REG - Aseana Prop Ltd - Annual Financial Report
28/04/2023 08:00
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RNS Number : 8543X Aseana Properties Limited 28 April 2023
28 April 2023
Aseana Properties Limited
("Aseana" or the "Company")
Full Year Results for the year ended 31 December 2022
Aseana Properties Limited (LSE: ASPL), a property developer in Malaysia,
listed on the Main Market of the London Stock Exchange, announces its full
year results for the year ended 31 December 2022.
For further information:
Grant Thornton UK LLP
Philip Secrett / Samuel Littler +44(0)20 7383 5100
CHAIRMAN'S STATEMENT
Dear Shareholders,
INTRODUCTION
Asia began its recovery from the COVID-19 pandemic from the middle of 2022
onwards, as both Malaysia and Vietnam (where we used to own properties)
steadily lifted their restrictions on population movement and international
travel. As a result, economic activity, and most importantly, the movement of
first the domestic populations and then foreign tourists began to accelerate.
These are very important to the Company as our assets comprised a hospital and
development land in Vietnam (which have now been sold), a 5-star hotel and
luxury residential apartments in Kuala Lumpur, a shopping mall and a hotel in
Sandakan and undeveloped beachfront land in Sabah.
COMMENTARY ON THE YEAR
Our focus has been to minimise operating costs and net cash outflows at each
of our properties whilst our Asset Divestment team seeks to dispose of them at
reasonable prices. The sale of our Vietnam assets significantly reduced the
project debts, reducing our debt servicing costs.
I am pleased that shareholders are co-operating in the common aim of selling
the Group's assets and returning as much capital as possible to all
shareholders.
ECONOMIC OVERVIEW
In 2022, the Malaysian economy recorded growth of 8.7% (2021: 3.1%) according
to the Malaysian government as the economy rebounded from the easing of
COVID-19 restrictions but this forecast is expected to slow to 4.0% in 2023
according to the World Bank.
PERFORMANCE REVIEW
During 2022, the Company recorded a net loss after finance costs and before
taxation of US$17.6 million compared to a net loss before taxation of US$5.8
million (restated) for the previous financial year. The Net Loss
attributable to equity holders was US$15.9 million for FY 2022, (2021
(restated): US$5.8 million), and the loss per share was US cents 7.99 (2021
(restated): US cents 2.90).
Our NAV per Share as at 31 December 2022 fell to US cents 37 (2021 (restated):
US cents 46).
Our net cash inflow for the year was US$0.1 million (2021 (restated): US$1.7
million) which reflected foreign exchange gain effect of US$ 2.9 million (2021
(restated): US$1.1 million loss effect), net cash outflows from operating
activities of US$4.5 million (2021 (restated): US$9.8 million) offset by a
cash inflow from investing and financing activities of US$1.7 million (2021
(restated): US$12.7 million).
OUR ASSET DIVESTMENT PROGRAMME
Progress on asset sales had been very difficult during the Covid restrictions
but in March 2022, we completed the sale of our two assets in Vietnam for a
gross price of US$95 million. We received a gross consideration of US$18.3
million in cash of which US$8.9 million was used to pay down project debts
owed in Malaysia. The balance was used for working capital purposes within
the Group.
Although we had to terminate a conditional agreement to sell the unsold
apartments in The RuMa Residences in August 2022, other potential buyers have
since appeared, and progress is being made to sell these and our other major
assets. Announcements will be made about these when such discussions convert
into detailed sale terms and signed commitments.
DIS-CONTINUATION VOTE IN MAY
The Company is required to hold another dis-continuation vote by the end of
May 2023 so that shareholders can vote on the future of the Company. The
Directors therefore intend to call an Extraordinary General Meeting on 30 May
2023 and current expectations are to also hold the Annual General Meeting on
the same date.
ACKNOWLEDGMENTS
Once again, I would like to thank my colleagues on the Company's Board of
Directors, the staff operating at the level of the Group and the staff working
at each of the properties that we own for their tireless work on behalf of the
Group and its shareholders. In addition, our external advisors and service
providers provide invaluable assistance to the Company.
On 3 March 2023, Hock Chye Tan joined the Board of Directors and the Audit
Committee as an independent non-executive Director based in Malaysia. He is
a corporate and finance professional bringing valuable expertise as a
qualified accountant.
Thank you.
NICHOLAS JOHN PARIS
Chairman
28 April 2023
PROPERTY PORTFOLIO AS AT 31 DECEMBER 2022
Project Type Effective Ownership Approximate Gross Approximate Land Area
Floor Area (sq m)
(sq m)
Completed projects
The RuMa Hotel and Residences Luxury residential tower and bespoke hotel 70.0% 40,000 4,000
Kuala Lumpur, Malaysia
Sandakan Harbour Square Hotel and retail mall 100.0% 126,000 48,000
Sandakan, Sabah, Malaysia
Undeveloped projects
Kota Kinabalu Seafront resort & residences Land parcel approved for development of: (i) Boutique resort hotel and resort 80.0% n/a 172,900
villas
(ii) Resort homes
Divested projects
Phase 1: City International Hospital, International Healthcare Park, Private general hospital 73.04% 48,000 25,000
Ho Chi Minh City, Vietnam
Other developments in International Healthcare Park, Commercial development with healthcare theme 73.04% 972,000 351,000
Ho Chi Minh City, Vietnam (formerly International Hi-Tech Healthcare Park)
PERFORMANCE SUMMARY
Year ended Year ended
31 December 2022 31 December 2021
Total Returns since listing
Ordinary share price -86.00% -80.00%
FTSE All-share index 22.31% -26.30%
FTSE 350 Real Estate Index -57.47% -33.88%
One Year Returns
Ordinary share price -30.00% -37.50%
FTSE All-share index -3.16% 14.55%
FTSE 350 Real Estate Index -35.67% 26.19%
Capital Values (2021 restated)
Total assets less current liabilities (US$ million) 104.24 126.09
Net asset value per share (US$) 0.41 0.45
Ordinary share price (US$) 0.14 0.20
FTSE 350 Real Estate Index 398.93 620.13
Debt-to-equity ratio (2021 restated)
Debt-to-equity ratio (1) 102.21% 92.52%
Net debt-to-equity ratio (2) 91.50% 84.52%
(Loss)/ Earnings Per Share (2021 restated)
Earnings per ordinary share - basic (US cents) -7.99 -2.90
-7.99 -2.90
- diluted (US cents)
Notes:
(1) Debt-to-equity ratio = (Total Borrowings ÷ Total Equity) x 100%
(2) Net debt-to-equity ratio = (Total Borrowings less Cash and Cash
Equivalents ÷ Total Equity) x 100%
FINANCIAL REVIEW
INTRODUCTION
The Group recorded a consolidated comprehensive loss of US$20.4 million for
the financial year ended 31 December 2022 (year ended 31 December 2021
(restated): US$12.6 million), largely due to impairment provided to inventory
and amount due from a related party.
STATEMENT OF COMPREHENSIVE INCOME
The Group recognised revenue of US$1.0 million (2021 (restated): US$0.6
million). Revenue of US$36.4 million has been deferred until control of sold
units in the leaseback program is passed to the buyer.
The Group recorded a net loss before taxation of US$17.6 million (2021
(restated): US$5.8 million). The loss was largely due to impairment provided
to inventory and amount due from a related party.
Net loss attributable to equity holders of the parent company was US$15.9
million (2021 (restated): US$5.8 million). Tax expenses for the year was
US$0.3 million (2021 (restated): US$0.1 million).
The consolidated comprehensive loss was US$20.3 million (2021 (restated):
US$12.6 million), which included a loss of US$2.5 million (2021 (restated):
US$3.6 million) attributable to foreign currency translation differences for
foreign operations due to an appreciation of the US Dollar against the
Ringgit, during the year.
Basic and diluted loss per share were both US cents 7.99 (2021 (restated): US
cents 2.90).
STATEMENT OF FINANCIAL POSITION
Total assets were US$157.2 million (2021 (restated): US$190.4 million),
representing a decrease of US$31.9 million. This was mainly due to disposal
of asset held for sale with a carrying amount of US$14.5 million and a
decrease of US$14.5 million in inventories that includes an impairment of
US$8.6 million.
Total liabilities were US$89.4 million (2021 (restated): US$101.4 million),
representing a decrease of US$12.0 million. This was mainly due to a
decrease of US$11.1 million in medium term notes which was partially repaid
during the year.
Net Asset Value per share was US$0.37 (31 December 2021 (restated): US$0.46).
CASH FLOW AND FUNDING
Cash generated from operations before interest and tax paid was US$1.1 million
(2021 (restated): US$6.2 million cash used).
The Group generated net cash flow of US$10.5 million from investing activities
(2021 (restated): US$0.7 million).
Some of the borrowings of the Group were repaid from divestment proceeds. As
at 31 December 2022, the Group's gross borrowings stood at US$32.9 million (31
December 2021 (restated): US$44.0 million). Net debt-to-equity ratio was
91.50% (31 December 2021 (restated): 84.52%).
Finance income was US$2.0 million for financial year ended 31 December 2022
(2021 (restated): US$2.0 million) which included accrued income of US$1.5
million (2021 (restated): US$1.3 million). Finance costs were US$3.3 million
(2021 (restated): US$3.6 million), which were mostly incurred by its operating
assets.
DIVIDEND
No dividend was declared or paid in the financial years 2022 and 2021.
PRINCIPAL RISKS AND UNCERTAINTIES
A review of the principal risks and uncertainties facing the Group is set out
in the Directors' Report of the Annual Report.
TREASURY AND FINANCIAL RISK MANAGEMENT
The Group undertakes risk assessments and identifies the principal risks that
affect its activities. The responsibility for the management of each key
risk has been clearly identified and has been managed by the Board of
Directors and the Board are closely involved in the day-to-day operation of
the Group.
A comprehensive discussion on the Group's financial risk management policies
is included in the notes to the financial statements of the Annual Report.
NICHOLAS JOHN PARIS
Director
28 April 2023
CORPORATE SOCIAL RESPONSIBILITY ("CSR")
Aseana Properties is committed to making a positive difference in the world,
whether it is for the local community or whether it is building a better
working environment. The Company believes that being socially and
environmentally responsible is good for people, the planet and for business.
The following six core principles define the essence of corporate citizenship
for the Company.
Managing Corporate Responsibility
The Board of Directors at Aseana Properties has oversight mechanisms, through
corporate-level policies and standards to ensure an effective CSR programme is
delivered in the interest of its employees, shareholders and the community at
large. It is determined to ensure that its CSR programme acts legally and
responsibly on all matters and that the highest ethical standards are
maintained. The Board recognizes this as a key part of its risk, management
strategy to protect the reputation of Aseana Properties and shareholders
values are enhanced.
Employees
In the current changing economic environment, with competing demands and
stress, the welfare of employees is critical in order to ensure they are
productive, creative and innovative. This is also in order to achieve the
highest standard in the workplace. The Board works hard to ensure that
employees are treated fairly and with dignity because it is the right thing to
do and also to get the best out of them.
Health and Safety
Aseana Properties considers Health and Safety to be important because it
protects the well-being of employees, visitors and clients. Looking after
Health and Safety makes good business sense and the Company works hard to
provide a healthy workplace environment for its staff, contractors and
visitors.
Some of the organized efforts and procedures for reducing workplace accidents,
risks and hazards, exposure to harmful solutions include:
· Paying particular attention to the regular maintenance of
equipment, plant and systems to ensure a safe working environment.
· Providing sufficient information, instruction, training and
supervision to enable all employees to avoid hazards and to contribute
positively to their own safety and safe performance at work.
Stakeholders
Aseana Properties works collaboratively with its stakeholders to improve
services and to ensure client satisfaction. The Company is committed to
meaningful dialogue and encourages stakeholder participation through
stakeholder events, roadshows, briefings, conference calls and timely release
of annual reports. Aseana Properties also maintains an updated and
informative website, www.aseanaproperties.com
(http://www.aseanaproperties.com/) that is accessible to stakeholders and
members of the public.
Environmental Management
Aseana Properties believes that any commitment to a more environmentally
sustainable world has to start at home, and to this end, it challenges itself
to work in an environmentally responsible manner and to find new ways to
reduce its carbon footprint. It also works with consultants such as
architects to look at how they can be more environmentally friendly by
incorporating natural elements such as water, greenery, light and air into its
projects. Maintaining and sustaining local Malaysian heritage is the essence
of the RuMa Hotel so decorative elements like batik prints throughout are
recycled from a local batik factory. The Kelelai (a type of bamboo)
ornaments and ceiling panels at the pool area of Level 6 of the hotel are
cultivated from a dying weaving art by Kelantanese women.
The RuMa Hotel and Residences have both been separately awarded the Green
Building Index (GBI) Provisional Gold Rating having successfully met all the
GBI Criteria under each category for Energy Efficiency, Indoor Environment
Quality, Sustainable Site Planning & Management, Materials &
Resources, Water Efficiency and Innovation. The GBI is Malaysia's industry
recognized green rating tool for buildings to promote sustainability in the
building industry.
The bathroom amenities at The RuMa Hotel were designed with sustainability in
mind and incorporated biodegradable materials such as bamboo, corn starch, and
recycled paper for dry amenities like toothbrushes, cotton swabs, soap dishes,
and shower caps. Additionally, the wet amenities range was created
exclusively for The RuMa Hotel and is both eco-friendly and able to be
disposed of in an environmentally responsible manner. By opting for
biodegradable bathroom amenities, we can contribute to the protection of our
planet and the promotion of a more sustainable future.
The RuMa Hotel recognizes that promoting gender equality is crucial to our
sustainability efforts, and we have incorporated the promotion of gender
equality in the workplace as a key component of our sustainability
initiatives. Our aim is to foster a more diverse, inclusive, and equitable
work environment by implementing clear policies and guidelines that promote
gender equality, such as equal pay for equal work, flexible work arrangements,
and a workplace that is free from harassment and discrimination. We are
committed to providing our employees with training and education on gender
equality issues, including unconscious bias and gender sensitivity, to ensure
that everyone in our organization understands the importance of this
initiative.
Community
Aseana Properties understands the importance of community engagement both for
the communities themselves but also for giving staff more meaningful
experiences by tapping into their professional skills and capabilities.
BOARD OF DIRECTORS
NICHOLAS JOHN PARIS
NON-EXECUTIVE INDEPENDENT CHAIRMAN
Nicholas (Nick) John Paris was re-appointed as a Non-Executive Director of
Aseana Properties Limited in September 2019 and became Chairman on 29 July
2020 following the retirement of Gerald Ong. He had previously been a
Non-Executive Director of Aseana from 22 June 2015 to 20 March 2019.
Nick is a fellow of the Institute of Chartered Accountants England & Wales
and a Chartered Alternative Investment Analyst.
Nick is currently Managing Director of Myanmar Investments International
Limited and a Managing Director of Dolphin Capital Investors Limited of which
both are quoted on the AIM market of the London Stock Exchange and a
Non-Executive Director of Fondul Proprietatea, a fund listed on the Bucharest
and London Stock Exchanges.
THOMAS HOLLAND
NON-EXECUTIVE INDEPENDENT DIRECTOR
Thomas (Tom) Holland was appointed as a Non-Executive Independent Director of
Aseana Properties Limited on 23 November 2020. Tom has been based in Asia
for 25 years with experience working in leadership positions in a number of
financial firms. Tom has been active in Vietnam since 2006, having led the
investments in large real estate developments as well as privatising state
owned enterprises. Prior to founding his current platform, Development
Finance Asia, a boutique investment firm, Tom was head of Asia for Cube
Capital and a senior investment manager for Income Partners Asset
Management. Tom has a track record of successfully managing private
investments in Vietnam, Malaysia, China, Indonesia, Myanmar, Mongolia and
Cambodia.
He holds a number of non-executive director roles for financial services,
logistics and consumer companies across Asia.
MONICA LAI VOON HUEY
NON-EXECUTIVE NON-INDEPENDENT DIRECTOR
Monica Lai was appointed as a Non-Executive Non- Independent Director of
Aseana Properties Limited in September 2019. Monica is the Group Chief
Executive Officer of Eccaz Sdn Bhd which is involved in property development
and urban transportation solutions.
Monica graduated from City University, London with a Bachelor of Science
(Hons) Degree in Accountancy and Economics and worked for EY London and KPMG
Hong Kong. Her professional qualifications include The Institute of
Chartered Accountants England & Wales, The Malaysian Institute of
Accountants and the Malaysian Institute of Taxation.
HOCK CHYE TAN
NON-EXECUTIVE INDEPENDENT DIRECTOR
Hock Chye Tan was appointed as a Non-Executive Independent Director of Aseana
Properties in March 2023. Hock Chye is a Chartered Global Management
Accountant (CGMA) of the Association of International Certified Professional
Accountants, a Fellow Member (FCMA) of the Chartered Institute of Management
Accountants and a Chartered Accountant (CA(M)) with the Malaysian Institute of
Accountants. He obtained an MBA from Oklahoma City University and has
attended a Harvard Premier Management Program. He also holds a Diploma in
Commerce from the TAR University College.
He has worked in Papua New Guinea, Singapore and Malaysia in both private and
public companies and held senior management and Board positions. Currently,
he is the CFO of SEATech Ventures Corp., a start-up company listed on the US
OTC Pink Market. He is also the National Assistant Treasurer of SME
Association of Malaysia and Treasurer of the Malaysia Cross Border E-Commerce
Association.
HELEN WONG SIU MING
NON-EXECUTIVE INDEPENDENT DIRECTOR
Helen Wong Siu Ming was appointed as a Non-Executive Independent Director of
Aseana Properties in June 2019. Helen has over 28 years of financial and
operational experience in the United States and Asia. She is Chief Executive
Officer and founder of LAPIS Global Limited, a Hong Kong based investment
management and advisory firm. She was formerly the CEO of Cushman &
Wakefield Capital Asia where she established the Asia Investment Management
and Investment Banking platform.
In addition, Helen has held numerous executive positions including Chief
Operating Officer of Lazard Asia Investment Management HK Limited, Managing
Director of IFIL Asia (renamed EXOR S.p.A), where she was responsible for the
Asian direct investment activities and Chief Financial Officer of the
Singapore listed investment vehicle, Pacific Century Regional Developments
Limited.
Helen also has extensive experience in infrastructure and transport through
her prior roles at the Provisional Airport Authority, Hong Kong and the Port
Authority of New York & New Jersey.
DIRECTORS' REPORT
The Directors present their report together with the audited financial
statements of Aseana Properties Limited (the "Company") and its subsidiary
undertakings (together with the "Group") for the year ended 31 December 2022.
Principal Activities
The principal activities of the Group were the development of upscale
residential and hospitality projects in Malaysia and Vietnam. The Group is now
focused on carrying out its divestment program which consists of selling the
Group's remaining Malaysian assets, repaying its debts and distributing the
remaining proceeds to its shareholders.
Business Review and Future Developments
The consolidated statement of comprehensive income for the year is set out on
page 40. A review of the development and performance of the business has
been set out in the Chairman's Statement and the Financial Review reports.
Objectives and Strategy
When the Company was launched in 2007, the Board considered it desirable that
Shareholders should have an opportunity to review the future of the Company at
appropriate intervals. The Company will hold another discontinuation vote at
a general meeting in May 2023, meanwhile the Company continues to seek for
disposal of its assets in a measured manner.
To the extent that the Company has not disposed of all of its assets by May
2023, Shareholders will be provided with an opportunity to review the future
of the Company, which would include the option for shareholders to vote for
the continuation of the Company.
Principal Risks and Uncertainties
The Group's business was property development in Malaysia and Vietnam. Since
divesting its assets in Vietnam in 2022, its principal risks are therefore
related solely to the property market in Malaysia. More detailed
explanations of these risks and the way they are managed are contained under
the heading of Financial and Capital Risk Management Objectives and Policies
in Note 4.1 to the financial statements.
