The choice for lifelong learning with global recognition. Ability-driven We offer ability-driven education and training.

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2 VISION The choice for lifelong learning with global recognition. MISSION An institution that maximises the future readiness of individuals and organisations through globally recognised and competency-based programmes. CORE VALUES The acronym for MDIS Core Values is LEARN. L E A R N Lifelong Learning We embrace lifelong learning. Excellence We strive for excellence in customer care. Ability-driven We offer ability-driven education and training. Responsibility We take utmost responsibility in ensuring high quality programmes. Nurture We nurture talents for the new economy. CULTURE MDIS embraces a culture of lifelong learning to nurture and maximise the potential of our stakeholders.

3 MAANAGEMENT DEVELOPMENT INSTITUTE OF SINGAPORE AND ITS SUBSIDIARIES REPORT AND FINANCIAL STATEMENTS CONTENTS PAGE Statement by Governing Council 1 Independent auditors report 2-4 Statements of financial position 5 Consolidated statement of comprehensive income 6 Consolidated statement of changes in funds and reserves 7-8 Consolidated statement of cash flows 9 Notes to the financial statements 10-56

4 Statement by Governing Council In our opinion: (a) (b) the financial statements set out on on pages FS1 5 to FS52 56 are are drawn up up so so as as to present fairly, in all material respects, the financial position of the Group and of the Institute as at 31 December 2016 and the financial performance, changes in funds and reserve, and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Charities Act, Chapter 37, the Singapore Societies Act, Chapter 311 and Singapore Financial Reporting Standards; and at the date of this statement, there are reasonable grounds to believe that the Institute will be able to pay its debts as and when they fall due. The Governing Council has, on the date of this statement, authorised these financial statements for issue. On behalf of the Governing Council Kuan Choon Hock, Eric President Shareef Bin Abdul Jaffar Honorary Treasurer 17 8 May

5 Independent auditors report Members of Management Development Institute of Singapore (Registered under the Societies Act, Chapter 311) Report on the audit of the financial statements Opinion We have audited the financial statements of Management Development Institute of Singapore ( the Institute ) and its subsidiaries ( the Group ), which comprise the consolidated statement of financial position of the Group and the statement of financial position of the Institute as at 31 December 2016, and the consolidated statements of comprehensive income, consolidated statements of changes in funds and reserves and consolidated statements of cash flows of the Group for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as as set set out out on on pages 5 to FS1 56. to FS52. In our opinion, the accompanying consolidated financial statements of the Group and the statement of financial position of the Institute are properly drawn up in accordance with the provisions of the Societies Act, Chapter 311 ( the Societies Act ), the Charities Act, Chapter 37 and other relevant regulations ( the Charities Act and Regulations ) and Financial Reporting Standards in Singapore ( FRSs ) to present fairly, in all material respects, the financial position of the Group as at 31 December 2016 and the consolidated financial performance, consolidated changes in funds and reserves and consolidated cash flows of the Group for the year ended on that date. Basis for opinion We conducted our audit in accordance with Singapore Standards on Auditing ( SSAs ). Our responsibilities under those standards are further described in the Auditors responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities ( ACRA Code ) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 2

6 Other information The Institute s Governing Council is responsible for the other information. The other information obtained at the date of this auditors report is the Statement by Governing Council, Message from MDIS President and the Financial Highlights. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Governing Council s responsibility for the financial statements The Institute s Governing Council is responsible for the preparation and fair presentation of the financial statements in accordance with the provisions of the Societies Act, the Charities Act and Regulations and FRSs, and such internal control as the Institute s Governing Council determines is necessary to enable the preparation of financial statements are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Institute s Governing Council is responsible for assessing the Group s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Institute s Governing Council either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The Institute s Governing Council are responsible for overseeing the Group s financial reporting process. Auditors responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 3

7 As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Institute s Governing Council. Conclude on the appropriateness of the Institute s Governing Council s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Institute s Governing Council regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal controls that we identify during our audit. Report on other legal and regulatory requirements In our opinion, the accounting and other records required by the regulations enacted under the Societies Act, the Charities Act and Regulations to be kept by the Institute and by those subsidiary corporations incorporated in Singapore of which we are the auditors have been properly kept in accordance with those regulations. KPMG LLP Public Accountants and Chartered Accountants Singapore 17 8 May

8 Statements of financial position As at 31 December 2016 Group Institute Note $ $ $ $ Non-current assets Property, plant and equipment 4 157,896, ,598,977 75,825,910 82,543,993 Investment properties 5 20,986,670 21,251,746 20,986,670 21,251,746 Goodwill 551, ,045 Subsidiaries 6 1,000,000 1,000,000 Joint venture 7 10,338,984 9,089,327 Associate 8 328, ,772 Available-for-sale investments 9 9,542,816 9,368,327 1,790,543 2,299,655 Deferred tax assets ,644, ,106,194 99,603, ,095,394 Current assets Inventories , , , ,643 Trade receivables 12 9,366,407 9,977,882 10,763,191 10,331,039 Other receivables 13 14,748,512 15,145, ,033,820 99,632,517 Available-for-sale investments 9 4,361,035 4,220, , ,295 Cash and cash equivalents 14 30,938,068 46,294,473 16,752,630 33,591,366 Pledged bank deposits 14 11,288,434 11,288, , ,379 70,946,335 87,177, ,660, ,745,239 Total assets 270,590, ,283, ,264, ,840,633 Funds and reserves Accumulated funds 164,895, ,795, ,923, ,200,868 Corporate Social Responsibility and Education fund 17 50,000,000 50,000,000 50,000,000 50,000,000 Building fund 17 50,000,000 50,000,000 50,000,000 50,000,000 Fair value reserve 18 (431,863) (450,514) (324,964) (247,459) Foreign currency translation reserve (11,352,693) (7,041,718) 253,110, ,303, ,598, ,953,409 Non-controlling interests (16,199) (16,312) Total funds and reserves 253,094, ,287, ,598, ,953,409 Non-current liabilities Deferred tax liabilities ,079 53,763 Trade and other payables 15 3,333,228 3,397,596 3,446,307 3,451,359 Current liabilities Trade and other payables 15 10,472,308 17,322,133 1,665,606 2,886,622 Unearned and advance course fees ,333 2,642, Deferred consideration payable 19 2,297,851 2,298,030 Current tax payable 339, ,547 14,049,573 22,545,304 1,665,606 2,887,224 Total liabilities 17,495,880 25,996,663 1,665,606 2,887,224 Total liabilities, funds and reserves 270,590, ,283, ,264, ,840,633 The accompanying notes form an integral part of these financial statements. 5

9 Consolidated statement of comprehensive income Year ended 31 December 2016 Note $ $ Revenue 20 73,106,580 75,013,264 Cost of services (26,087,896) (26,434,907) Gross profit 47,018,684 48,578,357 Other income 21 5,717,574 7,425,590 Administrative expenses (44,047,192) (43,728,458) Other expenses (1,479,040) (1,644,526) Results from operating activities 7,210,026 10,630,963 Share of profit of joint venture 7 2,344,123 2,058,828 Share of profit/(loss) of associate 8 64,596 (17,741) Surplus before donation and tax expense 9,618,745 12,672,050 Donations (31,980) (85,500) Surplus before tax expenses 9,586,765 12,586,550 Tax expense 23 (487,088) (267,865) Surplus for the year 22 9,099,677 12,318,685 Surplus attributable to: The Institute 9,099,860 12,334,469 Non-controlling interests (183) (15,784) Surplus for the year 9,099,677 12,318,685 Other comprehensive income Items that are or may be reclassified subsequently to profit or loss Net change in fair value of available-for-sale investments 18,651 (711,695) Foreign currency translation differences foreign operations (2,958,680) (3,867,933) Share of foreign currency translation differences of equity-accounted investee 7 (1,351,999) (1,294,241) Other comprehensive income for the year, net of tax (4,292,028) (5,873,869) Total comprehensive income for the year 4,807,649 6,444,816 Total comprehensive income attributable to: The Institute 4,807,536 6,458,265 Non-controlling interests 113 (13,449) Total comprehensive income for the year 4,807,649 6,444,816 The accompanying notes form an integral part of these financial statements. 6

10 Consolidated statement of changes in funds and reserves Year ended 31 December 2016 Note Accumulated funds Corporate Social Responsibility and Education fund Building fund Fair value reserve Foreign currency translation reserve Total attributable to the Institute Non-controlling interests Total $ $ $ $ $ $ $ $ Group At 1 January 2015 l43,461,082 50,000,000 50,000, ,181 (l,877,209) 241,845,054 (2,863) 241,842,191 Total comprehensive income for the year Surplus for the year 12,334,469 12,334,469 (15,784) 12,318,685 Other comprehensive income Foreign currency translation differences foreign operations (3,870,268) (3,870,268) 2,335 (3,867,933) Share of foreign currency translation differences of equity-accounted investee 7 (1,294,241) (1,294,241) (1,294,241) Net change in fair value of available-for-sale investments (711,695) (711,695) (711,695) Total comprehensive income for the year 12,334,469 (711,695) (5,164,509) 6,458,265 (13,449) 6,444,816 At 31 December ,795,551 50,000,000 50,000,000 (450,514) (7,041,718) 248,303,319 (16,312) 248,287,007 The accompanying notes form an integral part of these financial statements. 7

11 Consolidated statement of changes in funds and reserves (continued) Year ended 31 December 2016 Note Accumulated funds Corporate Social Responsibility and Education fund Building fund Fair value reserve Foreign currency translation reserve Total attributable to the Institute Non-controlling interests Total $ $ $ $ $ $ $ $ Group At 1 January ,795,551 50,000,000 50,000,000 (450,514) (7,041,718) 248,303,319 (16,312) 248,287,007 Total comprehensive income for the year Surplus for the year 9,099,860 9,099,860 (183) 9,099,677 Other comprehensive income Foreign currency translation differences foreign operations (2,958,976) (2,958,976) 296 (2,958,680) Share of foreign currency translation differences of equity-accounted investee 7 (1,351,999) (1,351,999) (1,351,999) Net change in fair value of available-for-sale investments 18,651 18,651 18,651 Total comprehensive income for the year 9,099,860 18,651 (4,310,975) 4,807, ,807,649 At 31 December ,895,411 50,000,000 50,000,000 (431,863) (11,352,693) 253,110,855 (16,199) 253,094,656 The accompanying notes form an integral part of these financial statements. 8

12 Consolidated statement of cash flows Year ended 31 December 2016 Note $ $ Cash flows from operating activities Surplus before tax 9,586,765 12,586,550 Adjustments for: Dividend income (135,616) (108,295) Depreciation of property, plant and equipment 10,911,034 10,733,404 Depreciation of investment properties 265, ,077 Finance cost 46, ,633 Loss/(Gain) on redemptions/disposals of available-forsale investments 102,679 (341,056) Interest income (834,440) (1,057,502) Impairment losses on trade receivables 18, ,343 Outstanding unclaimed advances realised (216,854) Payables no longer required (50,665) Recovery of bad debts (89,303) (114,448) Recovery of withholding tax from a joint venture (456,712) Share of profit of joint venture (2,344,123) (2,058,828) Share of (profit)/loss of associate (64,596) 17,741 Property, plant and equipment written off 8,597 Unrealised foreign exchange (gain)/loss (379,707) 289,682 17,091,764 20,051,070 Changes in working capital: Trade receivables 681,906 1,493,766 Other receivables (2,573,820) 2,526,229 Inventories 7,576 (47,381) Trade and other payables (6,649,190) 1,318,588 Cash from operating activities 8,558,236 25,342,272 Taxes paid (371,238) (132,664) Net cash generated from operating activities 8,186,998 25,209,608 Cash flows from investing activities Interest received 834,440 1,013,290 Deferred consideration (2,324,210) Dividend received from available-for-sale investments 135, ,295 Proceeds from disposal/redemption of available-for-sale investments 5,815,816 5,761,650 Purchase of property, plant and equipment (24,132,031) (43,752,385) Purchase of available-for-sale investments (6,215,144) (5,930,610) Net cash used in investing activities (23,561,303) (45,123,970) Net decrease in cash and cash equivalents (15,374,305) (19,914,362) Cash and cash equivalents at 1 January 46,294,473 66,498,517 Effects of exchange rate fluctuations on cash held 17,900 (289,682) Cash and cash equivalents at 31 December 14 30,938,068 46,294,473 The accompanying notes form an integral part of these financial statements. 9

