ANNUAL REPORT
2016
INVESTMENT GATEWAY TO
MALAYSIA AND VIETNAM
Corporate Strategy
Chairman’s Statement
Development Manager’s Review
Property Portfolio
Share Price Chart
Performance Summary
Financial Review
Corporate Social Responsibility
CONTENTS
2
3
4
8
9
9
10
11
12
14
16
19
20
23
24
63
Calendar of Events
Board of Directors
Directors’ Report
Report of Directors’ Remuneration
Corporate Governance Statement
Independent Auditor’s Report
Financial Statements
Corporate Information
The RuMa Hotel and Residences is a collection of luxury
residences and hotel suites with the rare combination of
vintage charm and city conveniences.
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.
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.
Annual Report 2016
CORPORATE
STRATEGY
INTRODUCTION
Aseana Properties Limited (“Aseana
Properties” or “the Company”) 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 the Company’s
property portfolio as well as facilitation of
divestment opportunities.
When Aseana Properties 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, at the 2015 Annual General
Meeting (“AGM”) the Company proposed
an ordinary resolution for it to cease
trading (the “Discontinuation Resolution”).
At an extraordinary general meeting of the
Company held in June 2015, Shareholders
voted in favour of the Board’s proposals to
amend the Company’s investment policy
to enable a realisation of the Company’s
COVER RATIONALE
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. Shareholders also supported
the Board’s recommendation to vote
against the Discontinuation Resolution
proposed at the 2015 AGM, in order to
allow a policy of orderly realisation of the
Company’s assets over a period of up to
three years in order to maximise the value
of the Company’s assets and returns to
Shareholders, both up to and upon the
eventual liquidation of the Company.
To the extent that the Company has not
disposed of all of its assets by the time of
the AGM in 2018, in accordance with the
Articles, Shareholders will be provided
with an opportunity to review the future
of the Company, which would include the
option for shareholders to vote for the
continuation of the Company.
Currently approximately 80% of Aseana
Properties’ investment portfolio is
allocated to projects in Malaysia and
approximately 20% to projects in Vietnam.
Great cities anchor economic activities and help define the
unique qualities of their businesses. This design identifies
Kuala Lumpur’s Sultan Abdul Samad building and Ho Chi
Minh City Hall, two historical buildings which define
their cultural roots. Selected to represent Aseana
Properties Limited, they signify its investments
in Malaysia and Vietnam. Solid and with
strong foundations, these two buildings
are steeped in heritage and have stood
the test of time, offering longevity
and stability.
The RuMa Hotel and Residences
Kuala Lumpur
KEY FACTS
ADVISERS
& SERVICE
PROVIDERS
EXCHANGE
London Stock Exchange
Main Market
SYMBOL
ASPL
SHARES ISSUED
212,025,002
VOTING SHARE CAPITAL
198,691,002
SHARE HELD IN TREASURY
13,334,000
DEVELOPMENT MANAGER
Ireka Development
Management Sdn. Bhd.
ADMISSION DATE
5 April 2007
CORPORATE BROKER
Nplus 1 Singer Advisory
LLP
AUDITOR
KPMG LLP
LOOKUP
Reuters – ASPL.L
Bloomberg – ASPL:LN
DOMICILE
Jersey
2
SHARE DENOMINATION
US Dollars
MANAGEMENT FEE
2% of NAV
PERFORMANCE FEE
20% of the out performance
of the NAV over a total
return hurdle rate of 10%
Annual Report 2016
CHAIRMAN’S
STATEMENT
2016 was an eventful year with Brexit and the
introduced in 2016, coupled with the slowdown in
into Sabah increased by 7.9% as compared to 2015.
presidential election in the United States of America
economic growth will continue to put pressure on the
FPSS recorded an occupancy rate of 39.4% to date. The
(“USA”) dominating headlines around the globe. In
property market in 2017.
addition, anxiety over China’s financial markets which
had been prevalent at the beginning of the year eased
However in Vietnam, an improved environment for
during the year as China’s economy stabilised and
bank lending, along with strong GDP growth for the
avoided the hard landing feared by many. Economic
past two years, low inflation, rising incomes and rapid
performance of HMS improved significantly with a more
promising outlook since the opening of a new cinema
attraction in July 2016. The cinema, which is located
on the 11th floor of the mall, is a modern designed
cinema and is equipped with advanced audio and visual
activities are projected to pick up in 2017 and 2018,
urbanisation have contributed to the robust growth in
technology. The occupancy rate of HMS stands at 67.7%
especially in developing and emerging markets. The
its property market. In addition, liberalisation of the
to date. In Vietnam, the operational performance of CIH
World Bank made an optimistic projection that the global
market for foreign purchasers in 2015 helped produce
has been improving steadily over the year. Outpatient
economy will grow at a rate of 2.7% in 2017 amid the
an encouraging level of foreign investment into the
volumes and inpatient volumes increased by 84.7% and
current stagnant global trade and subdued investment
country. The State Bank of Vietnam (“SBV”) announced
61.0% respectively compared to 2015. The hospital is
environment. However, the global outlook is still clouded
half-way through 2016 that it would raise the risk
expected to introduce several new service lines such
by uncertainty linked to the future direction of major
weight of property loans at commercial banks from
as the ophthalmology, cardiac, neurology and vascular
economies, in particular the impact of any changes
150.0% to 200.0% on concerns that the housing market
angiographic services in 2017 which will help to further
brought in by the new USA administration.
may overheat. With the implementation of this rule, a
boost patient volume.
real estate company’s capital base must be at least at
Against this background, Malaysia and Vietnam (Aseana
200.0% of its total loan amount. The new ruling came
Further information on each of the Company’s properties
Properties’ core markets) have shown moderate Gross
into effect at the beginning of 2017. Despite this, the
is set out in the Manager’s report on pages 5 to 7.
Domestic Product (“GDP”) growth of 4.2% and 6.2%
Vietnamese property market is expected to remain on
respectively, both lower than in the previous year. In
an upswing, particularly relative to other markets in the
FIRST DISTRIBUTION UPDATE
Malaysia, investors’ confidence over the last couple of
Asean region.
years was affected by dwindling demand from China,
Following the disposal of investments by the Company
one of its major trading partners, and the down cycle
The Group registered a significant increase in revenue
in 2016, Aseana Properties decided to return cash
of the oil and gas industry. The Malaysian Ringgit
from US$30.3 million (restated) in 2015 to US$112.5
to shareholders via a tender offer. On 8 December
declined further during the year and was one of the
million in 2016, mainly due to sale of the Aloft Kuala
2016, Aseana Properties announced that the Company
worst performing currencies in the Asean region in 2016,
Lumpur Sentral Hotel (“AKLS”). The sale resulted in
proposed to return US$10,000,500 to Shareholders via
depreciating by 4.5% against the US Dollar to RM4.4860/
a gain of US$36.2 million which contributed to the net
a tender offer for up to 13,334,000 shares at a tender
US$ at the end of the year compared to RM4.2940/US$ at
profit before taxation of US$16.2 million, compared
price equivalent to the net asset value per share of the
the end of 2015. Malaysia’s Central Bank, Bank Negara
to a net loss after taxation of US$20.7 million in 2015.
Company, as at 30 September 2016, of US$0.75 per
Malaysia (“BNM”) introduced a series of measures at
The net profit included operating losses attributable to
share. The proposals were approved by Shareholders
the end of November 2016 to reduce Ringgit speculative
City International Hospital (“CIH”) of US$6.2 million,
at an Extraordinary General Meeting on 4 January 2017
activities and rebalance the supply of onshore FOREX.
International Healthcare Park (“IHP”) of US$3.1 million,
and completed on 10 January 2017. The shares tendered
Nevertheless, Malaysian economic growth, which
Four Points by Sheraton Sandakan Hotel (“FPSS”)
represent approximately 6.3% of the Company’s current
was underpinned by private sector activity in 2016, is
and Harbour Mall Sandakan (“HMS”) totalling US$6.2
share capital and are now held in treasury.
expected to remain resilient in 2017, on the back of
million, together with the impairment loss on inventory
improving domestic demand.
in relation to FPSS of US$2.4 million. In addition,
OUTLOOK
Aseana Properties recorded a loss on foreign currency
Meanwhile, Vietnam emerged as one of the strongest
translation differences of US$2.5 million compared
Amidst the uncertainty in the global economy, Malaysia’s
performing economies in the Asean region in 2016.
to a loss of US$15.9 million in 2015, as a result of the
property market remains subdued, although we are
Robust domestic demand and record high foreign
weakening of Ringgit against US Dollars from RM4.2940/
optimistic that it will improve going into second half of
investment inflows underpinned the continued rapid
US$1.0 as at 31 December 2015 to RM4.4860/US$1.0 as
2017. On the other hand, the property market in Vietnam
growth of the Vietnamese economy during the year.
at 31 December 2016.
As a result of the diligent efforts of the Vietnamese
Government, inflation was kept at 4.7%, below the
5.0% ceiling forecasted. The combination of stable
macroeconomic conditions and low labour costs has
led to Vietnam becoming an attractive destination
PROGRESS OF THE PROPERTY
PORTFOLIO
is expected to remain on the same strong footing and will
continue to grow in 2017. The Board and the Manager
remain committed to their efforts in achieving optimum
value and performance for the Group’s remaining assets
in line with the Company’s Divestment Investment Policy.
for Foreign Direct Investment (“FDI”). Actual FDI
The highlight of the year for Aseana Properties was
In closing, I wish to extend my sincere appreciation to my
disbursement rose by 9.0% in 2016, reaching a
the disposal in June 2016 of AKLS to Prosper Group
fellow Directors and the Manager for their hard work and
record high of US$15.8 billion. In the meantime, the
Holdings Limited for a gross transaction value of
commitment to the business. I would also like to thank
Vietnamese Dong saw a 1.1% drop in value over the
RM418.7 million (approximately US$104.2 million).
the Government authorities, financiers, shareholders
course of 2016 compared to the previous year. Foreign
The disposal represents a significant milestone to
and business associates who have remained supportive
currency liquidity was stable during the year as a result
realise the Company’s assets in a controlled, orderly
of our business endeavours throughout the year.
of proactive policy management.
and timely manner in accordance with its divestment
investment policy. Additionally, Aseana Properties
Malaysia’s property market in both residential and
also disposed of its remaining shares in Nam Long
commercial segments saw an extension of the
Investment Corporation (“Nam Long”) during the year,
downtrend since 2015, amid the country’s weak
raising total gross proceeds of approximately US$9.9
economic situation and sentiment in the property
million. Aside from these noteworthy achievements,
MOHAMMED AZLAN HASHIM
Chairman
market. Factors such as the depreciation of the Ringgit,
sales at SENI Mont’ Kiara (“SENI”) and The RuMa Hotel
tightening of lending policies by banks and efforts
and Residences (“The RuMa”) have been affected by
26 April 2017
taken by the government to curb property speculation
the subdued market conditions in Malaysia. Sales at
have driven down property prices across the country.
SENI to date progressed to approximately 98.4% and
According to the National Property Information Centre
(“NAPIC”), 57.0% of residential property transactions in
sales at The RuMa increased marginally to 54.9% based
on sale and purchase agreements signed. Similarly,
the third quarter of 2016 were priced below RM250,000,
business conditions in Sabah remained sombre due to
while 43.0% were RM250,000 and above. New supplies
the kidnapping incidents which took place off the east
of completed office, retail and condominium spaces
coast of Sabah during the year. However, tourist arrivals
3
Annual Report 2016
DEVELOPMENT
MANAGER’S REVIEW
The RuMa Hotel
and Residences
Kuala Lumpur
MALAYSIA ECONOMIC UPDATE
Despite falling revenue as a result of the weaker
commodities market and concerns over political
uncertainties, Malaysia’s economy has maintained
steady growth in 2016. The Malaysian economy grew at
4.5% in the last quarter of 2016, exceeding economists’
forecasts of 4.4%, underpinned by the continued
expansion in private sector expenditure. This brings
Malaysia’s full year GDP growth to 4.2%, lower than
the 5.0% registered in 2015. The Ringgit continued
to depreciate against major currencies throughout
2016 due to weak export earnings, low foreign direct
investment, drastic fall in oil prices and general lack in
confidence in the Malaysian economy. The Ringgit fell
4.5% against the US Dollars to RM4.4860/US$1.0 by the
end of 2016, the weakest since the 1998 Asian financial
crisis. This prompted BNM, Malaysia’s Central Bank, to
implement a series of measures to stabilise the onshore
market, which included the requirement for exporters to
convert 75.0% of export proceeds received into Ringgit.
In addition, BNM decided to keep the Overnight Policy
Rate (“OPR”) unchanged at 3.0% during its last meeting
in March 2017. The bank last changed its OPR in July
2016, cutting it by 0.25%, the first reduction in seven
years. While the external environment might continue
to remain demanding, economists believe that the
Malaysian economy will experience sustained, albeit
slower growth in 2017, with domestic demand being the
primary driver.
Meanwhile, RAM Rating Services Bhd (“RAM”) has
recently reaffirmed its sovereign ratings of A2/stable
and AAA/stable for Malaysia. RAM is still supportive
of Malaysia’s current ratings although the country’s
external-resilience parameters have worsened amid
a sustained decline in commodity prices and reduced
foreign exchange reserves. However, RAM has warned
that Malaysia’s ratings could be revised downwards if
its fiscal position deteriorates. In addition, inflation, as
measured by the annual change in the Consumer Price
Index (“CPI”), increased to 1.7% in the fourth quarter of
2016 driven mainly by upward adjustments to domestic
fuel prices. Nonetheless, average inflation for the year
remained at 2.1%.
Foreign investments have played a major role in
Malaysia’s economic development. Local small and
medium enterprises have benefitted a great deal from
the presence of foreign companies in the country as
they provide access to valuable technology transfer
and the exchange of know-how. In April 2017, Indian
and Malaysian business leaders signed a US$36.0
billion (approximately RM156.7 billion) of trade deals
which collectively represent one of the biggest trade
deals in Malaysian history. In addition, in late 2016,
Malaysia and China signed fourteen agreements for
proposed investments worth almost RM144.0 billion,
including projects in the property development and steel
production sectors. Malaysia has also recently signed the
highly anticipated bilateral agreement with Singapore
which will pave the way for the implementation of the
Singapore-Kuala Lumpur High Speed Rail project.
Furthermore, Malaysia may consider the possibility
of pursuing bilateral Free Trade Agreements with the
relevant Trans-Pacific Partnership (“TPP”) members
should the TPP Agreement be cancelled. FDI for
Malaysia rose to RM10.8 billion in the last quarter of
2016, an increase in inflows as compared to RM6.5
billion in the third quarter of the year. Total FDI for the
year stood at RM41.2 billion, down from RM43.4 billion
from 2015.
VIETNAM ECONOMIC UPDATE
Notwithstanding the slowdown in the growth of emerging
markets, Vietnam’s economy remained resilient due
to robust domestic demand and export-oriented
The sales performance of both SENI and The RuMa
have been affected by the soft market in the high-end
residential segment in Malaysia. Sale of properties at
SENI and The RuMa improved marginally to 98.4% and
54.9% to date respectively. Meanwhile, performance
of HMS improved significantly since the opening of the
Lotus Five Star Cinema in July 2016. The outlook for
the Mall is promising with increasing footfalls and the
signing of several new tenants.
Following the realisation of certain assets, in December
2016 the Company proposed its first capital distribution
to Shareholders by way of a tender offer. In January
2017, the Company successfully completed the
distribution of US$10,000,500 through the repurchase of
13,334,000 shares at US$0.75 per share. The 13,334,000
repurchased shares, representing approximately 6.3 per
cent of the Company’s share capital, are held as treasury
shares. The issued and paid up share capital of the
Company remains unchanged at 212,025,002 (Ordinary
shares: 198,691,000; Treasury shares: 13,334,000;
Management shares:2).
4
BUSINESS OVERVIEW2016 was a milestone year for Aseana Properties in both Malaysia and Vietnam as the Group successfully disposed of the AKLS to Prosper Group Holdings Limited for a gross transaction value of approximately US$104.2 million (RM418.7 million) and its remaining shares in Nam Long for total proceeds of approximately US$9.9 million (VND219.7 billion). Despite these notable achievements, the economic conditions both globally and locally were challenging. Investors’ confidence in Malaysia remained subdued due to political headwinds, a weaker commodities market as well as the depreciating Ringgit. On the property front, the declining number of property transactions reflects the tightening of bank lending and slow recovery in consumers’ demand due to on-going concerns of the weak Ringgit as well as a tepid employment outlook. Nevertheless, the Board together with the Development Manager remain strongly committed in taking positive steps to realise the Group’s maturing assets in a controlled, orderly and timely manner. Annual Report 2016
DEVELOPMENT
MANAGER’S REVIEW cont’d
included the extension of the Investment Tax Allowance
and the Pioneer Status promotion for new four and
five-star hotels to December 2018. A total of 26.8 million
tourists visited Malaysia in 2016, an increase of 4.0%
compared to the same period in 2015. Of this total, 3.4
million tourists visited Sabah, of which 0.4 million were
from China. Room rates and occupancy rates have
remained stable but competitive in view of the increasing
hotel supply and alternative accommodation such as the
popular AirBNB.
Aseana Properties has five investments in Malaysia,
following the sale of one investment during the year.
These investments range from residential properties,
hotels, commercial offices to a retail mall:
•
SENI Mont’ Kiara
Owned 100.0% by Aseana Properties, SENI is a
completed upmarket condominium development
situated on one of the highest points in Mont’ Kiara.
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. Sales at SENI have
progressed to 98.4% to date. Debt on the project has
been fully repaid.
• 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, only 1 unit out of the 399
residential units remains to be sold. Debt on the
project has been fully repaid.
• The RuMa Hotel and Residences
This project is strategically located in the heart of
Kuala Lumpur City Centre (“KLCC”) on Jalan Kia
Peng, near 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 project consists of 199 units
of luxury residences (The RuMa Residences) and a
253-room luxury bespoke hotel (The RuMa Hotel),
built on 43,559 sq ft of development land. The RuMa
Meanwhile, demand for office space in Klang Valley
continued to be subdued in 2016 mainly due to weak
business sentiment and economic uncertainties as well
as weaker oil and commodity prices. The challenging
business operating environment continued to exert
pressure on the performance of the office market with
the average occupancy rate remaining flat at 79.0% in
Q4 2016. As for the retail market, the average occupancy
rate declined by 1.0% to 81.5% in the last quarter of
2016 from 82.5% compared to Q4 2015. Retail sales were
weak due to deteriorating consumer confidence caused
by the rising cost of living, weaker job prospects, the
weakening Ringgit and the uncertain economic outlook
of the country.
The hotel and tourism sector remained sanguine despite
concerns of oversupply during the year. The weak Ringgit
and the numerous pro-tourism efforts and activities by
the Government have encouraged the influx of more
local and foreign tourists, in particular, the increase in
the number of tourists from China. The Government has
introduced E-Visa facilities for selected major countries
and through the Tourism National Key Economic Area,
collaborative efforts between the Ministry of Tourism
and Culture, other Government agencies and the
private sector have been enhanced to help secure
Malaysia’s position as a leading tourist destination. The
Government’s measures to stimulate the sector have
The RuMa Hotel
and Residences
Kuala Lumpur
5
SENI Mont’ Kiara
Kuala Lumpur
manufacturing. Vietnam’s GDP growth in 2016 reached
6.2% and is one of the top performers amongst other
Asian countries. The country’s economic performance
has rebounded from a plunge in the first half of the year
due to the impact of a severe drought on agricultural
production and slower industrial growth. Although 2016’s
growth rate was lower than the 6.7% registered back in
2015 and the targeted GDP of 6.7% for 2016, it was still
seen as an encouraging achievement given the tough
global economic conditions.
Inflationary pressures in Vietnam remained subdued
as a result of the country’s macroeconomic stability.
