REG - Aseana Prop Ltd - ANNUAL FINANCIAL REPORT
30/04/2024 15:15
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RNS Number : 6605M Aseana Properties Limited 30 April 2024
30 April 2024
Aseana Properties Limited
("Aseana" or the "Company")
Full Year Results for the year ended 31 December 2023
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 2023.
For further information:
Aseana Properties Limited
Nick Paris, Non-Executive Chairman
nickparis@btinternet.com
+44 (0)7738 470550
Grant Thornton UK LLP
Philip
Secrett
+44 (0)207 383 5100
CHAIRMAN'S STATEMENT
Dear Shareholders,
INTRODUCTION
While Asia is showing a recovery from Covid-19, Malaysian GDP growth was below
target. Economic conditions are trending stronger, and tourism numbers are
rebounding; however, tourism visits have yet to achieve pre-Covid-19 levels.
As a result, prices of high end residential apartments appear to be forming
a floor, and there is growing interest by prospective purchasers. However, the
increase in demand has been tempered by a robust supply in Kuala Lumpur,
higher interest rates since early 2023, and tighter borrowing restrictions
imposed by banks on new borrowers. In spite of these challenges, the
Divestment team continues to diligently focus on selling the remaining assets.
COMMENTARY ON THE YEAR
Our focus has again 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 in 2022
significantly reduced our project debts, reducing our debt servicing costs
even in the higher rate environment.
All of our 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 2023, the Malaysian economy recorded growth of 3.7% (2022: 8.7%) according
to the Malaysian government as demand for its exports, which the country's
economy heavily relies on, slowed amid the tough global economic environment
and weak commodity prices. But the growth is expected to edge up to 4.3% in
2024 according to the World Bank.
PERFORMANCE REVIEW
During 2023, the Company recorded a net loss after finance costs and before
taxation of US$10.7 million compared to US$17.6 million for the previous
financial year. The Net Loss attributable to equity holders was US$8.7
million for FY 2023 (2022: US$15.9 million), and the loss per share was US
cents 4.39 (2022: US cents 7.99).
Our NAV per Share as at 31 December 2023 fell to US cents 32 (2022: US cents
37).
Our net cash outflow for the year was US$3.0 million (2022: US$0.1 million
inflow) which reflected foreign exchange gain effect of US$3.2 million (2022:
US$2.9 million gain effect), net cash outflow from operating activities of
US$5.5 million (2022: US$4.5 million) coupled with a cash outflow from
investing and financing activities of US$0.7 million (2022: US$1.7 million
inflow).
OUR ASSET DIVESTMENT PROGRAMME
Progress on asset sales continues, but it has proven difficult in the context
of a rapidly rising interest rate environment, lack of liquidity in the market
and its impact on the Malaysian economy. The Malaysian economy delivered
3.7% GDP growth in 2023, well below the target growth rate. Malaysia GDP is
expected to improve further in 2024, but the growth outlook is subject to
downside risks emanating from weaker-than-expected external demand, a further
escalation in geopolitical conflicts, and declines in commodity production.
In 2023, there was a contraction in fund raising in the Malaysian equity and
corporate bond markets along with negative capital flows in 2023 indicating a
tighter liquidity environment.
On 30 June 2023, ICSD Ventures Sdn Bhd, an indirect subsidiary of the Company
entered into a binding conditional agreement to sell the Sandakan Hotel Asset
and the Harbour Mall Sandakan (collectively, the "Sandakan Assets").
Although the transaction was supposed to be completed by 30 September 2023
upon certain conditions being met, the transaction did not complete due to
certain technicalities and subsequently, on 8 December 2023, Silver Sparrow
Berhad ("SSB"), the issuer of the Medium Term Notes (the "SSB MTNs" or "MTNs")
received a Notice of Default from the facility agent for the outstanding
principal amount of approximately RM60.9 million (US$13.3 million). The
proceeds of the MTNs were used to finance the development of the Sandakan
Assets. Although SSB is still in default, it has kept current any and all
default interest due.
On 6 April 2024, a Supplemental Sale and Purchase Agreement (the
"Supplemental") was signed with the original purchaser mainly to extend the
completion date in order to finalize the sale of the Sandakan Assets.
The Sandakan Assets have a gross sale consideration of MYR 165 million
(approximately US$35 million) against the carrying amount of MYR 200 million
(approximately US$43 million); an impairment of MYR 35 million (approximately
US$7.7 million) was therefore recognized in the financial year.
The proceeds of the sale will be used to repay the outstanding principal.
According to the terms of the Supplemental, the purchaser shall bear the
interest due in relation to the MTNs from the date of the Notice of Default to
the date of repayment. The repayment is expected to be made in approximately
30 days from the date of the signing of the Supplemental and the transaction
is estimated to complete in 45 days from such repayment date.
We continue to work on the asset divestment program and expect progress in
2024.
NON-GOING CONCERN STATUS OF THE COMPANY
The Company has been winding up its assets since May 2015. The Sandakan
Assets are the subject of an ongoing sale process but the Medium Term Note
programme which financed those assets has been in default since the capital
was not repaid on the final repayment date of 8 December 2023. In addition,
the Company is experiencing a shortfall of working capital for which Directors
have raised US$1 million in loans and have sought, but not received, further
support from shareholders. As a result, the Directors decided to have the
financial statements prepared on a non-going concern basis at this time.
They do however expect this status to revert to a going concern again once the
asset sales in Sandakan complete as the proceeds from them will enable the
Sandakan MTN to be repaid in full along with all other debts owed by the
Company.
DIS-CONTINUATION VOTE IN MAY 2025
The Company is required to hold another dis-continuation vote by the end of
May 2025 so that shareholders can vote on the future of the Company. The
Directors therefore intend to call an Extraordinary General Meeting by the end
of May 2025.
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.
Thank you.
NICHOLAS JOHN PARIS
Chairman
30 April 2024
PROPERTY PORTFOLIO AS AT 31 DECEMBER 2023
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
PERFORMANCE SUMMARY
Year ended Year ended
31 December 2023 31 December 2022
Total Returns since listing
Ordinary share price -91.50% -86.00%
FTSE All-share index 27.02% 22.31%
FTSE 350 Real Estate Index -54.13% -57.47%
One Year Returns
Ordinary share price -39.29% -30.00%
FTSE All-share index 3.85% -3.16%
FTSE 350 Real Estate Index 7.85% -35.67%
Capital Values
Total assets less current liabilities (US$ million) 98.13 104.24
Net asset value per share (US$) 0.35 0.41
Ordinary share price (US$) 0.085 0.140
FTSE 350 Real Estate Index 430.26 398.93
Debt-to-equity ratio
Debt-to-equity ratio (1) 116.18% 102.21%
Net debt-to-equity ratio (2) 108.61% 91.50%
Loss Per Share
Loss per ordinary share - basic (US cents) (4.39) (7.99)
(4.39) (7.99)
- 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$11.2 million for
the financial year ended 31 December 2023 (year ended 31 December 2022:
US$20.4 million), largely due to the impairment to the carrying amount of
Sandakan Assets, and the finance cost incurred in relation to The RuMa Hotel
& Residences and the Sandakan Assets.
STATEMENT OF COMPREHENSIVE INCOME
The Group recognised revenue of US$1.2 million (2022: US$1.0 million).
Revenue of US$34.9 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$10.7 million (2022:
US$17.6 million). The loss was largely due to the impairment to the carrying
amount of Sandakan Assets and the finance cost incurred in relation to The
RuMa Hotel & Residences and the Sandakan Assets.
Net loss attributable to equity holders of the parent company was US$8.7
million (2022: US$15.9 million). Tax recoverable for the year was US$0.2
million (2022: US$0.3 million tax expense).
The consolidated comprehensive loss was US$11.2 million (2022: US$20.3
million), which included a loss of US$0.8 million (2022: US$2.5 million)
attributable to foreign currency translation differences from Malaysian
operations due to a depreciation of the Malaysian Ringgit against the US
Dollar during the year.
Basic and diluted loss per share were both US cents 4.39 (2022: US cents
7.99).
STATEMENT OF FINANCIAL POSITION
Total assets were US$137.4 million (2022: US$157.2 million), representing a
decrease of US$19.8 million. This was mainly due to an impairment to the
carrying amount of Sandakan Assets for US$7.6 million and the decrease in the
carrying amount in inventories due to the depreciation in Malaysian Ringgit.
Total liabilities were US$80.9 million (2022: US$89.4 million), representing a
decrease of US$8.5 million. This was mainly due to a decrease of US$4.7
million in in trade and other payables.
Net Asset Value per share was US$0.32 (31 December 2022: US$0.37).
CASH FLOW AND FUNDING
Cash used in operations before interest and tax paid was US$0.2 million (2022:
US$1.1 million cash generation).
The Group generated net cash flow of US$0.2 million from investing activities
(2022: US$10.5 million).
Some of the borrowings of the Group were repaid during the year. As at 31
December 2023, the Group's gross borrowings stood at US$30.7 million (31
December 2022: US$32.9 million). Net debt-to-equity ratio was 110.2% (31
December 2022: 91.5%).
Finance income was US$1.9 million for financial year ended 31 December 2023
(2022: US$2.0 million) which included accrued income of US$1.7 million (2022:
US$1.5 million). Finance costs were US$2.9 million (2022: US$3.3 million),
which were mostly incurred by its operating assets.
EVENTS AFTER STATEMENT OF FINANCIAL POSITION DATE
Settlement with Ireka Corporation Bhd ("ICB")
The Group filed a claim against ICB on 21 October 2022 in the Malaysian Courts
in relation to the Joint Venture Agreement with respect to the RuMa Hotel
& Residences.
On 26 January 2024, a conditional settlement was reached between the Group and
ICB, whereby:
· ICB will transfer 38,837,504 shares of the Company held by it back to
the Company;
· ICB will also transfer its 30% shareholding in Urban DNA Sdn Bhd and
The RuMa Hotel KL Sdn Bhd to the Group;
· In return, the Company agreed to withdraw its claim against ICB; and
· the settlement shall constitute the full and final settlement of all
claims and debts between the parties.
