1 | ANNUAL REPORT 2017
A N N U A L
R E P O R T
ASEANA PROPERTIES LIMITED | 2
Contents
Corporate Information
Corporate Information ............................................... 2
Corporate Strategy ....................................................... 3
Chairman’s Statement ................................................ 4
Development Manager’s Review ........................... 6
Property Portfolio ......................................................... 9
Share Price Chart ........................................................10
Performance Summary ............................................10
Financial Review ..........................................................11
Corporate Social Responsibility ..........................12
Calendar of Events .....................................................13
Board of Directors.......................................................14
Directors’ Report .........................................................16
Report of Directors’ Remuneration ...................19
Corporate Governance Statement......................20
Independent Auditor’s Report ..............................24
Financial Statements
Consolidated Statement of
Comprehensive Income ...........................................28
Company Statement of
Comprehensive Income ...........................................29
Consolidated Statement of
Financial Position ........................................................30
Company Statement of
Financial Position ........................................................31
Consolidated Statement of
Changes In Equity ........................................32
Company Statement of
Changes In Equity ........................................33
Consolidated Statement of Cash Flows ........33
Company Statement of Cash Flows ..............35
Notes to the Financial Statements ...............36
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
Link 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
3 | ANNUAL REPORT 2017
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
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.
Ireka Corporation Berhad),
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,
at the 2015 AGM, held on 22 June 2015, the Board put forward a
resolution to Shareholders to determine if the Company should
continue in existence. Shareholders voted for the Company to
continue in existence, at the same time as approving the adoption
of a divestment investment policy to enable the controlled,
orderly and timely realisation of the Company’s assets, with the
objective of achieving a balance between periodically returning
cash to Shareholders and maximising the realisation value of the
Company’s investments (the “Divestment Investment Policy”).
Pursuant to the Divestment Investment Policy, the Company
committed to dispose of all of its assets by June 2018, ahead of
the annual general meeting of the Company to be held in 2018
(the “2018 AGM”), at which, pursuant to the Existing Articles, the
Board is required to propose a discontinuation resolution for the
Company to cease trading as presently constituted (the “2018
Discontinuation Resolution”).
Whilst significant progress has been made in realising the
Company’s assets in an orderly manner and paying down project
debts since the Divestment Investment Policy was adopted, not
all of the Company’s assets have yet been realised. Although
discussions are ongoing in relation to the realisation of the
Company’s remaining assets, the Board cannot be certain that
these discussions will successfully conclude by June 2018 and
therefore ahead of the 2018 AGM and the 2018 Discontinuation
Resolution.
The Board remains of the view that ceasing to trade and placing the
Company into liquidation would have a significant adverse effect
upon Shareholder value and, whilst the Board is obliged to put
forward the 2018 Discontinuation Resolution in accordance with
the Existing Articles, it does not consider that such a resolution is
in the best interests of Shareholders.
At a general meeting of the Company held on 23 April 2018,
Shareholders voted in favour of the Board’s proposals to reject
the 2018 Discontinuation Resolution and to continue with the
Company’s investment policy, for a period of 18 months from
the expected date of the 2018 AGM, 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. The Board believes this will 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 31 December 2019, 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.
KEY FACTS
Exchange: London Stock Exchange Main Market
Symbol: ASPL
Lookup: Reuters - ASPL.L; Bloomberg - ASPL:LN
Domicile: Jersey
Shares Issued: 212,025,002
Shares Held in Treasury: 13,334,000
Voting Share Capital: 198,691,002
Share Denomination: US Dollars
Fee Structure Prior to 1 May 2018:
• Management Fee:
– 2% of NAV
• Performance Fee:
– 20% of the out performance of the NAV over a total
return hurdle rate of 10%
Revised Fee Structure from 1 May 2018:
• Base fee:
– Period up to 30 April 2019 – US$75,000 per month
– From 1 May 2019 – US$50,000 per month
• Realisation fee:
– 1% of Net Disposal Proceeds of each asset if sold
within 3 months of the end of the relevant quater
specified in the published disposal schedule
• Incentive fee:
– 1% of Aggregate Net Disposal Proceeds if Aggregate
Net Disposal Proceeds is between 90% to 100% of
Aggregate RNAV plus;
– 20% of any Aggregate Net Disposal Proceeds in
excess of 100% of Aggregate RNAV
Admission Date: 5 April 2007
ADVISERS & SERVICE PROVIDERS
Development Manager: Ireka Development Management
Sdn. Bhd.
Corporate Broker: Nplus 1 Singer Advisory LLP
Currently approximately 80% of Aseana Properties’ investment
portfolio is allocated to projects in Malaysia and approximately 20%
to projects in Vietnam.
Auditor: KPMG LLP
ASEANA PROPERTIES LIMITED | 4
Chairman’s Statement
Global economic growth was more evenly balanced in 2017. During
the year, many encouraging results were achieved across several
fronts. Economic powerhouses such as the United States of
America, the world’s largest economy, got growth back on track,
while the Eurozone and Japan are set to register growth exceeding
expectations, courtesy of burgeoning global trade. On the back of a
rebound in investment and trade, accommodative policies and the
dissipating impact of the earlier commodity price collapse, global
growth is expected to be sustained over the next couple of years.
In tandem with this, The World Bank forecasts global economic
growth to edge up to 3.1% in 2018 after a stronger-than-expected
year in 2017. However, the global outlook is still vulnerable to
downside risks, including regional instability, possible financial
stress, rising geopolitical tensions and the recent trade dispute
between the United States of America and China.
The solid global growth has boded well for Aseana Properties’
core markets in Malaysia and Vietnam, with both countries
performing well above forecasts. Malaysia’s real Gross Domestic
Product (“GDP”) growth for instance, showed an impressive
steady upward trend to reach 5.9% for the whole of 2017, driven
primarily by strong domestic demand and robust exports.
Malaysia leveraged its strong economic fundamentals to record
strong growth despite the prevalence of cautious sentiment
earlier in the year, given that the Ringgit was by far the worst
performing currency in Asia. The local currency was kept in check
due to prudent measures implemented by Bank Negara Malaysia
(“BNM”), Malaysia’s Central Bank and rebounded strongly from
a 19-year low to deliver a total appreciation of approximately
10.0%. In addition, in January 2018, BNM increased the country’s
Overnight Policy Rate (“OPR”) from 3.0% to 3.25%, the first hike
since July 2016, against a background of steady growth. Despite
the lingering uncertainties ahead of the 14th General Election,
which could somewhat dampen sentiment, analysts predict that
Malaysia’s economy will remain resilient in 2018.
Similarly, Vietnam has emerged as one of the most impressive
emerging market success stories with GDP growth of 6.8% in 2017,
the highest in the last decade. The country’s strong GDP growth
was driven by the robust manufacturing and services sectors
as well as resilient domestic demand, underpinned by thriving
Foreign Direct Investment (“FDI”) growth. Vietnam attracted a
record US$35.9 billion of foreign investments in 2017 as a result
of the low cost of doing business in the country, an abundant
labour force and solid macroeconomic growth. Furthermore,
the nation’s average inflation grew at 3.53% against the previous
year, below the 4.0% target set by the Government whilst the
Vietnamese Dong was one of the most stable Asian currencies in
2017. However, the unresolved issues with the thinly-capitalised
banks and non-performing loans pose other medium-term risks
to the country’s economy.
Despite higher GDP growth and recovery in crude oil prices, the
Malaysian properties in both residential and commercial markets
are still hampered by factors such as the increased cost of living
and oversupply. The rising cost of living, the disparity between
the population’s income and affordability level, as well as the
oversupply of both residential and commercial properties are
the main reasons why the nation’s property market is still facing
headwinds. Completed-but-unsold residential units increased to
approximately RM12.3 billion during the first half of 2017, from
approximately RM8.6 billion a year ago. In addition, new residential
launches fell 9.1% to 28,397 units in the first half of 2017 from
31,257 units in the same period last year. With the impending 14th
General Election, consumers are exercising more caution in big-
ticket long-term purchases. On the other hand, the Vietnamese
property market saw positive growth, underpinned by the country’s
strong economic performance, relatively stable currency and rapid
urbanisation, which have fuelled massive interest from foreign
investors into the Vietnamese real estate market. During the year,
there were a total of 64,000 real estate transactions in Ho Chi Minh
City (“HCMC”) and Hanoi alone, up by 24,000 transactions compared
to 2016. 2017 has also emerged as a landmark year for mergers
and acquisitions in the Vietnamese property sector. According to
Vietnam’s Ministry of Construction, the country currently has over
US$145 billion of real estate developments under construction.
Aseana Properties Limited and its subsidiaries (“the Group”)
registered a significant decrease in revenue from US$112.5 million
in 2016 to US$19.1 million in 2017, largely due to the lack of major
asset sales during the year compared to the sale of the Aloft Kuala
Lumpur Sentral Hotel (“AKLS”) in 2016. The Group recorded a net
loss before taxation of US$5.0 million compared to a net profit of
US$16.2 million in 2016. The disposal of lands at International
Healthcare Park (“IHP”) generated gains of US$5.0 million but
were offset by operating losses and finance costs of IHP of US$2.0
million, City International Hospital (“CIH”) of US$5.4 million, Four
Points by Sheraton Sandakan Hotel (“FPSS”) and Harbour Mall
Sandakan (“HMS”) totalling US$1.6 million. Aseana Properties
recorded a gain on foreign currency translation differences of
US$7.9 million compared to a loss of US$2.5 million in 2016, as
a result of the strengthening of Ringgit against US Dollars from
RM4.4860/US$1.00 as at 31 December 2016 to RM4.0469/US$1.00
as at 31 December 2017.
PROGRESS OF THE PROPERTY PORTFOLIO
Amidst the sluggish property market in Malaysia, sales of
properties at SENI Mont’ Kiara (“SENI”) and The RuMa Hotel and
Residences (“The RuMa”) also progressed at a slower pace. Sales
at SENI to date progressed to approximately 99.3% and sales at
The RuMa increased marginally to 56.7% to date, based on signed
sale and purchase agreements. In addition, the last unit at Tiffani
by i-ZEN was sold during the year.
5 | ANNUAL REPORT 2017
Chairman’s Statement (cont’d)
OUTLOOK
Despite Malaysia’s buoyant economic growth
in 2017, the
repercussions of subdued investor confidence, political uncertainty
and weak currency have adversely affected the Malaysian property
market. On the other hand, Vietnam’s property market has shown
noticeable improvements during the year, in tandem with its robust
economic growth. Nevertheless, The Board and the Manager are
now focusing on realising the remaining assets of the Company
in line with its divestment policy. Aseana Properties remains
committed to ensure optimum capital value is achieved for the
portfolio in a properly managed and timely manner.
On a final note, I wish to take this opportunity to thank the Board
of Aseana Properties, our advisors, shareholders and business
associates for their continued support and guidance throughout
the year.
MOHAMMED AZLAN HASHIM
Chairman
26 April 2018
Meanwhile, the business environment and tourism in Sabah
showed signs of improvement over the year. International and
Malaysian tourist arrivals in Sabah reached 3.7 million in 2017,
which contributed approximately RM7.8 billion to tourism receipts.
Of this, 0.4 million were tourists from China, as a result of
increased flights to Sabah from China. Xiamen Airlines has recently
introduced direct flights from Beijing to Sabah and this move is
expected to spur the number of Chinese tourist arrivals including
those from southern and central China. In addition, the impending
extension of the Sandakan Airport runway will enable the airport
to accommodate larger aircraft, and this will also benefit local tour
operators and indirectly generate revenue for the local economy.
FPSS recorded an occupancy level of 42.1% as at the year ended
31 December 2017 and 38.5% for year 2018 to date. Home to the
first purpose-built cinema in Sandakan, the performance of HMS
has also improved to 71.4% occupancy to date, including a number
of new tenant signings over the past few months.
In Vietnam, two plots of land at IHP were divested for approximately
US$5.4 million and US$7.7 million respectively. On the operations
side, the performance of CIH has seen steady improvement over
the year, with a 58.0% increase in outpatient volume, and 67.2%
increase in inpatient volume compared to 2016. Dr. John Lucas,
a highly reputable and experienced former Medical Director of FV
Hospital, HCMC was appointed as the new Chief Executive Officer
(“CEO”) of CIH with effect from January 2018.
Further information on each of the Company’s properties is set out
in the Manager’s report on pages 7 to 8.
CONTINUATION VOTE
At a general meeting of the Company held on 23 April 2018,
Shareholders voted in favour of the Board’s proposals to reject
the 2018 Discontinuation Resolution and to continue with the
Company’s investment policy, for a period of 18 months from
the expected date of the 2018 AGM, 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. The Board believes this will 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 31 December 2019, 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.
ASEANA PROPERTIES LIMITED | 6
Development Manager’s Review
BUSINESS OVERVIEW
Aseana Properties has come through another challenging year in
2017. There were however some encouraging signs of improved
performances in Malaysia and Vietnam. During the year under
review, the Group successfully sold its remaining unit at Tiffani
by i-ZEN and divested two plots of land in Vietnam for a total
consideration of approximately US$13.1 million. Furthermore,
performance at each of the Company’s three operating assets has
shown encouraging improvements and losses have narrowed. This
is in line with the robust Vietnamese economy and the recovery
in Malaysia’s economic conditions, which have remained resilient
despite being dampened by the weak currency and subdued
investor confidence at the beginning of the year. In addition, the
recent positive economic indicators should bode well for the
Malaysian property market, which will be supported by strong
economic fundamentals. However, the higher-end properties
remain flat and challenging for at least the near future as supply
is still growing faster than demand at the moment. The current
freeze in new approvals for properties above RM1.0 million will
help to re-dress this imbalance in the coming years.
On the back of the lukewarm property market in Malaysia, sales
at both SENI and The RuMa have progressed marginally to 99.3%
and 56.7% to date respectively. Meanwhile, HMS showed notable
improvement in its performance during the year under review with
increased occupancy and footfall contributed by the addition of a
number of new tenants. Similarly, in Vietnam, CIH performed well
over the year with increased revenue and patient numbers.
MALAYSIA ECONOMIC UPDATE
Malaysia’s economic growth improved during 2017, surpassing
expectations, largely underpinned by strong domestic demand
with additional impetus provided by improved external demand.
The nation’s solid performance saw the International Monetary
Fund (“IMF”) upgraded its outlook on Malaysia’s GDP growth to
between 5.5% and 6.0%, while the World Bank made an upward
revision to the country’s GDP growth forecast to 5.8% in 2017. The
Malaysian economy grew at 5.9% in 2017, the strongest pace of
expansion in three years and was among the top performers in Asia,
underpinned by solid private consumption growth. Meanwhile, a
series of good news towards the year end boosted investors’
confidence and the Ringgit rebounded from being one of the worst
performing currencies in Asia at the beginning of the year, to climb
almost 10.0% against the US Dollar towards the end of the year.
The Ringgit took its cue from sturdier crude oil prices to rise from
a low of RM4.4860/US$1.0 at the end of 2016 to approximately
RM4.0469/US$1.0 by the end of 2017. Market interventions such
as BNM’s policy that requires exporters to convert 75.0% of their
proceeds back to Ringgit have enhanced liquidity and demand for
the currency. On the back of stronger growth and a manageable
inflation rate as well as upbeat results in the last quarter of 2017,
BNM increased the country’s OPR from 3.0% to 3.25% in January
2018. The rate was kept unchanged by the Malaysian Central Bank
since July 2016.
Echoing the country’s resilient economic performance, Moody’s
Investors Service (“Moody’s”) had in December 2017, reaffirmed
the Government’s local and foreign currency issuer and senior
unsecured bond ratings at A3, with the outlook being maintained
at “stable”. Similarly, in August 2017, Fitch Ratings affirmed
Malaysia’s Long-Term Foreign and Local-Currency Issuer Default
Ratings (“IDRs”) at “A-” with a stable outlook. During 2017,
domestic inflation was driven mostly by movements in global oil
prices. Malaysia’s Consumer Price Index (“CPI”) stood at 3.7% for
the whole of 2017, which is within its Central Bank’s target of 3.0%
to 4.0%.
FDI plays a major role in stimulating the Malaysian economy and it
serves as an impetus to the development of the country. Emerging
markets, such as Malaysia, will continue to reap benefits as
global investors undertake risk diversification in the region. Mega
infrastructure projects such as the Mass Rapid Transit (“MRT”) in
Kuala Lumpur, High-Speed Rail, East Coast Rail Link and China’s
One Belt One Road initiatives will create new job opportunities and
expand high value-added activities, which will pave the way for
higher-income jobs. The weaker Ringgit over the past few years
has also made Malaysia a more attractive investment destination.
China remained as Malaysia’s largest trading partner for the ninth
consecutive year. The Malaysia-China bilateral trade reached a
total amount of RM237.96 billion in the first 10 months of 2017, up
24.1% from the same period last year. In addition, the nation’s trade
and export activities to the European Union, Japan and the United
States have also increased. The favourable news of Malaysia and
China signing RM144.0 billion worth of agreements and the Saudi
Aramco and Petronas RM31.0 billion deals have been noteworthy
in lifting the positive business sentiment in Malaysia. Following a
record high FDI in 2016, Malaysia recorded an FDI net inflow of
RM39.2 billion in 2017. Notwithstanding the positive developments
in the nation’s FDI growth, the lingering uncertainties ahead of the
14th General Election (“GE14”) will be seen as a risk to the country’s
political health. The 13th Malaysian Parliament was dissolved on
7 April 2018 to pave way for the GE14 which is now scheduled to be
held on 9 May 2018.
VIETNAM ECONOMIC UPDATE
Vietnam saw a very positive year for its economic development
notwithstanding that the year started off on a subdued note due to
a prolonged drought. The country’s economy expanded by 6.8% in
2017, the highest growth of the last decade and slightly higher than
the Government’s initial target of 6.7%. The robust GDP growth
was driven by strong activity in the manufacturing and services
sector as well as an increase in domestic demand and sturdy retail
sales growth. Additionally, during the last quarter of the year,
Vietnam’s economy expanded 7.65% compared to the same period
in the previous year. Vietnam emerged as one of the world’s most
impressive emerging market countries, achieving high growth
rates and attracting significant foreign direct investment.
Meanwhile, through the implementation of market stabilisation
measures by the Vietnamese Government, as well as the
adoption of timely monetary policies by its Central Bank to
bolster macroeconomic stability, Vietnam’s core inflation growth
was contained at 1.4% in 2017. Despite the nation’s average CPI
edging up by 3.53% against the previous year, it is still below the
Vietnamese Government’s target of 4.0%. Strong increases were
recorded in the healthcare and education services, with hikes
of 42.3% and 9.1% respectively, mainly caused by scheduled fee
adjustments.
In July 2017, The State Bank of Vietnam unexpectedly eased the
country’s monetary policy by cutting its benchmark interest rate for
the first time in three years from 6.5% to 6.25%. This was positive
for the country’s economic growth and as a result, the emergence
of new companies hit a record high, with 127,000 new companies
registered in 2017, well above the record of 110,000 firms set up the
year before. Vietnam remained an attractive destination to foreign
investors with total FDI inflow hitting a record high of US$35.9
billion, an increase of 44.4% against 2016. The nation’s export
revenue expanded by 21.0% in 2017 to reach US$213.7 billion, the
highest in the past five years. Despite these notable achievements,
there remain shortcomings in the country’s economy, such as high
public debt and non-performing loans, dependence on a low-cost
labour force and depleting natural resources which need to be
addressed soon.
7 | ANNUAL REPORT 2017
Development Manager’s Review (cont’d)
PORTFOLIO REVIEW
MALAYSIA
PROPERTY MARKET REVIEW
The Malaysian Property market remained in a lull in 2017, although
some believed that the country’s property market was on the road
to recovery. Despite the country’s improved economic growth,
Malaysia’s commercial and housing property markets continued
to face a glut of supply. The key issues of price unaffordability,
overhang of high-rise homes, rising cost of living and tight lending
guidelines have had a dampening effect on the property market.
According to the National Property Information Centre (“NAPIC”),
the number of unsold properties in the country increased by 41.0%
to 21,000 units, valued at RM12.3 billion, in the first half of 2017
compared to the corresponding period in the previous year. In a bid
to avoid the oversupply issue affecting the nation’s economy, the
Government has recently frozen the approvals for developments
of four components of the property market which
include
condominiums and serviced apartments priced at RM1.0 million
and above. On a brighter side, the Malaysian Government has not
proceeded with the proposal to increase stamp duty rates from
3.0% to 4.0% on transfer instruments for properties worth more
than RM1.0 million, which was initially planned for 1 January 2018.
Malaysia’s tourism sector remains as the third largest contributor
to the country’s economy and is one of the twelve National Key
Economic Areas in the Government’s vision to propel Malaysia to be
a high-income nation by 2020. The Malaysian Government aspires
to attract 36.0 million tourists to Malaysia which will generate
income of RM168.0 billion by 2020. Sabah has, for instance,
welcomed 3.68 million international and Malaysian tourists in 2017,
representing an increase of 7.5% compared to the same period in
2016. Of this, 0.4 million of them were tourists from China. Room
rates remained competitive and the average occupancy for hotels
located in the Klang Valley for January to September increased
by 5.0% year-on-year. From the beginning of September 2017,
tourism tax was officially enforced by the Malaysian Government. A
flat rate of RM10 per room per night for all hotel classifications has
been imposed on foreign tourists. In addition, the nation has been
recognised as the “Medical Travel Destination of the Year” for the
third consecutive year at the International Medical Travel Journal’s
Medical Travel Awards 2017. The RM30.0 million allocations to the
Malaysia Healthcare Travel Council under Budget 2018 will further
spur the growth of the country’s medical tourism industry.
Aseana Properties currently has five investments in Malaysia.