Vietnam’s inflation rate has been kept relatively low
at 2.7%, an increase from 0.6% in 2015. The main
reasons contributing to the increase were due to the
Government’s upward price adjustment to healthcare
services, higher demand for food and construction
before the Lunar New Year as well as the impact of the
crippling drought which affected agricultural supplies.
In addition, Vietnam has boosted its international
economic integration by expanding the geographical
reach of its market during 2016. The Vietnamese
Government signed several free trade agreements with
the Eurasian Economic Union, The European Union,
South Korea and the TPP Agreement during the year.
Despite the withdrawal of the TPP Agreement, these
trade agreements are expected to serve as an impetus
for the long-needed structural changes in the country.
Underpinned by its resilient economy and its highly
competitive labour market as well as low cost, foreign
companies continue to invest in Vietnam. According to
the Ministry of Planning and Investment of Vietnam, in
2016 the disbursement of FDI capital climbed 9.0% to a
record high of US$15.8 billion and the total FDI capital
inflow totaled US$24.4 billion.
PORTFOLIO REVIEW
MALAYSIA
Property Market Review
The year ended on yet another gloomy note for the
Malaysian property market which has slowed down
significantly in recent years. Property developers are
expected to register another year of slow performance
in 2017 as a result of the ongoing concerns of the weak
Ringgit as well as cooling measures introduced by BNM
to rein in speculation, which continues to be the main
hurdle for property developers. According to the latest
property market report by NAPIC, the value of Malaysian
property market transactions has declined 6.3% quarter-
on-quarter to RM30.8 billion in the third quarter of
2016, while transaction volume fell by 8.5% quarter-on-
quarter to 76,456 units.
• 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 consists of four
phases; Phases One and Two comprised 129 shop lots
that are fully sold, while Phases Three and Four consist
of the only retail mall, HMS and the only international
four-star hotel in Sandakan, known as FPSS.
repaid. Approximately US$26.7 million (RM120.0
million) remain to date.
• Kota Kinabalu Seafront resort & residences
Aseana Properties acquired three adjoining plots of
land totaling approximately 80 acres in September
2008 with the intention of developing a boutique
resort hotel, resort villas and resort homes at the
seaside area in Kota Kinabalu, Sabah. In 2012, the
Board decided not to proceed with the development
and to dispose of the land instead. Marketing efforts
are on-going but prospects have been affected by the
subdued business environment and tourism in Sabah.
Annual Report 2016
DEVELOPMENT
MANAGER’S REVIEW cont’d
Hotel will be managed by Urban Resort Concepts,
a renowned bespoke hotel management company
based in Shanghai, which created and operates the
award-winning The Puli Hotel in Shanghai.
Construction of the main building is underway with
completion expected in Q4 2017. The RuMa Hotel
and Residences was first launched in 2013. Sales
were affected by the cooling measures imposed by
the Government to curb property speculation as well
as the current economic condition of Malaysia. To
date, total sales at both The RuMa have increased
marginally to approximately 54.9% based on signed
sales and purchase agreements. A further 6.0% have
been booked with deposits paid. During 2016 and
year-to-date, the Manager participated in marketing
and promotional events to boost sales both locally and
internationally, and is planning for further activities
focusing on the Chinese and Taiwanese markets
throughout the remainder of 2017.
Debt on the project was fully repaid in 2016.
• Aloft Kuala Lumpur Sentral Hotel
AKLS is part of the Kuala Lumpur Sentral project
which consists of two office towers and a business
class hotel, centrally located in Kuala Lumpur’s
urban transportation hub and was jointly developed
by Aseana Properties and Malaysian Resources
Corporation Berhad (“MRCB”) on a 40:60 basis. The
482-room AKLS is now managed by Starwood Hotels
& Resorts Asia Pacific Hotels & Resorts Pte Ltd
under the ‘Aloft’ brand and operations of the hotel
commenced on 22 March 2013.
The disposal of AKLS to Prosper Group Holdings
Limited for a gross transaction value of
approximately US$104.2 million (RM418.7 million)
was completed on 23 June 2016. The disposal
represented a significant milestone in line with
the divestment investment policy approved by
shareholders in 2015. The proceeds from the
disposal were used to fully repay the medium term
notes issued for AKLS, and to partly to repay the
medium term notes issued for FPSS.
HMS and FPSS commenced operations in July and
May 2012 respectively. The occupancy rate at HMS
is currently recorded at 67.7%. Notable tenants
include Popular Bookstore, Levi’s, The Body Shop,
Watson’s and McDonald’s amongst others. In addition,
a national cinema chain, Lotus Five Star, the first
modern designed cinema in Sandakan, was opened in
July 2016. Leasing initiatives at HMS to both local and
international retailers are ongoing. The outlook for
HMS is promising particularly with the opening of the
cinema which has significantly increased the footfall
to the Mall. Meanwhile, FPSS recorded an occupancy
rate of 39.4% to date, with an Average Daily Rate of
about US$49 (RM220). 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. Kidnapping incidents
in the east coast of Sabah continued to affect the
business climate in Sabah which in turn has affected
the performance of FPSS during the past twelve
months. In March 2017, in conjunction with the Prime
Minister’s visit to Sandakan, the Government pledged
to improve security and air transport connectivity
to Sandakan including extending the runway of the
Sandakan Airport. This bodes well for the Sandakan
tourism industry in the coming years.
The project was originally funded by guaranteed
medium term notes of about US$54.6 million
(RM245.0 million). Following the completion of the
AKLS disposal in 2016, approximately US$27.9 million
(RM125.0 million) of the medium term notes were
VIETNAM
Property Market Review
Growth in the Vietnamese property market has been the
most visible sign of the country’s economic expansion
over the last few years. Investments into the Vietnamese
real estate market saw a boost in 2016 buoyed by
stable economic conditions, a growing middle class
and improved legislative climate. Residential property
sales have been robust, construction of office towers
and condominiums are underway in major cities and the
number of industrial parks are rising in areas outside
the city. The property markets in both Hanoi and Ho Chi
Minh City (“HCMC”) reported solid growth during the
year, with property prices remaining on the uptrend
across all markets, in line with the favourable sentiment
in both demand and supply. In addition, mergers and
acquisitions (“M&A”) activity within the real estate sector
in Vietnam has witnessed a substantial increase in both
transaction value and volume in the last two years.
Notwithstanding the positive sentiment in the property
market, the Vietnamese Government has planned and
issued policies that aim to regulate the growth of many
sectors of the market. In particular, the State Bank of
Vietnam has issued a circular that will force developers
to reduce their dependence on bank credit and as a
result, some developers may have to look to other
sources of funding such as foreign investors and private
investment funds. This will pose a challenge for small
scaled and under capitalised developers.
On the back of sound macroeconomic factors, the
residential market has performed well during the year.
In HCMC, a total of 37,419 condominium units were
launched in 2016, of which 35,008 units were sold. The
mid-end segment of the market continued to perform
well and accounted for more than 48.0% of total units
sold. Likewise, in Hanoi, of the 30,000 condominium
units launched in 2016, 21,188 units were sold and 56.0%
of the sales were in the mid-end segment.
Meanwhile, on the commercial front in HCMC, the office
market continued to be robust with little new supply
coming into the market and with increasing demand for
premium offices. Average occupancy increased 2.0%
year-on-year to 97.0%, while average rent increased
3.0% year-on-year. Likewise, in Hanoi, average rent
increased by 1.1% year-on-year whilst average
occupancy increased 4.0% year-on-year. With its fast-
growing population and rapid urbanisation, Vietnam has
for several years been a favourite for investment in the
retail sector. The growth in infrastructure, an increasing
young middle class population and the demand for
modern shopping experiences, have attracted many
international brands and retailers. The retail sector has
seen a large number of mergers and acquisitions over
the past year, leading to the expansion of both foreign
retailers such as Aeon and Lotte and current market
players such as Vincom and Co-op Mart.
Sandakan
Harbour Square
Sabah
6
Annual Report 2016
DEVELOPMENT
MANAGER’S REVIEW cont’d
International
Healthcare Park
Ho Chi Minh City
Although still lagging behind some of its neighbouring
countries, Vietnam has seen a steady increase in the
number of international tourists in 2016, reaching
approximately 10.0 million visitors, an increase of 26.0%
year-on-year. The Vietnamese Government has begun to
see the potential of tourism and is taking measures to
make travelling to Vietnam easier through relaxed visa
regulations for citizens from five European countries
coupled with various tourism marketing strategies.
Asian visitors, particularly from China, South Korea and
Japan topped the list with more than 7.2 million visitors,
followed by Europe with 1.6 million and American with
0.7 million.
Aseana Properties now has two investments in Vietnam,
following the sale of one investment during the year.
• International Healthcare Park
IHP is a planned mixed development on 37.5 hectares
of land comprising world-class private hospitals, mixed
commercial, hospitality and residential developments.
It 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 72.4% stake in this development and
its minority 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 have been
allocated for residential developments. Of a total of
19 plots of land, four have been sold to date. As at 31
December 2016, the Manager has secured a buyer
for two plots of residential land of approximately 1.2
hectares each. These transactions are expected to
complete by Q2 2017 and Q3 2017 respectively.
To part finance the payment for the land and working
capital, total loan facilities of US$24.4 million have
been secured, of which US$19.8 million remained
outstanding as at 31 December 2016.
• City International Hospital
Construction of CIH was completed in March 2013
and commenced business in January 2014. CIH
is a modern private care hospital conforming to
international standards with 320 beds (Phase 1: 168
beds). Parkway Pantai Limited was the operator of
CIH but the contract was mutually terminated on 31
December 2015, in line with the Manager’s long-term
strategy to localise the management of the hospital
to optimise operating costs and to improve doctors’
and patients’ engagement with CIH. In early 2016,
the hospital appointed Dr. Le Quoc Su as the Chief
Executive Officer (“CEO”) to lead the operations team.
Prior to joining CIH, Dr. Su was the Group CEO of Hoan
My Medical Corporation, Vietnam’s largest healthcare
group. With the new management team in place,
the operation of CIH has been improving steadily.
Outpatient and inpatient volumes increased by 84.7%
and 61.0% respectively compared to 2015.
2017 and loan growth is expected to slow further due to
economic uncertainties and concerns about over supply
in the market. To the contrary, the real estate market in
Vietnam however is buoyant, boosted by the recovery in
the housing market, a booming economy and also the
deregulation of house and real estate ownership.
The disposal of AKLS and the Company’s entire
shareholding in Nam Long both represented significant
milestones for the Company’s divestment plans.
Alongside this, Aseana Properties completed a tender
offer exercise at the beginning of 2017 as a means
of returning cash to Shareholders. The Manager and
the Board of Directors are focused on preparing the
remaining assets for sale and are working together
closely to explore all opportunities to divest and
realise Aseana Properties’ remaining assets in both
Malaysia and Vietnam in order to make further capital
distributions to Shareholders at the earliest opportunity.
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$37.4 million remained outstanding as at 31
December 2016.
Lastly, I would like to take this opportunity to thank the
Board of Aseana Properties, our advisors and business
associates for all the guidance and support rendered
throughout the year.
LAI VOON HON
President / Chief Executive Officer
Ireka Development Management Sdn. Bhd.
Development Manager
26 April 2017
• Nam Long Investment Corporation
In 2008, Aseana Properties acquired a strategic
minority stake in 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.
Aseana Properties has strategically divested its entire
shareholding in Nam Long in 2016, for total proceeds
of approximately US$15.0 million (VND333.1 billion).
OUTLOOK
The overall economic outlook for Malaysia appears
to be plagued by the ongoing concern about the weak
Ringgit and the low crude oil and commodity prices
coupled with the global economic slowdown. Malaysia’s
property market is expected to remain stable but flat in
7
Annual Report 2016
PROPERTY PORTFOLIO
AS AT 31 DECEMBER 2016
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
SENI Mont’ Kiara
Kuala Lumpur, Malaysia
Luxury condominiums
100.0%
81,000
15,000
Completed in August 2009
Luxury condominiums
100.0%
225,000
36,000
Sandakan Harbour Square
Sandakan, Sabah, Malaysia
Retail lots, hotel and
retail mall
100.0%
126,000
48,000
Phase 1: Completed in April 2011
Phase 2: Completed in October 2011
Retail lots: Completed in 2009
Retail mall: Completed in March 2012
Hotel: Completed in May 2012
Phase 1: City International Hospital, Private general hospital
International Healthcare Park,
Ho Chi Minh City, Vietnam
PROJECT UNDER DEVELOPMENT
The RuMa Hotel and Residences
Kuala Lumpur, Malaysia
Luxury residential tower
and bespoke hotel
UNDEVELOPED PROJECTS
Other developments in
International Healthcare Park,
Ho Chi Minh City, Vietnam
(formerly International Hi-Tech
Healthcare Park)
Commercial and
residential development
with healthcare theme
72.4%*
48,000
25,000
Completed in March 2013
70.0%
40,000
4,000
Fourth quarter of 2017
72.4%*
972,000
351,000
n/a
Kota Kinabalu Seafront
resort & residences
Kota Kinabalu, Sabah, Malaysia
i. Boutique resort hotel
and resort villas
ii. Resort homes
100.0%
80.0%
n/a
327,000
n/a
DIVESTED PROJECTS
1 Mont’ Kiara by i-ZEN
Kuala Lumpur, Malaysia
Office suites, office tower
and retail mall
100.0%
96,000
14,000
Completed in November 2010
Waterside Estates
Ho Chi Minh City, Vietnam
Villa and high-rise
apartments
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)
55.0%
94,000
57,000
n/a
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
Listed equity investment in
Nam Long Investment Corporation,
an established developer in
Ho Chi Minh City, Vietnam
Listed equity investment
6.9%
n/a
n/a
Effective ownership as at FY2015 before
full disposal in November 2016
* Shareholding as at 31 December 2016
n/a: Not available/ not applicable
8
I
)
$
S
U
(
E
C
R
P
E
R
A
H
S
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
Annual Report 2016
SHARE PRICE CHART
8000
7000
6000
5000
4000
3000
2000
1000
)
S
’
0
0
0
(
E
M
U
L
O
V
JAN 16
FEB 16
MAR 16
APR 16
MAY 16
JUN 16
JUL 16
AUG 16
SEP 16
OCT 16
NOV 16
DEC 16
Aseana
FTSE All Share
FTSE 350/Real Estate
Volume
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)
PERFORMANCE SUMMARY
YEAR ENDED
31 DECEMBER 2016
YEAR ENDED
31 DECEMBER 2015
-48.00%
16.25%
-45.11%
15.56%
12.45%
-12.42%
188.62
0.68
0.52
514.80
58.75%
40.01%
8.89
8.89
-55.00%
3.38%
-37.33%
0.00%
-2.50%
8.22%
197.75
0.61
0.45
587.81
142.74%
125.28%
(7.44)
(7.44)
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%
9
Total liabilities have decreased from US$237.4 million
in 2015 to US$152.1 million in 2016, mainly due to
repayment of medium term notes of US$87.8 million.
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 of the Annual Report.
MONICA LAI VOON HUEY
Chief Financial Officer
Ireka Development Management Sdn. Bhd.
Development Manager
26 April 2017
Annual Report 2016
FINANCIAL REVIEW
INTRODUCTION
The Group recorded comprehensive profit of US$10.5
million due to a gain on sale of AKLS, offset by losses of its
operating assets and losses on foreign currency translation
Net Asset Value per share at 31 December 2016 was
differences for foreign operations, for financial year ended
US$0.68 (2015: US$0.61).
31 December 2016.
STATEMENT OF COMPREHENSIVE
INCOME
The Group registered a four times increase in revenue
from US$30.3 million (restated) in 2015 to US$112.5
CASH FLOW AND FUNDING
Cash flow generated from operation before interest and
tax paid was US$105.1 million in 2016, compared to cash
flow of US$4.3 million (restated) in 2015. The positive cash
flow was mainly attributable to the profit from the disposal
million in 2016, mainly due to sale of the AKLS. The sale
of AKLS.
resulted in a gain of US$36.2 million which contributed
to the net profit before taxation of US$16.2 million,
compared to a net loss after taxation of US$20.7
million in 2015. The net profit included operating losses
During the year, the Group generated net cash flow of
US$9.3 million from investing activities (2015: US$9.0
million), mainly due to disposal of the remaining
attributable to CIH of US$6.2 million, IHP of US$3.1
shares in Nam Long.
million, FPSS and HMS totalling US$6.2 million, together
with the impairment loss on inventory in relation to FPSS
of US$2.4 million.
Net profit attributable to equity holders of the parent
was US$18.8 million in 2016, compared to a net loss of
US$15.8 million in 2015. Tax charged for the year was
lower at US$0.6 million (2015: US$1.3 million) due to
fewer completed units of SENI and Tiffani sold in 2016.
The Group’s subsidiaries borrow to fund property
development projects. At 31 December 2016, the
Group had gross borrowings of US$83.5 million (2015:
US$187.8 million), a decrease of 55.5 % over the
previous year. Net debt-to-equity ratio decreased from
125.3% in 2015 to 40.0% in 2016 due to repayment of
medium term notes and an increase in shareholders’
funds attributable to gain on sale of AKLS.
The consolidated comprehensive profit for the year
ended 31 December 2016 was US$10.5 million compared
to a consolidated comprehensive loss of US$35.7 million
in 2015. The former included losses on foreign currency
Finance income was US$0.40 million in 2016 compared
to US$0.35 million in 2015. Finance costs decreased
from US$11.0 million in 2015 to US$9.6 million in 2016.
The finance costs were mainly attributable to CIH, IHP,
translation differences for foreign operations of US$2.5
AKLS, FPSS and HMS.
million (2015: US$15.9 million) due to weakening of
the Ringgit against the US Dollars from 4.294 as at
31 December 2015 to 4.486 as at 31 December 2016;
and fair value adjustment in relation to shares of Nam
Long Investment Corporation (“Nam Long”) of US$2.4
million (2015: increase of US$2.19 million) following the
complete disposal of the 9,784,653 shares in Nam Long
resulting in a gain on disposal of US$2.28 million.
Basic and diluted gain per share for the year ended 31
December 2016 were both US cents 8.89 (2015: Loss per
share of US cents 7.44).
EVENT AFTER STATEMENT OF
FINANCIAL POSITION DATE
On 4 January 2017, the Shareholders of the Company at
an Extraordinary General Meeting approved a proposal
to return US$10,000,500, or US$0.75 per share for
13,334,000 shares representing 6.29 per cent of the
Company’s share capital to Shareholders through N+1
Singer. The capital distribution was completed on 10
January 2017 and the repurchased shares of 13,334,000
are currently held as Treasury Shares. The issued and
paid up share capital of the Company remains unchanged
STATEMENT OF FINANCIAL POSITION
at 212,025,002.
Total assets at 31 December 2016 were US$294.3 million,
compared to US$368.9 million for 2015, representing
a decrease of US$74.6 million. This was mainly due to
decrease in inventories following the disposal of the AKLS,
completed units of SENI and Tiffani; and translation effect
due to the weaker Ringgit against the US Dollars. The
contributions from the disposal of the inventories were
used to repay the Group’s debt. Cash and cash equivalents
DIVIDEND
No dividend was declared or paid in 2016.
PRINCIPAL RISKS AND UNCERTAINTIES
A review of the principal risks and uncertainties facing
the Group is set out in the Directors’ Report of the
were higher at US$26.6 million (2015: US$23 million).
Annual Report.
The decrease in other receivables was largely due to the
receipt of US$6.4 million representing the balance of
consideration receivable for the disposal of Waterside
Estates project, via the Group’s 55% equity interest in
ASPL PLB-Nam Long Ltd Liability Co, a subsidiary of the
Group in year 2015.
10
Annual Report 2016
CORPORATE SOCIAL
RESPONSIBILITY
Aseana Properties is committed to making a positive
difference in the world, whether it is making a difference
to the local community or whether it is building a better
working environment. In a nutshell, Aseana Properties
believes that being socially and environmentally
responsible is good for people, the planet and for
business. The following 6 core principles define the
essence of corporate citizenship for the Company.
