ASEANA PROPERTIES LIMITED
ANNUAL REPORT
2021
1
CONTENTS
3
Corporate Information
13
Corporate Social Responsibility
4
Corporate Strategy
6
Chairman’s Statement
8
Property Portfolio
15
Board of Directors
17
Directors’ Report
23
Report of Directors’ Remuneration
9
Performance Summary
25
Corporate Governance Statement
10
Financial Review
33
Independent Auditor’s Report
FINANCIAL
STATEMENTS
42
Consolidated Statement of
Comprehensive Income
44
Consolidated Statement of
Financial Position
46
Consolidated Statement of
Changes In Equity
47
Consolidated Statement of
Cash Flows
49
Notes to the Financial Statements
2
CORPORATE INFORMATION
NON-EXECUTIVE CHAIRMAN
Nicholas Paris
NON-EXECUTIVE DIRECTORS
Thomas Holland
Monica Lai Voon Huey
Christopher Lovell
Helen Wong Siu Ming
COMPANY SECRETARY AND REGISTERED OFFICE
Apex Financial Services (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
PKF Littlejohn LLP
15 Westferry Circus
London E14 4HD
United Kingdom
FINANCIAL ADVISOR
GRANT THORNTON UK LLP
30 Finsbury Square
London EC2A 1AG
United Kingdom
REGISTRAR
Computershare Investor Services (Jersey) Limited
Queensway House
Hilgrove Street, St. Helier
Jersey JE1 1ES
Channel Islands
Tel: +44(0) 370 707 4040
Fax: +44(0) 370 873 5851
3
CORPORATE STRATEGY
KEY FACTS
Exchange
Symbol
Lookup
:
London Stock
Exchange Main Market
: ASPL
:
Reuters - ASPL.L
Bloomberg - ASPL:LN
Domicile
Shares Issued
Shares Held
in Treasury
Voting Share
Capital
Share
Denomination
Admission
Date
: Jersey
: 212,025,002
: 13,334,000
: 198,691,002
: US Dollars
: 5 April 2007
Aseana Properties Limited (“Aseana Properties” or the “Company”) is a London-listed company
incorporated in Jersey. The Company and its subsidiary undertakings (together with the “Group”)
were focused on property development opportunities in Malaysia and Vietnam.
The routine operations of the Company are supervised by the Chairman and the Board, with a small
team of finance professionals directly engaged to run our finances and operations. A Divestment
Director was also designated from the existing Board with a specific focus to sell the Company’s
remaining assets, in line with the Divestment Policy.
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. This will enable the
realisation of the Company’s assets in a controlled, orderly and timely manner, with the objective of
achieving a balance between periodically returning cash to Shareholders and maximising the
realisation value of the Company’s investments.
At a general meeting of the Company held on 28 May 2021, Shareholders voted in favour of the
Board’s proposals to reject the 2021 Discontinuation Resolution and enabled the orderly realisation of
the Company’s assets over a period of at least twelve months from the date of the approval of these
financial statements for the year ended 31 December 2020 in order to maximise the value of the
Company’s assets and returns to Shareholders, both up to and upon the eventual liquidation of the
Company. As a result, the Company will hold another discontinuation vote at a general meeting in
May 2023, meanwhile the Company continued to seek for disposal of its assets in a measured manner.
To the extent that the Company has not disposed of all of its assets by May 2023, Shareholders will be
provided with an opportunity to review the future of the Company, which would include the option for
shareholders to vote for the continuation of the Company.
4
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 strategy or a change to an alternative
strategy.
5
CHAIRMAN’S STATEMENT
Dear Shareholders,
INTRODUCTION
Your Company continued to be impacted by the COVID-19 pandemic throughout 2021 and from the
movement control orders imposed by the governments of both Malaysia and Vietnam to control it.
These controls eliminated foreign travel into both of those countries and severely curtailed the internal
movement of their citizens. The impact on tourism and hospitality related businesses was high and it
directly affected occupancy at our hotel in Kuala Lumpur throughout the year as well as affecting retail
businesses, specifically our shopping mall in Sandakan. In addition, our hospital in Ho Chi Minh City
struggled with reduced patient numbers as local citizens opted to defer non-urgent medical procedures
and health tourism by foreign patients was impossible. Our operating revenues from these assets were
therefore depressed for the whole year of 2021.
In response, management continued to cut operating and Group costs and to reduce cash outflows as
much as possible without affecting operations, however, our assets still delivered operating losses and
negative cash flow for the full fiscal year.
ECONOMIC OVERVIEW
In 2021, the Malaysian economy grew by 3.1% compared to a fall of 5.6% in 2020 because of the
impact of COVID-19 pandemic and it is forecast to grow by 6.1% in 2022.
The Vietnamese economy managed to grow by 2.58% in 2021 which was a slight fall from the growth
rate of 2.91% in 2020. The Asian Development Bank forecasts GDP growth of 6.5% for 2022.
The pandemic situation remains fluid with governments in Asia continuing to declare lock downs of
their citizenry due to sporadic outbreaks of clusters of infection within their countries. With such a
fluid situation, business conditions for the fiscal year ending 2022 will remain challenging especially
in the hospitality and retail businesses.
PERFORMANCE REVIEW
During 2021, the Company recorded a reduced net loss after finance costs and before taxation of
US$4.8 million on continuing operations compared to a net loss before taxation of US$9.1 million for
the previous financial year (re-presented). The Net Loss attributable to equity holders was US$5.5
million for FY 2021, (2020 (re-presented): US$10.3 million) and the loss per share was US cents 2.76
(2020: US cents 5.16).
Our NAV per Share as at 31 December 2021 fell to US cents 47 (2020: US cents 51).
Our net cash inflow for the year was US$2.9 million (2020 (re-presented): outflow of US$2.3 million)
which reflected net cash outflows from operating activities of US$9.8 million (2020 (re-presented):
US$11.2 million) offset by a cash inflow from investing and financing activities of US$12.7 million
(2020 (re-presented): US$8.9 million).
6
OUR ASSET DIVESTMENT PROGRAMME
The COVID-19 pandemic and the movement controls continued to adversely impact the interest of
prospective buyers for our assets but our persistence and a new focus on local prospective buyers in
Vietnam did lead to conditional sale agreements being signed during 2021 for three of our assets as
follows.
•
•
In August 2021, we announced the sale of our two assets in Vietnam to our local partner and
this sale was completed on 28 February 2022. The gross consideration for the transaction was
US$95 million and we received net cash of approximately US$18.3 million. The transaction
was pending completion as at 31 December 2021.
In September 2021, we announced the sale of the 58 unsold residences at the RuMa Hotel &
Residences in Kuala Lumpur. Due to continuing travel restrictions, progress on the sale has
been delayed however work to complete this sale is still ongoing.
ACKNOWLEDGMENTS
I would like to take this opportunity to thank all of my colleagues on the Board and in our Company
as well as our external advisors and service providers for their tireless efforts on behalf of the Company
and its Shareholders.
This has continued to be a very challenging period in the life of our Company but it has survived
despite the challenges from the COVID-19 pandemic and we remain committed to implementing our
asset divestment plans. Sale proceeds from divestments will continue to be used to pay down the
Company’s project related debts and then we will be returning surplus cash direct to our Shareholders.
Thank you.
NICK PARIS
Chairman
28 April 2022
7
PROPERTY PORTFOLIO AS AT 31 DECEMBER 2021
Project
Completed projects
The RuMa Hotel and Residences
Kuala Lumpur, Malaysia
Sandakan Harbour Square
Sandakan, Sabah, Malaysia
Phase 1: City International
Hospital, International
Healthcare Park,
Ho Chi Minh City, Vietnam
Undeveloped projects
Other developments in
International Healthcare Park,
Ho Chi Minh City, Vietnam
(formerly International Hi-Tech
Healthcare Park)
Kota Kinabalu Seafront resort &
residences
Type
Effective
Ownership
Approximate
Gross
Floor Area
(sq m)
Approximate
Land Area
(sq m)
Luxury residential
tower and bespoke
hotel
Retail lots, hotel and
retail mall
Private general
hospital
70.0%
40,000
4,000
100.0%
126,000
48,000
73.04%
48,000
25,000
Commercial
development with
healthcare theme
Land parcel approved
for development of:
(i) Boutique resort
hotel and resort villas
(ii) Resort homes
73.04%
972,000
351,000
80.0%
n/a
172,900
8
Year ended
31 December 2021
Year ended
31 December 2020
(re-presented)
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)
-80.00%
-26.30%
-33.88%
-37.50%
14.55%
26.19%
129.32
0.47
0.20
620.13
90.52%
82.70%
-2.76
-2.76
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%
-68.35%
14.43%
-18.89%
-30.43%
-7.42%
-14.19%
134.25
0.51
0.32
491.43
86.72%
81.01%
-5.16
-5.16
9
FINANCIAL REVIEW
INTRODUCTION
The Group recorded a consolidated comprehensive loss of US$11.7 million for the financial year
ended 31 December 2021 (year ended 31 December 2020 (re-presented): US$11.4 million), largely
due to the finance costs incurred in relation to The RuMa Hotel & Residences and the Sandakan hotel
asset and the Harbour Mall in Sandakan.
STATEMENT OF COMPREHENSIVE INCOME
The Group recognised revenue of US$0.6 million (2020 (re-presented): US$1.3 million). Revenue of
US$38.3 million has been deferred until control of sold units in a leaseback program is passed to the
buyer.
The Group recorded a net loss before taxation of US$4.8 million (2020 (re-presented): US$9.1
million). The loss was largely due to the finance cost incurred in relation to The RuMa Hotel &
Residences and the Sandakan hotel asset and the Harbour Mall in Sandakan.
Net loss attributable to equity holders of the parent company was US$5.5 million (2020 (re-presented):
US$10.3 million). Tax expenses for the year was US$0.1 million (2020 (re-presented): US$0.2
million).
The consolidated comprehensive loss was US$11.7 million (2020 (re-presented): US$11.4 million),
which included a loss of US$3.6 million (2020 (re-presented): gain of US$2.1 million) attributable to
foreign currency translation differences for foreign operations due to an appreciation of the US Dollar
against the Ringgit, during the year.
Basic and diluted loss per share were both US cents 2.76 (2020 (re-presented): US cents 5.16).
STATEMENT OF FINANCIAL POSITION
Total assets were US$189.1 million (2020 (re-presented): US$195.0 million), representing a decrease
of US$5.9 million. This was mainly due to a decrease of US$10.1 million in inventories.
Total liabilities were US$98.1 million (2020 (re-presented): US$100.5 million), representing a
decrease of US$2.4 million. This was mainly due to a decrease of US$2.9 million in trade and other
payables.
Net Asset Value per share was US$0.47 (31 December 2020 (re-presented): US$0.51).
10
CASH FLOW AND FUNDING
Cash used in operations before interest and tax paid was US$6.2 million (2020 (re-presented): cash
generated of US$1.1 million).
The Group generated net cash flow of US$0.7 million from investing activities (2020 (re-presented):
US$6.9 million).
