Company Announcements

23 June 2023

Asia Strategic Holdings Ltd.

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

Interim results for the six months ended 31 March 2023

The Board of Asia Strategic Holdings Ltd. (LSE: ASIA), the independent developer and operator of consumer businesses located in emerging Asia, is pleased to announce its unaudited interim results for the six-month period ended 31 March 2023. 

FINANCIAL HIGHLIGHTS

The financial information in this report to the six-month financial period ended 31 March 2023 ("6M'23" or "FPE 2023") and the Group's financial year ended 30 September 2022 ("FYE 2022"), unless otherwise stated. The comparative six-month financial period from 1 October 2021 to 31 March 2022 is referred to as "6M'22" or "FPE 2022".

·    Group revenues for the six-month financial period ended 31 March 2023 increased 38% year-on-year ("YOY") to US$11.5 million, of which 77% derived from Education and 23% from Services (6M'22: 64% derived from Education and 36% from Services). The double-digit revenue growth was driven by (i) Myanmar's Education segment surpassing pre-COVID-19 levels with revenue growth of 141% YOY despite the complex political and economic environment, and (ii) the continued turnaround in Vietnam's Education segment, delivering revenue growth of 22% YOY. The strong performance in the Education segment compensated for the weaker revenue generation in the Services segment in Myanmar, which recorded a 13% decline YOY due to the adverse economic conditions and the currency impact.

·    Group gross profit for the six-month financial period ended 31 March 2023 increased 106% YOY to US$6.6 million, of which 90% derived from Education and 10% from Services (6M'22: 68% derived from Education and 32% from Services). As a percentage of Group revenues, the gross profit margin stood at 57% for 6M'23 vs. 38% for 6M'22, thanks to (i) the strong commercial performance post COVID-19, (ii) the shift to higher margin products and (iii) the higher utilisation of teaching personnel and facilities.   

·    Despite the significant improvement in gross margin to 57% for 6M'23 (6M'22: 38%), the Group recorded only a moderate improvement in net losses to US$2.3 million for 6M'23 (6M'22: US$2.6 million net loss). Excluding the operating losses incurred in the financial period for the newly launched business of Kids&Us, net losses of the Group would be reduced by US$0.6 million to US$1.7 million. Other contributing factors were (i) the high volatility of the foreign exchange rates in Myanmar, (ii) the slower than expected recovery of Wall Street English ("WSE") Vietnam, and (iii) the lower profitability of EXERA due to a US$0.4 million decline in revenues.

·    The Group recorded a net comprehensive loss (including the foreign exchange difference in the translation of foreign operations and changes in fair value of FVOCI) for 6M'23 of US$2.4 million (6M'22: US$2.7 million).

·   Student fees in the Education segment and risk management report subscriptions at EXERA are generally collected in advance of service performance. For 6M'23, the Group collected cash from customers in advance of service performance amounting to US$9.4 million, an increase of US$2.9 million compared to the previous financial period (6M'22: US$6.5 million). At 31 March 2023, the Group's current and long-term deferred revenue amounted to US$9.8 million and US$0.7 million respectively (30 September 2022: US$8.1 million and US$1.9 million). Current deferred revenues shall be realised within the next twelve months while long-term deferred revenues shall be realised in FYE 2024 and FYE 2025.

·    As a result of strong sales performance from the Education segment, the Group recorded positive cash flows from operating activities of US$1.6 million, an increase of US$0.4 million compared to 6M'22 (US$1.2 million). If repayment of lease liabilities were considered, the Group would have recorded US$0.2 million cash inflows from operating activities (6M'22: US$0.2 million cash outflows).

·    The Group maintains a loan facility of US$3.0 million with MACAN, the Group's largest corporate shareholder and had drawn down US$1.7 million at the date of this report (US$1.5 million as at 31 March 2023). The recent additional loan drawn down was to fund the short-term working capital of Kids&Us in Vietnam and capital expenditures during its start-up phase.

