Value Investing Summit 2015 with 1,508 participants • Completion of Acquisition of Hemus Pacific Pte Ltd CORPORATE HIGHLIGHTS 2014 December • Admission of Official List of ASX Limited • Official quotation of company’s securities on ASX • Market capitalisation in excess of A$110,714,702 at the end of listing day November, 7th Prospectus approved by ASIC October, 30th Prospectus lodged for ASIC approval August MIP Batch 50 with 147 graduates May, 17th Incorporation of 8I Holdings Ltd 22 23 For personal use only GROUP STRUCTURE FINANCIAL HIGHLIGHTS 8I HOLDINGS LTD REVENUE 2012 -2015 NET PROFIT 2012 -2015 10,669.3 4,991.9 8 Investment Pte. Ltd. (100%) 8 Capital Pte. Ltd. (100%) 8 Education Pte. Ltd. (100%) 8 Property PLS Pte. Ltd. (100%) 6,517.5 3,277.5 8 Media Pte. Ltd. (100%) 8 Business Pte. Ltd. (100%) 8 Property Pte. Ltd. (100%) 2,430.4 1,492.1 691.2 146.4 Hemus Pacific Private Limited (51%)* CPA Academy Pte. Ltd. (31%)* *As at 31 March 2015 2012* 2013* 2014* 2015 2012* 2013* 2014* 2015 REVENUE S$ ‘000 NET PROFIT FOR THE PERIOD S$ ‘000 * Past performamces are extracted from notional figures from Prospectus, which may not be directly comparable 24 25 For personal use onlyMILESTONES 2012 • Inaugural Value Investing Summit with 520 participants 2013 • 2nd Value Investing Summit with 1,187 participants • Accumulated Group Revenue of S$10 million 2010 • Incorporation of 8 Property Pte Ltd 2008 • Incorporation of 8 Investment Pte Ltd • First batch of the Millionaire Investor Program 2011 • Incorporation of 8 Education Pte Ltd • First batch of the Real Estate Investment Trusts Program • First property acquisition Accumulated Group Revenue of S$1 million 2009 • Incorporation of 8 Capital Pte Ltd • First acquisition of listed securities 2015 January 4th Value Investing Summit with 1508 participants March, 31th Market capitalisation in excess of A$185,714,984 Annual revenue of S$10,792,717 (from date of incorporation May, 17th 2014) Total Number of Participants / Subscribers: MIP 3,122 MAPIC 205 BM 437 REITs 573 MIS 652* VIS 4,463* M Circle 616* *Non-unique numbers 2014 January 3rd Value Investing Summit with 1,248 participants April First batch of Mencius Advanced Property Investment Course May, 17th Incorporation of 8I Holdings Ltd August 50th batch of the Millionaire Investor Program December, 17th Official quotation on ASX 26 27 For personal use only “Mastering others is strength. Mastering yourself is true power.” Lao Tzu RIGHT MANAGEMENT 28 29 For personal use only MISSION STATEMENT & CORE VALUES CORE VALUES EMPOWERING GROWTH right resources to inspire and empower the growth of 100 million lives “The 8I Group is founded upon and stands by its mission to provide the through Education, Investment and Business.” We Do What We Think and Say As individuals and as a team to uphold the integrity and congruency of the organisation. With the beliefs and passion of serving humanity, in order to produce sustainable growth and long term results. We Enjoy What We Do We Correct without Invalidation of Self & Others In order to take ownership and progress beyond the learning experiences, towards greater heights and achieving Personal Mastery. We Take Care of One Another So that there will be no man or woman left behind. We are Value-Conscious, For the Price Paid As individuals and an organisation to utilise all resources wisely. We Uphold the Trust of our Stakeholders Through our beliefs, behaviour and actions in the long term, which enables us to grow as an organisation with our Stakeholders. 30 31 For personal use onlyBOARD OF DIRECTORS BOARD OF DIRECTORS MR. CHEE KUAN TAT, KEN EXECUTIVE CHAIRMAN Mr. Ken Chee was appointed Executive Chairman in May 2014. He is a co-founder of the 8I Group and is based in Singapore. Mr. Chee graduated from the Singapore Polytechnic with a Diploma in Banking and Financial Services, and the University of Queensland with a Bachelor’s Degree in Business Administration. He also attended the Columbia Business School in New York and graduated from its Executive Programme in Value Investing. As an experienced marketing executive and entrepreneur, Mr. Chee’s professional experiences include roles as a marketing specialist at Quicken (Singapore) and Regional Business Development Manager at Telekurs Financial. He is also the founder and CEO of JM Asia Pte Ltd, which continues to operate today as a branding and marketing agency in Singapore. In 2005, the President of Singapore awarded Mr. Chee with the Spirit of Enterprise, Honoree Award for outstanding business results. MR. CLIVE TAN CHE KOON EXECUTIVE DIRECTOR Mr. Clive Tan was appointed Executive Director in May 2014. He is a co-founder of the 8I Group and is based in Singapore. Mr. Tan holds a Post-Graduate Diploma in Education from the National Institute of Education and an Honours Degree in Mechanical and Production Engineering from the Nanyang Technological University. He also attended the University of Technology in Sydney on an academic exchange programme. Mr. Tan started his professional career as a secondary school educator in Singapore. That was when the concept of value investing caught his attention, triggering his interest in investment. His entrepreneurial journey started when he and his wife acquired a childcare centre. MR. ZANE ROBERT LEWIS NON-EXECUTIVE DIRECTOR AND COMPANY SECRETARY (AUSTRALIA) Mr. Zane Lewis was appointed Non-Executive Director in September 2014. He is the Company Secretary in Australia. Mr. Lewis holds a Bachelor of Economics from the University of Western Australia and has over 20 years of experience and leadership of small cap multinational companies. He has undertaken various corporate advisory roles with ASX listed companies as well as unlisted companies and has extensive international experience as President of the Commtech Wireless Group of software companies in USA, Europe, Hong Kong, China and Australia. Mr. Lewis is also Non-Executive Director at GRP Group Limited and Company Secretary at ASX listed companies Lion Energy Limited and APAC Coal Limited as well as AIM listed company Mosman Oil and Gas Limited. MR. CHAY YIOWMIN NON-EXECUTIVE DIRECTOR Mr. Chay Yiowmin was appointed Non-Executive Director in September 2014. Mr. Chay has more than 16 years of public accounting experience in Singapore and the United Kingdom. He is currently an advisory partner of BDO LLP, heading the Corporate Finance Practice. Prior to joining BDO LLP, Mr. Chay gained his professional experience with a number of large multinational accounting and audit firms including PricewaterhouseCoopers LLP, Deloitte LLP and Moore Stephens LLP, the latter of which Mr. Chay was admitted as a partner in January 2010. Mr. Chay has also accumulated considerable experience auditing large multinational corporations and financial institutions, as well as providing business advisory services in the areas of corporate restructuring, mergers and acquisitions, financial due diligence, and corporate valuations. He is considered a specialist in the field of Treasury and Financial Risk Management. Besides a Master of Business Administration from the University of Birmingham, Mr. Chay also holds an Honours Degree in Accountancy and a Master of Business from the Nanyang Technological University. He is a practising member of the Institute of Singapore Chartered Accountants (ISCA), a Certified Finance and Treasury Professional of the Finance and Treasury Association, and an Honorary Professor and Fellow Member of the American Academy of Financial Management. Mr. Chay currently sits on the Singapore Shipping Association Young Executive Group Committee and the Corporate Finance Committee of the ISCA. He is also Independent Director and Chairman of the Audit Committee of UMS Holdings Limited, an SGX listed company. 32 33 For personal use onlyKEY MANAGEMENT CORPORATE GOVERNANCE Corporate Governance MR. LOUIS CHUA CHUN WOEI CHIEF FINANCIAL OFFICER Mr. Louis Chua joined 8I Holdings as Chief Financial Officer in April 2015. Mr. Chua graduated from the University of Queensland with a Bachelor of Commerce (Finance). He is a member of the Institute of Singapore Chartered Accountants, the Association of Chartered Certified Accountants and Certified Practising Accountant (CPA) Australia. Mr. Chua is based in Singapore and has more than 15 years of financial and commercial experience in various areas including infrastructure development, treasury and controllership operations, group restructuring and consolidation, and mergers and acquisitions. Before he joined 8I Holdings, he had 9 years of experience in the offshore industry with Farstad Shipping, with its holding company listed in the Oslo Stock Exchange. Prior to that, Mr. Chua was Business Development Manager and Company Secretary of Ho Bee Group. He started his career with Arthur Andersen (later Ernst & Young) in the Audit Division. Within the 8I Group, Mr. Chua is responsible for controllership and treasury duties as well as economic strategy and forecasting for the company. MS. TEO PUAY LIN, PAULINE GENERAL MANAGER Ms. Pauline Teo is the General Manager of 8I Holdings and has been with the 8I Group since July 2011. Ms. Teo graduated from the Nanyang Technological University with a Master of Arts (Instructional Design and Methodology) and a Bachelor in Business Studies. She is based in Singapore and has more than 10 years of experience working as a public servant, primarily in the field of learning and development. During a period with the Singapore Ministry of Defence and in the Civil Service College of Singapore, Ms. Teo led a team of course developers and had experience doing the full spectrum of training and development, ranging from conducting learning-needs analysis to evaluation. Ms. Teo is responsible for the management and operations of the Company’s financial education and training seminar business segment. She is also one of the key speakers and trainers for the various programs, seminars and coaching sessions undertaken by the Company. The Board has adopted comprehensive systems of control and accountability as the basis for the administration of corporate governance, which are in effect as of the 15 May 2015. The Board is committed to administering the Company’s policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company’s needs. To the extent applicable, the Company has adopted the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (Recommendations). In light of the Company’s size and nature, the Board considers that the current Board is a cost effective and practical method of directing and managing the Company. As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance policies and structures will be reviewed. The Company’s main corporate governance policies and practices as at the date of this report are detailed below. The Company’s full Corporate Governance Plan is available in a dedicated corporate governance information section of the Company’s website at www.8iholdings.com. (a) Board of Directors The Board is responsible for the corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. Clearly articulating the division of responsibilities between the Board and management will help manage expectations and avoid misunderstandings about their respective roles and accountabilities. In general, the Board assumes (amongst others) the following responsibilities: (i) (ii) (iii) (iv) (v) (vi) (vii) providing leadership and setting the strategic objectives of the Company; appointing and when necessary replacing the Executive Directors; approving the appointment and when necessary replacement, of other senior executives; undertaking appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; overseeing management’s implementation of the Company’s strategic objectives and its performance generally; approving operating budgets and major capital expenditure and investment; overseeing the integrity of the company’s accounting and corporate reporting systems including the external audit; (viii) overseeing the company’s process for making timely and balanced disclosure of all material information concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Company’s securities; (ix) ensuring that the Company has in place an appropriate risk management framework and setting the risk appetite within which the board expects management to operate; and (x) monitoring the effectiveness of the Company’s governance practices. The Company is committed to ensuring that appropriate checks are undertaken before the appointment of a Director and has in place written agreements with each Director which detail the terms of their appointment. 