2014
ANNUAL REPORT
INVESTMENT GATEWAY TO
MALAYSIA AND VIETNAM
The past 7 years of investment and asset management have culminated
in our strategies coming to fruition. Like the farmers on the cover who are
working together, we are collaborating with our partners and associates
to capitalise on our assets in order to reap rewards.
The City International Hospital is strategically
located in the Binh Tan District, and is approximately
11 km from District 1, the central business and
commercial district of Ho Chi Minh City.
The 482-room Aloft Kuala Lumpur Sentral is the first
Aloft hotel in Malaysia, which is the largest Aloft hotel
in the world to date.
Four Points by Sheraton Sandakan is the only
internationally branded hotel in Sandakan while the
Harbour Mall Sandakan is known as the city’s only
modern lifestyle mall.
CONTENTS
2 • Corporate Strategy
3 • Chairman’s Statement
4 • Development Manager’s
Review
10 • Property Portfolio
11 • Share Price Chart
11 • Performance Summary
12 • Financial Review
13 • Corporate Social
Responsibility
14 • Calendar of Events
16 • Board of Directors
18 • Directors’ Report
21 • Report of Directors’
Remuneration
22 • Corporate Governance
Statement
25 • Independent Auditor’s
Report
26 • Financial Statements
63 • Corporate Information
••• CORPORATE STRATEGY •••
INTRODUCTION
Aseana Properties Limited is a property development
company established as an investment gateway to
Malaysia and Vietnam. Product innovation and
commitment to excellence are hallmarks of Aseana
Properties. With a focus on the upmarket segment of
the property market, Aseana Properties aims to be the
premier investment gateway for investors into Malaysia
and Vietnam.
KEY FACTS
Exchange
London Stock Exchange Main Market
Symbol
ASPL
Lookup
Reuters - ASPL.L; Bloomberg - ASPL:LN
Domicile
Jersey
Shares Issued
212,025,000
Voting Share Capital
212,025,000
Share Denomination
US Dollars
Management Fee
2% of NAV
Performance Fee
20% of the out performance NAV over a
total compounded return hurdle rate of
10% per annum
Admission Date
5 April 2007
ADVISERS & SERVICE
PROVIDERS
Development Manager
Ireka Development Management
Sdn. Bhd.
Corporate Broker
N+1 Singer
Auditor
KPMG LLP
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The RuMa Hotel and Residences
Kuala Lumpur
Aseana Properties Limited (“Aseana Properties”
or “Aseana”) is a London-listed company
incorporated in Jersey focusing on property
development opportunities in Malaysia and
Vietnam.
Ireka Development Management Sdn. Bhd.
(a wholly-owned subsidiary of Ireka Corporation
Berhad), the Development Manager for Aseana
Properties, is responsible for the day-to-day
management of its property portfolio as well as
the introduction and facilitation of new
investment opportunities.
Aseana Properties’ investment objective is to
provide shareholders with an attractive overall
total return achieved primarily through capital
appreciation by investing in properties in
Malaysia and Vietnam. Aseana Properties seeks
to achieve its investment objective through the
acquisition, development and redevelopment of
upscale residential, commercial and hospitality
projects leveraging on the Development
Manager’s experience in these sectors.
Aseana Properties typically invests in
development projects at the pre-construction
stage. It will also selectively invest in projects
under construction and completed projects with
the potential for high capital appreciation.
Aseana Properties typically makes investments
both as sole principal and, where appropriate,
in joint arrangements with third parties, where
management control resides with Aseana
Properties. Such joint arrangements are only
undertaken with parties who have demonstrable
relevant experience or local knowledge.
Currently approximately 70% of Aseana
Properties’ investment portfolio is allocated to
projects in Malaysia and approximately 30% to
projects in Vietnam.
••• CHAIRMAN’S STATEMENT •••
The global economy continued to
expand at a moderate and uneven
pace in 2014. Both advanced and
emerging economies have struggled
to gain momentum amid significant
economic uncertainty. In contrast to
the accelerating growth of the United
States economy, Japan’s consumption
tax hike caused its economy to fall into
recession as China’s growth slowed. A
combination of restrictive fiscal and
monetary policy accompanying weak
export growth caused the European
economy to stall. In addition, global
growth experienced further downside
risk following geopolitical developments
in Eastern Europe and the Middle
East as well as rising concerns over
the growth prospects of commodity-
producing emerging economies. While
the reduction in crude oil prices since
mid-2014 has helped stimulate growth
in oil-importing developing economies,
it has also had the effect of dampening
growth prospects for oil-exporting
countries, including Malaysia.
Meanwhile, Aseana Properties’ core
markets, Malaysia and Vietnam, have
experienced higher than expected Gross
Domestic Product (“GDP”) growth in
2014. Malaysia’s economy, although
shaken by the sharp drop in global oil
prices, has defied the more general
slide in commodities and oil prices to
grow at its fastest pace since 2010, up
6.0% in 2014 compared with 4.7% in
2013. The positive growth was primarily
driven by the continued strength of
domestic demand and supported by
an improvement in external trade
performance. The Malaysian economy’s
steady growth has however been
interrupted by the depreciation of the
Ringgit, which was partially caused
by the strengthening of the US Dollar
in anticipation of the Federal Reserve
raising interest rates. The Malaysian
Ringgit hit a near six-year low after
the government adjusted its economic
targets to cope with sliding oil prices.
Nevertheless, the Malaysian economy is
expected to remain resilient in 2015 and
withstand the challenges of the global
economic environment, largely because
of the country’s diversified economic
structure, low inflation, a strong and
well-capitalised banking system and
well-developed financial markets.
The economy in Vietnam has been
stable for the past two years and GDP
grew 6.0% in 2014. This was despite a
volatile period at the start of the year
as a result of a territorial dispute with
China and the impact of weaker global
economic conditions in the second half
of 2014. Inflation and interest rates fell
dramatically while exports maintained
a relatively high rate of growth. In
addition, the economic outlook has been
further enhanced by the revamping
of Vietnam’s laws on foreign property
ownership. In early 2015, The State
Bank of Vietnam (“SBV”) devalued the
Vietnam Dong against the US Dollar by
1.0% to VND21,458, a move that will make
Vietnam’s exports more competitive
compared to regional peers as the US
Dollar strengthens. In addition, the
National Assembly of Vietnam has set a
GDP growth target of 6.2% and inflation
rate of 5.0% for 2015.
With regard to the property market,
measures introduced by the central bank
have succeeded in cooling the Malaysian
property market. Stricter lending
conditions coupled with an interest rate
rise in July 2014 have increased the cost
of mortgage financing and rejection
rates for home buyers applying for new
home loans. As a result, the annual
rate of increase in property prices has
slowed down compared to the same
period in 2013 according to Bank Negara
Malaysia’s House Price indicators. The
number of successful transactions
was also lower compared to the same
period in 2013. The market is expected
to continue its lacklustre performance
into 2015 amid uncertainties around
the implementation of the Goods and
Services Tax (“GST”) in April 2015.
Buying sentiment will also be muted due
to the potential hike in property prices as
well as the heightened cost of living after
the implementation of GST, which is
further compounded by a weaker Ringgit.
Property buyers are likely to adopt a
“wait and see” approach when it comes to
property investment decisions.
Meanwhile, the performance of the
property market in Vietnam improved,
especially in the residential sector. Stalled
building projects have restarted and
construction progress has accelerated
due to cheaper and more readily
available funding. In 2014, the real
estate market ranked second in terms
of total foreign direct investment into
Vietnam, accounting for 12.6% of the total.
Furthermore, the amended housing and
real estate laws that take effect in July 2015
are likely to increase market activities as
foreigners are now able to purchase units
in housing projects. Concrete efforts by
the Vietnamese government to boost an
ailing real-estate market and accelerate
economic growth bode well for the sector
in the coming years.
PROGRESS OF
THE PROPERTY
PORTFOLIO
2014 was an exciting year for Aseana
Properties Limited (“Aseana Properties”
or “Aseana”). In May 2014, SENI Mont’
Kiara (“SENI”) bagged the prestigious
World Silver Award at the International
Real Estate Federation (“FIABCI”)
World Prix d’Excellence Awards 2014
in the residential (High Rise) category.
Sales at SENI increased from 85.0% at
the beginning of 2014 to 94.9% to date.
In a similar positive move, the Aloft
Kuala Lumpur Sentral Hotel (“Aloft”)
was awarded the FIABCI Malaysia
Property Award for the Hotel category
in November 2014, in recognition of
its development concept and design,
marketing appeal and sustainability.
Aloft closed the year in 2014 with
an occupancy rate of 65.4%, which
was commendable for a hotel that
started operating only two years ago.
Continuing into 2015, Aloft achieved
its highest-to-date monthly occupancy
rate of 85.5% in March 2015, and is on
track to achieve its target for the year.
In Sabah, the Harbour Mall Sandakan
(“HMS”) is 51.0% tenanted, while the
Four Points by Sheraton Sandakan Hotel
(“FPSS”) recorded an occupancy rate
of 41.8% as at 31 December 2014. The
Manager is constantly looking at ways
to improve efficiency and performance
of these assets as the Company moves
towards the realisation of its completed
property portfolio. At the RuMa Hotel
and Residences (“The RuMa”), the only
project currently under development,
sales of units progressed at a moderate
pace, currently at around 48.0%.
For Aseana Properties’ portfolio in
Vietnam, operation of City International
Hospital (“CIH”) is still going through
a period of stabilisation. In 2014, CIH’s
poor performance was largely caused by
challenges in human resources, lower
patient volumes and lack of awareness
of the hospital. The Manager is working
closely with Parkway Pantai Limited,
the operator of CIH, to improve the
performance of the hospital through
concerted marketing campaigns,
introduction of new service lines and
targeted sales. Nam Long Investment
Corporation (“Nam Long”), in which
Aseana owns a strategic minority stake,
issued 12.95 million new shares in a
share swap with three of its subsidiaries’
minority shareholders during the final
quarter of 2014. The share swap has
aligned interests between Nam Long and
its subsidiaries. As a result of the share
swap, Aseana’s stake in Nam Long was
diluted to 11.6%. On the back of positive
financial results in 2014 and its leadership
position in the affordable homes market,
Nam Long’s share price has increased
gradually from VND 17,600 per share
on 31 December 2014 to VND19,900 per
share on 24 April 2015.
Aseana Properties recorded positive
results for the financial year ended 31
December 2014, mainly due to the sale of
vacant plots of land at the International
Healthcare Park (“IHP”) (formerly
International Hi-Tech Healthcare Park)
as well as increased sales at both SENI
Mont’ Kiara and Tiffani. The Group
registered an increase in revenue from
US$29.3 million in 2013 to US$85.1
million in 2014 and recorded a net
profit before taxation of US$15.4 million
compared to a net loss of US$18.8 million
in 2013. The net profit before tax includes
profit attributable to SENI Mont’ Kiara
and Tiffani of US$16.7 million, a gain
on disposal of land to AEON Vietnam
Co. Ltd. (“AEON Vietnam”) of US$10.8
million, a gain on disposal of two pieces
of vacant land at IHP of US$4.1 million
and a gain on disposal of the 40% stake in
Excellent Bonanza Sdn. Bhd. (“EBSB”)
of US$5.3 million during the year. These
gains were offset by operating losses
and financing costs of Four Points by
Sheraton Sandakan Hotel and Harbour
Mall Sandakan, which totalled US$5.4
million, together with operating
losses and financing costs of the City
International Hospital, which totalled
US$9.8 million.
Further information on each of the
Company’s properties is set out in the
Manager’s report on pages 6 to 9.
CONTINUATION VOTE
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.
Accordingly, and as required under
the Company’s Articles of Association,
at the 2015 Annual General Meeting
(“AGM”), the Company must propose an
ordinary resolution for Aseana to cease
trading as presently constituted (the
“Discontinuation Resolution”).
However, the Board firmly believes
that ceasing to trade and placing the
Company in liquidation at this time
would have a significant adverse effect
upon shareholder value. Whilst the
Board is obliged to put forward the
Discontinuation Resolution at the
2015 AGM, it does not consider that
ceasing to trade at this time is in the best
interests of shareholders. Instead, the
Board believes that a policy of orderly
realisation of the Company’s assets
over a period of up to three years is a
more appropriate approach in order to
maximise the value of the Company’s
assets and returns to shareholders, both
up to and upon eventual liquidation of
the Company. Ahead of the 2015 AGM,
the Board is considering proposals to
amend the Company’s investment policy
to enable a realisation of its 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. If the Proposals are adopted,
the Board aims to complete the disposal
of the Company’s assets by June 2018.
The Proposals will require the approval
of shareholders and the Board intends
to convene an Extraordinary General
Meeting (“EGM”) , to be held immediately
prior to the 2015 AGM, to consider
the Proposals. The Board intends to
recommend to shareholders that they vote
for the Proposals at the EGM and against
the Discontinuation Resolution at the
Company’s 2015 AGM. Further detail of
the Proposals is expected to be posted to
the Company’s shareholders soon.
OUTLOOK
As we progress into 2015, efforts to
dispose of the remaining units at SENI
Mont’ Kiara and to increase the sale of
The RuMa Hotel and Residences will
continue. The Manager will also focus
on improving the performance of the
operating assets in preparation for their
eventual sale.
Last but not least, I would like to extend
my sincere appreciation to my fellow
Directors and The Manager for their
continuous commitment and support
throughout the year. Our heartfelt
gratitude also goes out to the Government
authorities, financiers, shareholders and
business associates for their continuous
support in our business undertakings.
MOHAMMED AZLAN
HASHIM
Chairman
27 April 2015
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••• DEVELOPMENT MANAGER’S REVIEW •••
BUSINESS OVERVIEW
Looking back, 2014 proved to be yet
another busy year for Aseana Properties.
The City International Hospital (“CIH”)
was officially opened for business on 5
January 2014, offering comprehensive
services including Gynecology,
Cardiology, Medical Oncology, Neurology,
Pediatrics, Ophthalmology and ENT.
With the opening of CIH, the Group
currently has a total of four assets
operating in Malaysia and Vietnam.
Meanwhile, the construction of the
main building at The RuMa Hotel and
Residences (“The RuMa”) is progressing
despite challenging market conditions
and is now targeted to be completed by
Q3 2017. The year ahead promises to be
another busy one as we work towards
realising the Group’s assets, in line with
the upcoming continuation vote and
proposed new investment policy for the
second half of 2015 onwards.
In May 2014, SENI Mont’ Kiara (“SENI”)
was awarded the prestigious World
Silver Award at the International Real
Estate Federation (“FIABCI”) World
Prix d’Excellence Awards 2014 in
the residential (High Rise) category.
This award represents outstanding
achievement and recognises the project
that has demonstrated excellence across
all the real estate disciplines. On the back
of this achievement, SENI has recorded
94.9% of sales to date, with a target that
the remaining units will be sold by end
of 2015. In the meantime, sales at The
RuMa have increased to approximately
48.0% to date, based on sales and
purchase agreements signed. Sales at The
RuMa have been affected by the cooling
measures implemented by the Malaysian
Government, to address the accelerating
house prices and property speculation.
Aseana also entered into a share sale
agreement with Malaysian Resources
Corporation Berhad (“MRCB”) to dispose
of its 40% stake in Excellent Bonanza Sdn.
Bhd. (“EBSB”) for RM17.0 million (US$5.3
million) being the sales consideration. In
addition, RM3.0 million (US$0.9million)
was repaid for the amount due from
EBSB during the financial year. The
transaction was completed in August
2014. The disposal represents an early
exit and realisation of profits from the
project which was originally planned for
December 2015.
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Aloft Kuala Lumpur Sentral Hotel
Kuala Lumpur
In Vietnam, Aseana, through its
68%-owned subsidiary, Hoa Lam
Shangri-La 3 Limited Liability Company
(“HLSL3”), has entered into an
agreement with AEON Vietnam Co.,
Ltd. (“AEON Vietnam”) to dispose a 4.7
hectares (11 acres) of retail mall land
at the International Healthcare Park
(“IHP”) (formerly known as International
Hi-Tech Healthcare Park) and also
to transfer the development rights of
the retail mall to AEON Vietnam. The
transaction was completed in August 2014
and has contributed positively to Aseana’s
FY2014 results. Separately, during the last
quarter of 2014, Nam Long issued 12.95
million new shares for the purpose of a
share swap with three of its subsidiaries’
minority shareholders. Through the share
swap, interests between Nam Long and
its subsidiaries are further aligned and
corporate governance was improved.
Following the share swap, Aseana’s stake
in Nam Long was further diluted to 11.6%.
MALAYSIA ECONOMIC
UPDATE
Despite moderate but uneven growth
exhibited by the global economy in
2014, the Malaysian economy grew at a
stronger pace, assisted by the continued
strength in private domestic demand and
positive growth in net exports. Malaysia’s
gross domestic product (“GDP”) for the
last quarter of 2014 stood at 5.8% while
for the whole of 2014, growth was at
6.0% compared to 4.7% in 2013. After
seven years of negative contribution,
net exports in Malaysia have turned
around to contribute positively to
growth following the recovery in the
advanced economies and the sustained
demand from regional economies which
have benefitted Malaysia. In spite of
the positive GDP growth, the Ringgit
depreciated towards the end of the year as
it was impacted by the plummeting crude
oil prices amid a strengthening US Dollar.
The Ringgit has depreciated by 6.1% to
RM3.4950 against the US Dollar during
the year as a whole. In 2015 to date, the
Ringgit has continued to decline against
the US Dollar, closing at RM3.5995 as at
24 April 2015. There were also concerns
over the Government’s revision of the
economic growth forecast to 4.5% - 5.5%
for 2015 from 5.0% - 6.0% and the fiscal
deficit target to 3.2% of GDP from 3.0%
during the Special Address by the Prime
Minister in January 2015.
The Overnight Policy Rate (“OPR”)
remained unchanged at 3.25%, since its
last increment in July 2014. This move is
to support economic activity following
a weaker global growth outlook amid
moderating domestic inflation. Malaysia’s
inflation rose by 3.2% during the year
mainly driven by domestic cost factors
arising from the adjustments in the
prices of several price-controlled items
since late 2013. After rising in the earlier
part of the year, inflation moderated
during the last four months due to
lower food inflation and the downward
adjustments in fuel prices following the
implementation of the managed-float
fuel-pricing mechanism. Although it
appears that the implementation of the
Goods and Services Tax (“GST”) in April
2015 may be tempered by the substantial
exemption list, some temporary impact
on inflation is believed to be inevitable.
In tandem with the Ringgit’s depreciation
and falling crude oil prices, business
confidence during the last quarter of
2014 appears subdued. According to
the Malaysian Institute of Economic
Research (“MIER”), Business Conditions
Index (“BCI”) slipped to 86.4 points in
Q4 2014, largely attributed to slower
domestic and export orders, continued
deterioration in sales, slowdown in
manufacturing activities coupled
with higher inventories. Similarly, the
Consumer Sentiment Index (“CSI”)
plunged to 83.0 points in the fourth
quarter of 2014, mainly caused by
looming concerns over the financial
outlook of Malaysia and also the impact of
the implementation of GST in April 2015.
Malaysia moved up from 20th position
to 18th in the World Bank’s Doing
Business 2015 Report, ahead of countries
such as Taiwan, Switzerland, Thailand,
the Netherlands and Japan. In Asia,
Malaysia ranked 4th, after Singapore,
Hong Kong and South Korea. The
improvements reflect the initiatives
undertaken by the government through
the Government Transformation and
Economic Programme as well as the work
undertaken by the Joint Public-Private
Sector Task force to facilitate businesses.
In line with this, Malaysia recorded a net
inflow of RM10.2 billion (US$2.9 billion)
of Foreign Direct Investment (“FDI”)
during the last quarter of 2014 with
countries such as Singapore, Netherlands
and Japan being the top investors.
The majority of the FDI inflows were
channeled into manufacturing, financial
and insurance as well as mining sectors.
For the whole of 2014, total cumulative
FDI stood at RM35.1 billion (US$10.0
billion), which was RM3.1 billion (US$0.9
billion) shy of the 2013 cumulative FDI of
RM38.2 billion (US$10.9 billion).
VIETNAM ECONOMIC
UPDATE
Although suffering from a slower start at
the beginning of the year and the negative
effect of the political tensions with
China, Vietnam’s economy rebounded
and its recovery is now back on track.
Vietnam’s GDP growth for 2014 was 6.0%,
surpassing the Vietnamese government’s
target of 5.8% and the highest since
2011. Continued macroeconomic
stability has helped underpin growth in
Vietnam and a new cycle of economic
growth was further confirmed by a
number of positive indicators such as
the recovery of the property market,
strong external accounts, accelerating
retail sales, a pick-up in credit expansion
and improving bank balance sheets.
Likewise, the Vietnamese Government
has implemented remedial measures that
have helped boost the economy such as,
actions to reduce inflation, stabilisation
of the foreign exchange market and
strengthening of external accounts.
Vietnam’s inflation has eased significantly
over recent years on the back of
government’s measures to curb demand.
In 2014, Vietnam’s average CPI grew at
4.1%, lower than the set target of 7.0%.
The easing inflation has provided the
State Bank of Vietnam (“SBV”) with the
needed room to further ease monetary
policy to support growth, encourage
consumer spending in productive
sectors and help enterprises reduce their
borrowing costs. Meanwhile, Vietnam
has recorded trade surpluses for 3
consecutive years and reached its highest
value at US$2.0 billion in 2014. Further
to that, the SBV devalued the Vietnamese
Dong against the US dollar by 1.0% to
VND 21,458 in January 2015 in a bid to
spur Vietnam’s exports and to sustain
growth relative to other South East Asian
economies.
Foreign Direct Investment (“FDI”)
remained as the largest contributor to
the trade surplus, accounting for 68.0%
of total export revenue. It is expected
that FDI in 2015 will continue its upside
growth fuelled by an accommodating
monetary policy, recovery of the banking
sector, improving domestic demand, the
lower oil price and a pick-up in export
manufacturing. The EU-Vietnam Free
Trade Agreement, when ratified in 2015,
will provide a positive impetus to FDI, to
exports and to consumer confidence.
On the back of improved macroeconomic
stability and stronger external balances,
Fitch Ratings upgraded Vietnam’s Long-
Term Foreign and Local Currency Issuer
Default Ratings from “B+” to “BB-”, and
Vietnam’s outlook has been revised from
“Positive” to “Stable”.
PORTFOLIO REVIEW
MALAYSIA
Property Market Review
Malaysia’s property market which was
seen to be bullish in the past couple
of years has slowed down noticeably
throughout 2014. The series of cooling
measures implemented under the 2014
budget by the Government, such as the
increase in the Real Property Gains
Tax (“RPGT”), the loan-to-value and
prohibition of the Developer Interest
Bearing Scheme (“DIBS”), have worked
well to arrest the steep rise in property
prices in the middle-end market and
reduced speculative activity. With
the implementation of the Goods and
Services Tax (“GST”) in April 2015,
buyers will likely adopt a “wait-and-see”
approach for at least the next six to nine
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The RuMa Hotel and Residences
Kuala Lumpur
months. Amid the rising costs of doing
business, tighter monetary policy and
the impact of the new tax system, the
property market is expected to remain
challenging going forward. The recent
plunge in crude oil prices and lower
trade surplus could further undermine
the country’s economy and its property
market especially if they are prolonged.
announced that more housing units will
be built under the 1 Malaysia People’s
Housing Programme (“PRIMA”) and
extended the 50% stamp duty exemption
until 31 December 2016. These are
amongst the measures introduced by
the government to assist the young and
first-time home buyers who are facing
difficulties in affording a home.