·   The diversification of the Group's operations between Vietnam and Myanmar continues to play an important role in mitigating single-country exposure. Management has assessed that there are sufficient mitigating actions within the control of the Group to ensure liquidity for at least the next twelve months from the date of this report. These include (i) undertaking a controlled expansion of its existing and future businesses, (ii) maintaining financial liquidity discipline, and (iii) accessing the unutilised credit facility of US$1.3 million with MACAN.

OPERATIONAL HIGHLIGHTS

Education

·  Group revenues from the owned Education businesses for 6M'23 were US$8.8 million (6M'22: US$5.1 million). Furthermore, during the period the Group completed service delivery to legacy students resulting in the managed Education business contributing only US$0.01 million for 6M'23 (6M'22 US$0.2 million).

·    The increase in Education revenues is attributable to (i) a US$2.8 million increase in Myanmar revenues (+141% YOY), driven by strong revenue growth at Auston and Wall Street English Myanmar which exceeded pre-COVID-19, (ii) a US$0.7 million improvement in WSE Vietnam revenues, and (iii) a US$0.1 million revenue contribution from the launch of Kids&Us in Vietnam with four centres opened since late 2022. It is worth noting that, despite persistent headwinds in Myanmar, high revenue and student growth demonstrate underlying robust demand and willingness to invest in high quality and globally recognised educational programmes.

·    At 31 March 2023, the Group's current and long-term deferred revenue from Education businesses were US$9.6 million and US$0.7 million (6M'22: US$7.9 million and US$1.9 million), respectively.

·   The Education segment currently operates the Group's owned businesses and services legacy students for the managed business of a related party, and comprises:

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

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

(iii)   Children English language education (Kids&Us) in Vietnam and Myanmar; and

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

Through these businesses Asia Strategic provides a wide range of education services to students from the age of one. Furthermore, Wall Street English supports the training of the Group's employees and provide synergistic value to the learning and development goals of the Group.

At 31 March 2023, the number of centres and students were as follows:

^#    The first Kids&Us centre in Myanmar has opened in June 2023, bringing the total number of centres to 20.

Wall Street English

·   The Group has exclusive development and franchising agreements with Wall Street English International to develop English language centres across Myanmar. At 31 March 2023, WSE Myanmar served over 3,600 (+99% YOY) students over 5 centres.

·    In July 2020, the Company completed the acquisition of the Wall Street English business in Vietnam. At 31 March 2023 WSE Vietnam operated 7 centres in Ho Chi Minh and Binh Duong serving ca. 3,600 students (+45% YOY).

·    6M'23 revenues for Wall Street English Vietnam and Myanmar were US$4.0 million and US$3.4 million (6M'22: US$3.3 and US$1.4 million), respectively. Together, the businesses contributed 64% (6M'22: 57%) of the Group's revenue.

·   At 31 March 2023, WSE's deferred revenues (current and long-term) amounted to ca. US$8.4 million, up from US$8.2 million at 30 September 2022, including US$7.9 million to be realised as revenue in the next twelve months, up from US$6.7 million at 30 September 2022.

Auston

·    Auston University ("Auston") is the result of a strategic collaboration with the Auston Institute of Management, an operator of private schools in Singapore that prepares students for careers in Engineering, Information Technology and Project Management through higher education learning.

·    In February 2020, the Company entered a partnership with Liverpool John Moores University ("LJMU") to provide high quality engineering training programmes for young, working professionals in Myanmar. The partnership enables a path towards a globally recognised engineering degree earned in Myanmar from lecturers with at least a master's degree or a PhD from a recognised awarding body.

·    For 6M'23 Auston's revenue grew exponentially, up 544% YOY, to US$0.9 million (6M'22: US$0.1 million), due to 253% growth in enrolled student (583 students at 31 March 2023 vs. 165 at 31 March 2022).  This has resulted in higher monthly average sales of ca. US$0.3 million.