The borrowings of the Group undertakings were used to fund property development projects and
working capital. As at 31 December 2021, the Group’s gross borrowings stood at US$44.0 million
(31 December 2020 (re-presented): US$41.9 million). Net debt-to-equity ratio was 82.70% (31
December 2020 (re-presented): 81.01%).
Finance income was US$0.7 million for financial year ended 31 December 2021 (2020 (re-presented):
US$2.1 million) which included accrued income of US$0.1 million (2020 (re-presented): US$0.3
million). Finance costs were US$3.6 million (2020 (re-presented): US$4.7 million), which were
mostly incurred by its operating assets.
EVENTS AFTER STATEMENT OF FINANCIAL POSITION DATE
In August 2021, we announced the sale of our two assets in Vietnam to our local partner, this sale was
completed on 28 February 2022. This enabled us to reduce our debts by approximately US$57.0
million, and we received net cash of $18.3 million. The Company has exited its assets in Vietnam.
DIVIDEND
No dividend was declared or paid in the financial years 2021 and 2020.
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.
11
TREASURY AND FINANCIAL RISK MANAGEMENT
The Group undertakes risk assessments and identifies the principal risks that affect its activities. The
responsibility for the management of each key risk has been clearly identified and has been managed
by the Board of Directors and the Board are closely involved in the day-to-day operation of the Group.
A comprehensive discussion on the Group’s financial risk management policies is included in the notes
to the financial statements of the Annual Report.
NICK PARIS
Director
28 April 2022
12
CORPORATE SOCIAL RESPONSIBILITY (“CSR”)
Aseana Properties is committed to making a positive difference in the world, whether it is for the local
community or whether it is building a better working environment. The Company believes that being
socially and environmentally responsible is good for people, the planet and for business. The following
six core principles define the essence of corporate citizenship for the Company.
Managing Corporate Responsibility
The Board of Directors at Aseana Properties has oversight mechanisms, through corporate-level
policies and standards to ensure an effective CSR programme is delivered in the interest of its
employees, shareholders and the community at large. It is determined to ensure that its CSR
programme acts legally and responsibly on all matters and that the highest ethical standards are
maintained. The Board recognizes this as a key part of its risk, management strategy to protect the
reputation of Aseana Properties and shareholders values are enhanced.
Employees
In the current changing economic environment, with competing demands and stress, the welfare of
employees is critical in order to ensure they are productive, creative and innovative. This is also in
order to achieve the highest standard in the workplace. The Board works hard to ensure that employees
are treated fairly and with dignity because it is the right thing to do and also to get the best out of them.
Health and Safety
Aseana Properties considers Health and Safety to be important because it protects the well-being of
employees, visitors and clients. Looking after Health and Safety makes good business sense and the
Company works hard to provide a healthy workplace environment for its staff, contractors and visitors.
Some of the organized efforts and procedures for reducing workplace accidents, risks and hazards,
exposure to harmful solutions include:
• Paying particular attention to the regular maintenance of equipment, plant and systems to
ensure a safe working environment.
• Providing sufficient information, instruction, training and supervision to enable all employees
to avoid hazards and to contribute positively to their own safety and safe performance at work.
Stakeholders
Aseana Properties works collaboratively with its stakeholders to improve services and to ensure client
satisfaction. The Company is committed to meaningful dialogue and encourages stakeholder
participation through stakeholder events, roadshows, briefings, conference calls and timely release of
annual reports.
informative website,
www.aseanaproperties.com that is accessible to stakeholders and members of the public.
Aseana Properties also maintains an updated and
Environmental Management
Aseana Properties believes that any commitment to a more environmentally sustainable world has to
start at home, and to this end, it challenges itself to work in an environmentally responsible manner
and to find new ways to reduce its carbon footprint. It also works with consultants such as architects
to look at how they can be more environmentally friendly by incorporating natural elements such as
water, greenery, light and air into its projects. Maintaining and sustaining local Malaysian heritage is
the essence of the RuMa Hotel so decorative elements like batik prints throughout are recycled from a
local batik factory. The Kelelai (a type of bamboo) ornaments and ceiling panels at the pool area of
Level 6 of the hotel are cultivated from a dying weaving art by Kelantanese women.
13
The RuMa Hotel and Residences have both been separately awarded the Green Building Index (GBI)
Provisional Gold Rating having successfully met all the GBI Criteria under each category for Energy
Efficiency, Indoor Environment Quality, Sustainable Site Planning & Management, Materials &
Resources, Water Efficiency and Innovation. The GBI is Malaysia’s industry recognized green rating
tool for buildings to promote sustainability in the building industry.
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.
14
BOARD OF DIRECTORS
NICHOLAS JOHN PARIS
NON-EXECUTIVE NON-INDEPENDENT CHAIRMAN
Nicholas (Nick) John Paris was re-appointed as a Non-Executive Director of Aseana Properties
Limited in September 2019 and became Chairman on 29 July 2020 following the retirement of Gerald
Ong. He had previously been a Non-Executive Director of Aseana from 22 June 2015 to 20 March
2019.
Nick is a director of LIM Advisors (London) Limited which is part of an Asian-focused investment
management firm, headquartered in Hong Kong. Nick is a fellow of the Institute of Chartered
Accountants England & Wales and a Chartered Alternative Investment Analyst.
Nick is currently Managing Director of Myanmar Investments International Limited and a Non-
Executive Director of Dolphin Capital Investors Limited of which both are quoted on the AIM market
of the London Stock Exchange) and Fondul Proprietatea, a fund listed on the Bucharest and London
Stock Exchanges.
THOMAS HOLLAND
NON-EXECUTIVE INDEPENDENT DIRECTOR
Thomas Holland was appointed as a Non-Executive Director of Aseana Properties Limited on 23
November 2020.
Tom has been based in Asia for 24 years with experience working in leadership positions in a number
of financial firms. Tom has been active in Vietnam since 2006, having led the investments in large
real estate developments as well as privatising state owned enterprises. Prior to founding his current
platform, Development Finance Asia, a boutique investment firm, Tom was head of Asia for Cube
Capital and a senior investment manager for Income Partners Asset Management. Tom has a track
record of successfully managing private investments in Vietnam, Malaysia, China, Indonesia,
Myanmar, Mongolia and Cambodia.
He holds a number of non-executive director roles for financial services, logistics and consumer
companies across Asia and he was appointed to the Board of APU Joint Stock Company (“APU”),
Mongolia, on 26 April 2019, and currently holds this position. APU, a fast moving consumer goods
company, is the largest company by market capitalisation on the Mongolian Stock Exchange.
MONICA LAI VOON HUEY
NON-EXECUTIVE NON-INDEPENDENT DIRECTOR
Monica Lai was appointed as a Non-Executive Director of Aseana Properties Limited in September
2019. Monica is the Group Chief Executive Officer of Eccaz Sdn Bhd which is involved in property
development, information technology and urban transportation solutions. She resigned as director of
Ireka Corporation Berhad in November 2021.
Monica graduated from City University, London with a Bachelor of Science (Hons) Degree in
Accountancy and Economics and worked for EY London and KPMG Hong Kong before joining Ireka
15
in 1993. Her professional qualifications include The Institute of Chartered Accountants England &
Wales, The Malaysian Institute of Accountants and the Malaysian Institute of Taxation.
CHRISTOPHER HENRY LOVELL
NON-EXECUTIVE INDEPENDENT DIRECTOR
Christopher Henry Lovell was re-appointed as a Non-Executive Director of Aseana Properties in
June 2019. He was first appointed as a Non-Executive Director of Aseana Properties in March 2007
and he retired at the 2018 Annual General Meeting as part of the Company’s strategy to reduce its
ongoing costs and bring the size of the Board in line with the objectives of the realisation process.
Christopher practised as an English Solicitor in Jersey between 1979 and 2008: he was a partner in the
law firm Theodore Goddard from 1983 until 1993 when he set up his own practice. In 2000, he was
one of the founding partners of Channel House Trustees Limited, a Jersey regulated trust company
which was acquired by Capita Group plc in 2005. He was subsequently appointed as a director of
Capita’s regulated trust company.
Christopher has acted as an independent non-executive director for over 20 years and specialises in
property holding groups. He is personally registered with the Jersey Financial Services Commission
to act as a non-executive director.
HELEN WONG SIU MING
NON-EXECUTIVE INDEPENDENT DIRECTOR
Helen Wong Siu Ming was appointed as a Non-Executive Director of Aseana Properties in June 2019.
Helen has over 27 years of financial and operational experience in the United States and Asia. She is
Chief Executive Officer and founder of LAPIS Global Limited, a Hong Kong based investment
management and advisory firm. She was formerly the CEO of Cushman & Wakefield Capital Asia
where she established the Asia Investment Management and Investment Banking platform.
In addition, Helen has held numerous executive positions including Chief Operating Officer of Lazard
Asia Investment Management HK Limited, Managing Director of IFIL Asia (renamed EXOR S.p.A),
where she was responsible for the Asian direct investment activities and Chief Financial Officer of the
Singapore listed investment vehicle, Pacific Century Regional Developments Limited.
Helen also has extensive experience in infrastructure and transport through her prior roles at the
Provisional Airport Authority, Hong Kong and the Port Authority of New York & New Jersey.
16
DIRECTORS’ REPORT
The Directors present their report together with the audited financial statements of Aseana Properties
Limited (the “Company”) and its subsidiary undertakings (together with the “Group”) for the year
ended 31 December 2021.
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 assets in Malaysia and
Vietnam. It is currently carrying out its divestment program which consists of selling the Group’s
assets, repaying its debts and distributing the remaining proceeds to its shareholders.
BUSINESS REVIEW AND FUTURE DEVELOPMENTS
The consolidated statement of comprehensive income for the year is set out on page 42. A review of
the development and performance of the business has been set out in the Chairman’s Statement, the
Director’s Review and the Financial Review reports.
OBJECTIVES AND STRATEGY
When the Company was launched in 2007, the Board considered it desirable that Shareholders should
have an opportunity to review the future of the Company at appropriate intervals. At a general meeting
of the Company held on 28 May 2021, Shareholders voted in favour of the Board’s proposals to reject
the 2021 Discontinuation Resolution and allow the orderly realisation of the Company’s assets in order
to maximise the value of the Company’s assets and returns to Shareholders, both up to and upon the
eventual liquidation of the Company. As a result, the Company will hold another discontinuation vote
at a general meeting in May 2023, meanwhile the Company continued to seek for disposal of its assets
in a measured manner.
To the extent that the Company has not disposed of all of its assets by May 2023, Shareholders will be
provided with an opportunity to review the future of the Company, which would include the option for
shareholders to vote for the continuation of the Company.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group’s business is property development in Malaysia and Vietnam. Its principal risks are
therefore related to the property market in these countries in general, and also the particular
circumstances of the property development projects it is undertaking. More detailed explanations of
these risks and the way they are managed are contained under the heading of Financial and Capital
Risk Management Objectives and Policies in Note 4 to the financial statements.
17
Other risks faced by the Group in Malaysia and Vietnam include the following:
Economic
Strategic
Regulatory
Law and regulations
Tax regimes
Management and control
Operational
Financial
Going Concern
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
shareholders.