Free Eye Consultation.
MANAGING CORPORATE
RESPONSIBILITY
HEALTH AND SAFETY
Aseana Properties considers Health and Safety to
The Board of Directors at Aseana Properties has
be important because it protects the well-being of
oversight mechanisms, through corporate-level policies
employees, visitors and clients. Looking after Health
and standards to ensure an effective CSR programme is
and Safety makes good business sense and the
delivered in the interest of its employees, shareholders
Company works hard to provide a healthy workplace
and the community at large. It is determined to ensure
environment for its staff, contractors and visitors.
that its CSR programme acts legally and responsibly on
all matters and that the highest ethical standards are
Some of the organised efforts and procedures for
maintained. The Board recognises this as a key part of
reducing workplace accidents, risks and hazards,
its risk management strategy to protect the reputation
including exposure to harmful situations include:
of Aseana Properties and shareholders values are
enhanced.
EMPLOYEES
• Paying particular attention to the regular
Lung Cancer Prevention health talk & screening.
maintenance of equipment, plant and systems to
ensure a safe working environment.
In the current economic environment as one of constant
• Providing sufficient information, instruction, training
STAKEHOLDERS
Aseana Properties works collaboratively with its
stakeholders to improve services and to ensure
client satisfaction. The Company is committed to
meaningful dialogue and encourages stakeholder
participation through stakeholder meetings,
roadshows, briefings, conference calls, 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.
change, competing demands and stress, the welfare
and supervision to enable all employees to avoid
of employees is critical in order to ensure they are
hazards and to contribute positively to their own
productive, creative and innovative. This is also in order
safety and safe performance at work.
to achieve the highest standard in the workplace. The
Company therefore works closely with its Development
COMMUNITY
Manager to ensure that all employees are treated fairly
and with dignity because it is the right thing to do and
Aseana Properties understands the importance of
also to get the best out of them.
community engagement both for the communities
ENVIRONMENTAL MANAGEMENT
themselves but also for giving staff more meaningful
experiences by tapping into their professional skills
and capabilities. Therefore, throughout the year,
Aseana Properties believes that any commitment to a
CIH organised the following as part of their CSR
more environmentally sustainable world has to start at
programme:
home, and to this end, it challenges itself to work in an
environmentally responsible manner and to find new
• Monthly parental classes to provide parents with
ways to reduce its carbon footprint, for instance. It is
expert advice on how to take care of their pregnancy,
working hard to move towards a low-carbon economy
their health and general well-being during
because this is the biggest impact on minimising the
pregnancy.
negative effects of climate change. This is done through
two critical sources where carbon output are at their
• Free eye consultations on World Sight Day in October
highest - office energy consumption and business
2016.
travel. The Company is implementing measurable
actions to increase energy efficiency in its offices, and
• Free lung screening in November 2016 as part of the
to be smarter about business travel. The next step is
community health prevention programme.
to work towards reducing waste in the communities it
serves in order to promote responsible treatment of the
• Participated in the Terry Fox annual run to raise
environment. Another way is through its Development
money for cancer research.
Manager, where Aseana Properties works with the local
authorities and planners to ensure that environmental
protection is key in any project scheme. It also works
with architects, designers and other consultants to
incorporate natural elements such as water, greenery,
light and air into its projects.
11
Annual Report 2016
CALENDAR OF EVENTS
22 MARCH
30 MARCH
AKLS celebrated its 3rd anniversary with a party
at the Tiki-themed rooftop Mai Bar.
Aseana Properties announced that it had entered into a conditional agreement with Prosper Group Holdings Limited
to dispose of AKLS. The gross transaction value was approximately RM418.7 million (approximately US$104.6 million),
which included the purchase of the entire issued share capital of ASPL M3B Limited and Iringan Flora Sdn Bhd (“Aloft
Companies”), and assumption of certain debts, assets and liabilities of the Aloft Companies.
02 APRIL
AKLS sponsored a charity event, ‘Children’s Chemo Graduation Ball’ in order to support children in need of
cancer treatment. The funds raised were donated to The National Cancer Society of Malaysia (NCSM) for
the University of Malaya Medical Centre (UMMC) and Hospital Kuala Lumpur (HKL).
23 JUNE
Aseana Properties announced the completion of the disposal of the AKLS to Prosper Group Holdings Limited.
20 APRIL
Aseana Properties realised VND45.6 billion
(approximately US$2.04 million) on the sale of 2.0 million
shares in Nam Long, a real estate developer in Vietnam
listed on the Ho Chi Minh Stock Exchange, at VND22,800
(approximately US$1.02) per share. Following the sale,
Aseana Properties’ effective stake in Nam Long is
reduced from 6.9% to 5.5%.
27 APRIL
Aseana Properties announced its Audited Full Year Results
for the financial year ended 31 December 2015.
29 JUNE
Aseana Properties convened its 10th Annual General Meeting
at its registered office in Jersey, Channel Islands. All the
resolutions tabled were passed at the meeting.
30 JULY
HMS officially opened the first Premium Cinema in Sandakan. The new cinema ‘Lotus Five Star Cinemas’ comes with 8 halls and is equipped with the latest Dolby Atmos
technology which can accommodate 1,000 movie goers at a time.
12
Annual Report 2016
CALENDAR OF EVENTS cont’d
15 AUGUST
26 AUGUST
Aseana Properties realised VND47.5 billion (approximately US$2.13 million) on the sale of
2,175,880 shares in Nam Long at VND21,837 (approximately US$0.98) per share. Following
the sale, Aseana Properties’ effective stake in Nam Long is reduced from 5.50% to 3.96%.
Aseana Properties announced its Half-Year Results for the 6-month
period ended 30 June 2016.
13 SEPTEMBER
Aseana Properties realised VND36.6 billion (approximately US$1.64 million) on the sale of 1.7 million shares in Nam Long at VND21,500 (approximately US$0.96) per
share. Following the sale, Aseana Properties’ effective stake in Nam Long is reduced from 3.96% to 2.75%.
14 OCTOBER
26 NOVEMBER
CIH organised free eye consultations in conjunction with World Sight
Day. The event focused attention on vision improvement and prevention
of eye disease.
CIH organised a “Science & Technology Seminar No. 1 2016”, where 11 doctors from CIH and
other local hospitals presented their updated medical researches.
02 NOVEMBER
Aseana Properties realised VND85.99 billion (approximately US$3.85
million) on the sale of its remaining stake in Nam Long of 3,908,773
shares at VND22,000 (approximately US$0.986) per share. This sale
completed Aseana Properties’ divestment of its shareholding in Nam
Long, in line with the Company’s overall divestment strategy.
27 NOVEMBER
CIH participated and sponsored the 20th year of Terry Fox Run,
Vietnam for Cancer Research. Terry Fox Run is an annual non-
competitive charity event held in numerous regions around the world
in commemoration of Canadian cancer activitist Terry Fox, and his
Marathon of Hope, to raise money for cancer research.
08 DECEMBER
Aseana Properties announced that it proposed, subject to Shareholder approval at an
Extraordinary General Meeting to be held in January 2017, to return US$10,000,500 to
Shareholders by way of a tender offer for up to 13,334,000 shares at a tender price equivalent to
the net asset value per share of the Company, as at 30 September 2016, of US$0.75 per share.
The Company proposed to hold all repurchased shares in treasury.
15 DECEMBER
As part of the Healthy Living Series for community awareness, CIH organised a Lung Cancer
Prevention health talk and offered free lung cancer screening to the public. The event was
to create awareness and educate the public about the risks of developing lung cancer and
healthy living.
13
Annual Report 2016
BOARD OF DIRECTORS
MOHAMMED AZLAN HASHIM
Non-Executive Chairman
CHRISTOPHER HENRY
LOVELL
Non-Executive Director
DAVID HARRIS
Non-Executive Director
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 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 the
minister of state and Financial Services
Attaché at the British Embassy in Paris.
He was a board member of London’s
Futures and Options Association, of the
London Clearing House and of Kenetics
Group Limited, and a former adviser
to the City of London Corporation. He
was the founding chairman of the Dubai
International Financial Exchange (now
known as Nasdaq Dubai) from 2003 until
2006. He is chairman of DSX Cloud plc
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.
Mohammed Azlan Hashim was
Christopher Henry Lovell was appointed
David Harris was appointed as Director
appointed as Chairman (Non-Executive)
as Director (Non-Executive) of Aseana
(Non-Executive) of Aseana Properties
of Aseana Properties in March 2007.
Properties in March 2007. He was a
in March 2007. David is currently Chief
partner in Theodore Goddard between
Executive of InvaTrust Consultancy
In Malaysia, Azlan serves as Chairman
1983 and 1993 before setting up his
Ltd, a company that specialises in the
of several public entities, listed on the
own legal practice in Jersey. In 2000,
provision of investment marketing
Bursa Malaysia Securities Berhad,
he was one of the founding principals
services to the Financial Services
including D&O Green Technologies
of Channel House Trustees Limited, a
Industry in both the UK and Europe.
Berhad, SILK Holdings Berhad, Scomi
Jersey regulated trust company, which
He was formerly Managing Director
Group Berhad and Deputy Chairman of
was acquired by Capita Group plc in
of Chantrey Financial Management
IHH Healthcare Berhad.
2005, when he became a director of
Ltd, a successful investment and
Capita’s Jersey regulated trust company
fund management company linked
He has extensive experience working in
until his retirement from Capita in 2010.
to Chartered Accountants, Chantrey
the corporate sector including financial
Vellacott. Additionally, he also served as
services and investments. Among
Christopher was a director of BFS Equity
Director of the Association of Investment
others, he has served as Chief Executive,
Income & Bond plc between 1998 and
Companies overseeing marketing and
Bumiputra Merchant Bankers Berhad,
2004, BFS Managed Properties plc
technical training.
Group Managing Director, Amanah
between 2001 and 2005 and Yatra Capital
Capital Malaysia Berhad and Executive
Limited between 2005 and 2010.
He is currently a non-executive director
Chairman, Bursa Malaysia Berhad
of a number of quoted companies in
Group.
Christopher holds a LI.B (Hons) degree
the UK including Character Group plc,
Azlan also serves as a Board Member
and is a member of the Law Society of
F&C Managed Portfolio Trust plc and
from the London School of Economics
Small Companies Dividend Trust plc,
of various government related
England & Wales.
organisations including Khazanah
Nasional Berhad, Labuan Financial
Services Authority and is a member of
the Government Retirement Fund Inc.
Investment Panels.
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.
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 commentator. He is a
previous winner of the award “Best
Investment Adviser” in the UK.
14
Annual Report 2016
BOARD OF DIRECTORS cont’d
GERALD ONG CHONG KENG
Non-Executive Director
NICHOLAS JOHN PARIS
Non-Executive Director
FERHEEN MAHOMED
Non-Executive Director
Gerald Ong was appointed as Director
Nicholas John Paris was appointed
Ferheen Mahomed was appointed as
(Non-Executive) of Aseana Properties
as Director (Non-Executive) of Aseana
Director (Non-Executive) of Aseana
in September 2009. Gerald is Chief
Properties in June 2015. Nicholas is
Properties in June 2015. Ferheen is
Executive Officer of PrimePartners
a portfolio manager for LIM Advisors
currently Group General Counsel for
Corporate Finance Group, has over
(“LIM”), an Asian-focused investment
Hong Kong Exchanges and Clearing
20 years of corporate finance related
management firm, headquartered
Limited. Her previous roles included
experience at various financial
in Hong Kong, and he specialises in
Executive Vice President of Business
institutions providing a wide variety of
investing in closed ended investment
Development for Pacific Century Group
services from advisory, M&A activities
funds. He is based in London and
and Group General Counsel for CLSA
and fund raising exercises incorporating
graduated from Newcastle University
Asia Pacific Markets for four years
various structures such as equity,
with a Bachelor of Science degree with
after spending 14 years as Asia Pacific
equity-linked and derivative-enhanced
Honours in Agricultural Economics.
General Counsel for Societe Generale.
issues. In June 2007, he was appointed
He is also a Chartered Accountant and
Ferheen is both a UK and Hong Kong
a Director of Metro Holdings Limited
a Chartered Alternative Investment
qualified lawyer having previously
which is listed on the Singapore
Analyst. He worked with Rothschild
worked at Slaughter and May in Hong
Exchange Securities Trading Limited.
Asset Management from 1986 until
Kong and London. She is a law graduate
1994, launching specialist investment
from the University of Hong Kong and
Gerald has been granted The Institute
products before becoming a corporate
Rhodes Scholar to St. John’s College
of Banking and Finance (IBF) –
adviser and broker in closed ended
Oxford, holding Bachelor of Civil Law
Distinguished Fellow status and is an
investment funds with a particular focus
Degree from Oxford.
alumnus of the National University
on those investing in emerging markets.
of Singapore, University of British
In this role, he worked between 1994
Ferheen is heavily involved in the
Columbia and Harvard Business School.
and 2001 at Baring Securities, Peregrine
financial community and is a former
Securities and then Credit Lyonnais Asia
member of the product advisory
Securities. He then joined the hedge
committee of the Securities and
fund industry in a series of sales roles
Futures Commission of Hong Kong
before founding Purbeck Advisers in
as well as the Asia Pacific legal and
2006, which is his own advisory and
regulatory Committee of ISDA.
sales business. He has been advising
LIM on investing in Asian closed end
funds for seven years and is a director
of their London-based investment
management subsidiary.
He has been a non-executive director of
Global Resources Investment Trust plc
(listed on the main market of the London
Stock Exchange), TAU Capital plc (listed
on the AIM market of the London Stock
Exchange) and The India IT Fund Limited
(previously listed on the Channel Islands
Stock Exchange).
15
Annual Report 2016
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2016
The Directors present their report together with the audited financial statements of the Group
for the year ended 31 December 2016.
PRINCIPAL ACTIVITIES
TAX REGIMES
The principal activities of the Group are development of upscale residential and
hospitality projects, sale of development land and operation of hotel, mall and hospital
in Malaysia and Vietnam.
MANAGEMENT AND CONTROL
BUSINESS REVIEW AND FUTURE DEVELOPMENTS
The statement of comprehensive income for the year is set out on pages 25 to 26. 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.
OPERATIONAL
OBJECTIVES AND STRATEGY
When the Company was launched in 2007 the Board considered it desirable that
Shareholders should have an opportunity to review the future of the Company at
appropriate intervals. Accordingly, and as required under the Company’s Articles, at
the 2015 AGM the Company proposed an ordinary resolution for it to cease trading (the
FINANCIAL
“Discontinuation Resolution”).
At an extraordinary general meeting of the Company held on 22 June 2015, Shareholders
voted in favour of the Board’s proposals to amend the Company’s investment policy to enable
a realisation of the Company’s assets in a controlled, orderly and timely manner, with the
objective of achieving a balance between periodically returning cash to Shareholders and
GOING CONCERN
maximising the realisation value of the Company’s investments. Shareholders also supported
the Board’s recommendation to vote against the Discontinuation Resolution proposed at
the 2015 AGM, in order to allow a policy of orderly realisation of the Company’s assets over
a period of up to three years in order to maximise the value of the Company’s assets and
returns to Shareholders, both up to and upon the eventual liquidation of the Company.
To the extent that the Company has not disposed of all of its assets by the time of the AGM in
2018, in accordance with the Articles, Shareholders will be provided with an opportunity to
Changes in the tax regimes could affect the tax
treatment of the Company and/or its subsidiaries
in these jurisdictions.
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.
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
review the future of the Company, where an ordinary resolution will be put to vote at the AGM
described on pages 21 to 22.
in 2018.
PRINCIPAL RISKS AND UNCERTAINTIES
RESULTS AND DIVIDENDS
The results for the year ended 31 December 2016 are set out in the attached financial
The Group’s business is property development in Malaysia and Vietnam. Its principal
statements.
No dividends were declared nor paid during the financial year under review.
PURCHASE OF OWN SHARES
On 4 January 2017, the Shareholders of the Company at an Extraordinary General Meeting
approved a proposal to return US$10,000,500 or US$0.75 per share for 13,334,000 shares
representing 6.29 per cent of the Company’s share capital to Shareholders through N+1
Singer. The capital distribution was completed on 10 January 2017 and the repurchased
shares of 13,334,000 are currently held as Treasury Shares. The issued and paid up share
capital of The Company remains unchanged at 212,025,002.
SHARE CAPITAL
No shares were issued in 2016. Further details on share capital are stated in Note 25 to the
financial statements.
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 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
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.
16
Annual Report 2016
DIRECTORS’ REPORT cont’d
FOR THE YEAR ENDED 31 DECEMBER 2016
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
• John Lynton Jones
• Gerald Ong Chong Keng
• Nicholas John Paris
• Ferheen Mahomed
DIRECTORS’ INTERESTS
The Company has no executive directors or employees. The subsidiaries of the Group have
a total of 612 employees at 31 December 2016. 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 59 managerial and technical staff under its employment in Malaysia and Vietnam at 31
December 2016.
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
The interests of the directors in the Company’s shares at 31 December 2016 and at the date of
concern basis in preparing the financial statements.
this report were as follows:
DIRECTOR
ORDINARY SHARES OF US$0.05 EACH
CREDITORS PAYMENT POLICY
As at 31 Dec 2016
As at 26 Apr 2017
CHRISTOPHER HENRY LOVELL
48,000
JOHN LYNTON JONES
20,000
DAVID HARRIS
165,000
48,000
20,000
152,527
GERALD ONG CHONG KENG
2,250,000
2,108,467
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 50
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 4 April 2017:
NUMBER OF
ORDINARY SHARES
HELD
PERCENTAGE OF
VOTING SHARE
CAPITAL
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 2016 amounted to 69 days (2015: 67 days) of property
development cost incurred during the year.
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 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;
IREKA CORPORATION BERHAD
45,837,504
23.07%
•
make judgements and estimates that are reasonable, comparable, understandable
LEGACY ESSENCE LIMITED
AND ITS’ RELATED PARTIES
LIM ADVISORS
ING ASIA (PB)
DR. THONG KOK CHEONG
KROHNE CAPITAL
36,628,282
36,654,192
29,302,626
11,959,608
6,650,708
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 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.
18.43%
18.45%
14.75%
6.02%
3.35%
17
Annual Report 2016
DIRECTORS’ REPORT cont’d
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
•
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 20 to 22.
ANNUAL GENERAL MEETING
The tabling of the 2016 Annual Report and Financial Statements to shareholders will be at an
Annual General Meeting (“AGM”) to be held in 3 July 2017.
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
26 April 2017
18
Annual Report 2016
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:
DIRECTORS
Mohammed Azlan Hashim (Chairman of the Board)
Christopher Henry Lovell (Chairman of the Audit Committee)
David Harris
Ismail Shahudin (Passed away in July 2016)
John Lynton Jones
Gerald Ong Chong Keng
Nicholas John Paris
Ferheen Mahomed
TOTAL
SHARE OPTIONS
YEAR ENDED
31 DECEMBER 2016
(US$)
YEAR ENDED
31 DECEMBER 2015
(US$)
70,000
55,000
48,000
28,000
48,000
48,000
–
–
70,000
55,000
48,000
48,000
48,000
48,000
–
–
297,000
317,000
The Company did not operate any share option schemes during the year ended 31 December 2016.
SHARE PRICE INFORMATION
• High for the year
• Low for the year
• Close for the year
– US$0.520
– US$0.395
– US$0.520
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
26 April 2017
19
Annual Report 2016
CORPORATE GOVERNANCE
STATEMENT
The Financial Conduct Authority requires all companies
Name of Directors
Attendance
RE-ELECTION OF DIRECTORS
with a Premium Listing to comply with The UK
Corporate Governance Code (the “Code”). Aseana
Mohammed Azlan Hashim
Properties is a Jersey incorporated company with a
Christopher Henry Lovell
Standard Listing on the UK Listing Authority’s Official
David Harris
List and is therefore not subject to the Code. The
John Lynton Jones
following explains how the principles of governance are
Gerald Ong Chong Keng
applied to the Company.