The settlement agreement was conditional upon both parties obtaining their
respective approvals. It was duly approved by the shareholders of the
Company in an Extraordinary General Meeting held on 27 February 2024. And on
25 March 2024, ICB received the approval for the settlement from the Winding
Up Court in Malaysia. The conditions were thus satisfied and the settlement
agreement had become binding.
Sandakan Assets sale
On 30 June 2023, ICSD Ventures Sdn Bhd, an indirect subsidiary of the Company
entered into a binding conditional agreement to sell the Sandakan Assets,
which comprises the Sandakan Hotel and the Harbour Mall Sandakan. Although
completion of the transaction was to take place by 30 September 2023 according
to the agreement, it was still not completed on 31 December 2023 due to
certain technicalities. On 8 December 2023, Silver Sparrow Berhad ("SSB"),
the issuer of Medium Term Notes (the "SSB MTNs" or "MTNs") received notice of
default from the facility agent for the outstanding principal amount of
approximately RM60.9 million (US$13.3 million). The proceeds of the SSB MTNs
were used to finance the development of the Sandakan Assets. Although SSB is
still in default, it has kept current any and all default interest due.
On 6 April 2024, a Supplemental Sale and Purchase Agreement (the
"Supplemental") was signed with the original purchaser mainly to extend the
completion date in order to finalize the sale of the Sandakan Assets.
The proceeds of the sale will be used to repay the outstanding principal.
According to the terms of the Supplemental, the purchaser shall bear the
interest due in relation to the SSB MTNs from the date of Notice of Default to
the date of repayment. The repayment is expected to be made in approximately
30 days from the date of the signing of the Supplemental and the transaction
is estimated to complete in 45 days from such repayment date. The repayment
is therefore expected to take place in May 2024 with the first payment made
from the purchaser.
However, should the Group be unable repay the outstanding principal, the
guarantors of the SSB MTN will have title over the pledged assets including
the Sandakan Assets, as well as the other operating assets, rights, interests
and benefits in relation to the Sandakan Assets.
The details of the security given by the Group under the SSB MTNs are
disclosed in Note 30 to the financial statements.
Sale of RuMa Residences Units
On 29 April 2024, the Group entered into Sale and Purchase Agreements to sell
10 RuMa Residences units (the "Units") for a gross consideration of RM15.4
million (approximately US$3.3 million). The Units were pledged for commercial
paper and/or medium term notes for a principal amount of RM12.5 million
(US$2.7 million), which will be repaid by the proceeds of the sale. The
completion of sale is expected to take place 90 days from the signing date of
the Sale and Purchase Agreements. A deposit of RM1.5 million (US$0.3
million), representing 10% of the consideration, has been received by the
Group.
DIVIDEND
No dividend was declared or paid in the financial years 2023 and 2022.
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
30 April 2024
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.
In 2023, a number of initiatives covering sustainability and social impact
were implemented at the RuMa Hotel, such as switching to biodegradable
bathroom amenities sourced locally, upgraded to refillable and larger-sized
bottles for bathroom amenities, recycling coffee capsules, replaced plastic
drinking bottles with glass bottles, and converted guest room vanity lights to
LED.
All the green initiatives recently culminated in the Global Sustainable
Tourism Council (GSTC) certification awarded to the RuMa Hotel, making it the
first hotel in Peninsular Malaysia to achieve this recognition. Globally
recognized, the certification evaluates a hotel's ability to maintain the
highest levels of sustainability by examining the policies, practices, and
overall impact on the environment, local culture, and communities. This
accolade underscores the management's dedication to advancing sustainability
and resilience.
More recently, The RuMa Hotel is also focused on sustaining its efforts
through initiatives such as composting coffee grounds, implementing wet and
dry waste segregation, and transitioning to biodegradable bedroom slippers.
In addition, it is upgrading its hotel car park facilities by installing
charging stations to cater to hybrid and electric vehicles. Furthermore, it
is also introducing a contactless and ticketless interfaces at the car park to
enhance convenience and efficiency , as well as reducing carbon footprint by
digitizing the internal paperwork.
Community
Furthermore, The RuMa Hotel is committed to promoting staff engagement and
well-being through various activities such as sports activities, departmental
decoration competitions, and CSR initiatives. The RuMa Hotel's CSR
initiatives aim to foster community engagement and social responsibility.
Zoo Visitation involves staff members in habitat cleaning activities,
promoting environmental awareness, while the "CSR Raya Shopping" activity
aimed at connecting staff members with the community, especially those in need
during the Hari Raya season and fostering empathy. Mental Health Screening
& Breast Cancer Awareness Talks address mental health issues and promote
awareness among all the associates, aligning with social impact objectives.
Visiting native villages to creates job opportunities and promotes cultural
understanding, preserving and celebrating cultural diversity.
Employment
Apart from creating a positive workplace culture, encouraging team spirit, and
fostering overall wellness among the staff members, recently The RuMa Hotel
engaged in CSR events such as "Back to School with Orphans" and
"Underprivileged Children's Home" in collaboration with the local esteemed
organizations. Additionally, the International Women's Day was also
celebrated by highlighting the contributions of female staff members at all
levels within the hotel.
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 a Managing Director of Dolphin Capital Investors Limited
which is 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 in November 2020. Tom has been based in Asia for
27 years with experience working in leadership positions in a number of
financial firms. 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 and transacting in private investments
in Vietnam, Malaysia, China, Indonesia, Myanmar, Mongolia and Cambodia.
ROBERT DONALD MINTY
NON-EXECUTIVE INDEPENDENT DIRECTOR
Robert (Bob) Minty was appointed as a Non-executive Independent Director of
Aseana Properties in August 2023. Bobby is an experienced commercial and
finance professional and a qualified chartered accountant. Resides and
educated in Jersey, he became a chartered accountant and possesses the
Certificate in ESG Investing awarded by the CFA Institute.
Bobby was a founding shareholder in ICECAP Limited, a regulated corporate
service provider in Jersey. As part of his role within ICECAP, Bobby has
extensive experience as a board member on a wide variety of Jersey companies
ranging from funds to property holding companies. He also has extensive
knowledge of cross-jurisdictional structures in Jersey and Africa through his
10 years of experience within the ICECAP group as investor and financial
controller.
Before founding ICECAP, he worked in PricewaterhouseCoopers in Jersey with a
range of businesses from property holding groups to listed venture capital
funds.
More recently, Bobby assisted an ultra-high-net-worth private family office to
establish a significant and sustainable operating business overseas.
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 National Assistant Treasurer of SME Association of Malaysia,
Treasurer of the Malaysia Cross Border E-Commerce Association and a member of
the Finance and Capital Market Committee of the Chinese Chamber of Commerce
and Industry of Kuala Lumpur and Selangor.
HELEN WONG SIU MING
NON-EXECUTIVE NON-INDEPENDENT DIRECTOR
Helen Wong Siu Ming was first appointed as a Non-Executive Independent
Director of Aseana Properties in June 2019 and as its Divestment Director in
September 2019. In 2021, the Nomination and Remuneration Committee developed
an incentive scheme for the Divestment team. As a result, her status has
changed to Divestment Director. Helen has over 29 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 2023.
Principal Activities
The principal activities of the Group were the development of upscale
residential and hospitality projects in Malaysia. 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 39. 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 2025, 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
2025, 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
exiting Vietnam, 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 Failure of the Company's internal financial reporting 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
confidence from the shareholders.
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.
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 30.
LITIGATION
Claim Against Ireka Corporation Bhd ("ICB")
A claim was filed in the Malaysian Courts on 21 October 2022 by ASPL M9
Limited ("ASPL M9"), a subsidiary of the Company, against ICB in relation to
the Joint Venture Agreement between ASPL M9 Limited, ICB and Urban DNA Sdn Bhd
(the latter being an indirect subsidiary of the Company) for the development
and construction of the RuMa Hotel & Residences.
On 26 January 2024, the Company (including ASPL M9) reached a conditional
settlement with ICB whereby ICB will transfer 38,837,504 shares in the Company
including its 30% shareholdings in the two joint venture companies that own
and operate The Ruma Hotel & Residences in Kuala Lumpur to the Company.
In exchange, the Company agreed to withdraw its claim against ICB. The
settlement shall constitute the full and final settlement of all claims and
debts owed between the parties.
The settlement agreement was conditional upon both parties obtaining their
respective approvals. The Company held its EGM on 27 February 2024, in which
the settlement was duly approved by the shareholders. On 25 March 2024, ICB
received its approval for the settlement from the Winding Up Court in
Malaysia. The conditions were thus satisfied and the settlement agreement
had become binding.
Details of the conditional settlement and the results of the EGM were
announced by the Company on 29 January and 27 February 2024 respectively.
Claim Against Ireka Engineering & Construction Sdn Bhd ("IECSB")
A claim 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 was appointed for IECSB on 27 March 2023 with the view to commence
the creditor's voluntary winding up process.
On 19 April 2023, ARSB obtained Judgment in Default against IECSB for the sum
of RM7,198,890 (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.
A Statement of Affairs of IECSB was provided by the Liquidators at a Creditor
Meeting held on 11 May 2023. As an unsecured creditor, it became clear that
recovering the sums obtained by ARSB in the Judgment in Default would not be
feasible. This amount had been fully impaired in the year ended 31 December
2022.
Results and Dividends
The results for the year ended 31 December 2023 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 2023. 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 (not re-elected at the Company's AGM on 30 May
2023)
· Robert Donald Minty (appointed 25 August 2023)
· Hock Chye Tan (appointed 3 March 2023)
· Helen Wong Siu Ming
· Mark George Nisbet (alternate director to Robert Minty and appointed
27 February 2024)
Directors' Interests
None of the 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 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 244 employees as at 31 December 2023,
of which 22 and 218 were employed by (i) the Sandakan hotel asset and Harbour
Mall Sandakan, and (ii) The RuMa Hotel and Residences in Kuala Lumpur
respectively.
Non-going concern
The Company will continue until May 2025 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 an orderly
manner.
As explained in Note 2.1 to the financial statements, it refers to the
assessment made by the Directors including the uncertainties regarding the
divestment of certain assets will be completed as planned and the loans and
borrowing can be discharged in a timely manner, that it may not be appropriate
to prepare the financial statements on the going concern basis but instead on
a non-going concern basis at this time.