Changes in the tax regimes could affect the tax treatment of
the Company and/or its subsidiaries in these jurisdictions.
the business and returns for
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.
The COVID-19 pandemic led to movement controls in both
Malaysia and Vietnam from March 2020 onwards which
affected our key properties as our two hotels had to be closed,
only food operations were permissible at our shopping mall
and patient bookings at our hospital decreased. There can be
no certainty as to how quickly operations at these properties
can be resumed and what overall effect this will have on our
revenues, costs and valuations. Failure of the Company’s
accounting system and disruption to the business, or to that of
third party service providers, could lead to an inability to
provide accurate reporting and monitoring leading to a loss of
shareholders’ confidence.
Inadequate controls by the Company or third party service
providers could lead to a misappropriation of assets.
Inappropriate accounting policies or failure to comply with
accounting standards could lead to misreporting or breaches
of regulations or a qualified audit report.
Failure of property development projects due to poor sales and
collection, construction delay, inability to secure financing
from banks may result in inadequate financial resources to
continue operational existence and to meet financial liabilities
and commitments.
The Board seeks to mitigate and manage these risks through continual review, policy setting and
enforcement of contractual rights and obligations. It also regularly monitors the economic and
investment environment in countries that it operates in and the management of the Group’s property
development portfolio. Details of the Group’s internal controls are described on page 30.
18
RESULTS AND DIVIDENDS
The results for the year ended 31 December 2021 are set out in the attached financial statements.
No dividends were declared nor paid during the financial year under review.
SHARE CAPITAL
No shares were issued in 2021. Further details on share capital are stated in Note 23 to the financial
statements.
DIRECTORS
The following were Directors of Aseana who held office throughout the financial year and up to the
date of this report:
• Nicholas John Paris - Chairman
• Thomas Holland
• Monica Lai Voon Huey
• Christopher Henry Lovell
• Helen Wong Siu Ming
DIRECTORS’ INTERESTS
The interests of the directors in the Company’s shares as at 31 December 2021 and as at the date of
this report were as follows:
DIRECTOR
Nicholas John Paris
Christopher Henry Lovell
Monica Lai Voon Huey
ORDINARY SHARES OF US$0.05 EACH
As at 31 Dec 2021
As at 31 Dec 2020
26,644,192
36,654,192
48,000
48,000
36,628,282
82,465,876
Notes: Nicholas John Paris is associated with the holdings of clients of LIM Advisors Limited. Monica
Lai Voon Huey is associated with the holdings of Legacy Essence Limited, she was associated with
Ireka Corporation Berhad until her resignation from the Board in November 2021.
None of the other directors in office at the end of the financial year had any interest in shares in the
Company during the financial year.
MANAGEMENT
The routine operations of the Company are supervised by the Chairman and the Board with a small
team of finance professionals were directly engaged to run our finances and operations. Ms Helen
Wong was nominated as the Divestment Director with a specific focus to sell the Company’s remaining
assets, in line with the Divestment Policy.
19
EMPLOYEES
The Company had no executive Directors during the year, and a team of four finance professionals
were engaged to run our finances and operations. The subsidiaries of the Group had a total of 573
employees as at 31 December 2021, of which 23, 351 and 199 were employed by (i) the Sandakan
hotel asset and Harbour Mall Sandakan, (ii) City International Hospital and Hoa Lam Shangri-La
Healthcare in Ho Chi Minh City and (iii) The RuMa Hotel and Residences in Kuala Lumpur
respectively.
GOING CONCERN
As the Group had not disposed of all of its assets by May 2021, the shareholders were provided a
further opportunity to review the future of the Group, including a shareholder vote on the dis-
continuation of the Company. The Board procured at a general meeting of the Company held in May
2021, an ordinary resolution that the Company continue until May 2023 at which time a continuation
vote will be had by shareholders. In connection with, or at the same time as, the proposal that the
Company be wound up voluntarily the Board shall be entitled to make proposals for the reconstruction
of the Company. Until then, the Company will continue to seek to dispose of its assets in a measured
manner.
As disclosed in Note 2.1 to the financial statements, it refers to the assumptions made by the Directors
including the uncertainty regarding the divestment of certain assets will be completed as planned and
the loans and borrowing can be discharged in a timely manner when concluding that it remains
appropriate to prepare the financial statements on the going concern basis.
CREDITORS PAYMENT POLICY
The Group’s operating companies are responsible for agreeing on the terms and conditions under
which business transactions with their suppliers are conducted. It is the Group’s policy that payments
to suppliers are made in accordance with all relevant terms and conditions. Trade creditors at 31
December 2021 amounted to 591 days (2020 (re-presented): 485 days) of property development cost
and interest expenses accrued by the Group.
FINANCIAL INSTRUMENTS
The Group’s principal financial instruments comprise cash balances, balances with related parties,
other payables, receivables and loans and borrowings that arise in the normal course of business. The
Group’s Financial and Capital Risk Management Objectives and Policies are set out in Note 4 to the
financial statements.
DIRECTORS’ LIABILITIES
Subject to the conditions set out in the Companies (Jersey) Law 1991 (as amended), the Company has
arranged appropriate Directors’ and Officers’ liability insurance to indemnify the Directors against
liability in respect of proceedings brought by third parties. Such provisions remain in force at the date
of this report.
20
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the annual report and the financial statements in
accordance with applicable law and regulations. Companies (Jersey) Law 1991 requires the Directors
to prepare financial statements for each financial year. Under that law the Directors are required to
prepare the financial statements in accordance with International Financial Reporting Standards
(“IFRSs”) as adopted by European Union.
Under company law the Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Group and of the profit or loss of the
Group for that year. In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant and reliable;
• ensure that the financial statements comply with IFRSs; and
• prepare the financial statements on the going concern basis, unless it is inappropriate to
presume that the Group and the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Group’s transactions and disclose with reasonable accuracy at any time the financial
position of the Group and to enable them to ensure that the financial statements comply with the
Companies (Jersey) Law 1991. The Directors are also responsible for safeguarding the assets of the
Group and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are also responsible for the maintenance and integrity of the Company’s website on the
internet. However, information is accessible in many different countries where legislation governing
the preparation and dissemination of financial statements may differ from that applicable in the United
Kingdom and Jersey.
The Directors of the Company confirm that to the best of their knowledge that:
•
•
the financial statements have been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group; and
the sections of this Report, including the Chairman’s Statement, Director’s Review, Financial
Review and Principal Risks and Uncertainties, which constitute the management report include a
fair review of all information required to be disclosed by the Disclosure and Transparency Rules
4.1.8 to 4.1.11 issued by the Financial Services Authority of the United Kingdom.
DISCLOSURE OF INFORMATION TO AUDITOR
So far as each person who was a Director at the date of approving this report is aware, there is no
relevant audit information, being information needed by the auditor in connection with preparing its
report, of which the auditor is unaware. Having made enquiries of fellow Directors, each Director has
taken all the steps that he is obliged to take as a Director in order to have made himself aware of any
relevant audit information and to establish that the auditor is aware of that information.
21
RE-APPOINTMENT OF AUDITOR
The auditor, PKF Littlejohn LLP, has expressed their willingness to continue in office. A resolution
proposing their re-appointment will be tabled at the forthcoming Annual General Meeting.
BOARD COMMITTEES
Information on the Audit Committee and Nomination & Remuneration Committee is included in the
Corporate Governance section of the Annual Report on pages 25 to 32.
ANNUAL GENERAL MEETING
The tabling of the 2021 Annual Report and Financial Statements to shareholders will be at an Annual
General Meeting (“AGM”) to be held on 17 June 2022.
During the AGM, investors will be given the opportunity to question the board and to meet with them
thereafter. They will be encouraged to participate in the meeting.
On behalf of the Board
THOMAS HOLLAND
Director
28 April 2022
22
REPORT OF DIRECTORS’ REMUNERATION
DIRECTORS’ EMOLUMENTS
The Company has no executive Directors, with a few employees who are mainly focused on the
divestment process. The Nomination & Remuneration Committee (“NRC”) 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 NRC assesses the
appropriateness of the emoluments on an annual basis by reference to comparable market conditions
with the overall objective of ensuring maximum stakeholder benefit from the retention of a high calibre
Board.
During the year, the Directors received the following emoluments in the form of fees from the
Company:
Directors
Nicholas John Paris
(Chairman of the Board)
Year ended
31 December 2021
(US$)
Year ended
31 December 2020
(US$)
70,000
58,902
Helen Wong Siu Ming
(Chairman of the Audit Committee)
77,105
67,270
Thomas Holland
Monica Lai Voon Huey
Christopher Henry Lovell
SHARE OPTIONS
48,058
48,000
48,082
5,299
42,000
41,918
The Company did not operate any share option schemes during the years ended 31 December 2021
and 2020.
23
SHARE PRICE INFORMATION
• High for the year
• Low for the year
• Close for the year
-
-
-
US$0.32
US$0.14
US$0.20
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.
CHRISTOPHER LOVELL
Chairman of the Nomination & Remuneration Committee
28 April 2022
24
CORPORATE GOVERNANCE STATEMENT
The Financial Conduct Authority requires all companies with a Premium Listing to comply with The
UK Corporate Governance Code (the “Code”). Aseana Properties is a Jersey incorporated company
with a Standard Listing on the UK Listing Authority’s Official List and is therefore not subject to the
Code. The following explains how the principles of governance are applied to the Company.
THE BOARD
The Company currently has a Board of five non-executive directors, including the non-executive
Chairman.
The brief biographies of the following Directors appear on pages 15 to 16 of the Annual Report 2021:
• Nicholas John Paris (Non-Executive Chairman)
• Thomas Holland
• Monica Lai Voon Huey
• Christopher Lovell
• Helen Wong Siu Ming
The routine operations of the Company are supervised by the Chairman and the Board and a team of
finance professionals were directly engaged to run our finances and operations. Ms Helen Wong was
nominated as the Divestment Director with a specific focus to sell the Company’s remaining assets, in
line with the Divestment Policy.
ROLE OF THE BOARD OF DIRECTORS
The Board’s role is to provide entrepreneurial leadership to the Company, within a framework of
prudent and effective controls, enabling risks to be assessed and managed. The Board sets the
Company’s strategic objectives, monitors and reviews the Company’s operational and financial
performance, ensures the Company has sufficient funding, and examines and approves disposal of the
Company’s assets in a controlled, orderly and timely manner. The Board also sets the Company’s
values and standards and ensures that its obligations to its shareholders and other stakeholders are met.
The Board has adopted a divestment strategy since 2015.
Appropriate level of directors’ and officers’ liability insurance is maintained by the Company.
The Board currently has the power to make purchases on behalf of the Company of its own Ordinary
Shares provided up to a maximum aggregate 29,783,780 Ordinary Shares (representing approximately
14.99 per cent. of the Company’s issued ordinary share capital (excluding ordinary shares held in
treasury)).
25
MEETINGS OF THE BOARD OF DIRECTORS
The Board meets at least four (4) times a year and at such other times as the Chairman shall require.