Other risks faced by the Group in Malaysia include the following:
Economic Inflation, economic recessions and movements in interest rates could affect
property development activities.
Strategic Incorrect strategy, including timing, could lead to poor returns for
shareholders.
Regulatory Breach of regulatory rules could lead to suspension of the Company's Stock
Exchange listing and financial penalties.
Law and regulations Changes in laws and regulations relating to planning, land use, development
standards and ownership of land could have adverse effects on the business and
returns for the shareholders.
Tax regimes Changes in the tax regimes could affect the tax treatment of the Company
and/or its subsidiaries in these jurisdictions.
Management and control Changes that cause the management and control of the Company to be exercised
in the United Kingdom could lead to the Company becoming liable to United
Kingdom taxation on income and capital gains.
Operational The COVID-19 pandemic and many related movement control measurements in
Malaysia lasted until 2022, which continued to affect our key properties as
our hotel suffered closure and low occupancy rates and our retail mall was
also forced to close; at times, only food operations were permissible at our
shopping mall. The overall effect of low occupancy rates and reduced
operating income had a negative impact on our revenues, costs and
valuations. Failure of the Company's accounting system and disruption to the
business, or to that of third party service providers, could lead to an
inability to provide accurate reporting and monitoring leading to a loss of
shareholders' confidence.
Financial Inadequate controls by the Company or third party service providers could lead
to a misappropriation of assets. Inappropriate accounting policies or
failure to comply with accounting standards could lead to misreporting or
breaches of regulations or a qualified audit report.
Going Concern Failure to sell the assets in a timely manner may result in inadequate
financial resources to continue operational existence and to meet financial
liabilities and commitments.
The Board seeks to mitigate and manage these risks through continual review,
policy setting and enforcement of contractual rights and obligations. It
also regularly monitors the economic and investment environment in Malaysia,
its only remaining market. Details of the Group's internal controls are
described on page 29.
LITIGATION
Claim Against Ireka Corporation Bhd ("ICB")
A civil suit was filed in the Malaysian Courts on 21 October 2022 by ASPL M9
Limited, a subsidiary of the Company, against ICB. The suit relates to the
Joint Venture Agreement between ASPL M9 Limited, ICB and Urban DNA Sdn Bhd (an
indirect subsidiary of the Company) for the development and construction of
the RuMa Hotel & Residences.
Claim Against Ireka Engineering & Construction Sdn Bhd ("IECSB")
A civil suit was filed in the Malaysian Courts on 2 August 2022 by Amatir
Resources Sdn Bhd ("ARSB", an indirect wholly owned subsidiary of the Company)
against IECSB (a wholly owned subsidiary of ICB). Since filing the claim, an
interim liquidator has been appointed for IECSB according to the announcement
at the Bursa Malaysia dated 27 March 2023 with reference to a creditor's
voluntary winding up. For details, please refer to the aforementioned
announcement at:
https:/www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3339385
On 19 April 2023, ARSB obtained Judgment in Default against IECSB for the sum
of RM 7,198,890 (approximately US$1.6 million) and interest thereon at the
rate of 8% per annum calculated on a daily basis from 1st January 2020 to the
date of full payment.
Results and Dividends
The results for the year ended 31 December 2022 are set out in the attached
financial statements.
No dividends were declared nor paid during the financial year under review.
Share Capital
No shares were issued in 2022. Further details on share capital are stated
in Note 23 to the financial statements.
Directors
The following were Directors of Aseana who held office throughout the
financial year and up to the date of this report:
· Nicholas John Paris - Chairman
· Thomas Holland
· Monica Lai Voon Huey
· Hock Chye Tan (appointed 3 March 2023)
· Helen Wong Siu Ming
Directors' Interests
The interests of the directors in the Company's shares as at 31 December 2022
and as at the date of this report were as follows:
DIRECTOR ORDINARY SHARES OF US$0.05 EACH
As at 31 Dec 2021 As at 31 Dec 2022
Nicholas John Paris 26,644,192 -
Christopher Henry Lovell 48,000 -
Monica Lai Voon Huey 36,628,282 36,628,282
Notes: Nicholas John Paris is no longer associated with the holdings of
clients of LIM Advisors Limited. Christopher Henry Lovell ceased to be a
director during the year. Monica Lai Voon Huey is associated with the
holdings of Legacy Essence Limited.
None of the other directors in office at the end of the financial year had any
interest in shares in the Company during the financial year.
Management
The routine operations of the Company are supervised by the Chairman and the
Board with a small team of finance professionals were directly engaged to run
our finances and operations. Ms Helen Wong was nominated as the Divestment
Director with a specific focus to sell the Company's remaining assets, in line
with the Divestment Policy.
Employees
The Company had no executive Directors during the year, and a team of four
finance professionals were engaged to run our finances and operations. The
subsidiaries of the Group had a total of 239 employees as at 31 December 2022,
of which 22 and 213 were employed by (i) the Sandakan hotel asset and Harbour
Mall Sandakan, and (ii) The RuMa Hotel and Residences in Kuala Lumpur
respectively.
going concern
The Company will continue until May 2023 at which time another continuation
vote will be held by shareholders. In connection with, or at the same time
as, the proposal that the Company be wound up voluntarily the Board shall be
entitled to make proposals for the reconstruction of the Company. Until
then, the Company will continue to seek to dispose of its assets in a measured
manner.
As disclosed in Note 2.1 to the financial statements, it refers to the
assumptions made by the Directors including the uncertainty regarding the
divestment of certain assets will be completed as planned and the loans and
borrowing can be discharged in a timely manner when concluding that it remains
appropriate to prepare the financial statements on the going concern basis.
Creditors Payment Policy
The Group's operating companies are responsible for agreeing on the terms and
conditions under which business transactions with their suppliers are
conducted. It is the Group's policy that payments to suppliers are made in
accordance with all relevant terms and conditions. Trade creditors at 31
December 2022 amounted to 349 days (2021: 591 days) of property development
cost and interest expenses accrued by the Group.
Financial Instruments
The Group's principal financial instruments comprise cash balances, balances
with related parties, other payables, receivables and loans and borrowings
that arise in the normal course of business. The Group's Financial and
Capital Risk Management Objectives and Policies are set out in Note 4.1 to the
financial statements.
Directors' Liabilities
Subject to the conditions set out in the Companies (Jersey) Law 1991 (as
amended), the Company has arranged appropriate Directors' and Officers'
liability insurance to indemnify the Directors against liability in respect of
proceedings brought by third parties. Such provisions remain in force at the
date of this report.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Companies (Jersey) Law 1991 requires the Directors to prepare financial
statements for each financial year. Under that law the Directors are
required to prepare the financial statements in accordance with International
Financial Reporting Standards ("IFRSs") as adopted by European Union.
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the assets,
liabilities, financial position and of the profit or loss of the Group for
that year. In preparing these financial statements, the Directors are
required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable, relevant and
reliable;
· ensure that the financial statements comply with IFRSs; and
· prepare the financial statements on the going concern basis, unless
it is inappropriate to presume that the Group and the Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and to
enable them to ensure that the financial statements comply with the Companies
(Jersey) Law 1991. The Directors are also responsible for safeguarding the
assets of the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are also responsible for the maintenance and integrity of the
Company's website on the internet. However, information is accessible in
many different countries where legislation governing the preparation and
dissemination of financial statements may differ from that applicable in the
United Kingdom and Jersey.
The Directors of the Company confirm that to the best of their knowledge that:
· the financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial position and
profit or loss of the Group; and
· the sections of this Report, including the Chairman's Statement,
Director's Review, Financial Review and Principal Risks and Uncertainties,
which constitute the management report include a fair review of all
information required to be disclosed by the Disclosure and Transparency Rules
4.1.8 to 4.1.11 issued by the Financial Services Authority of the United
Kingdom.
Disclosure of Information to Auditor
So far as each person who was a Director at the date of approving this report
is aware, there is no relevant audit information, being information needed by
the auditor in connection with preparing its report, of which the auditor is
unaware. Having made enquiries of fellow Directors, each Director has taken
all the steps that he is obliged to take as a Director in order to have made
himself aware of any relevant audit information and to establish that the
auditor is aware of that information.
Re-appointment of Auditor
The auditor, PKF Littlejohn LLP, has expressed their willingness to continue
in office. A resolution proposing their re-appointment will be tabled at the
forthcoming Annual General Meeting.
Board Committees
Information on the Audit Committee is included in the Corporate Governance
section of the Annual Report on pages 24 to 31.
Annual General Meeting
The tabling of the 2022 Annual Report and Financial Statements to shareholders
will be at an Annual General Meeting ("AGM") that is currently expected to be
held on 30 May 2023.
During the AGM, investors will be given the opportunity to question the board
and to meet with them thereafter. They will be encouraged to participate in
the meeting.
On behalf of the Board
THOMAS HOLLAND
Non-Executive Independent Director
28 April 2023
REPORT OF DIRECTORS' REMUNERATION
Directors' Emoluments
The Company has no executive Directors, solely a few employees who are mainly
focused on the divestment process. The Independent Directors in the Board of
Directors are responsible for setting the framework and reviewing compensation
arrangements for all non-executive Directors before recommending the same to
the Board for approval. The Independent Directors assess the appropriateness
of the emoluments on an annual basis by reference to comparable market
conditions with the overall objective of ensuring maximum stakeholder benefit
from the retention of a high calibre Board.
During the year, the Directors received the following emoluments in the form
of fees from the Company:
Directors Year ended Year ended
31 December 2022 31 December 2021
(US$) (US$)
Nicholas John Paris 70,000 70,000
(Chairman of the Board)
Helen Wong Siu Ming 77,000 77,105
(Chairman of the Audit Committee)
Thomas Holland 48,000 48,058
Monica Lai Voon Huey 48,000 48,000
Christopher Henry Lovell(1) 22,286 48,082
(1) Christopher Lovell was not re-elected at the Company's 2022 Annual General
Meeting on 17 June 2022.
Share Options
The Company did not operate any share option schemes during the years ended 31
December 2021 and 2022.
Share Price Information
· High for the year - US$0.20
· Low for the year - US$0.12
· Close for the year - US$0.14
Pension SchemeS
No pension schemes exist in the Company.
Service Contracts
In view of the non-executive nature of the directorships, there are no service
contracts in existence between the Company and any of the Directors. Each
Director was appointed by a letter of appointment that states his appointment
subject to the Articles of Association of the Company which set out the main
terms of his appointment.
THOMAS HOLLAND
Non-executive Independent Director
28 April 2023
CORPORATE GOVERNANCE STATEMENT
The Financial Conduct Authority requires all companies with a Premium Listing
to comply with The UK Corporate Governance Code (the "Code"). Aseana
Properties is a Jersey incorporated company with a Standard Listing on the UK
Listing Authority's Official List and is therefore not subject to the Code.
The following explains how the principles of governance are applied to the
Company.
THE BOARD
The Company currently has a Board of five non-executive directors, including
the non-executive Chairman.
The brief biographies of the following Directors appear on pages 14 to 15 of
this Annual Report:
· Nicholas John Paris (Non-Executive Chairman)
· Thomas Holland
· Monica Lai Voon Huey
· Hock Chye Tan (appointed 3 March 2023)
· Helen Wong Siu Ming
The routine operations of the Company are supervised by the Chairman and the
Board and a team of finance professionals were directly engaged to run our
finances and operations. Ms Helen Wong was nominated as the Divestment
Director with a specific focus to sell the Company's remaining assets, in line
with the Divestment Policy.
Role of the Board of Directors
The Board's role is to provide entrepreneurial leadership to the Company,
within a framework of prudent and effective controls, enabling risks to be
assessed and managed. The Board sets the Company's strategic objectives,
monitors and reviews the Company's operational and financial performance,
ensures the Company has sufficient funding, and examines and approves disposal
of the Company's assets in a controlled, orderly and timely manner. The
Board also sets the Company's values and standards and ensures that its
obligations to its shareholders and other stakeholders are met. The Board
has adopted a divestment strategy since 2015.
Appropriate level of directors' and officers' liability insurance is
maintained by the Company.
The Board currently has the power to make purchases on behalf of the Company
of its own Ordinary Shares provided up to a maximum aggregate 29,783,780
Ordinary Shares (representing approximately 14.99 percent of the Company's
issued ordinary share capital (excluding ordinary shares held in treasury)).
Meetings of the Board of Directors
The Board meets at least four (4) times a year and at such other times as the
Chairman shall require. During the year ended 31 December 2022, the Board
met ten (10) times and their respective attendance are as follows:
Name of Directors Attendance
Nicholas John Paris 10/10
Thomas Holland 9/9 *
Monica Lai Voon Huey 9/9 *
Christopher Henry Lovell 5/5
Helen Wong Siu Ming 9/9 *
* Each of Thomas Holland, Monica Lai Voon Huey, Helen Wong Siu Ming were
excused from one of the meetings during the year due to potential conflicts of
interest
Hock Chye Tan was appointed to the Board in March 2023 and therefore does not
appear in the above.
To enable the Board to discharge its duties effectively, all Directors receive
accurate, timely and clear information, in an appropriate form and quality,
including Board papers distributed in advance of Board meetings. The Board
periodically will receive presentations at Board meetings relating to the
Company's business and operations, significant financial, accounting and risk
management issues. All Directors have access to the advice and services of
the Company Secretary and advisers, who are responsible to the Board on
matters of corporate governance, board procedures and regulatory compliance.
Board Balance and Independence
Following the resignation of our former Development Manager as of 30 June
2019, ASEANA has been a self-managed company. The Board consists solely of
non-executive directors of which Nicholas Paris is the non-executive
Chairman. Monica Lai Voon Huey is a representative of Legacy Essence Limited
and she was a representative of Ireka Corporation Berhad until her resignation
from the latter's Board in November 2021; she is therefore classified as a
Non-Independent Non-Executive Director of the Company. The Board considers
the majority of Directors to be independent, being independent of management
and also having no business relationships which could interfere materially
with the exercise of their judgement.
The Chairman is responsible for leadership of the Board, ensuring
effectiveness in all aspects of its role and setting its agenda. Matters
referred to the Board are considered by the Board as a whole and no individual
has unrestricted powers of decision. Together, the Directors bring a wide
range of experience and expertise in business, law, finance and accountancy,
which are required to successfully direct and supervise the business
activities of the Company.
Performance Appraisal
The Board undertakes an annual evaluation of its own performance and that of
its Committees and individual Directors. During 2022, the evaluation
concluded that the performance of the Board, its Committees and each
individual Director was and remains effective and that all Directors
demonstrate full commitment in their respective roles. The Directors are
encouraged to continually attend training courses at the Company's expense to
enhance their skills and knowledge in matters that are relevant to their role
on the Board. The Directors also receive updates on developments of
corporate governance, the state of economy, management strategies and
practices, laws and regulations, to enable effective functioning of their
roles as Directors.
Re-election of Directors
The Company's Articles of Association states that all Directors shall submit
themselves for election at the first opportunity after their appointment, and
shall not remain in office for longer than three years since their last
election or re-election without submitting themselves for re-election. At
the Annual General Meeting held on 17 June 2022, Christopher Lovell retired by
rotation and offered himself for re-election by the shareholders. He was not
re-elected at the AGM.
At the forthcoming Annual General Meeting, Hock Chye Tan will be offering
himself for re-election having recently been appointed, and Nicholas John
Paris will be retiring by rotation and offering himself for re-election.
Board Committees
The Board has established Audit Committees which deals with the specific
aspect of the Company's affairs, under a written term of reference which is
reviewed annually. Necessary recommendations are then made to the Board for
its consideration and decision-making. No one, other than the committee
chairman and members of the relevant committee, is entitled to be present at a
meeting of board committees, but others may attend at the invitation of the
board committees for presenting information concerning their areas of
responsibility. Copies of the terms of reference are kept by the Company
Secretary and are available on request at the Company's registered office at
Osprey House, Old Street, St. Helier, Jersey, JE2 3RG, Channel Islands.
Audit Committee
The Audit Committee consists of three members and is currently chaired by
Helen Wong. The other members are Thomas Holland and Hock Chye Tan
(appointed in March 2023). The Committee members have no links with the
Company's external auditor and Helen Wong, Thomas Holland and Hock Chye Tan
are independent Directors. The Board considers that collectively the Audit
Committee has sufficient recent and relevant financial experience with the
ability to discharge its duties properly, through extensive service on the
Boards and Audit Committees of other listed companies.
Meetings of THE AUDIT COMMITTEE
The Committee meets at least twice a year and at such other times as the
Chairman of the Audit Committee shall require. Any member of the Audit
Committee or the auditor may request a meeting if they consider that one is
necessary. The Committee met two times during the year and their respective
attendance are as follows:
Name Attendance
Helen Wong Siu Ming 2/2
Christopher Henry Lovell (Not re-elected on 17 June 2022) 1/1
Thomas Holland 2/2
Hock Chye Tan was appointed to the Audit Committee in March 2023 and therefore
does not appear in the above.
Representatives of the auditor may attend by invitation.
The Committee is responsible for:
· monitoring, in discussion with the auditor, the integrity
of the financial statements of the Company, any formal announcements relating
to the Company's financial performance and reviewing significant financial
reporting judgements contained in them;
· reviewing the Company's internal financial controls and
risk management systems;
· making recommendations to the Board in relation to the
appointment, re-appointment and removal of the external auditor and approving
the remuneration and terms of engagement of the external auditor to be put to
the shareholders for their approval in general meetings;
· reviewing and monitoring the external auditor's
independence and objectivity and effectiveness of the audit process, the Audit
Committee recognises that the Code and AIC Code provisions for FTSE 350
companies to put the external audit contract out to tender at least every 10
years. Though the Company is not a member of the FTSE 350, the Audit
Committee considers this to be best practice (the current auditor has been the
auditor since 2020);
· developing and implementing policy on engagement of the
external auditor to supply non-audit services; and
· reporting to the Board any matters in respect of which it
considers that action or improvement is needed and making recommendations as
to the steps to be taken.
Since the start of the financial year ending 31 December 2022, the Audit
Committee performed its duties as set out in the terms of reference. The
main activities carried out by the Audit Committee encompassed the following:
· reviewing the audit plan with the Group's Auditor;
· reviewing and discussing the Audit Committee Report with
the Group's Auditor;
· reviewing the draft Audited Financial Statements as
contained in the draft Annual Report together with the Group's Auditor before
tabling to the Board for consideration and approval;
· reviewing other published financial information including
the half year results and results announcements before tabling to the Board
for consideration and approval;
· considering the independence of the auditor; and
· reviewing the auditor's performance and made a
recommendation for the reappointment of the Group's auditor by shareholders.
The Significant Issues
The Audit Committee considered the following key issues in relation to the
Group's financial statements during the year:
· valuation of inventory assets - The Audit Committee
considered and discussed the valuation of the Group's inventory assets as at
31 December 2022 and to identify potential impairment.
· impairment of receivables from a related party - The
Audit Committee noted that a related party to the Group, which the Group
maintained receivable balances with, had entered Judicial Management due to
financial distress. Consequently, the recoverability of the balances was
considered doubtful and full impairment has been made on the balances.
· going concern - The Audit Committee considered the
Company's financial requirements for the next 12 months and concluded that it
has sufficient resources to meet its commitments and any outstanding loan
covenants. Consequently, the financial statements have been prepared on a
going concern basis.
Nomination & REMUNERATION Committee ("NRC")
The Nomination & Remuneration Committee was chaired by Christopher Lovell.
The other committee members were Monica Lai Voon Huey and Nicholas Paris.
The responsibilities of the NRC are stated below and upon Christopher Lovell's
departure in June 2022 were integrated into the Board's responsibilities.