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 2023 amounted to 320 days (2022: 349 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 the
development and performance of the business and the position of the issuer and
the undertakings included in the consolidation taken as a whole, together with
a description of the principal risks and uncertainties that they face.
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 25 to 32.
Annual General Meeting
The tabling of the 2023 Annual Report and Financial Statements to shareholders
will be at an Annual General Meeting ("AGM") that is currently expected to be
held by 31 July 2024.
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
30 April 2024
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 2023 31 December 2022
(US$) (US$)
Nicholas John Paris 59,000 70,000
(Chairman of the Board)
Helen Wong Siu Ming(5) 77,000 77,000
(Chairlady of the Audit Committee)
Thomas Holland 48,000 48,000
Monica Lai Voon Huey(2) 19,912 48,000
Christopher Henry Lovell(1) - 22,286
Robert Donald Minty(3) - -
Hock Chye Tan(4) 39,867 -
(1) Christopher Lovell was not re-elected at the Company's 2022 Annual General
Meeting on 17 June 2022.
(2) Monica Lai was not re-elected at the Company's 2023 Annual General Meeting on
30 May 2023.
(3) Robert Minty was appointed on 25 August 2023 and did not have director fee
entitlement during the year. He is also a director in ICECAP (Secretaries)
Limited ("ICECAP"), the company secretary of the Company; therefore, the
company secretarial fee paid to ICECAP was regarded as a related party
transaction and amounted to US$13,333 during the relevant period, despite that
such fee was negotiated on an arm's length basis.
(4) Hock Chye Tan was appointed on 3 March 2023.
(5) Apart from director fee, Helen Wong received additional remuneration of
US$300,000 (2022: US$300,000) in relation to her service in the Company's
asset divestment program.
ASSET DIVESTMENT EXPENSES
In 2022, the independent Directors of the Company approved a programme aimed
at incentivising and retaining the Company's key personnel (including Ms.
Helen Wong who is the Divestment Director). This fee is calculated at 1.1%
of the gross proceeds less any agent commissions, if any have been used, from
sale of asset and is payable in cash once the Company receives the sale
proceeds to those personnel who have been involved in that transaction.
Share Options
The Company did not operate any share option schemes during the years ended 31
December 2022 and 2023.
Share Price Information
· High for the year - US$0.140
· Low for the year - US$0.080
· Close for the year - US$0.085
Pension SchemeS
No pension schemes exist in the Company.
Service Contracts
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 their appointment subject to the Articles of Association of the Company
which set out the main terms of their appointment.
THOMAS HOLLAND
Non-executive Independent Director
30 April 2024
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. Helen Wong is currently classified as a
non-independent Director.
The brief biographies of the following Directors appear on pages 15 to 16 of
this Annual Report:
· Nicholas John Paris (Non-Executive Chairman)
· Thomas Holland
· Robert Donald Minty (appointed 25 August 2023)
· 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 2023, the Board
met seven (7) times and their respective attendance are as follows:
Name of Directors Attendance
Nicholas John Paris 7/7
Thomas Holland 7/7
Monica Lai Voon Huey (not re-elected at the Company's AGM) 6/6
Robert Donald Minty (appointed 25 August 2023) 1/1
Hock Chye Tan (appointed 3 March 2023) 4/4
Helen Wong Siu Ming 7/7
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, a Chief Executive Officer was appointed and a consulting/secondment
agreement was signed between Aseana and the former Development Manager. In
January 2020, the CEO resigned, a de-merger exercise was proposed and as a
result, the consulting/secondment agreement was terminated with effect from 31
May 2020. Since then, ASEANA became a self-managed company. The Board
consists solely of non-executive directors of which Nicholas Paris is the
non-executive Chairman. 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 2023, 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 30 May 2023, Monica Lai retired by rotation
and offered herself for re-election by the shareholders. She was not
re-elected at the AGM.
At the forthcoming Annual General Meeting, Robert Minty will be offering
himself for re-election having recently been appointed, Thomas Holland and
Helen Wong will be retiring by rotation and offering themselves for
re-election.
Board Committees
The Board has established the Audit Committee 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). It is intended that Hock Chye Tan will become the
Chairman of the Committee during 2024. The Committee members have no links
with the Company's external auditor; 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 three times during the year and their
respective attendance are as follows:
Name Attendance
Helen Wong Siu Ming 3/3
Hock Chye Tan 3/3
Thomas Holland 3/3
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 2023, 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 2023 and to identify potential impairment.
· Receivables from a related party - The Audit Committee
noted the financial distress in Ireka Corporation Berhad, a related party to
the Group and which the Group maintained a net receivable from. The Audit
Committee assessed the potential impairment; however, no impairment was
considered necessary as such balance is believed to be recoverable through the
in-kind settlement pursuant to the settlement agreement. Details of the
settlement were explained under Events After Statement of Financial Position
Date in Financial Review section of the Annual Report.
· Non-going concern - The Audit Committee considered both
the current circumstances of Company and its financial requirements for the 12
months from the approval date of the financial statements and have concluded
that there are uncertainties on the Company's ability to remain as a going
concern. Consequently, the financial statements have been prepared on a
non-going concern basis at this time. For details, please refer to Note 2.1
to the financial statements.
Nomination & REMUNERATION Committee ("NRC")
The responsibilities of the NRC were integrated into the Board's
responsibilities. Given the Company is currently in its divestment phase,
all Directors are non-executive on fixed fees, save for the asset divestment
incentive where appropriate.
During the year ended 31 December 2023, the Board of Directors carried out the
functions 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.
As a Standard Listed entity, the Group is now subject to certain Diversity and
Inclusion targets. These include (i) at least 40% of the individuals on its
board of directors are women, (ii) at least one senior position (chair, chief
executive, senior independent director or chief financial officer) on its
board of directors is held by a woman, and (iii) at least one individual on
its board of directors is from a minority ethnic background. Whilst some of
these requirements were met for all or part of the financial period, given the
Group is in divestment phase, no formal diversity policy has been adopted.
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 13 November 2023.
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 2023:
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, Mr. Thomas Patrick Holland and Ms. Helen Siu
Ming Wong, attended the 2023 AGM in person, which was held on 30 May 2023 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
30 April 2024
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ASEANA PROPERTIES LIMITED
Opinion
We have audited the consolidated financial statements of Aseana Properties
Limited and its subsidiaries (the 'group') for the year ended 31 December 2023
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
consolidated 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 consolidated financial statements:
· give a true and fair view of the state of the group's affairs as at
31 December 2023 and of its loss for the year then ended;
· have been properly prepared in accordance with IFRS 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 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.
Emphasis of matter - basis of preparation
We draw attention to note 2.1 to consolidated financial statements of the
group which explain the directors reasons for preparing the consolidated
financial statements on a basis other than a going concern.
Our opinion is not modified in respect of this matter.
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 consolidated
financial statements as a whole.
Consolidated financial statements 2023 Consolidated financial statements 2022
Overall materiality US$750,000 US$1,200,000
Performance materiality US$450,000 US$720,000
Basis of materiality c. 0.5% 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 US$412,000 and US$749,000 (2022:
between US$5,000 and US$630,000). 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 US$37,500 (2022: US$60,000) 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 consolidated 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 eight trading companies consolidated within in the group
financial statements, all of which are based in Malaysia. We identified two
significant components, which were subject to a full scope of audit.
Significant Malaysian components were audited by the PKF network firm in
Malaysia under our direction and supervision. We reviewed component audit
working papers electronically.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the consolidated 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 consolidated
financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Key Audit Matter How our scope addressed this matter
Carrying value of inventories
Refer to note 20 Inventories. Our work in this area included:
The group owns a portfolio of land held for property development and completed We reviewed the signed Sale Purchase Agreement (and subsequent Supplemental
property units in Malaysia. The total carrying value of inventories for the Agreement) stating the potential buyer's interest in purchasing Sandakan
group was US$118.4 million. assets. Further, we assessed the buyer's credentials using publicly available
information; and
Of the year-end inventories the following two assets were not subject to a
third-party valuation: We compared recent land sales which had similar characteristics to the land
asset held by the entity and assessed whether there were any indicators that
Harbour Mall Sandakan and Sandakan Hotel Asset ('Sandakan assets') c.US$36m the land asset was impaired.
The carrying value of the Sandakan assets at the year end is written down to Based on the audit work performed:
the agreed purchase price at c.US$36m with an impairment loss of US$7.7m
recognised in the Consolidated Statement of Comprehensive Income. A Sales
Purchase Agreement was signed on 30 June 2023 by an interested party, the
timeline of which was not adhered to thus rendering the agreement null and · there is inherent uncertainty in relation to the completion of the
void. A Supplemental Agreement was signed on 6 April 2024 with the intention sale process for the Sandakan assets until such time as the proceeds are
to complete the sales transaction within 75 days from the signing of the received, the Sandakan assets are being recorded at net realisable value; and
Supplemental Agreement (Note 35). As at the date of this audit report, the
sales transaction is ongoing and no deposit nor form of payment has been made. · there are no indicators of impairment to the year-end carrying value
of the above noted inventories.
Land asset c.US$5.4m
The land asset with a carrying value of c.US$5.4 million as at 31 December
2023 was valued by management.
The valuation of the above-mentioned inventories requires significant judgment
and estimation by management. Inaccuracies in key assumptions and inputs could
result in a material misstatement in the consolidated financial statements.
Due to the significance of the estimates and judgements involved, we deemed
the carrying value of the above-mentioned inventories to be a significant risk
and a key audit matter.
Other information
The other information comprises the information included in the annual report,
other than the consolidated 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 consolidated 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 consolidated 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 consolidated 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:
· proper accounting records have not been kept by the parent company,
or proper returns adequate for our audit have not been received from branches
not visited by us; or
· the consolidated financial statements are not in agreement with the
accounting records and returns.
Responsibilities of directors
As explained more fully in the statement of directors' responsibilities, the
directors are responsible for the preparation of the consolidated 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 consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated 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 consolidated 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 consolidated financial statements. We obtained our
understanding in this regard through discussions with management, industry
research, and 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 Guidance and Transparency Rules;
o The Bribery Act 2010;
o Market Abuse Regulation;
o Anti-money laundering legislations;
o Local tax and employment law; and
o IFRSs as adopted by European Union.