The Malaysian Government has
introduced the Youth Housing Scheme,
a smart partnership between the
government, Bank Simpanan Nasional,
Employees Provident Fund (“EPF”)
and Cagamas. With this scheme, it is
On the commercial office front, the Klang
Valley office market continues to favour
tenants and was resilient in 2014. During
the year, total supply of commercial office
space in the Klang Valley increased to
107.7 million sq. ft. Amid the widening gap
••• DEVELOPMENT MANAGER’S REVIEW cont’d •••
between supply and demand, the overall
occupancy rate increased marginally to
82.0% while market rents have remained
stable with limited growth prospects.
Meanwhile, the average occupancy rate
for the retail sector in the Klang Valley
stood at 82.9% during the last quarter of
2014. Market prices as well as rents in
the retail sector have generally remained
stable. However, consumers’ spending
power has been affected as a result of the
removal of fuel subsidy, the plunge in
the CSI to below-100 points threshold,
the hike in the OPR from 3.0% to 3.2%,
coupled with the implementation of GST
in April 2015. The outlook for the retail
sector’s performance is expected to be
moderate.
Despite some major setbacks during
the year, including the two Malaysian
aircraft tragedies, Malaysia’s tourism
industry continued to show a sustainable
growth trend, contributed by Tourism
Malaysia’s aggressive promotional
efforts together with the support of
other industrial players in conjunction
with “Visit Malaysia Year 2014”. Hotel
supply in the Klang Valley was up 6.2%
compared to 2013. Looking forward, the
weakening of the Malaysian currency
will spur tourists’ inflow as visiting
and spending in Malaysia has become
relatively cheap and affordable. A
wide range of traditional and cultural
festivals have been planned for 2015 in
conjunction with the Malaysia Year of
Festivals (“MyFest”) campaign. MyFest
will be implemented in 2015 to boost
the tourism sector as announced by the
Malaysian Government in Budget 2015.
Aseana Properties has six development
projects in Malaysia, ranging from
residential properties, hotels, commercial
offices to a retail mall:
• SENI Mont’ Kiara
Owned 100.0% by Aseana Properties,
SENI Mont’ Kiara is an upmarket
condominium development situated
on one of the highest points in Mont’
Kiara. Construction was completed
in 2011. The project consists of two
12-storey blocks and two 40-storey
blocks, comprising 605 residential
units. The majority of units command
impressive views of the city skyline
including the 88-storey Petronas Twin
Towers and the KL Tower.
In May 2014, SENI Mont’ Kiara
was awarded the prestigious World
Silver Award at the FIABCI World
Prix d’Excellence Awards 2014 in the
residential (High Rise) category. On the
back of this achievement, sales at SENI
Mont’ Kiara have progressed to 94.9%
to date.
The bridging loan for the project was
fully repaid in 2013.
• Tiffani by i-ZEN
Tiffani by i-ZEN, wholly-owned by
Aseana Properties, is a completed
luxury condominium project located
in Mont’ Kiara. To date, 98.7% of
the 399 residential units have been
sold. The debt on the project has
been fully repaid. The Manager
has decided to partially fit out two
remaining penthouses at Tiffani by
i-ZEN to offer buyers and dwellers a
hassle-free experience of owning an
apartment unit.
• The RuMa Hotel and Residences
This project is strategically located
in the heart of Kuala Lumpur City
Centre (“KLCC”) on Jalan Kia Peng,
near neighbouring landmarks such
as the Grand Hyatt Kuala Lumpur,
KLCC Convention Centre, Suria KLCC
shopping mall, KLCC Park and the
world famous Petronas Twin Towers.
Aseana Properties owns 70.0% of
this project and 30.0% is owned by
Ireka Corporation Berhad. The Group
plans to develop 199 units of luxury
residences, The RuMa Residences,
and a 253-room luxury bespoke hotel,
The RuMa Hotel, on the 43,559 sq.
ft. of development land. The RuMa
Hotel will be managed by Urban
Resort Concepts, a renowned bespoke
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Kuala Lumpur
The RuMa Hotel and Residences
Kuala Lumpur
hotel management company based
in Shanghai, which created and now
operates the award-winning The Puli
Hotel in Shanghai.
Construction work commenced in
February 2013 and is estimated to
complete in Q3 2017. The sales launch
for The RuMa Hotel and Residences
was held on 8 March 2013. Sales at
The RuMa Hotel and Residences have
been affected by the cooling measures
imposed by the Government to curb
property speculation. To date, sales
at The RuMa Hotel and Residences
have increased to approximately
48.0% based on the sales and purchase
agreements signed.
The land was part financed by a
term-loan facility of RM65.3 million
(US$18.7 million), which was fully
drawn down. The development of
the project is funded by progressive
payments from buyers.
• Kuala Lumpur Sentral Project and
Aloft Kuala Lumpur Sentral Hotel
Kuala Lumpur Sentral project is a
mixed commercial and hospitality
development project consisting of
two office towers and a business
class hotel, centrally located in Kuala
Lumpur’s urban transportation hub.
The project is owned and developed by
Excellent Bonanza Sdn. Bhd. (“EBSB”),
which was jointly owned by Aseana
Properties and Malaysian Resources
Corporation Berhad on a 40:60 basis.
In June 2014, Aseana entered into a
share sale agreement with Malaysian
Resources Corporation Berhad
(“MRCB”) to dispose of its 40% stake in
Excellent Bonanza Sdn. Bhd. (“EBSB”)
for RM17.0 million (US$5.3 million)
being the sales consideration. In
addition, RM3.0 million (US$0.9 million)
was repaid for the amount due from
EBSB during the financial year. The
transaction completed in August 2014.
At the commencement of the project,
Aseana Properties conditionally agreed
to purchase the hotel component
from EBSB for a total consideration
of approximately RM217.0 million
(or US$62.1 million). The sale and
purchase of the 482-room Aloft
Kuala Lumpur Sentral Hotel was
completed in April 2013 and operations
commenced on 22 March 2013. Aseana
Properties entered into a Management
Agreement appointing Starwood Asia
Pacific Hotels & Resort Pte Ltd as the
2008 with the intention of developing a
hotel, villas and resort homes. Various
marketing efforts were conducted in
2014 to dispose of the land. However,
similar to the Sandakan Harbour
Square properties, the prospects have
been affected by the impact of the two
flight tragedies on the tourism market.
VIETNAM
Property Market Review
A larger number of successful
transactions and the rising prices
provide evidence that the Vietnamese
property market is on its path to
recovery, especially the residential
market. In the early months of 2014,
the number of successful transactions
doubled over the same period in 2013.
Policies introduced by the Vietnamese
Government, such as extending housing
loan channels, lowering interest rates,
the performance and support package
of VND30.0 trillion and the favourable
changes in housing law, have stimulated
and supported the recovery process of
the residential market. Based on the
revised housing law, which will come
into effect from July 2015, foreigners will
be allowed to purchase project-based
houses and condominiums. On top of
that, expatriate Vietnamese will also
have ownership rights equal to those of
local Vietnamese.
2014 saw a sharp increase in the number
of new development launches for
the residential market in both Hanoi
and Ho Chi Minh City (“HCMC”).
There were a total of 14,807 new units
launched in HCMC, which was 3.2
times higher than 2013. In Hanoi a
total of 16,253 new units were released,
which was 2.1 times higher than that
of 2013. It is expected that the market
will continue to look positive in 2015 as
more stalled projects restart and there
will be more new launches.
On the back of improving economic
indicators, demand in the HCMC office
market has risen, with limited supply
helping to support rents and lower the
vacancy rate. Overall occupancy stood at
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Four Points by Sheraton Sandakan
Sabah
operator of Kuala Lumpur Sentral
Hotel under the ‘Aloft’ brand name.
The purchase of the Aloft Kuala
Lumpur Sentral Hotel together with
fit-out expenses were financed by
guaranteed medium term notes of
RM270.0 million (US$77.2 million)
which is part of the RM515.0 million
(approximately US$147.3 million)
MTN programme announced in
November 2011, of which RM15.0
million was drawn down as at 31
December 2012. The remaining
RM254.0 million (US$72.6 million)
was fully drawn down in April 2013 to
complete the acquisition of the Aloft
Kuala Lumpur Sentral Hotel.
The Aloft Kuala Lumpur Sentral
Hotel has been awarded the winner
of the prestigious FIABCI Malaysia
Property Awards in the Hotel category
in recognition of its development
concept and design, marketing appeal
and sustainability back in November
2014. On top of that, the hotel was also
awarded with a number of other awards
during the year such as the Best Short
Stay Excellence Award by Expatriate
Lifestyle for the Best of Malaysia Travel
Awards and the Kuala Lumpur Mayor’s
Tourism Awards for 4-star hotel
category. The Aloft hotel has to date in
year 2015 achieved an occupancy rate
of 73.5%, and an Average Daily Rate
(“ADR”) of RM324.8.
• Sandakan Harbour Square
Sandakan Harbour Square, which is
wholly-owned by Aseana Properties,
is an urban redevelopment project in
the commercial centre of Sandakan,
Sabah. Sandakan is a ‘Nature City’
with a population of approximately
500,000, with eco-tourism and palm
oil plantations as the main drivers
of the local economy. The Sandakan
Harbour Square project consisted
of four phases, of which Phases one
and two comprised 129 shop lots that
are now fully sold, Phases three and
four consist of the first retail mall
(Harbour Mall Sandakan) and the
first international four-star hotel in
Sandakan, known as the Four Points
by Sheraton Sandakan Hotel.
The Harbour Mall Sandakan (“HMS”)
and Four Points by Sheraton
Sandakan Hotel (“FPSS”) commenced
business in July and May 2012
respectively. The occupancy rate
at the Harbour Mall Sandakan is
currently 53.0%. Notable tenants
in the mall include Parkwell
Departmental Store, Levi’s, The
Body Shop, GNC and McDonald’s
amongst others and leasing activities
at Harbour Mall Sandakan to both
local and international retailers
are still ongoing. Meanwhile, FPSS
recorded an occupancy rate of 35.7%
to date, with an ADR of RM204. The
management of FPSS continues
to improve the efficiency of its
operations and to work with the
relevant authorities to improve tourist
arrivals to Sandakan. The business
conditions in Sabah continue to
suffer from the impact of two airline
tragedies in the surrounding area and
several kidnapping cases off the east
coast of Sabah during 2014. These
events have affected the performance
of both HMS and FPSS during the past
twelve months.
The project is funded by guaranteed
medium term notes of RM245.0
million (US$70.1 million) which is
part of the RM515.0 million (US$147.3
million) MTN programme announced
in November 2011. The MTNs were
fully issued as at 31 December 2011.
• Kota Kinabalu Seafront Resort &
Residences
Facing the South China Sea,
this project is a resort-themed
development consisting of a boutique
resort hotel, resort villas and resort
homes at the seaside area in Kota
Kinabalu, Sabah. Aseana Properties
acquired three adjoining plots of
land amounting in aggregate to
approximately 80 acres in September
Harbour Mall Sandakan
Sabah
••• DEVELOPMENT MANAGER’S REVIEW cont’d •••
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City International Hospital in International Healthcare Park
Ho Chi Minh City
90.0% in 2014, the highest in the last five
years. In retail, 2014 saw the opening of
two shopping centres in HCMC by the
Japanese AEON Group. AEON Group has
set a target to operate up to 20 shopping
malls in Vietnam by 2020. In addition,
the Korean Lotte Group also announced a
plan to open 60 supermarkets in Vietnam
by 2020. During the year, local retailers
actively expanded, with the most notable
acquisition being that of a supermarket
chain from Ocean Retail Group by
Vingroup. Vingroup plans to construct or
purchase 100 VinMart supermarkets and
1,000 VinMart convenience stores by 2017
as well as an additional nine shopping
centers across the country. On the whole,
Vietnam’s retail and service sectors have
maintained an average growth rate above
10%, despite the economic downturn. As
a result of this performance, continuing
strong economic growth and a rising
middle class population, the retail sector
is expected to perform well in 2015.
Vietnam’s tourism industry has
experienced some setbacks during the
early part of the year as a result of a
political rift with China. As a result, the
total number of international visitors
in 2014 was recorded at only 7.9 million,
up 4.0% compared to 2013 and was
much lower than the growth of 10.6%
back in 2013.
Aseana Properties has one equity
investment and two development
projects in Vietnam - the latter
comprising one residential project
with its development partner, Nam
Long Investment Corporation and an
integrated healthcare development. The
highlights are as follow:
• International Healthcare Park
(formerly known as International
Hi-Tech Healthcare Park) and City
International Hospital
The International Healthcare
Park (“IHP”) is a planned mixed
development over 37.54 hectares of
land comprising world-class private
hospitals, mixed commercial, hospitality
and residential developments. This
development is located in the Binh
Tan District, close to Chinatown and
is approximately 11 km from District 1,
the central business and commercial
district of HCMC. Aseana Properties
has a 68.1% stake in this development
and its joint venture partner, Hoa Lam
Group holds a significant minority
stake together with a consortium of
investors from Singapore, Malaysia and
Vietnam. Approximately 20 hectares
will be dedicated to the hospital
and commercial developments and
five hectares has been allocated for
residential developments. Out of a total
19 plots of land, three plots have been
sold to date.
Construction commenced with
the first phase of the 320-bed City
International Hospital (“CIH”) in
May 2010 and completed in March
2013. CIH commenced business on
24 September 2013 and its official
opening was subsequently held on
5 January 2014. CIH is a modern
private care hospital conforming to
international standards with 320 beds
(Phase 1: 168 beds) and is managed
by Parkway Pantai Limited, Asia’s
leading private healthcare group
with a network of more than 3,300
beds across Singapore, Malaysia, the
Middle East and India. The operations
of CIH are expected to go through a
period of stabilisation before reaching
optimal performance.
To part finance the payment for the
land and working capital, the joint
venture companies have secured total
loan facilities of US$16.3 million, of
which US$13.2 million had been drawn
down as at 31 December 2014. The
development of City International
Hospital is funded by a syndicated term
loan of US$43.3 million and a revolving
credit facility of US$1.0 million, of
which US$41.0 million was drawn
down as at 31 December 2014.
• Nam Long Investment Corporation
In 2008, Aseana Properties acquired
a strategic minority stake in Nam
Long Investment Corporation
(“Nam Long”), a private property
development company in Vietnam
with market leadership in the low to
medium-end segment of the market.
Nam Long was subsequently listed
on the Ho Chi Minh Stock Exchange
on 8 April 2013. In February 2014,
Nam Long completed a placing of
25,500,000 new shares at VND18,000
(approximately US$0.855) per share
to a prominent list of institutional
investors including International
Finance Corporation (investment
City International Hospital in International Healthcare Park
Ho Chi Minh City
Waterside Estates
Ho Chi Minh City
arm of World Bank), which saw
the dilution of Aseana Properties’
effective stake in Nam Long to 12.9%
from 16.3%. Aseana Properties’
stake was further diluted to 11.6%
in the last quarter of 2014 following
the issuance of 12.95 million new
shares in a share swap with three of
Nam Long’s subsidiaries’ minority
shareholders. The swap improves
corporate governance and alignment
of interests between Nam Long and
its subsidiaries.
In 2014, the International Finance
Corporation (“IFC”), a member of
the World Bank Group, has awarded
its first “Excellence in Design for
Greater Efficiencies” (“EDGE”)
certifications in Vietnam to building
designs developed by Nam Long. IFC’s
EDGE is a new building resource
efficiency certification system created
for emerging markets which provides
clients with technical solutions for
going green and captures capital
costs and projected operational
savings. Nam Long, being the first
EDGE-awarded real estate developer
in Vietnam, is showing strong
commitment to developing affordable
and environmentally friendly
residences with high quality of life.
Nam Long’s affordable housing
projects, branded as “E-homes”,
continue to be their main revenue
driver. The high quality and low prices
have made its E-homes brand the
preferred brand among prospective
home buyers in Vietnam. Nam Long
currently owns a land bank of more
than 560 hectares, mainly in HCMC
and its neighbouring provinces,
making it one of the largest property
developers by land bank in HCMC.
Aloft Kuala Lumpur Sentral Hotel
Kuala Lumpur
introduced by the Government of
Malaysia. On the contrary, Vietnam’s
economy has shown signs of continued
growth through 2014. The Vietnamese
Government has undertaken a number
of important legal and regulatory
changes to improve the market situation
and encourage foreign investment.
Nevertheless, the Manager is currently
working closely with the Board to
improve the performances of the assets
of the company in preparation for their
eventual sale in view of the maturity of
Aseana Properties.
On a final note, we would like to take this
opportunity to thank the Board of Aseana
Properties, our advisers and business
associates for their support and guidance
throughout the year.
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LAI VOON HON
President / Chief Executive Officer
Ireka Development Management
Sdn. Bhd.
Development Manager
27 April 2015
For the year ended 2014, Nam Long
reported a total revenue of VND866.9
billion (US$40.5 million) and its net
profit after tax stood at VND103.6
billion (US$4.8 million).
• Waterside Estates
Waterside Estates was initially
planned for a low density development
comprising 37 villas (Phase 1) and 460
apartment units (Phase 2) set in a lush
green landscape, with the river-front
view of the Rach Chiec River. The
project was to be developed jointly
by Aseana Properties and Nam Long
on a 55:45 basis. However, due to the
challenging conditions of the high-end
real estate market in Vietnam and with
Aseana Properties approaching its
maturity, the board has now decided to
assess the market for opportunities to
divest this project.
OUTLOOK
Having pulled through another
challenging year in 2014, Aseana
Properties is now looking to continue
its focus on stabilising the operations
of its assets to achieve optimum capital
value and at the same time concentrate
on realising remaining assets as the date
for the continuation vote draws closer.
Ahead of a potential sale of assets in the
portfolio, Aseana Properties remains
committed to a regime of prudent
management, ensuring an optimum
capital value for the portfolio.
The Malaysian property market is
expected to remain challenging as there
are looming uncertainties in the outlook
for the property market arising from
the impending GST implementation
and the effect of the stringent measures
••• PROPERTY PORTFOLIO •••
AS AT 31 DECEMBER 2014
Project
Type
Effective
Ownership
Approximate
Gross Floor Area
(sq m)
Approximate
Land Area
(sq m)
Scheduled completion
COMPLETED PROJECTS
Tiffani by i-ZEN
Kuala Lumpur, Malaysia
1 Mont’ Kiara by i-ZEN
Kuala Lumpur, Malaysia
SENI Mont’ Kiara
Kuala Lumpur, Malaysia
Luxury condominiums
100.0%
81,000
15,000
Completed in August 2009
Office suites, office tower
and retail mall
100.0%
96,000
14,000
Completed in November 2010
Luxury condominiums
100.0%
225,000
36,000
Phase 1: Completed in April 2011
Phase 2: Completed in October 2011
Retail lots: Completed in 2009
Retail mall: Completed in March 2012
Sandakan Harbour Square
Sandakan, Sabah, Malaysia
Retail lots, hotel and
retail mall
100.0%
126,000
48,000
Kuala Lumpur Sentral Office
Towers & Hotel
Kuala Lumpur, Malaysia
Office towers
and a business hotel
Aloft Kuala Lumpur Sentral Hotel
Kuala Lumpur, Malaysia
Business-class hotel
(a Starwood Hotel)
Hotel: Completed in May 2012
40.0%
107,000
8,000 Office Towers: Completed in
December 2012
Hotel: Completed in January 2013
100.0%
28,000
5,000
Completed in January 2013
Phase 1: City International Hospital,
International Healthcare Park,
Ho Chi Minh City, Vietnam
Private general hospital
68.1%*
48,000
25,000
Completed in March 2013
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PROJECT UNDER DEVELOPMENT
The RuMa Hotel and Residences
Kuala Lumpur, Malaysia
Luxury residential tower
and boutique hotel
LISTED EQUITY INVESTMENT
Listed equity investment in Nam Long Listed equity investment
Investment Corporation,
an established developer in
Ho Chi Minh City, Vietnam
UNDEVELOPED PROJECTS
Waterside Estates
Ho Chi Minh City, Vietnam
Villa and high-rise
apartments
Other developments in
International Healthcare Park,
Ho Chi Minh City, Vietnam
(formerly International
Hi-Tech Healthcare Park)
Commercial and
residential development
with healthcare theme
70.0%
40,000
4,000
Third quarter of 2017
11.6%
n/a
n/a
n/a
55.0%
94,000
57,000
n/a
68.1%*
972,000
351,000
n/a
Kota Kinabalu seafront resort &
residences
Kota Kinabalu, Sabah, Malaysia
(i) Boutique resort
hotel resort villas
(ii) Resort homes
100.0%
80.0%
n/a
327,000
n/a
* Shareholding as at 31 December 2014
n/a: Not available / not applicable
••• SHARE PRICE CHART •••
0.60
0.50
0.40
0.30
)
$
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Jan
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Feb
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Mar
2014
Apr
2014
May
2014
Jun
2014
Jul
2014
Aug
2014
Sep
2014
Oct
2014
Nov
2014
Dec
2014
Aseana
FTSE All Share
FTSE 350 Real Estate
Volume
••• PERFORMANCE SUMMARY •••
1,200
1,000
800
600
400
200
0
’
)
S
0
0
0
(
E
M
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TOTAL RETURNS SINCE LISTING
Ordinary share price
FTSE All-share index
FTSE 350 Real Estate Index
ONE YEAR RETURNS
Ordinary share price
FTSE All-share index
FTSE 350 Real Estate Index
CAPITAL VALUES
Total assets less current liabilities (US$ million)
Net asset value per share (US$)
Ordinary share price (US$)
FTSE 350 Real Estate Index
DEBT-TO-EQUITY RATIO
Debt-to-equity-ratio1
Net debt-to-equity-ratio2
EARNINGS PER SHARE
Earnings per ordinary share - basic (US cents)
- diluted (US cents)
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Year ended
31 December 2014
Year ended
31 December 2013
-55.00%
6.03%
-42.09%
2.27%
-2.13%
15.72%
310.16
0.76
0.45
543.17
127.64%
110.04%
4.29
4.29
-56.00%
8.34%
-49.95%
10.69%
16.69%
19.10%
361.63
0.75
0.44
469.38
134.94%
120.25%
-8.96
-8.96
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 less Held-For-Trading Financial Instrument ÷ Total Equity) x 100%
••• FINANCIAL REVIEW •••
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 delegated to
the senior management of the
Development Manager. The
Development Manager’s senior
management team is 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.
MONICA LAI VOON HUEY
Chief Financial Officer
Ireka Development Management
Sdn. Bhd.
Development Manager
27 April 2015
STATEMENT OF
FINANCIAL POSITION
Total assets at 31 December 2014 were
US$445.4 million, compared to
US$494.8 million for 2013, representing
a decrease of US$49.4 million. The
decrease was mainly due to a decrease in
inventories following the disposal of
completed units of SENI Mont’ Kiara
and Tiffani, and disposal of three plots of
lands at IHP. Cash and cash equivalents
(excluding the impact of deposit
pledged) were higher at US$26.0 million
(2013: US$24.6 million) mainly due to
higher collection from SENI Mont’ Kiara
and proceeds from sale of lands in IHP.
