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CONTENTSCorporate Information
Group Corporate Structure
Directors’ Profile
Chairman’s Statement
Corporate Social Responsibility Statement
Audit Committee Report
Statement on Corporate Governance
Statement on Risk Management And Internal Control
Directors’ Report and Financial Statements
Notice of The Eleventh Annual General Meeting
Statement Accompanying Notice of The EleventhAnnual General Meeting
Analysis of Shareholdings
Analysis of Warrant Holdings
Form of Proxy
2
3
4-5
6
7-8
9-11
12-18
19-20
22-100
101-103
103
104-105
106-107
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 52
COMPANY SECRETARY Wong Youn Kim(MAICSA 7018778)
Sin May Peng (MAICSA 7018354)
REGISTERED OFFICE Level 2, Tower 1, Avenue 5Bangsar South City59200 Kuala Lumpur
CORPORATE OFFICE
No. 10, Jalan 15/22Tiong Nam Industrial ParkSection 15 40200 Shah Alam Selangor Darul Ehsan Tel no.: 03-5523 1781Fax no.: 03-5523 7502 website: www.eduspec.com.myEmail : smchang@eduspec.com.my
AUDITORS Crowe Horwath (AF 1018)Chartered AccountantsLevel 16, Tower CMegan Avenue II12 Jalan Yap Kwan Seng50450 Kuala LumpurMalaysiaTel : 603-2166 0000Fax : 603-2166 1000
CORPORATE INFORMATION
BOARD OF DIRECTORS Lim Een Hong (Chief Executive Officer/ Director)
Lim Soon Seong (Executive Director)
Lim Beng Weh (Independent Non-Executive Director)
Dato’ Dr. Mohd Ariff Bin Araff (Senior Independent Non-Executive Director)
Tan Sri Dato’ Haji Alimuddin Bin Haji Mohd Dom (Independent Non-Executive Director)(Appointed w.e.f. 16 June 2014)
Tengku Abu Bakar Ahmad Bin Tengku Abdullah (Independent Non-Executive Director)(Appointed w.e.f. 16 June 2014)
SHARE REGISTRAR Tricor Investor Services Sdn. Bhd. Level 17, The Gardens North Tower, Mid Valley Ciy, Lingkaran Syed Putra,59200 Kuala Lumpuer MalaysiaTel : 603-2264 3883 Fax : 603- 2282 1886
PRINCIPAL BANKERS United Overseas Bank (Malaysia) BerhadMalayan Banking BerhadUnited Overseas Bank Limited (Singapore)HSBC Bank Malaysia Berhad
STOCK EXCHANGE LISTING ACE Market of the Bursa Malaysia Securities Berhad Stock Name : EDUSPECStock Code : 0107
AUDIT COMMITTEE ChairmanLim Beng Weh(Independent Non-Executive Director)
MembersDato’ Dr. Mohd Ariff Bin Araff(Senior Independent Non-Executive Director)Tan Sri Dato’ Haji Alimuddin Bin Haji Mohd Dom(Independent Non-Executive Director)(Appointed w.e.f. 16 June 2014)
NOMINATION COMMITTEE
ChairmanLim Beng Weh(Independent Non-Executive Director)
MemberDato’ Dr. Mohd Ariff Bin Araff(Senior Independent Non-Executive Director)Tengku Abu Bakar Ahmad Bin Tengku Abdullah(Independent Non-Executive Director)(Appointed w.e.f. 16 June 2014)
REMUNERATION COMMITTEE
ChairmanLim Beng Weh(Independent Non-Executive Director)
MemberTan Sri Dato’ Haji Alimuddin Bin Haji Mohd Dom(Independent Non-Executive Director)(Appointed w.e.f. 16 June 2014)Lim Een Hong(Chief Executive Officer/ Director)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 3
Group Corporate Structure as at 12 February 2015
Group Corporate Structure as at 12 February 2015
*Eduspec ACG Pte Ltd was acquired on 11 April 2014
*Cloud Direct Sdn Bhd was acquired on 15 September2014
EDUSPEC SDN BHD(Malaysia Operations)
100% Wholly-owned Subsidiary
LITESPEED EDUCATIONPTE LTD
(Singapore Operations)100% Wholly-owned Subsidiary
EDUSPEC PTE LTD(Overseas Venture)
100% Wholly-owned Subsidiary
LITESPEED EDUCATIONPROGRAMMES SDN BHD
(Partners Programmes)100% Wholly-owned Subsidiary
MULTIPLE TECHNOLOGY MSC SDN BHD
(Malaysia Operations)100% Wholly-owned Subsidiary
EDUSPEC ACG PTE LTD60% Owned Subsidiary
EDM EDUCATIONALTECHNOLOGY (M)
SDN BHD50% Owned Joint Venture
Cloud Direct SDN BHD30% Owned Associate
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 54
Dato’ Dr. Mohd Ariff bin Araff, aged 70, a Malaysian, was appointed as an Independent Non-Executive Director of the Company on 19 December 2008. Dato’ Ariff holds a Bachelor of Science (Hons.) from University of Brighton in United Kingdom, MIEM (Malaysia), P.Eng., MIEE, C. Eng. (United Kingdom), MIEEE (USA), SMP (Harvard), AMP (INSEAD), and DSNS, SPTJ.
Dato’ Ariff has extensive experience in Electric Utility Engineering and Management. Dato’ Ariff has worked in various capacities in Generation, Transmission and Distribution Divisions of Tenaga Nasional, the biggest electric utility in Malaysia. In the 32 years Dato’ Ariff has worked with Tenaga Nasional, he has completed many varied assignments in areas of Generation and Transmission Projects, Generation Operation, Utility Planning, Transmission and Distribution Management, IT Applications in Distribution Corporate Management, Research and Development and Commercialization of Research Products.
Retired from TNB in April 2000 as Managing Director/CEO of TNB Research Dato’ Ariff was reappointed as an Advisor to TNB Research on contract basis for two years and thereafter appointed as a Director to the Board of TNB Research Sdn. Bhd. from 1997 until todate. Dato’ Ariff is a member of ASEAN Working Group on Utility Standards as well as the Working Group on Research, Development and Engineering. Internationally, Dato’ Ariff is a registered UNIDO Expert on Energy Audit and Energy Conservation and UNCTAD Expert on Power Generation and Transmission Equipments.
In 1998, Dato’ Ariff was appointed as a Board Member of Malaysia Energy Centre (Pusat Tenaga Malaysia- PTM) until todate. Using his vast experiences in Power Engineering and Management, Dato’ Ariff helped to steer PTM to become a premier Power Research Institute. Dato’ Ariff was appointed Chairman of MIMOS Berhad, a premier government-owned R&D establishment for ICT since October 2000 until 30th December 2004. In 2002 while as Chairman of MIMOS, Dato’ Ariff was conferred the prestigious award SPTJ.
Dato’ Ariff is Co-Chairman of Doble International Engineering Committee (USA) for Transformers. Dato’ Ariff was once the President of TNB Senior Officers Association (a Trade Union) and currently holds several positions as Advisor/Chairman/Board Member of private corporations and banking institutions.
DIRECTORS’ PROFILE
Mr. Lim Een Hong, aged 48, a Malaysian, is the Chief Executive Officer and Board member of the Company. Mr. Lim was appointed to the Board on 18 March 2010.
Before coming full time into the Education industry in 2008, Mr. Lim was a lawyer by profession and had been practicing continuously since 1992 as an advocate and solicitor of the High Court of Malaya. Mr. Lim was a partner in the legal practice of Messrs Eugene Tan & Co before he set up his own firm, Messrs. EH Lim Lee & Partners in 1998. Mr. Lim had since ceased legal practice to commit his career in Education.
Since his debut into the Education industry Mr. Lim has worked tirelessly to what Mr. Lim termed as institutionalizing K12 education. Since joining the board, Mr. Lim has worked diligently to promote his ideals in public or quasi-public Education sector. At his initiative, the EHB Group is now working very closely with various multinational companies such as iCarnegie, Microsoft, Acer and various MOEs in the Southeast Asia region. Mr. Lim has also endeavored to corroborate with other players in the industry to see a better growth in the qualitative aspects in the industry. Besides the Malaysian market, Mr. Lim also actively collaborates with his counterparts in Singapore, the Philippines, Indonesia, Vietnam, Thailand, and Myanmar in seeking to establish regional market presence and to introduce various education solutions, programs and services to these countries in the region.
Mr. Lim Soon Seong, aged 51, a Malaysian, has been the Executive Director of the Company since his appointment to the Board on 18 March 2010. Mr. Lim is an engineer by profession. After graduating in Mechanical Engineering from Singapore Polytechnic in 1986, Mr. Lim was in several attachments in production, product development and sales and marketing of electronics and electrical industries.
In 1996, Mr. Lim joined Grand-Flo Electronics System Sdn Bhd. There, Mr. Lim led the sales and marketing team in identifying and developing new accounts, strategizing marketing and promotional activities such as seminars and exhibitions. One of Mr. Lim’s major focus was to identify and establish business alliances with consultants of ERP systems such as SAP, Baan, JD Edward, Oracle and Solomon. Mr. Lim was also involved in project scooping and project management and responsible for managing business partners and principals. Mr. Lim was an Executive Director of Grand-Flo Solutions Berhad between October 2004 and May 2008.
With the potential growth and opportunities in the education industry, Mr. Lim decided to utilize his project management and business alliance skills for the education market. Currently Mr. Lim is managing the business development of EHB Group in respect of several overseas market to promote and market various IT education solutions, programs, products and services.
On the home front, Mr. Lim is a key personnel responsible for working with government and government-linked corporations in marketing various IT education programs, products and services. Mr. Lim is also activity working with partners to penetrate this sector of business.
Mr Lim Een Hong
Mr Lim Soon Seong
Dato’ Dr. Mohd Ariff bin Araff
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 5
Tengku Abu Bakar Ahmad bin Tengku Abdullah, aged 30, a Malaysian is the eldest son of YAM Tengku Arif Bendahara Pahang, Tengku Abdullah Ibni Almarhum Sultan Abu Bakar. Tengku was appointed as an Independent Non-Executive Director of the Company on 16 June 2014. Tengku graduated from Swinburne University Of Technology, Hawthrone, Australiawith Bachelor of Business Accounting major in Finance in 2009.
Tengku had gained working experience in insurance industry after graduation with ING Funds Bhd managing the marketing
and unit trust of the Company. In 2011, Tengku was appointed as Director of Unitab Medic Sdn Bhd, the largest medical health screening services for foreign workers in Malaysia. In 2012, Tengku was appointed to the Board of Directors of Helm Maritime Sdn Bhd and Oil and Gas Company.
DIRECTORS’ PROFILE (cont’d)
Lim Beng Weh, aged 56, a Malaysian, was appointed as an Independent Non-Executive Director of the Company on 30 July 2007 and is also Chairman of the Audit Committee of the Company. Mr. Lim graduated with a Diploma in Financial Accounting from Tunku Abdul Rahman College, Kuala Lumpur in 1985. Subsequently, he pursued post- graduate education and was conferred a Master of Business Administration Degree by the University of Bath, United Kingdom in 1995. Mr. Lim is a member of the Malaysian Institute of Accountants and is also an associate chartered management accountant of the Chartered Institute of Management Accountants in United Kingdom.
Mr. Lim started out his career in public practice with a firm of accountants. Mr. Lim was subsequently appointed as Head of Finance and Chief Financial Officer of a couple of insurance companies between 1987 and 2004. He has been sitting on the Board of Directors of various investment holding companies since 2004 till current date.
Tan Sri Dato’ Hj. Alimuddin Hj. Mohd. Dom, aged 63, a Malaysian, was appointed as an Independent Non-Executive Director of the Company on 16 June 2014. Tan Sri Alimuddin graduated with a Bachelor Degree in Arts (Anthropology and Sociology) from the Universiti Kebangsaan Malaysia in 1976. Tan Sri Alimuddin pursued his Masters degree in 1989 in the field of Educational Administration.
Tan Sri Alimuddin’s career as a teacher began in 1976 at SMK Tengku Menteri Changkat Jering, Perak. In 1984 Tan Sri Alimuddin was promoted as Vice Principal in SMK Dato’ Panglima Perang Kiri, Tapah Road, Perak. Tan Sri Alimuddin served as a principal in five schools among them, SM Sains Teluk Intan, Sekolah Tuanku Abdul Rahman, Ipoh and The Malay College Kuala Kangsar, Perak. Tan Sri Alimuddin was appointed Deputy Director, Schools Division in 2003 and was later promoted as the Deputy Director General, Private Higher Education Management Division in 2004. Tan Sri Alimuddin was the Head of School Inspectorate from 2005 – 2007. On the 16th of July 2007 Tan Sri Alimuddin was appointed as the Director General for Education, Ministry of Education Malaysia.
Tan Sri Alimuddin has always been a significant contributor in the development of education and as the Chairman of Malaysian Teacher’s Foundation. Tan Sri Alimuddin has been instrumental in enhancing teacher professionalism especially in capacity building. To date Tan Sri Alimuddin’s contribution and work in the field of education continues.
In recognition for his contribution to education Tan Sri Alimuddin was conferred the Panglima Setia Mahkota which carries the title “Tan Sri” in 2009 by the DYMM YDP Agong. In 2007, Tan Sri Alimuddin was conferred the Dato’ Paduka Mahkota Perak which carries the title “Dato’” by DYMM Sultan Perak.
Mr Lim Beng Weh
Tan Sri Dato’ Hj. Alimuddin Hj. Mohd Dom
Tengku Abu Bakar Ahmad bin Tengku Abdullah
Additional information:
- Save for Mr. Lim Een Hong and Mr. Lim Soon Seong who are siblings, none of the Director has any family relationship with any Director and/or major shareholder of the Company;
- None of the Director has any confl ict of interest with the Company; and
- None of the Director has any conviction for offences within past 10 years other than traffi c offences, if any.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 56
CHAIRMAN’S STATEMENT
On behalf of the Board of Directors, I am pleased to present the Annual Report of Eduspec Holdings Berhad for the financial year ended 30 September 2014.
OVERVIEWYear 2014 has been a good year for the Eduspec Group. There is a strong business growth within the group especially from the overseas division. Eduspec’s continued strong growth is due to its integrated service-to-school business model which is dynamic yet flexible. The business model is capable to adapt to the unique needs and demands from the different segment of schools in different countries. As the saying goes – in education one size does not fit all.
Eduspec assists schools in the region to adopt technology in education with a purpose by providing them with robust content that integrates with the best education technology and, the most practical and usable solutions. Thus, this effort makes Eduspec a renowned brand name in the region.
During the financial year ending 2014, we spent considerable amount of resources to fully support our partners in this region namely Indonesia, the Philippines and Vietnam. We intend to extend our market share under the branding of Eduspec in Thailand and Myanmar in 2015. In every new country, we need to see before we can harvest so we will continue this effort for the coming financial year. On the same note, better results are in the pipeline as we see a solid growth in the overseas units especially in Indonesia and we foresee this growth to continue.
In July 2014, we have signed a strategic collaboration agreement with iCarnegie Global Learning, which develops and represents strategic product and services powered by Carnegie Mellon University. iCarnegie Global Learning and Eduspec are align in the vision to deliver a cutting-edge science, technology, engineering and mathematics (STEM) curriculum focused on robotics and computer programming education for primary and secondary schools in the Asian market.
Our Prime Minister Datuk Seri Najib Razak said that to invest in STEM education is to invest in the future. He shared this at the Global STEM Alliance at the United Nations headquarters that Malaysia aims for 60 percents of its children and young people to take up STEM education and career for a better future of the country. STEM education has been a major focus for us last year and will continue to be so for the coming year.
Eduspec is taking the lead and driving promotional and awareness campaigns on the importance of STEM education with a two-fold strategy that targets Malaysia and ASEAN. Eduspec IT Advisory Council (EITE) is a platform to promote STEM education to ASEAN council members and to get their feedback. Aside from robust content in our programs, we are also creating awareness locally through large-scale youth events, competitions and seminars.
In our other business division, we have also moved to secondary schools and high schools, private and international schools as well as vocational and community colleges. In 2015, we are focused in expanding our business in this segment of the market which is a new market for Eduspec.
Additionally, we have successfully completed a corporate exercise to raise over RM35 million of funds from a private placement and Right Issue exercise. With this, we will be better equipped to bring the business to the next level.
RESEARCH AND DEVELOPMENT In line with our strategy to expand our range of programs and services for the regional market, Eduspec Group has invested signigicantly in R&D. For the financial period ended 30 September 2014, there was capitalization of R&D expenditure of RM2.1 million. The Company is committed to continue investing in R&D to further develop, enhance and improve on the range of educational programs and services to serve better the needs of our customers. With a bigger market share in this region, the increase amount in R&D will be well spent.
FINANCIAL PERFORMANCE & DIVIDENS For the financial period ended 30 September 2014, the Group recorded consolidated revenue of RM58.8 million. The Group recorded consolidated profit before tax of RM7.90million and a consolidated profit after tax of RM7.50 million.
There was no dividend paid or proposed to be paid during the financial period ended 30 September 2014.
FUTURE PROSPECTS Having extended our presence in Indonesia, the Philippines and Vietnam we will continue grow our programs and services in these markets to achieve high revenue contribution from our overseas ventures and we are also looking to further venture into new markets such as Myanmar and Thailand. The management expects strong growth for the existing market in Malaysia and Singapore as well as new market in Indonesia, Vietnam, and the Philippines. At the same time we are also on a constant lookout for viable ventures in other countries as the PPP in Education as a concept, especially in Education that relates to IT, has proven to be well accepted in many countries.
Another area which Eduspec has been involved and will continue to grow is the provision of teachers training programs on IT to teachers in schools.
There is clearly a trend where governments in many developed countries has transform their education policy for K12, encouraging private sectors to be more involved in the public school education. We can also see a strong emergence of Charter Schools in the United States of America and Academies in United Kingdom. In view of this trend, we clearly see a huge opportunity in this region of Asia.
ACKNOWLEDGEMENT AND APPRECIATIONOn behalf of the Board of Directors , I wishes to take this opportunity to thank our shareholders, customers, business associates, partners and the regulatory authorities for their ongoing support.
We would also like to thank the management and staff for their continuous dedication and commitment to the vision and mission of the Eduspec Group.
Lastly, I wish to convey my gratitude to my fellow directors for their invaluable contribution and support.
Lim Een HongChairman
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 7
Bridging Youth and Digital Innovations
Digital Campus is a multi-tier initiative spearheaded by the Malaysia non-profit organization, Youth On Unity (Y.O.U). Eduspec, played its CSR role in supporting Youth On Unity in this event , by providing among others event implementation and management support. It consists of activities focusing on digital education, e-gaming and workshops for the youth in Malaysia, where innovation, creativity, digital entertainment, and education are brought together under one roof. With the mission to bridge today’s youth to the creative and innovative industry, the event aims to integrate the youth with the industry through fun and educational activities.
The event was held between 3rd and 5th October 2014 at Sunway Pyramid Convention Centre,. The objectives of this CSR event aim to help to educate youths to embrace technology and prepare them for jobs of the future, powering innovation and bridging youths with the creative and innovate industry. It also inspiring action by imparting meaningful and useful knowledge to the youths in the area of their leisure interest and connecting with youths and educate them on Cyber wellness, moral and ethics.
CORPORATE SOCIAL RESPONSIBILITY STATEMENT
Eduspec Holdings Berhad recognizes the importance of Corporate Social Responsibility (CSR) towards education and community development. The Group is bonded together by a strong belief that our corporate philosophy is to be a caring company that has resulted in initiatives in the following areas:
(i) Equal Opportunity
We are an equal opportunity employer. There is no discrimination against employees regardless of race, religion, gender or culture. Our employees’ growth, development and safety have always been our priority. Employees are provided with a safe and healthy environment with adequate medical benefi ts and insurance protection. Effective and continuous trainings are given to focus on the Employees’ development and advancement.
(ii) Sustainability
We strive to constantly improve our e-learning products through our R&D programs while using Energy Effi ciency methods; this is what makes us unique. In our Green Education, we continuously promote awareness, understanding and commitment to our customers, while reducing wastage and contributing substantially towards helping our environment.
(iii) Service to Community
As part of our goal to give back to society, we continuously contribute to charitable causes and maintain our support covering both Corporate and Employee involvement. We understand that local businesses and communities are closely linked and that we can have a signifi cant impact on communities as a whole. EHB Group CSR Programmes focuses on contributing to these communities both through direct fi nancial support and through the support to our partners and staff who take part in activities organized.
Our CSR Programmes are directed at the disadvantaged community especially where children irrespective of race, culture or creed can benefi t from our initiatives. Our support and the assistance would enable them to have better education to build better lives and future for themselves and society on the whole.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 58
Sharing is Caring
This CSR was conducted in 23rd December 2014 at Padmasambhava Children Loving Association Klang Selangor. Estimated participants of 20 students from Standard 1 to Form 2 were participating in this event. The objective of CSR event is to provide exposure and sharing to the students about inquiry learning and emphasizes creative thinking and innovative skills.
Inquiry Learning has been used as a teaching and learning tool for thousands of year in the K12 sector. Children are the catalyst for excellence and integrity of the country. Therefore, Eduspec Holdings Berhad is committed to contribute towards the development of Malaysia’s future generation in academic learning using inquiry approach together with Science, Technology, Engeering and Mathematic (STEM), a 21st century learning approach.
Today, all students at all levels of education can successfully experience and develop deeper level thinking skill through scientific inquiry. Inquiry leaning approach harness the spirit of investigation, creating an interesting, engaging and meaningful curriculum that children’s interests and questions as a starting point got effective learning where as STEM is a powerful tool to promote children’s thinking and learning ability. Both of these approaches develop valuable and complex problem-solving skills.
Supporting Kelantan Flood Victims
Amal Foundation of Malaysia a non-goverrnmental organization with a welfare-oriented focus has recently involved itself with the charity department in Malaysia in helping the flood victims at East Coast, especially in Kelantan when the floods first hit the area of RantauPanjang and Kota Bahru. Even until now, when the flooding has ended, Amal Foundation of Malaysia is still actively involved in helping the flood victims of the East Coast who are in need.
On 9th February 2015, Eduspec Holdings Berhad, donoted 200 units sleeping bags for east coast flood victims through Amal Foundation of Malaysia.
CORPORATE SOCIAL RESPONSIBILITY STATEMENT(cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 9
AUDIT COMMITTEE REPORT
COMPOSITION AND DESIGNATION OF AUDIT COMMITTEE
The Audit Committee (“the Committee”) currently comprises the following members:-
Chairman : Lim Beng Weh (Independent Non-Executive Director)Members : Dato’ Dr. Mohd Ariff Bin Araff (Senior Independent Non-Executive Director) Tan Sri Dato’ Haji Alimuddin Bin (Independent Non-Executive Director) Haji Mohd Dom (Appointed w.e.f. 16 June 2014)
The composition of the Committee of the Group is in compliance with the Listing Requirements of Bursa Malaysia for the ACE Market.
• Membership
The Audit Committee shall be appointed by the Board from amongst the Directors and shall consist of not less than three (3) members, a majority of whom shall be Independent Directors. All members of the audit committee should be non-executive directors.
The members of the Audit Committee shall elect a chairman from among their members who shall be an independent director. No alternate director shall be appointed as a member of the Audit Committee.
• Qualification
At least one (1) member of the Audit Committee:-
(a) must be a member of the Malaysian Institute of Accountants; or
(b) if he/she is not a member of the Malaysian Institute of Accountants, he/she must have at least three (3) years’ working experience and:
he/she must have passed the examinations specified in Part I of the First Schedule of the Accountants Act, 1967; or he/she must be a member of one (1) of the association of accountants specified in Part II of the First Schedule of the
Accountants Act, 1967; or fulfills such other requirement as prescribed by the Bursa Securities.
• MeetingandMinutes
Meetings shall be held not less than four (4) times a year and attended by the Chief Executive Officer, General Manager of Finance and other senior management who may be invited as and when required. The presence of external and/or internal auditors will be requested, if required. Other members of the Board and senior management may attend meetings upon the invitation of the Audit Committee. Both the internal and/or external auditors may request a meeting if they consider it to be necessary. The Audit Committee shall meet with the external auditors without executive board members present at least twice a year.
The Secretary to the Audit Committee shall be the Company Secretary. The Chairman of the Audit Committee shall report on each meeting to the Board.
Any resolution in writing, signed or assented to by all the members of the Committee shall be as valid and effectual as if had been passed at a meeting of the Committee duly convened and held, and may consist of several documents in the like form, each signed by one or more members of the Committee.
• Authority
The Audit Committee is authorised by the Board to investigate any activity within its terms of reference and shall have unrestricted access to any information pertaining to the Group, both the internal and external auditors and to all employees of the Group. The Committee is also authorised by the Board to obtain external legal or other independent professional advice as necessary in the discharge of its duties.
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COMPOSITION AND DESIGNATION OF AUDIT COMMITTEE (cont’d)
• ResponsibilitiesandDuties
In fulfilling its primary objectives, the Audit Committee undertakes, amongst others, the following responsibilities and duties:- (a) To discuss with the external auditors, prior to the commencement of audit, the audit plan which states the nature and scope of audit;
(b) To review major audit findings arising from the interim and final external audits, the audit report and the assistance given by the Group’s officers to the external auditors;
(c) To review with the external auditors, their evaluation of the system of internal controls, their management letter and management’s responses;
(d) To review the internal audit scope and functions, plans, findings, performance of the internal audit function, appointment or termination of senior staff members of the internal audit function;
(e) To review the quarterly reporting to the Bursa Securities and year end annual financial statements of the Group before submission to the Board;
(f) To review any related party transaction and conflict of interest situation that may arise within the Group including any transaction, procedure or course of conduct that raises questions of management integrity;
(g) To consider the nomination and appointment of external auditors, as well as the audit fee;
(h) To review any letter of resignation from the external auditors and any questions of resignation or dismissal;
(i) To obtain written assurance from the external auditors confirming the Audit Committee’s independence;
(j) To review whether there is reason (supported by grounds) to believe that the external auditors are not suitable for re-appointment;
(k) To verify that the allocation of options pursuant to the Employees’ Share Options Scheme of the Company is in accordance with the criteria for allocation established under the scheme at the end of each financial year; and
(l) To promptly report to Bursa Securities if it is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements.
SUMMARY OF ACTIVITIES
There were five (5) Audit Committee meetings held during the financial year ended 30 September 2014. The number of meetings attended by the Committee Members is as follows:-
ATTENDANCELim Beng Weh 5/5Dato’ Dr. Mohd Ariff Bin Araff 4/5Tan Sri Dato’ Haji Alimuddin Bin Haji Mohd Dom 1/1(Appointed w.e.f. 16 June 2014)
The main activities undertaken by the Committee were as follows-:
• Reviewed the Group’s compliance, in particular, the interim financial report prepared on a quarterly basis andaudited financial statements with the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and other relevant legal and regulatory requirements, before recommending them for the Board’s approval;
• Reviewed and approved the external auditors’ audit plan prior to commencement of an audit.• Considering the external auditor’s re-appointment and remuneration.• Meeting with the external auditors without the presence of management.• Reviewed the Internal Audit Reports, which highlight audit issues, recommendations and management’s response and ensuring
that material findings were addressed and attended to by the management.• Reviewed related party transactions and conflict of interest situation that may arise within the Company or the Group including
any transaction, procedure or course of conduct that raises questions of management integrity (where applicable).• To review the Audit Committee’s Report and Statement on Risk Management and Internal Control for inclusion in the
Company’s Annual Report.
AUDIT COMMITTEE REPORT (cont’d)
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INTERNAL AUDIT FUNCTION
The Group has outsourced its internal audit function to Sterling Business Alignment Consulting Sdn. Bhd. (“SBAC”), an independent professional services firm to perform regular and systematic review of the risk management and internal control system of the Group and its subsidiaries. The Audit Committee acknowledges that an independent and adequately resourced internal audit function is required to provide assurance on the effectiveness of the system of the internal control in addressing the risks identified. The SBAC reports directly to the Audit Committee on a quarterly basis. The Audit Committee is chaired by an Independent Non-Executive Director and its members comprise of Non-Executive Directors.
The SBAC primarily acts as an assurance unit highlighting significant audit findings, areas for improvement, management comment on the audit findings and subsequently monitors the implementation of its recommended corrective actions.
The Board confirms that the Group has an adequate and conducive control environment for it to accomplish its business objectives. The Group’s internal control system encompasses the Board and its various Board Committees with its specific terms of reference, executive management that is accountable for all its actions and also various monitoring and review procedures that is embedded in the Group’s processes. The Board reviews these control processes regularly to ensure that an effective system of internal control is maintained within the Group.
The key elements of the Group’s internal control system are described below:
• The Group has a well-defined organisational structure with clearly defined lines of accountability, delegation of responsibility and level of authorisation for all aspects of the business have been laid down and communicated throughout the Group.
• Clearly defined Internal Policies, Standard Operating Procedures and Personnel Manual as the key framework for good internal control practices. These policies manuals are the subjects of regular reviews to meet new business requirements.
• Experienced and competent staffs are placed in areas of responsibility to support and continuously monitor the effectiveness of the Group’s system of internal control.
The group’s system of internal control does not apply to associated companies and a joint venture where the group does not have full management control over them.
AUDIT COMMITTEE REPORT (cont’d)
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STATEMENT ON CORPORATE GOVERNANCE
INTRODUCTION
The Board of Directors (“the Directors” or “the Board”) of Eduspec Holdings Berhad (“Eduspec” or “the Company”) remains committed to ensure that the sound principles of corporate governance set out in the Malaysian Code on Corporate Governance 2012 (“the Code”) and the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.
1. The Board of Directors (“the Board”)
Principal Duties and Responsibilities of the Board
The Board is responsible to guide and monitor the affairs of the Group on behalf of the shareholders to retain full and effective control over the Group. This includes without limitation, the review of the strategic direction for the Group, overseeing the business operations of the Group, and evaluating whether these are being properly managed.
The Board assumes the following responsibilities to facilitate the discharge of their stewardship responsibilities:
• Reviewing and adopting a strategic plan for the Company; • Overseeing the conduct of the Company’s business to evaluate whether the business is being properly managed and
the statutory requirements are being complied; • Identifying principal risks and ensuring the implementation of appropriate systems to manage these risks; • Overseeing and maintaining an effective investors’ and shareholders, communication policy;• Ensuring the adequacy of the management information and internal control systems, including systems for compliance
with applicable laws, regulations, rules, directives and guidelines in the Group
The Board is of the view that there is no necessity up to the present year to establish a separate whistle-blowing policy in view of the current Whistleblower Protection Act 2010.