· 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 minutes of board meetings;
o Reviewing accounting ledgers; and
o Reviewing Regulatory News Service announcements
· We also identified the risks of material misstatement of the
consolidated 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. We addressed this by challenging the key
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.
· In our audit procedures, we have considered matters of non-compliance
with laws and regulations, including fraud at the group and component levels.
We have performed audit procedures on all material components within the
group.
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 consolidated 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
consolidated 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. This description forms part of our
auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with our engagement letter dated 13 November 2023. Our audit work has been
undertaken so that we might state to the company'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 company and the company'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
Recognised
Auditor
London E14 4HD
30 April 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
Notes US$'000 US$'000
Continuing operations
Revenue 5 1,205 980
Cost of sales 6 (677) (640)
Gross profit 528 340
Other income 7 14,544 10,971
Administrative expenses 11 (1,069) (2,433)
Other operating expenses 11 (13,989) (17,465)
Impairment of inventory 11 (7,668) (8,620)
Gain on sale of discontinued operations - 2,702
Foreign exchange loss 8 (1,976) (1,695)
Operating loss (9,630) (16,200)
Finance income 1,860 1,970
Finance costs (2,912) (3,344)
Net finance costs 10 (1,052) (1,374)
Net loss before taxation 11 (10,682) (17,574)
Taxation 12 209 (302)
Loss for the year (10,473) (17,876)
Other comprehensive income/(loss), net of tax
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences 13 (755) (2,459)
for foreign operations
Total other comprehensive 13 (755) (2,459)
loss for the year
Total comprehensive (11,228) (20,335)
loss for the year
Loss attributable to:
Equity holders of the parent company 14 (8,732) (15,867)
Non-controlling interests 15 (1,741) (2,009)
Loss for the year (10,473) (17,876)
Total comprehensive loss attributable to:
Equity holders of the parent company (9,696) (18,451)
Non-controlling interests (1,532) (1,884)
Total comprehensive loss for the year (11,228) (20,335)
Loss per share (4.39) (7.99)
Basic and diluted (US cents)
The notes to the financial statements form an integral part of the financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
2023 2022
Notes US$'000 US$'000
Non-current assets
Property, plant and equipment 16 198 79
Intangible assets 17 578 578
Right of use 18 - -
Deferred tax assets 19 4,518 4,723
Total non-current assets 5,294 5,380
Current assets
Inventories 20 118,351 132,573
Trade and other receivables 21 9,078 11,575
Prepayments 141 376
Current tax assets 221 10
Cash and cash equivalents 22 4,273 7,259
Total current assets 132,064 151,793
TOTAL ASSETS 137,358 157,173
Equity
Share capital 23 10,601 10,601
Share premium 24 208,925 208,925
Capital redemption reserve 25 1,899 1,899
Translation reserve 26 (26,524) (25,436)
Accumulated losses (131,513) (122,781)
Shareholders' equity 63,388 73,208
Non-controlling interests 15 (6,936) (5,404)
Total equity 56,452 67,804
Non-current liabilities
Trade and other payable 27 - 36,440
Total non-current liabilities - 36,440
Current liabilities
Trade and other payables 27 48,281 18,089
Amount due to non-controlling interests 28 1,891 1,981
Loans and borrowings 29 1,471 1,595
Medium term notes 30 29,263 31,264
Total current liabilities 80,906 52,929
Total liabilities 80,906 89,369
TOTAL EQUITY AND LIABILITIES 137,358 157,173
The financial statements were approved on 30 April 2024 and authorised for
issue by the Board and were signed on its behalf by
THOMAS
HOLLAND
HELEN SIU MING WONG
Director
Director
30 April 2024
The notes to the financial statements form an integral part of the financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 december 2023
Consolidated Redeemable Ordinary Shares Management Shares Share Premium Capital Redemption Reserve Translation Reserve Accumulated Losses Total Equity Attributable to Equity Holders of the Parent Non- Controlling Interests Total Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2022 (restated) 10,601 -# 208,925 1,899 (22,852) (106,914) 91,659 (2,646) 89,013
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)
Disposal of subsidiaries - - - - - - - (874) (874)
As at 31 December 2022/ 1 January 2023 10,601 -# 208,925 1,899 (25,436) (122,781) 73,208 (5,404) 67,804
Loss for the year - - - - - (8,732) (8,732) (1,741) (10,473)
Total other comprehensive (loss)/income for the year - - - - (964) - (964) 209 (755)
Total comprehensive loss for the year - - - - (964) (8,732) (9,696) (1,532) (11,228)
Disposal of subsidiaries - - - - (124) - (124) - (124)
Sale of discontinued operations - - - - - - - - -
Shareholders' equity at 31 December 2023 10,601 -# 208,925 1,899 (26,524) (131,513) 63,388 (6,936) 56,452
# Represents 2 management shares at US$0.05 each
The notes to the financial statements form an integral part of the financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 december 2023
2023 2022
US$'000 US$'000
Cash Flows from Operating Activities
Net loss before taxation (10,682) (17,574)
Impairment of amount due from a related party 219 2,755
Bad debt written off 318 -
Impairment of inventory 7,668 8,620
Finance income (1,860) (1,970)
Finance costs 2,912 3,344
Loss on disposal of subsidiaries (121) (2,702)
Unrealised foreign exchange loss/(gain) 1,940 1,688
Depreciation of property, plant and equipment and right-of-use asset 32 60
Operating loss before changes in working capital 426 (5,779)
Changes in working capital:
Decrease/(Increase) in inventories 843 (1,671)
Decrease in trade and other receivables and prepayments 3,567 15,985
Decrease in trade and other payables (7,460) (7,448)
Cash (used in)/generated from operations (2,624) 1,087
Interest paid (3) (6,034)
Tax (refunded)/paid (2,854) 428
Net cash used in operating activities (5,481) (4,519)
Cash Flows From Investing Activities
Purchase of property, plant and equipment (154) (39)
Proceeds from the sale of discontinued operations - 10,045
Finance income received 130 508
Net cash from investing activities (24) 10,514
CONSOLIDATED STATEMENT OF CASH FLOWS (CONT'D)
For the year ended 31 december 2023
2023 2022
US$'000 US$'000
Cash Flows From Financing Activities
Advances from non-controlling interests - 129
Repayment of finance lease liabilities - (14)
Repayment of loans and borrowings (693) (8,884)
Net cash used in financing activities (693) (8,769)
Net changes in cash and cash equivalents during the year (6,198) (2,774)
Effect of changes in exchange rates 3,212 2,919
Cash and cash equivalents at the beginning of the year 7,259 7,114
Cash and cash equivalents at the end of the year (i) 4,273 7,259
(i) Cash and Cash Equivalents
Cash and cash equivalents included in the consolidated
statement of cash flows comprise the following consolidated statement of
financial position amounts:
2023 2022
US$'000 US$'000
Cash and bank balances 1,882 4,786
Short term bank deposits 2,391 2,473
4,273 7,259
Less: Deposits pledged (ii) (2,377) (2,473)
Cash and cash equivalents 1,896 4,786
(ii) Included in short term bank deposits and cash and bank
balance is US$2,377,000 (2022: US$2,473,000) pledged for loans and borrowings
and Medium Term Notes of the Group.
The notes to the financial statements form an integral part of the financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
1 GENERAL INFORMATION
Aseana Properties Limited (the "Company") was incorporated in Jersey as a
limited liability par value company. The Company's registered office is
Osprey House, Old Street, St Helier, Jersey JE2 3RG.
The consolidated financial statements comprise the financial information of
the Company and its subsidiary undertakings (together the "Group"). Details
of the entities of the Group are described in Note 32.
The principal activities of the Group were the development of upscale
residential and hospitality projects, sale of development land and operation
and sale of hotel and mall assets in Malaysia. It is currently carrying out
its divestment program which consists of selling the Group's remaining
Malaysian assets, repaying its debts and distributing the remaining proceeds
to its shareholders.
The financial statements are presented in US Dollar ("US$"), 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.
2.1 Non-going Concern
Financial statements are normally prepared on a going concern basis where
there is neither the intention nor need to suspend operations of an entity.
Where such an intention or need exists, the accounting standards preclude the
preparation of financial statements on a going concern basis.
During the year, due to the unexpected delay in the completion of the sale of
the Sandakan Hotel Asset and the Harbour Mall Sandakan (collectively, the
"Sandakan Assets"), the Group was unable to repay the outstanding Medium Term
Notes which were used to finance the development of the Sandakan Assets and
issued by Silver Sparrow Berhad. As a result, on 8 December 2023, Silver
Sparrow Berhad received a Notice of Default from the facility agent for the
outstanding principal amount of approximately RM60.9 million (US$13.3
million). Such principal amount remained outstanding as at 31 December 2023
and on 30 April 2024. Its eventual repayment depends upon the first payment
to be made by the purchaser of the Sandakan Asset, which has yet to take place
(for details of the sale, refer to Note 35).
Apart from the Medium Term Notes, the Group had an outstanding principal
repayment for a bank loan for RM750,000 (US$163,000), which was required by
the bank, that had remained outstanding as at 31 December 2023 and on 30 April
2024. The Group is engaged in discussion with the bank and the Directors are
of the opinion that the outstanding amount can be repaid by the proceeds from
the sale of Sandakan Assets.
Moreover, the Directors have borrowed short term loans to cover the working
capital requirement during the period of delay in the above sale, but only
US$1 million have been raised in loans and have sought, but not received,
further support from shareholders.
The circumstances as outlined above cast uncertainties on the Company's
ability to remain as a going concern, although the Directors are of the
opinion that such uncertainties will be removed once the sale of the Sandakan
Asset completes, the proceeds from the sale will enable the Company and the
Group to meet its financial obligations.
As a result, the financial statements have not been prepared on the going
concern basis but instead on a non-going concern basis. Adoption of the
non-going concern basis means that assets are measured at their net realisable
value. Any gains or losses resulting from measuring at net realisable value
are recognised in the surplus or deficit; however, no material change to the
values of assets and liabilities has been noted. Moreover, all liabilities
are also classified as current due to the uncertainty over when they will
become due.