During the year ended 31 December 2021, the Board met eighteen (18) times and their respective
attendance are as follows:
Name of Directors
Nicholas John Paris
Thomas Holland
Monica Lai Voon Huey
Christopher Henry Lovell
Helen Wong Siu Ming
Attendance
18/18
18/18
18/18
15/18
18/18
To enable the Board to discharge its duties effectively, all Directors receive accurate, timely and clear
information, in an appropriate form and quality, including Board papers distributed in advance of
Board meetings. The Board periodically will receive presentations at Board meetings relating to the
Company’s business and operations, significant financial, accounting and risk management issues. All
Directors have access to the advice and services of the Company Secretary and advisers, who are
responsible to the Board on matters of corporate governance, board procedures and regulatory
compliance.
BOARD BALANCE AND INDEPENDENCE
Following the resignation of our former Development Manager as of 30 June 2019, ASEANA has
been a self-managed company. The Board consists solely of non-executive directors of which
Nicholas Paris is the non-executive Chairman. Monica Lai is a representative of Legacy Essence
Limited and she was a representative of Ireka Corporation Berhad until her resignation from the Board
in November 2021; Nicholas Paris is the representative of LIM Advisors Limited; and they are
therefore classified as Non-Independent Non-Executive Directors of the Company. The Board
considers the majority of Directors to be independent, being independent of management and also
having no business relationships which could interfere materially with the exercise of their judgement.
The Chairman is responsible for leadership of the Board, ensuring effectiveness in all aspects of its
role and setting its agenda. Matters referred to the Board are considered by the Board as a whole and
no individual has unrestricted powers of decision. Together, the Directors bring a wide range of
experience and expertise in business, law, finance and accountancy, which are required to successfully
direct and supervise the business activities of the Company.
PERFORMANCE APPRAISAL
The Board undertakes an annual evaluation of its own performance and that of its Committees and
individual Directors. During 2021, 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.
26
RE-ELECTION OF DIRECTORS
The Company’s Articles of Association states that all Directors shall submit themselves for election
at the first opportunity after their appointment, and shall not remain in office for longer than three
years since their last election or re-election without submitting themselves for re-election. At the
Annual General Meeting held on 1 September 2021, Thomas Holland offered himself for re-election,
having been newly appointed and Nicholas Paris and Helen Wong retired by rotation and each of them
offered themselves for re-election by the shareholders. All of these Directors were re-elected at the
AGM.
At the forthcoming Annual General Meeting, Christopher Lovell will be retiring by rotation and
offering himself for re-election.
BOARD COMMITTEES
The Board has established Audit and Nomination & Remuneration 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 currently chaired by Helen Wong. The other
members are Christopher Lovell and Thomas Holland. Nick Paris resigned as a member on 1
December 2020 and Thomas Holland replaced him. The Committee members have no links with the
Company’s external auditor and Helen Wong, Thomas Holland and Christopher Lovell are
independent Directors. The Board considers that collectively the Audit Committee has sufficient
recent and relevant financial experience with the ability to discharge its duties properly, through
extensive service on the Boards and Audit Committees of other listed companies.
MEETINGS OF THE AUDIT COMMITTEE
The Committee meets at least twice a year and at such other times as the Chairman of the Audit
Committee shall require. Any member of the Audit Committee or the auditor may request a meeting
if they consider that one is necessary. The Committee met two times during the year and their
respective attendance are as follows:
Name
Helen Wong Siu Ming
Christopher Henry Lovell
Thomas Holland
Attendance
2/2
1/2
2/2
Representatives of the auditor may attend by invitation.
27
The Committee is responsible for:
•
•
•
•
•
•
monitoring, in discussion with the auditor, the integrity of the financial statements of the
Company, any formal announcements relating to the Company’s financial performance and
reviewing significant financial reporting judgements contained in them;
reviewing the Company’s internal financial controls and risk management systems;
making recommendations to the Board in relation to the appointment, re-appointment and
removal of the external auditor and approving the remuneration and terms of engagement of
the external auditor to be put to the shareholders for their approval in general meetings;
reviewing and monitoring the external auditor’s independence and objectivity and
effectiveness of the audit process, the Audit Committee recognises that the Code and AIC Code
provisions for FTSE 350 companies to put the external audit contract out to tender at least
every 10 years. Though the Company is not a member of the FTSE 350, the Audit Committee
considers this to be best practice (the current auditor has been the auditor since 2020);
developing and implementing policy on engagement of the external auditor to supply non-audit
services; and
reporting to the Board any matters in respect of which it considers that action or improvement
is needed and making recommendations as to the steps to be taken.
Since the start of the financial year ending 31 December 2021, the Audit Committee performed its
duties as set out in the terms of reference. The main activities carried out by the Audit Committee
encompassed the following:
•
•
•
•
•
•
reviewing the audit plan with the Group’s Auditor;
reviewing and discussing the Audit Committee Report with the Group’s Auditor;
reviewing the draft Audited Financial Statements as contained in the draft Annual Report
together with the Group’s Auditor before tabling to the Board for consideration and approval;
reviewing other published financial information including the half year results and results
announcements before tabling to the Board for consideration and approval;
considering the independence of the auditor; and
reviewing the auditor’s performance and made a recommendation for the reappointment of the
Group’s auditor by shareholders.
The Significant Issues
The Audit Committee considered the following key issues in relation to the Group’s financial
statements during the year:
28
•
•
Valuation of Property Assets - The Audit Committee considered and discussed the valuation
of the Group’s investment properties as 31 December 2021, particularly the impact of Covid-
19 during the financial year.
Going Concern - The Audit Committee considered the Company’s financial requirements for
the next 12 months and concluded that it has sufficient resources to meet its commitments and
any outstanding loan covenants. Consequently, the financial statements have been prepared on
a going concern basis.
NOMINATION & REMUNERATION COMMITTEE
The Nomination & Remuneration Committee is chaired by Christopher Lovell. The other committee
members are Monica Lai Voon Huey and Nicholas Paris. The Committee meets annually and at any
such times as the Chairman of the Nomination & Remuneration 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 & Remuneration Committee.
During the year ended 31 December 2021, the Nomination & Remuneration Committee carried out its
functions as set out in its terms of reference which are summarised below:
•
•
•
•
•
•
regularly reviewing the structure, size and composition (including diversity, skills, knowledge
and experience) of the Board and making recommendations to the Board with regard to any
change;
considering succession plans for Directors and the re-appointment or re-election of any
Directors at the conclusion of their specified term of office or retiring in accordance with the
Company’s Articles of Association;
identifying and nominating for the approval of the Board, candidates to fill Board vacancies as
and when they arise;
considering any matter relating to the continuation in office of any Director at any time;
determining and agreeing with the Board the framework for the remuneration of the Directors;
and
setting the remuneration for all Directors albeit since all Directors are non-executive, the
principles of the Code in respect of executive directors’ remuneration are not applicable and as
such there is no policy for executive compensation.
Given the Company is currently in its divestment phase, all Directors are non-executive and there are
no direct employees, a diversity and inclusion policy has not been applied. However, the Nomination
Committee consider the Board to have a suitable gender balance and to be suitably diverse.
FINANCIAL REPORTING
The Board aims to present a fair, balanced and understandable assessment of the Company’s position
and prospects in all reports to shareholders, investors and regulatory authorities. This assessment is
primarily provided in the half-yearly report and the Annual Report through the Chairman’s Statement,
Financial Review Statement and Directors’ Report.
29
The Audit Committee has reviewed the significant reporting issues and judgements made in
connection with the preparation of the Group’s financial statements including significant accounting
policies, significant estimates and judgements. The Audit Committee has also reviewed the clarity,
appropriateness and completeness of disclosures in the financial statements.
INTERNAL AUDIT
The Board has confirmed that the systems and procedures employed, provide sufficient assurance that
a sound system of risk management and internal control is maintained. An internal audit function
specific to the Company is therefore considered not necessary. However, the Directors will continue
to monitor if such need is required.
AUDITOR
The Audit Committee’s responsibilities include monitoring and reviewing the performance and
independence of the Company’s Auditor, PKF Littlejohn LLP who had been appointed on 6 October
2020.
Pursuant to audit and ethical standards, the auditor is required to assess and confirm to the Board their
independence, integrity and objectivity. The Auditor had carried out this assessment and considered
themselves to be independent, objective and in compliance with the Ethical Standard for Auditors
published by the UK Financial Reporting Council and the Code of Ethics issued by the Institute of
Chartered Accountants in England and Wales.
RISK MANAGEMENT AND INTERNAL CONTROL
The Board is responsible for the effectiveness of the Company’s risk management and internal control
systems and is supplied with information to enable it to discharge its duties. Such systems are designed
to meet the particular needs of the Company and to manage rather than eliminate the risk of failure to
meet business objectives and can only provide reasonable, and not absolute, assurance against material
misstatement or loss.
During the year, the Board discharged its responsibility for risk management and internal control
through the following key procedures:
•
•
•
clearly defined delegation of responsibilities to employees of the Company, including
authorisation levels for all aspects of the business;
regular and comprehensive information provided to the Board covering financial performance
and key business indicators;
a detailed system of budgeting, planning and reporting which is approved by the Board and
monitoring of results against budget with variances being followed up and action taken, where
necessary; and
•
regular visits to operating units and projects by the Board.
The Board has established frameworks, policies and procedures to comply with the requirement of the
Bribery Act 2010 (the “Bribery Act”) and Market Abuse Regulation (“MAR”). In respect of the
30
former, the Company has a legal and compliance function for the purposes of implementing the anti-
corruption and anti-bribery policy. Training and briefing sessions were conducted for the senior
management and employees. Compliance reviews are carried out as and when required to ensure the
effectiveness of the policy. In respect of dealing by employees and Directors of the Company, the
Company has a Dealing Code which imposes restrictions on dealings in its securities by Persons
Discharging Managerial Responsibilities (“PDMR”) and certain employees who have been told the
clearance procedures apply to them. The Company also has a Group-Wide Dealing Policy and a
Dealing Procedures Manual. These policies have been designed to ensure that the PDMR and other
employees of the Company and its subsidiaries do not misuse or place themselves under suspicion of
misusing information about the Group which they have and which is not public.
RELATIONSHIP WITH SHAREHOLDERS
The Board is committed to maintaining good communications with shareholders and has designated
the Chairman and certain members of its Board as the principal spokespersons with investors, analysts,
fund managers, the press and other interested parties. The Board is informed of material information
provided to shareholders and is advised on their feedback. The Board has also developed an
understanding of the views of major shareholders about the Company through meetings and
teleconferences conducted by the financial adviser. In addition, the Company seeks to regularly update
shareholders through stock exchange announcements, press releases and participation in roadshows.
To promote effective communication, the Company has a website, www.aseanaproperties.com
through which shareholders and investors can access relevant information.
SUBSTANTIAL SHAREHOLDERS
The Board was aware of the following direct and indirect interests comprising a significant amount of
more than 3% issued share capital of the Company as at 31 December 2021:
Ireka Corporation Berhad.