THE BOARD
Nicholas John Paris
Ferheen Mahomed
7/7
7/7
6/7
7/7
4/7
6/7
5/7
To enable the Board to discharge its duties effectively,
The Company currently has a Board of seven non-
all Directors receive accurate, timely and clear
executive directors, including the non-executive
information, in an appropriate form and quality,
Chairman, after the passing of Ismail Shahudin in July
including Board papers distributed in advance of
2016. The brief biographies of the following directors
Board meetings. The Board periodically will receive
appear on pages 14 to 15 of the Annual Report 2016:
presentations at Board meetings relating to the
• Mohammed Azlan Hashim (Non-Executive Chairman)
financial, accounting and risk management issues.
Company’s business and operations, significant
• Christopher Henry Lovell
• David Harris
• John Lynton Jones
• Gerald Ong Chong Keng
• Nicholas John Paris
• Ferheen Mahomed
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
The Board did not appoint a Chief Executive or a Senior
Independent Director as it did not consider it appropriate
Being an externally-managed company, the Board
given the nature of the Company’s business and that
consists solely of non-executive directors of which
the Company’s property portfolio is externally managed
Mohammed Azlan Hashim is the non-executive
by Ireka Development Management Sdn Bhd (the
Chairman. Notwithstanding that Nicholas John Paris,
“Development Manager”).
ROLE OF THE BOARD OF DIRECTORS
the representative of LIM Advisors, and Ferheen
Mahomed, the representative of Legacy Essence
Limited, being appointed as the non-independent
non-executive directors of the Company, the Board
The Board’s role is to provide entrepreneurial
considers the Directors to be independent, being
leadership to the Company, within a framework of
independent of management and also having no
prudent and effective controls, enabling risks to be
business relationships which could interfere materially
assessed and managed. The Board sets the Company’s
with the exercise of their judgement.
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 29 June 2016, Christopher Henry Lovell
and Gerald Ong Chong Keng, who retired by rotation
as Directors, and Nicholas John Paris and Ferheen
Mahomed, who submitted themselves for election at
the first opportunity after their appointment, were
respectively re-elected and elected to the Board. The
remainder of the Board recommended their election
and re-election following an evaluation which concluded
that their performance continued to be effective and
they demonstrated commitment to their roles.
BOARD COMMITTEES
The Board has established Audit, Nomination,
Remuneration and Management Engagement
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.
strategic objectives, monitors and reviews the
AUDIT COMMITTEE
Company’s operational and financial performance,
The Chairman is responsible for leadership of the
ensures the Company has sufficient funding, and
Board, ensuring effectiveness in all aspects of its
examines and approves disposal of the Company’s
role and setting its agenda. Matters referred to the
assets in a controlled, orderly and timely manner. The
Board are considered by the Board as a whole and
Board also sets the Company’s values and standards
no individual has unrestricted powers of decision.
and ensures that its obligations to its shareholders
Together, the Directors bring a wide range of
and other stakeholders are met. The implementation
experience and expertise in business, law, finance and
of the Company’s strategy is delegated to the
accountancy, which are required to successfully direct
Development Manager and its performance is
and supervise the business activities of the Company.
regularly assessed by the Board.
Appropriate level of directors’ and officers’ liability
PERFORMANCE APPRAISAL
insurance is maintained by the Company.
The Board undertakes an annual evaluation of its own
MEETINGS OF THE BOARD OF
DIRECTORS
performance and that of its Committees and individual
Directors. In November 2016, the evaluation concluded
that the performance of the Board, its Committees
and each individual Director was and remains effective
The Board meets at least four times a year and at such
and that all Directors demonstrate full commitment in
other times as the Chairman shall require. The Board
their respective roles. The Directors are encouraged to
met seven times during the year ended 31 December
continually attend training courses at the Company’s
2016 and their respective attendance are as follows:
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.
20
The Audit Committee consists of three members
and is chaired by Christopher Henry Lovell. Its other
members are Mohammed Azlan Hashim and Gerald
Ong. Gerald Ong was appointed on 25 August 2016
to fill the casual vacancy left by Ismail Shahudin who
passed away during the year. 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 four times during
the year and 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.
Annual Report 2016
CORPORATE GOVERNANCE
STATEMENT cont’d
The Committee is responsible for:
require. The Committee met once during the year and
was attended by all committee members and other
the meeting was attended by all committee members
Board members at the invitation of the Management
• monitoring, in discussion with the auditor,
and other Board members at the invitation of the
Engagement Committee.
the integrity of the financial statements of the
Nomination Committee.
Company, any formal announcements relating to
During the year ended 31 December 2016, the
the Company’s financial performance and reviewing
During the year ended 31 December 2016, the Nomination
Management Engagement Committee carried out its
significant financial reporting judgements contained
Committee carried out its functions as set out in its terms
duties as set out in its terms of reference which are
in them;
of reference which are summarised below:
summarised below:
• reviewing the Company’s internal financial controls
• regularly reviewing the structure, size and composition
• monitoring compliance by the Development Manager
and risk management systems operated by the
(including skills, knowledge and experience) of the
with the terms of the Management Agreement;
Development Manager;
Board and making recommendations to the Board with
• making recommendations to the Board in relation to
regard to any change;
• reviewing the terms of the Management Agreement
from time to time to ensure that the terms thereof
the appointment, re-appointment and removal of the
• considering the re-appointment or re-election of any
conform with market and industry practice and
external auditor and approving the remuneration and
Directors at the conclusion of their specified term of
remain in the best interest of shareholders;
terms of engagement of the external auditor to be put to
office or retiring in accordance with the Company’s
the shareholders for their approval in general meetings;
Articles of Association;
• from time to time monitoring compliance by
providers of other services to the Company with the
• reviewing and monitoring the external auditor’s
• identifying and nominating for the approval of the
terms of their respective agreements; and
independence and objectivity and effectiveness of the
Board, candidates to fill Board vacancies as and
audit process, taking into consideration relevant UK
when they arise (Gerald Ong was recommended
• reviewing and considering the appointment and
professional and regulatory requirements;
by the committee to fill the casual vacancy in
remuneration of providers of services to the
• developing and implementing policy on engagement
of Ismail Shahudin); and
Remuneration Committee arising from the passing
Company.
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.
• 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
Since the start of the financial year ended 31 December
Gerald Ong Chong Keng. Gerald Ong was appointed on
2016, the Audit Committee performed its duties as
25 August 2016 to fill the casual vacancy left by Ismail
set out in the terms of reference. The main activities
Shahudin who passed away during the year.
carried out by the Audit Committee encompassed the
following:
The Committee meets at least once a year and at any such
times as the Chairman of the Remuneration Committee
• reviewing the audit plan with the Group’s Auditor;
shall require. The Committee met once during the year
and the meeting was attended by all committee members
• reviewing and discussing the Audit Committee
and other Board members at the invitation of the
Report with the Group’s Auditor;
Remuneration Committee.
• reviewing the draft Audited Financial Statements as
During the year ended 31 December 2016, the
contained in the draft Annual Report together with
Remuneration Committee carried out its duties as set out
the Group’s Auditor before tabling to the Board for
in its terms of reference which are summarised below:
consideration and approval;
• determining and agreeing with the Board the
FINANCIAL REPORTING
The Board aims to present a fair, balanced and
understandable assessment of the Company’s position
and prospects in all reports to shareholders, investors
and regulatory authorities. This assessment is primarily
provided in the half-yearly report and the Annual Report
through the Chairman’s Statement, 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
• reviewing other published financial information
framework for the remuneration of the Directors;
that a sound system of risk management and internal
including the half year results and results
control is maintained. An internal audit function specific
announcements before tabling to the Board for
• setting the remuneration for all Directors; and
to the Company is therefore considered not necessary.
consideration and approval;
However, the Directors will continue to monitor if such
• considering the independence of the auditor; and
of remuneration as set out in the Directors’
Remuneration Report Regulations 2002, are fulfilled.
AUDITOR
• ensuring that provisions regarding disclosure
need is required.
• reviewing the auditor’s performance and made
a recommendation for the reappointment of the
Group’s auditor by shareholders.
MANAGEMENT ENGAGEMENT
COMMITTEE
NOMINATION COMMITTEE
The Management Engagement Committee is chaired by
Mohammed Azlan Hashim. Other committee members
The Nomination Committee is chaired by Mohammed
are David Harris, John Lynton Jones and Gerald Ong
Azlan Hashim. Other committee members are David
Chong Keng. The Committee meets at least once a
Harris, John Lynton Jones and Gerald Ong Chong Keng.
year and at any such times as the Chairman of the
The Committee meets annually and at any such times
Management Engagement Committee shall require. The
as the Chairman of the Nomination Committee shall
Committee met once during the year and the meeting
The Audit Committee’s responsibilities include monitoring
and reviewing the performance and independence of the
Company’s Auditor, KPMG LLP.
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 this assessment and considers themselves
to be independent, objective and in compliance with the
APB (Auditing Practices Board) Ethical Standards.
21
Annual Report 2016
CORPORATE GOVERNANCE
STATEMENT cont’d
RISK MANAGEMENT AND INTERNAL
CONTROL
RELATIONSHIP WITH SHAREHOLDERS
The Board is committed to maintaining good
The Board is responsible for the effectiveness of the
communications with shareholders and has
Company’s risk management and internal control
designated the Development Manager’s Chief
systems and is supplied with information to enable it to
Executive Officer, Chief Financial Officer and
discharge its duties. Such systems are designed to meet
designated members of its senior management as the
the particular needs of the Company and to manage
principal spokepersons with investors, analysts, fund
rather than eliminate the risk of failure to meet business
managers, the press and other interested parties. The
objectives and can only provide reasonable, and not
Board is informed of material information provided
absolute, assurance against material misstatement
to shareholders and is advised on their feedback.
or loss. The process is based principally on the
The Board has also developed an understanding of
Development Manager’s existing risk-based approach to
the views of major shareholders about the Company
risk management and internal control.
through meetings and teleconferences conducted by
the financial adviser and the Development Manager.
During the year, the Board discharged its responsibility
In addition, the Company seeks to regularly update
for risk management and internal control through the
shareholders through stock exchange announcements,
following key procedures:
press releases and participation in roadshows.
• clearly defined delegation of responsibilities to the
To promote effective communication, the Company
committees of the Board and to the Development
has a website, www.aseanaproperties.com through
Manager, including authorisation levels for all
which shareholders and investors can access relevant
aspects of the business;
information.
• regular and comprehensive information provided to
ANNUAL GENERAL MEETING (“AGM”)
the Board covering financial performance and key
business indicators;
The AGM is the principal forum for dialogue with
shareholders. At and after the AGM, investors are
• a detailed system of budgeting, planning and
given the opportunity to question the Board and seek
reporting which is approved by the Board and
clarification on the business and affairs of the Group.
monitoring of results against budget with variances
All Directors attended the 2016 AGM, held on 29 June
being followed up and action taken, where necessary;
2016 at the Company’s registered office.
and
• regular visits to operating units and projects by the
out to shareholders in good time to allow for full
Notices of the AGM and related papers are sent
Board.
consideration prior to the AGM. Each item of special
business included is accompanied by an explanation of
The Board has established frameworks, policies
the purpose and effect of a proposed resolution. The
and procedures to comply with the requirements
Chairman declares the number of votes received for,
of the Bribery Act 2010 (the "Bribery Act") and
against and withheld in respect of each resolution after
Market Abuse Regulation ("MAR"). In respect of
the shareholders and proxies present have voted on
the former, the Development Manager had set up a
each resolution. An announcement confirming whether
legal and compliance function for the purposes of
all the resolutions have been passed at the AGM is
implementing the anti-corruption and anti-bribery
made through the London Stock Exchange.
policy. Training and briefing sessions were conducted
for the Development Manager’s senior management
On behalf of the Board
and employees. Compliance reviews will be carried
out as and when required to ensure the effectiveness
of the policy. In respect of dealing by employees
and directors of the Company, the Company has a
Dealing Code which imposes restrictions on dealings
in its securities by Persons Discharging Managerial
Responsibilities (“PDMR”) and certain employees
who have been told the clearance procedures apply
to them. The Company also has a Group-Wide
Dealing Policy and a Dealing Procedures Manual.
These policies have been designed to ensure that the
PDMR and other employees of the Company and its
subsidiaries do not misuse or place themselves under
MOHAMMED AZLAN HASHIM
Director
CHRISTOPHER HENRY LOVELL
Director
suspicion of misusing information about the Group
26 April 2017
which they have and which is not public.
22
Annual Report 2016
INDEPENDENT
AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
ASEANA PROPERTIES LIMITED
Matters on which we are required to report by exception
We have audited the group and parent company financial statements of Aseana
Propertes Limited for the year ended 31 December 2016 which comprise Consolidated
and Company Statements of Comprehensive Income, the Consolidated and Company
Statement of Financial Position, the Consolidated and Company Statements of Changes
in Equity, the Consolidated and Company Statements of Cash Flows and the related
notes set out on pages 25 to 62. The financial reporting framework that has been
applied in their preparation is applicable law and International Financial Reporting
Standards as issued by the IASB.
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:
• adequate accounting records have not been kept by the company; or
• the parent 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.
RICHARD KELLY
for and on behalf of KPMG LLP
Chartered Accountants and Recognised Auditor
15 Canada Square
London E14 5GL
26 April 2017
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 Audit LLP accepts no responsibility for any changes
that may have occurred to the financial statements or our audit report since 26 April
2017. KPMG LLP has carried out no procedures of any nature subsequent to 26 April
2017 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.
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 AUDITORS
As explained more fully in the Statement of Directors’ Responsibilities set out on page
17, the directors are responsible for the preparation of the financial statements and
for being satisfied that they 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 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 of the state of the group’s and parent company’s affairs as
at 31 December 2016 and of the group’s and the parent company’s profit for the year
then ended;
• have been properly prepared in accordance with International Financial Reporting
Standards; and
• the parent company financial statements have been properly prepared in accordance
with International Financial Reporting Standards as applied in accordance with the
provisions of the Companies (Jersey) Law 1991; and
• have been prepared in accordance with the requirements of the Companies (Jersey)
Law 1991.
23
Annual Report 2016
FINANCIAL STATEMENTS
INVESTMENT GATEWAY TO
MALAYSIA AND VIETNAM
25
Consolidated Statement of
Comprehensive Income
Statements of
Changes In Equity
29
26
27
28
Company Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
Company Statement of
Financial Position
Consolidated Statement of
Cash Flows
Company Statement of
Cash Flows
Notes to the
Financial Statements
30
31
32
24
Annual Report 2016
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
Notes
2016
US$’000
5
6
7
8
9
11
12
13
18
14
15
17
2015
US$’000
*
Restated
30,323
(29,164)
1,159
28,886
(1,787)
(2,915)
(3,115)
(288)
112,535
(77,547)
34,988
21,963
(1,466)
(5,051)
(3,331)
(99)
(21,625)
(31,916)
25,379
401
(9,616)
(9,215)
16,164
(686)
(9,976)
355
(11,031)
(10,676)
(20,652)
(1,278)
15,478
(21,930)
(2,534)
(2,441)
(15,920)
2,190
(4,975)
(13,730)
10,503
(35,660)
18,856
(3,378)
(15,784)
(6,146)
15,478
(21,930)
13,674
(3,171)
(29,748)
(5,912)
10,503
(35,660)
15
8.89
(7.44)
CONTINUING ACTIVITIES
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Foreign exchange loss
Management fees
Marketing expenses
Other operating expenses
Operating profit/ (loss)
Finance income
Finance costs
Net finance costs
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
Fair value adjustment in relation to available-for-sale investments
Total other comprehensive expense for the year
Total comprehensive profit/ (loss) for the year
Profit/ (loss) attributable to:
Equity holders of the parent
Non-controlling interests
Total
Total comprehensive profit/(loss) attributable to:
Equity holders of the parent
Non-controlling interests
Total
Earnings/ (loss) per share
Basic and diluted (US cents)
* see Note 40
The notes to the financial statements form an integral part of the financial statements.
25
Annual Report 2016
COMPANY STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
CONTINUING ACTIVITIES
Revenue
Cost of sales
Gross profit
Administrative expenses
Foreign exchange (loss)/ gain
Gain on disposal of subsidiary
Management fees
Impairment of investment in subsidiaries
Impairment of amount due from subsidiaries
Other operating expenses
Operating profit/ (loss)
Finance income
Net profit/ (loss) before taxation
Taxation
Profit/ (loss) for the year/ Total comprehensive profit/ (loss) for the year
Profit/ (loss) per share
Basic and diluted (US cents)
Notes
2016
US$’000
2015
US$’000
– –
– –
– –
(403)
(3,542)
34,895 –
(1,259)
–
(14,376)
(855)
(519)
4,118
(1,257)
(6,284)
(8,223)
(878)
14,460
(13,043)
56
17
14,516
(13,026)
– –
14,516
(13,026)
8
17
9
17
23
11
12
15
6.85
(6.14)
The notes to the financial statements form an integral part of the financial statements.
26
Non-current assets
Property, plant and equipment
Available-for-sale investments
Intangible assets
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Prepayments
Current tax assets
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Equity
Share capital
Share premium
Capital redemption reserve
Translation reserve
Fair value reserve
Accumulated losses
Shareholders’ equity
Non-controlling interests
Total equity
Non-current liabilities
Loans and borrowings
Medium term notes
Total non-current liabilities
Current liabilities
Trade and other payables
Amount due to non-controlling interests
Loans and borrowings
Medium term notes
Current tax liabilities
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
Annual Report 2016
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AT 31 DECEMBER 2016
Notes
2016
US$’000
2015
US$’000
16
18
19
20
21
22
24
25
26
27
28
29
30
17
33
34
31
32
33
34
743
–
7,081
1,623
861
9,917
7,233
1,337
9,447
19,348
244,959
11,571
1,093
660
26,650
307,328
17,741
218
1,360
22,978
284,933
349,625
294,380
368,973
10,601
218,926
1,899
(29,142)
–
(58,922)
143,362
(1,148)
10,601
218,926
1,899
(26,401)
2,441
(77,301)
130,165
1,433
142,214
131,598
46,405
–
55,823
10,330
46,405
66,153
53,880
12,573
10,807
26,343
2,158
37,336
10,014
13,500
108,190
2,182
105,761
171,222
152,166
237,375
294,380
368,973
The financial statements were approved on 26 April 2017 and authorised for issue by the Board and were signed on its behalf by
MOHAMMED AZLAN HASHIM
CHRISTOPHER HENRY LOVELL
Director
Director
The notes to the financial statements form an integral part of the financial statements.
27
Notes
2016
US$’000
2015
US$’000
17
68,233
68,233
68,233
68,233
22
23
24
25
26
27
30
31
23
32 –
276 –
171,269
10,753
157,566
9,094
182,330
166,660
250,563
234,893
10,601
218,926
1,899
(58,231)
10,601
218,926
1,899
(72,747)
173,195
158,679
263
77,105
185
76,029
77,368
76,214
77,368
76,214
250,563
234,893
Annual Report 2016
COMPANY STATEMENT OF
FINANCIAL POSITION
AT 31 DECEMBER 2016
Non-current asset
Investment in subsidiaries
Total non-current asset
Current assets
Trade and other receivables
Prepayment
Amounts due from subsidiaries
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Equity
Share capital
Share premium
Capital redemption reserve
Accumulated losses
Total equity
Current liabilities
Trade and other payables
Amounts due to subsidiaries
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
The financial statements were approved on 26 April 2017 and authorised for issue by the Board and were signed on its behalf by
MOHAMMED AZLAN HASHIM
CHRISTOPHER HENRY LOVELL
Director
Director
The notes to the financial statements form an integral part of the financial statements.