The Board Balance and Composition
The Board currently has six (6) members comprising one (1) Chief Executive Officer (CEO)/Director, one (1) Executive Director and four (4) Independent Non-Executive Directors. This is in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad for ACE Market which requires at least two (2) Directors or one-third (1/3) of the Board, whichever is higher, are Independent Directors.
The Board retains full control over the Company and monitors the Management. The Board has delegated the responsibility for management and the making of day-to-day business and operational decisions and activities of the Group to the CEO/Director, Executive Director and senior management of the Company who implement the Board’s policies and decisions. There is a clear division of duties and responsibilities amongst them in order to maintain a balance of control, power and authority within the Management. In connection therewith, the Management keep the Board appropriately informed of overall operations of the Group and the major issues facing the Group, together with bringing forward to the Board significant matters for its consideration and approval, where required.
The Independent Non-Executive Directors play a pivotal role in incorporating accountability as they provided objective and independent views to the decision making process of the Board. The presence of the Independent Non-Executive Directors brings an additional element of check and balance to the Board. All Independent Non-Executive Directors are free from any business or other relationship that could materially interfere with the exercise of their independent judgment.
Decision by the Board is done collectively without undue influence or dominance by any individual Director or group of Directors.
The current composition of the Board provides an effective Board with a mix of industry specific knowledge, broad based business and commercial experience together with independent judgment on matters of strategy, operations, resources and business conduct.
The Independent Non-Executive Directors also have the breadth and depth of experience to ensure that the strategies proposed by management are independently and objectively deliberated and examined, taking into account the interests of all stakeholders.
The presence of the Independent Non-Executive Directors on the Board provides unbiased and independent view, advice and judgment on various issues dealt with at the Board.
The Board is confident that its current size and composition is sufficient and effective in discharging the Board’s responsibilities and in meeting the Group’s current needs and requirements.
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INTRODUCTION (cont’d)
Board Meeting
The Board ordinarily meets at least four times a year at quarterly intervals with additional meetings convened when urgent and important decisions need to be taken between the scheduled meetings. During the financial year ended 30 September 2014, the Board met five (5) times where it deliberated upon and considered a variety of matters including the Group’s financial results, strategic decisions and the direction of the Group.
The record of attendance of each director is set out below:-
Directors Number of Meetings Attended
Lim Een Hong 5 out of 5
Lim Soon Seong 5 out of 5
Lim Beng Weh 5 out of 5
Dato’ Dr. Mohd Ariff Bin Araff 4 out of 5
Tan Sri Dato’ Haji Alimuddin Bin Haji Mohd Dom 1 out of 1 (Appointed w.e.f. 16 June 2014)
Tengku Abu Bakar Ahmad Bin Tengku Abdullah 1 out of 1 (Appointed w.e.f. 16 June 2014)
STATEMENT ON CORPORATE GOVERNANCE (cont’d)
In addition, the Board has exercised control on matters that required the Board’s approval during the intervals between the scheduled Board meetings through the circulation of Directors’ Circular Resolution prepared from time to time by the Company Secretary.
Supply of Information and Advice
All Directors are provided with an agenda and Board papers containing information relevant to the business of the Board meeting. This is issued in sufficient time to enable the Directors to obtain further explanation where necessary and be properly briefed before the meeting. Where necessary, minutes of the Board Committees are also tabled at the Board meetings for information and deliberation.
All the Directors have direct access to the advice and services of Senior Management and the Company Secretaries, who are suitably qualified and competent, in carrying out their duties. The Company Secretaries are responsible to ensure that the Board meeting procedures are followed, and the applicable statutory and regulatory requirements are complied with. With the consent of the Board, the Directors may obtain independent professional advice in furtherance of their duties. Wherever necessary, consultants and experts are invited to brief the Board on their areas of expertise or their reports.
Board Committees
The Board delegates certain functions to several committees, namely the Audit Committee, Nomination Committee, and Remuneration Committee to support and assist in discharging its fiduciary duties and responsibilities. The respective committees report to the Board on matters considered and their recommendations thereon. The ultimate responsibility for the final decision on all matters, however, lies with the Board.
The Board may form other committees delegated with specific authorities to act on its behalf whenever required. These committees operate under approved terms of reference or guidelines set out by the Board.
Audit Committee Chairman : Lim Beng Weh (Independent Non-Executive Director) Members : Dato’ Dr. Mohd Ariff Bin Araff (Senior Independent Non-Executive Director) Tan Sri Dato’ Haji Alimuddin Bin (Independent Non-Executive Director) Haji Mohd Dom
Nomination Committee Chairman : Lim Beng Weh (Independent Non-Executive Director) Member : Dato’ Dr. Mohd Ariff Bin Araff (Senior Independent Non-Executive Director) Tengku Abu Bakar Ahmad (Independent Non-Executive Director) Bin Tengku Abdullah
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Remuneration Committee Chairman : Lim Beng Weh (Independent Non-Executive Director) Member : Tan Sri Dato’ Haji Alimuddin Bin (Independent Non-Executive Director) Haji Mohd Dom Lim Een Hong (Executive Director)
Appointments to the Board
The Nomination Committee is responsible for identifying, evaluating and nominating suitable candidates with the necessary mix of skills, experience and competencies to be appointed to the Board and Board Committees to ensure the effectiveness of the Board. Newly appointed Directors will be given a familiarisationprogrammeto familiarise themselves with the Group’s operations to better understand the Group’s businesses.
The process of assessing the Directors is an on-going responsibility of the Nomination Committee and the Board which is properly documented.
2. Directors’ Remuneration
The Company has adopted the objective as recommended by the MCCG in determining the remuneration of executive Directors so as to ensure that it attracts and retains the Directors needed to manage the Company and the Group effectively. Directors do not participate in decisions regarding their own remuneration. The responsibilities for developing a formal and transparent remuneration policy and determining the remuneration packages of executive Directors lie with the Remuneration Committee. Nevertheless, it is the ultimate responsibility of the Board to approve the remuneration of these Directors. The members and terms of reference of the Remuneration Committee are presented on page 14 of this Annual Report.
Directors’ fees are recommended by the Board for the approval by shareholders of the Company at the annual general meeting.
For confidentiality, the details of the Directors’ remuneration are not disclosed for each individual Director.
The transparency and accountability aspects of corporate governance applicable to Directors’ remuneration recommended by the best practices of the MCCG are deemed appropriately served by the disclosures in the ensuing paragraphs.
The aggregate remuneration of Directors who served during the financial year ended 30 September 2014 are categorised as follows:
STATEMENT ON CORPORATE GOVERNANCE (cont’d)
PensionCosts-defined Fee Salaries contribution plans RM RM RM Executive Directors 46,000 880,791 73,576 Non-executive Directors 88,550 - - Total 134,550 880,791 73,576
The Directors, whose remuneration falls within the following bands are as follows:-
Range Executive Non-Executive Below RM50,000 - 4 RM200,001 to RM250,000 1 - RM500,001 to RM550,000 1 -
Re-election of Directors
According to the Company’s Articles of Association(“the Articles”), any Director who is appointed during the year shall retire at the Company’s annual general meeting following his appointment and 1/3 of the Board who do not retire as aforesaid, will retire by rotation at every annual general meeting. The Articles further provide that every Director is subject to retirement once in every 3 calendar years and all retiring Directors are eligible for re-election. All Directors who have attained the age of 70 years are required to submit themselves for re-appointment annually at the Company’s annual general meetings in accordance with Section 129(6) of the Companies Act, 1965 (“the Act”).The Articles further provide that a managing director can be appointed for a fixed term which shall not exceed three (3) years.
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STATEMENT ON CORPORATE GOVERNANCE (cont’d)
2. Directors’ Remuneration (cont’d)
Directors’ Training
The Board, through the Nomination Committee, ensures that it recruits to the Board only individuals of sufficient caliber, knowledge and experience to fulfill the duties of a Director appropriately.
All the Directors of the Company have completed the Mandatory Accreditation Programme prescribed by the Bursa Malaysia Securities Berhad.
Directors are encouraged to attend continuous education programmes and seminars to keep abreast of relevant changes in laws and regulations and the development in the industry.
The following directors have attended external training programmes and seminars as follows:-
Directors
Lim Een Hong
Lim Soon Seong
Lim Beng Weh
Dato’ Mohd. Ariff Bin Araff
Tengku Abu Bakar Ahmad Bin Tengku Abdullah
Tan Sri Dato’ Hj. Alimuddin Hj. Mohd. Dom
Courses/Seminar/Conference
• Official Reception and Socrates Award Ceremony (in UK)• National Chamber of Commerce and Industry of Malaysia (NCCIM) Private Sector
Delegation to US
• MBA in Finance
• Risk Management & Internal Control
• Advocacy Session on Corporate Disclosure For Directors of Listed Issuers• Nominating Committee 2 Programme: Effective Board Evaluation• GST Awareness Programme MHW/MEDA Inc• Board Chairman Series: The Role of the Chairman• GST Specific Training Accounting & Reporting MHW/MEDA Inc• ACCU (Asian Credit Union) annual conference: Toward Sustainable Credit Union
Financing
• Mandatory Accreditation Program (MAP) For Directors of Public Listed Companies
• Mandatory Accreditation Program (MAP) For Directors of Public Listed Companies
Additionally, the Directors are also updated on a continuing basis by the Company Secretary on new and/ or revised requirements to the Listing Requirements as and when the same were advised by the Bursa Securities. The Directors will continue to undergo other relevant training programmes, conferences and seminars that may further enhance their skills and knowledge.
3. Relations with Shareholders and Investors Dialogue with Investors
Recognising the importance of timely dissemination of information to shareholders and other stakeholders, the Board is committed to ensuring that the shareholders and other stakeholders are well informed of major developments of the Company and the information is communicated to them through the following:-
(i) the Annual Report;
(ii) the various disclosures and announcements made to Bursa Malaysia Securities Berhad including the Quarterly Results and Annual Results; and
(iii) the website at www.eduspec.com.my which shareholders as well as members of the public are invited to access for the latest information on the Group.
General Meetings
The Company’s Annual General Meeting (“AGM”) serves as a principal forum for dialogue with shareholders. Shareholders are encouraged to meet and communicate with the Board at the AGM and to vote on all resolutions. Extraordinary General Meetings is held as and when required.
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4. Accountability and Audit
The Directors are responsible to present a true and fair assessment of the Group’s position and prospects in the annual reports and quarterly reports. The quarterly financial results were reviewed by the Audit Committee and approved by the Board of Directors prior to submission to Bursa Malaysia Securities Berhad.
A statement by the Directors of their responsibilities in the preparation of financial statements is set out in the ensuing section.
Directors Responsibility Statement in Financial Reporting
The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the provisions of the Companies Act 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group as at the end of the financial year and of the results and cash flows of the Group for the financial year then ended.
The Directors are satisfied that in preparing the financial statements of the Group for the year ended 30 September 2014, the Group has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The Directors also consider that all applicable approved accounting standards have been followed in the preparation of the financial statements, subject to any material departures being disclosed and explained in the notes to the financial statements. The financial statements have been prepared on the going concern basis.
The Directors are responsible for ensuring that the Group keeps sufficient accounting records to disclose with reasonable accuracy, the financial position of the Group and which enable them to ensure that the financial statements comply with the Companies Act, 1965.
Statement on Risk Management and Internal Controls
The Board has an overall responsibility in maintaining a sound risk management and internal control system that provides reasonable assurance of effective and efficient operations and compliance with internal procedures and guidelines. The Statement on Risk Management and Internal Control is set out on pages 19 to 20 of this Annual Report.
Relationship with the External Auditors
The Board has established a formal and transparent arrangement for maintaining appropriate relationships with the external auditors in seeking professional advice and ensuring the compliance with the appropriate accounting standards. The Audit Committee met with the external auditors to discuss their audit plan, audit findings and the financial statements. To this effect, the Audit Committee Chairman met the out-sourced external auditors without the presence of Management during the financial year.
Both the external and internal auditors meet the Board at least once a year when the audited financial statements and internal audit reports are presented to the Directors. Annual appointment of the external auditors is through shareholders’ resolution at the AGM on the recommendation of the Board. Re-appointment of the internal auditors is made by the Audit Committee’s recommendation.
Key features underlying the relationship of the Audit Committee with the internal and external auditors are included in the Audit Committee’s terms of references as detailed on pages 9 to 10 of the Annual Report.
A summary of the activities of the Audit Committee during the financial year, including the evaluation of the independent audit process, are set out in the Audit Committee Report on pages 9 to 10 of the Annual Report.
5. Compliance Statement
The Company has, in all material aspects, complied with the recommendations of the Code throughout the financial year, except the following recommendations:-
a) details of remuneration of each director; b) formalize, periodically review and make public Board Charter; andc) Board gender diversity policy.
Whilst the Code prescribes for disclosure of directors’ remuneration on individual basis, the Board is of the opinion that transparency and accountability principles of the Code in relation to Directors’ remuneration are appropriately and adequately addressed by disclosure on band basis.
STATEMENT ON CORPORATE GOVERNANCE (cont’d)
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5. Compliance Statement (cont’d)
The Board acknowledges the importance of board diversity as well as gender diversity to the effective functioning of the Board. Female representation will be considered when suitable candidates are identified taking into account of competencies, commitment, contribution and performance of the candidates.
Going forward, the Board intends to strengthen its roles and responsibilities by:-
(i) Defining the Board schedule of matters of those functions reserved to the Board and delegated to management;(ii) Implementing a whistle blowing policy and procedure to provide employees with a mechanism to monitor compliance
to the code of ethics;(iii) Setting out clearly the code of conduct that stipulates the sound principles to provide guidance to stakeholders on the
ethical behaviours to be expected from the Group;(iv) Defining its business sustainability policy and ensuring its current business decision making process incorporates the
elements of Environment, Social and Governance (“ESG”) within its value chain in the business processes; and (v) Formalising the above actions into its Board Charter and creating a new page on corporate governance in the present
corporate website to keep the public and shareholder informed of its progress and status of the above actions.
This Statement is made in accordance with a resolution of the Board of Directors dated 25th Feb 2015.
OTHERDISCLOSUREREQUIREMENTS
1. UTILISATION OF PROCEEDSIn line with the completion of the following exercises on 30 December 2013:-• Proposed private placement• Proposed Rights issue with Warrants
RM37 million in total was raised arising therefrom and the status of the utilisation of proceeds up to 31 December 2014 were
as follow:
Proposed Expected time frame for utilisation from Revised Utilisation date of listing of Rights Shares and Warrants Utilisation Plan Utilisation Balance
(RM ‘000) (RM) (RM)
Expansion of existing Within 36 months 9,584 4,641 4,943 business
Future business Within 36 months 4,792 4,223 569 expansion
R & D Within 24 months 5,102 2,746 2,356
Working capital Within 36 months 16,956 16,102 854 of the Group
Estimated expenses Within 3 months 583 583 - for the Proposals
Total 37,017 28,296 8,721
2. SHARE BUY-BACK During the financial year ended 30 September 2014, the Group did not enter into any share buy-back transactions.
3. OPTIONS, WARRANTS, OR CONVERTIBLE SECURITIES On 24 December 2013, 382,750,000 Warrants were issued free by the company persuant to the Right Issue on the basis of
one point five (1.5) Warrants for every two (2) existing ordinary shares of RM0.10 each held. During the financial year ended from 1 October 2013 to 30 September 2014, no warrant have been exercised.
On 10 October 2014, the Company granted 24,192,800 share options to certain directors of the Company. On 24 December 2014, 704,400 share options were exercised at RM0.23 per share.
Save as disclosed above, the company did not issue any other Option, Warrants or Convertible securities for the financial year ended from 1 October 2013 to 30 September 2014 under review.
STATEMENT ON CORPORATE GOVERNANCE (cont’d)
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4. DEPOSITORY RECEIPT PROGRAMME During the financial year ended 30 September 2014, the Group did not sponsor any depository receipt programme.
5. IMPOSITION OF SANCTIONS/PENALTIES There were no sanctions and/or penalties imposed on the Group or its subsidiary, directors or management by the relevant
regulatory bodies during the financial year ended 30 September 2014.
6. NON-AUDIT FEES Non-audit fees paid to the external auditors, Messrs Crowe Horwath for the financial year ended 30 September 2014 was
RM5,000.
7. VARIATION IN RESULTS There were no material variance between the audited results for the financial year ended 30 September 2014 and unaudited
results previously announced.
8. PROFIT FORECAST The Company did not issue any profit forecast for the financial year ended 30 September 2014.
9. PROFIT GUARANTEE The Group did not provide any profit guarantee in respect of the financial year ended 30 September 2014.
10. MATERIAL CONTRACTS There were no material contracts entered into by the Company and its subsidiary involving Directors’ and substantial
shareholders’ interest either subsisting or entered into during the financial year ended 30 September 2014.
11. REVALUATION OF LANDED PROPERTIES There Group did not have a revaluation policy on landed properties for the financial year ended 30 September 2014 as the
Group did not own any landed properties.
STATEMENT ON CORPORATE GOVERNANCE (cont’d)
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Statement On Risk Management And Internal Control
INTRODUCTION
It is the requirement of the Malaysian Code on Corporate Governance 2012 that the Board of Directors should establish a sound risk management framework and internal control system. The Board is committed to Rule 15.26 (b) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad (“AMLR”) and Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, and is pleased to set out below its Statement on Risk Management and Internal Control which outlines the nature and scope of risk management and internal control of the Group during the year.
RESPONSIBILITY FOR RISK MANAGEMENT AND INTERNAL CONTROLS
The Board affirms its overall responsibility for the Group’s systems of internal controls, risk management and reviewing of the adequacy and integrity of these systems. The Board has delegated the responsible of implementing the internal control systems that embedded in the routine business processes and daily operations to the executive management. The Board acknowledges that the systems of internal controls can only provide reasonable and not absolute assurance against material misstatement or loss as it is designated to manage rather than eliminate the risk of failure to achieve the Group’s business objectives.
RISK MANAGEMENT
The Board acknowledges its responsibility for establishing and maintaining a sound framework to manage risks. There is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group in achieving the Group’s objectives and strategies. The process has been in place during the year and is subject to review by the Board. However, due to the limitations that are inherent in any system of internal control, the Group’s system of internal control is designed to manage, rather than eliminate the risk of failure to achieve corporate objectives. Accordingly, it only provides reasonable but not absolute assurance against material misstatement or loss. Meanwhile, any significant issues and controls implemented were discussed at the regular operations and monthly management meetings.
INTERNAL AUDIT FUNCTION
The Group has outsourced its internal audit function to Sterling Business Alignment Consulting Sdn. Bhd. (“SBAC”), an independent professional services firm to perform regular and systematic review of the risk management and internal control system of the Group and its subsidiaries. The Audit Committee acknowledges that an independent and adequately resourced internal audit function is required to provide assurance on the effectiveness of the system of the internal control in addressing the risks identified. The SBAC reports directly to the Audit Committee on a quarterly basis. The Audit Committee is chaired by an Independent Non-Executive Director and its members comprise of Non-Executive Directors.
The SBAC primarily acts as an assurance unit highlighting significant audit findings, areas for improvement, management comment on the audit findings and subsequently monitors the implementation of its recommended corrective actions.
The Board confirms that the Group has an adequate and conducive control environment for it to accomplish its business objectives. The Group’s internal control system encompasses the Board and its various Board Committees with its specific terms of reference, executive management that is accountable for all its actions and also various monitoring and review procedures that is embedded in the Group’s processes. The Board reviews these control processes regularly to ensure that an effective system of internal control is maintained within the Group.
The cost incurred for internal Audit services in respect of the financial year ended 30 September 2014 was approximately RM40,000.
The key elements of the Group’s internal control system are described below:
• The Group has a well-defined organisational structure with clearly defined lines of accountability, delegation of responsibility and level of authorisation for all aspects of the business have been laid down and communicated throughout the Group.
• Clearly defined Internal Policies, Standard Operating Procedures and Personnel Manual as the key framework for good internal control practices. These policies manuals are the subjects of regular reviews to meet new business requirements.
• Experienced and competent staffs are placed in areas of responsibility to support and continuously monitor the effectiveness of the Group’s system of internal control.
The group’s system of internal control does not apply to associated companies and a joint venture where the Group does not have full management control over them.
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RISK MANAGEMENT FRAMEWORK
The Board recognises that risk management is an integral part of the Group’s business operations and that the identification and management of risks will affect the achievement of the Group’s business objectives. To this end, the Board has formalised a Risk Management Framework by implementing an on-going process of identifying, evaluating, monitoring and managing the significant risks affecting the achievement of its business objectives and has taken into account the guidance of the Malaysian Code on Corporate Governance.
The management of risks in the daily business operation is assigned to management team and significant risks are identified and related mitigating responses as well as the corresponding internal control measures were deliberated at the Audit Committee and Board meeting.
Going forward, on-going process shall be carried out to ensure consistent application, effective functioning of the Risk Management Framework, continued relevance of the risk profile developed, and completion of the management action plan.
ASSURANCE FROM MANAGEMENT
The Board has received assurance from the Group Managing Director and Chief Financial Controller that the Group’s risk management and internal control system are operating adequately and effectively in all material aspects, based on the risk management and internal control system of the Group.
REVIEW OF STATEMENT BY THE EXTERNAL AUDITORS
The external auditors have reviewed this Statement on Risk Management and Internal Control for inclusion in this Annual Report and had reported to the Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal control.
CONCLUSION
For the financial year under review and up to the date of approval of this statement, the Board is of the opinion that the risk management and internal control system currently in place is adequate and effective to safeguard the Group’s interests and assets. For the coming year, the Board will continually assess the adequacy and effectiveness of the Group’s system of internal control and to strengthen it, as and when necessary. This statement is made in accordance with the resolution passed by the Board dated 25th Feb 2015.
Statement on Risk Management And Internal Control(cont’d)
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FINANCIAL STATEMENTS
22 Directors’ Report
27 Statement by Directors
27 Statutory Declaration
28 Independent Auditors’ Report
30 Consolidated Statement of Financial Position
31 ConsolidatedStatementofProfitorLossandOtherComprehensiveIncome
32 ConsolidatedStatementofChangesinEquity
36 ConsolidatedStatementofCashFlows
38 Statement of Financial Position
39 StatementofProfitorLossandOtherComprehensiveIncome
40 StatementofChangesinEquity
41 StatementofCashFlows
43 NotestotheFinancialStatements
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ThedirectorsherebysubmittheirreportandtheauditedfinancialstatementsoftheGroupandoftheCompanyforthefinancialyear ended 30 September 2014.
PrinciPal activities
TheprincipalactivitiesoftheCompanyareinvestmentholdingandthedevelopmentandprovisionofITlearningprogramsandeducationalservices.TheprincipalactivitiesofthesubsidiariesaredisclosedinNote5tothefinancialstatements.Therehavebeennosignificantchangesinthenatureoftheseactivitiesduringthefinancialyear.
results
THE GROUP THE COMPANY RM RM
Profitaftertaxationforthefinancialyear 7,532,858 2,362,178
Attributable to:- OwnersoftheCompany 6,359,646 2,362,178Non-controllinginterests 1,173,212 - 7,532,858 2,362,178
DiviDenDs
Nodividendwaspaid since the endof thepreviousfinancial year and thedirectors donot recommend thepaymentof anydividendforthecurrentfinancialyear.
reserves anD Provisions
Allmaterialtransferstoorfromreservesorprovisionsduringthefinancialyeararedisclosedinthefinancialstatements.
issues of shares anD Debentures
Duringthefinancialyear,
(a) therewerenochangesintheauthorisedsharecapitaloftheCompany;
(b) theCompanyincreaseditsissuedandpaid-upsharecapitalfromRM38,333,333toRM76,549,999bywayof:-
(i) aprivateplacementof100,000,000newordinarysharesofRM0.10eachatanissuepriceofRM0.115forthepurposeofworkingcapital;
(ii) theissuanceof27,000,000newordinarysharesofRM0.10eachatfairvalueofRM0.16,givingrisetoapremiumof
RM0.06eachforthepurposeofacquisitionofasubsidiaryasdisclosedinNote33tothefinancialstatements;and
(iii) the issuance of a renounceable rights issue of 255,166,667 newordinary shares of RM0.10 each (“Rights Shares”)togetherwith382,750,000newfreedetachablewarrants(“Warrants”)atanissuepriceofRM0.10perRightsShareonthebasisofone(1)RightsSharetogetherwithonepointfive(1.5)freeWarrantsforeverytwo(2)existingordinarysharesofRM0.10each(“RightsIssue”).
ThenewordinarysharesissuedrankparipassuinallrespectswiththeexistingsharesoftheCompany;and
(c) therewerenoissuesofdebenturesbytheCompany.
oPtions GranteD over unissueD shares
Duringthefinancialyear,nooptionsweregrantedbytheCompanytoanypersontotakeupanyunissuedsharesintheCompany.
DIRECTORS’ REPORT
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DIRECTORS’ REPORT (cont’d)
Warrants
TheWarrantsareconstitutedbytheDeedPolldated19November2013(“DeedPoll”).
On24December2013,382,750,000WarrantswereissuedfreebytheCompanypursuanttotheRightsIssueonthebasisofonepointfive(1.5)Warrantsforeverytwo(2)existingordinarysharesofRM0.10eachheld.
SalientfeaturesoftheWarrantsareasfollows:
(a) EachWarrantentitlestheregisteredholderthereof(“Warrantholders”)tosubscribeforone(1)newordinaryshareofRM0.10eachintheCompanyattheexercisepriceofRM0.18,whichmaybeexercisedatanytimefromthedateofissuancetothecloseofbusinessonthemarketdayimmediatelyprecedingthedatewhichisthefifthanniversaryfromthedateoftheissuanceofWarrants(“ExercisePeriod”);
(b) AnyWarrantsnotexercisedduringtheExercisePeriodwillthereafterlapseandceasetobevalidforanypurpose;
(c) WarrantsholdersmustexercisetheWarrantsinaccordancewiththeproceduressetoutintheDeedPollandsharesallottedandissueduponsuchexerciseshallrankparipassuinallrespectswiththethenexistingsharesoftheCompany,andshallbeentitledforanydividends,rights,allotmentsand/orotherdistributionsaftertheissueandallotmentthereof;
(d) TheWarrantholdersarenotentitledtoanyvotingrightsortoparticipateinanydistributionand/orofferoffurthersecuritiesintheCompanyuntilandunlesssuchWarrantholdersexercisetheirwarrantsfornewsharesintheCompany;and
(e) TheDeedPollandaccordinglytheWarrants,aregovernedbyandshallbeconstruedinaccordancewiththelawsofMalaysia.
ThemovementsintheWarrantssincethelistingandquotationthereofisasfollows:
Entitlement For Ordinary Shares Of RM0.10 Each At At 1.10.2013 Issued Exercised 30.9.2014
NumberofunexercisedWarrants - 382,750,000 - 382,750,000
baD anD Doubtful Debts
BeforethefinancialstatementsoftheGroupandoftheCompanyweremadeout,thedirectorstookreasonablestepstoascertainthatactionhadbeentakeninrelationtothewritingoffofbaddebtsandthemakingofallowanceforimpairmentlossesonreceivables,andsatisfiedthemselvesthattherearenoknownbaddebtsandthatadequateallowancehadbeenmadeforimpairmentlossesonreceivables.
Atthedateofthisreport,thedirectorsarenotawareofanycircumstancesthatwouldrequirethewritingoffofbaddebts,ortheadditionalallowanceforimpairmentlossesonreceivablesinthefinancialstatements.
current assets
BeforethefinancialstatementsoftheGroupandoftheCompanyweremadeout,thedirectorstookreasonablestepstoascertainthatanycurrentassetsotherthandebts,whichwereunlikelytoberealisedintheordinarycourseofbusiness,includingtheirvalueasshownintheaccountingrecordsoftheGroupandoftheCompany,havebeenwrittendowntoanamountwhichtheymightbeexpectedsotorealise.
Atthedateofthisreport,thedirectorsarenotawareofanycircumstanceswhichwouldrenderthevaluesattributedtothecurrentassetsinthefinancialstatementsmisleading.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 524
DIRECTORS’ REPORT (cont’d)
valuation MethoDs
At thedateof this report, thedirectorsarenotawareofanycircumstanceswhichhavearisenwhich renderadherence to theexistingmethodsofvaluationofassetsorliabilitiesoftheGroupandoftheCompanymisleadingorinappropriate.
continGent anD other liabilities
ThecontingentliabilitiesaredisclosedinNote36tothefinancialstatements.Atthedateofthisreport,theredoesnotexist:-
(i) anychargeontheassetsoftheGroupandoftheCompanythathasarisensincetheendofthefinancialyearwhichsecurestheliabilitiesofanyotherperson;or
(ii) anycontingentliabilityoftheGroupandoftheCompanywhichhasarisensincetheendofthefinancialyear.
NocontingentorotherliabilityoftheGroupandoftheCompanyhasbecomeenforceableorislikelytobecomeenforceablewithintheperiodoftwelvemonthsaftertheendofthefinancialyearwhich,intheopinionofthedirectors,willormaysubstantiallyaffecttheabilityoftheGroupandoftheCompanytomeetitsobligationswhentheyfalldue.
chanGe of circuMstances
Atthedateofthisreport,thedirectorsarenotawareofanycircumstancesnototherwisedealtwithinthisreportorthefinancialstatementsoftheGroupandoftheCompanywhichwouldrenderanyamountstatedinthefinancialstatementsmisleading.
iteMs of an unusual nature
TheresultsoftheoperationsoftheGroupandoftheCompanyduringthefinancialyearwerenot,intheopinionofthedirectors,substantiallyaffectedbyanyitem,transactionoreventofamaterialandunusualnature.
Therehasnotarisenintheintervalbetweentheendofthefinancialyearandthedateofthisreportanyitem,transactionoreventofamaterialandunusualnaturelikely,intheopinionofthedirectors,toaffectsubstantiallytheresultsoftheoperationsoftheGroupandoftheCompanyforthefinancialyear.
Directors
Thedirectorswhoservedsincethedateofthelastreportareasfollows:-
LimBengWeh
Dato’MohdAriffBinAraff
LimEenHong
LimSoonSeong
TanSriDato’HajiAlimuddinBinHajiMohdDom(Appointedon16June2014)
TengkuAbuBakarAhmadBinTengkuAbdullah(Appointedon16June2014)
DatukYaacobBinWanIbrahim(Retiredon25March2014)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 25
DIRECTORS’ REPORT (cont’d)
Directors’ interests
Accordingtotheregisterofdirectors’shareholdings,theinterestsofdirectorsholdingofficeattheendofthefinancialyearinsharesintheCompanyanditsrelatedcorporationsduringthefinancialyearareasfollows:-
Number Of Ordinary Shares Of RM0.10 Each At AtShares in the Company 1.10.2013 Bought Sold 30.9.2014
Indirect Interest: Dato’MohdAriffBinAraff# 1,800,000 - - 1,800,000 TheCorporateShareholders* (a) VictorySolutions(M)Sdn.Bhd.(“VSM”) Direct Interest LimEenHong 55,000 - - 55,000 TheCompany Indirect Interest LimEenHong 88,567,214 30,230,300 - 118,797,514 (b) VictorySolutionsHoldingsSdn.Bhd.(“VSH”) Direct Interest LimEenHong 1 - - 1 TheCompany Indirect Interest LimEenHong 25,000,300 22,046,000 - 47,046,300
#Byvirtueofhisson,IsmaelAliasAriffBinMohdAriff,Dato’MohdAriffBinAraffisdeemedtohaveinterestsinsharesintheCompanyinaccordancewithsection134(12)(c)oftheCompaniesAct1965.