Legacy Essence Limited and its related parties
LIM Advisors
SIX SIS
Progressive Capital Partners
Dr. Thong Kok Cheong
Credit Suisse
NUMBER OF
ORDINARY
SHARES HELD
PERCENTAGE OF
ISSUED SHARE
CAPITAL
45,837,504
36,628,282
26,644,192
18,366,118
14,393,372
12,775,532
12,024,891
23.07%
18.43%
13.41%
9.24%
7.24%
6.43%
6.05%
ANNUAL GENERAL MEETING (“AGM”)
The AGM is the principal forum for dialogue with shareholders. At and after the AGM, investors are
given the opportunity to question the Board and seek clarification on the business and affairs of the
Group. Mr. Nick Paris, non-executive non-independent Chairman and Mr. Chris Lovell, non-
31
executive independent director, attended the 2021 AGM, either in person or by telephone, which was
held on 1 September 2021 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
NICK PARIS
Director
28 April 2022
32
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ASEANA PROPERTIES
LIMITED
Opinion
We have audited the financial statements of Aseana Properties Limited and its subsidiaries (the
‘group’) for the year ended 31 December 2021 which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement
of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the financial statements,
including significant accounting policies. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted
by the European Union.
In our opinion, the group financial statements:
• give a true and fair view of the state of the group’s affairs as at 31 December 2021 and of its
loss for the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been properly prepared in accordance with the requirements of the Companies (Jersey)
Law 1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of
the group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to note 2.1 in the financial statements, which indicates that the success of the group
relies on its ability to raise sufficient funds through project divestments across their respective
jurisdictions in order to finance the operation of the group.
As at 31 December 2021, the group’s loans and borrowings and medium term notes amounted to USD
$44 million (excluding the reclassification of loans and borrowings to non-current assets held for sale
relating to Vietnam operations of US$32m), of which the entirety is due for repayment as at 8
December 2022.
Included as a post balance sheet event, the group has concluded a transaction which includes a
divestment of the Vietnamese operations. The gross sale price of the transaction is USD $95 million
and under the terms of the agreement the buyer has assumed responsibility for the remaining liabilities
of the sale assets. The group has received net cash of approximately USD $18.3 million. This indicated
an improved ability of the group being able to meet its debts as they fall due.
33
However, the COVID-19 pandemic and the movement control orders (“MCO”) imposed by
government of Malaysia continued to adversely impact the interest of prospective buyers for group’s
remaining assets. Therefore, there is no certainty that the sale of the remaining assets will be completed
as planned and the loans and borrowings including medium term notes can be repaid in a timely
manner.
As stated in note 2.1, these events or conditions indicate that a material uncertainty exists that may
cast significant doubt on the group’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director’s use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the
directors’ assessment of the group’s ability to continue to adopt the going concern basis of accounting
included a review of management’s assessment of the going concern status of the group, including a
cash flow forecast for the twelve months from the anticipated approval of the group financial
statements. Our audit procedures included checking the integrity of the underlying formulas and
calculations within the going concern model; and reviewing the reasonableness of the key assumptions
used by the directors to prepare the cash flow forecast and consideration of the impact of COVID-19.
Our responsibilities and the responsibilities of the directors with respect to going concern are described
in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative
thresholds for materiality. These, together with qualitative considerations, helped us to determine the
scope of our audit and the nature, timing and extent of our audit procedures on the individual financial
statement line items and disclosures and in evaluating the effect of misstatements, both individually
and in aggregate, on the financial statements as a whole.
Overall materiality
Performance materiality
Basis of materiality
Rationale
Group financial statements 2020
USD $1,900,000
USD $1,235,000
c. 0.7% of gross assets
Group financial statements 2021
USD $1,400,000
USD $840,000
c. 0.7% of gross assets
A key determinant of the group’s value is property assets held within
inventory. Due to this, the key area of focus in the audit is the valuation
of inventory. On this basis, we consider gross assets to be a critical
financial performance measure for the group on the basis that it is a key
metric used by management, investors, analysts and lenders.
34
We use performance materiality to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we
use performance materiality in determining the scope of our audit and the nature and extent of our
testing of account balances, classes of transactions and disclosures, for example in determining sample
sizes.
For each component in the scope of our group audit, we allocated a materiality that is less than our
overall group materiality. The range of materiality allocated across components was between USD
$40,000 (2020: USD $50,000) and USD $720,000 (2020: USD $750,000). Certain components were
audited to a local statutory audit materiality that was also less than our overall group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during
our audit above USD $70,000 as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
Our approach to the audit
As part of designing our audit, we determined materiality and assessed risk of material misstatement
in the financial statements. In particular, we looked at areas involving significant accounting estimate
and judgment by the directors and considered future events that are inherently uncertain such as the
carrying value of inventory. We also addressed the risk of management override of controls, including
among other matters consideration of whether there was evidence of bias that represented a risk of
material misstatement due to fraud.
The group has thirteen trading companies consolidated within in the group financial statements, nine
of which are based in Malaysia and four based in Vietnam. We identified ten significant components,
which were subject to a full scope of audit. Significant Vietnamese components were audited by the
PKF network firm in Vietnam. Significant Malaysian components were audited by us as group auditor.
We were not able to visit the PKF network firm in Vietnam in order to carry out audit file reviews due
to the COVID travel restrictions in place, instead, we reviewed component audit working papers
electronically. In addition to this, significant components were subject to audits under our direction
and supervision.
35
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) we identified, including those which had
the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. In addition to the matter described in the material uncertainty related to going
concern section we have determined the matters described below to be the key audit matters to be
communicated in our report.
Key Audit Matter
How our scope addressed this matter
Carrying value of inventory
Refer to note 20 Inventory.
The group owns a portfolio of land held for
property development and completed property
units in Malaysia and Vietnam. The total
carrying value of inventory for the group was
USD $147 million (excluding USD $80.3m of
Vietnam assets reclassified to non-current assets
held for sale).
Inventory amounted to USD $140 million were
valued by third party valuers C H Williams
Talhar & Wong Sdn Bhd (“CBRE WTW”) and
Knight Frank Malaysia Sdn Bhd (“Knight
Frank”), together “the valuers” who are engaged
by the directors.
that
The valuers have included a material valuation
uncertainty clause in their valuation reports. This
clause highlights
less certainty, and
consequently a higher degree of caution, should
be attached to the valuation as a result of the
COVID-19 pandemic. This
represents a
significant estimation uncertainty in relation to
the valuation of inventory.
The valuation report issued by Knight Frank
dated 3rd February 2022 shows a write down of
c. USD $14.7 million (2020: c. USD $ 15.7
million) in the carrying value of Sandakan
Harbour Square
in Malaysia. The
located
valuation report issued by CBRE WTW dated 18
February 2022 shows a write down of c. USD
$1.9m in the carrying value of RuMa Hotel
(excluding services residences). Management
We performed testing of the inventory valuation
and critically assessed the key assumptions and
estimates made. The procedures performed are
summarised below:
An assessment of the valuers’ qualifications and
expertise and read their terms of engagement
with the group to determine whether there are
matters that might have affected their objectivity
or may have imposed scope of limitations upon
their work. We also considered fees and other
contractual arrangements
that might exist
between the group and the valuers. We found no
evidence to suggest that the objectivity of the
valuers was compromised.
We read all valuation reports including workings
realisable value
the net
support
which
assessment of inventory.
Tested the underlying data used by the valuers in
forming their valuation including benchmarking,
validating key assumptions to supporting third
party
and
evidence or market
considering contrary evidence.
activity
Assessed and challenged the key estimates and
assumptions used in the valuation methodology,
noted and performed analysis on changes from
prior year where relevant.
Evaluated a range of key estimates and
assumptions used in the valuations and profit and
cash flow forecasts.
36
In respect of the land located in Kota Kinabalu,
Sabah in Malaysia with a carrying value of USD
$6.6 million as at 31 December 2021 where no
third party valuation has been carried out, our
sensitivity analysis was inconclusive as there has
been no recent sale of land with similar
characteristics. Directors are currently
in
discussion with a prospective buyer at a sale
price of no less than c. USD $9.8m, which is
higher than the carrying value as at 31 December
2021. However, as at 31 December 2021 and the
date of this report, no binding agreement has
been entered into.
Except for the issues identified in relation to
Sandakan Harbour Square, The RuMa Hotel and
the land located in Kota Kinabalu, Sabah, we
concluded that the assumptions used in the
valuations by the valuers were supportable in
light of the evidence obtained and the disclosures
in relation to the material uncertainty within the
valuation reports are sufficient and appropriate to
highlight the increased estimation uncertainty as
a result of COVID-19.
believe Knight Frank and CBRE WTW have
taken into account the negative effects of the
COVID-19 pandemic and therefore only reflects
a “snapshot in time”. In the directors’ opinion the
value in an orderly sales process is equal to or in
excess of their current carrying value. As such,
no impairment is recognised.
A parcel of land located in Kota Kinabalu, Sabah
in Malaysia with a carrying value of USD $6.6
million as at 31 December 2021 was not valued
by any third party valuer.
In addition to this, and consistent with the market
conditions observed, we note there continued to
be a higher level of judgement associated with
certain asset valuations, notably those with a
retail and hospitality element.
significant
in
increased
further
COVID-19
relation to assumptions around:
judgment
- occupier demand and solvency;
-
-
asset liquidity; and
the relative impact on the different
sectors including retail, hospitality and
leisure.
In determining the carrying value of inventory,
the valuers take into account property specific
information such as the current lease agreements
and occupancy rates. They apply assumptions for
yields and expected future income growth rates,
which are influenced by prevailing market yields
and comparable market transactions, to arrive at
final valuation.
in
The valuation of inventory requires significant
judgment and estimation by management and
their valuers.
inputs or
Inaccuracies
unreasonable bases used in these judgements
could result in a material misstatement in the
financial statements. There is also a risk that
management may
the significant
judgments and estimates in respect of inventory
valuations in order to meet market expectations.
influence
The wider challenges currently facing
the
property markets as a result of COVID-19
further contributed to the subjectivity for the year
ended 31 December 2021. The significance of
37
the estimates and judgements involved, coupled
with the fact that only a small percentage
individual valuations, when
difference
aggregated,
a material
in
misstatement, warranted specific audit focus in
this area.
result
could
in
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information
contained within the annual report. Our opinion on the financial statements does not cover the other
information and we do not express any form of assurance conclusion thereon. Our responsibility is to
read the other information and, in doing so, consider whether the other information is materially
inconsistent with the group financial statements or our knowledge obtained in the course of the audit,
or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise to a material misstatement
in the group financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies
(Jersey) Law 1991 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have not
been received from branches not visited by us; or
the financial statements not in agreement with the accounting records and returns; or
•
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ report the directors are responsible for the preparation of the
group financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the group financial statements, the directors are responsible for assessing the group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the group or
to cease operations, or have no realistic alternative but to do so.
38
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
• We obtained an understanding of the group and the sector in which it operates to identify laws
and regulations that could reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through discussions with
management, industry research, application of cumulative audit knowledge and experience of
the sector. We also communicated relevant identified laws and regulations and potential fraud
risks to all engagement team members including significant component audit teams, and
remained alert to any indicators of fraud or non-compliance with laws and regulations
throughout the audit.