These investments consist of residential properties, hotels and a
retail mall:
• SENI Mont’ Kiara
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 99.3% to date, with only four large
units remaining unsold. Debt on the project was 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 world-famous Petronas Twin Towers, KLCC Convention
Centre, Suria KLCC shopping mall, KLCC Park and the Grand
Hyatt Kuala Lumpur. Aseana Properties owns 70.0% of this
project and remaining 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 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 expected to complete in
June 2018. 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 subdued property market in Malaysia. To date, total
sales at The RuMa have increased marginally to 56.7%, based
on signed sale and purchase agreements. During 2017 and year-
to-date, the Manager has participated in various marketing
and promotional events to boost sales of the remaining units,
both locally and internationally, but the results were below
expectation. Debt on the project was fully repaid.
• Harbour Mall Sandakan
HMS commenced operations in July 2012. The occupancy rate
at HMS is currently recorded at 71.4%. Notable tenants include
Lotus Five Star Cinema, Popular Bookstore, Levi’s, The Body
Shop, Watsons and McDonalds, amongst others. 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.
is
HMS
funded by medium term notes amounting to
approximately US$24.3 million (RM100.0 million) as at 31
December 2017.
• Four Points by Sheraton Sandakan Hotel
FPSS recorded an occupancy rate of 38.5% for year 2018 to
date, with an Average Daily Rate of about US$57 (RM230).
Sandakan’s hotel occupancy has been greatly affected by on-
going negative travel advisories issued by some countries in
response to previous cases of kidnapping for ransom along
the coast of Eastern Sabah. Occupancy has improved over the
last two years in line with the marked improvement in coastal
security in Sabah. The management of FPSS continues to
improve the efficiency of its operations and to work with the
relevant authorities to improve tourist arrivals to Sandakan. The
impending extension of Sandakan Airport Runway will attract
more commercial airlines and charter flights, especially from
China, to fly directly to Sandakan.
• Kota Kinabalu Seafront Resort & Residences
Aseana Properties acquired three adjoining plots of land
totalling approximately 80 acres in September 2008 with the
intention of developing a 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 and
the Manager is currently in negotiation with a potential buyer.
VIETNAM
PROPERTY MARKET REVIEW
The property market in Vietnam was buoyant in 2017 on the back of
the nation’s robust economic growth, a relatively stable currency,
more stringent Government lending controls and interest rates,
as well as the removal of barriers to foreign ownership. The
ASEANA PROPERTIES LIMITED | 8
Development Manager’s Review (cont’d)
announcement made in August 2017 concerning a draft amendment
to the Land Law which allows foreigners to own properties for up
to 99 years, as well as mortgaging of assets associated with land-
use rights at foreign credit institutions, have created an impetus
in the Vietnamese property market. FDI in the real estate sector
has continually increased over the last five years and is ranked
third in attracting FDI to Vietnam, accounting for 8.5% of the total
registered capital of the country during the year.
The Vietnamese property market performed well as the country
celebrated stellar GDP growth in 2017. The demand for residential
property in the nation’s two largest housing markets remained
at strong levels in 2017. In HCMC, record sales of villas and
townhouses were achieved during the last quarter of the year as
new launches in the mid-end segment reached new heights. In
addition, apartment sales in HCMC were over 15,100 units in Q4
2017, increasing 44.0% compared to last year.
• City International Hospital
Construction of CIH was completed in March 2013 and it
commenced business in January 2014. CIH is a modern private
care hospital conforming to international standards with 320
beds (Phase 1: 168 beds). In early 2018, the hospital appointed
Dr John Lucas as the Chief Executive Officer (“CEO”) to lead
the operations team and to replace Dr Le Quoc Su, who left
his position as the CEO of the hospital at the end of 2017. Prior
to joining CIH, Dr John Lucas was the Medical Director of FV
Hospital, where he was instrumental in achieving the first
Joint Commission International (“JCI”) accreditation in HCMC
and transformed a stand-alone hospital into an integrated
healthcare system. Dr Lucas has an excellent track record in
managing world-class hospitals.
The development of City International Hospital is funded by total
facilities of US$37.1 million as at 31 December 2017.
Apart from the strength in the residential market, the office market
in both HCMC and Hanoi was positive, recording healthy occupancy
rates with the average occupancy in HCMC reaching as much as
96.0%. In tandem with the increase in newly registered businesses,
Vietnam’s office market is expected to continue to experience
healthy absorption momentum and bustling new supply. Similarly,
Vietnam’s retail sector is attracting investments from many
foreign enterprises owing to its favourable economic outlook,
improved standard of living, increasingly open economy with rising
employment opportunities and large population. The Government’s
policy of allowing foreign retailers to establish businesses with
100.0% foreign capital since 2015 has made Vietnam one of the
world’s leading investment destinations. According to AT Kearney,
Vietnam is ranked 6th in the Global Retail Development Index in
2017, which signifies the nation’s appeal in the retail market.
OUTLOOK
Overall, Malaysia has fared well in 2017 as the country’s economy
remained bullish amid a combination of daunting domestic and
external factors, which included the weak currency and low
commodity prices at the beginning of the year. However, the
country’s property market is expected to remain flat and challenging
going into 2018, with oversupply and affordability issues remaining
unresolved. The impending 14th General Election brings with it
lingering uncertainties that could somewhat dampen sentiment.
Nevertheless, the recent curbs implemented by the Government
on high-end properties are expected to provide a breather for the
tough luxury residential sector. On the other hand, Vietnam’s real
estate market continues to maintain a positive growth rate due
to the country’s thriving and robust economic growth, which has
propelled the nation’s domestic property market.
In line with the buoyant retail sector, Vietnam’s tourism industry
bore encouraging results in 2017. According to the Vietnam
National Administration of Tourism, the number of international
visitors during the year reached 12.9 million with tourism revenue
reaching more than US$23.0 billion, an uplift of 29.1% and 25.0%
respectively, compared to 2016. China and South Korea were still
the largest sources of visitors with 6.4 million arrivals during
the year. Furthermore, Vietnam jumped eight notches to the 67th
position in the Travel and Tourism Competitiveness Report 2017,
published by the World Economic Forum.
Given the extension of life of Aseana Properties to 31 December
2019, the Manager, together with the Board of Directors of Aseana
Properties remain focused on exploring all possible opportunities
to divest the remaining assets in its portfolio in an orderly and
timely manner.
In closing, please allow me to take this opportunity to express my
warmest thanks to the Board of Directors of Aseana Properties, our
advisors, shareholders and business associates for the relentless
support and guidance rendered throughout the year.
LAI VOON HON
President
Ireka Development Management Sdn. Bhd.
Development Manager
26 April 2018
Aseana Properties now has two investments in Vietnam:
• International Healthcare Park
IHP is a planned mixed development on 37.5 hectares of land
comprising 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. There is a total of 19 plots of
land which have been fully approved for development and Land
Use Right (“LUR”) issued and paid for 69 years lease. Of the 19
plots, 6 plots are dedicated to hospital and related functions. To
date, 7 plots have been developed or divested. Apart from the
international-class City International Hospital, IHP also boasts
the largest AEON retail mall in Ho Chi Minh City.
US$14.3 million of loan facilities to part finance the land and
working capital remain outstanding as at 31 December 2017.
9 | ANNUAL REPORT 2017
Property Portfolio
as at 31 December 2017
Project
Type
Effective
Ownership
Approximate Gross
Floor Area (sq m)
Approximate Land
Area (sq m)
Scheduled Completion
Completed projects
SENI Mont’ Kiara
Kuala Lumpur, Malaysia
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
Completed in March
2013
Private general
hospital
72.4%*
48,000
25,000
Phase 1: City International
Hospital, International
Healthcare Park,
Ho Chi Minh City, Vietnam
Project under development
The RuMa Hotel and
Residences
Kuala Lumpur, Malaysia
Undeveloped projects
Luxury
residential
tower and
bespoke hotel
70.0%
40,000
4,000
Second quarter of 2018
Other developments in
International Healthcare Park,
Ho Chi Minh City, Vietnam
(formerly International
Hi-Tech Healthcare Park)
Commercial
and residential
development
with healthcare
theme
Kota Kinabalu Seafront Resort
& Residences
Kota Kinabalu, Sabah,
Malaysia
Divested projects
Tiffani by i-ZEN
Kuala Lumpur, Malaysia
1 Mont’ Kiara by i-ZEN
Kuala Lumpur, Malaysia
Waterside Estates
Ho Chi Minh City, Vietnam
i) Boutique
resort hotel
and resort
villas
ii) Resort
homes
Luxury
condominiums
Office suites,
office tower
and retail mall
Villa and
high-rise
apartments
72.4%*
972,000
351,000
n/a
100.0%
80.0%
100.0%
100.0%
n/a
327,000
n/a
81,000
15,000
96,000
14,000
Completed in August
2009
Completed in November
2010
55.0%
94,000
57,000
n/a
Kuala Lumpur Sentral Office
Towers & Hotel
Kuala Lumpur, Malaysia
Office towers
and a business
hotel
40.0%
107,000
8,000
Office towers:
Completed in December
2012
Hotel: Completed in
January 2013
Aloft Kuala Lumpur Sentral
Hotel
Kuala Lumpur, Malaysia
Listed equity investment
in Nam Long Investment
Corporation,
an established developer in
Ho Chi Minh City, Vietnam
Business-class
hotel
(a Starwood
Hotel)
Listed equity
investment
*Shareholding as at 31 December 2017
n/a: Not available/not applicable
100.0%
28,000
5,000
Completed in January
2013
6.9%
n/a
n/a
Effective ownership as
at FY2015 before full
disposal in November
2016
ASEANA PROPERTIES LIMITED | 10
Share Price Chart
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Jun 17
Jul 17
Aug 17
Sep 17
Oct 17
Nov 17
Dec 17
Aseana
FTSE All Shares
FTSE 350/Real Estsate
Volume
Performance Summary
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 ratio 1
Net debt-to-equity ratio 2
(Loss)/Earnings Per Share
Earnings per ordinary share - basic (US cents)
- diluted (US cents)
Notes:
1 Debt-to-equity ratio = (Total Borrowings ÷ Total Equity) x 100%
2 Net debt-to-equity ratio = (Total Borrowings less Cash and Cash Equivalents ÷ Total Equity) x 100%
Year ended
31 December 2017
Year ended
31 December 2016
-47.00%
26.71%
-39.43%
1.92%
9.00%
10.34%
189.03
0.69
0.53
568.05
68.26%
48.93%
-2.10
-2.10
-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
11 | ANNUAL REPORT 2017
Financial Review
INTRODUCTION
The Group recorded consolidated comprehensive profit of US$2.0
million for the financial year ended 31 December 2017, attributable
to gains on disposal of lands and gains on foreign currency
translation differences for foreign operations, offset by operating
losses and finance costs of its International Healthcare Park, City
International Hospital, Four Points by Sheraton Sandakan Hotel
and Harbour Mall Sandakan.
STATEMENT OF COMPREHENSIVE INCOME
The Group registered revenue of US$19.1 million for the financial year
ended 31 December 2017, compared to US$112.5 million for previous
financial year. The revenue was mainly attributable to the sale of
two plots of land at International Healthcare Park during the year,
generating US$13.1 million, while the sale of Aloft Kuala Lumpur
Sentral Hotel in 2016 generated revenue of US$104.3 million.
The Group recorded a net loss before taxation of US$5.0 million
for the financial year ended 31 December 2017, compared to
a net profit before taxation of US$16.2 million for the previous
financial year. The disposal of the two plots of land at International
Healthcare Park generated gains on disposal of US$5.0 million but
were offset by operating losses and finance costs of International
Healthcare Park of US$2.0 million, City International Hospital of
US$5.4 million, Four Points by Sheraton Sandakan and Harbour
Mall Sandakan of total US$1.6 million.
Net loss attributable to equity holders of the parent was US$4.2
million for the year ended 31 December 2017, compared to a net
profit of US$18.9 million for previous financial year. Taxation for
the year was higher at US$0.9 million (2016: US$0.7 million) due to
an increase in the number of completed units of SENI and Tiffani
sold in 2017.
The consolidated comprehensive income for the year ended 31
December 2017 was US$2.0 million (2016: US$10.5 million),
which included gains on foreign currency translation differences
for foreign operations of US$7.9 million (2016: losses of US$2.5
million) due to strengthening of Ringgit against US Dollars from
RM4.4860/US$1.00 as at 31 December 2016 to RM4.0469/US$1.00
as at 31 December 2017. There was no fair value adjustment on
available-for-sale assets in the financial year as the remaining
shares in Nam Long Investment Corporation were sold in 2016.
Basic and diluted loss per share for the year ended 31 December
2017 were both US cents 2.10 (2016: Basic and diluted earnings per
share of US cents 8.89).
STATEMENT OF FINANCIAL POSITION
Total assets as at 31 December 2017 were US$325.7 million,
compared to US$294.4 million for previous year, representing an
increase of US$31.3 million. This was mainly due to an increase
in The RuMa inventories of US$32.7 million which is under
construction.
Total liabilities as at 31 December 2017 were US$191.2 million,
compared to US$152.2 million for previous year, representing an
increase of US$39.0 million. This was mainly due to an increase of
trade and other payables of US$29.1 million, which are attributable
to The RuMa.
Net Asset Value per share at 31 December 2017 was US$0.69
(2016: US$ 0.68).
CASH FLOW AND FUNDING
Cash flow generated from operations before interest and tax paid
was US$8.9 million for financial year ended 31 December 2017,
compared to US$105.1 million for previous year. The latter was
mainly due to disposal of Aloft Kuala Lumpur Sentral Hotel.
The Group generated net cash flow of US$2.1 million from investing
activities, compared to US$9.4 million for previous year. The latter
was mainly due to the disposal of the remaining shares in Nam Long
Investment Corporation.
The Group’s subsidiaries borrow to fund property development
projects. As at 31 December 2017, the Group’s gross borrowings
stood at US$91.8 million (2016: US$83.6 million). The borrowings
included a Dong loan of US$16.0 million equivalent which would
be used to refinance part of the existing US Dollar loan for the
City International Hospital. Net debt-to-equity ratio was 49.0%
(2016: 40.0%). The Group will continue to focus on parring down
its borrowings.
Finance income was US$0.39 million for financial year ended
31 December 2017 (2016: US$0.4 million). Finance costs were
US$5.7 million (2016: US$9.6 million), incurred by International
Healthcare Park, City International Hospital, Four Points by
Sheraton Sandakan Hotel and Harbour Mall Sandakan.
On 10 January 2017 the Company returned US$10,000,500 to
Shareholders by way of a Tender Offer, purchasing 13,334,000
shares, representing 6.29 per cent of the Company’s share capital,
at a price of US$0.75 per share.
EVENT AFTER STATEMENT OF FINANCIAL POSITION
DATE
At a general meeting of the Company held on 23 April 2018,
Shareholders voted in favour of the Board’s proposals to reject
the 2018 Discontinuation Resolution and to continue with the
Company’s investment policy, for a period of 18 months from
the expected date of the 2018 AGM, 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. The Board believes this will 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 31 December 2019, 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.
DIVIDEND
No dividend was declared or paid in 2017 and 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 Annual Report.
TREASURY AND FINANCIAL RISK MANAGEMENT
The Group undertakes risk assessments and identifies the
principal risks that affect its activities. The responsibility for the
management of each key risk has been clearly identified and
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 2018
ASEANA PROPERTIES LIMITED | 12
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.
MANAGING CORPORATE RESPONSIBILITY
The Board of Directors at Aseana Properties has oversight
mechanisms, through corporate-level policies and standards to
ensure an effective CSR programme is delivered in the interest
of its employees, shareholders and the community at large. It is
determined to ensure that its CSR programme acts legally and
responsibly on all matters and that the highest ethical standards
are maintained. The Board recognises this as a key part of its
risk management strategy to protect the reputation of Aseana
Properties and shareholders values are enhanced.
EMPLOYEES
In the current changing economic environment, competing demands
and stress, the welfare of employees is critical in order to ensure
they are productive, creative and innovative. This is also in order
to achieve the highest standard in the workplace. The Company
therefore works closely with its Development Manager to ensure
that all employees are treated fairly and with dignity because it is the
right thing to do and also to get the best out of them.
HEALTH AND SAFETY
Aseana Properties considers Health and Safety to be important
because it protects the well-being of employees, visitors and
clients. Looking after Health and Safety makes good business
sense and the Company works hard to provide a healthy workplace
environment for its staff, contractors and visitors.
Some of the organised efforts and procedures for reducing
workplace accidents, risks and hazards, exposure to harmful
solutions include:
•
•
Paying particular attention to the regular maintenance of
equipment, plant and systems to ensure a safe working
environment.
information,
instruction, training and
Providing sufficient
supervision to enable all employees to avoid hazards and to
contribute positively to their own safety and safe performance
at work.
STAKEHOLDERS
Aseana Properties works collaboratively with its stakeholders to
improve services and to ensure client satisfaction. The Company
is committed to meaningful diaIogue and encourages stakeholder
participation through stakeholder meetings, roadshows, briefings,
conference calls, timely release of annual report and publication
of its quarterly magazine, CiTi-ZEN (now in its 12th year). Aseana
Properties also maintains an updated and informative website,
www.aseanaproperties.com that is accessible to stakeholders and
members of the public.
The RuMa Hotel and Residences has also created its own YouTube
Channel with the aim of informing their buyers, staff, business
associates and the public at large all aspects of The RuMa’s
development, providing an overview of The RuMa and introducing
key individuals behind the concept and design of both the hotel and
residences.
ENVIRONMENTAL MANAGEMENT
Aseana Properties believes that any commitment to a more
environmentally sustainable world has to start at home, and to this
end, it challenges itself to work in an environmentally responsible
manner and to find new ways to reduce its carbon footprint.
It also works with architects to look at how they can be more
environmentally friendly by incorporating natural elements such
as water, greenery, light and air into its projects.
The RuMa Hotel and Residences have both been separately
awarded the Green Building Index (GBI) Provisional Gold Rating
having successfully met all the GBI Criteria under each category
for Energy Efficiency, Indoor Environment Quality, Sustainable Site
Planning & Management, Materials & Resources, Water Efficiency
and Innovation. The GBI is Malaysia’s industry recognised green
rating tool for buildings to promote sustainability in the building
industry. The achievement is a significant milestone for Aseana
Properties to expand its green building footprints and delivering
“Green” Building projects that can lay claim to “Sustainability and
Environmental Excellence”.
COMMUNITY
Aseana Properties understands the importance of community
engagement both for the communities themselves but also for
giving staff more meaningful experiences by tapping into their
professional skills and capabilities.
Throughout the year, Sandakan Harbour Mall organised the
following as part of their CSR programme:
•
•
•
•
The Mall launched its official mascots, Mario and Manja in April
2017 as part of its branding exercise. The inspiration for the
characters are taken from the Orangutan, extinct native animal
to the State of Sabah.
Festive event with 20 children from an orphange in July 2017
where they were invited to visit and celebrate the festivities
at the mall. They had fun with archery, singing, going to the
cinema and Ronald McDonald was the event’s highlight when
he made a guest appearance to entertain the children.
The mall celebrated its Fantastic Fifth Anniversary in July 2017,
hosting a party for local dignitaries, business associates and
tenants. There were performances and games organised for the
enjoyment of the audience and the new tagline for the mall was
also unveiled at the event, “Pulse of the City”.
20 senior managers from the Mall visited the Children’s Ward
at the Duchess of Kent Hospital, Sandakan in December 2017
handing over specially made cupcakes and toys for everyone as
part of the festive mood.
13 | ANNUAL REPORT 2017
Mr Nguyen Thanh Phong, Chairman of the
People’s Committee, HCMC visited CIH.
HMS celebrated its fifth year anniversary
with a party at the concourse of The Mall.
Aseana Properties announced its Half-
Year Results for the 6-month period ended
30 June 2017.
National Assembly Chairman Mr Nguyen
Thi Kim Ngan visited CIH.
Aseana Properties published its Q2 2017
Corporate Presentation.
CIH organised its International Conference
on Science and Technology for the second
time.
Aseana Properties announced a further
update on the progress of divestment of
the Company’s assets following an earlier
update announced on 3 July 2017.
Aseana Properties published its Q3 2017
Corporate Presentation.
Calendar of Events
10
Jul
15
Jul
25
Aug
05
Sep
20
Sep
20
Oct
24
Nov
15
Dec
04
Jan
14
Jan
27
Apr
23
Jun
Aseana Properties convened its
Extraordinary General Meeting at its
registered office in Jersey, Channel Islands
where the Shareholders had supported the
Board’s recommendation to vote in favour
of the Tender Offer Resolution to approve
the Tender Offer and subsequent buyback
of the tendered shares from N+1 Singer
Capital Markets by Aseana Properties.
CIH celebrated its 3rd year anniversary.
Aseana Properties announced its Audited
Full Year Results for the financial year
ended 31 December 2016.
Aseana Properties announced that its
72.35% owned subsidiary, Hoa Lam-
Shangri-la Healthcare Limited Liability
Company (“HLSL”), had completed the
sale of a plot of 1.23 hectares of land at
International Healthcare Park (“IHP”),
through the sale of its 100 per cent stake in
HLSL 5 Limited Liability Company (“HLSL
5”) to Tien Phat Consultancy Investment
Company Limited, for a total consideration
of US$5.47 million.
In addition, HLSL had entered into a
conditional sale agreement with Tri Hanh
Consultancy Company Limited to dispose of
HLSL’s 100 per cent stake in HLSL 6 Limited
Liability Company (“HLSL 6”) for a total
consideration of US$7.73 million. HLSL 6
held a 1.19 hectare plot of land at IHP.