*ByvirtueofhisshareholdingsinVSMandVSHrespectively,LimEenHongisdeemedtohaveinterestsinsharesintheCompanyanditsrelatedcorporationstotheextentoftheCompany’sinterest,inaccordancewithSection6AoftheCompaniesAct1965.
NumberOfWarrants At At 1.10.2013 Bought Sold 30.9.2014
WarrantsintheCompany Indirect Interests LimEenHong - 54,814,450^ - 54,814,450Dato’MohdAriffBinAraff - 900,000^ - 900,000
^ Allotment of ordinary shares and issuance of Warrants pursuant to the Rights Issue during the financial year.
TheotherdirectorsholdingofficeattheendofthefinancialyeardidnothaveanyinterestinsharesintheCompanyoritsrelatedcorporationsduringthefinancialyear.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 526
DIRECTORS’ REPORT (cont’d)
Directors’ benefits
Sincetheendofthepreviousfinancialyear,nodirectorhasreceivedorbecomeentitledtoreceiveanybenefit(otherthanabenefitincludedintheaggregateamountofemolumentsreceivedordueandreceivablebydirectorsasshowninthefinancialstatements,orthefixedsalaryofafull-timeemployeeoftheCompany)byreasonofacontractmadebytheCompanyorarelatedcorporationwith thedirectororwithafirmofwhichthedirector isamember,orwithacompanyinwhichthedirectorhasasubstantialfinancialinterestexceptforanybenefitswhichmaybedeemedtoarisefromtransactionsenteredintointheordinarycourseofbusinesswithcompanies inwhichcertaindirectorshavesubstantialfinancial interestsasdisclosedinNote39to thefinancialstatements.
NeitherduringnorattheendofthefinancialyearwastheGrouportheCompanyapartytoanyarrangementswhoseobjectistoenablethedirectorstoacquirebenefitsbymeansoftheacquisitionofsharesinordebenturesoftheCompanyoranyotherbodycorporate.
siGnificant events DurinG the financial Year
ThesignificanteventsduringthefinancialyeararedisclosedinNote41tothefinancialstatements.
siGnificant events occurrinG after the rePortinG PerioD
ThesignificanteventsoccurringafterthereportingperiodaredisclosedinNote42tothefinancialstatements.
auDitors
Theauditors,Messrs.CroweHorwath,haveexpressedtheirwillingnesstocontinueinoffice.
siGneD in accorDance With a resolution of the Directors
DateD 29 JanuarY 2015
Lim Een Hong
Lim Soon Seong
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 27
STATEMENT BY DIRECTORS/ STATUTORY DECLARATIONstateMent bY Directors
We,LimEenHongandLimSoonSeong,beingtwoof thedirectorsofEduspecHoldingsBerhad,state that, in theopinionofthedirectors,thefinancialstatementssetoutonpages30to99aredrawnupinaccordancewithMalaysianFinancialReportingStandards, International FinancialReporting Standards and the requirementsof theCompaniesAct1965 inMalaysia so as togiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyat30September2014andoftheirfinancialperformanceandcashflowsforthefinancialyearendedonthatdate.
ThesupplementaryinformationsetoutinNote44,whichisnotpartofthefinancialstatements,ispreparedinallmaterialrespects,inaccordancewithGuidanceonSpecialMatterNo.1,DeterminationofRealisedandUnrealisedProfitsorLossesintheContextofDisclosurePursuanttoBursaMalaysiaSecuritiesBerhadListingRequirements,asissuedbytheMalaysianInstituteofAccountantsandthedirectiveofBursaMalaysiaSecuritiesBerhad.
siGneD in accorDance With a resolution of the Directors
DateD 29 JanuarY 2015
Lim Een Hong Lim Soon Seong
statutorY Declaration
I,LimEenHong,I/CNo.670728-04-5467 being the director primarily responsible for the financial management of EduspecHoldingsBerhad,dosolemnlyandsincerelydeclarethatthefinancialstatementssetoutonpages30to99are,tothebestofmyknowledgeandbelief,correct,andImakethissolemndeclarationconscientiouslybelievingthesametobetrueandbyvirtueoftheprovisionsoftheStatutoryDeclarationsAct1960.
Subscribed and solemnly declared byLimEenHong,I/CNo.670728-04-5467atKualaLumpurintheFederalTerritoryonthis29January2015
Lim Een HongBefore meDatin Hajah Raihela Wanchik (W-275)CommissionerforOaths
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 528
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF EDUSPEC HOLDINGS BERHAD (Incorporated in Malaysia)
Report on the Financial Statements
Wehaveaudited thefinancialstatementsofEduspecHoldingsBerhad,whichcomprise thestatementsoffinancialpositionasat 30 September 2014oftheGroupandoftheCompany,andthestatementsofprofitorlossandothercomprehensiveincome,statementsofchangesinequityandstatementsofcashflowsoftheGroupandoftheCompanyforthefinancialyear thenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation,assetoutonpages30 to 99.
Directors’ Responsibility for the Financial Statements
ThedirectorsoftheCompanyareresponsibleforthepreparationoffinancialstatementsthatgiveatrueandfairviewinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct1965inMalaysia.Thedirectorsarealsoresponsibleforsuchinternalcontrolasthedirectorsdetermineisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
Auditors’ Responsibility
Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithapprovedstandardsonauditinginMalaysia.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.
Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependonour judgement, including theassessmentof risksofmaterialmisstatementof thefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,weconsiderinternalcontrolrelevanttotheentity’spreparationoffinancialstatementsthatgiveatrueandfairviewinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebythedirectors,aswellasevaluatingtheoverallpresentationofthefinancialstatements.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.
Opinion Inouropinion,thefinancialstatementsgiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasof30September2014andoftheirfinancialperformanceandcashflowsforthefinancialyearthenendedinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct1965inMalaysia.
Report on Other Legal and Regulatory Requirements
InaccordancewiththerequirementsoftheCompaniesAct1965inMalaysia,wealsoreportthefollowing:-
(a) Inouropinion,theaccountingandotherrecordsandtheregistersrequiredbytheActtobekeptbytheCompanyanditssubsidiariesofwhichwehaveactedasauditorshavebeenproperlykeptinaccordancewiththeprovisionsoftheAct.
(b) Wehaveconsideredthefinancialstatementsandtheauditors’reportsofallthesubsidiariesofwhichwehavenotactedasauditors,whichareindicatedinNote5tothefinancialstatements.
(c) WearesatisfiedthatthefinancialstatementsofthesubsidiariesthathavebeenconsolidatedwiththeCompany’sfinancialstatementsareinformandcontentappropriateandproperforthepurposesofthepreparationofthefinancialstatementsoftheGroupandwehavereceivedsatisfactoryinformationandexplanationsrequiredbyusforthosepurposes.
(d) TheauditreportsonthefinancialstatementsofthesubsidiariesdidnotcontainanyqualificationoranyadversecommentmadeunderSection174(3)oftheAct.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 29
Other Reporting Responsibilities
ThesupplementaryinformationsetoutinNote44onpage100isdisclosedtomeettherequirementofBursaMalaysiaSecuritiesBerhadandisnotpartofthefinancialstatements.ThedirectorsareresponsibleforthepreparationofthesupplementaryinformationinaccordancewithGuidanceonSpecialMatterNo.1,DeterminationofRealisedandUnrealisedProfitsorLossesintheContextofDisclosurePursuanttoBursaMalaysiaSecuritiesBerhadListingRequirements,asissuedbytheMalaysianInstituteofAccountants(“MIAGuidance”)andthedirectiveofBursaMalaysiaSecuritiesBerhad.Inouropinion,thesupplementaryinformationisprepared,inallmaterialrespects,inaccordancewiththeMIAGuidanceandthedirectiveofBursaMalaysiaSecuritiesBerhad.
Other Matters
ThisreportismadesolelytothemembersoftheCompany,asabody,inaccordancewithSection174oftheCompaniesAct1965inMalaysiaandfornootherpurpose.Wedonotassumeresponsibilitytoanyotherpersonforthecontentofthisreport.
Crowe Horwath Lee Kok WaiFirmNo:AF1018 ApprovalNo:2760/06/16(J)CharteredAccountants CharteredAccountant
29January2015
KualaLumpur
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF EDUSPEC HOLDINGS BERHAD (Incorporated in Malaysia) (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 530
2014 2013 NOTE RM RM
ASSETS NON-CURRENTASSETS Investmentsinassociates 6 445,189 351,443Investmentinajointventure 7 124,515 -Equipment 8 5,726,200 4,216,199Intangibleassets 9 6,665,137 6,140,821Goodwillonconsolidation 10 6,361,524 292,853 19,322,565 11,001,316 CURRENT ASSETS Inventories 11 1,050,467 1,007,335Tradereceivables 12 30,381,134 9,036,691Otherreceivables,depositsandprepayments 13 9,016,103 4,216,308Amountowingbyassociates 15 138,845 809,975Amountowingbyajointventure 16 1,282,045 -Taxrecoverable 412,451 588,062Fixeddepositswithlicensedbanks 17 9,308,613 1,886,707Cashandbankbalances 10,055,899 939,603 61,645,557 18,484,681
TOTAL ASSETS 80,968,122 29,485,997
EQUITY AND LIABILITIES
EQUITY Sharecapital 18 76,549,999 38,333,333Reserves 19 (13,129,960) (22,594,781) TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 63,420,039 15,738,552NON-CONTROLLING INTERESTS (1,200,937) 173,502 TOTAL EQUITY 62,219,102 15,912,054 NON-CURRENT LIABILITIES Long-termborrowings 20 359,202 377,756Deferredtaxliabilities 23 640,987 519,664 1,000,189 897,420 CURRENT LIABILITIES Tradepayables 24 10,554,243 3,550,181Otherpayablesandaccruals 25 3,320,181 5,172,696Amountowingtoassociates 15 - 37,749Amountowingtoajointventure 16 487,992 -Short-termborrowings 26 1,660,944 1,057,700Bankoverdrafts 27 1,705,971 2,822,192Provisionfortaxation 19,500 36,005 17,748,831 12,676,523 TOTAL LIABILITIES 18,749,020 13,573,943 TOTAL EQUITY AND LIABILITIES 80,968,122 29,485,997
Theannexednotesformanintegralpartofthesefinancialstatements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 SEPTEMBER 2014
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 31
2014 2013 NOTE RM RM REVENUE 28 58,760,463 34,292,819 COST OF SALES (33,706,317) (21,918,251) GROSS PROFIT 25,054,146 12,374,568 OTHER INCOME 3,596,661 3,613,752
28,650,807 15,988,320 ADMINISTRATIVE EXPENSES (13,473,912) (10,066,249) SELLING AND DISTRIBUTION EXPENSES (2,450,884) (2,401,993) OTHER EXPENSES (4,620,379) (2,326,775) FINANCE COSTS (267,075) (244,734) SHARE OF RESULTS, NET OF TAX -Associates (29,060) 109,278-Jointventure 127,036 - PROFIT BEFORE TAXATION 29 7,936,533 1,057,847 INCOME TAX EXPENSE 30 (403,675) (65,939) PROFIT AFTER TAXATION 7,532,858 991,908 OTHER COMPREHENSIVE INCOME -Foreigncurrencytranslationdifferences 14,895 (202,768)-Shareofanassociate’sforeigncurrencytranslationdifferences (29,720) 17,599 TOTAL OTHER COMPREHENSIVE INCOME (14,825) (185,169) TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR 7,518,033 806,739
PROFIT AFTER TAXATION ATTRIBUTABLE TO: -OwnersoftheCompany 6,359,646 998,403-Non-controllinginterests 1,173,212 (6,495) 7,532,858 991,908
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLETO: -OwnersoftheCompany 6,344,821 813,234-Non-controllinginterests 1,173,212 (6,495) 7,518,033 806,739
EARNINGS PER SHARE (SEN) - Basic 31 0.83 0.22- Diluted 31 0.77 0.22
Theannexednotesformanintegralpartofthesefinancialstatements.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 532
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014
DIS
TRIB
UTA
BLE
N
ON
-DIS
TRIB
UTA
BLE
RESE
RVES
RE
SERV
ES
FO
REIG
N
AT
TRIB
UTAB
LE
REVE
RSE
CAPI
TAL
EX
CHAN
GE
TO
OW
NERS
NO
N-
SH
ARE
SHAR
E AC
QUI
SITI
ON
REDE
MPT
ION
WAR
RANT
TR
ANSL
ATIO
N AC
CUM
ULAT
ED
OF T
HE C
ONT
ROLL
ING
TOTA
L
CAPI
TAL
PREM
IUM
RE
SERV
E RE
SERV
E RE
SERV
E RE
SERV
E LO
SSES
CO
MPA
NY
INTE
REST
S EQ
UITY
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
Balanceat1.10.2012
38,333,3332,882,056(18,570,000)
546,778
-(252,826)(8,014,023)14,925,318
179,99715,105,315
Profitaftertaxationforthe
financialyear
--
--
--
998,403
998,403
(6,495)
991,908
Othercomprehensiveincome
forthefinancialyear:
-Foreigncurrencytranslation
differences
--
--
-(202,768)
-(202,768)
-(202,768)
-Shareofanassociate’sforeign
cu
rren
cy tr
ansl
atio
n differences
--
--
-17,599
-17,599
-17,599
Totalcomprehensiveincomefor
thefinancialyear
--
--
-(185,169)
998,403
813,234
(6,495)
806,739
Balanceat30.9.2013
38,333,3332,882,056(18,570,000)
546,778
-(437,995)(7,015,620)15,738,552
173,50215,912,054
Theannexednotesformanintegralpartofthesefinancialstatements.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 33
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
D
ISTR
IBU
TABL
E
NO
N-D
ISTR
IBU
TABL
E RE
SERV
ES
RESE
RVES
FORE
IGN
ATTR
IBUT
ABLE
RE
VERS
E CA
PITA
L
EXCH
ANGE
TO O
WNE
RS
NON-
SHAR
E SH
ARE
ACQ
UISI
TIO
N RE
DEM
PTIO
N W
ARRA
NT
TRAN
SLAT
ION
ACCU
MUL
ATED
O
F THE
CO
NTRO
LLIN
G TO
TAL
CA
PITA
L PR
EMIU
M
RESE
RVE
RESE
RVE
RESE
RVE
RESE
RVE
LOSS
ES
COM
PANY
IN
TERE
STS
EQUI
TY
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
Bala
nce
at
30.9.2013/1.10.2013
38,333,3332,882,056(18,570,000)
546,778
-(437,995)(7,015,620)15,738,552
173,50215,912,054
Profitaftertaxationforthe
financialyear
--
--
--
6,359,646
6,359,646
1,173,212
7,532,858
Othercomprehensiveincome
forthefinancialyear:
-Foreigncurrencytranslation
differences
--
--
-14,895
-14,895
-14,895
-Shareofanassociate’s
foreigncurrencytranslation
differences
--
--
-(29,720)
-(29,720)
-(29,720)
Totalcomprehensiveincome
forthefinancialyear
--
--
-(14,825)6,359,646
6,344,821
1,173,212
7,518,033
Balancecarriedforward
38,333,3332,882,056(18,570,000)
546,778
-(452,820)
(655,974)22,083,3731,346,71423,430,087
Theannexednotesformanintegralpartofthesefinancialstatements.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 534
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
DIS
TRIB
UTA
BLE
N
ON
-DIS
TRIB
UTA
BLE
RESE
RVES
RE
SERV
ES
FO
REIG
N
AT
TRIB
UTAB
LE
REVE
RSE
CAPI
TAL
EX
CHAN
GE
TO
OW
NERS
NO
N-
SH
ARE
SHAR
E AC
QUI
SITI
ON
REDE
MPT
ION
WAR
RANT
TR
ANSL
ATIO
N AC
CUM
ULAT
ED
OF T
HE C
ONT
ROLL
ING
TOTA
L
CA
PITA
L PR
EMIU
M
RESE
RVE
RESE
RVE
RESE
RVE
RESE
RVE
LOSS
ES
COM
PANY
IN
TERE
STS
EQUI
TY
No
te
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
Balancebroughtforward
38,333,3332,882,056(18,570,000)
546,778
-(452,820)
(655,974)22,083,3731,346,71423,430,087
Transactionwith
non-controllinginterests:-
-Acquisitionofa
subsidiary
--
--
--
--(2,557,932)(2,557,932)
- In
corp
orat
ion
of a
subsidiary
--
--
--
--
10,281
10,281
Totaltransactionswith
non-controllinginterests
33
--
--
--
--(2,547,651)(2,547,651)
Balancecarriedforward
38,333,3332,882,056(18,570,000)
546,778
-(452,820)
(655,974)22,083,373(1,200,937)20,882,436
Theannexednotesformanintegralpartofthesefinancialstatements.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 35
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
D
ISTR
IBU
TABL
E
NO
N-D
ISTR
IBU
TABL
E RE
SERV
ES
RESE
RVES
FORE
IGN
ATTR
IBUT
ABLE
RE
VERS
E CA
PITA
L
EXCH
ANGE
TO O
WNE
RS
NON-
SHAR
E SH
ARE
ACQ
UISI
TIO
N RE
DEM
PTIO
N W
ARRA
NT
TRAN
SLAT
ION
ACCU
MUL
ATED
O
F THE
CO
NTRO
LLIN
G TO
TAL
CAPI
TAL
PREM
IUM
RE
SERV
E RE
SERV
E RE
SERV
E RE
SERV
E LO
SSES
CO
MPA
NY
INTE
REST
S EQ
UITY
Note
RM
RM
RM
RM
RM
RM
RM
RM
RM
RM
Balancebroughtforward
38,333,3332,882,056(18,570,000)
546,778
-(452,820)
(655,974)22,083,373(1,200,937)20,882,436
Con
tribu
tions
by
and
distributionstoowners
oftheCompany:
-Issuanceofnewshares
-Privateplacement
1810,000,0001,500,000
--
--
-11,500,000
-11,500,000
-Acquisitionofa
subsidiary
182,700,000
1,620,000
--
--
-4,320,000
-4,320,000
-Rightsissueofshares
withwarrants
1825,516,666
--
-10,110,377
-(10,110,377)25,516,666
-25,516,666
Totaltransactionswith
owners
38,216,6663,120,000
--10,110,377
-(10,110,377)41,336,666
-41,336,666
Balanceat30.9.2014
76,549,9996,002,056(18,570,000)
546,77810,110,377
(452,820)(10,766,351)63,420,039(1,200,937)62,219,102
Theannexednotesformanintegralpartofthesefinancialstatements.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 536
2014 2013 RM RM CASH FLOWS (FOR)/FROM OPERATING ACTIVITIES Profitbeforetaxation 7,936,533 1,057,847 Adjustmentsfor:- Amortisationofintangibleassets 1,536,325 1,199,840Depreciationofequipment 1,865,851 1,599,327Equipmentwrittenoff 28,440 116Impairment losses on: -otherreceivables 865,425 26,743Interestexpense 267,075 244,734Inventorieswrittenoff 3,306 1,368Gainondisposalofequipment (16,550) (1,443)Interestincome (439,494) (53,171)Shareofresultsinassociates 29,060 (109,278)Shareofresultsinajointventure (127,036) -Unrealisedforeignexchangeloss/(gain) 586,210 (345,115)Writebackofimpairmentlosseson: -tradereceivables - (8,495)-otherreceivables (26,743) (50,669)
Operatingprofitbeforeworking capitalchanges 12,508,402 3,561,804(Increase)/Decreaseininventories (46,438) 114,464Increaseintradeandotherreceivables (25,197,651) (4,716,331)Increaseintradeandotherpayables 700,647 2,665,023(Decrease)/Increaseinamountowingtoassociates (37,749) 37,749Increaseinamountowingtoajointventure 487,992 -
CASH (FOR)/FROM OPERATIONS (11,584,797) 1,662,709Interestpaid (267,075) (244,734)Incometaxpaid (180,373) (234,180)
NET CASH (FOR)/FROM OPERATING ACTIVITIES/ BALANCE CARRIED FORWARD (12,032,245) 1,183,795
Theannexednotesformanintegralpartofthesefinancialstatements.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 37
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
2014 2013 NOTE RM RM NET CASH (FOR)/FROM OPERATING ACTIVITIES/ BALANCE BROUGHT FORWARD (12,032,245) 1,183,795 CASH FLOWS FOR INVESTING ACTIVITIES Additionofintangibleassets (2,062,890) (2,768,193)(Repaymentfrom)Advancestoassociates 671,130 (218,543)Advancestoajointventure (1,282,045) -Investmentsinassociates (150,000) -Netcashoutflowforacquisitionofsubsidiaries 33 (1,049,774) -Interestreceived 439,494 53,171Proceedsfromdisposalofequipment 32,714 3,430Purchaseofequipment 32 (2,787,997) (326,470)
NET CASH FOR INVESTING ACTIVITIES (6,189,368) (3,256,605)
NET CASH FROM FINANCING ACTIVITIES Drawdownoftermloans 812,608 991,897Proceedsfromprivateplacement 11,500,000 -Proceedsfromrightsissue 25,516,666 -Repaymentoftermloans (1,934,318) (743,130)Repaymentofhirepurchaseobligations (18,564) (17,015)Placementofpledgedfixeddeposits (7,162,731) (132,918) NET CASH FROM FINANCING ACTIVITIES 28,713,661 98,834
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 10,492,048 (1,973,976) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR (1,783,249) 186,049 EFFECT ON FOREIGN EXCHANGE (356) 4,678
CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 34 8,708,443 (1,783,249)
Theannexednotesformanintegralpartofthesefinancialstatements.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 538
2014 2013 NOTE RM RM
ASSETS NON-CURRENT ASSETS Investmentsinsubsidiaries 5 27,585,426 22,350,003Investmentsinassociates 6 150,000 45Investmentinajointventure 7 45 -Equipment 8 51,072 27,072 27,786,543 22,377,120 CURRENT ASSETS Otherreceivables,depositsandprepayments 13 4,606,072 53,529Amountowingbysubsidiaries 14 17,453,410 2,134,018Amountowingbyassociates 15 - 801,000Amountowingbyajointventure 16 1,147,455 -Taxrecoverable - 155,160Fixeddepositswithlicensedbanks 17 7,025,532 -Cashandbankbalances 7,148,592 6,002 37,381,061 3,149,709
TOTALASSETS 65,167,604 25,526,829
EQUITY AND LIABILITY EQUITY Sharecapital 18 76,549,999 38,333,333Reserves 19 (19,773,305) (25,255,483)
TOTALEQUITY 56,776,694 13,077,850
CURRENT LIABILITIES Otherpayablesandaccruals 25 160,131 765,600Amountowingtosubsidiaries 14 8,230,779 10,686,083Bankoverdrafts 27 - 997,296
TOTAL LIABILITY 8,390,910 12,448,979
TOTAL EQUITY AND LIABILITY 65,167,604 25,526,829
Theannexednotesformanintegralpartofthesefinancialstatements.
STATEMENT OF FINANCIAL POSITION AT 30 SEPTEMBER 2014
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 39
2014 2013 NOTE RM RM
REVENUE 28 - - OTHER INCOME 7,616,080 2,617,926 7,616,080 2,617,926 ADMINISTRATIVE EXPENSES (4,966,909) (3,279,251) SELLING AND DISTRIBUTION EXPENSES (47,710) (13,542) OTHER EXPENSES (217,796) (972,971) FINANCE COSTS (4,360) (1,088)
PROFIT/(LOSS) BEFORE TAXATION 29 2,379,305 (1,648,926) INCOME TAX EXPENSE 30 (17,127) -
PROFIT/(LOSS) AFTER TAXATION 2,362,178 (1,648,926) OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE INCOME/ (EXPENSES) FOR THE FINANCIAL YEAR 2,362,178 (1,648,926)
PROFIT/(LOSS) AFTER TAXATION ATTRIBUTABLE TO:- OwnersoftheCompany 2,362,178 (1,648,926) TOTAL COMPREHENSIVE INCOME/ (EXPENSES) ATTRIBUTABLE TO:- OwnersoftheCompany 2,362,178 (1,648,926)
Theannexednotesformanintegralpartofthesefinancialstatements.
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 540
SHARE SHARE WARRANT ACCUMULATED TOTAL CAPITAL PREMIUM RESERVE LOSSES EQUITY NOTE RM RM RM RM RM Balanceat1.10.2012 38,333,333 12,148,237 - (35,754,794) 14,726,776 Lossaftertaxation/Totalcomprehensiveexpensesforthefinancialyear - - - (1,648,926) (1,648,926)
Balance at 30.9.2013/1.10.2013 38,333,333 12,148,237 - (37,403,720) 13,077,850 Profitaftertaxation/Totalcomprehensiveincomeforthefinancialyear - - - 2,362,178 2,362,178 Contributions by and distributionstoownersoftheCompany: -Issuanceofnewshares -Privateplacement 18 10,000,000 1,500,000 - - 11,500,000-Acquisitionofasubsidiary 18 2,700,000 1,620,000 - - 4,320,000-Rightsissueofshareswithwarrants 18 25,516,666 - 10,110,377 (10,110,377) 25,516,666 Balanceat30.9.2014 76,549,999 15,268,237 10,110,377 (45,151,919) 56,776,694
Theannexednotesformanintegralpartofthesefinancialstatements.
STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 41
2014 2013 NOTE RM RM CASH FLOWS FOR OPERATING ACTIVITIES Profit/(Loss)beforetaxation 2,379,305 (1,648,926) Adjustmentsfor:- Depreciationofequipment 21,896 18,524Impairment losses on: -amountowingbysubsidiaries 195,900 836,808-investmentsinsubsidiaries - 117,639Interestexpense 4,360 1,088Interestincome (381,026) -Writebackofimpairmentlosses: -amountowingbysubsidiaries - (329,109)
Operatingprofit/(loss)beforeworkingcapitalchanges 2,220,435 (1,003,976)Increaseinotherreceivables (4,552,543) (17,652)Decreaseinotherpayables (605,469) (8,200)
CASH FOR OPERATIONS (2,937,577) (1,029,828)Interestpaid (4,360) (1,088)Incometaxrefund/(paid) 138,033 (20,785)
NET CASH FOR OPERATING ACTIVITIES (2,803,904) (1,051,701)
CASH FLOWS FOR INVESTING ACTIVITIES Advancestosubsidiaries (15,515,292) (407,588)Advancestoassociates - (216,000)Advancestoajointventure (346,455) -Interestreceived 381,026 -Investmentsinsubsidiaries (915,423) -Investmentsinassociates (150,000) -Purchaseofequipment 32 (45,896) (21,885)
NET CASH FOR INVESTING ACTIVITIES (16,592,040) (645,473) BALANCE CARRIED FORWARD (19,395,944) (1,697,174)
Theannexednotesformanintegralpartofthesefinancialstatements.
STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 542
2014 2013 NOTE RM RM BALANCE BROUGHT FORWARD (19,395,944) (1,697,174) CASH FLOWS FROM FINANCING ACTIVITIES Proceedsfromprivateplacement 11,500,000 -Proceedsfromrightsissue 25,516,666 -(Repaymentto)/Advancesfromsubsidiaries (2,455,304) 672,146Placementofpledgedfixeddeposits (7,025,532) -
NET CASH FROM FINANCING ACTIVITIES 27,535,830 672,146
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 8,139,866 (1,025,028) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR (991,294) 33,734 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 34 7,148,592 (991,294)
Theannexednotesformanintegralpartofthesefinancialstatements.
STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 43
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014
1. GENERAL INFORMATION
TheCompanyisapubliccompanylimitedbysharesandisincorporatedundertheCompaniesAct1965inMalaysia.ThedomicileoftheCompanyisMalaysia.Theregisteredofficeandprincipalplaceofbusinessareasfollows:-
Registeredoffice : Level2,Tower1,Avenue5, BangsarSouthCity, 59200KualaLumpur.
Principalplaceof : Level2,PacificOfficeBuilding, business No.18,JalanPemajuU1/15, Hicom-GlenmarieIndustrialPark, SectionU1,40150ShahAlam, SelangorDarulEhsan.
ThefinancialstatementswereauthorisedforissuebytheBoardofDirectorsinaccordancewitharesolutionofthedirectorsdated29January2015.
2. PRINCIPAL ACTIVITIES
TheprincipalactivitiesoftheCompanyareinvestmentholdingandthedevelopmentandprovisionofITlearningprogramsandeducationalservices.TheprincipalactivitiesofthesubsidiariesaredisclosedinNote5tothefinancialstatements.Therehavebeennosignificantchangesinthenatureoftheseactivitiesduringthefinancialyear.
3. BASIS OF ACCOUNTING
(A) Basis of Preparation
ThefinancialstatementsoftheGrouparepreparedunderthehistoricalcostconventionandmodifiedtoincludeotherbasesofvaluationasdisclosedinothersectionsundersignificantaccountingpolicies,andincompliancewithMalaysianFinancial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the requirements of theCompaniesAct1965inMalaysia.