• We determined the principal laws and regulations relevant to the group in this regard to be
those arising from:
o The Companies (Jersey) Law 1991
o Disclosure and Transparency Rules
o The Bribery Act 2010
o Market Abuse Regulations
o Anti Money Laundering Legislation
o Local Tax and Employment Law
o International Financial Reporting Standards (“IFRSs”) as adopted by European Union
(“EU”)
• We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the group with those laws and regulations. These procedures
included, but were not limited to:
o Making enquiries of management,
o Reviewing of minutes,
o Reviewing of accounting ledgers; and
o Reviewing of RNS announcements
39
• As in all of our audits, we addressed the risk of fraud arising from management override of
controls by performing audit procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the normal course of
business; and reviewing transactions through bank statements to identify potentially large and
unusual transactions that do not appear to be in line with our understanding of the business
operations. Aside from the non-rebuttable presumption of a risk of fraud arising from
management override of controls, we did not identify any significant fraud risks.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,
including those leading to a material misstatement in the financial statements or non-compliance with
regulation. This risk increases the more that compliance with a law or regulation is removed from the
events and transactions reflected in the financial statements, as we will be less likely to become aware
of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud
rather than error, as fraud involves intentional concealment, forgery, collusion, omission or
misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Other matters which we are required to address
Non-audit services prohibited by the FRC’s Ethical Standard were inadvertently provided by a PKF
network firm to certain controlled undertakings of the group during the period covered by our audit
engagement. These involved the provision of tax services to undertakings located in Malaysia. Once
we were made aware of the provision of these non-permitted services by the PKF network firm, which
had been undertaken without our knowledge or approval, we assessed the impact on our independence
in accordance with the requirements of the FRC’s Ethical Standard. In reviewing the nature of the
inadvertent breach, specifically the services provided by PKF network firm and that the tax balances
in question were immaterial to the group financial statements we concluded that this did not affect our
professional judgement or our audit report. The work performed by the PKF network firm was not
used for the purposes of our audit and the inadvertent provision of prohibited non-audit services was
duly reported to those charged with governance. On this basis, we determined that our independence
had not been compromised and we could continue to carry out the audit of the group.
40
Use of our report
This report is made solely to the company’s members, as a body, in accordance with our engagement
letter dated 19 April 2021. Our audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than
the company and the company's members as a body, for our audit work, for this report, or for the
opinions we have formed.
Mark Ling (Engagement partner)
For and on behalf of PKF Littlejohn LLP
Registered Auditor
28 April 2022
15 Westferry Circus
Canary Wharf
London E14 4HD
41
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
Notes
2021
US$’000
Continuing operations
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Other operating expenses
Loss on disposal of subsidiaries
Foreign exchange gain/(loss)
Operating loss
Finance income
Finance costs
Net finance costs
Net loss before taxation
from continuing operations
Taxation
Loss for the year
from continuing operations
Discontinued operations
Loss for the year
from discontinued operations
5
6
7
11
11
8
10
11
12
35
Loss 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
595
(318)
277
5,677
(1,408)
(6,826)
-
345
(1,935)
710
(3,621)
(2,911)
(4,846)
(141)
(4,987)
(3,087)
(8,074)
2020
US$’000
Re-presented
1,329
(950)
379
5,880
(1,393)
(9,441)
(784)
(1,140)
(6,499)
2,105
(4,727)
(2,622)
(9,121)
(187)
(9,308)
(4,208)
(13,516)
for foreign operations
Total other comprehensive
income for the year
Total comprehensive loss
for the year
13
13
(3,584)
2,078
(3,584)
2,078
(11,658)
(11,438)
42
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2021
Notes
2021
US$’000
2020
US$’000
(Re-presented)
(3,850)
(1,632)
(7,830)
(2,430)
14
(5,482)
(10,260)
Loss attributable to:
Equity holders of the parent company
Loss for the year
from continuing operations
Loss for the year
from discontinued operations
Profit/(loss) for the year attributable to
equity holders of the parent company
Non-controlling interests
Loss for the year
from continuing operations
Loss for the year
from discontinued operations
Loss for the year attributable to
non-controlling interests
Loss for the year
Total comprehensive loss attributable to:
Equity holders of the parent company
Loss for the year
from continuing operations
Loss for the year
from discontinued operations
Total comprehensive loss attributable to
equity holders of the parent company
Loss for the year
from continuing operations
Loss for the year
from discontinued operations
Total comprehensive loss attributable to
non-controlling interests
Total comprehensive loss for the year
15
(1,137)
(1,455)
(2,592)
(8,074)
(5,960)
(2,719)
(8,679)
(1,080)
(1,899)
(2,979)
(11,658)
(1.94)
(0.82)
(2.76)
(1,478)
(1,778)
(3,256)
(13,516)
(6,792)
(1,579)
(8,371)
(1,543)
(1,524)
(3,067)
(11,438)
(3.94)
(1.22)
(5.16)
43
Loss per share
Basic and diluted (US cents)
- from continuing operations
- from discontinued operations
14
The notes to the financial statements form an integral part of the financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021
Notes
2021
US$’000
2020
US$’000
(Re-presented)
Non-current assets
Property, plant and equipment
Intangible assets
Right of use
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Prepayments
Current tax assets
Assets held for sale
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Equity
Share capital
Share premium
Capital redemption reserve
Translation reserve
Accumulated losses
Shareholders’ equity
Non-controlling interests
Total equity
Non-current liabilities
Trade and other payable
Loans and borrowings
Total non-current liabilities
Current liabilities
Trade and other payables
Amount due to non-controlling interests
Loans and borrowings
Medium term notes
Current tax liabilities
Total current liabilities
Total liabilities
16
17
18
19
20
21
35
22
23
24
25
26
15
27
29
27
28
29
30
104
578
1
4,979
5,662
147,048
13,540
496
781
14,466
7,114
183,445
121
578
160
5,111
5,970
157,133
14,999
206
956
10,344
5,388
189,026
189,107
194,996
10,601
208,925
1,899
(22,852)
(105,915)
92,658
(1,678)
90,980
38,339
-
38,339
13,824
1,952
1,695
42,317
-
59,788
98,127
10,601
208,925
1,899
(19,655)
(100,433)
101,337
(6,877)
94,460
39,789
1
39,790
16,718
1,906
1,922
40,200
-
60,746
100,536
TOTAL EQUITY AND LIABILITIES
189,107
194,996
44
The financial statements were approved on 28 April 2022 and authorised for issue by the Board and
were signed on its behalf by
THOMAS HOLLAND
Director
28 April 2022
HELEN SIU MING WONG
Director
The notes to the financial statements form an integral part of the financial statements.
45
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Consolidated
Balance at 1 January 2020 (re-presented)
Changes in ownership interests in subsidiaries (Note 31)
Non-controlling interests contribution
Loss for the year
Total other comprehensive loss for the year
Total comprehensive loss for the year
Disposal of subsidiaries
Redeemable
Ordinary
Shares
US$’000
10,601
-
-
-
-
-
-
Management
Shares
US$’000
Share
Premium
US$’000
Capital
Redemption
Reserve
US$’000
Translation
Reserve
US$’000
Accumulated
Losses
US$’000
Total Equity
Attributable
to Equity
Holders of the
Parent
US$’000
Non-
Controlling
Interests
US$’000
Total Equity
US$’000
-
-
-
-
-
-
-
208,925
1,899
(21,644)
(90,135)
109,646
(3,848)
105,798
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,889
1,889
100
(38)
-
(38)
-
38
-
-
-
(10,260)
(10,260)
(3,256)
(13,516)
-
1,889
189
2,078
(10,260)
(8,371)
(3,067)
(11,428)
-
100
-
100
As at 31 December 2020/ 1 January 2021 (re-presented)
10,601
-#
208,925
1,899
(19,655)
(100,433)
101,337
(6,877)
94,460
Changes in ownership interests in subsidiaries (Note 31)
Non-controlling interests contribution
Loss for the year
Total other comprehensive loss for the year
Total comprehensive loss for the year
Disposal of subsidiaries
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,197)
(3,197)
-
-
-
-
-
-
-
(5,482)
-
-
-
(5,482)
(3,197)
(8,679)
(341)
8,519
(2,592)
(387)
(341)
8,519
(8,074)
(3,584)
(2,979)
(11,658)
-
Shareholders’ equity at 31 December 2021
10,601
-#
208,925
1,899
(22,852)
(105,915)
92,658
(1,678)
90,980
# Represents 2 management shares at US$0.05 each
The notes to the financial statements form an integral part of the financial statements.
46
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
Cash Flows from Operating Activities
Net loss before taxation
- Continuing operations
- Discontinued operation
Finance income
Finance costs
Loss on disposal of subsidiaries
Unrealised foreign exchange gain
Depreciation of property, plant and equipment and
right-of-use asset
Operating loss before changes in working capital
Changes in working capital:
Decrease in inventories
Increase in trade and other receivables and
prepayments
(Decrease)/Increase in trade and other payables
Cash (used in)/generated from operations
Interest paid
Tax paid
2021
US$’000
2020
(Re-presented)
US$’000
(4,846)
(3,087)
(710)
3,621
-
(346)
207
(5,161)
4,660
(3,341)
(2,324)
(6,166)
(3,618)
(46)
(9,121)
(4,208)
(3,323)
11,151
784
(546)
479
(4,784)
856
(3,167)
8,164
1,069
(9,932)
(2,309)
Net cash used in operating activities
(9,830)
(11,172)
Cash Flows From Investing Activities
Purchase of property, plant and equipment
Proceeds from disposal of subsidiaries
Finance income received
Net cash from investing activities
(42)
-
710
668
(39)
3,936
3,013
6,910
47
CONSOLIDATED STATEMENT OF CASH FLOWS (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2021
Cash Flows From Financing Activities
Advances (from)/to non-controlling interests
Issuance of ordinary share of subsidiaries to non-
controlling interests
Repayment of finance lease liabilities
Repayment of loans and borrowings
Drawdown of loans and borrowings and Medium
Term Notes
Net increase/(decrease) in pledged deposits for loans
and borrowings and Medium Term Notes
Net cash generated from financing activities
Net changes in cash and cash equivalents during
the year
Effect of changes in exchange rates
Cash and cash equivalents at the beginning of the
year
Cash and cash equivalents at the end of the year (i)
2021
US$’000
2020
(Re-presented)
US$’000
121
8,519
(163)
-
3,559
-
12,036
2,874
(1,148)
5,388
7,114
728
-
(463)
(4,879)
6,526
75
1,987
(2,275)
48
7,615
5,388
(i)
Cash and Cash Equivalents
Cash and cash equivalents included in the consolidated statement of cash flows comprise the
following consolidated statement of financial position amounts:
Cash and bank balances
Short term bank deposits
Less: Deposits pledged (ii)
Cash and cash equivalents
2021
US$’000
4,644
2,470
7,114
(2,470)
4,644
2020
(Re-presented)
US$’000
2,871
2,517
5,388
(2,240)
3,148
(ii)
Included in short term bank deposits and cash and bank balance is US$2,470,000 (2020 (re-
presented): US$2,240,000) pledged for loans and borrowings and Medium Term Notes of the
Group.