28
Annual Report 2016
CONSOLIDATED STATEMENTS
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016
Consolidated
Redeemable
Ordinary Management
Shares
US$’000
Shares
US$’000
Share
Premium
US$’000
Capital
Redemption
Reserve
US$’000
Translation
Reserve
US$’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$’000
1 January 2015
10,601
–
218,926
1,899
(10,247)
251
(60,932)
160,498
10,187
170,685
Issuance of management shares
(Note 25)
Changes in ownership interests in
subsidiaries (Note 36)
Non-controlling interests contribution
Loss for the year
Total other comprehensive expense
Total comprehensive loss
–
–
–
–
–
–
–*
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(16,154)
(16,154)
2,190
2,190
–
–
–
–
*
(585)
–
(15,784)
–
(15,784)
(585)
–
(15,784)
(13,964)
(29,748)
(5,340)
2,498
(6,146)
234
(5,912)
(5,925)
2,498
(21,930)
(13,730)
(35,660)
At 31 December 2015/ 1 January 2016
10,601
–*
218,926
1,899
(26,401)
2,441
(77,301)
130,165
1,433
131,598
Changes in ownership interests in
subsidiaries (Note 36)
Non-controlling interests contribution
Profit for the year
Total other comprehensive expense
Total comprehensive profit
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,741)
(2,741)
(2,441)
(2,441)
(477)
–
(477)
–
477
113
–
113
18,856
18,856
(3,378)
15,478
–
(5,182)
207
(4,975)
18,856
13,674
(3,171)
10,503
Shareholders’ equity at
31 December 2016
10,601
–*
218,926
1,899
(29,142)
–
(58,922)
143,362
(1,148)
142,214
Company
1 January 2015
Issuance of management shares (Note 25)
Loss for the year/ Total comprehensive loss
At 31 December 2015/ 1 January 2016
Profit for the year/ Total comprehensive profit
Redeemable
Capital
Ordinary Management
Shares
Shares
US$’000
US$’000
Share
Premium
US$’000
Redemption Accumulated
Losses
Reserve
Total
Equity
US$’000
US$’000
US$’000
10,601
–
–
10,601
–
–
–*
–
–*
–
218,926
1,899
(59,721)
171,705
–
–
–
–
–
–
*
(13,026)
(13,026)
218,926
1,899
(72,747)
158,679
–
–
14,516
14,516
Shareholders’ equity at 31 December 2016
10,601
–*
218,926
1,899
(58,231)
173,195
*represents 2 management shares at US$0.05 each
The notes to the financial statements form an integral part of the financial statements.
29
Annual Report 2016
CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
Cash Flows from Operating Activities
Net profit/ (loss) before taxation
Finance income
Finance costs
Unrealised foreign exchange loss
Write down/ Impairment of intangible assets
Depreciation of property, plant and equipment
Gain on disposal of available-for-sale investments
Gain on disposal of property, plant and equipment
Fair value loss on amount due to non-controlling interests
Operating profit/ (loss) before changes in working capital
Changes in working capital:
Decrease in inventories
Decrease/ (increase) in trade and other receivables and prepayments
Increase in trade and other payables
Cash generated from operations
Interest paid
Tax paid
Notes
2016
US$’000
2015
US$’000
*
Restated
16,164
(401)
9,616
4,939
152
98
(2,285)
(5) –
–
28,278
55,303
6,103
15,426
105,110
(9,616)
(318)
(20,652)
(355)
11,031
2,544
1,565
105
(806)
320
(6,248)
7,424
(4,105)
7,249
4,320
(11,031)
(4,321)
17
Net cash from/ (used in) operating activities
95,176
(11,032)
Cash Flows from Investing Activities
Proceeds from disposal of available-for-sale investments
Proceeds from disposal of property, plant and equipment
Disposal of held-for-trading financial instrument
Finance income received
Net cash from investing activities
Cash Flows from Financing Activities
Advances from non-controlling interests
Issuance of ordinary shares of subsidiaries to non-controlling interests
Issuance of management shares
Repayment of loans and borrowings
Drawdown of loans and borrowings
Increase in pledged deposits placed in licensed banks
Net cash (used in)/ 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
(i) Cash and Cash Equivalents
Cash and cash equivalents included in the consolidated statement of cash flows comprise the following consolidated statement of
financial position amounts:
Cash and bank balances
Short term bank deposits
Less: Deposits pledged
Cash and cash equivalents
(iii)
8,955
5 –
–
401
9,361
2,819
113
– –
(104,880)
1,571
(698)
5,359
3,291
355
9,005
1,067
1,058
#
(15,854)
16,046
(1,537)
(101,075)
780
3,462
(155)
13,332
(1,247)
(1,632)
16,211
16,639
13,332
14,858
11,792
26,650
(10,011)
9,143
13,835
22,978
(9,646)
16,639
13,332
(ii)
(i)
(i)
24
24
24
(ii)
During the financial year, US$113,000 (2015: US$2,498,000) of ordinary shares of subsidiaries were issued to non-controlling shareholders which was satisfied via cash
consideration (2015: US$1,058,000 was satisfied via cash consideration). In 2015, the remaining amount of US$1,440,000 was satisfied via capitalisation of amount due to non-
controlling interests.
(iii)
During the financial year, the Group disposed the entire balance representing 9,784,653 (2015: 5,800,000) shares in Nam Long for a consideration of US$9,848,000 (2015:
US$5,359,000) of which US$8,955,000 was received during the year. The balance consideration recoverable of US$ 893,000 was received on 23 February 2017.
* see Note 40
# represents 2 management shares at US$0.05 each
The notes to the financial statements form an integral part of the financial statements.
30
Cash Flows from Operating Activities
Net profit/ (loss) before taxation
Impairment of investment in subsidiaries
Impairment of amount due from subsidiaries
Finance income
Unrealised foreign exchange loss/ (gain)
Gain on disposal of a subsidiary
Operating loss before changes in working capital
Changes in working capital:
(Increase)/ decrease in receivables
Increase in payables
Net cash used in operating activities
Cash Flows from Investing Activities
Finance income received
Net cash used in investing activities
Cash Flows from Financing Activities
Net advances from subsidiaries
Issuance of management shares
Net cash from financing activities
Net changes in cash and cash equivalents during the year
Effect of changes in exchange rates
Cash and cash equivalents at the beginning of the year
Annual Report 2016
COMPANY STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
Notes
2016
US$’000
2015
US$’000
14,516
(13,026)
–
14,376
(56)
3,442
(34,895) –
6,284
8,223
(17)
(4,345)
(2,617)
(2,881)
(308)
79
18
39
(2,846)
(2,824)
56
56
4,413
– –
4,413
1,623
36
9,094
17
17
5,413
*
5,413
2,606
34
6,454
9,094
Cash and cash equivalents at the end of the year
24
10,753
* represents 2 management shares at US$0.05 each
The notes to the financial statements form an integral part of the financial statements.
31
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS
1 GENERAL INFORMATION
The principal activities of the Group are development of upscale residential and
hospitality projects, sale of development land and operation of hotel, mall and
hospital in Malaysia and Vietnam.
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 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,
adequacy of bank loans and medium term notes and also the refinancing of
the medium term notes (as described in Notes 33 and 34) and the Directors
believe that the business will be able to realise its assets and discharge its
liabilities in the normal course of business for at least 12 months from the
date of the approval of these financial statements.
The Directors expect to raise sufficient funds to finance the completion of the
Group’s existing project and the necessary working capital via the disposal
of its development lands in Vietnam and East Malaysia, its existing units of
condominium inventories in West Malaysia, and through the disposals of the
CIH, the FPSS and the HMS.
Should the planned disposals of the assets not materialise, or are delayed, the
Directors expect to “roll-over” the medium term notes which are due to expire
in the next 12 months, given that the notes are “AAA” rated (a highly sought
after investment in Malaysia) and secured by two completed inventories of
the Group with carrying amount of US$74.12 million as at 31 December 2016.
Included in the terms of the medium term notes programme is an option for
the Group to refinance the notes, as and when they expire. This option to
refinance is available until 2021.
The Group also has significant borrowings in Vietnam secured by the CIH and
development lands. The Directors expect to repay the short term portion of the
borrowings via sale of land in Vietnam. The remaining scheduled installments
are due only in 2019 and 2020.
The forecasts also incorporate current payables, committed expenditure
and other future expected expenditure, along with sales of all completed
inventories and disposal of all development lands.
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, at the 2015 AGM the Company proposed an ordinary
resolution for it to cease trading (the “Discontinuation Resolution”).
At an extraordinary general meeting of the Company held on 22 June
2015, Shareholders voted in favour of the Board’s proposals to amend the
Company’s investment policy to enable a realisation of the Company’s assets
in a controlled, orderly and timely manner, with the objective of achieving a
balance between periodically returning cash to Shareholders and maximising
the realisation value of the Company’s investments. Shareholders also
32
supported the Board’s recommendation to vote against the Discontinuation
Resolution proposed at the 2015 AGM, in order to allow a policy of orderly
realisation of the Company’s assets over a period of up to three years in order
to maximise the value of the Company’s assets and returns to Shareholders,
both up to and upon the eventual liquidation of the Company.
To the extent that the Company has not disposed of all of its assets by the
time of the AGM in 2018, in accordance with the Articles, Shareholders will be
provided with an opportunity to review the future of the Company, which would
include the option for Shareholders to vote for the continuation of the Company.
The directors have considered the appropriateness of preparing the
accounts on a going concern basis in light of the decision to realise the
Group’s investments in an orderly manner. There is no certainty over the
timeframe over which the investments will be realised. The directors note
that other viable alternative strategies to a wind- down remain available
and they will continue to evaluate whether to propose continuation of the
current divestment investment policy or a change to an alternative strategy.
Accordingly, the financial statements have been prepared on the going
concern basis.
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
IFRS 9
Financial
Instruments
Finalised version, incorporating
requirements for classification
and measurement, impairment,
general hedge accounting and
derecognition
Issued/
Revised
July 2014
Effective Date
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
December
2015
Deferred
indefinitely
IFRS 15
Revenue
from
Contracts
with
Customers
IFRS 16
Leases
IASB defers effective date to
annual periods beginning on or
after 1 January 2018
April 2016
Original Issue
January
2016
IAS 7
Statement of
Cash Flows
Amendments resulting from the
disclosure initiative
January
2016
IAS 12
Income Taxes
Amendments regarding the
recognition of deferred tax assets
for unrealised losses
January
2016
Effective for
annual periods
beginning on or
after 1 January
2018
Effective for
annual periods
beginning on or
after 1 January
2019
Effective for
annual periods
beginning on or
after 1 January
2017
Effective for
annual periods
beginning on or
after 1 January
2017
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.
c)
IFRS 16, Leases
IFRS 16 replaces, the guidance in IAS 17, Leases, IC Interpretation 4,
Determining whether an arrangement contains a Lease, IC interpretation
ILS, Operating Leases-Incentive and IC interpretation 127, Evaluating
the Substance of Transactions Involving The Legal Form of a Lease. The
Directors are currently determining the impact of IFRS 16.
2 BASIS OF PREPARATION CONT’D
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.
2.3 Use of estimates and judgements
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 in relation
to factors such as sales prices, comparable market transactions,
occupancy levels, projected growth rates, and discount rates.
b)
Impairment of licence contracts and related relationships
Licence contracts and related relationships represent the rights to
develop the IHP venture with the lease period ending on 9 July 2077.
The Group assesses the recoverable amount of licence contracts and
related relationships by reference to the realisability of the properties
of which the licence contracts and related relationship is attached
(refer Note 2.3(a)). The assessment requires the use of judgement and
estimates in relation to factors such as sales prices and comparable
market transactions.
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
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.
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
interests are accounted
for as
Acquisitions of non-controlling
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.
The Group derecognises licence contracts and related relationships
when a component of the venture is disposed of.
c)
Subsidiaries
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’s principal activity is of a property developer and 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 rather than hold them for rentals or capital appreciation. The
Group operates these inventories temporarily to stabilise its operation
while seeking 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.
33
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.
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
3 SIGNIFICANT ACCOUNTING POLICIES CONT’D
3.1 Basis of Consolidation cont’d
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) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements. Unrealised gains
arising from transactions with equity-accounted investees are eliminated
against the investment to the extent of the Group’s interest in the investee.
Unrealised losses are eliminated in the same way as unrealised gains,
but to the extent that there is no evidence of impairment.
3.2 Foreign Currencies
a) Foreign currency transactions
The Group financial statements are presented in United States Dollar
(“US$”), which is the Company’s functional and the Group’s presentation
currency. Each entity in the Group determines its own functional
currency and items included in the financial statements of each entity
are measured using that functional currency. Transactions in foreign
currencies are translated to the respective functional currencies of
the Group entities at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at
the reporting date are retranslated to the functional currency at the
exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies
that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date that the fair value was
determined. Non-monetary items in a foreign currency that are
measured in terms of historical cost are translated using the exchange
rate at the date of the transaction. Foreign currency differences arising
on retranslation are recognised in profit or loss, except for differences
arising on the retranslation of available-for-sale equity investments,
which are recognised in other comprehensive income.
b) Foreign operations
The assets and liabilities of foreign operations, including goodwill and
fair value adjustments arising on acquisition, are translated to US$
at exchange rates at the reporting date. The income and expenses of
foreign operations, are translated to US$ at exchange rates at the dates
of the transactions.
Foreign currency differences are recognised in other comprehensive
income, and presented in the foreign currency translation reserve
(“translation reserve”) in equity. However, if the foreign operation is a
non-wholly owned subsidiary, then the relevant proportionate share of
the translation difference is allocated to the non-controlling interest.
When a foreign operation is disposed of such that control, significant
influence or joint control is lost, the cumulative amount in the translation
reserve related to that foreign operation is reclassified to profit or loss
as part of the gain or loss on disposal. When the Group disposes of only
part of its interest in a subsidiary that includes a foreign operation while
retaining control, the relevant proportion of the cumulative amount is
reattributed to non-controlling interest. When the Group disposes of only
part of its investment in an associate that includes a foreign operation
while retaining significant influence or joint control, the relevant
proportion of the cumulative amount is reclassified to profit or loss.
34
When the settlement of a monetary item receivable from or payable to a
foreign operation is neither planned nor likely in the foreseeable future,
foreign exchange gains and losses arising from such a monetary item
are considered to form part of a net investment in a foreign operation
and are recognised in other comprehensive income, and presented in the
translation reserve in equity.
3.3 Revenue Recognition and Other Income
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
The following specific recognition criteria must also be met before revenue is
recognised:
a)
Sale of 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.
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 hospital operations which include healthcare support
services and medicine and medical services is recognised in the profit or
loss net of service tax and discounts as and when services are rendered.
Revenue from hospital operations is recognised as other income.
Revenue from the hotel operations, which include provision of rooms,
food and beverage, other departments sales and laundry service fees are
recognised when services are rendered. Revenue from hotel operations
is recognised 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. Where a rent-free period is included in a lease, the
rental income foregone is allocated evenly over the period from the date
the lease commencement to the earliest termination date. Revenue
from mall operations is recognised 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:
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
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.
Financial assets and liabilities are offset and the net amount presented
in the statement of financial position when, and only when, the Group
has a legal right to offset the amounts and intends either to settle on a
net basis or to realise the asset and settle the liability simultaneously.
The Group classifies non-derivative financial assets into the following
categories: loans and receivables, and available-for-sale investments.
i)
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.
ii)
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
in other comprehensive
impairment losses, are recognised
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.
3 SIGNIFICANT ACCOUNTING POLICIES CONT’D
3.4 Property, Plant and Equipment cont’d
Furniture, fittings and equipment
Motor vehicles
Leasehold building
4 - 10 years
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
35
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
3 SIGNIFICANT ACCOUNTING POLICIES CONT’D
3.7 Financial Instruments cont’d
b)
Non-derivative financial liabilities cont’d
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.
c)
Derecognition
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. Licence contratcs and related
relationship represent the rights to develop the International Healthcare
Park venture with the lease period ended on 9 July 2077. 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
36
commenced along with related costs on activities that are necessary to prepare
the land for its intended use. Land held for property development is transferred
to work-in-progress when development activities have commenced.
Work-in-progress comprises all costs directly attributable to property
development activities or that can be allocated on a reasonable basis to these
activities.
Upon completion of development, unsold completed development properties
are transferred to stock of completed units.
3.11 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 carrying amounts of non-financial assets (except for inventories and
deferred tax asset) are reviewed at the end of each reporting date to
determine whether there is any indication of impairment.
3 SIGNIFICANT ACCOUNTING POLICIES CONT’D
3.11 Impairment cont’d
d)
Non-financial assets cont’d
If any such indication exists, then the asset’s recoverable amount is
estimated. For the purpose of impairment testing, assets are grouped
together into the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the cash inflows
of other assets or groups of assets (the “cash-generating unit”).
The goodwill acquired in a business combination, for the purpose of
impairment testing, is allocated to cash-generating units that are
expected to benefit from the synergies of the combination. Goodwill is
tested for impairment on an annual basis.
The recoverable amount of an asset or cash-generating unit is the greater
of its value in use and its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
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.
3.12 Employee Benefits
a)
Short-term employee benefits
Short-term employee benefit obligations
in respect of salaries,
annual bonuses, paid annual leave and sick leave are measured on an
undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-
term cash bonus or profit-sharing plans if the Group has a present legal
or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.
An impairment loss is recognised if the carrying amount of an asset or
its cash-generating unit exceeds its recoverable amount.
b) State plans
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
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.
Instruments classified as equity are measured at cost on initial
recognition and are not remeasured subsequently.
3.14 Separately Disclosable Items
i)
Ordinary shares
Ordinary shares are redeemable only at the Company’s options and
are classified as equity. Distributions thereon are recognised as
distributions within equity.
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.
ii)
Management shares
3.15 Earnings per Ordinary Share
Management shares are classified as equity and are non-redeemable.
The Group presents basic and diluted earnings per share data for its ordinary
shares (“EPS”).
iii)
Issue expenses
Costs directly attributable to the issue of instruments classified as
equity are recognised as a deduction from equity.
iv)
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.
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.
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.
37
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
3 SIGNIFICANT ACCOUNTING POLICIES CONT’D
4.2 Credit Risk
3.17 Commitments and Contingencies
Commitments and contingent liabilities are disclosed in the financial
statements and described in Note 38. 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.
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 2016, 93.45% (2015: 99.00%) 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 6.55% (2015: 1.00%) 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 2016, 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 22 and totals US$11.6 million (2015: US$17.7 million). The Group’s
exposure to credit risk arising from deposits and balances with banks is set out
in Note 24 and totals US$26.7 million (2015: US$23.0 million).
3.19 Fair Value Measurements
Financial guarantees
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 assets, 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:
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.
Level 3: 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.
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
2016
US$’000
2015
US$’000
Financial institutions for bank facilities
granted to its subsidiaries
64,161
161,286
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 2016, 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.
38
Annual Report 2016
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 2016
Finance lease liabilities
Interest bearing loans and borrowings
Trade and other payables
Amount due to non-controlling interests
At 31 December 2015
Finance lease liabilities
Interest bearing loans and borrowings
Trade and other payables
Amount due to non-controlling interests
Company
At 31 December 2016
Financial guarantees
Trade and other payables
At 31 December 2015
Financial guarantees
Trade and other payables
The above table excludes current tax liabilities.
4.4 Market Risk
a)
Foreign Exchange Risk
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$’000
3
2.50% - 3.50%
83,552 5.25% - 10.50%
–
53,880
–
12,573
3
95,832
53,880
12,573
3
42,643
53,880
12,573
–
7,232
–
–
–
45,958
–
–
150,008
–
162,288
109,099
7,232
45,958
21
2.50% - 3.50%
187,822 5.25% - 12.50%
–
–
37,336
10,014
24
206,661
37,336
10,014
12
130,776
37,336
10,014
11
24,349
–
–
1
51,536
–
–
235,193
–
254,035
178,138
24,360
51,537
–
–
–
–
–
–
–
–
–
–
Carrying
amount
US$’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$’000
–
263
263
–
185
185
–
–
–
–
–
–
64,161
263
64,161
263
64,424
64,424
161,286
185
161,286
185
161,471
161,471
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Entities within the Group are exposed to foreign exchange risk from future commercial transactions and net monetary assets and liabilities that are denominated in
a currency that is not the entity’s functional currency. The foreign currency exposure is not hedged.