34 35 For personal use only Corporate Governance (continued) (b) Composition of the Board (c) (d) (e) (f) Election of Board members is substantially the province of the Shareholders in general meeting. The Board currently consists of the two Executive Directors (each of whom is a significant Shareholder) and two Non-Executive Directors (each of whom is independent). As the Company’s activities develop in size, nature and scope, the composition of the Board and the implementation of additional corporate governance policies and structures will be reviewed. Identification and management of risk The Board’s collective experience will assist in the identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation at Board meetings. Ethical standards The Board is committed to the establishment and maintenance of appropriate ethical standards. Independent professional advice Subject to the Executive Chairman’s approval (not to be unreasonably withheld), the Directors, at the Company’s expense, may obtain independent professional advice on issues arising in the course of their duties. Remuneration Committee The remuneration of any Executive Director will be decided by the Board following the recommendation of the Remuneration Committee, without the affected Executive Director participating in that decision-making process. The Remuneration Committee is currently comprised of both of the Non-Executive Directors, Mr. Zane Lewis and Mr. Chay Yiowmin, and one of the Executive Directors, Mr. Clive Tan. The Articles provide that the Non-Executive Directors will be paid by way of remuneration for their services as Directors a sum not exceeding such fixed sum per annum as may be determined by the Directors prior to the first annual general meeting of the Company or pursuant to a resolution passed at a general meeting of the Company. Until a different amount is determined, the amount of the remuneration is S$200,000 per annum. In addition, subject to any necessary Shareholder approval, a Director may be paid fees or other amounts as the Directors determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director (e.g. non-cash performance incentives such as options). Directors are also entitled to be paid reasonable travel and other expenses incurred by them in the course of the performance of their duties as Directors. The Remuneration Committee reviews and approves the Company’s remuneration policy in order to ensure that the Company is able to attract and retain executives and Directors who will create value for Shareholders, having regard to the amount considered to be commensurate for an entity of the Company’s size and level of activity as well as the relevant Directors’ time, commitment and responsibility. The Board is also responsible for reviewing any employee incentive and equity-based plans including the appropriateness of performance hurdles and total payments proposed. Corporate Governance (continued) (g) Trading policy The Board has adopted a policy that sets out the guidelines on the sale and purchase of securities in the Company by its key management personnel (i.e. Directors and, if applicable, any employees reporting directly to the Executive Directors). The policy generally provides that the written acknowledgement of the Executive Chairman (or the Board in the case of the Executive Chairman) must be obtained prior to trading. (h) Diversity policy The Board values diversity and recognises the benefits it can bring to the organisation’s ability to achieve its goals. Accordingly, the Company has set in place a diversity policy. This policy outlines the Company’s diversity objectives in relation to gender, age, cultural background and ethnicity. It includes requirements for the Board to establish measurable objectives for achieving diversity, and for the Board to assess annually both the objectives, and the Company’s progress in achieving them. (i) (j) (k) (l) Audit and Risk Committee The Company has established an Audit and Risk Committee which operates under an Audit and Risk Committee Charter which includes, but is not limited to, monitoring and reviewing any matters of significance affecting financial reporting and compliance, the integrity of the financial reporting of the Company, the Company’s internal financial control system and the Company’s risk management systems, the identification and management of business, economic, environmental and social sustainability risk and the external audit function. Such a review has taken place during the financial period ended 31 March 2015. The Audit and Risk Committee is currently comprised of the Non- Executive Directors and the Executive Chairman. External audit The Company in general meetings is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors following the recommendation from the Audit Committee. Internal audit The Company does not have an internal audit function. The Board considers the Audit and Risk Committee and financial control function in conjunction with its risk management policy is sufficient for a Company of its size and complexity. Evaluation of the performance of the board and senior executives A formal evaluation of the performance of the board, or senior executives, was not carried out in the financial period ended 31 March 2015 as the performance of the board, its committees, the individual directors and senior executives is assessed on an on-going basis by the Chairman of the Board. The performance of the Chairman of the board is assessed on an on-going basis by the Board as a whole. (m) Gender Diversity The Group does not discriminate on the basis of gender and has no measurable objectives for achieving gender diversity. 36 37 For personal use only Corporate Governance (continued) Departures from Recommendations Following admission to the Official List, the Company will be required to report any departures from the Recommendations in its annual financial report. The Company’s compliance and departures from the Recommendations as at the date of this report are detailed in the table below. Principles and Recommendations Explanation for Departure 2.1 The board of a listed entity should have a nomination committee The Company does not comply with Principle 2.1. The Company is not of a relevant size to consider formation of a nomination committee to deal with the selection and appointment of new Directors and as such a nomination committee has not been formed. Nominations of new Directors are considered by the full Board. If any vacancies arise on the Board, all directors are involved in the search and recruitment of a replacement. The Board has taken a view that the full Board will hold special meetings or sessions as required. The Board is confident that this process for selection, including undertaking appropriate checks before appointing a person, or putting forward to security holders a candidate for election, and review is stringent and full details of all Directors will be provided to Shareholders in the annual report and on the Company’s website. The Company has not disclosed the board skills matrix. Given the nature and size of the Company, its business interests and the stage of development, the Board is of the view that there is an adequate and broad mix of skills required and that given their experience, each of the directors are aware of and capable of acting in an independent manner and in the best interests of the shareholders. 2.2 A listed entity should have and disclose a board skills matrix 2.4 Majority of the board of a listed entity should be independent directors The Board considers that only two out of the four Directors are independent directors in accordance with the ASX Corporate Governance Council’s definition of independence: Mr. Zane Lewis (Independent Non-Executive Director) Mr. Chay Yiowmin (Independent Non-Executive Director) The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the expense of the appointment of additional independent non-executive Directors. The Board believes that the individuals on the Board can make, and do make, quality and independent judgements in the best interests of the Company on all relevant issues. Directors having a conflict of interest in relation to a particular item of business must absent themselves from the Board meeting before commencement of discussion on the topic. Corporate Governance (continued) Departures from Recommendations (continued) Principles and Recommendations Explanation for Departure 2.5 The chair of the board of a listed entity should be an independent director Mr. Chee currently holds the position of Executive Chairman which does not comply with the ASX Corporate Governance Council’s recommendations. While the Board considers the importance of a division of responsibility and independence at the head of the Company, the existing structure is considered appropriate and provides a unified leadership structure. Mr. Chee has been the major force behind the establishment of the 8I Group and its current growth and direction. The Board considers that, at this stage of the Company’s development, he is able to bring quality and independent judgement to all relevant issues, and the Company benefits from his long standing experience of its operations and business relationships. 4.1 The board of a listed entity should have an audit committee of at least three members that are non-executive The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the expense of the appointment of additional non-executive Director to satisfy this recommendation. The Board believes that the individuals on the Audit Committee can make, and do make, quality and informed judgements in the best interests of the Company on all relevant issues. 7.1 The board of a listed entity should have a risk committee The Board has not established a separate Risk Management Committee. However it has established an Audit and Risk Committee that has assumed the role of a separate Risk Management Committee, and operates under a charter approved by the Board. The Board is ultimately responsible for risk oversight and risk management. Discussions on the recognition and management of risks were also considered by the Board. Directors Meetings Since the date of incorporation, 2 meetings of directors were held. Attendances by each director during the period were as follows: DIRECTORS Ken Chee Kuan Tat Clive Tan Che Koon Zane Robert Lewis Yiowmin Chay DIRECTORS' MEETINGS ELIGIBLE TO ATTEND 2 2 2 2 ATTENDED 2 2 2 2 Environmental Issues The Company’s operations comply with all relevant environmental laws and regulations, and have not been subject to any actions by environmental regulators. 38 39 For personal use only Remuneration Report Remuneration Report (continued) This remuneration report set out information about the remuneration of 8I Holdings Limited’s key management personnel for the financial period ended 31 Match 2015. The term ‘key management personnel’ refer to those persons having authority and responsibility for planning, directing, controlling the activities of the consolidated entity, directly or indirectly, including any director (whether executive or otherwise) of the consolidated entity. Remuneration policy The remuneration policy of 8I Holdings Limited has been designed to align director and executive objectives with shareholder and business objectives. The board of the Company believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Company and Consolidated Group, as well as create goal congruence between directors, executives and shareholders. All remuneration paid to directors and executives is valued at the cost to the Consolidated Group and expensed. The names and positions of key management personnel of the Company and of the Consolidated Entity who have held office during the financial period are: Chee Kuan Tat, Ken Clive Tan Che Koon Chay Yiowmin Zane Robert Lewis Pauline Teo Executive Chairman (appointed on 17 May 2014) Executive Director (appointed on 17 May 2014) Non-Executive Director (appointed on 22 September 2014) Non-Executive Director and Company Secretary (Australia) (appointed on 22 September 2014) General Manager Service Agreements Remuneration and other terms of employment for the Executive Directors and other Key Management Personnel are formalized in a service agreement. For Non-Executive Directors, these terms are set out in a Letter of Appointment. The major provisions of the agreements relating to remuneration are set out below. Name Chee Kuan Tat, Ken Clive Tan Che Koon Chay Yiowmin Zane Robert Lewis Base Salary(1) S$260,000 p.a. S$208,000 p.a. S$nil S$nil Pauline Teo S$144,000 p.a. Fees S$nil S$nil S$36,000 p.a.(2) S$36,000 p.a.(2) A$60,000 p.a.