In adopting the non-going concern basis, the Group continues to apply
disclosure requirements of the IFRSs to the extent that they are relevant and
modified when considered appropriate.
Apart from the anticipated completion of sale of Sandakan Assets, the
Directors also anticipate the sale of the Group's remaining assets, comprising
a plot of development land in Kota Kinabalu and the hotel and the remaining
unsold residential units in Kuala Lumpur. The Company is continuing its
efforts in asset sales in order to raise sufficient resources to enable the
repayment of the Group's debts.
In addition, as described in Note 2.1.1 below, on 30 May 2023, shareholders
voted to extend the life of the Company by a further two years to May 2025 and
a further dis-continuation vote will be put to shareholders by the end of May
2025.
2.1.1 May 2023 Resolution
At a general meeting of the Company held on 30 May 2023, Shareholders voted in
favour of the Board's proposals to reject the 2023 Discontinuation Resolution
and enabled the Company to continue to pursue its Divestment Investment
Policy, 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) Non-going concern
As described in Note 2.1, the Directors consider the Company at this time to
be a non-going concern due to the current circumstances explained therein.
(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
2023, the carrying value of inventories were approximately US$118 million (31
December 2022: US$133 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$34.9
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
The ongoing conflicts in Ukraine, Middle East, and the high inflation
continued cast doubt 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 2023.
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.
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 2023, 100% (2022: 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 2023, 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$9.1 million (2022: US$11.6 million). The Group's
exposure to credit risk arising from deposits and balances with banks is set
out in Note 22 and totals US$4.3 million (2022: US$7.3 million).
Financial guarantees
The Company provides unsecured financial guarantee to banks in respect of
banking facilities granted to certain subsidiaries, as set out in Note 30.
At the end of the reporting period, the maximum exposure to credit risk as
represented by the outstanding banking and credit facilities of the
subsidiaries is as follows:
2023 2022
Company US$'000 US$'000
Financial institutions for bank facilities granted to its subsidiaries 30,734 32,859
The Company defaulted on their SSB medium term notes in the financial year as
disclosed in Note 30.
4.3 Liquidity Risk
The Group raises funds as required on the basis of budgeted expenditure and
inflows for the next twelve months with the objective of ensuring adequate
funds to meet commitments associated with its financial liabilities. When
funds are sought, the Group balances the costs and benefits of equity and debt
financing against the developments to be undertaken. At 31 December 2023 the
Group's borrowings to fund the developments had terms of less than ten years.
Cash flows are monitored on an on-going basis. The Group manages its
liquidity needs by monitoring scheduled debt servicing payments for long term
and short term financial liabilities as well as cash out flows due in its
day-to-day operations while ensuring sufficient headroom on its undrawn
committed borrowing facilities at all times so that borrowing limits and
covenants are not breached. Capital investments are committed only after
confirming the source of funds, e.g. securing financial liabilities.
Management is of the opinion that significant portion of the borrowings can be
renewed or re-financed based on the strength of the Group's earnings, cash
flow and asset base, while the rest can be repaid by utilizing the proceeds
from asset sales.
It is not expected that the cash flows included in the maturity analysis could
occur significantly earlier, or at a significantly different amount.
The maturity profile of the Group's financial liabilities at the statement of
financial position date, based on the contracted undiscounted payments, were
as follows:
Carrying amount Contractual interest rate Contractual cash flows Under 1 - 2 years 2 - 5 years More than
1 year
5 years
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 31 December 2023
Interest bearing loans and borrowings 30,734 9.9-12.0% 31,581 31,581 - - -
Trade and other payables 48,281 - 48,281 48,281 - - -
Amount due to non-controlling interests 1,891 - 1,891 1,891 - - -
80,906 - 81,753 81,753 - - -
At 31 December 2022
Interest bearing loans and borrowings 32,859 5.5%-12.0% 34,417 34,417 - - -
Trade and other payables 18,089 - 18,089 18,089 - - -
Amount due to non-controlling interests 1,981 - 1,981 1,981 - - -
52,929 - 54,487 54,487 - - -
The above table excludes current tax liabilities and contract liabilities.
4.4 Market Risk
(a) Foreign Exchange Risk
Entities within the Group are exposed to foreign exchange risk from future
commercial transactions and net monetary assets and liabilities that are
denominated in a currency that is not the entity's functional currency. The
foreign currency exposure is not hedged.
The Group maintains a natural hedge, whenever possible, by borrowing in the
currency of the country in which the property or investment is located or by
borrowing in currencies that match the future revenue stream to be generated
from its investments.
Management monitors the foreign currency exposure closely and takes necessary
actions in consultation with the bankers to avoid unfavourable exposure.
The Group is exposed to foreign currency risk on cash and cash equivalents
which are denominated in currencies other than the functional currencies of
the relevant Group entities.
The Group's exposure to foreign currency risk on cash and cash equivalents in
currencies other than the functional currencies of the relevant Group entities
at year end are as follows:
2023 2022
US$'000 US$'000
US Dollar 365 3,018
Ringgit Malaysia 3,908 4,241
Others - -
4,273 7,259
At 31 December 2023, if cash and cash equivalents denominated in a currency
other than the functional currencies of the Group entities strengthened/
(weakened) by 10% and all other variables were held constant, the effects on
the Group's profit or loss and equity expressed in US$ would have been
US$391,000/ (US$391,000) (2022: US$424,000/ (US$424,000)).
Currency risks as defined by IFRS 7 arise on account of monetary assets and
liabilities being denominated in a currency that is not the functional
currency. Differences resulting from the translation of financial statements
into the Group's presentation currency are not taken into consideration.
Subsequent to year end, there are no significant monetary balances held by
group companies that are denominated in a non-functional currency.
(b) Interest Rate Risk
The Group's policy is to minimise interest rate risk on bank loans and
borrowings using a mix of fixed and variable rate debts that represent market
rates. The Group prefers to maintain flexibility on the desired mix of fixed
and variable interest rates as this will depend on the economic environment,
the type of borrowings available and the funding requirements of the project
when a decision is to be made.
The interest rate profile of the Group's significant interest-bearing
financial instrument, based on carrying amounts at the end of the reporting
period was:
2023 2022
US$'000 US$'000
Fixed rate instruments:
Financial assets 2,377 2,473
Financial liabilities 30,734 32,859
Floating rate instruments:
Financial liabilities - -
The Group's exposure to the risk of changes in market interest rates relates
primarily to the Group's liabilities with a floating interest rate. The
fixed and floating interest rates were not hedged and would therefore expose
the Group to cash flow interest rate risk. Borrowings at fixed rate
represent 100% (2022: 100%) of the Group's total borrowings at 31 December
2023.
Interest rate risk is reported internally to key management personnel via a
sensitivity analysis, which is prepared based on the exposure to variable
interest rates for non-derivative instruments at the statement of financial
position date. For variable rate borrowings, the analysis is prepared
assuming that the amount of liabilities outstanding at the statement of
financial position date will be outstanding for the whole year. A 100 basis
point increase or decrease is used and represents the management's assessment
of the reasonable possible change in interest rate.
Sensitivity analysis for floating rate instrument
At 31 December 2023, if the interest rate had been 100 basis points lower/
higher and all other variables were held constant, this would
(decrease)/increase the Group loss for the year by approximately (US$ Nil)/US$
Nil (2023: 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:
2023 Fair value of financial instruments carried at fair value Fair value of financial instruments Total Carrying
not carried at fair value
fair
US$'000 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total value amount
Financial liabilities
Amount due to non-controlling interests - - - - - - 1,891 1,891 1,891 1,891
Bank loans and borrowings - - - - - - 1,471 1,471 1,471 1,471
Medium term notes - - - - - - 29,263 29,263 29,263 29,263
- - - - - - 32,625 32,625 32,625 32,625
2022 Fair value of financial instruments carried at fair value Fair value of financial instruments Total Carrying
not carried at fair value
fair
US$'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)
Medium term notes - - - - - - (31,264) (31,264) (31,264) (31,264)
- - - - - - (34,840) (34,840) (34,840) (34,840)
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 (2022: 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
(2022: 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 2023, the interest rate used to discount estimated cash flows of the
medium term notes is 10.24% (2022: 7.48%).
4.6 Capital Management
The Group's objectives when managing capital are to safeguard the Group's
ability to realise its assets in an orderly manner while meeting the finance
obligations, 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:
2023 2022
US$'000 US$'000
Cash and cash equivalents 4,273 7,259
Loans and borrowings and finance lease liabilities (1,471) (1,595)
Medium term notes (29,263) (31,264)
Equity attributable to equity holders of the parent (63,388) (73,208)
Total capital (89,849) (98,808)
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 2023 and 31 December 2022 were as
follows:
2023 2022
US$'000 US$'000
Total borrowings and finance lease liabilities 30,734 32,859
Less: Cash and cash equivalents (Note 22) (4,273) (7,259)
Net debt 26,461 25,600
Total equity 56,452 67,804
Net debt-to-equity ratio 0.47 0.38
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 and mall 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:
2023 2022
US$'000 US$'000
Sale of completed units 1,205 980
1,205 980
5.2 Segmental Information
2023 2022
Timing of revenue recognition US$'000 US$'000
Properties transferred at a point in time 1,205 980
Properties transferred over time - -
1,205 980
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 ("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 2023 and 2022.
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 2023
Investment Holding Companies Ireka Land Sdn. Bhd. ICSD Ventures Sdn. Bhd. Amatir Resources Sdn. Bhd. The RuMa Hotel KL Sdn. Bhd. Urban Total
DNA
Sdn. Bhd.