(I) During the current financial year, the Group has adopted the following new accounting standard(s) and/orinterpretation(s)(includingtheconsequentialamendments,ifany):-
MFRSs and/or IC Interpretations (Including The Consequential Amendments) MFRS10ConsolidatedFinancialStatements
MFRS11JointArrangements
MFRS12DisclosureofInterestsinOtherEntities
MFRS13FairValueMeasurement
MFRS119(2011)EmployeeBenefits
MFRS127(2011)SeparateFinancialStatements
MFRS128(2011)InvestmentsinAssociatesandJointVentures
AmendmentstoMFRS7:Disclosures-OffsettingFinancialAssetsandFinancialLiabilities
AmendmentstoMFRS10,MFRS11andMFRS12:TransitionGuidance
ICInterpretation20StrippingCostsintheProductionPhaseofaSurfaceMine
AnnualImprovementstoMFRSs2009-2011Cycle
Theadoptionoftheaboveaccountingstandard(s)and/orinterpretation(s)(includingtheconsequentialamendments)didnothaveanymaterialimpactontheGroup’sfinancialstatements.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 544
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
3. BASIS OF ACCOUNTING (CONT’D)
(A) Basis of Preparation (Cont’d)
(ii) TheGrouphasnotappliedinadvancethefollowingaccountingstandard(s)and/orinterpretation(s)(includingtheconsequentialamendments,ifany)thathavebeenissuedbytheMalaysianAccountingStandardsBoard(“MASB”),butarenotyeteffectiveforthecurrentfinancialyear:-
MFRSs and/or IC Interpretations (Including The Consequential Amendments) Effective Date MFRS9FinancialInstruments(IFRS9issuedbyIASBinJuly2014) 1January2018
MFRS15RevenuefromContractswithCustomers 1January2017
AmendmentstoMFRS10,MFRS12andMFRS127(2011):InvestmentEntities 1January2014
AmendmentstoMFRS10andMFRS128(2011):SaleorContributionofAssetsbetweenan InvestoranditsAssociateorJointVenture 1January2016
AmendmentstoMFRS11:AccountingforAcquisitionsofInterestsinJointOperations 1January2016
AmendmentstoMFRS116andMFRS138:ClarificationofAcceptableMethodsof DepreciationandAmortisation 1January2016
AmendmentstoMFRS116andMFRS141:Agriculture-BearerPlants 1January2016
AmendmentstoMFRS119:DefinedBenefitPlans-EmployeeContributions 1July2014
AmendmentstoMFRS127(2011):EquityMethodinSeparateFinancialStatements 1January2016
AmendmentstoMFRS132:OffsettingFinancialAssetsandFinancialLiabilities 1January2014
AmendmentstoMFRS136:RecoverableAmountDisclosuresforNon-financialAssets 1January2014
AmendmentstoMFRS139:NovationofDerivativesandContinuationofHedgeAccounting 1January2014
ICInterpretation21Levies 1January2014
AnnualImprovementstoMFRSs2010-2012Cycle 1July2014
AnnualImprovementstoMFRSs2011-2013Cycle 1July2014
AnnualImprovementstoMFRSs2012-2014Cycle 1January2016
(ii) The above accounting standard(s) and/or interpretation(s) (including the consequential amendments) are notrelevanttotheGroup’soperationsexceptasfollows:-
(i) MFRS9 (IFRS9 issuedby IASB in July2014) replaces theexistingguidance inMFRS139and introducesa revised guidance on the classification and measurement of financial instruments, including a singleforward-looking‘expectedloss’impairmentmodelforcalculatingimpairmentonfinancialassets,andanewapproachtohedgeaccounting.UnderthisMFRS9,theclassificationoffinancialassetsisdrivenbycashflowcharacteristicsandthebusinessmodelinwhichafinancialassetisheld.TheGroupisintheprocessofmakinganassessmentofthefinancialimpactarisingfromtheadoptionofMFRS9andtheextentoftheimpacthasnotbeen determined.
(ii) MFRS15establishesasinglecomprehensivemodelforrevenuerecognitionandwillsupersedethecurrentrevenuerecognitionguidanceandotherrelatedinterpretationswhenitbecomeseffective.UnderMFRS15,anentityshallrecogniserevenuewhen(oras)aperformanceobligationissatisfied,i.e.when‘control’ofthegoodsorservicesunderlyingtheparticularperformanceobligationistransferredtothecustomers.Inaddition,extensivedisclosuresarerequiredbyMFRS15.TheGroupisintheprocessofmakinganassessmentofthefinancialimpactarisingfromtheadoptionofMFRS15andtheextentoftheimpacthasnotbeendetermined.
(iii) The amendments to MFRS 10, MFRS 12 and MFRS 127 (2011) require investment entities to measureparticular subsidiaries at fair value through profit or loss instead of consolidating them. TheCompany isaninvestmententitywhosebusinesspurposeistoinvestfundssolelyforreturnsfromcapitalappreciation,investment income or both. Accordingly, the Group will deconsolidate its subsidiaries upon the initialapplicationoftheseamendmentsandtofairvaluetheinvestmentsinaccordancewithMFRS139.TherewillbenofinancialimpactonthefinancialstatementsoftheGroupuponitsinitialapplicationbutmayimpactitsfuture disclosures.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 45
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
3. BASIS OF ACCOUNTING (CONT’D)
(A) Basis of Preparation (Cont’d)
(ii) The above accounting standard(s) and/or interpretation(s) (including the consequential amendments) are notrelevanttotheGroup’soperationsexceptasfollows(Cont’d):-
(iv) TheamendmentstoMFRS116andMFRS138prohibitrevenue-baseddepreciationandamortisationbecauserevenuedoesnot,asamatterofprinciple,reflectthewayinwhichanitemofproperty,plantandequipmentandintangibleassetsisusedorconsumed.TherewillbenofinancialimpactonthefinancialstatementsoftheGroupuponitsinitialapplicationbutmayimpactitsfuturedisclosures.
(v) The amendments toMFRS132provide the application guidance for criteria to offset financial assets andfinancialliabilities.TherewillbenofinancialimpactonthefinancialstatementsoftheGroupuponitsinitialapplication but may impact its future disclosures.
(vi) Theamendments toMFRS136remove therequirement todisclose therecoverableamountwhenacash-generatingunit(CGU)containsgoodwillorintangibleassetswithindefiniteusefullivesbuttherehasbeennoimpairment.Therewillbenofinancial impactonthefinancialstatementsof theGroupuponits initialapplication but may impact its future disclosures.
(B) Reverse Acquisition
On1March2010,theCompanyacquireda77.78%equityinterestinEduspecSdn.Bhd.(“ESB”)foratotalpurchaseconsiderationofRM17,350,000.Thepurchaseconsiderationwassatisfiedasfollows:
(i) atotalcashconsiderationofRM800,000;
(ii) the issuance of 137,000,000 ordinary shares of RM0.10 each at par by the Company for a consideration ofRM13,700,000;and
(iii) the issuance of performance shares up to 47,500,000 ordinary shares of RM0.06 each by theCompany for aconsideration of RM2,850,000, if subsequent profitability is achieved by ESB in the financial year ended 30September2009and for thefinancialyearsending30September2010and2011as laidout in theShareSaleAgreements.
Upon completion of the acquisition, theCompany became the legal holding company of ESBwhereas the formershareholdersofESBtowhomthe137,000,000shareswereallottedbecamethemajorityshareholdersoftheCompany.InaccordancewithMFRS3BusinessCombinations,thesubstanceofsuchbusinesscombinationbetweentheCompanyandESBconstitutedareverseacquisitionwherebytheacquirerandacquireeofthetransactionforaccountingpurposesshouldbeESB(thelegalsubsidiary)andtheCompany(theholdingcompany).
Underthereverseacquisitionaccounting,theconsolidatedfinancialstatements,althoughissuedunderthenameofthelegalholdingcompany,theCompany,representacontinuationofthefinancialstatementsofthelegalsubsidiary,ESB.Accordingly,theconsolidatedfinancialstatementssetoutonpages30to37togetherwiththenotestheretocoverESB(astheaccountingacquirer)andtheCompany(astheaccountingacquiree)togetherwiththeirothersubsidiaries.
ThereverseacquisitionaccountingdoesnotapplyintheseparatefinancialstatementsoftheCompanysetoutonpages38to42togetherwiththenotesthereto.ThereportingperiodoftheCompanyisthesamewiththatoftheGroupinthecurrentandpreviousfinancialyears.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 546
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES
(a) Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated by the directors andmanagement and are based on historicalexperience and other factors, including expectations of future events that are believed to be reasonable under thecircumstances. The estimates and judgements that affect the application of the Group’s accounting policies anddisclosures,andhaveasignificantriskofcausingamaterialadjustment to thecarryingamountsofassets, liabilities,incomeandexpensesarediscussedbelow:-
(i) Depreciation of Equipment
Theestimatesfortheresidualvalues,usefullivesandrelateddepreciationchargesfortheequipmentarebasedon commercial factors which could change significantly as a result of technical innovations and competitors’actions in response to themarket conditions. TheGroup anticipates that the residual values of its equipmentwillbe insignificant.Asa result, residualvaluesarenotbeing taken intoconsideration for thecomputationofthedepreciableamount.Changes in theexpected levelofusageand technologicaldevelopmentcould impacttheeconomicusefullivesandtheresidualvaluesoftheseassets,thereforefuturedepreciationchargescouldberevised.
(ii) Income Taxes
Therearecertaintransactionsandcomputationsforwhichtheultimatetaxdeterminationmaybedifferentfromtheinitialestimate.TheGrouprecognisestaxliabilitiesbasedonitsunderstandingoftheprevailingtaxlawsandestimatesofwhethersuchtaxeswillbedueintheordinarycourseofbusiness.Wherethefinaloutcomeofthesemattersisdifferentfromtheamountsthatwereinitiallyrecognised,suchdifferencewillimpacttheincometaxanddeferredtaxprovisionsintheyearinwhichsuchdeterminationismade.
(iii) Impairment of Non-Financial Assets
When therecoverableamountofanasset isdeterminedbasedon theestimateof thevalue-in-useof thecash-generatingunittowhichtheassetisallocated,themanagementisrequiredtomakeanestimateoftheexpectedfuturecashflowsfromthecash-generatingunitandalsotoapplyasuitablediscountrateinordertodeterminethepresentvalueofthosecashflows.
(iv) Amortisation of Development Costs
Changesintheexpectedlevelofusageandtechnologicaldevelopmentcouldimpacttheeconomicusefullivesthereforefutureamortisationchargescouldberevised.
(v) Allowance for Slow-Moving Inventories
Reviewsaremadeperiodicallybymanagementondamaged,obsoleteandslow-movinginventories.Thesereviewsrequirejudgementandestimates.Possiblechangesintheseestimatescouldresultinrevisionstothevaluationofinventories.
(vi) Impairment of Trade and Other Receivables
Animpairmentlossisrecognisedwhenthereisobjectiveevidencethatafinancialassetisimpaired.Managementspecifically reviews its loan and receivables financial assets and analyses historical bad debts, customerconcentrations,customercreditworthiness,currenteconomictrendsandchangesinthecustomerpaymenttermswhenmaking a judgement to evaluate the adequacy of the allowance for impairment losses.Where there isobjectiveevidenceofimpairment,theamountandtimingoffuturecashflowsareestimatedbasedonhistoricallossexperienceforassetswithsimilarcreditriskcharacteristics.Iftheexpectationisdifferentfromtheestimation,suchdifferencewillimpactthecarryingvalueofreceivables.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 47
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(a) Critical Accounting Estimates and Judgements (Cont’d)
(vii) Impairment of Goodwill
Goodwillistestedforimpairmentannuallyandatothertimeswhensuchindicatorsexist.Thisrequiresmanagementtoestimatetheexpectedfuturecashflowsofthecash-generatingunittowhichgoodwillisallocatedandtoapplyasuitablediscountrateinordertodeterminethepresentvalueofthosecashflows.Thefuturecashflowsaremostsensitivetobudgetedgrossmargins,growthratesestimatedanddiscountrateused.Iftheexpectationisdifferentfromtheestimation,suchdifferencewillimpactthecarryingvalueofgoodwill.
(viii) Fair Value Estimates for Certain Financial Assets and Liabilities
TheGroupcarriescertainfinancialassetsandliabilitiesatfairvalue,whichrequiresextensiveuseofaccountingestimates and judgement. While significant components of fair value measurement were determined usingverifiableobjectiveevidence,theamountofchangesinfairvaluewoulddifferiftheGroupusesdifferentvaluationmethodologies.Anychangesinfairvalueoftheseassetsandliabilitieswouldaffectprofitand/orequity.
(b) Basis of Consolidation
Allbusinesscombinationsareaccountedforusingthepurchasemethodwhichrequirestheidentificationofanacquirerforaccountingpurposes.AsexplainedinNote3(B)tothefinancialstatements,theGroupadoptsthereverseacquisitionaccounting inpreparing theconsolidatedfinancial statementswhich incorporate thefinancial statementsofEduspecSdn.Bhd.(astheaccountingacquirer)andtheCompanytogetherwithitsothersubsidiaries(astheaccountingacquiree).
Intragrouptransactions,balances,incomeandexpensesareeliminatedonconsolidation.Wherenecessary,adjustmentsaremadetothefinancialstatementsofsubsidiariestoensureconsistencyofaccountingpolicieswiththoseoftheGroup.
(i) Business Combinations
Acquisitionsofbusinesses are accounted forusing the acquisitionmethod.Under the acquisitionmethod, theconsiderationtransferredforacquisitionofasubsidiaryisthefairvalueoftheassetstransferred,liabilitiesincurredandtheequityinterestsissuedbytheGroupattheacquisitiondate.Theconsiderationtransferredincludesthefairvalueofanyassetorliabilityresultingfromacontingentconsiderationarrangement.Acquisition-relatedcosts,otherthanthecoststoissuedebtorequitysecurities,arerecognisedinprofitorlosswhenincurred.
Inabusinesscombinationachievedinstages,previouslyheldequityinterestsintheacquireeareremeasuredtofairvalueattheacquisitiondateandanycorrespondinggainorlossisrecognisedinprofitorloss.
Non-controllinginterests intheacquireemaybeinitiallymeasuredeitherat fairvalueorat thenon-controllinginterests’proportionateshareofthefairvalueoftheacquiree’sidentifiablenetassetsatthedateofacquisition.Thechoiceofmeasurementbasis is made on a transaction-by-transaction basis.
(ii) Non-controlling Interests
Non-controllinginterestsarepresentedwithinequityintheconsolidatedstatementoffinancialposition,separatelyfromtheequityattributabletoownersoftheCompany.Profitorlossandeachcomponentofothercomprehensiveincomeareattributed to theownersof theCompanyand to thenon-controlling interests.Totalcomprehensiveincomeisattributedtonon-controllinginterestsevenifthisresultsinthenon-controllinginterestshavingadeficitbalance.
Attheendofeachreportingperiod,thecarryingamountofnon-controllinginterestsistheamountofthoseinterestsatinitialrecognitionplusthenon-controllinginterests’shareofsubsequentchangesinequity.
(iii) Changes In Ownership Interests In Subsidiaries Without Change of Control
Allchangesintheparent’sownershipinterestinasubsidiarythatdonotresultinalossofcontrolareaccountedforasequitytransactions.Anydifferencebetweentheamountbywhichthenon-controllinginterestisadjustedandthefairvalueofconsiderationpaidorreceivedisrecogniseddirectlyinequityoftheGroup.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 548
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(b) Basis of Consolidation (Cont’d)
(iv) Loss of Control
Uponthelossofcontrolofasubsidiary,theGrouprecognisesanygainorlossondisposalinprofitorlosswhichiscalculatedasthedifferencebetween:-
(i) theaggregateofthefairvalueoftheconsiderationreceivedandthefairvalueofanyretainedinterestintheformersubsidiary;and
(ii) thepreviouscarryingamountoftheassets(includinggoodwill),andliabilitiesoftheformersubsidiaryandanynon-controllinginterests.
Amountspreviouslyrecognisedinothercomprehensiveincomeinrelationtotheformersubsidiaryareaccountedforinthesamemanneraswouldberequirediftherelevantassetsorliabilitiesweredisposedof(i.e.reclassifiedtoprofitorlossortransferreddirectlytoretainedprofits).Thefairvalueofanyinvestmentsretainedintheformersubsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequentaccountingunderMFRS139or,whenapplicable,thecostoninitialrecognitionofaninvestmentinanassociateorajointventure.
(c) Goodwill
Goodwillismeasuredatcostlessaccumulatedimpairmentlosses,ifany.Thecarryingvalueofgoodwillisreviewedforimpairmentannuallyormorefrequentlyifeventsorchangesincircumstancesindicatethatthecarryingamountmaybeimpaired.Theimpairmentvalueofgoodwillisrecognisedinprofitorloss.Animpairmentlossrecognisedforgoodwillisnotreversedinasubsequentperiod.
Undertheacquisitionmethod,anyexcessofthesumofthefairvalueoftheconsiderationtransferredinthebusinesscombination,theamountofnon-controllinginterestsrecognisedandthefairvalueoftheGroup’spreviouslyheldequityinterestintheacquiree(ifany),overthenetfairvalueoftheacquiree’sidentifiableassetsandliabilitiesatthedateofacquisitionisrecordedasgoodwill.
Wherethelatteramountexceedstheformer,afterreassessment,theexcessrepresentsabargainpurchasegainandisrecognisedasagaininprofitorloss.
(d) Functional and Foreign Currencies
(i) Functional and Presentation Currency
The individual financial statements of each entity in theGroup are presented in the currency of the primaryeconomicenvironmentinwhichtheGroupoperateswhichisthefunctionalcurrency.
TheconsolidatedfinancialstatementsarepresentedinRinggitMalaysia(“RM”)whichistheCompany’sfunctionaland presentation currency.
(ii) Transactions and Balances
Transactions in foreigncurrenciesareconvertedinto therespective functionalcurrenciesoninitial recognition,usingtheexchangeratesapproximatingthoserulingatthetransactiondates.Monetaryassetsandliabilitiesattheendof thereportingperiodare translatedat theratesrulingasof thatdate.Non-monetaryassetsandliabilitiesaretranslatedusingexchangeratesthatexistedwhenthevaluesweredetermined.Allexchangedifferencesarerecognisedinprofitorloss.
(iii) Foreign Operations
AssetsandliabilitiesofforeignoperationsaretranslatedtoRMattheratesofexchangerulingattheendofthereportingperiod.Revenuesandexpensesofforeignoperationsaretranslatedatexchangeratesrulingatthedatesofthetransactions.Allexchangedifferencesarisingfromtranslationaretakendirectlytoothercomprehensiveincomeandaccumulatedinequityundertranslationreserve.Ondisposalofaforeignoperation,thecumulativeamountrecognisedinothercomprehensiveincomerelatingtothatparticularforeignoperationisreclassifiedfromequitytoprofitorloss.
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4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(d) Functional and Foreign Currencies (cont’d)
(iii) Foreign Operations (cont'd)
Goodwillandfairvalueadjustmentsarising fromtheacquisitionof foreignoperationsare treatedasassetsandliabilities of the foreign operations and are recorded in the functional currency of the foreign operations andtranslatedattheclosingrateattheendofthereportingperiod.
(e) Financial Instruments
FinancialinstrumentsarerecognisedinthestatementsoffinancialpositionwhentheGrouphasbecomeapartytothecontractualprovisionsoftheinstruments.
Financialinstrumentsareclassifiedasliabilitiesorequityinaccordancewiththesubstanceofthecontractualarrangement.Interest,dividends,gainsandlossesrelatingtoafinancialinstrumentclassifiedasaliability,arereportedasanexpenseorincome.Distributionstoholdersoffinancialinstrumentsclassifiedasequityarechargeddirectlytoequity.
FinancialinstrumentsareoffsetwhentheGrouphasalegallyenforceablerighttooffsetandintendstosettleeitheronanetbasisortorealisetheassetandsettletheliabilitysimultaneously.
A financial instrument is recognised initially, at its fair value. Transaction costs that are directly attributable to theacquisitionorissueofthefinancialinstrument(otherthanafinancialinstrumentatfairvaluethroughprofitorloss)areaddedto/deductedfromthefairvalueoninitialrecognition,asappropriate.Transactioncostsonthefinancialinstrumentatfairvaluethroughprofitorlossarerecognisedimmediatelyinprofitorloss.
Financialinstrumentsrecognisedinthestatementsoffinancialpositionaredisclosedintheindividualpolicystatementassociatedwitheachitem.
(i) Financial Assets
Oninitialrecognition,financialassetsareclassifiedaseitherfinancialassetsatfairvaluethroughprofitorloss,held-to-maturityinvestments,loansandreceivablesfinancialassets,oravailable-for-salefinancialassets,asappropriate.
• Financial Assets at Fair Value Through Profit or Loss
Financial assets are classified as financial assets at fair value throughprofit or losswhen the financial assetis eitherheld for tradingor isdesignated toeliminateor significantly reduceameasurementor recognitioninconsistency thatwould otherwise arise.Derivatives are also classified as held for trading unless they aredesignatedashedges.
Financialassetsatfairvaluethroughprofitorlossarestatedatfairvalue,withanygainsorlossesarisingonremeasurementrecognisedinprofitorloss.DividendincomefromthiscategoryoffinancialassetsisrecognisedinprofitorlosswhentheGroup’srighttoreceivepaymentisestablished.
Financialassetsatfairvaluethroughprofitorlosscouldbepresentedascurrentornon-current.Financialassetsthatareheldprimarilyfortradingpurposesarepresentedascurrentwhereasfinancialassetsthatarenotheldprimarilyfortradingpurposesarepresentedascurrentornon-currentbasedonthesettlementdate.
• Held-to-maturity investments
Held-to-maturityinvestmentsarenon-derivativefinancialassetswithfixedordeterminablepaymentsandfixedmaturities that themanagement has the positive intention and ability to hold tomaturity. Held-to-maturityinvestmentsaremeasuredatamortisedcostusingtheeffectiveinterestmethodlessanyimpairmentloss,withinterestincomerecognisedinprofitorlossonaneffectiveyieldbasis.
Held-to-maturity investmentsareclassifiedasnon-currentassets,except for thosehavingmaturitywithin12monthsafterthereportingdatewhichareclassifiedascurrentassets.
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 550
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(e) Financial Instruments (Cont’d)
(i) Financial Assets (Cont’d)
• Loans and Receivables Financial Assets
Tradereceivablesandother receivables thathavefixedordeterminablepayments thatarenotquoted inanactivemarket are classified as loans and receivables financial assets. Loans and receivables financial assetsaremeasuredatamortisedcostusingtheeffectiveinterestmethod,lessanyimpairmentloss.Interestincomeisrecognisedbyapplyingtheeffectiveinterestrate,exceptforshort-termreceivableswhentherecognitionofinterestwouldbeimmaterial.
Loansandreceivablesfinancialassetsareclassifiedascurrentassets,exceptforthosehavingsettlementdateslaterthan12monthsafterthereportingdatewhichareclassifiedasnon-currentassets.
• Available-for-sale Financial Assets
Available-for-salefinancialassetsarenon-derivativefinancialassetsthataredesignatedinthiscategoryorarenotclassifiedinanyoftheothercategories.
Afterinitialrecognition,available-for-salefinancialassetsareremeasuredtotheirfairvaluesattheendofeachreportingperiod.Gainsandlossesarisingfromchanges in fairvaluearerecognisedinothercomprehensiveincomeandaccumulatedinthefairvaluereserve,withtheexceptionofimpairmentlosses.Onderecognition,thecumulativegainorlosspreviouslyaccumulatedinthefairvaluereserveisreclassifiedfromequityintoprofitor loss.
Dividendsonavailable-for-saleequity instrumentsarerecognised inprofitor losswhentheGroup’sright toreceivepaymentsisestablished.
Investments in equity instruments whose fair value cannot be reliablymeasured aremeasured at cost lessaccumulatedimpairmentlosses,ifany.
Available-for-salefinancial assets areclassifiedasnon-current assetsunless theyareexpected tobe realisedwithin12monthsafterthereportingdate.
(ii) Financial Liabilities
Allfinancialliabilitiesareinitiallymeasuredatfairvalueplusdirectlyattributabletransactioncostsandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethodotherthanthosecategorisedasfairvaluethroughprofitorloss.
Fair value through profit or loss category comprises financial liabilities that are either held for trading or aredesignatedtoeliminateorsignificantlyreduceameasurementorrecognitioninconsistencythatwouldotherwisearise.Derivativesarealsoclassifiedasheldfortradingunlesstheyaredesignatedashedges.
FinancialliabilitiesareclassifiedascurrentliabilitiesunlesstheGrouphasanunconditionalrighttodefersettlementoftheliabilityforatleast12monthsafterthereportingdate.
(iii) Equity Instruments
Ordinarysharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofnewsharesoroptionsareshowninequityasadeduction,netoftax,fromproceeds.
Dividendsonordinarysharesarerecognisedasliabilitieswhenapprovedforappropriation.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 51
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(e) Financial Instruments (Cont’d)
(iv) Derecognition
Afinancialassetorpartofitisderecognisedwhen,andonlywhen,thecontractualrightstothecashflowsfromthefinancialassetexpireorthefinancialassetistransferredtoanotherpartywithoutretainingcontrolorsubstantiallyallrisksandrewardsoftheasset.Onderecognitionofafinancialasset,thedifferencebetweenthecarryingamountandthesumoftheconsiderationreceived(includinganynewassetobtainedlessanynewliabilityassumed)andanycumulativegainorlossthathadbeenrecognisedinequityisrecognisedinprofitorloss.
Afinancialliabilityorapartofitisderecognisedwhen,andonlywhen,theobligationspecifiedinthecontractisdischargedorcancelledorexpires.Onderecognitionofafinancialliability,thedifferencebetweenthecarryingamountofthefinancialliabilityextinguishedortransferredtoanotherpartyandtheconsiderationpaid,includinganynon-cashassetstransferredorliabilitiesassumed,isrecognisedinprofitorloss.
(f) Warrants
Amountallocatedinrelationtotheissuanceofwarrantsarecreditedtothewarrantreservewhichisnon-distributable.Thewarrant reserve is transferred to the sharepremiumaccountupon theexerciseof thewarrantsand thewarrantreserveinrelationtotheunexercisedwarrantsattheexpiryofthewarrantsperiodwillbetransferredtotheretainedearnings.
(g) Equipment
Equipmentarestatedatcostlessaccumulateddepreciationandimpairmentlosses,ifany.
Depreciationischargedtoprofitorloss(unlessitisincludedinthecarryingamountofanotherasset)onthestraight-linemethodtowriteoffthedepreciableamountoftheassetsovertheirestimatedusefullives.Depreciationofanassetdoesnotceasewhentheassetbecomesidleorisretiredfromactiveuseunlesstheassetisfullydepreciated.Theprincipalannualratesusedforthispurposeare:-
Motorvehicles 20% Officeandlabequipment,furnitureandfittings 10%-33.33% Computers,softwareandperipherals 20%-50% Educationaltools 20%-33.33% Renovation 10%-33.33% Electricalinstallation 10%-20%
Capitalwork-in-progressrepresentsassetsunderconstructionwhicharenotreadyforcommercialuseattheendofthereportingperiod.Capitalwork-in-progressisstatedatcost,andwillbetransferredtotherelevantcategoryofassetsanddepreciatedaccordinglywhentheassetsarecompletedandreadyforcommercialuse.
Thedepreciationmethod,usefullivesandresidualvaluesarereviewed,andadjustedifappropriate,attheendofeachreportingperiodtoensurethattheamounts,methodandperiodsofdepreciationareconsistentwithpreviousestimatesandtheexpectedpatternofconsumptionofthefutureeconomicbenefitsembodiedintheitemsoftheequipment.
Subsequentcostsare included in theasset’scarryingamountor recognisedasaseparateasset,asappropriate,onlywhenthecostisincurredanditisprobablethatthefutureeconomicbenefitsassociatedwiththeassetwillflowtotheGroupandthecostoftheassetcanbemeasuredreliably.Thecarryingamountofpartsthatarereplacedisderecognised.Thecostsoftheday-to-dayservicingofequipmentarerecognisedinprofitorlossasincurred.CostalsocomprisestheinitialestimateofdismantlingandremovingtheassetandrestoringthesiteonwhichitislocatedforwhichtheGroupisobligatedtoincurwhentheassetisacquired,ifapplicable.
Anitemofequipmentisderecognisedupondisposalorwhennofutureeconomicbenefitsareexpectedfromitsuse.Anygainorlossarisingfromderecognitionoftheassetisrecognisedinprofitorloss.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 552
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(h) Intangible Assets
(i) Research and Development Expenditure
Researchexpenditureisrecognisedasanexpensewhenitisincurred.
Developmentexpenditure is recognisedasanexpenseexcept that costs incurredondevelopmentprojectsarecapitalised as non-current assets to the extent that such expenditure is expected to generate future economicbenefits.Developmentexpenditureiscapitalisedif,andonlyifanentitycandemonstrateallofthefollowing:-
(i) itsabilitytomeasurereliablytheexpenditureattributabletotheassetunderdevelopment;
(ii) theproductorprocessistechnicallyandcommerciallyfeasible;
(iii) itsfutureeconomicbenefitsareprobable;
(iv) itsintentiontocompleteandtheabilitytouseorsellthedevelopedasset;and
(v) theavailabilityofadequatetechnical,financialandotherresourcestocompletetheassetunderdevelopment.
Capitaliseddevelopmentexpenditureismeasuredatcostlessaccumulatedamortisationandimpairmentlosses,ifany.Developmentexpenditureinitiallyrecognisedasanexpenseisnotrecognisedasassetsinthesubsequentperiod.
Thedevelopmentexpenditureisamortisedonastraight-linemethodoveraperiodof5yearswhentheproductsarereadyforsaleoruse.Intheeventthattheexpectedfutureeconomicbenefitsarenolongerprobableofbeingrecovered,thedevelopmentexpenditureiswrittendowntoitsrecoverableamount.
(ii) Licence Fee
Thelicencefeeisstatedatcostlessaccumulatedamortisationandimpairmentlosses,ifany.
Thelicencefeeisamortisedonastraight-linebasisandtheprincipalamortisationrateusedforthispurposeis20%.
Intheeventthattheexpectedfutureeconomicbenefitsarenolongerprobableofbeingrecovered,thelicencefeeiswrittendowntoitsrecoverableamount.
(i) Investments in Subsidiaries
InvestmentsinsubsidiariesarestatedatcostinthestatementoffinancialpositionoftheCompany,andarereviewedforimpairmentattheendofthereportingperiodifeventsorchangesincircumstancesindicatethattheircarryingvaluesmaynotberecoverable.
Onthedisposaloftheinvestmentsinsubsidiaries,thedifferencebetweenthenetdisposalproceedsandthecarryingamountoftheinvestmentsisrecognisedinprofitorloss.
(j) Investments in Associates
An associate isanentityinwhichtheGroupandtheCompanyhavealong-termequityinterestandwhereitexercisessignificantinfluenceoverthefinancialandoperatingpolicies.
InvestmentsinassociatesarestatedatcostinthestatementoffinancialpositionoftheCompany,andarereviewedforimpairmentattheendofthereportingperiodifeventsorchangesincircumstancesindicatethatthecarryingvaluesmaynotberecoverable.Thecostoftheinvestmentincludestransactioncosts.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 53
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(j) Investments in Associates (Cont’d)
The investment inanassociate isaccounted for in theconsolidatedstatementoffinancialpositionunder theequitymethod,basedonthefinancialstatementsoftheassociatemadeupto30September2014.TheGroup’sshareofthepost-acquisitionprofitsandothercomprehensiveincomeoftheassociateisincludedintheconsolidatedstatementofprofitorlossandothercomprehensiveincome,afteradjustmentifany,toaligntheaccountingpolicieswiththoseoftheGroup,fromthedatethatsignificantinfluencecommencesuptotheeffectivedateonwhichsignificantinfluenceceasesorwhentheinvestmentisclassifiedasheldforsale.TheGroup’sinterestintheassociateiscarriedintheconsolidatedstatementoffinancialpositionatcostplustheGroup’sshareofthepost-acquisitionretainedprofitsandreserves.Thecostofinvestmentincludestransactioncosts.