Given the Company is currently in its divestment phase, all Directors are
non-executive on fixed fees. For the same reason, a specific diversity and
inclusion policy has not been applied. However, it is considered that the
Board has suitable gender balance and is suitably diverse.
During the year ended 31 December 2022, the Nomination & Remuneration
Committee carried out its functions as set out in its terms of reference which
are summarised below:
· regularly reviewing the structure, size and composition
(including diversity, skills, knowledge and experience) of the Board and
making recommendations to the Board with regard to any change;
· considering succession plans for Directors and the
re-appointment or re-election of any Directors at the conclusion of their
specified term of office or retiring in accordance with the Company's Articles
of Association;
· identifying and nominating for the approval of the Board,
candidates to fill Board vacancies as and when they arise;
· considering any matter relating to the continuation in
office of any Director at any time;
· determining and agreeing with the Board the framework for
the remuneration of the Directors; and
· setting the remuneration for all Directors albeit since
all Directors are non-executive, the principles of the Code in respect of
executive directors' remuneration are not applicable and as such there is no
policy for executive compensation.
Financial Reporting
The Board aims to present a fair, balanced and understandable assessment of
the Company's position and prospects in all reports to shareholders, investors
and regulatory authorities. This assessment is primarily provided in the
half-yearly report and the Annual Report through the Chairman's Statement,
Financial Review Statement and Directors' Report.
The Audit Committee has reviewed the significant reporting issues and
judgements made in connection with the preparation of the Group's financial
statements including significant accounting policies, significant estimates
and judgements. The Audit Committee has also reviewed the clarity,
appropriateness and completeness of disclosures in the financial statements.
Internal Audit
The Board has confirmed that the systems and procedures employed, provide
sufficient assurance that a sound system of risk management and internal
control is maintained. An internal audit function specific to the Company is
therefore considered not necessary given the Company is in divestment phase of
its life. However, the Directors will continue to monitor if such need is
required.
Auditor
The Audit Committee's responsibilities include monitoring and reviewing the
performance and independence of the Company's Auditor, PKF Littlejohn LLP who
had been re-appointed on 8 December 2022.
Pursuant to audit and ethical standards, the auditor is required to assess and
confirm to the Board their independence, integrity and objectivity. The
Auditor had carried out this assessment and considered themselves to be
independent, objective and in compliance with the Ethical Standard for
Auditors published by the UK Financial Reporting Council and the Code of
Ethics issued by the Institute of Chartered Accountants in England and Wales.
RISK MANAGEMENT AND Internal Control
The Board is responsible for the effectiveness of the Company's risk
management and internal control systems and is supplied with information to
enable it to discharge its duties. Such systems are designed to meet the
particular needs of the Company and to manage rather than eliminate the risk
of failure to meet business objectives and can only provide reasonable, and
not absolute, assurance against material misstatement or loss.
During the year, the Board discharged its responsibility for risk management
and internal control through the following key procedures:
· clearly defined delegation of responsibilities to
employees of the Company, including authorisation levels for all aspects of
the business;
· regular and comprehensive information provided to the
Board covering financial performance and key business indicators;
· a detailed system of budgeting, planning and reporting
which is approved by the Board and monitoring of results against budget with
variances being followed up and action taken, where necessary; and
· regular visits to operating units and projects by the
Board.
The Board has established frameworks, policies and procedures to comply with
the requirement of the Bribery Act 2010 (the "Bribery Act") and Market Abuse
Regulation ("MAR"). In respect of the former, the Company has a legal and
compliance function for the purposes of implementing the anti-corruption and
anti-bribery policy. Training and briefing sessions were conducted for the
senior management and employees. Compliance reviews are carried out as and
when required to ensure the effectiveness of the policy. In respect of
dealing by employees and Directors of the Company, the Company has a Dealing
Code which imposes restrictions on dealings in its securities by Persons
Discharging Managerial Responsibilities ("PDMR") and certain employees who
have been told the clearance procedures apply to them. The Company also has
a Group-Wide Dealing Policy and a Dealing Procedures Manual. These policies
have been designed to ensure that the PDMR and other employees of the Company
and its subsidiaries do not misuse or place themselves under suspicion of
misusing information about the Group which they have and which is not public.
Relationship with Shareholders
The Board is committed to maintaining good communications with shareholders
and has designated the Chairman and certain members of its Board as the
principal spokespersons with investors, analysts, fund managers, the press and
other interested parties. The Board is informed of material information
provided to shareholders and is advised on their feedback. The Board has
also developed an understanding of the views of major shareholders about the
Company through meetings and teleconferences conducted by the financial
adviser. In addition, the Company seeks to regularly update shareholders
through stock exchange announcements, press releases and participation in
roadshows.
To promote effective communication, the Company has a website,
www.aseanaproperties.com through which shareholders and investors can access
relevant information.
Substantial Shareholders
The Board was aware of the following direct and indirect interests comprising
a significant amount of more than 3% issued share capital of the Company as at
31 December 2022:
NUMBER OF ORDINARY SHARES HELD PERCENTAGE OF ISSUED SHARE CAPITAL
Ireka Corporation Berhad. 45,837,504 23.07%
Legacy Essence Limited and its related parties 36,628,282 18.43%
LIM Advisors 26,644,192 13.41%
SIX SIS 18,366,118 9.24%
Progressive Capital Partners 14,393,372 7.24%
Dr. Thong Kok Cheong 12,775,532 6.43%
Credit Suisse 12,024,891 6.05%
Annual General Meeting ("AGM")
The AGM is the principal forum for dialogue with shareholders. At and after
the AGM, investors are given the opportunity to question the Board and seek
clarification on the business and affairs of the Group. Mr. Nicholas John
Paris, non-executive Chairman and Mr. Christopher Lovell, non-executive
independent director, attended the 2022 AGM, either in person or by telephone,
which was held on 17 June 2022 at the Company's registered office.
Notices of the AGM and related papers are sent out to shareholders in good
time to allow for full consideration prior to the AGM. Each item of special
business included is accompanied by an explanation of the purpose and effect
of a proposed resolution. The Chairman declares the number of votes received
for, against and withheld in respect of each resolution after the shareholders
and proxies present have voted on each resolution. An announcement
confirming whether all the resolutions have been passed at the AGM is made
through the London Stock Exchange.
On behalf of the Board
NICHOLAS JOHN PARIS
Chairman
28 April 2023
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ASEANA PROPERTIES LIMITED
Opinion
We have audited the financial statements of Aseana Properties Limited and its
subsidiaries (the 'group') for the year ended 31 December 2022 which comprise
the Consolidated Statement of Comprehensive Income, the Consolidated Statement
of Financial Position, the Consolidated Statement of Changes in Equity, the
Consolidated Statement of Cash Flows and notes to the financial statements,
including significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
· give a true and fair view of the state of the group's affairs as at
31 December 2022 and of its loss for the year then ended;
· have been properly prepared in accordance with IFRSs as adopted by
the European Union; and
· have been prepared in accordance with the requirements of the
Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the group in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2.1 in the financial statements, which indicates
that the success of the group relies on its ability to raise sufficient funds
through project divestments in order to finance the operation of the group, as
well as the result of the members' dis-continuation vote to be held at the end
of May 2023.
As at 31 December 2022, the group's loans, borrowings and medium term notes
amounted to USD $32.9 million, of which the entirety is due for repayment by 8
December 2023.
The economic consequences of the global pandemic have continued to adversely
impact the interest of prospective buyers for the group's remaining assets.
Therefore, there is no certainty that the sale of the remaining assets will be
completed as planned and the loans, borrowings including medium term notes can
be repaid in a timely manner.
As stated in note 2.1, these events or conditions indicate that a material
uncertainty exists that may cast significant doubt on the group's ability to
continue as a going concern.
Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group's ability to continue to adopt the going concern basis
of accounting included a review of management's assessment of the going
concern status of the group, including a cash flow forecast for the twelve
months from the anticipated approval of the group financial statements. Our
audit procedures included challenging the integrity of the underlying formulas
and calculations within the going concern model; and reviewing the
reasonableness of the key assumptions used by the directors to prepare the
cash flow forecast.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We
set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and
the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate, on the financial statements
as a whole.
Group financial statements 2022 Group financial statements 2021
Overall materiality USD $1,200,000 USD $1,400,000
Performance materiality USD $720,000 USD $840,000
Basis of materiality c. 0.7% of gross assets c. 0.7% of gross assets
Rationale A key determinant of the group's value is property assets held within
inventory. Due to this, the key area of focus in the audit is the valuation of
inventory. On this basis, we consider gross assets to be a critical financial
performance measure for the group given that it is a key metric used by
management, investors, analysts and lenders.
We use performance materiality to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements
exceeds overall materiality. Specifically, we use performance materiality in
determining the scope of our audit and the nature and extent of our testing of
account balances, classes of transactions and disclosures, for example in
determining sample sizes.
For each component in the scope of our group audit, we allocated a materiality
that is less than our overall group materiality. The range of materiality
allocated across components was between USD $5,000 (2021: USD $40,000) and USD
$630,000 (2021: USD $720,000). Certain components were audited to a local
statutory audit materiality that was also less than our overall group
materiality.
We agreed with the Audit Committee that we would report to them misstatements
identified during our audit above USD $60,000 (2021: USD $70,000) as well as
misstatements below those amounts that, in our view, warranted reporting for
qualitative reasons.
Our approach to the audit
As part of designing our audit, we determined materiality and assessed risk of
material misstatement in the financial statements. In particular, we looked at
areas involving significant accounting estimate and judgment by the directors
and considered future events that are inherently uncertain such as the
carrying value of inventory. We also addressed the risk of management override
of controls, including among other matters consideration of whether there was
evidence of bias that represented a risk of material misstatement due to
fraud.
The group has nine trading companies consolidated within in the group
financial statements, all of which are based in Malaysia. We identified seven
significant components, which were subject to a full scope of audit.
Significant Malaysian components were audited by the PKF network firm in
Malaysia. We reviewed component audit working papers electronically. In
addition to this, significant components were subject to audits under our
direction and supervision.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter
described in the material uncertainty related to going concern section we have
determined the matters described below to be the key audit matters to be
communicated in our report.
Key Audit Matter How our scope addressed this matter
Carrying value of inventory
Refer to note 20 Inventory. We performed testing of the inventory valuation and critically assessed the
key assumptions and estimates made. The procedures performed are summarised
below:
The group owns a portfolio of land held for property development and completed
property units in Malaysia. The total carrying value of inventory for the
group was USD $132.6 million. We assessed the valuers' qualifications and expertise and read their terms of
engagement with the group to determine whether there are matters that might
Inventory amounted to USD $126.2 million was valued by third party valuers C H have affected their objectivity or may have imposed limitation of scope upon
Williams Talhar & Wong Sdn Bhd ("CBRE WTW") and Knight Frank Malaysia Sdn their work. We also considered fees and other contractual arrangements that
Bhd ("Knight Frank"), together "the valuers" who are engaged by the directors. might exist between the group and the valuers. We found no evidence to suggest
that the objectivity of the valuers was compromised.
The valuation report issued by Knight Frank dated 13 February 2023 shows a
write down of c. USD $13.8 million (2021: c. USD $14.7 million) in the We read all valuation reports including workings which support the net
carrying value of Sandakan Harbour Square located in Malaysia. The valuation realisable value assessment of inventory.
report issued by CBRE WTW dated 23 March 2023 shows a write down of c. USD
$1.8m in the carrying value of RuMa Hotel (excluding Services Residences).
Tested the underlying data used by the valuers in forming their valuation
including benchmarking, validating key assumptions to supporting third party
The directors had been in discussions with a party leading up to the year end evidence or market activity and considering contrary evidence.
and on 17 January 2023 the directors of Aseana Properties Limited received a
signed Letter of Intent ("LOI") to purchase Sandakan Harbour Square and RuMa
Hotel & Services Residences, subject to normal due diligence ("the Offer
Price"). The Offer Price indicated an impairment of c. USD $8.6 million to the Assessed and challenged the key estimates and assumptions used in the
carrying value of the Sandakan Harbour Square and no impairment in respect of valuation methodology, noted and performed analysis on changes from prior year
the RuMa Hotel & Services Residences. The directors are of the opinion where relevant.
that the Offer Price included in the LOI indicates a fair price and that both
parties are actively seeking to agree contractual terms. The directors
considered the Offer Price as an appropriate carrying value of the inventory
at the year end. Directors do not plan to dispose any of the inventory with a Evaluated a range of key estimates and assumptions used in the valuations and
price lower that that indicated by the LOI. As a result, an impairment charge profit and cash flow forecasts.
of c. USD $8.6 million is recognised against the carrying value of the
Sandakan Harbour Square.
In addition to the above work on the valuation reports, we reviewed the signed
letter of intent stating the potential buyer's interest in purchasing Sandakan
At 31 December 2022, goodwill valued at USD $578,000 arose from the Harbour Square and Ruma Hotel and Service Residences. Further, we assessed the
acquisition of ICSD Ventures Sdn. Bhd (the owner of the Sandakan Harbour buyer's credentials using publicly available information.
Square) in 2009 was not impaired. Directors are of the opinion that the value
of goodwill can be recovered via the disposal of the Sandakan Harbour Square
despite the impairment charge stated above.
In respect of the land located in Kota Kinabalu, Sabah in Malaysia with a
carrying value of USD $6.3 million as at 31 December 2022 where no third party
valuation has been carried out, our comparison to recent sales transactions of
A parcel of land located in Kota Kinabalu, Sabah in Malaysia with a carrying land assets of similar characteristics resulted in the conclusion of no
value of USD $6.3 million as at 31 December 2022 was not valued by any third indicator of impairment to the year-end carrying value existed.
party valuer.
In addition to this, and consistent with the market conditions observed, we
note there continued to be a higher level of judgement associated with certain Except for the issues identified in relation to Sandakan Harbour Square, RuMa
asset valuations, notably those with a significant retail and hospitality Hotel and Service Residences as well as the land located in Kota Kinabalu,
element. The continuing economic consequences of COVID-19 further increased Sabah, we concluded that the directors' year end carrying value is supportable
judgment in relation to assumptions around: in light of the evidence. We note that the LOI is not a contractual document.
Contractual terms (in any) may differ materially from the Offer Price.
- occupier demand and solvency;
- asset liquidity; and
- the relative impact on the different sectors including retail,
hospitality and leisure.
In determining the carrying value of inventory, the valuers take into account
property specific information such as the current lease agreements and
occupancy rates. They apply assumptions for yields and expected future income
growth rates, which are influenced by prevailing market yields and comparable
market transactions, to arrive at final valuation.
The valuation of inventory requires significant judgment and estimation by
management and their valuers. Inaccuracies in inputs or unreasonable bases
used in these judgements could result in a material misstatement in the
financial statements. There is also a risk that management may influence the
significant judgments and estimates in respect of inventory valuations in
order to meet market expectations.
The significance of the estimates and judgements involved, coupled with the
fact that only a small percentage difference in individual valuations, when
aggregated, could result in a material misstatement, warranted specific audit
focus in this area.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. 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 course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. 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.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to
which the Companies (Jersey) Law 1991 requires us to report to you if, in our
opinion:
· adequate accounting records have not been kept, or returns adequate
for our audit have not been received from branches not visited by us; or
· the financial statements and the part of the directors' remuneration
report to be audited are not in agreement with the accounting records and
returns; or
· certain disclosures of directors' remuneration specified by law are
not made; or
· we have not received all the information and explanations we require
for our audit.
Responsibilities of directors
As explained more fully in the directors' report, the directors are
responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal control
as the directors determine 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, the directors are 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 directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) 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.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the group and the sector in which it
operates to identify laws and regulations that could reasonably be expected to
have a direct effect on the financial statements. We obtained our
understanding in this regard through discussions with management, industry
research, application of cumulative audit knowledge and experience of the
sector. We also communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members including the significant
component audit team, and remained alert to any indicators of fraud or
non-compliance with laws and regulations throughout the audit.
· We determined the principal laws and regulations relevant to the
group in this regard to be those arising from:
o The Companies (Jersey) Law 1991;
o Disclosure and Transparency Rules;
o The Bribery Act 2010;
o Market Abuse Regulations;
o Anti-Money Laundering Legislation;
o Local Tax and Employment Law; and
o International Financial Reporting Standards ("IFRSs") as adopted by European
Union ("EU")
· We designed our audit procedures to ensure the audit team considered
whether there were any indications of non-compliance by the group with those
laws and regulations. These procedures included, but were not limited to:
o Making enquiries of management;
o Reviewing of minutes of board meetings;
o Reviewing of accounting ledgers; and
o Reviewing of RNS announcements
· We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls, that the carrying value of inventory could indicate potential
management bias. The potential for management bias was identified in relation
to the carrying value of the inventory and we addressed this by challenging
the assumptions and judgements made by management when auditing that
significant accounting estimate.
· As in all of our audits, we addressed the risk of fraud arising from
management override of controls by performing audit procedures which included,
but were not limited to: the testing of journals; reviewing accounting
estimates for evidence of bias; and evaluating the business rationale of any
significant transactions that are unusual or outside the normal course of
business; and reviewing transactions through bank statements to identify
potentially large and unusual transactions that do not appear to be in line
with our understanding of the business operations.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities)
(http://www.frc.org.uk/auditorsresponsibilities)
(http://www.frc.org.uk/auditors/audit-assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor%E2%80%99s-responsibilities-for)
(https://www.frc.org.uk/auditors/audit-assurance/standards-and-guidance/2010-ethical-standards-for-auditors-(1))
. This description forms part of our auditor's report.