13 Notes to the financial statements These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Governing Council on 17 8 May Domicile and activities Management Development Institute of Singapore (the Institute ) is incorporated in the Republic of Singapore with its registered office at 501 Stirling Road, Singapore The Institute is registered in the Republic of Singapore under the Societies Act, Chapter 311 and its subsidiaries are registered in the Republic of Singapore under the Singapore Companies Act, Chapter 50. With effect from 23 August 1996, the Institute has been registered as a charity (Registration No. 1200) under the Singapore Charities Act The financial statements of the Institute as at and for the year ended 31 December 2016 comprise the Institute and its subsidiaries (together referred to as the Group and individually as Group entities ) and the Group s interest in an associate and a jointly-controlled entity. The Group is primarily involved in the arrangement of courses and seminars in the field of management and award of certificates, diplomas and degrees in respect of courses conducted. The principal activities of the subsidiaries are disclosed in note 6. 2 Basis of preparation 2.1 Statement of compliance The financial statements have been prepared in accordance with the Singapore Financial Reporting Standards ( FRS ). 2.2 Basis of measurement The financial statements have been prepared on the historical cost basis except as otherwise disclosed in the notes below. 2.3 Functional and presentation currency These financial statements are presented in Singapore dollars which is the Group s functional currency. 10

14 2.4 Use of estimates and judgements The preparation of financial statements in conformity with FRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in note 12 valuation of trade receivables. 3 Significant accounting policies The Group adopted new or new revised financial reporting standards and interpretations which became effective during the year. The initial adoption of these standards and interpretations did not have a material impact on the financial statements. The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by the Group entities. 3.1 Basis of consolidation Business combinations Business combinations are accounted for using the acquisition method in accordance with FRS 103 Business Combinations as at the acquisition date, which is the date on which control is transferred to the Group. The Group measures goodwill at the acquisition date as: the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree, over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. Any goodwill that arises is tested annually for impairment. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. 11

15 Any contingent consideration payable is recognised at fair value at the acquisition date and included in the consideration transferred. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss. Non-controlling interests ( NCI ) that are present ownership interests and entitle their holders to a proportionate share of the acquiree s net assets in the event of liquidation are measured either at fair value or at the NCI s proportionate share of the recognised amounts of the acquiree s identifiable net assets, at the acquisition date. The measurement basis taken is elected on a transaction-by-transaction basis. All other NCI are measured at acquisition-date fair value, unless another measurement basis is required by FRS. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Changes in the Group s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners and therefore no adjustments are made to goodwill and no gain or loss is recognised in profit or loss. Adjustments to NCI arising from transactions that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary. Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. Loss of control Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained. Investments in associates and joint ventures (equity-accounted investee) Associate is an entity in which the Group has significant influence, but not control or joint control, over the financial and operating policies of these entities. Significant influence is presumed to exist when the Group holds 20% or more of the voting power of another entity. Joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. 12

16 Investments in an associate and joint ventures are accounted for using the equity method. They are recognised initially at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group s share of the profit or loss and other comprehensive income of equity-accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of the investment, together with any long-term investments that form part thereof, is reduced to zero, and the recognition of further losses is discounted except to the extent that the Group s interest in the investee. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Subsidiaries, associates and joint ventures in the separate financial statements Investments in subsidiaries, associates and joint ventures are stated in the Institute s statement of financial position at cost less accumulated impairment losses. 3.2 Foreign currency Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising from the retranslation of monetary items that in substance form part of the Group s net investments in available-for-sale equity instruments (see note 3.3) and a foreign operation (see below), which are recognised in other comprehensive income. 13

17 Foreign operations The assets and liabilities of foreign operations, excluding goodwill and fair value adjustments arising on acquisition, are translated to Singapore dollars at exchange rates at the end of the reporting period. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2005 are treated as assets and liabilities of the foreign operation and are translated at the exchange rates at the end of the reporting period. For acquisitions prior to 1 January 2005, the exchange rates at the date of acquisition were used. Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity. However, if the foreign operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the NCI. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to NCI. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned, nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation. These are recognised in other comprehensive income, and are presented in the translation reserve in equity. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising from such a monetary item that are considered to form part of a net investment in a foreign operation are recognised in other comprehensive income, and are presented in the translation reserve in equity. 3.3 Financial instruments Non-derivative financial assets The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. 14

18 Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group classifies non-derivative financial assets into the following categories: loans and receivables, and available-for-sale investments. Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise trade receivables, other receivables and cash and cash equivalents. Cash and cash equivalents comprise cash balances and fixed deposits. For the purpose of the statement of cash flows, pledged deposits are excluded. Available-for-sale investments Available-for-sale investments are non-derivative financial assets that are designated as available for sale. Available-for-sale investments are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (see note 3.8) and foreign currency differences on available-for-sale debt instruments, are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss. Available-for-sale financial assets comprise equity securities and debt securities. Non-derivative financial liabilities Financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. Other financial liabilities comprise trade and other payables and deferred consideration payables. Funds Funds are contributions received net of expenses incurred and are recognised on an accrual basis. 15

19 3.4 Property, plant and equipment Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes: the cost of materials and direct labour; any other costs directly attributable to bringing the asset to a working condition for its intended use; when the Group has an obligation to remove the asset or restore the site, an estimate of the costs of dismantling and removing the items and restoring the site on which they are located; and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. Subsequent costs The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Depreciation Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately. Depreciation is recognised as an expense in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment, unless it is included in the carrying amount of another asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. 16

20 Depreciation is recognised from the date that the property, plant and equipment are installed and are ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use. The estimated useful lives for the current and comparative years are as follows: Leasehold properties Office furniture, fittings and equipment Office and other renovation Computers Audio and visual aids Laboratory equipment Hotel practicum facilities Hostel Over term of lease of 19 years 3 to 5 years 5 to 7 years 3 years 3 years 5 to 7 years 5 to 7 years Over term of lease of 14 years Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if appropriate. 3.5 Goodwill Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. For the measurement of goodwill at initial recognition, see note 3.1. Subsequent measurement Goodwill is measured at cost less accumulated impairment losses. In respect of associates and jointly-controlled entities, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the associates and joint ventures. 3.6 Investment properties Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at cost on initial recognition and subsequently at fair value with any change therein recognised in profit or loss. Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property or their intended use and capitalised borrowing costs. Investment property is subject to renovations or improvements at regular intervals. The cost of major renovations and improvements is capitalised and the carrying amounts of the replaced components are written off to profit or loss. The cost of maintenance, repairs and minor improvement is charged to profit or loss when incurred. Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of an item) is recognised in profit or loss. Depreciation is calculated based on the cost of an investment property less its residual value. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of investment property from the date that they are available for use. 17

21 The estimated useful lives of investment properties for the current and comparative years are as follows: Freehold apartments Freehold buildings 50 years 100 years Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if appropriate. 3.7 Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the weighted average cost formula and includes expenditure incurred in acquiring the inventories and other costs incurred in bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale. 3.8 Impairment Non-derivative financial assets A financial asset not carried at fair value through profit or loss, including an interest in an associate and jointly-controlled entity, is assessed at the end of each reporting period to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event(s) has occurred after the initial recognition of the asset, and that the loss event(s) has an impact on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the Group, or economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. The Group considers a decline of 20% to be significant and a period of 9 months to be prolonged. Loans and receivables The Group considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually significant loans and receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans and receivables that are not individually significant are collectively assessed for impairment by grouping together receivables with similar risk characteristics. In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends. 18

22 An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows, discounted at the asset s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. Interest on the impaired asset continues to be recognised. When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss. Available-for-sale investments Impairment losses on available-for-sale investments are recognised by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed. The amount of the reversal is recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-forsale equity security is recognised in other comprehensive income. Associate and joint ventures An impairment loss in respect of an associate or joint venture is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is recognised in profit or loss. An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. Non-financial assets The carrying amounts of the Group s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated. For goodwill, that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its estimated recoverable amount. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows 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 or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination. 19

23 Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Goodwill that forms part of the carrying amount of an investment in an associate is not recognised separately, and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an associate is tested for impairment as a single asset when there is objective evidence that the investment in an associate may be impaired. 3.9 Employee benefits Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which related services are rendered by employees. Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably Provisions 3.11 Revenue A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. Fees Fees from courses and seminars are recognised over the period in which the courses and seminars are conducted. Fees received on courses yet to commence are shown as advance course fees. Fees received on courses which have commenced but are uncompleted as at year end are shown as unearned course fees to the extent that they relate to the uncompleted portion of the course. 20

24 Members subscription fees, registration fees and entrance fees are recognised when no significant uncertainty as to its collectability exists. Sale of goods Revenue from the sale of goods is recognised when all the following conditions are satisfied: the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction flow to the Group; and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Rental income Rental income is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of rental income, over the term of the lease. Donation income Donations, other than those specified below, are recognised in profit or loss in the period of receipt. Cash donations with an individual value of more than $1,000 (designated for property, plant and equipment purchases), and property, plant and equipment received, are taken to deferred income in the period of receipt. The deferred income is amortised over the useful life of the property, plant and equipment by crediting to the profit or loss an amount so as to match the related depreciation expense. The donation income is recognised in profit or loss when the relevant expenditure is incurred. Cash donations which are designated for specific use other than for property, plant and equipment purchases are taken to the donation fund account in the period of receipt Government grants Wage Credit Scheme, SME cash grant and Productivity and Innovation Credits Cash grants received from the government in relation to the Wage Credit Scheme, SME cash grants and Productivity and Innovation Credits are recognised as other income on a systematic basis in the same periods in which the expenses are recognised Lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. 21

25 3.14 Finance income and finance cost 3.15 Tax Finance income comprises interest income on funds invested (including available-for-sale financial assets), dividend income, gains on the disposal of available-for-sale financial assets and fair value gains on financial assets at fair value through profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income from investments is recognised in profit or loss on the date that the Group s right to receive payment is established, which in the case of quoted securities is normally the exdividend date. Finance costs comprise unwinding of the discount on deferred consideration, losses on disposal of available-for-sale investments, impairment losses recognised on financial assets (other than trade receivables) and reclassifications of net losses previously recognised in other comprehensive income. Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position. Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; temporary differences related to investments in subsidiaries, associates and jointly-controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and taxable temporary differences arising on the initial recognition of goodwill. The measurement of deferred taxes reflects the tax consequences that would follow the manner in which the Group expects, at the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. 22