(3) S$nil Term of Agreement Notice Period No fixed term No fixed term No fixed term No fixed term N/A N/A N/A N/A No fixed term 2 months (1) Excluding employer’s Central Provident Fund (CPF) contribution (2) Non-executive director fee (3) Company secretary fee Details of Remuneration Compensation 2015 Compensation of Directors Chee Kuan Tat, Ken Clive Tan Che Koon Chay Yiowmin Zane Robert Lewis Compensation of other key management personnel Pauline Teo Compensation of director of a subsidiary Jimmy Lim Short Term Benefits Fees Salaries S$ S$ Central Provident Fund S$ Total S$ Percentage at Risk 157,620 130,243 - - 216,852* 92,517* 18,900 37,385 8,630 8,630 - - 383,102 231,390 18,900 37,385 0% 0% 0% 0% 287,863 365,654 17,260 670,777 98,545 38,145* 9,000 145,690 0% 56,475 - 9,600 66,075 0% 155,020 38,145 18,600 211,765 * The fees paid to Mr Chee, Mr Tan and Ms Teo pertained to speaker and trainer services performed before 30 September 2014. Subsequent to 30 September 2015, all key management personnel were no longer entitled to speaker fees and trainer fees for their services performed. The Company did not provide any equity compensation to directors or executives during the period ended 31 March 2015. The Company also reimburses validly incurred business expenses of Key Management Personnel. Other Information There were no loans made to any Key Management Personnel during the period or outstanding at period ended. Apart from disclosed elsewhere in this report, there were no transactions with Key Management Personnel during the period. During the financial period, a Remuneration Committee was set up to review and approve the Company’s remuneration policy. 40 41 For personal use only “Price is what you pay. Value is what you get.” Warren Buffett RIGHT FINANCIALS 42 43 For personal use onlyGENERAL INFORMATION REVIEW OF PERFORMANCE OF THE GROUP Directors’ Report DIRECTORS’ REPORT REVIEW OF PERFORMANCE OF THE GROUP General Information As at 31 March 2015 Directors Mr Chee Kuan Tat, Ken (Executive Chairman) Mr Clive Tan Che Koon (Executive Director) Mr Chay Yiowmin (Non-executive Director) Mr Zane Robert Lewis (Non-executive Director) Company secretary (Singapore) Mr Ang Teck Huat Company secretary (Australia) Mr Zane Robert Lewis ARBN: 601 582 129 The directors are pleased to present their report to the members together with the audited consolidated financial statements of 8I Holdings Limited (the Company) (previously known as 8 Group Ltd.) and its subsidiaries (collectively, the Group) and the statement of financial position and statement of changes in equity of the Company for the financial period from 17 May 2014 (date of incorporation) to 31 March 2015. 1. Directors The directors of the Company in office at the date of this report are as follows: Mr Chee Kuan Tat, Ken Mr Clive Tan Che Koon Mr Chay Yiowmin Mr Zane Robert Lewis Registered office (Singapore) Goldbell Towers, 47 Scotts Road, #03-03/04, Singapore 228233 2. Arrangements to enable Directors to acquire shares and debentures Tel: +65 6225 8480 Fax: +65 6235 0332 Registered office (Australia) C/- SmallCap Corporate Pty Ltd, Level 1, 981 Wellington Street, Perth, WA, Australia, 6005 Neither at the end of nor at any time during the financial period was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate. Tel: +61 (8) 6555 2950 Fax: +61 (8) 9321 3102 3. Directors’ interests in shares and debentures Principal place of business Goldbell Towers, 47 Scotts Road, #03-03/04, Singapore 228233 Share registrar Boardroom Pty Limited Level 7, 207 Kent Street, Sydney, NSW, Australia 2000 Auditors Tel: +61 (2) 9290 9600 Fax: +61 (2) 9279 0664 Kong, Lim & Partners LLP Chartered Accountants 13A MacKenzie Road Singapore 228676 Partner in charge: Charles Parulian (since 2014) Tel: +65 6227 4180 Fax: +65 6324 0213 Stock exchange listing 8I Holdings Limited shares are listed on the Australian Securities Exchange (ASX code: 8IH) Website www.8iholdings.com This report covers both 8I Holdings Limited as an individual entity and the consolidated entity comprising 8I Holdings Limited and its subsidiaries. The Group’s functional currency and presentation currency is Singapore Dollars (S$). A description of the Group’s operations and of its principal activities is included in the notes to the financial statements. The directors’ report is not part of the financial report. The following directors, who held office at the end of the financial period, had, according to the register of directors’ shareholdings required to be kept under section 164 of the Singapore Companies Act, Cap. 50, an interest in shares and share options of the Company and related corporations (other than wholly-owned subsidiaries) as stated below: Number of ordinary shares Name of directors The Company Mr Chee Kuan Tat, Ken Mr Clive Tan Che Koon Mr Zane Robert Lewis Direct interest Deemed interest At the date of incorporation or date of appointment At the end of financial period At the date of incorporation or date of appointment At the end of financial period 57,000,000 43,000,000 - 86,640,000 65,360,000 10,000 - - - 73,800,000* 73,800,000* 30,000 Notes: * Held in the name of 8 Capital Equities BVI There was no change in any of the above-mentioned interests in the Company between the end of the financial period and 17 May 2014. Except as disclosed in this report, no director who held office at the end of the financial period had interests in shares, share options, warrants or debentures of the Company, or of related corporations, either at the beginning of the financial period, or date of appointment if later, or at the financial period. 44 45 For personal use only Directors’ Report 4. Directors’ contractual benefits Directors’ Report 6. Auditor Except as disclosed in the financial statements, since the date of incorporation, no director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest. Kong, Lim & Partners LLP have expressed their willingness to accept reappointment as auditor. 5. Audit committee On behalf of the board of directors, The audit committee (AC) carried out its functions in accordance with section 201B(5) of the Singapore Companies Act, Cap. 50, including the following: - Reviews the audit plans of the internal and external auditors of the Company, and reviews the internal auditors’ evaluation of the adequacy of the Company’s system of internal accounting controls and the assistance given by the Company’s management to the external and internal auditors - Reviews the quarterly and annual financial statements and the auditor’s report on the annual financial statements of the Company before their submission to the board of directors Mr Chee Kuan Tat, Ken Director Singapore, 15 May 2015 Mr Clive Tan Che Koon Director - Reviews effectiveness of the Company’s material including financial, operational and compliance controls and risk management via reviews carried out by the internal auditors internal controls, - Meets with the external auditors, other committees, and management in separate executive sessions to discuss any matters that these groups believe should be discussed privately with the AC - Reviews legal and regulatory matters that may have a material impact on the financial statements, related compliance policies and programmes and any reports received from regulators - Reviews the cost effectiveness and the independence and objectivity of the external auditors - Reviews the nature and extent of non-audit services provided by the external auditors - Recommends to the board of directors the external auditors to be nominated, approves the compensation of the external auditors, and reviews the scope and results of the audit - Reports actions and minutes of the AC to the board of directors with such recommendations as the AC considers appropriate The AC, having reviewed all non-audit services provided by the external auditors to the Group, is satisfied that the nature and extent of such services would not affect the independence of the external auditors. The AC has also conducted a review of interested person transactions. Further details regarding the AC are disclosed in the Report on Corporate Governance. 46 47 For personal use only Statement by Directors STATEMENT BY DIRECTORS INDEPENDENT AUDITOR’S REPORT We state that, in the opinion of the board of directors, (a) the accompanying statements of financial position, consolidated statement of comprehensive income, statements of changes in equity and consolidated statement of cash flows together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2015 and the results of the business, changes in equity and cash flows of the Group and the changes in equity of the Company for the period ended on that date; and (b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. On behalf of the board of directors, Report on the Consolidated Financial Statements Independent Auditor’s Report To the members of 8I Holdings Limited 13A MacKenzie Road Singapore 228676 T: (65) 6227 4180 F: (65) 6324 0213 konglim@klp.com.sg www.konglim.com.sg Mr Chee Kuan Tat, Ken Director Singapore, 15 May 2015 Mr Clive Tan Che Koon Director We have audited the accompanying financial statements of 8I Holdings Limited (the “Company”) and its subsidiaries (the “Group”), which comprise the statements of financial position of the Group and the Company as at 31 March 2015, the statements of changes in equity of the Group and the Company and the consolidated statement of comprehensive income and consolidated statement of cash flows of the Group for the period from 17 May 2014 (date of incorporation) to 31 March 2015, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and statement of financial position and to maintain accountability of assets. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 48 49 For personal use only CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Consolidated Statement of Comprehensive Income For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Revenue Other income Other items of expense Administrative expenses Other operating expenses Finance costs Profit before tax Income tax expense Profit for the period Other comprehensive income: Net fair value gain on re-measurement of financial assets available for sale, representing the other comprehensive income for the period, net of tax Total comprehensive income for the period Attributable to: Owners of the Company Non-controlling interest Total comprehensive income for the period Earnings per share (cents per share) Basic Diluted Group 17.5.2014 (date of incorporation) to 31.3.2015 S$ 10,669,319 141,167 (2,443,986) (2,630,560) (7,168) 5,728,772 (736,875) 4,991,897 Notes 4 4 5 6 55,983 5,047,880 4,847,674 200,206 5,047,880 7 7 1.70 1.70 50 51 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. For personal use only STATEMENTS OF FINANCIAL POSITION STATEMENTS OF CHANGES IN EQUITY Statements of Financial Position As at 31 March 2015 Statements of Changes in Equity As at 31 March 2015 Assets Current Assets Cash and cash equivalents Trade and other receivables Prepaid operating expenses Investment securities Non-current Assets Plant and equipment Investment properties Intangible assets Investment in subsidiaries Investment in associate Investment securities Total Assets Liabilities Current Liabilities Trade and other payables Hire purchase Income tax payable Unearned revenue Non-current Liabilities Deferred tax liabilities Hire purchase Total Liabilities Net Assets Equity Equity attributable to owners of the Company Share capital Retained earnings Other reserves Non-controlling interests Total Equity Notes Group 31.3.2015 S$ Company 31.3.2015 S$ 8 9 10 11 12 13 14 15 10 16 16 17 18 16 19 20 21,656,807 2,030,660 411,814 12,091,307 36,190,588 214,052 208,667 1,901,072 - 959,696 814,201 4,097,688 5,278,839 24,632,403 642 - 29,911,884 - - - 4,779,957 - - 4,779,957 40,288,276 34,691,841 954,017 22,477 797,853 1,920,801 3,695,148 41,331 41,688 83,019 30,841 - 52,000 - 82,841 - - - 3,778,167 82,841 36,510,109 34,609,000 30,983,691 4,791,691 55,983 35,831,365 678,744 36,510,109 30,983,691 3,625,309 - 34,609,000 - 34,609,000 - - - - 2015 Group Attributable to owners of the Company Equity attributable to owners of the Company, total S$ Note Equity total S$ Share capital S$ Retained earnings S$ Fair value reserve S$ Opening balance at 17.5.2014 (date of incorporation) 116 116 116 - Profit for the period 4,991,897 4,791,691 4,791,691 Non- controlling interests S$ - 200,206 - - Other comprehensive income Net fair value gain on re-measurement of financial assets available for sale Other comprehensive income for the period, net of tax Total comprehensive income for the period Contributions by and distributions to owners Issuance of shares Conversion of related party loans to shares Conversion of third party loans to shares Share issuance expense Total contributions by and distributions to owners Changes in ownership interests