Total liabilities have decreased from
US$324.8 million in 2013 to US$274.7
million in 2014, a decrease of US$50.1
million. The decrease was mainly due to
a decrease of trade and other payables
from US$83.6 million in 2013 to US$40.5
million in 2014. Net Asset Value per
share at 31 December 2014 was US cents
75.7 (2013: US cents 74.8).
CASH FLOW AND
FUNDING
Changes in cash flow in 2014 were
positive at US$3.4 million, compared to
the positive cash flow of US$8.8 million
in 2013.
The Group’s subsidiaries borrow to fund
property development projects. At 31
December 2014, the Group had gross
borrowings of US$217.9 million (2013:
US$229.4 million), a decrease of 5.0%
over the previous year. Net debt-to-
equity ratio decreased from 120.3% in
2013 to 110.0% in 2014. Moving forward,
the Group will focus on parring down its
borrowings.
Finance income was US$0.6 million in
2014 compared to US$0.4 million in
2013. Finance costs increased from
US$9.8 million in 2013 to US$13.8
million in 2014. The increase was mainly
attributable to Aloft Kuala Lumpur
Sentral Hotel, City International
Hospital and IHP.
DIVIDEND
No dividend was declared or paid in 2014.
PRINCIPAL RISKS AND
UNCERTAINTIES
A review of the principal risks and
uncertainties facing the Group is set out
in the Directors’ Report.
INTRODUCTION
The Group has recorded positive
operating results for financial year ended
31 December 2014, mainly attributable
to the increased level of sales at SENI
Mont’ Kiara, sale of three plots of lands
at the International Healthcare Park
(“IHP”) and disposal of the Company’s
40% stake in an associated company,
Excellent Bonanza Sdn. Bhd (“EBSB”).
STATEMENT OF
COMPREHENSIVE
INCOME
The Group registered an increase in
revenue from US$29.3 million in 2013 to
US$85.1 million in 2014; and a net profit
before taxation of US$15.4 million as
compared to a net loss of US$18.8 million
in 2013. The net profit included profit
attributable to SENI Mont’ Kiara and
Tiffani of US$16.7 million, gains on
disposal of one plot of land at IHP to
AEON Vietnam Co. Ltd. of US$10.8
million, gains on disposal of another two
plots of land at IHP of US$4.1 million and
also the disposal of the 40% stake in EBSB
of US$5.3 million during the financial
year. These profits are offset by operating
losses and financing costs largely
attributable to Four Points by Sheraton
Sandakan Hotel and Harbour Mall
Sandakan totalling US$5.4 million,
together with operating losses and
financing costs of City International
Hospital of US$9.8 million. Finance cost
for these three operating assets together
with those of Aloft Kuala Lumpur Sentral
Hotel totalled US$11.6 million.
Net profit attributable to equity holders
of the parent was US$9.1 million in 2014,
compared to a net loss of US$19.0 million
in 2013. Tax charge for 2014 was higher
at US$9.4 million (2013: US$2.9 million)
due to corresponding higher revenue.
The consolidated comprehensive loss
for the year ended 31 December 2014
was US$1.24 million compared to a
consolidated comprehensive loss of
US$27.7 million in 2013. The former
includes a loss arising from foreign
currency translation differences for
foreign operations of US$7.4 million
(2013: Loss of US$6.2 million) due to
weakening of Ringgit against US Dollars
during the year; and an increase in the
fair value of shares in Nam Long of
US$0.13 million (2013: Increase of US$
0.13 million). The carrying amount of
shares in Nam Long was US$12.8
million as at 31 December 2014 (2013:
US$ 12.7 million).
Basic and diluted earnings per share for
the year ended 31 December 2014 were
both US cents 4.29 (2013: Loss per share
of US cents 8.96).
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••• CORPORATE SOCIAL RESPONSIBILITY •••
This Statement is about
how Aseana Properties
takes account of its
economic, social and
environmental impact in
the way it operates as a
business. By demonstrating
the Group’s commitment
to corporate social
responsibility, it aims to
align its business values,
purpose and strategy with
the needs of its clients.
Aseana Properties defines
corporate citizenship
as the business strategy
that shapes the values
underpinning the Group’s
mission and we believe
that the following six
core principles define
the essence of corporate
citizenship for the Group.
1. MANAGING
CORPORATE
RESPONSIBILITY
Here at Aseana Properties, the Board
of Directors does not differentiate
between corporate responsibility and
the way they do business. Corporate
responsibility is how it does business.
The Board of Directors is responsible
for approving appropriate policies
and procedures to govern the manner
in which it treats its customers,
employees and shareholders. Aseana
Properties manages its corporate social
responsibility through the development
and management of sustainable,
commercially viable properties that are
attractive to customers and contribute
higher returns to its shareholders.
It reviews corporate responsibility
issues as part of the risk of business,
and ensures that the reputation of
Aseana Properties is protected and
shareholders’ values are enhanced.
2. ENVIRONMENTAL
MANAGEMENT
Environmental management involves
a set of processes and practices that
enables an organisation to reduce its
environmental impact and increase its
operating efficiency. Aseana Properties
is committed to environmental
protection and to this end, recognises
that development activities will have an
impact on the environment and always
aims to operate in manners that mitigate
the impact on the environment. For
example, Aseana Properties, through
its Development Manager, works with
local authorities and planners to ensure
that environmental protection and
amenity improvements are key criteria
in any project scheme. It also works with
architects and designers to incorporate
natural elements such as water, greenery,
light and air into its schemes.
3. HEALTH AND SAFETY
Aseana Properties recognises and
accepts its responsibilities as an
employer for providing a safe and
healthy workplace and environment
for all its employees and contractors.
Health and safety issues are a top
priority, and Aseana Properties will take
all reasonable and practicable steps to
ensure that they meet legislative and
regulatory requirements. It will pay
particular attention to the provision
and maintenance of:
a.
b.
Equipment, plant and systems at
work to ensure a healthy working
environment.
Safe places of work and safe access
to it.
Free Phaco surgery for 100 seniors
Charity walk for disabilities and victims of Agent Orange
6. STAKEHOLDERS
Aseana Properties works collaboratively
with its stakeholders to improve services.
The Group is committed to meaningful
dialogue and encourages stakeholders’
participation through stakeholders’
meetings, roadshows, conference calls,
briefings, timely release of annual reports
and publication of its quarterly magazine,
CiTi-ZEN. Aseana Properties also
maintains an updated and informative
website (www.aseanaproperties.com)
that is accessible to stakeholders and
members of the public.
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c.
Sufficient information, instruction,
training and supervision to enable
all employees to avoid hazards and
contribute positively to their own
safety and health at work and to
enable the safe performance at work.
The Group believes that excellence in
the management of health and safety is
an essential element within its overall
business plan.
4. EMPLOYEES
Aseana Properties recognises that it
relies on its employees to be productive,
creative and innovative in order for the
Group to achieve excellence in the way
it works. The Group therefore works
closely with its Development Manager
to ensure that all employees are treated
fairly and with dignity to get the best
out of them.
5. COMMUNITY
Aseana Properties believes in supporting
and participating in community activities
that enhance social progress and
community welfare. During the year,
Aseana Properties participated in various
charity events and contributed in the
areas of education, arts as well as causes
that benefit the community. For example,
City International Hospital offered free
health check-ups for 3,500 seniors and
free Phaco surgery for 100 seniors in Ho
Chi Minh City. It also sponsored and
participated in a charity walk for people
with disabilities and victims of Agent
Orange.
••• CALENDAR OF EVENTS •••
FEB
APR
14
Aseana Properties announced that its investee company, Nam
Long Investment Corporation, a real estate developer in Vietnam,
in which Aseana Properties holds 11.63% stake, has successfully
completed a placing of 25,500,000 new shares at VND18,000
(approximately US$0.855) per share to a list of prominent
institutional investors, to raise VND459 billion (approximately
US$21.8 million).
27
The Doctors’ Appreciation Day ceremony was held to pay tribute
to and honour the hard work of the City International Hospital’s
(“CIH”) doctors. The event was attended by 100 doctors and
presided over by CEO, Mr Stephens Lo.
Aseana Properties announced its Audited Full Year Results for the
financial year ended 31 December 2013.
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MAY
19
31
Aseana Properties issued the Interim Management Statement for
the period 1 January 2014 to 16 May 2014.
As part of its Healthy Living Series for the community, CIH
organised a series of health talks, health checks and free advice
to a range of patients in Ho Chi Minh City (“HCMC”), including
children. The Speech and Language Therapy & Rehabilitation for
Children with Hearing Impairment meeting was one such event.
The Healthy Living Series was organised over an 8-month period.
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11
SENI Mont’ Kiara won the World Silver Winner of FIABCI World
Prix d’Excellence Awards 2014 under the High Rise Residential
category. SENI Mont’ Kiara is a prestigious residential urban
resort located on the highest point of Mont’ Kiara, offering
majority of its luxury residences impressive views of the Kuala
Lumpur city skyline.
JUN
OCT
11
CIH was showcased at the Health & Wellness
International Expo 2014 in Phnom Penh to
promote the hospital in Cambodia which is a key
part of its marketing programme for 2014.
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Aseana Properties announced that it has entered into a share sale agreement
with Malaysian Resources Corporation Berhad (“MRCB”) to dispose of its entire
40% stake in Excellent Bonanza Sdn. Bhd. (“EBSB”). EBSB is a joint venture
company with MRCB which involved the development of the Kuala Lumpur
Sentral Office Towers & Hotel Project, consisting of two Grade A office towers
and a business hotel. This disposal represented an early exit and realisation of
profit from this project.
Aseana Properties announced that its subsidiary company has entered into an
agreement with AEON Vietnam Co., Ltd. (“AEON Vietnam”) for the disposal of a
4.7 hectares (11 acres) plot of land with development rights at the International
Healthcare Park in HCMC, Vietnam as part of its strategy to realise assets.
Aseana Properties convened its 8th Annual General Meeting at its registered office
in Jersey, Channel Islands. All the resolutions tabled were passed at the meeting.
25
AUG
1
AUG
31
DEC
Free health checks for 3,500 seniors and free Phaco
surgery for 100 seniors in HCMC were undertaken
during this time. This was part of CIH’s programme to
reach out to the community.
9
As part of its Corporate Social Responsibility programme, hospital
staff participated and sponsored in the charity walk for people with
disabilities and victims of Agent Orange. The charity walk raised
awareness about helping people with disabilities and victims of
Agent Orange in the community.
27
Aseana Properties announced its Half-Year Results for the 6-month period ended 30 June 2014.
NOV
12
Aloft Kuala Lumpur Sentral Hotel won The International Real Estate Federation (“FIABCI”) Malaysia Property Award 2014
for the Hotel category.
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Aseana Properties issued the Interim Management Statement for the period 1 July 2014 to 17 November 2014.
Azlan holds a Bachelor of Economics
from Monash University, Melbourne
and qualified as a Chartered Accountant
in 1981. He is a Fellow Member of the
Institute of Chartered Accountants,
Australia, Malaysian Institute of
Directors, Institute of Chartered
Secretaries and Administrators, Hon.
Member of the Institute of Internal
Auditors, Malaysia and Member of the
Malaysian Institute of Accountants.
••• BOARD OF DIRECTORS •••
MOHAMMED AZLAN HASHIM
Non-Executive Chairman
Mohammed Azlan Hashim was
appointed as Chairman (Non-
Executive) of Aseana Properties in
March 2007.
In Malaysia, Azlan serves as Chairman
of several public entities, listed on the
Bursa Malaysia Securities Berhad,
including D&O Green Technologies
Berhad, SILK Holdings Berhad, Scomi
Group Berhad and Deputy Chairman of
IHH Healthcare Berhad.
He has extensive experience working in
the corporate sector including financial
services and investments. Among
others, he has served as Chief Executive,
Bumiputra Merchant Bankers Berhad,
Group Managing Director, Amanah
Capital Malaysia Berhad and Executive
Chairman, Bursa Malaysia Berhad Group.
Azlan also serves as a Board Member
of various government related
organisations including Khazanah
Nasional Berhad, Labuan Financial
Services Authority and is a member
of Employees Provident Fund and the
Government Retirement Fund Inc.
Investment Panels.
CHRISTOPHER HENRY LOVELL
Non-Executive Director
Christopher Henry Lovell was
appointed as Director (Non-Executive)
of Aseana Properties in March 2007.
He was a partner in Theodore Goddard
between 1983 and 1993 before setting
up his own legal practice in Jersey.
In 2000, he was one of the founding
principals of Channel House Trustees
Limited, a Jersey regulated trust
company, which was acquired by Capita
Group plc in 2005, when he became a
director of Capita’s Jersey regulated
trust company until his retirement
from Capita in 2010.
Christopher was a director of BFS
Equity Income & Bond plc between 1998
and 2004, BFS Managed Properties
plc between 2001 and 2005 and Yatra
Capital Limited between 2005 and 2010.
Currently he is also a non-executive
director of Public Service Properties
Investments Limited, listed on AIM
market of the London Stock Exchange.
Christopher holds an LI.B (Hons)
degree from the London School of
Economics and is a member of the Law
Society of England & Wales.
DAVID HARRIS
Non-Executive Director
David Harris was appointed as Director
(Non-Executive) of Aseana Properties
in March 2007. David is currently Chief
Executive of InvaTrust Consultancy
Ltd, a company that specialises in the
provision of investment marketing
services to the Financial Services
Industry in both the UK and Europe.
He was formerly Managing Director
of Chantrey Financial Management
Ltd, a successful investment and
fund management company linked
to Chartered Accountants, Chantrey
Vellacott. Additionally, he also served
as Director of the Association of
Investment Companies overseeing
marketing and technical training.
commentator. He is a previous
winner of the award “Best Investment
Adviser” in the UK.
He is currently a non-executive
director of a number of quoted
companies in the UK including
Character Group plc, Small Companies
Dividend Trust plc, F&C Managed
Portfolio Trust plc and Manchester
& London Investment Trust plc. He
writes regularly for both the national
and trade press and appears regularly
on TV and Radio as an investment
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ISMAIL SHAHUDIN
Non-Executive Director
Ismail Shahudin was appointed as
Director (Non-Executive) of Aseana
Properties in March 2007. Ismail is
chairman of Maybank Islamic Berhad,
Opus Group Berhad, UEM Edgenta
Berhad (formerly known as Faber
Group Berhad) and also serves as
Independent Non-Executive board
member of several Malaysia public
listed entities, among others, Malayan
Banking Berhad which is Malaysia’s
largest bank, EP Manufacturing Berhad,
UEM Group Berhad which is a non-
listed wholly-owned subsidiary of
Khazanah Nasional Berhad, one of the
JOHN LYNTON JONES
Non-Executive Director
John Lynton Jones was appointed as
Director (Non-Executive) of Aseana
Properties in March 2007. Lynton is
Chairman Emeritus of Bourse Consult,
a consultancy that advises clients on
initiatives relating to exchange trading,
regulation, clearing and settlement. He
has an extensive background as a chief
executive of several exchanges in
London, including the International
Petroleum Exchange, the OM London
Exchange and Nasdaq International
(whose operations he set up in Europe
in the late 1980s). He was chairman of
GERALD ONG CHONG KENG
Non-Executive Director
Gerald Ong was appointed as Director
(Non-Executive) of Aseana Properties in
September 2009. Gerald is Chief
Executive Officer of PrimePartners
Corporate Finance Group, has over 20
years of corporate finance related
experience at various financial
institutions providing a wide variety of
services from advisory, M&A activities
and fund raising exercises incorporating
various structures such as equity,
equity-linked and derivative-enhanced
issues. In June 2007, he was appointed a
Director of Metro Holdings Limited
Malaysia government’s investment
arms. He is also a Non-Independent
Non-Executive Director of Opus
International Consultants Limited, a
company listed on the New Zealand
Stock Exchange and a director of MCB
Bank Limited, Pakistan, a company
listed on the Karachi Stock Exchange.
Ismail started his career in ESSO
Malaysia in 1974 before joining Citibank
Malaysia in 1979. He was subsequently
posted to Citibank’s headquarters in
New York in 1984, returning to Malaysia
in 1986 as the Vice President & Group
Head of Public Sector and Financial
Institutions Group. Subsequently, he
served as the Deputy General Manager
for the then United Asian Bank Berhad
before joining Maybank in 1992 and was
appointed Executive Director in 1997.
Ismail subsequently assumed the
position of Group CEO of MMC
Corporation Berhad in 2002, until his
retirement in 2007.
Ismail holds a Bachelor of Economics
(Hons) degree from University of
Malaya.
the Morgan Stanley/OMX joint venture
Jiway in 2000 and 2001.
He spent the first 15 years of his career
in the British Diplomatic Service where
he became private secretary to a
minister of state and Financial Services
Attaché at the British Embassy in Paris.
He has been a board member of
London’s Futures and Options
Association, of the London Clearing
House and of Kenetics Group Limited.
He was the founding chairman of the
Dubai International Financial
Exchange (now known as Nasdaq
Dubai) from 2003 until 2006. He is
chairman of Digiservex plc, an adviser
to the City of London Corporation and a
Fellow of the Chartered Institute for
Securities and Investments. He was a
Trustee of the Horniman Museum in
London for 8 years until 2013. He
studied at the University of
Aberystwyth, where he took a first class
honours in International Politics. He is
now chairman of the University’s
Development Advisory Board.
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which is listed on the Singapore
Exchange Securities Trading Limited.
Gerald has been granted the Financial
Industry Certified Professional status
and is an alumnus of the National
University of Singapore, University of
British Columbia and Harvard
Business School.
••• DIRECTORS’ REPORT •••
For The Year Ended 31 December 2014
The Directors present their report together with the audited financial statements of
the Group for the year ended 31 December 2014.
MANAGEMENT AND CONTROL
PRINCIPAL ACTIVITIES
The principal activities of the Group are acquisition, development and redevelopment
of upscale residential, commercial, hospitality and healthcare projects in the major
cities of Malaysia and Vietnam.
OPERATIONAL
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.
Failure of the Development Manager’s
accounting system and disruption to the
Development Manager’s business, or
that of a third party service providers,
could lead to an inability to provide
accurate reporting and monitoring
leading to a loss of shareholders’
confidence.
Inadequate controls by the Development
Manager 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.
Failure of property development
projects due to poor sales and collection,
construction delay, inability to secure
financing from banks may result in
inadequate financial resources to
continue operational existence and to
meet financial liabilities and
commitments.
FINANCIAL
GOING CONCERN
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 countries that it operates in
and the management of the Group’s property development portfolio. Details of the
Group’s internal controls are described on pages 23 to 24.
RESULTS AND DIVIDENDS
The results for the year ended 31 December 2014 are set out in the attached financial
statements.
No dividends were declared nor paid during the financial year under review.
PURCHASE OF OWN SHARES
The authority to purchase its own shares up to a total aggregate value of 14.99% of the
issued ordinary shares capital of the Company was renewed in a resolution at its
Annual General Meeting held on 25 June 2014. The authority shall expire 12 months
from the date of passing of the resolution unless otherwise renewed, varied or
revoked. The Company did not purchase its own shares during the year ended 31
December 2014.
SHARE CAPITAL
No shares have been issued in 2014. Further details on share capital are stated in Note
28 to the financial statements.
BUSINESS REVIEW AND FUTURE DEVELOPMENTS
The statement of comprehensive income for the year is set out on pages 27 to 28.
A review of the development and performance of the business has been set out in the
Chairman’s Statement, the Development Manager’s Review and the Financial Review
reports.
OBJECTIVES AND STRATEGY
The Company’s investment objective is to provide shareholders with an attractive
overall total return achieved primarily through capital appreciation by investing in
properties in Malaysia and Vietnam. The Company intends to achieve its investment
objective through acquisition, development and redevelopment of upscale residential,
commercial, hospitality and healthcare projects leveraging on the Development
Manager’s experience in these sectors. The Company will typically invest in
development projects at the pre-construction stage. It will also selectively invest in
projects under construction and newly completed projects with the potential for high
capital appreciation.
The Company will only invest in projects where, at the time the investment is made,
both the Company and the Development Manager reasonably believe that there will be
a minimum 30% annualised Return on Equity (“ROE”) where the Company makes
investments in Vietnam and a minimum of 20% ROE where the Company makes
investments in Malaysia.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group’s business is property development in Malaysia and Vietnam. Its principal
risks are therefore related to the property market in these countries in general, and also
the particular circumstances of the property development projects it is undertaking.
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 to the financial statements.
Other risks faced by the Group in Malaysia and Vietnam include the following:
ECONOMIC
STRATEGIC
REGULATORY
LAW AND REGULATIONS
TAX REGIMES
Inflation, economic recessions and
movements in interest rates could affect
property development activities.
Incorrect strategy, including sector and
geographical allocations and use of
gearing, could lead to poor returns for
shareholders.
Breach of regulatory rules could lead to
suspension of the Company’s Stock
Exchange listing and financial penalties.
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.
Changes in the tax regimes could affect
the tax treatment of the Company and/
or its subsidiaries in these jurisdictions.
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DIRECTORS
EMPLOYEES
The following were directors of Aseana who held office throughout the financial year
and up to the date of this report:
• Mohammed Azlan Hashim – Chairman
• Christopher Henry Lovell
• David Harris
• Ismail Shahudin
• John Lynton Jones
• Gerald Ong Chong Keng
The Company has no executive directors or employees. The subsidiaries of the Group
have a total of 941 employees at 31 December 2014. A management agreement exists
between the Company and its Development Manager which sets out the role of the
Development Manager in managing the operating units of the Company. The
Development Manager had 65 managerial and technical staff under its employment in
Malaysia and Vietnam at 31 December 2014.
GOING CONCERN
The Directors are confident that the Group has adequate financial resources to
continue in operational existence for the foreseeable future and therefore continue to
adopt the going concern basis in preparing the financial statements.
DIRECTORS’ INTERESTS
The interests of the directors in the Company’s shares at 31 December 2014 and at the
date of this report were as follows:
Number of Shares held:
DIRECTOR
ORDINARY SHARES OF US$0.05 EACH
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 2014 amounted to 73 days (2013:
16 days) of property development cost incurred during the year.
Christopher Henry Lovell
John Lynton Jones
David Harris
Gerald Ong Chong Keng
48,000
20,000
165,000
2,250,000
None of the other directors in office at the end of the financial year had any interest in
shares in the Company during the financial year.
MANAGEMENT
The Board has contractually delegated the development management of the property
development portfolio to Ireka Development Management Sdn. Bhd.
(the “Development Manager”). The Development Manager is a wholly-owned
subsidiary of Ireka Corporation Berhad, a company listed on Bursa Malaysia since
1993 which has over 45 years of experience in construction and property
development. Under the management contract, the Development Manager will be
principally responsible for, inter alia, implementing the real estate strategy for the
Company, engaging, managing and coordinating third parties in relation to the
development and management of properties to be acquired and lead the negotiation
for the acquisition or disposal of assets and the financing of such assets.
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 at the latest
practicable date before the publication of this Report at 7 April 2015:
NUMBER OF
ORDINARY SHARES
HELD
PERCENTAGE OF
ISSUED SHARE
CAPITAL
Ireka Corporation Berhad
48,913,623
SIX SIS
40,140,013
Legacy Essence Limited
39,086,377
LIM Advisors
30,864,026
Dr. Thong Kok Cheong
11,090,538
Henderson Global Investors
7,570,000
Ironsides Partners CFD
7,175,000
23.07%
18.93%
18.43%
14.56%
5.23%
3.57%
3.38%
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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 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 International Financial Reporting Standards (“IFRS”),
interpretations from the International Financial Reporting Interpretations
Committee (“IFRIC”) and Companies (Jersey) Law 1991 (as amended).