26 Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unutilised tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made New standards and interpretations not adopted A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2016 and earlier application is permitted; however, the Group has not early applied the following new or amended standards in preparing these statements. For those new standards and amendments to standards that are expected to have an effect on the financial statements of the Group in future financial periods, the Group has assessed the transition options and the potential impact on its financial statement. A summary of the requirements of the new standards and the potential impact on the financial statements are as follows: Applicable to 2018 financial statements FRS 115 Revenue from Contracts with Customers FRS 115 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It also introduces new cost guidance which requires certain costs of obtaining and fulfilling contracts to be recognised as separate assets when specified criteria are met. When effective, FRS 115 replaces existing revenue recognition guidance, including FRS 18 Revenue, FRS 11 Construction Contracts, INT FRS 113 Customer Loyalty Programmes, INT FRS 115 Agreements for the Construction of Real Estate, INT FRS 118 Transfers of Assets from Customers and INT FRS 31 Revenue Barter Transactions Involving Advertising Services. FRS 115 is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted. FRS 115 offers a range of transition options including full retrospective adoption where an entity can choose to apply the standard to its historical transactions and retrospectively adjust each comparative period presented in its 2018 financial statements. When applying the full retrospective method, an entity may also elect to use a series of practical expedients to ease transition. 23

27 Potential impact on the financial statements During 2016, the Group completed its assessment of the impact on the Group s financial statements. Based on its assessment, the Group does not expect any material changes on adoption of FRS 115. The Group plans to adopt the standard, as necessary, when it becomes effective in FRS 109 Financial Instruments FRS 109 replaces most of the existing guidance in FRS 39 Financial Instruments: Recognition and Measurement. It includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from FRS 39. FRS 109 is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted. Retrospective application is generally required, except for hedge accounting. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. Restatement of comparative information is not mandatory. If comparative information is not restated, the cumulative effect is recorded in opening equity as at 1 January Potential impact on the financial statements During 2016, the Group completed its assessment of the impact on the Group s financial statements. Overall, the Group does not expect any material impact on its opening equity. Classification and measurement The Group does not expect any changes to the measurement basis arising from adopting the new classification and measurement model under FRS 109. For financial assets currently held at fair value, the Group expects to continue measuring the cost of these assets at fair value under FRS 109. The available-for-sale ( AFS ) assets are held as long-term investments by the Group. For these, the Group expects to elect to present subsequent changes in fair value in OCI, only dividend income is recognised in profit or loss. Any subsequent fair value changes are recognised in OCI and will not be reclassified to profit or loss even upon divestment. Loans and receivables that are currently accounted for at amortised cost will continue to be accounted for using amortised cost model under FRS 109. Impairment The Group is evaluating the approach to adopt in respect of recording expected impairment losses on its trade and other receivables. The Group plans to adopt the standard when it becomes effective, as necessary, in 2018 without restating comparative information. 24

28 Applicable to 2019 financial statements FRS 116 Leases FRS 116 eliminates the lessee s classification of leases as either operating leases or finance leases and introduces a single lessee accounting model. Applying the new model, a lessee is required to recognise right-of-use (ROU) assets and lease liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. FRS 116 substantially carries forward the lessor accounting requirements in FRS 17 Leases. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for these two types of leases using the FRS 17 operating lease and finance lease accounting models respectively. However, FRS 116 requires more extensive disclosures to be provided by a lessor. When effective, FRS 116 replaces existing lease accounting guidance, including FRS 17, INT FRS 104 Determining whether an Arrangement contains a Lease; INT FRS 15 Operating Leases Incentives; and INT FRS 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. FRS 116 is effective for annual periods beginning on or after 1 January 2019, with early adoption permitted if FRS 115 is also applied. Potential impact on the financial statements The Group has performed a high-level assessment of the new standard on its existing operating lease arrangements as a lessee (Refer to Note 24). Based on the assessment, the Group expects these operating leases to be recognised as ROU assets with corresponding lease liabilities under the new standard. The Group plans to adopt the standard, as necessary, when it becomes effective in The Group will perform a detailed analysis of the standard, including the transition options and practical expedients in

29 4 Property, plant and equipment Group Note Freehold land Leasehold properties Hostel Office furniture, fittings and equipment Office and other renovation Computers Audio and visual aids Laboratory equipment Hotel practicum facilities Constructionin-progress Total $ $ $ $ $ $ $ $ $ $ $ Cost At 1 January ,476,707 53,147,006 67,100,357 6,651,232 12,236,361 6,966, ,901 2,038,538 88,479 12,397, ,097,712 Additions 718, ,157' 343,706 2,054, , ,775 39,408,695 43,752,385 Write off (205,541) (205,541) Translation difference (1,744,541) (27,995) (38,946) (26,621) (11,144) (1,604,842) (3,454,089) At 31 December ,732,166 53,865,164 67,566,514 6,966,943 14,251,715 7,205, ,757 2,329,313 88,479 50,201, ,190,467 Additions 140,501 2,464, , , ,750 13,809 20,386,579 24,132,031 Write off (3,294) (7,574) (15,695) (26,563) Translation difference (235,137) (2,553) (5,325) (11,332) (1,471) (1,679,635) (1,935,453) At 31 December ,637,530 56,329,262 67,566,514 7,433,190 14,453,016 7,618, ,286 2,343,122 88,479 68,908, ,360,482 Accumulated depreciation At 1 January ,376,289 18,203,588 5,589,945 10,503,292 5,914, ,066 1,497,408 84,157 58,116,706 Depreciation charge for the year 22 3,849,754 4,855, , , ,685 26, , ,733,404 Write off (205,541) (205,541) Translation difference (14,046) (17,132) (15,294) (6,607) (53,079) At 31 December ,226,043 23,058,660 6,248,652 10,986,459 6,310, ,095 1,708,680 85,090 68,591,490 Depreciation charge for the year 22 3,818,212 4,851, , , ,113 16, , ,911,034 Write off (2,952) (15,014) (17,966) Translation difference (2,405) (5,363) (11,254) (1,718) (20,740) At 31 December ,044,255 27,910,034 6,809,713 11,729,180 6,931, ,286 1,970,670 86,024 79,463,818 Carrying amounts At 1 January ,476,707 37,770,717 48,896,769 1,061,287 1,733,069 1,051,657 47, ,130 4,322 12,397, ,981,006 At 31 December ,732,166 34,639,121 44,507, ,291 3,265, ,239 16, ,633 3,389 50,201, ,598,977 At 31 December ,637,530 33,285,007 39,656, ,477 2,723, , ,452 2,455 68,908, ,896,664 26

30 Institute Leasehold properties Hostel Office furniture, fittings and equipment Office and other renovation Computers Audio and visual aids Total $ $ $ $ $ $ $ Cost At 1 January ,147,006 67,100,357 3,905,632 11,904,954 5,852, , ,819,323 Additions 718, ,157 69,243 2,031,907 42,600 3,328,065 Write off (168,198) (168,198) At 31 December ,865,164 67,566,514 3,974,875 13,936,861 5,726, , ,979,190 Additions 2,464,098-11, , ,064-2,836,495 At 31 December ,329,262 67,566,514 3,986,008 14,151,061 5,874, , ,815,685 Accumulated depreciation At 1 January ,376,289 18,203,588 3,773,780 10,374,563 5,552, ,816 54,189,933 Depreciation charge for the year 3,849,754 4,855,072 73, , ,383 9,413,462 Write off (168,198) (168,198) At 31 December ,226,043 23,058,660 3,846,894 10,803,702 5,591, ,816 63,435,197 Depreciation charge for the year 3,818,212 4,851,374 71, , ,552 9,554,578 At 31 December ,044,255 27,910,034 3,918,003 11,482,033 5,726, ,816 72,989,775 Carrying amounts At 1 January ,770,717 48,896, ,852 1,530, ,661 88,629,390 At 31 December ,639,121 44,507, ,981 3,133, ,878 82,543,993 At 31 December ,285,007 39,656,480 68,005 2,669, ,390 75,825,910 27

31 5 Investment properties Group and Institute Note $ $ Costs At 1 January 25,098,082 25,098,082 Accumulated depreciation At 1 January 3,846,336 3,581,259 Depreciation charge for the year , ,077 At 31 December 4,111,412 3,846,336 Carrying amount At 31 December 20,986,670 21,251,746 Fair value At 31 December 57,830,000 59,910,000 All of the Group s investment properties are held as freehold properties. Investment properties comprise commercial and residential properties leased to external customers and held for capital appreciation. Measurement of fair values Fair value hierarchy The fair value of investment properties of the Group were determined by an external, independent and qualified valuation company at the end of every financial year. The fair value of the Group s investment properties of $57,830,000 (2015: $59,910,000) has been categorised as a Level 3 fair value based on the inputs to the valuation technique used. Valuation technique and significant unobservable input The following table shows the valuation technique used to determine fair value of investment properties, as well as the significant unobservable input used: Valuation technique Adjusted sales comparison method Significant unobservable input Adjusted comparable transacted price per square metre: The key unobservable input used is the transacted prices per square metre of comparable properties in close proximity based on recent market transactions. These recent transacted prices are subsequently adjusted to consider the size and floor level of the Group s property to those of the comparable properties sold to derive the fair value of the Group s investment properties. The estimated fair value increases with higher comparable price. 28

32 6 Subsidiaries Institute $ $ Equity investments at cost 1,000,000 1,000,000 Details of subsidiaries are as follows: Ownership Country of interest Name of subsidiary Principal activities incorporation % % (1) (2) MDIS Holdings Ltd (3) Investment holding and carrying on the business of management development Subsidiaries of MDIS Holdings Ltd MDIS International Pte Investment holding and carrying Ltd (2)(3) on the business of management development Singapore Singapore MDIS Corporation Pte Ltd (2)(3) MDIS Residences Pte Ltd (3) Investment holding and carrying on the business of management development Carrying on the business of hostel operations Singapore Singapore Subsidiaries of MDIS International Pte Ltd MDIS India Private Carrying on the business of Limited (5) management development India MDIS (Malaysia) Sdn Bhd (4) MDIS Unicampus (Malaysia) Sdn Bhd (4) Carrying on the business of management development Carrying on the business of management development Malaysia Malaysia

33 Name of subsidiary Principal activities Subsidiaries of MDIS Corporation Pte Ltd Management Carrying on the business of Development Institute management development of Singapore Pte Ltd (3) Country of incorporation Ownership interest % % Singapore MDIS College Pte Ltd (3) Service Quality Centre Pte Ltd (3) Carrying on the business of management development Carrying on the business of management development Singapore Singapore Subsidiary of Service Quality Centre Pte Ltd Service Quality (SQ) Training programmes and (Qingdao) Pte Ltd (5) consultancy services People s Republic of China (1) MDIS Holdings Ltd is a company limited by guarantee and does not have share capital. The members of the subsidiary have undertaken to contribute $100 towards the assets of the subsidiary in the event the subsidiary is wound up whilst they are still a member or within one year after they cease to be a member. As at 31 December 2016, the subsidiary had 2 (2015: 2) members, who are holding their interests in trust for the Institute. The Institute has provided a letter of indemnity to these members. (2) The shareholdings of this subsidiary are registered in the name of its two directors who hold the shares in trust for the Group. (3) Audited by KPMG LLP, Singapore. (4) Audited by other member firm of KPMG International. (5) Audited by non-member firm of KPMG International. The Group does not have any subsidiaries with material non-controlling interest. 7 Joint ventures Group $ $ Interest in joint ventures 10,338,984 9,089,327 30