WhentheGroup’sshareoflossesexceedsitsinterestinanassociate,thecarryingamountofthatinterestisreducedtozero,andtherecognitionoffurtherlossesisdiscontinuedexcepttotheextentthattheGrouphasanobligation.
UnrealisedgainsontransactionsbetweentheGroupandtheassociateareeliminatedtotheextentoftheGroup’sinterestintheassociate.Unrealisedlossesareeliminatedunlesscostcannotberecovered.
WhentheGroupceasestohavesignificantinfluenceoveranassociateandtheretainedinterestintheformerassociateisafinancialasset,theGroupmeasurestheretainedinterestatfairvalueatthatdateandthefairvalueisregardedastheinitialcarryingamountofthefinancialassetinaccordancewithMFRS139.Furthermore,theGroupalsoreclassifiesitsshareofthegainorlosspreviouslyrecognisedinothercomprehensiveincomeofthatassociatetoprofitorlosswhentheequitymethodisdiscontinued.However,theGroupwillcontinuetousetheequitymethodifthedilutiondoesnotresultinalossofsignificantinfluenceorwhenaninvestmentinajointventurebecomesaninvestmentinanassociate.Undersuchchangesinownershipinterest,theretainedinvestmentisnotremeasuredtofairvaluebutaproportionateshareoftheamountspreviouslyrecognisedinothercomprehensiveincomeoftheassociatewillbereclassifiedtoprofitorlosswhereappropriate.Alldilutiongainsorlossesarisingininvestmentsinassociatesarerecognisedinprofitorloss.
(k) Joint Arrangements
JointarrangementsarearrangementsofwhichtheGrouphasjointcontrol,establishedbycontractsrequiringunanimousconsentfordecisionsabouttheactivitiesthatsignificantlyaffectthearrangementsreturns.
Investmentsinjointarrangementsareclassifiedaseitherjointoperationsorjointventuresdependingonthecontractualrightsandobligationsofeachinvestor.TheGrouphasassessedthenatureofitsjointarrangementsanddeterminedthemtobejointventures.
A jointventure isa jointarrangementwhereby theGrouphas rightsonly to thenetassetsof thearrangement.Theinvestmentinajointventureisaccountedforintheconsolidatedstatementoffinancialpositionusingtheequitymethod,basedonthefinancialstatementsofthejointventuremadeupto30September2014.TheGroup’sshareofthepost-acquisitionprofitsandothercomprehensiveincomeofthejointventureisincludedintheconsolidatedstatementofprofitorlossandothercomprehensiveincome,afteradjustmentifany,toaligntheaccountingpolicieswiththoseoftheGroup,uptotheeffectivedatewhentheinvestmentceasestobeajointventureorwhentheinvestmentisclassifiedasheldforsale.TheGroup’sinterestinthejointventureiscarriedintheconsolidatedstatementoffinancialpositionatcostplustheGroup’sshareofthepost-acquisitionretainedprofitsandreserves.Thecostofinvestmentincludestransactioncosts.
WhentheGroup’sshareoflossesexceedsitsinterestinajointventure,thecarryingamountofthatinterestisreducedtozero,andtherecognitionoffurtherlossesisdiscontinuedexcepttotheextentthattheGrouphasanobligation.
UnrealisedgainsontransactionsbetweentheGroupandthejointventureareeliminatedtotheextentoftheGroup’sinterestinthejointventure.Unrealisedlossesareeliminatedunlesscostcannotberecovered.
TheGroupdiscontinuestheuseoftheequitymethodfromthedatewhentheinvestmentceasestobeajointventureorwhentheinvestmentisclassifiedasheldforsale.WhentheGroupretainsaninterestintheformerjointventureandtheretainedinterestisafinancialasset,theGroupmeasurestheretainedinterestatfairvalueatthatdateandthefairvalueisregardedastheinitialcarryingamountofthefinancialassetinaccordancewithMFRS139.Furthermore,theGroupalsoreclassifiesitsshareofthegainorlosspreviouslyrecognisedinothercomprehensiveincomeofthatjointventuretoprofitorlosswhentheequitymethodisdiscontinued.However,theGroupwillcontinuetousetheequitymethodwhenaninvestmentinajointventurebecomesaninvestmentinanassociate.Undersuchchangeinownershipinterest,theretainedinvestmentisnotremeasuredtofairvaluebutaproportionateshareoftheamountspreviouslyrecognisedinothercomprehensiveincomeofthejointventurewillbereclassifiedtoprofitorlosswhereappropriate.Alldilutiongainsorlossesarisingfrominvestmentsinjointventuresarerecognisedinprofitorloss.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 554
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(l) Impairment
(i) Impairment of Financial Assets
Allfinancialassets(otherthanthosecategorisedatfairvaluethroughprofitorloss),areassessedattheendofeachreportingperiodwhetherthereisanyobjectiveevidenceofimpairmentasaresultofoneormoreeventshavinganimpactontheestimatedfuturecashflowsoftheasset.Foranequityinstrument,asignificantorprolongeddeclineinthefairvaluebelowitscostisconsideredtobeobjectiveevidenceofimpairment.
An impairment loss in respect of held-to-maturity investments and loans and receivables financial assets isrecognisedinprofitorlossandismeasuredasthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflows,discountedatthefinancialasset’soriginaleffectiveinterestrate.
Animpairmentlossinrespectofavailable-for-salefinancialassetsisrecognisedinprofitorlossandismeasuredasthedifferencebetweenitscost(netofanyprincipalpaymentandamortisation)anditscurrentfairvalue,lessanyimpairmentlosspreviouslyrecognisedinthefairvaluereserve.Inaddition,thecumulativelossrecognisedinothercomprehensiveincomeandaccumulatedinequityunderfairvaluereserve,isreclassifiedfromequitytoprofitorloss.
Withtheexceptionofavailable-for-saleequityinstruments,if,inasubsequentperiod,theamountoftheimpairmentlossdecreasesandthedecreasecanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised,thepreviouslyrecognisedimpairmentlossisreversedthroughprofitorlosstotheextentthatthecarryingamountoftheinvestmentatthedatetheimpairmentisreverseddoesnotexceedwhattheamortisedcostwouldhavebeenhad the impairmentnotbeen recognised. In respectof available-for-sale equity instruments, impairment lossespreviouslyrecognisedinprofitorlossarenotreversedthroughprofitorloss.Anyincreaseinfairvaluesubsequenttoanimpairmentlossmadeisrecognisedinothercomprehensiveincome.
(ii) Impairment of Non-Financial Assets
Thecarryingvaluesofassets,other than those towhichMFRS136 - ImpairmentofAssetsdoesnotapply,arereviewedattheendofeachreportingperiodforimpairmentwhenthereisanindicationthattheassetsmightbeimpaired.Impairmentismeasuredbycomparingthecarryingvaluesoftheassetswiththeirrecoverableamounts.Therecoverableamountoftheassetsisthehigheroftheassets’fairvaluelesscoststosellandtheirvalue-in-use,whichismeasuredbyreferencetodiscountedfuturecashflow.
Animpairmentlossisrecognisedinprofitorlossimmediatelyunlesstheassetiscarriedatitsrevaluedamount.Anyimpairmentlossofarevaluedassetistreatedasarevaluationdecreasetotheextentofapreviouslyrecognisedrevaluationsurplusforthesameasset.
In respect of assets other than goodwill, andwhen there is a change in the estimates used to determine therecoverableamount,asubsequentincreaseintherecoverableamountofanassetistreatedasareversaloftheprevious impairment loss and is recognised to the extent of the carrying amountof the asset thatwouldhavebeendetermined(netofamortisationanddepreciation)hadnoimpairmentlossbeenrecognised.Thereversalisrecognisedinprofitorlossimmediately,unlesstheassetiscarriedatitsrevaluedamount,inwhichcasethereversaloftheimpairmentlossistreatedasarevaluationincrease.
(m) Assets Under Hire Purchase
Assetsacquiredunderhirepurchasearecapitalisedinthefinancialstatementsatthelowerofthefairvalueoftheleasedassetsandthepresentvalueoftheminimumleasepaymentsand,aredepreciatedinaccordancewiththepolicysetoutinNote4(g)above.Eachhirepurchasepaymentisallocatedbetweentheliabilityandfinancechargessoastoachieveaconstantrateonthefinancebalanceoutstanding.Financechargesarerecognisedinprofitorlossovertheperiodofthe respectivehirepurchaseagreements.
(n) Inventories
Inventoriesarestatedatthelowerofcostandnetrealisablevalue.Costisdeterminedonthefirst-in-first-outbasis,andcomprisesthepurchasepriceandincidentalsincurredinbringingtheinventoriestotheirpresentlocationandcondition.
Netrealisablevaluerepresentstheestimatedsellingpricelesstheestimatedcostsnecessarytomakethesale.
Wherenecessary,dueallowanceismadeforalldamaged,obsoleteandslow-movingitems.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 55
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(o) Provisions
ProvisionsarerecognisedwhentheGrouphasapresentobligationasaresultofpastevents,whenitisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligation,andwhenareliableestimateof theamountcanbemade.Provisionsarereviewedat theendofeachreportingperiodandadjustedtoreflect thecurrentbestestimate.Wheretheeffectofthetimevalueofmoneyismaterial,theprovisionisthepresentvalueoftheestimatedexpenditurerequiredtosettletheobligation.Theunwindingofthediscountisrecognisedasinterestexpense inprofitorloss.
(p) Income Taxes
Incometaxfortheyearcomprisescurrentanddeferredtax.
Currenttaxistheexpectedamountofincometaxespayableinrespectofthetaxableprofitforthereportingperiodandismeasuredusingthetaxratesthathavebeenenactedorsubstantivelyenactedattheendofthereportingperiod.
Deferredtaxisprovidedinfull,usingtheliabilitymethod,ontemporarydifferencesarisingbetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsinthefinancialstatements.
Deferred tax liabilitiesarerecognised forall taxable temporarydifferencesother than those thatarise fromgoodwillorexcessof theacquirer’s interest inthenetfairvalueof theacquiree’s identifiableassets, liabilitiesandcontingentliabilitiesoverthebusinesscombinationcostsorfromtheinitialrecognitionofanassetorliabilityinatransactionwhichisnotabusinesscombinationandatthetimeofthetransaction,affectsneitheraccountingprofitnortaxableprofit.
Deferredtaxassetsarerecognisedforalldeductibletemporarydifferences,unusedtaxlossesandunusedtaxcreditsto the extent that it is probable that future taxableprofitswill be available againstwhich thedeductible temporarydifferences,unusedtaxlossesandunusedtaxcreditscanbeutilised.Thecarryingamountsofdeferredtaxassetsarereviewedattheendofeachreportingperiodandreducedtotheextentthatitisnolongerprobablethatsufficientfuturetaxableprofitswillbeavailabletoallowallorpartofthedeferredtaxassetstobeutilised.
Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplyintheperiodwhentheassetisrealisedortheliabilityissettled,basedonthetaxratesthathavebeenenactedorsubstantivelyenactedattheendofthereportingperiod.
Deferredtaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttosetoffcurrenttaxassetsagainstcurrenttaxliabilitiesandwhenthedeferredincometaxesrelatetothesametaxationauthority.
Deferredtaxrelatingtoitemsrecognisedoutsideprofitorlossisrecognisedoutsideprofitorloss.Deferredtaxitemsarerecognisedincorrelationtotheunderlyingtransactionseitherinothercomprehensiveincomeordirectlyinequityanddeferredtaxarisingfromabusinesscombinationisincludedintheresultinggoodwillorexcessoftheacquirer’sinterestinthenetfairvalueoftheacquiree’sidentifiableassets,liabilitiesandcontingentliabilitiesoverthebusinesscombination costs.
(q) Borrowing Costs
Borrowingcosts,directlyattributabletotheacquisition,constructionorproductionofaqualifyingasset,arecapitalisedaspartofthecostofthoseassets,untilsuchtimeastheassetsarereadyfortheirintendeduseorsale.Capitalisationofborrowingcostsissuspendedduringextendedperiodsinwhichactivedevelopmentisinterrupted.
Allotherborrowingcostsarerecognisedinprofitorlossasexpensesintheperiodinwhichtheyareincurred.
Investmentincomeearnedonthetemporaryinvestmentofspecificborrowingpendingtheirexpenditureonqualifyingassetsisdeductedfromtheborrowingcostseligibleforcapitalisation.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 556
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(r) Cash and Cash Equivalents
Cashandcashequivalentscomprisecashinhand,bankbalances,demanddeposits,bankoverdraftsandshort-term,highlyliquidinvestmentsthatarereadilyconvertibletoknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvaluewithoriginalmaturityperiodsofthreemonthsorless.
During thecurrentfinancialyear, theGroupexcludeddepositspledged tofinancial institutions fromcashandcashequivalents for the purpose of the statements of cash flows. This change has been applied retrospectivelywith anadjustmentmadeagainsttheopeningbalanceofthecashandcashequivalentsasat1October2012.
(s) EmployeeBenefits
(i) Short-term Benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are measured on anundiscountedbasisandarerecognisedinprofitorlossandincludedinthedevelopmentcosts,whereappropriate,intheperiodinwhichtheassociatedservicesarerenderedbyemployeesoftheGroup.
(ii) Defined Contribution Plans
The Group’s contributions to defined contribution plans are recognised in profit or loss and included in thedevelopmentcosts,whereappropriate,intheperiodtowhichtheyrelate.Oncethecontributionshavebeenpaid,theGrouphasnofurtherliabilityinrespectofthedefinedcontributionplans.
(t) Related Parties
Apartyisrelatedtoanentity(referredtoasthe“reportingentity”)if:-
(a) A person or a closememberofthatperson’sfamilyisrelatedtoareportingentityifthatperson:-
(i) hascontrolorjointcontroloverthereportingentity;
(ii) hassignificantinfluenceoverthereportingentity;or
(iii) isamemberofthekeymanagementpersonnelofthereportingentityorofaparentofthereportingentity.
(b) Anentityisrelatedtoareportingentityifanyofthefollowingconditionsapplies:-
(i) Theentityandthereportingentityaremembersofthesamegroup(whichmeansthateachparent,subsidiaryandfellowsubsidiaryisrelatedtotheothers).
(ii) Oneentityisanassociateorjointventureoftheotherentity(oranassociateorjointventureofamemberofagroupofwhichtheotherentityisamember).
(iii) Bothentitiesarejointventuresofthesamethirdparty.
(iv) Oneentityisajointventureofathirdentityandtheotherentityisanassociateofthethirdentity.
(v) Theentityisapost-employmentbenefitplanforthebenefitofemployeesofeitherthereportingentityoranentityrelatedtothereportingentity.Ifthereportingentityisitselfsuchaplan,thesponsoringemployersarealsorelatedtothereportingentity.
(vi) Theentityiscontrolledorjointlycontrolledbyapersonidentifiedin(a)above.
(vii)Apersonidentifiedin(a)(i)abovehassignificantinfluenceovertheentityorisamemberofthekeymanagementpersonneloftheentity(orofaparentoftheentity).
Closemembersof the familyofapersonare those familymemberswhomaybeexpected to influence,orbeinfluencedby,thatpersonintheirdealingswiththeentity.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 57
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(u) Operating Segments
AnoperatingsegmentisacomponentoftheGroupthatengagesinbusinessactivitiesfromwhichitmayearnrevenuesandincurexpenses,includingrevenuesandexpensesthatrelatetotransactionswithanyoftheGroup’sothercomponents.Anoperatingsegment’soperatingresultsarereviewedregularlybythechiefoperatingdecisionmakertomakedecisionsaboutresourcestobeallocatedtothesegmentandassessitsperformance,andforwhichdiscretefinancialinformationisavailable.
(v) Contingent Liabilities
AcontingentliabilityisapossibleobligationthatarisesfrompasteventsandwhoseexistencewillonlybeconfirmedbytheoccurrenceofoneormoreuncertainfutureeventsnotwhollywithinthecontroloftheGroup.Itcanalsobeapresentobligationarisingfrompasteventsthatisnotrecognisedbecauseitisnotprobablethatanoutflowofeconomicresourceswillberequiredortheamountofobligationcannotbemeasuredreliably.
Acontingentliabilityisnotrecognisedbutisdisclosedinthenotestothefinancialstatements.Whenachangeintheprobabilityofanoutflowoccurssothattheoutflowisprobable,itwillthenberecognisedasaprovision.
(w) Fair Value Measurements
Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate,regardlessofwhetherthatpriceisdirectlyobservableorestimatedusingavaluationtechnique.Themeasurementassumesthatthetransactiontakesplaceeitherintheprincipalmarketorintheabsenceofaprincipalmarket,inthemostadvantageousmarket.Fornon-financialasset,thefairvaluemeasurementtakesintoaccountamarket’sparticipant’sabilitytogenerateeconomicbenefitsbyusingtheassetinitshighestandbestuseorbysellingittoanothermarketparticipantthatwouldusetheassetinitshighestandbestuse.However,thisbasisdoesnotapplytoshare-basedpaymenttransactions.
Forfinancialreportingpurposes,thefairvaluemeasurementsareanalysedintolevel1tolevel3asfollows:-
Level1: Inputsarequotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilitythattheentitycanaccessatthemeasurementdate;
Level2: Inputsareinputs,otherthanquotedpricesincludedwithinlevel1,thatareobservablefortheassetorliability,eitherdirectlyorindirectly;and
Level3: Inputsareunobservableinputsfortheassetorliability.
Thetransferoffairvaluebetweenlevelsisdeterminedasofthedateoftheeventorchangeincircumstancesthatcausedthetransfer.
(x) Revenue and Other Income
(i) Sale of Goods
Revenueismeasuredatfairvalueoftheconsiderationreceivedorreceivableandisrecognisedupondeliveryofgoodsandcustomers’acceptanceandwhereapplicable,netofreturnsandtradediscounts.
(ii) School Fees and Activity Income
Schoolfeesandactivityincomearerecogniseduponrenderingofservicesandwhentheoutcomeofthetransactionscanbeestimatedreliably.Intheeventtheoutcomeofthetransactioncouldnotbeestimatedreliably,revenueisrecognisedtotheextentoftheexpensesincurredthatarerecoverable.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 558
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
4. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(x) Revenue and Other Income (cont’d)
(iii) Deferred Income
Revenueinvoicedinadvanceisdeferredandrecognisedasrevenueuponprovisionoftheservice.
(iv) Rental Income
Rentalincomeisrecognisedonanaccrualbasis.
(v) Interest Income
Interestincomeisrecognisedonanaccrualbasis.
(vi) Management Fee
Managementfeeisrecognisedonanaccrualbasis.
(vii) Royalty Income
Royaltyincomeisrecognisedonanaccrualbasis.
5. INVESTMENTS IN SUBSIDIARIES
THE COMPANY 2014 2013 RM RM Unquotedshares,atcost At1October 35,979,483 35,979,483 Additionduringthefinancialyear 5,235,423 - 41,214,906 35,979,483 Accumulated impairment losses:- At1October (13,629,480) (13,511,841) Impairmentlossduringthefinancialyear - (117,639) (13,629,480) (13,629,480) At30September 27,585,426 22,350,003
Thedetailsofthesubsidiariesareasfollows:-
Name of Company Country of Effective Equity Incorporation Interest Principal Activities 2014 2013 % % Direct Subsidiaries:-
LitespeedEducationPte.Ltd. Singapore 100 100 Provisionofeducationalservices.(“LES”)* EduspecPte.Ltd.(“EPL”)* Singapore 100 100 ProvisionofITconsultancyactivities,IT developmentandotherITandcomputer relatedservices. LitespeedEducation Malaysia 100 100 Provisionofeducationalservices.ProgrammesSdn.Bhd.(“LEP”) EduspecSdn.Bhd.(“ESB”) Malaysia 100 100 Investmentholding. EduspecACGPte.Ltd.(“ACG”)* Singapore 60 - Dormant.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 59
5. INVESTMENTS IN SUBSIDIARIES (CONT’D)
Name of Company Country of Effective Equity Incorporation Interest Principal Activities 2014 2013 % % Direct Subsidiaries (Cont’d):-
MultipleTechnology Malaysia 100 - ProvidingcomputertrainingandtradinginMSCSdn.Bhd.(“MTM”) computerandcomputerperipherals. Held by Eduspec Sdn. Bhd.:- DynabookComputerCentre Malaysia 92.67 92.67 Providingcomputertrainingandtradingin(Perak)Sdn.Bhd.(“DCCPK”) computerandcomputerperipherals. DynabookComputerCentre Malaysia 82.67 82.67 Providingchildenrichmentprograms.(Melaka)Sdn.Bhd.(“DCCMK”) DynabookComputerCentre Malaysia 100 100 Providingcomputertrainingandtradingin(Sarawak)Sdn.Bhd.(“DCCSW”) computerandcomputerperipherals. EduspecInternationalEducation Malaysia 100 100 Providingchildenrichmentprograms.CulturalNetworkSdn.Bhd.(“EIECN”) DynabookComputerCentre Malaysia 100 100 Providingcomputertrainingandtradingin(Penang)Sdn.Bhd.(“DCCPG”) computerperipherals. DynabookComputerCentre Malaysia 90.53 90.53 Providingchildenrichmentprograms.(PantaiTimur)Sdn.Bhd.(“DCCPT”)
DynabookComputerCentre(M) Malaysia 100 100 Providingcomputercourse,tradingandSdn.Bhd.(“DCCM”) rentingofcomputers,educationalsoftware andbooks. DGBEducationSdn.Bhd.(“DGBE”) Malaysia 100 100 Tradinganddevelopmentofeducational software,technicalbooksandcomputer courses. CreativeEducare(M)Sdn.Bhd.(“CED”)Malaysia 100 100 Marketingandoperatingofroboticsfor schoolprogramsandotherrelated enrichmentprograms. OpenAcademicSystems Malaysia 100 100 ProvidingresearchanddevelopeducationalSdn.Bhd.(“OAS”) softwareandtechnicalbooks.
DigitalITSolutionsSdn.Bhd.(“DITS”) Malaysia 100 100 Tradingincomputerandperipherals,and technicalmaintenancesupportactivities. TimeCommunication Malaysia 97 97 Investmentholding.PartnersSdn.Bhd.(“TCP”) DynakidsSdn.Bhd.(“DYNAKIDS”) Malaysia 100 100 Provision and operation of IT learning for thepre-schoolmarketandrelatedactivities. DESSdn.Bhd.(“DES”) Malaysia 100 100 Research and development of courseware onroboticsforschoolprogramsandother relatedenrichmentprograms.
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 560
5. INVESTMENTS IN SUBSIDIARIES (CONT’D)
Name of Company Country of Effective Equity Incorporation Interest Principal Activities 2014 2013 % % Direct Subsidiaries (Cont’d):-
Held by Eduspec Sdn. Bhd.(Cont’d):-
DynabookComputerCentre Malaysia 100 100 Providingcomputertrainingandtradingin(N.S.)Sdn.Bhd.(“DCCNS”) computerperipherals. EduspecPropertiesSdn.Bhd. Malaysia 100 100 Dormant.(formerlyknownasTimeITInE(N.S.)Sdn.Bhd.)(“EPSB”) DynabookComputerCentre Malaysia 100 100 Providingcomputertrainingandtradingin(Sabah)Sdn.Bhd.(“DCCSB”) computerperipherals. TimeITInE(Sabah)Sdn. Malaysia 100 100 DistributionofinformationtechnologyBhd.(“TITIESB”) relatedproducts. Held by Eduspec Pte Ltd:- PTEduspecIndonesia(“PTEI”)*^ Indonesia 40 - ProvidingITlearningaswellasroboticclass and products in Indonesia.
* NotauditedbyMessrs.CroweHorwath. ^ AlthoughtheCompanyownslessthanhalfofthevotingpowerinPTEI,theCompanycontrolsthissubsidiarybyvirtueof
anagreementwiththeotherinvestorsofPTEI.Consequently,theCompanyconsolidatesitsinvestmentinthissubsidiary.
(a) Thenon-controllinginterestsattheendofthereportingperiodcomprisethefollowing:-
Effective Equity Interest The Group 2014 2013 2014 2013 % % RM RM PTEI 60 - (1,395,799) - Otherindividuallyimmaterialsubsidiaries 194,862 173,520 (1,200,937) 173,520
(b) The summarised financial information (before intra-group elimination) for each subsidiary that has non-controllingintereststhatarematerialtotheGroupisasfollows:-
PTEI 2014 2013 RM RM At 30 September Non-currentassets 236,595 41,579 Currentassets 3,337,634 911,101 Currentliabilities (5,900,561) (3,558,418) Netliabilities (2,326,332) (2,605,738)
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 61
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
5. INVESTMENTS IN SUBSIDIARIES (CONT’D)
(b) The summarised financial information (before intra-group elimination) for each subsidiary that has non-controllingintereststhatarematerialtotheGroupisasfollows(Cont’d):-
PTEI 2014 2013 RM RM
Financial year ended 30 September Revenue 1,262,546 621,058 Lossforthefinancialyear (433,096) (1,923,536) Totalcomprehensiveexpenses (433,096) (1,923,536) Totalcomprehensiveexpensesattributable tonon-controllinginterests (259,858) (1,154,122) Netcashflowsfrom/(for)operatingactivities 1,735,639 (2,666,939) Netcashflowsforinvestingactivities (290,029) (19,605) Netcashflows(for)/fromfinancingactivities (1,341,345) 2,334,107
(c) Thesummarisedfinancialinformation(beforeintra-groupelimination)oftheothersubsidiariesthathavenon-controllinginterestsarenotpresentedasthenon-controllinginterestsarenotmaterialtotheGroup.
6. INVESTMENTS IN ASSOCIATES
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM UnquotedsharesinMalaysia,atcost At1October 187,760 187,760 45 45 Additionduringthefinancialyear 150,000 - 150,000 - Reclassifiedtoinvestmentinajointventure(Note7) (45) - (45) - 337,715 187,760 150,000 45 Shareofpost-acquisitionprofits At1October 163,683 54,405 - - -forthefinancialyear (29,060) 109,278 - - Reclassifiedtoinvestmentinajointventure(Note7) 2,571 - - - 137,194 163,683 - - Translationreserve At1October - (17,599) - - -forthefinancialyear (29,720) 17,599 - - (29,720) - - - At30September 445,189 351,443 150,000 45
(a) Thedetailsoftheassociatesareasfollows:
Name of Company Country of Effective Equity Incorporation Interest Principal Activities 2014 2013 % % EDMEducational Malaysia ^ 45 Providingresearchanddevelopmentof Technology(M)Sdn.Bhd. educationalsoftwareandtechnicalbooks. (“EDM”)
FirstEduspecInc.(“FEI”)*# Philippines 40 40 Providinginformationoutsourcingand consultingservicestoschoolsand educationalinstitutionsinthePhilippines.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 562
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
6. INVESTMENTS IN ASSOCIATES (CONT’D)
(a) Thedetailsoftheassociatesareasfollows (Cont’d):-
Name of Company Country of Effective Equity Incorporation Interest Principal Activities 2014 2013 % % CloudDirectSdn.Bhd. Malaysia 30 - Providingservicesfordevelopment, (“CDSB”) deploymentandsupportmobileandserver softwareapplications.
* NotauditedbyMessrs.CroweHorwath.
^ Duringthefinancialyear,theGroupincreaseditsequityinterestinEDMfrom45%to50%bywayofanacquisitionofMTMasdisclosedinNotes5and33tothefinancialstatementsrespectively.TheequityinterestheldbyMTMinEDMis5%asdisclosedinNote7tothefinancialstatements.AsthedecisionoftheactivitiesinEDMrequiresunanimousconsentbytheCompanyandtheother investor,consequently,EDMbecameajointventureof theGroup.
# Theshareofresultsinthisassociateisbasedontheunauditedfinancialstatementsoftheassociate.
(b) Thedetailsoftheassociatesareasfollows:
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM
Assets and liabilities Totalassets 1,228,028 2,371,973 63,272 1,490,941 Totalliabilities 483,547 1,936,790 144,785 846,329
Results Revenue 1,549,735 1,545,098 - 513,781 Lossaftertaxation (95,675) (35,413) (117,361) (311,067)
(c) In the previous financial years, theGroup had not recognised losses relating to EDM Educational Technology (M)Sdn.Bhd.,whereitsshareoflossesexceededtheGroup’sinterestinthisassociate.TheGroup’scumulativeshareofunrecognisedlossesattheendofthepreviousreportingperiodwasRM175,406,ofwhichRM45wastheshareofthepreviousfinancialyear’slosses.TheGrouphadnoobligationinrespectoftheselosses.
(d) ThesummarisedunauditedfinancialinformationfortheassociatethatismaterialtotheGroupisasfollows:-
FEI 2014 2013 RM RM
At 30 September Non-currentassets 632,490 371,699 Currentassets 532,266 509,333 Currentliabilities (338,762) (56,059) Netassets 825,994 824,973
12-monthperiodended30September Revenue 1,549,735 1,031,317 Profitforthefinancialyear 21,686 275,654 Totalcomprehensiveincome 21,686 275,654 Group’sshareofprofitforthefinancialyear 8,674 109,278 Group’sshareofothercomprehensiveexpenses - - Group’sshareoftotalcomprehensiveexpenses 8,674 109,278
CarryingamountoftheGroup’sinterestsinthisassociate 330,397 351,443
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 63
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
6. INVESTMENTS IN ASSOCIATES (CONT’D)
(a) ThesummarisedfinancialinformationforallassociatesthatareindividuallyimmaterialtotheGroupareasfollows:-
Other Individually Immaterial Associates 2014 2013 RM RM
Financial year ended 30 September Group’sshareoflossforthefinancialyear (35,208) - Group’sshareofothercomprehensiveincome - - Group’sshareoftotalcomprehensiveexpenses (35,208) - Reconciliationofnetassetstocarryingamount Group’sshareofnetliabilitiesabove (24,454) - Goodwill 139,246 - AggregatecarryingamountoftheGroup’sinterestsintheseassociates 114,792 -
7. INVESTMENTS IN A JOINT VENTURE
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM
Unquotedshares,atcost: At1October - - - - -acquisitionofasubsidiary 5 - - - -reclassifiedfrominvestmentsinassociates(Note6) 45 - 45 - 50 - 45 - Shareofpost-acquisitionprofits: At1October - - - - -reclassifiedfrominvestmentsinassociates(Note6) (2,571) - - - -forthefinancialyear 127,036 - - - 124,465 - - -
At30September 124,515 - 45 -
(a) Thedetailsofthejointventureisasfollows:-
Name of Company Country of Effective Equity Incorporation Interest Principal Activities 2014 2013 % %
EDMEducational Malaysia Providingresearchanddevelopmentof Technology(M)Sdn.Bhd. educationalsoftwareandtechnicalbooks. -heldthroughtheCompany 45 - -heldthroughMTM 5 -
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 564
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
7. INVESTMENTS IN A JOINT VENTURE (CONT’D)
(b) ThesummarisedfinancialinformationforthejointventurethatismaterialtotheGroupisasfollows:-
EDM 2014 2013 RM RM
At 30 September Non-currentassets 1,795,001 1,404,775 Currentassets 535,133 105,975 Currentliabilities (1,982,676) (1,608,597) Non-currentliabilities (99,000) - Netassets/(liabilities) 248,458 (97,847)
12-monthperiodended30September Revenue 860,750 513,781 Profit/(Loss)forthefinancialyear 346,305 (18,724) Totalcomprehensiveincome/(expenses) 346,305 (18,724)
Group’sshareofincomeforthefinancialyear 127,036 - Group’sshareofothercomprehensiveincome 127,036 -
CarryingamountoftheGroup’sinterestsinthisjointventure 124,515 -
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 65
8.
