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New Trend Lifestyle (NTLG)

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Tuesday 08 September, 2020

New Trend Lifestyle

Final Results

RNS Number : 3820Y
New Trend Lifestyle Group plc
08 September 2020
 

   

8 September 2020

 

RNS ANNOUNCEMENT: The information communicated in this announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

 

NEW TREND LIFESTYLE GROUP PLC

("NTLG" or "the Company" or "the Group")

 

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

 

 

 

CHAIRMAN'S & CEO'S STATEMENT, INCLUDING FINANCIAL REVIEW

Background and summary of trading performance

The Group's trading performance was in line with the prior year, with the sales and marketing initiatives implemented continuing to have effect. This, together with the tight control of costs, resulted in the group reporting a reduced loss for the year.

Trading

Sales in the year were SGD 6,670k (2018: SGD 6,491k), which is in line with the prior year. The Group loss before tax from continuing operations showed an improvement on the prior year at SGD 11k (2018: loss SGD 390k), as a result of the increase in sales, and also due to the cost reductions and tight control achieved by the Board during the year.

In the Company balance sheet, the Company recognised an impairment against the investment in subsidiary of SGD 2,661k.

Balance sheet

Net inventories increased to SGD 791k (2018: SGD 723k).

Cash flow

Cash in hand at the year-end was SGD 1,157k (2018: SGD 1,216k), and the Group continues to manage its cash within its available resources.

CURRENT TRADING AND OUTLOOK

Revenue in the first quarter of 2020 has been in line with the same period in the prior year, at SGD1,818k (2018Q1: SGD1,858k). However, the onset of the COVID-19 pandemic has had a major adverse impact on the Group's operations, as a result of the closure of retail outlets and gatherings on 7 April 2020. The outlets, and head office, remained closed until 19 June 2020, when the retail outlets re-opened, although the head office remains closed. Trading at the outlets remains subdued due to the ongoing effect of the pandemic. It is uncertain as to when the trading conditions will return to some normality.

POST BALANCE SHEET EVENTS

The Board has received an offer from Master Phang to acquire the main trading subsidiary, New Trend Lifestyle Pte Ltd ("NTL"), from the Company. The proposal would involve the disposal of NTL, the raising of new finance by way of a placing of new shares, and the conversion of the Company into a Rule 15 cash shell in accordance with the AIM rules. The Company would then seek a reverse takeover target.

The Board have considered the trading outlook for the Group, the short and medium term liquidity position as a result of the COVID-19 pandemic, and the lack of progress in the search for a new acquisition, and have reached the conclusion that these proposals would be in the best interest of remaining shareholders. The Company has issued a circular to shareholders to dispose of NTL to Master Phang, and raise £1,000,000 by way of a placing of new shares. These proposals are conditional on receiving shareholder approval at the General Meeting as described in an announcement made today and a circular to shareholders which will be published and sent to shareholders, together with the Report and Accounts (together with the appropriate Meeting Notices for a General Meeting and the Annual General Meeting of the Company to be held on 1 October 2020) later today.

The Annual Report and Accounts, together with the Notice of Annual General Meeting, and the circular to shareholders mentioned herein (together with the Notice of General Meeting) will also be made available on the Company's website www.newtrendlifestylegroup.com later today.

 

Gregory Collier  Phang Song Hua

CHAIRMAN  CHIEF EXECUTIVE

 

For further information:

 

New Trend Lifestyle Group Plc

Gregory Collier, Non-Executive Chairman

+44 (0) 7830 182501

SPARK Advisory Partners Limited (NOMAD)

Mark Brady/Neil Baldwin

 

+44 (0) 20 3368 3550

Peterhouse Capital Limited (Broker)

Heena Karani/Lucy Williams

+44 (0) 20 7496 0930

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2019

 

Notes

Year ended

Year ended

 Continuing operations

 

31 December

2019

31 December

2018

 

 

SGD'000

SGD'000

 

 

 

 

Revenue from contracts with customers

5

6,670

6,491

 

 

 

 

Direct purchases and costs

 

(1,620)

(1,545)

Personnel expenses

7

(2,824)

(3,044)

Depreciation and amortisation expenses

 

(980)

(310)

Finance expenses

8

(305)

(97)

Commission expenses

 

(80)

(20)

Advertising and promotional expenses

 

(100)

(320)

Bank charges

 

(198)

(156)

Other operating expenses

9

(1,228)

(1,871)

Loss on Disposal

 

-

(8)

Other income

6

654

520

Loss before tax

 

(11)

(360)

Income tax (charges) / credits

10

-

-

Loss from continuing operations

 

(11)

(360)

Discontinued operations

 

 

 

Loss from discontinued operations

 

-

(30)

 

 

 

 

Loss for the year from continuing and discontinued operations

 

(11)

(390)

Other comprehensive income

 

-

-

Loss and total comprehensive income for the year

 

(11)

(390)

Attributable to:

 

 

 

 - Owners of the parent

 

(114)

(390)

 - Non-controlling interest

 

103

-

 

 

(11)

(390)

 

 

 

 

Basic and diluted loss per share

 

SGD

SGD

From continuing operations

11

  (0.0006)

(0.0026)

From discontinued operations

11

  (0.0000)

  (0.0002)

 

 

(0.0006)

(0.0028)

 

The notes to the accounts are an integral part of these consolidated financial statements.

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2019

Notes

31 December

2019

31 December 2018

 

SGD'000

SGD'000

ASSETS

 

 

 

Non-current assets

 

 

 

Property, plant and equipment 

15

2,127

1,280

Investment property

14

1,848

1,904

Intangible assets

16

-

-

 

 

3,975

3,184

Current assets

 

 

 

Inventories

17

791

723

Trade and other receivables 

18

373

428

Cash and cash equivalents 

19

1,157

1,216

 

 

2,321

2,367

Total assets

 

6,296

5,551

 

 

 

 

EQUITY and LIABILITIES

 

 

 

Capital and reserves attributable to

equity shareholders

 

 

 

Share capital

23

419

333

Share premium

23

3,301

3,033

Other reserves

 

208

295

Group reorganisation reserve

 

2,845

2,845

Currency translation reserve

 

-

(61)

Accumulated deficit

 

(7,088)

(7,027)

Total Equity attributable to owners of the parent

 

(315)

(582)

Non-Controlling interest

 

203

-

Total equity

 

(112)

(582)

 

 

 

 

Non-current liabilities

 

 

 

Provision for restoration costs

22

15

55

Other financial liabilities

21

3,604

2,715

 

 

3,619

2,770

Current liabilities

 

 

 

Trade and other payables 

20

1,187

2,427

Other financial liabilities

21

1,538

912

Provision for restoration costs

22

64

24

 

 

2,789

3,363

Total equity and liabilities

 

6,296

5,551

 

The notes to the accounts are an integral part of these consolidated financial statements.

The financial statements were approved by the Board of directors and authorised for issue on 8 September 2020. They were signed on its behalf by:

 

 

Greg Collier

Director

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2019

 

 

Notes

 

Year ended

31 December

2019

Year ended 31 December 2018

 

SGD'000

SGD'000

Cash flows from operating activities

 

 

 

Loss before income tax

 

(11)

(390)

Adjustments for:

 

 

 

Depreciation and amortisation expense

 

980

310

Interest expense

 

305

97

Provision for restoration costs

 

-

(13)

Loss on write-off of property, plant & equipment

 

5

54

Movement in stock provision

 

(85)

(50)

 

 

1,194

8

Changes in working capital:-

 

 

 

Decrease in inventories

 

16

17

Decrease in receivables

 

55

71

Decrease in payables

 

(887)

(45)

Cash generated from operations

 

378

51

 

 

 

 

Net cash inflow from operating activities

 

378

51

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment

15

(7)

(171)

Net cash outflow from investing activities

 

(7)

(171)

 

 

 

 

Cash flows from financing activities

 

 

 

Net proceeds from borrowings

21

1,094

-

Net proceeds from share issue

 

100

-

Repayment of borrowings

 

(357)

(376)

Redemption of convertible loans

 

(250)

(170)

Principal elements of lease payments

 

(739)

(55)

Interest paid

 

(278)

(182)

Net cash outflow from financing activities

 

(430)

(783)

 

 

 

 

Net decrease in cash and cash equivalents

(59)

(903)

 

 

 

Cash and cash equivalents at start of year

 

1,216

2,119

Cash and cash equivalents at end of year

19

1,157

1,216

 

 

 

 

     

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with maturity of three months or less, as adjusted for any bank overdrafts.

 

The notes to the accounts are an integral part of these consolidated financial statements.

