8I Holdings
Annual Report 2018

Plain-text annual report

8I Holdings Limited Annual Report FY2018 For personal use onlyAbout 8I Holdings 8I Holdings Limited (“the Group” or “8IH”) is an Australia-listed investment holding company engaged in the businesses of financial education, public and private market investments, and financial technology. licensed fund management business The Group is the leading financial education provider in Singapore and Malaysia through 8VIC Global Pte Limited (“8VIC”), with offices in Singapore, Malaysia, Thailand, Taiwan and Australia, supporting a community of value- investors from 24 cities globally. Through Hidden Champions Capital Management Pte Ltd (“HCCM”), the Group operates a in Singapore, investing in public listed equities in the Asia-Pacific through a focused strategy of investing in low-profile underappreciated Asian Hidden Champions to achieve long-term investment returns. The Group also invests in private businesses with hidden value and good operational track records. As a strategic investor, the goal is to value-add and create synergy amongst 8IH’s business ecosystem. 8Bit Global Pte Ltd (“8Bit”), a joint-venture between the Group and 8VIC, provides smart screening and proprietary investing analysis tools and passive investment products to enable the man- on-the-street investors to manage investment risk better and make smarter investing decisions. Copyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only3 Our Mission We Empower People to Create Sustainable Wealth Annual Report FY2018For personal use onlyOur Core Values The Core Values that Defines Us. 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use onlyContents 01 Group Overview 04 Governance 8I Ecosystem 02 Remuneration Report 02 Strategic Overview Chairman’s Message Board of Directors Key Management 03 Operations Overview Financial and Operations Review Financial Highlights Business Segment Highlights Corporate Highlights Corporate Structure Corporate Information 04 09 11 14 17 19 31 33 34 Directors’ Statement 05 Financial Independent Auditor’s Report Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Statement of Financial Position - Company Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Additional Information 36 39 42 49 50 51 52 54 57 123 Annual Report FY2018For personal use only1 01 Group Overview 8I Ecosystem 02 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only8I Ecosystem Group Overview 2 Financial Technology WealthPark - Smart AI Investing Tool - Wealth Management Platform Financial Education Value Investing BootcampTM Options Mastery ProgramTM REITs ProgramTM Value Investing SummitTM InvestopiaTM Inner-CircleTM ReWealthTM Unearthing CompoundersTM Waving the Red FlagTM 觉悟智慧 全息智慧 融道智慧 Financial Asset Management Hidden Champions Fund Velocity Property Group Digimatic Group CT Hardware 8 MAD Group 8IH China At 8I, we continue to strengthen our business ecosystem to create a single platform to share value investing knowledge and to empower our growing community to make smart investment decisions by applying the principles of value investing. Annual Report FY2018For personal use only3 02 Strategic Overview Chairman’s Message Board of Directors Key Management 04 09 11 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use onlyChairman’s Message “ It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat” - Man in the Arena, Theodore Roosevelt (1910). Strategic Overview 4 Dear Valued Partners, After co-founding and building 8I for the past ten years, we reported our first loss for the financial year ended 31 March 2018. This was not our intention to mark such a major milestone in this unpleasant manner. It is, however, our intention to disrupt and refine our business model in order to become sustainable and allow us to scale robustly forward into the next decade. This is especially critical when the world is moving rapidly towards globalisation and digitalisation with data analytics, artificial intelligence (“AI”) and machine learning. A trend that is happening in the USA for the last five years pertaining to our industry is that more funds are flowing out from the traditional active fund management into passive fund management using factor-based Exchange Traded Funds (“ETFs”) such as those offered by VanGuard and the emergence of smart robo-advisory technological platforms (Betterment and WealthFront). We will see this trend happening in Asia soon as the processing power of the computing chip continues to accelerate with decreasing production cost. This will enable the machines to get smarter as time goes by at an amazing speed and equipped with the ability to crunch trillions of data points. Personally, I would want my invested company’s management to be proactive and paranoid to such structural changes that will erode any past competitive advantages, leading to old existing business models becoming irrelevant. 8IH is in the midst of a deep transformation as stated in my last FY2017 Chairman’s letter and there is no turning back. This is what my team and I are determined to do. Let me touch on three main points: 1. Despite the absence of the one-off gain of S$10.4 million from the disposal of a subsidiary in FY2017 by the Private Market business unit, 8IH’s revenue from its core operations grew from S$17.3 million to S$20.5 million in FY2018. This was mainly contributed by our education subsidiaries, which underwent a regional expansion in the last 12 months, opening up new offices in Taiwan, Thailand and Australia. As with any new overseas expansion, it requires initial capex investments. When we first ventured into Malaysia (Kuala Lumpur) in 2012, we had to provide human and financial capital, as well as the IP know-how for at least three years without knowing if we will succeed. Now, the Malaysia market (Kuala Lumpur, Penang and Johor) is one of our fastest growing markets with a strong team leading the education operations there. 2. A major expansion and business model refinement exercise underway accounts for the 37.7% increase in Administrative Expenses. This was mainly due to hiring of new talents, which led to a 46.3% increase in salaries paid, and the leasing of new office spaces and special events costs by 8VIC, 8IH China Pte Ltd (“8IH China”) and 8 MAD Group Sdn Bhd (“8 MAD”) also account for the increase in the Administrative Expenses. Having said that, we are monitoring this cost closely and making appropriate Annual Report FY2018For personal use only5 Strategic Overview Chairman’s Message corrections without sacrificing the long-term objectives of building a more resilient business with greater scalability and higher recurring income. Several shareholders have expressed deep concerns regarding this matter and requested for more information on our employment cost. Please see the breakdown below: Employee Costs Directors’ Remuneration Investment & Corporate Office Unit Education Unit Investee Companies Newly Acquired Subsidiaries FY2018 S$’000 FY2017 S$’000 Difference S$’000 Difference % 667 740 (73) -10 2,003 1,782 221 3,298 2,024 1,274 1,339 1,107 232 964 - 964 8,271 5,653 2,618 12 63 21 N.A 46 As shown above, the main contributors to the increase in employee costs are the Education unit and newly acquired subsidiaries, namely Digimatic Group Ltd (“DMC”) and its subsidiaries. The increase in the Education unit’s employee cost of 63% was mainly due to the increase in weighted average headcount from 37 in FY2017 to 65 in FY2018. This jump in headcount is the result of the merger of 8I Education and Financial Joy Institution in FY2017 to form 8VIC Global Pte Ltd (“8VIC”), and the rapid growth in 8VIC’s overseas establishments in Thailand, Taiwan and Australia. Clive and I had initially taken a 15% pay reduction in the second half of FY2018 and further increase the pay reduction to 30% starting in FY2019. This also includes a pay and bonus freeze for all 8IH corporate and investment team members in FY2019 to be aligned with all our shareholder interests. Please note that I am still staying in a public housing flat in Singapore, happily eating in hawker centres (I bump into some shareholders frequently at my neighborhood market) and my children are attending a mass market pre-school. In a nutshell, my values have not changed since day one when I started 8I with Clive in 2008. And if there are any key managers who are not aligned with 8IH values, they will either leave or we will invite them out of the Group eventually. 3. We have slowed down our pace in the private market right, it will create great value to our targeted market and in return generate a steady recurring operational cash-flow, and eventually be extremely valuable to the 8I ecosystem. We will have a full product demonstration for phase 1 launch at the upcoming AGM. B) Support our existing investee companies in strengthening and growing their businesses. These include supporting Hidden Champions Capital Management Pte Ltd (“HCCM”) who manages Hidden Champions Fund to raise AUM, supporting 8VIC’s global expansion, providing consultancy and potential partnership contacts to 8IH China, 8 MAD Group and CT Hardware to strengthen and grow their businesses. Going forward, we will be focusing on divesting non-core investments and only acquire and partner with operating businesses that can enhance the eco-system for our Financial Education, Financial Asset Management and Financial Technology. C) Drill down to the core essence of 8IH; an asset- light, knowledge-based organisation that invests in Research & Development and constant innovation in the areas of financial education, wealth creation and wealth management platform rooted in Value Investing principles with a strong 8IH culture. In other words, this is 8IH’s moat – our intangible know-how. As a manifestation of this, we use this core competency to: i) Manage, invest and generate sustainable long-term investment returns; ii) Share more financial insights with our graduate network; iii) Create new financial and business training programs for potential joint ventures and licensing opportunities; iv) Support our private investees to improve their business models or enhance their M&A activities with greater synergy; v) Embed AI technology in our investing and wealth management app so more people around the world can invest safely and manage their wealth easily; and vi) Pioneer new intellectual proprietary features such as “Integrity Score”, “Factor Based Index” and advance stock screener as premium analysis tools in WealthPark. Next, I would like to address the concept of “Risk” as a pragmatic entrepreneur and investor, especially in three areas: investment space over the last 18 months in order to: 1. New Business Venture Risk A) Build up our own AI-based Financial Technology unit. 8Bit Global Pte Ltd (“8Bit”) is set to launch our first Smart Investing App known as “WealthPark” soon. The mission is to empower more lives to make better and safer investment decisions based on our unique proprietary formula in Value Investing. This platform will be opened to the 8VIC’s network first before scaling it to the public. I believe if we focus and build this idea Some shareholders have voiced out their concerns about whether we were taking too much risk in our new venture into financial technology. There is a stark difference between “Risk” and “Risky”. Whether you should take a risk depends not just on the probability that you are right but also on the consequences if you are wrong. 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only Chairman’s Message To make reliable, good decisions, you must always weigh how right you think you are against how sorry you will be if your decision turn out to be a mistake. In this case, we are building the financial technology platform exclusively for our 8VIC’s graduates first, leveraging on the robust infrastructure, growing quality database, strong brand goodwill and the regional network effect before spending any resources opening up to the public. This approach also provides us valuable insights and data points to study and fine-tune the features in the platform first, creating a smarter and user-friendly investing tool before we scale and serve our intended public market better. If the new business venture fails, our losses will be limited to the initial phase. However, if we go straight to the public like most financial technology firm, then it will be risky due to expensive customer acquisition cost and a high capital burn rate. 2. Investing in Public Company Risk I have shared with our former CIO on numerous occasions that we should be careful in allocating more than 20% of our portfolio into one single public company, especially for small capitalisation businesses with limited liquidity for a simple reason; Do you have the core operational capability to step in and run the business if something turns out wrong in your assessment? If the answer is an affirmative, then we should load up as much as possible if the fundamentals are strong with an attractive price to its valuation. If the answer is no and you still do it, then, this is “Risky” in my humble opinion. We must be mindful not to let personal ego and academic intelligence override common business sense. With that in mind, we have refined our risk management policy and implemented the “multi-counseller” system to ensure the fund does not carry out a “Risky” manoeuvre by allocating a high proportion of our fund capacity into businesses which we do not have the expertise to turn the ship around in difficult times. 3. Debts and Key Man Risk I always remember what Charlie Murger said when I attended the Berkshire Hathaway AGM in 2009, “Tell me where I will die, and I will never go there”. In this case, many corporate graveyards are filled by victims of over-leverage and high borrowings. Recently, I saw good companies with decent management being brought down to their knees seeking creditor protection with massive debt and asset value write-down due to change of business climate. Any company with huge total debt to equity ratio will experience greater difficulty and find it more challenging to turn the ship around when the storm suddenly appears and lasts longer than expected. Thus, I am constantly aware that 8IH must operate more sensibly and prudently in the area of financial discipline. We have low leverage on our existing web of eco-system in Strategic Overview 6 education, asset management and technology. The next risk that we are really careful about is key man risk. In the first six years of 8I’s operations, this was the greatest risk in 8I – with the key men being Clive and myself. This is because we trained, spoke and also held the responsibility of investing the company’s cash flow. In addition, a corporate episode happened in early 2013 which further deepened this concern. Thus, from that moment onwards, we actively seek to design and build a structure that relies on culture, team work, processes and technology instead of key individual superheroes. We have done it for the education unit where our next generation young leaders and trainers now take the stage and currently we are implementing this system for the investment unit. Everything that we do today, we will always execute with the next decade in mind, even though the actions may not be apparent at present. Most people may not be able to understand and appreciate what we do, just like how we first started spreading the Value Investing knowledge and movement during the depth of Great Financial Crisis in 2008. It takes a lot of convictions and “craziness” to do what we did. And today, the Group is leading in the Financial Education space across South-East Asia region. Just like what my young friend commented recently when I asked him to get his friends to join us for our famous 5AM daily exercise, “My friends say we are the odd balls. The crazy ones. Because most people will be sleeping at a God-forbidden hour at 5AM, let alone exercising!” However, today, the results in our physical and mental health show and silence the critics of yesterday. Lastly, I want to give thanks to all our past team members for their valuable contributions and also learning experiences. Most importantly, my deepest appreciation to the current team members who believe firmly in our business transformation and are working hard towards our vision; our board members, shareholders, strategic partners, associates, friends, families and loved ones who never waiver in their faith towards us during the good and challenging times. Like a Chinese saying; “You will only know the enduring stamina of a horse when the journey is long and you will see a person’s true character and his heart over a long period of ). time” ( 路遥知马力，日久见人心 Wishing you great health, loving relationships and abundance. May your kindness to me and others always return to you and your loved ones abundantly. And take massive action towards your dreams. Never, ever give up. Annual Report FY2018For personal use onlyAnd here’s to the crazy ones who believe in 8IH’s vision after 10 years and another decade to come. Ken Chee Executive Chairman Copyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only8 Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do. - Steve Jobs Annual Report FY2018For personal use only9 Strategic Overview Board of Directors Ken Chee Chairman & Executive Director Clive Tan Executive Director Ken Chee was appointed Chairman & Executive Director in May 2014. He is a co-founder of the 8I Group and is based in Singapore. Ken 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 Columbia Business School in New York and graduated from its Executive Program in Value Investing. As an experienced marketing executive and entrepreneur, Ken’s professional experiences include roles as a marketing specialist at Quicken (Singapore) and Regional Business Development Manager at Telekurs Financial. Within the 8I Group, Ken is one of the key executives involved in the strategic development and partnerships for the Group. Ken was awarded the Spirit of Enterprise, Honoree Award in 2005 by the President of Singapore for outstanding business results. He is also a Young Presidents’ Organisation member within the Singapore Chapter. Clive Tan was appointed Executive Director in May 2014. He is a co-founder of the 8I Group and is based in Singapore. Clive graduated with an Honours Degree from the Nanyang Technological University in Mechanical and Production Engineering and attended University of Technology, Sydney on an academic exchange program. He also holds a Post- Graduate Diploma in Education from the National Institute of Education. Clive started his professional career as a secondary school educator in Singapore. While teaching, the concept of value investing caught his attention and triggered his interest in investment. His entrepreneurial journey started when he and his wife acquired a childcare centre. Since inception of the 8I Group in 2008, Clive is responsible for the strategic planning, development, corporate policies and risk management of the businesses. He is also deeply involved in the development of corporate policies and management of the Group’s Human Capital. Clive also chairs the board of Australian-listed Digimatic Group Limited. 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use onlyBoard of Directors Strategic Overview 10 Charles Mac Non-Executive Director Chay Yiowmin Non-Executive Director Charles Mac was appointed Non-Executive Director in April 2016. Chay Yiowmin was appointed Non-Executive Director in September 2014. Charles has more than 18 years of experience in the SAP IT industry, dealing with multinational companies in the Asia Pacific Region. He has held various leadership roles for large, global multinational companies with extensive experience across Asia Pacific in Team Management, Quality Management, Audits, Business Development and Contract Deliveries. He is an Australian citizen and holds a Bachelor of Computing (Information System) from Monash University. Charles currently serves on the Board of an Australian-listed company, Ennox Group Limited as a Non-Executive Director. Yiowmin heads BDO Singapore’s Corporate Finance since 2012, providing business advisory services in the areas of mergers and acquisitions, corporate restructuring, financial modelling, corporate and financial instruments valuation, and financial and operational due diligence. Yiowmin has more than 19 years of public accounting experience in Singapore and the United Kingdom. Prior to joining BDO, Yiowmin has worked with various large multinational accounting firms, including PricewaterhouseCoopers, Deloitte and Moore Stephens. He was admitted as a partner in 2010 in Moore Stephens. Yiowmin is also the lead independent director and chairman of the audit committee for UMS Holdings Limited which is listed on the Singapore Exchange. Yiowmin holds a Bachelor of Accountancy (Hons) and a Master of Business from Nanyang Technological University (“NTU”), and a Master of Business Administration from University of Birmingham. Yiowmin is also a practicing member of the ISCA, an Associate Chartered Accountant (“ACA”) of the Institute of Chartered Accountants in England and Wales (“ICAEW”), a Certified Finance and Treasury Professional (“CFTP”) of the Finance and Treasury Association (“FTA”), and a Chartered Valuer and Appraiser of IVAS. Yiowmin is also an active Grassroots Leader, serving as a treasurer with the Kebun Baru Citizens Consultative Committee (“CCC”) and an auditor with the Thomson Hills Neighbourhood Committee (“NC”). He is also a member of the Kebun Baru and Thomson Inter-Racial and Religious Confidence Circles (“IRCC”). Yiowmin was recently awarded the Pingat Bakti Masyarakat (Public Service Medal) (“PBM”) by the President of the Republic of Singapore on 9 August 2016. Annual Report FY2018For personal use only11 Strategic Overview Key Management Louis Chua Chief Financial Officer; Chief Risk Officer; and Company Secretary (Australia) Low Ming Li Head of Private Markets Investment Louis Chua joined 8I Holdings in April 2015 as the Company’s Chief Financial Officer. Louis graduated from 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. Louis is based in Singapore and has more than 16 years of financial and commercial experience including infrastructure development, treasury and controllership operations, group restructuring and consolidation, tax planning and mergers and acquisitions. Before he joined 8I Holdings, he had 9 years of experience within the offshore marine industry in Farstad Shipping, with its holding company listed in the Oslo Stock Exchange. He started his career in the Audit Division with Arthur Andersen (later Ernst & Young). Within the 8I Group, Louis is responsible for risk management, corporate secretarial, controllership and treasury duties, as well as economic strategy and forecasting for the Company. Low Ming Li is the Head of Private Markets Investment at 8I Holdings. She has been with the Company since September 2015 and is based in Singapore. Ming Li graduated with a Bachelor in Accountancy and minor in Banking and Finance (Second Class Upper) from Nanyang Technological University. She was previously with PricewaterhouseCoopers Singapore for over 13 years, where she held the position of Associate Director (Assurance) and was in charge of strategising and rolling out new business development initiatives, coordinating audit assignments as well as training & development. Her past clients include Singapore Exchange Limited, the Government Investment Corporation of Singapore and Singapore Press Holdings. Within the Company, Ming Li is responsible for the successful planning, execution, monitoring, control, and completion of business and investment deals under the Private Markets Investment segment. 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use onlyKey Management Strategic Overview 12 Bernard Siah Chief Technology Officer Sally Teo Chief Branding Officer Bernard graduated from National University of Singapore with a Bachelor of Computing (Technology Focus). He has more than 10 years of experience working as a technology specialist. He started out his career in a start-up and led the R&D and product development team. During this period, he gained invaluable experience in building the R&D team and developing processes to deliver products in the intelligent CCTV industry. Eventually, he grew with the company through its IPO in SGX. After his start-up experience, he joined a marine company and continued to apply his vast experience in product development to develop a world-class system which provides advance vessel performance monitoring services. The company was eventually acquired by a French company from the growing LPG market. Today he is leading the tech development at 8Bit Global Pte Ltd (“8Bit”), leveraging on the digital economy for improved positioning and competitive edge on the digital front. Sally Teo is the Chief Branding Officer of 8I Holdings. She has been with the Company since July 2016 and is based in Singapore. Sally graduated with a Bachelor of Commerce (Marketing) from the University of New South Wales (Australia). Prior to her appointment in the Company, she was the Senior Manager for Marketing, Product and Channel Development in Seraya Energy and had more than 17 years of marketing experience across various industries. Her expertise included global implementation of marketing campaigns, new product launches, corporate development, business processes as well as pioneering comprehensive solutions that resulted in growth and corporate awards. Within the 8I Group, Sally is responsible for the management of the Company’s brands, as well as Investor Relations and Corporate Communications. Annual Report FY2018For personal use only13 03 Operations Overview Financial and Operations Review Financial Highlights Business Segment Highlights Corporate Highlights Corporate Structure Corporate Information 14 17 19 31 33 34 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use onlyFinancial and Operations Review Overview Our total revenue and other income from 1 April 2017 to 31 March 2018 (FY2018) is recorded at S$22.7 million and our net loss after tax for the year stands at S$4.4 million. This represents a decrease of 26.2% in total revenue and other income (total revenue and other income was S$30.7 million for FY2017). Total comprehensive loss attributable to owners of the company for FY2018 is S$16.4 million (total comprehensive profit was S$8.6 million for FY2017) The decline in revenue and the turn from profit to loss is attributable to a strategic change and transition period when we shifted the focus from private investments and placed more strategic focus on our education and public investment segments, in order to build a more sustainable and scalable business model. For our private investments going forward, we will acquire only businesses that have a strategic fit to our ecosystem. The main bulk of revenue decrease (comparing FY2018 to FY2017) was due to the absence of a one-off gain on disposal of a subsidiary in FY2017 and the absence of such financial contribution from the disposal of a subsidiary in FY2018 in the private markets segment. We also had an investment loss for our public markets investment of S$0.5 million (FY2017: S$3.0 million investment income). However, the underlying core revenue from education business, supported by program sales, has increased significantly by about 16.1%. The increase in our administrative and other expenses is due mainly to an expansion in our financial education segment, which incurred higher manpower-related and marketing expenses. Due to an aggressive push to several overseas markets, we incurred higher expenses. Going forward, as we have a better grasp of the market conditions in each targeted country, the increase in expenses will be better managed. With an overall view of our ecosystem, we are working towards a better strategic fit for the entire group. To improve our ecosystem, we are currently working on a joint venture between 8VIC Global Pte Ltd and the Group, where we are developing a technology platform for us to serve the needs of our customer base better. This will serve to close the loop in our ecosystem and allow us to serve our customers in the most effective and efficient manner. Business Segment Report Education 8VIC Global Pte Ltd (a wholly-owned subsidiary of Digimatic Group), together with its subsidiaries, has increased its revenue by 9.4% to S$11.7 million (FY2017: S$10.7 million) in the financial year reported. Our segmental profit has dropped due to higher expenses to S$0.3 million (FY2017: S$3.6 million), down 91.7%. This decrease in profits is largely due to the aggressive expansion of our education segment, where we expanded on our Operations Overview 14 manpower and increased our marketing and advertising efforts. We have performed a share swap between 8VIC Global Pte Ltd (8VIC) and Digimatic Group Ltd (DMC), after which and with some additional share purchases, the Group effectively now owns about 72% of DMC. A strategic review of DMC is currently underway and we expect that there will be efforts and actions to bring DMC forward to the next stage of development. With our overseas operations to propel our growth in a strategic manner, our business should grow and expand in a fast and sustainable manner. While it is never easy to expand overseas, our team has the intelligence, the teamwork and the grit to carry them out. On top of that, we are leveraging on technology and its applications to ensure that we can reach even more participants around the region and the world. While we have big dreams and ambitions, we must accept that the reality may not pan out exactly the way we are working towards. At the core, we are focused on adding value to all our stakeholders, especially our customers. With this in mind and in our hearts, I believe that DMC (with 8VIC) will grow into a company that will grow sustainably. For more information on our Education segment, do look out for the announcements and latest financial and annual reports under ASX:DMC. Investment: Hidden Champions Fund Our listed securities segment registered segmental losses of S$1.3 million for FY2018. The main reason is due to a drop in two of our core holdings’ share prices. As previously shared, the time horizon for our investments in the identified Hidden Champions is mid to long-term as we had consciously invested during the early growth stages of these companies. Internally, we have already put in place a sound portfolio allocation strategy, which will allow us to grow and yet be able to take care of the downside. We will also move towards a concentrated portfolio approach with more hidden champions so that the portfolio is more balanced Annual Report FY2018For personal use only15 Operations Overview Financial and Operations Review and diversified. It will take us some time (my personal target is before the end of 2018) before the portfolio allocation strategy is fully implemented due to certain constraints that we face. As mentioned previously, you should expect that the contribution from the Investment segment to be lumpy in nature. This year is one of those years where our returns is negative and performance is sub-par. To rectify this and reduce key man risk so often present in many boutique funds, we will be taking a “multi-counsellor” approach towards the managing of the portfolio so as to provide more autonomy and ownership for our investment managers. While a rigorous process executed by good talent will increase our probability of choosing the right company stock and portfolio allocation, the end result at every financial year can still vary significantly due to the volatility of the capital markets and the share prices of the vested companies. To do investment well long term, it is never just a checklist or merely based on an understanding of the companies. There are many perspectives that one must take into consideration and the challenge lies in predicting the companies that will do well in the long run. Over the mid to long term, I would expect that the odds are in our favour due to a sound investment process, portfolio allocation and good talent. This segment will fluctuate in terms of performance. However, the best opportunities will typically present themselves in the most uncertain times. Going forward, together with our investment managers in HCF Team, I will be taking over from Koon Boon for the management of the HCF portfolio and the asset management business. Investment: Private Markets The Private Markets Team registered a segmental loss after tax of S$0.5 million, a reduction from the previous S$12.9 million. This was due to the absence of a one-off gain on disposal of a subsidiary. The financial performance of 8IH China Pte Ltd, 8MAD Group Sdn Bhd and CT Hardware Sdn Bhd had started to show strength in their revenue growth. Our current portfolio of investees: 8IH China The new programmes (Fundamental Value Investing Program , Intermediate Value Investing Program , and Advanced Value Investing Program 《全息智 《觉悟智慧》 ) 慧》 《融道智慧》 introduced by 8IH Rongdao in July 2017 are starting to gain traction in China. We noticed that the sales are picking up with momentum due to strong referrals from our Singapore, Malaysia and China graduates. Our team in China has grown in strength and is now focusing on improving the content in the programmes and extending our reach into the different cities in China. As of March 2018, 814 people in Shanghai, Hebei, Shandong and Hubei have benefited from 8IH Rongdao’s new programmes and we are welcoming more onboard from Suzhou, Wuxi, Hubei and Hebei in FY2019. 8 MAD Group 8 MAD continued to grow with a high renewal rate for its retainer accounts and integrated campaigns. Much of its sales & revenue in FY2018 had been re-invested into the company as the team moved into a new office, increased its headcount and strengthened its Online to Offline (O2O) activations and Experiential Marketing activations. The company started a new division called LEAP Asia offering dynamic sales activation services. LEAP Asia had already secured and executed sales activation services for key accounts like Johnson Suisse and Nanowhite Fresh Vlog Star Search. A one-time capex was utilised in the procurement of VR technology and assets for LEAP Asia TV where the team rolled out a new service known as “Virtual Reality activations”. CT Hardware With the expansion of warehouse facility, CT Hardware implemented central purchasing and central logistic systems which helped improve the efficiency and productivity of the operations. With the support of the new warehouse facility and an online business unit, CTH launched a “CT Experience” event at its warehouse. The company also organised more roadshows and participated in exhibitions to increase sales and brand awareness. On a semi-annual basis via our investee roundtable, we share our respective know-how that we have accumulated through our own operations, research and through our interaction with other investees and businesses. We also continue to support by looking out for new strategic partners that can add value to our investees. We continue our hunt to acquire or collaborate with partners that have a synergistic impact to our unique eco-system. We believe this will bear fruit via our new initiative under 8Bit Global. Over and above what we have shared, the team plays a unique role in assisting our CEO and Executive Director with developing and executing various corporate strategic initiatives. This role ties in closely with our work scope of looking out for partners that will support to strengthen 8I’s eco-system. Financial Position Despite our challenges, the group’s current financial position remains fundamentally strong. As of 31 March 2018, the Group’s total assets stand at S$68.4 million (FY2017: S$68.6 million). However, Net Assets has decreased from S$61.7 million (FY2017) to S$48.0 million (FY2018). This is mainly due to a reduction in the prices of our financial assets. Most of our assets are in cash and cash equivalents (FY2018: S$23.3 million) and investment securities (FY2018: S$27.4 million), which will give us some buffer to ride through the uncertain times ahead. The Group’s cash flows from operating activities is in net outflow position because cash flows derived from our 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use onlyOperations Overview 16 Financial and Operations Review private market investment were classified under “cash from investment” despite that it was one of our principal activities, in accordance with Singapore Financial Reporting Standards (FRS). In Summary It may take some time before our group turn around as we work on the issues arising. A sound strategy and long-term efforts are required to ensure that the group can grow and reach towards her fullest potential. 8IH is our “child” and we are doing what we believe is best for the long-term benefit of the company. Like parents, we may make an unsupportive decision from time to time but I believe that we will grow 8IH to becoming a company that you will be proud being a shareholder of, long term. Clive Tan Executive Director Annual Report FY2018For personal use only17 Operations Overview Financial Highlights For the financial year ended 31 March 2018 01 Revenue & Other Income 04 Total Assets S$22.7 million S$30.7 million in FY2017 S$68.4 million S$68.6 million in FY2017 05 Post Tax Net Tangible Asset Per Share A$0.118 As of 31 March 2018 02 Total Comprehensive (Expense)/Income (S$16.6 million) S$8.9 million in FY2017 03 Net (Loss)/Profit for the Financial Year (S$4.4 million) S$11.5 million in FY2017 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only18 Business Segment Highlights Public Markets Investment - Hidden Champions Capital Management Private Markets Investment - 8IH China - 8 MAD Group - CT Hardware Financial Technology - 8Bit Global Financial Education - 8VIC Global Annual Report FY2018For personal use only19 Group Overview Public Markets Investment Hidden Champions Capital Management While going about our daily process of turning over rocks to look for gems (as an analogy for our stock picking process), we are constantly looking at ways to do so in a more effcient and effective manner. In FY2018, while working and interacting with our peers, we realised the importance of reducing key man risk, a common phenomenon amongst boutique funds such as ourselves, as well as the diversification of investment portfolio to manage concentration risks. In order to better manage our risks, we are currently piloting a “multi-counsellor” approach towards the management of our investment portfolio to provide autonomy and instil a higher sense of ownership among our team of investment managers, who are also at the same time looking at increasing the diversification of Hidden Champions Fund’s portfolio to mitigate the risks of our performance being too dependent on just a few key positions. into FY2019, Going the Hidden Champions Capital Management team is looking to achieve higher scalability in our fund capacity via a high-conviction investment strategy and provide greater transparency to our investors. Our strategy moving forward would be to look out for Hidden Champions with a market value range of between US$100 million to US$5 billion and target to potentially double our fund capacity in the next three to five years on an underlying CAGR (Compounded Annual Growth Rate) profit growth of between 15% to 25% and upward re-rating in valuation multiples. Simultaneously, the fund would also aim to hold positions between 5% to 20% stake in our positions, consisting of around 10 to 25 identified Hidden Champions. We hope to have your patience as the team work hard towards these goals. Clive Tan Chief Executive Officer Hidden Champions Capital Management Pte Ltd 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.KEEPING YOUR MONEY SAFE, ANDGROWING IT AT THE SAME TIME?If you had invested in ASSA ABLOY, the world’s largest lock manufacturer, in 1994, you would have gained 7,888%The Hidden Champions Fund aims to achieve long-term investment returns in listed equities in the Asia-Pacific markets through a focused strategy of investing in growing but underappreciated Asian Hidden Champions.Hidden Champions, taken from a concept coined by Professor Hermann Simon, are focused market leaders in sophisticated, hard-to-imitate niche products or services and valuable critical niches that may be “invisible” to the average consumer yet are indispensable in their daily lives. The intrinsic outperformance of Hidden Champions is often not linked to economic conditions, thus offering potential de-correlated returns. The fund does not employ leverage in its investment strategy.Hidden ChampionsAre All Around UsOur InvestmentProcess1Shortlisting Companies with Conservative Accounting Practices with Great Corporate Governance2Analysing the Business Models for Quality, Sustainability and Scalability3Selecting Entrepreneurs and Owner-Operators with Mission, Values and PassionFor More Informationwww.hiddenchampionsfund.comFor personal use onlyGroup Overview 20 Annual Report FY2018KEEPING YOUR MONEY SAFE, ANDGROWING IT AT THE SAME TIME?If you had invested in ASSA ABLOY, the world’s largest lock manufacturer, in 1994, you would have gained 7,888%The Hidden Champions Fund aims to achieve long-term investment returns in listed equities in the Asia-Pacific markets through a focused strategy of investing in growing but underappreciated Asian Hidden Champions.Hidden Champions, taken from a concept coined by Professor Hermann Simon, are focused market leaders in sophisticated, hard-to-imitate niche products or services and valuable critical niches that may be “invisible” to the average consumer yet are indispensable in their daily lives. The intrinsic outperformance of Hidden Champions is often not linked to economic conditions, thus offering potential de-correlated returns. The fund does not employ leverage in its investment strategy.Hidden ChampionsAre All Around UsOur InvestmentProcess1Shortlisting Companies with Conservative Accounting Practices with Great Corporate Governance2Analysing the Business Models for Quality, Sustainability and Scalability3Selecting Entrepreneurs and Owner-Operators with Mission, Values and PassionFor More Informationwww.hiddenchampionsfund.comFor personal use only21 Private Markets Investment 8IH China 8 MAD Group CT Hardware The key focus of the Private Market Investment business unit is to add value and expand 8IH’s ecosystem through partnership and acquisition. Most importantly, the team plays a unique role in assisting our CEO and Executive Director with developing and executing various corporate strategic initiatives. This role ties in closely with our work scope of looking out for partners that will support to strengthen 8I ecosystem. The investees under the team’s portfolio are 8IH China Pte Ltd, 8 MAD Group Sdn Bhd, CT Hardware Sdn Bhd and Velocity Property Group. More commentary of the investees’ progress can be found in Clive’s message. We continuously support our investees via a semi-annual investee roundtable where we share knowledge that has been accumulated through our operations, research and interaction with other potential acquirees. Simultaneously, we will continue to look out for new strategic partners who can add value to our investees and monetise 8IH’s initial investment when the right partner comes along. Ken shared, via his Chairman message, about the refinement of 8IH business model. I am excited and confident that this will propel 8IH’s future into one that build long term sustainability and long term value for our team members and shareholders. Please be assured that we are always on the pursuit to acquire or collaborate with partners who have synergistic impact to the unique eco-system that we built over the years. Low Ming Li Head of Private Markets Investment 8I Holdings Limited 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.Zhou GuiyinHonorary Advisor of 8IHChief Trainer in Shanghai RongdaoCulture Communication Co., Ltd.“The essence of value investing is to invest limited money, time, energy, and even one’s limited life in meaningful activities of valuable assets to create more values for oneself, the society, the nation, and humanity.”- Zhou Guiyin, Honorary Advisor of 8IH and the chief trainer in Shanghai Rongdao Culture Communication Co., Ltd. a subsidiary of 8IH ChinaAs a value investor of more than 20 years, Zhou Guiyin studies and advocates the concept of Value Investing. Integrating the wisdoms of Chinese history, Confucianism, Art of War, Legalism, Buddhism and Taoism and Value Investing philosophy, Zhou Guiyin created three programmes under 8I Rongdao Academy series where he simplified the concepts to empower participants to achieve sustainable wealth and happiness.价值投资精神8I Rong Dao is the first in China to IncorporateSinology & Value Investing!觉悟智慧Wisdom of Self-AwakeningFundamental ProgramInvesting is an important career and a life-time practice for everyone who wishes to obtain financial freedom in life.The important realisation is that one should not be a slave to wealth but instead seek to understand yourself, the different investing styles and the right investing method that suits you to achieve success.The Wisdom of Self-Awakening is a 3-day program that infuses the study of Chinese history, customs, and politics into investing. By the end of the three days, you will gain in-depth understanding on the concept of investing through Chinese religion and philosophy.