Jersey Law requires the directors to prepare financial statements for each financial
year, which give a true and fair view of the state of affairs of the Company and of the
Group and of the profit or loss of the Company and of the Group for that year. In
preparing the financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, comparable, understandable
and prudent;
• ensure that the financial statements comply with IFRS; and
• prepare the financial statements on the going concern basis, unless it is
inappropriate to presume that the Group and Company will continue in business.
The directors are responsible for maintaining proper accounting records that disclose
with reasonable accuracy at any time the financial position of the Company and of the
Group and to enable them to ensure that the financial statements comply with the
Jersey Law. 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 Group’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 consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards, including International Accounting
Standards and Interpretations adopted by the International Accounting Standards
Board; and
••• DIRECTORS’ REPORT cont’d •••
• the sections of this Report, including the Chairman’s Statement, Development
Manager’s Review, Financial Review and Principal Risks and Uncertainties, which
constitute the management report include a fair review of all information required to
be disclosed by the Disclosure and Transparency Rules 4.1.8 to 4.1.11 issued by the
Financial Services Authority of the United Kingdom.
DISCLOSURE OF INFORMATION TO AUDITOR
So far as each person who was a director at the date of approving this report is aware,
there is no relevant audit information, being information needed by the auditor in
connection with preparing its report, of which the auditor is unaware. Having made
enquiries of fellow directors and the Group’s auditors, 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, KPMG 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, Nomination Committee, Remuneration
Committee, Management Engagement Committee and Investment Committee is
included in the Corporate Governance section of the Annual Report on pages 22 to 24.
ANNUAL GENERAL MEETING
The tabling of the 2014 Annual Report and Financial Statements to shareholders will
be at an Annual General Meeting (“AGM”) to be held in June 2015.
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
MOHAMMED AZLAN HASHIM
Director
CHRISTOPHER HENRY LOVELL
Director
27 April 2015
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••• REPORT OF DIRECTORS’ REMUNERATION •••
DIRECTORS’ EMOLUMENTS
The Company has no executive Directors or employees. Since all the Directors are
non-executive, the provisions of The UK Corporate Governance Code in respect of the
directors’ remuneration are not relevant except in so far as they relate specifically to
non-executive directors.
The Remuneration Committee of the Board of Directors is responsible for setting the
framework and reviewing compensation arrangements for all non-executive Directors
before recommending the same to the Board for approval. The Remuneration
Committee assesses 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:
YEAR ENDED 31
DECEMBER 2014
(US$)
YEAR ENDED 31
DECEMBER 2013
(US$)
Mohammed Azlan Hashim
(Chairman of the Board)
Christopher Henry Lovell
(Chairman of the Audit
Committee)
David Harris
Ismail Shahudin
John Lynton Jones
Gerald Ong Chong Keng
70,000
55,000
48,000
48,000
48,000
48,000
70,000
55,000
48,000
48,000
48,000
48,000
TOTAL
317,000
317,000
SHARE OPTIONS
The Company did not operate any share option schemes during the year ended
31 December 2014.
SHARE PRICE INFORMATION
• High for the year
- US$0.46
• Low for the year
- US$0.395
• Close for the year
- US$0.45
PENSION SCHEMES
In view of the non-executive nature of the directorships, no pension schemes exist in
the Company.
SERVICE CONTRACTS
In view of the non-executive nature of the directorships, there are no service contracts
in existence between the Company and any of the Directors. Each Director was
appointed by a letter of appointment that states his appointment subject to the Articles
of Association of the Company which set out the main terms of his appointment.
JOHN LYNTON JONES
Chairman of the Remuneration Committee
27 April 2015
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••• 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. However, the Board recognises the
importance and value of good corporate governance and voluntarily seeks to apply the
principles of the Code where practical and relevant for a company of Aseana Properties’
size and nature. The following explains how the relevant principles of governance are
applied to the Company.
THE BOARD
The Company currently has a Board of six non-executive directors, including the
non-executive Chairman. The brief biographies of the following directors appear on
pages 16 to 17 of the Annual Report 2014:
• Mohammed Azlan Hashim (Non-Executive Chairman)
• Christopher Henry Lovell
• David Harris
• Ismail Shahudin
• John Lynton Jones
• Gerald Ong Chong Keng
The Board did not appoint a Chief Executive or a Senior Independent Director as it did
not consider it appropriate given the nature of the Company’s business and that the
Company’s property portfolio is externally managed by Ireka Development
Management Sdn Bhd (the “Development Manager”).
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 all major potential investment, acquisitions and
disposals. The Board also sets the Company’s values and standards and ensures that its
obligations to its shareholders and other stakeholders are met. The implementation of
the Company’s strategy is delegated to the Development Manager and its performance
is assessed by the Board regularly.
Appropriate level of directors’ and officers’ liability insurance is maintained by the
Company.
MEETINGS OF THE BOARD OF DIRECTORS
The Board meets at least four times a year and at such other times as the Chairman
shall require. The Board met six times during the year ended 31 December 2014.
Except for Ismail Shahudin, who was absent once, and Gerald Ong, who was absent
twice, the meetings were attended by all the Directors. 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 Development Manager, Company Secretary and advisers,
who are responsible to the Board on matters of corporate governance, board
procedures and regulatory compliance.
BOARD BALANCE AND INDEPENDENCE
Being an externally-managed company, the Board consists solely of non-executive
directors of which Mohammed Azlan Hashim is the non-executive Chairman. The
Board considers the Directors to be independent, being independent of management
and also having no business or other 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. In November 2014, 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 25 June
2014, Mohammed Azlan Hashim and John Lynton Jones, who retired by rotation as
Directors, were re-elected to the Board. The remainder of the Board recommended
their re-election.
BOARD COMMITTEES
The Board has established Audit, Nomination, Remuneration, Management
Engagement and Investment Committees which deal with specific aspects of the
Company’s affairs, each of which has written terms of reference which are 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
12 Castle Street, St. Helier, Jersey, JE2 3RT, Channel Islands.
AUDIT COMMITTEE
The Audit Committee consists of three members and is chaired by Christopher Henry
Lovell. Its other members are Mohammed Azlan Hashim and Ismail Shahudin. The
Committee members have no links with the Company’s external auditor and are
independent of the Company’s management. 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.
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 ended 31 December 2014. The meetings were attended by all the
committee members. Representatives of the auditor, the Chief Financial Officer and
Chief Executive Officer of the Development Manager 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
operated by the Development Manager;
• 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, taking into consideration relevant UK professional
and regulatory requirements;
• 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.
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Since the start of the financial year ended 31 December 2014, 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:
During the year ended 31 December 2014, the Management Engagement Committee
carried out its duties as set out in its terms of reference which are summarised below:
• monitoring compliance by the Development Manager with the terms of the
• reviewing the audit plan with the Group’s Auditor;
Management Agreement;
• 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 Company’s Auditor before tabling to the Board for
consideration and approval;
• reviewing other published financial information including the half year results, the
interim management statements and results announcements before tabling to the
Board for consideration and approval;
• reviewing the terms of the Management Agreement from time to time to ensure that
the terms thereof conform with market and industry practice and remain in the best
interest of shareholders;
• from time to time monitoring compliance by providers of other services to the
Company with the terms of their respective agreements; and
• reviewing and considering the appointment and remuneration of providers of
services to the Company.
• 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.
NOMINATION COMMITTEE
The Nomination Committee is chaired by Mohammed Azlan Hashim. Other
committee members are David Harris, John Lynton Jones and Gerald Ong Chong
Keng. The Committee meets annually and at any such times as the Chairman of the
Nomination Committee shall require. The Committee met once during the year ended
31 December 2014 and the meeting was attended by all committee members and other
Board members at the invitation of the Nomination Committee.
During the year ended 31 December 2014, the Nomination Committee carried out its
functions as set out in its terms of reference which are summarised below:
• regularly reviewing the structure, size and composition (including skills, knowledge
and experience) of the Board and making recommendations to the Board with regard
to any change;
• considering 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; and
• considering any matter relating to the continuation in office of any Director at any
time.
REMUNERATION COMMITTEE
The Remuneration Committee is chaired by John Lynton Jones. Other committee
members are David Harris and Ismail Shahudin.
The Committee meets at least once a year and at any such times as the Chairman of the
Remuneration Committee shall require. The Committee met once during the year
ended 31 December 2014. The meeting was attended by all committee members and
other Board members at the invitation of the Remuneration Committee.
INVESTMENT COMMITTEE
The Investment Committee is appointed by the Board and comprises four members,
being Lai Voon Hon, Mai Xuan Loc, Monica Lai Voon Huey and Dang The Duc. Mai
Xuan Loc and Dang The Duc are independent while Lai Voon Hon and Monica Lai are
the Chief Executive Officer and the Chief Financial Officer of the Development
Manager respectively. The Investment Committee meets at such time as required to
review and evaluate potential investments for recommendation to the Board. The
Investment Committee is responsible for providing advisory services to the Board to
consider investment and disposal recommendations of the Development Manager. The
Investment Committee has not met during the year ended 31 December 2014.
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 Annual Report
through the Chairman’s Statement, Development Manager’s Review 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 Company’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 by the
Development Manager, including the work carried out by the internal auditor of the
Development Manager, 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. However, the Directors will
continue to monitor if such need is required.
AUDITOR
During the year ended 31 December 2014, the Remuneration Committee carried out its
duties as set out in its terms of reference which are summarised below:
The Audit Committee’s responsibilities include monitoring and reviewing the
performance and independence of the Company’s Auditor, KPMG LLP.
• determining and agreeing with the Board the framework for the remuneration of the
Directors;
• setting the remuneration for all Directors; and
Pursuant to audit and ethical standards, the auditor is required to assess and confirm to
the Board their independence, integrity and objectivity. The auditor has carried out
assessment and considers themselves to be independent, objective and in compliance
with the APB (Auditing Practices Board) Ethical Standards.
• ensuring that provisions regarding disclosure of remuneration as set out in the
Directors’ Remuneration Report Regulations 2002, are fulfilled.
MANAGEMENT ENGAGEMENT COMMITTEE
The Management Engagement Committee is chaired by Mohammed Azlan Hashim.
Other committee members are David Harris, John Lynton Jones and Gerald Ong
Chong Keng. The Committee meets at least once a year and at any such times as the
Chairman of the Management Engagement Committee shall require. The Committee
met once during the year ended 31 December 2014. The meeting was attended by all
committee members and other Board members at the invitation of the Management
Engagement Committee.
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. The process is based principally on the Development Manager’s existing
risk-based approach to risk management and internal control.
During the year, the Board discharged its responsibility for risk management and
internal control through the following key procedures:
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••• CORPORATE GOVERNANCE STATEMENT cont’d •••
• clearly defined delegation of responsibilities to the committees of the Board and to
the Development Manager, 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.
In compliance with the Bribery Act 2010 (the “Act”), the Board has established a
framework to comply with the requirement of the Act. The Development Manager had
set up 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 Development Manager’s senior management and employees. Compliance review
will be carried out as and when required to ensure the effectiveness of the policy.
RELATIONSHIP WITH SHAREHOLDERS
The Board is committed to maintaining good communications with shareholders and
has designated the Development Manager’s Chief Executive Officer, Chief Financial
Officer and designated members of its senior management as the principal
spokepersons 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 and the Development Manager. 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 that shareholders and investors can access for timely
information.
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. All directors attended the 2014 AGM,
held on 25 June 2014 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 proxy votes received for, against and withheld in
respect of each resolution after the shareholders 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
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MOHAMMED AZLAN HASHIM
Director
CHRISTOPHER HENRY LOVELL
Director
27 April 2015
••• INDEPENDENT AUDITOR’S REPORT •••
identify material inconsistencies with
the audited financial statements and
to identify any information that is
apparently materially incorrect based
on, or materially inconsistent with,
the knowledge acquired by us in the
course of performing the audit. If we
become aware of any apparent material
misstatements or inconsistencies we
consider the implications for our report.
OPINION ON FINANCIAL
STATEMENTS
In our opinion the financial statements:
•
give a true and fair view, in accordance
with International Financial
Reporting Standards of the state of
the group’s and parent company’s
affairs as at 31 December 2014 and
of the group’s profit and the parent
company’s loss for the year then
ended; and
Notes:
•
The maintenance and integrity of
Aseana’s website is the responsibility
of the directors; the work carried
out by auditors does not involve
consideration of these matters and
accordingly, KPMG LLP accepts no
responsibility for any changes that
may have occurred to the financial
statements or our audit report since
27 April 2015. KPMG LLP has carried
out no procedures of any nature
subsequent to 27 April 2015 which in
any way extends this date.
•
Legislation in Jersey governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions. The
directors shall remain responsible
for establishing and controlling the
process for doing so, and for ensuring
that the financial statements are
complete and unaltered in any way.
•
have been properly prepared in
accordance with the Companies
(Jersey) Law 1991.
MATTERS ON WHICH
WE ARE REQUIRED TO
REPORT BY EXCEPTION
We have nothing to report in respect
of the following matters where the
Companies (Jersey) Law 1991 requires
us to report to you if, in our opinion:
•
proper accounting records have not
been kept by the company; or
•
•
•
proper returns adequate for our audit
have not been received from branches
not visited by us; or
the company financial statements are
not in agreement with the accounting
records and returns; or
we have not received all the
information and explanations we
require for our audit.
BILL HOLLAND
for and on behalf of KPMG LLP
Chartered Accountants and Recognised
Auditor
15 Canada Square
London E14 5GL
27 April 2015
INDEPENDENT
AUDITOR’S REPORT TO
THE MEMBERS OF
ASEANA PROPERTIES
LIMITED
We have audited the group and parent
company financial statements of Aseana
Properties Limited for the year ended
31 December 2014 which comprise the
Consolidated and Company Statements
of Comprehensive Income, the
Consolidated and Company Statements
of Financial Position, the Consolidated
and Company Statements of Changes in
Equity, the Consolidated and Company
Statements of Cash Flows and the
related notes. The financial reporting
framework that has been applied in
their preparation is applicable law and
International Financial Reporting
Standards.
This report is made solely to the
company’s members, as a body, in
accordance with Article 113A of the
Companies (Jersey) Law 1991. 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.
RESPECTIVE
RESPONSIBILITIES
OF DIRECTORS AND
AUDITOR
As explained more fully in the Statement
of Directors’ Responsibilities set out on
page 19, the directors are responsible for
the preparation of financial statements
which give a true and fair view. Our
responsibility is to audit, and express
an opinion on, the financial statements
in accordance with applicable law and
International Standards on Auditing
(UK and Ireland). Those standards
require us to comply with the Auditing
Practices Board’s Ethical Standards for
Auditors.
SCOPE OF THE AUDIT
OF THE FINANCIAL
STATEMENTS
An audit involves obtaining evidence
about the amounts and disclosures
in the financial statements sufficient
to give reasonable assurance that the
financial statements are free from
material misstatement, whether caused
by fraud or error. This includes an
assessment of: whether the accounting
policies are appropriate to the group’s
and parent company’s circumstances
and have been consistently applied and
adequately disclosed; the reasonableness
of significant accounting estimates
made by the directors; and the
overall presentation of the financial
statements. In addition, we read
all the financial and non-financial
information in the Annual Report to
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••• FINANCIAL STATEMENTS •••
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INVESTMENT GATEWAY TO
MALAYSIA AND VIETNAM
CONTENTS
27 • Consolidated Statement of Comprehensive Income
31 • Statements of Changes in Equity
28 • Company Statement of Comprehensive Income
32 • Consolidated Statement of Cash Flows
29 • Consolidated Statement of Financial Position
33 • Company Statement of Cash Flows
30 • Company Statement of Financial Position
34 • Notes to the Financial Statements
••• CONSOLIDATED STATEMENT OF •••
COMPREHENSIVE INCOME
For The Year Ended 31 December 2014
Continuing activities
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Foreign exchange gain/ (loss)
Management fees
Marketing expenses
Other operating expenses
Operating profit/ (loss)
Finance income
Finance costs
Net finance costs
Gain on disposal of investment in an associate
Share of loss of equity-accounted associate, net of tax
Net profit/ (loss) before taxation
Taxation
Profit/ (loss) for the year
Other comprehensive income/ (expense), net of tax
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences for foreign operations
Increase in fair value of available-for-sale investments
Total other comprehensive expense for the year
Total comprehensive loss for the year
Profit/ (loss) attributable to:
Equity holders of the parent
Non-controlling interests
Total
Total comprehensive loss attributable to:
Equity holders of the parent
Non-controlling interests
Total
Earnings/ (loss) per share
Basic and diluted (US cents)
Notes
2014
US$’000
2013
US$’000
5
6
7
8
9
11
17
17
12
13
19
14
18
85,102
(51,821)
33,281
27,369
(1,193)
716
(3,344)
(823)
(32,715)
23,291
577
(13,760)
(13,183)
5,641
(335)
15,414
(9,387)
6,027
(7,388)
125
(7,263)
(1,236)
9,091
(3,064)
6,027
2,074
(3,310)
(1,236)
29,269
(22,768)
6,501
16,122
(1,622)
(1,105)
(3,762)
(1,953)
(23,635)
(9,454)
424
(9,766)
(9,342)
_
–
(18,796)
(2,854)
(21,650)
(6,220)
126
(6,094)
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(27,744)
(19,006)
(2,644)
(21,650)
(24,971)
(2,773)
(27,744)
15
4.29
(8.96)
The notes to the financial statements form an integral part of the financial statements.
••• COMPANY STATEMENT OF •••
COMPREHENSIVE INCOME
For The Year Ended 31 December 2014
Continuing activities
Revenue
Cost of sales
Gross profit
Administrative expenses
Foreign exchange gain
Management fees
Impairment of investment in subsidiaries
Impairment of amount due from subsidiaries
Other operating expenses
Operating loss
Finance income
Net loss before taxation
Taxation
Loss for the year/ Total comprehensive loss for the year
Loss per share
Basic and diluted (US cents)
Notes
2014
US$’000
2013
US$’000
–
–
–
(533)
979
(1,180)
(124)
(15,103)
(499)
(16,460)
21
(16,439)
–
(16,439)
–
–
–
(456)
198
(1,238)
(6,305)
(12,950)
(485)
(21,236)
5
(21,231)
–
(21,231)
8
9
18
26
11
12
15
(7.75)
(10.01)
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The notes to the financial statements form an integral part of the financial statements.
••• CONSOLIDATED STATEMENT OF •••
FINANCIAL POSITION
AT 31 DECEMBER 2014
Notes
2014
US$’000
2013
US$’000
Non-current assets
Property, plant and equipment
Investment in an associate
Available-for-sale investments
Intangible assets
Deferred tax assets
Total non-current assets
Current assets
Inventories
Held-for-trading financial instrument
Trade and other receivables
Prepayments
Amount due from an associate
Current tax assets
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Equity
Share capital
Share premium
Capital redemption reserve
Translation reserve
Fair value reserve
Accumulated losses
Shareholders’ equity
Non-controlling interests
Total equity
Non-current liabilities
Amount due to non-controlling interests
Loans and borrowings
Medium term notes
Total non-current liabilities
Current liabilities
Trade and other payables
Amount due to non-controlling interests
Loans and borrowings
Medium term notes
Current tax liabilities
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
16
17
19
20
21
22
23
24
25
27
28
29
30
31
32
33
18
35
36
37
34
35
36
37
1,018
–
12,822
8,798
1,683
24,321
381,778
4,041
8,359
337
–
513
26,011
421,039
445,360
10,601
218,926
1,899
(10,247)
251
(60,932)
160,498
10,187
1,146
2,252
12,697
13,525
595
30,215
428,609
375
9,654
258
853
233
24,585
464,567
494,782
10,601
218,926
1,899
(3,105)
126
(69,876)
158,571
11,429
170,685
170,000
1,120
53,364
84,993
139,477
40,510
10,222
19,274
60,237
4,955
135,198
274,675
445,360
1,440
49,309
140,877
191,626
83,640
9,008
25,466
13,739
1,303
133,156
324,782
494,782
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The financial statements were approved on 27 April 2015 and authorised for issue by the Board and were signed on its behalf by
MOHAMMED AZLAN HASHIM
Director
CHRISTOPHER HENRY LOVELL
Director
The notes to the financial statements form an integral part of the financial statements.
••• COMPANY STATEMENT OF •••
FINANCIAL POSITION
AT 31 DECEMBER 2014
Notes
2014
US$’000
2013
US$’000
18
24
26
27
28
29
30
33
34
26
74,517
74,517
18
161,255
6,454
167,727
242,244
10,601
218,926
1,899
(59,721)
74,641
74,641
–
161,785
1,703
163,488
238,129
10,601
218,926
1,899
(43,282)
171,705
188,144
146
70,393
70,539
70,539
1,253
48,732
49,985
49,985
Non-current assets
Investment in subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Amounts due from subsidiaries
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Equity
Share capital
Share premium
Capital redemption reserve
Accumulated losses
Total equity
Current liabilities
Trade and other payables
Amounts due to subsidiaries
Total current liabilities
30
Total liabilities
TOTAL EQUITY AND LIABILITIES
242,244
238,129
The financial statements were approved on 27 April 2015 and authorised for issue by the Board and were signed on its behalf by
MOHAMMED AZLAN HASHIM
Director
CHRISTOPHER HENRY LOVELL
Director
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The notes to the financial statements form an integral part of the financial statements.
••• STATEMENTS OF CHANGES •••
IN EQUITY
For The Year Ended 31 December 2014
Consolidated
Share
Capital
US$’000
Capital
Share Redemption Translation
Reserve
US$’000
Reserve
US$’000
Premium
US$’000
Fair Value Accumulated
Losses
US$’000
Reserve
US$’000
Total Equity
Attributable
to Equity
Holders of
the Parent
US$’000
Non-
Controlling
Interests
US$’000
Total
Equity
US$’000
1 January 2013
10,626
218,926
1,874
2,986
Changes in ownership interests in
subsidiaries (Note 40)
Non-controlling interests contribution
Loss for the year
Total other comprehensive expense
Total comprehensive loss
Cancellation of shares
–
–
–
–
–
(25)
–
–
–
–
–
–
–
–
–
–
–
25
–
–
–
(6,091)
(6,091)
–
–
–
–
–
126
126
–
(50,828)
183,584
13,063
196,647
(42)
(42)
42
–
–
(19,006)
–
–
(19,006)
(5,965)
(19,006)
(24,971)
–
–
1,097
(2,644)
(129)
(2,773)
–
1,097
(21,650)
(6,094)
(27,744)
–
At 31 December 2013/ 1 January 2014
10,601
218,926
1,899
(3,105)
126
(69,876)
158,571
11,429
170,000
Changes in ownership interests in
subsidiaries (Note 40)
Non-controlling interests contribution
Profit for the year
Total other comprehensive expense
Total comprehensive loss
Shareholders’ equity at
31 December 2014
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(7,142)
(7,142)
–
–
–
125
125
(147)
(147)
147
–
–
9,091
-
9,091
–
9,091
(7,017)
2,074
1,921
(3,064)
(246)
(3,310)
1,921
6,027
(7,263)
(1,236)
10,601
218,926
1,899
(10,247)
251
(60,932)
160,498
10,187
170,685
Share
Capital
US$ ’000
Capital
Share Redemption Accumulated
Losses
US$ ’000
Reserve
US$ ’000
Premium
US$ ’000
Total
Equity
US$ ’000
10,626
218,926
1,874
–
(25)
–
–
–
25
(22,051)
(21,231)
–
209,375
(21,231)
–
10,601
218,926
1,899
(43,282)
188,144
–
–
–
(16,439)
(16,439)
10,601
218,926
1,899
(59,721)
171,705
Company
1 January 2013
Loss for the year/ Total comprehensive loss
Cancellation of shares
At 31 December 2013/ 1 January 2014
Loss for the year/ Total comprehensive loss
Shareholders’ equity at
31 December 2014
The notes to the financial statements form an integral part of the financial statements.