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2019

 

  Note

Share Capital

Share premium

Accumulated deficit

Other reserves

Group recognition reserve

Currency translation reserve

Total

Non-controlling interests

Total equity

 

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

At 1 January 2018

243

2,221

(6,637)

303

2,845

(61)

(1,086)

-

(1,086)

Comprehensive income

 

 

 

 

 

 

 

 

 

(Loss) for the year

-

-

(390)

-

-

-

(390)

-

(390)

Total Comprehensive income for the year

-

-

(390)

-

-

-

(390)

-

(390)

Share issued in the year

90

812

-

-

-

-

902

-

902

Convertible loan notes

-

-

-

(8)

-

-

(8)

-

(8)

At 31 December 2018

333

3,033

(7,027)

295

2,845

(61)

(582)

-

(582)

 

 

 

 

 

 

 

 

 

 

At 1 January 2019

333

3,033

(7,027)

295

2,845

(61)

(582)

-

(582)

Comprehensive income

 

 

 

 

 

 

 

 

 

(Loss) for the year

-

-

(114)

-

-

-

(114)

103

(11)

Total Comprehensive income for the year

-

-

(114)

-

-

-

(114)

103

(11)

Share issued in the year

86

268

-

-

-

-

354

-

354

Effect of adopting IFRS 16 Lease

-

-

(38)

-

-

-

(38)

-

(38)

Non-Controlling Interest

-

-

-

-

-

-

-

100

100

Foreign exchange reserve movement

-

-

(61)

-

-

61

-

-

-

Expiry of warrants

-

-

153

(153)

-

-

-

-

-

Convertible loan notes

-

-

-

66

-

-

66

-

66

At 31 DECEMBER 2019

419

3,301

(7,088)

208

2,845

-

(315)

203

(112)

 

Share capital

Amount subscribed for shares at nominal value.

Share premium

Amount subscribed for share capital in excess of nominal value.

Other reserves

Cumulative amounts charged in respect of share-based payments for unsettled warrants issued and the equity portion of convertible loans issued.

Group reorganisation reserve

Effect on equity of the group reorganisation. See Note 2.

Currency translation reserve

 

Accumulated deficit

The currency translation reserve represents historic foreign exchange differences on consolidation.

 

Cumulative deficit of the Group attributable to equity shareholders.

 

 

The notes to the accounts are an integral part of these consolidated financial statements.

 

 

 

COMPANY STATEMENT OF FINANCIAL POSITION

As at 31 December 2019

 

Notes

31 December 2019

31 December 2018

 

SGD'000

SGD'000

ASSETS

 

 

 

Non-current assets

 

 

 

Investments in subsidiaries 

13

700

3,361

 

 

700

3,361

Current assets

 

 

 

Trade and other receivables 

18

6

9

Cash and cash equivalents 

 

-

-

 

 

6

9

Total assets

 

706

3,370

 

 

 

 

EQUITY and LIABILITIES

 

 

 

Capital and reserves attributable

to equity shareholders

 

 

 

Share capital

23

419

333

Share premium

23

3,301

3,033

Other reserves

 

8

162

Merger relief reserve

 

545

5,069

Accumulated deficit

 

(4,751)

(6,517)

Total equity

 

(478)

2,080

 

 

 

 

Current liabilities

 

 

 

Trade and other payables 

20

1,164

1,270

Financial liabilities

21

20

20

 

 

1,184

1,290

Total equity and liabilities

 

706

3,370

     

 

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The Company's loss for the year was SGD 2,912k (2018: SGD 357k).

 

The notes to the accounts are an integral part of these financial statements.

The financial statements were approved by the Board of directors and authorised for issue on 8 September 2020. They were signed on its behalf by:

 

 

 

Greg Collier

Director

 

 

COMPANY STATEMENT OF CASH FLOWS

For the year ended 31 December 2019

 

Notes

 

Year ended

31 December 2019

Year ended

31 December 2018

 

SGD'000

SGD'000

Cash flows from operating activities

 

 

Loss before income tax

(2,912)

(357)

Adjustment for:

 

 

Reversal of interest expense

-

(141)

Impairment of investments

2,661

139

 

(251)

(359)

Changes in working capital:-

 

 

Decrease/(increase) in receivables

4

(4)

Increase in payables 

247

338

Cash generated/(expended) by operations

-

(25)

 

 

 

Net cash flow from operating activities

-

  (25)

 

 

 

Cash flows from financing activities

 

 

Proceeds from issues of share capital

-

-

Net cash from financing activities

-

-

 

 

 

Net increase/(decrease) in cash and cash equivalents

-

(25)

 

 

 

Cash and cash equivalents at start of year

-

25

Cash and cash equivalents at end of year

-

-

 

 

 

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with maturity of three months or less, as adjusted for any bank overdrafts.

 

The notes to the accounts are an integral part of these financial statements.

 

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2019

 

 

 

Share capital

Share premium

Accumulated deficit

Other reserves

Merger relief reserve

Total

 

 

Notes

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

At 1 January 2018

 

243

2,221

(6,160)

162

5,069

1,535

Loss for the year

 

-

-

(357)

-

-

(357)

Issue of shares

 

90

812

-

-

-

902

Convertible Loan notes

 

-

-

-

-

-

-

At 31 December 2018

 

333

3,033

(6,517)

162

5,069

2,080

 

 

 

 

 

 

 

 

At 1 January 2019

 

333

3,033

(6,517)

162

5,069

2,080

Loss for the year

 

-

-

(2,912)

-

-

(2,912)

Issue of shares 

23

86

268

-

-

-

354

Merger relief

 

-

-

4,524

-

(4,524)

-

Expiry of warrants

 

-

-

153

(153)

-

-

Convertible Loan notes

 

-

-

 

-

-

-

At 31 December 2019

 

419

3,301

(4,751)

8

545

(478)

 

 

 

 

 

 

 

 

         

 

Share capital

Amount subscribed for shares at nominal value.

Share premium

Amount subscribed for share capital in excess of nominal value.

Other reserves

Cumulative amounts charged in respect of share-based payments for unsettled warrants issued and the equity portion of convertible loans issued.

Merger relief reserve

Arises from the 100% acquisition of NTL in June 2013 whereby the excess of the fair value of the issued share capital over the nominal value of the shares was transferred to this reserve in accordance with Section 612 of the Companies Act 2006. Cumulative impairments recognised to date on this investment have been transferred to profit and loss reserves.

Accumulated deficit

Cumulative deficit of the Company attributable to equity shareholders.

 

 

The notes to the accounts are an integral part of these financial statements.

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

1.  General information

  New Trend Lifestyle Group Plc ("the Company") is a public limited company incorporated in England on 21 March 2012 under the Companies Act 2006 but domiciled in Singapore. It was listed on the AIM market on 28 June 2012. The address of the registered office is given at the start of the annual report. The nature of the Group's operations and its principal activities are set out in the Chairman's Statement on page 2.

 

2.  Basis of preparation and significant accounting policies

  The consolidated financial statements of New Trend Lifestyle Group Plc have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS's as adopted by the EU), IFRS Interpretations Committee and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

 

  The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.

 

    Going concern

  These financial statements have been prepared on the assumption that the Group is a going concern.

 

  When assessing the foreseeable future, the directors have looked at a period of twelve months from the date of approval of this report. The forecast cash-flow requirements of the business are contingent upon the ability of the Group to generate future sales.

 

  The COVID-19 outbreak has had a significant impact on the Group's operations since April 2020, when the Singapore Government announced the closure of all retail businesses and social gatherings. These restrictions were relaxed in June 2020, but there remains reduced levels of activity in the retail outlets, and still no corporate events at Head Office. This disruption is likely to continue for the remainder of 2020 and should hopefully ease when the pandemic eventually concludes.

 

  With the proposed disposal and new placing, the directors believe that the Group will have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

 

 

Application of new and revised International Financial Reporting Standards (IFRSs)

 

 

(a)  New and amended standards adopted by the Group

 

  The Group adopted IFRS 16 for the first time during the financial year using the modified retrospective approach. This resulted in the Group recognising right-of-use assets and lease liabilities at 1 January 2019 of SGD 1,001k and SGD 1,039k respectively. Consequently, a transition adjustment increasing the Group's accumulated deficit of SGD 38k arose.

 

  There are no other IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 April 2019 that would be expected to have a material impact on the Company.

  The new IFRSs adopted during the year areas as follows:

 

IFRS 16 - Leases

Amendments to IFRIC 23 - Uncertainty over income tax treatments

 

 

Standards, interpretations and amendments to published standards that are not yet effective.

 

  The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 January 2020 and have not been early adopted:

 

Reference

Title

Summary

Application date of standard

Application date of Company

IFRS 17

Insurance Contracts

Applies a model that combines a current balance sheet measurement of insurance contracts with recognition of profit over the period that services are provided.

Periods commencing on or after 1 January 2021

1 January 2021

IAS 23

Borrowing Costs

Annual Improvements 2015-2017 Cycle

Periods commencing on or after 1 January 2020

1 January 2020

 

 

Basis of consolidation

  The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31st December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

 

  On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to profit and loss in the year of acquisition. The interest of minority shareholders is stated at the minority's proportion of the fair values of the assets and liabilities recognised. Subsequently, any losses applicable to the minority interest in excess of the minority interest are allocated against the interests of the Parent Company. See also accounting policy on group reorganisation for acquisitions categorised as group reorganisation.