Use of our report
This report is made solely to the group's members, as a body, in accordance
with our engagement letter dated 8 December 2022. Our audit work has been
undertaken so that we might state to the group's members those matters we are
required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the group and the group's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Mark Ling (Engagement Partner)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Registered
Auditor
London E14 4HD
28 April 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
2022 2021
Restated *
Notes US$'000 US$'000
Continuing operations
Revenue 5 980 595
Cost of sales 6 (640) (318)
Gross profit 340 277
Other income 7 10,971 5,677
Administrative expenses 11 (2,433) (1,408)
Other operating expenses 11 (26,085) (9,013)
Gain on sale of discontinued operations 34 2,702 -
Foreign exchange (loss)/gain 8 (1,695) 345
Operating loss (16,200) (4,122)
Finance income 1,970 1,969
Finance costs (3,344) (3,621)
Net finance costs 10 (1,374) (1,652)
Net loss before taxation 11 (17,574) (5,774)
from continuing operations
Taxation 12 (302) (141)
Loss for the year from continuing operations (17,876) (5,915)
Discontinued operations
Loss for the year from discontinued operations - (3,087)
Loss for the year (17,876) (9,002)
Other comprehensive income/(loss), net of tax
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences 13 (2,459) (3,584)
for foreign operations
Total other comprehensive
income for the year 13 (2,459) (3,584)
Total comprehensive loss
for the year (20,335) (12,586)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONT'D)
FOR THE YEAR ENDED 31 DECEMBER 2022
2022 2021
Restated *
Notes US$'000 US$'000
Loss attributable to:
Equity holders of the parent company
Loss for the year from continuing operations (15,867) (4,122)
Loss for the year from discontinued operations - (1,632)
Loss for the year attributable to 14 (15,867) (5,754)
equity holders of the parent company
Non-controlling interests
Loss for the year from continuing operations (2,009) (1,793)
Loss for the year from discontinued operations - (1,455)
Loss for the year attributable to 15 (2,009) (3,248)
non-controlling interests
Loss for the year (17,876) (9,002)
Total comprehensive loss attributable to:
Equity holders of the parent company
Loss for the year from continuing operations (18,451) (6,232)
Loss for the year from discontinued operations - (2,719)
Total comprehensive loss attributable to (18,451) (8.951)
equity holders of the parent company
Loss for the year from continuing operations (1,884) (1,736)
Loss for the year from discontinued operations - (1,899)
Total comprehensive loss attributable to (1,884) (3,635)
non-controlling interests
Total comprehensive loss for the year (20,335) (12,586)
Loss per share 14
Basic and diluted (US cents)
- from continuing operations (7.99) (2.08)
- from discontinued operations - (0.82)
(7.99) (2.90)
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
The notes to the financial statements form an integral part of the financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022
2022 2021 1 Jan 2021
Restated* Restated*
Notes US$'000 US$'000 US$'000
Non-current assets
Property, plant and equipment 16 79 104 121
Intangible assets 17 578 578 578
Right of use 18 - 1 160
Deferred tax assets 19 4,723 4,979 5,111
Total non-current assets 5,380 5,662 5,970
Current assets
Inventories 20 132,573 147,048 157,133
Trade and other receivables 21 11,575 14,799 14,999
Prepayments 376 496 206
Current tax assets 10 781 956
Assets held for sale 34 - 14,466 10,344
Cash and cash equivalents 22 7,259 7,114 5,388
Total current assets 151,793 184,704 189,026
TOTAL ASSETS 157,173 190,366 194,996
Equity
Share capital 23 10,601 10,601 10,601
Share premium 24 208,925 208,925 208,925
Capital redemption reserve 25 1,899 1,899 1,899
Translation reserve 26 (25,436) (22,852) (19,655)
Accumulated losses (122,781) (106,904) (101,160)
Shareholders' equity 73,208 91,659 100,610
Non-controlling interests 15 (5,404) (2,646) (7,189)
Total equity 67,804 89,013 93,421
Non-current liabilities
Trade and other payable 27 36,440 38,339 39,789
Loans and borrowings - - 1
Total non-current liabilities 36,440 38,339 39,790
Current liabilities
Trade and other payables 27 18,089 17,050 17,757
Amount due to non-controlling interests 28 1,981 1,952 1,906
Loans and borrowings 29 1,595 1,695 1,922
Medium term notes 30 31,264 42,317 40,200
Total current liabilities 52,929 63,014 61,785
Total liabilities 89,369 101,353 101,575
TOTAL EQUITY AND LIABILITIES 157,173 190,366 194,996
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
The financial statements were approved on 28 April 2023 and authorised for
issue by the Board and were signed on its behalf by
THOMAS
HOLLAND
HELEN SIU MING WONG
Director
Director
28 April 2023
The notes to the financial statements form an integral part of the financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 december 2022
Consolidated Redeemable Ordinary Shares Management Shares Share Premium Capital Redemption Reserve Translation Reserve Accumulated Losses Total Equity Attributable to Equity Holders of the Parent Non- Controlling Interests Total Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2021 10,601 -# 208,925 1,899 (19,655) (100,433) 101,337 (6,877) 94,460
Correction or error (net of tax) (See Note 2.3(f)) - - - - - (727) (727) (312) (1,039)
As at the beginning of the financial year (restated *) 10,601 -# 208,925 1,899 (19,655) (101,160) 100,610 (7,189) 93,421
Changes in ownership interests in subsidiaries (341) (341)
Non-controlling interests contribution - - - - - - - 8,519 8,519
Loss for the year (restated *) - - - - - (5,754) (5,754) (3,248) (9,002)
Total other comprehensive loss for the year - - - - (3,197) - (3,197) (387) (3,584)
Total comprehensive loss for the year (restated *) - - - - (3,197) (5,754) (10,210) (3,635) (12,586)
Disposal of subsidiaries - - - - - -
As at 31 December 2021/ 1 January 2022 10,601 -# 208,925 1,899 (22,852) (106,914) 91,659 (2,646) 89,013
As at 31 December 2021 / 1 January 2022 as originally presented 10,601 -# 208,925 1,899 (22,852) (105,915) 92,658 (1,678) 90,980
Correction or error (net of tax) (See Note 2.3(f)) - - - - - (999) (999) (968) (1,967)
As at 31 December 2021 / 10,601 -# 208,925 1,899 (22,852) (106,914) 91,659 (2,646) 89,013
1 January 2022 (restated *)
Loss for the year - - - - - (15,867) (15,867) (2,009) (17,876)
Total other comprehensive loss for the year - - - - (2,584) - (2,584) 125 (2,459)
Total comprehensive loss for the year - - - - (2,584) (15,867) (18,451) (1,884) (20,335)
Sale of discontinued operations - - - - - - - (874) (874)
Shareholders' equity at 31 December 2022 10,601 -# 208,925 1,899 (25,436) (122,781) 73,208 (5,404) 67,804
# Represents 2 management shares at US$0.05 each
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
The notes to the financial statements form an integral part of the financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 december 2022
2022 2021
Restated *
US$'000 US$'000
Cash Flows from Operating Activities
Net loss before taxation
- Continuing operations (17,574) (5,774)
- Discontinued operation - (3,087)
Impairment of amount due from a related party 2,755 -
Impairment of inventory 8,620 -
Finance income (1,970) (1,969)
Finance costs 3,344 3,621
Loss on disposal of subsidiaries (2,702) -
Unrealised foreign exchange loss/(gain) 1,688 (346)
Depreciation of property, plant and equipment and right-of-use asset 60 207
Operating loss before changes in working capital (5,779) (7,348)
Changes in working capital:
(Increase)/Decrease in inventories (1,671) 4,660
Decrease/(Increase) in trade and other receivables and prepayments 15,985 (3,341)
Decrease in trade and other payables (7,448) (137)
Cash (used in)/generated from operations 1,087 (6,166)
Interest paid (6,034) (3,618)
Tax (refunded)/paid 428 (46)
Net cash used in operating activities (4,519) (9,830)
Cash Flows From Investing Activities
Purchase of property, plant and equipment (39) (42)
Proceeds from the sale of discontinued operations 10,045 -
Finance income received 508 710
Net cash from investing activities 10,514 668
CONSOLIDATED STATEMENT OF CASH FLOWS (CONT'D)
For the year ended 31 december 2022
2022 2021
Restated *
US$'000 US$'000
Cash Flows From Financing Activities
Advances from non-controlling interests 129 121
Issuance of ordinary share of subsidiaries to non-controlling interests - 8,519
Repayment of finance lease liabilities (14) (163)
Repayment of loans and borrowings (8,884) -
Drawdown of loans and borrowings and Medium Term Notes - 3,559
Net cash generated from financing activities (8,769) 12,036
Net changes in cash and cash equivalents during the year (2,774) 2,874
Effect of changes in exchange rates 2,919 (1,148)
Cash and cash equivalents at the beginning of the year 7,114 5,388
Cash and cash equivalents at the end of the year (i) 7,259 7,114
(i) Cash and Cash Equivalents
Cash and cash equivalents included in the consolidated
statement of cash flows comprise the following consolidated statement of
financial position amounts:
2022 2021
Restated *
US$'000 US$'000
Cash and bank balances 4,786 4,644
Short term bank deposits 2,473 2,470
7,259 7,114
Less: Deposits pledged (ii) (2,473) (2,470)
Cash and cash equivalents 4,786 4,644
(ii) Included in short term bank deposits and cash and bank
balance is US$2,473,000 (2021: US$2,470,000) pledged for loans and borrowings
and Medium Term Notes of the Group.
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
The notes to the financial statements form an integral part of the financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
1 GENERAL INFORMATION
Aseana Properties Limited (the "Company") was incorporated in Jersey as a
limited liability par value company. The Company's registered office is
Osprey House, Old Street, St Helier, Jersey JE2 3RG.
The consolidated financial statements comprise the financial information of
the Company and its subsidiary undertakings (together the "Group"). Details
of the entities of the Group are described in Note 32.
The principal activities of the Group were the development of upscale
residential and hospitality projects, sale of development land and operation
and sale of hotel, mall and hospital assets in Malaysia and Vietnam. It is
currently carrying out its divestment program which consists of selling the
Group's remaining Malaysian assets, repaying its debts and distributing the
remaining proceeds to its shareholders.
The financial statements are presented in US Dollar ("US$"), which is the
Group's presentation currency. All financial information is presented in US$
and has been rounded to the nearest thousand (US$'000), unless otherwise
stated.
2 BASIS OF PREPARATION
The financial statements of the Group have been prepared in accordance with
International Financial Reporting Standards ("IFRSs") as adopted by European
Union ("EU"), and IFRIC interpretations issued, and effective, or issued and
early adopted, at the date of these financial statements.
As permitted by Companies (Jersey) Law 1991 only the consolidated financial
statements are presented.
The preparation of financial statements in conformity with IFRS requires the
use of estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of expenses during the reporting period. Although these estimates
are based on management's best knowledge of the amount, event or actions,
actual results ultimately may differ from those estimates. The Board has
reviewed the accounting policies set out below and considers them to be the
most appropriate to the Group's business activities.
A disposal group qualifies as a discontinued operation if it is a component of
an entity that either has been disposed of, or is classified as held for sale
and:
(a) represents a separate major line of business or geographical
area of operations;
(b) is part of a single co-ordinated plan to dispose of a
separate major line of business or geographic area of operations; or
(c) is a subsidiary acquired exclusively with a view to resale.
Discontinued operations are excluded from the results of continuing operations
and are presented as a single amount as profit or loss after tax from
discontinued operations in the income statement. Comparatives are also
re-presented to reclassify disposed businesses or held for sale businesses
which meet the criteria for discontinued operations.
2.1 Going Concern
The financial statements have been prepared on the historical cost basis and
on the assumption that the Group is a going concern.
The Directors expect to raise sufficient funds to finance the operation of the
Group's existing projects via the disposal of its development assets in East
Malaysia, its existing units of residential apartment inventories at The RuMa
Residences in West Malaysia, and through the disposals of the Sandakan hotel
asset (formerly Four Points Sheraton Sandakan Hotel), the Harbour Mall
Sandakan and the RuMa Hotel.
The slow economic recovery after the COVID-19 pandemic and re-opening up of
society in Malaysia has had an ongoing impact affecting the interest of
prospective buyers for our remaining assets. The slow recovery casts doubt on
the outlook in tourism and hospitality related businesses such as our hotel in
Kuala Lumpur and our retail mall in Sandakan which was negatively affected.
Additionally, the Malaysian political landscape in 2022 was volatile until
the general election in November 2022 when the Pakatan Harapan formed a
coalition government with other political parties.
Given the challenges in engaging with prospective buyers during a time of
economic uncertainty, the Directors decided to "roll-over" the medium term
notes ("MTN's) related to the Sandakan assets which were due to expire on 8
December 2022. The "roll-over" of the MTN's was completed prior to the
expiry date and now has a maturity date of 8 December 2023. The notes are
"AAA" rated and secured by two completed inventories of the Group with
carrying amount of US$45.6 million as at 31 December 2022.
The Group has prepared and considered prospective financial information based
on assumptions and events that may occur for at least 12 months from the date
of approval of the financial statements and the possible actions to be taken
by the Group. Prospective financial information includes the Group's profit
and cash flow forecasts for the ongoing projects.
In preparing the cash flow forecasts, the Directors have considered the
availability of cash, adequacy of bank loans and medium term notes and also
the refinancing of the medium term notes (as described in Notes 29 and 30).
The Directors believe that the business will be able to realise its assets and
discharge its liabilities in the normal course of business for at least 12
months from the date of the approval of these financial statements.
The Directors anticipate the sale of the Group's remaining assets, comprising
the hotel asset and shopping mall in Sandakan, a plot of development land in
Kota Kinabalu and the hotel and the remaining unsold residential units in
Kuala Lumpur, can be sold as the economy gradually recovers in Malaysia. These
asset sales will collectively enable the repayment of the Group's bank debts
as or before they fall due.
In addition, as described in Note 2.1.1 below, on 28 May 2021, shareholders
voted to extend the life of the Company by a further two years to May 2023 and
a further dis-continuation vote will be put to shareholders by the end of May
2023.
After considering the forecasts and the business risks, there is no certainty
the divestment of certain assets will be completed as planned and the loans
and borrowing can be discharged in a timely manner. These conditions
indicate the existence of a material uncertainty which may cast significant
doubt about the Group and the Company's ability to continue as a going
concern.
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future.
For these reasons, they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
2.1.1 May 2021 Resolution
At a general meeting of the Company held on 28 May 2021, Shareholders voted in
favour of the Board's proposals to reject the 2021 Discontinuation Resolution
and enabled the Company to continue to pursue the new divestment strategy
rather than placing the Company into liquidation. This should enable the
realisation of the Company's assets in a controlled, orderly and timely
manner, with the objective of achieving a balance between periodically
returning cash to Shareholders and maximising the realisation value of the
Company's investments.
2.2 Statement of Compliance
A number of new standards and amendments to standards and interpretations have
been issued by International Accounting Standards Board but are not yet
effective and in some cases have not yet been adopted by the EU. The
Directors do not expect that the adoption of these standards will have a
material impact on the financial statements of the Group in future periods.
2.3 Use of estimates and judgements and errors
The preparation of the consolidated financial statements in conformity with
IFRS 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 critical judgements in applying accounting policies that
have the most significant effect on the amounts recognised in the consolidated
financial statements are discussed below:
(a) Going concern
The Extraordinary General Meeting that was held on 28 May 2021 extended the
Company's life until May 2023 and the Directors anticipate holding a similar
vote at that time. It is too early to be able to forecast how the Company's
shareholders will vote on a continuation resolution which would be a special
resolution needing to be passed by two-thirds majority of those voting. The
Company and the Group continue to adopt the going concern basis in preparing
the financial statements.
As described in Note 2.1 the Directors consider the Company to be a going
concern while the Directors continue with the agreed divestment and
realisation process in an orderly manner under their control and they expect
to be able to continue to meet all finance obligations as they fall due.
(b) Net realisable value of inventories
The Group assesses the net realisable value of inventories under development,
land held for development and completed properties held for sale according to
their recoverable amounts with reference to the realisability of these
properties, taking into account estimated net sales based on prevailing market
conditions supported by external valuations, as well as indicative market
transaction prices on an arm's length basis. Provision is made when events
or changes in circumstances indicate that the carrying amounts may exceed net
realisable value. The assessment requires the use of judgement and estimates
in relation to factors such as sales prices, comparable market transactions,
occupancy levels, projected growth rates, and discount rates.
The methods and key assumptions in relation to the calculation of the net
realisable value of inventories are described in Note 20. At 31 December
2022, the carrying value of inventories were approximately US$133 million (31
December 2021: US$147 million).
(c) Revenue - sale and leaseback arrangements
The Group entered into agreements with the buyers of The RuMa Hotel Suites in
a sale and leaseback arrangement. The sold hotel suites will be leased back
to the Group for the hotel operation over the lease term period of 10 years.
The Group considers that the control of the sold hotel suites, under the sale
and leaseback arrangement, has yet to be transferred to the buyer and the
transfer of the asset is therefore not a sale. No revenue is recognised in
the financial statements.
The nature of this leaseback transaction represents, in substance, a temporary
financing arrangement. Any contractual payment made to the buyer was
recognised as finance costs. The proceeds of the revenue received from these
buyers were recognised as amounts owed to contract buyers, amounted to US$36.4
million and is disclosed in Note 27.
(d) Classification of assets as inventory
The Directors apply judgements in determining the classification of the
properties held by the Group. As the Group's principal activity was property
development, the Group continues to classify its completed developments,
namely the two hotels, and mall as inventories, in line with the Group's
intention to dispose of these assets rather than hold them for rental or
capital appreciation. The Group operates these inventories temporarily to
stabilise its operation while seeking a potential buyer.
As described in the Notes 3.3(c) and (d), as a result of this classification
all income generating from the operations of these developments is recognised
as other income in Note 6.
(e) Global economic uncertainty
Although many countries around the globe have eased their COVID-19 pandemic
responses during 2022, including the easing of temporary movement controls,
travel restrictions and quarantine measures, the economic recovery remained
vulnerable. The slow economic recovery continued to affect supply chains and
the production of goods and services and lower economic activity which is
likely to result in reduced demand for the Group's goods and services.
Additionally with the ongoing Ukraine situation, high inflation and continued
disruption of supply chains there is concern on the pace of the economic
recovery.
The Group exercises judgement, in light of all facts and circumstances, to
assess what event in this series of events provides additional evidence about
the condition that existed at the reporting date and therefore affects the
recognition and measurement of the Group's assets and liabilities at 31
December 2022.
(f) Correction of material error in expense accrual
In the post-year end period, the management became aware of the following in
relation to prior financial years:
(i) An understatement in accruing guaranteed rental return ("GRR")
payable to the owners of certain sold and leased back hotel suites. The
error resulted in a material understatement of accrued GRR expense recognised
for the 2021 and prior financial years and a corresponding understatement of
net loss.
(ii) An understatement of accrued finance income from a related party in
relation to the Group's equity contribution to a non-wholly owned subsidiary
and pursuant to the relevant Joint Venture Agreement (see Note 31). The
error resulted in a material understatement of finance income recognised for
the 2021 financial year and a corresponding overstatement of net loss.
The errors have been corrected by restating each of the affected financial
statement line items for the prior periods as follows:
Consolidated Statement of 31 December 2021 Increase / 31 December 2021 31 December 2020 Increase / 1 January 2021
Financial Position (Extract)
(Decrease)
(Decrease)
(Restated) (Restated)
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Trade and other receivables 13,540 1,259 14,799 14,999 - 14,999
Total Assets 189,107 1,259 190,366 194,996 - 194,996
Accumulated losses (105,915) (999) (106,914) (100,433) (727) (101,160)
Non-Controlling interests (1,678) (968) (2,646) (6,877) (312) (7,189)
Total Equity 90,980 (1,967) 89,013 94,460 (1,039) 93,421
Trade and other payables 13,824 3,226 17,050 16,718 1,039 17,757
Total Equity and Liabilities 189,107 1,259 190,366 194,996 - 194,996
Consolidated Statement of Comprehensive Income (Extract) 2021 Increase / 2021
(Decrease)
(Restated)
US$'000 US$'000 US$'000
Other operating expenses (6,826) (2,187) (9,013)
Operating loss (1,935) (2,187) (4,122)
Finance income 710 1,259 1,969
Finance costs (3,621) - (3,621)
Net finance costs (2,911) 1,259 (1,652)
Net loss before taxation from continuing operations (4,846) (928) (5,774)
Taxation (141) - (141)
Loss for the year from continuing operations (4,987) (928) (5,915)
Loss for the year from discontinued operations (3,087) - (3,087)
Loss for the year (8,074) (928) (9,002)
Total other comprehensive income for the year (3,584) - (3,584)
Total comprehensive loss for the year (11,658) (928) (12,586)
Loss attributable to:
Equity holders of the parent company
Loss for the year from continuing operations (3,850) (272) (4,122)
Loss for the year from discontinued operations (1,632) - (1,632)
Loss for the year attributable to equity holders of the parent company (5,482) (272) (5,754)
Non-controlling interests
Loss for the year from continuing operations (1,137) (656) (1,793)
Loss for the year from discontinued operations (1,455) - (1,455)
Loss for the year attributable to non-controlling interests (2,592) (656) (3,248)
Loss for the year (8,074) (928) (9,002)
Total comprehensive loss attributable to:
Equity holders of the parent company
Loss for the year from continuing operations (5,960) (272) (6,232)
Loss for the year from discontinued operations (2,719) - (2,719)
Total comprehensive loss attributable to equity holders (8,679) (272) (8,951)
of the parent company
Non-controlling interests
Loss for the year from continuing operations (1,080) (656) (1,736)
Loss for the year from discontinued operations (1,899) - (1,899)
Total comprehensive loss attributable to non-controlling interests (2,979) (656) (3,635)
Total comprehensive loss for the year (11,658) (928) (12,586)
Loss per share
Basic and diluted (US cents)
- from continuing operations (1.94) (0.14) (2.08)
- from discontinued operations (0.82) - (0.82)
(2.76) (0.14) (2.90)
3 SIGNIFICANT ACCOUNTING POLICIES
3.1 Basis of Consolidation
(a) Business combinations
Business combinations are accounted for using the acquisition method as at the
acquisition date, which is the date on which control is transferred to the
Group. For new acquisitions, the Group measures the cost of 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 existing equity interest in the acquiree; less
• the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
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
generally are recognised in profit or loss.