03
Jul
Aseana Properties convened its 11th Annual
General Meeting at its registered office in
Jersey, Channel Islands. All the resolutions
tabled were passed at the meeting.
Aseana Properties announced an update
on the divestment of the Company’s assets
which commenced following a Shareholder
vote on 22 June 2015.
Aseana Properties published its Q1 2017
Corporate Presentation.
ASEANA PROPERTIES LIMITED | 14
Board of Directors
MOHAMMED AZLAN HASHIM
Non-Executive Chairman
Mohammed Azlan Hashim was appointed as Chairman (Non-
Executive) of Aseana Properties in March 2007.
In Malaysia, Azlan serves as Chairman of several public entities,
listed on the Bursa Malaysia Securities Berhad, including IHH
Healthcare Berhad, D&O Green Technologies Berhad and Marine
& General Berhad (formerly known as SILK Holdings Berhad).
He has extensive experience working in the corporate sector
including financial services and investments. Among others, he has
served as Chief Executive, Bumiputra Merchant Bankers Berhad,
Group Managing Director, Amanah Capital Malaysia Berhad and
Executive Chairman, Bursa Malaysia Berhad Group.
Azlan also serves as a Board Member of various government
related organisations
including Khazanah Nasional Berhad,
Labuan Financial Services Authority and is a member of 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.
CHRISTOPHER HENRY LOVELL
Non-Executive Director
Christopher Henry Lovell was appointed as Director (Non-
Executive) of Aseana Properties in March 2007. He was a
partner in Theodore Goddard between 1983 and 1993 before
setting up his own legal practice in Jersey. In 2000, he was
one of the founding principals of Channel House Trustees
Limited, a Jersey regulated trust company, which was
acquired by Capita Group plc in 2005, when he became a
director of Capita’s Jersey regulated trust company until his
retirement from Capita in 2010.
Christopher was a director of BFS Equity Income & Bond
plc between 1998 and 2004, BFS Managed Properties plc
between 2001 and 2005 and Yatra Capital Limited between
2005 and 2010.
Christopher holds a LI.B (Hons) degree from the London
School of Economics and is a member of the Law Society
of England & Wales.
DAVID HARRIS
Non-Executive Director
David Harris was appointed as Director (Non-Executive)
of Aseana Properties in March 2007. David is currently
Chief Executive of InvaTrust Consultancy Ltd, a company
that specialises in the provision of investment marketing
services to the Financial Services Industry in both the
UK and Europe. He was formerly Managing Director
of Chantrey Financial Management Ltd, a successful
investment and fund management company linked to
Chartered Accountants, Chantrey Vellacott. Additionally,
he also served as Director of the Association of Investment
Companies overseeing marketing and technical training.
He is currently a non-executive director of a number of
quoted companies in the UK including Character Group
plc, Small Companies Dividend Trust plc, F&C Managed
Portfolio Trust plc and Manchester & London Investment
Trust plc. He writes regularly for both the national and
trade press and appears regularly on TV and Radio as an
investment commentator. He is a previous winner of the
award “Best Investment Adviser” in the UK.
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.
15 | ANNUAL REPORT 2017
Board of Directors (cont’d)
FERHEEN MAHOMED
Non-Executive Director
Ferheen Mahomed was appointed as Director (Non-
Executive) of Aseana Properties in June 2015. Ferheen is
currently Group General Counsel for Hong Kong Exchanges
and Clearing Limited. Her previous roles included Executive
Vice President of Business Development for Pacific Century
Group and Group General Counsel for CLSA Asia Pacific
Markets for four years after spending 14 years as Asia
Pacific General Counsel for Societe Generale. Ferheen is
both a UK and Hong Kong qualified lawyer having previously
worked at Slaughter and May in Hong Kong and London.
She is a law graduate from the University of Hong Kong
and Rhodes Scholar to St. John’s College Oxford, holding
Bachelor of Civil Law Degree from Oxford.
Ferheen is heavily involved in the financial community and
is a former member of the product advisory committee of
the Securities and Futures Commission of Hong Kong as
well as the Asia Pacific legal and regulatory Committee
of ISDA.
GERALD ONG CHONG KENG
Non-Executive Director
Gerald Ong was appointed as Director (Non-Executive) of Aseana
Properties in September 2009. Gerald is Chief Executive Officer
of PrimePartners Corporate Finance Group, has over 20 years
of corporate finance related experience at various financial
institutions providing a wide variety of services from advisory,
M&A activities and fund raising exercises incorporating various
structures such as equity, equity-linked and derivative-enhanced
issues. In June 2007, he was appointed a Director of Metro Holdings
Limited which is listed on the Singapore Exchange Securities
Trading Limited.
Gerald has been granted The Institute of Banking and Finance
(IBF) – Distinguished Fellow status and is an alumnus of the
National University of Singapore, University of British Columbia
and Harvard Business School.
NICHOLAS JOHN PARIS
Non-Executive Director
Nicholas John Paris was appointed as Director (Non-
Executive) of Aseana Properties in June 2015. Nicholas is
a portfolio manager for LIM Advisors (“LIM”), an Asian-
focused investment management firm, headquartered in
Hong Kong, and he specialises in investing in closed ended
investment funds. He is based in London and graduated
from Newcastle University with a Bachelor of Science
degree with Honours in Agricultural Economics. He is
also a Chartered Accountant and a Chartered Alternative
Investment Analyst. He worked with Rothschild Asset
Management from 1986 until 1994, launching specialist
investment products before becoming a corporate adviser
and broker in closed ended investment funds with a
particular focus on those investing in emerging markets.
In this role, he worked between 1994 and 2001 at Baring
Securities, Peregrine Securities and then Credit Lyonnais
Asia Securities. He then joined the hedge fund industry in
a series of sales roles before founding Purbeck Advisers in
2006, which is his own advisory and sales business. He has
been advising LIM on investing in Asian closed end funds
for eight 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).
ASEANA PROPERTIES LIMITED | 16
Directors’ Report
as at 31 December 2017
The Directors present their report together with the audited
financial statements of the Group for the year ended 31 December
2017.
PRINCIPAL ACTIVITIES
The principal activities of the Group are development of upscale
residential and hospitality projects, sale of development land and
operation and sale of hotel, mall and hospital in Malaysia and
Vietnam.
BUSINESS REVIEW AND FUTURE DEVELOPMENTS
The statement of comprehensive income for the year is set out on
pages 28 to 29. 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.
To the extent that the Company has not disposed of all of its
assets by 31 December 2019, Shareholders will be provided with
an opportunity to review the future of the Company, which would
include the option for shareholders to vote for the continuation of
the Company.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group’s business is property development in Malaysia and
Vietnam. Its principal risks are therefore related to the property
market in these countries in general, and also the particular
circumstances of the property development projects
is
undertaking. More detailed explanations of these risks and the way
they are managed are contained under the heading of Financial
and Capital Risk Management Objectives and Policies in Note 4 to
the financial statements.
it
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,
at the 2015 AGM, held on 22 June 2015, the Board put forward a
resolution to Shareholders to determine if the Company should
continue in existence. Shareholders voted for the Company to
continue in existence, at the same time as approving the adoption
of a divestment investment policy to enable the controlled,
orderly and timely realisation of the Company’s assets, with the
objective of achieving a balance between periodically returning
cash to Shareholders and maximising the realisation value of the
Company’s investments (the “Divestment Investment Policy”).
Pursuant to the Divestment Investment Policy, the Company
committed to dispose of all of its assets by June 2018, ahead of
the annual general meeting of the Company to be held in 2018
(the “2018 AGM”), at which, pursuant to the Existing Articles, the
Board is required to propose a discontinuation resolution for the
Company to cease trading as presently constituted (the “2018
Discontinuation Resolution”).
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.
Tax regimes
Changes in the tax regimes could affect the
tax treatment of the Company and/or its
subsidiaries in these jurisdictions.
Whilst significant progress has been made in realising the
Company’s assets in an orderly manner and paying down project
debts since the Divestment Investment Policy was adopted, not
all of the Company’s assets have yet been realised. Although
discussions are ongoing in relation to the realisation of the
Company’s remaining assets, the Board cannot be certain that
these discussions will successfully conclude by June 2018 and
therefore ahead of the 2018 AGM and the 2018 Discontinuation
Resolution.
Management
and control
Operational
At a general meeting of the Company held on 23 April 2018,
Shareholders voted in favour of the Board’s proposals to reject
the 2018 Discontinuation Resolution and to continue with the
Company’s investment policy, for a period of 18 months from
the expected date of the 2018 AGM, 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. The Board believes this will maximise the
value of the Company’s assets and returns to Shareholders, both
up to and upon the eventual liquidation of the Company.
Financial
Going Concern
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.
17 | ANNUAL REPORT 2017
Directors’ Report
as at 31 December 2017 (cont’d)
The Board seeks to mitigate and manage these risks through
continual review, policy setting and enforcement of contractual
rights and obligations. It also regularly monitors the economic
and investment environment in countries that it operates in and
the management of the Group’s property development portfolio.
Details of the Group’s internal controls are described on pages 22
to 23.
RESULTS AND DIVIDENDS
The results for the year ended 31 December 2017 are set out in the
attached financial 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. The capital distribution was completed on 10
January 2017 and the repurchased shares of 13,334,000 are 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 2017. Further details on share capital are
stated in Note 24 to the financial statements.
DIRECTORS
The following were Directors of Aseana who held office throughout
the financial year and up to the date of this report:
• Mohammed Azlan Hashim – Chairman
• Christopher Henry Lovell
• David Harris
• John Lynton Jones
• Gerald Ong Chong Keng
• Nicholas John Paris
• Ferheen Mahomed
DIRECTORS’ INTERESTS
The interests of the directors in the Company’s shares at 31
December 2017 and at the date of this report were as follows:
Director
Ordinary shares of US$0.05 each
As at 31 Dec. 2017
As at 3 Apr. 2018
Christopher Henry Lovell
John Lynton Jones
48,000
20,000
48,000
20,000
David Harris
152,527
152,527
Gerald Ong Chong Keng
2,108,467
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
(the “Development
Development Management Sdn. Bhd.
is a wholly-owned
Manager”). The Development Manager
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 3 April 2018:
Number of
Ordinary Shares
Held
Percentage of
Voting Share
Capital
Ireka Corporation Berhad
45,837,504
Legacy Essence Limited
and its related parties
LIM Advisors
ING Asia (PB)
Dr. Thong Kok Cheong
38,594,758
36,654,192
29,452,626
11,959,608
23.07%
19.42%
18.45%
14.82%
6.02%
EMPLOYEES
The Company has no Executive Directors or employees. The
subsidiaries of the Group have a total of 613 employees at 31
December 2017. 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 2017.
GOING CONCERN
The Directors are confident that the Group has adequate financial
resources to continue in operational existence for the foreseeable
future and therefore continue to adopt the going concern basis in
preparing the financial statements.
CREDITORS PAYMENT POLICY
The Group’s operating companies are responsible for agreeing on
the terms and conditions under which business transactions with
their suppliers are conducted. It is the Group’s policy that payments
to suppliers are made in accordance with all relevant terms and
conditions. Trade creditors at 31 December 2017 amounted to 69
days (2016: 69 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 and Capital Risk
Management Objectives and Policies are set out in Note 4 to the
financial statements.
ASEANA PROPERTIES LIMITED | 18
Directors’ Report
as at 31 December 2017 (cont’d)
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”).
Companies (Jersey) Law requires the Directors to prepare financial
statements for each financial year, which give a true and fair view
of the state of affairs of the Company and of the Group and of the
profit or loss of the Company and of the Group for that year. In
preparing the financial statements, the Directors are required to:
•
•
select suitable accounting policies and then apply them
consistently;
make judgements and estimates that are reasonable, relevant
and reliable;
• 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
Companies (Jersey) Law. The Directors are also responsible
for safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are also responsible for the maintenance and integrity
of the Group’s website on the internet. However, information is
accessible in many different countries where legislation governing
the preparation and dissemination of financial statements may
differ from that applicable in the United Kingdom and Jersey.
DISCLOSURE OF INFORMATION TO AUDITOR
The Directors who held office at the date of approval of this
Directors’ Report confirm that, so far as they are each aware, there
is no relevant audit information of which the Company’s auditor is
unaware; and each Director has taken all the steps that one ought
to have taken as a Director to make oneself aware of any relevant
audit information and to establish that the Company’s auditors 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 21 to 22.
ANNUAL GENERAL MEETING
The tabling of the 2017 Annual Report and Financial Statements to
shareholders will be at an Annual General Meeting (“AGM”) to be
held on 2 July 2018.
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
The Directors of the Company confirm that to the best of their
knowledge that:
26 April 2018
•
•
the consolidated financial statements have been prepared
in accordance with
International Financial Reporting
International Accounting Standards
including
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.
19 | ANNUAL REPORT 2017
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. The Remuneration Committee
recommended to the Board during the year a 25% reduction in directors’ fees effective from July 2017, in line with the Directors’
intention to reduce cost of operating the Company during the divestment period.
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*
Year ended
31 December 2017
(US$)
Year ended
31 December 2016
(US$)
61,250
48,124
42,000
–
42,000
42,000
– –
– –
70,000
55,000
48,000
28,000
48,000
48,000
Total
235,374
297,000
* Nicholas John Paris and Ferheen Mahomed have waived their entitlement for directors’ fees since their appointment in 2015
SHARE OPTIONS
The Company did not operate any share option schemes during the year ended 31 December 2017.
SHARE PRICE INFORMATION
• High for the year – US$0.536
• Low for the year
– US$0.504
• Close for the year – US$0.530
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 2018
ASEANA PROPERTIES LIMITED | 20
Corporate Governance Statement
The Financial Conduct Authority requires all companies with a
Premium Listing to comply with The UK Corporate Governance Code
(the “Code”). Aseana Properties is a Jersey incorporated company
with a Standard Listing on the UK Listing Authority’s Official List and
is therefore not subject to the Code. The following explains how the
principles of governance are applied to the Company.
THE BOARD
The Company currently has a Board of seven non-executive directors,
including the non-executive Chairman.
The brief biographies of the following Directors appear on pages 14
to 15 of the Annual Report 2017:
• Mohammed Azlan Hashim (Non-Executive Chairman)
• Christopher Henry Lovell
• David Harris
• John Lynton Jones
• Gerald Ong Chong Keng
• Nicholas John Paris
• Ferheen Mahomed
The Board did not appoint a Chief Executive or a Senior Independent
Director since its incorporation as it did not consider it appropriate
given the nature of the Company’s business and that the Company’s
property portfolio is externally managed by Ireka Development
Management Sdn. Bhd. (the “Development Manager”).
The Board has reviewed its composition and it is proposed that David
Harris, John Lynton Jones and Christopher Henry Lovell will step
down from the Board at the 2018 Annual General Meeting so as to
reduce the Company’s ongoing costs and decrease the size of the
Board in line with the objectives of the realisation process.
ROLE OF THE BOARD OF DIRECTORS
The Board’s role is to provide entrepreneurial leadership to the
Company, within a framework of prudent and effective controls,
enabling risks to be assessed and managed. The Board sets the
Company’s strategic objectives, monitors and reviews the Company’s
operational and financial performance, ensures the Company has
sufficient funding, and examines and approves disposal of the
Company’s assets in a controlled, orderly and timely manner. The
Board also sets the Company’s values and standards and ensures
that its obligations to its shareholders and other stakeholders are
met. The implementation of the Company’s strategy is delegated
to the Development Manager and its performance is regularly
assessed by the Board.
Appropriate level of directors’ and officers’ liability insurance is
maintained by the Company.
MEETINGS OF THE BOARD OF DIRECTORS
The Board meets at least four times a year and at such other times
as the Chairman shall require. The Board met six times during the
year ended 31 December 2017 and their respective attendance are
as follows:
Name of Directors
Attendance
Mohammed Azlan Hashim
Christopher Henry Lovell
David Harris
John Lynton Jones
Gerald Ong Chong Keng
Nicholas John Paris
Ferheen Mahomed
5/6
6/6
5/6
6/6
6/6
5/6
4/6
To enable the Board to discharge its duties effectively, all Directors
receive accurate, timely and clear information, in an appropriate
form and quality, including Board papers distributed in advance of
Board meetings. The Board periodically will receive presentations at
Board meetings relating to the Company’s business and operations,
significant financial, accounting and risk management issues. All
Directors have access to the advice and services of the Development
Manager, Company Secretary and advisers, who are responsible to
the Board on matters of corporate governance, board procedures
and regulatory compliance.
BOARD BALANCE AND INDEPENDENCE
Being an externally-managed company, the Board consists solely
of non-executive directors of which Mohammed Azlan Hashim is
the non-executive Chairman. Notwithstanding that Nicholas John
Paris, 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 considers the Directors to be independent, being independent
of management and also having no business relationships which
could interfere materially with the exercise of their judgement.
The Chairman is responsible for leadership of the Board, ensuring
effectiveness in all aspects of its role and setting its agenda. Matters
referred to the Board are considered by the Board as a whole and
no individual has unrestricted powers of decision. Together, the
Directors bring a wide range of experience and expertise in business,
law, finance and accountancy, which are required to successfully
direct and supervise the business activities of the Company.
PERFORMANCE APPRAISAL
The Board undertakes an annual evaluation of its own performance
and that of its Committees and individual Directors. In November
2017, the evaluation concluded that the performance of the Board,
its Committees and each individual Director was and remains
effective and that all Directors demonstrate full commitment in
their respective roles. The Directors are encouraged to continually
attend training courses at the Company’s expense to enhance their
skills and knowledge in matters that are relevant to their role on
the Board. The Directors also receive updates on developments
of corporate governance, the state of economy, management
strategies and practices, laws and regulations, to enable effective
functioning of their roles as Directors.
RE-ELECTION OF DIRECTORS
The Company’s Articles of Association states that all Directors shall
submit themselves for election at the first opportunity after their
21 | ANNUAL REPORT 2017
Corporate Governance Statement (cont’d)
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
3 July 2017, Mohammed Azlan Hashim and John Lynton Jones, who
retired by rotation as Directors, were re-elected to the Board. The
remainder of the Board recommended their re-election 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.
AUDIT COMMITTEE
The Audit Committee consists of three members and is chaired
by Christopher Henry Lovell. Its other members are Mohammed
Azlan Hashim and Gerald Ong. The Committee members have no
links with the Company’s external auditor and are independent of
the Company’s management. The Board considers that collectively
the Audit Committee has sufficient recent and relevant financial
experience with the ability to discharge its duties properly, through
extensive service on the Boards and Audit Committees of other
listed companies.
The Committee meets at least twice a year and at such other times
as the Chairman of the Audit Committee shall require. Any member
of the Audit Committee or the auditor may request a meeting if they
consider that one is necessary. The Committee met three times
during the year and their respective attendance are as follows:
•
reviewing the Company’s internal financial controls and risk
management systems operated by the Development Manager;
•
•
making recommendations to the Board in relation to the
appointment, re-appointment and removal of the external auditor
and approving the remuneration and terms of engagement of the
external auditor to be put to the shareholders for their approval
in general meetings;
reviewing and monitoring the external auditor’s independence
and objectivity and effectiveness of the audit process, taking
into consideration relevant UK professional and regulatory
requirements;
•
developing and implementing policy on engagement of the
external auditor to supply non-audit services; and
•
reporting to the Board any matters in respect of which it
considers that action or improvement is needed and making
recommendations as to the steps to be taken.
Since the start of the financial year ended 31 December 2017, the
Audit Committee performed its duties as set out in the terms of
reference. The main activities carried out by the Audit Committee
encompassed the following:
• reviewing the audit plan with the Group’s Auditor;
•
reviewing and discussing the Audit Committee Report with the
Group’s Auditor;
•
•
reviewing the draft Audited Financial Statements as contained in
the draft Annual Report together with the Group’s Auditor before
tabling to the Board for consideration and approval;
reviewing other published financial information including the half
year results and results announcements before tabling to the
Board for consideration and approval;
• considering the independence of the auditor; and
Name
Christopher Henry Lovell
Mohammed Azlan Hashim
Gerald Ong Chong Keng
Attendance
•
reviewing the auditor’s performance and made a recommendation
for the reappointment of the Group’s auditor by shareholders.
3/3
2/3
3/3
NOMINATION COMMITTEE
The Nomination Committee is chaired by Mohammed Azlan Hashim.
Other committee members are David Harris, John Lynton Jones and
Gerald Ong Chong Keng. The Committee meets annually and at any
such times as the Chairman of the Nomination Committee shall
require. The Committee met once during the year and the meeting
was attended by all committee members and other Board members
at the invitation of the Nomination Committee.
Representatives of the auditor, the Chief Financial Officer and
Chief Executive Officer of the Development Manager may attend by
invitation.
The Committee is responsible for:
•
monitoring, in discussion with the auditor, the integrity of the
financial statements of the Company, any formal announcements
relating to the Company’s financial performance and reviewing
significant financial reporting judgements contained in them;
During the year ended 31 December 2017, the Nomination Committee
carried out its functions as set out in its terms of reference which are
summarised below:
ASEANA PROPERTIES LIMITED | 22
•
•
Corporate Governance Statement (cont’d)
regularly reviewing the structure, size and composition (including
skills, knowledge and experience) of the Board and making
recommendations to the Board with regard to any change;
•
monitoring compliance by the Development Manager with the
terms of the Management Agreement;
considering the re-appointment or re-election of any Directors
at the conclusion of their specified term of office or retiring in
accordance with the Company’s Articles of Association;
•
identifying and nominating for the approval of the Board,
candidates to fill Board vacancies as and when they arise; and
•
•
reviewing the terms of the Management Agreement from time to
time to ensure that the terms thereof conform with market and
industry practice and remain in the best interest of shareholders;
from time to time monitoring compliance by providers of other
services to the Company with the terms of their respective
agreements; and
•
considering any matter relating to the continuation in office of
any Director at any time.