·    At 31 March 2023, Auston's deferred revenues (current and long-term) amounted to ca. US$1.5 million, up from US$1.0 million at 30 September 2022, including US$1.4 million to be realised as revenue in the next twelve months, up from US$0.7 million at 30 September 2022.  

Kids&Us

·  The Group entered into exclusive franchising agreements with Kids&Us English, S.L.U ("Kids&Us") for the development of English language centres for children under the brand "Kids&Us School of English" in Myanmar and Vietnam on 25 April 2022 and 15 August 2022, respectively, for a period of ten years each.

·    Kids&Us is the leading provider of English language education for children from age one. Founded in Manresa (Barcelona, Spain) in 2003, Kids&Us teaches annually over 150,000 students across more than 500 schools in nine countries, achieving a loyalty rate in excess of 90%.

·   Under the terms of these agreements, the Group paid initial fees of US$216,000 for Myanmar and Vietnam (EUR100,000 for each territory) and has committed to pay (i) ongoing service fees as a percentage of revenues, (ii) cumulative opening fees of EUR150,000 within four years from signing of the Vietnam franchising agreement, and (iii) didactic materials based on consumption, among other fees.

·    Four Kids&Us centres opened between September 2022 and November 2022 in Ho Chi Minh City, Vietnam, with the flagship locations situated in prominent and prime locations to create brand awareness. The first centre in Myanmar was opened in June 2023. More centres are scheduled for the second half of calendar year 2023 in both Myanmar and Vietnam.

·   Revenues at Kids&Us Vietnam for 6M'23 amounted to US$0.1 million serving over 200 students. At 31 March 2023, current deferred revenues were ca. US$0.2 million.  

Yangon American

·  The Group owns and operates Yangon American International School ("Yangon American") an International Baccalaureate Primary Years Programme ("IB PYP") accredited and Myanmar Investment Commission-approved international school. Yangon American's 3,000 sqm campus has a planned capacity of 400 students and its enrolment for the academic year 2022-2023 was 57 students (31 March 2022: 80 students).

·    For 6M'23, Yangon American generated revenues of US$0.4 million in line with 6M'22. Yangon American remains in a development phase having opened in the school year 2019-2020 ahead of COVID-19 and the Myanmar's State of Emergency.  Demand for international education remains strong as parents are in search for a quality education as a path for their children to study abroad.

·    At 31 March 2023, Yangon American's deferred revenues (current and long-term) amounted to ca. US$0.3 million, down from US$0.6 million at 30 September 2022, including US$0.2 million to be realised as revenue in the next twelve months, down from US$0.5 million at 30 September 2022. The decrease in deferred revenues is mainly due to the timeline of the school year which begins in early August (higher collection) and ends in early June (deferred revenues realised as revenues) of the following year.

Services

·  Through its Services division, the Group is active in (i) owned security services (EXERA) and (ii) managed hospitality services (Ostello Bello).

·  6M'23 revenues from the owned services businesses amounted to US$2.6 million vs. US$3.0 for 6M'22. No revenues were contributed by the managed hospitality business. 

EXERA

·    EXERA is a provider of security and risk management services operating exclusively in Myanmar. As at 31 March 2023, EXERA employed an experienced workforce of over 1,400 (31 March 2022: 1,500) security officers and provides a range of integrated security, manned guarding, protective services, secured logistics and cash in transit, training, and nationwide risk consulting, to a wide range of international and local clients across ca. 200 sites (6M'22: 200).

·  EXERA's customer base includes multi-national corporations, large oil and gas companies, established local businesses, governmental bodies and international organisations and embassies. EXERA's services are essential to the continued presence of these organisations in Myanmar throughout the current political and economic instability.

·    EXERA's 6M'23 revenues were US$2.6 million down 13% YOY from US$3.0 million for 6M'22 due to (i) the loss of contracts with certain customers which exited Myanmar due to a challenging political and economic environment, and (ii) the weakening of the Myanmar Kyat from an average of 1,855 per US$ in FYE 2022 to 2,100 in 6M'23.