 

-All intra-group transactions, balances, income and expenses are eliminated on consolidation.

 

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

 

Group reorganisation accounting

The Company acquired its 100% interest in New Trend Lifestyle Pte Ltd ("NTL") in 2012 by way of a share for share exchange. This is a business combination involving entities under common control and the consolidated financial statements are issued in the name of the Group but they are a continuance of those of NTL.  Therefore, the assets and liabilities of NTL have been recognised and measured in these consolidated financial statements at their pre combination carrying values. The retained earnings and other equity balances recognised in these consolidated financial statements are the retained earnings and other equity balances of the Company and NTL. The equity structure appearing in these consolidated financial statements (the number and the type of equity instruments issued) reflect the equity structure of the Company including equity instruments issued by the Company to affect the consolidation.

 

The difference between consideration given and net assets of NTL at the date of acquisition is included in a group reorganisation reserve.

 

 

 

Functional and presentation currency 

The individual financial statements of each entity are measured using the currency of the primary economic environment in which the entity operates ("functional currency").

 

The consolidated financial statements are presented in Singapore dollars (SGD), which is the functional currency of the trading entity within the group.

 

 

 

 

 

 

2019

2018

 

Year End

Average

Year End

Average

 

 

 

 

 

GBP to SGD

1.79

1.74

1.73

1.81

 

 

 

 

 

 

 

Transactions and balances 

Transactions in a currency other than the functional currency ("foreign currency") are measured in the respective functional currencies and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

 

Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance sheet date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Company's net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity in the consolidated financial statements. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

 

 

Revenue recognition

Group companies recognise revenue from contracts with customers when (or as) the group company satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset. When (or as) a performance obligation is satisfied, the company recognises as revenue the amount of the transaction price (which includes estimates of variable consideration that are constrained in accordance with IFRS 15) that is allocated to that performance obligation.

 

Further details of the group company's revenue and other income recognition policies are as follows:

 

Service income is recognised as income on a straight-line based over the term unless another systematic basis is more representative of the time pattern of the user's benefit.

 

Rental income arising from operating leases is recognised on a straight-line basis over the lease terms.

 

  Interest income is recognised on a time-proportion basis using the effective interest method. When a loan and receivable is impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables is recognised using the original effective interest rate.

 

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all terms and conditions relating to the grants have been complied with. When the grant relates to an asset, the fair value is recognised as deferred capital grant on the balance sheet and is amortised to profit or loss over the expected useful life of the relevant asset by equal annual instalments.

 

Where the grant relates to income, the government grant shall be recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Grants related to income may be presented as a credit in profit or loss, either separately or under a general heading such as "Other income". Alternatively, they are deducted in reporting the related expenses.

 

 

  Employees' benefits

  i)  Retirement benefits 

  The Group participates in the national schemes as defined by the laws of the countries in which it has operations.

 

  Singapore

  The Group makes contributions to the Central Provident Fund (CPF) Scheme in Singapore, a defined contribution pension schemes. 

     

  Obligations for contributions to defined contribution retirement plans are recognised as an expense in the period in which the related service is performed.

 

    (ii) Employee leave entitlement 

    Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability as a result of services rendered by employees up to the balance sheet date.

  Borrowing costs

  Borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of fund.

  Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of an item of property, plant and equipment including subsequent expenditure is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

 

When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance expenses are recognised in profit or loss when incurred.

 

After initial recognition, property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment loss.

 

All items of property, plant and equipment are depreciated or amortised using the straight-line method to write-off the cost of the assets over their estimated useful lives as   follows: -

 

 

Useful lives (Years)

Computer equipment

3

Electrical equipment

5

Furniture and fittings

3

Motor vehicles

5 to 6

Office equipment

3

Leasehold property

41

Renovation

Over the lease term

 

  The estimated useful life and depreciation method are reviewed, and adjusted as appropriate, at each balance sheet date to ensure that the amount, method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. Fully depreciated assets are retained in the financial statements until they are no longer in use.

 

  An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The gain or loss on retirement or disposal is determined as the difference between any sales proceeds and the carrying amounts of the asset and is recognised in the profit or loss within "Other income (expenses)" and the asset revaluation reserve related to those asset, if any, is transferred directly to retained earnings.

 

Investment properties

Investment properties are properties that are either owned by the Group or leased under a finance lease in order to earn rentals or for capital appreciation, or both, rather than for use in the production or supply of goods or services, or for administrative purposes, or in the ordinary course of business. Investment properties comprise completed investment properties and properties that are being constructed or developed for future use as investment properties. Properties held under operating leases are classified as investment properties when the definition of investment properties is met and they are accounted for as finance leases.

 

Investment properties are initially measured at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met. Subsequent to initial recognition, investment properties are measured at cost less depreciation (depreciation of investment properties is calculated using the straight-line method to allocate the depreciable amount over the estimated useful life of 41 years).

 

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The gain or loss on the retirement or disposal of an investment property is determined as the difference between any sales proceeds and the carrying amounts of the asset and is recognised in profit or loss in the year of retirement or disposal within "Other income (expenses)".

 

Intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives.

 

The significant intangibles recognised by the Group and their useful economic lives are as follows:

  Useful lives (Years)

Software development costs  3

 

  Financial instruments

A financial instrument is recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial assets to another party without retaining control or substantially all risks and rewards of the asset. Regular purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.

 

Fair values

The carrying amounts of the financial assets and liabilities such as cash and cash equivalents, receivables and payables of the Group at the balance sheet date approximated their fair values, due to the relatively short-term nature of these financial instruments.

 

The Company provides financial guarantees to licensed banks for credit facilities extended to a subsidiary company. The fair value of such financial guarantees is not expected to be significantly different as the probability of the subsidiary company defaulting on the credit lines is remote.

  Financial assets

Initial recognition and measurement

Financial assets are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are initially recognised at fair value plus, in the case of financial assets classified as held-to-maturity, directly attributable transaction costs.

 

The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the nature of the assets and the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition and for held-to-maturity investments, re-evaluates this designation at every balance sheet date. As at the balance sheet date, the Group has no financial assets in the category of held-to-maturity investments and available-for-sale financial assets.

 

 Subsequent measurement 

(i)   Financial assets at fair value through profit or loss

  This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified as held for trading if they are acquired principally for the purpose of selling or repurchasing in the short term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets designated at fair value through profit or losses are those that are managed and their performance is evaluated on a fair value basis, in accordance with the Group's investment policy.  Assets in this category are presented as current assets if they are either held for trading or are expected to be realised within 12 months after the balance sheet date.

 

  Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains and losses arising from changes in fair value of the financial assets are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss include exchange differences, interest and dividend income.

 

  Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.

 

(ii) Loans and receivables 

  Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those expected to be realised later than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables comprise cash and cash equivalents, trade and other receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest rate method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

 

Derecognition

Financial assets are derecognised when the contractual rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, i.e. the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of the assets within the period generally established by regulation or convention in the marketplace concerned.

 

 

Impairment of financial assets

The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired.

 

 (i) Financial assets carried at amortised cost

  For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment.

 

  An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in the profit or loss.

 

When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset.

 

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

 

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

 

(ii) Financial assets carried at cost 

  If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

 

Financial liabilities

Initial recognition and measurement 

  Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition. Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities not at fair value through profit or loss, directly attributable transaction costs. As at the balance sheet date, the Group did not have any financial liabilities in the category of financial liabilities at fair value through profit or loss.

Subsequent measurement

  Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when liabilities are derecognised, and through the amortisation process.

Derecognition 

  A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss. 

Provisions

  A provision is recognised when the Group has a present obligation, legal or constructive, as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. Where the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

 

Borrowings

  Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date, in which case they are presented as non-current liabilities.

 

Borrowings are initially recorded at fair value, net of transaction costs and subsequently carried for at amortised costs using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowings which are due to be settled within twelve months after the balance sheet date are included in current borrowings in the balance sheet even though the original term was for a period longer than twelve months and an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the balance sheet date and before the financial statements are authorised for issue.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

 

Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using tax rates and tax laws that have been substantively enacted by the balance sheet date in the countries where the Group operates and generates taxable income. Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

 

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

 

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow deferred tax assets to be recovered.

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity.

 

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

 

 

Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset's recoverable amount.

 

An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely dependent on those from other assets.  Where the carrying amount of an asset or cash generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.

 

Impairment losses are recognised in profit or loss in those expense categories consistent with the function of the impaired asset, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

 

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset's or cash-generating unit's recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount of an asset since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. This increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the profit and loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.