•
reviewing and considering the appointment and remuneration of
providers of services to the Company.
REMUNERATION COMMITTEE
The Remuneration Committee is chaired by John Lynton Jones.
Other committee members are David Harris and Gerald Ong Chong
Keng. The Committee meets at least once a year and at any such
times as the Chairman of the Remuneration Committee shall
require. The Committee met twice during the year and the meeting
was attended by all committee members and other Board members
at the invitation of the Remuneration Committee.
During the year ended 31 December 2017, the Remuneration
Committee carried out its duties as set out in its terms of reference
which are summarised below:
•
determining and agreeing with the Board the framework for the
remuneration of the Directors;
• setting the remuneration for all Directors; and
•
ensuring that provisions regarding disclosure of remuneration as
set out in the Directors’ Remuneration Report Regulations 2002,
are fulfilled.
The Committee had deliberated on reducing the costs of the Board in
line with the Board’s plan to reduce costs of operating the Company,
wherever possible, during the divestment period. In this regard, the
Committee had recommended a reduction of Directors’ fee by 25%
with effect from July 2017 to June 2018, and a decrease in board size.
MANAGEMENT ENGAGEMENT COMMITTEE
The Management Engagement Committee is chaired by Mohammed
Azlan Hashim. Other committee members are David Harris, John
Lynton Jones and Gerald Ong Chong Keng. The Committee meets
at least once a year and at any such times as the Chairman of the
Management Engagement Committee shall require. The Committee
met once during the year and the meeting was attended by all
committee members and other Board members at the invitation of
the Management Engagement Committee.
During the year ended 31 December 2017, the Management
Engagement Committee carried out its duties as set out in its terms
of reference which are summarised below:
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
Group’s and Company’s financial statements including significant
accounting policies, significant estimates and judgements. The
Audit Committee has also reviewed the clarity, appropriateness and
completeness of disclosures in the financial statements.
INTERNAL AUDIT
The Board has confirmed that the systems and procedures
employed by the Development Manager, including the work carried
out by the internal auditor of the Development Manager, provide
sufficient assurance that a sound system of risk management and
internal control is maintained. An internal audit function specific to
the Company is therefore considered not necessary. However, the
Directors will continue to monitor if such need is required.
AUDITOR
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.
RISK MANAGEMENT AND INTERNAL CONTROL
The Board is responsible for the effectiveness of the Company’s
risk management and internal control systems and is supplied
with information to enable it to discharge its duties. Such systems
are designed to meet the particular needs of the Company and to
manage rather than eliminate the risk of failure to meet business
objectives and can only provide reasonable, and not absolute,
23 | ANNUAL REPORT 2017
Corporate Governance Statement (cont’d)
assurance against material misstatement or loss. The process is
based principally on the Development Manager’s existing risk-based
approach to risk management and internal control.
To promote effective communication, the Company has a website,
www.aseanaproperties.com
through which shareholders and
investors can access relevant information.
ANNUAL GENERAL MEETING (“AGM”)
The AGM is the principal forum for dialogue with shareholders. At
and after the AGM, investors are given the opportunity to question
the Board and seek clarification on the business and affairs of the
Group. All Directors attended the 2017 AGM, held on 3 July 2017 at
the Company’s registered office.
Notices of the AGM and related papers are sent out to shareholders in
good time to allow for full consideration prior to the AGM. Each item
of special business included is accompanied by an explanation of the
purpose and effect of a proposed resolution. The Chairman declares
the number of votes received for, against and withheld in respect
of each resolution after the shareholders and proxies present have
voted on each resolution. An announcement confirming whether all
the resolutions have been passed at the AGM is made through the
London Stock Exchange.
On behalf of the Board
MOHAMMED AZLAN HASHIM
Director
CHRISTOPHER HENRY LOVELL
Director
26 April 2018
During the year, the Board discharged its responsibility for risk
management and internal control through the following key
procedures:
•
clearly defined delegation of responsibilities to the committees
of the Board and to the Development Manager, including
authorisation levels for all aspects of the business;
•
regular and comprehensive information provided to the Board
covering financial performance and key business indicators;
•
a detailed system of budgeting, planning and reporting which
is approved by the Board and monitoring of results against
budget with variances being followed up and action taken, where
necessary; and
• regular visits to operating units and projects by the Board.
The Board has established frameworks, policies and procedures
to comply with the requirement of the Bribery Act 2010 (the
“Bribery Act”) and Market Abuse Regulation (“MAR”). In respect
of the former, the Development Manager had set up a legal and
compliance function for the purposes of implementing the anti-
corruption and anti-bribery policy. Training and briefing sessions
were conducted for the Development Manager’s senior management
and employees. Compliance 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 suspicion of misusing information about the Group which they
have and which is not public.
RELATIONSHIP WITH SHAREHOLDERS
The Board is committed to maintaining good communications with
shareholders and has designated the Development Manager’s Chief
Executive Officer, Chief Financial Officer and designated members
of its senior management as the principal spokepersons with
investors, analysts, fund managers, the press and other interested
parties. The Board is informed of material information provided to
shareholders and is advised on their feedback. The Board has also
developed an understanding of the views of major shareholders
about the Company through meetings and teleconferences
conducted by the financial adviser and the Development Manager.
In addition, the Company seeks to regularly update shareholders
through stock exchange announcements, press releases and
participation in roadshows.
ASEANA PROPERTIES LIMITED | 24
Independent Auditor’s Report
To The Members Of Aseana Properties Limited
1 Our opinion is unmodified
We have audited the financial statements of Aseana Properties Limited and its subsidiaries (“the Group”) for the year ended 31
December 2017 which comprise the Consolidated Statement of Comprehensive Income, Company Statement of Comprehensive Income,
Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated and Company Statements of
Changes in Equity, Consolidated Statement of Cash Flows, Company Statement of Cash Flows and the related notes, including the
accounting policies in note 3.
In our opinion the financial statements:
•
give a true and fair view, in accordance with International Financial Reporting Standards, of the state of the Group’s and of the parent
Company’s affairs as at 31 December 2017 and of the Group’s and parent company’s loss for the year then ended; and
• have been properly prepared in accordance with the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
are described below. We have fulfilled our ethical responsibilities under, and are independent of the Group in accordance with, UK
ethical requirements including FRC Ethical Standard as applied to listed entities. We believe that the audit evidence we have obtained
is a sufficient and appropriate basis for our opinion.
2 Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the other key audit matters, in
decreasing order of audit significance, were as follows:
Group financial statements
Carrying value of Inventory
Subjective valuation
Our audit procedures included:
The risk
Our response
Risk vs 2016:
US$278m; (2016
US$245m)
Refer to page 7-14 of the Audit
Committee, note 3.10 accounting
policy and note 20 disclosures
The Group’s inventories comprise land held
for property development, work-in-progress
and completed properties held for sale,
located in Malaysia and Vietnam, these are
held at lower of cost or net realisable value
(“NRV”).
The NRVs of the inventories are based on the
valuation of these properties as assessed
by management supported by the Group’s
external valuers.
The NRV of
for property
land held
development and completed residential
property is assessed based on observable
market transactions. Where the property
is still under development, estimated costs
to completion based on past experience
and committed contracts and estimated
net sales based on prevailing market
conditions are taken into account. NRV
for completed commercial properties
held for sale is assessed based on trading
forecasts which are inherently uncertain
and some of the operations take place in
jurisdictions where there are few observable
transactions. Certain of the assets are
subject to significant judgements as a result
of operational performance risk.
- Assessing valuers’ credentials:
The Group uses external valuers to provide a
valuation of their inventories to support the
Group’s assessment of NRV. We assessed
the competence and capabilities of the
valuers and verified their qualifications.
We also assessed their independence by
discussing the scope of their work.
- Methodology choice:
For significant assets, we held discussions
with the Group’s external property valuers
and the Group’s Development Manager to
the valuation methodologies
determine
used. We
the
methodologies adopted were appropriate by
reference to acceptable valuation practice.
assessed whether
- Benchmarking assumptions:
We met with the Development Manager
to understand the status and future plans
for each asset. We challenged the Group’s
Development Manager and the external
valuers in relation to the key assumptions
and trading forecasts used in the valuations,
by setting expected ranges using readily
available market data and challenged based
on outliers.
25 | ANNUAL REPORT 2017
Independent Auditor’s Report
To The Members Of Aseana Properties Limited (cont’d)
Carrying value of Inventory (cont’d)
Subjective valuation (cont’d)
Our audit procedures included: (cont’d)
The risk
Our response
- Sensitivity analysis:
We assessed how sensitive the trading
forecasts were
in key
assumptions and discussed the impact of
these sensitivities with the Audit Committee.
changes
to
- Historical comparisons:
We compared projections
in
the trading forecasts to historic trading
performance to check for consistency with
previous results.
included
- Test of details:
For those properties under development,
we agreed significant property development
expenditure (“PDE”) (including land and
costs,
associated
infrastructure costs and borrowing costs
capitalised as PDE) incurred during the year
to supporting documents.
construction
costs,
- Comparing valuations:
-
-
relevant we compared
Where
the
valuations to recent comparable market
transactions.
for
inspected any offers made
We
completed investments or land held for
property development and considered
whether
indicated
evidence of NRV below carrying value.
received
offers
- Assessing transparency:
We considered the adequacy of the Group’s
disclosures in relation to the valuation
techniques and significant unobservable
in the assessment of
inputs employed
the recoverable amount of those assets
where there were high levels of estimation
uncertainty.
Going Concern
Risk vs 2016:
Refer to page 15-18 of the Audit
Committee and note 2.1 statement of
compliance and going concern
The risk
Going Concern
Our response
Our procedures included:
In 2015, the Group committed to dispose of
all its assets by June 2018 and proposed an
ordinary resolution for it to cease trading
(the “Discontinuation Resolution”) at its
2018 Annual General Meeting (“AGM”).
- Key dependency assessment:
We agreed the outcome of the vote for the
rejection of the Discontinuation Resolution
by the shareholders to the announcement
post on the GM on 23 April 2018;
- Assessing transparency:
the completeness and
We assessed
accuracy of the matters described in the
going concern disclosure.
it entered
its
As the Group has not completed
into
divestment program,
consultation with key shareholders
to
agree on an alternative proposal to the
Discontinuation Resolution. A General
Meeting (“GM”) was held on 23 April 2018
to approve the board’s proposal in relation
to the rejection of the Discontinuation
Resolution. The vote in relation to the
recommendation was passed, the outcome
being that the Group will continue in its
current manner for a further 18 months
following the date of the AGM.
ASEANA PROPERTIES LIMITED | 26
Independent Auditor’s Report
To The Members Of Aseana Properties Limited (cont’d)
Company financial statements
Recoverability of Investment in
subsidiaries and recoverability of
amounts due from subsidiaries
Risk vs 2016:
Investment in Subsidiaries
US$68.2m; (2016
US$68.2m)
Amounts due from subsidiaries
US$179.1m; (2016
US$171.3m)
Refer to page 24 to 27 of the Audit
Committee, note 3.1 (c) accounting
policy and note 17 and 22 disclosures
The risk
Our response
Low risk, high value
Our audit procedures included:
The carrying amount of
the parent
company’s investments in subsidiaries and
intra-group debtor balance represents 28%
and 72% respectively (2016: 27% and 68%),
of total assets. Their recoverability is not at
a high risk of significant misstatement or
subject to significant judgement. However,
due to their materiality in the context of
the parent company’s financial statements,
this is considered to be the area that had
the greatest effect on our overall parent
company audit.
-
Test of details:
-
We compared the carrying amount of all the
investments with the relevant subsidiaries’
financial statements to identify whether
their net assets, being an approximation of
their minimum recoverable amount, were
in excess of their carrying amount and
assessing whether those subsidiaries have
historically been profit-making.
We assessed all the intercompany debtors
balances to identify, with reference to the
relevant debtors’ financial statements,
whether they have a positive net asset value
and therefore coverage of the debt owed.
Subsidiary audits:
We assessed the work performed by the
subsidiary audit teams on a sample of those
subsidiaries and considered the results of that
work, on those subsidiaries’ profits and net
assets.
3 Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at US$3.0m (2016: US$3.0m), determined with reference to a
benchmark of total assets of US$325.7m (2016: US$294.4m) (of which it represents 1% (2016: 1%)).
Materiality for the parent company financial statements as a whole was set at US$2.1m (2016: US$2.4m), determined with reference
to a benchmark of company total assets of US$247.7m (2016: US$250.6m), of which it represents 0.8% (2016: 1%).
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding US$0.15m (2016:
US$0.15m), in addition to other identified misstatements that warranted reporting on qualitative grounds.
Of the group’s 39 (2016: 39) reporting components, we subjected 19 (2016: 19) to full scope audits for group purposes.
The components within the scope of our work accounted for the percentages illustrated below.
Number of
components
Group
revenue
Group profits and
losses before tax
Group
total assets
Audits for group reporting purposes
Total
Total (2016)
19
19
19
100%
100%
100%
96%
96%
92%
100%
100%
100%
For the residual components, we performed analysis at an aggregated group level to re-examine our assessment that there were no
significant risks of material misstatement within these.
The Group team instructed component auditors as to the significant areas to be covered, including the relevant risks detailed above and
the information to be reported back.
The Group team approved the component materialities, which ranged from US$12,000 to US$2.1m (2016: US$1,000 to US$2.4m),
having regard to the mix of size and risk profile of the Group across the components.
The Group team visited one component location comprising 11 components (2016: two component locations comprising 18 components).
Telephone conference meetings were also held with these component auditors and those that were not physically visited. At these visits
and meetings, the findings reported to the Group team were discussed in more detail, and any further work required by the Group team
was then performed by the component auditor. Additionally, we inspected key work papers of all the Group’s reporting components.
The work on 18 components (2016: 18 components) was performed by component auditors and the rest, including the audit of the
parent company, was performed by the Group team.
27 | ANNUAL REPORT 2017
Independent Auditor’s Report
To The Members Of Aseana Properties Limited (cont’d)
4 We have nothing to report on going concern
We are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there
is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least twelve months
from the date of approval of the financial statements. We have nothing to report in these respects.
5 We have nothing to report on the other information in the Annual Report
The Directors are responsible for the other information presented in the Annual Report together with the financial statements. Our
opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, any
form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on
that work, we have not identified material misstatements in the other information.
6 We have nothing to report on the other matters on which we are required to report by exception
Under the Companies (Jersey) Law 1991, we are required to report to you if, in our opinion:
- proper accounting records have not been kept by the Company, or
- proper returns adequate for our audit have not been received from branches not visited by us; or
- the Company’s accounts 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.
We have nothing to report in these respects.
7 Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 16-18, the Directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group
and parent Company’s ability to continue as going concerns, disclosing, as applicable, matters related to going concern; and using the
going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of
assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
8 The purpose of our audit work and to whom we owe our responsibilities
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.
Richard Kelly (Senior Statutory Auditor)
for and on behalf of KPMG LLP
Chartered Accountants and Recognised Auditor
15 Canada Square,
London
E14 5GL
United Kingdom
26 April 2018
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 2018. KPMG LLP has carried out no procedures of any nature
subsequent to 26 April 2018 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.
ASEANA PROPERTIES LIMITED | 28
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2017
Continuing activities
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Foreign exchange gain/(loss)
Management fees
Marketing expenses
Other operating expenses
Operating profit
Finance income
Finance costs
Net finance costs
Net (loss)/profit before taxation
Taxation
(Loss)/Profit for the year
Other comprehensive income/ (loss), 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 income/ (loss) for the year
Total comprehensive income for the year
(Loss)/Profit attributable to:
Equity holders of the parent
Non-controlling interests
(Loss)/Profit for the year
Total comprehensive income attributable to:
Equity holders of the parent
Non-controlling interests
Total comprehensive income for the year
(Loss)/Earnings per share
Basic and diluted (US cents)
Notes
2017
US$’000
2016
US$’000
5
6
7
8
9
11
12
13
14
14
15
17
19,098
(13,383)
112,535
(77,547)
5,715
14,176
(927)
3,419
(3,129)
(496)
(18,417)
341
392
(5,744)
(5,352)
(5,011)
(863)
34,988
21,963
(1,466)
(5,051)
(3,331)
(99)
(21,625)
25,379
401
(9,616)
(9,215)
16,164
(686)
(5,874)
15,478
7,863
–
(2,534)
(2,441)
7,863
(4,975)
1,989
10,503
(4,176)
(1,698)
18,856
(3,378)
(5,874)
15,478
3,825
(1,836)
13,674
(3,171)
1,989
10,503
15
(2.10)
8.89
The notes to the financial statements form an integral part of the financial statements.
29 | ANNUAL REPORT 2017
Company Statement of Comprehensive Income
for the year ended 31 December 2017
Continuing activities
Revenue
Cost of sales
Gross profit
Administrative expenses
Foreign exchange gain/(loss)
Gain on disposal of subsidiary
Management fees
Reversal of impairment of amount due from a subsidiary
Impairment of amount due from subsidiaries
Other operating expenses
Operating (loss)/profit
Finance income
Net (loss)/profit before taxation
Taxation
Notes
2017
US$’000
2016
US$’000
– –
– –
– –
(383)
1,974
–
(1,002)
1,877 –
(10,238)
(449)
(8,221)
6
(8,215)
– –
8
17
9
22
22
11
12
(403)
(3,542)
34,895
(1,259)
(14,376)
(855)
14,460
56
14,516
(Loss)/Profit for the year/Total comprehensive (loss)/income for the year
(8,215)
14,516
(Loss)/Earnings per share
Basic and diluted (US cents)
15
(4.13)
6.85
The notes to the financial statements form an integral part of the financial statements.
ASEANA PROPERTIES LIMITED | 30
Consolidated Statement of Financial Position
as at 31 December 2017
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Prepayments
Current tax assets
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Equity
Share capital
Share premium
Capital redemption reserve
Translation reserve
Accumulated losses
Shareholders’ equity
Non-controlling interests
Total equity
Non-current liabilities
Loans and borrowings
Total non-current liabilities
Current liabilities
Trade and other payables
Amount due to non-controlling interests
Loans and borrowings
Medium term notes
Current tax liabilities
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
Notes
2017
US$’000
2016
US$’000
16
18
19
20
21
23
24
25
26
27
29
17
663
4,201
4,268
9,132
743
7,081
1,623
9,447
278,879
11,012
293
372
25,984
244,959
11,571
1,093
660
26,650
316,540
284,933
325,672
294,380
10,601
208,925
1,899
(21,141)
(62,614)
10,601
218,926
1,899
(29,142)
(58,922)
137,670
(3,216)
143,362
(1,148)
134,454
142,214
32
54,572
46,405
54,572
46,405
30
31
32
33
83,040
13,400
12,882
24,324
3,000
53,880
12,573
10,807
26,343
2,158
136,646
105,761
191,218
152,166
325,672
294,380
The financial statements were approved on 26 April 2018 and authorised for issue by the Board and were signed on its behalf by
MOHAMMED AZLAN HASHIM
Director
CHRISTOPHER HENRY LOVELL
Director
The notes to the financial statements form an integral part of the financial statements.
31 | ANNUAL REPORT 2017
Company Statement of Financial Position
as at 31 December 2017
Non-current assets
Investment in subsidiaries
Total non-current asset
Current assets
Trade and other receivables
Prepayment
Amounts due from subsidiaries
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Equity
Share capital
Share premium
Capital redemption reserve
Accumulated losses
Total equity
Current liabilities
Trade and other payables
Amounts due to subsidiaries
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
Notes
2017
US$’000
2016
US$’000
17
68,233
68,233
68,233
68,233
21
22
23
24
25
26
29
39
–
179,130
319
32
276
171,269
10,753
179,488
182,330
247,721
250,563
10,601
208,925
1,899
(66,446)
10,601
218,926
1,899
(58,231)
154,979
173,195
30
22
143
92,599
263
77,105
92,742
77,368
92,742
77,368
247,721
250,563
The financial statements were approved on 26 April 2018 and authorised for issue by the Board and were signed on its behalf by
MOHAMMED AZLAN HASHIM
Director
CHRISTOPHER HENRY LOVELL
Director
The notes to the financial statements form an integral part of the financial statements.
ASEANA PROPERTIES LIMITED | 32
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33 | ANNUAL REPORT 2017
Company Statement of Changes in Equity
for the year ended 31 December 2017
Company
1 January 2016
Redeemable
Capital
Ordinary Management
Shares
US$’000
Shares
US$’000
Share
Premium
US$’000
Redemption Accumulated
Losses
US$’000
Reserve
US$’000
Total Equity
US$’000
10,601
–*
218,926
1,899
(72,747)
158,679
Profit for the year/Total comprehensive income for the year
–
–
–
–
14,516
14,516
At 31 December 2016/ 1 January 2017
10,601
–*
218,926
1,899
(58,231)
173,195
Share buy back (Note 25)
Loss for the year/ Total comprehensive loss for the year
–
–
–
–
(10,001)
–
–
–
–
(10,001)
(8,215)
(8,215)
Shareholders’ equity at 31 December 2017
10,601
–*
208,925
1,899
(66,446)
154,979
*represents 2 management shares at US$0.05 each
Consolidated Statement of Cash Flows
for the year ended 31 December 2017
Cash Flows from Operating Activities
Net (loss)/profit before taxation
Finance income
Finance costs
Unrealised foreign exchange (gain)/loss
Disposal/Impairment of intangible assets
Depreciation of property, plant and equipment
Gain on disposal of available-for-sale investments
Gain on disposal of property, plant and equipment
Operating profit before changes in working capital
Changes in working capital:
(Increase)/Decrease in inventories
Decrease in trade and other receivables and prepayments
Increase in trade and other payables
Cash generated from operations
Interest paid
Tax paid
Net cash from operating activities
Cash Flows from Investing Activities
Proceeds from disposal of available-for-sale investments
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of an indirectly held subsidiary
Finance income received
Net cash from investing activities
The notes to the financial statements form an integral part of the financial statements.