全息智慧Wisdom of Multi-Dimensional AnalysisIntermediate ProgramMaster the essentials to investing by understanding how to value companies using sophisticated valuation methodologies to make wiser investment decisions.Wisdom of Multi-Dimensional Analysis is a 3-day program that imparts the knowledge of classic investment strategies, cash flow and business model analysis using real-life examples and case studies. By the end of the program, you will gain in-depth knowledge on how to filter out the noise in the market, screen out good companies, calculate the true value of a business and manage your investment portfolio.融道智慧Wisdom of Rong DaoAdvanced ProgramWisdom of Rong Dao is a 15 - 20 days program that cracks the codes towards achieving mastery in the areas of running a profitable business, investing, maintaining happy and harmonious relationships and living your purpose in life by combining the teachings of Sinology, Confucianism, Art of War, Legalism, Buddhism and Taoism in one program. The program consists of five modules, each module is conducted over three to four days. By the end of the program, you will gain the know-how to creating sustainable holistic wealth in all aspects of your life.For More Informationwww.8ichina.comFor personal use only22 Annual Report FY2018Zhou GuiyinHonorary Advisor of 8IHChief Trainer in Shanghai RongdaoCulture Communication Co., Ltd.“The essence of value investing is to invest limited money, time, energy, and even one’s limited life in meaningful activities of valuable assets to create more values for oneself, the society, the nation, and humanity.”- Zhou Guiyin, Honorary Advisor of 8IH and the chief trainer in Shanghai Rongdao Culture Communication Co., Ltd. a subsidiary of 8IH ChinaAs a value investor of more than 20 years, Zhou Guiyin studies and advocates the concept of Value Investing. Integrating the wisdoms of Chinese history, Confucianism, Art of War, Legalism, Buddhism and Taoism and Value Investing philosophy, Zhou Guiyin created three programmes under 8I Rongdao Academy series where he simplified the concepts to empower participants to achieve sustainable wealth and happiness.价值投资精神8I Rong Dao is the first in China to IncorporateSinology & Value Investing!觉悟智慧Wisdom of Self-AwakeningFundamental ProgramInvesting is an important career and a life-time practice for everyone who wishes to obtain financial freedom in life.The important realisation is that one should not be a slave to wealth but instead seek to understand yourself, the different investing styles and the right investing method that suits you to achieve success.The Wisdom of Self-Awakening is a 3-day program that infuses the study of Chinese history, customs, and politics into investing. By the end of the three days, you will gain in-depth understanding on the concept of investing through Chinese religion and philosophy.全息智慧Wisdom of Multi-Dimensional AnalysisIntermediate ProgramMaster the essentials to investing by understanding how to value companies using sophisticated valuation methodologies to make wiser investment decisions.Wisdom of Multi-Dimensional Analysis is a 3-day program that imparts the knowledge of classic investment strategies, cash flow and business model analysis using real-life examples and case studies. By the end of the program, you will gain in-depth knowledge on how to filter out the noise in the market, screen out good companies, calculate the true value of a business and manage your investment portfolio.融道智慧Wisdom of Rong DaoAdvanced ProgramWisdom of Rong Dao is a 15 - 20 days program that cracks the codes towards achieving mastery in the areas of running a profitable business, investing, maintaining happy and harmonious relationships and living your purpose in life by combining the teachings of Sinology, Confucianism, Art of War, Legalism, Buddhism and Taoism in one program. The program consists of five modules, each module is conducted over three to four days. By the end of the program, you will gain the know-how to creating sustainable holistic wealth in all aspects of your life.For More Informationwww.8ichina.comFor personal use only23 Operations Overview 8IH China “The vision for 8IH China is to become the most respectable institution, spreading the wisdom of Chinese culture and philosophies, infusing the application of Sinology into investing and life.” China is a country with 5,000 years of cultural and philosophical influence and rapid economic growth. In 2016, 8IH set up an office in Shanghai to spread value investing, a philosophy that originated from USA with only 90 years of history. We underestimated China’s high-speed development and its unique financial market environment. Even though background research was conducted before we entered China, the widespread perception of value investing is seriously distorted in China. To make things worse, the differences in language and culture posed a challenge for our Singapore and Malaysia trainers. Fortunately, Tian Dehua met Mr Zhou Gui Yin during a conference and was deeply impressed by Mr Zhou’s knowledge in the financial industry. We invited Mr Zhou to join 8IH China in 2017. Leveraging on Mr Zhou’s experience in the financial markets as well as his profound knowledge of sinology, he developed an improved range of programmes tailored to suit the needs of China consumers. We are proud to say that 8IH China is the first to incorporate the teaching of value investing and sinology in China. The responses for our new programmes were encouraging. This prompted us to venture into other provinces in China. In FY2018, besides Shanghai, 8IH China had expanded our reach to Hubei Wuhan, Hebei Zhengding, and Shandong Jinan. Every new location is based on an invitation by our graduates who had benefited from our programmes and requested that we conduct the programmes in their hometowns. In FY2019, 8IH China will continue to promote our programmes into Zhejiang, Hubei and Hebei. Although we may have found initial success with these programmes, we remain cautious as we expand into other provinces in this competitive market. On behalf of the 8IH China team, We sincerely invite you to China to attend our programmes offered by 8IH China. We will personally share a series of programs that are carefully research, design and integrate the spirit of Sinology and value investing. It will surely benefit your life, relationship with family and friends, investment and all aspects of your business or professional career. Tian Dehua & Juanna Chua Directors 8IH China (Shanghai) Co. Ltd For More Information Visit www.8ichina.com or scan the QR code 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only8IH China Operations Overview 24 Tian Dehua Director and General Manager 8IH China (Shanghai) Co. Ltd Juanna Chua Executive Director 8IH China (Shanghai) Co. Ltd As the General Manager & Director of 8IH China, Tian Dehua is responsible for the management, promotion and operations of the 8I Group in China. Dehua graduated from Hubei University in 1997 with a Degree in Accounting, majoring in Economics and completed an Executive Program with China’s Tsinghua University. Prior to joining 8I, Dehua was the Vice President of JHT Investment Holdings Limited, and Vice Chairman of Beijing JHT Investment Fund Management Co. Limited. He brings with him, expertise in sales and marketing of large-scale developments across China. As the Executive Director of 8IH China, Juanna ensures that the company’s strategic objectives and plans are being met. She manages the company’s operations in China and coordinates between the Singapore and China offices – aligning vision, mission and culture as it expands in the Chinese market. A graduate with a Bachelor of Business Administration (Honours) in Marketing from the University Tenaga Nasional. Prior to joining 8I, Juanna spent nine years working in Shell Malaysia Trading Sdn Bhd, as the distributor and central store manager. She brings with her, strong human capital and operations knowledge. Annual Report FY2018For personal use only25 As we continue hurtling towards a Trust Economy, 8MAD Group will focus on creating value through collaborative consumption and helping our clients leverage on our ever-growing eco-system. We will also continue to build our verticals in market intelligence and development of marketing talents as part of our efforts to help companies stay relevant in the fast-changing marketing landscape. Patrick Wee Group CEO 8 MAD Group Sdn Bhd 8I Holdings LimitedFor personal use only26 We are planning to expand the floor space in one of the existing store and potentially expand one new outlet, so that we can expand our product range to our customers. Seen Chia Toong Managing Director CT Hardware Sdn Bhd Annual Report FY2018CT Hardware Sdn BhdA Malaysia-based business engaged in the wholesale and retail of power tools, construction equipment and machinery since 1977.CT Hardware currently operates 5 retail stores with a service center as well as online stores at various channels in Malaysia and is an authorized dealer of major brands like Bosch, Grundfos, Karcher, Graco and many more.Retail BusinessE-CommerceCorporate SolutionsAfter-Sales SupportFor More Informationwww.cthardware.comFor personal use only27 Financial Technology 8Bit Global As a Technology Evangelist, my life mission is to build innovations that will live beyond their creators. As such, I am truly excited about the development of an intelligent investment platform that 8Bit Global Pte Ltd is building. WealthPark, as we call it, is a smart integration of information, analysis tools and social learning. The focused areas stem from the struggles plaguing the present day investor, which led to WealthPark’s vision of making investing easy, like a walk in the park. The initial idea was to build an app to support the learning of our 8VIC’s community. But as we start collaborating with 8VIC trainers and HCF investment managers during the app development, we realised that together, we have the potential to create something bigger that enables our users to better manage investment risk and make smarter investing decisions. These are only made possible with years of combined investing experiences, 8I’s tested and proven proprietary investment methodologies, and collaboration with our valuable partners. The beta version, loaded with premium features like the Intrinsic Value Line, Star Chart and Integrity Score, will be ready in September 2018 for our 8VIC’s community to enjoy early access. This group of users play a crucial role in helping us form the initial critical mass, following which the network effects of our strong community will enable us to grow our user-base rapidly. As WealthPark receives the continuous feedback and support from its users and our business partners, we will be able to drive more value and bring value investing to an entirely new level. Bernard Siah Chief Technology Officer 8Bit Global Pte Ltd 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only28 Annual Report FY2018Intelligence at your FingertipsInvesting Just Got EasyInvestment DecisionsJust Got Easy.The vision of WealthPark is to be a smart AI investing tool and wealth management platform that will incorporate 8I’s proprietary stock analysis methodologies and 8VIC”s learning materials to make lifetime learning and stock analysis easier for 8VIC’s community.Download and explore our basic version with features like retirement calculator, investor profiling analysis, VIC resources, market news subscription and watchlist with PIECE Risk and BSC calculators. For More Informationwealthpark.ioAvailable OnApp StoreAvailable OnGoogle PlayFor personal use only29 Financial Education 8VIC Global The mission of 8VIC Global Pte Ltd is to bring Value Investing to the World. We plan to do that through a BOOM approach. Branding The headquarter in Singapore will focus on creating more content to build our brand’s authority as the leading financial education provider in Value Investing. Overseas Expansion Being established in Singapore and Malaysia, our current focus will be to increase the market shares in Taiwan, Thailand, Australia and Hong Kong. We will also explore demands for financial education in other countries through our channel partners. Online Courses We are exploring to provide online courses to reach out to more audiences beyond our physical offices’ geographically. Media We are also exploring using more media channels to brand and to provide edutainment which was proven effective in Malaysia. Through our partnership with Astro, we sponsored and produced a financial education programme called “Money Money Home” which was very well-received. Money Money Home had received higher viewership ratings than other programmes in the same timeslot. In FY2019, 8VIC will continue to put in our hearts to bring value investing to the world in a sustainable and meaningful way. Sean Seah Chief Executive Officer 8VIC Global Pte Ltd A Subsidiary of Digimatic Group Limited 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.Value Investing College is the leading financial education provider in Singapore and Malaysia.Our flagship courses, Value Investing Bootcamp and Options Mastery Programme educate the principles of value investing and provide time-tested strategies to help our graduates grow their wealth safely and consistently.Our graduates enjoy lifetime access to our robust network in VIC Community for continuous learning and investing ideas.Signature Programmes & EventValue Investing BootcampProvides You With A Systematic Formula To Grow Your Wealth & Income.Options Mastery ProgrammeHelps You To Generate Passive Income Consistently with Tested and Proven Options StrategiesValue Investing SummitAn annual conference where industry experts and international well-known value investors gather to share their investment strategies and investing ideas with VIC Community. The upcoming VIS will be held on 19 - 20 January 2019 in Kuala Lumpur, Malaysia.For More Informationwww.valueinvestingcollege.com orwww.facebook.com/valueinvestingcollegeFor personal use only30 Annual Report FY2018Value Investing College is the leading financial education provider in Singapore and Malaysia.Our flagship courses, Value Investing Bootcamp and Options Mastery Programme educate the principles of value investing and provide time-tested strategies to help our graduates grow their wealth safely and consistently.Our graduates enjoy lifetime access to our robust network in VIC Community for continuous learning and investing ideas.Signature Programmes & EventValue Investing BootcampProvides You With A Systematic Formula To Grow Your Wealth & Income.Options Mastery ProgrammeHelps You To Generate Passive Income Consistently with Tested and Proven Options StrategiesValue Investing SummitAn annual conference where industry experts and international well-known value investors gather to share their investment strategies and investing ideas with VIC Community. The upcoming VIS will be held on 19 - 20 January 2019 in Kuala Lumpur, Malaysia.For More Informationwww.valueinvestingcollege.com orwww.facebook.com/valueinvestingcollegeFor personal use only31 Operations Overview Corporate Highlights 26 APR 17 30 JUN 17 Obtained approval from MAS to operate as a Registered Fund Management Company (“RFMC”) 8I Holdings Limited’s subsidiary, 8 Capital Pte Ltd now renamed as Hidden Champions Capital Management Pte Ltd (HCCM), obtained approval from MAS to operate as a Registered Fund Management Company (RFMC), With the approval, it allows the Company to commence its new asset management business which horizontally integrates value and investing ecosystem and also provide an additional revenue stream for the Company. complements 8IH’s Acquisition of 68% of Shanghai Rong Dao Culture Communications Co. Ltd 8I Holdings Limited completed the acquisition of 68% of Shanghai Rong Dao Culture Communication Co. Ltd [ (“Rong its subsidiary, 8IH 上海融道文化传播有限公司 Dao”), through China (Shanghai) Co. Ltd [ ] 信益安（上 ] (“8IH Shanghai), for 海）实业有限公司 RMB588,704. to local Rong Dao is a value investing promoter and educator in China founded by Mr Zhou Guiyin in 2016. The acquisition of Rong Dao will provide the Company with access investment communities and a customised range of value investing programmes on offer. Mr Zhou Guiyin will head 8IH Shanghai’s programme development and value investing training in China. With his extensive knowledge and expertise in value investing, Mr Zhou develops a range of customised programmes to suit China consumers’ tailored needs. 01 JUL 17 28 JUL 17 Soft-launch of Hidden Champions Fund (“HCF”) With the approval of MAS for Hidden Champions Management Pte Ltd to operate as a Registered Fund Management Company earlier in the year, Hidden Champions Fund (“HCF”) held a soft launch in July 2017 to commemorate its commencement of operations. HCF’s investment process focusses on its 3-step approach to investing in Hidden Champions, business which are successful yet low profile, have a global or domestic market leadership and have sophisticated, hard-to-imitate and valuable niche. Sale of Investment in Hemus Pacific Private Limited 8I Holdings Limited announced that it has completed the disposal of Hemus Pacific Private Limited to Clear A27 Pte Ltd for a consideration of 7,000,000 8IH shares in the form of Chess Depository Interests. As a result of the transaction, 8IH realised a gain in disposal of subsidiary of approximately S$970,000, based on A$0.49 per share as at 28th July 2017. The transaction will provide 8IH shareholders with share value accretion, and the Company with treasury shares to seek other investment opportunities. 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use onlyCorporate Highlights Operations Overview 32 28 NOV 17 Completion of Sale of 8VIC Global Pte Limited and Acquisition of Substantial in Digimatic Group Limited Interest 8I Holdings Limited announced the completion of sale of the Company’s 95% holdings in 8VIC Global Pte Limited (“8VIC”) to Digimatic Group Limited (“DMC”) for a consideration of 1,448,955,200 pre-consolidated DMC shares at a deemed issue price of A$0.042 per share. The sale was completed following: * The transfer of 2,148,421 ordinary shares in 8VIC Global from 8IH and Glorymont Ltd (collectively known as the “Vendors”) to DMC, and; to * The issuance of 1,525,216,000 pre- consolidated DMC CHESS Depositary Interests the Vendors which represents 70% of the enlarged share capital of DMC post-issuance. The details of the Consideration shares are set out as below: Vendor Consideration Shares (Pre-consolidated) Percentage of Enlarge Share Capital 8IH 1,448,955,200 Glorymont 76,260,800 Total 1,525,216,000 66.50% 3.50% 70.00% As a result of the transaction, 8IH will become the holding company of DMC. 29 JAN 18 Acquisition of additional 2% equity interest in Digimatic Group Limited 8I Holdings Limited has acquired 875,000 shares in Digimatic Group Limited off market from various DMC shareholders via a licensed broker. The DMC Shares represent a 2% equity interest in DMC. As consideration for the transaction, 8IH will transfer 7,000,000 ordinary shares in 8IH to DMC from its treasury stock in the form of CHESS Depository Interests. The consideration represents 1.9% of the ordinary share capital of 8IH. As a result of the transaction, the Company will increase its equity interest in DMC from 69.7% to 71.7%. 27 MAR 18 Investor Presentation 8I Holdings Limited released a presentation for its investor to give an update on FY2018 in review, Strategic Review, Rework & Restructure and 8IH’s key focuses for FY2019. In summary, 8IH will undertake a cost management exercise which targets to reduce corporate operating costs by 30%. The activities will include reducing professional fees, leasing out the office space at level 4, reducing the Executive Director and implementing pay freeze and no bonuses for all corporate and investment staffs. remunerations of The focuses for FY2019 will be : • To grow the AUM of Hidden Champions Fund • To grow the market shares in overseas & increase the profit margin for 8VIC Global • To launch a personal wealth management tool for the investor community Annual Report FY2018For personal use only33 Operations Overview Corporate Structure 8I Holdings Limited 8IH Global Limited (100%) Hidden Champions Fund (100%) Hidden Champions Capital Management Pte Ltd (formerly known as 8 Capital Pte Ltd) (100%) 8IH China Pte Ltd (65%) As of 31 March 2018 8IH China (Shanghai) Co. Ltd Shanghai Rong Dao Culture Communication Co. Ltd 信益安（上海）实业有限公司 (100%) 上海融道文化传播有限公司 (68%) 8 MAD Group Sdn Bhd (51%) MAD Integrated Sdn Bhd (100%) 8 Business Pte Ltd (100%) CT Hardware Sdn Bhd (49.9%) MAD Training Sdn Bhd (100%) 8Bit Global Pte Ltd (100%) LEAP Asia Sdn Bhd (56%) 8 Investment Pte Ltd (100%) Vue at Red Hill Pte Ltd (100%) Digimatic Group Ltd (72%) Digimatic Media Pte Ltd (100%) Digimatic Media Sdn Bhd (100%) Webbynomics Pte Ltd (51%) Keaworld Pte Ltd (100%) Wewe Media Group Pte Ltd (100%) Digimatic Creatives Pte Ltd (51%) Anonymous Production Sdn Bhd (100%) 8VIC Global Pte Limited (100%) 8VIC Singapore Pte Ltd (formerly known as Financial Joy Institute Pte Ltd) (100%) 8VIC Malaysia Sdn Bhd (100%) 8VIC JooY Media Sdn Bhd (70%) 8VIC (Australia) Pty Ltd (90%) 8VIC Taiwan Co., Ltd (70%) 8VIC (Thailand) Company Limited (70%) 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use onlyCorporate Information Operations Overview 34 As of 31 March 2018 Directors Mr Chee Kuan Tat, Ken (Executive Chairman) Mr Clive Tan Che Koon (Executive Director) Mr Chay Yiowmin (Non-Executive Director) Mr Charles Mac (Non-Executive Director) Company Secretary (Singapore) Mr Ang Teck Huat Company Secretary (Australia) Mr Louis Chua Chun Woei Company Registration Number 201414213R ARBN 601 582 129 Registered Office (Singapore) Goldbell Towers, 47 Scotts Road, #03-03/04, Singapore 228233 Tel Fax : +65 6801 4500 : +65 6235 0332 Registered Office (Australia) C/- SmallCap Corporate Pty Ltd, Suite 6, 295 Rokeby Road, Subiaco WA, Australia, 6008 Tel Fax : +61 (8) 6555 2950 : +61 (8) 6166 0261 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 Tel Fax : +61 (2) 9290 9600 : +61 (2) 9279 0664 Auditors PricewaterhouseCoopers LLP Public Accountants and Chartered Accountants 7 Straits View, Marina One East Tower Level 12, Singapore 018936 Singapore Partner in charge: Rebekah Khan (since 2016) Tel Fax : +65 6236 3388 : +65 6236 3715 Stock Exchange Listing 8I Holdings Limited shares are listed on the Australian Securities Exchange (ASX code: 8IH) Website www.8iholdings.com Annual Report FY2018For personal use only35 04 Governance Remuneration Report Directors’ Statement 36 39 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use onlyRemuneration Report Governance 36 This remuneration report set out information about the remuneration of 8I Holdings Limited’s key management personnel for the financial year ended 31 March 2018. 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 year are: Chee Kuan Tat, Ken Executive Chairman Clive Tan Che Koon Executive Director Chay Yiowmin Charles Mac Low Ming Li Non-Executive Director Non-Executive Director Head of Private Markets Investment Division Bernard Siah Wee Boon Chief Technology Officer Louis Chua Chun Woei Chief Financial Officer; Chief Risk Officer; and Company Secretary (Australia) Sally Teo Chief Branding Officer Kee Koon Boon Chief Investment Officer (resigned on 31 May 2018) 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 Directors’ remuneration as at date of this report are set out below. Name Base Salary(1) Chee Kuan Tat, Ken S$252,000 p.a. Fees S$ nil Term of Agreement Notice Period No fixed term Clive Tan Che Koon S$175,000 p.a. S$43,200 p.a.(2) No fixed term Chay Yiowmin Charles Mac S$ nil S$ nil S$42,000 p.a.(3) No fixed term S$42,000 p.a.(3) No fixed term (1) Excluding employer’s Central Provident Fund (CPF) contribution (2) Non-executive director fee of a subsidiary (3) Non-executive director fee of the Company N/A N/A N/A N/A Annual Report FY2018For personal use only37 Governance Remuneration Report (continued) Details of Remuneration A breakdown showing the level and mix of each Director’s and Key Management Personnel’s remuneration for the financial year ended 31 March 2018 is set out below: Name of Directors S$250,000 to below S$500,000 Chee Kuan Tat, Ken Clive Tan Che Koon Below S$100,000 Chay Yiowmin Charles Mac Salary* % Bonus/Profit- sharing % Directors’ Fee % Total % 100 94 - - - - - - - 6 100 100 100 100 100 100 Name of Key Management Personnel Designation S$100,000 to below S$250,000 Low Ming Li Head of Private Markets Investment Division Bernard Siah Wee Boon Chief Technology Officer Louis Chua Chun Woei Sally Teo Kee Koon Boon Chief Financial Officer; Chief Risk Officer; and Company Secretary (Australia) Chief Branding Officer Chief Investment Officer (resigned on 31 May 2018) Salary* % Bonus/Profit- sharing % Total % 82 94 82 86 83 18 6 18 14 17 100 100 100 100 100 * Salary is inclusive of fixed allowance and CPF contribution. The total remuneration of each Key Management Personnel has not been disclosed in dollar terms given the sensitivity of remuneration matters and to maintain the confidentiality of the remuneration packages of these Key Management Personnel. 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use onlyRemuneration Report (continued) Governance 38 Details of Remuneration (continued) The total remuneration of the top five key executives (who are not directors of the Company) is S$863,557 for the financial year ended 31 March 2018 (2017: S$940,632). There were no terminations, retirement or post-employment benefits granted to Directors and Key Management Personnel other than the standard contractual notice period termination payment in lieu of service for the financial year ended 31 March 2018. No employee whose remuneration exceeded S$50,000 during the financial year is an immediate family member of any of the members of the Board. The Company did not provide any equity compensation to Directors or executives during the financial year ended 31 March 2018. The Company also reimburses validly incurred business expenses of Directors and Key Management Personnel. Other Information There were no loans made to any Key Management Personnel during the financial year or outstanding at financial year ended. Apart from disclosed elsewhere in this report, there were no transactions with Key Management Personnel during the financial year. During the financial year, the Remuneration Committee reviewed and approved the Company’s remuneration policy. Directors Meetings Since the beginning of the financial year, four meetings of directors were held. Attendances by each director during the period were as follows: Directors’ Meeting Eligible to Attend Attended 4 4 4 4 4 4 4 4 Directors Chee Kuan Tat, Ken Clive Tan Che Koon Chay Yiowmin Charles Mac 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. Annual Report FY2018For personal use only39 Governance Directors’ Statement For the financial year ended 31 March 2018 The directors present their statement to the members together with the audited financial statements of the Group for the financial year ended 31 March 2018 and the statement of financial position of the Company as at 31 March 2018. In the opinion of the directors, (a) the statement of financial position of the Company and the consolidated financial statements of the Group as set out on pages 49 to 122 are drawn up so as to give a true and fair view of the financial position of the Company and of the Group as at 31 March 2018 and the financial performance, changes in equity and cash flows of the Group for the financial year covered by the consolidated financial statements; 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. Directors The directors of the Company in office at the date of this statement are as follows: Mr Chee Kuan Tat, Ken Mr Clive Tan Che Koon Mr Charles Mac Mr Chay Yiowmin Arrangements to enable directors to acquire shares and debentures Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Directors’ interests in shares or debentures According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had any interest in the shares or debentures of the Company or its related corporations, except as follows: 8I Holdings Limited (No. of ordinary shares) Mr Chee Kuan Tat, Ken Mr Clive Tan Che Koon Holdings registered in name of director or nominee Holdings in which director is deemed to have an interest At 31.3.2018 At 1.4.2017 At 31.3.2018 At 1.4.2017 86,458,500 86,358,500 65,140,000 65,091,500 - - 21,991,741 21,991,741 There was no change in any of the above-mentioned interests in the Company between the end of the financial year and date of this statement. Except as disclosed in this statement, no director who held office at the end of the financial year had interests in shares, shares options, warrants or debentures of the Company, or of related corporations, either at the beginning of the financial year, or date of appointment if later, or during the financial year. 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use onlyDirectors’ Statement Governance 40 For the financial year ended 31 March 2018 Audit Committee The members of the Audit Committee at the end of the fi nancial year were as follows: Mr Chay Yiowmin Mr Clive Tan Che Koon Mr Charles Mac All members of the Audit Committee were non-executive directors,except for Mr Clive Tan Che Koon. The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act. In performing those functions, the Committee reviewed: • the audit plan of the Company’s independent auditor and any recommendations on internal accounting controls arisingfromthe statutory audit; • the assistancegivenbythe Company’s management to the independent auditor;and • the statement of financial position of the Company and the consolidated financial statements of the Group for the financial year ended 31 March 2018 before their submission to the Board of Directors. The Audit Committee has recommended to the Board that the independent auditor, PricewaterhouseCoopers LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company. Independent Auditor The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-appointment. On behalf of the directors Chee Kuan Tat, Ken Director 29 June 2018 Clive Tan Che Koon Director Annual Report FY2018For personal use only41 Governance 05 Financial Independent Auditor’s Report Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Statement of Financial Position - Company Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Additional Information 42 49 50 51 52 54 57 123 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED Report on the Audit of the Financial Statements Our opinion In our opinion, the accompanying consolidated financial statements of 8I Holdings Limited (the “Company”) and its subsidiaries (the “Group”) and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 (the “Act”) and Financial Reporting Standards in Singapore (“FRSs”) so as to give a true and fair view of the consolidated financial position of the Group and the financial position of the Company as at 31 March 2018 and of the consolidated financial performance, consolidated changes in equity and consolidated cash flows of the Group for the financial year ended on that date. What we have audited The financial statements of the Company and the Group comprise: the consolidated statement of comprehensive income of the Group for the year ended 31 March 2018; the consolidated statement of financial position of the Group as at 31 March 2018; the statement of financial position of the Company as at 31 March 2018; the consolidated statement of changes in equity of the Group for the year then ended; the consolidated statement of cash flows of the Group for the year then ended; and the notes to the financial statements, including a summary of significant accounting po licies. • • • • • • We conducted our audit in accordance with Singapore Standards on Auditing (“SSAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We are independent of the Group in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (“ACRA Code”) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. Basis for Opinion report. Independence Our Audit Approach As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the accompanying financial statements. In particular, we considered where management made subjective judg ements; for example, in respect of signifi cant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal control s, including among other matters considera tion of whether there was evidence of bias that represented a risk of material misstatement due to fraud. PricewaterhouseCoopers LLP, 7 Straits View, Marina One East Tower Level 12, Singapore 018936 T: (65) 6236 3388, F: -, www.pwc.com/sg GST No.: M 90362196L Reg. No.: T09LL0001D PricewaterhouseCoopers LLP (Registration No. T09LL0001D) is an accounting limited liability partnership registered in Singapore under the Limited Liabil ity Partnership Act (Chapter 163A). PricewaterhouseCoopers LLP is part of the network of member f irms of PricewaterhouseCoopers Internat ional Limited, each of which is a separate and independent legal entity . 3 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only Financial 42 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED Report on the Audit of the Financial Statements Our opinion In our opinion, the accompanying consolidated financial statements of 8I Holdings Limited (the “Company”) and its subsidiaries (the “Group”) and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 (the “Act”) and Financial Reporting Standards in Singapore (“FRSs”) so as to give a true and fair view of the consolidated financial position of the Group and the financial position of the Company as at 31 March 2018 and of the consolidated financial performance, consolidated changes in equity and consolidated cash flows of the Group for the financial year ended on that date. What we have audited The financial statements of the Company and the Group comprise: • • • • • • the consolidated statement of comprehensive income of the Group for the year ended 31 March 2018; the consolidated statement of financial position of the Group as at 31 March 2018; the statement of financial position of the Company as at 31 March 2018; the consolidated statement of changes in equity of the Group for the year then ended; the consolidated statement of cash flows of the Group for the year then ended; and the notes to the financial statements, including a summary of significant accounting po licies. Basis for Opinion We conducted our audit in accordance with Singapore Standards on Auditing (“SSAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (“ACRA Code”) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. Our Audit Approach As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the accompanying financial statements. In particular, we considered where management made subjective judg ements; for example, in respect of signifi cant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal control s, including among other matters considera tion of whether there was evidence of bias that represented a risk of material misstatement due to fraud. PricewaterhouseCoopers LLP, 7 Straits View, Marina One East Tower Level 12, Singapore 018936 T: (65) 6236 3388, F: -, www.pwc.com/sg GST No.: M 90362196L Reg. No.: T09LL0001D PricewaterhouseCoopers LLP (Registration No. T09LL0001D) is an accounting limited liability partnership registered in Singapore under the Limited Liabil ity Partnership Act (Chapter 163A). PricewaterhouseCoopers LLP is part of the network of member f irms of PricewaterhouseCoopers Internat ional Limited, each of which is a separate and independent legal entity . 3 Annual Report FY2018For personal use only On 28 November 2017, Digimatic entered into a Share Purchase Agreement where Digimatic issued 1,448,955,200 shares to 8IH. The consideration was satisfied through the injection of 8VIC Global Pte. Limited and its subsidiaries (“8VIC”) from 8IH to Digimatic. Arising from this transaction, 8IH’s direct interest was changed as follows: • 10.81% interest in Digimatic increased to approximately 69.7%. As a result, the fair value through other comprehensive income (“FVOCI”) equity investment was reclassified to investment in a subsidiary. 95% interest in 8VIC decreased to approximately 69.7% (increase of minority interest by 25.3%). A gain on bargain purchase of S$425,042 was recognised as a result of this transaction. • • 43 Financial INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED (continued) INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED (continued) Key Audit Matters Key Audit Matters (continued) Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements for the financial year ended 31 March 2018. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How our audit addressed the Key Audit Matter Acquisition of Digimatic Group Limited (“Digimatic”) Refer to Notes 3 (critical accounting estimates, assumptions and judgements) and 30 (Business combinations) to the financial statements. Key Audit Matter How our audit addressed the Key Audit Matter Acquisition of Digimatic Group Limited (“Digimatic”) (continued) We focused on the accounting for the acquisition as the transaction is material and it required key areas of judgement relating to: • Fair value of consideration and re-measurement of investments at FVOCI The Group applied significant judgement to determine that the fair value consideration was assessed based on the independent valuation of 8VIC’s capitalisation of future maintainable earnings (“FME”) as the primary methodology instead of the quoted price of new shares issued by Digimatic to the Company (due to indicative of few recent transactions and downwards trend). Judgements, estimates and assumptions in determining the fair value considerations include 8VI C’s growth rate and its multiplier, adjusted by control premium/business risks and management’s selection of mid-point between possible high and low scenarios. The share swap representing the fair value consideration in 8VIC’s 25.3% interest, was valued at S$5.9 million. In addition, the previously held investment (FVOCI) was re-measured at S$0.3 million based on the fair value per share arising from the fair value consideration of Digimatic’s acquisition. As a result, a loss arising from the re-measurement of FVOCI was included in the other comprehensive income. • Purchase price allocations At the time the financial statements were authorised for issue, the group had not yet completed the purchase price allocations for the acquisition of Digimatic Group Limited. The fair values of the assets and liabilities amounting to S$9.9 million have only been determined provisionally as the independent valuations have not been finalised. We have performed the following procedures: • We discussed with senior management to understand the commercial substance of the transactions. reviewed sales and purchase agreement to validate the key terms and conditions of the transaction. • We the • We involved our internal valuation specialist to assess appropriateness valuation methodology adopted by the valuer. • We assessed key valuation report. inputs assumption in the • We assessed the appropriateness of the disclosures in the financial statements relating to the acquisitions. the found We judgements, estimates and (including assumptions used by management disclosure) is supportable and the acquisition were appropriately accounted. 4 5 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only Key Audit Matter How our audit addressed the Key Audit Matter Key Audit Matters these matters. Acquisition of Digimatic Group Limited (“Digimatic”) Refer to Notes 3 (critical accounting estimates, assumptions and judgements) and 30 (Business combinations) to the financial statements. On 28 November 2017, Digimatic entered into a Share Purchase Agreement where Digimatic issued 1,448,955,200 shares to 8IH. The consideration was satisfied through the injection of 8VIC Global Pte. Limited and its subsidiaries (“8VIC”) from 8IH to Digimatic. follows: • 10.81% interest in Digimatic increased to approximately 69.7%. As a result, the fair value through other comprehensive income (“FVOCI”) equity investment was reclassified to investment in a subsidiary. • • 95% interest in 8VIC decreased to approximately 69.7% (increase of minority interest by 25.3%). A gain on bargain purchase of S$425,042 was recognised as a result of this transaction. We have performed the following procedures: • We discussed with senior management to understand the commercial substance of the transactions. • We reviewed the sales and purchase agreement to validate the key terms and • We involved our internal valuation specialist to assess appropriateness valuation methodology adopted by the valuer. • We assessed key inputs assumption in the valuation report. • We assessed the appropriateness of the disclosures in the financial statements relating to the acquisitions. We found the judgements, estimates and assumptions used by management (including disclosure) is supportable and the acquisition were appropriately accounted. Arising from this transaction, 8IH’s direct interest was changed as conditions of the transaction. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED (continued) INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED (continued) Key Audit Matters (continued) Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements for the financial year ended 31 March 2018. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on Key Audit Matter Acquisition of Digimatic Group Limited (“Digimatic”) (continued) How our audit addressed the Key Audit Matter Financial 44 We focused on the accounting for the acquisition as the transaction is material and it required key areas of judgement relating to: • Fair value of consideration and re-measurement of investments at FVOCI The Group applied significant judgement to determine that the fair value consideration was assessed based on the independent valuation of 8VIC’s capitalisation of future maintainable earnings (“FME”) as the primary methodology instead of the quoted price of new shares issued by Digimatic to the Company (due to indicative of few recent transactions and downwards trend). Judgements, estimates and assumptions in determining the fair value considerations include 8VI C’s growth rate and its multiplier, adjusted by control premium/business risks and management’s selection of mid-point between possible high and low scenarios. The share swap representing the fair value consideration in 8VIC’s 25.3% interest, was valued at S$5.9 million. In addition, the previously held investment (FVOCI) was re-measured at S$0.3 million based on the fair value per share arising from the fair value consideration of Digimatic’s acquisition. As a result, a loss arising from the re-measurement of FVOCI was included in the other comprehensive income. • Purchase price allocations At the time the financial statements were authorised for issue, the group had not yet completed the purchase price allocations for the acquisition of Digimatic Group Limited. The fair values of the assets and liabilities amounting to S$9.9 million have only been determined provisionally as the independent valuations have not been finalised. 4 5 Annual Report FY2018For personal use only 45 Financial INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED (continued) INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED (continued) Key Audit Matters (continued) Other Information Key Audit Matter How our audit addressed the Key Audit Matter Impairment assessment on goodwill Refer to Note 14 (Goodwill) to the financial statements. Goodwill recognised separately as an intangible asset is tested for impairment annually and whenever there is indication that the goodwill may be impaired. We focused on the goodwill impairment assessment performed by management due to the s ignificant estimates by management and the dependency on future market circumstances. Value in- use calculations were performed by management to assess the recoverable amount. The key assumptions relate to discount rates and growth rates. Based on the results of impairment testing performed by management, there was no impairment of goodwill. This conclusion was based on the recoverable amounts, determined based on value-in-use calculations, which exceeded the carrying value of the cash generating unit (“CGU”), including goodwill as at 31 March 2018. The key assumptions and sensitivity analysis are disclosed in Note 14 of the financial statements. lead that could Our audit procedures included, among others, verifying the mathematical accuracy of the calculations and the basis of the assumptions, under which the discount rate was applied. The examination of the assumptions with respect to the expected growth rates were part of our audit procedures. We tested the assumptions among others by means of comparison with the historic performance of the company and the growth expectation. We also verified the completeness of the disclosures of the assumptions and sensitivity analysis in Note 14 of the financial statements for to an possible situations impairment. Management is responsible for the other information. The other information comprises information disclosed in Group Overview, Strategic Overview, Operations Overview, Governance and Additional Information, which we obtained prior to the date of this auditor’s report. of assurance conclusion thereon. Our opinion on the financial statements does not cover the other information and we do not and will not express any form In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the Other Sections, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions in accordance with SSAs. Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Act and FRSs, 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 financial statements and to maintain accountability of assets. In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The directors’ responsibilities include overseeing the Group’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. We found the Group’s assumptions and disclosures to be reasonable based on available evidence. Responsibilities of Management and Directors for the Financial Statements 6 7 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED (continued) INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED (continued) Financial 46 Key Audit Matters (continued) Impairment assessment on goodwill Key Audit Matter How our audit addressed the Key Audit Matter Refer to Note 14 (Goodwill) to the financial statements. Our audit procedures included, among others, verifying the mathematical accuracy of the Goodwill recognised separately as an intangible asset is tested for calculations and the basis of the assumptions, impairment annually and whenever there is indication that the under which the discount rate was applied. The goodwill may be impaired. We focused on the goodwill impairment assessment performed by management due to the s ignificant estimates by management and the dependency on future market circumstances. Value in- use calculations were performed by management to assess the recoverable amount. The key assumptions relate to discount rates and growth rates. examination of the assumptions with respect to the expected growth rates were part of our audit procedures. We tested the assumptions among others by means of comparison with the historic performance of the company and the growth expectation. We also verified the completeness of the disclosures of the assumptions and sensitivity analysis in Note 14 of the financial statements for possible situations that could lead to an impairment. Based on the results of impairment testing performed by management, there was no impairment of goodwill. This We found the Group’s assumptions and disclosures conclusion was based on the recoverable amounts, determined to be reasonable based on available evidence. based on value-in-use calculations, which exceeded the carrying value of the cash generating unit (“CGU”), including goodwill as at 31 March 2018. The key assumptions and sensitivity analysis are disclosed in Note 14 of the financial statements. Other Information Management is responsible for the other information. The other information comprises information disclosed in Group Overview, Strategic Overview, Operations Overview, Governance and Additional Information, which we obtained prior to the date of this auditor’s report. Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the Other Sections, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions in accordance with SSAs. Responsibilities of Management and Directors for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Act and FRSs, 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 financial statements and to maintain accountability of assets. In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The directors’ responsibilities include overseeing the Group’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 6 7 Annual Report FY2018For personal use only 47 Financial INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED (continued) INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED (continued) Auditor’s Responsibilities for the Audit of the Financial Statements (continued) Report on other Legal and Regulatory Requirements As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiary corporations incorporated in Singapore, of which we are the auditors, have been properly kept in accordance with the We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material mis statement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. provisions of the Act. The engagement partner on the audit resulting in this independent auditor’s report is Rebekah Khan. • • • Obtain an understanding of internal control relevant to the audit 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 Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves f air presentation. • PricewaterhouseCoopers LLP Public Accountants and Chartered Accountants Singapore, 29 June 2018 • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financi al statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 8 9 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED (continued) INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF 8I HOLDINGS LIMITED (continued) Auditor’s Responsibilities for the Audit of the Financial Statements (continued) Report on other Legal and Regulatory Requirements In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiary corporations incorporated in Singapore, of which we are the auditors, have been properly kept in accordance with the provisions of the Act. The engagement partner on the audit resulting in this independent auditor’s report is Rebekah Khan. Financial 48 PricewaterhouseCoopers LLP Public Accountants and Chartered Accountants Singapore, 29 June 2018 As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material mis statement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the • Obtain an understanding of internal control relevant to the audit 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 Group’s Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related override of internal control. internal control. disclosures made by management. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves f air going concern. presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. • • • We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financi al statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 8 9 Annual Report FY2018For personal use only 49 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the financial year ended 31 March 2018 OCI Revenue and investment income Other gains Other income Expenses - Cost of sales and services - Administrative expenses - Other operating expenses - Finance costs Note 2018 S$ 2017 S$ 4 5 5 6 6 6 21,506,451 425,042 739,023 28,906,069 1,255,447 553,162 (12,425,506) (11,048,212) (3,858,329) (83,324) (6,058,088) (8,021,706) (5,445,335) (41,710) - Share of loss attributable to the unit holders of redeemable participating shares 21 395,985 - Share of (loss)/profit of associated companies (79,789) 566,675 (Loss)/Profit before income tax Income tax expense (Loss)/Profit for the year Other comprehensive (expense)/income: Items that may be reclassified subsequently to profit or loss: Financial assets through other comprehensive income - Fair value losses at available for sale Currency translation differences arising from consolidation - (Losses)/gains 8 (4,428,659) (9,929) (4,438,588) 11,714,514 (221,157) 11,493,357 17 - (2,719,704) (1,010,448) (1,010,448) 143,859 (2,575,845) Items that will not be reclassified subsequently to profit or loss: - Financial losses, at FVOCI Other comprehensive expense, net of tax 17 (11,171,173) (12,181,621) - (2,575,845) Total comprehensive (expense)/income (16,620,209) 8,917,512 (Loss)/Profit attributable to: Equity holders of the Company Non-controlling interests Total comprehensive (expense)/income attributable to: Equity holders of the Company Non-controlling interests (4,249,612) (188,976) (4,438,588) 11,245,023 248,334 11,493,357 (16,447,952) (172,257) (16,620,209) 8,648,328 269,184 8,917,512 (Loss)/Earnings per share attributable to equity holders of the Company (S$ cents per share) Basic earnings per share Diluted earnings per share 9 9 (1.19) (1.19) 3.14 3.14 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION Investment in an associated company Financial assets, at FVOCI/ available-for-sale Deferred income tax assets As at 31 March 2018 SOFP-Group ASSETS Current assets Cash and cash equivalents Trade and other receivables Financial assets, at FVPL Inventories Non-current assets Other receivables Plant and equipment Goodwill Total assets LIABILITIES Current liabilities Trade and other payables Finance lease liabilities Borrowings Current income tax liabilities Unearned revenue Redeemable participating shares Non-current liabilities Finance lease liabilities Deferred income tax liabilities Unearned revenue Total liabilities NET ASSETS EQUITY Share capital Other reserves Retained profits Non-controlling interests Total equity Capital and reserves attributable to equity holders of the Company Note 31 March 2018 S$ 2017 S$ 10 11 12 11 13 14 16 17 22 18 19 10 8 20 21 19 22 20 23 24 15 23,328,043 11,874,662 25,696,375 454,723 61,353,803 733,603 1,356,466 1,688,861 1,263,908 1,751,877 217,905 7,012,620 68,366,423 3,693,680 33,578 4,209,809 235,094 4,938,840 7,035,922 12,562,376 10,681,560 26,356,434 49,600,370 148,667 910,601 3,459,119 1,425,911 13,025,188 18,969,486 68,569,856 2,782,540 50,180 248,980 3,157,151 - - - - 20,146,923 6,238,851 57,692 93,591 69,523 220,806 92,040 5,344 538,295 635,679 20,367,729 47,998,694 6,874,530 61,695,326 34,422,910 (10,869,540) 21,073,166 44,626,536 3,372,158 34,422,910 (720,786) 26,227,725 59,929,849 1,765,477 47,998,694 61,695,326 The accompanying notes form an integral part of these financial statements. The accompanying notes form an integral part of these financial statements. 10 11 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the financial year ended 31 March 2018 OCI CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 March 2018 SOFP-Group Financial 50 - Share of loss attributable to the unit holders of redeemable 21 395,985 - Share of (loss)/profit of associated companies (79,789) 566,675 Revenue and investment income Other gains Other income Expenses - Cost of sales and services - Administrative expenses - Other operating expenses - Finance costs participating shares (Loss)/Profit before income tax Income tax expense (Loss)/Profit for the year Other comprehensive (expense)/income: Items that may be reclassified subsequently to profit or loss: Financial assets through other comprehensive income - Fair value losses at available for sale Currency translation differences arising from consolidation - (Losses)/gains 4 5 5 6 6 6 8 Note 2018 S$ 2017 S$ 21,506,451 425,042 739,023 28,906,069 1,255,447 553,162 (12,425,506) (11,048,212) (3,858,329) (83,324) (6,058,088) (8,021,706) (5,445,335) (41,710) (4,428,659) 11,714,514 (9,929) (221,157) (4,438,588) 11,493,357 17 - (2,719,704) (1,010,448) (1,010,448) 143,859 (2,575,845) Items that will not be reclassified subsequently to profit or loss: - Financial losses, at FVOCI Other comprehensive expense, net of tax 17 (11,171,173) (12,181,621) - (2,575,845) Total comprehensive (expense)/income (16,620,209) 8,917,512 (Loss)/Profit attributable to: Equity holders of the Company Non-controlling interests Total comprehensive (expense)/income attributable to: Equity holders of the Company Non-controlling interests (4,249,612) (188,976) (4,438,588) 11,245,023 248,334 11,493,357 (16,447,952) (172,257) (16,620,209) 8,648,328 269,184 8,917,512 ASSETS Current assets Cash and cash equivalents Trade and other receivables Financial assets, at FVPL Inventories Non-current assets Other receivables Plant and equipment Goodwill Investment in an associated company Financial assets, at FVOCI/ available-for-sale Deferred income tax assets Total assets LIABILITIES Current liabilities Trade and other payables Finance lease liabilities Borrowings Current income tax liabilities Unearned revenue Redeemable participating shares Non-current liabilities Finance lease liabilities Deferred income tax liabilities Unearned revenue Total liabilities NET ASSETS EQUITY Capital and reserves attributable to equity holders of the Company Share capital Other reserves Retained profits (Loss)/Earnings per share attributable to equity holders of the Company (S$ cents per share) Basic earnings per share Diluted earnings per share 9 9 (1.19) (1.19) 3.14 3.14 Non-controlling interests Total equity Note 31 March 2018 S$ 2017 S$ 10 11 12 11 13 14 16 17 22 18 19 10 8 20 21 19 22 20 23 24 15 23,328,043 11,874,662 25,696,375 454,723 61,353,803 733,603 1,356,466 1,688,861 1,263,908 1,751,877 217,905 7,012,620 68,366,423 3,693,680 33,578 4,209,809 235,094 4,938,840 7,035,922 20,146,923 57,692 93,591 69,523 220,806 12,562,376 10,681,560 26,356,434 - 49,600,370 148,667 910,601 3,459,119 1,425,911 13,025,188 - 18,969,486 68,569,856 2,782,540 50,180 - 248,980 3,157,151 - 6,238,851 92,040 5,344 538,295 635,679 20,367,729 47,998,694 6,874,530 61,695,326 34,422,910 (10,869,540) 21,073,166 44,626,536 3,372,158 34,422,910 (720,786) 26,227,725 59,929,849 1,765,477 47,998,694 61,695,326 The accompanying notes form an integral part of these financial statements. The accompanying notes form an integral part of these financial statements. 10 11 Annual Report FY2018For personal use only 51 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES STATEMENT OF FINANCIAL POSITION - COMPANY As at 31 March 2018 SOFP-Co ASSETS Current assets Cash and cash equivalents Trade and other receivables Financial assets, at FVPL Current income tax asset Non-current assets Investments in subsidiaries Financial assets, at FVOCI/ available-for-sale Other receivables Total assets LIABILITIES Current liabilities Trade and other payables Borrowings Unearned income Total liabilities NET ASSETS EQUITY Capital and reserves attributable to equity holders of the Company Share capital Other reserves Retained profits Total equity Note 31 March 2018 S$ 2017 S$ 10 11 12 8 15 17 11 18 10 20 23 24 5,369,817 17,227,838 37,000 3,959 22,638,614 28,288,147 733,603 29,021,750 51,660,364 2,809,430 27,839,749 - 30,650 30,679,829 13,984,921 428,267 - 14,413,188 45,093,017 4,494,147 4,209,809 274,704 8,978,660 8,978,660 4,126,264 - - 4,126,264 4,126,264 42,681,704 40,966,753 34,422,910 (2,062,917) 10,321,711 42,681,704 34,422,910 76,042 6,467,801 40,966,753 The accompanying notes form an integral part of these financial statements. 12 I 8 C l a t o T y t i u q e $ S - n o N g n i l l o r t n o c s t s e r e t n i $ S l a t o T $ S d e n i a t e R s t i f o r p $ S l a t i p a C e v r e s e r $ S n o i t a l s n a r t e u l a v r i a F y r u s a e r T e v r e s e r e v r e s e r s e r a h s $ S $ S $ S e r a h S l a t i p a c $ S e t o N y t i u q e o t e l b a t u b i r t t A y n a p m o C e h t f o s r e d l o h y c n e r r u C ) 4 1 1 , 7 1 6 ( ) 4 1 1 , 7 1 6 ( ) 0 0 8 , 6 2 5 , 4 ( ) 5 9 3 , 0 1 8 ( ) 5 0 4 , 6 1 7 , 3 ( - - 7 4 0 , 1 5 1 7 4 0 , 1 5 1 ) 7 4 9 , 4 2 1 , 1 ( ) 0 0 0 , 0 2 2 ( ) 7 4 9 , 4 0 9 ( ) 7 4 9 , 4 0 9 ( 8 4 5 , 4 7 2 , 9 5 0 9 , 4 2 4 , 3 3 4 6 , 9 4 8 , 5 3 4 6 , 9 4 8 , 5 ) 7 5 1 , 3 3 2 ( ) 5 0 5 , 9 4 1 ( ) 2 5 6 , 3 8 ( ) 7 5 0 , 0 0 8 , 3 ( 7 7 5 , 3 2 9 , 2 8 3 9 , 8 7 7 , 1 9 3 6 , 4 4 1 , 1 ) 7 4 9 , 4 0 9 ( 6 8 5 , 9 4 0 , 2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - ) 1 2 6 , 1 8 1 , 2 1 ( 9 1 7 , 6 1 ) 0 4 3 , 8 9 1 , 2 1 ( - ) 8 8 5 , 8 3 4 , 4 ( ) 6 7 9 , 8 8 1 ( ) 2 1 6 , 9 4 2 , 4 ( ) 2 1 6 , 9 4 2 , 4 ( ) 9 0 2 , 0 2 6 , 6 1 ( ) 7 5 2 , 2 7 1 ( ) 2 5 9 , 7 4 4 , 6 1 ( ) 2 1 6 , 9 4 2 , 4 ( ) 7 6 1 , 7 2 0 , 1 ( ) 3 7 1 , 1 7 1 , 1 1 ( ) 7 6 1 , 7 2 0 , 1 ( ) 3 7 1 , 1 7 1 , 1 1 ( 6 2 3 , 5 9 6 , 1 6 7 7 4 , 5 6 7 , 1 9 4 8 , 9 2 9 , 9 5 5 2 7 , 7 2 2 , 6 2 ) 2 6 1 , 7 1 9 , 1 ( 5 1 9 , 3 1 1 1 6 4 , 2 8 0 , 1 0 1 9 , 2 2 4 , 4 3 - - - - - - - - - - ) 5 0 4 , 6 1 7 , 3 ( 5 0 4 , 6 1 7 , 3 - - - - - - - - - - 5 2 & ) d ( 5 1 ) a ( 3 2 1 2 ) a ( ) i ( 0 3 & ) b ( 3 2 ) b ( 4 2 l a s o p s i d r o f e g n a h c x e n i d t L p u o r G c i t a m i g i D f o n o i t i s i u q c A y t i l i b a i l o t s r e d l o h t i n u g n i l l o r t n o c - n o n f o n o i t a c i f i s s a l c e R f o n o i t a r e d i s n o c h t i w y r a i d i s b u s a f o l a s o p s i D s e r a h s y r u s a e r t n i e g n a h c a t u o h t i w t s e r e t n i g n i l l o r t n o c - n o n f o n o i t i s i u q c A C I V 8 n i t s e r e t n i % 3 . 5 2 f o l o r t n o c y t i u q e n i y l t c e r i d d e s i n g o c e r , s r e n w o h t i w s n o i t c a s n a r t l a t o T s e r a h s y r a n i d r o n o s d n e d i v i D s e i r a i d i s b u s f o n o i t a r o p r o c n I r a e y e h t r o f ) e m o c n i ( / e s n e p x e e v i s n e h e r p m o c r e h t O r a e y e h t r o f e s n e p x e e v i s n e h e r p m o c l a t o T r a e y l a i c n a n i f f o g n i n n i g e B r a e y e h t r o f s s o L 8 1 0 2 4 9 6 , 8 9 9 , 7 4 8 5 1 , 2 7 3 , 3 6 3 5 , 6 2 6 , 4 4 6 6 1 , 3 7 0 , 1 2 4 2 4 , 2 3 1 ) 2 5 2 , 3 1 9 ( ) 2 1 7 , 8 8 0 , 0 1 ( 0 1 9 , 2 2 4 , 4 3 r a e y l a i c n a n i f f o d n E Y T I U Q E N I S E G N A H C F O T N E M E T A T S D E T A D I L O S N O 8 1 0 2 h c r a M 1 3 d e d n e r a e y l a i c n a n i f e h t r o F 8 1 0 2 - E C O S S E I R A I D I S B U S S T I D N A D E T I M I L S G N I D L O H 3 1 . s t n e m e t a t s l a i c n a n i f e s e h t f o t r a p l a r g e t n i n a m r o f s e t o n g n i y n a p m o c c a e h T 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES STATEMENT OF FINANCIAL POSITION - COMPANY Non-current assets Investments in subsidiaries Financial assets, at FVOCI/ available-for-sale As at 31 March 2018 SOFP-Co ASSETS Current assets Cash and cash equivalents Trade and other receivables Financial assets, at FVPL Current income tax asset Other receivables Total assets LIABILITIES Current liabilities Trade and other payables Borrowings Unearned income Total liabilities NET ASSETS EQUITY of the Company Share capital Other reserves Retained profits Total equity Capital and reserves attributable to equity holders Note 31 March 2018 S$ 2017 S$ 10 11 12 8 15 17 11 18 10 20 23 24 5,369,817 17,227,838 37,000 3,959 2,809,430 27,839,749 - 30,650 22,638,614 30,679,829 28,288,147 13,984,921 733,603 29,021,750 51,660,364 428,267 - 14,413,188 45,093,017 4,494,147 4,209,809 274,704 8,978,660 8,978,660 4,126,264 - - 4,126,264 4,126,264 42,681,704 40,966,753 34,422,910 (2,062,917) 10,321,711 42,681,704 34,422,910 76,042 6,467,801 40,966,753 The accompanying notes form an integral part of these financial statements. 12 l a t o T y t i u q e $ S - n o N g n i l l o r t n o c s t s e r e t n i $ S y t i u q e o t l e b a t u b i r t t A y n a p m o C e h t f o s r e d o h l y c n e r r u C l a t o T $ S i d e n a t e R s t i f o r p $ S l a t i p a C e v r e s e r $ S n o i t a l s n a r t e u a v l r i a F y r u s a e r T e v r e s e r e v r e s e r s e r a h s $ S $ S $ S e r a h S l a t i p a c $ S e t o N Y T I U Q E N I S E G N A H C F O T N E M E T A T S D E T A D I L O S N O C 8 1 0 2 h c r a M 1 3 d e d n e r a e y l a i c n a n i f e h t r o F I S E I R A D I S B U S S T I D N A D E T I M I I L S G N D L O H I 8 8 1 0 2 - E C O S Financial 3 1 6 2 3 , 5 9 6 , 1 6 7 7 4 , 5 6 7 , 1 9 4 8 , 9 2 9 , 9 5 5 2 7 , 7 2 2 , 6 2 ) 2 6 1 , 7 1 9 , 1 ( 5 1 9 , 3 1 1 1 6 4 , 2 8 0 , 1 7 4 0 , 1 5 1 7 4 0 , 1 5 1 - ) 4 1 1 , 7 1 6 ( ) 4 1 1 , 7 1 6 ( - ) 0 0 8 , 6 2 5 , 4 ( ) 5 9 3 , 0 1 8 ( ) 5 0 4 , 6 1 7 , 3 ( 8 4 5 , 4 7 2 , 9 5 0 9 , 4 2 4 , 3 3 4 6 , 9 4 8 , 5 ) 7 5 1 , 3 3 2 ( ) 5 0 5 , 9 4 1 ( ) 2 5 6 , 3 8 ( - - - - - ) 1 2 6 , 1 8 1 , 2 1 ( 9 1 7 , 6 1 ) 0 4 3 , 8 9 1 , 2 1 ( - ) 8 8 5 , 8 3 4 , 4 ( ) 6 7 9 , 8 8 1 ( ) 2 1 6 , 9 4 2 , 4 ( ) 2 1 6 , 9 4 2 , 4 ( ) 9 0 2 , 0 2 6 , 6 1 ( ) 7 5 2 , 2 7 1 ( ) 2 5 9 , 7 4 4 , 6 1 ( ) 2 1 6 , 9 4 2 , 4 ( ) 7 4 9 , 4 2 1 , 1 ( ) 0 0 0 , 0 2 2 ( ) 7 4 9 , 4 0 9 ( ) 7 4 9 , 4 0 9 ( - - - - - - - 3 4 6 , 9 4 8 , 5 ) 7 5 0 , 0 0 8 , 3 ( 7 7 5 , 3 2 9 , 2 8 3 9 , 8 7 7 , 1 9 3 6 , 4 4 1 , 1 ) 7 4 9 , 4 0 9 ( 6 8 5 , 9 4 0 , 2 - - - - - - - - - - - - - - - - ) 7 6 1 , 7 2 0 , 1 ( ) 3 7 1 , 1 7 1 , 1 1 ( ) 7 6 1 , 7 2 0 , 1 ( ) 3 7 1 , 1 7 1 , 1 1 ( 4 9 6 , 8 9 9 , 7 4 8 5 1 , 2 7 3 , 3 6 3 5 , 6 2 6 , 4 4 6 6 1 , 3 7 0 , 1 2 4 2 4 , 2 3 1 ) 2 5 2 , 3 1 9 ( ) 2 1 7 , 8 8 0 , 0 1 ( - - - - - - - - ) 5 0 4 , 6 1 7 , 3 ( - - 5 0 4 , 6 1 7 , 3 - - - - - - - - - - 0 1 9 , 2 2 4 , 4 3 5 2 & ) d ( 5 1 ) a ( 3 2 1 2 ) a ( ) i ( 0 3 & ) b ( 3 2 ) b ( 4 2 r a e y e h t r o f ) e m o c n i ( / e s n e p x e e v i s n e h e r p m o c r e h t O r a e y e h t r o f e s n e p x e e v i s n e h e r p m o c l a t o T r a e y l a i c n a n i f f o i g n n n i g e B r a e y e h t r o f s s o L 8 1 0 2 s e r a h s y r a n i d r o n o s d n e d i v i D s e i r a d i i s b u s f o n o i t a r o p r o c n I f o n o i t a r e d i s n o c h t i w y r a d i s e r a h s y r u s a e r t i s b u s a f o l a s o p s i D y t i l i b a i l o t s r e d l o h t i n u g n i l l o r t n o c - n o n f o n o i t a c i f i s s a l c e R l a s o p s i d r o f e g n a h c x e n i d t L p u o r G c i t a m g D i i f o n o i t i s i u q c A n i e g n a h c a t u o h t i w t s e r e t n i g n i l l o r t n o c - n o n f o n o i t i s i u q c A I C V 8 n i t s e r e t n i % 3 . 5 2 f o l o r t n o c y t i u q e n i y l t c e r i d d e s i n g o c e r , s r e n w o h t i w s n o i t c a s n a r t l a t o T 0 1 9 , 2 2 4 , 4 3 r a e y l a i c n a n i f f o d n E . s t n e m e t a t s l a i c n a n i f e s e h t f o t r a p l a r g e t n i n a m r o f s e t o n g n i y n a p m o c c a e h T Annual Report FY2018For personal use only T h e a c c o m p a n y i n g n o t e s f o r m a n i n t e g r a l p a r t o f t h e s e f i n a n c i a l s t a t e m e n t s . 1 4 Financial 2 0 1 7 P r o f i t f o r t h e y e a r B e g i n n n g i o f f i n a n c i a l y e a r E n d o f f i n a n c i a l y e a r S h a r e s b u y - b a c k A c q u i s i t i o n o f a s u b s i i d a r y D i v i d e n d s o n o r d i n a r y s h a r e s p a r t i c i p a t i n g s h a r e s T o t a l t r a n s a c t i o n s w i t h o w n e r s , r e c o g n i s e d d i r e c t l y i n e q u i t y A c q u i s i t i o n o f a s u b s i i d a r y b y w a y o f s h a r e s w a p A c q u i s i t i o n o f n o n - c o n t r o l l i n g i n t e r e s t w i t h o u t a c h a n g e i n c o n t r o l I n v e s t m e n t f r o m n o n - c o n t r o l l i n g i n t e r e s t o n s u b s i i d a r y ’ s i s s u a n c e o f 3 0 3 0 2 5 2 3 T o t a l c o m p r e h e n s i v e i n c o m e f o r t h e y e a r O t h e r c o m p r e h e n s i v e ( e x p e n s e ) / i n c o m e f o r t h e y e a r 2 4 ( b ) , 3 4 4 2 2 9 1 0 , , 3 6 8 5 9 4 4 , - , 1 9 3 2 6 5 1 , , 2 0 4 0 0 0 0 , ( 2 8 6 7 0 7 ) , - - - - - , 3 0 7 3 6 9 6 6 , , 1 0 8 2 4 6 1 , - - - - - - - , ( 2 7 1 9 7 0 4 ) , , ( 2 7 1 9 7 0 4 ) , , 3 8 0 2 1 6 5 , - , 1 1 3 9 1 5 - - - - - - - , 1 2 3 0 0 9 , 1 2 3 0 0 9 , ( 9 0 9 4 ) - , ( 1 9 1 7 1 6 2 ) , , ( 1 9 1 7 1 6 2 ) , - , ( 1 9 1 7 1 6 2 ) , - - - - - - - - , 2 6 2 2 7 7 2 5 , , ( 1 7 9 6 5 7 8 ) , - - - - , ( 1 7 9 6 5 7 8 ) , , 5 9 9 2 9 8 4 9 , , ( 2 7 7 9 6 ) - , 1 5 4 8 9 , 2 0 4 0 0 0 0 , , ( 1 7 9 6 5 7 8 ) , - , 1 7 6 5 4 7 7 , , 6 1 6 9 5 3 2 6 , , 3 8 2 7 7 7 , 6 1 7 1 1 4 , 3 5 4 9 8 1 , 6 1 7 1 1 4 , ( 1 5 4 8 9 ) , ( 1 3 9 7 2 ) , 1 3 8 1 2 4 ( 3 4 3 0 0 0 ) , , 2 0 2 6 0 2 8 , , ( 2 1 3 9 5 7 8 ) , , 1 3 8 1 2 4 - , 1 1 2 4 5 0 2 3 , , 8 6 4 8 3 2 8 , , 1 1 2 4 5 0 2 3 , - , 1 6 7 7 9 2 8 0 , , 1 1 2 4 5 0 2 3 , , 5 1 3 0 9 3 1 7 , , ( 2 5 9 6 6 9 5 ) , , 2 6 9 1 8 4 , 2 4 8 3 3 4 , 2 0 8 5 0 , 1 1 1 3 5 1 6 , , 8 9 1 7 5 1 2 , , 1 1 4 9 3 3 5 7 , , 5 2 4 2 2 8 3 3 , , ( 2 5 7 5 8 4 5 ) , - ( 2 8 6 7 0 7 ) , - ( 2 8 6 7 0 7 ) , 8 I H O L D N G S L I I M I T E D A N D I T S S U B S I D A R I E S I S O C E - 2 0 1 7 F o r t h e f i n a n c i a l y e a r e n d e d 3 1 M a r c h 2 0 1 8 C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y N o t e S $ c a p i t a l S h a r e S $ S $ r e s e r v e r e s e r v e F a i r v a l u e t r a n s l a t i o n S $ r e s e r v e C a p i t a l S $ p r o f i t s R e t a i n e d S $ T o t a l C u r r e n c y h o l d e r s o f t h e C o m p a n y A t t r i b u t a b l e t o e q u i t y S $ i n t e r e s t s c o n t r o l l i n g N o n - S $ e q u i t y T o t a l 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS For the financial year ended 31 March 2018 SOCF Cash flows from operating activities (Loss)/profit for the year Adjustments for: - Income tax expense - Gain on disposal of an associated company - Gain on disposal of a subsidiary - Gain on initial recognition at its fair value from former associated - Net fair value loss/(gain) of investment securities held at fair value company to AFS through profit or loss - Net gain on disposal of investment securities held at fair value through - Share of loss/(profit) of associated companies - Share of loss attributable to the unit holders of redeemable participating profit or loss - Gain from bargain purchase - Interest income - Dividend income - Depreciation of plant and equipment - Loss on disposal of plant and equipment - Plant and equipment written off - Bad debts written off - Credit loss allowance - Finance costs shares - Exchange differences Change in working capital, net of effects from acquisition and disposal of subsidiaries: - Trade and other receivables - Financial assets through profit or loss - Inventories - Trade and other payables - Unearned revenue Cash used in operations Interest received Dividend received Finance costs paid Income tax paid Net cash used in operating activities Note 2018 S$ 2017 S$ (4,438,588) 11,493,357 9,929 4, 15(d) (971,860) 221,157 (1,199,836) (10,370,350) (1,160,825) 1,353,244 (1,609,600) 5, 30 17 8 4 4 4 5 4 6 6 6 21 8(b) - - - - - (120,925) (425,042) (467,146) (684,461) 622,164 169,685 83,324 79,789 (395,985) (926,271) (575,948) (572,260) (113,077) (671,280) 272,893 467,146 684,461 (83,324) (307,398) (7,010,930) (907,788) (260,892) (481,121) 335,458 2,618 6,910 338,205 41,710 (566,675) 126,078 - - - - 214,607 (3,666,169) 921,694 (798,354) 33,309 481,121 (41,710) (1,477,882) (8,324,978) (6,112,143) (3,991,594) (7,771,815) (7,319,816) The accompanying notes form an integral part of these financial statements. 15 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only T h e a c c o m p a n y i n g n o t e s f o r m a n i n t e g r a l p a r t o f t h e s e f i n a n c i a l s t a t e m e n t s . 1 4 H O L D I N G S L I M I T E D A N D I T S S U B S I D I A R I E S S O C E - 2 0 1 7 F o r t h e f i n a n c i a l y e a r e n d e d 3 1 M a r c h 2 0 1 8 O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y E n d o f f i n a n c i a l y e a r 3 4 , 4 2 2 , 9 1 0 1 , 0 8 2 , 4 6 1 1 1 3 , 9 1 5 ( 1 , 9 1 7 , 1 6 2 ) 2 6 , 2 2 7 , 7 2 5 5 9 , 9 2 9 , 8 4 9 1 , 7 6 5 , 4 7 7 6 1 , 6 9 5 , 3 2 6 T o t a l t r a n s a c t i o n s w i t h o w n e r s , r e c o g n i s e d d i r e c t l y i n e q u i t y ( 1 , 9 1 7 , 1 6 2 ) ( 1 , 7 9 6 , 5 7 8 ) ( 2 7 , 7 9 6 ) p a r t i c i p a t i n g s h a r e s i i i S h a r e s b u y - b a c k A c q u i s t i o n o f s u b s d i a r y D i v i d e n d s o n o r d i n a r y s h a r e s a a i i A c q u i s t i o n o f s u b s d i a r y b y w a y o f s h a r e s w a p A c q u i s t i o n o f n o n - c o n t r o l l i n g i n t e r e s t w i t h o u t a c h a n g e i n c o n t r o l I n v e s t m e n t f r o m n o n - c o n t r o l l i n g i n t e r e s t o n s u b s i d i a r y ’ s i s s u a n c e o f 3 0 3 0 2 5 2 3 3 , 6 8 5 , 9 4 4 1 , 9 3 2 , 6 5 1 2 , 0 4 0 , 0 0 0 - - - ( 2 8 6 , 7 0 7 ) - - - - - - - - - - - - - - ( 1 , 9 1 7 , 1 6 2 ) ( 1 , 7 9 6 , 5 7 8 ) ( 1 , 7 9 6 , 5 7 8 ) ( 3 4 3 , 0 0 0 ) ( 2 , 1 3 9 , 5 7 8 ) ( 2 8 6 , 7 0 7 ) - ( 2 8 6 , 7 0 7 ) 2 , 0 4 0 , 0 0 0 1 5 , 4 8 9 - - 3 8 2 , 7 7 7 6 1 7 , 1 1 4 3 5 4 , 9 8 1 6 1 7 , 1 1 4 ( 1 5 , 4 8 9 ) ( 1 3 , 9 7 2 ) 1 3 8 , 1 2 4 2 , 0 2 6 , 0 2 8 1 3 8 , 1 2 4 - 2 0 1 7 P r o f i t f o r t h e y e a r B e g i n n i n g o f f i n a n c i a l y e a r T o t a l c o m p r e h e n s i v e i n c o m e f o r t h e y e a r O t h e r c o m p r e h e n s i v e ( e x p e n s e ) / i n c o m e f o r t h e y e a r 2 4 ( b ) 3 0 , 7 3 6 , 9 6 6 3 , 8 0 2 , 1 6 5 ( 9 , 0 9 4 ) 1 6 , 7 7 9 , 2 8 0 5 1 , 3 0 9 , 3 1 7 1 , 1 1 3 , 5 1 6 - - - ( 2 , 7 1 9 , 7 0 4 ) ( 2 , 7 1 9 , 7 0 4 ) - 1 2 3 , 0 0 9 1 2 3 , 0 0 9 - 1 1 , 2 4 5 , 0 2 3 8 , 6 4 8 , 3 2 8 1 1 , 2 4 5 , 0 2 3 1 1 , 2 4 5 , 0 2 3 ( 2 , 5 9 6 , 6 9 5 ) 2 6 9 , 1 8 4 2 4 8 , 3 3 4 2 0 , 8 5 0 8 , 9 1 7 , 5 1 2 1 1 , 4 9 3 , 3 5 7 5 2 , 4 2 2 , 8 3 3 ( 2 , 5 7 5 , 8 4 5 ) - - - - - - - - - - - - - - - C u r r e n c y h o l d e r s o f t h e C o m p a n y A t t r i b u t a b l e t o e q u i t y N o t e S $ c a p i t a l S h a r e S $ S $ r e s e r v e r e s e r v e F a i r v a l u e t r a n s l a t i o n S $ r e s e r v e C a p i t a l S $ p r o f i t s R e t a i n e d S $ T o t a l S $ i n t e r e s t s c o n t r o l l i n g N o n - S $ e q u i t y T o t a l C 8 I 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 54 CONSOLIDATED STATEMENT OF CASH FLOWS For the financial year ended 31 March 2018 SOCF Cash flows from operating activities (Loss)/profit for the year Adjustments for: - Income tax expense - Gain on disposal of an associated company - Gain on disposal of a subsidiary - Gain on initial recognition at its fair value from former associated company to AFS - Net fair value loss/(gain) of investment securities held at fair value through profit or loss - Net gain on disposal of investment securities held at fair value through profit or loss - Gain from bargain purchase - Interest income - Dividend income - Depreciation of plant and equipment - Loss on disposal of plant and equipment - Plant and equipment written off - Bad debts written off - Credit loss allowance - Finance costs - Share of loss/(profit) of associated companies - Share of loss attributable to the unit holders of redeemable participating shares - Exchange differences Change in working capital, net of effects from acquisition and disposal of subsidiaries: - Trade and other receivables - Financial assets through profit or loss - Inventories - Trade and other payables - Unearned revenue Cash used in operations Interest received Dividend received Finance costs paid Income tax paid Net cash used in operating activities Note 2018 S$ 2017 S$ (4,438,588) 11,493,357 8 4 4, 15(d) 9,929 - (971,860) 221,157 (1,199,836) (10,370,350) 17 4 4 5, 30 5 4 6 6 6 21 8(b) - (1,160,825) 1,353,244 (1,609,600) (120,925) (425,042) (467,146) (684,461) 622,164 - - - 169,685 83,324 79,789 (907,788) - (260,892) (481,121) 335,458 2,618 6,910 338,205 - 41,710 (566,675) (395,985) (926,271) (6,112,143) - 126,078 (3,991,594) (575,948) (572,260) (113,077) (671,280) 272,893 (7,771,815) 467,146 684,461 (83,324) (307,398) (7,010,930) 214,607 (3,666,169) - 921,694 (798,354) (7,319,816) 33,309 481,121 (41,710) (1,477,882) (8,324,978) The accompanying notes form an integral part of these financial statements. 15 Annual Report FY2018For personal use only 55 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS For the financial year ended 31 March 2018 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS For the financial year ended 31 March 2018 Note 2018 S$ 2017 S$ Significant non-cash transactions: Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired Acquisition of subsidiaries by share swap, net of cash acquired Acquisition of non-controlling interest without a change in control Acquisition of an associated company Contribution from non-controlling interest for incorporation of a new subsidiary Additional investment in an associated company Proceeds from disposal of plant and equipment Proceeds from sale of subsidiary, net of cash disposed Proceeds from sale of shares in an associated company Loan to a non-related party Additions to plant and equipment Additions to financial assets through other comprehensive income Addition to pledged deposits Net cash provided by investing activities Cash flows from financing activities Dividend paid to equity holders of the Company Dividend paid to non-controlling interest Shares buy-back Repayment of finance lease liabilities Proceeds received from fund’s non-controlling unit holders Net cash provided by/(used in) financing activities 30 16 21,379 10,459,440 (233,157) - 369,554 - - (1,287,440) 151,047 - - (1,043,276) - (735,000) (613,282) (88,964) (5,000,000) 2,918,187 - (42,000) 3,227 10,574,549 3,085,028 (7,169,000) (545,038) (353,370) - 4,635,510 (904,947) (220,000) - (41,245) 6,814,793 5,648,601 (1,796,578) (343,000) (286,707) (59,341) - (2,485,626) 15(d), 15(e) 15(f) 13 17 10 25 23 21 Net increase/(decrease) in cash and cash equivalents 1,555,858 (6,175,094) Cash and cash equivalents Beginning of financial year End of financial year 12,562,376 18,737,470 14,118,234 12,562,376 a) Consideration paid on acquisition of subsidiary, Digimatic Group Limited, on 28 November 2017 by way of share swap, with partial disposal of 25.3% equity interest in subsidiary 8VIC Global Pte. Limited of S$5,849,643, no actual cash paid for this transaction (Note 30). shares (Note 23 (b)). b) Consideration paid on acquisition of 2% non-controlling interest of Digimatic Group Limited by reissuance of treasury c) Consideration paid on acquisition of subsidiary, 8VIC Singapore Pte Ltd (formerly known as Financial Joy Institute Pte. Ltd. (“FJI”)) on 29 June 2016 is by way of share swap for value of S$2,040,000, no actual cash paid for this transaction. d) Consideration paid on acquisition of remaining non-controlling interest of FJI on 31 March 2017 is by way of share swap for value of S$4,632,651, no actual cash paid for this transaction. Reconciliation of liabilities arising from financing activities: Principal and Non-cash changes Foreign exchange 1 April 2017 interest payments Interest expense movement 31 March 2018 S$ S$ S$ S$ S$ Bank borrowings - 4,287,023 (77,214) - 4,209,809 The bank borrowings have been fully repaid subsequent to the financial year. The accompanying notes form an integral part of these financial statements. The accompanying notes form an integral part of these financial statements. 16 17 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS For the financial year ended 31 March 2018 CONSOLIDATED STATEMENT OF CASH FLOWS For the financial year ended 31 March 2018 Note 2018 S$ 2017 S$ Significant non-cash transactions: Financial 56 Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired Acquisition of subsidiaries by share swap, net of cash acquired Acquisition of non-controlling interest without a change in control Acquisition of an associated company Contribution from non-controlling interest for incorporation of a new subsidiary Additional investment in an associated company Proceeds from disposal of plant and equipment Proceeds from sale of subsidiary, net of cash disposed Proceeds from sale of shares in an associated company Loan to a non-related party Additions to plant and equipment Additions to financial assets through other comprehensive income Addition to pledged deposits Net cash provided by investing activities Cash flows from financing activities Dividend paid to equity holders of the Company Dividend paid to non-controlling interest Shares buy-back Repayment of finance lease liabilities Proceeds received from fund’s non-controlling unit holders Net cash provided by/(used in) financing activities Cash and cash equivalents Beginning of financial year End of financial year - - - - 21,379 10,459,440 (233,157) 151,047 (1,043,276) (735,000) (613,282) (88,964) (5,000,000) 2,918,187 15(d), 15(e) 15(f) 30 16 13 17 10 25 23 21 369,554 (1,287,440) (42,000) 3,227 10,574,549 3,085,028 (7,169,000) (545,038) (353,370) 4,635,510 - - - - - (904,947) (220,000) - (41,245) 6,814,793 5,648,601 (1,796,578) (343,000) (286,707) (59,341) (2,485,626) 12,562,376 18,737,470 14,118,234 12,562,376 Net increase/(decrease) in cash and cash equivalents 1,555,858 (6,175,094) a) Consideration paid on acquisition of subsidiary, Digimatic Group Limited, on 28 November 2017 by way of share swap, with partial disposal of 25.3% equity interest in subsidiary 8VIC Global Pte. Limited of S$5,849,643, no actual cash paid for this transaction (Note 30). b) Consideration paid on acquisition of 2% non-controlling interest of Digimatic Group Limited by reissuance of treasury shares (Note 23 (b)). c) Consideration paid on acquisition of subsidiary, 8VIC Singapore Pte Ltd (formerly known as Financial Joy Institute Pte. Ltd. (“FJI”)) on 29 June 2016 is by way of share swap for value of S$2,040,000, no actual cash paid for this transaction. d) Consideration paid on acquisition of remaining non-controlling interest of FJI on 31 March 2017 is by way of share swap for value of S$4,632,651, no actual cash paid for this transaction. Reconciliation of liabilities arising from financing activities: 1 April 2017 S$ Principal and interest payments S$ Interest expense S$ Foreign exchange movement S$ 31 March 2018 S$ Non-cash changes Bank borrowings - 4,287,023 (77,214) - 4,209,809 The bank borrowings have been fully repaid subsequent to the financial year. The accompanying notes form an integral part of these financial statements. The accompanying notes form an integral part of these financial statements. 16 17 Annual Report FY2018For personal use only 57 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 These notes form an integral part of and should be read in conjunction with the acc ompanying financial statements. 2. Significant accounting policies (continued) 1. General information 8I HOLDINGS LIMITED (the “Company”) is listed on the Australia Securities Exchange and incorporated and domiciled in Singapore. The address of its registered office is Goldbell Towers, 47 Scotts Road, #03-03/04, Singapore 228233. The principal activities of the Company are investment holding and management consultancy services. The principal activities of its subsidiaries are the seminars and programs organiser as well as investment in public and private companies. 2. Significant accounting policies 2.1 Basis of preparation These financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”) under the historical cost convention, except as disclosed in the accounting policies below. The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. Interpretations and amendments to published standards effective in 2018 On 1 April 2017, the Group adopted the new or amended FRS and Interpretations of FRS (“INT FRS”) that are mandatory for application for the financial year. Changes to the Group’s accounting policies have been made as required, in accordance with the transitional provisions in the respective FRS and INT FRS. The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the accounting policies of the Group and the Company and had no material effect on the amounts reported for the current or prior financial years except for the following: 2.2 Revenue recognition FRS 7 Statement of cash flows The amendments to FRS 7 Statement of cash flows (Disclosure initiative) sets out required disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. The Group has included the additional required disclosures in Consolidated Statement of Cash Flows to the Financial Statements. 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2.1 Basis of preparation (continued) FRS 109 Financial instruments The Group has elected to early adopt FRS 109 Financial instruments. The accounting policy is disclosed in Note 2.9. Accordingly, the requirements of FRS 39 Financial Instruments: Recognition and Measurement are applied to financial instruments up to the financial year ended 31 March 2017. (i) Classification and measurement For financial assets held by the Group on 1 April 2017, management has assessed the business models that are applicable on that date to these assets so as to classify them into the appropriate categories under FRS 109 Financial instruments. Material reclassifications/adjustments resulting from management’s assessment are disclosed below. • Equity investments reclassified from available-for-sale to Fair value through other comprehensive income (“FVOCI”) The Group has elected to recognise changes in the fair value of all its equity investments not held for trading and previously classified as available-for-sale in other comprehensive income. As a result, assets with a fair value of S$13,025,188 were reclassified from “financial assets, available- for-sale” to “financial assets, at FVOCI” on 1 April 2017. (ii) Impairment of financial assets The following financial assets are subject to the expected credit loss model under FRS 109: trade receivables; - - loans to non-related parties and other receivables at amortised cost. The impairment methodology for each of these classes of financial assets under the FRS 109 is as disclosed in Note 2.9 and Note 27(b). Sales comprise the fair value of the consideration received or receivable for the rendering of services in the ordinary course of the Group’s activities. Sales are presented, net of value-added tax, rebates and discounts, and after eliminating sales within the Group. The Group assesses its role as an agent or principal for each transaction and in an agency arrangement the amounts collected on behalf of the principal are excluded from revenue. The Group recognises revenue when the amount of revenue and related cost can be reliably measured, it is probable that the collectability of the related receivables is reasonably assured and when the specific criteria for each of the Group’s activities are met as follows: 18 19 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 These notes form an integral part of and should be read in conjunction with the acc ompanying financial statements. 2. Significant accounting policies (continued) 8I HOLDINGS LIMITED (the “Company”) is listed on the Australia Securities Exchange and incorporated and domiciled in Singapore. The address of its registered office is Goldbell Towers, 47 Scotts Road, #03-03/04, 2.1 Basis of preparation (continued) FRS 109 Financial instruments The Group has elected to early adopt FRS 109 Financial instruments. The accounting policy is disclosed in Note 2.9. Accordingly, the requirements of FRS 39 Financial Instruments: Recognition and Measurement are applied to financial instruments up to the financial year ended 31 March 2017. The principal activities of the Company are investment holding and management consultancy services. The principal activities of its subsidiaries are the seminars and programs organiser as well as investment in public and (i) Classification and measurement Financial 58 For financial assets held by the Group on 1 April 2017, management has assessed the business models that are applicable on that date to these assets so as to classify them into the appropriate categories from under FRS 109 Financial management’s assessment are disclosed below. instruments. Material reclassifications/adjustments resulting • Equity investments reclassified from available-for-sale to Fair value through other comprehensive income (“FVOCI”) The Group has elected to recognise changes in the fair value of all its equity investments not held for trading and previously classified as available-for-sale in other comprehensive income. As a result, assets with a fair value of S$13,025,188 were reclassified from “financial assets, available- for-sale” to “financial assets, at FVOCI” on 1 April 2017. (ii) Impairment of financial assets The following financial assets are subject to the expected credit loss model under FRS 109: trade receivables; loans to non-related parties and other receivables at amortised cost. - - The impairment methodology for each of these classes of financial assets under the FRS 109 is as disclosed in Note 2.9 and Note 27(b). 2.2 Revenue recognition Sales comprise the fair value of the consideration received or receivable for the rendering of services in the ordinary course of the Group’s activities. Sales are presented, net of value-added tax, rebates and discounts, and after eliminating sales within the Group. The Group assesses its role as an agent or principal for each transaction and in an agency arrangement the amounts collected on behalf of the principal are excluded from revenue. The Group recognises revenue when the amount of revenue and related cost can be reliably measured, it is probable that the collectability of the related receivables is reasonably assured and when the specific criteria for each of the Group’s activities are met as follows: 18 19 1. General information Singapore 228233. private companies. 