Inventories

Inventories comprise finished goods held for resale and are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to be incurred for selling and distribution.

 

Assets classified as held for sale

Non-current assets (or disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

 

Cash and cash equivalents

In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months.

 

Share Capital

Ordinary shares are classified as equity. Proceeds from issuance of ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against share capital.

 

Investments in subsidiaries

Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.

 

Leases

The Group applies, for the first time, IFRS 16 Leases, that does not require restatement of previous financial statements.

 

Several other amendments and interpretations apply for the first time in 2019, but do not have an impact on the Consolidated Financial Statements of the Group.

 

IFRS 16 Leases

IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees - leases of 'low-value' assets (e.g. personal computers) and short-term leases (i.e. leases with a lease term of twelve months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e. the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e. the right-of-use asset).

 

Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

 

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the rightofuse asset.

IFRS 16, which is effective for annual periods beginning on or after 1 January 2019, requires lessees and lessors to make more extensive disclosures than under IAS 17.

 

Transition to IFRS 16

The Group adopted IFRS 16 using the simplified retrospective method of adoption with the date of initial application of 1 January 2019. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application. The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option ('short-term leases'), and lease contracts for which the underlying asset is of low value ('low-value assets').

 

The effect of adoption of IFRS 16 is as follows:

Impact on the statement of financial position as at 31 December 2018:

 

 

 

31 December 2018

 

 

SGD'000

Assets

 

 

Property, plant and equipment (right-of-use assets)

 

1,001

Liabilities

 

 

Lease liabilities

 

(1,039)

Net impact on equity

 

(38)

 

The cumulative impact on equity to 31 December 2018 can be reconciled as follows:

 

 

SGD'000

Depreciation expense

 

(412)

Rent expense

 

433

Net impact on profit from operations

 

21

Finance costs

 

(59)

Net impact on loss for the period

 

(38)

     

 

 

Cumulative impact on the statement of cash flows to 31 December 2018 is as follows:

 

 

£'000

Net cash flows from operating activities

 

374

Net cash flows from financing activities

 

(374)

 

Summary of new accounting policies

Right of use assets

The Group recognises right of use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right of use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right of use assets are subject to impairment.

 

Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

 

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 5.75%. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

 

Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below $5,000). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

 

Amounts recognised in the statement of financial position

 

 

Right of use assets

Lease liabilities

 

 

SGD'000

SGD'000

As at 1 January 2019

 

1,001

1,216

Additions

 

768

768

Depreciation expense

 

(702)

-

Interest expense (included in finance costs)

 

-

77

Payments

 

-

(816)

As at 31 December 2019

 

1,067

1,245

Current

 

-

687

Non-current

 

1,067

558

 

Maturity of leases

 

 

31 December

 

 

2019

 

 

SGD'000

Within one year

 

687

Between one and two years

 

424

Between two and five years

 

134

 

 

1,245

 

 

i  As lessee

  For any new contracts entered into on or after 1 January 2019, the Group considers whether a contract is, or contains a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'.

 

  At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

 

  The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

 

  At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate.

 

  Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

 

  Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.

 

  When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

 

  The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.

  On the statement of financial position, right-of-use assets have been included in property, plant and equipment and lease liabilities have been included in other financial liabilities.

 

 

ii.    As lessee

Operating leases

As explained above, the Group has changed its accounting policy for leases where the Group is

the lessee. The new policy and the impact of the change are described above.

 

Until 31 December 2018 the determination of whether an arrangement was a lease was based on

the substance of the arrangement at the inception of the lease. The arrangement was a lease if

fulfilment of the arrangement was dependent on the use of a specific asset and the arrangement

conveyed a right to use the asset, even if that asset was not explicitly specified in an arrangement.

 

Rentals payable under operating leases were charged to expense on a straight-line basis over the

term of the relevant lease. Contingent rentals arising under operating leases were recognised as

an expense in the period in which they were incurred.

 

In the event that lease incentives were received to enter into operating leases, such incentives were

recognised as a liability. The aggregate benefit of incentives was recognised as a reduction of rental

expense on a straight-line basis over the lease term, except where another systematic basis was

more representative of the time pattern in which economic benefits from the leased asset were

consumed. 

 

Leases in which the company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising from operating leases on the Company's investment properties is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

 

Rental leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement.

 

 

3.  Critical accounting estimates and judgements

Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

i.  Critical accounting estimates and assumptions.

  The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

  (a)   Useful lives of freehold building and investment property 

  The cost of freehold building is depreciated on a straight-line basis over the estimated economic useful lives. Management estimates the useful lives of the freehold building to be 50 years. This is a common life expectancy applied in the industry. Changes in the physical conditions of the freehold building and/or expected level of usage and technological developments could impact the economic useful life of the asset. Therefore, future depreciation charges could be revised. As at 31 December 2019, there are no indications that the remaining economic useful life of the asset is significantly lower than the remaining useful life. The carrying amount of the Group's freehold building at the balance sheet date is disclosed in Note 15 to the financial information.

 

  Depreciation of investment properties is calculated using the straight-line method to allocate the depreciable amount over the estimated useful life of 41 years. The residual value, useful life and depreciation method of investment properties are

  reviewed, and adjusted as appropriate, at the end of each reporting period. The effects of any revision are included in profit or loss when the changes arise.

 

    (b)  Impairment of inventories 

  An impairment review is made periodically on inventory for excess inventory, obsolescence and declines in net realisable value below cost and an allowance is recorded against the inventory balance for any such declines. These reviews require management to estimate future demand for the products. Possible changes in these estimates could result in revisions to the valuation of inventory. The carrying amount of inventories as at 31 December 2019 is disclosed in Note 17 to the financial information.

 

    (c)  Fair value measurement of the derivative financial instrument and convertible loan 

  Where the fair values of financial instruments recorded on the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the discounted cash flow model. The inputs to these models are derived from observable market data where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The determination of the fair value is based on a probability - weighted expected outcome for the conversion right and taking into consideration of certain parameters such as the issuer's probability of listing on AIM from inception until the maturity of the convertible loan note and the expected return based on the issuer's estimated credit rating.  Changes in assumptions about these factors could affect the reported fair value of the derivative financial instrument and convertible loan.

 

    The basis of estimates and the carrying amounts of the derivative financial instrument and convertible loan as at 31 December 2019 are disclosed in Note 21 to the financial information.

 

  (d)  Impairment of investment in subsidiaries

  Investments are held as non-current assets at cost less any provision for impairment. Where the recoverable amount of the investment is less than the carrying amount, impairment is recognised.

 

3.  Critical accounting estimates and judgements (continued)

 

ii.  Critical judgement in applying the entity's accounting policies

  In the opinion of the management, there are no critical judgements made in applying the Group's accounting policies, apart from those involving estimations, which has a significant effect on the amounts recognised in the financial statements.

 

4.  Segmental reporting

In the opinion of the Directors the Group has one class of business, being the provider of Feng Shui services in Singapore.

The Group's primary reporting format is determined by the geographical segment according to the location of its establishments. There is currently one geographic reporting segment.

 

2019  2018

 

 

Singapore

Other

Total

Singapore

Other

Total

 

SGD

'000

SGD

'000

SGD

'000

SGD

'000

SGD

'000

SGD

'000

Income Statement

 

 

 

 

 

Revenues from external customers

6,670

-

6,670

6,491

-

6,491

Other income

654

-

654

550

-

550

Interest expense

-

-

-

-

-

-

Depreciation and amortisation

(980)

-

(980)

(310)

-

(310)

Impairment of assets

-

-

-

-

-

-

Gain on disposal of property, plant and equipment

-

-

-

-

-

-

Direct and operating costs

(3,547)

(2,912)

(6,459)

(6,824)

(357)

(7,181)

Group profit / (loss) before tax

2,797

(2,912)

(114)

(33)

(357)

(390)

Assets and Liabilities

 

 

 

 

 

Segment assets

5,590

706

6,296

5,541

10

5,551

Segment liabilities

(6,271)

(137)

(6,408)

(6,027)

(106)

(6,133)

 

(681)

569

(112)

(486)

(96)

(582)

 

Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales in the current year (2018: nil).