The notes to the financial statements form an integral part of the financial statements.
48
NOTES TO THE FINANCIAL STATEMENTS
1
GENERAL INFORMATION
Aseana Properties Limited (the “Company”) was incorporated in Jersey as a limited liability par
value company. The Company’s registered office is 12 Castle Street, St Helier, Jersey JE2 3RT.
The consolidated financial statements comprise the financial information of the Company and its
subsidiary undertakings (together the “Group”). Details of the entities of the Group are described
in Note 33.
The principal activities of the Group are development of upscale residential and hospitality
projects, sale of development land and operation and sale of hotel, mall and hospital assets in
Malaysia and Vietnam. It is currently carrying out its divestment program which consists of
selling the Group’s assets, repaying its debts and distributing the remaining proceeds to its
shareholders.
The financial statements are presented in US Dollar (“US$”), which is the Group’s presentation
currency. All financial information is presented in US$ and has been rounded to the nearest
thousand (US$’000), unless otherwise stated.
2
BASIS OF PREPARATION
The financial statements of the Group have been prepared in accordance with International
Financial Reporting Standards (“IFRSs”) as adopted by European Union (“EU”), and IFRIC
interpretations issued, and effective, or issued and early adopted, at the date of these financial
statements.
As permitted by Companies (Jersey) Law 1991 only the consolidated financial statements are
presented.
The preparation of financial statements in conformity with IFRS requires the use of estimates
and assumptions that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of expenses during the reporting period.
Although these estimates are based on management’s best knowledge of the amount, event or
actions, actual results ultimately may differ from those estimates. The Board has reviewed the
accounting policies set out below and considers them to be the most appropriate to the Group’s
business activities.
A disposal group qualifies as a discontinued operation if it is a component of an entity that
either has been disposed of, or is classified as held for sale and:
(a)
(b)
(c)
represents a separate major line of business or geographical area of operations;
is part of a single co-ordinated plan to dispose of a separate major line of business or
geographic area of operations; or
is a subsidiary acquired exclusively with a view to resale.
Discontinued operations are excluded from the results of continuing operations and are
presented as a single amount as profit or loss after tax from discontinued operations in the
49
income statement. Comparatives are also re-presented to reclassify disposed businesses or held
for sale businesses which meet the criteria for discontinued operations.
2.1 Going Concern
The financial statements have been prepared on the historical cost basis and on the assumption
that the Group is a going concern.
The Directors expect to raise sufficient funds to finance the operation of the Group’s existing
projects via the disposal of its development assets in East Malaysia, its existing units of
condominium inventories at The RuMa Residences in West Malaysia, and through the
disposals of the Sandakan hotel asset (formerly Four Points Sheraton Sandakan Hotel), the
Harbour Mall Sandakan and the RuMa Hotel.
During the year, the Group announced the sale of our two assets in Vietnam to our local partner
and the transaction was pending completion as at 31 December 2021. Moreover, in September
2021, the Group also announced the sale of the 58 unsold residences at the RuMa Hotel &
Residences in Kuala Lumpur, this sale process is still ongoing.
The COVID-19 pandemic and the movement control orders (“MCO”) imposed by both
governments of Malaysia and Vietnam continue to adversely impact the interest of prospective
buyers for our remaining assets. These MCOs virtually eliminated foreign travel into both of
those countries and severely curtailed the internal movement of their citizens. The impact on
tourism and hospitality related businesses such as our hotel in Kuala Lumpur and our retail
mall in Sandakan was negatively affected. In addition, detailed due diligence and site visits by
prospective buyers became impossible and sales interest therefore stalled.
Given the difficulties of engaging with prospective buyers during the MCO in Malaysia, the
Directors decided to “roll-over” the medium term notes (“MTN’s) which were due to expire
on 8 December 2021. The “roll-over” of the MTN’s was completed prior to the expiry date
and now has a maturity date of 8 December 2022. The notes are “AAA” rated and secured by
two completed inventories of the Group with carrying amount of US$57 million as at 31
December 2021.
The Group also has significant borrowings in Vietnam secured by the City International
Hospital and adjacent development lands. The Directors expect to repay the borrowings via the
sale of the hospital and its adjacent land in Vietnam, or to re-structure the repayment dates of
the borrowings or to re-finance the loan. As noted in the section “Financial Review”, the sale
of the Vietnam assets was announced on 25 August 2021.
The Group has prepared and considered prospective financial information based on
assumptions and events (including effect of the COVID-19 pandemic) that may occur for at
least 12 months from the date of approval of the financial statements and the possible actions
to be taken by the Group. Prospective financial information includes the Group’s profit and
cash flow forecasts for the ongoing projects.
In preparing the cash flow forecasts, the Directors have considered the availability of cash,
adequacy of bank loans and medium term notes and also the refinancing of the medium term
notes (as described in Notes 29 and 30). The Directors believe that the business will be able
50
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.
On 7 May 2020, the Group announced that it was considering proposals to demerge certain
assets held by the Group in exchange for the buyback and cancellation of a significant
percentage of the issued ordinary shares of US$0.05 each in the capital of the Company (“De-
Merger”). The De-Merger transaction would have resulted in approximately 50% in aggregate
of the outstanding shares in the Company being bought back from Ireka Corporation Berhad
(“ICB”) and its concert party Legacy Essence Limited (“Legacy Essence”) along with certain
other shareholders (the “Participating Shareholders”). The consideration would have been an
in specie distribution of certain assets owned by the Group to the Participating Shareholders
together with a balancing cash payment from Participating Shareholders to the Group to reflect
the relative value of the assets to be distributed and the value of the shareholding of the
Participating Shareholders as at the date of the buyback. The Group assessed the net book value
of the Group's assets for the purposes of the transaction based on the unaudited net asset value
as at 31 December 2019 and had agreed with Ireka that adjustments should be made, where
appropriate, to reflect the settlement of potential claims that the Group may have had against
Ireka or its group companies in connection with the Group's projects, including the settlement
of amounts owing by a subsidiary of Ireka to the Group relating to the construction of The
RuMa Hotel and Residences in Kuala Lumpur ("RuMa"). However on 8 February 2021, the
De-Merger transaction was cancelled as the banks that had financed the construction of certain
of the Company’s assets would not give their approval for it to proceed.
Following the termination of the De-Merger Transaction the business plan remained
unchanged and the Directors anticipate the sale of the Group’s remaining assets, comprising of
the hospital and adjacent development lands in Ho Chi Minh City, the hotel asset and shopping
mall in Sandakan, a plot of development land in Kota Kinabalu and the hotel in Kuala Lumpur,
can be sold as COVID-19 related movement restrictions ease in both Malaysia and Vietnam.
These asset sales will collectively enable the repayment of the Group’s bank debts as or before
they fall due.
In addition, as described in Note 2.1.1 below, on 28 May 2021, shareholders voted to extend
the life of the Company by a further two years to May 2023 and a further dis-continuation vote
will be put to shareholders by the end of May 2023.
After considering the forecasts and the business risks, there is no certainty the divestment of
certain assets will be completed as planned and the loans and borrowing can be discharged in
a timely manner. These conditions indicate the existence of a material uncertainty which may
cast significant doubt about the Group and the Company’s ability to continue as a going
concern.
The Directors have a reasonable expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future. For these reasons, they continue to adopt
the going concern basis of accounting in preparing the annual financial statements.
2.1.1 May 2021 Resolution
At a general meeting of the Company held on 28 May 2021, Shareholders voted in favour of
the Board’s proposals to reject the 2021 Discontinuation Resolution and enabled the Company
to continue to pursue the new divestment strategy rather than placing the Company into
51
liquidation. This should enable the realisation of the Company’s assets in a controlled, orderly
and timely manner, with the objective of achieving a balance between periodically returning
cash to Shareholders and maximising the realisation value of the Company’s investments.
2.2
Statement of Compliance
A number of new standards and amendments to standards and interpretations have been issued
by International Accounting Standards Board but are not yet effective and in some cases have
not yet been adopted by the EU. The Directors do not expect that the adoption of these
standards will have a material impact on the financial statements of the Group in future periods.
2.3
Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimates are revised and in any
future periods affected.
Information about critical judgements in applying accounting policies that have the most
significant effect on the amounts recognised in the consolidated financial statements are
discussed below:
(a)
Going concern
The Extraordinary General Meeting that was held on 28 May 2021 extended the
Company’s life until May 2023 and the Directors anticipate holding a similar vote at
that time. It is too early to be able to forecast how the Company’s shareholders will
vote on a continuation resolution which would be a special resolution needing to be
passed by two-thirds majority of those voting. The Company and the Group continue
to adopt the going concern basis in preparing the financial statements.
As described in Note 2.1 the Directors consider the Company to be a going concern
while the Directors continue with the agreed divestment and realisation process in an
orderly manner under their control and they expect to be able to continue to meet all
finance obligations as they fall due.
(b)
Net realisable value of inventories
The Group assesses the net realisable value of inventories under development, land held
for development and completed properties held for sale according to their recoverable
amounts 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
52
sales prices, comparable market transactions, occupancy levels, projected growth rates,
and discount rates.
The COVID-19 pandemic began in late 2019 and continues to this day, during this
period, many countries implemented varying degrees of lockdown or movement control
measures in attempt to contain the spread of infections. The pandemic and the
lockdown measures has made significant impact to different industries and businesses
worldwide.
In determining market values of the Group’s inventories, valuers typically take into
account the prevailing economy as one of the factors. However, any such snapshot at
the end of 2021 would inevitably reflect the negative effects of the global pandemic
and lockdown measures implemented by governments. As such, the management of
the Group believed that the market values indicated by valuations for the year ended 31
December 2021 only represented a worst-case scenario; these were not reflective of an
orderly market nor the objectives of the Group as a going concern; the management
believed that the valuations as at 31 December 2021 were more reflective of an orderly
market condition without the COVID-19 pandemic and its effects.
As described in Note 2.1.1, the shareholders of the Group had voted to support the
Group to sell its assets in a controlled manner in order to maximize shareholder value,
the Board will not sell at prices below their carrying amounts as at 31 December 2021.
Therefore, the management believe that the various assumptions used to prepare the
valuations for the year ended 31 December 2021 are still relevant and appropriate for
the sale condition.
The methods and key assumptions in relation to the calculation of the net realisable
value of inventories are described in Note 20. At 31 December 2021, the carrying value
of inventories were approximately US$147 million (31 December 2020 (re-presented):
US$157 million).
(c)
Revenue – sale and leaseback arrangements
The Group entered into agreements with the buyers of The RuMa Hotel Suites in a sale
and leaseback arrangement. The sold hotel suites will be leased back to the Group for
the hotel operation over the lease term period of 10 years.
The Group considers that the control of the sold hotel suites, under the sale and
leaseback arrangement, has yet to be transferred to the buyer and the transfer of the
asset is therefore not a sale. No revenue is recognised in the financial statements.