Transaction 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.
Any contingent consideration payable is measured at fair value at the
acquisition date. If the contingent consideration is classified as equity,
then it is not remeasured and settlement is accounted for within equity.
Otherwise, subsequent changes in the fair value of the contingent
consideration are recognised in profit or loss.
(b) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial information
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.
The Group controls an entity when it is exposed, 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. Potential voting rights are
considered when assessing control only when such rights are substantive. The
Group also considers it has de facto power over an investee when, despite not
having the majority of voting rights, it has the current ability to direct the
activities of the investee that significantly affect the investee's return.
(c) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses
arising from intra-group 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 to the extent
that there is no evidence of impairment.
(d) Acquisition of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions
with owners in their capacity as owners and therefore no goodwill is
recognised as a result. Adjustments to non-controlling interests arising
from transactions that do not involve the loss of control are based on a
proportionate amount of the net assets of the subsidiary.
3.2 Foreign Currencies
(a) Foreign currency transactions
The consolidated financial statements are presented in United States Dollar
("US$"), which is the Group's presentation currency. Each entity in the
Group determines its own functional currency and items included in the
financial statements of each entity are measured using that functional
currency. Transactions in foreign currencies are translated to the
respective functional currencies of the Group entities at exchange rates at
the dates of the transactions. Monetary assets and liabilities denominated
in foreign currencies at the reporting date are retranslated to the functional
currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Non-monetary
items in a foreign currency that are measured in terms of historical cost are
translated using the exchange rate at the date of the transaction. Foreign
currency differences arising on retranslation are recognised in profit or
loss, except for differences arising on the retranslation of
available-for-sale equity investments, which are recognised in other
comprehensive income.
(b) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on acquisition, are translated to US$ at exchange
rates at the reporting date. The income and expenses of foreign operations
are translated to US$ at exchange rates at the dates of the transactions.
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 non-controlling interest. 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
non-controlling interest. When the Group disposes of only part of its
investment in an associate 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 and are recognised in
other comprehensive income, and presented in the translation reserve in
equity.
3.3 Revenue Recognition and Other Income
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
The following specific recognition criteria must also be met before revenue is
recognised:
(a) Sale of completed properties
Revenue from sale of completed properties is recognised when effective control
of ownership of the properties is transferred to the purchasers which is when
the completion certificate or occupancy permit has been issued.
(b) Sale of development properties
Revenue from sale of development properties is recognised as and when the
control of the asset is transferred to the buyer and it is probable that the
Group will collect the consideration to which it will be entitled in exchange
for the asset that will be transferred to the buyer. In light of the terms
of the contract and the laws that apply to the contract, control of the asset
is transferred over time as the Group's performance does not create an asset
with an alternative use to the Group and the Group has an enforceable right to
payment for performance completed to date.
Revenue is recognised over the period of the contract by reference to the
progress towards complete satisfaction of that performance obligation. This
is determined based on the actual cost incurred to date to estimated total
cost for each contract.
Where the outcome of a contract cannot be reliably estimated, revenue is
recognised to the extent of contract costs incurred that are likely to be
recoverable. Contract costs are recognised as expenses in the period in
which they are incurred.
When it is probable that total contract costs will exceed total contract
revenue, the expected loss is recognised as an expense immediately.
(c) Rental income
Rental income is recognised in profit or loss on a straight-line basis over
the lease term. Lease incentives granted are recognised as an integral part
of the total rental income, over the term of the lease. Rental income is
recognised as other income.
(d) Income from hotel and mall operations
Income from the hotel operations, which include provision of rooms, food and
beverage, other departments sales and laundry service fees are recognised when
services are rendered. Income from hotel operations is recognised as other
income.
Income from mall operations 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 the total rental income, over the term of the lease.
Where a rent-free period is included in a lease, the rental income foregone is
allocated evenly over the period from the date the lease commencement to the
earliest termination date. Income from mall operations is recognised as
other income.
(e) Interest income
Interest income is recognised as it accrues using the effective interest
method in profit or loss except for interest income arising from temporary
investment of borrowings taken specifically for the purpose of obtaining a
qualifying asset which is accounted for in accordance with the accounting
policy on borrowing costs.
3.4 Property, Plant and Equipment
All property, plant and equipment are stated at cost less depreciation unless
otherwise stated. Cost includes all relevant external expenditure incurred
in acquiring the asset.
The estimates for the residual values, useful lives and related depreciation
charges for the property and equipment are based on commercial factors which
could change significantly as a result of technical innovations and
competitors' actions in response to the market conditions. The Group
anticipates that the residual values of its property and equipment will be
insignificant. As a result, residual values are not being taken into
consideration for the computation of the depreciable amount. Changes in the
expected level of usage and technological development could impact the
economic useful lives and the residual values of these assets, therefore
future depreciation charges could be revised. The carrying amount of
property and equipment as at the reporting date is disclosed in Note 16 to the
financial statements.
The cost of property, plant and equipment recognised as a result of a business
combination is based on fair value at acquisition date. The fair value of
property is the estimates amount for which a property could be exchanged
between knowledgeable willing parties in an arm's length transaction after
proper marketing wherein the parties had each acted knowledgeably, prudently
and without compulsion. The fair value of other items of plant and equipment
is based on the quoted market prices for similar items when available and
replacement cost when appropriate.
Depreciation of property, plant and equipment is calculated using the
straight-line method to allocate cost to their residual values over their
estimated useful lives, as follows:
• Furniture, Fittings & Equipment 4 - 33⅓%
• Motor Vehicles
20%
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable
amount if the asset's
carrying amount is greater than its estimated recoverable amount as described
in Note 3.10(b).
The gain or loss on disposal of an item of property, plant and equipment is
determined by comparing the proceeds from disposal with the carrying amount of
property, plant and equipment and is recognised net within "other income" and
"other operating expenses" respectively in profit or loss.
3.5 Income Tax
Income tax expense comprises current tax 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 on the taxable income for the year,
using tax rates enacted or substantively enacted by the end of the reporting
period, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the liability method, providing for temporary
differences between the carrying amounts of assets and liabilities in the
statement of financial position and their tax bases. Deferred tax is not
recognised for the following temporary differences: the initial recognition of
goodwill, and 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. Deferred tax is measured at the tax
rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by
the end of the reporting period.
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 to the extent that it is probable that
future taxable profits will be available against which the temporary
difference can be utilised. Deferred tax assets are reviewed at the end of
each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
3.6 Financial Instruments
(a) 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.
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.
(i) Loans and receivables
Loans and receivables are held with an objective to collect contractual cash
flows which are solely payments of principal and interest on the principal
amount outstanding. 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 cash and cash equivalents and other receivables.
Trade receivables are recognised initially at the transaction price and
subsequently measured at amortised cost, less any impairment losses.
(b) Non-derivative financial liabilities
All 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 the 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 other financial
liability 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 loans and borrowings, bank overdrafts,
and trade and other payables.
Accounting for interest income and finance cost are discussed in Notes 3.3(e)
and 3.12 respectively.
(c) De-recognition
A financial asset or part of it is derecognised when, and only when, the
contractual rights to the cash flows from the financial asset expire or the
financial asset is transferred to another party without retaining control or
substantially all risks and rewards of the asset. On de-recognition of a
financial asset, the difference between the carrying amount and the sum of the
consideration received (including any new asset obtained less any new
liability assumed) and any cumulative gain or loss that had been recognised in
equity is recognised in profit or loss.
A financial liability or a part of it is derecognised when, and only when, the
obligation specified in the contract is discharged or cancelled or expire.
On de-recognition of a financial liability, the difference between the
carrying amount of the financial liability extinguished or transferred to
another party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss.
3.7 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and at bank, deposits held at
call and short term highly liquid investments that are subject to an
insignificant risk of changes in value and are used by the Group in the
management of their short term commitments. Bank overdrafts are included
within borrowings in the current liabilities section on the statement of
financial position. For the purpose of the statement of cash flows, cash and
cash equivalents are presented net of bank overdrafts and pledged deposits.
3.8 Intangible Assets
Intangible assets comprise licence contracts and related relationships and
goodwill.
(a) Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in
intangible assets. For the measurement of goodwill at initial recognition,
refer to Note 3.1(a). Goodwill is tested for impairment when there is an
indicator of impairment. The Group assesses the recoverable amount of
goodwill by reference to the realisability of the properties of which the
goodwill is attached to (refer to Note 17).
Where it is not possible to estimate the recoverable amount of an intangible
asset, the impairment test is carried out on the smallest Group of assets to
which it belongs for which there are separately identifiable cash flows; its
Cash Generating Units ('CGUs'). Goodwill is allocated on initial recognition
to each of the Group's CGUs that are expected to benefit from a business
combination that gives rise to the goodwill. Impairment charges would be
included in profit or loss, except to the extent they reverse gains previously
recognised in other comprehensive income. An impairment loss recognised for
goodwill is not reversed.
The carrying values of assets, other than those to which IAS 36-Impairment of
Assets does not apply, are reviewed at the end of each reporting period for
impairment when an annual impairment assessment is compulsory or there is an
indication that the assets might be impaired. Impairment is measured by
comparing the carrying values of the assets with their recoverable amounts.
When the carrying amount of an asset exceeds its recoverable amount, the asset
is written down to its recoverable amount and an impairment loss shall be
recognised. The recoverable amount of an asset is the higher of the asset's
fair value less costs to sell and its value in use, which is measured by
reference to discounted future cash flows using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the asset. Where it is not possible to estimate the recoverable
amount of an individual asset, the Group determines the recoverable amount of
the cash-generating unit to which the asset belongs.
An impairment loss is recognised in profit or loss immediately unless the
asset is carried at its revalued amount. Any impairment loss of a revalued
asset is treated as a revaluation decrease to the extent of a previously
recognised revaluation surplus for the same asset. Any impairment loss
recognised in respect of a cash-generating unit is allocated first to reduce
the carrying amounts of the other assets in the cash-generating unit on a pro
rata basis.
3.9 Inventories
Inventories comprise land held for property development, work-in-progress and
stock of completed units.
Inventories are stated at the lower of cost and net realisable value. Net
realisable value represents the estimated net selling price in the ordinary
course of business, less estimated total costs of completion and the estimated
costs necessary to make the sale (refer to Note 2.3(b)).
Land held for property development consists of reclaimed land, freehold land,
leasehold land and land use rights on which development work has not been
commenced along with related costs on activities that are necessary to prepare
the land for its intended use. Land held for property development is
transferred to work-in-progress when development activities have commenced.
Work-in-progress comprises all costs directly attributable to property
development activities or that can be allocated on a reasonable basis to these
activities.
Upon completion of development, unsold completed development properties are
transferred to stock of completed units.
3.10 Impairment
(a) Loans and receivables
The Group considers evidence of impairment for loans and receivables at a
specific asset level. All individually significant receivables are assessed
for specific impairment.
An impairment loss in respect of loans and receivables is recognised in profit
or loss and is measured as the difference between the asset's carrying amount
and the present value of estimated future cash flows (excluding future credit
losses that had not been incurred) discounted at the asset's original
effective interest rate. The carrying amount of the asset is reduced and the
loss is recognised in the statement of comprehensive income within
administrative expenses.
When a subsequent event (e.g. repayment by a debtor) causes the amount of
impairment loss to decrease, the decrease in impairment loss is reversed
through profit or loss. The impairment loss is reversed, to the extent that
the debtor's carrying amount does not exceed what the carrying amount would
have been had the impairment not been recognised at the date the impairment is
reversed.
(b) Non-financial assets
The carrying amounts of non-financial assets (except for inventories and
deferred tax asset) are reviewed at the end of each reporting date to
determine whether there is any indication of impairment.
If any such indication exists, then the asset's recoverable amount is
estimated. For the purpose of impairment testing, assets 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 groups of assets (the "cash-generating unit"). The goodwill
acquired in a business combination, for the purpose of impairment testing, is
allocated to cash-generating units that are expected to benefit from the
synergies of the combination. Goodwill is tested for impairment on an annual
basis.
The recoverable amount of an asset or cash-generating unit 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.
An impairment loss is recognised if the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses
recognised in respect of cash-generating units are allocated first to reduce
the carrying amount of any goodwill allocated to the units and then to reduce
the carrying amount of the other assets in the unit (groups of units) on a pro
rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets,
impairment losses recognised in prior periods are assessed at the end of each
reporting period 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 since the last impairment
loss was recognised. 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. Reversals of impairment losses are credited to
profit or loss in the year in which the reversals are recognised.
(c) Equity instruments
Instruments classified as equity are measured at cost on initial recognition
and are not re-measured subsequently.
(i) Ordinary shares
Ordinary shares are redeemable only at the Company's options and are
classified as equity. Distributions thereon are recognised as distributions
within equity.
(ii) Management shares
Management shares are classified as equity and are non-redeemable.
3.11 Employee Benefits
(a) Short-term employee benefits
Short-term employee benefit obligations in respect of salaries, annual
bonuses, paid annual leave and sick leave 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.
(b) State plans
Certain companies in the Group maintain a defined contribution plan in
Malaysia and Vietnam for providing employee benefits, which is required by
laws in Malaysia and Vietnam respectively. The retirement benefit plan is
funded by contributions from both the employees and the companies to the
employees' provident fund. The Group's contributions to employees' provident
fund are charged to profit or loss in the year to which they relate.
3.12 Finance Costs
Finance costs directly attributable to the acquisition, construction or
production of qualifying assets, are capitalised to the cost of those
assets. Investment income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying assets is deducted from the
borrowing costs eligible for capitalisation.
Any unsold unit is not a qualifying asset because the asset is ready for its
intended sale in its current condition. The unsold unit fails to meet the
definition of qualifying asset under IAS 23 and accordingly, no capitalisation
of borrowing costs.
All sold units are not a qualifying asset to the developer as the control of
the asset has been transferred to customers over time. No capitalisation
borrowing costs relating to assets that it no longer controls and recognises.
All other finance costs are recognised in profit or loss in the period in
which they are incurred using the effective interest method.
3.13 Commitments and Contingencies
Commitments and contingent liabilities are disclosed in the financial
statements and described in Note 33. They are disclosed unless the
possibility of an outflow of resources embodying economic benefits is
remote. A contingent asset is not recognised in the financial statements but
disclosed when an inflow of economic benefits is probable.
3.14 Segment Reporting
Segmental information represents the level at which financial information is
reported to the Board of Directors, being the chief operating decision makers
as defined in IFRS 8. The Directors determine the operating segments based
on reports prepared by their staff for strategic decision making and resource
allocation. For management purposes, the Group is organised into project
units as operation segments set out in Note 5.2.
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Group's
other components
Segment capital expenditure is the total cost incurred during the year to
acquire property, plant and equipment, and intangible assets other than
goodwill.
3.15 Right-of-use assets and lease liabilities
A right-of-use asset and a lease liability are recognized at the commencement
date of a lease. The right-of-use asset is initially measured at cost
comprising the initial amount of the lease liability plus payments made before
the lease commenced and any direct costs less any incentives received. The
right-of-use asset is subsequently depreciated using the straight-line method
from the commencement of the lease to the earlier of the end of the lease term
or the end of the useful life of the asset. The right-of-use asset is also
reduced for impairment losses, if any, and adjusted for certain
re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease
payments at the commencement date discounted using the Group's incremental
borrowing rate of between 1% and 6%, and is subsequently measured at amortised
cost using the effective interest method. The lease liability is re-measured
when there is a change in the future lease payments, and a corresponding
adjustment is made to the right-of-use asset.
The Group has elected not to recognise right-of-use assets and lease
liabilities for short term leases of plant and machinery that have a lease
term of 12 months or less and leases of low value including leases of office
equipment. The lease payments associated with these leases are recognised as
an expense on a straight-line basis over the lease term.
3.16 Asset held for sale and discontinued operation
(a) Asset held for sale
An asset (or disposal group) is classified as held for sale if it is highly
probable that its carrying amount will be recovered through a sale transaction
rather than through continuing use and the asset (or disposal group) is
available for sale in its present condition. A disposal group is a group of
assets to be disposed of together as a group in a single transaction, and
liabilities directly associated with those assets that will be transferred in
the transaction.
When the Group is committed to a sale plan involving loss of control of a
subsidiary, all the assets and liabilities of that subsidiary are classified
as held for sale when the above criteria for classification as held for sale
are met, regardless of whether the group will retain a non-controlling
interest in the subsidiary after the sale.
Immediately before classification as held for sale, the measurement of the
assets (and all individual assets and liabilities in a disposal group) is
brought up-to-date in accordance with the accounting policies before the
classification. Then, on initial classification as held for sale and until
disposal, the noncurrent assets (except for certain assets as explained
below), or disposal groups, are recognised at the lower of their carrying
amount and fair value less costs to sell. The principal exceptions to this
measurement policy so far as the financial statements of the Group and the
Company are concerned are deferred tax assets, assets arising from employee
benefits, financial assets (other than investments in subsidiaries, associates
and joint ventures) and investment properties. These assets, even if held for
sale, would continue to be measured in accordance with the policies set out
elsewhere in Note 3.
Impairment losses on initial classification as held for sale, and on
subsequent remeasurement while held for sale, are recognised in profit or
loss. As long as a current asset is classified as held for sale, or is
included in a disposal group that is classified as held for sale, the asset is
not depreciated or amortised.
An asset held for sale (or disposal group) is derecognized from the date that
control ceases.
(b) Discontinued operation
A discontinued operation is a component of the Group's business, the
operations and cash flows of which can be clearly distinguished from the rest
of the Group and which represents a separate major line of business or
geographical area of operations, or is part of a single co-ordinated plan to
dispose of a separate major line of business or geographical area of
operations, or is a subsidiary acquired exclusively with a view to
resale.
Classification as a discontinued operation occurs upon disposal or when the
operation meets the criteria to be classified as held for sale (see (i)
above), if earlier. It also occurs if the operation is abandoned.
Where an operation is classified as discontinued, a single amount is presented
on the face of the statement of profit or loss, which comprises:
- the post-tax profit or loss of the discontinued operation; and
- the post-tax gain or loss recognised on the measurement to fair
value less costs to sell, or on the disposal of the assets, or disposal
group(s) constituting the discontinued operation.
4 FINANCIAL INSTRUMENTS
The Group's principal financial instruments comprise cash and cash
equivalents, trade and other receivables, trade and other payable, amount due
to non-controlling interest, medium term notes, loan and borrowings. The
Group's accounting policies and method adopted, including the criteria for
recognition, the basis on which income and expenses are recognised in respect
of each class of financial assets, financial liability and equity instrument
are set out in Note 3.6.
4.1 Financial Risk Management Objectives and Policies
The Group's operations and debt financing arrangements expose it to a variety
of financial risks: credit risk, liquidity risk and price risk (including
foreign exchange risk, and interest rate risk). The Group's financial risk
management policies and their implementation on a group-wide basis are under
the direction of the Board of Aseana Properties Limited.