·    The ability to continuously maintain and secure new high-profile customers is mainly due to EXERA's competitive advantage as the only company in Myanmar with ISO 18788 Management System for Private Security Operations, ISO 9001, OHSAS 18000, and ANSI/ASIS PSC 1 accreditations. These accreditations are the hallmark of EXERA's intent on delivering high-quality services for the benefit of our customers.

·   At 31 March 2023, EXERA's deferred revenues (current) to be realised as revenue in the next twelve months amounted to ca. US$0.2 million in line with 30 September 2022.

Ostello Bello

·    Ostello Bello, comprises boutique hostels with ca. 300 beds and over 70 rooms in two locations across Bagan and Mandalay.

·    Due to the adverse political situation in Myanmar, inbound tourism has become virtually non-existent. Accordingly, in December 2022, management ceased operations in one location in Bagan. The closure of this outlet does not have a material impact on the Group as the operations and management fees were already minimal.  

·   It is worth noting that through its boutique hostels, the Group provides livelihood for hundreds of individuals in developing communities such as Bagan. Management takes great pride and acknowledges its role as a responsible long-term investor in these communities. Furthermore, Ostello Bello Mandalay hosts teachers and security personnel, providing safe accommodation and flexibility to grow the headcount in Mandalay to enable expansion of the Group's Education operations.  

New Business Development

·   Asia Strategic continues to develop its business network and expand its presence within the Group's existing sectors while exploring new sectors. The Group is focused on expanding its educational offering by building a stronger presence on the ground in Vietnam whilst seeking new opportunities throughout emerging Asia to diversify the Group's geographical exposure.

·  Management also routinely conducts in-depth studies of new sectors (e.g. Healthcare, Retail and Financial Services) to determine whether to allocate additional human and financial resources to selected initiatives.

The Group's minority investments include, among others:

·    A minority interest in Myanmar Investments International Limited ("MIL"), a Myanmar-focused investment company listed on the AIM market of the London Stock Exchange with investments in the telecommunications and financial sectors. At 31 March 2023, the quoted share price of MIL was US$0.09 (31 March 2022: US$0.27) per share and based on available information, the audited net asset value reported by MIL at 31 March 2023 was US$8.7 million (31 March 2022: unaudited US$13.2 million), equivalent to US$0.23 (31 March 2022: US$0.35) per share.

SIGNIFICANT EVENTS

a)  Issuance of shares in lieu of bonus payments

Taking into consideration the recommendations of the Remuneration Committee of the Company, the Directors approved the payment of US$0.2 million of annual bonuses to certain Group key management personnel with respect to the financial year ended 30 September 2022. These bonuses were satisfied through the issuance of 40,000 new ordinary shares in the Company at a price of US$5.00 per share (being the closing bid price of the Company's ordinary shares as of 31 January 2023). Refer to Note 18 for further details.

b)  Employee Share Options Scheme

On 6 February 2023, the Company granted 33,000 share options to a director of the Company under the Company's 2022 employee share option plan.

MACROECONOMIC UPDATE

Vietnam macroeconomic highlights

·     Vietnam achieved (i) a GDP growth rate of 8.0% in 2022, due in part to the low base effect post COVID-19 and (ii) a more modest growth of 3.3% in 1Q2023. The gross regional domestic product of the two largest cities, Ho Chi Minh City and Hanoi increased by 5.8% and 0.7%, respectively. The Asian Development Bank forecasts GDP growth of 6.5% for 2023 and 6.8% for 2024.

·      According to Mirae Asset Securities Vietnam, to meet the full year GDP growth target of 6.5% set by the National Assembly, public investment is expected to be deployed in a strong and consistent manner. The Prime Minister set a government spending budget of VND707 trillion (US$30 billion) in 2023.