31
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••• CONSOLIDATED STATEMENT OF •••
CASH FLOWS
For The Year Ended 31 December 2014
Notes
2014
US$’000
2013
US$’000
Cash Flows from Operating Activities
Net profit/ (loss) before taxation
Finance income
Finance costs
Unrealised foreign exchange (gain)/ loss
Impairment of goodwill
Depreciation of property, plant and equipment
Gain on disposal of investment in an associate
Gain on disposal of property, plant and equipment
Property, plant and equipment written off
Share of loss of equity-accounted associate, net of tax
Fair value gain on amount due to non-controlling interests
Fair value (gain)/ loss on held-for-trading financial instrument
Operating profit / (loss) before changes in working capital
Changes in working capital:
Decrease/ (increase) in inventories
Decrease in trade and other receivables and prepayments
(Decrease)/ increase in trade and other payables
Cash generated from/ (used in) operations
Interest paid
Tax paid
Net cash used in operating activities
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Cash Flows from Investing Activities
Repayment from/ (advances to) associate
Proceeds from disposal of investment in an associate
Proceeds from disposal of property, plant and equipment
(Purchase of )/ disposal of held-for-trading financial instrument
Purchase of property, plant and equipment
Finance income received
Net cash generated from investing activities
Cash Flows from Financing Activities
Advances from non-controlling interests
Issuance of ordinary shares of subsidiaries to non-controlling interests
Repayment of loans and borrowings
Drawdown of loans and borrowings
Decrease in pledged deposits placed in licensed banks
Net cash generated from financing activities
Net changes in cash and cash equivalents during the year
Effect of changes in exchange rates
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
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:
Cash and bank balances
Short term bank deposits
Less: Deposits pledged
Cash and cash equivalents
27
27
27
15,414
(577)
13,760
(291)
4,727
122
(5,641)
(3)
_
335
(320)
(39)
27,487
29,437
647
(40,615)
16,956
(13,760)
(6,679)
(18,796)
(424)
9,766
1,065
320
114
–
–
7
–
–
5
(7,943)
(96,690)
2,063
28,884
(73,686)
(9,766)
(4,029)
(3,483)
(87,481)
853
5,306
12
(3,651)
(20)
577
3,077
1,635
1,921
(16,858)
17,108
–
3,806
3,400
(1,355)
14,166
16,211
12,057
13,954
26,011
(630)
–
–
899
(154)
424
539
1,081
1,097
(17,341)
110,860
77
95,774
8,832
(248)
5,582
14,166
11,498
13,087
24,585
(9,800)
(10,419)
16,211
14,166
In the previous financial year, the Group acquired property, plant and equipment with an aggregate cost of US$194,000 of which US$40,000 was acquired by means of
finance leases.
During the financial year, US$1,921,000 (2013: US$1,097,000) of ordinary shares of subsidiaries were issued to non-controlling shareholders, which was satisfied via
cash consideration.
The notes to the financial statements form an integral part of the financial statements.
••• COMPANY STATEMENT OF •••
CASH FLOWS
For The Year Ended 31 December 2014
Notes
2014
US$’000
2013
US$’000
Cash Flows from Operating Activities
Net loss before taxation
Impairment of investment in subsidiaries
Impairment of amount due from subsidiaries
Finance income
Unrealised foreign exchange gain
Operating loss before changes in working capital
Changes in working capital:
(Increase)/ decrease in receivables
Decrease in payables
Net cash used in operating activities
Cash Flows from Investing Activities
Advances to subsidiaries
Finance income received
Net cash used in investing activities
Cash Flows from Financing Activitiy
Advances from subsidiaries
Net cash generated from financing activity
Net changes in cash and cash equivalents during the year
Effect of changes in exchange rates
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
27
(16,439)
124
15,103
(21)
(1,175)
(2,408)
(18)
(1,107)
(3,533)
(17,933)
21
(17,912)
26,205
26,205
4,760
(9)
1,703
6,454
(21,231)
6,305
12,950
(5)
(151)
(2,132)
3
(424)
(2,553)
(19,455)
5
(19,450)
23,201
23,201
1,198
151
354
1,703
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The notes to the financial statements form an integral part of the financial statements.
••• NOTES TO THE •••
FINANCIAL STATEMENTS
1 GENERAL INFORMATION
The principal activities of the Group and the Company are acquisition, development
and redevelopment of upscale residential, commercial, hospitality and healthcare
projects in the major cities of Malaysia and Vietnam. The Group typically invests in
development projects at the pre-construction stage and may also selectively invest
in projects in construction and newly completed projects with potential capital
appreciation.
2 BASIS OF PREPARATION
2.1 Statement of compliance and going concern
The Group and the Company financial statements have been prepared in
accordance with International Financial Reporting Standards (“IFRS”), and
IFRIC interpretations issued, and effective, or issued and early adopted, at the
date of these financial statements.
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.
The financial statements have been prepared on the historical cost basis except
for available-for-sale investments and held-for-trading financial instruments
which are measured at fair value and on the assumption that the Group and the
Company are going concerns.
The Group has prepared and considered prospective financial information
based on assumptions and events that may occur for at least 12 months from
the date of approval of the financial statements and the possible actions to be
taken by the Group. Prospective financial information includes the Group’s
profit and cash flow forecasts for the ongoing projects. In preparing the cash
flow forecasts, the Directors have considered the availability of cash and held-
for-trading financial instruments, along with the adequacy of bank loans and
medium term notes and refinancing of these medium term notes (as described
in Notes 36 and 37).
The Directors expect to fully “roll-over” the medium term notes which are
due to expire in the next 12 months, as the notes are rated AAA (a highly
sought after investment in Malaysia) and are guaranteed by three completed
inventories of the Group with carrying amount of US$170.54 million as at 31
December 2014. Included in the terms of the medium term notes programme
is an option for the Group to refinance the notes as provided on the onset of
the programme. The option is available until 2021. The forecasts incorporate
current payables, committed expenditure and other future expected
expenditure, along with substantial sales of completed inventories, in
addition to the disposal of certain land held for property development and
available-for-sale investments. In the event that the Group disposes any of
the three completed inventories that guaranteed the medium term notes, the
proceeds from the disposal will reduce the amount of notes the Group seeks
to “roll over”.
Based on these forecasts, cash resources and existing credit facilities, the
Directors consider that the Group and the Company have adequate resources
to continue in business for the foreseeable future. For this reason, the Directors
continue to adopt the going concern basis in preparing the financial statements.
The Group and the Company have not applied the following new/revised
accounting standards that have been issued by International Accounting
Standards Board but are not yet effective.
New/Revised International Financial
Reporting Standards
Issued/
Revised
Effective Date
34
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New/Revised International Financial
Reporting Standards
Issued/
Revised
Effective Date
IFRS 3
Business
Combinations
Amendments resulting from
Annual Improvements 2010-
2012 Cycle (accounting for
contingent consideration)
December 2013 Annual periods
beginning on or
after 1 July 2014
IFRS 3
Business
Combinations
Amendments resulting from
Annual Improvements 2011-
2013 Cycle (scope exception
for joint ventures)
December 2013 Annual periods
beginning on or
after 1 July 2014
IFRS 5
Non-current
Assets Held
for Sale and
Discontinued
Operations
IFRS 7
Financial
Instruments:
Disclosures
IFRS 8
Operating
Segments
IFRS 9
Financial
Instruments
Amendments resulting from
September 2014 Annual
Improvements to IFRSs
September
2014
Annual periods
beginning on or
after 1 January
2016
Amendments resulting from
September 2014 Annual
Improvements to IFRSs
September
2014
Annual periods
beginning on or
after 1 January
2016
Amendments resulting from
Annual Improvements 2010-
2012 Cycle (aggregation of
segments, reconciliation of
segment assets)
Finalised version,
incorporating requirements
for classification and
measurement, impairment,
general hedge accounting and
derecognition
December 2013 Annual periods
beginning on or
after 1 July 2014
July 2014
Effective for
annual periods
beginning on or
after 1 January
2018
IFRS 10
Consolidated
Financial
Statements
Amendments regarding the
sale or contribution of assets
between an investor and its
associate or joint venture
September
2014
Annual periods
beginning on or
after 1 January
2016
IFRS 11 Joint
Arrangements
IFRS 13
Fair Value
Measurement
IFRS 15
Revenue from
Contracts
with
Customers
IAS 1
Presentation
of Financial
Statements
IAS 16
Property,
Plant and
Equipment
Amendments regarding the
accounting for acquisitions
of an interest in a joint
operation
Amendments resulting
from Annual Improvements
2011-2013 Cycle (scope of
the portfolio exception in
paragraph 52)
May 2014
December
2013
Annual periods
beginning on or
after 1 January
2016
Annual periods
beginning on or
after 1 July 2014
Original issue
May 2014
Amendments resulting from
the disclosure initiative
December
2014
Applies to an
entity's first
annual IFRS
financial
statements for a
period beginning
on or after
1 January 2017
Annual periods
beginning on or
after 1 January
2016
Amendments resulting from
Annual Improvements 2010-
2012 Cycle (proportionate
restatement of accumulated
depreciation on revaluation)
December
2013
Annual periods
beginning on or
after 1 July 2014
IFRS 1
First-time
Adoption of
International
Financial
Reporting
Standards
IFRS 2 Share-
based payment
Amendments resulting
from Annual Improvements
2011-2013 Cycle (meaning of
effective IFRSs)
December 2013 Annual periods
beginning on or
after 1 July 2014
IAS 16
Property,
Plant and
Equipment
Amendments regarding the
clarification of acceptable
methods of depreciation and
amortisation
May 2014
Annual periods
beginning on or
after 1 January
2016
Amendments resulting
from Annual Improvements
2010-2012 Cycle (definition of
“vesting condition”)
December 2013 Annual periods
beginning on or
after 1 July 2014
2 BASIS OF PREPARATION cont’d
2.3 Use of estimates and judgements
2.1 Statement of compliance and going concern cont’d
New/Revised International Financial
Reporting Standards
IAS 19
Employee
Benefits
Amendments to clarify the
requirements that relate
to how contributions from
employees or third parties
that are linked to service
should be attributed to period
of service
Issued/
Revised
November
2013
Effective Date
Annual periods
beginning on or
after 1 July 2014
IAS 19
Employee
Benefits
Amendments resulting from
September 2014 Annual
Improvements to IFRSs
September
2014
IAS 24
Related Party
Disclosures
Amendments resulting from
Annual Improvements 2010-
2012 Cycle (management
entities)
December
2013
IAS 27
Separate
Financial
Statements
(as amended
in 2011)
IAS 28
Investments
in Associates
and Joint
Ventures
IAS 28
Investments
in Associates
and Joint
Ventures
IAS 38
Intangible
Assets
IAS 38
Intangible
Assets
IAS 40
Investment
Property
Amendments reinstating
the equity method as an
accounting option for
investments in subsidiaries,
joint ventures and associates
in an entity's separate
financial statements
Amendments regarding the
sale or contribution of assets
between an investor and its
associate or joint venture
August 2014
September
2014
Amendments regarding
the application of the
consolidation exception
December
2014
Amendments resulting from
Annual Improvements 2010-
2012 Cycle (proportionate
restatement of accumulated
depreciation on revaluation)
Amendments regarding the
clarification of acceptable
methods of depreciation and
amortisation
Amendments resulting
from Annual Improvements
2011-2013 Cycle (inter-
relationship between IFRS 3
and IAS 40)
December
2013
Annual periods
beginning on or
after 1 July 2014
May 2014
December
2013
Annual periods
beginning on or
after 1 January
2016
Annual periods
beginning on or
after 1 July 2014
Annual periods
beginning on or
after 1 January
2016
Annual periods
beginning on or
after 1 July 2014
Annual periods
beginning on or
after 1 January
2016
Annual periods
beginning on or
after 1 January
2016
Annual periods
beginning on or
after 1 January
2016
The Directors anticipate that the adoption of the above standards, amendments
and interpretations in future periods will have no material impact on the
financial information of the Group or Company except as mentioned below.
(a) IFRS 9, Financial instruments
IFRS 9, which becomes mandatory for the Group’s 2018 Consolidation
Financial Statements, could change the classification and measurement of
financial assets. The Directors are currently determining the impact of
IFRS 9.
(b) IFRS 15, Revenue from contracts with customers
IFRS 15 replaces the guidance in IFRS 11, Construction Contracts, IFRS 18,
Revenue, IC Interpretation 13, Customer Loyalty Programmes, IC
Interpretation 15, Agreements for Construction of Real Estate, IC
Interpretation 18, Transfer of Assets from Customers and IC Interpretation
131, Revenue – Barter Transactions Involving Advertising Services. The
Directors are currently determining the impact of IFRS 15.
2.2 Functional and presentation currency
These financial statements are presented in US Dollar (US$), which is the
Company’s functional currency and the Group’s presentation currency. All
financial information is presented in US$ and has been rounded to the nearest
thousand, unless otherwise stated.
The preparation of the consolidated financial statements in conformity with
IFRSs 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) 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 based on the realisability
of these properties, taking into account estimated costs to completion
based on past experience and committed contracts and estimated net sales
based on prevailing market conditions. Provision is made when events or
changes in circumstances indicate that the carrying amounts at completion
of development may exceed net realisable value. The assessment requires
the use of judgement and estimates.
(b) Impairment of licence contracts and related relationships
Licence contracts and related relationships represent the rights to develop
the International Healthcare Park venture with the operation period
ending on 9 July 2077.
The Group assesses the recoverable amount of license contracts and
related relationships by reference to the realisability of the properties of
which the license contracts and related relationship is attached (refer
Note 2.3(a)).
The Group amortises licence contracts and related relationships when a
component of the venture is disposed of.
(c) Impairment of goodwill
The Group assesses the recoverable amount of goodwill by reference to
the realisability of the properties of which the goodwill is attached to (refer
Note 2.3(a)).
(d) Classification of assets as inventory
The Group continues to classify its completed developments, namely the
hotels, mall and hospital as inventories in line with the Group’s intention
to dispose these assets. The Group operate these inventories temporarily
to stabilise its operations while seeking for a potential buyer.
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.
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••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
3 SIGNIFICANT ACCOUNTING POLICIES cont’d
(f ) Transactions eliminated on consolidation
3.1 Basis of Consolidation cont’d
(a) Business combinations cont’d
Acquisitions prior to 1 January 2010
For acquisitions prior to 1 January 2010, goodwill represents the excess of
the cost of the acquisition over the Group’s interest in the recognised
amount (generally fair value) of the identifiable assets, liabilities and
contingent liabilities of the acquiree. When the excess was negative, a
bargain purchase gain was recognised immediately in profit or loss.
Transaction costs, other than those associated with the issue of debt or
equity securities, that the Group incurred in connection with business
combinations were capitalised as part of the cost of the acquisition.
(b) 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.
(c) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements
of subsidiaries are included in the consolidated financial statements from
the date that control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed when necessary
to align them with the policies adopted by the Group.
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.
Investments in subsidiaries are stated in the Company’s statement of
financial position at cost less any impairment losses, unless the investment
is held for sale.
(d) Loss of control
On the loss of control, the Group derecognises the assets and liabilities of
the subsidiary, any non-controlling interests and the other components of
equity related to the subsidiary. Any surplus or deficit arising on the loss of
control is recognised in profit or loss. If the Group retains any interest in
the previous subsidiary, then such interest is measured at fair value at the
date that control is lost. Subsequently it is accounted for as an equity-
accounted investee or as an available-for-sale financial asset depending on
the level of influence retained.
(e) Associates
Associates are those entities in which the Group exercises significant
influence, but not control over the financial and operating policies.
Significant influence is presumed to exist when the Group holds between
20% to 50% of the voting power of another entity.
Investments in associated entities are accounted for using the equity
method and are recognised initially at cost. The cost of investment includes
transaction costs.
The consolidated financial statements include the Group’s share of the
profit or loss and other comprehensive income of equity accounted
investees, after adjustments to align the accounting policies with those of
the Group, from the date that significant influence commences until the
date that significant influence ceases.
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.
3.2 Foreign Currencies
(a) Foreign currency transactions
The Group financial statements are presented in United States Dollar
(“US$”), which is the Company’s functional and the Groups’s presentation
currency. Each entity in the Group determines its own functional currency
and items included in the financial statements of each entity are measured
using that functional currency. Transactions in foreign currencies are
translated to the respective functional currencies of the Group entities at
exchange rates at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies at the reporting date are
retranslated to the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies
that are measured at fair value are retranslated to the functional currency
at the exchange rate at the date that the fair value was determined. Non-
monetary items in a foreign currency that are measured in terms of
historical cost are translated using the exchange rate at the date of the
transaction. Foreign currency differences arising on retranslation are
recognised in profit or loss, except for differences arising on the
investments, which are
retranslation of available-for-sale equity
recognised in other comprehensive income.
(b) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on acquisition, are translated to US$ 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:
When the Group’s share of losses exceeds its interest in an associate, the
carrying amount of that investment, including any long-term interests
that form part thereof, is reduced to zero, and the recognition of further
losses is discontinued except to the extent that the Group has an obligation
or has made payments on behalf of the associate.
(a) Sale of development properties
Revenue from sales of 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 as
described in Note 5.
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3.3 Revenue Recognition and Other Income cont’d
(b) 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.
(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) Revenue from hotel, hospital and mall operations
Revenue from hotel and hospital operations is recognised when services
are rendered, and have been treated as other income.
Revenue 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. Revenue from mall operations has been treated as other
income.
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 Group selects its depreciation rates carefully and reviews them regularly
to take account of any changes in circumstances. When determining expected
economic lives, the Group considers the expected rate of technological
developments and the intensity at which the assets are expected to be used. All
assets are subject to annual review and where necessary, further write-downs
are made for any impairment in value.
Property, plant and equipment are recorded at cost, excluding the costs of day-
to-day servicing, less accumulated depreciation and accumulated impairment
in value. Such cost includes the cost of replacing parts of such plant and
equipment when that cost is incurred if the recognition criterias are met.
Property, plant and equipment under construction are not depreciated until
the assets are ready for their intended use. Depreciation is provided at rates
calculated to write off the cost, less estimated residual value, of each asset on a
straight line basis over its expected useful life:
Furniture, fittings and equipment
4 - 10 years
Motor vehicles
Leasehold building
5 years
6 - 25 years
The initial cost of equipment comprises its purchase price, including import
duties and non-refundable purchase taxes and any directly attributable costs of
bringing the asset to its working condition and location for its intended use.
Expenditure incurred after the equipment has been placed into operation,
such as repairs and maintenance and overhaul costs, are normally charged to
profit or loss in the year in which the costs are incurred. In situations where it
can be clearly demonstrated that the expenditure has resulted in an increase in
the future economic benefits expected to be obtained from the use of an item of
equipment beyond its original assessed standard of performance, the
expenditures are capitalised as an additional cost of equipment. The useful life
and depreciation method are reviewed periodically to ensure that the method
and period of depreciation are consistent with the expected pattern of economic
benefits from items of equipment.
When significant parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items (major
components) of property, plant and equipment.
The 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.
An item of equipment is derecognised upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss on
derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the
profit or loss in the period the asset is derecognised.
3.5 Leased Assets
Finance leases
Leases where the Group or the Company assumes substantially all the risks
and rewards of ownership are classified as finance leases. Upon initial
recognition, the leased asset is measured at an amount equal to the lower of its
fair value and the present value of the minimum lease payments. Subsequent to
initial recognition, the asset is accounted for in accordance with the accounting
policy applicable to that asset.
Minimum lease payments made under finance leases are apportioned between
the finance expense and the reduction of the outstanding liability. The finance
expense is allocated to each period during the lease term so as to produce a
constant periodic rate of interest of the remaining balance of the liability.
Contingent lease payments are accounted for by revising the minimum lease
payments over the remaining term of the lease when the lease adjustment is
confirmed.
3.6 Income Tax
Income tax expense comprises current tax and deferred tax. Current tax and
deferred tax is 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.
3.7 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.
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••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
3 SIGNIFICANT ACCOUNTING POLICIES cont’d
(c) Derecognition
3.7 Financial Instruments cont’d
(a) Non-derivative financial assets cont’d
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: financial assets at fair value through profit or loss, loans and
receivables, and available-for-sale investments.
(i) Financial assets at fair value through profit or loss
A financial asset is classified as at fair value through profit or loss if it
is classified as held-for-trading or is designated as at fair value through
profit or loss if the Group manages such investments and makes
purchase and sale decisions based on their fair value in accordance
with the Group’s documented risk management or investment
strategy. Attributable transaction costs are recognised in profit or loss
as incurred. Financial assets at fair value through profit or loss are
measured at fair value and changes therein, which takes into account
any dividend income, are recognised in profit or loss.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market.
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, trade
and other receivables.
(iii) Available-for-sale investments
Available-for-sale investments are non-derivative financial assets
that are designated as available for sale or are not classified in any of
the other categories of financial assets. Available-for-sale financial
assets are recognised initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition,
they are measured at fair value and changes therein, other than
impairment losses, are recognised in other comprehensive income
and presented in the fair value reserve in equity. When an investment
is derecognised, the gain or loss accumulated in equity is reclassified
to profit or loss.
(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 is discussed in Note 3.3
(b) and 3.13.
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 derecognition 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 derecognition 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.
3.8 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 and the Company 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.
3.9 Intangible Assets
Intangible assets comprise licence contracts and related relationships and
goodwill.
(a) Licence Contracts and Related Relationships
On acquisition, value is attributable to non-contractual relationships
and other contracts of long-standing to the extent that future economic
benefits are expected to flow from the relationships. Acquired licence
contracts and related relationships have finite useful lives.
Subsequent measurement
When a component of the project to which the licence contracts and
related relationships relate is disposed of, the part of the carrying amount
of the licence contracts and related relationships that has been allocated
to the component is recognised in profit or loss.
(b) Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in
intangible assets. For the measurement of goodwill at initial recognition,
see note 3.1(a).
3.10 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.
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.
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3.11 Impairment
(a) Non-derivative financial assets
A financial asset not classified as fair value through profit or loss is
assessed at each reporting date to determine whether there is objective
evidence that it is impaired. A financial asset is impaired if objective
evidence of impairment as a result of one or more events that occurred
after the initial recognition of the asset, and that the loss event had an
impact on the estimated future cash flows of that asset that can be
estimated reliably.
Objective evidence that financial assets (including equity securities) are
impaired can include default or delinquency by a debtor, restructuring of
an amount due to the Group on terms that the Group would not consider
otherwise, indications that a debtor or issuer will enter bankruptcy,
adverse changes in the payment status of borrowers or issuers in the
Group, economic conditions that correlate with defaults or the
disappearance of an active market for a security. In addition, for an
investment in an equity security, a significant or prolonged decline in its
fair value below its cost is objective evidence of impairment.