 

5.  Revenue

 

 

2019

2018

 

 

SGD'000

SGD'000

 

 

 

 

Sale of products

 

2,890

2,743

Services rendered

 

3,780

3,748

 

 

 

 

6,670

6,491

 

 

______

______

 

6.  Other income

 

 

2019

2018

 

 

SGD'000

SGD'000

 

 

 

 

Government grants

 

46

73

Rental income

 

414

396

Others

 

194

51

 

 

Total other income

 

654

520

 

 

______

______

 

 

 

 

7.  Personnel expenses and staff numbers (including Directors)

 

 

Group

Company

 

 

2019

2018

2019

2018

 

 

Number

Number

Number

Number

The average number of employees in the year were:

 

 

 

 

 

Directors

 

3

3

3

4

Operations

 

41

49

-

-

 

 

 

 

44

52

3

4

 

 

______

______

______

______

 

 

 

 

 

 

 

SGD'000

SGD'000

SGD'000

SGD'000

The aggregate payroll costs for these persons were:

 

 

 

 

Salaries, wages and bonuses

2,414

2,728

-

127

Pension contribution

317

236

-

-

Employee benefits

93

80

-

-

 

Total personnel expense

2,824

3,044

-

127

 

______

______

________

________

          

 

7.  Personnel expenses and staff numbers (including Directors) (continued)

Directors' remuneration

Year ended 31 December 2019

Year ended 31 December 2018

 

Salaries and fees

Pension contri-butions

Total

Salaries and fees

Pension contri-butions

Total

 

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

Hillary Phang Song Hua

593

15

608

593

17

610

Ajay Kumar Rajpal *

93

-

93

85

-

85

Gregory Collier

26

-

26

27

-

27

Leung Chi Chiu

1

-

1

13

-

13

Leung Bo Yee Nancy

-

-

-

18

-

18

 

 

713

15

728

736

17

753

 

_________

_________

_________

_________

________

________

 

 

 

 

 

 

 

 

  *Includes consultancy fees charged

 

8.  Finance expenses, net

 

 

 

2019

2018

 

 

 

SGD'000

SGD'000

Finance income: Over-accrued Convertible loan Interest

 

 

-

141

 

 

 

 

 

 

-

141

Less Finance costs

 

 

 

 

-  Lease obligations

 

 

77

13

-  Term loans

 

 

177

136

-  Convertible loan

 

 

51

89

 

 

 

 

 

 

305

238

 

 

 

Finance costs, net

 

 

305

97

 

 

 

______

______

 

9.  Other operating expenses

 

 

 

2019

2018

 

 

 

SGD'000

SGD'000

Auditors' fees: - Audit

 

 

21

31

Professional fees

 

 

143

204

Printing and stationery

 

 

21

1

Repairs and maintenance

 

 

19

-

Stamp duties

 

 

6

-

Telephone and insurance

 

 

68

-

Operating lease expenses

 

 

411

1,219

Travelling and transportation

 

 

68

10

Other

 

 

471

406

 

 

 

Total other expenses

 

 

1,228

1,871

 

 

 

________

________

 

10.  Taxation

The major components of income tax (credit)/expense recognised in profit or loss for the year
ended 31 December 2019 and 2018 were as follows:

 

 

2019

2018

 

 

SGD'000

SGD'000

Current income tax

 

 

 

- Under / (Overprovision) in respect of previous years

 

-

-

 

 

 

 

Deferred tax:

 

 

 

- Benefits from previously unrecognised tax losses

 

-

-

 

 

Total tax charge / (credit) recognised in the profit and loss

 

-

-

 

 

_________

_________

 

The reconciliation of the tax expense and the product of accounting profit multiplied by the
effective rate is as follows:

 

 

 

2019

2018

 

 

 

SGD'000

SGD'000

Accounting profit/(loss)

 

 

(11)

(390)

 

 

 

Tax at the effective tax rate of Singapore of 17% (2018: 17%)

(2)

(66)

Unrecognised tax losses carried forward

 

 

2

66

 

 

 

Income tax (credit) / expenses

 

 

-

-

 

 

 

_________

_________

 

The Company is incorporated in the UK but is treated as a Singapore resident for tax purposes.

The Singapore Government has announced that for Years of Assessment ("YA") 2020, all companies will receive a 25% Corporate Income Tax ("CIT") Rebate that is subject to a cap of $15,000 per YA, Years of Assessment ("YA") 2019, all companies will receive a 40% Corporate Income Tax ("CIT") Rebate that is subject to a cap of $15,000 ,Years of Assessment ("YA") 2018, all companies will receive a 40% Corporate Income Tax ("CIT") Rebate that is subject to a cap of $15,000.

 

Unrecognised tax losses and capital allowances

Deferred income tax assets are recognised for tax losses and capital allowances carried forward to the extent that realisation of the related tax benefits through future taxable profits is probable.

 

The Group has unrecognised tax losses of SGD 218k (2018: SGD 1,433k) and capital allowances of SGD nil (2018: nil) at the reporting date which can be carried forward and used to offset against future taxable income subject to meeting certain statutory requirements. The tax losses and capital allowances have no expiry date.

 

 

11.  Loss per share

  Loss per share data is based on the Group loss for the year and the weighted average number of shares in issue.

 

Year ended

Year ended

 

31 December 2019

31 December 2018

Basic and diluted loss per share from continuing and discontinued operations

SGD

 

(0.00058)

SGD

 

(0.00264)

Loss from continuing operations for the purposes of basic and diluted profit per share

(114,290)

(390,152)

Number of shares

No.

No.

Weighted average number of ordinary shares for the purposes of basic earnings per share

196,780,822

147,876,712

 

 

 

    

 

 

Year ended

Year ended

 

31 December 2019

31 December 2018

Basic and diluted loss per share from continuing and operations

SGD

 

(0.00058)

SGD

 

(0.00243)

Loss from continuing operations and discontinued for the purposes of basic and diluted profit per share

(114,290)

(359,682)

Number of shares

No.

No.

Weighted average number of ordinary shares for the purposes of basic earnings per share

196,780,822

147,876,712

 

 

 

    

 

 

Year ended

Year ended

 

31 December 2019

31 December 2018

Basic and diluted loss per share from discontinued operations

SGD

 

-

SGD

 

(0.00021)

Loss from discontinued for the purposes of basic and diluted profit per share

-

(30,470)

Number of shares

No.

No.

Weighted average number of ordinary shares for the purposes of basic earnings per share

196,780,822

147,876,712

 

 

 

    

 

12.  Discontinued operations

 

Discontinued operations refers to the closure of the operation in Singapore. Analysis of the operations is as follows:

 

 

 

 

 

2018

2018

2018

 

Continuing operations

Discontinued operations

Total

 

SGD'000

SGD'000

SGD'000

 

 

 

 

Revenue

6,491

74

6,565

 

 

 

 

Direct purchases and costs

(1,545)

(18)

(1,563)

Personnel expenses

(2,917)

(41)

(2,958)

Depreciation and amortisation expenses

(310)

(18)

(328)

Finance expenses

(97)

-

(97)

Commission expenses

(20)

-

(20)

Advertising and promotional expenses

(320)

-

(320)

Bank charges

(156)

(2)

(158)

Operating lease expenses

(1,219)

(11)

(1,230)

Loss on disposal

(652)

(19)

(701)

Other operating expenses

(8)

-

(8)

Other income

520

5

555

Directors' remuneration

(127)

-

(127)

Loss before tax

(360)

(30)

(390)

 

 

13.  Investment in subsidiary undertakings

Company

 

2019

2018

 

 

SGD'000

SGD'000

Cost

 

 

 

At 1 January

 

5,225

5,225

 

 

At 31 December

 

5,225

5,225

 

 

Impairment

 

 

 

At 1 January

 

1,864

1,725

Impairment recognised in the year

 

2,661

139

 

 

At 31 December

 

4,525

1,864

 

 

 

 

 

 

 

 

Net Carrying Amount at 31 December

 

700

3,361

 

 

_________

_________

 

  The company held the following subsidiaries as at 31 December 2019:

Name of companies

Principal

activities

Country of incorporation

and place of business

Proportion (%) of

equity interest

 

 

 

2019 and 2018

 

 

 

%

Held by the Company

 

 

 

New Trend Lifestyle Pte

 Limited

Feng Shui services and products

Singapore

85.7 [2018 : 100]

 

 

 

 

 

 

 

 

 

 

 

14.  Investment property

Group

2019

2018

 

SGD'000

SGD'000

Balance Sheet:

 

 

Cost

 

 

As at the beginning of the year

2,273

2,273

 

As at the end of the year

2,273

2,273

 

Amortisation

 

 

As at the beginning of the year

369

314

Charge for the year

56

55

 

As at the end of the year

425

369

 

 

 

 

Net carrying amount at 31 December

1,848

1,904

 

 

 

 

Income statement:

2019

2018

 

SGD'000

SGD'000

Rental income from investment property:

 

 

      Minimum lease payments

414

396

 

Direct operating expenses (including repairs and  maintenance) arising from:

 

 

      Rental generating property expenses

55

71

     

Transfer from property, plant and equipment

On 21 May 2013, the Group transferred a leasehold building that was held as owner-occupied property to investment property.