in subsidiaries Acquisition of subsidiaries Disposal of subsidiaries Total changes in ownership interests in subsidiaries Total transactions with owners in their capacity as owners 55,983 55,983 55,983 55,983 5,047,880 4,847,674 - - 55,983 55,983 - - 4,791,691 55,983 200,206 19 26,114,998 26,114,998 26,114,998 19 19 19 670,440 670,440 670,440 5,216,977 (1,018,840) 5,216,977 (1,018,840) 5,216,977 (1,018,840) 30,983,575 30,983,575 30,983,575 516,844 (38,306) 478,538 - - - - - - 31,462,113 30,983,575 30,983,575 - - - - - - - - - - - - - - - - - - - - - - - 516,844 (38,306) 478,538 478,538 Closing balance at 31.3.2015 36,510,109 35,831,365 30,983,691 4,791,691 55,983 678,744 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 52 53 For personal use only Statements of Changes in Equity As at 31 March 2015 2015 Company Opening balance at 17.5.2014 (date of incorporation) Profit for the period, representing total comprehensive income for the period Contributions by and distributions to owners Issuance of shares Conversion of related party loans to shares Conversion of third party loans to shares Share issuance expense Total transactions with owners in their capacity as owners Note Equity total S$ Share capital S$ Retained earnings S$ 116 116 - 3,625,309 - 3,625,309 19 19 19 19 26,114,998 26,114,998 670,440 670,440 5,216,977 5,216,977 (1,018,840) (1,018,840) 30,983,575 30,983,575 - - - - Closing balance at 31.3.2015 34,609,000 30,983,691 3,625,309 CONSOLIDATED STATEMENT OF CASH FLOWS Consolidated Statement of Cash Flows For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Operating activities Profit before income tax Adjustments for: Fair value gain on held-for-trading financial assets Profit from sale of a subsidiary’s shares Gain from bargain purchase Dividend income Interest income Depreciation of plant and equipment Finance costs Total adjustments Operating cash flows before changes in working capital Changes in working capital: Prepaid operating expenses Trade and other receivables Unearned revenue Trade and other payables Total changes in working capital Cash flows generated from operations Interest received Interest paid Income taxes paid Net cash flows generated from operating activities Investing activities Acquisition of subsidiaries by cash, net of cash acquired Acquisition of subsidiaries by shares swap, net of cash acquired Proceeds from sale of shares in subsidiary, net of cash disposed Dividend income from investment securities Purchase of investment securities Net cash flows used in investing activities Financing activities Issuance of shares Share issuance Net cash flows generated from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at incorporation date Cash and cash equivalents at the end of the period Group 17.5.2014 (date of incorporation) to 31.3.2015 S$ Notes 5,728,772 (1,121,997) (3,880,841) (17,769) (225,476) (8,182) 102,315 7,168 (5,144,782) 583,990 (411,764) 236,075 1,020,863 498,508 1,343,682 1,927,672 8,182 (7,168) (279,853) 1,648,833 (3,796,465) 4,825,565 3,761,839 225,476 (5,324,758) (308,343) 21,335,041 (1,018,840) 20,316,201 21,656,691 116 21,656,807 4 4 4 4 4 5 19 19 8 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 54 55 For personal use only Consolidated Statement of Cash Flows For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 The Group disposed 39.2% of its holding in CPA Academy Pte. Ltd. (the CPAA), a subsidiary, on 30 March 2015 at a price of S$4,500,000. The disposal consideration was fully settled in cash. The sale reduced the Group’s stake in CPAA from 51% to 31%. Accordingly, CPAA ceased to be a subsidiary and became an associate company of the Group. The value of assets and liabilities of CPA Academy Pte. Ltd. recorded in the consolidated financial statements as at 30 March 2015, and the cash flow effect of the disposal were: Plant and equipment Prepaid operating expenses Trade and other receivables Cash and cash equivalents Income tax payable Unearned revenue Trade and other payables Deferred tax liabilities Carrying value of net assets Total consideration Cash and cash equivalents of the subsidiary Net cash inflow on sale of shares in subsidiary Group 31.3.2015 S$ 4,117 4,353 17,943 738,161 764,574 (41,307) (318,271) (328,936) (949) 75,111 4,500,000 (738,161) 3,761,839 NOTES TO THE FINANCIAL STATEMENTS Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 1. Corporate information 8I Holdings Limited (the “Company”) is a limited liability company incorporated and domiciled in Singapore and is listed on the Australian Securities Exchange (ASX). With effect from 15 August 2014, the name of the Company was changed from 8 Group Ltd. to 8I Holdings Limited. The registered office and principal place of business of the Company is located at Goldbell Towers, 47 Scotts Road, #03-03/04, Singapore 228233. The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 14 to the financial statements. 2. 2.1 Significant accounting policies Basis of preparation The consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company have been prepared in accordance with the Singapore Financial Reporting Standards (FRS) including related interpretations promulgated by the Accounting Standards Council and the disclosure requirements of the Singapore Companies Act, Cap. 50. The financial statements have been prepared on a historical cost basis, unless stated otherwise. The financial statements are presented in Singapore Dollar (SGD or S$). 2.2 Standards issued but not yet effective The Group has not adopted the following standards and interpretations that have been issued but not yet effective: Description Improvements to FRSs (January 2014) Amendments to FRS 16 Property, Plant and Equipment and FRS 38 Intangible Assets Amendments to FRS 24 Related Party Disclosures Amendments to FRS 103 Business Combinations Amendments to FRS 113 Fair Value Measurement Amendments to FRS 108 Operating Segments Improvement to FRSs (February 2014) Amendments to FRS 103 Business Combination Amendments to FRS 113 Fair Value Measurement Effective for annual year beginning on or after 1 July 2014 1 July 2014 1 July 2014 1 July 2014 1 July 2014 1 July 2014 1 July 2014 The directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application. The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 56 57 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 2. Significant accounting policies (continued) 2.3 Basis of consolidation 2. Significant accounting policies (continued) 2.4 Business combinations and goodwill (continued) The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra- group transactions and dividends are eliminated in full. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Losses within subsidiaries are attributed to the non-controlling interest even if that results in a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:        De-recognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost; De-recognises the carrying amount of any non-controlling interest; De-recognises the cumulative transaction differences recorded in equity; Recognises the fair value of the consideration received; Recognises the fair value of any investment retained; Recognises any surplus or deficit in profit or loss; Re-classifies comprehensive income to profit or loss or retained earnings, as appropriate. the Group’s share of components previously recognised in other 2.4 Business combinations and goodwill Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in profit or loss. The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any), that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation, is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Other components of non-controlling interests are measured at their acquisition date fair value, unless another measurement basis is required by another FRS. Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill. In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date. Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the Group’s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquire are assigned to those units. The cash-generating units to which goodwill have been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. 2.5 Transactions with non-controlling interests Non-controlling interest represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position separately from equity attributable to owners of the Company. Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and 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 interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. 2.6 Subsidiaries A subsidiary is an investee that is controlled by the Group. The Group controls an investee when it is exposed, or has rights, to variable returns from its investment with the investee and has ability to affect these returns through its power over the investee. In the Company’s separate financial statements, investment in subsidiaries are accounted for at cost less impairment losses. On disposal of investment in subsidiaries, the difference between disposal proceeds and the carrying amounts of the investment are recognised in profit or loss. 58 59 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 2. Significant accounting policies (continued) 2. Significant accounting policies (continued) 2.7 Associate An associate is an entity over which the Group has the power to participate in the financial and operating policy decisions of the investee but does not have control of those policies. The Group account for its investment in associate using the equity method from the date on which it becomes an associate. On acquisition of the investment, any excess of the cost of the investment over the Group’s share of the net fair value of the investee’s identifiable assets and liabilities is accounted as goodwill and is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the investee’s identifiable assets and liabilities over the cost of the investment is included as income in the determination of the entity’s share of the associate’s profit or loss in the period in which the investment is acquired. Under the equity method, the investment in associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate. The profit or loss reflects the share of results of the operations of the associate. Distributions received from the associate reduces the carrying amount of the investment. Where there has been a change recognised in other comprehensive income by the associate, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and associate are eliminated to the extent of the interest in the associate. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in associate. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss. The financial statements of the associate is prepared as the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. Upon loss of significant influence over the associate, the Group measures the retained interest at fair value. Any difference between the fair value of the aggregate of the retained interest and proceeds from disposal and the carrying amount of the investment at the date the equity method was discontinued is recognised in profit or loss. 2.8 Foreign currency Transaction and balances Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non- monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation. Consolidated financial statements For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the end of the reporting period and their profit or loss are translated at the exchange rates prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss. In the case of a partial disposal without loss of control of subsidiaries that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re- attributed to non-controlling interest and are not recognised in profit or loss. For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss. 2.9 Plant and equipment All items of plant and equipment are initially recorded at cost. The cost of an item of equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. 60 61 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 2. 2.9 Significant accounting policies (continued) Plant and equipment (continued) 2. Significant accounting policies (continued) 2.11 Impairment of non-financial assets Depreciation is calculated on a straight-line basis so as to write off the costs of the assets over their estimated useful lives. The estimated useful lives used are as follows: Office Equipment Furniture & Fittings Motor vehicle Years 1 to 3 3 5 Fully depreciated assets are retained in the financial statements until they are no longer in use. 