(b) 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
discounted at the asset’s original effective interest rate. The carrying
amount of the asset is reduced through the use of an allowance account,
and the loss is recognised in the statement of comprehensive income
within administrative expenses. When a receivable is uncollectible, it is
written off against the allowance account for receivables. Subsequent
recoveries of amounts previously written off are credited against
administrative expenses in profit or loss.
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.
(c) Impairment of available-for-sale investment
An impairment loss in respect of available-for-sale financial assets is
recognised in profit or loss and is measured as the difference between
the asset’s acquisition cost (net of any principal repayment and
amortisation) and the asset’s current fair value, less any impairment loss
previously recognised. Where a decline in the fair value of an available-
for-sale financial asset has been recognised in other comprehensive
income, the cumulative loss in other comprehensive income is
reclassified from equity and recognised in profit or loss.
Impairment losses recognised in profit or loss for an investment in an
equity instrument are classified as available for sale not reversed through
profit or loss.
(d) Non-financial assets
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.
(e) Equity instruments
Instruments classified as equity are measured at cost on initial
recognition and are not remeasured subsequently.
(i) Ordinary shares
Ordinary shares are classified as equity.
(ii) Issue expenses
Costs directly attributable to the issue of instruments classified as
equity are recognised as a deduction from equity.
(iii) Repurchase, disposal and reissue of share capital
(“treasury shares”)
When share capital recognised as equity is repurchased, the amount
of the consideration paid, including directly attributable costs, net
of any tax effects, is recognised as a deduction from equity.
Repurchased shares that are not subsequently cancelled are
classified as treasury shares in the statement of changes in equity.
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Where treasury shares are sold or reissued subsequently, the
difference between the sales consideration net of directly
attributable costs and the carrying amount of the treasury shares is
recognised in equity.
Where treasury shares are distributed as share dividends, the cost of
the treasury shares is applied in the reduction of the share premium
account or distributable reserves, or both.
Where treasury shares are reissued by re-sale in the open market,
the sales consideration is recognised in equity.
Where treasury shares are cancelled, the equivalent will be credited
to capital redemption reserves.
The carrying amounts of non-financial assets (except for inventories and
deferred tax assets) are reviewed at the end of each reporting date to
determine whether there is any indication of impairment.
3.12 Employee Benefits
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.
(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.
••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
3 SIGNIFICANT ACCOUNTING POLICIES cont’d
3.12 Employee Benefits cont’d
(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.
3.13 Finance Costs
Finance costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that take a substantial
period of time to get ready for their intended use or sale, are capitalised to
the cost of those assets, until such time as the assets are substantially ready
for their intended use or sale. 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.
All other finance costs are recognised in profit or loss in the period in which
they are incurred using the effective interest method.
3.14 Separately Disclosable Items
Items that are both material in size and unusual and infrequent in nature
are presented as separately disclosable items in the statement of
comprehensive income or separately disclosed in the notes to the financial
statements. The Directors are of the opinion that the separate recording of
these items provides helpful information about the Group’s underlying
business performance.
3.15 Earnings per Ordinary Share
The Group presents basic and diluted earnings per share data for its
ordinary shares (“EPS”).
Basic EPS is calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of ordinary
shares outstanding during the period.
3.16 Provisions
Provisions are recognised if, as a result of past event, the Group has a
present legal or constructive obligation that can be estimated reliably and
it is probable that an outflow of economic benefits will be required to settle
the obligation. Where the Group expects some or all of a provision to be
reimbursed, the reimbursement is recognised as a separate asset but only
when the reimbursement is virtually certain. The expense relating to any
provision is presented in profit or loss net of any reimbursement. If the
effect of the time value of money is material, provisions are discounted
using a current pre-tax rate that reflects, where appropriate, the risks
specific to the liability. Where discounting is used, the increase in the
provision due to the passage of time is recognised as a borrowing cost.
3.17 Commitments and Contingencies
Commitments and contingent liabilities are disclosed in the financial
statements and described in Note 42. 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.
3.18 Segment Reporting
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. An operating segment’s operating results are reviewed regularly
by the chief operating decision maker, which in this case is the Executive
Management of Ireka Development Management Sdn. Bhd. (“IDM”), to make
decisions about resources to be allocated to the segment and assess its
performance, and for which discrete financial information is available.
Segment results that are reported to the Executive Management of IDM
include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly the
Group’s administrative functions.
Segment capital expenditure is the total cost incurred during the year to
acquire property, plant and equipment, and intangible assets other than
goodwill.
3.19 Fair Value Measurements
Fair value of an asset or a liability, except for lease transactions, is determined
as the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement
date. The measurement assumes that the transaction to sell the asset or
transfer the liability takes place either in the principal market or in the
absence of a principal market, in the most advantageous market.
For non-financial asset, the fair value measurement takes into account a
market participant’s ability to generate economic benefits by using the
asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
When measuring the fair value of an asset or a liability, the Group uses
observable market data as far as possible. Fair value are categorised into
different levels in a fair value hierarchy based on the input used in the
valuation technique as follows:
Level 1:
Level 2:
Level 3:
quoted prices (unadjusted) in active markets for identical assets
or liabilities that the Group can access at the measurement
date.
inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
unobservable inputs for the asset or liability.
The Group recognises transfers between levels of the fair value hierarchy
as of the date of the event or change in circumstances that caused the
transfers.
4 FINANCIAL RISK MANAGEMENT
4.1 Financial Risk Management Objectives and Policies
The Group’s international operations and debt financing arrangements
expose it to a variety of financial risks: credit risk, liquidity risk and market
risk (including foreign exchange risk, interest rate risk and price 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.
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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 2014, 99.80% (2013: 96.00%) 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) and 0.20%
(2013: 4.00%) with local banks, in the case of Vietnam. Management does
not expect any counterparty to fail to meet its obligations.
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 2014, 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 24 and totals US$8.4 million (2013: US$9.7 million). The Group’s
exposure to credit risk arising from deposits and balances with banks is set
out in Note 27 and totals US$26.0 million (2013: US$24.6 million).
Financial guarantees
The Company provides unsecured financial guarantee to banks in respect
of banking facilities granted to certain subsidiaries.
At the end of the reporting period, the maximum exposure to credit risk as
represented by the outstanding banking and credit facilities of the
subsidiaries is as follows:
Company
Financial institutions for bank facilities
granted to its subsidiaries
2014
US$’000
2013
US$’000
195,305
199,196
At the end of the reporting period there was no indication that any
subsidiary would default on repayment.
The financial guarantees have not been recognised in the Statement of
Financial Position since the fair value on initial recognition was not material.
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 2014, the Group’s borrowings to fund the
developments had terms of less than ten years.
Cash flows are monitored on an on-going basis. The Group manages its
liquidity needs by monitoring scheduled debt servicing payments for long
term and short term financial liabilities as well as cash out flows due in its
day to day operations while ensuring sufficient headroom on its undrawn
committed borrowing facilities at all times so that borrowing limits and
covenants are not breached. Capital investments are committed only after
confirming the source of funds, e.g. securing financial liabilities.
Management is of the opinion that most of the bank borrowings can be
renewed or re-financed based on the strength of the Group’s earnings, cash
flow and asset base.
It is not expected that the cash flows included in the maturity analysis
could occur significantly earlier, or at a significantly different amount.
41
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••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
4 FINANCIAL RISK MANAGEMENT cont’d
4.3 Liquidity Risk cont’d
The maturity profile of the Group’s and the Company’s financial liabilities at the statement of financial position date, based on the contracted undiscounted
payments, were as follows:
Group
At 31 December 2014
Finance lease liabilities
Interest bearing loans and borrowings
Trade and other payables
Amount due to non-controlling interests
Carrying
amount
US$’000
Contractual
interest
rate
Contractual
cash flows
US$’000
Under
1 year
US$’000
1 – 2
years
US$’000
2 – 5
years
US$’000
More than
5 years
US$’000
38 2.50% – 3.50%
217,830 5.25% – 17.70%
–
40,510
–
11,342
45
241,610
40,510
11,662
15
92,649
40,510
10,222
15
93,344
–
–
15
33,742
–
1,440
–
21,875
–
–
269,720
293,827
143,396
93,359
35,197
21,875
At 31 December 2013
Finance lease liabilities
Interest bearing loans and borrowings
Trade and other payables
Amount due to non-controlling interests
56
229,335
83,640
10,448
323,479
2.50% – 3.50%
5.25% – 17.70%
–
–
65
263,163
83,640
10,448
16
51,301
83,640
9,008
16
84,492
–
–
33
104,520
–
–
–
22,850
–
1,440
357,316
143,965
84,508
104,553
24,290
Company
At 31 December 2014
Trade and other payables
At 31 December 2013
Trade and other payables
Carrying
amount
US$’000
Contractual
interest
rate
Contractual
cash flows
US$’000
Under
1 year
US$’000
1 – 2
years
US$’000
2 – 5
years
US$’000
More than
5 years
US$’000
146
146
1,253
1,253
–
–
146
146
1,253
1,253
146
146
1,253
1,253
–
–
–
–
–
–
–
–
–
–
–
–
The above table excludes current tax liabilities.
4.4 Market Risk
(a) Foreign Exchange Risk
Entities within the Group are exposed to foreign exchange risk from future commercial transactions and net monetary assets and liabilities that are denominated in
a currency that is not the entity’s functional currency. The foreign currency exposure is not hedged.
The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which the property or investment is located or by borrowing
in currencies that match the future revenue stream to be generated from its investments.
Management monitors the foreign currency exposure closely and takes necessary actions in consultation with the bankers to avoid unfavourable exposure.
The Group is exposed to foreign currency risk on cash and cash equivalents which are denominated in currencies other than the functional currency of the relevant
Group entity.
42
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4 FINANCIAL RISK MANAGEMENT cont’d
4.4 Market Risk cont’d
(a) Foreign Exchange Risk cont’d
The Group’s exposure to foreign currency risk on cash and cash equivalents at year end is as follows:
Group
Ringgit Malaysia
Sterling Pound
Others
2014
US$’000
2013
US$’000
490
571
90
1,151
1,684
–
25
1,709
At 31 December 2014, if cash and cash equivalents denominated in a currency other than the functional currency of the Group entity strengthened/
(weakened) by 10% and all other variables were held constant, the effects on the Group profit and loss and equity expressed in US$ would have been
US$115,100/ (US$115,100) (2013: US$170,900/ (US$170,900)).
Currency risks as defined by IFRS 7 arise on account of monetary assets and liabilities being denominated in a currency that is not the functional currency.
Differences resulting from the translation of financial statements into the Group’s presentation currency are not taken into consideration.
Subsequent to year end, there are no significant monetary balances held by group companies that are denominated in a non-functional currency.
(b) Interest Rate Risk
The Group’s policy is to minimise interest rate risk on bank loans and borrowings using a mix of fixed and variable rate debts that represent market rates. The Group
prefers to maintain flexibility on the desired mix of fixed and variable interest rates as this will depend on the economic environment, the type of borrowings available
and the funding requirements of the project when a decision is to be made.
The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instrument, based on carrying amounts at the end of the reporting
period was:
Fixed rate instruments:
Financial assets
Financial liabilities
Floating rate instruments:
Financial liabilities
Group
2014
US$’000
2013
US$’000
Company
2014
US$’000
2013
US$’000
26,011
145,268
24,585
154,672
6,454
–
72,600
74,719
–
1,703
-
-
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 67% (2013: 67%) of the Group’s
borrowings at 31 December 2014.
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 2014, if the interest rate had been 100 basis point lower/ higher and all other variables were held constant, this would increase/ (decrease) the
Group profit for the year by approximately US$726,000/ (US$726,000) (2013: (decrease)/ increase Group loss for the year by (US$747,190)/ US$747,190).
(c) Price Risk
Equity price risk arises from the Group’s investments in quoted shares on the Ho Chi Minh Stock Exchange (“HOSE”) which are available-for-sale and held by the
Group at fair value at reporting date. Gains and losses arising from changes in the fair value of available-for-sale investments are recognised in other comprehensive
income/(expense).
Equity price risk sensitivity analysis
This analysis assumes that all other variables remain constant and the Group’s equity investment moved in correlation with HOSE.
A 10% (2013: 10%) strengthening of the HOSE at the end of the reporting period would have increased equity by US$1,282,200 (2013: US$1,269,700) for investment
classified as available for sale. A 10% (2013:10%) weakening of the HOSE would have had equal but opposite effect on equity.
43
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••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
4 FINANCIAL RISK MANAGEMENT cont’d
4.5 Fair Values
The carrying amount of trade and other receivables, amount due from an associate, deposits, cash and cash equivalents, trade and other payables and accruals
of the Group and Company approximate their fair values in the current and prior years due to relatively short term nature of these financial instruments.
The table below analyses financial instruments carried at fair value and those not carried at fair value, along with their carrying amounts shown in the statement
of financial position:
2014
Group
US$’000
Fair value of financial instruments
carried at fair value
Level 1
Level 2
Level 3
Total
Fair value of financial instruments
not carried at fair value
Level 2
Level 3
Total
Level 1
Total
fair
value
Carrying
amount
Financial assets
Held-for-trading financial instrument
Available-for-sale investments
Financial liabilities
Amount due to non-controlling interests
Bank loans and borrowings
Finance lease liabilities
Medium term notes
–
–
–
–
–
–
–
–
4,041
12,822
–
–
4,041
12,822
–
–
–
–
–
–
–
–
4,041
12,822
4,041
12,822
16,863
–
16,863
–
–
–
–
16,863
16,863
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(72,600)
(38)
(139,746)
(11,342)
–
–
–
(11,342)
(72,600)
(38)
(139,746)
(11,342)
(72,600)
(38)
(139,746)
(11,342)
(72,600)
(38)
(145,230)
–
– (212,384)
(11,342) (223,726)
(223,726)
(229,210)
2013
Group
US$’000
Fair value of financial instruments
carried at fair value
Level 1
Level 2
Level 3
Total
Fair value of financial instruments
not carried at fair value
Level 2
Level 3
Total
Level 1
Total
fair
value
Carrying
amount
44
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Financial assets
Held-for-trading financial instrument
Available-for-sale investments
Financial liabilities
Amount due to non-controlling interests
Bank loans and borrowings
Finance lease liabilities
Medium term notes
–
–
–
–
–
–
–
–
375
12,697
–
–
375
12,697
13,072
–
13,072
–
–
–
–
–
–
–
–
–
–
–
375
12,697
375
12,697
–
13,072
13,072
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(74,719)
(56)
(147,381)
(10,059)
–
–
–
(10,059)
(74,719)
(56)
(147,381)
(10,059)
(74,719)
(56)
(147,381)
(10,448)
(74,719)
(56)
(154,616)
–
(222,156)
(10,059)
(232,215)
(232,215)
(239,839)
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 (2013: no transfer in either direction).
Transfers between Level 2 and Level 3 fair values
During the previous financial year, available-for-sale investments with a carrying amount of US$12,571,000 were transferred from Level 3 to Level 2 as the quoted price in
the market for the equity instrument became available following the listing of the instrument on the Ho Chi Minh Stock Exchange. There has been no transfer in either
direction during the financial year.
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate
of interest at the end of the reporting period. At 31 December 2014, the interest rate used to discount estimated cash flows of the amount due to non-controlling interests
and medium term notes are 6.5% (2013:6.5%) and 7.51% (2013: 7.44%) respectively.
4.6 Management and Control
Changes that cause the management and control of the Company to be exercised in the United Kingdom could lead to the Company becoming liable to United
Kingdom taxation on income and capital gains.
4 FINANCIAL RISK MANAGEMENT cont’d
4.7 CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns to shareholders
and benefits to other stakeholders and to maintain an optimal capital structure to reduce cost of capital.
The capital structure of the Group consisted of held-for-trading financial instrument, cash and cash equivalents, loans and borrowings, medium term notes and
equity attributable to equity holders of the parent, comprising issued share capital and reserves, were as follows:
Group
Capital structure analysis:
Held-for-trading financial instrument
Cash and cash equivalents
Loans and borrowings and finance lease liabilities
Medium term notes
Equity attributable to equity holders of the parent
Total capital
2014
US$’000
2013
US$’000
4,041
26,011
(72,638)
(145,230)
(160,498)
375
24,585
(74,775)
(154,616)
(158,571)
(348,314)
(363,002)
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares
or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of net debt-to-equity ratio.
Net debt-to-equity ratio is calculated as a total of interest-bearing borrowings less held-for-trading financial instrument and cash and cash equivalents to the total equity.
The net debt-to-equity ratios at 31 December 2014 and 31 December 2013 were as follows:
Group
Total borrowings and finance lease liabilities
Less: Held-for-trading financial instrument (Note 23)
Less: Cash and cash equivalents (Note 27)
Net debt
Total equity
Net debt-to-equity ratio
5 REVENUE AND SEGMENTAL INFORMATION
2014
US$’000
217,868
(4,041)
(26,011)
187,816
170,685
1.10
2013
US$’000
229,391
(375)
(24,585)
204,431
170,000
1.20
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The gross revenue represents the sales value of development properties where the effective control of ownership of the properties is transferred to the purchasers
when the completion certificate or occupancy permit has been issued.
The Company is an investment holding company and has no operating revenue. The Group’s operating revenue for the year was mainly attributable to the sale of
completed units in Malaysia and land held for property development in Vietnam.
5.1 Revenue recognised during the year as follows:
Sale of completed units
Sale of land held for property development
2014
US$’000
55,762
29,340
85,102
Group
2013
US$’000
29,269
–
29,269
Company
2014
US$’000
2013
US$’000
–
–
–
–
–
–
••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
5 REVENUE AND SEGMENTAL INFORMATION cont’d
5.2 Segmental Information
The Group’s assets and business activities are managed by Ireka Development Management Sdn. Bhd. (“IDM”) as the Development Manager under a
management agreement dated 27 March 2007.
Segmental information represents the level at which financial information is reported to the Executive Management of IDM, being the chief operating decision
maker as defined in IFRS 8. The Executive Management consists of the Chief Executive Officer, the Chief Financial Officer, Chief Operating Officer and Chief
Investment Officer of IDM. The management determines the operating segments based on reports reviewed and used by the Executive Management 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. – develops Tiffani by i-ZEN;
(iii) ICSD Ventures Sdn. Bhd. – owns and operates Harbour Mall Sandakan and Four Points by Sheraton Sandakan Hotel;
(iv) Amatir Resources Sdn. Bhd. – develops SENI Mont’ Kiara;
(v) Iringan Flora Sdn. Bhd. – owns and operates Aloft Kuala Lumpur Sentral Hotel;
(vi) Urban DNA Sdn. Bhd. – develops The RuMa Hotel and Residences; and
(vii) Hoa Lam-Shangri-La Healthcare Group – master developer of International Healthcare Park; owns and operates City International Hospital.
Other non-reportable segments comprise the Group’s other development projects. None of these segments meets any of the quantitative thresholds for
determining reportable segments in 2014 and 2013.
Information regarding the operations of each reportable segment is included below. The Executive Management monitors 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 and Vietnam.
5.3 Analysis of the group’s reportable operating segments is as follows:
Operating Segments – ended 31 December 2014
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Investment
Holding
Companies
US$’000
Ireka Land
Sdn. Bhd.
US$’000
ICSD
Ventures
Sdn. Bhd.
US$’000
Amatir
Resources
Sdn. Bhd.
US$’000
Iringan
Flora Urban DNA
Sdn. Bhd.
US$’000
Sdn. Bhd.
US$’000
Hoa Lam-
Shangri-La
Healthcare
Group
US$’000
Total
US$’000
Segment profit/ (loss) before taxation
3,100
99
(5,436)
16,607
569
(1,474)
1,366
14,831
Included in the measure of
segment profit/ (loss) are:
Revenue
Revenue from hotel operations
Revenue from mall operations
Revenue from hospital operations
Cost of acquisition written down #
Impairment of goodwill
Marketing expenses
Expenses from hotel operations
Expenses from mall operations
Expenses from hospital operations
Depreciation of property, plant and equipment
Finance costs
Finance income
–
–
–
–
–
–
–
–
–
–
–
–
24
4,839
–
–
–
(150)
–
–
–
–
–
–
–
11
–
4,323
1,027
–
–
–
–
(4,507)
(1,789)
–
(10)
(4,328)
312
50,923
–
–
–
(8,329)
(451)
(266)
–
–
–
–
–
115
–
18,171
–
–
–
–
–
(12,499)
–
–
(9)
(4,906)
20
–
–
–
–
–
–
(557)
–
–
–
–
–
14
29,340
–
–
2,525
–
(4,276)
–
–
–
(9,702)
(99)
(4,526)
81
85,102
22,494
1,027
2,525
(8,479)
(4,727)
(823)
(17,006)
(1,789)
(9,702)
(118)
(13,760)
577
Segment assets
19,471
5,150
100,570
45,938
76,447
58,587
101,643
407,806
Included in the measure of segment assets are:
Addition to non-current assets other than
financial instruments and deferred tax assets
–
–
–
–
–
1
19
20
# Cost of acquisition relates to the fair value adjustment in relation to the inventories upon the acquisition of certain subsidiaries of the Group. The cost of acquisition
written down is charged to profit or loss as part of cost of sales upon the sales of these inventories.
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items
Profit or loss
Total profit for reportable segments
Other non-reportable segments
Depreciation
Consolidated profit before taxation
US$’000
14,831
587
(4)
15,414
5 REVENUE AND SEGMENTAL INFORMATION cont’d
5.3 Analysis of the group’s reportable operating segments is as follows: cont’d
Operating Segments – ended 31 December 2013
Investment
Holding
Companies
US$’000
Ireka Land
Sdn. Bhd.
US$’000
ICSD
Ventures
Sdn. Bhd.
US$’000
Amatir
Resources
Sdn. Bhd.
US$’000
Iringan
Flora Urban DNA
Sdn. Bhd.
US$’000
Sdn. Bhd.
US$’000
Hoa Lam-
Shangri-La
Healthcare
Group
US$’000
Total
US$’000
Segment profit/ (loss) before taxation
(2,217)
(323)
(5,927)
4,169
(4,382)
(2,126)
(7,559)
(18,365)
Included in the measure of
segment profit/ (loss) are:
Revenue
Revenue from hotel operations
Revenue from mall operations
Revenue from hospital operations
Cost of acquisition written down #
Impairment of goodwill
Marketing expenses
Expenses from hotel operations
Expenses from mall operations
Expenses from hospital operations
Depreciation of property, plant and equipment
Finance costs
Finance income
–
–
–
–
–
–
–
–
–
–
–
–
7
1,278
–
–
–
(33)
–
–
–
–
–
(2)
–
4
433
3,409
954
–
(68)
–
–
(3,833)
(1,659)
–
(10)
(4,464)
301
27,558
–
–
–
(5,918)
(320)
(711)
–
–
–
(1)
(252)
28
–
10,089
–
–
–
–
–
(10,112)
–
–
(7)
(3,841)
44
–
–
–
–
–
–
(1,242)
–
–
–
–
–
13
–
–
–
179
–
–
–
–
–
(4,538)
(91)
(1,209)
27
29,269
13,498
954
179
(6,019)
(320)
(1,953)
(13,945)
(1,659)
(4,538)
(111)
(9,766)
424
Segment assets
18,273
9,703
105,954
81,743
79,231
49,696
110,545
455,145
Included in the measure of segment assets are:
Addition to non-current assets other than
financial instruments and deferred tax assets
–
–
5
–
44
–
145
194
# Cost of acquisition relates to the fair value adjustment in relation to the inventories upon the acquisition of certain subsidiaries of the Group. The cost of acquisition
written down is charged to profit or loss as part of cost of sales upon the sales of these inventories.