The Group's treasury policies are formulated to manage the financial impact of
fluctuations in interest rates and foreign exchange rates to minimise the
Group's financial risks. The Group has not used derivative financial
instruments, principally interest rate swaps and forward foreign exchange
contracts for hedging transactions. The Group does not envisage using these
derivative hedging instruments in the short term as it is the Group's policy
to borrow in the currency to match the revenue stream to give it a natural
hedge against foreign currency fluctuation. The derivative financial
instruments will only be used under the strict direction of the Board. It is
also the Group's policy not to enter into derivative transactions for
speculative purposes.
4.2 Credit Risk
The Group's credit risk is primarily attributable to deposits with banks and
credit exposures to customers. The Group has credit policies in place and
the exposures to these credit risks are monitored on an ongoing basis. The
Group manages its deposits with banks and financial institutions by monitoring
credit ratings and limiting the aggregate risk to any individual
counterparty. At 31 December 2022, 100% (2021: 100%) of deposits and cash
balances were placed at banks and financial institutions with credit ratings
of no less than A (Moody's Rating Agency Malaysia). Management does not
expect any counterparty to fail to meet its obligations.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade receivables
and contract assets.
To measure the expected credit losses, trade receivables and contract assets
have been grouped based on shared credit risk characteristics and the days
past due. The contract assets relate to unbilled work in progress and have
substantially the same risk characteristics as the trade receivables for the
same types of contracts. The Group has therefore concluded that the expected
loss rates for trade receivables are a reasonable approximation of the loss
rates for the contract assets.
In respect of credit exposures to customers, the Group receives progress
payments from sales of commercial and residential properties to individual
customers prior to the completion of transactions. In the event of default
by customers, the Group companies undertake legal proceedings to recover the
properties. The Group has limited its credit exposure to customers due to
secured bank loans taken by the purchasers. At 31 December 2022, there was
no significant concentration of credit risk within the Group.
The Group's exposure to credit risk arising from total debtors was set out in
Note 21 and totals US$11.3 million (2021: US$13.5 million). The Group's
exposure to credit risk arising from deposits and balances with banks is set
out in Note 22 and totals US$7.3 million (2021: US$7.1 million).
Financial guarantees
The Company provides unsecured financial guarantee to banks in respect of
banking facilities granted to certain subsidiaries, as set out in Note 30.
At the end of the reporting period, the maximum exposure to credit risk as
represented by the outstanding banking and credit facilities of the
subsidiaries is as follows:
2022 2021
Company US$'000 US$'000
Financial institutions for bank facilities granted to its subsidiaries 32,859 43,998
At the end of the reporting period there was no indication that any subsidiary
would default on repayment.
4.3 Liquidity Risk
The Group raises funds as required on the basis of budgeted expenditure and
inflows for the next twelve months with the objective of ensuring adequate
funds to meet commitments associated with its financial liabilities. When
funds are sought, the Group balances the costs and benefits of equity and debt
financing against the developments to be undertaken. At 31 December 2022 the
Group's borrowings to fund the developments had terms of less than ten years.
Cash flows are monitored on an on-going basis. The Group manages its
liquidity needs by monitoring scheduled debt servicing payments for long term
and short term financial liabilities as well as cash out flows due in its
day-to-day operations while ensuring sufficient headroom on its undrawn
committed borrowing facilities at all times so that borrowing limits and
covenants are not breached. Capital investments are committed only after
confirming the source of funds, e.g. securing financial liabilities.
Management is of the opinion that most of the bank borrowings can be renewed
or re-financed based on the strength of the Group's earnings, cash flow and
asset base.
It is not expected that the cash flows included in the maturity analysis could
occur significantly earlier, or at a significantly different amount.
The maturity profile of the Group's financial liabilities at the statement of
financial position date, based on the contracted undiscounted payments, were
as follows:
Carrying amount Contractual interest rate Contractual cash flows Under 1 - 2 years 2 - 5 years More than
1 year
5 years
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 31 December 2022
Finance lease liabilities - - - - - - -
Interest bearing loans and borrowings 32,859 5.5%-12.0% 34,417 34,417 - - -
Trade and other payables 18,089 - 18,089 18,089 - - -
Amount due to non-controlling interests 1,981 - 1,981 1,981 - - -
52,929 - 54,487 54,487 - - -
At 31 December 2021 (restated *)
Finance lease liabilities 14 2.50%-3.50% 14 14 - - -
Interest bearing loans and borrowings 43,998 4.5%-12.0% 46,122 46,122 - - -
Trade and other payables (restated *) 17,050 - 17,050 17,050 - - -
Amount due to non-controlling interests 1,952 - 1,952 1,952 - - -
63,014 - 65,138 65,138 - - -
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
The above table excludes current tax liabilities and contract liabilities.
4.4 Market Risk
(a) Foreign Exchange Risk
Entities within the Group are exposed to foreign exchange risk from future
commercial transactions and net monetary assets and liabilities that are
denominated in a currency that is not the entity's functional currency. The
foreign currency exposure is not hedged.
The Group maintains a natural hedge, whenever possible, by borrowing in the
currency of the country in which the property or investment is located or by
borrowing in currencies that match the future revenue stream to be generated
from its investments.
Management monitors the foreign currency exposure closely and takes necessary
actions in consultation with the bankers to avoid unfavourable exposure.
The Group is exposed to foreign currency risk on cash and cash equivalents
which are denominated in currencies other than the functional currencies of
the relevant Group entities.
The Group's exposure to foreign currency risk on cash and cash equivalents in
currencies other than the functional currencies of the relevant Group entities
at year end are as follows:
2022 2021
US$'000 US$'000
US Dollar 3,018 2,870
Ringgit Malaysia 4,241 4,244
Others - -
7,259 7,114
At 31 December 2022, if cash and cash equivalents denominated in a currency
other than the functional currencies of the Group entities strengthened/
(weakened) by 10% and all other variables were held constant, the effects on
the Group's profit or loss and equity expressed in US$ would have been
US$424,000/ (US$424,000) (2021: US$424,400/ (US$424,400)).
Currency risks as defined by IFRS 7 arise on account of monetary assets and
liabilities being denominated in a currency that is not the functional
currency. Differences resulting from the translation of financial statements
into the Group's presentation currency are not taken into consideration.
Subsequent to year end, there are no significant monetary balances held by
group companies that are denominated in a non-functional currency.
(b) Interest Rate Risk
The Group's policy is to minimise interest rate risk on bank loans and
borrowings using a mix of fixed and variable rate debts that represent market
rates. The Group prefers to maintain flexibility on the desired mix of fixed
and variable interest rates as this will depend on the economic environment,
the type of borrowings available and the funding requirements of the project
when a decision is to be made.
The interest rate profile of the Group's significant interest-bearing
financial instrument, based on carrying amounts at the end of the reporting
period was:
2022 2021
US$'000 US$'000
Fixed rate instruments:
Financial assets 2,473 2,470
Financial liabilities 32,859 44,012
Floating rate instruments:
Financial liabilities - -
The Group's exposure to the risk of changes in market interest rates relates
primarily to the Group's liabilities with a floating interest rate. The
fixed and floating interest rates were not hedged and would therefore expose
the Group to cash flow interest rate risk. Borrowings at fixed rate
represent 100% (2021: 100%) of the Group's total borrowings at 31 December
2022.
Interest rate risk is reported internally to key management personnel via a
sensitivity analysis, which is prepared based on the exposure to variable
interest rates for non-derivative instruments at the statement of financial
position date. For variable rate borrowings, the analysis is prepared
assuming that the amount of liabilities outstanding at the statement of
financial position date will be outstanding for the whole year. A 100 basis
point increase or decrease is used and represents the management's assessment
of the reasonable possible change in interest rate.
Sensitivity analysis for floating rate instrument
At 31 December 2022, if the interest rate had been 100 basis point lower/
higher and all other variables were held constant, this would
(decrease)/increase the Group loss for the year by approximately (US$ Nil)/US$
Nil (2021: would (decrease)/ increase the Group loss for the year by
approximately (US$ Nil)/US$ Nil.
4.5 Fair Values
The carrying amount of trade and other receivables, deposits, cash and cash
equivalents, trade and other payables and accruals of the Group approximate
their fair values in the current and prior years due to relatively short term
nature of these financial instruments.
The table below analyses financial instruments carried at fair value and those
not carried at fair value, along with their carrying amounts shown in the
statement of financial position:
2022 Fair value of financial instruments carried at fair value Fair value of financial instruments Total Carrying
not carried at fair value
fair
US$'000 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total value amount
Financial liabilities
Amount due to non-controlling interests - - - - - - (1,981) (1,981) (1,981) (1,981)
Bank loans and borrowings - - - - - - (1,595) (1,595) (1,595) (1,595)
Finance lease liabilities - - - - - - - - - -
Medium term notes - - - - - - (31,264) (31,264) (31,264) (31,264)
- - - - - - (34,840) (34,840) (34,840) (34,840)
2021 Fair value of financial instruments carried at fair value Fair value of financial instruments Total Carrying
not carried at fair value
fair
US$'000 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total value amount
Financial liabilities
Amount due to non-controlling interests - - - - - - (1,952) (1,952) (1,952) (1,952)
Bank loans and borrowings - - - - - - (1,681) (1,681) (1,681) (1,681)
Finance lease liabilities - - - - - - (14) (14) (14) (14)
Medium term notes - - - - - - (42,317) (42,317) (42,317) (42,317)
- - - - - - (45,964) (45,964) (45,964) (45,964)
Policy on transfer between levels
The fair value on an asset to be transferred between levels is determined as
of the date of the event or change in circumstances that caused the transfer.
Level 1 fair value
Level 1 fair value is derived from quoted price (unadjusted) in an active
market for identical financial assets or liabilities that the entity can
access at the measurement date.
Level 2 fair value
Level 2 fair value is estimated using inputs other than quoted prices included
within Level 1 that are observable for the financial assets or liabilities,
either directly or indirectly.
Level 3 fair value
Level 3 fair value is estimated using unobservable inputs for the financial
assets and liabilities.
Transfers between Level 1 and Level 2 fair values
There has been no transfer between Level 1 and 2 fair values during the
financial year (2021: no transfer in either direction).
Transfers between Level 2 and Level 3 fair values
There has been no transfer in either direction during the financial year
(2021: no transfer in either direction).
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based
on the present value of future principal and interest cash flows, discounted
at the market rate of interest at the end of the reporting period. At 31
December 2022, the interest rate used to discount estimated cash flows of the
medium term notes is 7.48% (2021: 7.00%).
4.6 Capital Management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns to
shareholders and benefits to other stakeholders and to maintain an optimal
capital structure to reduce cost of capital.
The capital structure of the Group consisted of cash and cash equivalents,
loans and borrowings, medium term notes and equity attributable to equity
holders of the parent, comprising issued share capital and reserves, were as
follows:
2022 2021
(Restated *)
US$'000 US$'000
Cash and cash equivalents 7,259 7,114
Loans and borrowings and finance lease liabilities (1,595) (1,695)
Medium term notes (31,264) (42,317)
Equity attributable to equity holders of the parent (73,208) (91,659)
Total capital (98,808) (128,557)
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debts.
Consistent with others in the industry, the Group monitors capital on the
basis of net debt-to-equity ratio.
Net debt-to-equity ratio is calculated as a total of interest-bearing
borrowings less held-for-trading financial instrument and cash and cash
equivalents to the total equity.
The net debt-to-equity ratios at 31 December 2022 and 31 December 2021 were as
follows:
2022 2021
US$'000 US$'000
Total borrowings and finance lease liabilities 32,859 44,012
Less: Cash and cash equivalents (Note 22) (7,259) (7,114)
Net debt 25,600 36,898
Total equity 67,804 89,013
Net debt-to-equity ratio 0.38 0.41
5 REVENUE AND SEGMENTAL INFORMATION
The Group's operating revenue for the year was mainly attributable to the sale
of completed units in Malaysia.
Income earned from hotel, mall and hospital operations are included in other
income in line with management's intention to dispose of the properties.
5.1 Revenue recognised during the year as follows:
2022 2021
US$'000 US$'000
Sale of completed units 980 595
980 595
5.2 Segmental Information
2022 2021
Timing of revenue recognition US$'000 US$'000
Properties transferred at a point in time 980 595
Properties transferred over time - -
980 595
Segmental information represents the level at which financial information is
reported to the Board of Directors, being the chief operating decision makers
as defined in IFRS 8. The Directors determine the operating segments based
on reports reviewed and used by their staff for strategic decision making and
resource allocation. For management purposes, the Group is organised into
project units.
The Group's reportable operating segments are as follows:
(i) Investment Holding Companies - investing activities;
(ii) Ireka Land Sdn. Bhd. - developed Tiffani ("Tiffani") by
i-ZEN;
(iii) ICSD Ventures Sdn. Bhd. - owns and operates Harbour Mall
Sandakan ("HMS") and the Sandakan hotel asset (formerly Four Points by
Sheraton Sandakan Hotel) ("SHA");
(iv) Amatir Resources Sdn. Bhd. - developed SENI Mont' Kiara
("SENI"); and
(v) Urban DNA Sdn. Bhd.- developed The RuMa Hotel and Residences
("The RuMa").
Other non-reportable segments comprise the Group's development projects.
None of these segments meets any of the quantitative thresholds for
determining reportable segments in 2022 and 2021.
Information regarding the operations of each reportable segment is in Note
5.3. The Directors monitor the operating results of each segment for the
purpose of performance assessments and making decisions on resource
allocation. Performance is based on segment gross profit/(loss) and
profit/(loss) before taxation, which the Executive Management believes are the
most relevant in evaluating the results relative to other entities in the
industry. Segment assets and liabilities are presented inclusive of
inter-segment balances and inter-segment pricing is determined on an arm's
length basis.
The Group's revenue generating development projects are in Malaysia.
5.3 Analysis of the Group's reportable operating segments is as follows:
Operating Segments - year ended 31 December 2022
Continuing operations
Investment Holding Companies Ireka Land Sdn. Bhd. ICSD Ventures Sdn. Bhd. Amatir Resources Sdn. Bhd. The RuMa Hotel KL Sdn. Bhd. Urban Total continuing operations Discontinued Operations Total
DNA
Sdn. Bhd.
US$'000 US$'000 US$'000 US$'000 US$'000 S$'000 US$'000 US$'000 US$'000
Segment (loss)/profit before taxation 826 (5) (9,061) (1,789) (1,792) (4,898) (16,719) - (16,719)
Included in the measure of segment (loss)/profit are:
Revenue - - - - - 980 980 - 980
Other income from hotel operations - - - - 8,169 - 8,169 - 8,169
Other income from mall operations - - 2,098 - - - 2,098 - 2,098
Other income from hospital operations - - - - - - - - -
Expenses from hotel operations - - (310) - (9,859) - (10,169) - (10,169)
Expenses from mall operations - - (1,251) - - - (1,251) - (1,251)
Expenses from hospital operations - - - - - - - - -
Depreciation of property, plant and equipment - - (10) - (50) - (60) - (60)
Finance costs - - (1,172) (192) - (1,933) (3,297) - (3,297)
Finance income 1,462 - 47 413 - 1 1,923 - 1,923
Segment assets 9,331 60 46,882 704 965 89,571 147,513 - 147,513
Segment liabilities 459 3 1,294 2,511 6,758 45,205 56,230 - 56,230
Reconciliation of reportable segment revenues, profit or loss, assets and
liabilities and other material items
Profit or loss US$'000
Total loss for reportable segments (16,719)
Other non-reportable segments (856)
Depreciation 1
Finance income (47)
Finance costs 47
Consolidated loss before taxation (17,574)
US$'000 Revenue Depreciation Finance costs Finance income Segment Segment liabilities Additions to non-current assets
assets
Total reportable segment 980 (60) (3,297) 1,923 147,513 56,230 39
Other non-reportable segments - 1 (47) 47 9,660 33,139 -
Consolidated total 980 (59) (3,344) 1,970 157,173 89,369 39
Operating Segments - year ended 31 December 2021 (restated *)
Continuing operations
Investment Holding Companies Ireka Land Sdn. Bhd. ICSD Ventures Sdn. Bhd. Amatir Resources Sdn. Bhd. The RuMa Hotel KL Sdn. Bhd. Urban Total continuing operations Discontinued operations Total
DNA
Sdn. Bhd.
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Segment (loss)/profit before taxation (1.854)* (2) (580) 360 (3,825)* (2,030) (7,931)* (3,087) (11,017)*
Included in the measure of segment (loss)/profit are:
Revenue - - - - - 595 595 - 595
Other income from hotel operations - - - - 2,679 - 2,679 - 2,679
Other income from mall operations - - 2,007 - - - 2,007 - 2,007
Other income from hospital operations - - - - - - - 12,768 12,768
Expenses from hotel operations - - (255) - (4,042) - (4,297) - (4,297)
Expenses from mall operations - - (1,072) - - - (1,072) - (1,072)
Expenses from hospital operations - - - - - - - (11,144) (11,144))
Depreciation of property, plant and equipment - - (43) - (164) - (207) - (207)
Finance costs (172) - (1,290) (203) (2) (1,909) (3,576) (5,358) (8,934)
Finance income 1,259* - 45 600 - 20 1,924* 335 2,259*
Segment assets 8,096* 78 58,322 3,212 703 95,243 165,654* 100,812 266,466*
Segment liabilities 3,659 3 1,589 2,785 5,050* 44,246 57,332* 86,347 143,679*
Reconciliation of reportable segment revenues, profit or loss, assets and
liabilities and other material items
Profit or loss US$'000
Total loss for reportable segments (restated *) (7,931)*
Other non-reportable segments 2,157
Depreciation -
Finance income (45)
Finance costs 45
Consolidated loss before taxation (restated *) (5,774)*
US$'000 Revenue Depreciation Finance costs Finance income Segment Segment liabilities Additions to non-current assets
assets
Total reportable segment (restated *) 595 (207) (3,576) 1,924* 165,654* 57,332* 42
Other non-reportable segments - 109 (45) 45 24,712 44,021 -
Consolidated total (restated *) 595 (98) (3,621) 1,969* 190,366* 101,353* 42
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
Geographical Information - year ended 31 December 2022
Continuing operations
Malaysia Total continuing operations Discontinued operation Total
US$'000 US$'000 US$'000 US$'000
Revenue 980 980 - 980
Non-current assets 5,380 5,380 - 5,380
In the financial year ended 31 December 2022, no single customer exceeded 10%
of the Group's total revenue.
Geographical Information - year ended 31 December 2021
Continuing operations
Malaysia Total continuing operations Discontinued operation Total
US$'000 US$'000 US$'000 US$'000
Revenue 595 595 - 595
Non-current assets 5,662 5,662 3,919 9,581
In the financial year ended 31 December 2021, no single customer exceeded 10%
of the Group's total revenue.
6 COST OF SALES
2022 2021
US$'000 US$'000
Direct costs attributable to:
Completed units (Note 20) 640 318
7 OTHER INCOME
2022 2021
US$'000 US$'000
Rental income 121 78
Other income from hotel operations (a) 8,169 2,679
Other income from mall operations (b) 2,098 2,007
Sundry income 583 913
10,971 5,677
(a) Other income from hotel operations
The income relates to the hotel operations of the Sandakan Hotel Asset which
is owned by a subsidiary of the Company, ICSD Ventures Sdn. Bhd. The income
earned from hotel operations is included in other income in line with
management's intention to dispose of the hotel.
(b) Other income from mall operations
The income relates to the operation of Harbour Mall Sandakan which is owned by
a subsidiary of the Company, ICSD Ventures Sdn. Bhd. The income earned from
mall operations is included in other income in line with management's
intention to dispose of the mall.
8 FOREIGN EXCHANGE GAIN/(LOSS)
2022 2021
US$'000 US$'000
Foreign exchange gain/(loss) comprises:
Realised foreign exchange loss (6) (1)
Unrealised foreign exchange gain/(loss) (1,689) 346
(1,695) 345
9 STAFF COSTS
2022 2021
US$'000 US$'000
Wages, salaries and others (including key management personnel) 5,259 2,817
Employees' provident fund, social security and other pension costs 46 40
5,305 2,857
The Company has no executive Directors or employees under its employment. As
of the year ended 31 December 2022, the subsidiaries of the Group have a total
of 235 (2021: 573) employees.