The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which the property or investment is located or by borrowing
in currencies that match the future revenue stream to be generated from its investments.
Management monitors the foreign currency exposure closely and takes necessary actions in consultation with the bankers to avoid unfavourable exposure.
The Group is exposed to foreign currency risk on cash and cash equivalents which are denominated in currencies other than the functional currency of the relevant
Group entity.
39
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
4 FINANCIAL RISK MANAGEMENT CONT’D
4.4 Market Risk cont’d
a)
Foreign Exchange Risk cont’d
The Group’s exposure to foreign currency risk on cash and cash equivalents at year end is as follows:
Group
Ringgit Malaysia
Sterling Pound
Others
2016
US$’000
2015
US$’000
157
1
16
174
144
1
30
175
At 31 December 2016, if cash and cash equivalents denominated in a currency other than the functional currency of the Group entity strengthened/ (weakened)
by 10% and all other variables were held constant, the effects on the Group profit or loss and equity expressed in US$ would have been US$17,400/ (US$17,400)
(2015: US$17,500/ (US$17,500)).
Currency risks as defined by IFRS 7 arise on account of monetary assets and liabilities being denominated in a currency that is not the functional currency. Differences
resulting from the translation of financial statements into the Group’s presentation currency are not taken into consideration.
Subsequent to year end, there are no significant monetary balances held by group companies that are denominated in a non-functional currency.
b)
Interest Rate Risk
The Group’s policy is to minimise interest rate risk on bank loans and borrowings using a mix of fixed and variable rate debts that represent market rates. The Group
prefers to maintain flexibility on the desired mix of fixed and variable interest rates as this will depend on the economic environment, the type of borrowings available
and the funding requirements of the project when a decision is to be made.
The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instrument, based on carrying amounts at the end of the reporting
period was:
Fixed rate instruments:
Financial assets
Financial liabilities
Floating rate instruments:
Financial liabilities
Group
Company
2016
US$’000
2015
US$’000
2016
US$’000
2015
US$’000
11,792
26,346
13,835
119,329
57,209
68,514
90
– –
– –
3,005
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 32% (2015: 64%) of the Group’s
borrowings at 31 December 2016.
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 2016, 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$572,000/ (US$572,000) (2015: (decrease)/ increase the Group loss for the year by (US$685,000)/ US$685,000).
40
Annual Report 2016
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, 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 showns in the statement of
financial position:
2016
Group
USD’000
Fair value of financial instruments
carried at fair value
Level 2
Level 3
Level 1
Total
Level 1
not carried at fair value
Level 2
Level 3
Total
Total
fair value
Carrying
amount
Fair value of financial instruments
Financial liabilities
Amount due to non-controlling
interests
Bank loans and borrowings
Finance lease liabilities
Medium term notes
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(12,573)
(57,209)
(3)
(26,073)
(12,573)
(57,209)
(3)
(26,073)
(12,573)
(57,209)
(3)
(26,073)
(12,573)
(57,209)
(3)
(26,343)
(95,858)
(95,858)
(95,858)
(96,128)
2015
Group
USD’000
Financial assets
Fair value of financial instruments
carried at fair value
Level 2
Level 3
Level 1
Total
Level 1
not carried at fair value
Level 2
Level 3
Total
Total
fair value
Carrying
amount
Fair value of financial instruments
Available-for-sale investments
9,917
–
–
9,917
–
–
–
–
9,917
9,917
Financial liabilities
Amount due to non-controlling
interests
Bank loans and borrowings
Finance lease liabilities
Medium term notes
Policy on transfer between levels
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(10,014)
(69,302)
(21)
(114,452)
(10,014)
(69,302)
(21)
(114,452)
(10,014)
(69,302)
(21)
(114,452)
(10,014)
(69,302)
(21)
(118,520)
–
–
–
–
–
–
(193,789)
(193,789)
(193,789)
(197,857)
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 (2015: no transfer in either direction other than the available-for-sale financial
assets representing the Group’s investment in shares of Nam Long Investment Corporation (“Nam Long”) with a carrying amount of US$9,917,000 which were transferred
from Level 2 to Level 1 because the shares in Nam Long were actively traded in the Ho Chi Minh Stock Exchange (“HOSE”) as compared to the previous financial year).
Transfers between Level 2 and Level 3 fair values
There has been no transfer in either direction during the financial year (2015: no transfer in either direction).
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market
rate of interest at the end of the reporting period. At 31 December 2016, the interest rate used to discount estimated cash flows of the medium term notes is 8.19% (2015:
7.94%).
41
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
4 FINANCIAL RISK MANAGEMENT CONT’D
4.6 Management and Control
Changes that cause the management and control of the Company to be exercised in the United Kingdom could lead to the Company becoming liable to United Kingdom
taxation on income and capital gains.
4.7 Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns to shareholders and benefits
to other stakeholders and to maintain an optimal capital structure to reduce cost of capital.
The capital structure of the Group consisted of cash and cash equivalents, loans and borrowings, medium term notes and equity attributable to equity holders of the parent,
comprising issued share capital and reserves, were as follows:
Group
Capital structure analysis:
Cash and cash equivalents
Loans and borrowings and finance lease liabilities
Medium term notes
Equity attributable to equity holders of the parent
Total capital
2016
US$’000
2015
US$’000
26,650
(57,212)
(26,343)
(143,362)
22,978
(69,323)
(118,520)
(130,165)
(200,267)
(295,030)
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares
or sell assets to reduce debts.
Consistent with others in the industry, the Group monitors capital on the basis of net debt-to-equity ratio.
Net debt-to-equity ratio is calculated as a total of interest-bearing borrowings less held-for-trading financial instrument and cash and cash equivalents to the total equity.
The net debt-to-equity ratios at 31 December 2016 and 31 December 2015 were as follows:
Group
Total borrowings and finance lease liabilities
Less: Cash and cash equivalents (Note 24)
Net debt
Total equity
Net debt-to-equity ratio
5 REVENUE AND SEGMENTAL INFORMATION
2016
US$’000
83,555
(26,650)
56,905
142,214
2015
US$’000
187,843
(22,978)
164,865
131,598
0.40
1.25
The gross revenue represents the sales value of development properties where the effective control of ownership of the properties is transferred to the purchasers when the
completion certificate or occupancy permit has been issued.
The Company is an investment holding company and has no operating revenue. The Group’s operating revenue for the year was mainly attributable to the sale of completed
units in Malaysia and land held for property development in Vietnam.
5.1 Revenue recognised during the year as follows:
Sales of land held for property development
Sale of completed units
Group
2016
US$’000
411
112,124
2015
US$’000
Restated
8,227
22,096
112,535
30,323
Company
2016
US$’000
2015
US$’000
– –
– –
– –
42
Annual Report 2016
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:
Investment Holding Companies – investing activities;
i.
Ireka Land Sdn. Bhd. – develops Tiffani (“Tiffani”) by i-ZEN;
ii.
ICSD Ventures Sdn. Bhd. – owns and operates Harbour Mall Sandakan (“HMS”) and Four Points by Sheraton Sandakan Hotel (“FPSS”);
iii.
iv. Amatir Resources Sdn. Bhd. – develops SENI Mont’ Kiara (“SENI”);
v.
vi. Urban DNA Sdn. Bhd.– develops The RuMa Hotel and Residences (“The RuMa”);
vii. Hoa Lam-Shangri-La Healthcare Group – master developer of International Healthcare Park (“IHP”); owns and operates the City International Hospital (“CIH”); and
viii. ASPL PLB-Nam Long Limited Liability Co - developer of Waterside Estates residential project.
Iringan Flora Sdn. Bhd. – owns and operates Aloft Kuala Lumpur Sentral Hotel (“AKLS”);
Other non-reportable segments comprise the Group’s development projects. None of these segments meets any of the quantitative thresholds for determining reportable
segments in 2016 and 2015.
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 presented are 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 are as follows:
Operating Segments – ended 31 December 2016
Investment
Holding
Companies
US$’000
Ireka Land
Sdn. Bhd.
US$’000
ICSD
Ventures
Sdn. Bhd.
US$’000
Amatir
Resources
Sdn. Bhd.
US$’000
Iringan
Flora
Sdn. Bhd.
US$’000
Urban DNA
Sdn. Bhd.
US$’000
Hoa Lam-
Shangri-La
Healthcare
Group
US$’000
Total
US$’000
Segment profit/ (loss) before taxation
(4,410)
135
(6,237)
515
37,223
(1,338)
(9,359)
16,529
Included in the measure of segment profit/ (loss) are:
Revenue
Revenue from hotel operations
Revenue from mall operations
Revenue from hospital operations
Impairment of inventory*
Write down of intangible assets
Marketing expenses
Expenses from hotel operations
Expenses from mall operations
Expenses from hospital operations
Depreciation of property, plant and equipment
Finance costs
Finance income
–
–
–
–
–
–
–
–
–
–
–
–
57
1,306
–
–
–
–
–
–
–
–
–
–
–
2
–
3,435
1,041
–
(2,408)
–
–
(3,763)
(1,399)
–
(6)
(2,992)
258
6,529
–
–
–
–
(79)
–
–
–
–
–
–
9
104,289
8,762
–
–
–
–
–
(5,719)
–
–
(3)
(1,957)
2
–
–
–
–
–
–
(193)
–
–
–
–
–
7
411
–
–
5,754
–
(73)
–
–
–
(9,039)
(89)
(4,363)
66
112,535
12,197
1,041
5,754
(2,408)
(152)
(193)
(9,482)
(1,399)
(9,039)
(98)
(9,312)
401
Segment assets
12,160
1,843
76,174
18,722
–
69,618
97,833
276,350
*
The amount relates to impairment of FPSS as the recoverable amount, estimated based on its net realisable value, is below its carrying amounts (see note 21).
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items
Profit or loss
Total profit for reportable segments
Other non-reportable segments
Finance cost
Consolidated profit before taxation
US$’000
16,529
(61)
(304)
16,164
43
Annual Report 2016
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
Operating Segments – ended 31 December 2015 (Restated)
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
Sdn. Bhd.
US$’000
Urban DNA
Sdn. Bhd.
US$’000
Hoa Lam-
Shangri-La
Healthcare
Group
US$’000
ASPL
PLB
Limited
US$’000
Total
US$’000
Segment profit/ (loss) before taxation
(297)
79
(9,168)
4,156
1,621
(863)
(16,090)
(4)
(20,566)
Included in the measure of segment
profit/ (loss) are:
Revenue
Revenue from hotel operations
Revenue from mall operations
Revenue from hospital operations
Impairment of inventory*
Write down/ Impairment of
intangible assets
Marketing expenses
Expenses from hotel operations
Expenses from mall operations
Expenses from hospital operations
Depreciation of property, plant and
equipment
Finance costs
Finance income
–
–
–
–
–
–
–
–
–
–
–
–
19
1,322
–
–
–
–
–
–
–
–
–
–
–
2
–
3,701
1,033
–
(3,200)
(1,397)
–
(4,256)
(1,401)
–
(7)
(3,635)
268
20,774
–
–
–
–
(168)
(57)
–
–
–
–
–
19
–
18,314
–
–
–
–
–
(12,351)
–
–
(7)
(4,133)
4
–
–
–
–
–
–
(231)
–
–
–
–
–
7
–
–
–
4,244
–
–
–
–
–
(11,110)
(90)
(3,263)
34
8,227
–
–
–
–
–
–
–
–
–
–
–
–
30,323
22,015
1,033
4,244
(3,200)
(1,565)
(288)
(16,607)
(1,401)
(11,110)
(104)
(11,031)
353
Segment assets
26,589
3,903
80,392
22,271
62,112
56,776
98,362
–
350,405
* The amount relates to impairment of FPSS as the recoverable amount, estimated based on its net realisable value, is below its carrying amounts (see note 21).
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items
Profit or loss
Total loss for reportable segments
Other non-reportable segments
Depreciation
Finance cost
Finance income
Consolidated loss before taxation
US$’000
Restated
(20,566)
(87)
(1)
–
2
(20,652)
There are no additions to non-current assets other than financial instruments and deferred tax assets for the financial year 2016 and 2015 respectively.
2016
US$’000
Total reportable segment
Other non-reportable segments
Consolidated total
2015
US$’000 (Restated)
Total reportable segment
Other non-reportable segments
Consolidated total
Revenue Depreciation
Finance
costs
Finance
income
Segment
assets
112,535
–
(98)
–
(9,312)
(304)
401
–
276,350
18,030
112,535
(98)
(9,616)
401
294,380
Revenue Depreciation
Finance
costs
Finance
income
Segment
assets
30,323
–
(104)
(1)
(11,031)
–
353
2
350,405
18,568
30,323
(105)
(11,031)
355
368,973
There are no additions to non-current assets other than financial instruments and deferred tax assets for the financial year ended 2016 and 2015 respectively.
44
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 2016
Revenue
Non-current assets
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
Malaysia
US$’000
Vietnam Consolidated
US$’000
US$’000
112,124
2,359
411
7,088
112,535
9,447
Included in the revenue of the Group for the financial year ended 31 December 2016 is revenue from the sale of AKLS and a plot of land (GD1) at the IHP.
For the year ended 31 December 2016, one customer exceeded 10% of the Group’s total revenue as follow:
Prosper Group Holdings Limited
Geographical Information – ended 31 December 2015 (Restated)
Revenue
Non-current assets
For the year ended 31 December 2015, one customer exceeded 10% of the Group’s total revenue as follow:
Name Long Investment Corporation
(“Nam Long”) and Nam Khang
Construction Investment
Development Limited Liability
Company (“Nam Khang”)
6 COST OF SALES
Direct costs attributable to: Completed units
Sales of land held for property development (Note 21)
Write down/ Impairment of intangible assets (Note 19)
Impairment of inventory (Note 21)
US$’000
Segments
Iringan
Flora
Sdn. Bhd.
104,289
Malaysia
US$’000
Vietnam Consolidated
US$’000
US$’000
22,096
2,172
8,227
17,176
30,323
19,348
US$’000
Segments
ASPL PLB-
Nam Long
Limited
Liability Co
8,227
Group
2016
US$’000
74,796
191
152
2,408
77,547
2015
US$’000
Restated
16,847
7,552
1,565
3,200
29,164
Company
2016
US$’000
2015
US$’000
– –
– –
– –
–
– –
–
Included in the cost of sales of the Group for the financial year ended 31 December 2016 is cost of sales related to the sale of AKLS and a plot of land (GD1) at the IHP (2015:
Sale of Waterside Estates residential project).
7 OTHER INCOME
Group
Dividend income
Gain on disposal of available-for-sale investments
Gain on disposal of property, plant and equipment
Rental income
Revenue from hotel operations (a)
Revenue from mall operations (b)
Revenue from hospital operations (c)
Sundry income
2016
US$’000
208
2,285
5 –
211
12,197
1,041
5,754
262
21,963
2015
US$’000
Restated
293
806
115
22,015
1,033
4,244
380
28,886
a) Revenue from hotel operations
The revenue relates to the operations of two hotels – FPSS and AKLS, 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.
b) Revenue from mall operations
The revenue relates to the operation of HMS 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.
45
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
7 OTHER INCOME CONT’D
c) Revenue from hospital operations
The revenue relates to the operation of CIH 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 (LOSS)/ GAIN
Foreign exchange (loss)/ gain comprises:
Realised foreign exchange loss
Unrealised foreign exchange (loss)/ gain
9 MANAGEMENT FEES
Group
Company
2016
US$’000
2015
US$’000
2016
US$’000
2015
US$’000
(112)
(4,939)
(371)
(2,544)
(100)
(3,442)
(5,051)
(2,915)
(3,542)
(227)
4,345
4,118
Group
Company
2016
US$’000
2015
US$’000
2016
US$’000
2015
US$’000
Management fees
3,331
3,115
1,259
1,257
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 the 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 of the 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 (2015: US$Nil).
10 STAFF COSTS
Group
Wages, salaries and others
Employees’ provident fund, social security and other pension costs
2016
US$’000
2015
US$’000
9,144
497
9,641
11,774
626
12,400
The Company has no executive directors or employees under its employment. As of year ended 2016, the subsidiaries of the Group have a total of 612 (2015: 856) employees.
11 FINANCE (COSTS)/ INCOME
Interest income from banks
Arrangement fee
Agency fees
Bank guarantee commission
Interest on bank loans
Interest on financial liabilities at amortised cost
Interest on medium term notes
Group
Company
2016
US$’000
2015
US$’000
2016
US$’000
2015
US$’000
401
(621)
(194)
(50)
(4,313)
(1)
(4,437)
355
–
(83)
(49)
(3,214)
(2)
(7,683)
(9,215)
(10,676)
56
–
– –
– –
– –
– –
– –
56
17
–
17
46
12 NET PROFIT/ (LOSS) BEFORE TAXATION
Net profit/ (loss) before taxation is stated after charging/ (crediting):
• Auditor’s remuneration
- current year
• Directors’ fees
• Depreciation of property, plant and equipment
• Expenses of hotel operations
• Expenses of mall operations
• Expenses of hospital operations
• Fair value loss on amount due to non-controlling interests
• Impairment of amount due from subsidiary
• Impairment of investment in subsidiary
• Unrealised foreign exchange loss/ (gain)
• Realised foreign exchange loss
• Write down/ Impairment of intangible assets
• Gain on disposal of available-for-sale investments
• Gain on disposal of property, plant and equipment
• Gain on disposal of a subsidiary
• Tax services
13 TAXATION
Current tax
Deferred tax (credit)/ expense
Total tax expense for the year
– Current year
– Prior year
– Current year
– Prior year
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
Group
Company
2016
US$’000
2015
US$’000
2016
US$’000
2015
US$’000
205
297
98
9,482
1,399
9,039
–
–
–
4,939
112
152
(2,285)
(5)
–
8
226
317
105
16,607
1,401
11,110
320
–
–
2,544
371
1,565
(806)
–
–
15
101
297
– –
– –
– –
– –
– –
14,376
–
3,442
100
– –
– –
– –
(34,895) –
– –
119
317
8,223
6,284
(4,345)
227
2016
US$’000
2015
US$’000
796
262
(354)
(18)
686
1,468
(227)
678
(641)
1,278
The numerical reconciliation between the income tax expenses and the product of accounting results multiplied by the applicable tax rate is computed as follows:
Group
Net profit/ (loss) before taxation
Income tax at a rate of 24% (2015: 25%)
Add :
Tax effect of expenses not deductible in determining taxable profit
Current year losses and other tax benefits for which no deferred tax asset was recognised
Tax effect of different tax rates in subsidiaries
Less :
Tax effect of income not taxable in determining taxable profit
Under/ (over) provision in respect of prior years
Total tax expense for the year
2016
US$’000
2015
US$’000
16,164
(20,652)
3,879
6,854
2,029
1,521
(5,163)
3,689
2,449
2,703
(13,841)
244
(1,532)
(868)
686
1,278
The applicable corporate tax rate in Malaysia is 24% (2015: 25%).
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 rates in Singapore and Vietnam are 17% and 20% (2015: 22%) respectively.
A subsidiary of the Group, CIH 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 industry.
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 tax effect of income not taxable in determining taxable profit are mainly relates to the net gain on disposal from the sale of the AKLS (see Note 17).
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.