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items
Profit or loss
Total profit or loss for reportable segments
Other non-reportable segments
Depreciation
Consolidated loss before taxation
2014
US$’000
Total reportable segment
Other non-reportable segments
Revenue Depreciation
Finance
costs
Finance
income
Segment
assets
85,102
–
(118)
(4)
(13,760)
–
577
–
407,806
37,554
Consolidated total
85,102
(122)
(13,760)
577
445,360
2013
US$’000
Total reportable segment
Other non-reportable segments
Revenue Depreciation
Finance
costs
Finance
income
Segment
assets
29,269
–
(111)
(3)
(9,766)
–
424
–
455,145
39,637
Consolidated total
29,269
(114)
(9,766)
424
494,782
US$’000
(18,365)
(428)
(3)
(18,796)
Addition to
non-current
assets
20
–
20
Addition to
non-current
assets
194
–
194
47
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••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
5 REVENUE AND SEGMENTAL INFORMATION cont’d
5.3 Analysis of the group’s reportable operating segments is as follows: cont’d
Geographical Information – ended 31 December 2014
Revenue
Non-current assets
Major customer exceeded 10% of the Group’s total revenue is as follows:
Malaysia
US$’000
55,762
4,104
Vietnam
US$’000
29,340
20,217
Consolidated
US$’000
85,102
24,321
US$’000
Revenue
2014
2013
Segments
AEON Vietnam Co. Ltd.
37,308
22,991
––
Hoa Lam-
Shangri-La
Healthcare Group
Geographical Information – ended 31 December 2013
Revenue
Non-current assets
In 2013, no single customer exceeded 10% of the Group’s total revenue.
6 COST OF SALES
48
A
S
E
A
N
A
P
R
O
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E
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T
I
E
S
L
I
M
I
T
E
D
Direct costs attributable to:
Completed units
Land held for property development
Impairment of intangible assets (Note 20)
7 OTHER INCOME
Group
Dividend income
Fair value gain on held-for-trading financial instrument
Gain on disposal of property, plant and equipment
Investment income
Late payment interest income
Novation fee (a)
Rental income
Revenue from hotel operations (b)
Revenue from mall operations (c)
Revenue from hospital operations (d)
Sundry income
Malaysia
US$’000
29,269
5,741
Vietnam
US$’000
–
24,474
Consolidated
US$’000
29,269
30,215
Group
Company
2014
US$’000
2013
US$’000
2014
US$’000
2013
US$’000
36,856
10,238
4,727
51,821
22,448
–
320
22,768
–
–
–
–
2014
US$’000
409
39
3
–
52
–
196
22,494
1,027
2,525
624
27,369
–
–
–
–
2013
US$’000
15
–
–
92
9
641
209
13,498
954
179
525
16,122
(a) Novation fee
The amount relates to income receivable from a third party for assigning the rights, title, interests, benefits and obligation and/or liabilities under a Sales and Purchase
Agreement for acquisition of carpark bays in Nu Towers by a subsidiary of the Group.
(b) Revenue from hotel operations
The revenue relates to the operations of two hotels – Four Points by Sheraton Sandakan Hotel and Aloft Kuala Lumpur Sentral Hotel which are owned by subsidiaries of
the Company, ICSD Ventures Sdn. Bhd. and Iringan Flora Sdn. Bhd. respectively. The revenue earned from hotel operations is included in other income in line with
management’s intention to dispose of the hotels.
(c) Revenue from mall operations
The revenue relates to the operation of Harbour Mall Sandakan which is owned by a subsidiary of the Company, ICSD Ventures Sdn. Bhd.. The revenue earned from mall
operations is included in other income in line with management’s intention to dispose of the mall.
(d) Revenue from hospital operations
The revenue relates to the operation of City International Hospital which is owned by a subsidiary of the Company, City International Hospital Company Limited.
The revenue earned from hospital operations is included in other income in line with management’s intention to dispose of the hospital.
8 FOREIGN EXCHANGE GAIN/ (LOSS)
Foreign exchange gain/ (loss) comprises:
Realised foreign exchange gain/ (loss)
Unrealised foreign exchange gain/ (loss)
9 MANAGEMENT FEES
Group
2014
US$’000
2013
US$’000
Company
2014
US$’000
2013
US$’000
425
291
716
(40)
(1,065)
(1,105)
(196)
1,175
979
47
151
198
Group
2014
US$’000
2013
US$’000
Company
2014
US$’000
2013
US$’000
Management fees
3,344
3,762
1,180
1,238
The management fees payable to the Development Manager are based on 2% per annum of the Group’s net asset value calculated on the last business day of June and
December of each calendar year and payable quarterly in advance. The management fees were allocated to the subsidiaries and Company based on where the service was
provided.
In addition to the annual management fee, the Development Manager is entitled to a performance fee calculated at 20% of the out performance net asset value over a total
compounded return hurdle rate of 10% per annum. No performance fee has been paid or accrued during the year (2013: US$ Nil).
10 STAFF COSTS
Group
Wages, salaries and others
Employees’ provident fund, social security and other pension costs
2014
US$’000
12,090
548
12,638
2013
US$’000
7,120
505
7,625
The Company has no executive directors or employees under its employment. The subsidiaries of the Group have a total of 941 (2013: 790) employees.
11 FINANCE (COSTS)/ INCOME
Interest income from banks
Agency fees
Annual trustees monitoring fee
Bank guarantee commission
Interest on bank loans
Interest on financial liabilities at amortised cost
Interest on medium term notes
Group
2014
US$’000
2013
US$’000
Company
2014
US$’000
2013
US$’000
577
(104)
(5)
–
(4,526)
(2)
(9,123)
(13,183)
424
(25)
(7)
(4)
(1,460)
(1)
(8,269)
(9,342)
21
–
–
–
–
–
–
21
5
–
–
–
-
–
–
5
49
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N
N
U
A
L
R
E
P
O
R
T
2
0
1
4
••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
12 NET PROFIT/ (LOSS) BEFORE TAXATION
Net profit/ (loss) before taxation is stated after charging/(crediting):
• Auditor’s remuneration
– current year
– under provision in prior year
• Directors’ fees
• Depreciation of property, plant and equipment
• Expenses of hotel operations
• Expenses of mall operations
• Expenses of hospital operations
• Fair value (gain)/ loss on held-for-trading financial instrument
• Impairment of amount due from subsidiary
• Impairment of investment in subsidiary
• Unrealised foreign exchange (gain)/ loss
• Realised foreign exchange (gain)/ loss
• Impairment of goodwill
• Gain on disposal of property, plant and equipment
• Property, plant and equipment written off
• Tax services
13 TAXATION
Group
Current tax expense
Deferred tax credit
Total tax expense for the year
Group
2014
US$’000
2013
US$’000
Company
2014
US$’000
2013
US$’000
244
–
317
122
17,006
1,789
9,702
(39)
–
–
(291)
(425)
4,727
(3)
–
25
238
2
317
114
13,945
1,659
4,538
5
–
–
1,065
40
320
–
7
11
122
–
317
–
–
–
–
–
15,103
124
(1,175)
196
–
–
–
–
120
–
317
–
–
–
–
–
12,950
6,305
(151)
(47)
–
–
–
–
2014
US$’000
2013
US$’000
10,587
(1,200)
9,387
50
A
S
E
A
N
A
P
R
O
P
E
R
T
I
E
S
L
I
M
I
T
E
D
3,470
(616)
2,854
2013
US$’000
(18,796)
(4,699)
4,989
1,833
960
(377)
148
2,854
The numerical reconciliation between the income tax expenses and the product of accounting results multiplied by the applicable tax rate is computed as follows:
Group
Accounting profit/ (loss)
Income tax at a rate of 25%
Add :
Tax effect of expenses not deductible in determining taxable profit
Movement of unrecognised deferred tax benefits
Tax effect of different tax rates in subsidiaries
Less :
Tax effect of income not taxable in determining taxable profit
Under provision in respect of prior years
Total tax expense for the year
The applicable corporate tax rate in Malaysia is 25%.
2014
US$’000
15,414
3,853
2,063
2,621
1,784
(1,415)
481
9,387
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%.
The applicable corporate tax rate in Singapore and Vietnam is 17% and 22% respectively.
A subsidiary of the Group, Hoa Lam-Shangri-La Healthcare Ltd Liability Co is granted preferential corporate tax rate of 10% for the results of the hospital operations.
The preferential income tax is given by the government of Vietnam due to the subsidiary’s involvement in the healthcare and education industries.
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.
The Directors intend to conduct the Group’s affairs such that the central management and control is not exercised in the United Kingdom and so that neither the Company nor
any of its subsidiaries carries on any trade in the United Kingdom. The Company and its subsidiaries will thus not be residents in the United Kingdom for taxation purposes. On
this basis, they will not be liable for United Kingdom taxation on their income and gains other than income derived from a United Kingdom source.
14 OTHER COMPRENHENSIVE EXPENSE
Group
Items that are or may be reclassified subsequently to profit or loss, net of tax
Foreign currency translation differences for foreign operation
Fair value of available-for-sale investment
2014
US$’000
(7,388)
125
(7,263)
2013
US$’000
(6,220)
126
(6,094)
15 EARNINGS/ (LOSS) PER SHARE
Basic and diluted earnings/ (loss) per ordinary share
The calculation of basic and diluted earnings/ (loss) per ordinary share for the year ended 31 December 2014 was based on the profit/ (loss) attributable to equity holders of the
parent and a weighted average number of ordinary shares outstanding, calculated as below:
Group
Profit/ (loss) attributable to equity holders of the parent
Weighted average number of shares
Earnings/ (loss) per share
Basic and diluted (US cents)
Company
Loss for the year
Weighted average number of shares
Loss per share
Basic and diluted (US cents)
16 PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 January 2014
Exchange adjustments
Additions
Disposal
Written off
At 31 December 2014
Accumulated Depreciation
At 1 January 2014
Exchange adjustments
Charge for the year
Disposal
Written off
At 31 December 2014
Net carrying amount at 31 December 2014
Cost
At 1 January 2013
Exchange adjustments
Additions
Disposal
Transfer to inventories
Written off
At 31 December 2013
Accumulated Depreciation
At 1 January 2013
Exchange adjustments
Charge for the year
Disposal
Transfer to inventories
Written off
At 31 December 2013
Net carrying amount at 31 December 2013
2014
US$’000
9,091
212,025
2013
US$’000
(19,006)
212,025
4.29
(8.96)
(16,439)
212,025
(21,231)
212,025
(7.75)
(10.01)
51
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N
N
U
A
L
R
E
P
O
R
T
2
0
1
4
Furniture,
Fittings &
Equipment
US$’000
Motor
Vehicles
US$’000
Leasehold
Building
US$’000
Total
US$’000
392
(5)
1
–
(22)
366
166
(2)
45
–
(22)
187
179
450
(8)
31
–
(28)
(53)
392
171
(3)
49
–
(5)
(46)
166
226
326
(10)
5
(22)
–
299
94
(5)
39
(13)
–
115
184
169
(6)
163
–
–
–
326
69
(3)
28
–
–
–
94
232
843
(11)
14
–
–
846
155
(2)
38
–
–
191
655
854
(11)
–
–
–
–
843
120
(2)
37
–
–
–
155
688
1,561
(26)
20
(22)
(22)
1,511
415
(9)
122
(13)
(22)
493
1,018
1,473
(25)
194
–
(28)
(53)
1,561
360
(8)
114
-
(5)
(46)
415
1,146
In the previous financial year, the Group acquired property, plant and equipment with an aggregate cost of US$194,000 of which US$40,000 was acquired by means of
finance lease. Motor vehicle of the Group with net carrying amount of US$40,000 (2013: US$59,000) is held under finance lease arrangement at year end.
••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
17 INVESTMENT IN AN ASSOCIATE
Group
At cost - unquoted shares
Share of post-acquisition reserve
Disposal of associate
At 31 December
2014
US$’000
2013
US$’000
611
1,306
(1,917)
–
611
1,641
–
2,252
The Company, via a wholly-owned subsidiary ASPL M3A Limited, had a 40% equity interest in a company known as Excellent Bonanza Sdn. Bhd. (“EBSB”), a company
incorporated in Malaysia, which is a vehicle set up to undertake a commercial development in Kuala Lumpur, Malaysia.
A summary of the current assets, non-current assets, current liabilities, non-current liabilities, income and expenses of the associate for the financial year ended
31 December 2013 was as follows:
Group
Statement of Financial Position
Non-current asset
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Equity
Total Equity and Liabilities
Statement of Comprehensive Income
Revenue
Finance income
Cost of sales, expenses including finance costs and taxation
Profit
2013
US$’000
148,041
5,281
153,322
3,239
144,452
147,691
5,631
153,322
218,452
1,627
(213,880)
6,199
The Group entered into a Sales and Purchase Agreement on 20 June 2014 to dispose of ASPL M3A Limited’s interest in EBSB. The sale consideration was US$5,306,000.
The condition precedent for the completion of the disposal of EBSB was met on 20 August 2014, when the transfer of share was effected and payment of the sales proceeds
were received.
The Group recognised a gain on disposal of US$5,641,000 from the sales of the associate. The details are as follows:
Sales consideration
Carrying value of associate as at 20 August 2014
Realisation of previously unrealised profit in relation to sales of Aloft Kuala Lumpur Sentral Hotel
Gain on disposal
2014
US$’000
5,306
(1,917)
2,252
5,641
The unrealised profit of US$2,252,000 in relation to the sale of Aloft Kuala Lumpur Sentral Hotel to a subsidiary of the Group was realised as EBSB is no longer an associate of
the Group.
18 INVESTMENT IN SUBSIDIARIES
Company
Unquoted shares, at cost
Discount on loans to subsidiaries
Less: Impairment loss
A list of the main operating subsidiaries is provided in Note 41.
2014
US$’000
66,428
14,518
(6,429)
74,517
2013
US$’000
66,428
14,518
(6,305)
74,641
52
A
S
E
A
N
A
P
R
O
P
E
R
T
I
E
S
L
I
M
I
T
E
D
18 INVESTMENT IN SUBSIDIARIES cont’d
Non-controlling interests in subsidiaries
The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:
2014
Hoa Lam
Services
Co Ltd
US$’000
Shangri-La
Healthcare
Investment
Pte Ltd
US$’000
ASPL PLB-
Nam Long
Ltd
Liability
Co
US$’000
Urban
DNA
Sdn. Bhd.
US$’000
Other
individually
immaterial
subsidiaries
US$’000
Total
US$’000
NCI percentage of ownership interest and voting interest
Carrying amount of NCI
Loss allocated to NCI
49%
1,391
(849)
24.62%
4,102
(1,737)
45%
6,265
(24)
30%
(969)
(442)
(602)
(12)
10,187
(3,064)
Summarised financial information before intra-group elimination
As at 31 December
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets/ (liabilities)
Year ended 31 December
Revenue
Loss for the year
Total comprehensive loss
Cash flows used in operating activities
Cash flows (used in)/ from investing activities
Cash flows from financing activities
28,911
35,081
(13,198)
(27,106)
65,380
82,283
(30,796)
(52,377)
15,056
62
–
(1,195)
833
57,752
(9,344)
(52,472)
23,688
64,490
13,923
(3,231)
8,802
(1,733)
(1,942)
20,538
(7,056)
(7,639)
–
(53)
(193)
(10,883)
(17)
10,546
(27,692)
8,226
18,628
(26,617)
52
36,557
–
(1,474)
(1,259)
(5,181)
–
4,942
Net (decrease)/ increase in cash and cash equivalents
(354)
(838)
9,992
(239)
2013
Hoa Lam
Services
Co Ltd
US$’000
Shangri-La
Healthcare
Investment
Pte Ltd
US$’000
ASPL PLB-
Nam Long
Ltd
Liability
Co
US$’000
Urban
DNA
Sdn. Bhd.
US$’000
Other
individually
immaterial
subsidiaries
US$’000
Total
US$’000
NCI percentage of ownership interest and voting interest
Carrying amount of NCI
Loss allocated to NCI
49%
2,648
(793)
26%
3,787
(1,176)
45%
6,352
(32)
30%
(592)
(638)
(766)
(5)
11,429
(2,644)
53
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
4
Summarised financial information before intra-group elimination
As at 31 December
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets/ (liabilities)
Year ended 31 December
Revenue
Loss for the year
Total comprehensive loss
Cash flows from/ (used in) operating activities
Cash flows used in investing activities
Cash flows from financing activities
22,568
33,939
(11,788)
(26,246)
50,653
79,190
(27,506)
(58,090)
4
15,292
–
(1,181)
–
49,694
(41,692)
(9,974)
18,473
44,247
14,115
(1,972)
–
(1,618)
(1,659)
–
(4,543)
(4,734)
35
(15,284)
15,715
(4,451)
(31,826)
37,362
–
(70)
(226)
(333)
(13)
229
–
(2,126)
(2,063)
(77)
–
1,284
Net increase/ (decrease) in cash and cash equivalents
466
1,085
(117)
1,207
••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
19 AVAILABLE-FOR-SALE INVESTMENTS
The available-for-sale investments represent the investment in shares of Nam Long Investment Corporation (“Nam Long”) which the Group acquired over four tranches in
2008 and 2009.
Group
2014
1 January – fair value
Recognised in other comprehensive income
At 31 December – fair value
Group
2013
1 January – fair value
Recognised in other comprehensive income
At 31 December – fair value
Quoted
shares
US$’000
12,697
125
12,822
Quoted
shares
US$’000
12,571
126
12,697
54
A
S
E
A
N
A
P
R
O
P
E
R
T
I
E
S
L
I
M
I
T
E
D
At 31 December 2014, an increase in fair value of US$0.125 million (2013: US$0.126 million) has been recognised in other comprehensive income. The Directors have
considered various prevailing factors at year end, including the economic conditions and market conditions of the Ho Chi Minh Stock Exchange in assessing the fair value
of the investment.
20 INTANGIBLE ASSETS
Group
Cost
Licence
Contracts and
Related
Relationships
US$’000
Goodwill
US$’000
Total
US$’000
At 1 January 2013 / 31 December 2013 / 31 December 2014
10,695
6,479
17,174
Accumulated impairment losses
At 1 January 2013
Impairment loss
At 31 December 2013 / 1 January 2014
Impairment loss
At 31 December 2014
Carrying amounts
At 31 December 2013
At 31 December 2014
–
–
–
4,276
4,276
10,695
6,419
3,329
320
3,649
451
4,100
2,830
2,379
3,329
320
3,649
4,727
8,376
13,525
8,798
The licence contracts and related relationships represents the rights to develop the International Healthcare Park. Other than Phase 1 of City International Hospital,
the rest of the projects have not commenced development. In 2014, the Group sold its undeveloped land in International Healthcare Park consisted of Lot D1, PT1, BV5
and BV6 to third party purchasers.
For the purpose of impairment testing, goodwill and licence contracts and related relationships are allocated to the Group’s operating divisions which represent the lowest level
within the Group at which the goodwill and licence contracts and related relationships are monitored for internal management purposes.
The aggregate carrying amounts of intangible assets allocated to each unit are as follows:
Group
Licence, contracts and related relationships
International Healthcare Park
Goodwill
SENI Mont’ Kiara
Sandakan Harbour Square
2014
US$’000
2013
US$’000
6,419
10,695
432
1,947
2,379
883
1,947
2,830
The recoverable amount of licence, contracts and related relationships has been tested based on the fair value less cost to sell of the Land Use Rights (“LUR”) owned by the
subsidiaries. The key assumption used is the expected market value of the LUR. The Group believes that any reasonably possible changes in the above key assumptions applied
is not likely to materially cause the recoverable amount to be lower than its carrying amount.
Impairment losses of US$451,000 (2013: US$320,000) and US$4,276,000 (2013: US$Nil) in relation to the SENI Mont’ Kiara and International Healthcare Park projects have
been recognised as the recoverable amount of the cash generating units, estimated based on fair value less costs to sell is below their carrying amount.
The recoverable amount of goodwill has been tested by reference to underlying profitability of the developments using discounted cash flow projections.
21 DEFERRED TAX ASSETS
Group
At 1 January
Exchange adjustments
Deferred tax credit relating to origination and reversal of temporary differences during the year
At 31 December
The deferred tax assets comprise:
Group
Taxable temporary differences between accounting profit and taxable profit of property development units sold
At 31 December
2014
US$’000
2013
US$’000
595
(112)
1,200
1,683
2014
US$’000
1,683
1,683
–
(21)
616
595
2013
US$’000
595
595
Deferred tax assets have not been recognised in respect of unused tax losses of US$38,821,000 (2013: US$22,983,000) and other tax benefits which includes temporary
differences between net carrying amount and tax written down value of property, plant and equipment accrual of construction costs and other deductible temporary
differences of US$3,722,000 (2013: US$29,000) which are available for offset against future taxable profits. Deferred tax assets have not been recognised due to the
uncertainty of the recovery of the losses.
22 INVENTORIES
Group
Land held for property development
Work-in-progress
Stock of completed units, at cost
Consumables
At 31 December
(a) Land held for property development
Group
At 1 January
Add:
Exchange adjustments
Additions
Transfer from work-in-progress
Transfer to stock of completed units
Less:
Costs recognised as expenses in the statement of comprehensive income during the year
At 31 December
(b) Work-in-progress
Group
At 1 January
Add :
Exchange adjustments
Work-in-progress incurred during the year
Transfer to land held for property development #
Transfer to stock of completed units
At 31 December
55
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
4
Note
(a)
(b)
2014
US$’000
40,560
55,332
285,234
652
381,778
2013
US$’000
24,403
73,134
330,475
597
428,609
2014
US$’000
2013
US$’000
24,403
(849)
2,710
24,534
–
50,798
(10,238)
40,560
2014
US$’000
73,134
(3,464)
10,196
(24,534)
–
24,912
(1,036)
1,344
–
(817)
24,403
–
24,403
2013
US$’000
116,876
(4,243)
112,390
–
(151,889)
55,332
73,134
The above amounts included borrowing cost capitalised at interest rate ranges from 7.53% to 12.62% per annum (2013: 7.43% to 13.58% per annum) of US$1,799,000 during
the financial year (2013: US$2,446,000).
# The land were reclassified as land held for property development from work-in-progress in line with the Group’s intention to dispose of the land held.
••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
23 HELD-FOR-TRADING FINANCIAL INSTRUMENT
The financial asset represents a placement in money market fund (“Fund”), which is held as a trading instrument. The market value and the market price per unit of the Fund
at 31 December 2014 were US$4,041,000 (2013: US$375,000) and US$0.29 (2013: US$0.31) respectively. During the year, the Group acquired additional held-for-trading
financial instrument for a consideration of US$3,651,000 at a market price per unit of US$0.29. The Group recognised a fair value gain of US$39,000 (2013: fair value loss of
US$5,000) in relation to the investment.