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 residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodies in the items of plant and equipment. An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included in profit or loss in the year the asset is derecognised. 2.10 Investment properties The investment properties are properties that are either owned by the Group in order to earn rentals or for capital appreciation, or both, rather than for use in the production or supply of goods or services, or for administrative purposes, or in the ordinary course of business. Investment properties comprised completed investment properties and properties that are being constructed or developed for future use as investment properties. Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value which reflects market conditions at the end of the reporting period. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or disposal. The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when an annual impairment testing for an asset required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Impairment losses of continuing operations are recognised in profit or loss, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. For assets an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. 2.12 Financial assets Initial recognition and measurement Financial assets are recognised when, and only when, the Group becomes a party to contractual provisions of the financial instrument. The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. 62 63 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 2. Significant accounting policies (continued) 2.12 Financial assets (continued) Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows: Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by FRS 39. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated effective hedging instruments. Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial assets are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss include exchange differences, interest and dividend income. Loans and receivables Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. Available-for-sale financial assets Available-for-sale financial assets include equity securities. Equity investments classified available for sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. After initial recognition, available for sale financial assets are subsequently measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Derecognition A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income. 2. Significant accounting policies (continued) 2.13 Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand which are subject to an insignificant risk of changes in value. 2.14 Impairment of financial assets The Group assesses at each end of the reporting period whether there is any objective evidence that a financial asset is impaired. Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through the use of an allowance amount. The amount of the loss is recognised in the profit or loss. When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset. To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency of significant financial difficulties of the debtor and default or significant delay in payments. If, in a subsequent year, the amount of the impairment loss decrease and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. 64 65 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 2. Significant accounting policies (continued) 2.14 Impairment of financial assets (continued) Available-for-sale financial assets In the case of equity investments classified as available-for-sale, objective evidence of impairment include (i) significant financial difficulty of the issuer, (ii) information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may not be recovered; and (iii) a significant or prolonged decline in the fair value of the investment below its costs. Significant is to be evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost. If an available-for-sale financial asset is impaired, an amount comprising the difference between its acquisition cost (net of any reprincipal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from other comprehensive income and recognised in profit or loss. Reversals of impairment losses in respect of equity instruments are not recognised in profit or loss; increase in their fair value after impairment are recognised directly in other comprehensive income. 2.15 Financial liabilities Initial recognition and measurement Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value plus in case of financial liabilities not at fair value through profit or loss, directly attributable transaction costs. Subsequent measurement After initial recognition, financial liabilities that are not carried at fair value through profit or loss are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. 2. Significant accounting policies (continued) 2.16 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. 2.17 Employee benefits Defined contribution plans The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. In particular, the Singapore companies in the Group make contributions to the Central Provident Fund scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed. 2.18 Leases As lessee Finance leases which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. As lessor Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.19. Contingent rents are recognised as revenue in the period in which they are earned. 66 67 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 2. Significant accounting policies (continued) 2.19 Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of the consideration received or receivable and represents amount receivable for goods and services provided in the normal course of business, net of discounts and sales related taxes. Revenue from rendering of services is recognised over the period the services are performed. Dividend income is recognised when the Group’s right to receive payment is established. Revenue from sale of books is recognised as the books are sold. Revenue from sales of investment property is recognised upon the transfer of significant risk and rewards of ownership of the property to the buyer and the amount of revenue and cost incurred or to be incurred in respect of the transaction can be measured reliably. Rental income is accounted for on a straight line basis over the lease terms. 2.20 Taxes Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authority. The tax rates and tax laws used to compute the amount are those that are enacted at the end of the reporting period, in the country where the Group operates and generates taxable income. Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. 2. Significant accounting policies (continued) 2.20 Taxes (continued) Deferred tax (continued) - In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised of except: - Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and - In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Sales tax Revenues, expenses and assets are recognised net of the amount of sales tax except:  Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the 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. Deferred tax  Deferred tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable in the years in which those temporary differences are expected to be recovered or settled based on tax rates. Deferred tax liabilities are recognised for all temporary differences, except: - Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and 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. 2.21 Related parties A related party is defined as follows: (a) A person or a close member of that person’s family is related to the Group if that person: (i) (ii) (iii) Has control or joint control over the Group; Has significant influence over the Group; or Is a member of the key management personnel of the Group or of a parent of the Group 68 69 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 2. Significant accounting policies (continued) 2.21 Related parties (continued) (b) An entity is related to the Group if any of the following conditions applies: (i) (ii) The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). Both entities are joint ventures of the same third party. (iii) (iv) One entity is a joint venture of a third entity and the other entity is an associate of the (v) third entity. The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group. If the Group is itself such a plan, the sponsoring employers are also related to the Group; The entity is controlled or jointly controlled by a person identified in (a); (vi) (vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). 2.22 Segment reporting For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 27, including the factors used to identify the reportable segments and the measurement basis of segment information. 2.23 Share capital and share issuance expenses Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital. 3. Significant accounting judgments and estimates The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods. 3.1 Judgments made in applying accounting policies In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements. 3.2 Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, 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. Useful lives of plant and equipment The cost of plant and equipment is depreciated on a straight line basis over the plant and equipment’s useful lives. Management estimates the useful lives of these plant and equipment to be within 1 to 5 years. These are common life expectancies applied in the similar industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amount of the Group’s plant and equipment at 31 March 2015 was S$214,052 (Company: Nil). Impairment of loans and receivables The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables at the end of the reporting period is S$23,687,467. Fair value of unquoted available-for-sale financial assets The fair values of unquoted available-for-sale financial assets are determined using valuation techniques including the discounted cash flow model. The inputs to these models are derived from observable market data where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The assumptions applied in determination of the valuation of these unquoted available-for-sale financial assets and a sensitivity analysis are described in more detail in Note 24. The carrying amount of the unquoted available-for-sale financial assets as at 31 March 2015 is S$43,879. 70 71 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 4. Revenue and other income Revenue Fair value gain on held-for-trading financial assets Dividend income Gain from sale of a subsidiary’s shares Program sales Property rental Others Other income Interest income Gain from bargain purchase Others Total revenue and other income 5. Profit before tax The following items have been included in arriving at profit before tax: Audit fees paid to: - Auditors of the Company Non-audit fees paid to: - Auditors of the Company - Other auditors Depreciation of plant and equipment Employee benefits expense (Note 21) Operating lease expense (Note 23) Commission Net foreign exchange loss Group 17.5.2014 (date of incorporation) to 31.3.2015 S$ 1,121,997 225,476 3,880,841 4,007,575 1,278,456 154,974 10,669,319 8,182 17,769 115,216 141,167 10,810,486 Group 17.5.2014 (date of incorporation) to 31.3.2015 S$ 42,851 39,248 44,084 102,315 1,649,333 899,923 166,545 223,629 6. Income tax expense Major components of income tax expense The major components of income tax expense for the period ended 31 March 2015 are: Consolidated income statement: Current income tax, representing the income tax expense recognised in the income statement Group 17.5.2014 (date of incorporation) to 31.3.2015 S$ 736,875 A reconciliation between the tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the period ended 31 March 2015 is as follows: Profit before tax Tax at the domestic rates applicable to profits in the countries where the Group operates Adjustments: Non-deductible expenses Income not subjected to taxation Effect of partial tax exemption and tax relief Deferred tax assets not recognised Group 17.5.2014 (date of incorporation) to 31.3.2015 S$ 5,728,772 973,891 41,181 (60,316) (221,656) 3,775 736,875 72 73 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 7. Earnings per share 9. Trade and other receivables The basic earnings per share is calculated by dividing the profit for the year attributable to owners of the Company by the weighted average number of ordinary shares for basic earnings per share computation. The following table reflects the profit and share data used in the computation of basic earnings per share for the period ended 31 March: Profit, net of