2. Significant accounting policies 2.1 Basis of preparation These financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”) under the historical cost convention, except as disclosed in the accounting policies below. The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. Interpretations and amendments to published standards effective in 2018 On 1 April 2017, the Group adopted the new or amended FRS and Interpretations of FRS (“INT FRS”) that are mandatory for application for the financial year. Changes to the Group’s accounting policies have been made as required, in accordance with the transitional provisions in the respective FRS and INT FRS. The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the accounting policies of the Group and the Company and had no material effect on the amounts reported for the current or prior financial years except for the following: FRS 7 Statement of cash flows The amendments to FRS 7 Statement of cash flows (Disclosure initiative) sets out required disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. The Group has included the additional required disclosures in Consolidated Statement of Cash Flows to the Financial Statements. Annual Report FY2018For personal use only 59 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2. Significant accounting policies (continued) 2.2 Revenue recognition (continued) (a) Rendering of services Revenue is recognised when the services are rendered. This included program sales, events site rental income, digital production and advertising income. Commission and referral income is recognised when the related services are provided. (b) Sale of goods Revenue from these sales is recognised when the Group has delivered the goods to locations specified by its customers and the customers have accepted the goods in accordance with the sales contract and the collectability of the related receivables is reasonably assured. (c) Interest income Interest income, including income arising from finance leases and other financial instruments, is recognised using the effective interest method. (d) Dividend income Dividend income is recognised when the right to receive payment is established. (e) Rental income Rental income from operating leases (net of any incentives given to the lessees) is recognised on a straight-line basis over the lease term. having a deficit balance. (ii) Acquisitions 2.3 Government grants Grants from the government are recognised as a receivable at their fair value when there is reasonable assurance that the grant will be received and the Group will comply with all the attached conditions. Government grants receivable are recognised as income over the periods neces sary to match them with the related costs which they are intended to compensate, on a systematic basis. Government grants relating to expenses are shown separately as other income. Government grants relating to assets are deducted against the carrying amount of the assets. Acquisition-related costs are expensed as incurred. 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2.4 Group accounting (a) Subsidiaries (i) Consolidation Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date on that control ceases. In preparing the consolidated financial statements, inter-companies transactions and balances and unrealised gains on transactions between group entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment indicator of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests comprise the portion of a subsidiary’s net results of operations and its net assets, which is attributable to the interests that are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of comprehensive income, statement of changes in equity, and consolidated statement of financial position. Total comprehensive income is attributed to the non-controlling interests based on their respective interests i n a subsidiary, even if this results in the non-controlling interests The acquisition method of accounting is used to account for business combinations entered into by the Group. The consideration transferred for the acquisition of a subsidiary or business comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes any contingent consideration arrangement and any pre-existing equity interest in the subsidiary measured at their fair values at the acquisition date. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at the date of acquisition either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. 20 21 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2. Significant accounting policies (continued) Financial 60 2.2 Revenue recognition (continued) (a) Rendering of services the related services are provided. (b) Sale of goods Revenue is recognised when the services are rendered. This included program sales, events site rental income, digital production and advertising income. Commission and referral income is recognised when Revenue from these sales is recognised when the Group has delivered the goods to locations specified by its customers and the customers have accepted the goods in accordance with the sales contract and the collectability of the related receivables is reasonably assured. Interest income, including income arising from finance leases and other financial instruments, is recognised using the effective interest method. Dividend income is recognised when the right to receive payment is established. (c) Interest income (d) Dividend income (e) Rental income 2.3 Government grants Grants from the government are recognised as a receivable at their fair value when there is reasonable assurance that the grant will be received and the Group will comply with all the attached conditions. Government grants receivable are recognised as income over the periods neces sary to match them with the related costs which they are intended to compensate, on a systematic basis. Government grants relating to expenses are shown separately as other income. 2.4 Group accounting (a) Subsidiaries (i) Consolidation Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date on that control ceases. In preparing the consolidated financial statements, inter-companies transactions and balances and unrealised gains on transactions between group entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment indicator of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests comprise the portion of a subsidiary’s net results of operations and its net assets, which is attributable to the interests that are not owned directly or indirectly by the equity holders of the Company. They are shown separately in the consolidated statement of comprehensive income, statement of changes in equity, and consolidated statement of financial position. Total comprehensive income is attributed to the non-controlling interests based on their respective interests i n a subsidiary, even if this results in the non-controlling interests having a deficit balance. Rental income from operating leases (net of any incentives given to the lessees) is recognised on a straight-line basis over the lease term. (ii) Acquisitions Government grants relating to assets are deducted against the carrying amount of the assets. Acquisition-related costs are expensed as incurred. The acquisition method of accounting is used to account for business combinations entered into by the Group. The consideration transferred for the acquisition of a subsidiary or business comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes any contingent consideration arrangement and any pre-existing equity interest in the subsidiary measured at their fair values at the acquisition date. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at the date of acquisition either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. 20 21 Annual Report FY2018For personal use only 61 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.4 Group accounting (continued) (a) Subsidiaries (continued) (ii) Acquisitions (continued) 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.4 Group accounting (continued) (c) Associated companies (continued) (i) Acquisitions The excess of (a) the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the (b) fair value of the identifiable net assets acquired is recorded as goodwill. Please refer to the paragraph “Intangible assets – Goodwill on acquisitions” for the subsequent accounting policy on goodwill. (iii) Disposals When a change in the Group’s ownership interest in a subsidiary results in a loss of control over the subsidiary, the assets and liabilities of the subsidiary including any goodwill are derecognised. Amounts previously recognised in other comprehensive income in respect of that entity are also reclassified to profit or loss or transferred directly to retained earnings if required by a specific Standard. Any retained equity interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained interest at the date when control is lost and its fair value is recognised in profit or loss. Please refer to the paragraph “Investments in subsidiaries, and associated companies” for the accounting policy on investments in subsidiaries in the separate financial statemen ts of the Company. (b) Transactions with non-controlling interests Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control over the subsidiary are accounted for as transactions with equity owners of the Company. Any difference between the change in the carrying amounts of the non-controlling interest and the fair value of the consideration paid or received is recognised within equity attributable to the equity holders of the Company. (iii) Disposals (c) Associated companies Associated companies are entities over which the Group has significant i nfluence, but not control, generally accompanied by a shareholding giving rise to voting rights of 20% and above but not exceeding 50%. Investments in associated companies is accounted for in the consolidated financial statements using the equity method of accounting less impairment losses, if any. Investments in associated companies is initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Goodwill on associated companies represents the excess of the cost of acquisition of the associated company over the Group’s share of the fair value of the identifiable net assets of the associated company and is included in the carrying amount of the investments. (ii) Equity method of accounting Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise Group’s share of its associated companies’ post-acquisition profits or losses of the investee in profit or loss and its share of movements in other comprehensive income of the investee’s other comprehensive income. Dividends received or receivable from the associated companies are recognised as a reduction of the carrying amount of the investments. When the Group’s share of losses in an associated company equals to or exceeds its interest in the associated company, the Group does not recognise further losses, unless it has legal or constructive obligations to make, or has made, payments on behalf of the associated company. If the associated company subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised. Unrealised gains on transactions between the Group and its associated companies are eliminated to the extent of the Group's interest in the associated companies. Unrealised losses are also eliminated unless the transactions provide evidence of impairment of the assets transferred. The accounting policies of associated companies is changed where necessary to ensure consistency with the accounting policies adopted by the Group. Investments in associated companies is derecognised when the Group loses significant influence. If the retained equity interest in the former associated company is a financial asset, the retained equity interest is measured at fair value. The difference between the carrying amount of the retai ned interest at the date when significant influence is lost, and its fair value and any proceeds on partial disposal, is recognised in profit or loss . Please refer to the paragraph “Investments in subsidiaries and associated companies” for the accounting policy on investments in associated companies and in the separate financial statements of the Company. 22 23 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 62 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.4 Group accounting (continued) (a) Subsidiaries (continued) (ii) Acquisitions (continued) NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.4 Group accounting (continued) (c) Associated companies (continued) (i) Acquisitions The excess of (a) the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the (b) fair value of the identifiable net assets acquired is recorded as goodwill. Please refer to the paragraph “Intangible assets – Goodwill on acquisitions” for the subsequent accounting policy on goodwill. (iii) Disposals When a change in the Group’s ownership interest in a subsidiary results in a loss of control over the subsidiary, the assets and liabilities of the subsidiary including any goodwill are derecognised. Amounts previously recognised in other comprehensive income in respect of that entity are also reclassified to profit or loss or transferred directly to retained earnings if required by a specific Standard. Any retained equity interest in the entity is remeasured at fair value. The difference between the carrying amount of the retained interest at the date when control is lost and its fair value is recognised in profit or loss. Please refer to the paragraph “Investments in subsidiaries, and associated companies” for the accounting policy on investments in subsidiaries in the separate financial statemen ts of the Company. (b) Transactions with non-controlling interests Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control over the subsidiary are accounted for as transactions with equity owners of the Company. Any difference between the change in the carrying amounts of the non-controlling interest and the fair value of the consideration paid or received is recognised within equity attributable to the equity holders of the Company. (c) Associated companies Associated companies are entities over which the Group has significant i nfluence, but not control, generally accompanied by a shareholding giving rise to voting rights of 20% and above but not exceeding 50%. Investments in associated companies is accounted for in the consolidated financial statements using the equity method of accounting less impairment losses, if any. Investments in associated companies is initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Goodwill on associated companies represents the excess of the cost of acquisition of the associated company over the Group’s share of the fair value of the identifiable net assets of the associated company and is included in the carrying amount of the investments. (ii) Equity method of accounting Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise Group’s share of its associated companies’ post-acquisition profits or losses of the investee in profit or loss and its share of movements in other comprehensive income of the investee’s other comprehensive income. Dividends received or receivable from the associated companies are recognised as a reduction of the carrying amount of the investments. When the Group’s share of losses in an associated company equals to or exceeds its interest in the associated company, the Group does not recognise further losses, unless it has legal or constructive obligations to make, or has made, payments on behalf of the associated company. If the associated company subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised. Unrealised gains on transactions between the Group and its associated companies are eliminated to the extent of the Group's interest in the associated companies. Unrealised losses are also eliminated unless the transactions provide evidence of impairment of the assets transferred. The accounting policies of associated companies is changed where necessary to ensure consistency with the accounting policies adopted by the Group. (iii) Disposals Investments in associated companies is derecognised when the Group loses significant influence. If the retained equity interest in the former associated company is a financial asset, the retained equity interest is measured at fair value. The difference between the carrying amount of the retai ned interest at the date when significant influence is lost, and its fair value and any proceeds on partial disposal, is recognised in profit or loss . Please refer to the paragraph “Investments in subsidiaries and associated companies” for the accounting policy on investments in associated companies and in the separate financial statements of the Company. 22 23 Annual Report FY2018For personal use only 63 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. 2.5 Significant accounting policies (continued) 2. Significant accounting policies (continued) Plant and equipment (a) Measurement (i) Plant and equipment Plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses. (ii) Components of costs The cost of an item of plant and equipment initially recognis ed includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. 2.6 Goodwill Goodwill on acquisitions of subsidiaries and businesses, represents the excess of (i) the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over (ii) the fair value of the identifiable net ass ets acquired. Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less accumulated impairment losses. Goodwill on acquisitions of associated companies represents the excess of the cost of the acquisition over the Group’s share of the fair value of the identifiable net assets acquired. Goodwill on associated companies is included in the carrying amount of the investments. Gains and losses on the disposal of subsidiaries and associated companies include the carrying amount of goodwill relating to the entity sold. (b) Depreciation 2.7 Investments in subsidiaries and associated companies Depreciation of plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows: Investments in subsidiaries and associated companies are carried at cost less accumulated impairment losses in the Company’s statement of financial position. On disposal of such investments, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss. Office equipment Furniture and fittings Motor vehicles Useful lives 1 to 3 years 3 years 5 years 2.8 Impairment of non-financial assets (a) Goodwill The residual values, estimated useful lives and depreciation method of plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in profit or loss when the changes arise. (c) Subsequent expenditure Subsequent expenditure relating to plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in profit or loss when incurred. (d) Disposal On disposal of an item of plant and equipment, the difference between the disposal proceeds and its carrying amount is recognised in profit or loss wi thin “other gains and (losses)”. Goodwill recognised separately as an i ntangible asset is tested for impairment annually and whenever there is indication that the goodwill may be impaired. For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash- generating-units (“CGU”) expected to benefit from synergies arising from the business combination. An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds the recoverable amount of the CGU. The recoverable amount of a CGU is the higher of the CGU’s fair value less cost to sell and value-in-use. The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU. An impairment loss on goodwill is recognised as an expense and is not reversed in a subsequent period. 24 25 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 64 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 Significant accounting policies (continued) 2. 2.5 Plant and equipment (a) Measurement (i) Plant and equipment Plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses. (ii) Components of costs The cost of an item of plant and equipment initially recognis ed includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.6 Goodwill Goodwill on acquisitions of subsidiaries and businesses, represents the excess of (i) the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over (ii) the fair value of the identifiable net ass ets acquired. Goodwill on subsidiaries is recognised separately as intangible assets and carried at cost less accumulated impairment losses. Goodwill on acquisitions of associated companies represents the excess of the cost of the acquisition over the Group’s share of the fair value of the identifiable net assets acquired. Goodwill on associated companies is included in the carrying amount of the investments. Gains and losses on the disposal of subsidiaries and associated companies include the carrying amount of goodwill relating to the entity sold. (b) Depreciation 2.7 Investments in subsidiaries and associated companies Depreciation of plant and equipment is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows: Investments in subsidiaries and associated companies are carried at cost less accumulated impairment losses in the Company’s statement of financial position. On disposal of such investments, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss. Office equipment Furniture and fittings Motor vehicles Useful lives 1 to 3 years 3 years 5 years 2.8 Impairment of non-financial assets (a) Goodwill The residual values, estimated useful lives and depreciation method of plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in profit or loss when the changes arise. (c) Subsequent expenditure (d) Disposal Subsequent expenditure relating to plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repair and maintenance expenses are recognised in profit or loss when incurred. On disposal of an item of plant and equipment, the difference between the disposal proceeds and its carrying amount is recognised in profit or loss wi thin “other gains and (losses)”. Goodwill recognised separately as an i ntangible asset is tested for impairment annually and whenever there is indication that the goodwill may be impaired. For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash- generating-units (“CGU”) expected to benefit from synergies arising from the business combination. An impairment loss is recognised when the carrying amount of a CGU, including the goodwill, exceeds the recoverable amount of the CGU. The recoverable amount of a CGU is the higher of the CGU’s fair value less cost to sell and value-in-use. The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU. An impairment loss on goodwill is recognised as an expense and is not reversed in a subsequent period. 24 25 Annual Report FY2018For personal use only 65 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.8 Impairment of non-financial assets (continued) (b) Plant and equipment Investments in subsidiaries and associated companies Plant and equipment and investments in subsidiaries and associated companies are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash inflows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the CGU to which the asset belongs. If the recoverable amount of the asset (or CGU) is estimated to be l ess than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The difference between the carrying amount and recoverable amount is recognised as an impairment loss in profit or loss. An impairment loss for an asset other than goodwill 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. The carrying amount of this asset is increased to its revised recover able amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss . 2.9 Financial assets The accounting for financial assets before 1 April 2017 are as follows: (a) Classification The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity and available-for-sale. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition and in the case of assets classified as held-to-maturity, re-evaluates this designation at each balance sheet date. (b) Recognition and derecognition Financial assets, available-for-sale assets 26 27 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.9 Financial assets (continued) (a) Classification (continued) (i) Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified as held for trading if it is acquired principally for the purpose of selling in the short term. Financial assets designated as at fair value through profit or loss at inception are those that are managed and their performances are evaluated on a fair value basis, in accordance with a documented Group investment strategy. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are presented as current assets if they are either held for trading or are expected to be realised within 12 months after the balance sheet date. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are presented as non-current assets. Loans and receivables are presented as “trade and other receivables” and “cash and cash equivalents” on the balance sheet. (iii) Financial assets, held-to-maturity Financial assets, held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of financial assets, held-to-maturity, the whole category would be tainted and reclassified as available-for-sale. They are presented as non-current assets, except for those maturing within 12 months after the balance sheet date which are presented as current assets. Financial assets, available-for-sale are non-derivatives that are either designated in this category or not classified in any of the other categories. They are presented as non-current assets unless the investment matures or management intends to dispose of the assets withi n 12 months after the balance sheet date. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a financial asset, the difference between the carrying amo unt and the sale proceeds is recognised in profit or loss. Any amount previously recognised in other comprehensive income relating to that asset is reclassified to profit or loss. 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 66 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.8 Impairment of non-financial assets (continued) (b) Plant and equipment Investments in subsidiaries and associated companies NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.9 Financial assets (continued) (a) Classification (continued) (i) Financial assets at fair value through profit or loss Plant and equipment and investments in subsidiaries and associated companies are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash inflows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the CGU to which the asset belongs. If the recoverable amount of the asset (or CGU) is estimated to be l ess than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified as held for trading if it is acquired principally for the purpose of selling in the short term. Financial assets designated as at fair value through profit or loss at inception are those that are managed and their performances are evaluated on a fair value basis, in accordance with a documented Group investment strategy. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are presented as current assets if they are either held for trading or are expected to be realised within 12 months after the balance sheet date. The difference between the carrying amount and recoverable amount is recognised as an impairment loss in profit or loss. (ii) Loans and receivables An impairment loss for an asset other than goodwill 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. The carrying amount of this asset is increased to its revised recover able amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss . years. 2.9 Financial assets The accounting for financial assets before 1 April 2017 are as follows: (a) Classification The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity and available-for-sale. The classification depends on the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition and in the case of assets classified as held-to-maturity, re-evaluates this designation at each balance sheet date. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are presented as non-current assets. Loans and receivables are presented as “trade and other receivables” and “cash and cash equivalents” on the balance sheet. (iii) Financial assets, held-to-maturity Financial assets, held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of financial assets, held-to-maturity, the whole category would be tainted and reclassified as available-for-sale. They are presented as non-current assets, except for those maturing within 12 months after the balance sheet date which are presented as current assets. (b) Recognition and derecognition Financial assets, available-for-sale assets Financial assets, available-for-sale are non-derivatives that are either designated in this category or not classified in any of the other categories. They are presented as non-current assets unless the investment matures or management intends to dispose of the assets withi n 12 months after the balance sheet date. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a financial asset, the difference between the carrying amo unt and the sale proceeds is recognised in profit or loss. Any amount previously recognised in other comprehensive income relating to that asset is reclassified to profit or loss. 26 27 Annual Report FY2018For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2.9 Financial assets (continued) (e) Impairment (continued) (i) Loans and receivables (continued) 67 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2. Significant accounting policies (continued) 2.9 Financial assets (continued) (c) Initial measurement Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit or loss are recognised immediately as expenses. (d) Subsequent measurement Financial assets, available-for-sale and financial assets at FVPL are subsequently carried at fair value. Loans and receivables and held-to-maturity financial assets are subsequently carried at amortised cost using the effective interest method. prior periods. (ii) Financial assets, available-for-sale Changes in the fair values of financial assets at fair value through profi t or loss including the effects of currency translation, interest and dividends, are recognised in profit or loss when the changes arise. Interest and dividend income on financial assets , available-for-sale are recognised separately in income. Changes in the fair values of available-for-sale debt securities (i.e. monetary items) denominated in foreign currencies are analysed into currency translation differences on the amortised cost of the securities and other changes; the currency translation differences are recognised in profit or loss and the other changes are recognised in other comprehensive income and accumula ted in the fair value reserve. Changes in the fair values of available-for-sale equity securities (i.e. non-monetary items) are recognised in other comprehensive income and accumulated in the fair value reserve, together with the related currency translation differences. (e) Impairment The accounting for financial assets from 1 April 2017 are as follows: The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired and recognises an allowance for impairment when such evidence exists. (f) Classification and measurement (i) Loans and receivables Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default or significant delay in payments are objective evidence that these financial assets are impaired. The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective i nterest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in profit or loss. The impairment allowance is reduced through profit or loss in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no impairment been recognised in In addition to the objective evidence of impairment described in Note 2.9(e)(i), a significant or prolonged decline in the fair value of an equity security below its cost is considered as an indicator that the available-for-sale financial asset is impaired. If there is objective evidence of impairment, the cumulative loss that had been recognised in other comprehensive income is reclassified from equity to profit or loss. The amount of cumulative loss that is reclassified is measured as the difference between the acquisition cost (net of any principal repayment and amortisation) and current fair value, les s any impairment loss on that financial asset previously recognised in profit or loss. The impairment losses recognised as an expense for an equity security are not reversed through profit or loss in subsequent period. The Group classifies its financial assets in the following measurement categories: • Amortised cost; • Fair value through other comprehensive income (FVOCI); and • Fair value through profit or loss (FVPL). The classification depends on the Group’s business model for managing the financial assets as well as the contractual terms of the cash flows of the financial asset. The Group reclassifies debt investments when and only when its business model for managing those assets changes. At initial recognition At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. 28 29 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2. Significant accounting policies (continued) Financial 68 2.9 Financial assets (continued) (c) Initial measurement Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit or loss are recognised immediately as expenses. (d) Subsequent measurement Financial assets, available-for-sale and financial assets at FVPL are subsequently carried at fair value. Loans and receivables and held-to-maturity financial assets are subsequently carried at amortised cost using the effective interest method. Changes in the fair values of financial assets at fair value through profi t or loss including the effects of currency translation, interest and dividends, are recognised in profit or loss when the changes arise. Interest and dividend income on financial assets , available-for-sale are recognised separately in income. Changes in the fair values of available-for-sale debt securities (i.e. monetary items) denominated in foreign currencies are analysed into currency translation differences on the amortised cost of the securities and other changes; the currency translation differences are recognised in profit or loss and the other changes are recognised in other comprehensive income and accumula ted in the fair value reserve. Changes in the fair values of available-for-sale equity securities (i.e. non-monetary items) are recognised in other comprehensive income and accumulated in the fair value reserve, together with the related currency translation differences. (e) Impairment exists. (i) Loans and receivables Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default or significant delay in payments are objective evidence that these financial assets are impaired. The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective i nterest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in profit or loss. 2.9 Financial assets (continued) (e) Impairment (continued) (i) Loans and receivables (continued) The impairment allowance is reduced through profit or loss in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no impairment been recognised in prior periods. (ii) Financial assets, available-for-sale In addition to the objective evidence of impairment described in Note 2.9(e)(i), a significant or prolonged decline in the fair value of an equity security below its cost is considered as an indicator that the available-for-sale financial asset is impaired. If there is objective evidence of impairment, the cumulative loss that had been recognised in other comprehensive income is reclassified from equity to profit or loss. The amount of cumulative loss that is reclassified is measured as the difference between the acquisition cost (net of any principal repayment and amortisation) and current fair value, les s any impairment loss on that financial asset previously recognised in profit or loss. The impairment losses recognised as an expense for an equity security are not reversed through profit or loss in subsequent period. The accounting for financial assets from 1 April 2017 are as follows: The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired and recognises an allowance for impairment when such evidence (f) Classification and measurement The Group classifies its financial assets in the following measurement categories: • Amortised cost; • Fair value through other comprehensive income (FVOCI); and • Fair value through profit or loss (FVPL). The classification depends on the Group’s business model for managing the financial assets as well as the contractual terms of the cash flows of the financial asset. The Group reclassifies debt investments when and only when its business model for managing those assets changes. At initial recognition At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. 28 29 Annual Report FY2018For personal use only 69 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.9 Financial assets (continued) (f) Classification and measurement (continued) At subsequent measurement (i) Debt instruments There are three subsequent measurement categories, depending on the Group’s business model for managing the asset and the cash flow characteristics of the asset: For trade receivables, the Group applies the simplified approach permitted by the FRS 109, which requires expected lifetime losses to be recognised from initial recognition of the receivables. • Amortised cost: Debt instruments that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method. • • FVOCI: Debt instruments that are held for collection of contractual cash flows and for sale, and where the assets’ cash flows represent solely payments of principal and interest, are classified as FVOCI. Movements in fair values are recognised in Other Comprehensive Income (OCI) and accumulated in fair value reserve, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses, which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and presented in “other gains/(losses)”. Interest income from these financial assets is recognised using the effective interest rate method and presented in “interest income”. FVPL: Debt instruments that are held for trading as well as those that do not meet the criteria for classification as amortised cost or FVOCI are classified as FVPL. Movement in fair values and interest income that is not part of a hedging relationship is recognised in profit or loss in the period in which it arises and presented in “other gains/(losses)”. (ii) Equity instruments The Group subsequently measures all its equity investments at their fair values. Equity instruments are classified as FVPL with movements in their fair values recognised in profit or loss in the period in which the changes arise and presented in “other gains/ (losses)”, except where the Group has elected to classify the investments as FVOCI. Movements in fair values of investments classified as FVOCI are presented as “fair value gains and losses” in Other Comprehensive Income. Dividends from equity investments are recognised in profit or loss as “dividend income”. 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.9 Financial assets (continued) (g) Impairment The Group assesses on a forward looking basis the expected credit losses associated with its debt financial assets carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. (h) Recognition and derecognition Regular way purchases and sales of financial assets are recognised on trade date – the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a debt instrument, the difference between the carr ying amount and the sale proceeds is recognised in profit or loss. Any amount previously recognised in other comprehensive income relating to that asset is reclassified to profit or loss. On disposal of an equity investment, the difference between the carrying amount and sales proceed is recognised in profit or loss if there was no election made to recognise fair value changes in other comprehensive income. If there was an election made, any difference between the carrying amount and sales proceed amount would be recognised in other comprehensive income and transferred to retained profits along with the amount previously recognised in other comprehensive income relating to that asset. 2.10 Offsetting of financial instruments Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position when there is a legally enforceable right to offset and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. 2.11 Trade and other payables Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. They are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). Otherwise, they are presented as non -current liabilities. Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method. 30 31 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 70 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.9 Financial assets (continued) (f) Classification and measurement (continued) At subsequent measurement (i) Debt instruments NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.9 Financial assets (continued) (g) Impairment There are three subsequent measurement categories, depending on the Group’s business model for managing the asset and the cash flow characteristics of the asset: For trade receivables, the Group applies the simplified approach permitted by the FRS 109, which requires expected lifetime losses to be recognised from initial recognition of the receivables. • Amortised cost: Debt instruments that are held for collection of contractual cash flows where (h) Recognition and derecognition The Group assesses on a forward looking basis the expected credit losses associated with its debt financial assets carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method. • FVOCI: Debt instruments that are held for collection of contractual cash flows and for sale, and where the assets’ cash flows represent solely payments of principal and interest, are classified as FVOCI. Movements in fair values are recognised in Other Comprehensive Income (OCI) and accumulated in fair value reserve, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses, which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and presented in “other gains/(losses)”. Interest income from these financial assets is recognised using the effective interest rate method and presented in “interest income”. • FVPL: Debt instruments that are held for trading as well as those that do not meet the criteria for classification as amortised cost or FVOCI are classified as FVPL. Movement in fair values and interest income that is not part of a hedging relationship is recognised in profit or loss in the period in which it arises and presented in “other gains/(losses)”. (ii) Equity instruments The Group subsequently measures all its equity investments at their fair values. Equity instruments are classified as FVPL with movements in their fair values recognised in profit or loss in the period in which the changes arise and presented in “other gains/ (losses)”, except where the Group has elected to classify the investments as FVOCI. Movements in fair values of investments classified as FVOCI are presented as “fair value gains and losses” in Other Comprehensive Income. Dividends from equity investments are recognised in profit or loss as “dividend income”. Regular way purchases and sales of financial assets are recognised on trade date – the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a debt instrument, the difference between the carr ying amount and the sale proceeds is recognised in profit or loss. Any amount previously recognised in other comprehensive income relating to that asset is reclassified to profit or loss. On disposal of an equity investment, the difference between the carrying amount and sales proceed is recognised in profit or loss if there was no election made to recognise fair value changes in other comprehensive income. If there was an election made, any difference between the carrying amount and sales proceed amount would be recognised in other comprehensive income and transferred to retained profits along with the amount previously recognised in other comprehensive income relating to that asset. 2.10 Offsetting of financial instruments Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position when there is a legally enforceable right to offset and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. 2.11 Trade and other payables Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. They are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). Otherwise, they are presented as non -current liabilities. Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method. 