US$'000 US$'000 US$'000 US$'000 US$'000 S$'000 US$'000
Segment (loss)/profit before taxation (231) (139) (7,815) (2,299) 15 700 (9,769)
Included in the measure of segment (loss)/profit are:
Revenue - - - 1,205 - - 1,205
Other income from hotel operations - - - - 11,308 - 11,308
Other income from mall operations - - 2,254 - - - 2,254
Expenses from hotel operations - - (346) - (11,219) - (11,565)
Expenses from mall operations - - (1,277) - - - (1,277)
Depreciation of property, plant and equipment - - (20) - (12) - (32)
Finance costs - - (978) (192) - (1,683) (2,853)
Finance income 1,730 - 60 1 - 1 1,792
Segment assets 8,123 61 37,341 275 990 81,533 128,323
Segment liabilities 600 4 1,232 1,531 6,579 39,389 49,335
Reconciliation of reportable segment revenues, profit or loss, assets and
liabilities and other material items
Profit or loss US$'000
Total loss for reportable segments (9,769)
Other non-reportable segments (921)
Depreciation -
Finance income (60)
Finance costs 68
Consolidated loss before taxation (10,682)
US$'000 Revenue Depreciation Finance costs Finance income Segment Segment liabilities Additions to non-current assets
assets
Total reportable segment 1,205 (32) (2,853) 1,792 128,323 49,335 154
Other non-reportable segments - - (59) 68 9,035 31,571 -
Consolidated total 1,205 (32) (2,912) 1,860 137,358 80,906 154
Operating Segments - Year ended 31 December 2022
Investment Holding Companies Ireka Land Sdn. Bhd. ICSD Ventures Sdn. Bhd. Amatir Resources Sdn. Bhd. The RuMa Hotel KL Sdn. Bhd. Urban Total
DNA
Sdn. Bhd.
US$'000 US$'000 US$'000 US$'000 US$'000 S$'000 US$'000
Segment (loss)/profit before taxation 826 (5) (9,061) (1,789) (1,792) (4,898) (16,719)
Included in the measure of segment (loss)/profit are:
Revenue - - - - - 980 980
Other income from hotel operations - - - - 8,169 - 8,169
Other income from mall operations - - 2,098 - - - 2,098
Expenses from hotel operations - - (310) - (9,859) - (10,169)
Expenses from mall operations - - (1,251) - - - (1,251)
Depreciation of property, plant and equipment - - (10) - (50) - (60)
Finance costs - - (1,172) (192) - (1,933) (3,297)
Finance income 1,462 - 47 413 - 1 1,923
Segment assets 9,331 60 46,882 704 965 89,571 147,513
Segment liabilities 459 3 1,294 2,511 6,758 45,205 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
Geographical Information - Year ended 31 December 2023
Malaysia Total
US$'000 US$'000
Revenue 1,205 1,205
Non-current assets 5,294 5,294
In the financial years ended 31 December 2023, no single customer exceeded 10%
of the Group's total revenue.
Geographical Information - Year ended 31 December 2022
Malaysia Total
US$'000 US$'000
Revenue 980 980
Non-current assets 5,380 5,380
In the financial year ended 31 December 2022, no single customer exceeded 10%
of the Group's total revenue.
6 COST OF SALES
2023 2022
US$'000 US$'000
Direct costs attributable to:
Completed units (Note 20) 677 640
7 OTHER INCOME
2023 2022
US$'000 US$'000
Rental income 43 121
Other income from hotel operations (a) 11,309 8,169
Other income from mall operations (b) 2,254 2,098
Forfeiture of deposit 791 -
Sundry income 147 583
14,544 10,971
(a) Other income from hotel operations
The income relates to the hotel operations of the RuMa Hotel and Residences
which is operated by a subsidiary of the Company, The RuMa Hotel KL 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)
2023 2022
US$'000 US$'000
Foreign exchange gain/(loss) comprises:
Realised foreign exchange loss (36) (6)
Unrealised foreign exchange loss (1,940) (1,689)
(1,976) (1,695)
9 STAFF COSTS
2023 2022
US$'000 US$'000
Wages, salaries and others (including key management personnel) 4,302 5,259
Employees' provident fund, social security and other pension costs 47 46
4,349 5,305
The Company had no executive Directors. As of the year ended 31 December
2023, the subsidiaries of the Group had a total of 244 (2022: 235) employees.
10 FINANCE INCOME/(COSTS)
2023 2022
US$'000 US$'000
Interest income from banks 130 508
Accrued interest 1,730 1,462
Interest on bank loans (252) (239)
Interest on medium term notes (2,660) (3,105)
(1,052) (1,374)
Accrued interest represents interest on a contract payment by Ireka
Corporation Berhad. For more detailed information see Note 31.
11 NET LOSS BEFORE TAXATION
Net loss before taxation is stated after charging/(crediting):
2023 2022
US$'000 US$'000
Auditor's remuneration 105 96
Directors' fees/emoluments 244 265
Divestment expenses - 1,088
Depreciation of property, plant and equipment 32 58
Expenses of hotel operations 11,565 10,170
Expenses of mall operations 1,277 1,251
Unrealised foreign exchange loss/(gain) 1,940 1,689
Realised foreign exchange loss 36 6
Impairment of amount due from a related party 219 4,778
Bad debt written off 318 -
Impairment of inventory 7,668 8,620
Gain on sale of discontinued operations - (2,702)
12 TAXATION
2023 2022
US$'000 US$'000
Current tax expense - Current year 15 85
- Prior (224) 217
year
Deferred tax charge - Current year - -
- Prior - -
year
Total tax (recoverable)/expense for the year (209) 302
The numerical reconciliation between the income tax (recoverable)/expense and
the product of accounting results multiplied by the applicable tax rate is
computed as follows:
2023 2022
US$'000 US$'000
Net loss before taxation (10,682) (17,574)
Income tax at a rate of 24% (2022: 24%) (2,564) (4,218)
Add:
Tax effect of expenses not deductible in determining taxable profit 1,212 2,379
Current year losses and other tax benefits for which no deferred tax asset was 2,569 3,670
recognised
Tax effect of different tax rates in subsidiaries - -
Less:
Tax effect of income not taxable in determining taxable profit (1,202) (1,746)
(Over)/under-provision in respect of prior period/year (224) 217
Total tax (recoverable)/expense for the year (209) 302
The applicable corporate tax rate in Malaysia is 24% (2022: 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% (2022: 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 2023 2022
tax
US$'000 US$'000
Foreign currency translation differences for foreign operations
Losses arising during the year (755) (2,440)
(755) (2,440)
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 2023 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:
2023 2022
US$'000 US$'000
Loss attributable to equity holders of the parent (8,732) (15,867)
Number of shares (thousand shares) * 198,691 198,691
Loss per share
Basic and diluted (US cents) (4.39) (7.99)
* 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
2023 US$'000 US$'000 US$'000 US$'000
NCI percentage of ownership interest and voting interest 30% 30%
Carrying amount of NCI (2,016) (4,950) 30 (6,936)
Loss allocated to NCI (1,741) 5 (5) (1,741)
Summarised financial information before intra-group elimination
Urban DNA The RuMa Hotel KL Sdn. Bhd.
Sdn. Bhd.
US$'000 US$'000
As at 31 December 2023
Non-current assets 736 84
Current assets 81,023 906
Non-current liabilities (81,956) (10,952)
Current liabilities (3,768) (6,538)
Net assets (3,965) (16,500)
Year ended 31 December 2023
Revenue - -
Loss for the year (5,804) 15
Total comprehensive loss (5,854) 767
Cash flows used in operating activities (1,104) (4)
Cash flows from/(used in) investing activities - (73)
Cash flows (used in)/from financing activities (1,112) (65)
Net increase in cash 8 (142)
and cash equivalents
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 The RuMa Hotel KL Sdn. Bhd.
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
16 PROPERTY, PLANT AND EQUIPMENT
Furniture, Fittings & Equipment Motor Vehicles Total
US$'000 US$'000 US$'000
Cost
At 1 January 2023 298 28 326
Exchange adjustments (13) (1) (14)
Addition 154 - 154
At 31 December 2023 439 27 466
Accumulated Depreciation
At 1 January 2023 221 26 247
Exchange adjustments (10) (1) (11)
Charge for the year 32 - 32
At 31 December 2023 243 25 268
Net carrying amount at 196 2 198
31 December 2023
Cost
At 1 January 2022 272 29 301
Exchange adjustments (13) (1) (14)
Addition 39 - 39
At 31 December 2022 298 28 326
Accumulated Depreciation
At 1 January 2022 170 27 197
Exchange adjustments (8) (1) (9)
Charge for the year 59 - 59
At 31 December 2022 221 26 247
Net carrying amount at 77 2 79
31 December 2022
17 INTANGIBLE ASSETS
Goodwill
US$'000
Cost
At 1 January 2022/ 31 December 2022/ 6,479
31 December 2023
Accumulated impairment
At 1 January 2022 5,901
Disposals -
At 31 December 2022/ 1 January 2023 5,901
Disposals -
At 31 December 2023 5,901
Carrying amount
At 31 December 2022 578
At 31 December 2023 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:
2023 2022
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$'000
At 1 January 2022 4,424
Exchange adjustments -
Disposal (3)
At 31 December 2022/ 1 January 2023 4,421
Exchange adjustments (256)
Disposal (3)
At 31 December 2023 4,162
Depreciation charges
At 1 January 2022 4,423
Exchange adjustments -
Charge for the year 1
Disposal (3)
At 31 December 2022/ 1 January 2023 4,421
Exchange adjustments (256)
Charge for the year -
Disposal (3)
At 31 December 2023 4,162
NET BOOK VALUE
At 31 December 2022 -
At 31 December 2023 -
Lease liabilities include in the consolidated statement of financial position
2023 2022
US$'000 US$'000
Current - -
Non-Current - -
Total - -
Amount recognized in the consolidated income statement
2023 2022
US$'000 US$'000
Depreciation charges on right-of-use - 1
Interest on lease liabilities - -
Total - 1
There is a decrease in depreciation charges of right-of-use assets by US$1,000
for the financial year ended 31 December 2023.
19 DEFERRED TAX ASSETS
2023 2022
US$'000 US$'000
At 1 January 4,723 4,979
Exchange adjustments (205) (256)
Deferred tax credit relating to origination of - -
temporary differences during the year
At 31 December 4,518 4,723
The deferred tax assets comprise:
2023 2022
US$'000 US$'000
Taxable temporary differences between accounting profit and taxable profit of 4,518 4,723
property development units sold
At 31 December 4,518 4,723
Deferred tax assets have not been recognised in respect of unused tax losses
of US$47 million (31 December 2022: US$48 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$11.5 million (31
December 2022: US$11.6 million).