47
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
14 OTHER COMPREHENSIVE EXPENSE
Group
Items that are or may be reclassified subsequently to profit or loss, net of tax
Foreign currency translation differences for foreign operation
Loss arising during the year
Reclassification to profit or loss on disposal of subsidiary
Fair value of available-for-sale investment
(Loss)/ Gain arising during the year
Reclassification adjustments for gain on disposal included in profit or loss
2016
US$’000
2015
US$’000
(3,522)
988
(2,534)
(233)
(2,208)
(2,441)
(15,374)
(546)
(15,920)
2,680
(490)
2,190
(4,975)
(13,730)
15 EARNINGS/ (LOSS) PER SHARE
Basic and diluted earnings/ (loss) per ordinary share
The calculation of basic and diluted earnings/ (loss) per ordinary share for the year ended 31 December 2016 was based on the profit/ (loss) attributable to equity holders of the
parent and a weighted average number of ordinary shares outstanding, calculated as below:
Group
Profit/ (Loss) attributable to equity holders of the parent
Weighted average number of shares
Earnings/ (loss) per share
Basic and diluted (US cents)
Company
Profit/ (loss) for the year
Weighted average number of shares
Earnings/ (loss) per share
Basic and diluted (US cents)
16 PROPERTY, PLANT AND EQUIPMENT
Cost
At 1 January 2016
Exchange adjustments
Disposal
At 31 December 2016
Accumulated Depreciation
At 1 January 2016
Exchange adjustments
Charge for the year
Disposal
At 31 December 2016
Net carrying amount at 31 December 2016
Cost
At 1 January 2015
Exchange adjustments
At 31 December 2015
Accumulated Depreciation
At 1 January 2015
Exchange adjustments
Charge for the year
At 31 December 2015
Net carrying amount at 31 December 2015
2016
US$’000
18,856
212,025
2015
US$’000
(15,784)
212,025
8.89
(7.44)
2016
US$’000
14,516
212,025
2015
US$’000
(13,026)
212,025
6.85
(6.14)
Furniture,
Fittings &
Equipment
US$’000
Motor
Vehicles
US$’000
Leasehold
Building
US$’000
348
(4)
–
344
213
(3)
35
–
245
99
366
(18)
348
187
(10)
36
213
135
270
(6)
(60)
204
131
(4)
27
(49)
105
99
299
(29)
270
115
(16)
32
131
139
804
(9)
–
795
217
(3)
36
–
250
545
846
(42)
804
191
(11)
37
217
587
Total
US$’000
1,422
(19)
(60)
1,343
561
(10)
98
(49)
600
743
1,511
(89)
1,422
493
(37)
105
561
861
48
17 INVESTMENT IN SUBSIDIARIES
Company
Unquoted shares, at cost
Discount on loans to subsidiaries
Less: Impairment loss
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
2016
US$’000
66,428
14,518
(12,713)
2015
US$’000
66,428
14,518
(12,713)
68,233
68,233
A list of the main operating subsidiaries is provided in Note 37.
The investments in subsidiaries will be recovered through realisation of subsidiaries’ assets and liabilities, including the sale of the underlying assets in the Group. The key
sensitivities in relation to the recovery of these assets have been set up in Note 21.
Disposal of ASPL M3B Limited and Iringan Flora Sdn. Bhd.
During the financial year, the Group entered into a sale and purchase agreement to dispose of AKLS to Prosper Group Holdings Limited for a net adjusted price of US$104.3
million through disposal of the entire issued share capital of ASPL M3B Limited and Iringan Flora Sdn. Bhd. A gain on disposal of US$34.9million was recognised from the
disposal of the subsidiary at Company level.
The condition precedent for the completion of the disposal of AKLS was met on 23 June 2016 when the transfer of shares was effected and upon the satisfactory completion of
a due diligence conducted by Prosper Group Holdings Limited, and certain consents being obtained from Starwood Asia Pacific Hotels & Resorts Pte Ltd, the operator of the
AKLS, and consents from the Company’s financiers for the AKLS.
Disposal of Morningstar International Preschool Limited Liability Co.
During the financial year, the Group disposed of a plot of land in IHP through disposal of its entire interest in Morningstar International Preschool Limited Liability Company
(previously known as Hoa Lam Shangri-La Limited Liability Co) (“HLSL4”), for a consideration of US$411,000 (VND9 billion). The condition precedent for the completion of the
disposal was met on 22 January 2016 when the shares were transferred to the purchaser.
Disposal of ASPL PLB-Nam Long Limited Liability Co.
In the previous financial year, the Group disposed of the Waterside Estates residential project through the disposal of its 55% equity interest in ASPL PLB-Nam Long Ltd Liability
Co (“ASPL PLB-Nam Long”), a subsidiary of the Group for a consideration of US$8,227,000 (VND185,165,679,414). The disposal of ASPL PLB-Nam Long in the previous financial
year resulted in the derecognition of non-controlling interest of US$5,925,000.
Non-controlling interests in subsidiaries
The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:
2016
NCI percentage of ownership interest and voting interest
Carrying amount of NCI
Loss allocated to NCI
Summarised financial information before intra-group elimination
As at 31 December
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets/ (liabilities)
Year ended 31 December
Revenue
Loss for the year
Total comprehensive loss
Cash flows (used in)/ from operating activities
Cash flows (used in) investing activities
Cash flows from financing activities
Hoa Lam
Services
Co Ltd
US$’000
49%
(3,083)
(1,593)
Shangri-La
Healthcare
Investment
Pte Ltd
US$’000
18.50%
3,100
(1,377)
Urban
DNA
Sdn. Bhd.
US$’000
30%
(1,353)
(401)
Other
individually
immaterial
subsidiaries
US$’000
Total
US$’000
188
(7)
(1,148)
(3,378)
30,523
45,477
(13,921)
(44,627)
68,820
103,340
(32,483)
(68,131)
1,219
68,398
–
(74,127)
17,452
71,546
(4,510)
–
(3,252)
(3,092)
(1,699)
(5,816)
4,774
–
(7,444)
(7,160)
(3,974)
(4,366)
11,154
–
(1,338)
(1,089)
1,121
–
781
1,902
Net (decrease)/ increase in cash and cash equivalents
(2,741)
2,814
49
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
17 INVESTMENT IN SUBSIDIARIES CONT’D
Non-controlling interests in subsidiaries cont’d
The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:
2015
NCI percentage of ownership interest and voting interest
Carrying amount of NCI
Loss allocated to NCI
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 investing activities
Cash flows from financing activities
Hoa Lam
Services
Co Ltd
US$’000
49%
(1,524)
(3,028)
36,487
31,035
(16,744)
(25,322)
Shangri-La
Healthcare
Investment
Pte Ltd
US$’000
20.24%
4,009
(2,851)
Urban
DNA
Sdn. Bhd.
US$’000
30%
(1,026)
(259)
Other
individually
immaterial
subsidiaries
US$’000
Total
US$’000
(26)
(8)
1,433
(6,146)
82,824
74,229
(39,069)
(32,184)
1,023
55,752
–
(60,196)
25,456
85,800
(3,421)
–
(6,180)
(5,741)
(4,509)
(6,743)
11,018
–
(14,085)
(13,431)
(10,612)
(9,971)
20,053
–
(863)
(191)
(4,221)
–
3,879
Net decrease in cash and cash equivalents
(234)
(530)
(342)
18 AVAILABLE-FOR-SALE INVESTMENTS
The available-for-sale investments represent the investment in shares of Nam Long Investment Corporation (“Nam Long”) which the Group acquired over four tranches in 2008
and 2009.
Group
2016
1 January – fair value
Disposal
Exchange adjustments
Recognised in other comprehensive expense
Reclassified from equity to profit or loss
At 31 December – fair value
Group
2015
1 January – fair value
Disposal
Exchange adjustments
Recognised in other comprehensive income
Reclassified from equity to profit or loss
At 31 December – fair value
Quoted Shares
US$’000
9,917
(7,562)
86
(233)
(2,208)
–
Quoted Shares
US$’000
12,822
(4,553)
(542)
2,680
(490)
9,917
During the financial year, the Group disposed the entire balance representing 9,784,653 (2015: 5,800,000) numbers of shares in Nam Long for a consideration of
US$9,850,945 (2015: US$5,359,000) at an average market price of US$1.01 (2015: US$0.92) per share. The Group recognised a gain on disposal of US$ 2,285,000 during
the year (2015: US$806,000).
50
19 INTANGIBLE ASSETS
Group
Cost
At 1 January 2015/ 31 December 2015/ 31 December 2016
Accumulated impairment losses
At 1 January 2015
Impairment
Write down
At 31 December 2015/ 1 January 2016
Write down
At 31 December 2016
Carrying amounts
At 31 December 2015
At 31 December 2016
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
Licence Contracts
and Related
Relationships
US$’000
Goodwill
US$’000
Total
US$’000
10,695
6,479
17,174
4,276
–
–
4,276
73
4,100
1,397
168
5,665
79
8,376
1,397
168
9,941
152
4,349
5,744
10,093
6,419
6,346
814
735
7,233
7,081
The licence contracts and related relationships represent the land use rights (“LUR”) for the Group’s land in Vietnam. LUR represents the rights to develop the IHP within a lease period
ending on 9 July 2077. In 2016, the Group sold a selected plot of its undeveloped land in the IHP Lot, GD1 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
2016
US$’000
2015
US$’000
6,346
6,419
185
550
735
264
550
814
The recoverable amount of licence contracts and related relationships has been tested based on the net realisable value 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 amounts.
The recoverable amount of goodwill has been tested by reference to underlying profitability of the ongoing operations of the developments using discounted cash flow
projections (Refer Note 21).
In the previous financial year, impairment loses of US$1,397,000 in relation to the FPSS, have been recognised as the recoverable amount of the cash generating unit, estimated
based on net realisable value, is below its carrying amount. Intangible assets of US$79,000 (2015: US$168,000) and US$73,000 (2015: US$Nil) in relation to SENI and IHP projects
respectively were written down as certain components from developments were sold during the year.
20 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
2016
US$’000
2015
US$’000
1,337
(86)
372
1,683
(309)
(37)
1,623
1,337
2016
US$’000
2015
US$’000
1,623
1,623
1,337
1,337
Deferred tax assets have not been recognised in respect of unused tax losses of US$65,440,000 (2015: US$55,000,000) 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$4,460,000 (2015: US$3,100,000) which are available for offset against future taxable profits. Deferred tax assets have not been recognised due to the uncertainty of the
recovery of the losses.
51
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
21 INVENTORIES
Group
Land held for property development
Work-in-progress
Stock of completed units, at cost
Consumables
At 31 December
Note
(a)
(b)
(c)
2016
US$’000
22,514
62,708
159,334
403
2015
US$’000
23,223
53,182
230,436
487
244,959
307,328
Carrying amount of inventories pledged as security for Loan and borrowings and Medium Term Notes
148,427
237,059
(a) Land held for property development
Group
At 1 January
Add :
Exchange adjustments
Additions
At 31 December
2016
US$’000
2015
US$’000
23,223
40,560
(604)
86
(3,466)
451
22,705
37,545
Less: Costs recognised as expenses in the statement of comprehensive income during the year (Note 6)
(191)
(14,322)
At 31 December
(b) Work-in-progress
Group
At 1 January
Add :
Exchange adjustments
Work-in-progress incurred during the year
At 31 December
22,514
23,223
2016
US$’000
2015
US$’000
53,182
55,332
(3,967)
13,493
(10,273)
8,123
62,708
53,182
The above amounts included borrowing costs capitalised at interest rate ranging from 5.50% to 10.00% per annum (2015: 5.50% to 10.00%per annum) of US$1,620,000
(2015: US$1,670,000) during the financial year.
(c) Stock of completed units, at cost
The net realisable value of completed units have been tested by reference to underlying profitability of the ongoing operations of the developments using discounted cash
flow projections and/ or comparison method with the similar properties within the local market which provides an approximation of the estimated selling price that is
expected to be achieved in the ordinary course of business.
Included in the stock of completed units are SENI, Tiffani by i-ZEN as well as the following completed units:
Four Points by Sheraton Sandakan Hotel (“FPSS”)
The recoverable amount of FPSS was determined based on a valuation by an external, independent valuer with appropriate recognised professional qualification. The carrying
amount of FPSS including the attached goodwill was determined to be higher than its recoverable amount of US$37,012,000 (2015: US$40,949,000) and impairment losses of
US$Nil (2015: US$1,397,000) and US$2,408,000 (2015: US$3,200,000) in relation to the goodwill and inventory amounts was recognised respectively. The impairment loss was
included in cost of sales.
The valuation of FPSS was determined by discounting the future cash flows expected to be generated from the continuing operations of FPSS and was based on the
following key assumptions:
1) Cash flows were projected based on past experience, actual operating results in 2016 and the 10 years budget of FPSS adjusted by the valuer;
2)
The occupancy rate of FPSS will improve to an optimum level of 75% in 2026;
3) Projected gross margin reflects the average historical gross margin, adjusted for projected market and economic conditions and internal resources efficiency; and
4) Pre-tax discount rate of 9% was applied in discounting the cash flows. The discount rates takes into the prevailing trend of the hotel industry in Malaysia.
52
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
21 INVENTORIES CONT’D
Sensitivity analysis
The above estimates are sensitive in the following key areas:
a)
an increase/ (decrease) of 1% in discount rate used would have (decreased)/ increased the recoverable amount by approximately (US$4,828,000)/ US$6,199,000.
b)
an increase/ (decrease) of 1% in occupancy rate throughout the entire projection term used would have increased/ (decreased) the recoverable amount by approximately
US$684,000/ (US$684,000).
Harbour Mall Sandakan (“HMS”)
The recoverable amount of HMS was determined based on an internal valuation performed by management. The recoverable amount of HMS was determined to be higher
than its carrying amount and no impairment losses in relation to the inventory amounts was recognised.
The valuation of HMS was determined by the capitalisation of net income expected to be generated from the continuing operations of HMS (“investment approach”) when
the mall operates at an optimum occupancy rate and was based on the following key assumptions:
1) Occupancy rate will improve to an optimum level of 95%;
2) Capitalisation period of 73 years covering the period of HMS achieving optimum operations to expiration of the title term;
3) Outgoing rate was projected at 35% against gross annual income;
4) Capitalisation rate was assumed at 6%;
Sensitivity analysis
The above estimates are sensitive in the following key areas:
a)
an increase/ (decrease) of 1% in capitalisation rate used would have (decreased)/ increased the recoverable amount by approximately (US$5,652,000)/ US$7,555,000.
b)
an increase/ (decrease) of 1% in optimum occupancy rate throughout the entire projection term would have increased/ (decreased) the recoverable amount by
approximately US$435,000/ (US$435,000).
City International Hospital (“CIH”)
The recoverable amount of CIH was determined based on a valuation by an external, independent valuer with appropriate recognised professional qualification. The
recoverable amount of CIH was determined to be higher than its carrying amount and no impairment losses in relation to the inventory amounts was recognised.
The valuation of CIH was determined on a depreciated replacement cost approach which entails estimating the land value for its existing use, and the depreciated
replacement costs of the site improvements and related expenditure. The followings are the key assumptions:
1)
The underlying land value is based on the current prices quoted by the similar properties to potential investors who are looking to set up the private hospital in the area;
2)
Replacement costs for the improvements on site was made with reference to construction cost data and research on similar structures, taking into considerations of
professional fees, finance cost and depreciation expense in relation to the improvements on site and related expenditure; and
3) Plant and machinery that form part of the building services installations are reflective of its carrying amounts.
Sensitivity analysis
The above estimates are sensitive in the following key areas:
a) an increase/ (decrease) of 1% in land value would have increased/ (decreased) the recoverable amount by approximately US$149,700/ (US$149,700).
b)
an increase/ (decrease) of 1% in depreciation charges used would have (decreased)/ increased the recoverable amount by approximately (US$30,000)/ US$30,000.
53
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
22 TRADE AND OTHER RECEIVABLES
Group
Trade receivables
Other receivables
Sundry deposits
Company
Other receivables
2016
US$’000
3,303
7,877
391
2015
US$’000
2,901
14,489
351
11,571
17,741
2016
US$’000
2015
US$’000
32 –
Trade receivables represent progress billings receivable from the sale of completed units and land held for property development. Progress billings receivable from the sale
of completed units are generally due for settlement within 21 days from the date of invoice and are recognised and carried at the original invoice amount less allowance for
any uncollectible amounts. They are recognised at their original invoice amounts which represent their fair values on initial recognition less provision for impairment where
it is required.
The ageing analysis of trade receivables past due are set out below. These relate to a number of independent customers for whom there is no recent history of default.
Group
2016
Within credit terms
Stakeholder sums
Past due
0 – 60 days
61 –120 days
More than 120 days
Group
2015
Within credit terms
Stakeholder sums
Past due
0 – 60 days
61 –120 days
More than 120 days
Gross
US$’000
Individual
Impairment
US$’000
434
497
10
–
2,362
3,303
–
–
–
–
–
–
Gross
US$’000
Individual
Impairment
US$’000
602
404
1
1
1,893
2,901
–
–
–
–
–
–
Net
US$’000
434
497
10
–
2,362
3,303
Net
US$’000
602
404
1
1
1,893
2,901
Included in trade receivables is an amount of US$1,760,000 (2015: US$1,840,000) due from a subsidiary of Ireka Corporation Berhad in relation to the acquisition of three units
of SENI. As at 31 December 2016, these receivables are aged more than 120 days (2015: 120 days).
As at 31 December 2016, the stakeholder sums represent amounts receivable from two customers with sound financial standing (2015: One).
As at 31 December 2016, approximate 85% (2015: 77%) of the Group’s trade receivables are from customers with sound financial standing. Other than the abovementioned
customer, the Group has a large number of customers whose property purchases are mainly secured by personal bank financing.
Included in other receivables are sums of US$2,904,000 (2015: US$1,997,000) and US$114,000 (2015: US$1,415,000), due from a subsidiary of Ireka Corporation Berhad for
advance payment to its contractors and due from Ireka Corporation Berhad for rental expenses paid on behalf.
Included in the other receivables at 31 December 2016 is US$ 893,000 (2015: US$nil) representing the balance of consideration receivable for the disposal of Nam Long shares.
The amount was subsequently received on 23 February 2017.
Included in the other receivables at 31 December 2015 is US$6,400,000 representing the balance of consideration receivable for the disposal of the Group’s 55% equity interest
in ASPL PLB-Nam Long Ltd Liability Co, a subsidiary of the Group. The amount was subsequently received on 13 January 2016.
The maximum exposure to credit risk is represented by the carrying amount in the statement of financial position. No allowance for impairment loss of trade receivables has
been made for the remaining past due receivables as the Group monitors the repayment of the customers regularly and are confident of the ability of the customers to repay
the balance outstanding.
54
23 AMOUNTS DUE FROM/ (TO) SUBSIDIARIES
Company
Due from subsidiaries (Current portion)
Less : Impairment loss
Due to subsidiaries (Current portion)
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
2016
US$’000
239,397
(68,128)
2015
US$’000
211,318
(53,752)
171,269
157,566
(77,105)
(76,029)
The amounts due from/ (to) subsidiaries are current, unsecured and repayable on demand.
As at the end of the reporting period, inter-company balances that were assessed to be irrecoverable were impaired by US$14,376,000 (2015: US$8,223,000).
24 CASH AND CASH EQUIVALENTS
Group
Cash and bank balances
Short term bank deposits
Less: Deposits pledged
Included in short term bank deposits is US$10,011,000 (2015: US$9,646,000) pledged for banking facilities granted to its subsidiaries.
Company
Cash and bank balances
Short term bank deposits
2016
US$’000
14,858
11,792
26,650
(10,011)
2015
US$’000
9,143
13,835
22,978
(9,646)
16,639
13,332
2016
US$’000
10,663
90
10,753
2015
US$’000
6,089
3,005
9,094
The interest rate on cash and cash equivalents, excluding deposit pledged with licensed bank of US$10,011,000 (2015: US$9,646,000) pledged for banking facilities granted to
subsidiaries, ranges from 0.20% to 2.80% per annum (2015: 0.20% to 2.80% per annum) and the maturity period is on daily basis (2015: 1 day to 7 days).