Notes
2017
US$’000
2016
US$’000
8
18
16
(iii)
34
(5,011)
(392)
5,744
(2,973)
2,880
84
–
–
16,164
(401)
9,616
4,939
152
98
(2,285)
(5)
332
28,278
(20,459)
1,449
27,589
8,911
(5,744)
(2,606)
55,303
6,103
15,426
105,110
(9,616)
(318)
561
95,176
893
(5) –
– 5
800 –
392
2,080
8,955
401
9,361
ASEANA PROPERTIES LIMITED | 34
Consolidated Statement of Cash Flows
for the year ended 31 December 2017 (cont’d)
Cash Flows from Financing Activities
Advances from non-controlling interests
Issuance of ordinary shares of subsidiaries to non-controlling interests
Issuance of management shares
Share buy back
Repayment of loans and borrowings
Repayment of medium term notes
Drawdown of loans and borrowings
Net decrease/(increase) in pledged deposits for loans
and borrowings and Medium Term Notes
Deposits subject to restriction in use
Net cash used in 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
*represents 2 management shares at US$0.05 each
(i) Cash and Cash Equivalents
Notes
2017
US$’000
2016
US$’000
(ii)
25
32
33
32
(iv)
(i)
(i)
327
252
–
(10,001) –
(14,773)
(4,615)
25,038
7,923
(13,867) –
2,819
113
–*
(17,057)
(87,823)
1,571
(698)
(9,716)
(101,075)
(7,075)
(270)
16,639
3,462
(155)
13,332
9,294
16,639
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 subject to restriction in use
Less: Deposits pledged
Cash and cash equivalents
23
23
(iv)
(v)
10,343
15,641
25,984
(13,867) –
(2,823)
14,858
11,792
26,650
(10,011)
9,294
16,639
(ii) During the financial year, US$252,000 (2016: US$113,000) of ordinary shares of subsidiaries were issued to non-controlling
shareholders which was satisfied via cash consideration.
(iii) In the previous financial year, the Group disposed the entire balance representing 9,784,653 shares in Nam Long Investment
Corporation for a consideration of US$9,848,000 of which US$8,955,000 was received in 2016. The balance consideration of
US$893,000 was received during the financial year.
(iv) Included in short term bank deposits in 2017 is US$13,867,000 obtained from the term loan granted to City International Hospital
Company Ltd (“CIH”) by Vietbank during the year where the utilisation of this balance is restricted solely for the purpose of
refinancing the existing syndicated term loan under CIH.
(v) Included in short term bank deposits and cash and bank balance is US$2,823,000 (2016: US$10,011,000) pledged for loans and
borrowings and Medium Term Notes of the Group.
The notes to the financial statements form an integral part of the financial statements.
35 | ANNUAL REPORT 2017
Company Statement of Cash Flows
for the year ended 31 December 2017
Cash Flows from Operating Activities
Net (loss)/profit before taxation
Reversal of impairment of amount due from a subsidiary
Impairment of amount due from subsidiaries
Finance income
Unrealised foreign exchange (gain)/loss
Gain on disposal of a subsidiary
Operating loss before changes in working capital
Changes in working capital:
Decrease/(Increase) in receivables
(Decrease)/Increase in payables
Net cash used in operating activities
Cash Flows from Investing Activity
Finance income received
Net cash from investing activity
Cash Flows from Financing Activities
Net advances from subsidiaries
Issuance of management shares
Share buy back
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
*represents 2 management shares at US$0.05 each
Notes
2017
US$’000
2016
US$’000
22
22
8
(8,215)
(1,877) –
10,238
(6)
(1,970)
–
14,516
14,376
(56)
3,442
(34,895)
(1,830)
(2,617)
269
(120)
(308)
79
(1,681)
(2,846)
6
6
1,212
–
25
(10,001)
56
56
4,413
–*
–
(8,789)
4,413
(10,464)
30
10,753
1,623
36
9,094
319
10,753
The notes to the financial statements form an integral part of the financial statements.
ASEANA PROPERTIES LIMITED | 36
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 and sale 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 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 32 and 33) 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 projects and
the necessary working capital via the disposal of its
in Vietnam and East Malaysia,
development lands
its existing units of condominium
in
West Malaysia, and through the disposals of the City
International Hospital,
the Four Points Sheraton
Sandakan Hotel and the Harbour Mall Sandakan.
inventories
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 and secured
by two completed inventories of the Group with carrying
amount of US$81.31 million as at 31 December 2017.
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 City International Hospital 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 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.
2.1.1 2018 Discontinuation Resolution
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, at the 2015
AGM, held on 22 June 2015, the Board put forward
a resolution to Shareholders to determine if the
Company should continue in existence. Shareholders
voted for the Company to continue in existence, at the
same time as approving the adoption of a divestment
investment policy to enable the controlled, orderly
and timely realisation of the Company’s assets,
with the objective of achieving a balance between
periodically returning cash to Shareholders and
maximising the realisation value of the Company’s
investments (the “Divestment Investment Policy”).
Pursuant to the Divestment Investment Policy, the
Company committed to dispose of all of its assets
by June 2018, ahead of the annual general meeting
of the Company to be held in 2018 (the “2018 AGM”),
at which, pursuant to the Existing Articles, the Board
is required to propose a discontinuation resolution
for the Company to cease trading as presently
constituted (the “2018 Discontinuation Resolution”).
Whilst significant progress has been made
in
realising the Company’s assets in an orderly manner
and paying down project debts since the Divestment
Investment Policy was adopted, not all of the
Company’s assets have yet been realised. Although
discussions are ongoing in relation to the realisation
of the Company’s remaining assets, the Board cannot
be certain that these discussions will successfully
conclude by June 2018 and therefore ahead of the
2018 AGM and the 2018 Discontinuation Resolution.
At a general meeting of the Company held on 23
April 2018, Shareholders voted in favour of the
Board’s proposals to reject the 2018 Discontinuation
Resolution and to continue with the Company’s
investment policy, for a period of 18 months from the
expected date of the 2018 AGM, 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. The Board believes
this will 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 31 December 2019, 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.
37 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
2 BASIS OF PREPARATION (cont’d)
2.1 Statement of compliance and going concern (cont’d)
2.1.1 2018 Discontinuation Resolution (cont’d)
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.
2.1.2 Statement of Compliance
The Group and the Company have not applied the following new/revised accounting standards that have been issued by
International Accounting Standards Board but are not yet effective.
New/Revised International Financial Reporting Standards
Issued/Revised
Effective Date
IFRS 9 Financial
Instruments
Finalised version, incorporating requirements
for classification and measurement, impairment,
general hedge accounting and derecognition
July 2014
Effective for annual
periods beginning
on or after 1 January
2018
IFRS 10 Consolidated
Financial Statements
Amendments regarding the sale or contribution
of assets between an investor and its associate or
joint venture
December 2015
Deferred indefinitely
IFRS 15 Revenue from
Contracts with Customers
IASB defers effective date to annual periods
beginning on or after 1 January 2018
April 2016
IFRS 16 Leases
Original Issue
January 2016
Effective for annual
periods beginning on
or after
1 January 2018
Effective for annual
periods beginning
on or after 1 January
2019
IFRIC 22 Foreign Currency
Transactions and Advance
Consideration
Annual Improvements to
IFRSs 2014-2016 Cycle
(Amendments to
IFRS 1 First-time Adoption
of IFRSs and IAS 28
Investments in Associates
and Joint Ventures)
IFRIC 22 clarifies that the date of the transaction
- which is used to determine the spot exchange
rate for translating the related item on initial
recognition - is the date of the initial recognition
of the non-monetary asset or liability arising
from the payment or receipt of the advance
consideration.
Amendments to IFRS 1 delete the short-term
exemptions provided by Appendix E6-E7 of IFRS
1. As a result, a first-time adopter transitioning
to IFRS on or after 1 January 2018 assesses
whether it qualifies as an investment entity
retrospectively.
December 2016
Effective date to be
confirmed.
December 2016
Effective for annual
periods beginning on
or after
1 January 2018
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 is applicable to the Group’s Consolidated Financial Statements for the year ending 31 December 2018. The new standard
addresses the classification, measurement and recognition of financial assets and financial liabilities. It simplifies the existing
categories of financial instruments, introduces an expected credit loss model and redefines the criteria required for hedge
effectiveness. On adoption of the new standard, these changes are not expected to have a material impact on the consolidated
financial statements of the Group. There will however be limited changes to presentation and disclosure.
b)
IFRS 15, Revenue from contracts with customers
IFRS 15 replaces the guidance in IFRS 11, Construction Contracts, IAS 18, Revenue, IFRIC 13, Customer Loyalty Programmes,
IFRIC 15, Agreements for Construction of Real Estate and IFRIC 18, Transfer of Assets from Customers which is applicable to
the Group’s Consolidated Financial Statements for the year ending 31 December 2018.
The Group currently applies IAS 18, Revenue and IFRIC 15, Agreements for Construction of Real Estate for revenue recognition
from its sales of land held for property development, work-in-progress and stock of completed units. Revenue is recognised at
a point in time when the effective control of ownership of the properties is transferred to the customers when the completion
certificate or occupancy permit has been issued.
ASEANA PROPERTIES LIMITED | 38
Notes to The Financial Statements (cont’d)
2 BASIS OF PREPARATION (cont’d)
a) Net realisable value of inventories
2.1 Statement of compliance and going concern (cont’d)
2.1.2 Statement of Compliance (cont’d)
b)
IFRS 15, Revenue from contracts with customers
(cont’d)
The adoption of the new standard is not expected to
have a material impact on the consolidated financial
statements of the Group, except for the effect of
changes to the timing of revenue recognition for the
property development activities of serviced residences
under The RuMa Hotel and Residences (“The RuMa”).
Revenue from the development of serviced residences
is recognised as and when the control of the asset is
transferred to the customer and it is probable that
the Group will collect the consideration to which it
will be entitled in exchange for the asset that will be
transferred to the customer. In light of the terms of
the contract and the laws that apply to the contract,
control of the asset is transferred over time as the
Group’s performance does not create an asset with
an alternative use to the Group and the Group has
an enforceable right to payment for performance
completed to date.
Revenue from the development of serviced residences
is recognised over the period of the contract
by reference to the progress towards complete
satisfaction of that performance obligation.
The Group assesses the net realisable value of
inventories under development, land held for property
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
supported by external valuations. 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
relationships
licence contracts and related
Licence contracts and related relationships represent
the rights to develop the International Healthcare Park
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 relationships is attached (refer
to 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.
The Directors are currently assessing and have yet
to quantify the potential financial impact of the initial
application of the standard to the Group.
The Group derecognises licence contracts and related
relationships when a component of the venture is
disposed of.
c)
IFRS 16, Leases
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 to Note 2.3(a)).
d) Classification of assets as inventory
The Director apply judgements in determining the
classification of the properties held by the Group. As
the Group’s principal activity is property development,
the Group continues
its completed
developments, namely the hotel, mall and hospital
as inventories, in line with the Group’s intention to
dispose of 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.
to classify
IFRS 16 replaces, the guidance in IAS 17, Leases, IFRIC
4, Determining whether an Arrangement contains a
Lease, SIC-15, Operating Leases – Incentives and SIC-
27, Evaluating the Substance of Transactions Involving
the Legal Form of Lease. The Directors are currently
determining the impact of IFRS 16.
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
in applying
accounting policies that have the most significant effect
on the amounts recognised in the consolidated financial
statements are discussed below:
judgements
39 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
3 SIGNIFICANT ACCOUNTING POLICIES
b) Acquisition of non-controlling interests
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.
Acquisitions of non-controlling interests are accounted
for as transactions with owners in their capacity as
owners and therefore no goodwill is recognised as
a result. Adjustments to non-controlling interests
arising from transactions that do not involve the loss of
control are based on a proportionate amount of the net
assets of the subsidiary.
For new acquisitions, the Group measures the cost of
goodwill at the acquisition date as:
c) Subsidiaries
•
•
•
•
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.
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.
in subsidiaries are stated
Investments
the
Company’s statement of financial position at cost less
any impairment losses, unless the investment is held
for sale.
in
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.
ASEANA PROPERTIES LIMITED | 40
Notes to The Financial Statements (cont’d)
3 SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.3 Revenue Recognition and Other Income
3.2 Foreign Currencies
a) Foreign currency transactions
items
included
The Group financial statements are presented in
United States Dollar (“US$”), which is the Company’s
functional and the Group’s presentation currency.
Each entity in the Group determines its own functional
currency and
the financial
statements of each entity are measured using that
functional currency. Transactions in foreign currencies
are translated to the respective functional currencies
of the Group entities at exchange rates at the dates
of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting
date are retranslated to the functional currency at the
exchange rate at that date.
in
Non-monetary assets and liabilities denominated in
foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange
rate at the date that the fair value was determined.
Non-monetary items in a foreign currency that are
measured in terms of historical cost are translated
using the exchange rate at the date of the transaction.
Foreign currency differences arising on retranslation
are recognised in profit or loss, except for differences
arising on the retranslation of available-for-sale
equity investments, which are recognised in other
comprehensive income.
b) Foreign operations
The assets and liabilities of foreign operations,
including goodwill and fair value adjustments arising
on acquisition, are translated to US$ at exchange rates
at the reporting date. The income and expenses of
foreign operations, are translated to US$ at exchange
rates at the dates of the transactions.
Foreign currency differences are recognised in other
comprehensive income, and presented in the foreign
currency translation reserve (“translation reserve”) in
equity. However, if the foreign operation is a non-wholly
owned subsidiary, then the relevant proportionate
share of the translation difference is allocated to the
non-controlling interest. When a foreign operation is
disposed of such that control, significant influence
or joint control is lost, the cumulative amount in the
translation reserve related to that foreign operation
is reclassified to profit or loss as part of the gain or
loss on disposal. When the Group disposes of only
part of its interest in a subsidiary that includes a
foreign operation while retaining control, the relevant
proportion of the cumulative amount is reattributed
to non-controlling interest. When the Group disposes
of only part of its investment in an associate that
includes a foreign operation while retaining significant
influence or joint control, the relevant proportion of the
cumulative amount is reclassified to profit or loss.
When the settlement of a monetary item receivable
from or payable to a foreign operation is neither
planned nor likely in the foreseeable future, foreign
exchange gains and losses arising from such a
monetary item are considered to form part of a net
investment in a foreign operation and are recognised
in other comprehensive income, and presented in the
translation reserve in equity.
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.
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)
Income from hotel, hospital and mall operations
Income 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.
Income from hospital operations is recognised as
other income.
Income from the hotel operations, which include
provision of rooms,
food and beverage, other
departments sales and laundry service fees are
recognised when services are rendered. Income from
hotel operations is recognised as other income.
Income from mall operations is recognised in profit or
loss on a straight-line basis over the term of the lease.
Lease incentives granted are recognised as an integral
part of the total rental income, over the term of the
lease. Where a rent-free period is included in a lease,
the rental income foregone is allocated evenly over the
period from the date the lease commencement to the
earliest termination date. Income from mall operations
is recognised as other income.
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.
Notes to The Financial Statements (cont’d)
41 | ANNUAL REPORT 2017
3 SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.4 Property, Plant and Equipment (cont’d)
the costs of day-to-day servicing,
Property, plant and equipment are recorded at cost,
excluding
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 criteria are met. Property, plant and equipment
under construction are not depreciated until the assets
are ready for their intended use. Depreciation is provided
at rates calculated to write off the cost, less estimated
residual value, of each asset on a straight line basis over its
expected useful life:
Furniture, fittings and equipment
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.
The gain or loss on disposal of an item of property, plant
and equipment is determined by comparing the proceeds
from disposal with the carrying amount of property, plant
and equipment and is recognised net within “other income”
and “other operating expenses” respectively in profit or
loss.
3.5 Leased Assets
Finance leases
Leases where the Group or the Company assumes
substantially all the risks and rewards of ownership are
classified as finance leases. Upon initial recognition, the
leased asset is measured at an amount equal to the lower
of its fair value and the present value of the minimum lease
payments. Subsequent to initial recognition, the asset is
accounted for in accordance with the accounting policy
applicable to that asset.
Minimum lease payments made under finance leases are
apportioned between the finance expense and the reduction
of the outstanding liability. The finance expense is allocated
to each period during the lease term so as to produce a
constant periodic rate of interest of the remaining balance
of the liability. Contingent lease payments are accounted
for by revising the minimum lease payments over the
remaining term of the lease when the lease adjustment is
confirmed.
3.6 Income Tax
Income tax expense comprises current tax and deferred
tax. Current tax and deferred tax is recognised in profit
or loss except to the extent that it relates to a business
combination, or items recognised directly in equity or in
other comprehensive income.
Current tax is the expected tax payable on the taxable
income for the year, using tax rates enacted or substantively
enacted by the end of the reporting period, and any
adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the liability method,
providing for temporary differences between the carrying
amounts of assets and liabilities in the statement of
financial position and their tax bases. Deferred tax is not
recognised for the following temporary differences: the
initial recognition of goodwill, and the initial recognition of
assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable
profit or loss. Deferred tax is measured at the tax rates that
are expected to be applied to the temporary differences
when they reverse, based on the laws that have been
enacted or substantively enacted by the end of the reporting
period.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities
and assets, and they relate to taxes levied by the same tax
authority on the same taxable entity, or on different tax
entities, but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities will
be realised simultaneously.
A deferred tax asset is recognised to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred
tax assets are reviewed at the end of each reporting date
and are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
3.7 Financial Instruments
a) Non-derivative financial assets
The Group initially recognises loans and receivables
and deposits on the date that they are originated. All
other financial assets are recognised initially on the
trade date, which is the date that the Group becomes a
party to the contractual provisions of the instrument.
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.
ASEANA PROPERTIES LIMITED | 42
Notes to The Financial Statements (cont’d)
3 SIGNIFICANT ACCOUNTING POLICIES (cont’d)
c) Derecognition
3.7 Financial Instruments (cont’d)
a) Non-derivative financial assets (cont’d)
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 impairment losses, are recognised in other
comprehensive income and presented in the fair
value reserve in equity. When an investment is
derecognised, the gain or loss accumulated in
equity is reclassified to profit or loss.
b) Non-derivative financial liabilities
All financial liabilities are recognised initially on the
trade date, which is the date that the Group becomes a
party to the contractual provisions of the instrument.
The Group derecognises a financial liability when the
contractual obligations are discharged, cancelled or
expire.
Financial assets and liabilities are offset and the
net amount presented in the statement of financial
position when, and only when, the Group has a legal
right to offset the amounts and intends either to settle
on a net basis or to realise the asset and settle the
liability simultaneously.
The Group classifies non-derivative financial liabilities
into other financial liability category. Such financial
liabilities are recognised initially at fair value plus any
directly attributable transaction costs.
Subsequent to
initial recognition, these financial
liabilities are measured at amortised cost using the
effective interest method.
loans and
Other financial
borrowings, bank overdrafts, and trade and other
payables.
liabilities comprise
Accounting for interest income and finance cost is
discussed in Note 3.3 (b) and 3.13.
A financial asset or part of it is derecognised when,
and only when, the contractual rights to the cash
flows from the financial asset expire or the financial
asset is transferred to another party without retaining
control or substantially all risks and rewards of the
asset. On derecognition of a financial asset, the
difference between the carrying amount and the sum
of the consideration received (including any new asset
obtained less any new liability assumed) and any
cumulative gain or loss that had been recognised in
equity is recognised in profit or loss.
A financial liability or a part of it is derecognised when,
and only when, the obligation specified in the contract
is discharged or cancelled or expire. On derecognition
of a financial liability, the difference between the
carrying amount of the financial liability extinguished
or transferred to another party and the consideration
paid, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss.
3.8 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and
at bank, deposits held at call and short term highly liquid
investments that are subject to an insignificant risk of
changes in value and are used by the Group and the Company
in the management of their short term commitments. Bank
overdrafts are included within borrowings in the current
liabilities section on the statement of financial position.
For the purpose of the statement of cash flows, cash and
cash equivalents are presented net of bank overdrafts and
pledged deposits.
3.9 Intangible Assets
Intangible assets comprise licence contracts and related
relationships and goodwill.
a) Licence Contracts and Related Relationships
is attributable
On acquisition, value
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
contracts and related relationships represent the
rights to develop the International Healthcare Park
venture with the lease period ending 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
is
licence contracts and related relationships
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. The licence contracts and related
relationships are tested for impairment when there
is an indicator of impairment. 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 relationships is attached to (refer to Note
2.3(a), 18 and 20).
Notes to The Financial Statements (cont’d)
3 SIGNIFICANT ACCOUNTING POLICIES (cont’d)
b) Loans and receivables
43 | ANNUAL REPORT 2017
3.9 Intangible Assets (cont’d)
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).
Goodwill is tested for impairment when there is an
indicator of impairment. The Group assesses the
recoverable amount of goodwill by reference to the
realisability of the properties of which the goodwill is
attached to (refer to Note 2.3(a), 18 and 20).
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 (refer to Note 2.3(a)).
Land held for property development consists of reclaimed
land, freehold land, leasehold land and land use rights
on which development work has not been commenced
along with related costs on activities that are necessary to
prepare the land for its intended use. Land held for property
development is transferred to work-in-progress when
development activities have commenced.
Work-in-progress comprises all costs directly attributable
to property development activities or that can be allocated
on a reasonable basis to these activities.