·      According to preliminary data from the General Statistics Office ("GSO"), trade activities reached
US$154.3 billion in the first quarter of 2023, of which exports were US$79.2 billion (down 11.9% YOY) and imports registered US$75.1 billion, resulting in a trade surplus of US$4.1 billion. The United States is Vietnam's largest export market, with an estimated turnover of US$20.6 billion (down 22% YOY), followed by China at US$11.5 billion (down 14% YOY). Meanwhile, China is Vietnam's largest import market, with an
estimated turnover of US$23.6 billion (down 15% YOY).

·   Over the longer term, Vietnam continues to be a prime destination in Southeast Asia for supply chain and manufacturing relocations by global manufacturers due to strong economic fundamentals and a favourable foreign investment environment. According to the GSO, total registered foreign direct investment in the first quarter or 2023 increased by 20% YOY, reaching US$7.8 billion. 

Myanmar macroeconomic highlights

·   The World Bank's Myanmar Economic Monitor forecasts 3.0% economic growth for the fiscal year ending September 2023. However, Myanmar's economy is unlikely to yet reach pre-pandemic levels in the foreseeable future due to ongoing challenges such as exchange rate volatility, inflation, and low confidence.

·     In April 2022, the Central Bank of Myanmar ("CBM") introduced foreign exchange control measures, mandating the conversion of all foreign currency receipts into Myanmar Kyat ("MMK") at a reference rate lower than the market rate. Between mid-April and late August 2022, the MMK depreciated 14% against the US Dollar ("USD"). The CBM then shifted the reference rate from 1,850 to 2,100 MMK-USD in August 2022. To alleviate market concerns, the CBM exempted certain entities from these measures. The CBM also permitted exporters to convert 65% of their earnings to MMK at the reference rate and sell the remaining 35% at market rates within one month of receipt. Additionally, the CBM allowed the use of Thai Baht ("THB") and Renminbi ("RMB") for trade-related payments, which further stabilized the USD exchange rate.

·      According to S&P Global, in May 2023, Myanmar manufacturing Purchasing Manager's Index ("PMI"), declined to 53.0% from the previous month's record high of 57.4%, the softest expansion since February. This indicates a slower but still solid improvement in business conditions. This slight slowdown was driven by a weaker increase in new orders, leading to a less pronounced growth in output. Workforce numbers saw fractional expansion as companies hired additional employees to support production.

·     The near-term economic outlook remains weak due to macroeconomic and regulatory uncertainties. The country's growth prospects are further hampered by gloomy global economic conditions, inflationary pressures, and strained relationships with trading partners such as the United States and the European Union. However, with the reopening of China's economy in 1Q23, expectations in trade flows and the manufacturing sector have improved.

Enrico Cesenni, Chief Executive Officer of Asia Strategic Holdings, said:

"I am pleased to report that over the six-month financial period ended 31 March 2023, Asia Strategic Holdings has achieved significant growth in both revenue (+38% YOY) and gross profit margins (+106% YOY), while further strengthening its business foundations with the launch of Kids&Us in both Vietnam and Myanmar.

"As the COVID-19 related restrictions have substantially ceased across ASEAN, the Group has experienced a strong rebound in its Education business, particularly in Myanmar, supported by pent-up demand and limited local availability of high-quality products. The total number of students enrolled with the Group rose 78% YOY to ca. 8,100, almost evenly split between Vietnam and Myanmar.

"In 2022, the Group expanded its Education product portfolio with the partnership with Kids&Us and opened four schools in Ho Chi Minh City and one in Yangon, yielding ca. 300 students as of June 2023. Building on the initial commercial success, the Group plans additional openings during 2023.

"On the other hand, the Services division experienced a 13% contraction in revenue driven by the exit of certain customers from Myanmar and the adverse FX impact. Management expects a rebound in monthly revenues in the second half of FY'23 driven by the successful negotiation of price increases in existing contracts and the acquisition of new high-profile customers.