34 Details of the joint venture are set out below: Ownership Country of interest Name of joint venture Principal activities incorporation % % MDIS Tashkent LLC (1) Provision of educational and other academic services Republic of Uzbekistan MDIS-VELS Education Pte. Ltd. (2) Provision of educational and other academic services Republic of India (1) Audited by non-member firm of KPMG International. (2) The above joint venture remained inactive as at 31 December The following table summarises the financial information of the Group s joint venture based on the audited financial statements of MDIS Tashkent LLC prepared in accordance with FRS $ $ Revenue 16,204,723 14,833,296 Profit from continuing operations a 4,596,319 4,036,918 Other comprehensive income (2,650,978) (2,537,728) Total comprehensive income 1,945,341 1,499,190 a Includes: - depreciation and amortisation of $547,906 (2015: $674,429) - income tax expense of $23,521 (2015: $26,205) Non-current assets 10,792,427 12,196,301 Current assets b 31,140,182 28,767,209 Non-current liabilities c (5,162,539) (6,117,945) Current liabilities d (16,497,554) (17,023,356) Net assets 20,272,516 17,822,209 b Includes cash and cash equivalents of $28,700,708 (2015: $26,133,114) c Includes non-current financial liabilities (excluding trade and other payables and provisions) of $Nil (2015: $169,668) d Includes current financial liabilities (excluding trade and other payables and provisions) of $2,559,566 (2015: $2,448,875) 31

35 $ $ Group s interest in net assets of investee at beginning of the year 9,089,327 7,765,078 Share of: - profit from continuing operations 2,344,123 2,058,828 - other comprehensive income (1,351,999) (1,294,241) - total comprehensive income 992, ,587 Translation differences 257, ,662 Carrying amount of interest in investees at end of the year 10,338,984 9,089,327 8 Associate Group $ $ Equity investment at cost 566, ,773 Less: Allowance for impairment loss (238,001) (238,001) 328, ,772 The Group has interests in an immaterial associate (2015: one immaterial associate). The following table summarise the carrying amount and share of loss and other comprehensive income of the associate that are accounted for using the equity method: $ $ Carrying amount of interest in immaterial associate 328, ,772 Group s share of profit/(loss) from continuing operations, representing total comprehensive income 64,596 (17,741) 9 Available-for-sale investments Group Institute $ $ $ $ Current Quoted equity securities, at fair value 4,361,035 3,978, , ,295 Quoted debt securities, at fair value 241,250 4,361,035 4,220, , ,295 32

36 Group Institute $ $ $ $ Non-current Quoted debt securities, at fair value 9,542,816 9,368,327 1,790,543 2,299,655 The fair values of these securities are based on the quoted bid prices on the last market day of the financial year. The quoted equity securities of the Group and the Institute offer the opportunity for return through dividend income and fair value gains. They have no fixed maturity or coupon rate. The quoted debt securities of the Group and the Institute have effective interest rates ranging from 1.85% to 7.20% (2015: 1.11% to 7.20%) per annum respectively and have maturity dates ranging from May 2017 to December 2049 and October 2018 to February 2022 (2015: June 2016 to December 2049 and June 2016 to February 2022) respectively. The Group s and the Institute s exposure to foreign currency risks and equity price risks are disclosed in note Deferred tax assets/(liabilities) The following are the deferred tax assets and liabilities recognised by the Group, and the movements thereon, during the current and prior reporting periods: Balance as at 1 January 2015 Recognised in profit or loss (note 23) Balance as at 31 December 2015 Recognised in profit or loss (note 23) Balance as at 31 December 2016 $ $ $ $ $ Group Deferred tax assets Unutilised tax losses 46,556 (46,556) Deferred tax liabilities Property, plant and equipment (48,000) (5,763) (53,763) (53,763) Others (59,316) (59,316) (48,000) (5,763) (53,763) (59,316) (113,079) 33

37 At 31 December, deferred tax assets relating to the following temporary differences have not been recognised: Group $ $ Unutilised tax losses 760, ,609 Others 215, , ,111 1,126,551 Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which its subsidiary can utilise the benefits therefrom. 11 Inventories Group Institute $ $ $ $ Trading supplies 50,634 52,344 45,773 50,532 Consumable materials 193, , , , , , , , Trade receivables Group Institute $ $ $ $ External parties 6,228,233 7,629, , ,331 Amounts due from subsidiaries 5,568,002 3,276,386 Amounts due from a jointlycontrolled entity 5,038,055 6,928,751 5,038,055 6,928,751 11,266,288 14,557,798 10,825,620 10,393,468 Less: Impairment losses (1,899,881) (4,579,916) (62,429) (62,429) 9,366,407 9,977,882 10,763,191 10,331,039 The amounts due from subsidiaries and a jointly controlled-entity were unsecured, interest-free and repayable on demand. There was no allowance for doubtful debts arising from these outstanding balances. Concentration of credit risk relating to trade receivables is limited due to the Group s many varied customers. The Group s historical experience in the collection of accounts receivables falls within the recorded allowances. Due to these factors, management believes that no additional credit risk beyond amounts provided for collection losses is inherent in the Group s trade receivables. The Group s and Institute exposure to foreign currency risks is disclosed in note

38 Impairment losses The ageing of trade receivables at the reporting date was: Gross Impairment losses Gross $ $ $ $ Impairment losses Group Not past due 1,682,799 2,120,437 Past due 1 90 days 3,905,184 (1,674) 2,154,399 Past due days 2,307,802 (6,696) 1,341,319 Past due days 828,017 (867) 1,858,889 (178,882) Past due more than 360 days 2,542,486 (1,890,644) 7,082,754 (4,401,034) 11,266,288 (1,899,881) 14,557,798 (4,579,916) Institute Not past due 6,136,542 3,802,308 Past due 1 90 days 2,370,650 1,602,156 Past due days 1,335,256 1,149,215 Past due days 563,756 1,577,705 Past due more than 360 days 419,416 (62,429) 2,262,084 (62,429) 10,825,620 (62,429) 10,393,468 (62,429) The movement in the allowance for impairment losses in respect of trade receivables during the year was as follows: Group Institute Note $ $ $ $ At 1 January 4,579,916 4,260,212 62,429 62,429 Impairment losses recognised 22 18, ,343 Bad debts recovered 21 (89,303) (114,448) Impairment utilised (2,609,604) (191) At 31 December 1,899,881 4,579,916 62,429 62,429 Based on management s experience of the historical payment behaviour of the Group s customers, the Group believes that, apart from the above, no impairment allowance is necessary in respect of unimpaired amounts. Source of estimation uncertainty The Group evaluates whether there is any objective evidence that trade receivables are impaired, and determines the amount of impairment loss as a result of the inability of the debtors to make the required payments. The Group bases the estimates on the ageing of the trade receivable balance, credit worthiness of the debtors and historical write-off experience. If the financial conditions of the debtors were to deteriorate, actual write-offs would be higher than that estimated. 35

39 13 Other receivables Group Institute $ $ $ $ Other receivables 937,775 1,168,442 13,162 11,908 Interest receivables 251, , , ,100 Amounts due from associate 91,751 43,035 Amounts due from subsidiaries 122,597,005 94,156,737 Amounts due from a joint venture 6,160,629 3,819,555 2,884,027 1,482,990 Amounts due from related corporations 17, ,120 17, ,820 Deposits 531, , , ,507 7,990,659 6,589, ,981,198 96,680,062 Prepayments 6,757,853 8,555,186 3,052,622 2,952,455 14,748,512 15,145, ,033,820 99,632,517 The amounts due from associate, subsidiaries, a joint venture and related corporations are nontrade in nature, unsecured, interest-free and repayable on demand except for an amount due from subsidiaries as at 31 December 2016 of $12,074,308 (2015: $12,074,308) which bears interest ranging from 5% to 10% (2015: 5% to 10%) per annum. The Group s and Institute exposure to interest rate risks and foreign currency risks are disclosed in note Cash and cash equivalents Group Institute $ $ $ $ Cash in hand 20,461 26,640 20,462 22,266 Cash at bank 14,628,907 10,747,126 5,468,993 2,841,267 Fixed deposits (1) 16,288,700 35,520,707 11,263,175 30,727,833 Cash and cash equivalents in cash flow statement 30,938,068 46,294,473 16,752,630 33,591,366 Pledged bank deposits (1)(2) 11,288,434 11,288, , ,379 (1) The fixed deposits earn interest ranging from 0.2% to 1.9% (2015: 0.15% to 1.90%) per annum and for tenures of 12 months (2015: 24 months or less). These deposits are considered as cash and cash equivalents as management is of the view that these deposits may be withdrawn as and when required without having to incur a penalty. (2) Includes deposits of the Group amounting to $11,288,434 (2015: $11,288,434) and $320,379 (2015: $320,379) respectively, which are pledged to certain banks as security for performance guarantees (Note 28). The Group s and the Institute exposure to interest rate risks and foreign currency risks are disclosed in note

40 15 Trade and other payables Group Institute $ $ $ $ Current Trade payables 1,248,320 2,568, ,695 1,102,427 Deferred income 1,703,523 1,698, ,567 Accreditation fee payables 1,695,548 1,048, ,745 Accrued operating expenses 3,369,856 4,591, , ,049 Deposit payables 1,064,153 1,209, , ,923 Other payables 1,390,908 6,205,832 91, ,223 10,472,308 17,322,133 1,665,606 2,886,622 Non-current Other payables 3,333,228 3,397,596 The average credit period of the Group and the Institute s trade payables is 30 days (2015: 30 days). No interest is charged on the outstanding trade payable balances. As at 31 December 2016, the Group has deferred income of $1,703,523 (2015: $1,698,766), which represents the consideration received or receivable in respect of rental income from hostel rooms for which occupancy rights have been granted, but not yet earned. The Group s and the Institute s exposure to foreign currency risks are disclosed in note Unearned and advance course fees Unearned course fees includes both amounts received by the Group for courses which have commenced but are uncompleted as at year end, and amounts received by the Group on courses yet to commence (advance course fees). 17 Funds Corporate Social Responsibility and Education fund This fund will be used to pay bursary and scholarship awards. At the reporting date, a total cumulated amount of $50,000,000 (2015: $50,000,000) has been contributed to the fund by way of transfers from the accumulated funds of the Group and the Institute. Building fund This fund will be used to pay for capital expenditure of the Group and the Institute. At the reporting date, a total amount of $50,000,000 (2015: $50,000,000) has been contributed to the fund by way of transfers from the accumulated funds of the Group and the Institute. 37

41 18 Fair value reserve The fair value reserve comprises the cumulative net change in the fair value of the available-forsale investments until the investments are derecognised or impaired. 19 Deferred consideration payable Group $ $ Deferred consideration (current) 2,297,851 2,298,030 Deferred consideration relates to payables by a subsidiary of the Group, MDIS (Malaysia) Sdn Bhd, to Education@Iskandar Sdn Bhd for a piece of land at Bandar Iskandar, Johor, based on the payment schedule set out under the sale and purchase agreement. On 29 February 2012, a subsidiary of the Group, MDIS (Malaysia) Sdn Bhd, entered into a sale and purchase agreement ( agreement ) with Education@Iskandar Sdn Bhd ( vendor ) for a piece of land at Bandar Iskandar, Johor, Malaysia at a total purchase consideration of MYR 35,577,630. The purpose of the land is to set up a campus for students in Malaysia. The unconditional date as stated in the agreement is 7 August The payment schedule as per clause 3.1 of the agreement is as follows: i. upon execution of the agreement, 10% of the purchase price amounting to MYR 3,557,763 ($1,428,648) was paid in prior years; ii. iii. iv within 30 days of the unconditional date, 10% of the purchase price amounting to MYR 3,557,763 ($1,428,648) was paid in prior years; within 12 months of the unconditional date, 20% of the purchase price amounting to MYR 7,115,526 ($2,755,606) was paid in the prior years; within 24 months of the unconditional date, 20% of the purchase price amounting to MYR 7,115,526 ($2,742,014) was paid in prior years; v. within 36 months of the unconditional date, 20% of the purchase price amounting to MYR 7,115,526 which approximates $2,324,210 was paid in prior years; vi. within 48 months of the unconditional date, 20% of the purchase price amounting to MYR 7,115,526, which approximates $2,297,851 (2015: $2,343,872) shall be paid. The amount was fully paid off in February