30 31 Annual Report FY2018For personal use only 71 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2. Significant accounting policies (continued) 2.12 Fair value estimation of financial assets and liabilities 2.13 Leases (continued) The fair values of financial instruments traded in active markets (such as exchange-traded and over-the-counter securities and derivatives) are based on quoted market prices at the balance sheet date. The quoted market prices used for financial assets are the current bid prices; the appropriate quoted market prices used for financial liabilities are the current asking prices. The fair values of financial instruments that are not traded in an active market are determined by using valuation techniques. The Group uses a variety of methods and makes assumptions based on market conditions that are existing at each balance sheet date. Where appropriate, quoted market prices or dealer quotes for similar instruments are used. Valuation techniques, such as discounted cash flow analysis, are also used to determine the fair values of the financial instruments. The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying amounts. (b) When the Group is the lessor: 2.13 Leases (a) When the Group is the lessee The Group leases motor vehicles under finance leases and office premises and event spaces under operating leases from non-related parties. (i) Lessee - Finance leases Leases where the Group assumes substantially all risks and rewards incidental to ownership of the leased assets are classified as finance leases. The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are recognised on the consolidated statement of financial position as plant and equipment and borrowings respectively, at the inception of the leases based on the lower of the fair value of the leased assets and the present value of the minimum lease payments. Each lease payment is apportioned between the finance expense and the reduction of the outstanding lease liability. The finance expense is recognised in profit or loss on a basis that reflects a constant periodic rate of interest on the finance lease liability. 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 (a) When the Group is the lessee (continued) (ii) Lessee - Operating leases Leases where substantially all risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessors) are recognised in profit or loss on a straight-line basis over the period of the lease. Contingent rents are recognised as an expense in profit or loss when incurred. The Group leases event rental space under operating leases to non-related parties. (i) Lessor - Operating leases Leases of event rental spaces where the Group retains substantially all risks and rewards incidental to ownership are classified as operating leases. Rental income from operating leases (net of any incentives given to the lessees) is recognised in profit or loss on a straight-line basis over the lease term. Initial direct costs incurred by the Group in negotiating and arranging operating leases are added to the carrying amount of the leased assets and recognised as an expense in profit or loss over the lease term on the same basis as the lease income. Contingent rents are recognised as income in profit or loss when earned. 2.14 Income taxes Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries and associated companies, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. 32 33 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2. Significant accounting policies (continued) 2.12 Fair value estimation of financial assets and liabilities 2.13 Leases (continued) The fair values of financial instruments traded in active markets (such as exchange-traded and over-the-counter securities and derivatives) are based on quoted market prices at the balance sheet date. The quoted market prices used for financial assets are the current bid prices; the appropriate quoted market prices used for financial liabilities are the current asking prices. The fair values of financial instruments that are not traded in an active market are determined by using valuation techniques. The Group uses a variety of methods and makes assumptions based on market conditions that are existing at each balance sheet date. Where appropriate, quoted market prices or dealer quotes for similar instruments are used. Valuation techniques, such as discounted cash flow analysis, are also used to determine the fair values of the financial instruments. (a) When the Group is the lessee (continued) (ii) Lessee - Operating leases Leases where substantially all risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessors) are recognised in profit or loss on a straight-line basis over the period of the lease. Contingent rents are recognised as an expense in profit or loss when incurred. The fair values of current financial assets and liabilities carried at amortised cost approximate their carrying (b) When the Group is the lessor: Financial 72 amounts. 2.13 Leases (a) When the Group is the lessee The Group leases motor vehicles under finance leases and office premises and event spaces under operating leases from non-related parties. (i) Lessee - Finance leases Leases where the Group assumes substantially all risks and rewards incidental to ownership of the leased assets are classified as finance leases. The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are recognised on the consolidated statement of financial position as plant and equipment and borrowings respectively, at the inception of the leases based on the lower of the fair value of the leased assets and the present value of the minimum lease payments. Each lease payment is apportioned between the finance expense and the reduction of the outstanding lease liability. The finance expense is recognised in profit or loss on a basis that reflects a constant periodic rate of interest on the finance lease liability. The Group leases event rental space under operating leases to non-related parties. (i) Lessor - Operating leases Leases of event rental spaces where the Group retains substantially all risks and rewards incidental to ownership are classified as operating leases. Rental income from operating leases (net of any incentives given to the lessees) is recognised in profit or loss on a straight-line basis over the lease term. Initial direct costs incurred by the Group in negotiating and arranging operating leases are added to the carrying amount of the leased assets and recognised as an expense in profit or loss over the lease term on the same basis as the lease income. Contingent rents are recognised as income in profit or loss when earned. 2.14 Income taxes Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. A deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries and associated companies, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. 32 33 Annual Report FY2018For personal use only 73 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.14 Income taxes (continued) Deferred income tax is measured: 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.17 Currency translation (a) Functional and presentation currency (i) (ii) at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date; and Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements are presented in Singapore Dollars, which is the functional currency of the Company. based on the tax consequence that will follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities except for investment properties. Investment property measured at fair value is presumed to be recovered en tirely through sale. Current and deferred income taxes are recognised as income or expense in profit or loss, except to the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition. The Group accounts for investment tax credits (for example, productivity and innovative credit) similar to accounting for other tax credits where deferred tax asset is recognised for unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax credit can be utilised. 2.15 Provisions Provisions for restructuring costs and legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses. Other provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax discount rate that reflects the current market assessment of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised in the statement of comprehensive income as finance expense. Changes in the estimated timing or amount of the expenditure or discount rate are recognised in profit or loss when the changes arise. 2.16 Employee compensation Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an asset. Defined contribution plans Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Central Provident Fund on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. (b) Transactions and balances Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency exchange differences resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in profit or loss. (c) Translation of Group entities’ financial statements The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) (ii) assets and liabilities are translated at the closing exchange rates at the reporting date; income and expenses are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the tra nsaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and (iii) all resulting currency translation differences are recognised in other comprehensive income and accumulated in the currency translation reserve. These currency translation differences are reclassified to profit or loss on disposal or partial disposal of the entity giving rise to such reserve. Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and translated at the closing rates at the reporting date. 2.18 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the executive committee whose members are responsible for allocating resources and assessing performance of the operating segments. 34 35 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 74 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.14 Income taxes (continued) Deferred income tax is measured: NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.17 Currency translation (a) Functional and presentation currency (i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date; and Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements are presented in Singapore Dollars, which is the functional currency of the Company. (ii) based on the tax consequence that will follow from the manner in which the Group expects, at the (b) Transactions and balances balance sheet date, to recover or settle the carrying amounts of its assets and liabilities except for investment properties. Investment property measured at fair value is presumed to be recovered en tirely through sale. Current and deferred income taxes are recognised as income or expense in profit or loss, except to the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition. The Group accounts for investment tax credits (for example, productivity and innovative credit) similar to accounting for other tax credits where deferred tax asset is recognised for unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax credit can be utilised. 2.15 Provisions Provisions for restructuring costs and legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses. Other provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax discount rate that reflects the current market assessment of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised in the statement of comprehensive income as finance expense. Changes in the estimated timing or amount of the expenditure or discount rate are recognised in profit or loss when the changes arise. 2.16 Employee compensation Defined contribution plans Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an asset. Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Central Provident Fund on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency exchange differences resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in profit or loss. (c) Translation of Group entities’ financial statements The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) (ii) (iii) assets and liabilities are translated at the closing exchange rates at the reporting date; income and expenses are translated at average exchange rates (unless the average is not a reasonable approximation of the cumulative effect of the rates prevailing on the tra nsaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and all resulting currency translation differences are recognised in other comprehensive income and accumulated in the currency translation reserve. These currency translation differences are reclassified to profit or loss on disposal or partial disposal of the entity giving rise to such reserve. Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and translated at the closing rates at the reporting date. 2.18 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the executive committee whose members are responsible for allocating resources and assessing performance of the operating segments. 34 35 Annual Report FY2018For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 3. Critical accounting estimates, assumptions and judgements Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 3.1 Critical accounting estimates and assumptions (a) Acquisition of Digimatic Group Limited (“DMC”) (acquisition of 69.7% equity interest on 28 November 2017) In performing the fair value considerations of DMC, significant judgements, estimates and assumptions are used to determine the fair value consideration (independent valuation of subsidiary based on future maintainable earnings method). Detailed information about each of these estimates and judgements is In performing the impairment assessment of the carrying amount of goodwill, the recoverable amount of the CGU (Education CGU) in which goodwill has been attributable to, are determined in using value-in- use (“VIU”) calculation. Significant estimates are used to estimate the discount rate, short term and long term growth rate in revenues and expenses. Detailed information about each of these estimates and judgements is included in Note 14. 75 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.19 Cash and cash equivalents For the purpose of presentation in the consolidated statement of cash flows, c ash and cash equivalents include cash on hand, deposits with financial institutions which are subject to an insignificant risk of change in value, and bank overdrafts. Bank overdrafts are presented as current borrowings on the consolidated statement of financial position. For cash subjected to restriction, assessment is made on the economic substance of the restriction and whether they meet the definition of cash and cash equivalents. 2.20 Inventories Inventories are carried at the lower of cos t and net realisable value. Cost is determined using the first-in, first-out method. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and applicable variable selling expenses. included in Note 30. (b) Estimated impairment goodwill 2.21 Share capital and treasury shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted agai nst the share capital account. When any entity within the Group purchases the Company’s ordinary shares (“treasury shares”), the carrying amount which includes the consideration paid and any directly attributable transaction cost is presented as a component within equity attributable to the Company’s equity holders, until they are cancelled, sold or reissued. When treasury shares are subsequently cancelled, the cost of treasury shares are deducted against the share capital account if the shares are purchased out of capital of the Company, or against the retained profits of the Company if the shares are purchased out of earnings of the Company. When treasury shares are subsequently sold or reissued, the cost of treasury shares is reversed from the treasury share account and the realised gain or loss on sale or reissue, net of any directly attributable incremental transaction costs and rel ated income tax, is recognised in the capital reserve. 2.22 Dividends to Company’s shareholders Dividends to the Company’s shareholders are recognised when the dividends are approved for payment. 2.23 Redeemable participating shares Redeemable participating shares are redeemable at the option of the unit holders and providing the investors with the right to require redemption for cash at the value proportionate to the investor’s share in the fund’s net assets. Profit/(losses) attributable to the holders of redeemable participating shares were recorded as part of the liabilities of redeemable participating shares. 36 37 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 76 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 3. Critical accounting estimates, assumptions and judgements Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 3.1 Critical accounting estimates and assumptions (a) Acquisition of Digimatic Group Limited (“DMC”) (acquisition of 69.7% equity interest on 28 November 2017) In performing the fair value considerations of DMC, significant judgements, estimates and assumptions are used to determine the fair value consideration (independent valuation of subsidiary based on future maintainable earnings method). Detailed information about each of these estimates and judgements is included in Note 30. (b) Estimated impairment goodwill In performing the impairment assessment of the carrying amount of goodwill, the recoverable amount of the CGU (Education CGU) in which goodwill has been attributable to, are determined in using value-in- use (“VIU”) calculation. Significant estimates are used to estimate the discount rate, short term and long term growth rate in revenues and expenses. Detailed information about each of these estimates and judgements is included in Note 14. NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 2. Significant accounting policies (continued) 2.19 Cash and cash equivalents For the purpose of presentation in the consolidated statement of cash flows, c ash and cash equivalents include cash on hand, deposits with financial institutions which are subject to an insignificant risk of change in value, and bank overdrafts. Bank overdrafts are presented as current borrowings on the consolidated statement of financial position. For cash subjected to restriction, assessment is made on the economic substance of the restriction and whether they meet the definition of cash and cash equivalents. 2.20 Inventories Inventories are carried at the lower of cos t and net realisable value. Cost is determined using the first-in, first-out method. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and applicable variable selling expenses. 2.21 Share capital and treasury shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted agai nst the share capital account. When any entity within the Group purchases the Company’s ordinary shares (“treasury shares”), the carrying amount which includes the consideration paid and any directly attributable transaction cost is presented as a component within equity attributable to the Company’s equity holders, until they are cancelled, sold or reissued. When treasury shares are subsequently cancelled, the cost of treasury shares are deducted against the share capital account if the shares are purchased out of capital of the Company, or against the retained profits of the Company if the shares are purchased out of earnings of the Company. When treasury shares are subsequently sold or reissued, the cost of treasury shares is reversed from the treasury share account and the realised gain or loss on sale or reissue, net of any directly attributable incremental transaction costs and rel ated income tax, is recognised in the capital reserve. 2.22 Dividends to Company’s shareholders 2.23 Redeemable participating shares Dividends to the Company’s shareholders are recognised when the dividends are approved for payment. Redeemable participating shares are redeemable at the option of the unit holders and providing the investors with the right to require redemption for cash at the value proportionate to the investor’s share in the fund’s net assets. Profit/(losses) attributable to the holders of redeemable participating shares were recorded as part of the liabilities of redeemable participating shares. 36 37 Annual Report FY2018For personal use only 77 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 4. Revenue and investment income 6. Expenses by nature Rendering of services Event site rental income Financial education program sales Advertising income Digital marketing and production income Commission and referral income Non-financial education program sales Others Sales of goods Investment income/(losses) from public markets Fair value (loss)/gain on investment securities Gain on sale of investment securities Dividend income Investment income from private markets Gain on disposal of a subsidiary (Note 15 (d,e)) Gain on disposal of an associated company’s shares Group 2018 S$ 2017 S$ 931,701 12,591,387 2,203,811 552,223 1,311,747 2,570,506 - 20,161,375 2,238,937 10,802,296 1,258,035 - - - 38,106 14,337,374 921,074 - (1,353,244) 120,925 684,461 (547,858) 1,609,600 907,788 481,121 2,998,509 971,860 - 971,860 10,370,350 1,199,836 11,570,186 Total revenue and investment income 21,506,451 28,906,069 5. Other gains and other income Other gains Gain from bargain purchase (Note 30(i)(f)) Gain on initial recognition at its fair value from former associated company to available-for-sale financial assets (Note 17) Gain on foreign exchange - net Other income Interest income Others Group 2018 S$ 425,042 - - 425,042 467,146 271,877 739,023 2017 S$ - 1,160,825 94,622 1,255,447 260,892 292,270 553,162 38 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 Depreciation of plant and equipment (Note 13) Employee compensation (Note 7) Rental expense on operating leases Audit fees paid to: - Auditors of the Company - Other auditors Non-audit fees paid to: - Auditors of the Company - Other auditors Travelling expense Professional fees Commission Net foreign exchange loss Marketing expenses Credit card charges Trainer fees Event expenses Food catering expense Book and printing expenses Other program costs Investment related expense Corporate expenses Training costs AGM expenses Office expenses Advertising expenses Amortisation Bad debts written off Credit loss allowance Digital production costs Cost of inventories Other expenses expenses 7. Employee compensation Wages and salaries Employer’s contribution to defined contribution plans Other short-term benefits Group 2018 S$ 301,251 47,662 5,350 3,017 622,164 8,270,806 1,910,350 835,798 524,727 615,736 145,087 4,105,331 517,386 1,694,465 608,408 242,146 576,864 932,838 262,957 792,428 163,768 99,070 284,141 1,362,763 100,000 - 169,685 331,218 751,131 1,055,500 2017 S$ 219,858 18,101 627,564 - 335,458 5,652,869 2,071,296 524,489 478,298 180,914 - 2,169,860 404,575 557,561 961,064 247,178 366,889 215,878 297,585 2,025,415 180,321 150,774 264,941 768,342 75,000 338,205 - - - 392,694 Group 2018 S$ 7,060,995 771,877 437,934 8,270,806 2017 S$ 4,871,021 561,888 219,960 5,652,869 39 Total cost of sales and services, administrative expenses and other operating 27,332,047 19,525,129 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 4. Revenue and investment income 6. Expenses by nature Audit fees paid to: - Auditors of the Company - Other auditors Non-audit fees paid to: - Auditors of the Company - Other auditors Depreciation of plant and equipment (Note 13) Employee compensation (Note 7) Rental expense on operating leases Travelling expense Professional fees Commission Net foreign exchange loss Marketing expenses Credit card charges Trainer fees Event expenses Food catering expense Book and printing expenses Other program costs Investment related expense Corporate expenses Training costs AGM expenses Office expenses Advertising expenses Amortisation Bad debts written off Credit loss allowance Digital production costs Cost of inventories Other expenses Total cost of sales and services, administrative expenses and other operating Financial 78 Group 2018 S$ 301,251 47,662 5,350 3,017 622,164 8,270,806 1,910,350 835,798 524,727 615,736 145,087 4,105,331 517,386 1,694,465 608,408 242,146 576,864 932,838 262,957 792,428 163,768 99,070 284,141 1,362,763 100,000 - 169,685 331,218 751,131 1,055,500 2017 S$ 219,858 18,101 627,564 - 335,458 5,652,869 2,071,296 524,489 478,298 180,914 - 2,169,860 404,575 557,561 961,064 247,178 366,889 215,878 297,585 2,025,415 180,321 150,774 264,941 768,342 75,000 338,205 - - - 392,694 expenses 27,332,047 19,525,129 7. Employee compensation Wages and salaries Employer’s contribution to defined contribution plans Other short-term benefits Group 2018 S$ 7,060,995 771,877 437,934 8,270,806 2017 S$ 4,871,021 561,888 219,960 5,652,869 39 Rendering of services Event site rental income Financial education program sales Advertising income Digital marketing and production income Commission and referral income Non-financial education program sales Others Sales of goods Investment income/(losses) from public markets Fair value (loss)/gain on investment securities Gain on sale of investment securities Dividend income Investment income from private markets Gain on disposal of a subsidiary (Note 15 (d,e)) Gain on disposal of an associated company’s shares Total revenue and investment income 21,506,451 28,906,069 5. Other gains and other income Other gains Other income Interest income Others Gain from bargain purchase (Note 30(i)(f)) 425,042 - Gain on initial recognition at its fair value from former associated company to available-for-sale financial assets (Note 17) Gain on foreign exchange - net Group 2018 S$ 2017 S$ 931,701 12,591,387 2,203,811 552,223 1,311,747 2,570,506 921,074 2,238,937 10,802,296 1,258,035 - - - - - 38,106 20,161,375 14,337,374 (1,353,244) 120,925 684,461 (547,858) 1,609,600 907,788 481,121 2,998,509 971,860 - 971,860 10,370,350 1,199,836 11,570,186 Group 2018 S$ 2017 S$ - - 425,042 467,146 271,877 739,023 1,160,825 94,622 1,255,447 260,892 292,270 553,162 38 Annual Report FY2018For personal use only 79 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 8. (a) Income taxes Income tax expense Tax expense attributable to profit is made up of: - Profit for the financial year: Current income tax - Singapore - Foreign Deferred income tax (Note 22) - Under/(over) provision in prior financial years: Current income tax Deferred income tax (Note 22) Group 2018 S$ 2017 S$ - 122,525 122,525 (2,571) 119,954 95,769 (205,794) 9,929 95,276 344,797 440,073 (6,000) 434,073 (212,916) - 221,157 The tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the Singapore standard rate of income tax as follows: (Loss)/Profit before income tax Share of loss /(profit) of associated company, net of tax (Loss)/Profit before income tax and share of loss /(profit) of associated company Tax calculated at tax rate of 17% (2017: 17%) Effects of: - different tax rates in other countries - tax incentives - expenses not deductible for tax purposes - income not subject to tax - deferred tax assets not recognised - others - under/(over) provision of tax in prior financial years Tax charge Group 2018 S$ 2017 S$ (4,428,659) 79,789 11,714,514 (566,675) (4,348,870) 11,147,839 (739,308) 1,895,132 1,003 (84,193) 448,283 (216,081) 712,821 - 95,769 218,294 44,195 (130,385) 471,785 (2,132,838) 287,955 4,229 (212,916) 227,157 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 Income taxes (continued) 8. (b) Movement in current income tax liabilities/(assets): Beginning of financial year Currency translation differences Acquisition and disposal of subsidiaries Income tax (paid)/credited Tax expense Under/(Over) provision in prior financial years End of financial year Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 248,980 1,457,699 (30,650) 29,766 (307,398) (1,477,882) 26,691 (31,961) 2,852 72,366 122,525 95,769 235,094 435 41,571 440,073 (212,916) 248,980 - - - - - - - (3,959) (28,455) (30,650) 9. Earnings per share 2018 2017 Net (losses)/profit attributable to equity holders of the Company (S$) (4,249,612) 11,245,023 Weighted average number of ordinary shares outstanding for basic earnings per share Basic earnings per share (S$ cents per share) 358,507,352 357,720,786 (1.19) 3.14 10. Cash and cash equivalents Cash at bank and on hand Short-term bank deposits following: Cash and bank balances (as above) Less: Bank deposits pledged Less: Bank overdraft Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 17,572,023 11,246,576 369,817 2,809,430 5,756,020 1,315,800 5,000,000 - 23,328,043 12,562,376 5,369,817 2,809,430 Group 2018 S$ 2017 S$ 23,328,043 12,562,376 (5,000,000) (4,209,809) - - For the purpose of presenting the consolidated statement of cash flows, cash and cash equivalents comprise the Cash and cash equivalents per consolidated statement of cash flows 14,118,234 12,562,376 Bank deposits are pledged against bank overdraft facility. The bank overdraft facility had been fully settled and charge satisfied subsequent to the financial year end. 40 41 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 80 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 8. (a) Income taxes Income tax expense Tax expense attributable to profit is made up of: - Profit for the financial year: Current income tax - Singapore - Foreign Deferred income tax (Note 22) - Under/(over) provision in prior financial years: Current income tax Deferred income tax (Note 22) Group 2018 S$ 2017 S$ - 122,525 122,525 (2,571) 119,954 95,769 (205,794) 9,929 95,276 344,797 440,073 (6,000) 434,073 (212,916) - 221,157 Group 2018 S$ 2017 S$ (4,428,659) 11,714,514 79,789 (566,675) (4,348,870) 11,147,839 1,003 (84,193) 448,283 (216,081) 712,821 - 95,769 218,294 44,195 (130,385) 471,785 (2,132,838) 287,955 4,229 (212,916) 227,157 The tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the Singapore standard rate of income tax as follows: Tax calculated at tax rate of 17% (2017: 17%) (739,308) 1,895,132 (Loss)/Profit before income tax Share of loss /(profit) of associated company, net of tax (Loss)/Profit before income tax and share of loss /(profit) of associated company Effects of: - others Tax charge - different tax rates in other countries - tax incentives - expenses not deductible for tax purposes - income not subject to tax - deferred tax assets not recognised - under/(over) provision of tax in prior financial years NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 8. (b) Income taxes (continued) Movement in current income tax liabilities/(assets): Beginning of financial year Currency translation differences Acquisition and disposal of subsidiaries Income tax (paid)/credited Tax expense Under/(Over) provision in prior financial years End of financial year Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 248,980 2,852 72,366 (307,398) 122,525 95,769 235,094 1,457,699 435 41,571 (1,477,882) 440,073 (212,916) 248,980 (30,650) - - 26,691 - - (3,959) 29,766 - - (31,961) - (28,455) (30,650) 9. Earnings per share Net (losses)/profit attributable to equity holders of the Company (S$) Weighted average number of ordinary shares outstanding for basic earnings per share Basic earnings per share (S$ cents per share) 2018 2017 (4,249,612) 11,245,023 358,507,352 (1.19) 357,720,786 3.14 10. Cash and cash equivalents Cash at bank and on hand Short-term bank deposits Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 17,572,023 11,246,576 5,756,020 1,315,800 23,328,043 12,562,376 369,817 2,809,430 5,000,000 - 5,369,817 2,809,430 For the purpose of presenting the consolidated statement of cash flows, cash and cash equivalents comprise the following: Cash and bank balances (as above) Less: Bank deposits pledged Less: Bank overdraft Cash and cash equivalents per consolidated statement of cash flows Group 2018 S$ 2017 S$ 23,328,043 (5,000,000) (4,209,809) 14,118,234 12,562,376 - - 12,562,376 Bank deposits are pledged against bank overdraft facility. The bank overdraft facility had been fully settled and charge satisfied subsequent to the financial year end. 40 41 Annual Report FY2018For personal use only 81 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 11. Trade and other receivables 13. Plant and equipment Current Trade receivables Other receivables - Non-related parties (a) - Subsidiaries - Others (b) Deposits Prepayments (c) Credit loss allowance Non-current Other receivables (d) Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 2,612,177 1,003,231 - - 7,215,683 - 634,568 7,373,826 - 692,171 7,373,826 7,215,683 9,979,679 20,162,012 261,641 8,195 689,642 892,277 (169,685) 11,874,662 705,310 907,022 - 10,681,560 - 30,545 (6,264) - 42,270 - 17,227,838 27,839,749 733,603 148,667 733,603 - (a) Advances were granted to a previously associated company amounting to S$7,196,483 (2017: S$7,373,826) is secured by the borrower’s assets, bears interest at 5% per annum and is repayable 10 years from commencement date or by notice from lender within 6 months requiring payment in full. Included in the other receivables is an advance to an employee amounting to S$200,000 (2017: S$nil). The advance is unsecured, interest bearing at 5% per annum and repayable on demand. (b) (c) Prepayments include an amount of S$325,000 (2017: S$425,000), arising from the remuneration element included in the consideration through share swap acquisition of 8VIC Singapore Pte. Ltd. (formerly known as Financial Joy Institution Pte. Ltd. (“FJI”)). The remuneration element required the founders of FJI to remain in employment until the period of June 2021. (d) Non-current other receivables fair value approximates carrying amount. A promissory note of S$240,000 and loan to a non-related developer of S$495,000, classified as non-current assets (due more than 12 months period). 12. Financial assets at FVPL Fair value through profit or loss: Listed securities - Equity securities - Australia - Equity securities - Japan - Equity securities – India - Equity securities – Taiwan - Equity securities – New Zealand - Equity securities – Malaysia - Equity securities - Singapore Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 6,961,018 101,397 4,848,012 13,117,436 - 179,619 488,893 25,696,375 15,537,537 9,645,155 710,955 219,233 82,973 160,581 - 26,356,434 - - - - - - 37,000 37,000 - - - - - - - - 42 Group 2018 Cost Beginning of financial year Currency translation differences Acquisition of subsidiaries Disposal of subsidiary Additions Written off End of financial year Accumulated depreciation Beginning of financial year Currency translation differences Disposal of subsidiary Depreciation charge (Note 6) Written off End of financial year Net book value End of financial year 2017 Cost Beginning of financial year Currency translation differences Acquisition of subsidiary Additions Disposals Written off End of financial year Accumulated depreciation Beginning of financial year Currency translation differences Depreciation charge (Note 6) Disposals Written off End of financial year Net book value End of financial year sheet date. Office Furniture and Motor equipment fittings vehicles S$ S$ S$ Total S$ 264,937 12,479 (114,373) (95,800) 781,192 24,318 294,720 486,784 (7,826) 1,526,676 39,963 557,963 (303,763) 613,282 (12,033) 775,657 1,464,815 181,616 2,422,088 224,256 9,530 (65,225) 399,143 (7,826) 559,878 85,361 4,685 (49,497) 46,041 - 616,075 15,297 (175,881) 622,164 (12,033) 86,590 1,065,622 480,547 3,166 263,243 (93,590) 126,498 (4,207) 306,458 1,082 (61,159) 176,980 (4,207) 419,154 356,503 904,937 95,026 1,356,466 336,173 (31,502) 16,607 162,415 (3,146) 408,443 208,573 (11,876) (16,658) 78,281 15,367 382,623 - (5,259) - (13,365) 480,547 781,192 264,937 1,526,676 207,670 (28,272) 129,620 (2,560) 73,402 4,929 152,380 - - (6,455) 39,538 (7,635) 53,458 306,458 224,256 85,361 616,075 174,089 556,936 179,576 910,601 953,189 (60,036) 110,255 545,038 (8,405) (13,365) 320,610 (30,978) 335,458 (2,560) (6,455) - - - - - - - 43 The carrying amounts of motor vehicles held under finance leases are S$95,026 (2017: S$179,576) at the balance 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 11. Trade and other receivables 13. Plant and equipment Group 2018 Cost Beginning of financial year Currency translation differences Acquisition of subsidiaries Disposal of subsidiary Additions Written off End of financial year Accumulated depreciation Beginning of financial year Currency translation differences Disposal of subsidiary Depreciation charge (Note 6) Written off End of financial year Net book value End of financial year 2017 Cost Beginning of financial year Currency translation differences Acquisition of subsidiary Additions Disposals Written off End of financial year Accumulated depreciation Beginning of financial year Currency translation differences Depreciation charge (Note 6) Disposals Written off End of financial year Net book value End of financial year Financial 82 Office equipment S$ Furniture and fittings S$ Motor vehicles S$ Total S$ 480,547 3,166 263,243 (93,590) 126,498 (4,207) 775,657 306,458 1,082 (61,159) 176,980 (4,207) 419,154 781,192 24,318 294,720 (114,373) 486,784 (7,826) 1,464,815 264,937 12,479 - (95,800) - - 181,616 1,526,676 39,963 557,963 (303,763) 613,282 (12,033) 2,422,088 224,256 9,530 (65,225) 399,143 (7,826) 559,878 85,361 4,685 (49,497) 46,041 - 86,590 616,075 15,297 (175,881) 622,164 (12,033) 1,065,622 356,503 904,937 95,026 1,356,466 336,173 (31,502) 16,607 162,415 (3,146) - 480,547 207,670 (28,272) 129,620 (2,560) - 306,458 408,443 (11,876) 15,367 382,623 - (13,365) 781,192 208,573 (16,658) 78,281 - (5,259) - 264,937 953,189 (60,036) 110,255 545,038 (8,405) (13,365) 1,526,676 73,402 4,929 152,380 - (6,455) 224,256 39,538 (7,635) 53,458 - - 85,361 320,610 (30,978) 335,458 (2,560) (6,455) 616,075 174,089 556,936 179,576 910,601 The carrying amounts of motor vehicles held under finance leases are S$95,026 (2017: S$179,576) at the balance sheet date. 43 Current Trade receivables Other receivables - Non-related parties (a) - Subsidiaries - Others (b) Deposits Prepayments (c) Credit loss allowance Non-current Other receivables (d) Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 2,612,177 1,003,231 - 7,215,683 7,373,826 - 634,568 692,171 7,215,683 7,373,826 9,979,679 20,162,012 8,195 261,641 689,642 892,277 (169,685) 705,310 907,022 - 30,545 (6,264) 42,270 11,874,662 10,681,560 17,227,838 27,839,749 - - 733,603 148,667 733,603 (a) Advances were granted to a previously associated company amounting to S$7,196,483 (2017: S$7,373,826) is secured by the borrower’s assets, bears interest at 5% per annum and is repayable 10 years from commencement date or by notice from lender within 6 months requiring payment in full. (b) Included in the other receivables is an advance to an employee amounting to S$200,000 (2017: S$nil). The advance is unsecured, interest bearing at 5% per annum and repayable on demand. (c) Prepayments include an amount of S$325,000 (2017: S$425,000), arising from the remuneration element included in the consideration through share swap acquisition of 8VIC Singapore Pte. Ltd. (formerly known as Financial Joy Institution Pte. Ltd. (“FJI”)). The remuneration element required the founders of FJI to remain in employment until the period of June 2021. (d) Non-current other receivables fair value approximates carrying amount. A promissory note of S$240,000 and loan to a non-related developer of S$495,000, classified as non-current assets (due more than 12 months period). 12. Financial assets at FVPL Fair value through profit or loss: Listed securities - Equity securities - Australia - Equity securities - Japan - Equity securities – India - Equity securities – Taiwan - Equity securities – New Zealand - Equity securities – Malaysia - Equity securities - Singapore Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 6,961,018 101,397 4,848,012 13,117,436 - 179,619 488,893 15,537,537 9,645,155 710,955 219,233 82,973 160,581 - 25,696,375 26,356,434 - - - - - - 37,000 37,000 - - - - - - - - - - - - 42 Annual Report FY2018For personal use only 83 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 14. Goodwill Goodwill arising on consolidation Cost Beginning of financial year Acquisition of subsidiaries Disposal of a subsidiary (Note 15(d)) End of financial year Impairment tests for goodwill Group 2018 S$ 3,459,119 130,814 (1,901,072) 1,688,861 2017 S$ 1,901,072 1,558,047 - 3,459,119 Goodwill is allocated to the Group’s cash-generating units (“CGUs”) identified according to business segments as follows: Group Private markets Education 2018 S$ 2017 S$ 134,319 1,554,542 1,688,861 1,904,577 1,554,542 3,459,119 Goodwill relating to the Education Cash Generating Unit (“CGU”) The recoverable amount of a CGU was determined based on value-in-use. Cash flow projections used in the value- in-use calculations were based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period were extrapolated using the estimated growth rates stated below. Management determined budgeted revenues and expenses based on past performance and its expectations of market developments. The short term average growth rates used were consistent with forecasts and long term growth rate does not exceed customer price index in Singapore. The discount rates used were pre-tax and reflected specific risks relating to the CGU. Key estimates used for value-in-use calculations Discount rate (pre-tax) Short term growth rate Long term growth rate Gross profit margin 2018 22.81% 10-15% 0% 25% 2017 22.81% 1-3% 0% 23% The impairment test carried out as at 31 March 2018 for the education segment, has revealed that the recoverable amount of the CGU is higher than its carrying amount. A further decrease in the growth rate by 2% or increase in discount rate by 2% would still result in no impairment of the CGU’s carrying value. 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 15. Investments in subsidiaries Equity investments at cost Beginning of financial year Acquisition of a subsidiary (a) Disposal of a subsidiary (a)(i) Impairment of investment (b) Increase in investment (c) End of financial year 30(i)(a)) Company 2018 S$ 2017 S$ 13,984,921 8,300,020 (2,456,606) (1,540,188) 10,000,000 28,288,147 3,424,521 10,560,400 - - - 13,984,921 a. Acquisition of subsidiaries amounting to S$8,294,965 is in connection with DMC acquisition (Note 24 and Note 2018 S$ 5,971,223 18,078 2,310,719 8,300,020 Acquisition of DMC (i) Existing equity interest held in DMC as FVOCI at parent entity level being reclassified to investment in a subsidiary Additional acquisition of 2% equity interest in DMC (ii) End of financial year (i) The Company acquired approximately 58.9% interest in DMC amounting to S$5,971,223 (Note 30(i)(a)). The acquisition of DMC was satisfied through the disposal of the Company’s 95% interest in 8VIC Global Pte. Limited to DMC. The carrying value of the investment in 8VIC Global Pte. Limited, at cost, was S$2,456,606. The difference between the cons ideration of S$5,971,223 and the carrying value of S$2,456,606 was recognised as a gain on disposal of a subsidiary in the income statement of the Company. (ii) On 25 January 2018, the Group acquired an additional 2% equity interest in DMC by re-issuing 7,000,000 treasury shares at a fair value of S$2,072,504 which represents 8IH’s quoted price as of the date of transaction (Note 23(b)) and cash of S$238,215. The total additional investment amounted to S$2,310,719. b. Impairment of investment in DMC An allowance for impairment loss amounting to S$1,540,188 was made during the year in respect to reduce the carrying value of the investments additional of the 2% acquisition as described in Note 15(a)(ii) above to the recoverable amounts. The recoverable amount was determined using the same basis as the fair value consideration arising from the DMC acquisition. (Note 30(i)(a)). c. Effective from 1 April 2017, the Company converted its receivables from its subsidiary (8IH Global Limited) amounting to S$10,000,000 into equity. 44 45 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 14. Goodwill Goodwill arising on consolidation Cost Beginning of financial year Acquisition of subsidiaries Disposal of a subsidiary (Note 15(d)) End of financial year Impairment tests for goodwill follows: Group Private markets Education Group 2018 S$ 3,459,119 130,814 (1,901,072) 1,688,861 2017 S$ 1,901,072 1,558,047 - 3,459,119 2018 S$ 2017 S$ 134,319 1,554,542 1,688,861 1,904,577 1,554,542 3,459,119 Goodwill is allocated to the Group’s cash-generating units (“CGUs”) identified according to business segments as Goodwill relating to the Education Cash Generating Unit (“CGU”) The recoverable amount of a CGU was determined based on value-in-use. Cash flow projections used in the value- in-use calculations were based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period were extrapolated using the estimated growth rates stated below. Management determined budgeted revenues and expenses based on past performance and its expectations of market developments. The short term average growth rates used were consistent with forecasts and long term growth rate does not exceed customer price index in Singapore. The discount rates used were pre-tax and reflected specific risks relating to the CGU. Key estimates used for value-in-use calculations Discount rate (pre-tax) Short term growth rate Long term growth rate Gross profit margin 2018 22.81% 10-15% 0% 25% 2017 22.81% 1-3% 0% 23% The impairment test carried out as at 31 March 2018 for the education segment, has revealed that the recoverable amount of the CGU is higher than its carrying amount. A further decrease in the growth rate by 2% or increase in discount rate by 2% would still result in no impairment of the CGU’s carrying value. 