The Fund is permitted under the Deed to invest in the following:
(i) Bank deposits;
(ii)
Money market instruments such as treasury bills, bankers acceptance, negotiable certificates of deposits, Bank Negara Malaysia bills, Bank Negara Malaysia negotiable
notes, Negotiable Instruments of Deposit and Negotiable Islamic Debt Certificate with maturities not exceeding one (1) year; and
Malaysian Government Securities and/or securities guaranteed by the Government of Malaysia and/or notes/securities issued by Bank Negara Malaysia with maturity not
exceeding two (2) years.
(iii)
24 TRADE AND OTHER RECEIVABLES
Group
Trade receivables
Other receivables
Sundry deposits
Company
Other receivables
2014
US$’000
2013
US$’000
2,977
5,030
352
8,359
2014
US$’000
18
1,482
7,772
400
9,654
2013
US$’000
–
Trade receivables represent progress billings receivable from the sale of completed units and land held for property development. Progress billings receivable from sale of
completed units are generally due for settlement within 21 days from the date of invoice and are recognised and carried at the original invoice amount less allowance for any
uncollectible amounts. They are recognised at their original invoice amounts which represent their fair values on initial recognition less provision for impairment where it
is required.
The ageing analysis of trade receivables past due are set out below. These relate to a number of independent customers for whom there is no recent history of default.
Group
2014
Within credit terms
Stakeholder sums
Past due
0 – 60 days
61 –120 days
More than 120 days
Group
2013
Within credit terms
Stakeholder sums
Past due
0 – 60 days
61 –120 days
More than 120 days
Gross
US$’000
Individual
Impairment
US$’000
715
2,127
–
1
134
2,977
–
–
–
–
–
–
Gross
US$’000
Individual
Impairment
US$’000
376
938
–
–
168
1,482
–
–
–
–
–
–
Net
US$’000
715
2,127
–
1
134
2,977
Net
US$’000
376
938
–
–
168
1,482
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As at 31 December 2014, the stakeholder sums represent amount receivable from AEON Vietnam Co. Ltd. of US$2.13 million. Subsequent to financial year end, the Group
received US$1.7 million out of the total stakeholder sums of US$2.13 million with the remaining balance of US$0.43 million expected to be received within the next 12 months.
In the previous financial year, included in the stakeholder sums was approximately US$0.17 million in respect of SENI Mont’ Kiara which was receivable upon the expiry of
6 months and 18 months from the date of vacant possession. It also included approximately US$0.76 million receivable from 1MK Retail Sdn. Bhd. and 1MK Office Sdn. Bhd.
receivable upon the issuance of strata title from the land office. The stakeholder sums were fully collected during the financial year.
As at 31 December 2014, approximately 71% of the Group’s trade receivables are from a customer with sound financial standing. There was no concentration of credit risk with
respect to trade receivables in the previous financial year. The Group has a large number of customers whose property purchases are mainly secured by personal bank financing.
The maximum exposure to credit risk is represented by the carrying amount in the statement of financial position. No allowance for impairment loss of trade receivables has
been made for the remaining past due receivables as the Group monitors the repayment of the customers regularly and are confident of the ability of the customers to repay the
balance outstanding.
25 AMOUNT DUE FROM AN ASSOCIATE
The amount due from an associate was unsecured, interest free and repayable on demand. The amount was repaid during the financial year.
26 AMOUNTS DUE FROM / (TO) SUBSIDIARIES
Company
Due from subsidiaries (Current portion)
Less : Impairment loss
Due to subsidiaries (Current portion)
2014
US$’000
206,784
(45,529)
161,255
2013
US$’000
192,211
(30,426)
161,785
(70,393)
(48,732)
The amounts due from/ (to) subsidiaries are current, unsecured and repayable on demand.
At the end of the reporting period, inter-company balances that were assessed to be irrecoverable were impaired by US$15,103,000 (2013: US$12,950,000).
27 CASH AND CASH EQUIVALENTS
Group
Cash and bank balances
Short term bank deposits
Less : Deposit pledged
Included in short term bank deposits is US$9,800,000 (2013: US$10,419,000) pledged for banking facilities granted to its subsidiaries.
Company
Cash and bank balances
Short term bank deposits
2014
US$’000
2013
US$’000
12,057
13,954
26,011
(9,800)
16,211
11,498
13,087
24,585
(10,419)
14,166
2014
US$’000
2013
US$’000
6,454
–
6,454
726
977
1,703
The interest rate on cash and cash equivalents, excluding deposit pledged with licensed bank of US$9,800,000 (2013: US$10,419,000) pledged for banking facilities granted to
subsidiaries, ranges from 2.65% to 2.80% per annum (2013: 2.55% to 3.15% per annum) and the maturity period ranges from 1 day to 7 days (2013: 1 day to 1 month).
The interest rate on short term bank deposits pledged for banking facilities granted to subsidiaries ranges from 0.20% to 4.70% per annum (2013: 0.50% to 7.00% per annum)
and the maturity period ranges from 3 months to 1 year (2013: 1 month to 1 year).
57
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28 SHARE CAPITAL
Group & Company
Authorised Share Capital
Issued Share Capital
At 1 January
Cancellation of shares (Note 38)
At 31 December
Group & Company
Authorised Share Capital of US$0.05 each
Issued Share Capital of US$0.05 each
At 1 January
Cancellation of shares (Note 38)
At 31 December
2014
Number of
Shares’000
2013
Number of
Shares’000
2,000,000
2,000,000
212,025
–
212,025
2014
US$’000
100,000
10,601
–
10,601
212,525
(500)
212,025
2013
US$’000
100,000
10,626
(25)
10,601
••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
29 SHARE PREMIUM
Share premium represents the excess of proceeds raised on the issuance of shares over the nominal value of those shares. The costs incurred in issuing shares were deducted
from the share premium.
Group & Company
At 1 January / 31 December
30 CAPITAL REDEMPTION RESERVE
2014
US$’000
218,926
2013
US$’000
218,926
The capital redemption reserve was incurred after the Company cancelled its 37,475,000 and 500,000 ordinary shares of US$0.05 per share in 2009 and 2013 respectively.
31 TRANSLATION RESERVE
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.
32 FAIR VALUE RESERVE
The fair value reserve comprises the cumulative change in the fair value of available-for-sale investments until the investments are derecognised or impaired.
33 ACCUMULATED LOSSES
Group
At 1 January
Profit/ (loss) attributable to equity holders of the parent
Changes in ownership interests in subsidiaries
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At 31 December
Company
At 1 January
Loss for the year
At 31 December
34 TRADE AND OTHER PAYABLES
Group
Trade payables
Other payables
Progress billings
Deposits refundable
Accruals
Company
Other payables
Accruals
2014
US$’000
(69,876)
9,091
(147)
2013
US$’000
(50,828)
(19,006)
(42)
(60,932)
(69,876)
2014
US$’000
(43,282)
(16,439)
(59,721)
2014
US$’000
3,083
8,278
22,514
1,193
5,442
40,510
2013
US$’000
(22,051)
(21,231)
(43,282)
2013
US$’000
10,389
17,950
27,775
8,278
19,248
83,640
2014
US$’000
2013
US$’000
4
142
146
1,135
118
1,253
Trade payables represent trade purchases and services rendered by suppliers as part of the normal business transactions of the Group. The credit terms granted by trade
suppliers range from 30 to 90 days.
Progress billings represent the proceeds received from purchasers for development properties i.e. SENI Mont’ Kiara and The RuMa Hotel and Residences which are pending
for transfer of vacant possession.
Deposits and accruals are from normal business transactions of the Group.
35 AMOUNT DUE TO NON-CONTROLLING INTERESTS
Group
Non-current
Minority Shareholders of Shangri-La Healthcare Investment Pte Ltd:
– Tran Thi Lam
– Econ Medicare Centre Holdings Pte Ltd
– Value Energy Sdn. Bhd.
– Thang Shieu Han
– Nguyen Quang Duc
Current
Minority Shareholder of Bumiraya Impian Sdn. Bhd.:
– Global Evergroup Sdn. Bhd.
Minority Shareholders of Hoa Lam Services Co Ltd:
– Tran Thi Lam
– Tri Hanh Consultancy Co Ltd
– Hoa Lam Development Investment Joint Stock Company
– Duong Ngoc Hoa
Minority Shareholder of Urban DNA Sdn. Bhd.:
- Ireka Corporation Berhad
2014
US$’000
2013
US$’000
415
491
147
56
11
1,120
1,418
1,725
2,510
188
126
4,255
10,222
11,342
533
632
189
72
14
1,440
1,514
1,613
1,191
89
60
4,541
9,008
10,448
The current amount due to non-controlling interests amounting to US$10,222,000 (2013: US$9,008,000) is unsecured, interest free and repayable on demand.
The non-current amount due to non-controlling interests amounting to US$1,120,000 (2013: US$1,440,000) is unsecured, interest free and shall only be repayable to the
respective minority shareholders if the minority shareholders cease to be a shareholder in Shangri-La Healthcare Investment Pte Ltd.
36 LOANS AND BORROWINGS
Group
Non-current
Bank loans
Finance lease liabilities
Current
Bank loans
Finance lease liabilities
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4
2014
US$’000
2013
US$’000
53,338
26
53,364
19,262
12
19,274
72,638
49,267
42
49,309
25,452
14
25,466
74,775
The effective interest rates on the bank loans and finance lease arrangement for the year ranged from 5.25% to 17.70% (2013: 5.25% to 17.70%) per annum and 2.50%
to 3.50% (2013: 2.50% to 3.50%) per annum respectively.
Borrowings are denominated in Ringgit Malaysia, United State Dollars and Vietnam Dong.
Bank loans are repayable by monthly, quarterly or semi-annually instalments.
Bank loans are secured by land held for property development, work-in-progress, operating assets of the Group, pledged deposits and some by the corporate guarantee of
the Company.
Finance lease liabilities are payable as follows:
Group
Within one year
Between one and five years
Future
minimum
lease
payment
2014
US$’000
15
30
45
Present
value of
minimum
lease
payment
2014
US$’000
Future
minimum
lease
payment
2013
US$’000
12
26
38
16
49
65
Interest
2014
US$’000
3
4
7
Present
value of
minimum
lease
payment
2013
US$’000
14
42
56
Interest
2013
US$’000
2
7
9
••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
37 MEDIUM TERM NOTES
Group
Outstanding medium term notes
Net transaction costs
Less:
Repayment due within twelve months *
Repayment due after twelve months
2014
US$’000
147,004
(1,774)
(60,237)
84,993
2013
US$’000
156,924
(2,308)
(13,739)
140,877
* Includes net transaction costs in relation to medium term notes due within twelve months of US$1.25 million.
The medium term notes (“MTN”) were issued pursuant to a programme with a tenure of ten (10) years from the first issue date of the notes. The MTN were issued by a subsidiary,
to fund two development projects known as Sandakan Harbour Square and Aloft Kuala Lumpur Sentral Hotel in Malaysia. US$70.07 million (RM245.00 million) was drawn
down in 2011 for Sandakan Harbour Square. US$4.29 million (RM15.00 million) was drawn down in 2012 for Aloft Kuala Lumpur Sentral Hotel and the remaining US$72.64
million (RM254 million) in 2013. The Group secured a rollover of MTN amounting US$12.87 million (RM45 million) which was due for repayment on 8 December 2014 to be
repaid on 8 December 2017. No repayments were made in the current financial year.
The weighted average interest rate of the MTN was 5.56% per annum at the statement of financial position date. The effective interest rates of the MTN and their outstanding
amounts are as follows:
Series 1 Tranche FG 003
Series 1 Tranche BG 003
Series 1 Tranche FG 002
Series 1 Tranche BG 002
Series 2 Tranche FG 001
Series 2 Tranche BG 001
Series 3 Tranche FG 001
Series 3 Tranche BG 001
Series 3 Tranche FG 002
Series 3 Tranche BG 002
Series 3 Tranche FG 003
Series 3 Tranche BG 003
Maturity
Dates
Interest rate %
per annum
8 December 2017
8 December 2017
8 December 2015
8 December 2015
8 December 2015
8 December 2015
1 October 2015
1 October 2015
29 January 2016
29 January 2016
8 April 2016
8 April 2016
5.90
5.85
5.46
5.41
5.46
5.41
5.40
5.35
5.50
5.45
5.65
5.58
US$’000
7,150
5,720
12,870
8,580
20,020
15,730
2,860
1,430
4,290
2,860
36,894
28,600
147,004
The medium term notes are secured by way of:
(i) bank guarantee from two financial institutions in respect of the BG Tranches;
(ii)
financial guarantee insurance policy from Danajamin Nasional Berhad 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, ICSD Ventures Sdn. Bhd. and Iringan Flora 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)
asignment of all Iringan Flora Sdn Bhd’s present and future rights, title, interest and benefits in and under Sales and Purchase Agreement to purchase the Aloft Kuala
Lumpur Sentral Hotel from Excellent Bonanza Sdn. Bhd.;
(vi) first fixed land charge over the Aloft Kuala Lumpur Sentral Hotel and the Aloft Kuala Lumpur Sentral Hotel’s Land (to be executed upon construction completion);
(vii) a corporate guarantee by Aseana Properties Limited;
(viii) letter of undertaking from Aseana Properties Limited 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;
(ix)
assignment of all its present and future rights, interest and benefits under the ICSD Ventures Sdn. Bhd.’s and Iringan Flora Sdn. Bhd.’s Put Option Agreements and the
proceeds from the Harbour Mall Sandakan, Four Points by Sheraton Sandakan Hotel and Aloft Kuala Lumpur Sentral Hotel;
(x)
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 Venture Sdn. Bhd. and escrow account of Ireka Land Sdn. Bhd.;
(xi) assignment of all ICSD Ventures Sdn. Bhd.’s and Iringan Flora Sdn. Bhd.’s present and future rights, title, interest and benefits in and under the insurance policies; and
(xii) a first legal charge over all the shares of Silver Sparrow Berhad, ICSD Ventures Sdn. Bhd. and Iringan Flora Sdn. Bhd. and any dividends, distributions and entitlements.
38 PURCHASE OF OWN SHARES AND CANCELLATION OF SHARES
The shareholders of the Company, by a special resolution passed in a general meeting held on 25 June 2014, approved the Company’s plan to repurchase its own shares.
There was no repurchase of issued share capital in the current financial year.
Cancellation of treasury shares
The shares repurchased in the prior year were cancelled and an amount equivalent to their nominal value was transferred to the capital redemption reserve in accordance
with the requirement of Section 61 of the Companies (Jersey) Law 1991. The transfer to capital redemption reserve and the premium paid on the shares repurchased were
made out of the share premium.
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39 RELATED PARTY TRANSACTIONS
Transactions between the Group and the Company 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. ICB’s relationship with the Group is also mentioned on page 19 of the Directors’ Report under the headings of ‘Management’.
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 includes all the Directors of the Group, and certain members of senior management of the Group.
Group
ICB Group of Companies
Accounting and financial reporting services fee charged by an ICB subsidiary
Construction progress claims charged by an ICB subsidiary
Management fees charged by an ICB subsidiary
Marketing commission charged by an ICB subsidiary
Project management fee for interior fit out works charged by an ICB subsidiary
Project staff costs reimbursed to an ICB subsidiary
Rental expenses charged by an ICB subsidiary
Sales and administrative fee charged by an ICB subsidiary
Secretarial and administrative services fee charged by an ICB subsidiary
Key management personnel
Remuneration of key management personnel - Directors’ fees
Remuneration of key management personnel – Salaries
Company
ICB Group of Companies
Accounting and financial reporting services fee charged by an ICB subsidiary
Management fees charged by an ICB subsidiary
Secretarial and administrative services fee charged by an ICB subsidiary
Key management personnel
Remuneration of key management personnel - Directors’ fees
Transactions between the Group with other significant related parties are as follows:
Group
Non-controlling interests
Advances – non-interest bearing (Note 35)
Associate – Excellent Bonanza Sdn. Bhd.
Advances – non-interest bearing
Settlement of purchase consideration of Aloft Kuala Lumpur Sentral Hotel
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 2014 and 31 December 2013 are as follows:
Group
Amount due to an ICB subsidiary for accounting and financial reporting services fee
Amount due to an ICB subsidiary for construction progress claims charged (2013: Net of LAD’s recoverable US$6,046,000)
Amount due to an ICB subsidiary for management fees
Amount due to an ICB subsidiary for marketing commissions
Amount due to an ICB subsidiary for reimbursement of project staff costs
Amount due to an ICB subsidiary for rental expenses
Amount due to an ICB subsidiary for secretarial and administrative services fee
Company
Amount due to an ICB subsidiary for accounting and financial reporting services fee
Amount due to an ICB subsidiary for management fees
Amount due to an ICB subsidiary for secretarial and administrative services fee
The outstanding amounts due from/ (to) the other significant related parties as at 31 December 2014 and 31 December 2013 are as follows:
Group
Non-controlling interests
Advances – non-interest bearing (Note 35)
Associate – Excellent Bonanza Sdn. Bhd.
Advances – non-interest bearing
2014
US$’000
2013
US$’000
53
13,912
3,344
1,226
–
544
31
–
53
317
49
53
11,035
3,762
330
90
682
–
50
53
317
40
2014
US$’000
2013
US$’000
53
1,180
53
317
53
1,238
53
317
2014
US$’000
2013
US$’000
1,635
–
–
1,081
630
63,867
2014
US$’000
2013
US$’000
–
891
–
34
60
2
–
53
965
2,343
151
488
–
80
2014
US$’000
2013
US$’000
–
10
–
53
948
80
2014
US$’000
2013
US$’000
(11,342)
(10,448)
–
853
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0
1
4
Transactions between the parent company and its subsidiaries are eliminated in these consolidated financial statements. A list of the main operating subsidiaries is provided
in Note 41.
••• NOTES TO THE FINANCIAL STATEMENTS cont’d •••
40 BUSINESS COMBINATION
During the financial year, the Group increased its equity interest in Shangri-La Healthcare Investment Pte Ltd (“SHIPL”) from 74.11% to 75.38% (2013: 73.50% to 74.11%)
resulting from an issue of new shares in the subsidiary. Consequently, the Company’s effective equity interest in Hoa Lam – Shangri-La Healthcare Ltd Liability Co, City
International Hospital Co Ltd, Hoa Lam – Shangri-La 3 Ltd Liability Co and Hoa Lam – Shangri-La 4 Ltd Liability Co, subsidiaries of SHIPL, increased to 68.07% (2013:67.20%).
The Group recognised an increase in non-controlling interests of US$147,000 (2013: US$42,000) and an increase in accumulated losses of US$147,000 (2013: US$42,000)
resulting from the increase in equity interest in the above subsidiaries. The transaction was accounted for using the purchase method of accounting.
During the financial year, the Group disposed of its entire interest in Hoa Lam-Shangri-La 2 Ltd Liability Co, a subsidiary of the Group for a consideration of US$500,000
(VND10.50 billion). The disposal of Hoa Lam-Shangri-La 2 Ltd Liability Co. has no significant impact on the results of the Group.
41 INVESTMENT IN PRINCIPAL SUBSIDIARIES AND ASSOCIATE
Country of
incorporation
Principal
activities
Effective ownership interest
2013
2014
Name
Principal Subsidiaries
Ireka Land Sdn. Bhd.
Bumijaya Mawar Sdn. Bhd.
Bumijaya Mahligai Sdn. Bhd.
Amatir Resources Sdn. Bhd.
ICSD Ventures Sdn. Bhd.
Priority Elite Sdn. Bhd.
Iringan Flora Sdn. Bhd.
Silver Sparrow Berhad
Bumiraya Impian Sdn. Bhd.
The RuMa Hotel KL Sdn. Bhd.
Urban DNA Sdn. Bhd.
Aseana-BDC Co Ltd
ASPL PLB-Nam Long Ltd Liability Co
Hoa Lam Services Co Ltd
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Vietnam
Vietnam
Vietnam
Singapore
Shangri-La Healthcare Investment Pte Ltd
and its subsidiaries
Hoa Lam-Shangri-La Healthcare Ltd Liability Co Vietnam
Vietnam
City International Hospital Co Ltd
Vietnam
Hoa Lam-Shangri-La 2 Ltd Liability Co*
Vietnam
Hoa Lam-Shangri-La 3 Ltd Liability Co
Vietnam
Hoa Lam-Shangri-La 4 Ltd Liability Co
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Associate
Excellent Bonanza Sdn. Bhd.**#
Malaysia
Property development
* The entire shareholding was disposed of in 2014
** The entire shareholding was disposed of in 2014 (Note 17)
# Not audited by KPMG
Principal subsidiaries and associate are those which materially affect the results or assets of the Group.
The shareholdings of the principal subsidiaries and associate are held through subsidiaries.
42 COMMITMENTS AND CONTINGENCIES
The Group and Company do not have any contingencies at the statement of fi nancial position date except as follows:
Property development
Property development
Property development
Property development
Hotel and mall ownership and operation
Project management services
Hotel ownership and operation
Participating in the transactions
contemplated under the
Guaranteed MTN Programme
Property development
Investment holding
Property development
Investment holding
Property development
Investment holding
Investment holding
Property development
Hospital ownership and operation
Property development
Property development
Property development
100%
100%
100%
100%
100%
100%
100%
100%
80%
70%
70%
65%
55%
51%
75%
68%
68%
–
68%
68%
–
100%
100%
100%
100%
100%
100%
100%
100%
80%
70%
70%
65%
55%
51%
74%
67%
67%
67%
67%
–
40%
Debt service reserve account
Under the medium term notes programme of up to US$147 million, Silver Sparrow Berhad (“SSB”) had opened a Ringgit Malaysia debt service reserve account (“DSRA”) and
shall ensure that an amount equivalent to RM30.0 million (US$8.58 million) (the “Minimum Deposit”) be maintained in the DSRA at all times. In the event the funds in the
DSRA falls below the Minimum Deposit, SSB shall within fi ve (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.
Copies of the Annual Report
Copies of the annual report will be available on the Company’s website at www.aseanaproperties.com and from the Company’s registered offi ce, 12 Castle Street, St. Helier, Jersey,
JE2 3RT, Channel Islands.
••• CORPORATE INFORMATION •••
NON-EXECUTIVE
CHAIRMAN
Mohammed Azlan Hashim
NON-EXECUTIVE
DIRECTORS
Christopher Henry Lovell
David Harris
Ismail Shahudin
John Lynton Jones
Gerald Ong Chong Keng
COMPANY SECRETARY
AND REGISTERED OFFICE
Capita Secretaries Limited
12 Castle Street, St. Helier
Jersey JE2 3RT
Channel Islands
WEBSITE
www.aseanaproperties.com
LISTING DETAILS
Main Market of the London Stock
Exchange under the ticker symbol ASPL
AUDITOR
KPMG LLP
15 Canada Square
London E14 5GL
United Kingdom
CORPORATE BROKER
N+1 Singer
One Bartholomew Lane
London EC2N 2AX
United Kingdom
PUBLIC RELATIONS
Tavistock Communications
131 Finsbury Pavement
London EC2A 1NT
United Kingdom
REGISTRAR
Computershare Investor Services
(Jersey) Limited
Queensway House
Hilgrove Street, St. Helier
Jersey JE1 1ES
Channel Islands
T +44(0) 870 707 4040
F +44(0) 870 873 5851
Aloft Kuala Lumpur Sentral Hotel
Kuala Lumpur
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ASEANA PROPERTIES LIMITED
REGISTERED OFFICE
12 Castle Street, St. Helier, Jersey JE2 3RT, Channel Islands
T + 44(0) 1534 847 000 F +44 (0) 1534 847 001 www. aseanaproperties.com
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