Upon completion of development, unsold completed
development properties are transferred to stock of
completed units.
3.11 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.
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.
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.
ASEANA PROPERTIES LIMITED | 44
Notes to The Financial Statements (cont’d)
3 SIGNIFICANT ACCOUNTING POLICIES (cont’d)
iv)
Repurchase, disposal and reissue of share capital
(“treasury shares”)
3.11 Impairment (cont’d)
d) Non-financial assets (cont’d)
The recoverable amount of an asset or cash-
generating unit is the greater of its value in use and
its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that
reflects current market assessments of the time value
of money and the risks specific to the asset.
An impairment loss is recognised if the carrying
amount of an asset or its cash-generating unit exceeds
its recoverable amount.
Impairment losses are recognised in profit or loss.
Impairment losses recognised in respect of cash-
generating units are allocated first to reduce the
carrying amount of any goodwill allocated to the units
and then to reduce the carrying amount of the other
assets in the unit (groups of units) on a pro rata basis.
impairment
An impairment loss in respect of goodwill is not
losses
reversed. For other assets,
recognised in prior periods are assessed at the end
of each reporting period for any indications that the
loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the
estimates used to determine the recoverable amount
since the last impairment loss was recognised. An
impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying
amount that would have been determined, net of
depreciation or amortisation, if no impairment loss
had been recognised. Reversals of impairment losses
are credited to profit or loss in the year in which the
reversals are recognised.
e) Equity instruments
Instruments classified as equity are measured at
cost on initial recognition and are not remeasured
subsequently.
i) Ordinary shares
Ordinary shares are redeemable only at the
Company’s options and are classified as
equity. Distributions thereon are recognised as
distributions within equity.
ii) Management shares
Management shares are classified as equity and
are non-redeemable.
iii)
Issue expenses
issue of
Costs directly attributable to the
instruments classified as equity are recognised as
a deduction from equity.
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.
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.
treasury shares are cancelled,
the
Where
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.
b) State plans
Certain companies in the Group maintain a defined
contribution plan in Malaysia and Vietnam for providing
employee benefits, which is required by laws in Malaysia
and Vietnam respectively. The retirement benefit plan
is funded by contributions from both the employees
and the companies to the employees’ provident fund.
The Group’s contributions to employees’ provident
fund are charged to profit or loss in the year to which
they relate.
Notes to The Financial Statements (cont’d)
3 SIGNIFICANT ACCOUNTING POLICIES (cont’d)
3.18 Segment Reporting
45 | ANNUAL REPORT 2017
3.13 Finance Costs
Finance costs directly attributable to the acquisition,
construction or production of qualifying assets, which are
assets that take a substantial period of time to get ready
for their intended use or sale, are capitalised to the cost of
those assets, until such time as the assets are substantially
ready for their intended use or sale. Investment income
earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation.
All other finance costs are recognised in profit or loss in the
period in which they are incurred using the effective interest
method.
3.14 Separately Disclosable Items
Items that are both material in size and unusual and
infrequent in nature are presented as separately disclosable
items in the statement of comprehensive income or
separately disclosed in the notes to the financial statements.
The Directors are of the opinion that the separate recording
of these items provides helpful information about the
Group’s underlying business performance.
3.15 Earnings per Ordinary Share
The Group presents basic and diluted earnings per share
data for its ordinary shares (“EPS”).
Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding
during the period.
3.16 Provisions
Provisions are recognised if, as a result of past event, the
Group has a present legal or constructive obligation that
can be estimated reliably and it is probable that an outflow
of economic benefits will be required to settle the obligation.
Where the Group expects some or all of a provision to be
reimbursed, the reimbursement is recognised as a separate
asset but only when the reimbursement is virtually certain.
The expense relating to any provision is presented in profit
or loss net of any reimbursement. If the effect of the time
value of money is material, provisions are discounted using
a current pre-tax rate that reflects, where appropriate, the
risks specific to the liability. Where discounting is used,
the increase in the provision due to the passage of time is
recognised as a borrowing cost.
3.17 Commitments and Contingencies
Commitments and contingent liabilities are disclosed in
the financial statements and described in Note 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.
An operating segment is a component of the Group that
engages in business activities from which it may earn
revenues and incur expenses, including revenues and
expenses that relate to transactions with any of the Group’s
other components. An operating segment’s operating
results are reviewed regularly by the chief operating
decision maker, which in this case is the Executive
Management of Ireka Development Management Sdn. Bhd.
(“IDM”), to make decisions about resources to be allocated
to the segment and assess its performance, and for which
discrete financial information is available.
Segment results that are reported to the Executive
Management of IDM include items directly attributable
to a segment as well as those that can be allocated on a
reasonable basis. Unallocated items comprise mainly the
Group’s administrative functions.
Segment capital expenditure is the total cost incurred
during the year to acquire property, plant and equipment,
and intangible assets other than goodwill.
3.19 Fair Value Measurements
Fair value of an asset or a liability, except for lease
transactions, is determined as the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the
measurement date. The measurement assumes that the
transaction to sell the asset or transfer the liability takes
place either in the principal market or in the absence of a
principal market, in the most advantageous market.
For non-financial 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: quoted prices (unadjusted) in active markets for
identical assets or liabilities that the Group can
access at the measurement date.
Level 2: 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.
ASEANA PROPERTIES LIMITED | 46
Notes to The Financial Statements (cont’d)
4 FINANCIAL RISK MANAGEMENT
Financial guarantees
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.
4.2 Credit Risk
The Group’s credit risk is primarily attributable to deposits
with banks and credit exposures to customers. The Group
has credit policies in place and the exposures to these
credit risks are monitored on an ongoing basis. The Group
manages its deposits with banks and financial institutions
by monitoring credit ratings and limiting the aggregate
risk to any individual counterparty. At 31 December 2017,
96.52% (2016: 93.45%) 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 3.48% (2016: 6.55%) 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 2017,
there was no significant concentration of credit risk within
the Group.
The Group’s exposure to credit risk arising from total
debtors was set out in Note 21 and totals US$11.0 million
(2016: US$11.6 million). The Group’s exposure to credit risk
arising from deposits and balances with banks is set out in
Note 23 and totals US$26.0 million (2016: US$26.7 million).
The Company provides unsecured financial guarantee to
banks in respect of banking facilities granted to certain
subsidiaries.
At the end of the reporting period, the maximum exposure
to credit risk as represented by the outstanding banking
and credit facilities of the subsidiaries is as follows:
Company
Financial institutions for bank
facilities granted to its
2017
US$’000
2016
US$’000
subsidiaries
77,825
64,161
At the end of the reporting period there was no indication
that any subsidiary would default on repayment.
The financial guarantees have not been recognised in the
Statement of Financial Position since the fair value on initial
recognition was not material.
4.3 Liquidity Risk
The Group raises funds as required on the basis of budgeted
expenditure and inflows for the next twelve months with the
objective of ensuring adequate funds to meet commitments
associated with its financial liabilities. When funds are
sought, the Group balances the costs and benefits of
equity and debt financing against the developments to be
undertaken. At 31 December 2017, the Group’s borrowings
to fund the developments had terms of less than ten years.
Cash flows are monitored on an on-going basis. The Group
manages its liquidity needs by monitoring scheduled debt
servicing payments for long term and short term financial
liabilities as well as cash out flows due in its day-to-day
operations while ensuring sufficient headroom on its
undrawn committed borrowing facilities at all times so that
borrowing limits and covenants are not breached. Capital
investments are committed only after confirming the
source of funds, e.g. securing financial liabilities.
Management is of the opinion that most of the bank
borrowings can be renewed or re-financed based on the
strength of the Group’s earnings, cash flow and asset base.
It is not expected that the cash flows included in the
maturity analysis could occur significantly earlier, or at a
significantly different amount.
–
–
–
–
–
–
–
–
–
47 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
4 FINANCIAL RISK MANAGEMENT (cont’d)
4.3 Liquidity Risk (cont’d)
The maturity profile of the Group’s and the Company’s financial liabilities at the statement of financial position date, based on the
contracted undiscounted payments, were as follows:
Carrying
amount
US$’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$’000
Group
At 31 December 2017
Interest bearing loans and borrowings
Trade and other payables
Amount due to non-controlling interests
91,778 5.35% - 10.50%
–
15,734
–
13,400
104,554
15,734
13,400
43,715
15,734
13,400
8,450
–
–
52,389
–
–
120,912
–
133,688
72,849
8,450
52,389
At 31 December 2016
Finance lease liabilities
Interest bearing loans and borrowings
Trade and other payables
Amount due to non-controlling interests
3
2.50% - 3.50%
83,552 5.25% - 10.50%
–
15,534
–
12,573
3
95,833
15,534
12,573
3
42,643
15,534
12,573
–
7,232
–
–
–
45,958
–
–
111,662
–
123,943
70,753
7,232
45,958
Company
At 31 December 2017
Financial guarantees
Trade and other payables
At 31 December 2016
Financial guarantees
Trade and other payables
Carrying
amount
US$’000
Contractual
interest rate
Contractual
cash flows
US$’000
Under
1 year
US$’000
1 – 2 years
US$’000
2 – 5 years
US$’000
More than
5 years
US$’000
–
143
143
–
263
263
–
–
–
–
–
–
77,825
143
77,825
143
77,968
77,968
64,161
263
64,161
263
64,424
64,424
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The above table excludes current tax liabilities and progress billings.
4.4 Market Risk
a) Foreign Exchange Risk
Entities within the Group are exposed to foreign exchange risk from future commercial transactions and net monetary assets
and liabilities that are denominated in a currency that is not the entity’s functional currency. The foreign currency exposure is not
hedged.
The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which the property or
investment is located or by borrowing in currencies that match the future revenue stream to be generated from its investments.
Management monitors the foreign currency exposure closely and takes necessary actions in consultation with the bankers to
avoid unfavourable exposure.
The Group is exposed to foreign currency risk on cash and cash equivalents which are denominated in currencies other than the
functional currencies of the relevant Group entities.
ASEANA PROPERTIES LIMITED | 48
Notes to The Financial Statements (cont’d)
4 FINANCIAL RISK MANAGEMENT (cont’d)
4.4 Market Risk (cont’d)
a) Foreign Exchange Risk Cont’d)
The Group’s exposure to foreign currency risk on cash and cash equivalents in currencies other than the functional currencies of
the relevant Group entities at year end are as follows:
Group
US Dollar
Ringgit Malaysia
Sterling Pound
Others
2017
US$’000
2016
US$’000
2,217
115
– 1
11
2,343
83
157
16
257
At 31 December 2017, if cash and cash equivalents denominated in a currency other than the functional currencies of the Group
entities strengthened/ (weakened) by 10% and all other variables were held constant, the effects on the Group’s profit or loss and
equity expressed in US$ would have been US$234,300/ (US$234,300) (2016: US$25,700/ (US$25,700)).
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
2017
US$000
2016
US$000
2017
US$’000
2016
US$’000
15,641
24,324
11,792
26,346
67,454
57,209
90
–
– –
– –
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 27% (2016: 32%) of the Group’s borrowings at 31 December 2017.
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 2017, if the interest rate had been 100 basis point lower/ higher and all other variables were held constant, this
would (decrease)/increase the Group loss for the year by approximately (US$674,000)/US$674,000 (2016: increase/(decrease) the
Group profit for the year by US$572,000/(US$572,000)).
49 | ANNUAL REPORT 2017
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4
ASEANA PROPERTIES LIMITED | 50
Notes to The Financial Statements (cont’d)
4 FINANCIAL RISK MANAGEMENT (cont’d)
4.5 Fair Values (cont’d)
Policy on transfer between levels
The fair value on an asset to be transferred between levels is determined as of the date of the event or change in circumstances that
caused the transfer.
Level 1 fair value
Level 1 fair value is derived from quoted price (unadjusted) in an active market for identical financial assets or liabilities that the entity
can access at the measurement date.
Level 2 fair value
Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the financial assets
or liabilities, either directly or indirectly.
Level 3 fair value
Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities.
Transfers between Level 1 and Level 2 fair values
There has been no transfer between Level 1 and 2 fair values during the financial year (2016: no transfer in either direction).
Transfers between Level 2 and Level 3 fair values
There has been no transfer in either direction during the financial year (2016: 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 2017, the interest rate used to
discount estimated cash flows of the medium term notes is 8.10% (2016: 8.19%).
4.6 Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide
returns to shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce cost of capital.
The capital structure of the Group consisted of cash and cash equivalents, loans and borrowings, medium term notes and equity
attributable to equity holders of the parent, comprising issued share capital and reserves, were as follows:
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
2017
US$’000
2016
US$’000
25,984
(67,454)
(24,324)
(137,670)
26,650
(57,212)
(26,343)
(143,362)
(203,464)
(200,267)
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital
to shareholders, issue new shares or sell assets to reduce debts.
Consistent with others in the industry, the Group monitors capital on the basis of net debt-to-equity ratio.
51 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
4 FINANCIAL RISK MANAGEMENT (cont’d)
4.6 Capital Management (cont’d)
Net debt-to-equity ratio is calculated as a total of interest-bearing borrowings less held-for-trading financial instrument and cash and
cash equivalents to the total equity.
The net debt-to-equity ratios at 31 December 2017 and 31 December 2016 were as follows:
Group
Total borrowings and finance lease liabilities
Less: Cash and cash equivalents (Note 23)
Net debt
Total equity
Net debt-to-equity ratio
5 REVENUE AND SEGMENTAL INFORMATION
2017
US$’000
91,778
(25,984)
65,794
134,454
2016
US$’000
83,555
(26,650)
56,905
142,214
0.49
0.40
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.
Income earned from hotel, mall and hospital operations are included in other income in line with management’s intention to dispose
of the properties.
5.1 Revenue recognised during the year as follows:
Sales of land held for property development
Sale of completed units
5.2 Segmental Information
Group
2017
US$000
13,132
5,966
2016
US$000
411
112,124
19,098
112,535
Company
2017
US$’000
2016
US$’000
– –
– –
– –
The Group’s assets and business activities are managed by Ireka Development Management Sdn. Bhd. (“IDM”) as the Development
Manager under a Management Agreement dated 27 March 2007.
Segmental information represents the level at which financial information is reported to the Executive Management of IDM, being
the chief operating decision maker as defined in IFRS 8. The Executive Management consists of the Chief Executive Officer, the Chief
Financial Officer, Chief Operating Officer and Chief Investment Officer of IDM. The management determines the operating segments
based on reports reviewed and used by the Executive Management for strategic decision making and resource allocation. For
management purposes, the Group is organised into project units.
The Group’s reportable operating segments are as follows:
i)
ii)
iii)
Investment Holding Companies – investing activities;
Ireka Land Sdn. Bhd. – develops Tiffani (“Tiffani”) by i-ZEN;
ICSD Ventures Sdn. Bhd. – owns and operates Harbour Mall Sandakan (“HMS”) and Four Points by Sheraton Sandakan Hotel
(“FPSS”);
Iringan Flora Sdn. Bhd. – owns and operates Aloft Kuala Lumpur Sentral Hotel (“AKLS”);
iv) Amatir Resources Sdn. Bhd. – develops SENI Mont’ Kiara (“SENI”);
v)
vi) Urban DNA Sdn. Bhd.– develops The RuMa Hotel and Residences (“The Ruma”); and
vii)
Hoa Lam Shangri-La Healthcare Group – master developer of International Healthcare Park (“IHP”); owns and operates the City
International Hospital (“CIH”).
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 2017 and 2016.
Information regarding the operations of each reportable segment is in Note 5.3. 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 are presented inclusive of inter-segment balances
and inter-segment pricing is determined on an arm’s length basis.
The Group’s revenue generating development projects are in Malaysia and Vietnam.
ASEANA PROPERTIES LIMITED | 52
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:
Operating Segments – ended 31 December 2017
Investment
Holding
Companies
US$’000
Ireka
Land
Sdn. Bhd.
US$’000
ICSD
Ventures
Sdn. Bhd.
US$’000
Amatir
Resources
Sdn. Bhd.
US$’000
Hoa Lam
Urban Shangri-La
DNA Healthcare
Group
US$’000
Sdn. Bhd.
US$’000
Total
US$’000
Segment profit/ (loss) before taxation
1,077
(432)
(1,554)
193
(1,413)
(2,852)
(4,981)
Included in the measure of
segment profit/ (loss) are:
Revenue
Other income from hotel operations
Other income from mall operations
Other income from hospital operations
Disposal 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
–
–
–
–
–
–
–
–
–
–
–
6
935
–
–
–
–
–
–
–
–
–
–
2
–
3,842
1,440
–
–
–
(3,939)
(1,488)
–
–
(1,713)
236
5,031
–
–
–
(53)
(8)
–
–
–
–
–
12
–
–
–
–
–
(488)
–
–
–
–
–
23
13,132
–
–
8,234
(2,827)
–
–
–
(10,491)
(84)
(4,031)
113
19,098
3,842
1,440
8,234
(2,880)
(496)
(3,939)
(1,488)
(10,491)
(84)
(5,744)
392
Segment assets
735
523
83,525
15,438
106,355
104,829
311,405
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
Consolidated profit before taxation
Operating Segments – ended 31 December 2016
US$’000
(4,981)
(30)
(5,011)
Investment
Holding
Companies
US$’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
Hoa Lam
Urban Shangri-La
DNA Healthcare
Group
US$’000
Sdn. Bhd.
US$’000
Total
US$’000
Segment profit/ (loss) before
taxation
(4,410)
135
(6,237)
515
37,223
(1,338)
(9,359)
16,529
Included in the measure of
segment profit/ (loss) are:
Revenue
Other income from hotel operations
Other income from mall operations
Other income from hospital operations
Impairment of inventory *
Disposal of intangible assets
Marketing expenses
Expenses from hotel operations
Expenses from mall operations
Expenses from hospital operations
Depreciation of property,
plant and equipment
Finance costs
Finance income
–
–
–
–
–
–
–
–
–
–
–
–
57
1,306
–
–
–
–
–
–
–
–
–
–
–
2
–
3,435
1,041
–
(2,408)
–
–
(3,763)
(1,399)
–
(6)
(2,992)
258
6,529
–
–
–
–
(79)
–
–
–
–
–
–
9
104,289
8,762
–
–
–
–
–
(5,719)
–
–
(3)
(1,957)
2
–
–
–
–
–
–
(99)
–
–
–
–
–
7
411
–
–
5,754
–
(73)
–
–
–
(9,039)
(89)
(4,363)
66
112,535
12,197
1,041
5,754
(2,408)
(152)
(99)
(9,482)
(1,399)
(9,039)
(98)
(9,312)
401
Segment assets
12,160
1,843
76,174
18,722
–
69,618
97,833
276,350
* The amount relates to impairment of Four Points by Sheraton Sandakan Hotel as the recoverable amount, estimated based on its net
realisable value, is below its carrying amounts (refer to Note 20).
53 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
5 REVENUE AND SEGMENTAL INFORMATION (cont’d)
5.3 Analysis of the group’s reportable operating segments is as follows (cont’d):
Operating Segments – ended 31 December 2016 (cont’d)
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items
Profit or loss
Total profit for reportable segments
Other non-reportable segments
Finance cost
Consolidated profit before taxation
US$’000
16,529
(61)
(304)
16,164
There were no additions to non-current assets other than financial instruments and deferred tax assets for the financial year ended 2016.
2017
US$’000
Total reportable segment
Other non-reportable segments
Consolidated total
2016
US$’000
Total reportable segment
Other non-reportable segments
Consolidated total
Revenue Depreciation
Finance
cost
Finance
income
Additions to
Segment non-current
assets
assets
19,098
–
19,098
(84)
–
(5,744)
–
392
–
311,405
14,267
(84)
(5,744)
392
325,672
–
5
5
Revenue Depreciation
Finance
cost
Finance
income
Additions to
Segment non-current
assets
assets
112,535
–
112,535
(98)
–
(98)
(9,312)
(304)
401
–
276,350
18,030
(9,616)
401
294,380
–
–
–
There were no additions to non-current assets other than financial instruments and deferred tax assets for financial year ended 2016.
Geographical Information – ended 31 December 2017
Revenue
Non-current assets
Malaysia
US$’000
Vietnam Consolidated
US$’000
US$’000
5,966
4,954
13,132
4,178
19,098
9,132
Included in the revenue of the Group for the financial year ended 31 December 2017 is revenue from the sale of two plots of land (Lot D2
and D3) at the International Healthcare Park (“IHP”).
For the year ended 31 December 2017, two customers exceeded 10% of the Group’s total revenue as follows:
Tien Phat Consultancy Investment Co. Ltd
Tri Hanh Consultancy Co. Ltd
Geographical Information – ended 31 December 2016
Revenue
Non-current assets
US$’000
5,399
7,733
Segments
Hoa Lam Shangri-La Healthcare Group
Hoa Lam Shangri-La Healthcare Group
Malaysia
US$’000
Vietnam Consolidated
US$’000
US$’000
112,124
2,359
411
7,088
112,535
9,447
Included in the revenue of the Group for the financial year ended 31 December 2016 is revenue from the sale of Aloft Kuala Lumpur
Sentral Hotel (“AKLS”) and a plot of land (Lot GD1) at the IHP.
For the year ended 31 December 2016, one customer exceeded 10% of the Group’s total revenue as follows:
Prosper Group Holdings Limited
US$’000
104,289
Segments
Iringan Flora Sdn. Bhd.