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 15. Investments in subsidiaries Equity investments at cost Beginning of financial year Acquisition of a subsidiary (a) Disposal of a subsidiary (a)(i) Impairment of investment (b) Increase in investment (c) End of financial year Financial 84 Company 2018 S$ 2017 S$ 13,984,921 8,300,020 (2,456,606) (1,540,188) 10,000,000 28,288,147 3,424,521 10,560,400 - - - 13,984,921 a. Acquisition of subsidiaries amounting to S$8,294,965 is in connection with DMC acquisition (Note 24 and Note 30(i)(a)) Acquisition of DMC (i) Existing equity interest held in DMC as FVOCI at parent entity level being reclassified to investment in a subsidiary Additional acquisition of 2% equity interest in DMC (ii) End of financial year 2018 S$ 5,971,223 18,078 2,310,719 8,300,020 (i) The Company acquired approximately 58.9% interest in DMC amounting to S$5,971,223 (Note 30(i)(a)). The acquisition of DMC was satisfied through the disposal of the Company’s 95% interest in 8VIC Global Pte. Limited to DMC. The carrying value of the investment in 8VIC Global Pte. Limited, at cost, was S$2,456,606. The difference between the cons ideration of S$5,971,223 and the carrying value of S$2,456,606 was recognised as a gain on disposal of a subsidiary in the income statement of the Company. (ii) On 25 January 2018, the Group acquired an additional 2% equity interest in DMC by re-issuing 7,000,000 treasury shares at a fair value of S$2,072,504 which represents 8IH’s quoted price as of the date of transaction (Note 23(b)) and cash of S$238,215. The total additional investment amounted to S$2,310,719. b. Impairment of investment in DMC An allowance for impairment loss amounting to S$1,540,188 was made during the year in respect to reduce the carrying value of the investments additional of the 2% acquisition as described in Note 15(a)(ii) above to the recoverable amounts. The recoverable amount was determined using the same basis as the fair value consideration arising from the DMC acquisition. (Note 30(i)(a)). c. Effective from 1 April 2017, the Company converted its receivables from its subsidiary (8IH Global Limited) amounting to S$10,000,000 into equity. 44 45 Annual Report FY2018For personal use only 85 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 15. Investments in subsidiaries (continued) The Group had the following subsidiaries as at 31 March 2018 and 2017: Name Principal activities Country of business/ incorporation Proportion of ordinary shares directly held by parent 2018 % 2017 % Proportion of ordinary shares held by the Group 2017 2018 % % Proportion of ordinary shares held by non- controlling interests 2018 % 2017 % ` Held by the Company: 8 Investment Pte. Ltd. 8 Business Pte. Ltd. 8IH Global Limited 8Bit Global Pte. Ltd. (formerly known as 8I Media Pte. Ltd.) Hidden Champions Capital Management Pte. Ltd (formerly known as 8 Capital Pte. Ltd.) Digimatic Group Limited Singapore 100 100 100 100 Singapore 100 100 100 100 Mauritius Singapore 100 100 100 100 100 100 100 100 Singapore 100 100 100 100 - - - - - Singapore - - 72 - 28 Business management consultancy Business management consultancy Investment trading Computer programming and data processing and hosting Registered fund management company Investment holding and development of other software and programming activities Held through 8 Investment Pte. Ltd. Fusion 462 Pte. Ltd. Oxford Views Pte. Ltd. Vue at Red Hill Pte. Ltd. Dormant Dormant Business management consultancy Singapore Singapore Singapore Held through 8 Business Pte. Ltd. Hemus Pacific Private Limited Events organiser Singapore Held through 8IH Global Limited Hidden Champions Fund 8IH China Pte. Ltd. 8 MAD Group Sdn Bhd Held through 8IH China Pte. Ltd. 8IH China (Shanghai) Co. Ltd 信益安（上海）实业有限公司 Investment trading Business management consultancy Investment holdings Mauritius Singapore Malaysia Business and management consultancy services People’s Republic of China Held through 8IH China (Shanghai) Co. Ltd Shanghai Rong Dao Culture Communication Co. Ltd Seminar and programs organiser 上海融道文化传播有限公司 People’s Republic of China - - - - - - - - - - - - - - - - - - 49 - 35 49 100 100 100 100 100 100 - 51 100 65 100 65 51 51 - - - - - 35 49 - - - - - - - - 65 65 35 35 - 44.2 - 55.8 - 46 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 15. Investments in subsidiaries (continued) 15. Investments in subsidiaries (continued) The Group had the following subsidiaries as at 31 March 2018 and 2017: The Group had the following subsidiaries as at 31 March 2018 and 2017: Financial 86 Name Principal activities incorporation by parent by the Group Name Principal activities Country of business/ incorporation Proportion of ordinary shares directly held by parent 2018 % 2017 % Proportion of ordinary shares held by the Group 2017 2018 % % Proportion of ordinary shares held by non- controlling interests 2018 % 2017 % Held through 8 MAD Group Sdn Bhd MAD Integrated Sdn Bhd MAD Training Sdn Bhd Leap Asia Sdn. Bhd. Held through Digimatic Group Limited 8VIC Global Pte. Limited Digimatic Creatives Pte. Ltd. Digimatic Media Private Limited Webbynomics Pte. Ltd. Wewe Media Group Pte. Ltd. Held through 8VIC Global Pte. Limited 8VIC Malaysia Sdn. Bhd. 8VIC Singapore Pte. Ltd. (formerly known as Financial Joy Institute Pte. Ltd.) 8VIC (Australia) Pty Ltd 8VIC Taiwan Co., Ltd 8VIC (Thailand) Company Limited Advertising and event management Advertising, public relations and publicity programmes Advertising and event management Seminar and programs organiser Motion picture/ video production Conducting business courses/ advertising activities E-commerce Advertising activities Seminar and programs organiser Seminar and programs organiser Seminar and programs organiser Seminar and programs organiser Seminar and programs organiser Malaysia Malaysia Malaysia Singapore Singapore Singapore Singapore Singapore Malaysia Singapore Australia Taiwan Thailand Held through 8VIC Malaysia Sdn. Bhd. 8VIC JooY Media Sdn. Bhd. Agency and media Malaysia Held through Digimatic Creatives Pte. Ltd. Anonymous Production Sdn Bhd Motion picture/ video Malaysia production Held through Digimatic Media Private Limited Digimatic Media Sdn Bhd Keaworld Pte. Ltd. Conducting business courses E-commerce Malaysia Singapore - - - - - - - - - - - - - - - - - - - - 51 51 51 51 49 49 49 49 28.6 - 71.4 - 95 72 95 28 5 - - - - - - - - - - - - - 36.7 72 36.7 72 - - - - 63.3 28 63.3 28 72 72 95 95 28 28 64.8 50.4 50.4 50.4 72 72 72 - - - - - - - 35.2 49.6 49.6 49.6 28 28 28 - - - - 5 5 - - - - - - - 47 Proportion of ordinary shares directly held Proportion of ordinary shares held Country of business/ Proportion of ordinary shares held by non- controlling interests 2018 2017 2018 2017 2018 2017 % % % % % % ` Held by the Company: 8 Investment Pte. Ltd. Business management Singapore 100 100 100 100 8 Business Pte. Ltd. Business management Singapore 100 100 100 100 8IH Global Limited 8Bit Global Pte. Ltd. (formerly known as 8I Media Pte. Ltd.) Mauritius Singapore 100 100 100 100 100 100 100 100 Hidden Champions Capital Registered fund Singapore 100 100 100 100 Management Pte. Ltd (formerly management company known as 8 Capital Pte. Ltd.) Digimatic Group Limited Investment holding and Singapore - - 72 - 28 consultancy consultancy Investment trading Computer programming and data processing and hosting development of other software and programming activities Hemus Pacific Private Limited Events organiser Singapore - 51 Held through 8 Investment Pte. Ltd. Fusion 462 Pte. Ltd. Oxford Views Pte. Ltd. Vue at Red Hill Pte. Ltd. Held through 8 Business Pte. Ltd. Dormant Dormant Business management consultancy Singapore Singapore Singapore Held through 8IH Global Limited Hidden Champions Fund 8IH China Pte. Ltd. Investment trading Business management Mauritius Singapore consultancy 8 MAD Group Sdn Bhd Investment holdings Malaysia Held through 8IH China Pte. Ltd. 8IH China (Shanghai) Co. Ltd 信益安（上海）实业有限公司 Business and management consultancy services People’s Republic of China Held through 8IH China (Shanghai) Co. Ltd Shanghai Rong Dao Culture Communication Co. Ltd 上海融道文化传播有限公司 Seminar and programs organiser People’s Republic of China - - - - - - - - - - - - - - - - - 100 100 100 100 100 100 100 65 100 65 51 51 - 35 49 65 65 35 35 - 44.2 - 55.8 - - - - - - - - - - - - - - - - - - - 49 - 35 49 46 Annual Report FY2018For personal use only 87 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 15. Investments in subsidiaries (continued) Significant restrictions Cash and short-term deposits of S$635,919 are held in the People’s Republic of China and are subject to local exchange control regulations. These local exchange control regulations provide for restrictions on exporting capital from the country, other than through normal dividends. Carrying value of non-controlling interests Digimatic Group Limited and its subsidiaries Hemus Pacific Private Limited Others Total 2018 S$ 3,338,270 - 33,888 3,372,158 2017 S$ - 742,845 1,022,632 1,765,477 Summarised financial information of subsidiaries with material non-controlling interests Set out below are the summarised financial information for each subsidiary that has non-controlling interests that are material to the Group. These are presented before inter-company eliminations. Summarised statement of financial position Current Assets Liabilities Total current net assets Non-current Assets Liabilities Total non-current net assets Net assets Digimatic Group Limited and its subsidiaries 31 March 2018 S$ Hemus Pacific Private Limited 31 March 2017 S$ 14,018,323 (6,570,130) 7,448,193 1,803,798 (409,496) 1,394,302 14,028,788 (130,771) 13,898,017 123,052 (1,344) 121,708 21,346,210 1,516,010 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 15. Investments in subsidiaries (continued) Summarised statement of comprehensive income Digimatic Group Limited and its Hemus Pacific subsidiaries Private Limited For period ended For period ended 31 March 31 March 2018 S$ 17,305,069 549,849 (105,183) 444,666 2017 S$ 2,238,937 (107,089) - (107,089) (75,305) 52,474 Digimatic Group Limited and its Hemus Pacific subsidiaries Private Limited 31 March 2018 31 March 2017 S$ S$ 175,356 28,650 64,430 268,436 (108,775) (1,596) - (68,315) (178,686) Revenue Profit/(loss) before income tax Income tax expense Profit/(loss) for the year Total comprehensive income allocated to non-controlling interests Summarised statement of cash flows Dividends paid to non-controlling interests 220,000 98,000 Cash flows from operating activities Cash generated from operations Finance costs paid Interest income received Income tax refunded/(paid) Net cash provided by/(used in) operating activities Net cash generated from/(used in) investing activities 9,730,666 (38,759) Net cash used in financing activities (4,412,009) (226,133) Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 5,587,093 4,206,647 9,793,740 (443,578) 1,419,442 975,864 There were no transactions with non-controlling interests for the financial years ended 31 March 2018 and 2017, except as disclosed in Note 30. 48 49 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 15. Investments in subsidiaries (continued) Significant restrictions Cash and short-term deposits of S$635,919 are held in the People’s Republic of China and are subject to local exchange control regulations. These local exchange control regulations provide for restrictions on exporting capital from the country, other than through normal dividends. Carrying value of non-controlling interests Digimatic Group Limited and its subsidiaries Hemus Pacific Private Limited Others Total 2018 S$ 3,338,270 - 33,888 3,372,158 2017 S$ - 742,845 1,022,632 1,765,477 Summarised financial information of subsidiaries with material non-controlling interests NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 15. Investments in subsidiaries (continued) Summarised statement of comprehensive income Revenue Profit/(loss) before income tax Income tax expense Profit/(loss) for the year Total comprehensive income allocated to non-controlling interests Financial 88 Digimatic Group Limited and its subsidiaries For period ended 31 March 2018 S$ Hemus Pacific Private Limited For period ended 31 March 2017 S$ 17,305,069 549,849 (105,183) 444,666 2,238,937 (107,089) - (107,089) (75,305) 52,474 Set out below are the summarised financial information for each subsidiary that has non-controlling interests that Dividends paid to non-controlling interests 220,000 98,000 are material to the Group. These are presented before inter-company eliminations. Summarised statement of financial position Summarised statement of cash flows Total current net assets Current Assets Liabilities Non-current Assets Liabilities Net assets Total non-current net assets Digimatic Group Limited and its Hemus Pacific subsidiaries 31 March 2018 Private Limited 31 March 2017 S$ S$ 14,018,323 (6,570,130) 7,448,193 1,803,798 (409,496) 1,394,302 14,028,788 (130,771) 13,898,017 123,052 (1,344) 121,708 21,346,210 1,516,010 Cash flows from operating activities Cash generated from operations Finance costs paid Interest income received Income tax refunded/(paid) Net cash provided by/(used in) operating activities Digimatic Group Limited and its subsidiaries 31 March 2018 S$ Hemus Pacific Private Limited 31 March 2017 S$ 175,356 28,650 64,430 268,436 (108,775) (1,596) - (68,315) (178,686) Net cash generated from/(used in) investing activities 9,730,666 (38,759) Net cash used in financing activities (4,412,009) (226,133) Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 5,587,093 4,206,647 9,793,740 (443,578) 1,419,442 975,864 There were no transactions with non-controlling interests for the financial years ended 31 March 2018 and 2017, except as disclosed in Note 30. 48 49 Annual Report FY2018For personal use only 89 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 15. Investments in subsidiaries (continued) Note 15(d): Current year disposal of a subsidiary On 19 May 2017, the Company and its wholly owned subsidiary, 8 Business Pte. Ltd., entered into an agreement with a founder of Hemus Pacific Private Limited (“Hemus”) and also as shareholder Clear A2Z Pte. Ltd. for sale of the Company’s entire interest in Hemus, in consideration for 7,000,000 8I Holdings (“8IH”) shares (equivalent of S$3,716,405 as of transaction date) in the form of treasury shares (held by Clear A2Z Pte. Ltd.). The Transaction was approved during annual general meeting, on 27 July 2017. As a result, there was loss of control and Hemus ceased to be a subsidiary of the Group. Accordingly, a gain on disposal of a subsidiary of S$971,860 is recognised. The effect of the disposal was as follows: Consideration for 7,000,000 8IH shares in the form of treasury shares Carrying amounts of assets and liabilities disposed of Net assets derecognised (including goodwill of S$1,901,072 and cash in bank of S$1,043,276) Less: Non-controlling interests Net assets disposed of Gain from sale of a subsidiary’s shares (Note 4) Note 15(e): Prior year disposal of a subsidiary 2018 S$ 3,716,405 3,554,940 (810,395) 2,744,545 971,860 On 19 August 2016, the Company disposed of its entire interest in Oxford Views Pty Ltd for a cash consideration of S$10,581,705. The effects of the disposal on the cash flows of the Group were: 16. Investment in an associated company Carrying amounts of assets and liabilities disposed of Cash and cash equivalents Trade and other receivables Total assets Trade and other payables Net assets disposed of 2017 S$ 7,156 215,540 222,696 (11,341) 211,355 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 15. Investments in subsidiaries (continued) Note 15(e): Prior year disposal of a subsidiary (continued) The aggregate cash inflows arising from the disposal of Oxford Views Pty Ltd were: Net assets disposed of (as above) Gain from sale of a subsidiary’s shares (Note 4) Cash proceeds from disposal Less: Cash and cash equivalents in subsidiary disposed of Net cash inflow on disposal Note 15 (f): Prior year disposal of associated company On 28 September 2016, Fusion 462 Pte. Ltd. and Vue at Red Hill Pte. Ltd. partially disposed of its holding in Velocity Property Group Limited (“Velocity”) for a consideration of S$3,085,028 (cash inflows arising from disposal). The Group recognised a gain on disposal of S$1,199,836 (Note 4) and the Group’s shareholding in Velocity reduced to 10.7%. Accordingly, Velocity ceased to be an associated company of the Group. Net assets disposed of (Note 16) Gain on disposal of an associated company’s shares (Note 4) Cash proceeds from disposal CT Hardware Sdn. Bhd. At beginning of financial year Acquisition of associated companies Share of (loss)/profit of associated companies Disposal of interest in associated company (Note 15(f)) Reclassification of remaining interest to available-for-sale (Note 17) Translation difference At end of financial year Set out below is the associated company of the Group as at 31 March 2018, which, in the opinion of the directors, are material to the Group. The associated company as listed below have share capital consisting solely of ordinary shares, which is held directly by the Group; the country of incorporation is also its principal place of business. 2017 S$ 211,355 10,370,350 10,581,705 (7,156) 10,574,549 2017 S$ 1,885,192 1,199,836 3,085,028 Group 2018 S$ 2017 S$ 1,263,908 1,425,911 1,425,911 (79,789) (82,214) - - - 1,263,908 1,885,151 1,287,440 566,675 (1,885,192) 89,274 (517,437) 1,425,911 50 51 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 15. Investments in subsidiaries (continued) Note 15(d): Current year disposal of a subsidiary On 19 May 2017, the Company and its wholly owned subsidiary, 8 Business Pte. Ltd., entered into an agreement with a founder of Hemus Pacific Private Limited (“Hemus”) and also as shareholder Clear A2Z Pte. Ltd. for sale of the Company’s entire interest in Hemus, in consideration for 7,000,000 8I Holdings (“8IH”) shares (equivalent of S$3,716,405 as of transaction date) in the form of treasury shares (held by Clear A2Z Pte. Ltd.). The Transaction was approved during annual general meeting, on 27 July 2017. As a result, there was loss of control and Hemus ceased to be a subsidiary of the Group. Accordingly, a gain on disposal of a subsidiary of S$971,860 is recognised. The effect of the disposal was as follows: NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 15. Investments in subsidiaries (continued) Note 15(e): Prior year disposal of a subsidiary (continued) The aggregate cash inflows arising from the disposal of Oxford Views Pty Ltd were: Net assets disposed of (as above) Gain from sale of a subsidiary’s shares (Note 4) Cash proceeds from disposal Less: Cash and cash equivalents in subsidiary disposed of Net cash inflow on disposal Note 15 (f): Prior year disposal of associated company Financial 90 2017 S$ 211,355 10,370,350 10,581,705 (7,156) 10,574,549 On 28 September 2016, Fusion 462 Pte. Ltd. and Vue at Red Hill Pte. Ltd. partially disposed of its holding in Velocity Property Group Limited (“Velocity”) for a consideration of S$3,085,028 (cash inflows arising from disposal). The Group recognised a gain on disposal of S$1,199,836 (Note 4) and the Group’s shareholding in Velocity reduced to 10.7%. Accordingly, Velocity ceased to be an associated company of the Group. On 19 August 2016, the Company disposed of its entire interest in Oxford Views Pty Ltd for a cash consideration of S$10,581,705. The effects of the disposal on the cash flows of the Group were: 16. Investment in an associated company Carrying amounts of assets and liabilities disposed of CT Hardware Sdn. Bhd. Net assets disposed of (Note 16) Gain on disposal of an associated company’s shares (Note 4) Cash proceeds from disposal At beginning of financial year Acquisition of associated companies Share of (loss)/profit of associated companies Disposal of interest in associated company (Note 15(f)) Translation difference Reclassification of remaining interest to available-for-sale (Note 17) At end of financial year 2017 S$ 1,885,192 1,199,836 3,085,028 Group 2018 S$ 2017 S$ 1,263,908 1,425,911 1,425,911 - (79,789) - (82,214) - 1,263,908 1,885,151 1,287,440 566,675 (1,885,192) 89,274 (517,437) 1,425,911 Consideration for 7,000,000 8IH shares in the form of treasury shares Carrying amounts of assets and liabilities disposed of Net assets derecognised (including goodwill of S$1,901,072 and cash in bank of S$1,043,276) Less: Non-controlling interests Net assets disposed of Gain from sale of a subsidiary’s shares (Note 4) Note 15(e): Prior year disposal of a subsidiary Cash and cash equivalents Trade and other receivables Total assets Trade and other payables Net assets disposed of 2018 S$ 3,716,405 3,554,940 (810,395) 2,744,545 971,860 2017 S$ 7,156 215,540 222,696 (11,341) 211,355 Set out below is the associated company of the Group as at 31 March 2018, which, in the opinion of the directors, are material to the Group. The associated company as listed below have share capital consisting solely of ordinary shares, which is held directly by the Group; the country of incorporation is also its principal place of business. 50 51 Annual Report FY2018For personal use only 91 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 16. Investments in an associated company (continued) 16. Investments in an associated company (continued) Name of entity Place of business/ country of incorporation % of ownership interest CT Hardware Sdn. Bhd. Malaysia 49.9% CT Hardware Sdn. Bhd. (“CTH”) is a wholesale and retail sale of power tools, equipment, and machinery. The acquisition of CTH is in line with the Group’s value investing strategy of investing in undervalued private businesses with growth potential. There are no contingent liabilities relating to the Group’s interest in the associated company. Set out below is the summarised financial information for CTH. Summarised statement of financial position Current assets Includes: - Cash and cash equivalents Current liabilities Includes: - Financial liabilities (excluding trade payables) Non-current assets Non-current liabilities Includes: - Financial liabilities Net assets CTH As at 31 March 2018 S$ 2017 S$ 2,544,152 2,716,798 586,123 848,733 (670,773) (910,706) (134,059) (209,506) 2,033,410 2,043,057 (1,370,040) (1,332,084) (1,370,040) (1,332,084) 2,536,749 2,517,065 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 Summarised statement of comprehensive income Revenue and other income Expenses Includes: - Depreciation - Interest expense (Loss)/Profit before tax Income tax expense (Loss)/Profit after tax At 1 Apr 2017 / Net assets at date of acquisition Profit for the year Foreign exchange differences End of financial year Interest in associated companies (49.9%) Goodwill Foreign exchange differences Carrying value CTH For the year ended 31 March 2018 S$ 2017 S$ 6,794,611 6,071,299 (6,954,527) (5,876,287) (122,174) (126,744) (109,637) (146,691) (159,916) 195,012 - (12,253) (159,916) 182,759 CTH As at 31 March 2018 S$ 2017 S$ 2,517,065 (159,916) 179,600 2,536,749 1,265,838 45,666 (47,596) 1,263,908 2,527,355 182,759 (193,049) 2,517,065 1,256,016 45,666 124,229 1,425,911 The information above reflects the amounts presented in the financial statements of the associated company (and not the Group’s share of those amounts). Reconciliation of summarised financial information Reconciliation of the summarised financial information presented, to the carrying amount of the Group’s interest in the associated companies, is as follows: 52 53 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only Name of entity Place of business/ country of incorporation % of ownership interest CT Hardware Sdn. Bhd. Malaysia 49.9% CT Hardware Sdn. Bhd. (“CTH”) is a wholesale and retail sale of power tools, equipment, and machinery. The acquisition of CTH is in line with the Group’s value investing strategy of investing in undervalued private businesses with growth potential. There are no contingent liabilities relating to the Group’s interest in the associated company. Set out below is the summarised financial information for CTH. Summarised statement of financial position - Financial liabilities (excluding trade payables) (134,059) (209,506) Current assets Includes: - Cash and cash equivalents Current liabilities Includes: Non-current assets Non-current liabilities Includes: - Financial liabilities Net assets CTH As at 31 March 2018 S$ 2017 S$ 2,544,152 2,716,798 586,123 848,733 (670,773) (910,706) 2,033,410 2,043,057 (1,370,040) (1,332,084) (1,370,040) (1,332,084) 2,536,749 2,517,065 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 16. Investments in an associated company (continued) 16. Investments in an associated company (continued) Summarised statement of comprehensive income Revenue and other income Expenses Includes: - Depreciation - Interest expense (Loss)/Profit before tax Income tax expense (Loss)/Profit after tax Financial 92 CTH For the year ended 31 March 2018 S$ 2017 S$ 6,794,611 6,071,299 (6,954,527) (5,876,287) (122,174) (126,744) (109,637) (146,691) (159,916) 195,012 - (12,253) (159,916) 182,759 The information above reflects the amounts presented in the financial statements of the associated company (and not the Group’s share of those amounts). Reconciliation of summarised financial information Reconciliation of the summarised financial information presented, to the carrying amount of the Group’s interest in the associated companies, is as follows: At 1 Apr 2017 / Net assets at date of acquisition Profit for the year Foreign exchange differences End of financial year Interest in associated companies (49.9%) Goodwill Foreign exchange differences Carrying value CTH As at 31 March 2018 S$ 2017 S$ 2,517,065 (159,916) 179,600 2,536,749 1,265,838 45,666 (47,596) 1,263,908 2,527,355 182,759 (193,049) 2,517,065 1,256,016 45,666 124,229 1,425,911 52 53 Annual Report FY2018For personal use only 93 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 17. Financial assets, at FVOCI/available-for-sale 18. Trade and other payables Financial assets, at FVOCI comprise of equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value through OCI rather than profit or loss as these are strategic investments and the Group considered this to be more relevant. Group 2018 S$ 2017 S$ Beginning of financial year Reclassification at 1 April 2017 Additions Acquisition of subsidiaries Fair value losses recognised in other comprehensive income (Note 24) Reclassification from financial assets at FVOCI to subsidiary (Note 30(i)(e)) End of financial year - 13,025,188 88,964 100,000 (11,171,173) (291,102) 1,751,877 Company Accruals for operating expenses 2018 S$ - 428,267 89,924 - (500,113) (18,078) - 2017 S$ - - - - - - - - - - - - - - The Group has elected to recognise changes in the fair value of all its equity investments not held for trading and previously classified as available-for-sale in other comprehensive income. As a result, assets with a fair value of S$13,025,188 were reclassified from “financial assets, available-for-sale” to “financial assets, at FVOCI” on 1 April 2017. Financial assets, available-for sale is summarised as below: Beginning of financial year Reclassification as at 1 April 2017 Additions Reclassification from associated company to available- for-sale (Note 16) Fair value gains recognised in profit or loss from initial re-measurement (Note 5) Fair value (losses)/gains recognised in other comprehensive income (Note 24) End of financial year Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 13,025,188 13,713,260 - (13,025,188) 353,370 - 428,267 (428,267) - - - 352,225 - - 517,437 1,160,825 (2,719,704) - - 13,025,188 - - - - - - 76,042 428,267 Financial assets at FVOCI/available-for-sale are analysed as follows: Listed securities Unlisted securities Total Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 1,637,998 13,011,309 13,879 1,751,877 13,025,188 113,879 - - - 428,267 - 428,267 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 Current Trade payables Deposits received GST payable Other payables Amount owing to subsidiaries Provision for reinstatement Total trade and other payables 19. Finance lease liabilities Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 870,772 415,894 2,355,879 1,654,003 40,165 368,828 177,511 701,518 - - 53,256 348,773 65,000 98,087 238,970 375,586 - - 78,686 55,171 4,006,468 3,192,064 - - - - - - 3,693,680 2,782,540 4,494,147 4,126,264 The Group leases certain motor vehicles from non-related parties under finance leases. The lease agreements do not have renewal clauses but provide the Group with options to purchase the leased assets at nominal values at the end of the lease term. Minimum lease payments due - Not later than one year - Between one and five years Less: Future finance charges Present value of finance lease liabilities The present values of finance lease liabilities are analysed as follows: Not later than one year Later than one year - Between one and five years Total Group 2018 S$ 2017 S$ 37,286 60,144 97,430 (6,160) 91,270 56,471 100,282 156,753 (14,533) 142,220 Group 2018 S$ 2017 S$ 33,578 50,180 57,692 92,040 91,270 142,220 54 55 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 17. Financial assets, at FVOCI/available-for-sale 18. Trade and other payables Current Trade payables Accruals for operating expenses Deposits received GST payable Other payables Amount owing to subsidiaries Provision for reinstatement Total trade and other payables 19. Finance lease liabilities Financial 94 Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 870,772 2,355,879 - 53,256 348,773 - 65,000 3,693,680 415,894 1,654,003 98,087 238,970 375,586 - - 2,782,540 40,165 368,828 - - 78,686 4,006,468 - 4,494,147 177,511 701,518 - - 55,171 3,192,064 - 4,126,264 The Group leases certain motor vehicles from non-related parties under finance leases. The lease agreements do not have renewal clauses but provide the Group with options to purchase the leased assets at nominal values at the end of the lease term. Minimum lease payments due - Not later than one year - Between one and five years Less: Future finance charges Present value of finance lease liabilities The present values of finance lease liabilities are analysed as follows: Not later than one year Later than one year - Between one and five years Total Group 2018 S$ 2017 S$ 37,286 60,144 97,430 (6,160) 91,270 56,471 100,282 156,753 (14,533) 142,220 Group 2018 S$ 2017 S$ 33,578 50,180 57,692 92,040 91,270 142,220 55 Financial assets, at FVOCI comprise of equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value through OCI rather than profit or loss as these are strategic investments and the Group considered this to be more relevant. Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ Beginning of financial year Reclassification at 1 April 2017 Additions Acquisition of subsidiaries Fair value losses recognised in other comprehensive income (Note 24) Reclassification from financial assets at FVOCI to subsidiary (Note 30(i)(e)) End of financial year - 13,025,188 88,964 100,000 (11,171,173) (291,102) 1,751,877 - - - - - - - 428,267 89,924 (500,113) (18,078) The Group has elected to recognise changes in the fair value of all its equity investments not held for trading and previously classified as available-for-sale in other comprehensive income. As a result, assets with a fair value of S$13,025,188 were reclassified from “financial assets, available-for-sale” to “financial assets, at FVOCI” on 1 April 2017. Financial assets, available-for sale is summarised as below: Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ Beginning of financial year Reclassification as at 1 April 2017 Additions 13,025,188 13,713,260 (13,025,188) 428,267 (428,267) 352,225 Reclassification from associated company to available- for-sale (Note 16) Fair value gains recognised in profit or loss from initial re-measurement (Note 5) Fair value (losses)/gains recognised in other comprehensive income (Note 24) End of financial year Financial assets at FVOCI/available-for-sale are analysed as follows: - 353,370 517,437 1,160,825 - - - - (2,719,704) - 13,025,188 76,042 428,267 Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 1,637,998 13,011,309 113,879 13,879 1,751,877 13,025,188 - - - 428,267 - 428,267 Listed securities Unlisted securities Total - - - - - - - - - - - - - - - - - - - 54 Annual Report FY2018For personal use only 95 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 20. Unearned revenue Current Non-current Total Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 4,938,840 69,523 5,008,363 3,157,151 538,295 3,695,446 274,704 - 274,704 - - - This represents revenue received from customers but not yet recognised to the profit or loss as service has yet to be rendered as at reporting date. 21. Redeemable participating shares As at beginning of year Reclassification of non-controlling unit holders Proceeds received from fund’s non-controlling unit holders Share of loss attributable to the unit holders of redeemable participating shares As at end of year Group 2018 S$ 2017 S$ - 617,114 6,814,793 (395,985) 7,035,922 - - - - - Hidden Champions Fund is an investment fund with redeemable participating shares. These shares relate to amounts payable to non-controlling unit holders of the redeemable participating shares in Hidden Champions Fund. The unit holders are entitled to redeem their shares in cash at the option of the holders at the value proportionate to the investors share in the fund’s net assets at the redemption price. 22. Deferred income tax assets/(liabilities) Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The amounts, determined after appropriate offsetting, are shown on the consolidated statement of financial position as follows: Deferred income tax assets - To be settled within one year Deferred income tax liabilities - To be settled within one year Group 2018 S$ 2017 S$ 217,905 - (93,591) (5,344) 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 22. Deferred income tax assets/(liabilities) (continued) Movement in deferred income tax account is as follows: Deferred income tax assets are recognised for tax losses and capital allowances carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable. The Group has unrecognised tax losses of S$5,736,918 (2017: S$1,639,655) at the balance sheet date which can be carried forward and used to offset against future taxable income subject to meeting certain statutory requirements by those companies with unrecognised tax losses and capital allowances in their respective countries of incorporation. The movement in deferred income tax assets/(liabilities) (prior to offsetting of balances within the same tax Beginning of financial year Currency translation differences Acquisition of subsidiaries Disposal of a subsidiary Tax credited to - profit or loss (Note 8(a)) End of financial year jurisdiction) is as follows: Group Deferred income tax liabilities 2018 Beginning of financial year Currency translation differences Acquisition of subsidiaries Credited to profit or loss End of financial year 2017 Beginning of financial year Credited to profit or loss End of financial year Group 2018 S$ (5,344) 11,829 (91,880) 1,344 208,365 124,314 2017 S$ (11,344) - - - 6,000 (5,344) Accelerated tax depreciation Fair value gains - net S$ S$ (5,344) 1,814 (22,578) 1,819 (24,289) (11,344) 6,000 (5,344) (69,302) (69,302) - - - - - - Total S$ (5,344) 1,814 (91,880) 1,819 (93,591) (11,344) 6,000 (5,344) 56 57 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 20. Unearned revenue Current Non-current Total Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ 4,938,840 3,157,151 274,704 69,523 538,295 - 5,008,363 3,695,446 274,704 - - - - - - - - Group 2018 S$ 2017 S$ - 617,114 6,814,793 (395,985) 7,035,922 This represents revenue received from customers but not yet recognised to the profit or loss as service has yet to be rendered as at reporting date. 21. Redeemable participating shares As at beginning of year Reclassification of non-controlling unit holders Proceeds received from fund’s non-controlling unit holders Share of loss attributable to the unit holders of redeemable participating shares As at end of year Hidden Champions Fund is an investment fund with redeemable participating shares. These shares relate to amounts payable to non-controlling unit holders of the redeemable participating shares in Hidden Champions Fund. The unit holders are entitled to redeem their shares in cash at the option of the holders at the value proportionate to the investors share in the fund’s net assets at the redemption price. 22. Deferred income tax assets/(liabilities) Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The amounts, determined after appropriate offsetting, are shown on the consolidated statement of financial position as follows: Deferred income tax assets - To be settled within one year Deferred income tax liabilities - To be settled within one year Group 2018 S$ 2017 S$ 217,905 - (93,591) (5,344) 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 22. Deferred income tax assets/(liabilities) (continued) Movement in deferred income tax account is as follows: Beginning of financial year Currency translation differences Acquisition of subsidiaries Disposal of a subsidiary Tax credited to - profit or loss (Note 8(a)) End of financial year Financial 96 Group 2018 S$ (5,344) 11,829 (91,880) 1,344 208,365 124,314 2017 S$ (11,344) - - - 6,000 (5,344) Deferred income tax assets are recognised for tax losses and capital allowances carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable. The Group has unrecognised tax losses of S$5,736,918 (2017: S$1,639,655) at the balance sheet date which can be carried forward and used to offset against future taxable income subject to meeting certain statutory requirements by those companies with unrecognised tax losses and capital allowances in their respective countries of incorporation. The movement in deferred income tax assets/(liabilities) (prior to offsetting of balances within the same tax jurisdiction) is as follows: Group Deferred income tax liabilities 2018 Beginning of financial year Currency translation differences Acquisition of subsidiaries Credited to profit or loss End of financial year 2017 Beginning of financial year Credited to profit or loss End of financial year Accelerated tax depreciation S$ Fair value gains - net S$ (5,344) 1,814 (22,578) 1,819 (24,289) (11,344) 6,000 (5,344) - - (69,302) - (69,302) - - - Total S$ (5,344) 1,814 (91,880) 1,819 (93,591) (11,344) 6,000 (5,344) 56 57 Annual Report FY2018For personal use only 97 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 22. Deferred income tax assets/(liabilities) (continued) Deferred income tax assets 2018 Beginning of financial year Currency translation differences Credited to profit or loss End of financial year 2017 Beginning/End of financial year 23. Share capital Group and Company 2018 Beginning/End of financial year Accelerated tax depreciation S$ - 213 5,430 5,643 Unearned Revenue S$ - 8,012 204,250 212,262 Total S$ - 8,225 209,680 217,905 - - - Number of shares Amount S$ 361,978,585 34,422,910 24. Other reserves 2017 Beginning of financial year Share buy back Additional share issuance: - Acquisition of 51% equity interest in FJI (Note 30(ii)) - Acquisition of 49% non-controlling interest FJI through share swap of the Company’s shares (Note 30(ii)) End of financial year 356,894,200 (385,442) 30,736,966 (286,707) 2,551,939 2,040,000 2,917,888 361,978,585 1,932,651 34,422,910 (a) Composition: Fair value reserve Currency translation reserve Capital reserve (b) Movements: (i) Fair value reserve All issued ordinary shares are fully paid. There is no par value for these ordinary shares. On 29 June 2016, the Group acquired 51% equity interest in Financial Joy Institute Pte. Ltd. (“FJI”) by way of share swap for a purchase consideration of S$2.04 million (2,551,939 shares). The Group acquired the 49% non-controlling interest of FJI on 31 March 2017 (9 months after the initial acquisition date) for a purchase consideration through the issuance of 2,917,888 Company’s shares amounting to S$1,932,651, which is the market share price as at the completion date of the transaction. 58 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 23. Share capital (continued) Treasury shares Group and Company 2018 Beginning of financial year Treasury shares purchase (a) Treasury shares re-issued (b) End of financial year a. Treasury share purchase Number of shares 7,000,000 (7,000,000) - - - Amount S$ 3,716,405 (2,072,504) (1,643,901) - - Loss on re-issued treasury shares recognised in capital reserve (b) The Group has disposed its entire interest in Hemus Pacific Private Limited (“Hemus”) to Clear A2Z Pte Ltd, an investment holding company owned by one of the founders of Hemus, for a consideration of 7,000,000 shares of the Company, valued at S$3,716,405 (Note 15(d)). b. On 25 January 2018, the Group re-issued its 7,000,000 treasury shares (S$2,072,504 at the Company’s quoted price as of the date of transaction) to acquire an additional 2% equity interest in DMC (Note 24). The loss on the re-issuance of the treasury shares amounting to S$1,643,901 is recognised in the capital reserve. Group Company 2018 S$ 2017 S$ 2018 S$ 2017 S$ (10,088,712) 1,082,461 (424,071) 76,042 (913,252) 113,915 - 132,424 (1,917,162) (1,638,846) (10,869,540) (720,786) (2,062,917) 76,042 Beginning of financial year 1,082,461 3,802,165 76,042 Financial assets through other comprehensive income - Fair value (losses)/gains from financial assets at FVOCI/AFS (Note 17) End of financial year (11,171,173) (2,719,704) (10,088,712) 1,082,461 (500,113) (424,071) 76,042 76,042 (ii) Currency translation reserve Beginning of financial year 113,915 (9,094) Net currency translation differences of financial statements of foreign subsidiaries and associated companies End of financial year (1,027,167) (913,252) 123,009 113,915 - - - - - - - - - 59 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 98 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 22. Deferred income tax assets/(liabilities) (continued) Deferred income tax assets NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 23. Share capital (continued) Treasury shares 2018 Beginning of financial year Currency translation differences Credited to profit or loss End of financial year 2017 Beginning/End of financial year 23. Share capital Group and Company 2018 Beginning/End of financial year 2017 Beginning of financial year Share buy back Additional share issuance: Accelerated depreciation tax S$ Unearned Revenue S$ Total S$ - 213 5,430 5,643 - 8,012 204,250 212,262 8,225 209,680 217,905 - - - - Number of shares Amount S$ Group and Company 2018 Beginning of financial year Treasury shares purchase (a) Treasury shares re-issued (b) Loss on re-issued treasury shares recognised in capital reserve (b) End of financial year Number of shares - 7,000,000 (7,000,000) - - Amount S$ - 3,716,405 (2,072,504) (1,643,901) - a. Treasury share purchase The Group has disposed its entire interest in Hemus Pacific Private Limited (“Hemus”) to Clear A2Z Pte Ltd, an investment holding company owned by one of the founders of Hemus, for a consideration of 7,000,000 shares of the Company, valued at S$3,716,405 (Note 15(d)). b. On 25 January 2018, the Group re-issued its 7,000,000 treasury shares (S$2,072,504 at the Company’s quoted price as of the date of transaction) to acquire an additional 2% equity interest in DMC (Note 24). The loss on the re-issuance of the treasury shares amounting to S$1,643,901 is recognised in the capital reserve. 