20 INVENTORIES
2023 2022
Notes US$'000 US$'000
Land held for property development (a) 5,401 6,288
Stock of completed units, at cost (b) 112,862 126,181
Consumables 88 104
At 31 December 118,351 132,573
2023 2022
Notes US$'000 US$'000
Carrying amount of inventories pledged as security for Loans and borrowings 111,896 119,956
and Medium Term Notes
(a) Land held for property development
2023 2022
US$'000 US$'000
At 1 January 6,288 6,628
Less:
Exchange adjustments (274) (340)
Additions - -
Disposals - -
Costs recognised as expenses in the consolidated statement of comprehensive (613) -
income during the year
At 31 December 5,401 6,288
(b) Stock of completed units, at cost
2023 2022
US$'000 US$'000
At 1 January 126,181 140,300
Transfer (to)/from work in progress - 2,321
Less:
Exchange adjustments (5,432) (7,180)
Disposals - -
Impairment (7,668) (8,620)
Costs recognised as expenses in the consolidated statement of comprehensive (219) (640)
income during the year
At 31 December 112,862 126,181
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 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 market
transaction price on an arm's length basis. The aggregate recoverable amount
of US$35,948,000 (RM165,000,000) (2022: US$45,558,000 (RM200,000,000)) 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$84,314,000 (RM387,000,000) (2022:
US$83,599,000 (RM367,000,000)) of The RuMa was determined to be higher than
its carrying amount.
The valuation of The RuMa Hotel was determined by discounting the future cash
flows expected to be generated from the continuing operations of The RuMa and
was based on the following key assumptions:
(1) Cash flows were projected based on the 10 years projection
of The RuMa Hotel;
(2) The occupancy rate of The RuMa Hotel will improve to 78% in
year 10 which is when the hotel's operations are expected to stabilise;
(3) Average daily rates of the hotel will improve to US215.03
(RM987) in year 10 which is when the hotel's operations are expected to
stabilise;
(4) Projected gross margin reflects the industry average
historical gross margin, adjusted for projected market and economic conditions
and internal resources efficiency; and
(5) Pre-tax discount rate of 9% was applied in discounting the
cash flows. The discount rate takes into the prevailing trend of the hotel
industry in Malaysia.
The valuation of The RuMa Residences was determined based on the Comparison
Approach as the sole method of valuation.
21 TRADE AND OTHER RECEIVABLES
2023 2022
US$'000 US$'000
Trade receivables 754 4,401
Other receivables 8,095 6,842
Sundry deposits 229 332
9,078 11,575
Trade receivables represent progress billings receivable from the sale of
completed units and land held for property development. Progress billings
receivable from the sale of completed units are generally due for settlement
within 30 days from the date of invoice and are recognised and carried at the
original invoice amount less allowance for any uncollectible amounts. They
are recognised at their original invoice amounts on initial recognition less
provision for impairment where it is required.
The loss allowance as at 31 December 2023 and 31 December 2022 was determined
as follows for both trade receivables and contract assets:
Trade receivable Contract asset Loss allowance Total
31 December 2023 US$'000 US$'000 US$'000 US$'000
Current 752 - - 752
Past due
0 - 60 days - - - -
61 -120 days - - - -
More than 120 days 2 - - 2
754 - - 754
Trade receivable Contract asset Loss allowance Total
31 December 2022 US$'000 US$'000 US$'000 US$'000
Current 4,399 - - 4,399
Past due
0 - 60 days - - - -
61 -120 days - - - -
More than 120 days 2,035 - (2,033) 2
6,434 - (2,033) 4,401
The Group uses the simplified approach to estimate credit loss allowance for
all trade receivables and contract assets, which will be based on the past
payment trends, existing market conditions and adjusts for qualitative and
quantitative reasonable and supportable forward-looking information. The
loss allowances are also based on assumptions about risk of default. The
quantum of any probability of an expected credit loss will occur to be low or
not material. No provision is recognised in these financial statements.
Included in other receivables was an amount due from Ireka Corporation Berhad
in relation to the interest owed on the unpaid shareholder advances to the
construction of The RuMa Hotel and Residences, as described in Note 31.
The maximum exposure to credit risk is represented by the carrying amount in
the statement of financial position. The Group monitors the repayment of the
customers regularly and are confident of the ability of the customers to repay
the balance outstanding.
22 CASH AND CASH EQUIVALENTS
2023 2022
US$'000 US$'000
Cash and bank balances 1,882 4,786
Short term bank deposits 2,391 2,473
4,273 7,259
Less: Deposits pledged (2,377) (2,473)
Cash and cash equivalents 1,896 4,786
Included in short term bank deposits and cash and bank balance is US$2,377,000
(31 December 2022: US$2,473,000) 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$2,377,000 (31 December 2022: US$2,473,000), pledged for
loans and borrowings and Medium Term Notes of the Group, ranges from 2.10% to
2.80% per annum (31 December 2022: 1.05% to 2.85% per annum).
The interest rate on short term bank deposits and cash and bank balance
pledged for loans and borrowings and Medium Term Notes of the Group, ranges
from 2.10% to 2.80% per annum (31 December 2022: 1.05% to 2.85% per annum).
23 SHARE CAPITAL
Number of shares Amount Number of shares Amount
2023 2023 2022 2022
'000 US$'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$0.05 per share in 2009 and 2013
respectively.
26 TRANSLATION RESERVE
The translation reserve comprises foreign currency differences arising from
the translation of the financial statements of foreign operations.
27 TRADE AND OTHER PAYABLES
2023 2022
US$'000 US$'000
Non-current
Amount due to contract buyers - 36,440
- 36,440
Current
Trade payables 630 5,609
Other payables 4,357 3,944
Amount due to contract buyers 34,852
Deposits refundable 732 778
Accruals 7,710 7,758
48,281 18,089
48,281 54,529
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 2023 still effectively controlled by the Group.
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$0.6 million (31 December 2022:
US$0.7 million).
Deposits and accruals are from normal business transactions of the Group.
28 AMOUNT DUE TO NON-CONTROLLING INTERESTS
2023 2022
US$'000 US$'000
Minority Shareholder of Bumiraya Impian Sdn. Bhd.:
- Global Evergroup Sdn. Bhd. 1,081 1,129
Minority Shareholder of Urban DNA Sdn. Bhd. and
The RuMa Hotel KL Sdn. Bhd.:
- Ireka Corporation Berhad 810 852
1,891 1,981
The current amount due to non-controlling interests amounting to US$1,891,000
(31 December 2022: US$1,981,000) is unsecured, interest free and repayable on
demand.
29 LOANS AND BORROWINGS
2023 2022
US$'000 US$'000
Current
Bank loans 1,471 1,595
Lease liabilities - -
1,471 1,595
LEASE LIABILITIES
2023 2022
Future minimum lease payment US$,000 US$'000
Within one year - -
Between one and five years - -
Over five years - -
- -
The effective interest rates on the bank loans for the year is 12% (31
December 2022: 12%) per annum.
Borrowings are denominated in Ringgit Malaysia.
Bank loans are repayable within one year. It was last extended for one year
on 31 May 2023. As a condition of the extension, the Group was required make
principal repayment for RM1,000,000 (US$218,000) by 30 June 2023. However,
RM750,000 (US$163,000) of the required repayment had remained outstanding as
at 31 December 2023. The Group is engaged in discussion with the bank and the
Directors are of the opinion that the outstanding amount can be repaid by the
proceeds from the sale of Sandakan Assets.
Bank loans are secured by land held for property development,
work-in-progress, operating assets of the Group, pledged deposits and some are
secured by the corporate guarantee of the Company.
Reconciliation of movement of loan and borrowings to cash flows arising from
financing activities:
As at 1 January 2023 Drawdown of loan Repayment of loan Foreign exchange movements As at 31 December 2023
US$'000 US$'000 US$'000 US$'000 US$'000
Bank loans 1,595 - (54) (70) 1,471
Total 1,595 - (54) (70) 1,471
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$'000
Bank loans 1,681 - - (86) 1,595
Total 1,681 - - (86) 1,595
As at 1 January 2022 Repayment of lease payment Interest expense Foreign exchange movements As at 31 December 2022
US$'000 US$'000 US$'000 US$'000 US$'000
Lease liabilities - - - - -
Total - - - - -
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$'000
Lease liabilities 14 (13) - (1) -
Total 14 (13) - (1) -
30 MEDIUM TERM NOTES
2023 2022
US$'000 US$'000
Outstanding medium term notes 29,263 31,264
Less:
Repayment due within twelve months (29,263) (31,264)
Repayment due after twelve months - -
Reconciliation of movement of medium term notes to cash flows arising from
financing activities:
As at 1 January 2023 Drawdown of loan Repayment of loan Foreign exchange movements As at 31 December 2023
US$'000 US$'000 US$'000 US$'000 US$'000
Medium Term Notes 31,264 - (639) (1,362) 29,263
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
Notes issued by Silver Sparrow Berhad
The medium term notes (the "SSB MTNs" or "MTNs") were issued by Silver Sparrow
Berhad ("SSB"), an indirect subsidiary of the Company, 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$8.89 million (RM39.0 million) was made on 7 April 2022.
Subsequently, they were further "rolled over" and became repayable on 8
December 2023. The MTNs are rated AAA.
The MTNs matured on 8 December 2023 however due to the non-completion of the
sale of the Sandakan assets, an event of default occurred as evidenced by the
receipt of a Notice of Default received from the facility agent. The Group
is engaged in discussion with the bank guarantors to apply the sale proceeds
of the Sandakan Assets for repayment of the MTNs, the Directors are of the
opinion that the repayment will take place in May 2024 with the first payment
made from the purchaser. Although the MTNs are in default, the Group has
kept current any and all default interest due. For details, please refer to
Note 35.
The weighted average interest rate of the MTN was 9.88% per annum at the
statement of financial position date. The effective interest rates of the
MTN and their outstanding amounts are as follows:
Maturity Dates Interest rate % per annum As at 31 December 2023
US$'000
Series 1 Tranche FG 8 Dec 2023 9.65 7,625
Series 1 Tranche BG 8 Dec 2023 10.20 5,647
13,272
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 Bank Pembangunan
Malaysia Berhad ("BPMB", formerly Danajamin Nasional Berhad) 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 BPMB, 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.