EQU
IPM
ENT
A
CQ
UIS
ITIO
N
CU
RREN
CY
A
T
OF
WRI
TTEN
TR
AN
SLA
TIO
N D
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CIA
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N
AT
1.
10.2
013
AD
DIT
ION
S SU
BSID
IARI
ES
DIS
POSA
LS
OFF
D
IFFE
REN
CES
C
HA
RGE
30.9
.201
4
RM
RM
RM
RM
RM
RM
RM
RMTH
E G
ROU
P
NET
BO
OK
VA
LUE
Motorvehicles
84,217
118,820
56,758
(5,379)
--
(37,467)
216,949
Officeandlabequipment,
furnitureandfittings
1,307,449
273,313
67,396
-(5)
-(312,222)
1,335,931
Computers,software
andperipherals
1,609,771
2,082,204
155,361
--
(4,525)
(1,049,009)
2,793,802
Educationaltools
775,005
404,155
47,817
(10,785)
--
(338,186)
878,006
Renovation
283,285
101,523
77,164
-(28,435)
-(93,557)
339,980
Electricalinstallation
156,472
40,470
--
--
(35,410)
161,532
4,216,199
3,020,485
404,496
(16,164)
(28,440)
(4,525)
(1,865,851)
5,726,200
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 566
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
8.
EQU
IPM
ENT
(CO
NT’
D)
REC
LASS
IFIE
D
CU
RREN
CY
FRO
M
A
T
W
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IN
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LE
DEP
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T
1.10
.201
2 A
DD
ITIO
NS
DIS
POSA
LS
OFF
D
IFFE
REN
CES
A
SSET
S C
HA
RGE
30.9
.201
3
RM
RM
RM
RM
RM
RM
RM
RMTH
E G
ROU
P
NET
BO
OK
VA
LUE
Motorvehicles
130,934
800
--
--
(47,517)
84,217
Officeandlabequipment,
furnitureandfittings
1,377,705
241,455
-(67)
--
(311,644)
1,307,449
Computers,softwareandperipherals1,337,489
765,386
-(46)
20,362
346,021
(859,441)
1,609,771
Educationaltools
687,504
362,456
(1,987)
--
-(272,968)
775,005
Renovation
318,412
41,878
--
--
(77,005)
283,285
Electricalinstallation
144,890
42,337
-(3)
--
(30,752)
156,472
3,996,934
1,454,312
(1,987)
(116)
20,362
346,021
(1,599,327)
4,216,199
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 67
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
8. EQUIPMENT (CONT’D)
ACCUMULATED AT IMPAIRMENT ACCUMULATED NET BOOK COST LOSS DEPRECIATION VALUE RM RM RM RMTHE GROUP
AT 30.9.2014 Motorvehicles 671,027 - (454,078) 216,949 Officeandlabequipment,furnitureandfittings 5,545,675 - (4,209,744) 1,335,931 Computers,softwareandperipherals 15,908,994 - (13,115,192) 2,793,802 Educationaltools 2,352,758 - (1,474,752) 878,006 Renovation 1,628,772 (100,340) (1,188,452) 339,980 Electricalinstallation 501,261 - (339,729) 161,532 26,608,487 (100,340) (20,781,947) 5,726,200 AT 30.9.2013 Motorvehicles 571,183 - (486,966) 84,217 Officeandlabequipment,furnitureandfittings 5,198,966 - (3,891,517) 1,307,449 Computers,softwareandperipherals 13,583,112 - (11,973,341) 1,609,771 Educationaltools 1,938,217 - (1,163,212) 775,005 Renovation 1,417,978 (100,340) (1,034,353) 283,285 Electricalinstallation 460,791 - (304,319) 156,472
23,170,247 (100,340) (18,853,708) 4,216,199
AT DEPRECIATION AT 1.10.2013 ADDITION CHARGE 30.9.2014 RM RM RM RM
THE COMPANY NET BOOK VALUE Computers,softwareandperipherals 19,821 39,309 (16,997) 42,133Officeandlabequipment,furnitureandfittings 7,250 6,587 (4,899) 8,938Renovation 1 - - 1
27,072 45,896 (21,896) 51,072
AT DEPRECIATION AT 1.10.2012 ADDITION CHARGE 30.9.2013 RM RM RM RM NET BOOK VALUE Computers,softwareandperipherals 20,642 13,620 (14,441) 19,821Officeandlabequipment,furnitureandfittings 3,068 8,265 (4,083) 7,250Renovation 1 - - 1
23,711 21,885 (18,524) 27,072
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 568
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
8. EQUIPMENT (CONT’D)
ACCUMULATED AT IMPAIRMENT ACCUMULATED NET BOOK COST LOSS DEPRECIATION VALUE RM RM RM RM
THE COMPANY AT 30.9.2014 Computers,softwareandperipherals 119,654 - (77,521) 42,133 Officeandlabequipment,furnitureandfittings 145,465 - (136,527) 8,938 Renovation 134,578 (100,340) (34,237) 1
399,697 (100,340) (248,285) 51,072
AT 30.9.2013
Computers,softwareandperipherals 80,345 - (60,524) 19,821 Officeandlabequipment,furnitureandfittings 138,878 - (131,628) 7,250 Renovation 134,578 (100,340) (34,237) 1 353,801 (100,340) (226,389) 27,072
IncludedinthenetbookvalueoftheequipmentoftheGroupattheendofthereportingperiodaremotorvehiclesacquiredunderhirepurchasetermsamountingtoRM155,704(2013-RM70,446).
9. INTANGIBLE ASSETS
INTELLECTUAL PROPERTIES TOTAL RM THE GROUP COST AT1.10.2012 10,808,331 Additionduringthefinancialyear 2,768,193 ReclassifiedtoEquipment (346,021) AT30.9.2013/1.10.2013 13,230,503 Additionduringthefinancialyear 2,062,890 Currencytranslationdifferences 327,736 AT30.9.2014 15,621,129
ACCUMULATED AMORTISATION AT1.10.2012 (5,889,842) Amortisationforthefinancialyear (1,199,840) AT30.9.2013/1.10.2013 (7,089,682) Amortisationforthefinancialyear (1,536,325) Currencytranslationdifferences (329,985)
AT30.9.2014 (8,955,992) NETCARRYINGAMOUNT AT30.9.2014 6,665,137
AT30.9.2013 6,140,821
Intellectualpropertiesareinrespectofthedevelopmentofcontentforaneducationalsoftware.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 69
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
10. GOODWILL ON CONSOLIDATION
THE GROUP 2014 2013 RM RM At1October 292,853 292,853 Acquisitionofnewsubsidiaries 6,068,671 -
At30September 6,361,524 292,853
(a) Thecarryingamountsofgoodwillallocatedtoeachcash-generatingunitareasfollows:-
THE GROUP 2014 2013 RM RM
EPL 292,853 292,853 MTM 4,055,989 - PTEI 2,012,682 - 6,361,524 292,853
(b) TheGroupassessedtherecoverableamountsofgoodwillallocatedanddeterminedthatnoadditionalimpairmentisrequired.Therecoverableamountsofthecash-generatingunits(“CGU”)aredeterminedusingthevalue-in-useapproach,andthisisderivedfromthepresentvalueofthefuturecashflowsfromtheoperatingsegmentscomputedbasedontheprojectionsoffinancialbudgetsapprovedbymanagementcoveringaperiodof5years.Thekeyassumptionsusedinthedeterminationoftherecoverableamountsareasfollows:-
AverageBudgetedAverageGrowth Discount GrossMargin Rate Rate 2015-2019 2015-2019 2015-2019 EPL 19% 6% 8.67%
MTM 15% 3-10% 8.67% PTEI 22% 16% 8.67% FEI* 41% 21% 8.67%
*ThisrepresentstheCGUofPhilippinesunitshareofprofitinEPL’sCGUs.
Thekeyassumptionsrepresentmanagement’sassessmentof futuretrendsintheregionalEducationindustryandarebasedonbothexternalsourcesandinternalsources.
Management has determined the average budgeted profitmargin andweighted average growth rate based on pastperformanceanditsexpectationofmarketdevelopment.ThediscountratesusedarecomputedbasedontheweightedaveragecostofcapitaloftheindustrythattheGroupoperatesin.
SensitivitytoChangesinAssumptions
Themanagementbelievesthatnoreasonablypossiblechangesinanyoftheabovekeyassumptionswouldcausethecarryingvalueofthegoodwilltobemateriallyhigherthanitsrecoverableamount.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 570
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
11. INVENTORIES
THE GROUP 2014 2013 RM RM At cost:- Finishedgoods 1,050,467 1,007,335
Noneoftheinventoriesiscarriedatnetrealisablevalue.
Recognisedinprofitorloss Inventoriesrecognisedascostofsales 6,468,711 5,310,529
12. TRADE RECEIVABLES
THE GROUP 2014 2013 RM RM
Tradereceivables 30,732,740 9,388,297 Allowanceforimpairmentlosses (351,606) (351,606)
30,381,134 9,036,691
Allowanceforimpairmentlosses:- At1October (351,606) (360,101) Writebackduringthefinancialyear - 8,495
At30September (351,606) (351,606)
TheGroup’snormalcredittermsrangefrom30to60(2013-30to60)days.Othercredittermsareassessedandapprovedon a case-by-case basis.
13. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM
Otherreceivables 4,237,540 3,029,694 1,363,033 5,000 Allowanceforimpairmentlosses (865,416) (26,743) - - 3,372,124 3,002,951 1,363,033 5,000 Deposits 4,061,968 228,356 3,213,343 25,295 Prepayments 1,536,403 900,883 29,696 23,234 Recoverableexpenses 45,608 84,118 - - 9,016,103 4,216,308 4,606,072 53,529
Allowanceforimpairmentlosses:- At1October (26,743) (50,669) - - Additionduringthefinancialyear (865,425) (26,743) - - Writebackduringthefinancialyear 26,743 50,669 - - Translation difference 9 - - -
At30September (865,416) (26,743) - -
(a) OtherreceivablesrepresentadvancesofRM2,335,384(2013-RM2,390,310)forthepurposesofcapitalinjectionforfuturejointarrangements.
(b) DepositspaidtoasupplieramountingtoRM3,175,116(2013-RMNil)asperformancesecurityasdisclosedinNote41(d).
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 71
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
14. AMOUNTS OWING BY/(TO) SUBSIDIARIES
THE COMPANY 2014 2013 RM RM
Amountowingby:- Non-tradebalances 26,146,864 10,631,572 Allowanceforimpairmentlosses (8,693,454) (8,497,554)
17,453,410 2,134,018
Amountowingto:- Non-tradebalances (8,230,779) (10,686,083) Allowanceforimpairmentlosses:- At1October (8,497,554) (7,989,855) Additionduringthefinancialyear (195,900) (836,808) Writebackduringthefinancialyear - 329,109 At30September (8,693,454) (8,497,554)
Theamountsowingarenon-tradeinnature,unsecured,interest-freeandrepayableondemand.Theamountsowingaretobesettledincash.
15. AMOUNTS OWING BY/(TO) ASSOCIATES
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM
Amountowingby: Non-tradebalances 138,845 809,975 - 801,000
Amountowingto: Tradebalances - (37,749) - -
Thetradebalancesinthepreviousfinancialyearwassubjectedtothenormaltradecredittermsrangingfrom30to60days.Theamountowingwassettledincash.
Thenon-tradeamountowingisunsecured,interest-freeandrepayableondemand.Theamountowingistobesettledincash.
16. AMOUNTS OWING BY/(TO) A JOINT VENTURE
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM
Amountowingby: Non-tradebalances 1,282,045 - 1,147,455 -
Amountowingto: Tradebalances (487,992) - - -
Thetradebalancesaresubjectedtothenormaltradecredittermsrangingfrom30to60(2013-nil)days.Theamountowingistobesettledincash.
Thenon-tradeamountowingisunsecured,interest-freeandrepayableondemand.Theamountowingistobesettledincash.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 572
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
17. FIXED DEPOSITS WITH LICENSED BANKS
(a) ThefixeddepositswithlicensedbanksoftheGroupandoftheCompanyattheendofthereportingperiodboreeffectiveinterest rates ranging from0.09% to3.50% (2013 -0.09% to3.50%)perannum.Thefixeddepositshavematurityperiodsrangingfrom1to12months(2013-1to12months).
(b) IncludedinthefixeddepositswithlicensedbanksoftheGroupandoftheCompanyattheendofthereportingperiod
isanamountofRM8,950,098(2013-RM1,787,367)andRM7,025,532(2013-nil)whichhasbeenpledgedassecurityforbankingfacilitiesgrantedtotheGrouprespectively.
18. SHARE CAPITAL
Themovementsintheauthorisedandpaid-upsharecapitaloftheCompanyareasfollows:
THE COMPANY ORDINARY SHARES 2014 2013 2014 2013 OF RM0.10 EACH: Number Of Shares RM RM AUTHORISED At1October 2,000,000,000 500,000,000 200,000,000 50,000,000 Createdduringtheyear - 1,500,000,000 - 150,000,000
At30September 2,000,000,000 2,000,000,000 200,000,000 200,000,000
ISSUEDANDFULLY PAID-UP At1October 383,333,333 383,333,333 38,333,333 38,333,333 Issuanceofshares pursuant to: -privateplacement 100,000,000 - 10,000,000 - -acquisitionofasubsidiary 27,000,000 - 2,700,000 - -rightsissueofshareswithwarrants 255,166,667 - 25,516,666 -
At30September 765,500,000 383,333,333 76,549,999 38,333,333
(a) Duringthefinancialyear,
(i) therewerenochangesintheauthorisedsharecapitaloftheCompany;
(ii) theCompanyincreaseditsissuedandpaid-upsharecapitalfromRM38,333,333toRM76,549,999bywayof:-
(i) aprivateplacementof100,000,000newordinarysharesofRM0.10eachatanissuepriceofRM0.115forthepurposeofworkingcapital;
(ii) the issuanceof27,000,000newordinarysharesofRM0.10eachat fairvalueofRM0.16,giving rise toapremiumofRM0.06eachforthepurposeofacquisitionofasubsidiaryasdisclosedinNote33tothefinancialstatements;and
(iii) the issuanceofa renounceable rights issueof255,166,667newordinary sharesofRM0.10each (“RightsShares”)togetherwith382,750,000newfreedetachablewarrants(“Warrants”)atanissuepriceofRM0.10perRightsShareonthebasisofone(1)RightsSharetogetherwithonepointfive(1.5)freeWarrantsforeverytwo(2)existingordinarysharesofRM0.10each(“RightsIssue”).
ThenewordinarysharesissuedrankparipassuinallrespectswiththeexistingsharesoftheCompany.
(b) TheholdersofordinarysharesareentitledtoreceivedividendsaswhendeclaredbytheCompany,andareentitled to onevotepershareatmeetingsoftheCompany.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 73
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
19. RESERVES
THE GROUP THE COMPANY 2014 2013 2014 2013 Note RM RM RM RM
Sharepremium (a) 6,002,056 2,882,056 15,268,237 12,148,237 Reverseacquisitionreserve (b) (18,570,000) (18,570,000) - - Capitalredemptionreserve (c) 546,778 546,778 - - Warrantreserve (d) 10,110,377 - 10,110,377 - Foreignexchangetranslationreserve (e) (452,820) (437,995) - - Accumulatedlosses (10,766,351) (7,015,620) (45,151,919) (37,403,720) (13,129,960) (22,594,781) (19,773,305) (25,255,483)
(a) SharePremium
ThesharepremiumisnotdistributablebywayofcashdividendsandmaybeutilisedinthemannersetoutinSection60(3)oftheCompaniesAct,1965.
ThemovementsinthesharepremiumoftheGroupandoftheCompanyareasfollows:
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM
At1October 2,882,056 2,882,056 12,148,237 12,148,237 Issuanceofordinarysharespursuantto: -privateplacement 1,500,000 - 1,500,000 - -acquisitionofasubsidiary 1,620,000 - 1,620,000 -
At30September 6,002,056 2,882,056 15,268,237 12,148,237
(b) ReverseAcquisitionReserve
The reverse acquisition reserve represents thedifferencebetween thenominal valueof Eduspec Sdn.Bhd. and theCompanyandtheparvalueoftheenlargedissuedandpaidupsharecapitaloftheCompanyof275,000,000sharesaftertheacquisitiontocomplywiththeMalaysianCompaniesAct1965.
(c) CapitalRedemptionReserve
Thecapitalredemptionreserverepresentstheredemptionoftheredeemablepreferenceshares.
(d) WarrantReserve
THE GROUP/THE COMPANY 2014 2013 RM RM
At1October - - Createdduringthefinancialyear 10,110,377 -
At30September 10,110,377 -
Thewarrantreservearosefromtheallocationoftheproceedsreceivedfromtherenounceablerightsissueof255,166,667newordinarysharesofRM0.10eachtogetherwith382,750,000freenewdetachablewarrantsduringthefinancialyear.ThereserveisdeterminedbyreferencetothefairvalueofthewarrantsamountingtoRM10,110,377immediatelyuponthelistingandquotationoftherightsissuecompletedon30December2013.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 574
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
19. RESERVES (CONT’D)
(e) ForeignExchangeTranslationReserve
The foreign exchange translation reserve represents exchange differences arising from the translation of the foreignsubsidiarieswhosefunctionalcurrenciesaredifferentfromthatoftheGroup’spresentationcurrency.
20. LONG-TERM BORROWINGS
THE GROUP 2014 2013 RM RM
Hirepurchasepayables(Note21) 101,563 40,913 Termloans(Note22) 257,639 336,843 359,202 377,756
21. HIRE PURCHASE PAYABLES
THE GROUP 2014 2013 RM RM Minimumhirepurchasepayments: -notlaterthanoneyear 43,213 20,139 -laterthanoneyearandnotlaterthanfiveyears 110,962 44,117
154,175 64,256 Less:Futurefinancecharges (16,102) (5,409)
Presentvalueofhirepurchasepayables 138,073 58,847
Thenethirepurchasepayablesarerepayableasfollows:- Current (Note 26): -notlaterthanoneyear 36,510 17,934 Non-current (Note 20): -laterthanoneyearandnotlaterthanfiveyears 101,563 40,913
138,073 58,847
ThehirepurchasepayablesoftheGroupboreaneffectiveinterestrateof5.00%(2013-5.28%to6.54%)perannumattheendofthereportingperiod.
22. TERM LOANS
THE GROUP 2014 2013 RM RM Current portion (Note 26): -notlaterthanoneyear 1,624,434 1,039,766 Non-current portion (Note 20): -laterthanoneyearandnotlaterthantwoyears 92,397 85,016 -laterthantwoyearsandnotlaterthanfiveyears 165,242 196,480 -laterthanfiveyears - 55,347 257,639 336,843 1,882,073 1,376,609
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 75
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
22. TERM LOANS (CONT’D)
Detailsoftherepaymenttermsareasfollows:
TERM NUMBER OF DATE OF INTEREST LOAN MONTHLY MONTHLY COMMENCEMENT RATE PER INSTALMENTS INSTALMENT OF REPAYMENT ANNUM THE GROUP RM 2014 2013 RM RM
1 60 9,473 1April2013 9.60% 341,403 418,081
QUARTERLY TERM NUMBER OF INSTALMENT DATE OF INTEREST LOAN MONTHLY (BY COMMENCEMENT RATE PER INSTALMENTS TRANCHES) OF REPAYMENT ANNUM THE GROUP RM 2014 2013 RM RM
2 7 Tranche1* 9January2013 7.00% - 302,766 7 Tranche2* 5February2013 7.00% - 302,809 7 Tranche3* 7March2013 7.00% - 294,027 7 Tranche4^ 8April2013 7.00% 160,158 58,926 7 Tranche5* 21April2013 7.00% 68,516 - 7 Tranche6^ 21April2013 7.00% 126,230 - 7 Tranche7* 21April2013 7.00% 142,669 - 7 Tranche8* 21April2013 7.00% 142,460 - 7 Tranche9* 21April2013 7.00% 163,820 - 7 Tranche10^ 10January2014 7.00% 437,707 - 7 Tranche11* 11March2014 7.00% 299,110 -
1,540,670 958,528
1,882,073 1,376,609
Notes:- *approximatelyfromRM60,000toRM80,000. ^approximatelyfromRM100,000toRM175,000.
Thetermloansboreeffectiveinterestratesrangingfrom7.00%to9.60%(2013-7.00%to9.60%)perannumattheendofthereportingperiodandaresecuredby:
(i) anassignmentofproceedsfromthecontractssignedbetweenasubsidiaryanditscustomers;
(ii) alegalassignmentandchargeoverthecollectionaccountandsinkingfundsaccountrespectively;
(iii) adebentureoverthesubsidiary’spresentandfuturefixedandfloatingassets;
(iv) pledgesoffixeddepositsoftheGroupasdisclosedinNote17tothefinancialstatements;
(v) acorporateguaranteeoftheCompany;and
(vi) ajointandseveralguaranteeofcertaindirectorsoftheGroup.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 576
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
23. DEFERRED TAX LIABILITIES
THE GROUP 2014 2013 RM RM
At1October 519,664 610,340 Recognisedinprofitorloss(Note30) 100,003 (90,676) Acquisitionofsubsidiaries(Note33) 21,320 -
At30September 640,987 519,664
Thecomponentsofdeferredtaxassetsanddeferredtaxliabilityareasfollows:-
THE GROUP 2014 2013 RM RM
Deferredtaxliability:- Acceleratedcapitalallowances 1,544,031 525,493 Deferredtaxassets:- Unabsorbedcapitalallowances (278,094) (622) Unutilisedtaxlosses (594,602) (5,207) Others (30,348) -
640,987 519,664
24. TRADE PAYABLES
ThenormalcredittermsgrantedtotheGrouprangefrom 30 to 60 (2013 - 30 to 60) days.
25. OTHER PAYABLES AND ACCRUALS
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM
Otherpayables 1,186,973 2,604,062 57,813 421,636 Accruals 1,828,090 2,315,257 102,318 343,964 Depositsreceived 700 - - - Deferredrevenue 304,418 253,377 - -
3,320,181 5,172,696 160,131 765,600
26. SHORT-TERM BORROWINGS
THE GROUP 2014 2013 RM RM
Hirepurchasepayables(Note21) 36,510 17,934 Termloans(Note22) 1,624,434 1,039,766
1,660,944 1,057,700
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 77
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
27. BANK OVERDRAFTS
ThebankoverdraftsoftheGroupboreeffectiveinterestratesrangingfrom8.35%to8.60%(2013-7.60%to8.60%)perannumattheendofthereportingperiod and are secured by:-
(i) apledgeofthefixeddepositsofcertain subsidiariesasdisclosedinNote17tothefinancialstatements;
(ii) ajointandseveralguaranteeofcertaindirectorsoftheGroup;and
(iii) acorporateguaranteeofasubsidiary.
28. REVENUE
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM
Activityincome 4,001,263 3,461,937 - - Saleofgoods 32,960,360 11,317,024 - - Schoolfees 21,798,840 19,513,858 - -
58,760,463 34,292,819 - -
29. PROFIT/(LOSS) BEFORE TAXATION
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM Profit/(Loss)beforetaxationisarrivedat aftercharging/(crediting):- Amortisationofintangibleassets 1,536,325 1,199,840 - - Auditfee 235,905 219,229 81,500 81,500 Depreciationofequipment 1,865,851 1,599,327 21,896 18,524 Directors’fees 134,500 210,000 88,500 72,000 Directors’ non-fee emoluments: -salaries,bonusandallowances 903,411 510,486 538,409 287,177 -definedcontributionplan 49,716 34,560 64,680 34,560 -otherbenefits 1,240 1,240 1,240 1,240 Equipmentwrittenoff 28,440 116 - - Impairment losses on: -otherreceivables 865,425 26,743 - - -amountowingbysubsidiaries - - 195,900 836,808 -investmentsinsubsidiaries - - - 117,639 Interestexpense: -bankoverdrafts 122,270 138,445 4,360 1,088 -hirepurchase 3,480 4,429 - - -termloans 141,325 101,860 - - Inventorieswrittenoff 3,306 1,368 - - Loss/(Gain)onforeignexchange: -realised (266,010) 1,964 (147,619) (2,091) -unrealised 586,210 (345,115) - - Rentalexpense 3,834,411 2,594,523 114,661 106,589 Staff costs: -salaries,wages,bonusandallowances 12,295,365 9,381,724 2,011,966 1,252,506 -definedcontributionplan 1,501,257 1,134,989 257,885 156,455 -otherbenefits 1,336,960 889,053 194,703 46,013 Gainondisposalofequipment (16,550) (1,443) - - Interestincome (439,494) (53,171) (381,026) - Rentalincome (8,460) (16,372) (144,000) - Shareofresultsin: -associates 29,060 (109,278) - - -jointventure (127,036) - - -
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 578
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
29. PROFIT/(LOSS) BEFORE TAXATION (CONT’D)
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM Profit/(Loss)beforetaxationisarrivedatafter charging/(crediting):- Writebackofimpairmentlosseson: -tradereceivables - (8,495) - - -otherreceivables (26,743) (50,669) - - -amountowingbysubsidiaries - - - (329,109)
30. INCOME TAX EXPENSE
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM Currenttaxexpense: -forthefinancialyear 294,767 163,845 - - -under/(over)provisioninthepreviousfinancialyear 8,905 (7,230) 17,127 - 303,672 156,615 17,127 - Deferredtaxexpense(Note23): -forthefinancialyear (929,795) (49,100) - - -under/(over)provisioninthepreviousfinancialyear 1,029,798 (41,576) - -
100,003 (90,676) - - Taxforthefinancialyear 403,675 65,939 17,127 -
Duringthefinancialyear,thestatutorytaxrateremainedat25%.
A subsidiaryof theCompany in thepreviousfinancial yearhadbeengranted theMSCMalaysia Status,whichqualifiedthesubsidiary for thePioneerStatus incentiveunder thePromotionof InvestmentsAct1986.Thesubsidiaryenjoyedfullexemptionfromincometaxonitsstatutoryincomefrompioneeractivitiesforfiveyearsfrom29July2009to28July2014.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 79
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
30. INCOME TAX EXPENSE (CONT’D)
Areconciliationofincometaxexpenseapplicabletotheprofit/(loss)beforetaxationatthestatutorytaxratetoincometaxexpenseattheeffectivetaxrateoftheGroupandoftheCompanyareasfollows:-
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM Profit/(Loss)beforetaxation 7,936,533 1,057,847 2,379,305 (1,648,926)
Taxatthestatutorytaxrateof25%(2013-25%) 1,984,133 264,462 594,826 (412,232)
Taxeffectsof:- Shareofresultsin: -associates 7,265 (27,320) - - -jointventure (31,759) - - - Non-deductibleexpenses 371,058 595,760 189,894 259,068 Non-taxableincome (36,905) (80,139) (36,905) (82,800) Utilisationofunabsorbedtaxlossesandcapital allowancesbroughtforward (2,848,990) (204,488) (747,815) - Incometaxexemptedfromtaxduetopioneerstatus - (665,872) - - Deferredtaxassetsnotrecognisedduringthe financialyear 422,180 478,761 - 235,964 Under/(over)provisioninthepreviousfinancialyear -currenttax 8,905 (7,230) 17,127 - -deferredtax 1,029,798 (41,576) - - Differentialintaxrates (502,010) (246,419) - -
Taxforthefinancialyear 403,675 65,939 17,127 -
Thestatutorytaxratewillbereducedto24%fromthecurrentfinancialyear’srateof25%,effectiveyearofassessment2016.
Subjecttotheagreementofthetaxauthorities,attheendofthereportingperiod,theGroupandtheCompanyhaveunutilisedtaxlossesandunabsorbedcapitalallowancesavailabletobecarriedforwardforoffsetagainstfuturetaxablebusinessincomeasfollows:-
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM Acceleratedcapitalallowances (858,222) (215,393) (42,847) (21,077) Unutilisedtaxlosses 23,557,318 32,448,844 7,622,475 10,489,718 Unabsorbedcapitalallowances 504,836 133,487 - 102,248 Others 43,000 49,839 - - Total 23,246,932 32,416,777 7,579,628 10,570,889 Nodeferredtaxassetsarerecognisedontheseitems.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 580
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
31. EARNINGS PER SHARE THE GROUP 2014 2013 Basic earnings per share ProfitattributabletoownersoftheCompany(RM) 6,359,646 998,403
Weightedaveragenumberofordinaryshares:- At1October 455,208,333 383,333,333 Effectofsharesissuedunderprivateplacement 88,818,493 - Effectofsharesissuedforacquisitionofasubsidiary 26,704,110 - EffectsofsharesissuedunderRightsIssue 190,850,685 71,875,000*
At30September 761,581,621 455,208,333
Basicearningspershare(sen) 0.83 0.22
Diluted earnings per share ProfitattributabletoownersoftheCompany(RM) 6,359,646 998,403 Weightedaveragenumberofordinarysharesforbasicearningspershare 761,581,621 455,208,333 Effectofdilution: -exerciseofWarrants 62,233,919 -
Weightedaveragenumberofordinarysharesfordilutedearnings persharecomputation 823,815,540 455,208,333 Dilutedearningspershare(sen) 0.77 0.22 * Theweightedaveragenumberofordinarysharesforthepreviousfinancialyearisadjustedtoreflectthebonuselement
ofaRightsIssue.