10 FINANCE INCOME/(COSTS)
2022 2021
(Restated *)
US$'000 US$'000
Interest income from banks 508 588
Accrued interest 1,462 1,381
Interest on bank loans (239) (841)
Lease interest - (2)
Interest on medium term notes (3,105) (2,778)
(1,374) (1,652)
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
Accrued interest represents interest on a contract payment by a subsidiary of
Ireka Corporation Berhad. For more detailed information see Note 31.
11 NET LOSS BEFORE TAXATION
Net loss before taxation is stated after charging/(crediting):
2022 2021
US$'000 US$'000
Auditor's remuneration 96 171
Directors' fees/emoluments 265 291
Depreciation of property, plant and equipment 58 54
Expenses of hotel operations 10,170 4,298
Expenses of mall operations 1,251 1,405
Unrealised foreign exchange loss/(gain) 1,689 (346)
Realised foreign exchange loss 6 1
Impairment of amount due from a related party 4,778 -
Impairment of inventory 8,620 -
Gain on sale of discontinued operations (2,702) -
12 TAXATION
2022 2021
US$'000 US$'000
Current tax expense - Current year 85 70
- Prior 217 119
year
Deferred tax charge - Current year - -
- Prior - (48)
year
Total tax expense/(income) for the year 302 141
The numerical reconciliation between the income tax (income)/expense and the
product of accounting results multiplied by the applicable tax rate is
computed as follows:
2022 2021
(Restated *)
US$'000 US$'000
Net loss before taxation (17,574) (5,774)
Income tax at a rate of 24% (2021: 24%) (4,218) (1,386)
Add:
Tax effect of expenses not deductible in determining taxable profit 2,379 1,666
Current year losses and other tax benefits for which no deferred tax asset was 3,670 1,312
recognised
Tax effect of different tax rates in subsidiaries - -
Less:
Tax effect of income not taxable in determining taxable profit (1,746) (1,522)
Under provision in respect of prior period/year 217 71
Total tax expense/(income) for the year 302 141
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
The applicable corporate tax rate in Malaysia is 24% (2021: 24%).
The Company is treated as a tax resident of Jersey for the purpose of Jersey
tax laws and is subject to a tax rate of 0% (2021: 0%).
A Goods and Services Tax was introduced in Jersey in May 2008. The Company
has been registered as an International Services Entity so it does not have to
charge or pay local GST. The cost for this registration is £200 per annum.
13 OTHER COMPREHENSIVE (LOSS)/INCOME
Items that are or may be reclassified subsequently to profit or loss, net of 2022 2021
tax
US$'000 US$'000
Foreign currency translation differences for foreign operations
Losses arising during the year (2,440) (3,584)
(2,440) (3,584)
14 LOSS PER SHARE
Basic and diluted loss per ordinary share
The calculation of basic and diluted loss per ordinary share for the year
ended 31 December 2022 was based on the loss attributable to equity holders of
the parent and ordinary shares outstanding and held by shareholders of the
Company, calculated as below:
2022 2021
(Restated *)
US$'000 US$'000
Loss attributable to equity holders of the parent
- continuing operations (15,867) (4,122)
- discontinued operations - (1,632)
(15,867) (5,754)
Number of shares (thousand shares) * 198,691 198,691
Loss per share
Basic and diluted (US cents)
- continuing operations (7.99) (2.08)
- discontinued operations - (0.82)
(7.99) (2.90)
* The Company currently holds 13,334,000 Treasury Shares which are deducted
from the total number of shares for the purpose of calculating loss per
share. For details of the Treasury Shares, please refer to the description
at Note 24.
The diluted loss per share was not applicable as there were no dilutive
potential ordinary shares outstanding at the end of the reporting period.
15 NON-CONTROLLING INTERESTS
Non-controlling interests in subsidiaries
The Group's subsidiaries that have material non-controlling interests ("NCI")
are as follows:
Urban DNA Sdn. Bhd. The RuMa Hotel KL Sdn. Bhd. Other individually immaterial subsidiaries Total
2022 US$'000 US$'000 US$'000 US$'000
NCI percentage of ownership interest and voting interest 30% 30%
Carrying amount of NCI (259) (5,180) 35 (5,404)
Loss allocated to NCI (1,536) (342) (6) (1,884)
Summarised financial information before intra-group elimination
Urban DNA Sdn. Bhd. The RuMa Hotel KL Sdn. Bhd.
US$'000 US$'000
As at 31 December 2022
Non-current assets 827 24
Current assets 84,833 941
Non-current liabilities (84,590) (11,518)
Current liabilities (3,957) (6,657)
Net assets (2,887) (17,210)
Year ended 31 December 2022
Revenue 980 -
Loss for the year (4,898) (1,792)
Total comprehensive loss (5,121) (1,142)
Cash flows used in operating activities (1,203) (63)
Cash flows from/(used in) investing activities - (9)
Cash flows (used in)/from financing activities 991 299
Net increase in cash (212) 227
and cash equivalents
Urban DNA Sdn. Bhd. The RuMa Hotel KL Sdn. Bhd. Other individually immaterial subsidiaries Total
2021 (Restated *) US$'000 US$'000 US$'000 US$'000
NCI percentage of ownership interest and voting interest 30% 30%
Carrying amount of NCI 1,277 (4,838) 915 (2,646)
Loss allocated to NCI (711) (1,020) (1,456) (3,248)
Summarised financial information before intra-group elimination
Urban DNA Sdn. Bhd. The RuMa Hotel KL Sdn. Bhd.
US$'000 US$'000
As at 31 December 2021 (restated *)
Non-current assets 522 68
Current assets 94,212 635
Non-current liabilities (84,570) (11,779)
Current liabilities (5,907) (5,049)
Net assets 4,257 (16,125)
Year ended 31 December 2021 (restated *)
Revenue 595 -
Loss for the year (2,149) (3,824)
Total comprehensive loss (2,371) (3,401)
Cash flows used in operating activities (532) (1,780)
Cash flows from/(used in) investing activities 1,702 (37)
Cash flows (used in)/from financing activities (1,107) 1,828
Net increase in cash and 63 11
cash equivalents
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
16 PROPERTY, PLANT AND EQUIPMENT
Furniture, Fittings & Equipment Motor Vehicles Total
US$'000 US$'000 US$'000
Cost
At 1 January 2022 272 29 301
Exchange adjustments (13) (1) (14)
Addition 39 - 39
At 31 December 2022 298 28 326
Accumulated Depreciation
At 1 January 2022 170 27 197
Exchange adjustments (8) (1) (9)
Charge for the year 59 - 59
At 31 December 2022 221 26 247
Net carrying amount at 77 2 79
31 December 2022
Cost
At 1 January 2021 239 30 269
Exchange adjustments (9) (1) (10)
Addition 42 - 42
At 31 December 2021 272 29 301
Accumulated Depreciation
At 1 January 2021 120 28 148
Exchange adjustments (4) (1) (5)
Charge for the year 54 - 54
At 31 December 2021 170 27 197
Net carrying amount at 102 2 104
31 December 2021
17 INTANGIBLE ASSETS
Goodwill
US$'000
Cost
At 1 January 2021 (re-presented)/ 31 December 2021/ 6,479
31 December 2022
Accumulated impairment
At 1 January 2021 (re-presented) 5,901
Disposals -
At 31 December 2021/ 5,901
1 January 2022
Disposals -
At 31 December 2022 5,901
Carrying amount
At 31 December 2021 578
At 31 December 2022 578
For the purpose of impairment testing, goodwill is allocated to the Group's
operating divisions which represent the lowest level within the Group at which
the goodwill is monitored for internal management purposes.
The aggregate carrying amounts of intangible assets allocated to each unit are
as follows:
2022 2021
US$'000 US$'000
Goodwill
SENI Mont' Kiara 28 28
Sandakan Harbour Square 550 550
578 578
The recoverable amount of goodwill has been tested by reference to underlying
profitability of the ongoing operations of the developments using discounted
cash flow projections (refer to Note 20).
18 RIGHT OF USE
Cost US$'000
At 1 January 2021 4,436
Exchange adjustments -
Disposal (12)
At 31 December 2021/ 1 January 2022 4,424
Exchange adjustments -
Disposal (3)
At 31 December 2022 4,421
Depreciation charges
At 1 January 2021 4,276
Charge for the year 157
Disposal (10)
At 31 December 2021/ 1 January 2022 4,423
Charge for the year 1
Disposal (3)
At 31 December 2022 4,421
NET BOOK VALUE
At 31 December 2021 1
At 31 December 2022 -
Lease liabilities include in the consolidated statement of financial position
2022 2021
US$'000 US$'000
Current - 14
Non-Current - -
Total - 14
Amount recognized in the consolidated income statement
2022 2021
US$'000 US$'000
Depreciation charges on right-of-use 1 157
Interest on lease liabilities - 2
Total 1 159
A decrease in depreciation charges of right-of-use assets and interest charges
of lease liabilities by US$156,000 and US$2,000 respectively, for the
financial year ended 31 December 2022.
19 DEFERRED TAX ASSETS
2022 2021
US$'000 US$'000
At 1 January 4,979 5,111
Exchange adjustments (256) (180)
Deferred tax credit relating to origination of - 48
temporary differences during the year
At 31 December 4,723 4,979
The deferred tax assets comprise:
2022 2021
US$'000 US$'000
Taxable temporary differences between accounting profit and taxable profit of 4,723 4,979
property development units sold
At 31 December 4,723 4,979
Deferred tax assets have not been recognised in respect of unused tax losses
of US$48 million (31 December 2021: US$42 million) which are available for
offset against future taxable profits. The unrecognised deferred tax asset
at effective tax rates of the Group would be approximately US$11.6 million (31
December 2021: US$10 million).
20 INVENTORIES
2022 2021
Notes US$'000 US$'000
Land held for property development (a) 6,288 6,628
Stock of completed units, at cost (b) 126,181 140,300
Consumables 104 120
At 31 December 132,573 147,048
2022 2021
Notes US$'000 US$'000
Carrying amount of inventories pledged as security for Loans and borrowings 119,956 124,660
and Medium Term Notes
(a) Land held for property development
2022 2021
US$'000 US$'000
At 1 January 6,628 6,871
Add:
Exchange adjustments (340) (243)
Additions - -
Disposals - -
At 31 December 6,288 6,628
Less:
Costs recognised as expenses in the consolidated statement of comprehensive - -
income during the year
At 31 December 6,288 6,628
(b) Stock of completed units, at cost
2022 2021
US$'000 US$'000
At 1 January 140,300 150,120
Transfer (to)/from work in progress 2,321 -
Less:
Exchange adjustments (7,180) (5,292)
Disposals - -
Impairment (8,620) -
Costs recognised as expenses in the consolidated statement of comprehensive (640) (4,528)
income during the year
At 31 December 126,181 140,300
The net realisable value of completed units have been tested by reference to
underlying profitability of the ongoing operations of the developments using
discounted cash flow projections and/or comparison method with the similar
properties within the local market which provides an approximation of the
estimated selling price that is expected to be achieved in the ordinary course
of business.
Included in the stock of completed units are SENI units as well as the
following completed units:
Sandakan hotel asset ("SHA") and Harbour Mall Sandakan ("HMS")
The aggregate recoverable amount of SHA and HMS was determined based on
indicative market transaction prices on an arm's length basis. The aggregate
recoverable amount of US$45,558,000 (RM200,000,000) (2021: US$57,142,000
(RM238,000,000)) for both assets was determined to approximate with their
carrying amount.
The RuMa Hotel and Residences ("The RuMa")
The recoverable amount of The RuMa was determined based on a valuation by an
external, independent valuer with appropriate recognised professional
qualification. The recoverable amount US$83,599,000 (RM367,000,000) (2021:
US$101,322,000 (RM422,000,000)) of The RuMa was determined to be higher than
its carrying amount.
The valuation of The RuMa Hotel was determined by discounting the future cash
flows expected to be generated from the continuing operations of The RuMa and
was based on the following key assumptions:
(1) Cash flows were projected based on the 10 years projection
of The RuMa Hotel;
(2) The occupancy rate of The RuMa Hotel will improve to 78% in
year 10 which is when the hotel's operations are expected to stabilise;
(3) Average daily rates of the hotel will improve to US$221.87
(RM974) in year 10 which is when the hotel's operations are expected to
stabilise;
(4) Projected gross margin reflects the industry average
historical gross margin, adjusted for projected market and economic conditions
and internal resources efficiency; and
(5) Pre-tax discount rate of 9% was applied in discounting the
cash flows. The discount rate takes into the prevailing trend of the hotel
industry in Malaysia.
The valuation of The RuMa Residences was determined based on the Comparison
Approach as the sole method of valuation.
21 TRADE AND OTHER RECEIVABLES
2022 2021
(Restated *)
US$'000 US$'000
Trade receivables 4,401 2,343
Other receivables 6,842 12,224
Sundry deposits 332 232
11,575 14,799
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
Trade receivables represent progress billings receivable from the sale of
completed units and land held for property development. Progress billings
receivable from the sale of completed units are generally due for settlement
within 30 days from the date of invoice and are recognised and carried at the
original invoice amount less allowance for any uncollectible amounts. They
are recognised at their original invoice amounts on initial recognition less
provision for impairment where it is required.
The loss allowance as at 31 December 2022 and 31 December 2021 was determined
as follows for both trade receivables and contract assets:
Trade receivable Contract asset Loss allowance Total
31 December 2022 US$'000 US$'000 US$'000 US$'000
Current 4,399 - - 4,399
Past due
0 - 60 days - - - -
61 -120 days - - - -
More than 120 days (2,035) - (2,033) 2
6,434 - (2,033) 4,401
Trade receivable Contract asset Loss allowance Total
31 December 2021 US$'000 US$'000 US$'000 US$'000
Current 248 - - 248
Past due
0 - 60 days - - - -
61 -120 days - - - -
More than 120 days 2,095 - - 2,095
2,343 - - 2,343
The Group uses the simplified approach to estimate credit loss allowance for
all trade receivables and contract assets, which will be based on the past
payment trends, existing market conditions and adjusts for qualitative and
quantitative reasonable and supportable forward-looking information. The
loss allowances are also based on assumptions about risk of default. The
quantum of any probability of an expected credit loss will occur to be low or
not material. No provision is recognised in these financial statements.
Included in trade receivables is US$ Nil representing 0% of the Group's trade
receivables which are due from a subsidiary of Ireka Corporation Berhad for
the acquisition of SENI units (31 December 2021: US$2,005,000, representing
86% of the Group's trade receivables, for the acquisition of SENI units and
expenses paid on behalf), the amount was fully impaired in 2022 (refer to Note
31).
Included in other receivables was an amount due from Ireka Corporation Berhad
in relation to the interest owed on the unpaid shareholder advances to the
construction of The RuMa Hotel and Residences, as described in Note 31.
The maximum exposure to credit risk is represented by the carrying amount in
the statement of financial position. The Group monitors the repayment of the
customers regularly and are confident of the ability of the customers to repay
the balance outstanding.
22 CASH AND CASH EQUIVALENTS
2022 2021
US$'000 US$'000
Cash and bank balances 4,786 4,644
Short term bank deposits 2,473 2,470
7,259 7,114
Less: Deposits pledged (2,473) (2,470)
Cash and cash equivalents 4,786 4,644
Included in short term bank deposits and cash and bank balance is US$2,473,000
(31 December 2021: US$2,470,000) pledged for loans and borrowings and Medium
Term Notes of the Group.
The interest rate on cash and cash equivalents, excluding deposit pledged with
licensed bank of US$2,473,000 (31 December 2021: US$2,470,000), pledged for
loans and borrowings and Medium Term Notes of the Group, ranges from 1.05% to
2.85% per annum (31 December 2021: 1.60% to 1.85% per annum).
The interest rate on short term bank deposits and cash and bank balance
pledged for loans and borrowings and Medium Term Notes of the Group, ranges
from 1.05% to 2.85% per annum (31 December 2021: 1.60% to 1.85% per annum).
23 SHARE CAPITAL
Number of shares Amount Number of shares Amount
2022
2022
2021
2021
'000 US$'000 '000 US$'000
Authorised Share Capital
Ordinary shares of US$0.05 each 2,000,000 100,000 2,000,000 100,000
Management shares of US$0.05 each - * - * - * - *
2,000,000 100,000 2,000,000 100,000
Issued Share Capital
Ordinary shares of US$0.05 each 212,025 10,601 212,025 10,601
Management shares of US$0.05 each - # - # - # - #
212,025 10,601 212,025 10,601
* represents 10 management shares at US$0.05 each
# represents 2 management shares at US$0.05 each
In 2015, the shareholders of the Company approved the creation and issuance of
management shares by the Company as well as a compulsory redemption mechanism
that was proposed by the Board.
The Company increased its authorised share capital from US$100,000,000 to
US$100,000,000.50 by the creation of 10 management shares of US$0.05 each for
cash.
The Company also increased its issued and paid-up share capital from
US$10,601,250 to US$10,601,250.10 by way of an allotment of 2 new management
shares of US$0.05 each at par via cash consideration.
In accordance with the compulsory redemption scheme, the Company's ordinary
shares were converted into redeemable ordinary shares.
The ordinary shares and the management shares shall have attached thereto the
rights and privileges, and shall be subject to the limitations and
restrictions, as are set out below:
(a) Distribution of dividend:
(i) The ordinary shares carry the right to receive all the
profits of the Company available for distribution by way of interim or final
dividend at such times as the Directors may determine from time to time; and
(ii) The management shares carry no right to receive dividends
out of any profits of the Company.
(b) Winding-up or return of capital:
(i) The holders of the management shares shall be paid an
amount equal to the paid-up capital on such management shares; and
(ii) Subsequent to the payment to holders of the management
shares, the holders of the ordinary shares shall be repaid the surplus assets
of the Company available for distribution.
(c) Voting rights:
(i) The holders of the ordinary shares and management shares
shall have the right to receive notice of and to attend and vote at general
meetings of the Company; and
(ii) Each holder of ordinary shares and management shares being
present in person or by a duly authorised representative (if a corporation) at
a meeting shall upon a show of hands have one vote and upon a poll each such
holder present in person or by proxy or by a duly authorised representative
(if a corporation) shall have one vote in respect of every full paid share
held by him.
24 SHARE PREMIUM
Share premium represents the excess of proceeds raised on the issuance of
shares over the nominal value of those shares. The costs incurred in issuing
shares were deducted from the share premium.
In 2017, the Shareholders of the Company at an Extraordinary General Meeting
approved a proposal to return US$10,000,500 or US$0.75 per share for
13,334,000 shares representing 6.29 per cent of the Company's share capital to
Shareholders. The capital distribution was completed on 10 January 2017 and
the repurchased shares of 13,334,000 are currently held as Treasury Shares.
The issued and paid up share capital of the Company remains unchanged at
212,025,002.
25 CAPITAL REDEMPTION RESERVE
The capital redemption reserve was incurred after the Company cancelled its
37,475,000 and 500,000 ordinary shares of US$0.05 per share in 2009 and 2013
respectively.
26 TRANSLATION RESERVE
The translation reserve comprises foreign currency differences arising from
the translation of the financial statements of foreign operations.
27 TRADE AND OTHER PAYABLES
2022 2021
(Restated *)
US$'000 US$'000
Non-current
Amount owed to contract buyers 36,440 38,339
36,440 38,339
Current
Trade payables 5,609 3,219
Other payables 3,944 10,763
Deposits refundable 778 705
Accruals 7,758 2,363
18,089 17,050
54,529 55,389
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
Trade payables represent trade purchases and services rendered by suppliers as
part of the normal business transactions of the Group. The credit terms
granted by trade suppliers range from 30 to 90 days.