361,978,585 34,422,910 24. Other reserves 356,894,200 30,736,966 (385,442) (286,707) 2,551,939 2,040,000 2,917,888 361,978,585 1,932,651 34,422,910 (a) Composition: Fair value reserve Currency translation reserve Capital reserve (b) Movements: (i) Fair value reserve Beginning of financial year Financial assets through other comprehensive income - Fair value (losses)/gains from financial assets Group Company 2018 S$ 2017 S$ 2018 S$ 2017 S$ (10,088,712) (913,252) 132,424 (10,869,540) 1,082,461 113,915 (1,917,162) (720,786) (424,071) - (1,638,846) (2,062,917) 76,042 - - 76,042 1,082,461 3,802,165 76,042 - at FVOCI/AFS (Note 17) End of financial year (11,171,173) (10,088,712) (2,719,704) 1,082,461 (500,113) (424,071) 76,042 76,042 (ii) Currency translation reserve Beginning of financial year 113,915 (9,094) Net currency translation differences of financial statements of foreign subsidiaries and associated companies End of financial year (1,027,167) (913,252) 123,009 113,915 - - - - - - 59 58 - Acquisition of 51% equity interest in FJI (Note 30(ii)) - Acquisition of 49% non-controlling interest FJI through share swap of the Company’s shares (Note 30(ii)) End of financial year All issued ordinary shares are fully paid. There is no par value for these ordinary shares. On 29 June 2016, the Group acquired 51% equity interest in Financial Joy Institute Pte. Ltd. (“FJI”) by way of share swap for a purchase consideration of S$2.04 million (2,551,939 shares). The Group acquired the 49% non-controlling interest of FJI on 31 March 2017 (9 months after the initial acquisition date) for a purchase consideration through the issuance of 2,917,888 Company’s shares amounting to S$1,932,651, which is the market share price as at the completion date of the transaction. Annual Report FY2018For personal use only 99 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 24. Other reserves (continued) 25. Dividends (iii) Capital reserve Beginning of financial year Disposal of 25.3% interest in 8VIC Global and its subsidiaries Decrease in equity attributable to non-controlling interest End of financial year Group Company 2018 S$ 2017 S$ 2018 S$ 2017 S$ (1,917,162) 5,849,643 - - - - (3,800,057) 132,424 (1,917,162) (1,638,846) (1,917,162) (1,638,846) - - - - Declared and paid during the financial year Ordinary dividends Final exempt (one-tier) dividend for 2017: 0.25 (SGD cents) (2016: 0.50 cents) per share 904,947 1,796,578 Group 2018 S$ 2017 S$ 26. Commitments Disposal of 25.3% interest in 8VIC Global and its subsidiaries (a) Operating lease commitments - where the Group is a lessee On 28 November 2017, as part of the DMC’s acquisition as described in Note 30 (i), the Group disposed 25.3% interests of 8VIC Global Pte. Limited and its subsidiaries with carrying value of S$121,580. The excess of the fair value consideration from acquisition of DMC and the carrying amount of 25.3% non -controlling interests was adjusted in the capital reserve amounting to S$5,849,643. Fair value consideration from acquisition of DMC (A) Carrying amount of the 25.3% non-controlling interests of 8VIC Global Pte. Ltd. and its subsidiaries (B) Excess of fair value consideration recognised in parent’s equity (A)-(B) Current year decrease in equity attributable to non-controlling interest 2018 S$ 5,971,223 (121,580) 5,849,643 On 25 January 2018, he Group acquired 2% equity interest in DMC by re-issuing 7,000,000 treasury shares at a fair value of S$2,072,504 which represents 8IH’s quoted price as of the date of transaction (Note 23(b)) and cash S$238,215. The difference between the total consideration above of S$2,310,719 and the carrying value of DMC’s non- controlling interest of S$149,505 amounting to S$2,161,214 is recognised in the capital reserve. In addition, the loss on the re-issuance of the treasury shares amounting to S$1,643,901 (Note 23(b)) is recognised in the capital reserve. Prior year decrease in equity attributable to non-controlling interest The calculation of premium on acquisition of non-controlling interest as of the date of acquisition 49% non- controlling interest in FJI is as follow: 2017 Acquisition of remaining 49% non- controlling interest in FJI Share capital of the Company (Note 23) S$ Non-controlling interest – FJI (49%) S$ Non-controlling interest – 8VIG (5%) S$ Capital reserve S$ 1,932,651 (125,516) 110,027 (1,917,162) The Group leases office premises and event spaces from non-related parties under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. The future minimum lease payables under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities, are as follows: (b) Operating lease commitments - where the Group is a lessor The Group lease out event rental space to non-related parties under non-cancellable operating leases. The lessees are required to pay either absolute fixed annual increase to the lease payments or contingent rents computed based on their sales achieved during the lease period. The future minimum lease receivables under non-cancellable operating leases contracted for at the balance sheet date but not recognised as receivables, are as follows: Not later than one year Between one and five years Not later than one year Between one and five years Group 2018 S$ 2017 S$ 1,593,000 2,319,000 3,912,000 1,445,000 1,305,000 2,750,000 Group 2018 S$ 2017 S$ 298,726 209,594 508,320 - - - 60 61 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 24. Other reserves (continued) 25. Dividends Financial 100 Declared and paid during the financial year Ordinary dividends Final exempt (one-tier) dividend for 2017: 0.25 (SGD cents) (2016: 0.50 cents) per share 904,947 1,796,578 Group 2018 S$ 2017 S$ Disposal of 25.3% interest in 8VIC Global and its subsidiaries (a) Operating lease commitments - where the Group is a lessee 26. Commitments The Group leases office premises and event spaces from non-related parties under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. The future minimum lease payables under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities, are as follows: Not later than one year Between one and five years Group 2018 S$ 2017 S$ 1,593,000 2,319,000 3,912,000 1,445,000 1,305,000 2,750,000 (b) Operating lease commitments - where the Group is a lessor The Group lease out event rental space to non-related parties under non-cancellable operating leases. The lessees are required to pay either absolute fixed annual increase to the lease payments or contingent rents computed based on their sales achieved during the lease period. The future minimum lease receivables under non-cancellable operating leases contracted for at the balance sheet date but not recognised as receivables, are as follows: Not later than one year Between one and five years Group 2018 S$ - - - 2017 S$ 298,726 209,594 508,320 60 61 (iii) Capital reserve Beginning of financial year Disposal of 25.3% interest in 8VIC Global and its subsidiaries Decrease in equity attributable to non-controlling interest End of financial year Group Company 2018 S$ 2017 S$ 2018 S$ 2017 S$ (1,917,162) 5,849,643 - - - - (3,800,057) (1,917,162) (1,638,846) 132,424 (1,917,162) (1,638,846) - - - - On 28 November 2017, as part of the DMC’s acquisition as described in Note 30 (i), the Group disposed 25.3% interests of 8VIC Global Pte. Limited and its subsidiaries with carrying value of S$121,580. The excess of the fair value consideration from acquisition of DMC and the carrying amount of 25.3% non -controlling interests was adjusted in the capital reserve amounting to S$5,849,643. 2018 S$ 5,971,223 (121,580) 5,849,643 Fair value consideration from acquisition of DMC (A) Carrying amount of the 25.3% non-controlling interests of 8VIC Global Pte. Ltd. and its subsidiaries (B) Excess of fair value consideration recognised in parent’s equity (A)-(B) Current year decrease in equity attributable to non-controlling interest On 25 January 2018, he Group acquired 2% equity interest in DMC by re-issuing 7,000,000 treasury shares at a fair value of S$2,072,504 which represents 8IH’s quoted price as of the date of transaction (Note 23(b)) and cash S$238,215. The difference between the total consideration above of S$2,310,719 and the carrying value of DMC’s non- controlling interest of S$149,505 amounting to S$2,161,214 is recognised in the capital reserve. In addition, the loss on the re-issuance of the treasury shares amounting to S$1,643,901 (Note 23(b)) is recognised in the capital reserve. Prior year decrease in equity attributable to non-controlling interest The calculation of premium on acquisition of non-controlling interest as of the date of acquisition 49% non- controlling interest in FJI is as follow: 2017 Acquisition of remaining 49% non- controlling interest in FJI Share capital of the Company (Note 23) S$ Non-controlling Non-controlling interest – FJI interest – 8VIG (49%) S$ (5%) S$ Capital reserve S$ 1,932,651 (125,516) 110,027 (1,917,162) Annual Report FY2018For personal use only 101 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management Financial risk factors The Group’s activities expose it to market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management strategy seeks to minimise any adverse effects from the unpredictability of financial markets on the group’s financial performance. 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 . (a) Market risk (i) Currency risk The Group operates in Asia with dominant operations in Singapore, Malaysia and China. Entities in the Group regularly transact in currencies other than their respective functional currencies (“foreign currencies”). Currency risk arises within entities in the Group when transactions are denominated in foreign currencies such as the Singapore Dollar (“SGD”), Malaysian Ringgit (“MYR”), Australian Dollar (“AUD”), United States Dollar (“USD”), Chinese Renminbi (“RMB”), Japanese Yen (“JPY”), New Taiwan Dollar (“NTD”) and Indian Rupee (“INR”). In addition, the Group is exposed to currency translation risk on the net assets in foreign operations. Currency exposure to the net assets of the Group’s foreign operations in Malaysia and China are managed primarily through transactions denominated in the relevant foreign currencies. 62 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) (a) Market risk (continued) (i) Currency risk (continued) The Group’s currency exposure based on the information provided to key management is as follows: SGD S$ MYR S$ AUD S$ USD S$ RMB S$ JPY S$ NTD S$ INR S$ fi nancial assets, at FVOCI 13,772,080 2,222,382 8,615,314 7,165,043 Tra de a nd other receiva bles 9,992,367 442,162 - 730,184 23,764,447 2,664,544 8,615,314 7,895,227 517,488 23,034 540,522 101,397 13,534,583 4,848,012 174,668 495,844 25,393 276,065 14,030,427 4,873,405 (2,378,784) (446,431) (5,054) (611,200) (41,353) (210,858) (4,209,809) - - (91,270) - - - - - - - (7,035,922) - - - (6,588,593) (537,701) (5,054) (7,647,122) (41,353) (210,858) - - - - - Net financial assets 17,175,854 2,126,843 8,610,260 248,105 499,169 276,065 13,819,569 4,873,405 139,153 (112,235) 8,610,260 (12,828) 33,321 276,065 13,117,435 4,873,405 At 31 Ma rch 2018 Financial assets Ca s h a nd cash equivalents, Fi na ncial a ssets, at FVPL a nd Financial liabilities Tra de a nd other paya bles Fi nancial lease liabilities Borrowi ngs Redeemable participating s ha res Currency exposure of financial assets net of those denominated in the respective entities’ functional currencies At 31 Ma rch 2017 Financial assets Ca s h a nd cash equivalents, i nves tment s ecurities and a va i lable-for-sale financial a s s ets 10,192,655 959,822 29,146,278 1,057,427 141,192 9,457,488 Tra de a nd other receiva bles 8,900,067 534,596 211,816 245,916 1,075 29,735 19,092,722 1,494,418 29,358,094 1,303,343 142,267 9,487,223 Financial liabilities Tra de a nd other paya bles (2,283,086) Fi nancial lease liabilities (17,485) (2,300,571) (394,042) (124,735) (518,777) (18,518) (75,043) (11,851) - - - (18,518) (75,043) (11,851) - - - Net financial assets 16,792,151 975,641 29,339,576 1,228,300 130,416 9,487,223 Currency exposure of financial assets net of those denominated in the respective entities’ functional currencies 229,549 101,635 29,339,576 393,863 14,549 9,487,223 - - - - - - - - - - - - - - - - - - - - - - - - 63 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 102 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) (a) Market risk (continued) (i) Currency risk (continued) The Group’s currency exposure based on the information provided to key management is as follows: At 31 Ma rch 2018 Financial assets Ca s h a nd cash equivalents, Fi na ncial a ssets, at FVPL a nd fi nancial assets, at FVOCI Tra de a nd other receiva bles Financial liabilities Tra de a nd other paya bles Fi nancial lease liabilities Borrowi ngs Redeemable participating s ha res SGD S$ MYR S$ AUD S$ USD S$ RMB S$ JPY S$ NTD S$ INR S$ 13,772,080 9,992,367 23,764,447 2,222,382 8,615,314 - 2,664,544 8,615,314 442,162 7,165,043 730,184 7,895,227 517,488 23,034 540,522 101,397 13,534,583 174,668 495,844 276,065 14,030,427 4,848,012 25,393 4,873,405 (2,378,784) - (4,209,809) (446,431) (91,270) - (5,054) - - (611,200) - - (41,353) - - - (6,588,593) - (537,701) - (5,054) (7,035,922) (7,647,122) - (41,353) - - - - - (210,858) - - - (210,858) - - - - - Net financial assets 17,175,854 2,126,843 8,610,260 248,105 499,169 276,065 13,819,569 4,873,405 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management Financial risk factors The Group’s activities expose it to market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management strategy seeks to minimise any adverse effects from the unpredictability of financial markets on the group’s financial performance. 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 . (a) Market risk (i) Currency risk currencies”). Rupee (“INR”). The Group operates in Asia with dominant operations in Singapore, Malaysia and China. Entities in the Group regularly transact in currencies other than their respective functional currencies (“foreign Currency risk arises within entities in the Group when transactions are denominated in foreign currencies such as the Singapore Dollar (“SGD”), Malaysian Ringgit (“MYR”), Australian Dollar (“AUD”), United States Dollar (“USD”), Chinese Renminbi (“RMB”), Japanese Yen (“JPY”), New Taiwan Dollar (“NTD”) and Indian In addition, the Group is exposed to currency translation risk on the net assets in foreign operations. Currency exposure to the net assets of the Group’s foreign operations in Malaysia and China are managed primarily through transactions denominated in the relevant foreign currencies. 139,153 (112,235) 8,610,260 (12,828) 33,321 276,065 13,117,435 4,873,405 Currency exposure of financial assets net of those denominated in the respective entities’ functional currencies At 31 Ma rch 2017 Financial assets Ca s h a nd cash equivalents, i nves tment s ecurities and a va i lable-for-sale financial a s s ets Tra de a nd other receiva bles Financial liabilities Tra de a nd other paya bles Fi nancial lease liabilities 10,192,655 8,900,067 19,092,722 959,822 29,146,278 1,057,427 245,916 534,596 211,816 1,494,418 29,358,094 1,303,343 141,192 1,075 142,267 9,457,488 29,735 9,487,223 (2,283,086) (17,485) (2,300,571) (394,042) (124,735) (518,777) (18,518) - (18,518) (75,043) - (75,043) (11,851) - (11,851) - - - Net financial assets 16,792,151 975,641 29,339,576 1,228,300 130,416 9,487,223 Currency exposure of financial assets net of those denominated in the respective entities’ functional currencies 229,549 101,635 29,339,576 393,863 14,549 9,487,223 62 - - - - - - - - - - - - - - - - 63 Annual Report FY2018For personal use only 103 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) 27. Financial risk management (continued) (a) Market risk (continued) (i) Currency risk (continued) (a) Market risk (continued) (i) Currency risk (continued) The Company’s currency exposure based on the information provided to key management is as follows: 2018 SGD S$ AUD S$ 2017 SGD S$ AUD S$ Financial Assets Cash and cash equivalents, financial assets, at FVPL and financial assets, at FVOCI Trade and other receivables Financial Liabilities Trade and other payables Borrowings 5,370,796 17,753,710 23,124,506 20,045 - 20,045 2,404,801 27,797,479 30,202,280 815,871 - 815,871 (4,489,093) (4,209,809) (8,698,902) (5,054) - (5,054) (4,037,626) - (4,037,626) (18,518) - (18,518) Net financial assets 14,425,604 14,991 26,164,654 797,353 Currency exposure of financial assets net of those denominated in the respective entities’ functional currencies - 14,991 - 797,353 64 If the MYR, AUD, USD, RMB, JPY, NTD and INR change against the SGD by 7% (2017: 8%), 6% (2017: 3%), 6% (2017: 3%), 3% (2017: 3%), 1% (2017: 4%), 2% (2017: nil) and 7% (2017: nil) respectively with all other variables including tax rate being held constant, the effects arising from the net financial asset that are exposed to currency risk will be as follows: Group MYR against SGD - Strengthened - Weakened AUD against SGD - Strengthened - Weakened USD against SGD - Strengthened - Weakened RMB against SGD - Strengthened - Weakened JPY against SGD - Strengthened - Weakened NTD against SGD - Strengthened - Weakened INR against SGD - Strengthened - Weakened Company AUD against SGD - Strengthened - Weakened Profit after tax S$ (6,521) 6,521 (639) 639 830 (830) 2,291 (2,291) 217,749 (217,749) 283,145 (283,145) 747 (747) Increase/(Decrease) 2018 comprehensive Profit comprehensive Other income S$ 2017 Other after tax income S$ S$ 5,827 (5,827) 922 (922) 347,480 (347,480) 81,311 (81,311) 406,636 (406,636) 323,919 (323,919) - - - - - - - - - - - - - - 9,807 (9,807) 362 (362) 314,976 (314,976) - - - - - - - - - - - - - - 9,190 (9,190) 10,664 (10,664) 65 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) 27. Financial risk management (continued) (a) Market risk (continued) (i) Currency risk (continued) (a) Market risk (continued) (i) Currency risk (continued) Financial 104 The Company’s currency exposure based on the information provided to key management is as follows: 2018 SGD S$ AUD S$ 2017 SGD S$ AUD S$ Financial Assets Cash and cash equivalents, financial assets, at FVPL and financial assets, at FVOCI Trade and other receivables Financial Liabilities Trade and other payables Borrowings 5,370,796 17,753,710 23,124,506 20,045 2,404,801 27,797,479 815,871 20,045 30,202,280 815,871 (4,489,093) (4,209,809) (8,698,902) (5,054) (4,037,626) (18,518) (5,054) (4,037,626) (18,518) - - - - - Net financial assets 14,425,604 14,991 26,164,654 797,353 Currency exposure of financial assets net of those denominated in the respective entities’ functional currencies - 14,991 - 797,353 If the MYR, AUD, USD, RMB, JPY, NTD and INR change against the SGD by 7% (2017: 8%), 6% (2017: 3%), 6% (2017: 3%), 3% (2017: 3%), 1% (2017: 4%), 2% (2017: nil) and 7% (2017: nil) respectively with all other variables including tax rate being held constant, the effects arising from the net financial asset that are exposed to currency risk will be as follows: Group MYR against SGD - Strengthened - Weakened AUD against SGD - Strengthened - Weakened USD against SGD - Strengthened - Weakened RMB against SGD - Strengthened - Weakened JPY against SGD - Strengthened - Weakened NTD against SGD - Strengthened - Weakened INR against SGD - Strengthened - Weakened Company AUD against SGD - Strengthened - Weakened Increase/(Decrease) 2018 2017 Profit after tax S$ Other comprehensive income S$ Profit after tax S$ Other comprehensive income S$ (6,521) 6,521 - - 5,827 (5,827) 922 (922) 347,480 (347,480) 81,311 (81,311) 406,636 (406,636) 323,919 (323,919) (639) 639 830 (830) 2,291 (2,291) 217,749 (217,749) 283,145 (283,145) 747 (747) - - - - - - - - - - - - 9,807 (9,807) 362 (362) 314,976 (314,976) - - - - - - - - - - - - - - 9,190 (9,190) 10,664 (10,664) 65 64 Annual Report FY2018For personal use only 105 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) 27. Financial risk management (continued) (a) Market risk (continued) (ii) Price risk The Group is exposed to equity securities price risk arising from the investments held by the Group which are classified on the consolidated statement of financial position either as available-for-sale or at fair value through profit or loss. These securities are listed in Australia, Japan, India, Taiwan, New Zealand, Malaysia and Singapore. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group. If prices for equity securities listed in Australia, Japan, India, Taiwan, New Zealand, Malaysia and Singapore had changed by 18% (2017: 17%), 18% (2017: 17%), 18% (2017: 17%), 18% (2017: 17%), 18% (2017: 17%), 18% (2017: 17%) and 18% (2017: 17%) respectively with all other variables including tax rate being held constant, the effects on profit after tax and other comprehensive income would have been: Group Listed in Australia - increased by - decreased by Listed in Japan - increased by - decreased by Listed in India - increased by - decreased by Listed in Taiwan - increased by - decreased by Listed in the New Zealand - increased by - decreased by Listed in the Malaysia - increased by - decreased by Increase/(Decrease) 2018 2017 Profit after tax S$ Other comprehensive income S$ Profit after tax S$ Other comprehensive income S$ 1,016,161 (1,010,161) 238,348 (238,348) 2,192,346 (2,192,346) 1,835,542 (1,835,542) 14,802 (14,802) 707,707 (707,707) 1,914,867 (1,914,867) - - 26,221 (26,221) - - - - - - - - - - 1,360,931 (1,360,931) 100,316 (100,316) 30,934 (30,934) 11,574 (11,574) 22,792 (22,792) - - - - - - - - - - 66 (a) Market risk (continued) (ii) Price risk (continued) Group Listed in the Singapore - increased by - decreased by Company Listed in Australia - increased by - decreased by Listed in the Singapore - increased by - decreased by (b) Credit risk Increase/(Decrease) 2018 2017 Profit comprehensive Profit comprehensive Other income S$ Other income S$ after tax S$ after tax S$ 71,368 (71,368) - - 6,507 (6,507) - - - - - - - - - - - - - - - - 60,428 (60,428) Credit exposure to an individual counterparty is restricted by credit limits that are approved by the Board of Directors based on ongoing credit evaluations. The counterparty’s payment pattern and credit exposure are continuously monitored at the entity level by the respective management and at the Group level by the Executi ve Management. Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Group. The Group categorises a loan or receivable for write off when a debtor fails to make contractual payments greater than a year past due based on historical collection trend. Where loans or receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries a re made, these are recognised in profit or loss. The Group applies the simplified approach to providing for expected credit losses prescribed by FRS 109, which permits the use of the lifetime credit loss provision for all trade receivables. To measure the expected credit losses, trade receivables, have been grouped based on shared credit risk characteristics and days past due. In calculating the expected credit loss rates, the Group considers historical loss rates for each category of customers, and adjusts for forward-looking macroeconomic data. The Group and Company uses four categories of internal credit risk rating for its financial assets at amortised costs. These four categories reflect the respective credit risk and how the loan loss provision is determined for each of those categories. 67 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) 27. Financial risk management (continued) Financial 106 (a) Market risk (continued) (ii) Price risk The Group is exposed to equity securities price risk arising from the investments held by the Group which are classified on the consolidated statement of financial position either as available-for-sale or at fair value through profit or loss. These securities are listed in Australia, Japan, India, Taiwan, New Zealand, Malaysia and Singapore. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group. If prices for equity securities listed in Australia, Japan, India, Taiwan, New Zealand, Malaysia and Singapore had changed by 18% (2017: 17%), 18% (2017: 17%), 18% (2017: 17%), 18% (2017: 17%), 18% (2017: 17%), 18% (2017: 17%) and 18% (2017: 17%) respectively with all other variables including tax rate being held constant, the effects on profit after tax and other comprehensive income would have been: Group Listed in Australia - increased by - decreased by Listed in Japan - increased by - decreased by Listed in India - increased by - decreased by Listed in Taiwan - increased by - decreased by Listed in the New Zealand - increased by - decreased by Listed in the Malaysia - increased by - decreased by Increase/(Decrease) 2018 Other 2017 Other Profit comprehensive Profit comprehensive after tax income after tax income S$ S$ S$ S$ 1,016,161 (1,010,161) 238,348 2,192,346 (238,348) (2,192,346) 1,835,542 (1,835,542) 14,802 (14,802) 707,707 (707,707) 1,914,867 (1,914,867) - - 26,221 (26,221) - - - - - - - - - - 1,360,931 (1,360,931) 100,316 (100,316) 30,934 (30,934) 11,574 (11,574) 22,792 (22,792) - - - - - - - - - - 66 (a) Market risk (continued) (ii) Price risk (continued) Group Listed in the Singapore - increased by - decreased by Company Listed in Australia - increased by - decreased by Listed in the Singapore - increased by - decreased by (b) Credit risk Increase/(Decrease) 2018 2017 Profit after tax S$ Other comprehensive income S$ Profit after tax S$ Other comprehensive income S$ 71,368 (71,368) - - 6,507 (6,507) - - - - - - - - - - - - - - 60,428 (60,428) - - Credit exposure to an individual counterparty is restricted by credit limits that are approved by the Board of Directors based on ongoing credit evaluations. The counterparty’s payment pattern and credit exposure are continuously monitored at the entity level by the respective management and at the Group level by the Executi ve Management. Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Group. The Group categorises a loan or receivable for write off when a debtor fails to make contractual payments greater than a year past due based on historical collection trend. Where loans or receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries a re made, these are recognised in profit or loss. The Group applies the simplified approach to providing for expected credit losses prescribed by FRS 109, which permits the use of the lifetime credit loss provision for all trade receivables. To measure the expected credit losses, trade receivables, have been grouped based on shared credit risk characteristics and days past due. In calculating the expected credit loss rates, the Group considers historical loss rates for each category of customers, and adjusts for forward-looking macroeconomic data. The Group and Company uses four categories of internal credit risk rating for its financial assets at amortised costs. These four categories reflect the respective credit risk and how the loan loss provision is determined for each of those categories. 67 Annual Report FY2018For personal use only 107 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) (b) Credit risk (continued) A summary of assumptions underpinning the Group’s expected credit loss model is as follow: The Group’s credit risk exposure in relation to trade receivables, under FRS 109 as at 31 March 2018 are set out Group and Company’s category of internal credit rating Performing Underperforming Non-performing Write-off Group and Company’s definition of category Customers have a low risk of default and a strong capacity to meet contractual cash flows. Loans for which there is a significant increase in credit risk. As significant increase in credit risk is presumed i f interest and/or principal repayments are 30 days past due. Interest and/or principal repayments are 60-365 days past due. Interest and/or principal repayments are 365 days past due and there is no reasonable expectation of recovery. Basis for recognition of expected credit loss provision 12-month expected credit losses Lifetime expected credit losses Lifetime expected credit losses Asset is written off Movements in credit loss allowance for financial assets are set out as follows: Group Balance at 1 April 2017 Application of FRS 109 Balance at 1 April 2017 under FRS 109 Changes in credit loss recognised in profit or loss: - New financial assets acquired - Increase due to credit risk Balance at 31 March 2018 Company Balance at 1 April 2017 Application of FRS 109 Balance at 1 April 2017 under FRS 109 Changes in credit loss recognised in profit or loss: - Increase due to credit risk Balance at 31 March 2018 Trade receivables Other financial assets at amortised costs - - - 163,421 - 163,421 - - - - 6,264 6,264 Total - - - 163,421 6,264 169,685 Other financial assets at amortised costs - - - 6,264 6,264 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) (b) Credit risk (continued) in the provision matrix as follows: The Group’s credit risk exposure in relation to trade receivables under FRS 109 as at 31 March 2018 are set out as Current Within 30 30 to 60 More than Total days days 90 days Past due 61-90 days 0% 0% 0.35% 37% 56% 1,005,191 1,008,031 230,051 238,005 130,899 2,612,177 - - (813) (88,741) (73,867) (163,421) Current Within 30 30 to 60 days days 61-90 days More than 90 days Total Past due 1,005,191 - 1,008,031 213,790 - 672 - 1,005,191 351 1,222,844 16,261 237,333 130,548 384,142 - - - - - - - - - - - - 496,142 146,556 117,274 89,272 153,987 - - - - 496,142 507,089 - 496,142 146,556 117,274 89,272 153,987 1,003,231 2018 Expected loss rate Gross carrying amount Credit loss allowance follows: 2018 Gross carrying amount -Not past due -Past due but not impaired -Past due and impaired 2017 Gross carrying amount -Not past due -Past due but not impaired Less allowance for impairment Net carrying amount Trade receivables Less allowance for impairment Net carrying amount 1,005,191 1,008,031 229,238 149,264 57,032 2,448,756 (813) (88,741) (73,867) (163,421) In 2017, the impairment of financial assets was assessed based on the incurred loss impairment model. Individual receivables which were known to be uncollectible were written off by reducing the carrying amount directly. The other receivables were assessed collectively, to determine whether there was objective evidence that an impairment had been incurred but not yet identified. The Group considered that there was evidence if any of the following indicators were present: • Significant financial difficulties of the debtor; • Probability that the debtor will enter bankruptcy or financial reorganisation; and • Default or delinquency in payments (more than 90 days overdue). Financial assets that are neither past due nor impaired Financial assets that are neither past due nor impaired are mainly deposits with banks with high credit-ratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group and Company. 68 69 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 108 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) (b) Credit risk (continued) NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) (b) Credit risk (continued) A summary of assumptions underpinning the Group’s expected credit loss model is as follow: Group and Company’s Group and Company’s definition category of internal of category credit rating Performing Customers have a low risk of default and a strong capacity to 12-month expected meet contractual cash flows. credit losses Underperforming Loans for which there is a significant increase in credit risk. Lifetime expected As significant increase in credit risk is presumed i f interest credit losses and/or principal repayments are 30 days past due. Non-performing Interest and/or principal repayments are 60-365 days past Lifetime expected due. credit losses Write-off Interest and/or principal repayments are 365 days past due Asset is written off and there is no reasonable expectation of recovery. Basis for recognition of expected credit loss provision Movements in credit loss allowance for financial assets are set out as follows: Balance at 1 April 2017 Application of FRS 109 Balance at 1 April 2017 under FRS 109 Changes in credit loss recognised in profit or loss: - New financial assets acquired - Increase due to credit risk Balance at 31 March 2018 Group Company Balance at 1 April 2017 Application of FRS 109 Balance at 1 April 2017 under FRS 109 Changes in credit loss recognised in profit or loss: - Increase due to credit risk Balance at 31 March 2018 Trade Other financial Total receivables assets at amortised costs - - - - 163,421 163,421 - - - - 6,264 6,264 - - - 163,421 6,264 169,685 Other financial assets at amortised costs - - - 6,264 6,264 The Group’s credit risk exposure in relation to trade receivables, under FRS 109 as at 31 March 2018 are set out in the provision matrix as follows: 2018 Expected loss rate Gross carrying amount Credit loss allowance Current Within 30 days 30 to 60 days 61-90 days More than 90 days Total Past due 0% 0% 1,005,191 1,008,031 - - 0.35% 230,051 (813) 37% 238,005 (88,741) 56% 130,899 2,612,177 (163,421) (73,867) The Group’s credit risk exposure in relation to trade receivables under FRS 109 as at 31 March 2018 are set out as follows: 2018 Gross carrying amount -Not past due -Past due but not impaired -Past due and impaired Current Within 30 days 30 to 60 days 61-90 days More than 90 days Total Past due 1,005,191 - - 1,008,031 - - - 213,790 - 672 16,261 237,333 - 1,005,191 351 1,222,844 384,142 130,548 Less allowance for impairment Net carrying amount - 1,005,191 1,008,031 - (813) (88,741) 229,238 149,264 (73,867) (163,421) 57,032 2,448,756 2017 Gross carrying amount -Not past due -Past due but not impaired 496,142 - - 146,556 - 117,274 - 89,272 - 153,987 496,142 507,089 Less allowance for impairment Net carrying amount - 496,142 - 146,556 - 117,274 - 89,272 - - 153,987 1,003,231 Trade receivables In 2017, the impairment of financial assets was assessed based on the incurred loss impairment model. Individual receivables which were known to be uncollectible were written off by reducing the carrying amount directly. The other receivables were assessed collectively, to determine whether there was objective evidence that an impairment had been incurred but not yet identified. The Group considered that there was evidence if any of the following indicators were present: • Significant financial difficulties of the debtor; • Probability that the debtor will enter bankruptcy or financial reorganisation; and • Default or delinquency in payments (more than 90 days overdue). Financial assets that are neither past due nor impaired Financial assets that are neither past due nor impaired are mainly deposits with banks with high credit-ratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group and Company. 68 69 Annual Report FY2018For personal use only 109 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) (c) Liquidity risk 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) (e) Fair value measurements Prudent liquidity risk management includes maintaining sufficient cash and cash equivalents and the ability to close out market positions at a short notice. At the balance sheet date, assets held by the Group and the Company for managing liquidity risk included cash and short term deposits as disclosed in Note 10. The table below analyses non-derivative financial liabilities of the Group and the Company into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying amounts as the impact of discounting is not significant. The table below presents assets and liabilities measured and carried at fair value and classified by level of the following fair value measurement hierarchy: (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); (b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). Group At 31 March 2018 Trade and other payables Finance lease liabilities Borrowings Redeemable participating shares At 31 March 2017 Trade and other payables Finance lease liabilities Company At 31 March 2018 Trade and other payables Borrowings At 31 March 2017 Trade and other payables Less than 1 year S$ Between 1 and 5 years S$ 3,693,680 37,286 4,209,809 7,035,922 - 60,144 - - 2,782,540 56,471 - 100,282 4,494,147 4,209,809 4,126,264 - - - (d) Capital risk Financial assets, at FVOCI 428,267 428,267 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 were no transfers between levels 1 and 2 during the year. The fair value of financial instruments traded in active markets (such as fair value through profit and loss and financial assets through other comprehensive income) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price. These instruments 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. The carrying amount less impairment provision of trade receivables and payables are assumed to approximate 70 71 Level 1 Level 2 Level 3 S$ S$ S$ Total S$ 25,696,375 1,637,998 27,334,373 113,879 113,879 26,356,434 13,011,309 39,367,743 25,696,375 1,751,877 27,448,252 26,356,434 13,011,309 39,367,743 - - - - - - - - - - - - - - Financial assets, at FVPL 37,000 37,000 Financial assets, at FVPL Financial assets, at FVOCI Total assets Financial assets, at FVPL Financial assets, at FVOCI Total assets Group 2018 Assets 2017 Assets Company 2018 Assets 2017 Assets are included in Level 1. their fair values. 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 110 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) (c) Liquidity risk NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) (e) Fair value measurements Prudent liquidity risk management includes maintaining sufficient cash and cash equivalents and the ability to close out market positions at a short notice. At the balance sheet date, assets held by the Group and the Company for managing liquidity risk included cash and short term deposits as disclosed in Note 10. The table below analyses non-derivative financial liabilities of the Group and the Company into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying amounts as the impact of discounting is not significant. The table below presents assets and liabilities measured and carried at fair value and classified by level of the following fair value measurement hierarchy: (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); (b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). Between 1 and 5 years S$ 60,144 Less than 1 year S$ 3,693,680 37,286 4,209,809 7,035,922 2,782,540 56,471 100,282 4,494,147 4,209,809 4,126,264 - - - - - - - Group 2018 Assets Financial assets, at FVPL Financial assets, at FVOCI Total assets 2017 Assets Financial assets, at FVPL Financial assets, at FVOCI Total assets Company 2018 Assets Financial assets, at FVPL 2017 Assets Financial assets, at FVOCI Level 1 S$ Level 2 S$ Level 3 S$ Total S$ 25,696,375 1,637,998 27,334,373 - 113,879 113,879 26,356,434 13,011,309 39,367,743 37,000 428,267 - - - - - - - - - - - - - 25,696,375 1,751,877 27,448,252 26,356,434 13,011,309 39,367,743 37,000 428,267 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 There were no transfers between levels 1 and 2 during the year. 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. The fair value of financial instruments traded in active markets (such as fair value through profit and loss and financial assets through other comprehensive income) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level 1. The carrying amount less impairment provision of trade receivables and payables are assumed to approximate their fair values. 70 71 Group At 31 March 2018 Trade and other payables Finance lease liabilities Borrowings Redeemable participating shares At 31 March 2017 Trade and other payables Finance lease liabilities Company At 31 March 2018 Trade and other payables Borrowings At 31 March 2017 Trade and other payables (d) Capital risk concern. Annual Report FY2018For personal use only 111 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) (f) Financial instruments by category Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ Financial assets, at FVPL Financial assets, at FVOCI Financial assets at amortised cost Financial liabilities at amortised cost 25,696,375 1,751,877 35,044,031 (15,030,681) 26,356,434 13,025,188 22,485,581 (2,924,760) 37,000 - 23,300,713 (8,703,956) - 428,267 30,606,909 (4,126,264) 28. Related party transactions In addition to the information disclosed elsewhere in the financial statements, the following transactions took place between the Group and related parties at terms agreed between the parties: (a) Sales and purchases of services Professional fees paid to an affiliated company Consultation (expense)/income with associated company Interest income from associated company Sale of course materials to an affiliated company Group 2018 S$ - - - - 2017 S$ - (61,698) 11,836 - Other related parties comprise mainly companies which are controlled by the Group’s key management personnel and their close family members. Outstanding balances at 31 March 2018, arising from sale/purchase of services, are unsecured and receivable/payable within 12 months from balance sheet date and are di sclosed in Notes 11 and 18 respectively. (b) Directors and key management personnel compensation Directors and key management personnel compensation is as follows: Wages, salaries and fees Employer’s contribution to defined contribution plans, including Central Provident Fund Group 2018 S$ 2017 S$ 1,943,913 1,552,270 137,842 2,081,755 100,342 1,652,612 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 29. Segment information The Group is organised into geographic business units based on management reporting structure and organisational set-up, in line with the main business divisions driving the growth of the Group. Geographically, management manages and monitors the business in two primary geographic areas namely Singapore and Malaysia, where the Company and certain subsidiaries operate. Based on the management reporting structure, management reviews the business segments’ performance and to make strategic decisions. The segments under the reporting model are as follows: - Education: involved in financial education and training providers in Asia, via its flagship course “Value Investing Bootcamp”, which focus on educating its students on the principles and techniques of value investing. - Investment in Public Markets: involved in investment in listed equities in the Asia -Pacific through a focused strategy of investing in undervalued companies with unique, scalable and resilient business models run by aligned owner-operators to provide the foundation for sustainable long-term growth and to achieve long- term investment returns. - Investment in Private Markets: involved in strategic investment in private businesses which have strong and sustainable business models, with long-term growth potential. - Media: involved in specialists and training academy that assists brands and individuals with the opportunity to achieve business and financial success. - Creatives: involved in branding and marketing arm of Digimatic and specialises in content creation as well as full end-to-end branding and marketing solutions for clients. - E-commerce: involved in marketing and selling products globally via ecommerce platform, utilising data analytics and customers’ feedback to sell products effectively with ROI focused. - All other segments: includes subsidiaries that just commenced operations in China, Taiwan, Thailand and Australia, providing financial education and training. Management monitors the operating results of its business units separately for 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. 72 73 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 112 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 27. Financial risk management (continued) (f) Financial instruments by category Group 2018 S$ 2017 S$ Company 2018 S$ 2017 S$ Financial assets, at FVPL Financial assets, at FVOCI Financial assets at amortised cost Financial liabilities at amortised cost 25,696,375 1,751,877 35,044,031 26,356,434 13,025,188 37,000 - 22,485,581 23,300,713 (15,030,681) (2,924,760) (8,703,956) - 428,267 30,606,909 (4,126,264) 28. Related party transactions (a) Sales and purchases of services In addition to the information disclosed elsewhere in the financial statements, the following transactions took place between the Group and related parties at terms agreed between the parties: Professional fees paid to an affiliated company Consultation (expense)/income with associated company Interest income from associated company Sale of course materials to an affiliated company Other related parties comprise mainly companies which are controlled by the Group’s key management personnel and their close family members. Outstanding balances at 31 March 2018, arising from sale/purchase of services, are unsecured and receivable/payable within 12 months from balance sheet date and are di sclosed in Notes 11 and 18 respectively. (b) Directors and key management personnel compensation Directors and key management personnel compensation is as follows: Group 2018 S$ 2017 S$ (61,698) 11,836 - - - - - - Group 2018 S$ 2017 S$ 1,943,913 1,552,270 137,842 2,081,755 100,342 1,652,612 Employer’s contribution to defined contribution plans, including Central Wages, salaries and fees Provident Fund NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 29. Segment information The Group is organised into geographic business units based on management reporting structure and organisational set-up, in line with the main business divisions driving the growth of the Group. Geographically, management manages and monitors the business in two primary geographic areas namely Singapore and Malaysia, where the Company and certain subsidiaries operate. Based on the management reporting structure, management reviews the business segments’ performance and to make strategic decisions. The segments under the reporting model are as follows: - - - involved in financial education and training providers in Asia, via its flagship course “Value Education: Investing Bootcamp”, which focus on educating its students on the principles and techniques of value investing. Investment in Public Markets: involved in investment in listed equities in the Asia -Pacific through a focused strategy of investing in undervalued companies with unique, scalable and resilient business models run by aligned owner-operators to provide the foundation for sustainable long-term growth and to achieve long- term investment returns. Investment in Private Markets: involved in strategic investment in private businesses which have strong and sustainable business models, with long-term growth potential. - Media: involved in specialists and training academy that assists brands and individuals with the opportunity to achieve business and financial success. - - - Creatives: involved in branding and marketing arm of Digimatic and specialises in content creation as well as full end-to-end branding and marketing solutions for clients. E-commerce: involved in marketing and selling products globally via ecommerce platform, utilising data analytics and customers’ feedback to sell products effectively with ROI focused. All other segments: includes subsidiaries that just commenced operations in China, Taiwan, Thailand and Australia, providing financial education and training. Management monitors the operating results of its business units separately for 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. 