The interest rate on short term bank deposits pledged for banking facilities granted to subsidiaries ranges from 3.10% to 4.70% per annum (2015: 3.15% to 4.70% per annum)
and the maturity period ranges from 1 month to 1 year (2015: 1 month to 1 year).
25 SHARE CAPITAL
Group and Company
Authorised Share Capital
Ordinary shares of US$0.05 each
Management shares of US$0.05 each
Issued Share Capital
Ordinary shares of US$0.05 each
Management shares of US$0.05 each
Number of
shares
2016
’000
Amount
2016
US$’000
Number of
shares
2015
’000
Amount
2015
US$’000
2,000,000
–*
100,000
–*
2,000,000
–
100,000
–
2,000,000
100,000
2,000,000
100,000
212,025
–#
10,601
–#
212,025
–
212,025
10,601
212,025
10,601
–
10,601
* represents 10 management shares at US$0.05 each
# represents 2 management shares at US$0.05 each
At previous financial year end, the shareholders of the Company approved the creation and issuance of management shares by the Company as well as a compulsory redemption
mechanism that was proposed by the Board.
The Company increased its authorised share capital from US$100,000,000 to US$100,000,000.50 by the creation of 10 management shares of US$0.05 each for cash.
The Company also increased its issued and paid-up share capital from US$10,601,250 to US$10,601,250.10 by way of an allotment of 2 new management shares of US$0.05
each at par via cash consideration.
In accordance with the compulsory redemption scheme, the Company’s ordinary shares were converted into redeemable ordinary shares.
55
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
25 SHARE CAPITAL CONT’D
The ordinary shares and the management shares shall have attached thereto the rights and privileges, and shall be subject to the limitations and restrictions, as are set out below:
a) Distribution of dividend:
i)
The ordinary shares carry the right to receive all the profits of the Company available for distribution by way of interim or final dividend at such times as the Directors
may determine from time to time; and
ii)
The management shares carry no right to receive dividends out of any profits of the Company.
b) Winding-up or return of capital:
i)
The holders of the management shares shall be paid an amount equal to the paid-up capital on such management shares; and
ii)
Subsequent to the payment to holders of the management shares, the holders of the ordinary shares shall be repaid the surplus assets of the Company available for
distribution.
c)
Voting rights:
i)
The holders of the ordinary shares and management shares shall have the right to receive notice of and to attend and vote at general meetings of the Company; and
ii)
Each holder of ordinary shares and management shares being present in person or by a duly authorised representative (if a corporation) at a meeting shall upon a
show of hands have one vote and upon a poll each such holder present in person or by proxy or by a duly authorised representative (if a corporation) shall have one
vote in respect of every full paid share held by him.
26 SHARE PREMIUM
Share premium represents the excess of proceeds raised on the issuance of shares over the nominal value of those shares. The costs incurred in issuing shares were deducted
from the share premium.
Group and Company
At 1 January/ 31 December
27 CAPITAL REDEMPTION RESERVE
2016
US$’000
2015
US$’000
218,926
218,926
The capital redemption reserve was incurred after the Company cancelled its 37,475,000 and 500,000 ordinary shares of US$0.05 per share in 2009 and 2013 respectively.
28 TRANSLATION RESERVE
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.
29 FAIR VALUE RESERVE
The fair value reserve comprises the cumulative change in the fair value of available-for-sale investments.
30 ACCUMULATED LOSSES
Group
At 1 January
Profit/ (Loss) attributable to equity holders of the parent
Changes in ownership interests in subsidiaries
At 31 December
Company
At 1 January
Profit/ (Loss) for the year
At 31 December
2016
US$’000
(77,301)
18,856
(477)
2015
US$’000
(60,932)
(15,784)
(585)
(58,922)
(77,301)
2016
US$’000
(72,747)
14,516
2015
US$’000
(59,721)
(13,026)
(58,231)
(72,747)
56
31 TRADE AND OTHER PAYABLES
Group
Trade payables
Other payables
Progress billings
Deposits refundable
Accruals
Company
Other payables
Accruals
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
2016
US$’000
2,284
4,741
38,346
6,087
2,422
2015
US$’000
2,094
6,526
23,199
1,337
4,180
53,880
37,336
2016
US$’000
2015
US$’000
90
173
263
62
123
185
Trade payables represent trade purchases and services rendered by suppliers as part of the normal business transactions of the Group. The credit terms granted by trade
suppliers range from 30 to 90 days.
Progress billings represent proceeds received from purchasers of development properties i.e. SENI and The RuMa which are pending transfer of vacant possession.
Deposits and accruals are from normal business transactions of the Group.
32 AMOUNT DUE TO NON-CONTROLLING INTERESTS
Group
Current
Minority Shareholder of Bumiraya Impian Sdn. Bhd.:
- Global Evergroup Sdn. Bhd.
Minority Shareholders of Hoa Lam Services Co Ltd:
- Tran Thi Lam
- Tri Hanh Consultancy Co Ltd
- Hoa Lam Development Investment Joint Stock Company
- Duong Ngoc Hoa
Minority Shareholder of The RuMa Hotel KL Sdn. Bhd.:
- Ireka Corporation Berhad
Minority Shareholder of Urban DNA Sdn. Bhd.:
- Ireka Corporation Berhad
2016
US$’000
2015
US$’000
1,105
1,155
1,727
3,257
244
163
1,752
3,944
2,228
226
2 1
3,316
3,467
12,573
10,014
The current amount due to non-controlling interests amounting to US$12,573,000 (2015: US$10,014,000) is unsecured, interest free and repayable on demand.
In the previous financial year, amount due to non-controlling interests amounting to US$1,440,000 was capitalised as share capital of Shangri-La Healthcare Investment Pte Ltd.
57
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
33 LOANS AND BORROWINGS
Group
Non-current
Bank loans
Finance lease liabilities
Current
Bank loans
Finance lease liabilities
2016
US$’000
2015
US$’000
46,405
–
46,405
10,804
3
10,807
57,212
55,813
10
55,823
13,489
11
13,500
69,323
The effective interest rates on the bank loans and finance lease arrangement for the year ranged from 5.25% to 12.50% (2015: 5.25% to 12.50%) per annum and 2.50% (2015:
2.50%to 3.50%) per annum respectively.
Borrowings are denominated in Ringgit Malaysia, United States Dollars and Vietnam Dong.
Bank loans are repayable by monthly, quarterly or semi-annually instalments.
Bank loans are secured by land held for property development, work-in-progress, operating assets of the Group, pledged deposits and some by the corporate guarantee of the Company.
Finance lease liabilities are payable as follows:
Group
Within one year
Between one and five years
34 MEDIUM TERM NOTES
Group
Outstanding medium term notes
Net transaction costs
Less:
Repayment due within twelve months*
Repayment due after twelve months
Future
minimum
lease
payment
2016
US$’000
3
–
3
Interest
2016
US$’000
–
–
–
Present
value of
minimum
lease
payment
2016
US$’000
3
–
3
Future
minimum
lease
payment
2015
US$’000
12
12
24
Present
value of
minimum
lease
payment
2015
US$’000
11
10
21
Interest
2015
US$’000
1
2
3
2016
US$’000
26,748
(405)
2015
US$’000
119,711
(1,191)
(26,343)
(108,190)
–
10,330
* Includes net transaction costs in relation to medium term notes due within twelve months of US$0.40 million (2015: US$1.04 million).
The Medium Term Notes (“MTNs”) were issued pursuant to a programme with a tenure of ten (10) years from the first issue date of the notes. The MTNs were issued by a
subsidiary, to fund two development projects known as Sandakan Harbour Square and AKLS in Malaysia. US$54.61 million (RM245.00 million) was drawn down in 2011 for
Sandakan Harbour Square. US$3.34 million (RM15.00 million) was drawn down in 2012 for AKLS and the remaining US$56.62 million (RM254 million) in 2013.
During the financial year, the Group completed the sale of the AKLS. The net adjusted price for the sale of AKLS, which includes the sale of the entire issued share capital of
ASPL M3B Limited and Iringan Flora Sdn. Bhd is approximately US$104.3 million. Proceeds received from the sale of AKLS were used to redeem the MTNs Series 2 and Series
3. Following the completion of the disposal of AKLS, US$87.8 million (RM394.0 million) of MTNs associated with the AKLS (Series 3) and the FPSS (Series 2) was repaid on 19
August 2016. The charges in relation to AKLS was also discharged following the completion of the disposal. Subsequent to the repayment of MTNs Series 2 and Series 3, MTNs
Series 1 of US$26.75 million (RM120 million) remains. The Group secured a rollover of US$16.72 million (RM75 million) on 7 December 2016 to expire on 8 December 2017.
The weighted average interest rate of the MTNs was 5.93% per annum at the statement of financial position date. The effective interest rates of the MTNs and their outstanding
amounts are as follows:
Series 1 Tranche FG 003
Series 1 Tranche BG 003
Series 1 Tranche FG 004
Series 1 Tranche BG 004
Maturity Dates
Interest rate %
per annum
8 December 2017
8 December 2017
8 December 2017
8 December 2017
5.90
5.85
6.00
5.92
US$’000
5,572
4,458
10,031
6,687
26,748
58
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
34 MEDIUM TERM NOTES CONT’D
The medium term notes are secured by way of:
i)
bank guarantee from two financial institutions in respect of the BG Tranches;
ii)
financial guarantee insurance policy from Danajamin Nasional Berhad (“Danajamin”) in respect to the FG Tranches;
iii) a first fixed and floating charge over the present and future assets and properties of Silver Sparrow Berhad and ICSD Ventures Sdn. Bhd. by way of a debenture;
iv) a third party first legal fixed charge over ICSD Ventures Sdn. Bhd.’s assets and land;
v)
a corporate guarantee by Aseana Properties Limited;
vi)
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;
vii)
assignment of all its present and future rights, interest and benefits under the ICSD Ventures Sdn. Bhd.’s Put Option Agreements in favor of Danajamin, Malayan Banking
Berhad and OCBC Bank (Malaysia) Berhad (collectively as “the guarantors”) where once exercised, the sale and purchase of HMS and FPSS shall take place in accordance
with the provision of the Put Option Agreement; and the proceeds from HMS and FPSS will be utilised to repay the MTNs.;
viii) assignment over the disbursement account, revenue account, operating account, sale proceed account, debt service reserve account and sinking fund account of Silver
Sparrow Berhad; revenue account of ICSD Venture Sdn. Bhd. and escrow account of Ireka Land Sdn. Bhd.;
ix) assignment of all ICSD Ventures Sdn. Bhd’s present and future rights, title, interest and benefits in and under the insurance policies; and
x)
a first legal charge over all the shares of Silver Sparrow Berhad, ICSD Ventures Sdn. Bhd. and any dividends, distributions and entitlements.
35 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 17 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
Advance payment to the contractors of an ICB subsidiary
Construction progress claims charged by an ICB subsidiary
Acquisition of SENI units by an ICB subsidiary
Management fees charged by an ICB subsidiary
Marketing commission charged by an ICB subsidiary
Project staff cost reimbursed to an ICB subsidiary
Rental expenses charged by an ICB subsidiary
Rental expenses paid on behalf of ICB
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 32)
Capitalisation of amount due to non-controlling interests as share capital
59
2016
US$’000
2015
US$’000
50
1,591
9,960
–
3,331
248
2
– 4
493
50
297
123
50
833
6,423
2,008
3,115
281
289
512
50
317
49
2016
US$’000
2015
US$’000
50
1,259
50
50
1,257
50
297
317
2016
US$’000
2015
US$’000
2,819
–
1,067
1,440
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
35 RELATED PARTY TRANSACTIONS CONT’D
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 2016 and 31 December 2015 are as follows:
Group
Amount due from an ICB subsidiary for advance payment to its contractors
Amount due to an ICB subsidiary for construction progress claims charged
Amount due from an ICB subsidiary for acquisition of SENI units
Amount due from/ (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 from ICB for rental expenses paid on behalf
Company
Amount due from/ (to) an ICB subsidiary for management fees
Note
2016
US$’000
2015
US$’000
(ii)
(i)
(i)
(ii)
(ii)
(ii)
(ii)
(ii)
Note
(ii)
2,903
(928)
1,760
(22)
(13)
–
–
114
1,997
(38)
1,840
25
(43)
(24)
(3)
1,415
2016
US$’000
2015
US$’000
12
(52)
i)
These amounts are trade in nature and subject to normal trade terms.
ii)
These amounts are non-trade in nature and are unsecured, interest-free and repayable on demand.
The outstanding amounts due from/ (to) the other significant related parties as at 31 December 2016 and 31 December 2015 are as follows:
Group
Non-controlling interests
Advances – non-interest bearing (Note 32)
2016
US$’000
2015
US$’000
(12,573)
(10,014)
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 37.
36 BUSINESS COMBINATION
Change in equity interest in subsidiaries
During the financial year, the Group increased its equity interest in Shangri-La Healthcare Investment Pte Ltd (“SHIPL”) from 79.76% to 81.50%(2015: 75.38% to 79.76%)
arising from an issue of new shares in the subsidiary for cash consideration of US$4.3 million. 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, Hoa Lam – Shangri-La 5 Ltd Liability Co and Hoa Lam – Shangri-La 6
Ltd Liability Co, subsidiaries of SHIPL, increased to 72.35% (2015: 71.13%).
The Group recognised an increase in non-controlling interests of US$477,000 (2015: US$585,000) and an increase in accumulated losses of US$477,000 (2015: US$585,000)
resulting from the increase in equity interest in the above subsidiaries. The transaction was accounted for using the acquisition method of accounting.
60
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
37 INVESTMENT IN PRINCIPAL SUBSIDIARIES
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
Hoa Lam Services Co Ltd
Shangri-La Healthcare Investment Pte Ltd and its subsidiaries
Hoa Lam-Shangri-La Healthcare Ltd Liability Co
City International Hospital Co Ltd
Hoa Lam-Shangri-La 3 Ltd Liability Co
Morningstar International Preschool Ltd Liability Co
(Formerly known as Hoa Lam- Shangri-La 4 Ltd Liability Co) *
Hoa Lam-Shangri-La 5 Ltd Liability Co
Hoa Lam-Shangri-La 6 Ltd Liability Co
Country of
incorporation
Principal activities
Effective ownership interest
2015
2016
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Vietnam
Vietnam
Singapore
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
Vietnam
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
MTNs Programme
Property development
Investment holding
Property development
Investment holding
Investment holding
Investment holding
Property development
Hospital ownership and operation
Property development
Property development
Property development
Property development
100%
100%
100%
100%
100%
100%
100%
100%
80%
70%
70%
65%
51%
80%
71%
71%
71%
71%
100%
100%
100%
100%
100%
100%
–
100%
80%
70%
70%
65%
51%
82%
72%
72%
72%
–
72% –
72% –
* The entire shareholding was disposed of in 2016
Principal subsidiaries are those which materially affect the results or assets of the Group.
The shareholdings of the principal subsidiaries are held through subsidiaries.
38 COMMITMENTS AND CONTINGENCIES
The Group and Company do not have any contingencies at the statement of financial position date except as follows:
Debt service reserve account
Under the par down medium term notes programme of up to US$26.748 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$6.69 million) (the “Minimum Deposit”) be maintained in the DSRA at all times. The amount is
disclosed as deposits pledged (refer Note 24). In the event the funds in the DSRA falls below the Minimum Deposit, SSB shall within five (5) Business Days from the date of
receipt of written notice from the facility agent or upon SSB becoming aware of the shortfall, whichever is earlier, deposit such sums of money into the DSRA to ensure the
Minimum Deposit is maintained.
39 EVENT AFTER STATEMENT OF FINANCIAL POSITION DATE
On 4 January 2017, the Shareholders of the Company at an Extraordinary General Meeting approved a proposal to return US$10,000,500 or US$0.75 per share for 13,334,000
shares representing 6.29 per cent of the Company’s share capital to Shareholders through N+1 Singer. The capital distribution was completed on 10 January 2017 and the
repurchased shares of 13,334,000 are currently held as Treasury Shares. The issued and paid up share capital of The Company remains unchanged at 212,025,002.
61
Annual Report 2016
NOTES TO THE
FINANCIAL STATEMENTS cont’d
40 PRIOR YEAR RESTATEMENT
In the previous financial year, the Group disposed of its 55% interest in ASPL PLB-Nam Long Limited Liability Co. (“ASPL PLB-Nam Long”), a subsidiary of the Group, who is the
developer of the Waterside Estates residential project in Vietnam, to Nam Long Investment Corporation (“Nam Long”) and Nam Khang Construction Investment Development
Limited Liability Company (“Nam Khang”) for a cash consideration of US$8.2 million.
As the Group is principally a property developer, the disposal of ASPL PLB-Nam Long represents a disposal of the Waterside Estates residential project. Accordingly, the Group
has more appropriately reflected the disposal of ASPL PLB-Nam Long as a disposal of the Group’s inventory, the Waterside Estates residential project. Thus reflecting the
transaction as revenue from sale of the inventory with the relevant costs being recognised as its cost of sales, instead of gain on disposal of a subsidiary which was reflected in
the previous year’s financial statements.
The cash generated from Operating profit/ (loss) before changes in working capital has been adjusted by the gain on disposal of subsidiary of US$675,000, this has now been
reflected into changes in working capital in net cash from operating activities rather than Operating profit/ (loss) before changes in working capital as previously stated. The
operating cash flows have also been adjusted by the net cash outflows on disposal, which was made up of proceeds received in 2015 (US$1,517,000), offset by the cash and cash
equivalents disposed of (US$1,663,000), this has been reflected in net cash from operating activities rather than net cash from investing activities as previously stated.
The effects of restatement are disclosed below:
Consolidated statement of comprehensive income
Revenue
Cost of sales
Other Income
Consolidated statement of cash flows
Operating profit/ (loss) before changes in working capital
Cash generated from operations (before interest and tax paid)
Net cash used in operating activities
Net cash from investing activities
Group
31.12.2015
As previously
stated
US$’000
As restated
US$’000
30,323
(29,164)
28,886
(6,248)
4,320
(11,032)
9,005
22,096
(21,612)
29,561
(6,923)
4,466
(10,886)
8,859
The comparatives in notes 5, 6 and 7 to the financial statements were restated to reflect the above.
The restatement had no impact on the profit for the financial year, the total assets, total equity, or net cash flow for any of the periods presented of the Group.
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 office, 12 Castle Street, St. Helier, Jersey,
JE2 3RT, Channel Islands.
62
Annual Report 2016
CORPORATE
INFORMATION
NON-EXECUTIVE CHAIRMAN
Mohammed Azlan Hashim
NON-EXECUTIVE DIRECTORS
Christopher Henry Lovell
David Harris
John Lynton Jones
Gerald Ong Chong Keng
Nicholas John Paris
Ferheen Mahomed
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
Nplus 1 Singer Advisory LLP
One Bartholomew Lane
London EC2N 2AX
United Kingdom
PUBLIC RELATIONS
Tavistock Communications
1 Cornhill
London EC3V 3ND
United Kingdom
REGISTRAR
Computershare Investor Services (Jersey) Limited
Queensway House
Hilgrove Street, St. Helier
Jersey JE1 1ES
Channel Islands
T +44(0) 370 707 4040
F +44(0) 370 873 5851
The RuMa Hotel
and Residences
Kuala Lumpur
63
STAY TUNED FOR MORE
5:47
3:59
ONE | PROLOGUE
The RuMa Hotel and Residences
10 months ago
TWO | IDENTITY
The RuMa Hotel and Residences
4 months ago
www.youtube.com/watch?v=SJTdclhSA2Y&t=210s
www.youtube.com/watch?v=Rbq0BReijYU
COMING SOON
The RuMa Hotel and Residences on Jalan Kia Peng is a contemporary masterpiece
blending together two distinctive elements of culture & heritage, luxury & comfort.
Experience cosmopolitan living at the heart of Kuala Lumpur City Centre where you will be minutes away from
everything that a vibrant city has to offer!
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
This report is printed on 100% recycled paper