42 In 2012, a deposit of $2,857,296 (MYR 7,115,526) was paid and recognised. In 2013, the land title was received by MDIS (Malaysia) Sdn Bhd. Accordingly, the deposit placed in 2012 and the remaining amounts paid/payable in accordance with the agreement were recognised as part of property, plant and equipment and correspondingly a deferred consideration payable, as follows: Group Note 2013 $ Deposit for land purchase (payment in 2012) 2,857,296 Amount paid up during the year in accordance to payment schedule 20% of purchase price 2,755,606 Deferred consideration recognised (current) 20% of purchase price 2,742,014 Fair value of deferred consideration recognised (non-current) remaining 40% of purchase price 5,233,711 Others (90,348) Additions to land in the prior reporting period 13,498,279 In 2013, the transfer of the land title was completed. Accordingly, this consideration was stated at fair value at inception and recognised as an addition to property, plant and equipment (note 4). Fair value at inception was determined based on expected future cash flows, discounted at an interest rate of 3.2% per annum. The consideration is subsequently measured at amortised cost using the effective interest method. The unwinding of the difference between the fair value and the consideration amount is recognised as interest expense in profit or loss over the term of the agreement, as follows: Group $ $ Deferred consideration (current) 2,297,851 2,298,030 Interest expense recognised over the term of the agreement in subsequent years 49,734 48,881 Contracted consideration amount 2,347,585 2,346,911 Discount rate The discount rate is estimated based on the coupon rate on a 3-year government-issued security in Malaysia, to reflect the prevailing rates which apply to the foreign operations of the Group. 39

43 20 Revenue Group $ $ Fee from courses, seminars, training programmes and tuitions, net of discount 62,928,173 63,875,164 Registration fees 382, ,862 Sales of books, magazines and publications 423, ,663 Membership subscriptions and entrance fees 578, ,113 Rental income from hostel accommodation 7,058,465 7,966,006 Rental income from investment properties 1,480,275 1,318,642 Others 255, ,814 73,106,580 75,013, Other income Group Note $ $ Administrative income 200, ,129 Car park income 167, ,247 Commission income 44,869 Dividend income 135, ,295 Government grants 538, ,737 Guaranteed fee income from joint venture , ,040 Interest income 834,440 1,057,502 Income generated from cafeteria operations 221, ,955 Loss on redemptions/disposals of available-for-sale investments 341,056 Net foreign exchange gain 317, ,516 Other rental income 534, ,146 Outstanding unclaimed advances realised 216,854 Payables no longer required 50,665 Partial recovery of available-for-sale investments previously written off 481, ,220 Recovery of bad debts 12 89, ,448 Recovery of withholding tax from a joint venture 456,712 Others 1,349, ,199 5,717,574 7,425,590 40

44 22 Surplus for the year The following items have been included in arriving at surplus for the year: Group Note $ $ Employee benefits expense (see below) 18,681,386 18,844,156 Depreciation of property, plant and equipment 4 10,911,034 10,733,404 Depreciation of investment properties 5 265, ,077 Interest expense 46, ,633 Impairment losses on trade receivables 12 18, ,343 Impairment losses on available-for-sale investments 266,782 Loss on redemptions of available-for-sale investments 102,679 Donations (1) 31,980 85,500 Operating lease expense 1,394,877 1,516,259 Loss on disposal of property, plant and equipment 8,597 Employee benefits expense Salaries, bonus and other staff costs 15,493,559 16,225,248 Contribution to defined contribution plans 3,187,827 2,658,908 18,681,386 18,884,156 (1) Donations paid to beneficiaries are approved at the discretion of the Governing Council and charged to profit or loss upon approval. 23 Tax expense Group Note $ $ Tax expense Current year 338, ,344 Adjustment for prior years 89,565 (60,798) 427, ,546 Deferred tax expense Origination and reversal of temporary differences 23,678 52,319 Adjustment for prior years 35, ,316 52,319 Total tax expense 487, ,865 41

45 Reconciliation of effective tax rate Group $ $ Surplus before tax 9,586,765 12,568,550 Tax calculated using the Singapore tax rate of 17% (2015: 17%) 1,629,750 2,139,714 Tax exempt income (2,068,764) (3,323,243) Non-deductible expenses 1,475,406 2,233,805 Effect of tax rate in foreign jurisdictions (239,451) (447,231) Effect of results in equity-accounted investees presented net of tax (409,482) (346,985) Utilisation of previously unrecognised tax losses (7,672) (10,121) Current year tax losses which no deferred tax assets was recognised 26,065 Changes in temporary differences (17,902) 56,659 Adjustment for prior years 125,203 (60,798) 487, , Financial risk management Overview The Group has exposure to the following risks from its use of financial instruments: credit risk liquidity risk market risk This note presents information about the Group s exposure to each of the above risks, the Group s objectives, policies and processes for measuring and managing risk, and the Group s management of capital. Risk management framework The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continues to ensure that an appropriate balance between risk and control is achieved. Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group s loans and receivables and available-for-sale investments. 42

46 Loans and receivables The Group has a credit policy in place which monitors their customer balances on an ongoing basis. The Group does not require collateral in respect of trade and other receivables. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of loans and receivables. This allowance comprises specific losses that relates to individually significant exposures. The allowance account in respect of loans and receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the impaired financial asset. Cash and cash equivalents are placed with financial institutions which are regulated. Available-for-sale investments The Group limits its exposure to credit risk by investing only in debt and equity securities listed on the Singapore Stock Exchange and primary funds. The Group and the Institute did not have any held-to-maturity investments that were past due but not impaired at 31 December 2016 (2015: nil). Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. As part of its overall prudent liquidity management, the Group maintains sufficient level of cash to meet its working capital requirement. At the reporting date, the expected contractual undiscounted cash flows of the Group s trade and other payables are expected to occur within one year and are equivalent to their carrying amounts. The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements: Carrying amount Contractual cash flows Within 1 year Within 2 5 years More than 5 years $ $ $ $ $ Group 2016 Non-derivative financial liabilities Trade and other payables 13,805,536 (13,805,536) (10,472,308) (3,333,228) Deferred consideration payable 2,347,585 (2,347,585) (2,347,585) 16,153,121 (16,153,121) (12,819,893) (3,333,228) 43

47 Carrying amount Contractual cash flows Within 1 year Within 2 5 years More than 5 years $ $ $ $ $ Group 2015 Non-derivative financial liabilities Trade and other payables 20,719,704 (20,719,704) (17,322,133) (3,397,571) Deferred consideration payable 2,346,911 (2,346,911) (2,346,911) 23,066,615 (23,066,615) (19,669,044) (3,397,571) Institute 2016 Non-derivative financial liabilities Trade and other payables 1,665,606 (1,665,606) (1,665,606) 2015 Non-derivative financial liabilities Trade and other payables 2,886,622 (2,886,622) (2,886,622) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Interest rate risk The Group s exposure to changes in interest rates relates primarily to its interest-bearing financial assets. The Group does not hedge its exposure to interest rate risk. Profile At the reporting date, the interest rate profile of the interest-bearing financial instruments was: Group Institute Carrying amount Carrying amount $ $ $ $ Fixed rate instruments Quoted debt securities, at fair value 9,542,816 9,609,577 1,790,543 2,299,655 Amount due from subsidiaries 12,597,005 12,074,308 Fixed deposits 16,288,700 35,520,707 11,263,175 30,727,833 Pledged bank deposits 11,288,434 11,288, , ,379 37,119,950 56,418,718 25,971,102 45,422,175 44

48 Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss. Foreign exchange risk The Group is exposed to foreign currency risk on revenue and expenses that are denominated in a currency other than the respective functional currencies of the Group entities. The currencies giving rise to this risk are primarily the United States Dollar, Australian Dollar, British Pound, Euro, Chinese Renminbi, Ringgit Malaysia and Japanese Yen. 45

49 Exposure to currency risk The summary of quantitative data about the Group s exposure to currency risk is as follows: Group United States Dollar Australian Dollar British Pound Euro Chinese Renminbi Ringgit Malaysia Japanese Yen $ $ $ $ $ $ $ 2016 Available-for-sale investments 2,209,861 96,879 81,514 Cash and cash equivalents 5,197,103 1,078 66,191 4, , ,320 Trade receivables 5,038,056 Other receivables 3,276,602 Trade and other payables (483,006) (1,212,542) 15,238,616 1,078 (1,146,351) 101, , ,320 81, Available-for-sale investments 1,391, ,399 41,924 Cash and cash equivalents 2,188,355 11,828 1,088, , ,756 22,650 Trade receivables 6,928,751 Other receivables 2,336,565 Trade and other payables (353,660) (694,651) 12,491,080 11, , , ,756 22,650 41,924 46

50 Institute United States Australian British Dollar Dollar Pound Euro $ $ $ $ 2016 Cash and cash equivalents 4,818, ,191 1,464 Trade receivables 5,038,056 Trade and other payables (487,745) 9,856, (421,554) 1, Cash and cash equivalents 1,967,246 1,085 1,087, ,455 Trade receivables 6,928,751 8,895,997 1,085 1,087, ,455 Sensitivity analysis A strengthening/(weakening) of the following foreign currencies against the functional currency of the Group and the Institute at 31 December would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. This analysis is based on foreign currency exchange rate variances that the Group has considered to be reasonably possible at the end of the reporting date Group Institute Equity Profit or loss Profit or loss $ $ $ United States Dollar (10% strengthening) 50,505 1,424, ,832 Australian Dollar (10% strengthening) British Pound (10% strengthening) (65,861) 6,619 Euro (10% strengthening) 9, Chinese Renminbi (10% strengthening) 37,955 Ringgit Malaysia (10% strengthening) 27,632 Japanese Yen (10% strengthening) 8,151 United States Dollar (10% weakening) (50,505) (1,424,582) (936,832) Australian Dollar (10% weakening) (108) (66) British Pound (10% weakening) (65,861) (6,619) Euro (10% weakening) (9,688) (418) (146) Chinese Renminbi (10% weakening) (37,955) Indian Rupees (10% weakening) (27,632) Japanese Yen (10% weakening) (8,151) 47

51 Group Institute Equity Profit or loss Profit or loss $ $ $ 2015 United States Dollar (10% strengthening) 139,107 1,110, ,600 Australian Dollar (10% strengthening) 1, British Pound (10% strengthening) 39, ,718 Euro (10% strengthening) 23,240 26,122 25,846 Chinese Renminbi (10% strengthening) 23,876 Ringgit Malaysia (10% strengthening) 2,265 Japanese Yen (10% strengthening) 4,192 United States Dollar (10% weakening) (139,107) (1,110,001) (889,600) Australian Dollar (10% weakening) (1,183) (109) British Pound (10% weakening) (39,375) (108,718) Euro (10% weakening) (23,420) (26,122) (25,846) Chinese Renminbi (10% weakening) (23,876) Ringgit Malaysia (10% weakening) (2,265) Japanese Yen (10% weakening) (4,192) Equity price risk Equity price risk is the risk that the fair value or future cash flows of the Group s investments will fluctuate because of changes in market prices (other than interest or exchange rates). The Group holds investments in listed equity instruments, some of which are quoted on primary funds in United States, Europe and Asia Pacific countries. The market values of these investments are affected by changes in market prices as a result of changes in the global economic conditions, macro and micro economic factors affecting the country where the exchange is situated and factors specific to the investee corporations. The fluctuations in market prices due to the above factors are unforeseen and the Group monitors these changes to respond to them as and when necessary. The Group does not use derivative financial instruments to hedge its equity price exposure. Sensitivity analysis A 10% change in the underlying prices of the equity and debt securities and the fair value of the equity and debt derivatives of the Group and the Institute at the reporting date would increase/ (decrease) in equity and profit or loss (before any tax effects) by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis is performed on the same basis for Group Institute Equity Profit or Profit or Profit or Profit or Equity Equity Equity loss loss loss loss $ $ $ $ $ $ $ $ Equity securities 10% increase 436, ,897 55,190 62,030 10% decrease (361,806) (74,298) (397,897) (1,795) (53,395) (62,030) Debt securities 10% increase 954, , , ,966 10% decrease (954,282) (960,958) (179,054) (229,866) 48