 

The investment property held by the Group as at 31 December 2019 is as follows;

 

Description

Existing use

Tenure

Floor area

Fair Value

No. 22 Kaki Bukit Crescent,

Kaki Bukit Techpark I,

Singapore 416253

 

 

Offices

 

 

Leasehold

 

 

1,011.5 square metre

 

 

SGD 4,714,504

(2018: SGD 5,313,344)

 

At the end of the reporting period, the market value of the investment property is valued at SGD 4,714,504 (2018: SGD 5,313,344). In 2018 and 2019, the valuation was determined by management based on the quoted prices for similar properties in active markets whereas the the valuation for 2016 was determined based on the properties' highest and best use by an external and independent professional valuer, Dennis Wee Realty Pte Ltd, using the Comparable Sales Method, under which the property is assessed having regards to the recent transactions within the development and around the vicinity. Appropriate adjustments have been made between comparables and the subject property to reflect the differences in size, tenure, location, condition, prevailing marketing and all other factors affecting their value. The fair value measurement is categorised under Level 2 of the fair value hierarchy.

 

Property pledged as security

Group borrowings are secured against Investment property (Note 21).

 

15.  Property, plant and equipment

 

 

 

Leasehold property

Computer equipment

Electrical equipment

 

 

 

SGD'000

SGD'000

SGD'000

Cost

 

 

 

 

 

 

As at 1 January 2018

 

 

927

439

248

Additions

 

 

-

-

9

Disposals

 

 

-

-

-

 

 

 

As at 31 December 2018

 

 

927

439

257

Effect of adopting IFRS 16

 

 

-

-

-

 

 

 

As at 1 January 2019

 

 

927

439

257

Additions

 

 

-

2

-

Disposals/written off

 

 

-

-

(3)

 

 

 

As at 31 December 2019

 

 

927

441

254

 

 

 

 

 

 

 

 

 

Accumulated Depreciation

 

 

 

 

 

 

As at 1 January 2018

 

 

128

395

212

Charge for the year

 

 

23

24

25

Disposals

 

 

-

-

-

 

 

 

As at 31 December 2018

 

 

151

419

237

Effect of adopting IFRS 16

 

 

-

-

-

 

 

 

As at 1 January 2019

 

 

151

419

237

Charge for the year

 

 

23

22

14

Disposals/written off

 

 

(1)

-

(2)

 

 

 

As at 31 December 2019

 

 

173

441

249

 

 

 

 

 

 

 

 

 

Net book values

 

 

 

 

 

 

At 31 December 2019

 

 

754

-

5

 

 

 

At 31 December 2018

 

 

776

20

20

 

 

 

 

 

 

 

Furniture and fittings

 

Motor vehicles

 

Office equipment

 

Renovation

Outlet

 

 

Total

 

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

SGD'000

Cost

 

 

 

 

 

 

 

At 1 January 2018

218

538

-

1,130

-

3,500

Additions

-

-

-

161

-

170

Disposals/written off

-

-

-

(25)

-

(25)

 

As at 31 December 2018

218

538

-

1,266

-

3,645

Effect of adopting IFRS 16

-

-

298

-

1,115

1,413

 

As at 1 January 2019

218

538

298

1,266

1,115

5,058

Additions

-

-

-

5

768

775

Disposals/written off

-

-

-

(220)

-

(223)

 

As at 31 December 2019

218

538

298

1,051

1,883

5,610

 

 

 

 

 

 

 

 

Accumulated Depreciation and Amortisation

 

 

 

 

 

 

 

As at 1 January 2018

215

189

-

1,019

-

2,158

Charge for the year

3

86

-

71

-

232

Disposals/ written off

-

-

-

(25)

-

(25)

 

As at 31 December 2018

218

275

-

1,065

-

2,365

Effects of adopting IFRS 16

-

-

100

-

312

412

 

As at 1 January 2019

218

275

100

1,065

312

2,777

Charge for the year

-

81

59

83

643

925

Disposals/ written off

-

-

-

(216)

-

(219)

 

As at 31 December 2019

218

356

159

932

955

3,483

 

 

 

 

 

 

 

 

Net book values

 

 

 

 

 

 

At 31 December 2019

-

182

139

119

928

2,127

 

At 31 December 2018

-

263

-

201

-

1,280

 

Included in the above line items are right-of use assets over the following:

 

 

SGD'000

Outlet

928

Office equipment

139

 

1,067

 

 

  Assets held under hire purchase agreements

 

  The carrying amount of office equipment, motor vehicles and renovation held under finance leases at the balance sheet date was 2018: SGD 248,557.

 

  Leased assets are pledged as security for the lease obligations (Note 21).

 

   

  Assets pledged as security 

 

In addition to assets held under finance leases, the group's leasehold building with a carrying amount of SGD 753,631 (2018: SGD 776,240) is mortgaged to secure the Group's bank loans (Note 21).

 

16.   Intangible assets

 

 

Software development costs

 

SGD'000

Cost

 

 

At 1 January 2018

75

Additions

-

Disposals/written off

-

 

As at 31 December 2018

75

 

 

As at 1 January 2019

75

Additions

-

Disposals/written off

-

Currency translation differences

-

 

As at 31 December 2019

75

 

 

 

Accumulated Depreciation and Amortisation

 

 

At 1 January 2018

52

Charge for the year

23

Disposals/written off

-

Currency translation differences

-

 

As at 31 December 2018

75

 

 

As at 1 January 2019

75

Charge for the year

-

Disposals/ written off

-

Currency translation differences

-

 

As at 31 December 2019

75

 

 

 

Net book values

 

At 31 December 2019

-

 

At 31 December 2018

-

 

 

 

17.    Inventories

 

 

 

2019

2018

 

 

 

SGD'000

SGD'000

 

 

 

 

 

Finished goods

 

 

1,328

1,345

Less: Allowance for inventories obsolescence

(537)

(622)

 

 

 

 

 

 

791

723

 

 

 

_________

_________

The cost of inventories recognised as expense and included in 'direct purchase and costs' amounted to SGD 869,529 (2018: SGD 864,370). 


The reversal of write-down of inventories amounting to SGD 84,505 (2018: SGD 52,752) was made as the related inventories were sold above their carrying amounts. The reversal was included in 'direct purchase and costs'.

 

 

18.  Trade and other receivables

 

 

  Group

Company

 

 

2019

2018

2019

2018

 

 

SGD'000

SGD'000

SGD'000

SGD'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits*

 

297

273

-

-

Prepayments

 

34

153

6

9

Other receivables (non-trade)**

 

42

2

-

-

 

 

 

 

373

428

6

9

 

 

 

________

________

________

________

 

 

  *  Included in deposits are refundable rental deposits, amounting to SGD 241,259 (2018: SGD 254,000) paid in respect of office premises and retail outlets.

  **  This amount is as a result of a loan to the Temple partner (Zue Zuen Ge Enterprise)

 

 

 

19.   Cash and cash equivalents

 

 

 

2019

2018

 

 

 

SGD'000

SGD'000

 

 

 

 

Cash and bank balances

 

 

1,157

1,216

Fixed deposits

 

 

-

-

 

 

 

Cash and bank balances as presented in balance sheets

 

 

1,157

1,216

Less: Pledged fixed deposits

 

 

-

-

 

 

 

Cash and cash equivalents as presented in consolidated statement of cash flows 

 

 

1,157

1,216

 

 

 

 _________

 _________

 

 

 

 

 

 

   

 

20.  Trade and other payables

 

 

  Group

  Company

 

 

2019

2018

2019

2018

 

 

SGD'000

SGD'000

SGD'000

SGD'000

 

 

 

 

 

 

Trade payables

 

388

989

-

-

Other payables:

 

 

 

 

 

-  Due to a subsidiary (non-trade)*

 

-

-

1,027

1,164

-  Accrued expenses **

 

697

1,421

35

106

-  Customers' deposits

 

-

17

-

-

-  Others

 

102

-

102

-

 

 

 

 

 

 

 

 

 

 

1,187

2,427

1,164

1,270

 

 

 

_________

_________

________

________

  *  These amounts are unsecured, interest-free and repayable on demand.

**  Included in the accrued expenses of the Group as at 31 December 2019 mainly is an amount of SGD 494,501 (2018: SGD 514,631) which relates to audit fees and accruals that  are payable to its Group's personnel subsequent to the year end.

 

 

21.  Financial liabilities

 

 

  Group

  Company

 

 

2019

2018

2019

2018

 

 

SGD'000

SGD'000

SGD'000

SGD'000

Current liabilities

 

 

 

 

 

Lease liabilities

 

687

60

-

-

Bank loan

 

267

385

-

-

Convertible loan

 

585

467

20

20

 

 

 

 

1,538

912

20

20

 

 

_________

_________

_________

_________

Non-current liabilities

 

 

 

 

 

Lease liabilities

 

558

117

-

-

Bank loan

 

3,046

2,192

-

-

Convertible Loan

 

-

406

-

-

 

 

 

 

3,604

2,715

-

-

 

 

_________

_________

_________

_________

 

 

Group

 

Minimum lease payments

Interest

Present value of payments

 

 

SGD'000

SGD'000

SGD'000

2019

 

 

 

 

Not later than one year

 

732

(45)

687

Later than one year and not later than five years

 

577

(19)

558

 

 

 

 

1,309

(64)

1,245

 

 

_________

_________

_________

 

 

 

Minimum lease payments

 

Interest

 

Present value of payments

 

 

SGD'000

SGD'000

SGD'000

2018

 

 

 

 

Not later than one year

 

69

(9)

60

Later than one year and not later than five years

 

125

(8)

117

 

 

 

 

194

(17)

177

 

 

_________

_________

_________

 

 

 

 

 

Lease obligations are secured by the following: 

 

(a)   Motor vehicles of the Group (Note 15);

(b)   Personal guarantee by Master Phang, amounting to the total lease liability.