"While global inflation, supply chain shortages and local shocks may reduce disposable income and hinder discretionary spending, the Board believes that the Group is strategically positioned in sectors that will attract continued investments such as Education and that demonstrate less correlation to the broader economy such as Security services. In turn, this allows us to take a strategic view, pursue a long-term agenda and strengthen our foundations, confident in our capital structure.

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

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

Notes to editors

Asia Strategic Holdings Ltd.  

Asia Strategic Holdings Ltd. (LSE: ASIA) is an independent developer and operator of consumer businesses in emerging Asia. The Company's portfolio focuses on Education and Services with the view to expand within the broader consumer sector and is located in Vietnam and Myanmar, two of the fastest growing economies in the world over the last decade.

Education sector:  the Company operates a range of brands across English language learning, tertiary education and K-12. As of June 2023, it operated 20 schools (19 at 31 March 2023), serving ca. 8,200 students (ca. 8,100 at 31 March 2023).

The Company currently has exclusive development and franchising agreements with Wall Street English to develop English language centres across Myanmar. As of June 2023, Wall Street English Myanmar served over 3,600 students through five centres.

In July 2020, the Company completed the acquisition of the Wall Street English business in Vietnam. Founded in 2013, the WSE Vietnam business operates through seven centres in Ho Chi Minh and Binh Duong serving over 3,700 students (3,600 at 31 March 2023).

The Company also operates a joint venture with Auston Institute of Management to develop and operate the Auston University. Auston opened in May 2018 offering diplomas in Engineering Technology, Mechanical Engineering and Networking, Information Systems, and Security. English language learning is also provided by the Company's nearby Wall Street English centre. In February 2020, the Company announced a partnership with Liverpool John Moores University to provide high quality engineering training programmes for young, working professionals in Myanmar, to be taught by its teaching staff in Myanmar. As of 30 June 2023, Auston University served ca. 600 students (580 at 31 March 2023).

In August 2019 the Company launched its first private K-12 international school, the Yangon American International School ("Yangon American") in Yangon. In July 2021 Yangon American was recognised as an official International Baccalaureate Primary Years Programme ("IB PYP") school by the International Baccalaureate Organization.

In April 2022, the Company entered into an exclusive franchising agreement with Kids&Us for the development of English language schools for children across Myanmar. The first centre opened in Yangon in June 2023. In August 2022, the Company entered into an exclusive franchising agreement with Kids&Us for the development of English language schools for children across Vietnam. The first four centres are operational in Ho Chi Minh.

Services sector:  through its acquisition of EXERA, the Company offers security, risk management and secure logistics services. Founded in 2013, EXERA employs approximately 1,400 well-trained and high-quality security officers (1,500 on 31 March 2023) making it one of the largest security services providers accredited to "ISO 18788 Management System for Private Security Companies" in Myanmar.

Furthermore, the Company provides hospitality services, managing two boutique hotels in core tourist locations in Myanmar, operating under the award-winning Ostello Bello budget hospitality brand. The Company operates an asset-light strategy, entering into long-term operating and management agreements with local hotel owners.

Vietnam and Myanmar were among the fastest growing economies in Asia in 2017-2020 (Source: Asian Development Bank). Vietnam's annual GDP growth rate is expected to be 6.5% in 2023 and 6.8% in 2024, while Myanmar's is expected to be 2.8% in 2023 and 3.2% in 2024 (Source: Asian Development Bank).

The Company is well positioned to provide investors early exposure to Vietnam's and Myanmar's strong economic fundamentals enhanced by ASEAN's wider growth prospects. 

To receive news alerts on Asia Strategic Holdings please sign up here under the 'RNS' header: https://asia-strategic.com/investor-relations/

FINANCIAL REVIEW    

·    Group revenues from owned and managed businesses for 6M'23 were US$11.5 million (+38% YOY) vs. US$8.3 million for 6M'22 (+9% YOY).