32. PURCHASE OF EQUIPMENT
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM Costofequipmentpurchased 3,020,485 1,454,312 45,896 21,885 Amountfinancedthrough: -hirepurchase (97,790) - - - -termloans (134,698) (1,127,842) - -
Cashdisbursedforpurchaseofequipment 2,787,997 326,470 45,896 21,885
32. ACQUISITION OF SUBSIDIARIES AND JOINT VENTURE
(a) Duringthefinancialyear,theGroupacquired:
(i) 100%equityinterestinMultipleTechnologyMSCSdn.Bhd.(“MTM”)foratotalconsiderationofRM5,220,000satisfiedbywayofcashconsiderationofRM900,000andissuanceof27,000,000newordinarysharesofRM0.10eachatfairvalueofRM0.16each,givingrisetoapremiumofRM0.06eachatpar;
(ii) a40%equityinterestinPTEduspecIndonesia(“PTEI”)foratotalcashconsiderationofRM307,394;and
(iii) a60%equityinterestinEduspecACGPte.Ltd.(“ACG”)foratotalcashconsiderationofRM15,422.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 81
33. ACQUISITION OF SUBSIDIARIES AND JOINT VENTURE (CONT’D)
(a) The fairvaluesof the identifiableassetsand liabilitiesof theabovementionedsubsidiariesat thedateofacquisitionwere:-
At Date Of Acquisition Carrying Fair Value Amount Recognised RM RM Equipment(Note8) 404,496 404,496 Otherinvestment 5 5 Tradeandotherreceivables 1,903,553 1,903,553 Cashandbankbalances 173,042 173,042 Otherpayables (4,538,927) (4,538,927) Provisionfortaxation (35,807) (35,807) Deferredtaxliabilities(Note23) (21,320) (21,320) Termloan (958,548) (958,548) Non-controllinginterests 2,547,651 2,547,651
Group’sshareofnetidentifiableassetsandliabilities (525,855) (525,855) Add:Goodwillonacquisition 6,068,671
Totalpurchaseconsideration 5,542,816
Less:Issuanceofshares (4,320,000)
Add:Cashandbankbalancesofsubsidiariesacquired (173,042)
Netcashoutflowforacquisitionofsubsidiaries 1,049,774
Thenon-controllinginterestsaremeasuredatthenon-controllinginterests’proportionateshareofthefairvalueoftheacquiree’sidentifiablenetassetsatthedateofacquisition.
TheacquiredsubsidiarieshavecontributedthefollowingresultstotheGroup:-
The Group 2014 RM Revenue 3,948,779 Profitaftertaxation 2,396,118
(b) On12November2013,theGroupacquiredanadditional5%equityinterestinEDMEducationalTechnology(M)Sdn.Bhd.(“EDM”),heldthroughMTMforacashconsiderationofRM5,increasingitsownershipfrom45%to50%.ThedecisionoftheactivitiesofEDMrequiresunanimousconsentbytheGroupandtheotherinvestor,consequently,EDMbecameajointventureoftheGroup.
ThefollowingsummarisestheeffectofchangesinthenetassetsinEDMthatisattributabletoownersoftheGroup:-
The Group 2014 RM Equityinterestat12November2013 45 EffectofincreaseinEDM’sownershipinterest 5 Shareofcomprehensiveincome(Note7) 124,465
Equityinterestat30September2014 124,515
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 582
34. CASH AND CASH EQUIVALENTS
Forthepurposeofthestatementsofcashflows,cashandcashequivalentscomprisethefollowing:-
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM Fixeddepositswithlicensedbanks(Note17) 9,308,613 1,886,707 7,025,532 - Cashandbankbalances 10,055,899 939,603 7,148,592 6,002 Bankoverdrafts(Note27) (1,705,971) (2,822,192) - (997,296)
17,658,541 4,118 14,174,124 (991,294)
Less:Depositspledgedtolicensedbanks(Note17) (8,950,098) (1,787,367) (7,025,532) - 8,708,443 (1,783,249) 7,148,592 (991,294)
35. OPERATING LEASE COMMITMENTS
Thefutureminimumpaymentsunderthenon-cancellableoperatingleasesareasfollows:-
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM Notmorethanoneyear 2,076,488 1,650,005 52,984 14,490 Laterthanoneyearandnotlaterthanfiveyears 1,462,646 1,367,726 - - 3,539,134 3,017,731 52,984 14,490
36. CONTINGENT LIABILITIES
THE COMPANY 2014 2013 RM RM Undertakingofadvancesofasubsidiary 2,335,384 2,390,310 Corporateguaranteegiventolicensedbanksforbankingfacilitiesgrantedto subsidiaries 1,541,471 958,528 37. DIRECTORS’ REMUNERATION
(a) Theaggregateamountsof remunerationreceivedandreceivableby thedirectorsof theGroupandof theCompanyduringthefinancialyearareasfollows:-
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM Executivedirectors: -non-feeemoluments 954,367 546,286 604,329 322,977 -fees 46,000 138,000 - - Non-executivedirectors: -fees 88,500 72,000 88,500 72,000
1,088,867 756,286 692,829 394,977
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 83
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
37. DIRECTORS’ REMUNERATION (CONT’D)
(b) Thenumberofdirectorsof theGroupandof theCompanywhosetotal remunerationreceivedorreceivable for thefinancialyearfallinginbandsofRM50,000areasfollows:-
THE GROUP THE COMPANY 2014 2013 2014 2013 No. No. No. No. Executivedirectors:- BelowRM50,000 - - - - RM50,001toRM100,000 - - - - RM100,001toRM150,000 - - - 1 RM150,001toRM200,000 - 1 - 1 RM200,001toRM250,000 1 - 1 - RM250,001toRM300,000 - - - - RM300,001toRM350,000 - - - - RM350,001toRM400,000 - - 1 - RM400,001toRM450,000 - - - - RM450,001toRM500,000 - - - - RM500,001toRM550,000 1 1 - - Non-executivedirectors:- BelowRM50,000 4 3 4 3
38. OPERATING SEGMENTS
Operating segments are prepared in a manner consistent with the internal reporting provided to the Group ExecutiveCommitteeasitschiefoperatingdecisionmakerinordertoallocateresourcestosegmentsandtoassesstheirperformance.Formanagementpurposes,theGroupisorganisedintobusinessunitsbasedontheirproductsandservicesprovided.
TheprimarysegmentreportingformatisdeterminedtobegeographicalsegmentastheGroup’srisksandratesofreturnareaffectedpredominantlybythedifferencesinthecountriesoperated.
AstheGroupoperatesprimarilyinthedevelopmentandprovisionofITlearningprogramsandeducationalservicessegment,consequently,nosegmentinformationispreparedinrespectofbusinesssegments.
ThefollowingisananalysisoftheGroup’sgeographicalsegments:-
MALAYSIA SINGAPORE INDONESIA GROUP RM RM RM RM 2014 Revenue Externalrevenue 36,251,584 22,175,275 333,604 58,760,463 Inter-segmentrevenue 6,742,070 - - 6,742,070
42,993,654 22,175,275 333,604 65,502,533 Consolidationadjustmentsandelimination (6,742,070)
Consolidatedrevenue 58,760,463
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 584
38. OPERATING SEGMENTS (CONT’D)
ThefollowingisananalysisoftheGroup’sgeographicalsegments:-
MALAYSIA SINGAPORE INDONESIA GROUP RM RM RM RM 2014 Results Segmentresults 8,213,143 Interestincome 439,494 Depreciationofequipment (1,865,851)
6,786,786 Consolidationadjustmentsandelimination 1,318,846
8,105,632 Financecosts (267,075) Shareofresultsinassociatesandjointventure 97,976
Profitbeforetaxation 7,936,533 Incometaxexpense (403,675) Profitaftertaxation 7,532,858
Assets Segmentassets 92,864,802 28,183,591 1,494,683 122,543,076 Consolidationadjustmentsandelimination (41,574,954) 80,968,122
Liabilities Segmentliabilities (24,876,792) (9,665,135) (3,634,045) (38,175,972)
Deferredtaxliabilities (640,987) Provisionfortaxation (19,500)
(38,836,459) Consolidationadjustmentsandelimination 20,087,439
(18,749,020)
Other segment items Additionstonon-currentassetsotherthanfinancial instruments:- -equipment 2,063,408 935,396 21,681 3,020,485 -intangibleassets 1,748,989 313,901 - 2,062,890 Amortisationofintangibleassets 1,536,325 - - 1,536,325 Impairmentlossonreceivables 237,000 628,425 - 865,425
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 85
38. OPERATING SEGMENTS (CONT’D)
MALAYSIA SINGAPORE GROUP RM RM RM 2013 Revenue Externalrevenue 29,699,564 4,765,979 34,465,543 Inter-segmentrevenue 7,608,892 - 7,608,892
37,308,456 4,765,979 42,074,435
Consolidationadjustmentsandelimination (7,781,616)
Consolidatedrevenue 34,292,819 Results Segmentresults 506,411 Interestincome 53,171 Depreciationofequipment (1,599,327)
(1,039,745)
Consolidationadjustmentsandelimination 2,233,048
1,193,303 Financecosts (244,734)
Shareofresultsinassociatesandjointventure 109,278
Profitbeforetaxation 1,057,847 Incometaxexpense (65,939)
Profitaftertaxation 991,908
Assets Segmentassets 53,960,283 8,705,941 62,666,224
Consolidationadjustmentsandelimination (33,180,227)
29,485,997
Liabilities Segmentliabilities (21,172,571) (3,071,295) (24,243,866)
Deferredtaxliabilities (519,664) Provisionfortaxation (36,005)
(24,799,535)
Consolidationadjustmentsandelimination 11,225,592
(13,573,943)
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 586
38. OPERATING SEGMENTS (CONT’D)
MALAYSIA SINGAPORE GROUP RM RM RM 2013
Other segment items Additionstonon-currentassetsotherthanfinancialinstruments:- -equipment 1,414,763 39,549 1,454,312 -intangibleassets 2,490,606 277,587 2,768,193 Amortisationofintangibleassets 1,199,840 - 1,199,840 Impairmentlossonreceivables - 26,743 26,743
MAJOR CUSTOMERS Thefollowingaremajorcustomerswithrevenueequaltoormorethan10%ofGrouprevenue:-
REVENUE GEOGRAPHICAL SEGMENT 2014 2013 RM RM CustomerA 18,756,131 1,951,006 Singapore
39. RELATED PARTY DISCLOSURES
(a) Identities of related parties
Inadditiontotheinformationdetailedelsewhereinthefinancialstatements,theGrouphasrelatedpartyrelationshipswithitsdirectors,keymanagementpersonnelandentitieswithinthesamegroupofcompanies.
(b) Other than thosedisclosedelsewhere in thefinancial statements, theGroupand theCompanyalsocarriedout thefollowingsignificanttransactionswiththerelatedpartiesduringthefinancialyear:-
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM (i) Subsidiaries: -Managementfeesreceivable - - 6,112,000 1,440,000 -Rentalreceivable - - 144,000 - -Otherfeesreceivable - - 240,000 - -Utilitiesandmaintenancechargesreceivable - - 144,000 - (ii) Associates: -Salesofgoods 181,846 - - - -Royaltyreceivable 147,116 131,847 - - (iii)Jointventure: -Salesofgoods 181 - - - -Salesofequipment 10,951 - - - -Royaltiespayable (433,700) (373,400) - -
(c) KeyManagementPersonnel
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM Short-termemployeebenefits 1,088,867 756,286 692,829 394,977 Keymanagement personnel comprise executive and non-executive directors of theGroupwho have authority and
responsibilityforplanning,directingandcontrollingtheactivitiesoftheGroup,directlyorindirectly.
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 87
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)40
. FI
NA
NC
IAL
INST
RUM
ENTS
TheGroup’sactivitiesareexposedtoavarietyofmarketrisk(includingforeigncurrencyrisk,interestrateriskandequitypricerisk),creditriskandliquidityrisk.The
Group’soverallfinancialriskmanagementpolicyfocusesontheunpredictabilityoffinancialmarketsandseekstominimisepotentialadverseeffectsontheGroup’sfinancial
perfo
rman
ce.
(a
) Fi
nanc
ial R
isk
Man
agem
ent P
olic
ies
TheGroup’spoliciesinrespectofthemajorareasoftreasuryactivityareasfollows:-
(i)
Mar
ket R
isk
(i)
Fo
reig
n C
urre
ncy
Ris
k
TheGroupisexposedtoforeigncurrencyriskontransactionsandbalancesthataredenominatedincurrenciesotherthanRinggitMalaysia.Thecurrencies
givingrisetothisriskareprimarilySingaporeDollar,UnitedStatesDollar,IndonesianRupiahandJapaneseYen.Foreigncurrencyriskismonitoredcloselyon
anongoingbasistoensurethatthenetexposureisatanacceptablelevel.
U
NIT
ED
SI
NG
APO
RE
STA
TES
IND
ON
ESIA
N
JAPA
NES
E RI
NG
GIT
D
OLL
AR
DO
LLA
R RU
PIA
H
YEN
M
ALA
YSIA
TO
TAL
THE
GRO
UP
RM
RM
RM
RM
RM
RM
20
14
Fina
ncia
l Ass
ets
Tradereceivables
-22,303,651
168,965
-7,908,518
30,381,134
Otherreceivablesanddeposits
1,846,807
3,175,116
270,122
-2,142,047
7,434,092
Amountowingbyassociates
88,063
--
-50,782
138,845
Amountowingbyajointventure
-
--
-1,282,045
1,282,045
Fixeddepositswithlicensedbanks
-
258,263
--
9,050,350
9,308,613
Cashandbankbalances
246,068
18,474
141,213
-9,650,144
10,055,899
2,180,938
25,755,504
580,300
-30,083,886
58,600,628
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 588
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
40.
FIN
AN
CIA
L IN
STRU
MEN
TS (C
ON
’T)
(a
) Fi
nanc
ial R
isk
Man
agem
ent P
olic
ies
(con
t’d)
(i)
Mar
ket R
isk
(con
t’d)
(i)
Fo
reig
n C
urre
ncy
Ris
k (C
ont’d
)
Foreigncurrencyexposure(Cont’d)
U
NIT
ED
SI
NG
APO
RE
STA
TES
IND
ON
ESIA
N
JAPA
NES
E RI
NG
GIT
D
OLL
AR
DO
LLA
R RU
PIA
H
YEN
M
ALA
YSIA
TO
TAL
THE
GRO
UP
RM
RM
RM
RM
RM
RM
20
14
Fina
ncia
l Lia
bilit
ies
Tradepayables
270,436
8,731,257
61,221
369,186
1,122,143
10,554,243
Otherpayablesandaccruals
153,636
-140,571
-3,025,974
3,320,181
Amountowingbyajointventure
-
--
-487,992
487,992
Hirepurchasepayables
--
--
138,073
138,073
Termloans
-1,540,670
--
341,403
1,882,073
Bankoverdrafts
--
--
1,705,971
1,705,971
424,072
10,271,927
201,792
369,186
6,821,556
18,088,533
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 89
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)40
. FI
NA
NC
IAL
INST
RUM
ENTS
(CO
N’T
)
(a
) Fi
nanc
ial R
isk
Man
agem
ent P
olic
ies
(con
t’d)
(i)
Mar
ket R
isk
(con
t’d)
(i)
Fo
reig
n C
urre
ncy
Ris
k (C
ont’d
)
Foreigncurrencyexposure(Cont’d)
U
NIT
ED
SI
NG
APO
RE
STA
TES
IND
ON
ESIA
N
JAPA
NES
E RI
NG
GIT
D
OLL
AR
DO
LLA
R RU
PIA
H
YEN
M
ALA
YSIA
TO
TAL
THE
GRO
UP
RM
RM
RM
RM
RM
RM
20
14
Netfinancialassets/(liabilities)
1,756,866
15,483,577
378,508
(369,186)
23,262,330
40,512,095
Less:Netfinancial(assets)/liabilities
denominatedintherespective
entities’functionalcurrencies
(1,756,866)
-(378,508)
-(23,262,330)
(25,397,704)
CurrencyExposure
-15,483,577
-(369,186)
-15,114,391
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 590
40. FINANCIAL INSTRUMENTS (CONT’D)
(a) Financial Risk Management Policies (Cont’d)
(i) Market Risk (Cont’d)
(i) Foreign Currency Risk (Cont’d)
Foreigncurrencyexposure(Cont’d)
UNITED SINGAPORE STATES RINGGIT DOLLAR DOLLAR MALAYSIA TOTAL THE GROUP RM RM RM RM 2013 Financial Assets Tradereceivables - 4,622,092 4,414,599 9,036,691 Otherreceivablesanddeposits 359,282 2,395,462 476,563 3,231,307 Amountowingbyassociates - - 809,975 809,975 Fixeddepositswithlicensedbanks - - 1,886,707 1,886,707 Cashandbankbalances 42,742 - 896,861 939,603 402,024 7,017,554 8,484,705 15,904,283
Financial Liabilities Tradepayables 2,597,170 - 953,011 3,550,181 Otherpayablesandaccruals 384,935 - 4,787,761 5,172,696 Amountowingtoassociates - - 37,749 37,749 Hirepurchasepayables - - 58,847 58,847 Termloans - 958,528 418,081 1,376,609 Bankoverdrafts - - 2,822,192 2,822,192
2,982,105 958,528 9,077,641 13,018,274
Netfinancialassets/(liabilities) (2,580,081) 6,059,026 (592,936) 2,886,009 Less:Netfinancial(assets)/liabilities denominatedintherespectiveentities’ functionalcurrencies 2,580,081 - 592,936 3,173,017
Currency Exposure - 6,059,026 - 6,059,026
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 91
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
40. FINANCIAL INSTRUMENTS (CONT’D)
(a) Financial Risk Management Policies (Cont’d)
(i) Market Risk (Cont’d)
(i) Foreign Currency Risk (Cont’d)
Foreigncurrencyexposure(Cont’d) SINGAPORE RINGGIT DOLLAR MALAYSIA TOTAL THE COMPANY RM RM RM 2014 Financial Assets Otherreceivablesanddeposits - 4,576,376 4,576,376 Amountowingbysubsidiaries 8,841,070 8,612,340 17,453,410 Amountowingbyajointventure - 1,147,455 1,147,455 Fixeddepositswithlicensedbanks - 7,025,532 7,025,532 Cashandbankbalances - 7,148,592 7,148,592
8,841,070 28,510,295 37,351,365
Financial Liabilities Otherpayablesandaccruals - 160,131 160,131 Amountowingtosubsidiaries 15,399 8,215,380 8,230,779
15,399 8,375,511 8,390,910
Netfinancialassets 8,825,671 20,134,784 28,960,455 Less:Netfinancialliabilities denominatedintherespective entities’functionalcurrencies - (20,134,784) (20,134,784)
Currency Exposure 8,825,671 - 8,825,671
Financial Assets Otherreceivablesanddeposits - 30,295 30,295 Amountowingbysubsidiaries 2,068,985 65,033 2,134,018 Amountowingbyassociates - 801,000 801,000 Cashandbankbalances - 6,002 6,002 2,068,985 902,330 2,971,315 Financial Liabilities Otherpayablesandaccruals - 765,600 765,600 Amountowingtosubsidiaries - 10,686,083 10,686,083 Bankoverdrafts - 997,296 997,296 - 12,448,979 12,448,979
Netfinancial(liabilities)/assets 2,068,985 (11,546,649) (9,477,664) Less:Netfinancialliabilities/(assets) denominatedintherespective entities’functionalcurrencies - 11,546,649 11,546,649 Currency Exposure 2,068,985 - 2,068,985
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 592
40. FINANCIAL INSTRUMENTS (CONT’D)
(a) Financial Risk Management Policies (Cont’d)
(i) Market Risk (Cont’d)
(i) Foreign Currency Risk (Cont’d)
Foreigncurrencyrisksensitivityanalysis
Thefollowingtabledetailsthesensitivityanalysistoareasonablypossiblechangeintheforeigncurrenciesattheendofthereportingperiod,withallothervariablesheldconstant:-
THE GROUP THE COMPANY 2014 2013 2014 2013 Increase/ Increase/ Increase/ Increase/ (Decrease) (Decrease) (Decrease) (Decrease) RM RM RM RM
Effectsonprofitaftertaxation and equity SingaporeDollar: -strengthenedby10% - - 661,925 155,174 -weakenedby10% - - (661,925) (155,174) UnitedStatesDollar: -strengthenedby10% 1,161,268 454,427 - - -weakenedby10% (1,161,268) (454,427) - - JapaneseYen: -strengthenedby10% (27,689) - - - -weakenedby10% 27,689 - - -
(ii) InterestRateRisk
Interest rate risk is the risk that the fair valueor future cashflowsof a financial instrumentwill fluctuatebecauseofchanges inmarket interest rates.TheGroup’sexposure to interest rate riskarisesmainly frominterest-bearingfinancialassetsandliabilities.TheGroup’spolicyis toobtainthemost favourableinterestratesavailable.AnysurplusfundsoftheGroupwillbeplacedwithlicensedfinancialinstitutionstogenerateinterest income.
Interestraterisksensitivityanalysis
Thefollowingtabledetailsthesensitivityanalysisonareasonablypossiblechangeintheinterestratesattheendofthereportingperiod,withallothervariablesheldconstant:-
THE GROUP THE COMPANY 2014 2013 2014 2013 Increase/ Increase/ Increase/ Increase/ (Decrease) (Decrease) (Decrease) (Decrease) RM RM RM RM Effectsonprofitaftertaxation and equity Increase of 100 basis points (bp) 54,459 (9,861) 52,691 (7,480) Decrease of 100bp (54,459) 9,861 (52,691) 7,480 (iii) EquityPriceRisk
TheGroupandtheCompanydoesnothaveanyquotedinvestmentsandhenceisnotexposedtoequitypricerisk.
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 93
40. FINANCIAL INSTRUMENTS (CONT’D)
(a) Financial Risk Management Policies (Cont’d)
(ii) CreditRisk
TheGroup’sexposuretocreditrisk,or theriskofcounterpartiesdefaulting,arisesmainlyfromtradeandotherreceivables.TheGroupmanages itsexposure tocredit riskby theapplicationofcredit approvals, credit limitsandmonitoringproceduresonanongoingbasis.Forotherfinancialassets(includingcashandbankbalances),theGroupminimisescreditriskbydealingexclusivelywithhighcreditratingcounterparties.
TheGroupestablishesanallowanceforimpairmentthatrepresentsitsestimateofincurredlossesinrespectofthetradeandotherreceivablesasappropriate.Themaincomponentsofthisallowanceareaspecificlosscomponentthatrelatestoindividuallysignificantexposures,andacollectivelosscomponentestablishedforgroupsofsimilarassetsinrespectoflossesthathavebeenincurredbutnotyetidentified.Impairmentisestimatedbymanagementbasedonpriorexperienceandthecurrenteconomicenvironment.
(a) Creditriskconcentrationprofile
TheGroup’smajorconcentrationofcreditriskrelatestotheamountsowingby2customerswhichconstitutedapproximately72%ofitstradereceivablesattheendofthereportingperiod.
(b) Exposuretocreditrisk
AstheGroupdoesnotholdanycollateral,themaximumexposuretocreditriskisrepresentedbythecarryingamountofthefinancialassetsattheendofthereportingperiod.
Theexposureofcreditriskfortradereceivablesbygeographicalregionisasfollows:-
THE GROUP 2014 2013 RM RM Malaysia 7,872,068 4,414,599 Indonesia 22,170,424 4,581,185 Singapore 338,642 40,907 30,381,134 9,036,691
(c) Ageinganalysis
TheageinganalysisoftheGroup’stradereceivablesattheendofthereportingperiodisasfollows:-
GROSS INDIVIDUAL CARRYING AMOUNT IMPAIRMENT VALUE RM RM RM 2014 Notpastdue 28,158,863 - 28,158,863 Past due -Pastduewithin30days 498,666 - 498,666 -Pastdue31-60days 651,362 - 651,362 -Pastdue61-90days 168,818 - 168,818 -Pastduemorethan90days 1,255,031 (351,606) 903,425 2,573,877 (351,606) 2,222,271 30,732,740 (351,606) 30,381,134
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 594
40. FINANCIAL INSTRUMENTS (CONT’D)
(a) Financial Risk Management Policies (Cont’d)
(ii) CreditRisk(Cont’d)
(c) Ageinganalysis (Cont’d)
GROSS INDIVIDUAL CARRYING AMOUNT IMPAIRMENT VALUE RM RM RM 2013 Notpastdue 7,753,331 - 7,753,331 Past due -Pastduewithin30days 371,426 - 371,426 -Pastdue31-60days 582,271 - 582,271 -Pastdue61-90days 71,764 - 71,764 -Pastduemorethan90days 609,505 (351,606) 257,899 1,634,966 (351,606) 1,283,360 9,388,297 (351,606) 9,036,691
Attheendofthereportingperiod,tradereceivablesthatareindividuallyimpairedwerethoseinsignificantfinancialdifficultiesandhavedefaultedonpayments.Thesereceivablesarenotsecuredbyanycollateralorcreditenhancement.
Tradereceivablesthatarepastduebutnotimpaired
TheGroupbelievesthatnoimpairmentallowanceisnecessaryinrespectofthesetradereceivables.Theyaresubstantiallycompanieswithgoodcollectiontrackrecordandnorecenthistoryofdefault.
Tradereceivablesthatareneitherpastduenorimpaired
AsignificantportionoftradereceivablesthatareneitherpastduenorimpairedareregularcustomersthathavebeentransactingwiththeGroup.TheGroupusesageinganalysistomonitorthecreditqualityofthetradereceivables.Anyreceivableshavingsignificantbalancespastdueormorethan180days,whicharedeemedtohavehighercreditrisk,aremonitoredindividually.
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 95
40. FINANCIAL INSTRUMENTS (CONT’D)
(a) Financial Risk Management Policies (Cont’d)
(iii) LiquidityRisk
Liquidity risk arises mainly from general funding and business activities. The Group practises prudent riskmanagementbymaintainingsufficientcashbalancesand theavailabilityof funding throughcertaincommittedcredit facilities.
Thefollowingtablesetsoutthematurityprofileofthefinancialliabilitiesattheendofthereportingperiodbasedoncontractualundiscountedcashflows(includinginterestpaymentscomputedusingcontractualratesor,iffloating,basedontheratesattheendofthereportingperiod):-
WEIGHTED AVERAGE CONTRACTUAL EFFECTIVE CARRYING UNDISCOUNTED WITHIN 1 - 5 RATE AMOUNT CASH FLOWS 1 YEAR YEARS % RM RM RM RM THE GROUP 2014 Tradepayables - 10,554,243 10,554,243 10,554,243 - Otherpayablesandaccruals - 3,320,181 3,320,181 3,320,181 - Amountowingtoajointventure - 487,992 487,992 487,992 - Hirepurchasepayables 5.50 138,073 154,175 43,213 110,962 Termloans 9.08 1,882,073 1,992,726 1,700,059 292,667 Bankoverdrafts 8.39 1,705,971 1,705,971 1,705,971 - 18,088,533 18,215,288 17,811,659 403,629
2013 Tradepayables - 3,550,181 3,550,181 3,550,181 - Otherpayablesandaccruals - 5,172,696 5,172,696 5,172,696 - Amountowingtoassociates - 37,749 37,749 37,749 - Hirepurchasepayables 5.81 58,847 64,256 20,139 44,117 Termloans 7.79 1,376,609 1,594,069 1,196,203 397,866 Bankoverdrafts 7.98 2,822,192 2,822,192 2,822,192 - 13,018,274 13,241,143 12,799,160 441,983
THE COMPANY 2014 Otherpayablesandaccruals - 160,131 160,131 160,131 - Amountowingtosubsidiaries - 8,230,779 8,230,779 8,230,779 - 8,390,910 8,390,910 8,390,910 -
2013 Otherpayablesandaccruals - 765,600 765,600 765,600 - Amountowingtosubsidiaries - 10,686,083 10,686,083 10,686,083 - Bankoverdrafts 7.60 997,296 997,296 997,296 - 12,448,979 12,448,979 12,448,979 -
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 596
40. FINANCIALINSTRUMENTS(CONT’D)
(b) Capital Risk Management
TheGroupmanages its capital to ensure that entitieswithin theGroupwill beable tomaintain anoptimal capitalstructuresoastosupporttheirbusinessesandmaximiseshareholders’value.Toachievethisobjective,theGroupmaymakeadjustmentstothecapitalstructureinviewofchangesineconomicconditions,suchasadjustingtheamountofdividendpayment,returningofcapitaltoshareholdersorissuingnewshares.
TheGroupmanages itscapitalbasedondebt-to-equity ratio. In thecurrentfinancialyear, thenetdebtcomponentscomprisetotalborrowingsfromfinancialinstitutionlesscashandcashequivalents.Inpreviousfinancialyears,thenetdebtcomponentscompriseborrowingsplustradeandotherpayableslesscashandcashequivalents.
Thedebt-to-equityratiooftheGroupattheendofthereportingperiodisasfollows:-
THE GROUP 2014 2013 RM RM Hirepurchasepayables 138,073 58,847 Termloans 1,882,073 1,376,609 Bankoverdrafts 1,705,971 2,822,192 3,726,117 4,257,648 Less:Fixeddepositswithlicensedbanks (9,308,613) (1,886,707) Less:Cashandbankbalances (10,055,899) (939,603) Netdebt (15,638,395) 1,431,338 Totalequity 62,219,102 15,912,054 Debt-to-equityratio Notapplicable 0.09
Under the requirement of Bursa Malaysia Guidance Note No. 3/2006, the Company is required to maintain itsshareholders’equityequaltoornotlessthanthe25%oftheissuedandpaid-upsharecapital(excludingtreasuryshares)oftheCompany.TheCompanyhascompliedwiththisrequirement.
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 97
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)40
. FI
NA
NC
IAL
INST
RUM
ENTS
(CO
NT’
D)
(c)ClassificationOfFinancialInstruments
TH
E G
ROU
P T
HE
CO
MPA
NY
2014
20
13
2014
20
13
RM
RM
RM
RM
Fina
ncia
l Ass
ets
Loansandreceivablesfinancialassets
Tradereceivables
30,381,134
9,036,691
--
Otherreceivablesanddeposits
7,434,092
3,231,307
4,576,376
30,295
Amountowingbysubsidiaries
--
17,453,410
2,134,018
Amountowingbyassociates
138,845
809,975
-801,000
Amountowingbyajointventure
1,282,045
-1,147,455
-
Fixeddepositswithlicensedbanks
9,308,613
1,886,707
7,025,532
-
Cashandbankbalances
10,055,899
939,603
7,148,592
6,002
58,600,628
15,904,283
37,351,365
2,971,315
Fina
ncia
l Lia
bilit
ies
Otherfinancialliabilities
Tradepayables
10,554,243
3,550,181
--
Otherpayablesandaccruals
3,320,181
5,172,696
160,131
765,600
Amountowingtosubsidiaries
--
8,230,779
10,686,083
Amountowingtoassociates
-37,749
--
Amountowingtoajointventure
487,992
--
-
Hirepurchasepayables
138,073
58,847
--
Termloans
1,882,073
1,376,609
--
Bankoverdrafts
1,705,971
2,822,192
-997,296
18,088,533
13,018,274
8,390,910
12,448,979
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 598
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
40.