52 Accounting classifications and fair values Fair value versus carrying amounts The carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy are as follows. It does not includes fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Carrying amount Fair value Loans and receivables Designated at fair value Other financial liabilities Total Level 1 Level 2 Total Note Group $ $ $ $ $ $ $ 31 December 2016 Financial assets not measured at fair value Trade receivables 12 9,366,407 9,366,407 Other receivables* 13 7,990,659 7,990,659 Cash and cash equivalents 14 30,938,068 30,938,068 Pledged bank deposits 14 11,288,434 11,288,434 59,583,568 59,583,568 Financial liabilities not measured at fair value Non-current Trade and other payables 15 (3,333,228) (3,333,228) (3,123,358) (3,123,358) Current Trade and other payables 15 (10,472,308) (10,472,308) (10,472,308) (10,472,308) Deferred consideration payable 19 (2,297,851) (2,297,851) (2,297,851) (2,297,851) (16,103,387) (16,103,387) Financial assets measured at fair value Available-for-sale investments: - quoted equity securities 9 4,361,035 4,361,035 4,361,035 4,361,035 - quoted debt securities 9 9,542,816 9,542,816 9,542,816 9,542,816 13,903,851 13,903,851 *Excludes prepayments 49

53 Accounting classifications and fair values (continued) Group Note Loans and receivables Carrying amount Fair value Designated at fair value Other financial liabilities Total Level 1 Level 2 Total $ $ $ $ $ $ $ 31 December 2015 Financial assets not measured at fair value Trade receivables 12 9,977,882 9,977,882 Other receivables* 13 6,589,823 6,589,823 Cash and cash equivalents 14 46,294,473 46,294,473 Pledged bank deposits 14 11,288,434 11,288,434 74,150,612 74,150,612 Financial liabilities not measured at fair value Non-current Trade and other payables 15 (3,397,596) (3,397,596) (3,187,071) (3,187,071) Current Trade and other payables 15 (17,322,133) (17,322,133) Deferred consideration payable 19 (2,298,030) (2,298,030) (2,298,030) (2,298,030) (23,017,759) (23,017,759) Financial assets measured at fair value Available-for-sale investments: - quoted equity securities 9 3,978,973 3,978,973 3,978,973 3,978,973 - quoted debt securities 9 9,609,577 9,609,577 9,609,577 9,609,577 13,588,550 13,588,550 *Excludes prepayments 50

54 Accounting classifications and fair values (continued) Institute Note Loans and receivables Carrying amount Fair value Designated at fair value Other financial liabilities Total Level 1 Total $ $ $ $ $ $ 31 December 2016 Financial assets not measured at fair value Trade receivables 12 10,763,191 10,763,191 Other receivables* ,981, ,981,198 Cash and cash equivalents 14 16,752,630 16,752,630 Pledged bank deposits , , ,817, ,817,398 Financial liabilities not measured at fair value Trade and other payables 15 (1,665,606) (1,665,606) Financial assets measured at fair value Available-for-sale investments: - quoted equity securities 9 551, , , ,903 - quoted debt securities 9 1,790,543 1,790,543 1,790,543 1,790,543 2,342,446 2,342,446 *Excludes prepayments 51

55 Accounting classifications and fair values (continued) Institute Note Loans and receivables Carrying amount Fair value Designated at fair value Other financial liabilities Total Level 1 Total $ $ $ $ $ $ 31 December 2015 Financial assets not measured at fair value Trade receivables 12 10,331,039 10,331,039 Other receivables* 13 96,680,062 96,680,062 Cash and cash equivalents 14 33,591,366 33,591,366 Pledged bank deposits , , ,922, ,922,846 Financial liabilities not measured at fair value Trade and other payables 15 (2,886,622) (2,886,622) Financial assets measured at fair value Available-for-sale investments: - quoted equity securities 9 620, , , ,295 - quoted debt securities 9 2,299,655 2,299,655 2,299,655 2,299,655 2,919,950 2,919,950 *Excludes prepayments 52

56 Fair value hierarchy The different levels in the fair value hierarchy are defined as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Measurement of fair values Valuation techniques and significant unobservable inputs The following table shows the valuation technique used in measuring Level 2 and Level 3 fair values, as well as the significant unobservable inputs used: Financial instruments not measured at fair value Type Valuation technique Significant unobservable inputs Trade and other payables Discounted cash flows Not applicable Deferred consideration payable Discounted cash flows Not applicable Financial instruments measured at fair value Type Investment in equity and debt securities Valuation technique Market comparison technique: The fair values are determined by reference to their quoted bid prices at the last market day of the financial year. Significant unobservable inputs Not applicable Inter - relationship between key unobservable inputs and fair value measurement Not applicable Other financial assets and liabilities The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade receivables, other receivables, cash and cash equivalents, pledged bank deposits and trade and other payables are assumed to approximate their fair values because of the short period to maturity. Non-financial assets not carried at fair value but for which fair value is disclosed. Details of valuation techniques and key assumptions used to estimate the fair values of investment properties are set in note 5. Transfers between levels There are no transfers between the levels during the year. 53

57 25 Commitments Capital commitments relate to the construction-in-progress for the campus located at Bandar Iskandar, Johor, Malaysia. Group $ $ Amount contracted but not invoiced 3,956,361 21,293,845 The Institute has provided unconditional financial support to its subsidiaries, MDIS International Pte Ltd, MDIS Corporation Pte Ltd, MDIS Holdings Ltd, MDIS Residences Pte Ltd, MDIS (Malaysia) Sdn. Bhd. and MDIS Unicampus (Malaysia) Sdn. Bhd., for the next 12 months, so that they can meet their financial obligations as and when they fall due. 26 Operating leases Leases as lessee Operating lease payments represent rental payable by the Group for certain of its office equipment and office properties. Each lease is generally for a period of one to three years (2015: one to five years). At the reporting date, the future minimum lease payments payable for the Group and for the Institute under non-cancellable leases are as follows: Group Institute $ $ $ $ Lease payments payable: - Within 1 year 1,408,233 1,517,949 1,312,637 1,375,843 - Within 2 to 5 years 2,662, ,076 2,662, ,225 4,071,001 2,203,025 3,975,405 1,985,068 Leases as lessor The Group leases out its investment properties (see note 5) to third parties. Property rental income earned during the year was $1,544,568 (2015: $1,353,891). Each lease is generally for a period of two to three years (2015: two to three years) with an option to renew the lease after that date. No contingent rents are charged. 54

58 At the reporting date, the future minimum lease payments receivable for the Group and for the Institute under non-cancellable leases are as follows: Group and Institute $ $ Lease payments receivable: - Within 1 year 1,544,569 1,353,891 - Within 2 to 5 years 1,462,795 1,784,034 3,007,364 3,317, Performance guarantees Group Institute $ $ $ $ Guarantees given to banks in favour of vendors in lieu of utilities and rental charges 320, , , ,379 Guarantee given to a bank as security on the purchase of land in Malaysia by a subsidiary of the Group 10,968,055 10,968,055 11,288,434 11,288, , , Related parties Key management personnel compensation Key management personnel of the Group are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group. Compensation paid and payable to key management personnel comprise: Group $ $ Short-term employee benefits 937, ,779 Post-employment benefits 120, ,901 1,057, ,680 The members of the Institute s Governing Council are not paid any remuneration. 55

59 The salary bands of the top three executives annual remuneration are as follows: Group Less than $100,000 2 $100,001 - $150, Related party transactions Related parties in these financial statements refer to charities or companies whose trustees or members are members of the Institute s Governing Council. Transactions with entities in which the Governing Council members have direct/indirect interest: Group $ $ Administrative costs (relate mainly to student enrolment and teaching expenses etc) 223, ,942 Agent commissions 402, ,255 Honorarium and sponsor ships 49, ,046 IT related services 195, ,634 Printing and publication services 1,321,907 1,582,929 Security and travel expenses 561, ,325 Other related party transactions Other than those disclosed elsewhere in the financial statements, transactions with related parties at terms agreed between the parties are as follows: Group $ $ Jointly-controlled entity Academic fee income (5,097,923) (4,313,532) Related corporations Administrative fee income (18,000) (18,000) Accountancy fee income (18,000) (18,000) Maintenance fee expense 204, ,000 56

60

61

62 MDIS EDUCATION TRUST FUND Introduction In 1997, the MDIS Governing Council initiated the setting up of a MDIS Education Trust Fund (Trust Fund). The main purpose was to contribute back to the community and in furtherance of MDIS main objective to foster, encourage and develop the concepts of Management Development. MDIS transferred part of its annual surpluses to build up the Capital of this Trust Fund and the income generated from the Capital would be used to award scholarships, bursaries and study loans to deserving and needy individuals to further pursue their education at MDIS or at any school, junior college, university or other educational establishment. More than 93% of the Capital of the Trust Fund was contributed and transferred from the surpluses obtained from MDIS operations. Other contributions came from Council members and interrelated donations. Contributions received from corporate donors and associates were disbursed as scholarships and bursaries to needy students who are Singapore citizens or permanent residents at the annual Scholarship and Bursary Awards events. Contributions by Governing Council Members The Trust Fund received the support of the Council Members. Dr R Theyvendran, PBM, a Trustee of the Trust Fund, gave an initial donation of S$10,000 in the name of his parents in To-date, three Council Members including an ex-council Member had donated to the Trust Fund as follows: Dr R Theyvendran, PBM - S$100,000 Mr Chua Chen How - S$ 25,000 Dr Thirumalai Chandroo - S$ 10,000 Financial Statements for the Year Ended 31 December 2016 The total fund stands about S$13.07 million as at 31 December The financial report for the year 2016 forms part of this report. 59

63 MDIS EDUCATION TRUST FUND REPORT AND FINANCIAL STATEMENTS CONTENTS PAGE Statement by Trustees 1 Independent auditors report 2-4 Statements of financial position 5 Statement of comprehensive income 6 Statement of changes in funds 7-8 Statement of cash flows 9 Notes to the financial statements 10-23

64 Statement by Trustees In the opinion of the Trustees, (a) the financial statements set out on on pages FS1 5 to FS19 23 are are drawn up up so so as as to present fairly, in all material respects, the financial position of the MDIS Education Trust Fund ( Trust Fund ) as at 31 December 2016 and the financial performance, changes in funds and cash flows of the Trust Fund for the year then ended on that date in accordance with the provisions of the Charities Act, Chapter 37 and Singapore Financial Reporting Standards; and (b) at the date of this statement, there are reasonable grounds to believe that the Trust Fund will be able to pay its debts as and when they fall due. The Trustees have, on the date of this statement, authorised these financial statements for issue. On behalf of the Trustees Kuan Choon Hock, Eric Trustee R Theyvendran, PBM Trustee Singapore 17 May