 

The weighted average effective interest rate for finance leases is 6.53% (2018: 6.53%) per annum. The carrying amounts of the Group's finance lease liabilities are approximate their fair value.

 

    Bank loan

Group

 

 

2019

2018

 

 

 

SGD'000

SGD'000

 

 

 

 

 

Term loan 1

 

 

-

969

Term loan 2

 

 

-

1,558

Term loan 3

 

 

-

49

Term loan 4

 

 

3,313

-

 

 

 

 

 

 

3,313

2,576

 

 

 

_________

_________

Terms loans of the Group are secured by the following: 

(a)  a personal guarantee by Master Phang; and

(b)  a mortgage on the Group's investment property (Note 14) and leasehold building (Note 15).

The borrowings are denominated in Singapore Dollar. As at 31 December 2019, the weighted effective interest rate for borrowings was 5.75% (2018: 3.76%) per annum.

 

  Bank loan

  The repayment terms of the term loans are as follows: 

(a)  Term loan 1 is repayable over 96 monthly instalments which commenced in December 2014 and bears interest at the rate of n/a (2018: 4.75% to 5.25%) per annum at the end of the reporting period. It was fully repaid October 2019.

(b)  Term loan 2 is repayable over 180 monthly instalments which commenced in December 2014 and bears interest at the rate of n/a (2018: 4.75% to 5.25%) per annum at the end of the reporting period. It was fully repaid July 2019.

(c)  Term loan 3
Term loan 3 is repayable over 48 monthly instalments which commenced in October 2015 and bears interest at the rate of n/a (2018: 10.28%) per annum at the end of the reporting period. It was fully repaid in July 2019.

(d)  Term loan 4

Term Loan 4 is repayable over 120 monthly instalments commencing from August 2019 and bears interest at the rate of 5.75% (2018: n/a) per annum at the end of the reporting period.

 

Convertible loan

Group and company

 

 

2019

2018

 

 

 

SGD'000

SGD'000

Liability portion of convertible loan notes

 

 

565

854

Equity portion of convertible loan notes

 

 

20

20

 

 

 

Total convertible loan notes

 

 

585

874

 

 

 

_________

_________

      

  The subsidiary issued SGD 470,000 and SGD50,000, 3% and 5% unsecured convertible loan notes in 2018 and repayable on 31 December 2020. The convertible loans entitle the holders to convert them into ordinary shares of the subsidiary (unless previously redeemed, Converted or cancelled), subject to and in accordance with the terms and conditions of the Notes Agreement.

  The convertible loan notes contain two components, liability and equity elements. The equity
element is presented in equity heading "Other reserve". The effective interest rate of the liability
component is 10.88% (2018: 10.88%) per annum.

 

22.    Provision for Restoration Costs

Group

 

 

2019

2018

 

 

 

SGD'000

SGD'000

 

 

 

 

 

Not later than one year

 

 

64

24

Later than one year and not later than five years

 

 

15

55

 

 

 

 

 

 

79

79

 

 

 

_________

_________

  The movement in provision for restoration costs is as follows:

 

 

 

 

2019

2018

 

 

 

SGD'000

SGD'000

 

 

 

 

 

At 1 January

 

 

79

93

Provision made

 

 

-

15

Provision utilised

 

 

-

(29)

 

 

 

 

 

 

79

79

 

 

 

_________

_________

 

 

  Provision for restoration costs relate to the estimated cost of dismantling, removing and restoring the premises to their original conditions upon expiration of the leases. The provision is expected to be recognised after one year but within three years from the balance sheet date.

 

23.  Share capital and share premium

Group and company

 

2019

2019

2018

2018

 

 

SGD'000

SGD'000

SGD'000

SGD'000

 

 

Share Capital

Share premium

Share Capital

Share premium

At the beginning

 

333

3,033

243

2,221

Issued during the year

 

86

268

90

812

 

 

At the end of the year

 

419

3,301

333

3,033

 

 

_________

_________

_________

_________

 

 

 

 

 

 

  During the accounting period 50,000,000 ordinary shares of 0.1p were issued at a price of 1p per share in settlement of a creditor in New Trend Lifestyle Pte Limited. This is referred to in note 26.

 

  The issued share capital as at 31 December 2019 was 225,000,000 Ordinary Shares of 0.1p each.

   

 

 

24.  Warrants

 

Number

of warrants

Exercise

price

Weighted average

remaining

contractual

life

At 1 January 2019

3,000,000

8p

3.6 years

Warrants issued in the year

-

-

-

Warrants expired

(3,000,000)

-

-

At 31 December 2019

-

 

 

     

 

The fair value of the warrants issued in a previous year was £0.026 and was derived using

the Black Scholes model. The following assumptions were used in the calculation:

 

Bid price discount

25%

Risk-free rate

0.67%

Volatility

60%

 

 

25.  Share options

 

Number

of options

Exercise

price

Weighted average

remaining

contractual

life

At 1 January 2019 and 31 December 2019

600,000

8p

3.4 years

 

 

 

 

 

 

The fair value of the share options issued in a previous year is £0.009 and was derived using the Black Scholes model. The following assumptions were used in the calculation:

 

Bid price discount

25%

Risk-free rate

0.67%

Volatility

60%

Expected life

3 years

 

Expected volatility was determined by calculating the historical volatility of the Company's share price over the last four years. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

 

There were no share options which lapsed or were exercised during the year.

 

 

26.  Related-party transactions

  Some of the arrangements with related parties (as defined in Note 2) and the effects of these bases determined between the parties are reflected elsewhere in this report. Details of transactions between the Group and related parties are disclosed below: 

 

 

 

 

2019

2018

 

 

 

SGD'000

SGD'000

Key management personnel

compensation

 

 

 

 

Directors' remuneration

 

 

 

 

- Salaries, wages and bonuses

 

 

593

593

- Pension contributions

 

 

15

17

- Directors' fees

 

 

120

143

- Share based payment

 

 

-

-

 

  Related parties comprise mainly companies which are controlled or jointly controlled by Master Phang and his close family members.

 

  Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity.

 

  During the year, SGD 93,154 (2018: SGD 85,000) was paid to NAS Corporate Services Limited for non-executive directors fees and consultancy fees in relation to Ajay Kumar Rajpal.

  Of this amount, SGD 30,193 (2018: SGD 33,750)  was charged to the Company and SGD 62,961 (2018: SGD 51,210) was charged to New Trend Lifestyle Pte Ltd.

 

  During the year, SGD 26,132 (2018: SGD 27,000) was paid to Gregory Collier for non-executive directors fees and consultancy fees.

 

During the year the Company successfully completed an issue of 50,000,000 new ordinary shares of 0.1p each ("New Ordinary Shares") at a price of 0.42p per share (the "Issue") in full settlement of a debt owed by the Group to a trade creditor as at 30 April 2019. The issue price represents a significant premium to the mid-market closing price of 0.2p on 25 July 2019.

 

The Issue is the result of discussions with Zishange Capital Management Pte Ltd ("ZSG"), a creditor of New Trend Lifestyle Pte Ltd ("NTLSG"), the Company's subsidiary in Singapore. As at 30 April 2019 ZSG was owed SGD353,317 by NTLSG and has agreed to accept 50,000,000 New Ordinary Shares, as full payment against this debt, at an issue price of £0.0042 per share (SGD0.00707 per share). As a result, ZSG will own approximately 22.22 per cent. of the enlarged issued share capital of the Company and has also entered into a Relationship Agreement with the Company and the Company's Nominated Adviser which regulates the shareholder's relationship with the Company. The group had the following transactions with this related party:

 

· Rent paid by Zue Zuen Ge Enterprise to New Trend Lifestyle Pte Limited amounted to

SGD 413,598 (2018: SGD 396,000).

· Services provided to New Trend Lifestyle Pte Limited amounted to SGD 87,707 (2018: SGD 545,475).

· Purchases provided by New Trend Lifestyle Pte Limited amounted to SGD nil (2018: SGD 545,745).

· The balance owed at the year end to Zue Zuen Ge Enterprise by New Trend Lifestyle Pte Limited amounted to SGD 2,288 (2018: SGD 794,100) in respect of trade payables and SGD 95,151 (2018: SGD 652,932) in respect of non-trade payables.