Included in the other payable comprise of the accrued costs for the
development of the RuMa project amounted to US$0.7 million (31 December 2021:
US$1.0 million).
Contract liabilities represent proceeds received from purchasers of
development properties i.e. SENI and The RuMa Residences which are pending
transfer of vacant possession.
2022 2021
US$'000 US$'000
Revenue recognised in the period from:
Amounts included in contract liability at 980 596
the beginning of the period
Performance obligations satisfied in - -
previous period
Amount owed to contract buyer is of funding received, by way of non-refundable
deposits, in advance of completion of the hotel suites which are at 31
December 2022 still controlled by the Group.
Deposits and accruals are from normal business transactions of the Group.
28 AMOUNT DUE TO NON-CONTROLLING INTERESTS
2022 2021
US$'000 US$'000
Minority Shareholder of Bumiraya Impian Sdn. Bhd.:
- Global Evergroup Sdn. Bhd. 1,129 1,190
Minority Shareholder of Urban DNA Sdn. Bhd. and
The RuMa Hotel KL Sdn. Bhd.:
- Ireka Corporation Berhad 852 762
1,981 1,952
The current amount due to non-controlling interests amounting to US$1,981,000
(31 December 2021: US$1,952,000) is unsecured, interest free and repayable on
demand.
29 LOANS AND BORROWINGS
2022 2021
US$'000 US$'000
Current
Bank loans 1,595 1,681
Lease liabilities - 14
1,595 1,695
LEASE LIABILITIES
2022 2021
Future minimum lease payment US$,000 US$'000
Within one year - 14
Between one and five years - -
Over five years - -
- 14
The effective interest rates on the bank loans for the year is 12% (31
December 2021: 12%) per annum.
Borrowings are denominated in Ringgit Malaysia.
Bank loans are repayable annually.
Bank loans are secured by land held for property development,
work-in-progress, operating assets of the Group, pledged deposits and some are
secured by the corporate guarantee of the Company.
Reconciliation of movement of loan and borrowings to cash flows arising from
financing activities:
As at 1 January 2022 Drawdown of loan Repayment of loan Foreign exchange movements As at 31 December 2022
US$'000 US$'000 US$'000 US$'000 US$'000
Bank loans 1,681 - - (86) 1,595
Total 1,681 - - (86) 1,595
As at 1 January 2021 Drawdown of loan Repayment of loan Foreign exchange movements As at 31 December 2021
US$'000 US$'000 US$'000 US$'000 US$'000
Bank loans 1,742 - - (61) 1,681
Total 1,742 - - (61) 1,681
As at 1 January 2022 Repayment of lease payment Interest expense Foreign exchange movements As at 31 December 2022
US$'000 US$'000 US$'000 US$'000 US$'000
Lease liabilities 14 (13) - (1) -
Total 14 (13) - (1) -
As at 1 January 2021 Repayment of lease payment Interest expense Foreign exchange movements As at 31 December 2021
US$'000 US$'000 US$'000 US$'000 US$'000
Lease liabilities 181 (163) 3 (7) 14
Total 181 (163) 3 (7) 14
30 MEDIUM TERM NOTES
2022 2021
US$'000 US$'000
Outstanding medium term notes 31,264 42,317
Less:
Repayment due within twelve months (31,264) (42,317)
Repayment due after twelve months - -
Reconciliation of movement of medium term notes to cash flows arising from
financing activities:
As at 1 January 2022 Drawdown of loan Repayment of loan Foreign exchange movements As at 31 December 2022
US$'000 US$'000 US$'000 US$'000 US$'000
Medium Term Notes 42,316 - (8,884) (2,168) 31,264
As at 1 January 2021 Drawdown of loan Repayment of loan Foreign exchange movements As at 31 December 2021
US$'000 US$'000 US$'000 US$'000 US$'000
Medium Term Notes 40,200 3,559 - (1,443) 42,316
The medium term notes ("MTNs") were issued pursuant to a programme with a
tenor of ten (10) years from the first issue date of the notes. The MTNs
were issued by a subsidiary, to fund two development projects known as
Sandakan Harbour Square and Aloft Kuala Lumpur Sentral ("AKLS") in Malaysia.
Following the completion of the sale of the AKLS by the Group in 2016. The
net adjusted price value for the sale of AKLS, which included the sale of the
entire issued share capital of ASPL M3B Limited and Iringan Flora Sdn. Bhd.
(the "Aloft Companies") were used to redeem the MTN Series 2 and Series 3.
Following the completion of the disposal of AKLS, US$96.25 million (RM394.0
million) of MTN associated with the AKLS (Series 3) and the Four Points
Sheraton Sandakan (Series 2) were repaid on 19 August 2016. The charges in
relation to AKLS was also discharged following the completion of the disposal.
The Group completed "roll-over" for the remaining MTNs of US$24.43 million on
their maturity dates on 10 December 2020, 2021.
Repayment of US$8.89 million (RM39.0 million) was made on 7 April 2022.
Subsequently, they were further "rolled over" and now repayable on 8 December
2023. The MTNs are rated AAA.
The weighted average interest rate of the MTN was 5.50% per annum at the
statement of financial position date. The effective interest rates of the
MTN and their outstanding amounts are as follows:
Maturity Dates Interest rate % per annum As at 31 December 2022
US$'000
Series 1 Tranche FG 8 December 2023 5.50 7,973
Series 1 Tranche BG 8 December 2023 5.50 5,922
13,895
The medium term notes are secured by way of:
(i) bank guarantee from two financial institutions in respect
of the BG Tranches;
(ii) financial guarantee insurance policy from Danajamin
Nasional Berhad ("Danajamin") in respect to the FG Tranches;
(iii) a first fixed and floating charge over the present and
future assets and properties of Silver Sparrow Berhad and ICSD Ventures Sdn.
Bhd. by way of a debenture;
(iv) a third party first legal fixed charge over ICSD Ventures
Sdn. Bhd.'s assets and land;
(v) a corporate guarantee by the Company;
(vi) letter of undertaking from the Company to provide financial
and other forms of support to ICSD Ventures Sdn. Bhd. to finance any cost
overruns associated with the development of the Sandakan Harbour Square;
(vii) assignment of all its present and future rights, interest and
benefits under the ICSD Ventures Sdn. Bhd.'s Put Option Agreements in favour
of Danajamin, Malayan Banking Berhad and OCBC Bank (Malaysia) Berhad
(collectively as "the guarantors") where once exercised, the sale and purchase
of HMS and SHA shall take place in accordance with the provision of the Put
Option Agreement; and the proceeds from HMS and SHA will be utilised to repay
the MTNs;
(viii) assignment over the disbursement account, revenue account,
operating account, sale proceed account, debt service reserve account and
sinking fund account of Silver Sparrow Berhad, revenue account of ICSD
Ventures Sdn. Bhd. and escrow account of Ireka Land Sdn. Bhd.;
(ix) assignment of all ICSD Ventures Sdn. Bhd.'s present and
future rights, title, interest and benefits in and under the insurance
policies; and
(x) a first legal charge over all the shares of Silver Sparrow
Berhad, ICSD Ventures Sdn. Bhd. and any dividends, distributions and
entitlements.
Potensi Angkasa Sdn. Bhd. ("PASB"), a subsidiary incorporated on 25 February
2019, has secured a commercial paper and/or medium term notes programme of not
exceeding US$21.99 million (RM90.0 million) ("CP/MTN Programme") to fund a
project known as The RuMa Hotel and Residences. PASB may, from time to time,
issue commercial paper and/or medium term notes ("Notes") whereby the nominal
value of outstanding Notes shall not exceed US$21.99 million (RM90.0 million)
at any one time.
The details of the drawdown schedule were as follows:
Initial Issue First Roll-over Second Roll-over Third Roll-over
Tranche Number Date RM ('000) Tranche Number Date RM ('000) Tranche Number Date RM ('000) Tranche Number Date RM ('000)
Tranche 1-23 10 Jun 2019 22,850 Tranche 63-83 10 Jun 2020 20,950 Tranche 124-142 10 Jun 2021 19,050
Tranche 24-31 30 Sep 2019 9,600 Tranche 84-91 30 Sep 2020 9,600 Tranche 143-147 1 Oct 2021 4,750 Tranche 180-184 3 Oct 2022 4,750
Tranche 32-49 7 Oct 2019 17,100 Tranche 92-109 7 Oct 2020 17,100 Tranche 148-165 8 Oct 2021 17,100 Tranche 185-202 10 Oct 2022 17,100
Tranche 50-62 25 Feb 2020 15,350 Tranche 110-122 25 Feb 2021 15,350 Tranche 166-178 28 Feb 2022 15,350
Tranche 123 9 Jun 2021 18,100 Tranche 179 10 Jun 2022 20,000
The weighted average interest rate of the loan was 9.07% per annum at the
statement of financial position date. The effective interest rates of the
medium term notes and their outstanding amounts were as follows:
Maturity Dates Interest rate % per annum As at 31 December 2022
US$'000
Tranches 124-142 13 February 2023 7.00 4,339
Tranches 166-178 1 March 2023 8.50 3,497
Tranche 179 12 June 2023 11.00 4,556
Tranches 180-184 3 April 2023 9.50 1,082
Tranches 185-202 11 April 2023 9.50 3,895
17,369
Security for CP/MTN Programme
(a) A legal charge over the Designated Accounts by the PASB
and/or the Security Party (as defined below) (as the case may be) and
assignment of the rights, titles, benefits and interests of the PASB and/or
the Security Party (as the case may be) thereto and the credit balances
therein on a pari passu basis among all Notes, subject to the following:
(b)
(i) In respect of the 75% of the sale proceeds of a Secured
Asset ("Net Sale Proceeds") arising from the disposal of a Secured Asset, the
Noteholders of the relevant Tranche secured by such Secured Asset shall have
the first ranking security over such Net Sale Proceeds;
(ii) In respect of the insurance proceeds from the Secured
Assets ("Insurance Proceeds"), the Noteholders of the relevant Tranche secured
by such Secured Asset shall have the first ranking security over such
Insurance Proceeds;
(iii) In respect of the sale deposits from the Secured Assets
("Sale Deposits"), the Noteholders of the relevant Tranche secured by such
Secured Asset shall have the first ranking security over such Sale Deposits;
(iv) In respect of the amount at least equivalent to an amount
payable in respect of any coupon payment of that particular Tranche for the
next six (6) months to be maintained by the Issuer ("Issuer's DSRA Minimum
Required Balance"), the Noteholders of the relevant Tranche shall have the
first ranking security over such Issuer's DSRA Minimum Required Balance;
(v) In respect of the proceeds from the Collection Account ("CA
Proceeds"), the Noteholders of the relevant Tranche shall have the first
ranking security over such CA Proceeds; and
(vi) In respect of any amount deposited by the Guarantor which are
earmarked for the purposes of an early redemption of a particular Tranche of
the Notes and/or principal payment of a particular Tranche of the Notes
("Deposited Amount"), the Noteholders of the relevant Tranche shall have the
first ranking security over such Deposited Amount;
(c) An irrevocable and unconditional guarantee provided by the
Urban DNA Sdn Bhd for all payments due and payable under the CP/MTN Programme
("Guarantee"); and
(d) Any other security deemed appropriate and mutually agreed
between the PASB and the Principal Adviser/Lead Arranger ("PA/LA"), the latter
being Kenanga Investment Bank Berhad.
Security for each medium term note:
Each Tranche shall be secured by assets ("Secured Assets") to be identified
prior to the issue date of the respective Tranche.
Such Secured Assets may be provided by third party(ies), (which, together with
the Guarantor, shall collectively be referred to as "Security Parties" and
each a "Security Party") and/or by the PASB. Subject always to final
identification of the Secured Asset prior to the issue date of the respective
Tranche, the security for any particular Tranche may include but not limited
to the following:
(a) Legal assignment and/or charge by the PASB and/or the
Security Party (as the case may be) of the Secured Assets;
(b) An assignment over all the rights, titles, benefits and
interests of the PASB and/or the Security Party (as the case may be) under all
the sale and purchase agreements executed by end-purchasers and any subsequent
sale and purchase agreement to be executed in the future by end-purchaser (if
any), in relation to the Secured Assets;
(c) A letter of undertaking from Aseana Properties Limited to,
amongst others, purchase the Secured Assets ("Letter of Undertaking"); and/or
(d) Any other security deemed appropriate and mutually agreed
between the Issuer and the PA/LA and/or Lead Manager prior to the issuance of
the relevant Tranche.
The security for each Tranche is referred to as "Tranche Security".
31 RELATED PARTY TRANSACTIONS
Transactions between the Group with Ireka Corporation Berhad ("ICB") and its
group of companies are classified as related party transactions based on ICB's
23.07% shareholding in the Company.
In 2009, the Group entered into a Joint Venture Agreement (JVA) with Ireka
Corporation Berhad (ICB) for the construction of The RuMa Hotel and Residences
("RuMa"). Under the terms of that JVA, the joint venture partners are
required to make equity contribution in the proportion to their participating
interest for the purpose of the development and construction of the RuMa. In
the opinion of the directors, they have considered that the JVA allows for the
equity contribution to be deferred and paid upon the conclusion of
construction. At 31 December 2022, the total amount of equity contribution
owed by ICB was US$11.7 million (at 31 December 2021: US$12.2 million). The
recognition of these amount owed by ICB would be offset by the corresponding
entry of the amount owed to ICB, which therefore has no net impact to the
consolidated financial statements.
The equity contributions are non-trade in nature and are unsecured and
interest bearing.
Furthermore, the Group was entitled to interest receivable from ICB. The
interest receivable was calculated based on an annual interest rate of 2%
above the Malaysia lending rate and applied to the deferred equity
contributions.
Related parties also include key management personnel defined as those persons
having authority and responsibility for planning, directing and controlling
the activities of the Group either directly or indirectly. The key
management personnel include all the Directors of the Group, and certain
members of senior management of the Group.
2022 2021
US$'000 (Restated *)
US$'000
ICB Group of Companies
Accrued interest on shareholders advance payable by ICB 1,462 1,259
Accrued interest on a contract payment by an ICB subsidiary 131 122
Key management personnel
Remuneration of key management personnel - Directors' fees 265 291
Remuneration of key management personnel - 300 287
Consulting fees
* See Note 2.3(f) for details regarding the restatement as a result of an
error.
Transactions between the Group with other significant related parties are as
follows:
2022 2021
US$'000 US$'000
Non-controlling interests
Advances - non-interest bearing (Note 28) 129 121
Other related parties
Disposal of subsidiaries - -
The above transactions have been entered into in the normal course of business
and have been established under negotiated terms.
The outstanding amounts due from/(to) ICB and its group of companies as at 31
December 2022 and 31 December 2021 are as follows:
2022 2021
US$'000 (Restated *)
US$'000
Net amount due from an ICB subsidiary # - 2,005
Net amount due from ICB 5,461 4,416
# Amount was fully impaired in the year ended 31 December 2022 due to
financial distressed encountered by the captioned subsidiary; an interim
liquidator was subsequently appointed on 27 March 2023.
The outstanding amounts due to the other significant related parties as at 31
December 2022 and 31 December 2021 are as follows:
2022 2021
US$'000 US$'000
Non-controlling interests
Advances - non-interest bearing (Note 28) (1,981) (1,952)
Transactions between the parent company and its subsidiaries are eliminated in
these consolidated financial statements. A list of subsidiaries is provided
in Note 32.
32 INVESTMENT IN SUBSIDIARIES
Name Country of incorporation Principal activities Effective ownership interest
2022 2021
Subsidiaries
Ireka Land Sdn. Bhd. Malaysia Property development 100% 100%
Amatir Resources Sdn. Bhd. Malaysia Property development 100% 100%
ICSD Ventures Sdn. Bhd. Malaysia Hotel and mall ownership and operation 100% 100%
Potensi Angkasa Sdn. Bhd Malaysia Participating in the transactions contemplated under the Guaranteed MTNs 100% 100%
Programme
Silver Sparrow Berhad Malaysia Participating in the transactions contemplated under the Guaranteed MTNs 100% 100%
Programme
Bumiraya Impian Sdn. Bhd. Malaysia Property development 80% 80%
The RuMa Hotel KL Sdn. Bhd. Malaysia Investment holding 70% 70%
Urban DNA Sdn. Bhd. Malaysia Property development 70% 70%
Aseana-BDC Co Ltd Vietnam Investment holding 65% 65%
33 COMMITMENTS AND CONTINGENCIES
Debt service reserve account
In 2017, Silver Sparrow Berhad obtained consent from the lenders to utilise
proceeds of US$4.89 million in the Sales Proceeds Account and Debt Service
Reserve Account ("DSRA") to partially redeem the MTNs. Thereafter, amount
equivalent to RM10.0 million (US$2.40 million) (the "Minimum Deposit") is
maintained in the DSRA at all times and the amount is disclosed as deposit
pledged (refer to Note 22).
In the event the funds in the DSRA falls below the Minimum Deposit, SSB shall
within five (5) Business Days from the date of receipt of written notice from
the facility agent or upon SSB becoming aware of the shortfall, whichever is
earlier, deposit such sums of money into the DSRA to ensure the Minimum
Deposit is maintained.
34 SALE OF DISCONTINUED OPERATIONS
On 23 August 2021, the Group entered into the sale agreement to divest its
operations and assets of the International Healthcare Park ("IHP") and the
City International Hospital ("CIH") (the "Transaction"), held under Hoa Lam
Services Company Limited ("HLS") and Shangri-La Healthcare Investment Pte.
Ltd. ("SHIPL"), and the indirectly held subsidiaries under both companies
(collectively, the "Disposal Group"), for a gross consideration of
approximately US$18.3 million. The gross consideration comprised the repayment
of current account to the Group for approximately US$8.3 million and a net
consideration for transfer of equity interest for US$10.0 million. The
conditions precedent for the divestment were met and the Transaction was
completed on 28 February 2022 (the "Disposal Date") when the shares were
transferred to the purchaser.
The subsidiaries were reported in 2021 as discontinued operations and until
the Disposal Date.
Details of financial position of the Disposal Group were as follows:
2022 2021
US$'000 US$'000
Property, plant and equipment 400 400
Intangible Assets 3,519 3,519
Inventories 80,315 80,315
Trade and other receivables 1,250 1,250
Cash and cash equivalents 8,561 15,329
Trade and other payables (54,314) (54,314)
Loans and borrowings (32,016) (32,016)
Current tax liabilities (17) (17)
Net assets classified as Asset held for Sale 7,698 14,466
There was no reported profit or loss from the discontinued operations during
the year up to the Disposal Date.
Analysis of the cash flows of discontinued operations are as follows:
2022 2021
US$'000 US$'000
Net cash generated from operating activities - 32,537
Net cash used in investing activities - -
Net cash used in financing activities (6,768) (17,768)
Net cash (used in)/generated from discontinued operations (6,768) 14,769
Details of the sale of the discontinued operations are as follows:
2022 2021
US$'000 US$'000
Consideration received or receivable
Cash 10,045 -
Total disposal consideration 10,045 -
-
Carrying amount of net asset sold (7,698) -
Non-controlling interests derecognized 874 -
Receivables derecognized (279) -
Gain on sale before income tax and reclassification of foreign currency 2,943 -
translation reserve
Reclassification of foreign currency translation reserve (241) -
Income tax expense on gain - -
Gain on sale after income tax (2,702) -
COPIES OF THE ANNUAL REPORT
Copies of the annual report will be available on the Company's website at and
from the Company's registered office, Osprey House, Old Street, St. Helier,
Jersey, JE2 3RG, Channel Islands.
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