FIN
AN
CIA
L IN
STRU
MEN
TS (C
ON
T’D
)
(d
) Fa
ir V
alue
Info
rmat
ion
Otherthanthosedisclosedbelow,thefairvaluesofthefinancialassetsandfinancialliabilitiesmaturingwithinthenext12monthsapproximatedtheircarryingamounts
duetotherelativelyshort-termmaturityofthefinancialinstruments.
Fair
Val
ue O
f Fin
anci
al In
stru
men
ts
Fair
Val
ue O
f Fin
anci
al In
stru
men
ts
Tota
l
Car
ried
At F
air
Val
ue
N
ot C
arri
ed A
t Fai
r V
alue
Fair
C
arry
ing
Leve
l 1
Leve
l 2
Leve
l 3
Leve
l 1
Leve
l 2
Leve
l 3
Val
ue
Am
ount
THE
GRO
UP
RM
RM
RM
RM
RM
RM
RM
RM
20
14
FinancialLiabilities
Hirepurchasepayables
--
--
101,563
-101,563
101,563
Termloans
--
--
257,639
-257,639
257,639
FinancialLiabilities
Hirepurchasepayables
--
-
40,913*
40,913
40,913
Termloans
--
-
336,843*
336,843
336,843
*Comparativefairvalueinformationisnotpresentedbylevels,byvirtueoftheexemptiongiveninMFRS13.
Therewerenotransferbetweenlevel1andlevel2duringthefinancialyear.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 99
41. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
(a) On22October2013,thePrivatePlacementwascompletedfollowingthelistingofandquotationfor100,000,000newordinarysharesoftheCompanyontheACEMarketofBursaSecuritiesMalaysiaBerhad(“BursaSecurities”);
(b) On12November2013, theCompanycompleted theacquisitionofMultipleTechnologyMSCSdn.Bhd. fora totalconsiderationofRM5,220,000satisfiedbywayofcashconsiderationofRM900,000andissuanceof27,000,000newordinarysharesofRM0.10eachatfairvalueofRM0.16,givingrisetoapremiumofRM0.06eachatpar;
(c) On30December2013,therightsissueofshareswithwarrantswerecompletedfollowingthelistingofandquotationfor255,166,667RightsSharestogetherwith382,750,000WarrantsontheACEMarketofBursaSecurities;
(d) On17July2014,theCompanyenteredintoaStrategicAllianceAgreement(“SAA”)withiCarnegieGlobalLearningLLC(“iCarnegie”)tojointlyexplorefuturepossibilitiesinanumberofbusinessareaswithintheeducationsector.Therewerenomaterialeffectonthesharecapital,netassets,gearingandsubstantialshareholders’shareholdingsoftheCompanyduringthefinancialyear.
42. SIGNIFICANT EVENTS OCCURRING AFTER THE FINANCIAL PERIOD
In2011,theshareholdersoftheCompanyatanExtraordinaryGeneralMeetingapprovedtheestablishmentandimplementationofanEmployeeShareOptionScheme(“ESOS”).
On10October2014,theCompanygranted24,192,800shareoptionstocertaindirectorsoftheCompany.On24December2014,704,400shareoptionswereexercisedatRM0.23pershare.
43. COMPARATIVE INFORMATION
Thefollowinginformationhavebeenreclassifiedtoconformwiththepresentationofthecurrentfinancialyear:
THE GROUP As Restated As Previously Reported RM RM ConsolidatedStatementsofCashFlows(Extract): Netcashfromfinancingactivities 98,834 231,572 Cashandcashequivalentsatbeginningofthefinancialyear 186,049 1,840,498 Cashandcashequivalentsatendofthefinancialyear (1,783,249) 4,118
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5100
44. SUPPLEMENTARY INFORMATION - DISCLOSURE OF REALISED AND UNREALISED PROFITS/LOSSES
ThebreakdownoftheaccumulatedlossesoftheGroupandoftheCompanyattheendofthereportingperiodintorealisedandunrealisedlossesarepresentedinaccordancewiththedirectiveissuedbyBursaMalaysiaSecuritiesBerhadandpreparedinaccordancewithGuidanceonSpecialMatterNo.1,DeterminationofRealisedandUnrealisedProfitsorLossesintheContextofDisclosurePursuanttoBursaMalaysiaSecuritiesBerhadListingRequirements,asissuedbytheMalaysianInstituteofAccountants,asfollows:-
THE GROUP THE COMPANY 2014 2013 2014 2013 RM RM RM RM Total accumulated losses oftheCompanyanditssubsidiaries: -realised (38,291,467) (40,395,858) (35,041,542) (37,403,720) -unrealised (10,884,754) (612,544) (10,110,377) - (49,176,221) (41,008,402) (45,151,919) (37,403,720) Totalshareofretainedprofitsofassociates: -realised 137,194 163,683 - - - unrealised - - - - Totalshareofretainedprofitsofjointventure: -realised 124,465 - - - - unrealised - - - - (48,914,562) (40,844,719) (45,151,919) (37,403,720) Less:Consolidationadjustments 38,148,211 33,829,099 - - At30September (10,766,351) (7,015,620) (45,151,919) (37,403,720)
NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 (cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 101
NOTICE OF THE ELEVENTH ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the EleventhAnnualGeneralMeeting of EDUSPEC HOLDINGS BERHAD (Company No.: 646756-X)(“EHB”or“theCompany”)willbeheldatGreens2,TropicanaGolf&CountryResort,JalanKelabTropicana,47410PetalingJaya,SelangorDarulEhsanonThursday,26March2015at10.00a.m.forthefollowingpurposes:-
ORDINARY BUSINESS:-
1. Toreceive theAuditedFinancialStatements for thefinancialyearended30September2014togetherwiththeReportsoftheDirectorsandAuditorsthereon.
Please refer to Note 1
2. ToapprovethepaymentofDirectors’feesforthefinancialyearended30September2014. Resolution 1
3. Tore-electthefollowingDirectorwhoisretiringunderArticle80oftheArticlesofAssociation:
(i) Mr.LimEenHong Resolution 2
4. Tore-electthefollowingDirectorswhoareretiringunderArticle85oftheArticlesofAssociation:
(i) TanSriDato’HajiAlimuddinBinHajiMohdDom
(ii) TengkuAbuBakarAhmadBinTengkuAbdullah
Resolution 3
Resolution 4
5. Tore-appointMessrs.CroweHorwathastheAuditorsoftheCompanyfortheensuingyearandtoauthorisetheDirectorstofixtheirremuneration.
Resolution 5
6. SPECIAL BUSINESS:-
Toconsiderand,ifthoughtfit,passwithorwithoutmodifications,thefollowingresolutions:-
6.1 Authority to issue shares pursuant to Section 132D of the Companies Act, 1965
“THATsubjectalwaystotheapprovalsoftherelevantauthorities,theDirectorsbeandareherebyempoweredpursuanttoSection132DoftheCompaniesAct,1965,toallotandissuesharesintheCompanyatanytimeanduponsuchtermsandconditionsandforsuchpurposesastheDirectorsmay in theirabsolutediscretiondeemfit,provided that theaggregatenumberofshares tobeissueddoesnotexceed10%oftheissuedsharecapitaloftheCompanyatthetimeofissueandtheDirectorsareherebyfurtherempoweredtoobtainapprovalforthelistingofandquotationoftheadditionalsharessoissuedontheBursaMalaysiaSecuritiesBerhadandthatsuchauthorityshallcontinueinforceuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompany.”
Resolution 6
6.2 ProposedGrantingofOptions to theChiefExecutiveOfficerof theCompany,Mr.LimEenHong under the Company’s Employees’ Share Option Scheme (“ESOS” or “the Scheme”)
“THAT pursuant to Company’s ESOS approval by the shareholders of the Company at theExtraordinaryGeneralMeetingheldon18August2011,authoritybeandisherebygiventotheCompanyto,atanytimefromtimetotimeduringthedurationoftheESOS,toofferandgranttoMr.LimEenHongbeinganChiefExecutiveOfficeroftheCompany,optionstosubscribeforuptoamaximumentitlementof1,800,000EHB’ssharesundertheESOS,subjecttotheprovisionsoftheBy-LawsgoverningandconstitutingtheScheme.”
Resolution 7
6.3 Proposed Granting of Options to the Executive Director of the Company, Mr. Lim Soon Seong under the Company’s ESOS
“THAT pursuant to Company’s ESOS approval by the shareholders of the Company at theExtraordinaryGeneralMeetingheldon18August2011,authoritybeandisherebygiventotheCompanyto,atanytimefromtimetotimeduringthedurationoftheESOS,toofferandgranttoMr.LimSoonSeongbeinganExecutiveDirectoroftheCompany,optionstosubscribeforuptoamaximumentitlementof1,300,000EHB’ssharesundertheESOS,subjecttotheprovisionsoftheBy-LawsgoverningandconstitutingtheScheme.”
Resolution 8
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5102
NOTICE OF THE ELEVENTH ANNUAL GENERAL MEETING(cont’d)
6.4 Proposed Granting of Options to the Independent Non-Executive Director of the Company, Mr. Lim Beng Weh under the Company’s ESOS
“THAT pursuant to Company’s ESOS approval by the shareholders of the Company at theExtraordinaryGeneralMeetingheldon18August2011,authoritybeandisherebygiventotheCompanyto,atanytimefromtimetotimeduringthedurationoftheESOS,toofferandgranttoMr.LimBengWehbeinganIndependentNon-ExecutiveDirectoroftheCompany,optionstosubscribeforuptoamaximumentitlementof500,000EHB’ssharesundertheESOS,subjecttotheprovisionsoftheBy-LawsgoverningandconstitutingtheScheme.”
Resolution 9
6.5 Proposed Granting of Options to the Independent Non-Executive Director of the Company, Dato’ Dr. Mohd Ariff Bin Araff under the Company’s ESOS
“THAT pursuant to Company’s ESOS approval by the shareholders of the Company at theExtraordinaryGeneralMeetingheldon18August2011,authoritybeandisherebygiventotheCompanyto,atanytimefromtimetotimeduringthedurationoftheESOS,toofferandgranttoDato’Dr.MohdAriffBinAraffbeinganIndependentNon-ExecutiveDirectoroftheCompany,optionstosubscribeforuptoamaximumentitlementof500,000EHB’ssharesundertheESOS,subjecttotheprovisionsoftheBy-LawsgoverningandconstitutingtheScheme.”
Resolution 10
6.6 Proposed Granting of Options to the Independent Non-Executive Director of the Company, Tan Sri Dato’ Haji Alimuddin Bin Haji Mohd Dom under the Company’s ESOS
“THAT pursuant to Company’s ESOS approval by the shareholders of the Company at theExtraordinaryGeneralMeetingheldon18August2011,authoritybeandisherebygiventotheCompanyto,atanytimefromtimetotimeduringthedurationoftheESOS,toofferandgranttoTanSriDato’HajiAlimuddinBinHajiMohdDombeinganIndependentNon-ExecutiveDirectoroftheCompany,optionstosubscribeforuptoamaximumentitlementof500,000EHB’ssharesundertheESOS,subjecttotheprovisionsoftheBy-LawsgoverningandconstitutingtheScheme.”
Resolution 11
6.7 Proposed Granting of Options to the Independent Non-Executive Director of the Company, Tengku Abu Bakar Ahmad Bin Tengku Abdullah under the Company’s ESOS
“THAT pursuant to Company’s ESOS approval by the shareholders of the Company at theExtraordinaryGeneralMeetingheldon18August2011,authoritybeandisherebygiventotheCompanyto,atanytimefromtimetotimeduringthedurationoftheESOS,toofferandgranttoTengkuAbuBakarAhmadBinTengkuAbdullahbeinganIndependentNon-ExecutiveDirectoroftheCompany,optionstosubscribeforuptoamaximumentitlementof500,000EHB’ssharesundertheESOS,subjecttotheprovisionsoftheBy-LawsgoverningandconstitutingtheScheme.”
Resolution 12
ANY OTHER BUSINESS:-
7. TotransactanyotherbusinessforwhichduenoticeshallhavebeengiveninaccordancewiththeCompany’sArticlesofAssociationandtheCompaniesAct,1965.
Resolution 13
BY ORDER OF THE BOARD
WONG YOUN KIM (MAICSA 7018778)SIN MAY PENG (MAICSA 7018354)Company Secretaries
KualaLumpurDate:4March2015
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 103
Notes:-
1. Item 1 of the Notice is meant for discussion only as the provision Section 169(1) of the Companies Act, 1965 does not require a formal approval of shareholders for the Audited Financial Statements and hence, is not put forward for voting.
2. A member of the Company entitled to attend and vote at the Meeting may appoint a proxy or proxies (or being a corporate member, a corporate representative) to attend and vote in his stead. A proxy may but need not be a member of the Company and Section 149 (1) (b) of the Companies Act, 1965 Act shall not apply to the Company.
3. The instrument appointing a proxy in the case of an individual shall be signed by the appointer or his/her attorney or in the case of a corporation executed under its common seal or signed on behalf of the corporation by its attorney or by an officer duly authorised.
4. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed or executed must be deposited at the Company’s Registered Office at Level 2, Tower 1, Avenue 5, Bangsar South City, 59200 Kuala Lumpur not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.
5. Where a member of the Company is an exempt authorized nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”) as defined under the Securities Industry (Central Depositories) Act, 1991, there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds.
6. In respect of deposited securities, only members whose names appear on the Record of Depositors on 23 March 2015 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his/her behalf.
7. Explanatory Notes on Special Business
(a) Resolution pursuant to Section 132D of the Companies Act, 1965
The proposed under Ordinary Resolution 6 item 6.1, if passed will give the Directors of the Company from the date of the above Meeting, authority to allot and issue ordinary shares for the unissued capital of the Company for such purposes as the Directors consider would be in the interest of the Company. This authority will, unless revoked or varied by the Company in General Meeting, expire at the next Annual General Meeting.
The Company did not issue any share pursuant to a mandate granted to the Directors at the last Annual General Meeting held on 25 March 2014.
The general mandate for issue of shares will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares for the purpose of funding future investment, working capital and/or acquisition.
8. (b) Resolutions on the Proposed Granting of Options to the Directors under the Company’s Employees’ Share Option Scheme (“ESOS” or “the Scheme”)
The establishment of the ESOS was approved by the shareholders of the Company at the Extraordinary General Meeting held on 18 August 2011.
The proposed Resolutions 7 to 12, if passed will enable the Company to grant ESOS to the Directors of the Company in accordance with the ESOS By-Laws as approved by the shareholders of the Company.
STATEMENT ACCOMPANYING NOTICE OF THE ELEVENTH ANNUAL GENERAL MEETING1. TheDirectorwho is standing for re-electionat theEleventhAnnualGeneralMeetingofEduspecHoldingsBerhadareasfollows:
i. Mr.LimEengHong ii. TanSriDato’HajiAlimuddinBinHajiMohdDom iii. TengkuAbuBakarAhmadBinTengkuAbdullah
TheprofilesoftheDirectorswhoarestandingforre-electionissetoutonpages4to5 ofthisAnnualReport.
2. ThedetailsofattendanceoftheDirectorsoftheCompanyatBoardofDirectors’Meetingsheldduringthefinancialyearended30September2014aredisclosedintheCorporateGovernanceStatementsetoutonpage13ofthisAnnualReport.
3. ThedetailsoftheEleventhAnnualGeneralMeetingareasfollows:
Date of Meeting Time of Meeting Place of Meeting
Thursday,26March2015 10.00 am Greens2,TropicanaGolf&CountryResort,JalanKelabTropicana,47410PetalingJaya,SelangorDarulEhsan
NOTICE OF THE ELEVENTH ANNUAL GENERAL MEETING(cont’d)
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5104
Analysis of Shareholdingsas at 12 February 2015
AuthorisedShareCapital : RM200,000,000Issuedandfullypaid-upShareCapital : RM76,620,440ClassofShares : OrdinarySharesofRM0.10eachVotingRights : One(1)votepershareholderonashowofhandsorone(1)voteperordinaryshareon
poll NumberofShareholders : 1,494
ANALYSIS OF SHAREHOLDINGS
Size of Holdings No of Shareholders % Shareholdings %
Lessthan100 13 0.870 546 0100–1,000 178 11.914 143,996 0.0181,001-10,000 409 27.376 2,646,150 0.34510,001-100,000 655 43.842 25,985,103 3.391100,001–38,310,219 235 15.729 455,224,624 59.4125%andaboveofissuedsharecapital 4 0.267 282,203,981 36.831Total 1,494 100 766,204,400 100
Substantial Shareholders AspertheRegisterofSubstantialShareholders
naMe ShareholdingsDirect % Indirect %
VictorySolutions(M)SdnBhd 118,797,514 15.50 -AutonaireSdnBhd 90,727,381 11.84 -ArecaCapitalSdnBhd 92,700,000 12.10 -VictorySolutionsHoldingsSdnBhd 47,046,300 6.14 -LimEenHong 250,000 0.03 165,843,814*1 21.64YapAiLia - - 119,047,514*2 15.53Chen,Jiu-Liang 5,000,200 0.65 47,046,300*3 6.14
Notes:-*1 Deemed interested by virtue of his shareholdings in Victory Solutions (M) Sdn Bhd and Victory Solutions Holdings Sdn Bhd
under Section 6A(4) of the Companies Act, 1965.*2 Deemed interested by virtue of her shareholdings in Victory Solutions (M) Sdn Bhd and her spouse’s shareholdings in Eduspec
Holdings Sdn Bhd under Section 6A(4) of the Companies Act, 1965.*3 Deemed interested by virtue of his shareholdings in Victory Solutions Holdings Sdn Bhd under Section 6A(4) of the Companies
Act, 1965.
Directors’ Interests in Shares AspertheRegisterofDirectors’Shareholdings
Name Shareholdings Direct % Indirect %
LimEenHong*1 250,000 0.03 165,843,814*1 21.64LimSoonSeong - - - -LimBengWeh - - - -Dato’MohdAriffBinAraff*2 - - 1,800,000 0.23TanSriDato’HajiAlimuddinBinHajiMohdDom - - - -TengkuAbuBakarAhmadBinTengkuAbdullah - - - -
Notes:-
*1 Deemed interested by virtue of his shareholdings in Victory Solutions (M) Sdn Bhd and Victory Solutions Holdings Sdn Bhd under Section 6A(4) of the Companies Act, 1965.
*2 Deemed interested by virtue of his son Ismael Alias Ariff Bin Mohd Ariff’s direct shareholdings in Eduspec Holdings Berhad by virtue of Section 134(12)(c) of the Companies Act, 1965.
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 105
ListofTop30Holdersasat12February2015
No. Name of Shareholders No. of Shares Held %
1. AutonaireSdnBhd 90,727,381 11.841
2. UOBMNominees(Tempatan)SdnBhdExemptAnForArecaCapitalSdnBhd
80,700,000 10.532
3. M&ANominee(Tempatan)SdnBhdPledgedSecuritiesAccountforVictorySolutions(M)SdnBhd
63,730,300 8.317
4. VictorySolutionsHoldingsSdnBhd 47,046,300 6.140
5. VictorySolutions(M)SdnBhd 34,967,214 4.563
6. Chang,Li-Yin 31,395,833 4.097
7. RHBNominees(Asing)SdnBhdPledgedSecuritiesAccountforChung,Chih-Chieh
30,890,366 4.031
8. ChoLin,Hsiu-Hui 21,839,000 2.850
9. LimKokChuan@BernardLim 20,000,000 2.610
10. VictorySolutions(M)SdnBhd 20,000,000 2.610
11. TanChinKwangJohnson 15,627,850 2.039
12. CimsecNominees(Tempatan)SdnBhdPledgedSecuritiesAccountforJamesKhongPohWah
15,070,750 1.966
13. LingkaranBersatuSdnBhd 15,000,000 1.957
14. MaybankNominees(Tempatan)SdnBhdExemptAnForArecaCapitalSdnBhd
12,000,000 1.566
15. ChenJui-Hung 10,762,450 1.404
16. CimsecNominees(Tempatan)SdnBhdCIMBBankForLauJooLiang
8,408,600 1.097
17. WanHuzaifahAriff 7,738,298 1.009
18. MaybankSecuritiesNominees(Tempatan)SdnBhdPledgedSecuritiesAccountforAbdulRazakBinKechik
7,600,000 0.991
19. LeowThangFong 7,500,000 0.978
20. GohThongBeng 7,270,000 0.948
21. WanHilwanieAriff 7,253,358 0.946
22. M&ANominee(Tempatan)SdnBhdPledgedSecuritiesAccountforLauJooLiang
7,061,800 0.921
23. NgThiamSeong 6,764,800 0.882
24. Chung,Chih-Chieh 6,748,200 0.880
25. AlliancegroupNominees(Asing)SdnBhdPledgedSecuritiesAccountforLimGoidLian
5,964,000 0.778
26. QueensvaleHoldingsInc. 5,770,000 0.753
27. LingSiewIng 5,500,000 0.717
28. JamesKhongPohWah 5,450,000 0.711
29. KenangaNominees(Asing)SdnBhdMonexBoomSecurities(HK)LimitedforChenJuiLiang
5,000,200 0.652
30. MokhtarBinAhmad 5,000,000 0.652
Total 608,786,700 79.454
Analysis of Shareholdingsas at 12 February 2015
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5106
No.ofWarrantsinIssue : 382,750,000ExercisePriceofWarrants : RM0.18pershareVotingRights : One(1)voteperwarrantholderonshowof
handsorone(1)voteperwarrantonapollinthemeetingof warrantholders
No.ofWarrantHolders : 795
ANALYSIS BY SIZE OF WARRANT HOLDINGS AS AT 12 FEBRUARY 2015
Size of Holdings No of Shareholders % Shareholdings %
Lessthan100 45 5.660 2,220 0
100–1,000 30 3.773 19,462 0.005
1,001-10,000 109 13.710 798,651 0.208
10,001-100,000 406 51.069 19,844,534 5.184
100,001–19,137,499 200 25.157 184,093,144 48.097
5%andaboveofissuedwarrants 5 0.628 177,991,989 46.503
Total 795 100 382,750,000 100
Directors’InterestsinWarrantsAspertheRegisterofDirectors’Warrantholdings
Name Shareholdings
Direct % Indirect %
LimEenHong*1 - - 116,814,450 28.78
LimSoonSeong - - - -
LimBengWeh - - - -
Dato’DrMohdAriffBinAraff*2 - - 900,000 0.24
TanSriDato’HajiAlimuddinBinHajiMohdDom - - - -
TengkuAbuBakarAhmadBinTengkuAbdullah - - - -
Notes:-*1 Deemed interested by virtue of his shareholdings in Victory Solutions (M) Sdn Bhd and Victory Solutions Holdings Sdn Bhd under
Section 6A(4) of the Companies Act, 1965.*2 Deemed interested by virtue of his son Ismael Alias Ariff Bin Mohd Ariff’s direct warrant holdings in Eduspec Holdings Berhad by
virtua of Section 134(12)(c) of the Companies Act, 1965.
Analysis of Warrant Holdingsas at 12 February 2015
E D U S P E C H O L D I N G S B E R H A D ( 6 4 6 7 5 6 - X )A n n u a l R e p o r t 2 0 1 5 107
ListofTop30Holdersasat12February2015
No. Name of Warrant holders No. of Shares Held %
1. RHBNominees(Asing)SdnBhdPledgedSecuritiesAccountforChung,Chih-Chieh
52,909,299 13.823
2. AutonaireSdnBhd 45,363,690 11.852
3. UOBMNominees(Tempatan)SdnBhdExemptAnforArecaCapitalSdnBhd
29,100,000 7.602
4. VictorySolutionsHoldingsSdnBhd 28,719,000 7.503
5. MaybankNominees(Tempatan)SdnBhdExemptAnforArecaCapitalSdnBhd
21,900,000 5.721
6. VictorySolutions(M)SdnBhd 18,595,450 4.858
7. CimsecNominees(Tempatan)SdnBhdPledgedSecuritiesAccountforJamesKhongPohWah
11,365,375 2.969
8. TanChinKwangJohnson 8,461,425 2.210
9. QueensvaleHoldingsInc. 8,435,000 2.203
10. VictorySolutions(M)SdnBhd 7,500,000 1.959
11. HSBCNominees(Asing)SdnBhdExemptAnforCreditSuisse
5,116,425 1.336
12. NgThiamSeong 4,817,645 1.258
13. LeowThangFong 3,500,000 0.914
14. RHBNominees(Asing)SdnBhdMaybankKimEngSecuritiesPte.Ltd.forExquisiteHoldingsLimited
3,500,000 0.914
15. ChoongWaiKee 3,300,000 0.862
16. RHBCapitalNominees(Tempatan)SdnBhdPledgedSecuritiesAccountforJaganathDerekStevenSabapathy
3,240,900 0.846
17. JamesKhongPohWah 3,225,000 0.842
18. RHBCapitalNominees(Tempatan)SdnBhdPledgedSecuritiesAccountforLimBengTeck
3,000,000 0.783
19. LeongLeeChing 2,623,000 0.685
20. HSBCNominees(Asing)SdnBhdExemptAnforBankJuliusBaer&Co.Ltd.
2,591,650 0.677
21. TeoSiewHong 2,500,000 0.653
22. HLIBNominees(Tempatan)SdnBhdHongLeongBankBhdforTehShiouCherng
2,284,800 0.596
23. MaybankNominees(Tempatan)SdnBhdPledgedSecuritiesAccountforLimYuHeng
2,034,000 0.531
24. LimFongMo@LimFungChee 2,000,000 0.522
25. ChangMoy 1,799,850 0.470
26. CimsecNominees(Tempatan)SdnBhdCIMBforGohEuJim
1,792,000 0.468
27. CimsecNominees(Tempatan)SdnBhdCIMBforAhmadFuadBinMDAli
1,750,000 0.457
28. TungPuiHiew 1,739,300 0.454
29. GVAsiaFundLimited 1,693,300 0.442
30. CimsecNominees(Tempatan)SdnBhdExemptAnforCIMBSecurities(Singapore)PteLtd
1,600,000 0.418
Total 286,457,109 74.841
Analysis of Warrant Holdingsas at 12 February 2015
Thispagehasbeenleftblankintentionally.
*I/We, (FULLNAMEINBLOCKLETTERS)
of (ADDRESS)
beingamember(s)ofEDUSPECHOLDINGSBERHAD,herebyappoint (FULLNAME)of
(ADDRESS)orfailingwhom,
(FULLNAME)of
(ADDRESS)theChairmanoftheMeetingas*my/ourproxy(ies) toattend,speakandvoteonmy/ourbehalfattheEleventhAnnualGeneralMeetingoftheCompanytobeheldatGreens2,TropicanaGolf&ContryResort,JalanKelabTropicana,47410PetalingJaya,SelangorDarulEhsanonThursday,26March2015at10.00a.m.oratanyadjournmentthereof.
for aGainst
no. orDinarY resolution
1. ToapprovethepaymentofDirectors’feeforthefinancialyearended30September2014.
2. Re-electionofDirector–Mr.LimEengHong.
3. Re-electionofDirector–TanSriDato’HajiAlimuddinBinHajiMohdDom.
4. Re-electionofDirector–TengkuAbuBakarAhmadBinTengkuAbdullah.
5. Tore-appointMessrs.CroweHorwathastheAuditorsoftheCompanyandtoauthorisetheBoardofDirectorstofixtheirremuneration.
SPECIAL BUSINESS
6. AuthoritytoIssueSharesPursuanttoSection132DoftheCompaniesAc,1965.
7. GrantofOptionstotheChiefExecutiveOfficeroftheCompany,Mr.LimEenHongundertheCompany’sEmployees’ShareOptionScheme(“ESOS”or“theScheme”).
8. GrantofOptionstotheExecutiveDirectoroftheCompany,Mr.LimSoonSeongundertheCompany’sESOS.
9. GrantofOptionstotheIndependentNon-ExecutiveDirectoroftheCompany,Mr.LimBengWehundertheCompany’sESOS.
10. GrantofOptionstotheIndependentNon-ExecutiveDirectoroftheCompany,Dato’Dr.MohdAriffBinAraffundertheCompany’sESOS.
11. Grant of Options to the Independent Non-Executive Director of the Company, Tan Sri Dato’ HajiAlimuddinBinHajiMohdDomundertheCompany’sESOS.
12. GrantofOptionstotheIndependentNon-ExecutiveDirectoroftheCompany,TengkuAbuBakarAhmadBinTengkuAbdullahundertheCompany’sESOS.
Plesae indicate with an ”X’ in the appropriate boxes on how you wish your vote to be cast on the Resolutions specified in the Notice of Meeting. Unless voting instructions are indicated in the space above, the proxy will vote as he/she thinks fit.
Datedthis day of 2015
NoofOrdinarySharesHeld:
CDS Account No.:
TelNo.(duringofficehours):
FORM OF PROXY
Signature/CommonSealofShareholder(s)[*Deleteifnotapplicable]
Notes:-
1. A member of the Company entitled to attend and vote at this meeting is entitled to appoint not more than two (2) proxies to attend and vote at the meeting. Subject to Note 4 below, where a member appoints two (2) proxies, he/she shall specify the proportion of his/her shareholdings to be represented by each proxy. A proxy may but need not be a member of the Company and the provision of Section 149(1) (a) and (b) of the Companies Act, 1965 shall not apply to the Company.
2. The instrument appointing a proxy in the case of an individual shall be signed by the appointer or his/her attorney or in the case of a corporation executed under its common seal or signed on behalf of the corporation by its attorney or by an officer duly authorised.
3. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed or executed must be deposited at the Company’s Registered Office at Level 2, Tower 1, Avenue 5, Bangsar South City, 59200 Kuala Lumpur not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.
4. Where a member of the Company is an exempt authorized nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”) as defined under the Securities Industry (Central Depositories) Act, 1991, there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds.
5. In respect of deposited securities, only members whose names appear on the Record of Depositors on 23 March 2015 (General Meeting Record of Depositors) shall be eligible to attend the meeting or appoint proxy(ies) to attend and/or vote on his/her behalf.
(CompanyNo.646756-X)(IncorporatedinMalaysia)
For appointment of two proxies, percentage ofshareholdingtoberepresentedbytheproxies:-
No.ofShares Percentage
Proxy1 %
Proxy2 %
Total 100%
EDUSPEC HOLDINGS BERHAD (646756-X)
LEVEL 2, TOWER 1AVENUE 5, BANGSAR SOUTH CITY
59200 KUALA LUMPUR
Then fold here
1st fold here
Fold this flap for sealing
AFFIXSTAMP
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