tax, attributable to owners of the Company used in the computation of basic earnings per share Weighted average number of ordinary shares for basic earnings per share computation 8. Cash and cash equivalents Group 17.05.2014 (date of incorporation) to 31.03.2015 S$ 4,791,691 No. of shares 281,226,184 Group 31.3.2015 S$ Company 31.3.2015 S$ Cash at banks and on hand 21,656,807 5,278,839 Cash and cash equivalents denominated in foreign currencies at 31 March 2015 is as the follows: Group 31.3.2015 S$ Company 31.3.2015 S$ Australian Dollar 646,649 546,387 Current Trade receivables Deposits Banker’s guarantee Amounts due from subsidiaries (non-trade) Amounts due from associate Amounts due from affiliated companies (non-trade) Other receivables (non-trade) Add: Cash and cash equivalents (Note 8) Total loans and receivables Trade receivables Group 31.3.2015 S$ Company 31.3.2015 S$ 683,585 376,581 190,000 - 125,000 502,478 153,016 2,030,660 - - - 24,632,403 - - - 24,632,403 21,656,807 5,278,839 23,687,467 29,911,242 The trade receivables are non-interest bearing and are generally on 30 days’ terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition. Trade receivables are denominated in Singapore Dollars. Banker’s guarantee Banker’s guarantee represent guarantee as required by Global Payments in order to provide services in accordance to the merchants agreement. Related party balances - Amounts due from subsidiaries are unsecured, bear interest at 5% p.a., repayable upon demand and are to be settled in cash. - Amounts due from associate and affiliated companies are unsecured, non-interest bearing, repayable upon demand and are to be settled in cash. 74 75 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 9. Trade and other receivables (continued) Receivables that are past due but not impaired The Group has trade receivables amounting to S$366,421 that are past due at the end of the reporting period but not impaired. These receivables are unsecured and the analysis of their aging at the end of the reporting period is as follows: Trade receivables past due but not impaired: Lesser than 30 days 30 – 60 days More than 60 days 10. Investment securities Current: Held-for-trading financial assets Equity securities (quoted) Non-current: Available-for-sale financial assets Equity securities (quoted) Shares (unquoted), at cost Group 31.3.2015 S$ 96,245 137,901 132,275 366,421 Group 31.3.2015 S$ 12,091,307 770,322 43,879 814,201 Available-for-sale financial assets, shares (unquoted), comprise investments in the ordinary issued capital of various entities. There are no fixed returns or fixed maturity dates attached to these investments. No intention to dispose of any unquoted available-for-sale financial assets existed at 31 March 2015. 11. Plant and equipment Group Cost Addition from acquisition of subsidiaries Additions Disposal of a subsidiary At 31.3.2015 Accumulated Depreciation Charge for the year Disposal of a subsidiary At 31.3.2015 Net Carrying Amount At 31.3.2015 Office Equipment S$ Furniture and Fittings S$ Motor Vehicle S$ Total S$ 66,416 10,929 (768) 76,577 56,213 (543) 55,670 86,262 61,077 (4,327) 143,012 41,312 (435) 40,877 - 95,800 - 95,800 4,790 - 4,790 152,678 167,806 (5,095) 315,389 102,315 (978) 101,337 20,907 102,135 91,010 214,052 During the financial year, the Group acquired motor vehicle amounting to S$95,800 by means of hire purchase. The cash outflow on acquisition of motor vehicle amounted to S$25,800. The carrying amount of motor vehicle under hire purchase at the end of the reporting period was S$91,010. 12. Investment properties Group 31.3.2015 S$ Company 31.3.2015 S$ Addition from acquisition of a subsidiary, representing carrying amount at end of the financial period 208,667 - There are no rental income nor direct operating expense arising from investment properties during the financial period. Valuation of investment properties The investment properties are still under development and are stated at the cost of investment. The investment properties held by the Group as at 31 March 2015 are as follows: Description and Location Existing Use Tenure Unexpired lease term One unit of a mixed-use office located at Dela Rosa Street in Manila, Philippines Offices Freehold n/a Investment in the project for property development at 16-24 Lower Clifton Terrace, Brisbane, Australia Residential Freehold n/a 76 77 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 13. Intangible assets 14. Investment in subsidiaries Goodwill on acquisition Addition from acquisition of subsidiaries Disposal of a subsidiary At 31.3.2015 Group 31.3.2015 S$ Company 31.3.2015 S$ 3,441,621 (1,540,549) 1,901,072 - - - Impairment testing of goodwill Goodwill acquired through business combination has been allocated to the same cash-generating unit (CGU) for impairment testing in the education segment. The recoverable amounts of the CGU have been determined based on value in use calculations using cash flow projections from financial budgets approved by management covering a five-year period. The pre-tax discount rate applied to the cash flow projections and the forecasted growth rates used to extrapolate cash flow projections beyond the five-year period are as follows: Growth rates Pre-tax discount rates 2015 2% 5% The calculations of value in use for the CGU are most sensitive to the following assumptions: Budgeted gross margins – Gross margins are based on average values achieved in the three years preceding the start of the budget period. These are increased over the budget period for anticipated efficiency improvements. An increase of 5% per annum has been applied. Growth rates – The forecasted growth rates are based on industry research relevant to the CGU. Pre-tax discount rates – Discount rates represent the current market assessment of the risks specific to the CGU, regarding the time value of money and individual risks of the underlying assets which have not been incorporated in the cash flows estimates. The discount rate calculation is based on the specific circumstances of the Group and derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Group’s investors. The cost of debt is based on the interest bearing borrowings the Group is obliged to service. Market share assumptions – These assumptions are important because, as well as using industry data for growth rates (as noted above), management assesses how the CGU’s position, relative to its competitors, might change over the budget period. Management expects the Group’s share of the education business to be stable over the budget period. Shares, at cost Name Country of incorporation Principal activities Held by the Company: 8 Investment Pte. Ltd. 8 Capital Pte. Ltd. 8 Business Pte. Ltd. 8 Education Pte. Ltd. 8 Property Pte. Ltd. 8 Property PLS Pte. Ltd. Singapore Singapore Singapore Singapore Singapore Singapore 8 Media Pte. Ltd. Singapore Investment dealings and management consultancy service Investment trading Corporate and equity investment Seminars and programs organiser Seminars and programs organiser Business management consultancy service and investment holdings Seminars and programs organiser Held through 8 Business Pte. Ltd.: Hemus Pacific Private Singapore Event organiser Limited Company 31.3.2015 S$ 4,779,957 Proportion (%) of ownership interest 31.3.2015 100% 100% 100% 100% 100% 100% 100% 51% All the subsidiaries are audited by KONG, LIM & PARTNERS LLP, Public Accountants and Chartered Accountants, Singapore. Acquisition of immediate subsidiaries On 5 June 2014 (the acquisition date), the Company acquired 100% equity interest in 8 Investment Pte. Ltd., 8 Capital Pte. Ltd., 8 Business Pte. Ltd., 8 Education Pte. Ltd., 8 Property Pte. Ltd., 8 Property PLS Pte. Ltd. and 8 Media Pte. Ltd. (the immediate subsidiaries) as part of the Group’s restructuring process. This restructuring process was for the purpose of listing the Company on the Australian Securities Exchange (ASX). 78 79 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 14. Investment in subsidiaries (continued) The fair value of the identifiable assets and liabilities of the immediate subsidiaries as at the acquisition date were: Plant and equipment Investment properties Investment in securities Prepaid operating expenses Trade and other receivables Cash and cash equivalents Income tax payable Unearned revenue Trade and other payables Deferred tax liabilities Total identifiable net assets at fair value Gain from bargain purchase Consideration transferred for the acquisition of the immediate subsidiaries Fair value recognised on acquisition S$ 147,583 208,667 6,402,770 50 990,881 4,825,565 12,575,516 (350,862) (899,938) (6,495,753) (31,237) (7,777,790) 4,797,726 (17,769) 4,779,957 Shares swap, representing the total consideration transferred 4,779,957 Trade and other receivables acquired Trade and other receivables acquired with fair value of S$990,881 is expected to be collected. Gain from bargain purchase A gain from bargain purchase of S$17,769 has been recognised as other income in the current financial period. The gain recognised is not expected to be taxable for income tax purposes. Impact of the acquisition on profit and loss From the acquisition date, the immediate subsidiaries have contributed S$8,900,000 of revenue and S$4,900,000 to the Group’s profit after tax for the financial period. If the business combination had taken place on 1 April 2014, the Group’s revenue would have been S$11,400,000 and the Group’s profit, net of tax would have been S$5,500,000. The cost of shares swap was expense taken directly to share capital reserve. 14. Investment in subsidiaries (continued) Acquisition of Hemus Pacific Private Limited On 16 January 2015 (the acquisition date), the Group’s subsidiary company, 8 Business Pte. Ltd., acquired 51% equity interest in Hemus Pacific Private Limited (the “HPPL”), a successful property and events management business since 2005, with an audited revenue of more than S$4,400,000 in financial year 2014. The acquisition of HPPL will provide the Company with access to retail properties and events operated by HPPL. These properties are typically located in retail shopping centres and mass transit interchanges with very high foot traffic. HPPL specialises in operating promotional events in these locations, which can be synergised to provide the Group with ongoing opportunities to attract enrolments for its financial education seminars and courses. HPPL operates as a master property manager for many properties located in mass transit terminals and has close working relationships with SBS Transit Ltd and SMRT Corporation Ltd. The management anticipates that relationships with these clients will provide the Group with access to future property co-development and investment opportunities with prominent real estate owners and developers. The fair value of the identifiable assets and liabilities of HPPL as at the acquisition date were: Trade and other receivables Cash and cash equivalents Deferred tax liabilities Income tax payable Trade and other payables Total identifiable net assets at fair value Non-controlling interest measured at the non-controlling interest’s proportionate share of immediate subsidiaries’ net identifiable assets Goodwill arising from acquisition Fair value recognised on acquisition S$ 1,780,864 181,535 1,962,399 (1,344) (76,000) (812,648) (889,992) 1,072,407 (525,479) 1,901,072 2,448,000 Consideration transferred for the acquisition of the immediate subsidiaries Cash paid, representing the total consideration transferred 2,448,000 80 81 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 14. Investment in subsidiaries (continued) Trade and other receivables acquired Trade and other receivables acquired with fair value of S$1,129,181 is expected to be collected. Goodwill arising from acquisition The goodwill of S$1,824,573 comprises the value of providing the Group with access to future property co-development and investment opportunities with prominent real estate owners and developers. None of the goodwill recognised is expected to be deductible for income tax purposes. Impact of the acquisition on profit and loss From the acquisition date, HPPL has contributed S$1,300,000 of revenue and S$300,000 to the Group’s profit after tax for the financial period. If the business combination had taken place on 1 April 2014, the revenue from operations would have been S$10,600,000 and the Group’s profit from operations, net of tax would have been S$8,300,000. 