 

 

27.  Operating lease commitments

 

IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees - leases of 'low-value' assets (e.g. personal computers) and short-term leases (i.e. leases with a lease term of twelve months or less).

 

Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

 

IFRS 16, which is effective for annual periods beginning on or after 1 January 2019, requires lessees and lessors to make more extensive disclosures than under IAS 17.

 

  (i)  Where the Group is the lessee

  The Group leases certain retail outlets and premises under non-cancellable lease agreements. From 1 January 2019, these agreements have been recognised as lease liabilities under IFRS 16, so the Group no longer has any non-cancellable lease commitments other than those recognised in the Statement of Financial Position.

 

  The future aggregate minimum leases payments under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities are as follows:

 

 

 

 

2019

2018

 

 

 

SGD'000

SGD'000

 

 

 

 

 

Not later than one year

 

 

-

899

Later than one year and not later than five years

 

 

-

596

 

 

 

 

 

 

-

1,495

 

 

 

_________

_________

 

  (ii) Where the Group is the lessor

  The future aggregate minimum lease payments receivable under non-cancellable operating leases contracted for at the reporting date but not recognised as receivables are as follows:

 

 

 

 

2019

2018

 

 

 

SGD'000

SGD'000

 

 

 

 

 

Not later than one year

 

 

178

165

Later than one year and not later than five years

 

 

-

-

 

 

 

 

 

 

178

165

 

 

 

_________

_________

   

 

 

28.  Financial instruments

  Financial risk management objectives and policies 

 

  The Group is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks are market risks (including foreign exchange risk and interest rate risk), liquidity risk and credit risk. The Director reviews and agrees policies and procedures for the management of these risks.

 

It is the Group's policy not to trade in derivative contracts.

 

(a)   Market risk 

 

  i)   Foreign currency risk 

  The Group is exposed to movement in foreign currency exchange rates arising from normal trading transactions that are denominated in currencies other than the respective functional currencies of the Group entities. The group does not have a policy to hedge its exposure to foreign currency exchange risk.

 

2019

 

 

Total

 

 

SGD' 000

SGD' 000

SGD' 000

Financial assets

 

 

 

 

Financial assets at fair value through profit or loss

 

 

 

 

Other receivables

 

339

-

339

Cash and bank balances

 

1,157

-

1,157

 

 

 

 

1,496

-

1,496

 

 

_______

_______

________

 

 

 

 

 

Financial liabilities

 

 

 

 

Trade and other payables

 

23

1,164

1,187

Lease obligations

 

1,127

-

1,127

Borrowings, secured

 

3,431

-

3,431

Convertible loans

 

585

20

605

 

 

 

 

5,166

1,184

6,350

 

 

_______

_______

________

 

 

 

 

 

Net financial assets/(liabilities)

 

(3,670)

(1,184)

(4,854)

 

 

 

 

 

Less: Net financial assets

 denominated in the respective

entities' functional currencies

 

3,670

1,184

4,854

 

 

 

 

 

Foreign currency exposure

 

-

-

-

 

 

 

 

 

 

 

28.  Financial instruments (continued)

2018

 

 

GBP

Total

 

 

SGD' 000

SGD' 000

SGD' 000

Financial assets

 

 

 

 

Financial assets at fair value through profit or loss

 

 

 

 

Other receivables

 

419

10

429

Cash and bank balances

 

1,216

-

1,216

 

 

 

 

1,635

10

1,645

 

 

_______

_______

________

 

 

 

 

 

Financial liabilities

 

 

 

 

Trade and other payables

 

2,321

106

2,427

Lease obligations

 

176

-

176

Borrowings, secured

 

2,576

-

2,576

Convertible loans

 

854

20

874

 

 

 

 

5,927

126

6,053

 

 

_______

________

________

 

 

 

 

 

Net financial assets/(liabilities)

 

(4,116)

(116)

(4,232)

 

 

 

 

 

Less: Net financial assets

 denominated in the respective

entities' functional currencies

 

4,116

116

4,232

 

 

 

 

 

Foreign currency exposure

 

-

-

-

 

 

 

Foreign exchange risk sensitivity 

The following table details the sensitivity to a 10% increase and decrease in the Singapore Dollars against the relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.

 

If the foreign currencies strengthen by 10% against the relevant functional currencies, with all other variables held constant profit or loss and other equity will increase (decrease) by:

 

2019

 

 

 

 

SGD '000

SGD '000

 

 

 

 

 

Profit (Loss)/Other comprehensive income

-

-

 

 

 

 

 

 

2018

 

 

 

 

SGD '000

SGD '000

 

 

 

 

 

Profit (Loss)/Other comprehensive income

  20

  1

 

 

_________

_________

 

 

A 10% weakening of foreign currencies against the respective functional currencies at the balance sheet date would have had the equal but opposite effect on the above currencies to the amount shown above, on the basis that all other variables remains constant.

 

  (ii) Interest rate risk 

    The Group obtains additional financing through bank borrowings (interest bearing). The Group's policy to obtain the most favourable interest rates available without increasing its foreign currency exposure. The Group constantly monitors its interest rate risk and does not utilise interest rate swap or other arrangements for trading or speculative purposes. As at 31 December 2019, there were no such arrangements, interest rate swap contracts or other derivative instruments outstanding.

 

    Summary quantitative data of the Group's interest-bearing financial instruments can be found in part (b) of this note.

 

Interest in financial instruments subject to floating interest rates is repriced regularly. The other financial instruments of the Group that are not included in the above table are not subject to interest rate risks.

 

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting periods in the case of instruments that have floating rates. A 100 basis point increase or decrease is used as it represents management's assessment of the possible change in interest rates. 

 

  Interest risk sensitivity 

 

  If the interest rates had been 100 basis point higher or lower and all other variables were held constant, the Group's profit for the year ended 31 December 2019 would decrease or increase by SGD 27,500 (2018: SGD 25,000).

 

(b) Liquidity risk 

 

  The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group's operations and to mitigate the effects of fluctuations in cash flows. Typically, the Group ensures that it has sufficient cash on demand to meet expected operational expenses including the servicing of financial obligations. Management monitors the Group's liquidity reserve, comprising cash and cash equivalents (Note 20) on the basis of expected cash flows.

 

  The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.

 

b)    Liquidity risk (continued)

 

 

2019

 

Weighted average

interest rate

On demand or not later than 1 year

Later than 1 year and not later than 5 years

Later than 5 years

 

 

%

SGD'000

SGD'0000

SGD'0000

 

 

 

 

 

 

Trade and other payables

 

 

1,050

-

-

Lease obligations (Fixed rates)

 

6.52

732

576

-

Borrowings, secured (Fixed rates)

 

5.75

450

1,802

2,065

Convertible loans

 

3

616

-

-

Provision for restoration costs

 

 

-

-

-

 

 

 

 

 

 

2,849

2,378

2,065

 

 

 

_________

________

_________

2018

 

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

989

-

-

Lease obligations (Fixed rates)

 

6.52

59

117

-

Borrowings, secured (Floating rates)

 

3.76

385

2,192

-

Convertible loans

 

3

467

406

-

Provision for restoration costs

 

 

24

55

-

 

 

 

 

 

 

1,924

2,770

-

 

 

 

_________

________

_________

 

 

  (c) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The carrying amounts of other receivables and cash and bank balances represent the Company's maximum exposure to credit risk in relation to financial assets. No other financial assets carry a significant exposure to credit risk.

 

As the Group and Company does not hold any collateral, the maximum exposure to credit risk for each class of financial instrument is the carrying amount of that class of financial instruments presented on the balance sheet.

 

Cash and bank balances, including fixed deposits are placed with reputable financial institutions.

 

  (d) Financial instruments by category 

  The following table sets out the financial instruments as at the statement of balance sheet date: 

 

 

 

2019

2018

 

 

 

SGD'000

SGD'000

Financial assets at fair value through profit or loss

 

 

-

-

Loans and receivables (including cash and cash balances)

 

 

2,201

1,491

 

 

 

 

 

 

2,201

1,491

 

 

 

_________

_________

Financial liabilities at amortised cost

 

 

6,173

4,632

 

 

 

_________

_________

 

Capital risk management policies and objectives 

 

The Group's policy is to maintain adequate capital based on ensure continuity as a going concern while maximising the return to shareholder through the optimisation of the debts and equity balance.

 

The capital structure of the Company consists of equity, comprising issued capital and retained earnings as disclosed in the financial statements. The Group's overall strategy remains unchanged since 2015.

 

29.  Ultimate controlling party

 

The Group has no controlling party.

 

30.  Post balance sheet events

 

The Company has issued a circular to shareholders to dispose of NTL to Master Phang, and raise £1,000,000 by way of a placing of new shares. These proposals are conditional on receiving shareholder approval at the General Meeting as described in the circular.

 

 

~ ENDS ~

 

 

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