·    The double-digit revenue growth was a combination of (i) strong improvements across the Education businesses in Myanmar (+141% YOY), (ii)  the recovery in Education in Vietnam (+22% YOY), leading towards the completion of WSE Vietnam's turnaround and supported by the opening of four new Kids&Us English language learning centres in late 2022, and (iii) the underperformance at EXERA (-13% YOY) due to the loss of certain customers due to the challenging political and economic environment.  

RESULTS OF OPERATIONS

·  The Group's gross profit for 6M'23 was US$6.6 million up 106% vs US$3.2 million for 6M'22. The notable improvement in gross profit margin (57% for 6M'23 vs. 38% for 6M'22) was attributable to (i) the strong commercial performance, (ii) the shift to higher-margin products and (iii) the higher utilization of teachers and facilities thanks to the ramp-up in enrolled students.  

·    The growth in Group revenue (+US$3.1 million YOY) and gross profit (+US$3.4 million YOY) was partially offset by the increase in foreign exchange loss (+US$0.3 million YOY) and administrative and other operating expenses (+US$2.8 million YOY).  The latter rose primarily due to (i) higher marketing expenses, and (ii) an increase in personnel costs due to the expansion in the Education businesses and salary increments to mitigate the inflationary pressures affecting the Group's employees.

·   The Group was close to Adjusted EBITDA break-even for 6M'23 vs. a US$0.5 million loss for 6M'22. When adjusted for the impact of the right-of-use assets ("ROUs"), the Group's Adjusted EBITDA loss amounted to US$1.8 million vs. a US$2.2 million loss in 6M'22.

LIQUIDITY AND CAPITAL RESOURCES

·    At 31 March 2023, the Group's cash and cash equivalents amounted to US$1.4 million, compared to US$2.0 million at 30 September 2022. The decrease of US$0.6 million is primarily due to capital expenditures of US$0.8 million and bank loan repayments of US$0.1 million.

·    The Group generated positive cash flows from operating activities of US$1.6 million, an increase of US$0.4 million vs 6M'22 (US$1.2 million) mainly due to the increase in prepayments and deposits received from customers of US$0.8 million (6M'22: increase of US$3.0 million) as of 31 March 2023. If repayment of lease liabilities were considered, the Group generated cash from operating activities of US$0.2 million (6M'22: cash outflows of US$0.2 million).

·   For 6M'23, the Group incurred capital expenditures of US$0.8 million vs. US$0.6 million for 6M'22 mainly for leasehold improvements related to the (i) opening of three Kids&Us Centres in Vietnam, (ii) additional centres for Wall Street English in Yangon and Auston in Mandalay, (iii) refurbishments at Wall Street English Vietnam, and (iv) a new dedicated and secured headquarter for EXERA.

·    In December 2022, the interest-free bank loan of US$0.1 million from a bank in Vietnam was repaid in full. The Group funded its capital expenditures and business expansion through effective cash management from its operating activities. No new shares nor convertible notes have been issued during the financial period.

·  For 6M'22, the Group issued Convertible Notes which generated cash inflows of US$3.2 million (excluding transaction costs) and were utilised for working capital and partial repayment of the shareholder loans and interest, totalling US$1.8 million.  

OTHER INFORMATION

At 31 March 2023, 97% of the total workforce (30 September 2022: 96%) were local employees in the countries in which the Group operates. All employees earn at least the local minimum wage and are provided cost of living allowances to weather global inflation and benefit from fair working conditions and shift patterns. Approximately 75% (30 September 2022: 72%) of the Group's workforce are female (excluding EXERA's security officers).

Direct and indirect FTE decreased to 1,847 (30 September 2022: 1,973) mainly due to the reduction in EXERA's security officers over the period.

CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the financial period from 1 October 2022 to 31 March 2023

The above condensed interim consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2023

The above condensed interim consolidated statement of financial position should be read in conjunction with the accompanying notes.