ASEANA PROPERTIES LIMITED | 54
Notes to The Financial Statements (cont’d)
6 COST OF SALES
Direct costs attributable to:
Completed units (Note 20)
Sales of land held for property development (Note 20)
Disposal/impairment of intangible assets (Note 18)
Impairment of inventory (Note 20)
Group
Company
2017
US$000
2016
US$000
2017
US$’000
2016
US$’000
5,212
5,291
2,880
–
74,796
191
152
2,408
13,383
77,547
– –
– –
– –
– –
– –
Included in the cost of sales of the Group for the financial year ended 31 December 2017 is cost of sales related to the sale of two plots of
land (Lot D2 and D3) at the IHP (2016: sale of Aloft Kuala Lumpur Sentral and a plot of land (Lot GD1) at the IHP).
7 OTHER INCOME
Dividend income
Gain on disposal of available-for-sale investments
Gain on disposal of property, plant and equipment
Rental income
Other income from hotel operations (a)
Other income from mall operations (b)
Other income from hospital operations (c)
Sundry income
2017
US$’000
2016
US$’000
–
–
–
260
3,842
1,440
8,234
400
208
2,285
5
211
12,197
1,041
5,754
262
14,176
21,963
a) Other income from hotel operations
The income in 2017 relates to the hotel operations of FPSS which is owned by a subsidiary of the Company, ICSD Ventures Sdn. Bhd.
The income in 2016 includes the income from hotel operations of FPSS and AKLS amounting to US$3,435,000 and US$8,762,000
respectively. AKLS was owned by a subsidiary of the Company, Iringan Flora Sdn. Bhd which was disposed of in 2016. The income
earned from hotel operations is included in other income in line with management’s intention to dispose of the hotel.
b) Other income from mall operations
The income relates to the operations of HMS which is owned by a subsidiary of the Company, ICSD Ventures Sdn. Bhd.. The income
earned from mall operations is included in other income in line with management’s intention to dispose of the mall.
c) Other income from hospital operations
The income relates to the operations of CIH which is owned by a subsidiary of the Company, City International Hospital Company
Limited. The income earned from hospital operations is included in other income in line with management’s intention to dispose of the
hospital.
8 FOREIGN EXCHANGE GAIN/(LOSS)
Foreign exchange gain/(loss) comprises:
Realised foreign exchange gain/ (loss)
Unrealised foreign exchange gain/(loss)
Group
Company
2017
US$000
2016
US$000
2017
US$’000
2016
US$’000
446
2,973
3,419
(112)
(4,939)
(5,051)
4
1,970
1,974
(100)
(3,442)
(3,542)
55 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
9 MANAGEMENT FEES
Management fees
2017
US$000
3,129
Group
Company
2016
US$000
2017
US$’000
2016
US$’000
3,331
1,002
1,259
The management fees payable to the Development Manager are based on 2% per annum of the Group’s net asset value calculated on the
last business day of June and December of each calendar year and payable quarterly in advance. The management fees were allocated to
the subsidiaries and the Company based on where the service was provided.
In addition to the annual management fee, the Development Manager is entitled to a performance fee calculated at 20% of the out
performance net asset value over a total compounded return hurdle rate of 10% per annum. No performance fee has been paid or accrued
during the year (2016: US$Nil).
10 STAFF COSTS
Group
Wages, salaries and others (including key management personnel)
Employees’ provident fund, social security and other pension costs
2017
US$’000
2016
US$’000
7,498
292
7,790
9,144
497
9,641
The Company has no Executive Directors or employees under its employment. As of year ended 2017, the subsidiaries of the Group have a
total of 613 (2016: 612) 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
12 NET (LOSS)/ PROFIT BEFORE TAXATION
Net (loss) /profit before taxation is stated after charging/(crediting):
Auditor’s remuneration
Directors’ fees/emoluments
Depreciation of property, plant and equipment
Expenses of hotel operations
Expenses of mall operations
Expenses of hospital operations
Impairment of amounts due from subsidiaries
Reversal of impairment of amount due from a subsidiary
Unrealised foreign exchange (gain)/loss
Realised foreign exchange (gain)/loss
Disposal/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
Loss on disposal of an indirectly held subsidiary (Note 34)
Tax services
–
–
Group
Company
2017
US$000
392
–
(34)
(4,031)
–
(1,679)
2016
US$000
401
(621)
(194)
(50)
(4,313)
(1)
(4,437)
(5,352)
(9,215)
2017
US$’000
6
– –
– –
– –
– –
– –
– –
6
2016
US$’000
56
56
Group
Company
2017
US$000
2016
US$000
2017
US$’000
2016
US$’000
202
235
84
3,939
1,488
10,491
–
–
(2,973)
(446)
2,880
–
–
–
1,298
13
205
297
98
9,482
1,399
9,039
–
4,939
112
152
(2,285)
(5) –
–
–
8
105
235
– –
– –
– –
– –
10,238
(1,877) –
(1,970)
(4)
– –
– –
–
–
– –
– –
101
297
14,376
3,442
100
(34,895)
ASEANA PROPERTIES LIMITED | 56
Notes to The Financial Statements (cont’d)
13 TAXATION
Group
Current tax – Current year
– Prior year
Deferred tax credit
– Current year
– Prior year
Total tax expense for the year
2017
US$’000
2016
US$’000
3,096
412
(2,046)
(599)
863
796
262
(354)
(18)
686
The numerical reconciliation between the income tax expenses and the product of accounting results multiplied by the applicable tax rate
is computed as follows:
Group
Net (loss)/profit before taxation
Income tax at a rate of 24% (2016: 24%)
Add:
Tax effect of expenses not deductible in determining taxable profit
Current year losses and other tax benefits for which no deferred tax asset was recognised
Tax effect of different tax rates in subsidiaries
Less:
Tax effect of income not taxable in determining taxable profit
(Over)/under provision in respect of prior years
Total tax expense for the year
2017
US$’000
2016
US$’000
(5,011)
16,164
(1,203)
592
1,742
590
(671)
(187)
863
3,879
6,854
2,029
1,521
(13,841)
244
686
The applicable corporate tax rate in Malaysia is 24% (2016: 24%).
The Company is treated as a tax resident of Jersey for the purpose of Jersey tax laws and is subject to a tax rate of 0%.
The applicable corporate tax rates in Singapore and Vietnam are 17% and 20% (2016: 17% and 20%) 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 for the prior year mainly relates to the net gain on disposal from the sale
of the AKLS (refer to 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.
14 OTHER COMPRENHENSIVE INCOME/(LOSS)
Group
Items that are or may be reclassified subsequently to profit or loss, net of tax
Foreign currency translation differences for foreign operations
Gains/(Losses) arising during the year
Reclassification to profit or loss on disposal of land held for property development
Reclassification to profit or loss on disposal of an indirectly held subsidiary
Fair value of available-for-sale investment
Losses arising during the year
Reclassification adjustments for gain on disposal included in profit or loss
2017
US$’000
2016
US$’000
8,944
61
(1,142) –
7,863
–
–
–
7,863
(3,522)
988
(2,534)
(233)
(2,208)
(2,441)
(4,975)
57 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
15 (LOSS) /EARNINGS PER SHARE
Basic and diluted (loss)/ earnings per ordinary share
The calculation of basic and diluted (loss)/ earnings per ordinary share for the year ended 31 December 2017 was based on the (loss)/ profit
attributable to equity holders of the parent and a weighted average number of ordinary shares outstanding, calculated as below:
Group
(Loss)/Profit attributable to equity holders of the parent (US$’000)
Weighted average number of shares
(Loss)/Earnings per share
Basic and diluted (US cents)
Company
(Loss)/Profit for the year (US$’000)
Weighted average number of shares
(Loss)/Earnings per share
Basic and diluted (US cents)
Weighted average number of ordinary shares
Group
Issued ordinary shares at 1 January
Effect of share buy back (Note 25)
Weighted average number of ordinary shares at 31 December
16 PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 January 2017
Exchange adjustments
Addition
At 31 December 2017
Accumulated Depreciation
At 1 January 2017
Exchange adjustments
Charge for the year
At 31 December 2017
Net carrying amount at 31 December 2017
Cost
At 1 January 2016
Exchange adjustments
Disposal
At 31 December 2016
Accumulated Depreciation
At 1 January 2016
Exchange adjustments
Charge for the year
Disposal
At 31 December 2016
Net carrying amount at 31 December 2016
2017
2016
(4,176)
199,019,784
18,856
212,025,002
(2.10)
8.89
2017
2016
(8,215)
199,019,784
14,516
212,025,002
(4.13)
6.85
2017
2016
212,025,002
(13,005,218)
212,025,002
–
199,019,784
212,025,002
Furniture, fittings
& equipment
US$’000
Motor
vehicles
US$’000
Leasehold
building
US$’000
5
344
1
–
350
245
3
32
280
70
348
(4)
–
344
213
(3)
35
–
245
99
204
3
–
207
105
3
18
126
81
270
(6)
(60)
204
131
(4)
27
(49)
105
99
795
2
5
797
250
1
34
285
512
804
(9)
–
795
217
(3)
36
–
250
545
Total
US$’000
1,343
6
1,354
600
7
84
691
663
1,422
(19)
(60)
1,343
561
(10)
98
(49)
600
743
ASEANA PROPERTIES LIMITED | 58
Notes to The Financial Statements (cont’d)
17 INVESTMENT IN SUBSIDIARIES
Company
Unquoted shares, at cost
Discount on loans to subsidiaries
Less: Impairment losses
Notes
17.1
17.2
2017
US$’000
66,428
14,518
(12,713)
2016
US$’000
66,428
14,518
(12,713)
68,233
68,233
17.1 Discount on loans to subsidiaries relates to a historic fair value adjustment on a non-current portion of amount due from subsidiaries
recognised as investment in subsidiaries.
17.2 This represents accumulated impairment losses recognised on investment in subsidiaries where there is an indicator of impairment.
A list of 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 out in Note 20.
Disposal of indirectly held subsidiaries in Financial Year Ended 2017
During the financial year, the Group disposed the following indirectly held subsidiaries:
a) Hoa Lam Shangri-La 3 Limited Liability Co.
During the financial year, the Group disposed Hoa Lam Shangri-La 3 Limited Liability Co. (“HLSL 3”), an indirectly held subsidiary of the
Group, for a consideration of US$998,000 (VND23 billion). HLSL 3 did not hold any properties as at the date of disposal. The condition
precedent for the completion of the disposal was met on 25 December 2017 when the shares were transferred to the purchaser.
b) Hoa Lam Shangri-La 5 Limited Liability Co.
During the financial year, the Group disposed of a plot of land in IHP through the disposal of its entire interest in Hoa Lam Shangri-La
5 Limited Liability Co. (“HLSL 5”) for a consideration of US$5,399,000 (VND122 billion). The condition precedent for the completion of
the disposal was met on 24 May 2017 when the shares were transferred to the purchaser.
c) Hoa Lam Shangri-La 6 Limited Liability Co.
During the financial year, the Group disposed of a plot of land in IHP through the disposal of its entire interest in Hoa Lam Shangri-La
6 Limited Liability Co. (“HLSL 6”) for a consideration of US$7,733,000 (VND176 billion). The condition precedent for the completion of
the disposal was met on 29 August 2017 when the shares were transferred to the purchaser.
Disposal of subsidiaries in Financial Year Ended 2016
a) Disposal of ASPL M3B Limited and Iringan Flora Sdn. Bhd.
In the previous financial year, the Group disposed of Aloft Kuala Lumpur Sentral 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.
b) Disposal of Morningstar International Preschool Limited Liability Co.
In the previous financial year, the Group disposed of a plot of land in IHP through disposal of its entire interest in an indirectly held
subsidiary, Morningstar International Preschool Limited Liability Company (previously known as Hoa Lam Shangri-La 4 Limited
Liability Co.) (“HLSL4”), for a consideration of US$411,000 (VND9 billion). The condition precedent for the completion of the disposal
was met on 22 January 2016 when the shares were transferred to the purchaser.
Non-controlling interests in subsidiaries
The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:
2017
NCI percentage of ownership interest and voting interest
Carrying amount of NCI
Loss allocated to NCI
Hoa Lam
Services
Co Ltd
US$’000
49%
(6,205)
(426)
Shangri-La
Healthcare
Investment
Pte Ltd
US$’000
18.42%
328
(708)
Urban
DNA
Sdn. Bhd.
US$’000
30%
(1,948)
(424)
Other
individually
immaterial
subsidiaries
US$’000
Total
US$’000
4,609
(140)
(3,216)
(1,698)
59 | ANNUAL REPORT 2017
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: (cont’d)
Summarised financial information before intra-group elimination
2017
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 from investing activities
Cash flows from financing activities
Hoa Lam
Services
Co Ltd
US$’000
33,626
43,082
(8,008)
(48,998)
Shangri-La
Healthcare
Investment
Pte Ltd
US$’000
Urban
DNA
Sdn. Bhd.
US$’000
Other
individually
immaterial
subsidiaries
US$’000
Total
US$’000
76,058
97,799
(18,684)
(76,840)
3,789
102,564
–
(112,848)
19,702
78,333
(6,495)
–
(869)
(851)
(1,617)
954
4,338
–
(3,841)
(3,855)
(3,346)
3,991
10,158
–
(1,413)
(1,984)
(4,348)
–
3,438
Net increase /(decrease) in cash and cash equivalents
3,675
10,803
(910)
2016
NCI percentage of ownership interest and voting interest
Carrying amount of NCI
Loss allocated to NCI
Hoa Lam
Services
Co Ltd
US$’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)
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
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
ASEANA PROPERTIES LIMITED | 60
Notes to The Financial Statements (cont’d)
18 INTANGIBLE ASSETS
Group
Cost
At 1 January 2016/ 31 December 2016 / 31 December 2017
Accumulated impairment
At 1 January 2016
Disposals
At 31 December 2016 / 1 January 2017
Disposals
At 31 December 2017
Carrying amounts
At 31 December 2016
At 31 December 2017
Licence contracts
and related
relationships
US$’000
Goodwill
US$’000
Total
US$’000
10,695
6,479
17,174
4,276
73
4,349
2,827
5,665
79
5,744
53
9,941
152
10,093
2,880
7,176
5,797
12,973
6,346
3,519
735
682
7,081
4,201
The licence contracts and related relationships represent the Land Use Rights (“LUR”) for the Group’s lands in Vietnam. LUR represents the
rights to develop the IHP within a lease period ending on 9 July 2077. In 2017, the Group disposed of its undeveloped land in the IHP (Lot D2
and D3) to third party purchasers (2016: Lot GD1).
For the purpose of impairment testing, goodwill and licence contracts and related relationships are allocated to the Group’s operating
divisions which represent the lowest level within the Group at which the goodwill and licence contracts and related relationships are
monitored for internal management purposes.
The aggregate carrying amounts of intangible assets allocated to each unit are as follows:
Group
Licence contracts and related relationships
International Healthcare Park
Goodwill
SENI Mont’ Kiara
Sandakan Harbour Square
2017
US$’000
2016
US$’000
3,519
6,346
132
550
682
185
550
735
The recoverable amount of licence contracts and related relationships has been tested based on the net realisable value of the 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 to Note 20).
Intangible assets of US$53,000 (2016: US$79,000) and US$2,827,000 (2016: US$73,000) in relation to SENI and IHP projects respectively
were written down as certain components from the developments were sold during the year.
19 DEFERRED TAX ASSETS
Group
At 1 January
Exchange adjustments
Deferred tax credit relating to origination of temporary differences during the year
At 31 December
The deferred tax assets comprise:
Group
Taxable temporary differences between accounting profit and taxable profit of property development units sold
At 31 December
2017
US$’000
2016
US$’000
1,623
311
2,334
4,268
2017
US$’000
4,268
4,268
1,337
(86)
372
1,623
2016
US$’000
1,623
1,623
61 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
19 DEFERRED TAX ASSETS (cont’d)
Deferred tax assets have not been recognised in respect of unused tax losses of US$72,240,000 (2016: US$65,440,000) 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$4,920,000 (2016: US$4,460,000) which are available for
offset against future taxable profits. Deferred tax assets have not been recognised due to the uncertainty of the recovery of the losses.
20 INVENTORIES
Group
Land held for property development
Work-in-progress
Stock of completed units, at cost
Consumables
At 31 December
Notes
(a)
(b)
(c)
2017
US$’000
19,021
95,450
163,880
528
2016
US$’000
22,514
62,708
159,334
403
278,879
244,959
Carrying amount of inventories pledged as security for Loans and borrowings and Medium Term Notes
156,857
148,427
a) Land held for property development
Group
At 1 January
Add :
Exchange adjustments
Additions/(disposal)
At 31 December
2017
US$’000
2016
US$’000
22,514
23,223
925
873
(604)
86
24,312
22,705
Less: Costs recognised as expenses in the statement of comprehensive income during the year (Note 6)
(5,291)
(191)
At 31 December
b) Work-in-progress
Group
At 1 January
Add :
Exchange adjustments
Work-in-progress incurred during the year
At 31 December
19,021
22,514
2017
US$’000
2016
US$’000
62,708
53,182
6,809
25,933
(3,967)
13,493
95,450
62,708
Included in previous financial year are the borrowing costs capitalised at interest rate ranging from 5.50% to 10.00% per annum of
US$0.2 million.
c) Stock of completed units, at cost
Group
At 1 January
Less :
Exchange adjustments
Costs recognised as expenses in the statement of comprehensive income during the year (Note 6)
Impairment of inventory
At 31 December
2017
US$’000
2016
US$’000
159,334
230,436
9,758
(5,212)
–
6,102
(74,796)
(2,408)
163,880
159,334
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.
ASEANA PROPERTIES LIMITED | 62
Notes to The Financial Statements (cont’d)
20 INVENTORIES (cont’d)
c) Stock of completed units, at cost (cont’d)
Included in the stock of completed units are SENI units as well as the following completed units:
Four Points by Sheraton Sandakan Hotel (“FPSS”)
The recoverable amount of FPSS was determined based on an internal valuation performed by management, supported by valuation
undertaken by an external, independent valuer with appropriate recognised professional qualification. The recoverable amount
US$40,788,000 (2016: US$37,012,000) of FPSS was determined to approximate with its carrying amount. In 2016, impairment loss of
US$2,408,000 in relation to inventory amount 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 2017 and the 10 years budget of FPSS;
2) The occupancy rate of FPSS will improve to 73% in 2027 which is when the hotel’s operations are expected to stabilise;
3)
Average daily rates of the hotel will improve to US$103 in 2027 which is when the hotel’s operations are expected to stabilise;
4)
5)
Projected gross margin reflects the average historical gross margin, adjusted for projected market and economic conditions and
internal resources efficiency; and
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.
Sensitivity analysis
The above estimates are sensitive in the following key areas:
a)
b)
c)
an increase/(decrease) of 1% in discount rate used would have (decreased)/ increased the recoverable amount by approximately
(US$5,342,000)/US$6,624,000;
an increase/(decrease) of 1% in occupancy rate throughout the entire projection term used would have increased/ (decreased) the
recoverable amount by approximately US$758,000/ (US$758,000); and
an increase/(decrease) of 5% in average daily rates throughout the entire projection term used would have increased/ (decreased)
the recoverable amount by approximately US$3,476,000/ (US$3,476,000).
Harbour Mall Sandakan (“HMS”)
The recoverable amount of HMS was determined based on an internal valuation performed by management, supported by valuation
undertaken by an external, independent valuer with appropriate recognised professional qualification. The recoverable amount
US$43,490,000 (2016: US$41,237,000) of HMS was determined to be higher than its carrying amount and no impairment losses in
relation to the inventory amount 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 95% by 2020 which is when the mall’s operations are expected to stabilise;
2)
Projected optimum average rental rates to improve to US$1.44 per square feet over a ten-year period;
3) Outgoing rate projected at 35% against gross annual income;
4) Capitalisation rate assumed at 6%; and
5) Capitalisation period of 84 years covering the period of HMS achieving optimum operations to expiration of the title term.
Sensitivity analysis
The above estimates are sensitive in the following key areas:
a)
b)
c)
an increase/(decrease) of 0.25% in capitalisation rate used would have (decreased) /increased the recoverable amount by
approximately (US$1,730,000)/ US$1,730,000;
an increase/(decrease) of 1% in optimum occupancy rate throughout the entire projection term would have increased/(decreased)
the recoverable amount by approximately US$494,000/ (US$494,000); and
an increase/(decrease) of 5% in average rental rate used would have increased /(decreased) the recoverable amount by
approximately US$1,977,000/ (US$2,224,000).
63 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
20 INVENTORIES (cont’d)
c) Stock of completed units, at cost (cont’d)
City International Hospital (“CIH”)
The recoverable amount US$75,200,000 (2016: US$75,200,000) 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 by discounting the future cash flows expected to be generated from the continuing operations of
CIH. The followings are the key assumptions:
1)
2)
3)
Cash flows were projected based on past experience, actual operating results in 2017 and the 5 years budget of CIH adjusted by
the valuer;
Projected revenue growth reflects the increase in average historical growth figures, adjusted for projected market and economic
conditions and internal resources efficiency. Revenue is projected to grow at a compound annual growth rate of 25% from 2018 to 2022;
Pre-tax discount rate of 12% was applied in discounting the cash flows. The discount rates take into the prevailing trend of the
hospital industry in Vietnam; and
4) Terminal capitalisation rate of 10% was applied. The rates take into the prevailing trend of the hospital industry in Vietnam.
Sensitivity analysis
The above estimates are sensitive in the following key areas:
a)
b)
c)
an increase/(decrease) of 1% in revenue growth rates would have increased/(decreased) the recoverable amount by approximately
US$2,100,000/(US$3,900,000);
an increase/(decrease) of 1% in discount rate used would have (decreased)/increased the recoverable amount by approximately
(US$5,502,000)/ US$6,023,000; and
an increase/(decrease) of 1% in capital terminalisation rate used would have (decreased)/increased the recoverable amount by
approximately (US$3,739,000)/ US$4,481,000.