65 Independent auditors report Trustees of MDIS Education Trust Fund (Registered under the Charities Act, Chapter 37) Report on the financial statements Opinion We have audited the accompanying financial statements of MDIS Education Trust Fund (the Trust Fund ), which comprise the statement of financial position as at 31 December 2016, the statement of comprehensive income, statement of changes in funds and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages FS1 5 to 23. to FS19. In our opinion, the accompanying financial statements are properly drawn up in accordance with the provisions of the Charities Act, Chapter 37 and Singapore Financial Reporting Standards ( SFRSs ) so as to present fairly, in all material respects, the state of affairs of the Trust Fund as at 31 December 2016 and the results, changes in funds and cash flows of the Trust Fund for the year ended on that date. Basis for opinion We conducted our audit in accordance with Singapore Standards on Auditing ( SSAs ). Our responsibilities under those standards are further described in the Auditors responsibilities for the audit of the financial statements section of our report. We are independent of the Trust Fund in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities ( ACRA Code ) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information Trustees of the Trust Fund are responsible for the other information. The other information comprises the Statement by Trustees and Fulfilling Educational Aspirations. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. 2

66 In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Trustees responsibility for the financial statements Trustees of the Trust Fund are responsible for the preparation and fair presentation of the financial statements in accordance with the provisions of the Singapore Charities Act, Chapter 37 (the Act) and Singapore Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, Trustees of the Trust Fund are responsible for assessing the Trust Fund s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustees of the Trust Fund either intends to liquidate the Trust Fund or to cease operations, or has no realistic alternative but to do so. Auditors responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. 3

67 Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust Fund s internal controls. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Trustees. Conclude on the appropriateness of the Trustee s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Trust Fund s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Trust Fund to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the Trustees of the Trust Fund regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal controls that we identify during our audit. KPMG LLP Public Accountants and Chartered Accountants Singapore 17 May

68 Statement of financial position As at 31 December 2016 Note $ $ Non-current assets Available-for-sale investments 4 4,126,828 4,438,561 Current assets Interest receivables 120, ,435 Available-for-sale investments 4 1,002,925 Cash and cash equivalents 5 9,009,714 7,856,949 9,129,738 8,964,309 Total assets 13,256,566 13,402,870 Funds Investment revaluation reserve (26,040) 38,618 Ramanathan and Nallammah Fund 6 100, ,000 Fancy Paper Fund 7 25,000 25,000 Modern Montessori Institute Fund 8 10,000 10,000 Education Fund 9 12,962,732 13,218,572 13,071,692 13,392,190 Current liabilities Accrued expenses 5,850 5,380 Amount due to a related corporation ,024 5, ,874 10,680 Total funds and liabilities 13,256,566 13,402,870 5

69 Statement of comprehensive income Year ended 31 December $ $ Dividend income 35,405 39,503 Interest income from bonds 116, ,680 Interest income from fixed deposits 123,025 89,249 Net gain on disposal of available-for-sale investments release to profit or loss 389,281 Total income 274, ,713 Auditors remuneration (1,070) (1,233) Administrative expenses (18,000) (18,000) Bank charges (2,231) (2,395) Maintenance of computer expenses (240) (240) Merit Scholarships (179,024) (223,511) Printing expenses (4,938) Professional fees expenses (631) (2,170) Scholarship awards ceremony event expenses (325,968) (407,850) Transportation expenses (798) Telephone expenses (240) (240) Utilities, cleaning and security expenses (3,000) (3,000) General expenses (190) Total expenditure (530,404) (664,565) Deficit for the year (255,840) (12,852) Other comprehensive income Items that are or may be reclassified subsequently to profit or loss Net change in fair value of available-for-sale investments (64,658) (108,267) Net gain on disposal of available-for-sale investments release to profit or loss (389,281) Other comprehensive income for the year (64,658) (497,548) Total comprehensive income for the year (320,498) (510,400) The accompanying notes form an integral part of these financial statements. 6

70 Statement of changes in funds Year ended 31 December 2016 Investment revaluation reserve Ramanathan and Nallammah Fund Fancy Paper Fund Modern Montessori Institute Fund Education Fund Total $ $ $ $ $ $ At 1 January , ,000 25,000 10,000 13,231,424 13,902,590 Total comprehensive income for the year Deficit for the year (12,852) (12,852) Other comprehensive income Net change in fair value of available-for-sale investments (108,267) (108,267) Net gain on disposal of available-for-sale investments release to profit or loss (389,281) (389,281) Total comprehensive income for the year (497,548) (12,852) (510,400) At 31 December , ,000 25,000 10,000 13,218,572 13,392,190 The accompanying notes form an integral part of these financial statements. 7

71 Statement of changes in funds Year ended 31 December 2016 Investment revaluation reserve Ramanathan and Nallammah Fund Fancy Paper Fund Modern Montessori Institute Fund Education Fund Total $ $ $ $ $ $ At 1 January , ,000 25,000 10,000 13,218,572 13,392,190 Total comprehensive income for the year Deficit for the year (255,840) (255,840) Other comprehensive income Net change in fair value of available-for-sale investments (64,658) (64,658) Total comprehensive income for the year (64,658) (255,840) (320,498) At 31 December 2016 (26,040) 100,000 25,000 10,000 12,962,732 13,071,692 The accompanying notes form an integral part of these financial statements. 8

72 Statement of cash flows Year ended 31 December 2016 Note $ $ Cash flows from operating activities Deficit for the year (255,840) (12,852) Adjustments for: Interest income from bonds and fixed deposits (239,159) (222,929) Dividend income (35,405) (39,503) Net gain on disposal of available-for-sale investments release to profit or loss (389,281) (530,404) (664,565) Change in accrued expenses Net cash used in operating activities (529,934) (664,035) Cash flows from investing activities Purchase of available-for-sale investments (1,770) Interest received from bonds and fixed deposits 223, ,465 Redemption of available-for-sale investments 1,250,000 Dividend received 35,405 39,503 Net cash from investing activities 1,508, ,198 Cash flows from financing activities Repayment to a related corporation (5,300) (44,810) Advance received from a related corporation 179,024 5,300 Net cash from/(used in) financing activities 173,724 (39,510) Net increase/(decrease) in cash and cash equivalents 1,152,765 (451,347) Cash and cash equivalents at 1 January 7,856,949 8,308,296 Cash and cash equivalents at 31 December 5 9,009,714 7,856,949 The accompanying notes form an integral part of these financial statements. 9 FS5

73 Notes to the financial statements These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Trustees on 17 [date May of signing]. 1 Domicile and activities MDIS Education Trust Fund (the Trust Fund ) is incorporated in the Republic of Singapore. The address of the Trust Fund s registered office is 501 Stirling Road, Singapore The Trust Fund is a trust formed by a trust deed dated 1 February 1999 and was registered under the Charities Act, Chapter 37 on 18 April The principal activities of the Trust Fund is to further the education of students who are Singapore citizens or permanent residents by awarding scholarships, bursaries and loans tenable for courses conducted by Management Development Institute of Singapore or at any school, junior college, university or other educational establishment approved by the trustees. 2 Basis of preparation 2.1 Statement of compliance The financial statements have been prepared in accordance with the Singapore Financial Reporting Standards (FRS). 2.2 Basis of measurement The financial statements have been prepared on the historical cost basis except as otherwise disclosed in the notes below. 2.3 Functional and presentation currency The financial statements are presented in Singapore dollars, which is the Trust Fund s functional currency. 2.4 Use of estimates and judgements The preparation of the financial statements in conformity with FRS requires the trustees to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. There are no accounting estimates and judgement made by management that has a significant effect on the financial statements. 10

74 Measurement of fair values A number of the Company s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: Level 1: Level 2: Level 3: quoted prices (unadjusted) in active markets for identical assets or liabilities. inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement (with Level 3 being the lowest). The Company recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred. Further information about the assumptions made in measuring fair values is included in the Note 12 financial instruments. 3 Significant accounting policies The Company adopted new or new revised financial reporting standards and interpretations which became effective during the year. The initial adoption of these standards and interpretations did not have a material impact on the financial statements. The accounting policies set out below have been applied consistently to all periods presented in these financial statements. 3.1 Interest income Interest income from fixed deposits with a financial institution and debt securities are recognised as it accrues, using the effective interest method. 3.2 Dividend income Dividend income is recognised on the date that the Trust Fund s right to receive payment is established, which in the case of quoted securities is normally the ex-dividend date. 3.3 Fees, commission and other expenses Fees, commission and other expenses are recognised in profit or loss on an accrual basis. 11

75 3.4 Tax expense With effect from the Year of Assessment 2008, all registered charities will enjoy automatic tax exemption without having the need to meet the 80% spending rule under Section 13U(1) of the Income Tax Act. Accordingly, no taxation was provided for by the Trust Fund. 3.5 Financial instruments Non-derivative financial assets The Trust Fund initially recognises loans and receivables on the date that they are originated. All other financial assets are recognised initially on the trade date, which is the date that the Trust Fund becomes a party to the contractual provisions of the instrument. The Trust Fund derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset and does not retain control over the transferred asset. Any interest in transferred financial assets that is created or retained by the Trust Fund is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Trust Fund has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Trust Fund has the following non-derivative financial assets: loans and receivables and available-for-sale investments. Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise interest receivables and cash and cash equivalents. Cash and cash equivalents comprise cash balances and fixed deposits with original maturities of twelve months or less. Available-for-sale investments Available-for-sale investments are non-derivative financial assets that are designated as available for sale. Available-for-sale investments are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (see note 3.6) and foreign currency differences on available-for-sale debt instruments, are recognised in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised, the gain or loss accumulated in equity is reclassified to profit or loss. Available-for-sale investments comprise equity securities and debt securities. 12

76 Non-derivative financial liabilities Financial liabilities are recognised initially on the trade date when the Trust Fund becomes a party to the contractual provisions of the instrument. The Trust Fund derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Trust Fund has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Trust Fund classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. Other financial liabilities comprise accrued expenses and amount due to a related corporation. Funds Funds are contributions received net of expenses incurred and are recognised on an accrual basis. 3.6 Impairment Non-derivative financial assets A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting period to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event has an impact on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Trust Fund on terms that the Trust Fund would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the Trust Fund, or economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. The Trust Fund considers a decline of 20% to be significant and a period of 9 months to be prolonged. Loans and receivables An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows, discounted at the asset s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. Interest on impaired assets continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. 13

77 Available-for-sale investments Impairment losses on available-for-sale investments are recognised by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in profit or loss. Changes in cumulative impairment provisions attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed. The amount of the reversal is recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-forsale equity security is recognised in other comprehensive income. 3.7 Provisions A provision is recognised if, as a result of a past event, the Trust Fund has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. 3.8 New standards and interpretations not adopted A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2016 and earlier application is permitted; however, the Trust Fund has not early applied the following new or amended standards in preparing these statements. For those new standards and amendments to standards that are expected to have an effect on the financial statements of the Trust Fund in future financial periods, the Trust Fund has assessed the transition options and the potential impact on its financial statement. The requirements of the new standards and the potential impact on the financial statements are as follows: FRS 109 Financial Instruments FRS 109 replaces most of the existing guidance in FRS 39 Financial Instruments: Recognition and Measurement. It includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from FRS 39. FRS 109 is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted. Retrospective application is generally required, except for hedge accounting. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. Restatement of comparative information is not mandatory. If comparative information is not restated, the cumulative effect is recorded in opening equity as at 1 January