Notes issued by Potensi Angkasa Sdn. Bhd
Potensi Angkasa Sdn. Bhd. ("PASB"), an indirect subsidiary incorporated on 25
February 2019, has secured a commercial paper and/or medium term notes
programme of not exceeding US$19.61 million (RM90.0 million) (the "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 (the
"PASB Notes" or "Notes") whereby the nominal value of outstanding Notes shall
not exceed US$19.61 million (RM90.0 million) at any one time.
The details of the drawdown schedule were as follows:
Initial Issue First Roll-over Second Roll-over Third Roll-over Fourth Roll-over
Tranche No. Date RM ('000) Tranche No. Date RM ('000) Tranche No. Date RM ('000) Tranche No. Date RM ('000) Tranche No. Date RM ('000)
Tranche 1-23 10 Jun 2019 22,850 Tranche 63-83 10 Jun 2020 20,950 Tranche 124-142 10 Jun 2021 19,050 Tranche 203-218 13 Feb 2023 16,200
Tranche 24-31 30 Sep 2019 9,600 Tranche 84-91 30 Sep 2020 9,600 Tranche 143-147 1 Oct 2021 4,750 Tranche 180-184 3 Oct 2022 4,750 Tranche 232-236 3 Apr 2023 4,750
Tranche 32-49 7 Oct 2019 17,100 Tranche 92-109 7 Oct 2020 17,100 Tranche 148-165 8 Oct 2021 17,100 Tranche 185-202 10 Oct 2022 17,100 Tranche 237-254 11 Apr 2023 17,100
Tranche 50-62 25 Feb 2020 15,350 Tranche 110-122 25 Feb 2021 15,350 Tranche 166-178 28 Feb 2022 15,350 Tranche 219-231 1 Mar 2023 15,350
Tranche 123 9 Jun 2021 18,100 Tranche 179 10 Jun 2022 20,000 Tranche 255 12 Jun 2023 20,000
The weighted average interest rate of the Notes was 10.54% per annum at the
statement of financial position date. The effective interest rates of the
Notes and their outstanding amounts were as follows:
Maturity Dates Interest rate % per annum As at 31 December 2023
US$'000
Tranches 203-218 15 Feb 2024 10.00% 3,529
Tranches 219-231 1 Mar 2024 10.00% 3,344
Tranches 232-236 3 Apr 2024 10.00% 1,035
Tranches 237-254 12 Apr 2024 10.00% 3,726
Tranche 255 12 Jun 2024 12.00% 4,357
15,991
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
(the "Guarantee"); and
(d) Any other security deemed appropriate and mutually agreed
between the PASB and the Principal Adviser/Lead Arranger (the "PA/LA"), the
latter being Kenanga Investment Bank Berhad.
Security for each medium term note:
Each Tranche shall be secured by assets (the "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 2023, the total amount of equity
contribution owed by ICB was US$11.6 million (at 31 December 2022: US$11.7
million). The recognition of these amount owed by ICB would be offset by the
corresponding entry of the amount owed to ICB, which therefore has no net
impact to the consolidated financial statements.
The equity contributions are non-trade in nature and are unsecured and
interest bearing.
Furthermore, the Group was entitled to interest receivable from ICB. The
interest receivable was calculated based on an annual interest rate of 2%
above the Malaysia lending rate and applied to the deferred equity
contributions.
Related parties also include key management personnel defined as those persons
having authority and responsibility for planning, directing and controlling
the activities of the Group either directly or indirectly. The key
management personnel include all the Directors of the Group, and certain
members of senior management of the Group.
2023 2022
US$'000 US$'000
ICB Group of Companies
Accrued interest on shareholders advance payable by ICB 1,730 1,462
Accrued interest on a contract payment by an ICB subsidiary - 131
Key management personnel
Remuneration of key management personnel - 244 265
Directors' fees
Remuneration of key management personnel - 300 300
Consulting fees
Remuneration of key management personnel - - 816
Divestment expenses
Remuneration of key management personnel - 13 -
Sums paid to third parties *
* represents company secretarial fee payable to ICECAP (Secretaries)
Limited ("ICECAP"), which was negotiated on an arm's length basis, but was
classified as related party transaction nonetheless due to the existence of a
common director.
Transactions between the Group with other significant related parties are as
follows:
2023 2022
US$'000 US$'000
Non-controlling interests
Advances - non-interest bearing (5) 129
The above transactions have been entered into in the normal course of business
and have been established under negotiated terms.
The outstanding amounts due from/(to) ICB and its group of companies as at 31
December 2023 and 31 December 2022 are as follows:
2023 2022
US$'000 US$'000
Net amount due from ICB # 6,948 5,461
# Pursuant to the conditional settlement reached between the Group and ICB
on 26 January 2024, the amount would be satisfied by in-kind settlement from
ICB, for details please refer to Note 35.
The outstanding amounts due to the other significant related parties as at 31
December 2023 and 31 December 2022 are as follows:
2023 2022
US$'000 US$'000
Net amount due to other non-controlling interests (Note 28) (1,891) (1,981)
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
2023 2022
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
Silver Sparrow Berhad is required to maintain a minimum amount equivalent to
RM10.0 million (US$2.18 million) (the "Minimum Deposit") in the Debt Service
Reserve Account ("DSRA") at all times and the amount is disclosed as deposit
pledged (refer to Note 22).
In the event the funds in the DSRA falls below the Minimum Deposit, SSB shall
within five (5) Business Days from the date of receipt of written notice from
the facility agent or upon SSB becoming aware of the shortfall, whichever is
earlier, deposit such sums of money into the DSRA to ensure the Minimum
Deposit is maintained.
34 DISSOLUTION OF A SUBSIDIARY
On 31 December 2023 (the "Dissolution Date"), Priority Elite Sdn Bhd ("PESB"),
a subsidiary of the Company that was incorporated in Malaysia, completed the
process of member's voluntary liquidation and had been dissolved.
Details of financial position of PESB were as follows:
2023 2022
US$'000 US$'000
Cash and cash equivalents 5 6
Trade and other payables 1 (2)
Net assets classified as Asset held for Sale 4 4
There was no reported profit or loss from PESB during the year up to the
Dissolution Date.
Analysis of the cash flows of PESB are as follows:
2023 2022
US$'000 US$'000
Net cash generated from operating activities - (2)
Net cash used in investing activities - -
Net cash used in financing activities - -
Net changes in cash and cash equivalents during the year - (2)
Details of the sale of the discontinued operations are as follows:
2023 2022
US$'000 US$'000
Consideration received or receivable - -
Cash - -
Total disposal consideration - -
Carrying amount of net asset sold (4) -
Receivables derecognized - -
Loss on sale before income tax (4) -
Reclassification of foreign currency translation reserve (124)
Income tax expense - -
Loss on disposal after income tax (128) -
35 EVENTS AFTER STATEMENT OF FINANCIAL POSITION DATE
Settlement with Ireka Corporation Bhd ("ICB")
The Group filed a claim against ICB on 21 October 2022 in the Malaysian
Courts in relation to the Joint Venture Agreement with respect to the RuMa
Hotel & Residences.
On 26 January 2024, a conditional settlement was reached between the Group and
ICB, whereby:
(a) ICB will transfer 38,837,504 shares of the Company held by
it back to the Company;
(b) ICB will also transfer its 30% shareholding in Urban DNA Sdn
Bhd and The RuMa Hotel KL Sdn Bhd to the Group;
(c) In return, the Company agreed to withdraw its claim against
ICB; and
(d) the settlement shall constitute to the full and final
settlement of all claims and debts between the parties.
The settlement agreement was conditional upon both parties obtaining their
respective approvals. It was duly approved by the shareholders of the
Company in an Extraordinary General Meeting held on 27 February 2024. And on
25 March 2024, ICB received the approval for the settlement from the Winding
Up Court in Malaysia. The conditions were thus satisfied and the settlement
agreement had become binding.
Sandakan Assets sale
On 30 June 2023, ICSD Ventures Sdn Bhd, an indirect subsidiary of the Company
entered into a binding conditional agreement to sell the Sandakan Assets,
which comprises the Sandakan Hotel and the Harbour Mall Sandakan. Completion
of the transaction was to take place by 30 September 2023 according to the
agreement, however the transaction had not completed as at 31 December 2023
due to certain technicalities. On 8 December 2023, Silver Sparrow Berhad,
the issuer of the SSB MTNs received a Notice of Default from the facility
agent for the outstanding principal amount of approximately RM60.9 million
(US$13.3 million). The proceeds of the SSB MTNs were used to finance the
development of the Sandakan Assets. Although SSB is still in default, it has
kept current any and all default interest due.
On 6 April 2024, a Supplemental Sale and Purchase Agreement (the
"Supplemental") was signed with the original purchaser mainly to extend the
completion date in order to finalize the sale of the Sandakan Assets.
The proceeds of the sale will be used to repay the outstanding principal.
According to the terms of the Supplemental, the purchaser shall bear the
interest due in relation to the MTNs from the date of Notice of Default to the
date of repayment. The repayment is expected to be made in approximately 30
days from the date of the signing of the Supplemental and the transaction is
estimated to complete in 45 days from such repayment date. The repayment is
therefore expected to take place in May 2024 with the first payment made from
the purchaser.
However, should the Group be unable to repay the outstanding principal, the
guarantors of the SSB MTN will have title over the pledged assets including
the Sandakan Assets, as well as the other operating assets, rights, interests
and benefits in relation to the Sandakan Assets.
For details of the MTN and the security given by the Group, please refer to
Note 30.
Sale of RuMa Residences Units
On 29 April 2024, the Group entered into Sale and Purchase Agreements to sell
10 RuMa Residences units (the "Units") for a gross consideration of RM15.4
million (approximately US$3.3 million). The Units were pledged for the PASB
Notes for a principal amount of RM12.5 million (US$2.7 million), which will be
repaid by the proceeds of the sale. The completion of sale is expected to
take place 90 days from the signing date of the Sale and Purchase
Agreements. A deposit of RM1.5 million (US$0.3 million), representing 10% of
the consideration, has been received by the Group.
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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