15. Investment in associate Shares, at cost Disposal during the financial period Share of post-acquisition reserves Name Country of incorporation Principal activities Group 31.3.2015 S$ 1,530,000 (600,000) 29,696 959,696 Proportion (%) of ownership interest 31.3.2015 Held through 8 Business Pte. Ltd.: CPA Academy Pte. Ltd. Singapore IT business and seminars organiser 31% The associate is audited by KONG, LIM & PARTNERS LLP, Public Accountants and Chartered Accountants, Singapore. On 30 January 2015 (the acquisition date), the Group’s subsidiary company, 8 Business Pte. Ltd., acquired 51% equity interest in CPA Academy Pte. Ltd. (the “CPAA”), a successful provider of training courses on online lead generation marketing, and conducting online lead generation on behalf of various clients. The acquisition of CPAA will provide the Group with additional course offerings for its education division. In addition, the expertise and experience of the management of CPAA will synergise with the Group in creating more education events and programs. The marketing and lead generation activities of CPAA are also expected to generate additional enrolments for the Group’s financial education seminars and courses. 15. Investment in associate (continued) Subsequent to the acquisition of CPAA, the management worked with CPAA’s founder to transform CPAA from an education provider to an internet advertising “traffic platform” provider. CPAA plans to develop an online advertising platform, Trafficpedic, which connects online advertisers with web and mobile publishers. Trafficpedic will be a natural complement to CPAA’s training division, which provides value to non- tech professionals and educates them on becoming online entrepreneurs in the lead generation business, where they will be able to generate commission from companies on a per lead basis, through multiple sources including online advertising and various traffic websites. With a lack of online advertisement platforms in the Asia Pacific region for small and medium enterprises, the focus of Trafficpedic will be in the Asia Pacific region, starting from Singapore, and concentrating on delivering the highest traffic quality to advertisers for positive return on investment, while maximising online revenue for web publishers via Trafficpedic. On 30 March 2015 (the disposal date), as part of the strategic plan to raise capital in CPAA to develop Trafficpedic, the Group entered into a sale and purchase agreement with an investor through its subsidiary, 8 Business Pte. Ltd., to sell 39.2% of its holding in CPAA at a consideration of S$4,500,000. The Group recognised a gain of S$3,880,841 as a result of the sale. The sale reduced the Group’s stake in CPAA from 51% to 31%. Accordingly, CPAA ceased to be a subsidiary and became an associate company of the Group. The summarised financial information of the associate, not adjusted for the proportion of ownership interest held by the Group, is as follows: Assets and Liabilities Total assets Total liabilities Results for the period (30.1.2015 to 31.3.2015): Revenue Profit for the period Group 31.3.2015 S$ 764,574 (689,463) 571,092 95,796 15. Investment in associate (continued) 82 8I Holdings Limited and its Subsidiaries Annual Financial Statement 40 83 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 16. Trade and other payables 17. Unearned revenue Trade payables Accrued operating expenses Deposits received GST payable Amounts due to related parties (non-trade) Other payables Trade and other payable Hire purchase Total trade and other payables, representing financial liabilities Group 31.3.2015 S$ Company 31.3.2015 S$ 53,894 342,096 183,876 149,393 181,342 43,416 954,017 64,165 18,441 12,400 - - - - - - carried at amortised cost 1,018,182 30,841 Trade and other payables These amounts are non-interest bearing. Trade and other payables are normally settled on 30-day terms. Trade and other payables are denominated in Singapore Dollars. Amounts due to related parties These amounts are unsecured, non-interest bearing, repayable on demand and are to be settled in cash. Hire purchase This amount is secured by a charge over the leased asset (Note 11). The effective interest of the lease is 2.28% p.a. This hire purchase is denominated in Singapore Dollars. Minimum lease payments and present value of the minimum lease payments are as follows: Not later than one year Later than one year but not later than five years Total minimum lease payments Less: amounts representing finance charges Present value of minimum lease payments Group 31.3.2015 Minimum lease payments Present value of payments S$ S$ 25,047 43,507 68,554 (4,389) 64,165 22,477 41,688 64,165 - 64,165 This represents revenue received from customers but not yet recognised to the profit or loss due to service not yet rendered as at reporting date. 18. Deferred tax liabilities Differences in depreciation for tax purposes Difference in fair value reserve for available-for-sale securities for tax purposes 19. Share capital Issued and fully paid ordinary shares At 17.5.2014 (date of incorporation) Issuance of shares Conversion of related party loans to shares Conversion of other loans to shares Share issuance expense At 31.3.2015 Group 31.3.2015 S$ Company 31.3.2015 S$ 2,831 38,500 41,331 - - - Group and Company No. of shares S$ 100,000,000 116 168,814,665 26,114,998 58,329,535 30,000,000 - 357,144,200 670,440 5,216,977 (1,018,840) 30,983,691 The shareholders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions. The ordinary shares have no par value. During the financial period, there were no returns to shareholders including distributions and buy backs. 20. Other reserves Fair value reserve Fair value reserve represents the cumulative unrealised fair value changes, net of tax, of available- for-sale financial assets until they are disposed of or impaired. 84 85 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 21. Employee benefits Employee benefits expense (including directors): Salaries, bonuses and fees Central Provident Fund contributions Other short-term benefits 22. Related parties transactions Group 17.5.2014 (date of incorporation) to 31.3.2015 S$ 1,507,991 126,330 15,012 1,649,333 23. Commitments and contingent liabilities Operating lease commitments – as lessee The Group has entered into commercial leases on event spaces and office premises. These leases have tenures of 6 months to 3 years with no renewal option or contingent rent provision included in the contracts. The Group is restricted from subleasing the office premises to third parties. Minimum lease payments recognised as expense in the income statement for the financial period ended 31 March 2015 amounted to S$899,923. Future minimum rental payable under non-cancellable operating leases at the end of the reporting period are as follows: Group 31.3.2015 S$ 1,368,000 247,000 1,615,000 Related parties comprise mainly companies which are controlled or significantly influenced by the Group’s key management personnel and their close family members. a) Sale and purchase of goods and services In additional to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial period: Not later than one year Later than one year but not later than five years Contingent liabilities Professional fees paid to an affiliated company1 Sale of course materials to an affiliated company2 b) Compensation of key management personnel Salaries, bonuses and fees Central Provident Fund contributions Comprise amounts paid to: Directors of the Company Other key management personnel Group 17.5.2014 (date of incorporation) to 31.3.2015 S$ 117,473 140,939 846,682 35,860 882,542 670,777 211,765 882,542 Note: 1 The professional fees are paid to SmallCap Corporate Pty Ltd, a company which Mr Zane Robert Lewis has a significant interest, for services provided to list the Company on the Australian Securities Exchange and company secretary services performed during the financial period. 2 The sales of course materials were made to 8 Education Sdn Bhd, a company which Mr Chee Kuan Tat, Ken and Mr Clive Tan Che Koon have a significant interest. Except as disclosed in the financial statements, the Group does not have any significant contingent liability at the end of the financial period. 24. Fair value of assets and liabilities a) Fair value hierarchy The Group categorised fair value measurements using a fair value hierarchy that is dependent on the valuation inputs used as follows: - Level 1 – Quoted prices (unadjusted) in active market for identical assets or liabilities that the Group can access at the measurement date, - Level 2 – Inputs other that quoted prices included within Level 1 that are observable for the asset of liability, either directly or indirectly, and - Level 3 – Unobservable inputs for the asset of liability. Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the fair value hierarchy as the lowest level input that is significant to the entire measurement. 86 87 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 24. Fair value of assets and liabilities (continued) b) Financial instruments measured at fair value The following table shows an analysis of each class of financial instruments measured at fair value at the end of the reporting period: Fair value measurements at the end of the reporting period using Quoted prices in active markets for identical instruments Significant observable inputs other than quoted prices Significant unobservable inputs Total (Level 1) (Level 2) (Level 3) S$ S$ S$ S$ 12,091,301 770,322 - 12,861,623 - - - - - - - - - - - 12,091,301 - 43,879 770,322 43,879 43,879 12,905,502 148,667 60,000 148,667 60,000 208,667 208,667 Group As at 31.3.2015 Assets measured at fair value Financial assets: Held-for-trading financial assets Quoted equity securities Available-for-sale financial assets Quoted equity securities Unquoted equity securities Non-financial assets: Investment properties Commercial Residential Included within Level 1 of the hierarchy are listed investments. The fair value of these financial assets has been based on the closing quoted bid prices at the end of the reporting period, excluding transaction cost. 24. Fair value of assets and liabilities (continued) c) Level 3 fair value measurement i) Information about significant unobservable inputs used in Level 3 fair value measurements The following table shows the information about fair value measurements using significant unobservable inputs (Level 3) Fair value as at 31.3.2015 Valuation techniques Unobservable inputs Range Description Recurring fair value measurements Available-for-sale financial assets: Unquoted equity securities Investment properties Commercial 43,879 Market comparable approach Yield adjustments based on management’s assumptions* 5% 5% 5% Residential 60,000 Market comparable approach 148,667 Market comparable approach Yield adjustments based on management’s assumptions* Yield adjustments based on management’s assumptions* *The yield adjustments are made for any difference in the nature, location or condition of the specific property. For unquoted equity securities and investment properties, a significant increase (decrease) in yield adjustments based on management’s assumptions would result in a significantly lower (higher) fair value measurement. ii) Movements in Level 3 assets measured at fair value There are no movements in Level 3 assets measured at fair value during the reporting period. iii) Valuation policies and procedures The Group’s Chief Financial Officer (CFO) oversees the Group’s financial reporting valuation process and is responsible for setting the documenting the Group’s valuation policies and procedures. Significant changes in fair value measurements from period to period are evaluated for reasonableness. Key drivers of the changes are identified and assessed for reasonableness against relevant information from independent sources, or internal sources if necessary and appropriate. 88 89 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 25. Financial risk management objectives and policies 25. Financial risk management objectives and policies (continued) The Group and the Company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, market price risk and liquidity risk. The board of directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Chief Financial Officer. The audit committee provides independent oversight to the effectiveness of the risk management process. The following sections provide details regarding the Group’s and Company’s exposure to the above- mentioned financial risks and the objectives, policies and processes for the management of these risks. Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities and cash and cash equivalents), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. In addition, receivable balances are monitored on an ongoing basis with the result the Group’s exposure to bad debts is not significant. The Group minimised its credit risk through investing surplus funds in financial institutions that maintain a high credit rating or in entities that the finance committee has otherwise assessed as being financially sound. Where the Group is unable to ascertain a satisfactory credit risk profile in relation to a customer or counterparty, the risk may be further managed through title retention clauses over goods or obtaining security by way of personal or commercial guarantees over assets of sufficient value which can be claimed against in the event of any default. Credit risk exposures The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period, excluding the value of any collateral or other security held, is equivalent to the carrying amount and classification of those financial assets (net of any provisions) as presented in the statement of financial position. Credit risk related to balances with banks and other financial institutions is managed in accordance with approved board policy. Such policy requires that surplus funds are only invested with counterparties with a Standard and Poor’s rating of at least AA-. The following table provides information regarding the credit risk relating to cash and money market securities based on Standard and Poor’s counterparty credit ratings: Group 31.3.2015 S$ Company 31.3.2015 S$ Cash and cash equivalents 21,656,807 5,278,839 The Group has no significant concentration of credit risk with any single counterparty or group counterparties. Trade and other receivables that are neither past due nor impaired are with creditworthy debtors with good payment record with the Group. Market risk i. Interest rate and foreign currency risk The Group’s exposure to interest rate and foreign currency risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates or foreign currency will affect future cash flows or the fair value of fixed rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments. The financial instruments that expose the Group to interest rate and foreign currency risk are limited to listed shares, and cash and cash equivalents. The Group has no significant exposure to interest rate risk and foreign currency risk, attributable to floating interest rate financial liabilities and small exposure in foreign currency financial instruments respectively. ii. Other price risk Other price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk) of securities held. Such risk is managed through diversification of investments across industries and geographic locations. The Group’s investments are held in the following sectors at the end of the reporting period: Available-for-sale financial assets – non-current Automotive Conglomerate Entertainment Food and beverage Food producer Healthcare Property REIT Real estate development Group 31.3.2015 S$ 66,300 82,620 130,781 28,350 81,500 41,748 110,408 228,615 43,879 814,201 90 91 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 25. Financial risk management objectives and policies (continued) 26. Capital management Market risk (continued) ii. Other price risk (continued) Held-for-trading financial assets – current Conglomerate Entertainment Financial service Food and beverage Food producer Healthcare Property REIT Sensitivity analysis Group 31.3.2015 S$ 2,384,645 1,363,225 2,492,926 497,475 1,857,324 415,230 1,506,924 1,573,558 12,091,307 The following table illustrates sensitivities to the Group’s exposures to changes in interest rates, foreign currency rates and equity prices. The table indicates the impact on how profit and equity values reported at the end of the reporting period would have been affected by changes in the relevant risk variable that management considers to be reasonably possible. These sensitivities also assume that the movement in a particular variable is independent of other variables. Period ended 31.3.2015 +/-5% in forex rates +/-10% in listed investments Liquidity risk Profit S$ Equity S$ +/-286,506 +/-296,691 +/-1,286,163 +/-1,363,195 Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk is minimum due to net current asset of S$32,497,631 as at 31 March 2015. Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and to ensure that the Group can fund its operations and continue as a going concern. The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets. There are no externally imposed capital requirements. Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. 27. Segment information For management purposes, the Group is organised into business units based on their products and services, and has four reportable segments as follows: I. The investment segment is involved in investments in listed securities. II. The corporate segment is involved in Group-level corporate services, treasury functions and private investment in companies with IPO potential. III. The education and event segment is involved in financial education, training seminar and event organisation business. IV. The property segment is in the business of constructing, developing and leasing out of residential and commercial properties. This reportable segment has been formed by aggregating the property construction/development operating segment and the investment properties operating segment, which are regarded by management to exhibit similar economic characteristics. Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Group income taxes are managed on a group basis and are not allocated to operating segments. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties. 92 93 For personal use only Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 Notes to the Financial Statements For the financial period from 17 May 2014 (date of incorporation) to 31 March 2015 27. Segment information (continued) 27. Segment information (continued) Investment 31.3.2015 S$ Corporate 31.3.2015 S$ Education and event 31.3.2015 S$ Property 31.3.2015 S$ Adjustments and eliminations 31.3.2015 S$ Notes *1,436,814 920,687 2,357,501 3,876,976 3,780,000 7,656,976 5,285,329 - 5,285,329 70,200 298,682 368,882 - (4,999,369) (4,999,369) 4,567 13,700 1,218,660 469,534 - 3,586,331 - 52,696 921,605 - 35,919 9,344 (465,919) - (7,168) A A B Per consolidated financial statements 31.3.2015 S$ 10,669,319 - 10,669,319 8,182 102,315 5,728,772 - 959,696 - - - 959,696 895,707 22,075,127 1,824,573 10,755,751 148,297 5,997,938 269,415 499,764 - 959,696 C D 3,137,992 40,288,276 93,263 42,440 2,793,959 9,321 839,184 E 3,778,167 Revenue External customers Inter-segment Total revenue Results: Interest income Depreciation Segment profit Assets: Investment in associate Additions to non- current assets Segment assets Liabilities Segment liabilities * Revenue from investment mostly pertained to fair value gain and dividend income from investment in equity security. Notes Nature of adjustments are eliminations to arrive at amounts reported in the consolidated financial statements. A B C D Inter-segment revenues are eliminated on consolidation. The following item is deducted from segment profit to arrive at “profit before tax” presented in the consolidated income statement: Finance costs 31.03.2015 S$ (7,168) Additions to non-current assets consist of additions to plant and equipment, investment properties, intangible assets and investment securities. The following item is added segment assets to arrive at total assets reported in the consolidated balance sheet: Investment in associate 31.03.2015 S$ 959,696 E The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated balance sheet: Deferred tax liabilities Income tax payable 28. Dividends 31.03.2015 S$ 41,331 797,853 839,184 Group and Company 31.03.2015 S$ Proposed but not recognised as a liability as at 31 March 2015 Dividends on ordinary shares, subject to shareholders’ approval at the AGM: - Final exempt (one-tier) dividend for 2015: 1.00 (SGD cent) per share 3,571,442 29. Events occurring after the reporting period On 1 April 2015, the Group entered into a non-binding memorandum of understanding to acquire 49.9% of Velocity holdings Limited (“Velocity”) for A$2,329,207. Velocity is currently engaged in three projects in Brisbane suburbs of Red Hill and Bulimba, and has a significant pipeline of future projects. The acquisition is subject to due diligence by the Group, and certain regulatory approvals in Australia which are expected to take several months to finalise, and the parties agreeing formal documentation. On 28 April 2015, the Company entered into agreements to provide S$2,000,000 loan facilities to Oxford Views Pte. Ltd. (“Oxford”), a company within Velocity group of companies. As at 7 May 2015, Oxford has since drawn down on the facilities in the amount of S$1,708,524. The loans are guaranteed by a director of Oxford, and carries an interest rate of 12% per annum. The loan can be called by the Company for repayment in full by providing 5 days notice. 30. Comparative figures The Company was incorporated on 17 May 2014. This being the first set of financial statements, there are no comparative figures. 31. Authorisation of financial statements for issue The financial statements for the period from 17 May 2014 (date of incorporation) to 31 March 2015 were authorised for issue in accordance with a resolution of the directors on 15 May 2015. 94 95 For personal use only ADDITIONAL INFORMATION Additional Information Shareholders Information as at 15 May 2015 Analysis of CDI Holders* Category (size of holding) 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over Holdings of less than a marketable parcel Voting Rights All ordinary shares carry one vote per share without restriction. Twenty Largest CDI Holders* Registered Holder Chee Kuan Tat, Ken 8 Capital Equities BVI Clive Tan Che Koon Sok Hong Seah HSBC Custody Nominees (Australia) Limited Clear A2Z Pte Ltd Puay Lin Teo Chee Kiang Lee Shao Kuang Ivan Ong Citicorp Nominees Pty Limited UOB Kay Hian Private Limited Lim Wei Lin Teng Kiat Koh Tan Teck Yeong J P Morgan Nominees Australia Limited Vivek Verma Attlee Kuan Yew Hue Ng Sing Beng & Chan Ya Yun Tan Chong Yan Lau Eng Seng ALL OTHER SHAREHOLDERS No. of holders 4 20 26 186 190 426 42 Percentage of Total 24.26% 20.66% 18.30% 3.84% 3.75% 3.08% 2.21% 1.54% 1.32% 1.14% 0.80% 0.56% 0.44% 0.41% 0.38% 0.31% 0.31% 0.28% 0.25% 0.24% 15.92% Number of Shares 86,640,000 73,800,000 65,360,000 13,695,000 13,409,231 11,000,000 7,900,000 5,500,000 4,701,000 4,059,602 2,865,795 2,000,000 1,571,605 1,450,000 1,369,108 1,100,000 1,094,850 1,000,000 900,000 860,000 56,868,009 Total 357,144,200 100.00% Substantial CDI Holders** Date Announced 29/12/2014 29/12/2014 29/12/2014 Name Chee Kuan Tat, Ken Clive Tan Che Koon 8 Capital Equities BVI Number of Shares 160,440,000 139,160,000 73,800,000 Notes * CDI Holders are holder of CHESS Depository Interests issued by CHESS Depository Nominees Pty Limited, where each CDI represents a beneficial interest in one ordinary share. ** This table is compiled on the basis that each holding of CDIs is a separate holding and accordingly, the holding of shares by CHESS Depository Nominees Pty Limited is ignored. 96 Additional Information Current on-market buy-back There are no current on-market buy-back arrangements for the Company. Consistency with business objectives In accordance with ASX Listing Rule 4.10.19, the Group states that it has used the cash and assets in a form readily convertible to cash that it had at the time of admission in a way consistent with its business objectives. The business objective is primarily investment business focusing on investments in listed securities and real property development investments; and a financial education and training seminar business currently operating in Singapore. The Group believes it has used its cash in a consistent manner to which was disclosed under the Prospectus dated 30 October 2014. Investment Portfolio Transaction, brokerage and management fees The Group had a total of 61 transactions in securities during the period and has paid or accrued brokerage totalling S$30,355. There were no management fees paid or accrued during the financial period ended 31 March 2015. Investments As at 31 March 2015, the Group held the following investments: AEA8 Jelutong Bhd AEA8 Pandan Sdn Bhd AEA8 Waterfront Bhd AEON Co (M) Bhd ARA Asset Management Ltd ASX Ltd Boustead Singapore Ltd BreadTalk Group Ltd CapitaCommercial Trust Centurion Corp Ltd Coca-Cola Amatil Ltd First Real Estate Investment Trust Frasers Centrepoint Trust Guinness Anchor Bhd Hartalega Holdings Bhd Hongkong Land Holdings Ltd Major Cineplex Group PCL Singapore Post Ltd VICOM Ltd Wilmar International Ltd For personal use only Goldbell Towers, 47 Scotts Road, #03-03/04, Singapore 228233 | Tel: +65 6225 8480 For personal use only

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