72 73 Annual Report FY2018For personal use only Financial L A T O T $ S e t a r o p r o C $ S r e h t o l l A s t n e m g e s $ S a i d e M $ S a i s y a l a M n i t n e m t s e v n I e t a v i r P s t e k r a M $ S : s w o l l o f s a e r a s t n e m g e s e l b a t r o p e r e h t r o f t n e m e g a n a m y e k e h t o t d e d i v o r p n o i t a m r o f n i t n e m g e s e h T S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 8 1 0 2 h c r a M 1 3 d e d n e r a e y l a i c n a n i f e h t r o F I S E I R A D I S B U S S T I D N A D E T I M I L S G N D L O H I I 8 ) d e u n i t n o c ( n o i t a m r o f n i t n e m g e S . 9 2 , 2 8 5 8 4 7 3 2 , , 8 1 0 3 0 1 1 , , ) 1 3 1 2 4 2 2 ( , , ) 8 1 0 3 0 1 1 ( , , 1 5 2 4 1 5 1 , 1 3 3 5 3 5 , , 1 1 8 3 0 2 2 , , 1 2 4 9 7 2 2 , 8 7 5 3 2 9 , 8 6 3 9 7 5 , , 5 6 9 2 9 3 3 , , 8 5 7 3 6 3 2 , , ) 3 4 8 7 2 4 ( , 4 2 9 0 8 2 9 , - - - ) 0 0 7 3 1 ( , - ) 5 7 7 1 6 ( , ) 7 6 5 3 6 ( , , ) 0 0 0 0 2 4 ( , ) 0 0 0 0 2 1 ( , ) 1 7 0 0 6 4 ( 1 5 4 , 6 0 5 , 1 2 - 1 5 2 , 4 1 5 , 1 1 3 3 , 5 3 5 1 1 8 , 3 0 2 , 2 1 2 7 , 5 6 2 , 2 8 7 5 , 3 2 9 3 9 5 , 7 1 5 8 9 3 , 9 2 3 , 3 8 5 7 , 3 4 9 , 1 ) 3 4 8 , 7 4 5 ( 3 5 8 , 0 2 8 , 8 s e i t r a p l a n r e t x e o t ) 9 8 7 8 7 ( , 0 6 8 1 7 9 , - - - - - - - ) 9 8 7 8 7 ( , - - , ) 4 6 1 2 2 6 ( ) 2 9 1 7 1 ( , ) 8 8 5 , 8 3 4 , 4 ( ) 6 6 1 , 5 1 3 , 3 ( ) 0 0 9 6 2 ( , ) 7 7 4 , 7 2 5 ( ) 4 5 0 1 ( , 8 8 7 , 0 6 1 ) 6 6 0 5 3 ( , ) 9 8 7 , 0 2 1 ( ) 5 6 8 , 5 1 ( , ) 6 9 3 3 0 2 ( - - - ) 5 8 9 , 4 2 ( ) 5 1 0 8 1 ( , 6 3 7 , 5 3 1 ) 9 8 9 5 7 ( , 7 7 6 , 9 3 1 ) 1 2 9 1 2 ( , 1 0 8 , 2 8 2 - - - - - 0 6 8 1 7 9 , - - - ) 2 3 7 , 2 1 3 , 1 ( - - 4 2 4 , 9 5 1 , ) 1 3 6 2 2 2 ( i s ’ y r a d i s b u s a f o e l a s m o r f n i a G d e t a i c o s s a f o s s o l f o e r a h S i s e n a p m o c s e r a h s x a t r e t f a s s o L n o i t a i c e r p e D 3 2 4 , 6 6 3 , 8 6 3 4 3 , 2 9 3 , 4 1 7 8 0 , 2 3 0 , 2 1 8 7 , 2 3 0 , 1 4 5 0 , 7 3 7 0 0 9 , 6 4 4 , 1 1 2 4 , 8 9 1 , 1 3 4 4 , 7 5 9 5 9 6 , 1 8 7 , 3 2 4 1 , 4 8 9 , 1 7 5 3 , 7 7 4 , 3 3 0 0 2 , 6 2 3 , 7 s t e s s a t n e m g e S 2 8 2 3 1 6 , 4 1 8 0 3 1 , - 1 8 4 2 2 , 5 0 1 7 1 , 7 7 5 1 2 1 , - 0 0 2 9 1 , 7 3 2 9 , 1 7 1 8 1 , - - 8 8 8 8 0 1 , 8 8 1 9 1 , - 4 3 6 1 , - 5 0 5 1 1 , - 0 5 7 6 2 , - - - 0 6 3 8 6 3 , s n o i t i d d a s e d u l c n i s t e s s a t n e m g e S i t n e m p u q e d n a t n a l p s t e s s a e b l i g n a t n i - - : o t ) 9 2 7 , 7 6 3 , 0 2 ( ) 7 6 2 , 6 1 2 , 5 ( ) 9 0 4 , 2 1 6 , 1 ( ) 5 4 2 , 2 2 4 ( ) 8 1 0 , 7 1 1 ( ) 6 8 5 , 8 5 2 , 1 ( ) 0 2 6 , 6 3 ( ) 6 6 8 , 5 6 1 ( ) 4 8 5 , 2 6 4 , 2 ( ) 8 1 2 , 8 4 ( ) 2 4 3 , 6 6 1 , 7 ( ) 4 7 5 , 1 6 8 , 1 ( s e i t i l i b a i l t n e m g e S 4 7 5 7 ) 8 5 4 , 5 3 3 ( 5 7 6 , 6 5 5 6 3 8 , 9 9 1 , 1 0 5 3 , 0 7 3 , 0 1 5 2 8 , 0 6 1 , 1 1 1 9 , 5 2 4 , 1 8 3 0 , 5 4 5 7 4 0 , 8 5 5 , 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ) 9 1 3 , 0 9 ( 5 7 6 , 6 5 5 6 3 8 , 9 9 1 , 1 0 5 3 , 0 7 3 , 0 1 5 2 8 , 0 6 1 , 1 1 1 9 , 5 2 4 , 1 - - - - - - - - - 2 8 8 , 7 0 3 , 3 5 2 9 3 , 1 1 7 , 2 2 8 6 7 , 0 2 1 5 3 0 , 8 5 2 , 1 7 8 6 , 1 0 6 , 1 1 1 9 , 9 3 5 , 4 1 2 9 0 , 8 9 9 , 2 ) 3 1 8 , 1 0 4 , 4 2 ( ) 2 9 3 , 1 1 7 , 2 2 ( ) 0 0 0 , 2 3 7 ( 9 6 0 , 6 0 9 , 8 2 8 6 7 , 0 2 1 5 3 0 , 8 5 2 , 1 7 8 6 , 1 0 6 , 1 1 1 9 , 7 0 8 , 3 1 2 9 0 , 8 9 9 , 2 7 5 3 , 3 9 4 , 1 1 ) 6 1 5 , 7 8 8 , 6 ( ) 5 1 1 , 7 3 3 ( ) 8 5 4 , 2 ( ) 3 9 3 , 7 1 ( 2 2 1 , 5 5 1 ) 4 8 0 , 8 5 ( 9 0 7 , 3 9 2 6 0 3 , 1 0 1 , 3 1 2 1 5 , 9 6 8 , 1 L A T O T $ S e t a r o p r o C $ S r e h t o l l A s t n e m g e s $ S n i t n e m t s e v n I n i t n e m t s e v n I n i t n e m t s e v n I s t e k r a M e t a v i r P n o i t a c u d E s t e k r a M e t a v i r P s t e k r a M c i l b u P n o i t a c u d E $ S $ S $ S $ S $ S a i s y a l a M e r o p a g n i S ) 0 3 5 , 4 7 8 , 6 ( ) 5 6 8 , 7 9 0 , 1 ( ) 5 9 4 , 7 6 1 ( ) 1 0 5 , 2 1 3 ( ) 3 4 0 , 7 2 8 ( ) 4 9 5 , 6 0 0 , 1 ( ) 5 1 4 , 8 7 1 ( ) 7 1 6 , 4 8 2 , 3 ( 9 5 4 , 1 1 5 0 5 , 3 9 9 4 , 6 3 3 5 8 , 0 3 4 8 5 , 4 6 - 3 4 6 , 1 0 4 2 4 5 , 4 5 5 , 1 - - - - - ) 1 2 4 , 8 5 9 ( 6 7 5 , 9 1 1 , 9 7 9 9 , 7 7 0 , 0 1 ) 4 0 2 , 7 6 1 ( 9 3 3 , 8 9 2 , 3 d e t a i c o s s a r e m r o f m o r f e u l a v r i a f s t i t a n o i t i n g o c e r l a i t i n i n o e m o c n i e v i s n e h e r p m o c r e h t o h g u o r h t s t e s s a l a i c n a n i f o t y n a p m o c s e r a h s s ’ y n a p m o c d e t a i c o s s a n s e r a h s s ’ y r a i d i s b u s a a f f o o e l a s m o r f e l a s m o r f s e i n a p m o c d e t a i c o s s a f o t i f o r p f o e r a h S n n n i i i a G a G a G x a t r e t f a t i f o r P n o i t a i c e r p e D s e i t r a p l a n r e t x e o t e m o c n i t n e m t s e v n i d n a e u n e v e R i i e m o c n t n e m t s e v n i d n a e u n e v e r t n e m g e s l a t o T e m o c n t n e m t s e v n i d n a e u n e v e r t n e m g e s - r e t n I e m o c n i t n e m t s e v n i d n a e u n e v e R 7 1 0 2 s e i n a p m o c d e t a i c o s s a n i t n e m t s e v n I : s e d u l c n i s t e s s a t n e m g e S t n e m p i u q e d n a t n a l p s t e s s a e l b i g n a t n i - - : o t s n o i t i d d A s e i t i l i b a i l t n e m g e S 6 5 8 , 9 6 5 , 8 6 8 9 8 , 2 3 0 , 4 1 0 0 2 , 6 3 5 9 2 2 , 6 3 7 6 7 2 , 1 8 1 , 1 8 6 1 , 2 9 5 , 6 1 7 6 2 , 9 2 7 , 8 2 8 1 8 , 1 6 7 , 6 s t e s s a t n e m g e S S T N E M E T A T S L A I C N A N I F E H T O T 8 1 0 2 h c r a M 1 3 d e d n e r a e y l a i c n a n i f e h t r o F S E T O N S E I R A I D I S B U S S T I D N A D E T I M I L S G N I D L O H I 8 ) d e u n i t n o c ( n o i t a m r o f n i t n e m g e S . 9 2 e m o c n i t n e m t s e v n i d n a e u n e v e R d n a e u n e v e r t n e m g e s l a t o T d n a e u n e v e r t n e m g e s - r e t n I e m o c n i t n e m t s e v n i e m o c n i t n e m t s e v n i e m o c n i t n e m t s e v n i d n a e u n e v e R 8 1 0 2 n o i t a c u d E e c r e m m o c - E s e v i t a e r C $ S $ S $ S a i d e M $ S e r o p a g n i S n i t n e m e t a v i r P s t e k r a M t s e v n I s n t e k r a M i t n e m t s e v n I c i l b u P $ S $ S n o i t a c u d E $ S 8I Holdings LimitedFor personal use only L A T O T $ S e t a r o p r o C $ S , 2 8 8 7 0 3 3 5 , , 2 9 3 1 1 7 2 2 , , ) 3 1 8 1 0 4 4 2 ( , , 9 6 0 6 0 9 8 2 , - , ) 2 9 3 1 1 7 2 2 ( , r e h t o l l A s t n e m g e s $ S 8 6 7 0 2 1 , - 8 6 7 0 2 1 , a i s y a l a M e r o p a g n i S n i t n e m t s e v n I n i t n e m t s e v n I n i t n e m t s e v n I s t e k r a M e t a v i r P n o i t a c u d E s t e k r a M e t a v i r P s t e k r a M c i l b u P n o i t a c u d E $ S $ S $ S $ S $ S - - , ) 0 0 0 2 3 7 ( - , ) 1 2 4 8 5 9 ( , 5 3 0 8 5 2 1 , , 7 8 6 1 0 6 1 , , 1 1 9 7 0 8 3 1 , , 2 9 0 8 9 9 2 , , 6 7 5 9 1 1 9 , , 5 3 0 8 5 2 1 , , 7 8 6 1 0 6 1 , , 1 1 9 9 3 5 4 1 , , 2 9 0 8 9 9 2 , , 7 9 9 7 7 0 0 1 , S T N E M E T A T S L A I C N A N I F E H T O T S E T O N 8 1 0 2 h c r a M 1 3 d e d n e r a e y l a i c n a n i f e h t r o F I S E I R A D I S B U S S T I D N A D E T I M I L S G N D L O H I I 8 ) d e u n i t n o c ( n o i t a m r o f n i t n e m g e S . 9 2 s e i t r a p l a n r e t x e o t e m o c n i t n e m t s e v n i d n a e u n e v e R e m o c n i t n e m t s e v n i d n a e u n e v e r t n e m g e s l a t o T e m o c n i t n e m t s e v n i d n a e u n e v e r t n e m g e s - r e t n I e m o c n i t n e m t s e v n i d n a e u n e v e R 7 1 0 2 , ) 8 5 4 5 3 3 ( 5 7 6 6 5 5 , , 0 5 3 0 7 3 0 1 , , 6 3 8 9 9 1 1 , , 5 2 8 0 6 1 1 , - - - - - - - - - ) 8 5 4 2 ( , 7 5 3 , 3 9 4 , 1 1 ) 6 1 5 , 7 8 8 , 6 ( ) 5 1 1 , 7 3 3 ( - - - - - - - - ) 3 9 3 7 1 ( , 2 2 1 , 5 5 1 ) 4 8 0 8 5 ( , 9 0 7 , 3 9 2 ) 9 1 3 0 9 ( , 5 7 6 6 5 5 , , 0 5 3 0 7 3 0 1 , , 6 3 8 9 9 1 1 , , 5 2 8 0 6 1 1 , - - - - - 6 0 3 , 1 0 1 , 3 1 2 1 5 , 9 6 8 , 1 - - - - , ) 4 0 2 7 6 1 ( 9 3 3 , 8 9 2 , 3 e m o c n i e v i s n e h e r p m o c r e h t o h g u o r h t s t e s s a l a i c n a n i f o t y n a p m o c d e t a i c o s s a r e m r o f m o r f e u l a v r i a f s t i t a n o i t i n g o c e r l a i t i n i n o n s e r a h s s ’ y n a p m o c d e t a i c o s s a n a f o e l a s m o r f n s e r a h s i s ’ y r a d i s b u s a f o e l a s m o r f n i i i a G a G a G i s e n a p m o c d e t a i c o s s a f o t i f o r p f o e r a h S x a t r e t f a t i f o r P n o i t a i c e r p e D Financial 5 7 ) 0 3 5 , 4 7 8 , 6 ( ) 5 6 8 , 7 9 0 , 1 ( ) 5 9 4 , 7 6 1 ( ) 1 0 5 , 2 1 3 ( ) 3 4 0 , 7 2 8 ( ) 4 9 5 , 6 0 0 , 1 ( ) 5 1 4 , 8 7 1 ( ) 7 1 6 , 4 8 2 , 3 ( , 1 1 9 5 2 4 1 , 8 3 0 5 4 5 , , 7 4 0 8 5 5 1 , - - - - 9 5 4 1 1 , 5 0 5 3 , 9 9 4 6 3 , - - 3 5 8 0 3 , 4 8 5 4 6 , - - - , 1 1 9 5 2 4 1 , - - - - 3 4 6 1 0 4 , , 2 4 5 4 5 5 1 , i s e n a p m o c d e t a i c o s s a n i t n e m t s e v n I : s e d u l c n i s t e s s a t n e m g e S i t n e m p u q e d n a t n a l p s t e s s a e b l i g n a t n i - - : o t s n o i t i d d A s e i t i l i b a i l t n e m g e S 6 5 8 , 9 6 5 , 8 6 8 9 8 , 2 3 0 , 4 1 0 0 2 , 6 3 5 9 2 2 , 6 3 7 6 7 2 , 1 8 1 , 1 8 6 1 , 2 9 5 , 6 1 7 6 2 , 9 2 7 , 8 2 8 1 8 , 1 6 7 , 6 s t e s s a t n e m g e S Annual Report FY2018For personal use only 115 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 29. Segment information (continued) 30. Business combinations The management assesses the performance of the operating segments based on profit after tax. Current year acquisition (a) Revenue from major products and services (i) Acquisition of Digimatic Group Limited. Revenues from external customers are derived mainly from financial education and training providers, investment income from public and private markets , media, creatives and e-commerce. Breakdown of the revenue and investment income is as follows: Revenue and investment income Education Investment in Public Markets Investment in Private Markets Media Creatives E-commerce Others (b) Geographical information 2018 S$ 2017 S$ 11,086,574 (547,843) 4,147,569 3,864,729 517,593 923,578 1,514,251 21,506,451 10,721,263 2,998,092 15,065,946 - - - 120,768 28,906,069 The Group’s business segments operate in two main geographical areas: possible high and low scenarios. • Singapore - the Company is headquartered and has operations in Singapore. The operations in this area are principally the financial education and training providers , and investment in public and pri vate markets; Description Fair value considerations Unobservable inputs Range of input • Malaysia - the operations in this area are principally the financial education and training providers, and private markets investee; Revenue and investment income Singapore Malaysia Others Non-current assets Singapore Malaysia Others 2018 S$ 2017 S$ 14,987,337 5,004,863 1,514,251 21,506,451 5,409,412 561,536 1,041,672 7,012,620 25,925,579 2,859,722 120,768 28,906,069 18,577,616 382,262 9,608 18,969,486 At the beginning of the financial year, the Group held 10.8 % interest in Digimatic Group Limited (“Digimatic” or “DMC”) which was recogni sed as financial assets, at FVOCI. Prior to the adoption of FRS 109, it was classified as available for sale financial assets (Note 17). On 28 November 2017, the Group acquired an additional 58.9% equity interests in DMC. The acquisition was satisfied through the partial disposal of 25.3% of the Group’s effective equity interest in 8VIC Global Pte. Limited and its subsidiaries (“8VIC”) to DMC as per Note 24(b)(iii). Following this transaction, DMC became a 69.7% owned subsidiary of the Group. The Group applied significant judgement to determine that the fair value consideration was assessed based on the independent valuation of 8VIC’s capitalisation of future maintainable earnings (“FME”) as the primary methodology instead of the quoted price of new shares issued by Digimatic to the Company as the trading volume of DMC’s shares were low and infrequent with a downward trend in quoted prices. The independent valuer performed a valuation of 8VIC to form an opinion that the transaction is fair to the non- associated shareholders of DMC. Estimates and judgements in determining the fair value considerations include 8 VIC’s growth rate and its multiplier, adjusted by control premium/business risks and management’s selection of mid -point between Relationship of unobservable inputs to fair value The higher the multiple, the higher fair value consideration Fair value The share swap representing Assessed 8VIC 6 to 9.5 consideration of the fair value consideration in EBITDA multiple DMC acquisition 8VIC group’s 25.3% interest, and discounts (*) was valued at S$5.9 million (S$23.6 million at 100% interest). *Assessed 8VIC EBITDA multiple was determined based on the comparable companies trading multiple adjusted by business specific discounts and control premium. The independent valuation resulted in a valuation ranging between S$4.2 million to S$7.5 million for the 25.3% equity interest in 8VIC. The Company assessed the value to be the mid-point of the range being S$5,971,000. 76 77 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 29. Segment information (continued) 30. Business combinations The management assesses the performance of the operating segments based on profit after tax. Current year acquisition (a) Revenue from major products and services (i) Acquisition of Digimatic Group Limited. Financial 116 Revenues from external customers are derived mainly from financial education and training providers, investment income from public and private markets , media, creatives and e-commerce. Breakdown of the revenue and (b) Geographical information The Group’s business segments operate in two main geographical areas: investment income is as follows: Revenue and investment income Education Investment in Public Markets Investment in Private Markets Media Creatives E-commerce Others private markets investee; Revenue and investment income Singapore Malaysia Others Singapore Malaysia Others Non-current assets 2018 S$ 2017 S$ 11,086,574 (547,843) 4,147,569 3,864,729 517,593 923,578 1,514,251 21,506,451 10,721,263 2,998,092 15,065,946 - - - 120,768 28,906,069 2018 S$ 2017 S$ 14,987,337 5,004,863 1,514,251 25,925,579 2,859,722 120,768 21,506,451 28,906,069 5,409,412 561,536 1,041,672 7,012,620 18,577,616 382,262 9,608 18,969,486 At the beginning of the financial year, the Group held 10.8 % interest in Digimatic Group Limited (“Digimatic” or “DMC”) which was recogni sed as financial assets, at FVOCI. Prior to the adoption of FRS 109, it was classified as available for sale financial assets (Note 17). On 28 November 2017, the Group acquired an additional 58.9% equity interests in DMC. The acquisition was satisfied through the partial disposal of 25.3% of the Group’s effective equity interest in 8VIC Global Pte. Limited and its subsidiaries (“8VIC”) to DMC as per Note 24(b)(iii). Following this transaction, DMC became a 69.7% owned subsidiary of the Group. The Group applied significant judgement to determine that the fair value consideration was assessed based on the independent valuation of 8VIC’s capitalisation of future maintainable earnings (“FME”) as the primary methodology instead of the quoted price of new shares issued by Digimatic to the Company as the trading volume of DMC’s shares were low and infrequent with a downward trend in quoted prices. The independent valuer performed a valuation of 8VIC to form an opinion that the transaction is fair to the non- associated shareholders of DMC. Estimates and judgements in determining the fair value considerations include 8 VIC’s growth rate and its multiplier, adjusted by control premium/business risks and management’s selection of mid -point between possible high and low scenarios. • Singapore - the Company is headquartered and has operations in Singapore. The operations in this area are principally the financial education and training providers , and investment in public and pri vate markets; Description Fair value considerations Unobservable inputs Range of input • Malaysia - the operations in this area are principally the financial education and training providers, and Fair value consideration of DMC acquisition The share swap representing the fair value consideration in 8VIC group’s 25.3% interest, was valued at S$5.9 million (S$23.6 million at 100% interest). Assessed 8VIC EBITDA multiple and discounts (*) 6 to 9.5 Relationship of unobservable inputs to fair value The higher the multiple, the higher fair value consideration *Assessed 8VIC EBITDA multiple was determined based on the comparable companies trading multiple adjusted by business specific discounts and control premium. The independent valuation resulted in a valuation ranging between S$4.2 million to S$7.5 million for the 25.3% equity interest in 8VIC. The Company assessed the value to be the mid-point of the range being S$5,971,000. 76 77 Annual Report FY2018For personal use only 117 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 30. Business combinations (continued) Current year acquisition (continued) 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 30. Business combinations (continued) Current year acquisition (continued) (i) Acquisition of Digimatic Group Limited. (continued) (i) Acquisition of Digimatic Group Limited. (continued) Details of the consideration, the assets acquired and liabilities assumed, the non -controlling interest recognised and the effects on the cash flows of the Group, at the acquisition date, are as follows: (d) Provisional fair value (a) Provisional fair value of identifiable assets acquired and liabilities assumed: Cash and cash equivalents Plant and equipment Trade and other receivables Inventory Other investment Total assets Trade and other payables Current tax liabilities Unearned revenue Deferred tax liabilities Total liabilities Total identifiable net assets Less: Non-controlling interest based on proportionate method Less: Existing equity interests held in DMC as FVOCI (Note 30(i)(e)) Less: Gain on bargain purchase (Note 5) Consideration transferred for the business (b) Effect on cash flows of the Group Cash paid (as above) Less: cash and cash equivalents in subsidiary acquired Net cash inflow on acquisition (c) Acquired receivables 28 November 2017 S$ 10,459,440 447,215 1,470,452 341,646 100,000 12,818,753 (1,724,016) (75,939) (983,541) (91,880) (2,875,376) 9,943,377 (3,256,010) (291,102) (425,042) 5,971,223 - 10,459,440 10,459,440 The fair value of trade and other receivables is S$1,470,452 and include trade receivabl es with a fair value of S$1,099,249. The gross contractual amount of trade receivables is S$1,099,249, of which S$1,099,249 is expected to be collectible. At the time the financial statements were authorised for issue, the group had not yet completed the accounting for the acquisition of DMC. In particular, the fair values of the assets and liabilities disclosed above have only been determined provisionally as the independent valuations have not been finalised. (e) Existing equity interests held in DMC as FVOCI At the transaction date, the Group held 10.8% equity interests in DMC as FVOCI, valued at S$2.7 million (based on the DMC’s quoted price). From the overall 10.8% interest, 0.2% interest was held at the Company level and the remaining 10.6% was held by 8 Business Pte. Ltd. (the Company’s wholly owned subsidiary). Following the acquisition of DMC, the FVOCI was re-measured based on the fair value per share arising from the fair value consideration of DMC’s acquisition (Note 30(i)(a)). As a result, a loss arising from the re-measurement of FVOCI of S$2.4 million was recorded in the other comprehensive income. The fair value of FVOCI after re-measurement was S$291,102. The gain on bargain purchase of S$425,042 arising from the acquisition is attributable to the difference between fair value of the acquired net identifiable assets/liabilities and the purchase consideration. DMC was willing to accept the purchase consideration as the transaction allowed DMC to acquire a profitable (f) Gain on bargain purchase business with operating cash flows . (g) Non-controlling interests of the DMC’s identifiable net assets. (h) Revenue and profit contribution The Group has chosen to recognise the 30.3% non-controlling interest based on its proportionate share The acquired business contributed revenue of S$5,315,338 and net profit of S$46,303 to the Group from the period from 28 November 2017 to 31 March 2018. Had DMC been consolidated from 1 April 2017, consolidated revenue and consolidated loss for the year ended 31 March 2018 would have been S$14,756,310 and S$3,335,545 respectively. 78 79 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 118 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 30. Business combinations (continued) Current year acquisition (continued) NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 30. Business combinations (continued) Current year acquisition (continued) (i) Acquisition of Digimatic Group Limited. (continued) (i) Acquisition of Digimatic Group Limited. (continued) Details of the consideration, the assets acquired and liabilities assumed, the non -controlling interest recognised (d) Provisional fair value and the effects on the cash flows of the Group, at the acquisition date, are as follows: (a) Provisional fair value of identifiable assets acquired and liabilities assumed: Cash and cash equivalents Plant and equipment Trade and other receivables Inventory Other investment Total assets Trade and other payables Current tax liabilities Unearned revenue Deferred tax liabilities Total liabilities Total identifiable net assets Less: Non-controlling interest based on proportionate method Less: Existing equity interests held in DMC as FVOCI (Note 30(i)(e)) Less: Gain on bargain purchase (Note 5) Consideration transferred for the business (b) Effect on cash flows of the Group Cash paid (as above) Less: cash and cash equivalents in subsidiary acquired Net cash inflow on acquisition (c) Acquired receivables The fair value of trade and other receivables is S$1,470,452 and include trade receivabl es with a fair value of S$1,099,249. The gross contractual amount of trade receivables is S$1,099,249, of which S$1,099,249 is expected to be collectible. 28 November 2017 S$ 10,459,440 447,215 1,470,452 341,646 100,000 12,818,753 (1,724,016) (75,939) (983,541) (91,880) (2,875,376) 9,943,377 (3,256,010) (291,102) (425,042) 5,971,223 - 10,459,440 10,459,440 At the time the financial statements were authorised for issue, the group had not yet completed the accounting for the acquisition of DMC. In particular, the fair values of the assets and liabilities disclosed above have only been determined provisionally as the independent valuations have not been finalised. (e) Existing equity interests held in DMC as FVOCI At the transaction date, the Group held 10.8% equity interests in DMC as FVOCI, valued at S$2.7 million (based on the DMC’s quoted price). From the overall 10.8% interest, 0.2% interest was held at the Company level and the remaining 10.6% was held by 8 Business Pte. Ltd. (the Company’s wholly owned subsidiary). Following the acquisition of DMC, the FVOCI was re-measured based on the fair value per share arising from the fair value consideration of DMC’s acquisition (Note 30(i)(a)). As a result, a loss arising from the re-measurement of FVOCI of S$2.4 million was recorded in the other comprehensive income. The fair value of FVOCI after re-measurement was S$291,102. (f) Gain on bargain purchase The gain on bargain purchase of S$425,042 arising from the acquisition is attributable to the difference between fair value of the acquired net identifiable assets/liabilities and the purchase consideration. DMC was willing to accept the purchase consideration as the transaction allowed DMC to acquire a profitable business with operating cash flows . (g) Non-controlling interests The Group has chosen to recognise the 30.3% non-controlling interest based on its proportionate share of the DMC’s identifiable net assets. (h) Revenue and profit contribution The acquired business contributed revenue of S$5,315,338 and net profit of S$46,303 to the Group from the period from 28 November 2017 to 31 March 2018. Had DMC been consolidated from 1 April 2017, consolidated revenue and consolidated loss for the year ended 31 March 2018 would have been S$14,756,310 and S$3,335,545 respectively. 78 79 Annual Report FY2018For personal use only 119 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 30. Business combinations (continued) Prior year acquisition 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 30. Business combinations (continued) Prior year acquisition (continued) (ii) Acquisition of Financial Joy Institute Pte. Ltd. (ii) Acquisition of Financial Joy Institute Pte. Ltd. (continued) On 29 June 2016, the Group acquired 51% equity interest in Financial Joy Institute Pte. Ltd. (“FJI”) by way of share swap for a purchase consideration of S$2.04 million and FJI became a subsidiary of the Group. (d) Goodwill Management engaged an external valuation specialist to perform the purchase price allocation for this acquisition including the identification of intangible assets in line with FRS 103 Business combinations. Based on the purchase price allocation exercise, only goodwill have been identified as an intangible asset being the difference between the purchase consideration and the fair value of the identifiable assets acquired and liabilities assumed. Details of the consideration paid, the assets acquired and liabilities assumed, the non-controlling interest recognised and the effects on the cash flows of the Group, at the acquisition date, are as follows: (a) (b) (c) Share swap, representing the total consideration transferred (Note 23) Less: Remuneration element (Note 11(c)) Total consideration through equity swap Effect on cash flows of the Group Cash paid (as above) Less: Cash and cash equivalents in subsidiary acquired Net cash inflow on acquisition Fair value of identifiable assets acquired and liabilities assumed: Cash and cash equivalents Plant and equipment Trade and other receivables Total assets Trade and other payables Current tax liabilities Unearned revenue Total liabilities Total identifiable net liabilities Less: Non-controlling interest based on proportionate method Add: Goodwill (Notes 14 and 30(ii)(d)) Consideration transferred for the business As of the date of acquisition 29 June 2016 S$ 2,040,000 (500,000) 1,540,000 - 414,733 414,733 414,733 19,434 6,399 440,566 (11,840) (790) (456,450) (469,080) (28,514) 13,972 1,554,542 1,540,000 The goodwill of S$1,554,542 arising from the acquisition is attributable to potential growth to regional markets with additional trainers and course offerings as well as additional events and programs. It has been allocated to Education segment. None of the goodwill recognised is expected to be deductible for income tax purposes. (e) Revenue and profit contribution The acquired business contributed revenue of S$3,331,010 and net profit of S$784,669 to the Group from the period from 29 June 2016 to 31 March 2017. Had FJI been consolidated from 1 March 2016, consolidated revenue and consolidated profit for the year ended 31 March 2017 would have been S$4,052,951 and S$1,107,428 respectively. (f) On 31 March 2017, the Group acquired the remaining 49% equity interest in FJI (9 months period since the first transaction) by way of share swap (Note 24). Based on the assessment performed by management, we have concluded that these are two separate transactions as they are negotiated and entered into at two different point of time and the arrangement is not dependent on each other (different commercial objectives). 31. New or revised accounting standards and interpretations Below are the mandatory standards, amendments and interpretations to existing standards that have been published, and are relevant for the Group’s accounting periods beginning on or after 1 April 2018 and which the Group has not early adopted: • FRS 115 Revenue from contracts with customers (effective for annual periods beginning on or after 1 January 2018) or services. FRS 115 replaces FRS 11 Construction contracts, FRS 18 Revenue, and related interpretations. Revenue is recognised when a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service. The core principle of FRS 115 is that an entity recognises revenue to depict the transfer of promised goods or ser vices to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods 80 81 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES Financial 120 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 30. Business combinations (continued) Prior year acquisition NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 30. Business combinations (continued) Prior year acquisition (continued) (ii) Acquisition of Financial Joy Institute Pte. Ltd. (ii) Acquisition of Financial Joy Institute Pte. Ltd. (continued) On 29 June 2016, the Group acquired 51% equity interest in Financial Joy Institute Pte. Ltd. (“FJI”) by way of share (d) Goodwill swap for a purchase consideration of S$2.04 million and FJI became a subsidiary of the Group. Management engaged an external valuation specialist to perform the purchase price allocation for this acquisition including the identification of intangible assets in line with FRS 103 Business combinations. Based on the purchase price allocation exercise, only goodwill have been identified as an intangible asset being the difference between the purchase consideration and the fair value of the identifiable assets acquired and liabilities assumed. Details of the consideration paid, the assets acquired and liabilities assumed, the non-controlling interest recognised and the effects on the cash flows of the Group, at the acquisition date, are as follows: (a) Share swap, representing the total consideration transferred (Note 23) Less: Remuneration element (Note 11(c)) Total consideration through equity swap (b) Effect on cash flows of the Group Cash paid (as above) Less: Cash and cash equivalents in subsidiary acquired Net cash inflow on acquisition (c) Fair value of identifiable assets acquired and liabilities assumed: Cash and cash equivalents Plant and equipment Trade and other receivables Total assets Trade and other payables Current tax liabilities Unearned revenue Total liabilities Total identifiable net liabilities Less: Non-controlling interest based on proportionate method Add: Goodwill (Notes 14 and 30(ii)(d)) Consideration transferred for the business As of the date of acquisition 29 June 2016 S$ 2,040,000 (500,000) 1,540,000 - 414,733 414,733 414,733 19,434 6,399 440,566 (11,840) (790) (456,450) (469,080) (28,514) 13,972 1,554,542 1,540,000 The goodwill of S$1,554,542 arising from the acquisition is attributable to potential growth to regional markets with additional trainers and course offerings as well as additional events and programs. It has been allocated to Education segment. None of the goodwill recognised is expected to be deductible for income tax purposes. (e) Revenue and profit contribution The acquired business contributed revenue of S$3,331,010 and net profit of S$784,669 to the Group from the period from 29 June 2016 to 31 March 2017. Had FJI been consolidated from 1 March 2016, consolidated revenue and consolidated profit for the year ended 31 March 2017 would have been S$4,052,951 and S$1,107,428 respectively. (f) On 31 March 2017, the Group acquired the remaining 49% equity interest in FJI (9 months period since the first transaction) by way of share swap (Note 24). Based on the assessment performed by management, we have concluded that these are two separate transactions as they are negotiated and entered into at two different point of time and the arrangement is not dependent on each other (different commercial objectives). 31. New or revised accounting standards and interpretations Below are the mandatory standards, amendments and interpretations to existing standards that have been published, and are relevant for the Group’s accounting periods beginning on or after 1 April 2018 and which the Group has not early adopted: • FRS 115 Revenue from contracts with customers (effective for annual periods beginning on or after 1 January 2018) FRS 115 replaces FRS 11 Construction contracts, FRS 18 Revenue, and related interpretations. Revenue is recognised when a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service. The core principle of FRS 115 is that an entity recognises revenue to depict the transfer of promised goods or ser vices to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. 80 81 Annual Report FY2018For personal use only 121 Financial 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 31. New or revised accounting standards and interpretations (continued) 31. New or revised accounting standards and interpretations (continued) • FRS 115 Revenue from contracts with customers (effective for annual periods beginning on or after 1 January 2018) (continued) The Group has voluntarily adopted SFRS(I)s on 1 April 2018 and will be issuing its first set of financial information prepared under SFRS(I)s for the half year period ended 30 September 2018 in November 2018. An entity recognises revenue in accordance with that core principle by applying the following steps: • • • • • Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation FRS 115 also includes a cohesive set of disclosure requirements that will result in an entity providing users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. Management has identified the following areas that are likely to be affected: (i) Accounting for certain costs incurred in fulfilling a contract – certain costs which are currently expensed may need to be recognised as an asset under FRS 115. At this stage, the Group is not able to estimate the impact of the new rules on the Group’s financial statements. The Group will make more detailed assessment of the impact over the next six months. • FRS 116 Leases (effective for annual periods beginning on or after 1 January 2019) 32. Authorisation of financial statements FRS 116 will result in almost all leases being recognised on the consolidated statement of financial position, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short- term and low-value leases. The accounting for lessors will not change significantly. Some of the commitments may be covered by the excepti on for short-term and low-value leases and some commitments may relate to arrangements that will not qualify as leases under FRS 116. • FRS 116 Leases (effective for annual periods beginning on or after 1 January 2019) (continued) The new standard also introduces expanded disclosure requirements and changes in presentation. The Group has yet to determine to what extent the commitments as at the reporting date will result in the recognition of an asset and a liability for future payments and how this will affect the Group’s profit and classification of cash flows. • Adoption of SFRS(I)s The Singapore Accounting Standards Council has introduced a new Singapore financial reporting framework that is equivalent to the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The new framework is referred to as ‘Singapore Financial Reporting Standards (International)’ (“SFRS(I)s”) hereinafter. In adopting SFRS(I)s, the Group is required to apply all of the specific transition requirements in SFRS(I) 1 First- time Adoption of Singapore Financial Reporting Standards (International). The Group will also concurrently apply new major SFRS(I) 15 Revenue from Contracts with Customers. The estimated impact arising from the adoption of SFRS(I)s on the Group’s financial statements are set out as follows: (a) Application of SFRS(I) 1 The Group is required to retrospectively apply all SFRS(I)s effective at the end of the first SFRS(I) reporting period (financial year ending 31 March 2018), subject to the mandatory exceptions and optional exemptions under SFRS(I) 1. The Group plans to el ect relevant optional exemptions and the exemptions resulting in significant adjustments to the Group’s financial statements prepared under SFRS(I)s are as follows: (i) Cumulative translation differences The Group plans to elect to set the cumulative translation differences for all foreign operations to be zero as at the date of transition to SFRS(I)s on 1 April 2018. As a result, other reserves and retained profits as at 1 April 2018 and 31 March 2018 will be increased/ reduced by S$913,252 respectively. These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of 8I Holdings Limited on 29 June 2018. 82 83 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use only 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES 8I HOLDINGS LIMITED AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 March 2018 Financial 122 31. New or revised accounting standards and interpretations (continued) 31. New or revised accounting standards and interpretations (continued) • FRS 115 Revenue from contracts with customers (effective for annual periods beginning on or after 1 January 2018) (continued) The Group has voluntarily adopted SFRS(I)s on 1 April 2018 and will be issuing its first set of financial information prepared under SFRS(I)s for the half year period ended 30 September 2018 in November 2018. In adopting SFRS(I)s, the Group is required to apply all of the specific transition requirements in SFRS(I) 1 First- time Adoption of Singapore Financial Reporting Standards (International). The Group will also concurrently apply new major SFRS(I) 15 Revenue from Contracts with Customers. The estimated impact arising from the adoption of SFRS(I)s on the Group’s financial statements are set out as follows: (a) Application of SFRS(I) 1 The Group is required to retrospectively apply all SFRS(I)s effective at the end of the first SFRS(I) reporting period (financial year ending 31 March 2018), subject to the mandatory exceptions and optional exemptions under SFRS(I) 1. The Group plans to el ect relevant optional exemptions and the exemptions resulting in significant adjustments to the Group’s financial statements prepared under SFRS(I)s are as follows: (i) Cumulative translation differences The Group plans to elect to set the cumulative translation differences for all foreign operations to be zero as at the date of transition to SFRS(I)s on 1 April 2018. As a result, other reserves and retained profits as at 1 April 2018 and 31 March 2018 will be increased/ reduced by S$913,252 respectively. • FRS 116 Leases (effective for annual periods beginning on or after 1 January 2019) 32. Authorisation of financial statements These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of 8I Holdings Limited on 29 June 2018. An entity recognises revenue in accordance with that core principle by applying the following steps: • • • • • Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation FRS 115 also includes a cohesive set of disclosure requirements that will result in an entity providing users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. Management has identified the following areas that are likely to be affected: (i) Accounting for certain costs incurred in fulfilling a contract – certain costs which are currently expensed may need to be recognised as an asset under FRS 115. At this stage, the Group is not able to estimate the impact of the new rules on the Group’s financial statements. The Group will make more detailed assessment of the impact over the next six months. FRS 116 will result in almost all leases being recognised on the consolidated statement of financial position, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short- term and low-value leases. The accounting for lessors will not change significantly. Some of the commitments may be covered by the excepti on for short-term and low-value leases and some commitments may relate to arrangements that will not qualify as leases under FRS 116. • FRS 116 Leases (effective for annual periods beginning on or after 1 January 2019) (continued) The new standard also introduces expanded disclosure requirements and changes in presentation. The Group has yet to determine to what extent the commitments as at the reporting date will result in the recognition of an asset and a liability for future payments and how this will affect the Group’s profit and classification of cash flows. • Adoption of SFRS(I)s The Singapore Accounting Standards Council has introduced a new Singapore financial reporting framework that is equivalent to the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The new framework is referred to as ‘Singapore Financial Reporting Standards (International)’ (“SFRS(I)s”) hereinafter. 82 83 Annual Report FY2018For personal use only 123 Financial Additional Information Shareholders Information as at 29 June 2018 8I Holdings Limited – Ordinary Shares The Company has ordinary shares on issue. These are listed on the Australian Securities Exchange under ASX code: 8IH. Details of trading activity are published daily by electronic information vendors. All ordinary shares carry one vote per share without restriction. Analysis of Shareholders and 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 Number of Holders Number of Shares % of Issued Capital 0.00% 0.09% 0.16% 6.22% 93.53% 100.00% 9,842 308,759 566,819 22,519,283 338,573,882 361,978,585 14 80 60 492 293 939 The number of investors holding less than a marketable parcel of 4,167 8IH shares (based on a share price of A$0.12) was 50. They hold 100,292 8IH shares in total. Twenty Largest Shareholders and CDI Holders* Registered Holder BNP Paribas Noms Pty Ltd Pauline Teo Puay Lin Philip John Raff 1. Chee Kuan Tat, Ken 2. Clive Tan Che Koon 3. HSBC Custody Nominees (Australia) Limited 4. J P Morgan Nominees Australia Limited 5. Citicorp Nominees Pty Limited 6. 7. 8. 9. Clarence Wee Kim Leng 10. Glorymont Ltd 11. Lim Wei Lin 12. Ho Tuck Chee 13. Hor Chook Lam 14. Alex Chia Che Keng 15. Hue Kuan Yew 16. Fance Chua Meon Keng 17. Loo Tian Guan 18. Vivek Verma 19. Yap Pei Koon 20. Edwin Kang Tien Hock All Other Shareholders Total Notes Number of Shares % of Issued Capital 86,458,500 65,140,000 22,927,782 22,588,848 18,830,204 8,978,084 8,859,103 7,870,652 2,063,400 2,060,000 2,000,000 1,866,320 1,546,000 1,398,140 1,213,914 1,118,000 1,107,203 1,100,000 1,020,872 934,000 102,897,563 361,978,585 23.88% 18.00% 6.33% 6.24% 5.20% 2.48% 2.45% 2.17% 0.57% 0.57% 0.55% 0.52% 0.43% 0.39% 0.34% 0.31% 0.31% 0.30% 0.28% 0.26% 28.42% 100.00% * 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. 8I Holdings LimitedCopyright © 8I Holdings Limited 2018. All Rights Reserved.For personal use onlyAdditional Information (continued) Financial 124 Shareholders Information as at 29 June 2018 Substantial Shareholders and CDI Holders** Date Announced Name Direct Interest Shares %of Voting Power Deemed Interest Shares % of Voting Power 1/2/2018 1/2/2018 Notes Chee Kuan Tat, Ken Clive Tan Che Koon 86,458,500 23.88% 65,140,000 18.00% - - - - ** 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. Current On-Market Buy-Back (ASX Listing Rule 4.10.18) There is no current on-market buy-back arrangement for the Company. Investment (ASX Listing Rule 4.10.20) The Group had a total of 433 transactions in securities during the financial year ended 31 March 2018 and has paid or accrued brokerage and management fees totalling S$29,494 and S$225,310 respectively. As at 31 March 2018, the Group held investment in DIP Corporation, Emmbi Industries Limited, HRnetGroup Limited, Nick Scali Limited, Nyquest Technology Co Ltd, PPAP Automotive Limited, Riverstone Holdings Limited, SeaLink Travel Group Limited, Start Today Co. Ltd and Velocity Property Group Ltd. Corporate Governance Statement The directors of 8I Holdings Limited support and adhere to the principles of corporate governance, recognising the need for the highest standard of corporate behaviour and accountability. Please refer to the corporate governance statement and the appendix 4G released to ASX and posted on the Company website at www.8iholdings.com. The directors are focused on fulfilling their responsibilities individually, and as a Board, for the benefit of all the Company’s stakeholders. That involves recognition of, and a need to adopt, principles of good corporate governance. The Board supports the guidelines on the “Principles of Good Corporate Governance and Recommendations – 3rd Edition” established by the ASX Corporate Governance Council. Given the size and structure of the Company, the nature of its business activities, the stage of its development and the cost of strict and detailed compliance with all of the recommendations, it has adopted a range of modified systems, procedures and practices which enables it to meet the principles of good corporate governance. The Company’s practices are mainly consistent with those of guidelines and where do not correlate with the recommendations in the guidelines the Company considers that its adopted practices are appropriate to it. Annual Report FY2018For personal use only8I Holdings Limited (Incorporated Company Registration Number: 201414213R ARBN 601 582 129 in the Republic of Singapore) www.8iholdings.com Offices Singapore Goldbell Towers, 47 Scotts Road, #03-03/04 Singapore 228233 T F : +65 6801 4500 : +65 6235 0332 info@8iholdings.com Australia C/- SmallCap Corporate Pty Ltd, Suite 6, 295 Rokeby Road, Subiaco WA, Australia, 6008 T F : +61 (8) 6555 2950 : +61 (8) 6166 0261 China A13, Zun Mu Hui, No.2695 Hutai Road, Bao Shan District, 200436, Shanghai, China 中国上海市宝山区沪太路2695号尊木汇A13 T : +60 3-2201 8089 Follow Us On: Facebook Linkedin : www.facebook.com/8IHoldings : www.linkedin.com/company/8iholdings For personal use only

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