21 TRADE AND OTHER RECEIVABLES
Group
Trade receivables
Other receivables
Sundry deposits
Company
Other receivables
2017
US$’000
2,074
8,498
440
2016
US$’000
3,303
7,877
391
11,012
11,571
2017
US$’000
2016
US$’000
39
32
Trade receivables represent progress billings receivable from the sale of completed units and land held for property development. Progress
billings receivable from the sale of completed units are generally due for settlement within 21 days from the date of invoice and are
recognised and carried at the original invoice amount less allowance for any uncollectible amounts. They are recognised at their original
invoice amounts which represent their fair values on initial recognition less provision for impairment where it is required.
The ageing analysis of trade receivables past due are set out below. These relate to a number of independent customers for whom there is
no recent history of default.
Group
2017
Within credit terms
Stakeholder sums
Past due
0 – 60 days
61 –120 days
More than 120 days
Gross
US$’000
Individual
Impairment
US$’000
–
–
120
–
1,954
2,074
–
–
–
–
–
–
Net
US$’000
–
–
120
–
1,954
2,074
ASEANA PROPERTIES LIMITED | 64
Notes to The Financial Statements (cont’d)
21 TRADE AND OTHER RECEIVABLES (cont’d)
Group
2016
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
–
–
–
–
–
–
Net
US$’000
434
497
10
–
2,362
3,303
In 2016, the stakeholder sums represent amounts receivable from two customers with sound financial standing. The stakeholder sums
were collected during the financial year.
Included in trade receivables is US$1.95mil representing 94% of the Group’s trade receivables which are due from a subsidiary of Ireka
Corporation Berhad, for the acquisition of SENI units (2016: US$2.3mil, representing 85% of the Group’s trade receivables, for the acquisition
of SENI units and expenses paid on behalf). Other than the abovementioned customers, 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$3,993,000 (2016: US$2,903,000) due from a subsidiary of Ireka Corporation Berhad for advance
payment made to its contractors and US$137,000 (2016: US$114,000) due from Ireka Corporation Berhad for rental expenses paid on behalf.
The maximum exposure to credit risk is represented by the carrying amount in the statement of financial position. No allowance for
impairment loss of trade receivables has been made for the remaining past due receivables as the Group monitors the repayment of the
customers regularly and are confident of the ability of the customers to repay the balance outstanding.
22 AMOUNTS DUE FROM / (TO) SUBSIDIARIES
Company
Due from subsidiaries (Current portion)
Less : Impairment loss
Due to subsidiaries (Current portion)
2017
US$’000
2016
US$’000
255,619
(76,489)
239,397
(68,128)
179,130
171,269
(92,599)
(77,105)
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$10,238,000
(2016: US$14,376,000).
In prior years, impairment losses amounting to US$22,420,000 was recognized in relation to subsidiary, ASPL M1 Limited, the immediate
holding company of Ireka Land Sdn. Bhd. which is involved in the development and sales of Tiffani units. Reversal of impairment losses
amounting to US$1,877,000 were made in line with the repayments by Ireka Land Sdn. Bhd. during the financial year.
23 CASH AND CASH EQUIVALENTS
Group
Cash and bank balances
Short term bank deposits
Less: Deposits subject to restriction in use
Less: Deposits pledged
Cash and cash equivalents
2017
US$’000
10,343
15,641
25,984
(13,867) –
(2,823)
2016
US$’000
14,858
11,792
26,650
(10,011)
9,294
16,639
Included in short term bank deposits in 2017 is US$13,867,000 obtained from the term loan granted to City International Hospital Company
Ltd (“CIH”) by Vietbank during the year where the utilisation of this balance is restricted solely for the purpose of refinancing the existing
syndicated term loan under CIH.
Included in short term bank deposits and cash and bank balance is US$2,823,000 (2016: US$10,011,000) pledged for loans and borrowings
and Medium Term Notes of the Group.
65 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
23 CASH AND CASH EQUIVALENTS (cont’d)
The interest rate on cash and cash equivalents, excluding deposit pledged with licensed bank of US$2,823,000 (2016: US$10,011,000)
pledged for loans and borrowings and Medium Term Notes of the Group, ranges from 1.20% to 2.80% per annum (2016: 0.20% to 2.80% per
annum).
The interest rate on short term bank deposits and cash and bank balance pledged for loans and borrowings and Medium Term Notes of the
Group, ranges from 2.50% to 4.70% per annum (2016: 3.10% to 4.70% per annum).
Company
Cash and bank balances
Short term bank deposits
24 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$0.05 each
2017
US$’000
319
–
319
2016
US$’000
10,663
90
10,753
Number
of shares
2017
’000
Amount
2017
US$’000
Number
of shares
2016
’000
Amount
2016
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
–# –
# –
# –
10,601
#
212,025
10,601
212,025
10,601
* represents 10 management shares at US$0.05 each
# represents 2 management shares at US$0.05 each
In 2015, the shareholders of the Company approved the creation and issuance of management shares by the Company as well as a
compulsory redemption mechanism that was proposed by the Board.
The Company increased its authorised share capital from US$100,000,000 to US$100,000,000.50 by the creation of 10 management shares
of US$0.05 each for cash.
The Company also increased its issued and paid-up share capital from US$10,601,250 to US$10,601,250.10 by way of an allotment of 2 new
management shares of US$0.05 each at par via cash consideration.
In accordance with the compulsory redemption scheme, the Company’s ordinary shares were converted into redeemable ordinary shares.
The ordinary shares and the management shares shall have attached thereto the rights and privileges, and shall be subject to the limitations
and restrictions, as are set out below:
a) Distribution of dividend:
i)
The ordinary shares carry the right to receive all the profits of the Company available for distribution by way of interim or final
dividend at such times as the Directors may determine from time to time; and
ii) The management shares carry no right to receive dividends out of any profits of the Company.
b) Winding-up or return of capital:
i)
The holders of the management shares shall be paid an amount equal to the paid-up capital on such management shares; and
ii)
Subsequent to the payment to holders of the management shares, the holders of the ordinary shares shall be repaid the surplus
assets of the Company available for distribution.
c) Voting rights:
i)
ii)
The holders of the ordinary shares and management shares shall have the right to receive notice of and to attend and vote at
general meetings of the Company; and
Each holder of ordinary shares and management shares being present in person or by a duly authorised representative (if a
corporation) at a meeting shall upon a show of hands have one vote and upon a poll each such holder present in person or by proxy
or by a duly authorised representative (if a corporation) shall have one vote in respect of every full paid share held by him.
ASEANA PROPERTIES LIMITED | 66
Notes to The Financial Statements (cont’d)
25 SHARE PREMIUM
Share premium represents the excess of proceeds raised on the issuance of shares over the nominal value of those shares. The costs
incurred in issuing shares were deducted from the share premium.
Group and Company
At 1 January
Treasury shares
As at 31 December
2017
US$’000
218,926
(10,001) –
2016
US$’000
218,926
208,925
218,926
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. 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.
26 CAPITAL REDEMPTION RESERVE
The capital redemption reserve was incurred after the Company cancelled its 37,475,000 and 500,000 ordinary shares of US$0.05 per share
in 2009 and 2013 respectively.
27 TRANSLATION RESERVE
The translation reserve comprises foreign currency differences arising from the translation of the financial statements of foreign operations.
28 FAIR VALUE RESERVE
The fair value reserve comprises the fair value adjustment of the Group’s available-for-sale investments, namely the investment of shares
in Nam Long Investment Corporation until the investment was disposed of in 2016.
29 ACCUMULATED LOSSES
Group
At 1 January
(Loss)/ Profit attributable to equity holders of the parent
Changes in ownership interests in subsidiaries
At 31 December
Company
At 1 January
(Loss)/ Profit for the year
At 31 December
30 TRADE AND OTHER PAYABLES
Group
Trade payables
Other payables
Progress billings
Deposits refundable
Accruals
Company
Other payables
Accruals
2017
US$’000
(58,922)
(4,176)
484
2016
US$’000
(77,301)
18,856
(477)
(62,614)
(58,922)
(58,231)
(8,215)
(72,747)
14,516
(66,446)
(58,231)
2017
US$’000
2,717
6,351
67,306
2,027
4,639
2016
US$’000
2,284
4,741
38,346
6,087
2,422
83,040
53,880
2017
US$’000
2016
US$’000
2
141
143
90
173
263
67 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
30 TRADE AND OTHER PAYABLES (cont’d)
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 Hotel and Residences
which are pending transfer of vacant possession.
Included within progress billings is US$26,300,000 (2016: US$19,100,000) of funding received, by way of non-refundable deposits, in
advance of completion of the hotel suites which are at 31 December 2017 still controlled by the Group.
Deposits and accruals are from normal business transactions of the Group.
31 AMOUNT DUE TO NON-CONTROLLING INTERESTS
Group
Current
Minority Shareholder of Bumiraya Impian Sdn. Bhd.:
- Global Evergroup Sdn. Bhd.
Minority Shareholders of Hoa Lam Services Co Ltd:
- Tran Thi Lam
- Tri Hanh Consultancy Co Ltd
- Hoa Lam Development Investment Joint Stock Company
- Duong Ngoc Hoa
Minority Shareholder of The RuMa Hotel KL Sdn. Bhd.:
- Ireka Corporation Berhad
Minority Shareholder of Urban DNA Sdn. Bhd.:
- Ireka Corporation Berhad
2017
US$’000
2016
US$’000
1,225
1,105
1,752
3,944
2,228
226
1,756
3,954
2,560
227
2 2
3,676
3,316
13,400
12,573
The current amount due to non-controlling interests amounting to US$13,400,000 (2016: US$12,573,000) is unsecured, interest free and
repayable on demand.
32 LOANS AND BORROWINGS
Group
Non-current
Bank loans
Current
Bank loans
Finance lease liabilities
2017
US$’000
2016
US$’000
54,572
54,572
12,882
– 3
12,882
67,454
46,405
46,405
10,804
10,807
57,212
The effective interest rates on the bank loans for the year ranged from 5.35% to 10.50% (2016: 5.25% to 10.50%) per annum. In 2016, the
effective interest rates for finance lease arrangements was at 2.50% per annum.
Borrowings are denominated in Ringgit Malaysia, United State Dollars and Vietnam Dong.
Bank loans are repayable by monthly, quarterly or semi-annually instalments.
Bank loans are secured by land held for property development, work-in-progress, operating assets of the Group, pledged deposits and
some by the corporate guarantee of the Company.
ASEANA PROPERTIES LIMITED | 68
Notes to The Financial Statements (cont’d)
32 LOANS AND BORROWINGS (cont’d)
Reconciliation of movement of loan and borrowings to cash flows arising from financing activities:
Group
Bank loans
Finance lease liabilities
Total
Finance lease liabilities are payable as follows:
Group
Within one year
Between one and five years
Drawndown
of loan
US$’000
Repayment
of loan
US$’000
Foreign
exchange
movements
US$’000
As at
December
2017
US$’000
As at
January
2017
US$’000
57,209
3
25,038
–
(14,770)
(3)
57,212
25,038
(14,773)
(23)
–
(23)
67,454
–
67,454
Present
value of
minimum lease
payment
2016
US$’000
Interest
2016
US$’000
Future
minimum lease
payment
2017
US$’000
Present
value of
Future
minimum lease minimum lease
payment
2016
US$’000
payment
2017
US$’000
Interest
2017
US$’000
–*
–
–
–
–
–
– 3
–
– 3
–
–
–
3
–
3
–
* Finance lease liabilities has been repaid in the current financial year.
33 MEDIUM TERM NOTES
Group
Outstanding medium term notes
Net transaction costs
Less:
Repayment due within twelve months*
Repayment due after twelve months
2017
US$’000
24,710
(386)
2016
US$’000
26,748
(405)
(24,324)
(26,343)
– –
Reconciliation of movement of medium term notes to cash flows arising from financing activities:
Group
Medium Term Notes
As at
January
2017
US$’000
26,343
Drawndown
of loan
US$’000
Repayment
of loan
US$’000
Foreign
exchange
movements
US$’000
As at
December
2017
US$’000
–
(4,615)
2,596
24,324
* Includes net transaction costs in relation to medium term notes due within twelve months of US$0.39 million (2016: US$0.40 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 Aloft Kuala
Lumpur Sentral (“AKLS”) in Malaysia.
In the previous financial year, the Group completed the sale of the AKLS. The net adjusted price value for the sale of AKLS, which included
the sale of the entire issued share capital of ASPL M3B Limited and Iringan Flora Sdn. Bhd. (the “Aloft Companies”) were used to redeem
the MTN Series 2 and Series 3. Following the completion of the disposal of AKLS, US$97.35 million (RM394.0 million) of MTN associated
with the AKLS (Series 3) and the Four Points Sheraton Sandakan (Series 2) were repaid on 19 August 2016. The charges in relation to AKLS
was also discharged following the completion of the disposal.
During the year, Silver Sparrow Berhad (“SSB”) obtained consent from the lenders to utilise proceeds of US$4.94 million in the Sales
Proceeds Account and Debt Service Reserve Account to partially redeem the MTNs in November 2017. SSB also secured a “roll-over” for
the remaining MTNs of US$24.3mil which is due on 8 December 2017 (now repayable on 10 December 2018). The MTNs are rated AAA.
69 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
33 MEDIUM TERM NOTES (cont’d)
The weighted average interest rate of the MTN was 6.00% per annum at the statement of financial position date. The effective interest rates of
the MTN and their outstanding amounts are as follows:
Group
Series 1 Tranche FGI
Series 1 Tranche BG
Maturity dates
Interest rate %
per anum
10 December 2018
10 December 2018
6.00
6.00
US$’000
10,625
14,085
24,710
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 Ventures Sdn. Bhd. and escrow account of Ireka Land
Sdn. Bhd.;
ix)
x)
assignment of all ICSD Ventures Sdn. Bhd.’s present and future rights, title, interest and benefits in and under the insurance policies;
and
a first legal charge over all the shares of Silver Sparrow Berhad, ICSD Ventures Sdn. Bhd. and any dividends, distributions and
entitlements.
34 DISPOSAL OF AN INDIRECTLY HELD SUBSIDIARY
During the financial year, the Group disposed Hoa Lam Shangri-La 3 Limited Liability Co. (“HLSL 3”), an indirectly held subsidiary of the
Group. The condition precedent for the completion of the disposal was met on 25 December 2017 when the shares were transferred to the
purchaser.
Details of disposal of the financial position of the Group
Group
Trade and other receivables
Current tax assets
Cash and cash equivalents
Exchange fluctuation reserve
Trade and other payable
Net assets and liabilities
Net disposal proceeds
Loss on disposal to the Group
The net cash flow on disposal was determined as follow:
Consideration received, satisfied in cash
Cash and cash equivalent disposed of
Net cash inflow
2017
US$’000
16,326
392
198
1,142
(15,762)
2,296
(998)
1,298
998
(198)
800
Loss on disposal of an indirectly held subsidiary amounting to US$1,298,000 has been included in other operating expense in the
consolidated statement of other comprehensive income.
ASEANA PROPERTIES LIMITED | 70
Notes to The Financial Statements (cont’d)
35 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 81.50%
to 81.58% (2016: 79.76% to 81.50%) arising from an issue of new shares in the subsidiary for cash consideration of US$1.5 million.
(2016: 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, subsidiaries of SHIPL, increased to 72.41% (2016: 72.35%). The Group recognised a decrease/increase
in non-controlling interests of US$484,000 (2016: US$477,000) and a decrease/increase in accumulated losses of US$484,000 (2016:
US$477,000) resulting from the decrease/increase in equity interest in the above subsidiaries. The transaction was accounted for using
the acquisition method of accounting.
36 RELATED PARTY TRANSACTIONS
Transactions between the Group and the Company with Ireka Corporation Berhad (“ICB”) and its group of companies are classified as
related party transactions based on ICB’s 23.07% shareholding in the Company. ICB’s relationship with the Group is also mentioned on
page 17 of the Directors’ Report under the headings of ‘Management’.
Related parties also include key management personnel defined as those persons having authority and responsibility for planning,
directing and controlling the activities of the Group either directly or indirectly. The key management personnel includes all the Directors
of the Group, and certain members of senior management of the Group.
Group
ICB Group of Companies
Accounting and financial reporting services fee charged by an ICB subsidiary
Advance payment to the contractors of an ICB subsidiary
Construction progress claims charged by an ICB subsidiary
Management fees charged by an ICB subsidiary
Marketing commission charged by an ICB subsidiary
Project staff cost reimbursed to an ICB subsidiary
Rental expenses charged by an ICB subsidiary
Rental expenses paid on behalf of ICB
Secretarial and administrative services fee charged by an ICB subsidiary
Key management personnel
Remuneration of key management personnel - Directors’ fees
Remuneration of key management personnel - Salaries
Company
ICB Group of Companies
Accounting and financial reporting services fee charged by an ICB subsidiary
Management fees charged by an ICB subsidiary
Secretarial and administrative services fee charged by an ICB subsidiary
Key management personnel
Remuneration of key management personnel - Directors’ fees
2017
US$’000
2016
US$’000
50
732
21,099
3,129
114
311 2
4 –
516
50
235
143
50
1,591
9,960
3,331
248
493
50
297
123
2017
US$’000
2016
US$’000
50
1,002
25
235
50
1,259
50
297
Liquidated and Ascertained Damages (“LADs”)
Ireka Engineering & Construction Sdn. Bhd. (“IECSB”), a subsidiary of ICB, is the project contrator of The RuMa Hotel and Residences
(“The RuMa”). The expected completion date of the RuMa development has been deferred to 15 June 2018, with vacant possession
expected to be issued from 15 June 2018. Based on the Sale and Purchase Agreements (“SPAs”) signed, the contractual date of issuance
of vacant possession to purchasers starts from June 2017 (48 months from date of signed SPAs). For hotel suites, Urban DNA Sdn. Bhd
(“the Developer”) is given three months from the date of delivery of vacant possession letter for installation of the furniture and fittings as
stipulated in the respective buyers’ SPA for hotel suites. The delay will potentially result in Liquidated and Ascertained Damages (“LADs”)
being imposed to the Developer. However, the Developer is entitled to recover these LADs from the project contractor, IECSB.
Transactions between the Group with other significant related parties are as follows:
Group
Non-controlling interests
Advances – non-interest bearing (Note 31)
2017
US$’000
2016
US$’000
327
2,819
The above transactions have been entered into in the normal course of business and have been established under negotiated terms.
71 | ANNUAL REPORT 2017
Notes to The Financial Statements (cont’d)
36 RELATED PARTY TRANSACTIONS (cont’d)
The outstanding amounts due from/ (to) ICB and its group of companies as at 31 December 2017 and 31 December 2016 are as follows:
Group
Amount due from an ICB subsidiary for advance payment to its contractors
Amount due to an ICB subsidiary for construction progress claims charged
Amount due from an ICB subsidiary for acquisition of SENI Mont’ Kiara units
Amount due to an ICB subsidiary for management fees
Amount due to an ICB subsidiary for marketing commissions
Amount due to an ICB subsidiary for reimbursement of project staff costs
Amount due to an ICB subsidiary for rental expenses
Amount due from ICB for rental expenses paid on behalf
Amount due to an ICB subsidiary for staff cost paid on behalf
Company
Notes
2017
US$’000
2016
US$’000
(ii)
(i)
(i)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
3,993
(2,046)
1,952
–
(15)
(55) –
(5) –
137
(4) –
2,903
(928)
1,760
(22)
(13)
114
2017
US$’000
2016
US$’000
Amount due from an ICB subsidiary for management fees
(ii)
–
12
i)
These amounts are trade in nature and subject to normal trade terms.
ii) These amounts are non-trade in nature and are unsecured, interest-free and repayable on demand.
The outstanding amounts due to the other significant related parties as at 31 December 2017 and 31 December 2016 are as follows:
Group
Non-controlling interests
Advances – non-interest bearing (Note 31)
2017
US$’000
2016
US$’000
(13,400)
(12,573)
Transactions between the parent company and its subsidiaries are eliminated in these consolidated financial statements. A list of
subsidiaries is provided in Note 37.
37
INVESTMENT IN SUBSIDIARIES
Name
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.
Silver Sparrow Berhad
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Vietnam
Vietnam
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
Vietnam
Vietnam
City International Hospital Co Ltd
Hoa Lam Shangri-La 3 Ltd Liability Co* Vietnam
Hoa Lam Shangri-La 5 Ltd Liability Co* Vietnam
Hoa Lam Shangri-La 6 Ltd Liability Co* Vietnam
Singapore
* The entire shareholding was disposed of in 2017
Country of
incorporation
Principal
activities
Property development
Property development
Property development
Property development
Hotel and mall ownership and operation
Project management services
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
Effective
ownership interest
2017
2016
100%
100%
100%
100%
100%
100%
100%
80%
70%
70%
65%
51%
82%
72%
72%
–
–
–
100%
100%
100%
100%
100%
100%
100%
80%
70%
70%
65%
51%
82%
72%
72%
72%
72%
72%
ASEANA PROPERTIES LIMITED | 72
Notes to The Financial Statements (cont’d)
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
During the year, Silver Sparrow Berhad obtained consent from the lenders to utilise proceeds of US$4.94 million in the Sales Proceeds
Account and Debt Service Reserve Account (“DSRA”) to partially redeem the MTNs. Thereafter, amount equivalent to RM10.0 million
(US$2.47 million) (the “Minimum Deposit”) is maintained in the DSRA at all times and the amount is disclosed as deposit pledged (refer
to Note 23).
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
At a general meeting of the Company held on 23 April 2018, Shareholders voted in favour of the Board’s proposals to reject the 2018
Discontinuation Resolution and to continue with the Company’s investment policy, for a period of 18 months from the expected date
of the 2018 AGM, 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. The Board believes this will 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 31 December 2019, 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.
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.