78 Potential impact on the financial statements During 2016, the Trust Fund performed a preliminary assessment of the potential impact on the Trust Fund s financial statements. Overall, the Trust Fund does not expect any material impact on its opening equity. Classification and measurement The Trust Fund does not expect any changes to the measurement basis arising from adopting the new classification and measurement model under FRS 109. For financial assets currently held at fair value, the Trust Fund expects to continue measuring the cost of these assets at fair value under FRS 109. The available-for-sale ( AFS ) assets are held as long-term investments by the Trust Fund. For these, the Trust Fund expects to elect to present subsequent changes in fair value in OCI, only dividend income is recognised in profit or loss. Any subsequent fair value changes are recognised in OCI and will not be reclassified to profit or loss even upon divestment. Loans and receivables that are currently accounted for at amortised cost will continue to be accounted for using amortised cost model under FRS 109. Impairment The Trust Fund will continue to apply the simplified approach and record lifetime expected impairment losses on all trade and other receivables. On adoption of FRS 109, the Trust Fund does not expect an increase in the impairment loss allowance. The Trust Fund plans to adopt the standard when it becomes effective, as necessary, in 2018 without restating comparative information. 4 Available-for-sale investments $ $ Quoted debt securities, at fair value 3,343,713 4,598,090 Quoted equity securities, at fair value 783, ,396 4,126,828 5,441,486 Breakdown as follows: Current Quoted debt securities, at fair value 1,002,925 Non-current Quoted debt securities, at fair value 3,343,713 3,595,165 Quoted equity securities, at fair value 783, ,396 4,126,828 4,438,561 Investments in quoted equity shares offer the Trust Fund the opportunity for return through dividend income and fair value gains. They have no fixed maturity or coupon rate. The fair values of these securities are based on the quoted bid prices on the last market day of the financial year. 15

79 The investments in quoted debt securities have effective interest rates ranging from 3.14% to 3.49% (2015: 1.69% to 3.49%) per annum and have maturity dates from April 2020 to February 2022 (2015: February 2016 to February 2022). Available-for-sale investments are denominated in the Trust Fund s functional currency. 5 Cash and cash equivalents $ $ Cash at banks 274,828 48,457 Fixed deposits 8,734,886 7,808,492 9,009,714 7,856,949 As at the end of the reporting period, the fixed deposits earn interest ranging from 1.10% to 1.90% (2015: 1.05% to 1.45%) per annum and have a maturity of twelve months (2015: twelve months or less). These deposits are considered as cash and cash equivalents as the trustees are of the view that these deposits may be withdrawn as and when required without having to incur a penalty fee. 6 Ramanathan and Nallammah Fund This fund will be used to pay scholarship and bursary awards. In 2002, R Theyvendran, PBM, a trustee, had pledged to donate $100,000 to the stated fund and has since fully contributed to the fund. 7 Fancy Paper Fund This fund will be used to pay scholarship and bursary awards. In 2003, Mr Chua Chen How had pledged to donate $25,000 to the stated fund and has since fully contributed to the fund. 8 Modern Montessori Institute Fund This fund will be used to pay scholarship and bursary awards. In 2003, Modern Montessori International (MMI) pledged to donate $50,000 to the stated fund and had contributed an amount of $10,000 to the fund. In October 2007, MMI confirmed that no additional funds, apart from this $10,000, would be contributed. 16

80 9 Education Fund Donations and contributions made to the Education Fund are retained as principal capital to be kept intact and preserved to earn income. Income and expenditure of the fund are taken to profit or loss. 10 Amount due to a related corporation The amount due to a related corporation is non-trade, unsecured, interest-free and repayable on demand. 17

81 Net assets of the Trust Fund The net assets of the Trust Fund as shown in the statement of financial position are related to the following: Represented by: Ramanathan Nallammah Fund Fancy Paper Fund Modern Montessori Institute Fund Education Fund Total $ $ $ $ $ $ $ $ $ $ Non-current assets Available-for-sale investments 4,126,828 4,438,561 4,126,828 4,438,561 Current assets Interest receivables 120, , , ,435 Available-for-sale investments 1,002,925 1,002,925 Cash and cash equivalents 100, ,000 25,000 25,000 10,000 10,000 8,874,714 7,721,949 9,009,714 7,856, , ,000 25,000 25,000 10,000 10,000 8,994,738 8,829,309 9,129,738 8,964,309 Current liabilities Accrued expenses 5,850 5,380 5,850 5,380 Amount due to a related corporation 179,024 5, ,024 5, ,874 10, ,874 10, Total net assets 100, ,000 25,000 25,000 10,000 10,000 12,936,692 13,257,190 13,071,692 13,392,190 18

82 12 Financial risk management Overview The Trust Fund has exposure to the following risks from its use of financial instruments: credit risk liquidity risk market risk This note presents information about the Trust Fund s exposure to each of the above risks, and the Trust Fund s objectives, policies and processes for measuring and managing risk. Risk management framework The Trust Fund has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The trustees continually ensure an appropriate balance between risk and control is achieved. Credit risk Credit risk is the risk of financial loss to the Trust Fund if a counterparty to a financial instrument fails to meet its obligation and arises principally from the Trust Fund s investment securities. Cash and cash equivalents are placed with financial institutions which are regulated. Investment securities The Trust Fund limits its exposure to credit risk by investing only in equity securities listed on the Singapore Stock Exchange. Liquidity risk Liquidity risk is the risk that the Trust Fund will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. At the reporting date, the expected contractual undiscounted cash flows of accrued expenses and amount due to a related corporation are expected to occur within one year and are equivalent to their carrying amounts. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Trust Fund s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Foreign currency risk Foreign currency risk is the risk that the value of financial assets or liabilities will fluctuate due to a change in foreign exchange rates. The Trust Fund invests in financial instruments and enters into transactions that are denominated in its functional currency; hence the exposure to foreign currency risk may be considered as minimal. 19

83 Interest rate risk The Trust Fund s exposure to changes in interest rates primarily affects the interest income earned by the Trust Fund. Interest income is derived from securities and fixed deposits with financial institutions, which is subject to the contractual repricing at prevailing market interest rates on maturity dates, and debt securities. Equity price risk Equity price risk is the risk that the fair value or future cash flows of the Trust Fund s investments will fluctuate because of changes in market prices (other than interest or exchange rates). The Trust Fund s exposure to equity price risk arises from its investments in listed equity instruments. The Trust Fund does not use derivative financial instruments to hedge its equity price exposure. Equity price risk - Sensitivity analysis The Company has investments in quoted debt securities and quoted equity securities. A 10% increase/(decrease) in the underlying equity prices at the reporting dates would increase/(decrease) equity by the amounts shown below. This analysis assumes that all other variables remain constant $ $ Quoted debt securities 334, ,809 Quoted equity securities 78,312 84, , ,149 Estimation of fair values The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments of the Trust Fund. Investment in quoted debt securities and quoted equity securities The fair value of available-for-sale financial assets is determined by reference to its quoted bid price at the reporting date. Estimating fair values Investment in equity and debt securities The fair values of debt and equity securities held by the Trust Fund are determined by reference to their quoted bid prices at the last market day of the financial year. 20

84 Accounting classifications and fair values The carrying amounts of financial assets and financial liabilities, including their levels in the fair value hierarchy are as follows. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Note Loans and receivables Carrying amount Fair value Available-forsale Other financial liabilities Total Level 1 Total 31 December 2016 $ $ $ $ $ $ Financial assets not measured at fair value Interest receivables 120, ,024 Available-for-sale investments: - quoted debt securities 4 3,343,713 3,343,713 3,343,713 3,343,713 - quoted equity securities 4 783, , , ,115 Cash and cash equivalents 5 9,009,714 9,009,714 9,129,738 4,126,828 13,256,566 Financial liabilities not measured at fair value Accrued expenses (5,850) (5,850) Amount due to a related corporation (179,024) (179,024) (184,874) (184,874) 21

85 Accounting classifications and fair values (continued) Note Loans and receivables Carrying amount Fair value Available-forsale Other financial liabilities Total Level 1 Total 31 December 2015 $ $ $ $ $ $ Financial assets not measured at fair value Interest receivables 104, ,435 Available-for-sale investments: - quoted debt securities 4 4,598,090 4,598,090 4,598,090 4,598,090 - quoted equity securities 4 843, , , ,396 Cash and cash equivalents 5 7,856,949 7,856,949 7,961,384 5,441,486 13,402,870 Financial liabilities not measured at fair value Accrued expenses (5,380) (5,380) Amount due to a related corporation (5,300) (5,300) (10,680) (10,680) As at 31 December 2016, no financial instrument falls under the classification of Level 2 and Level 3. Other financial assets and liabilities The carrying amounts of financial assets and liabilities with a maturity of less than one year (including interest receivables, cash and cash equivalents, accrued expenses and amount due to a related corporation) are assumed to approximate their fair values because of the short period to maturity. 22

86 13 Related parties Key management personnel compensation Key management personnel of the Trust Fund are those persons having the authority and responsibility for planning, directing and controlling the activities of the Trust Fund. The trustees are considered as key management personnel of the Trust Fund. The trustees are not paid any remuneration. The Trust Fund did not have any staff in its employment for the years ended 31 December 2015 and The Trust Fund s administrative services were provided by Management Development Institute of Singapore (MDIS). Other related party transactions The related party referred to in these financial statements is MDIS, registered as a society and charity in Singapore. Significant transactions with MDIS are as follows: $ $ Administrative expenses 18,000 18,000 23

87 MANAGEMENT DEVELOPMENT INSTITUTE OF SINGAPORE (MDIS) Founded in 1956, the Management Development Institute of Singapore (MDIS) is Singapore s oldest not-for-profit professional institute for lifelong learning. MDIS has two main subsidiaries: Management Development Institute of Singapore Pte Ltd to oversee its Singapore academic operations, and MDIS International Pte Ltd to further its globalisation strategy. MDIS offers well-accredited courses in Business and Management, Engineering, Fashion Design, Health and Life Sciences, Information Technology, Mass Communications, Psychology and Travel, Tourism and Hospitality Management. These programmes are offered in collaboration with renowned universities in France, the United Kingdom and the United States of America. MDIS is EduTrust certified, attesting to the institute s exemplary education and business excellence standards. The institute was first awarded the certification in 2010 and it was subsequently renewed for another four years in MDIS is also one of the first Private Education Institutions (PEIs) to be registered under the Enhanced Registration Framework. MDIS is one of the leading Private Education Institutions (PEIs) to be ranked Top 2 among PEIs in Singapore, according to the Webometrics ranking of World Universities by Cybermetrics Lab in January 2017 ( - Asia). In 2015, MDIS received the Enterprise 50 Award for its contributions and resilience in spurring Singapore s economy. The institute set up the MDIS Education Trust Fund in 1999 to support deserving students who have financial difficulties in pursuing their education in Singapore. To date, MDIS has awarded more than some 7,000 scholarships and bursaries totalling more than S$5 million. The institute also upholds the spirit of giving by actively reaching out to help the young, elderly and disabled, supporting various charities, and providing community assistance. MDIS corporate training arm, the Management Development and Consultancy was set up in 1995 to cater to the training needs of the workforce. In 2014, MDIS acquired the Service Quality Centre to diversify its offerings in training solutions and secure the institute s position as a premium provider of training solutions in the region. Apart from the main Singapore campus, MDIS has three international campuses Tashkent, Uzbekistan; Johor, Malaysia; and Chennai, India, set up in 2008, 2013 and 2015 respectively. MDIS also has representative offices in China, India, Indonesia, Sri Lanka, and Thailand, as well as agents throughout Southeast Asia.

88