The nature of this leaseback transaction represents, in substance, a temporary financing
arrangement. Any contractual payment made to the buyer was recognised as finance
costs. The proceeds of the revenue received from these buyers were recognised as
amounts owed to contract buyers, amounted to US$38 million and is disclosed in Note
27.
(d)
Classification of assets as inventory
53
The Directors 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 to classify 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.
As described in the Notes 3.3(c) and (d), as a result of this classification all income
generating from the operations of these developments is recognised as other income in
Note 6.
(e)
Impairment of licence contracts and related 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.
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 Notes 2.3(b) and 17). The
assessment requires the use of judgement and estimates in relation to factors such as
sales prices and comparable market transactions.
The Group derecognises licence contracts and related relationships when a component
of the venture is disposed of.
(f)
Pandemic of Coronavirus Disease 2019 (COVID-19)
The current outbreak of COVID-19 pandemic has resulted in the occurrence of a
multitude of associated events such as temporary closing of businesses, travel
restrictions and quarantine measures across the globe. These measures and policies
affect supply chains and the production of goods and services and lower economic
activity which is likely to result in reduced demand for the Group’s goods and services.
The Group exercises judgement, in light of all facts and circumstances, to assess what
event in this series of events provides additional evidence about the condition that
existed at the reporting date and therefore affects the recognition and measurement of
the Group’s assets and liabilities at 31 December 2021.
3
SIGNIFICANT ACCOUNTING POLICIES
3.1
Basis of Consolidation
(a)
Business combinations
Business combinations are accounted for using the acquisition method as at the
acquisition date, which is the date on which control is transferred to the Group. For
new acquisitions, the Group measures the cost of goodwill at the acquisition date as:
•
•
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquiree; plus
54
•
•
if the business combination is achieved in stages, the fair value of the existing
equity interest in the acquiree; less
the net recognised amount (generally fair value) of the identifiable assets acquired
and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in
profit or loss. The consideration transferred does not include amounts related to the
settlement of pre-existing relationships. Such amounts generally are recognised in
profit or loss.
Transaction costs related to the acquisition, other than those associated with the issue
of debt or equity securities, that the Group incurs in connection with a business
combination are expensed as incurred.
Any contingent consideration payable is measured at fair value at the acquisition date.
If the contingent consideration is classified as equity, then it is not remeasured and
settlement is accounted for within equity.
Otherwise, subsequent changes in the fair value of the contingent consideration are
recognised in profit or loss.
(b)
Subsidiaries
Subsidiaries are entities controlled by the Group. The financial information of
subsidiaries are included in the consolidated financial statements from the date that
control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed when necessary to align
them with the policies adopted by the Group.
The Group controls an entity when it is exposed, or has rights, to variable returns from
its involvement with the entity and has the ability to affect those returns through its
power over the entity. Potential voting rights are considered when assessing control
only when such rights are substantive. The Group also considers it has de facto power
over an investee when, despite not having the majority of voting rights, it has the
current ability to direct the activities of the investee that significantly affect the
investee’s return.
(c)
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising
from intra-group transactions, are eliminated in preparing the consolidated financial
statements. Unrealised gains arising from transactions with equity-accounted investees
are eliminated against the investment to the extent of the Group’s interest in the
investee. Unrealised losses are eliminated in the same way as unrealised gains, but to
the extent that there is no evidence of impairment.
55
(d)
Acquisition of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with owners
in their capacity as owners and therefore no goodwill is recognised as a result.
Adjustments to non-controlling interests arising from transactions that do not involve
the loss of control are based on a proportionate amount of the net assets of the
subsidiary.
3.2
Foreign Currencies
(a)
Foreign currency transactions
The consolidated financial statements are presented in United States Dollar (“US$”),
which is the Group’s presentation currency. Each entity in the Group determines its
own functional currency and items included in the financial statements of each entity
are measured using that functional currency. Transactions in foreign currencies are
translated to the respective functional currencies of the Group entities at exchange rates
at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional currency at the
exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are retranslated to the functional currency at the exchange rate
at the date that the fair value was determined. Non-monetary items in a foreign
currency that are measured in terms of historical cost are translated using the exchange
rate at the date of the transaction. Foreign currency differences arising on retranslation
are recognised in profit or loss, except for differences arising on the retranslation of
available-for-sale equity investments, which are recognised in other comprehensive
income.
(b)
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value
adjustments arising on acquisition, are translated to US$ at exchange rates at the
reporting date. The income and expenses of foreign operations are translated to US$ at
exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and
presented in the foreign currency translation reserve (“translation reserve”) in equity.
However, if the foreign operation is a non-wholly owned subsidiary, then the relevant
proportionate share of the translation difference is allocated to the non-controlling
interest. When a foreign operation is disposed of such that control, significant influence
or joint control is lost, the cumulative amount in the translation reserve related to that
foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
When the Group disposes of only part of its interest in a subsidiary that includes a
foreign operation while retaining control, the relevant proportion of the cumulative
amount is reattributed to non-controlling interest. When the Group disposes of only
part of its investment in an associate that includes a foreign operation while retaining
significant influence or joint control, the relevant proportion of the cumulative amount
is reclassified to profit or loss.
56
When the settlement of a monetary item receivable from or payable to a foreign
operation is neither planned nor likely in the foreseeable future, foreign exchange gains
and losses arising from such a monetary item are considered to form part of a net
investment in a foreign operation and are recognised in other comprehensive income,
and presented in the translation reserve in equity.
3.3
Revenue Recognition and Other Income
Revenue is recognised to the extent that it is probable that the economic benefits will flow to
the Group and the revenue can be reliably measured. The following specific recognition
criteria must also be met before revenue is recognised:
(a)
Sale of completed properties
Revenue from sale of completed properties is recognised when effective control of
ownership of the properties is transferred to the purchasers which is when the
completion certificate or occupancy permit has been issued.
(b)
Sale of development properties
Revenue from sale of development properties is recognised as and when the control of
the asset is transferred to the buyer and it is probable that the Group will collect the
consideration to which it will be entitled in exchange for the asset that will be
transferred to the buyer. In light of the terms of the contract and the laws that apply to
the contract, control of the asset is transferred over time as the Group’s performance
does not create an asset with an alternative use to the Group and the Group has an
enforceable right to payment for performance completed to date.
Revenue is recognised over the period of the contract by reference to the progress
towards complete satisfaction of that performance obligation. This is determined based
on the actual cost incurred to date to estimated total cost for each contract.
Where the outcome of a contract cannot be reliably estimated, revenue is recognised to
the extent of contract costs incurred that are likely to be recoverable. Contract costs are
recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the
expected loss is recognised as an expense immediately.
(c)
Rental income
Rental income is recognised in profit or loss on a straight-line basis over the lease term.
Lease incentives granted are recognised as an integral part of the total rental income,
over the term of the lease. Rental income is recognised as other income.
(d)
Income from hotel, 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
57
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.
(e)
Interest income
Interest income is recognised as it accrues using the effective interest method in profit
or loss except for interest income arising from temporary investment of borrowings
taken specifically for the purpose of obtaining a qualifying asset which is accounted
for in accordance with the accounting policy on borrowing costs.
3.4
Property, Plant and Equipment
All property, plant and equipment are stated at cost less depreciation unless otherwise stated.
Cost includes all relevant external expenditure incurred in acquiring the asset.
The estimates for the residual values, useful lives and related depreciation charges for the
property and equipment are based on commercial factors which could change significantly as
a result of technical innovations and competitors’ actions in response to the market conditions.
The Group anticipates that the residual values of its property and equipment will be
insignificant. As a result, residual values are not being taken into consideration for the
computation of the depreciable amount. Changes in the expected level of usage and
technological development could impact the economic useful lives and the residual values of
these assets, therefore future depreciation charges could be revised. The carrying amount of
property and equipment as at the reporting date is disclosed in Note 16 to the financial
statements.
The cost of property, plant and equipment recognised as a result of a business combination is
based on fair value at acquisition date. The fair value of property is the estimates amount for
which a property could be exchanged between knowledgeable willing parties in an arm’s length
transaction after proper marketing wherein the parties had each acted knowledgeably,
prudently and without compulsion. The fair value of other items of plant and equipment is
based on the quoted market prices for similar items when available and replacement cost when
appropriate.
Depreciation of property, plant and equipment is calculated using the straight-line method to
allocate cost to their residual values over their estimated useful lives, as follows:
• Furniture, Fittings & Equipment
• Motor Vehicles
4 – 33⅓%
20%
58
• Leasehold Building
4 - 10%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the
end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount as described in Note 3.10(b).
The gain or loss on disposal of an item of property, plant and equipment is determined by
comparing the proceeds from disposal with the carrying amount of property, plant and
equipment and is recognised net within “other income” and “other operating expenses”
respectively in profit or loss.
3.5
Income Tax
Income tax expense comprises current tax and deferred tax. Current tax and deferred tax 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.
59
3.6
Financial Instruments
(a)
Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they
are originated. All other financial assets are recognised initially on the trade date, which
is the date that the Group becomes a party to the contractual provisions of the
instrument.
Financial assets and liabilities are offset and the net amount presented in the statement
of financial position when, and only when, the Group has a legal right to offset the
amounts and intends either to settle on a net basis or to realise the asset and settle the
liability simultaneously.
The Group classifies non-derivative financial assets into the following categories:
loans and receivables.
(i) Loans and receivables
Loans and receivables are held with an objective to collect contractual cash flows
which are solely payments of principal and interest on the principal amount
outstanding. Such assets are recognised initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, loans and
receivables are measured at amortised cost using the effective interest method, less
any impairment losses. Loans and receivables comprise cash and cash equivalents
and other receivables.
Trade receivables are recognised initially at the transaction price and subsequently
measured at amortised cost, less any impairment losses.
(b)
Non-derivative financial liabilities
All financial liabilities are recognised initially on the trade date, which is the date that
the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial liability when the contractual obligations are
discharged, cancelled or expire.
Financial assets and liabilities are offset and the net amount presented in the statement
of financial position when, and only when, the Group has a legal right to offset the
amounts and intends either to settle on a net basis or to realise the asset and settle the
liability simultaneously.
The Group classifies non-derivative financial liabilities into other financial liability
category. Such financial liabilities are recognised initially at fair value plus any directly
attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at amortised
cost using the effective interest method.
60
Other financial liabilities comprise loans and borrowings, bank overdrafts, and trade
and other payables.
Accounting for interest income and finance cost are discussed in Notes 3.3 (e) and 3.12
respectively.
(c)
De-recognition
A financial asset or part of it is derecognised when, and only when, the contractual
rights to the cash flows from the financial asset expire or the financial asset is
transferred to another party without retaining control or substantially all risks and
rewards of the asset. On de-recognition of a financial asset, the difference between the
carrying amount and the sum of the consideration received (including any new asset
obtained less any new liability assumed) and any cumulative gain or loss that had been
recognised in equity is recognised in profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation
specified in the contract is discharged or cancelled or expire. On de-recognition of a
financial liability, the difference between the carrying amount of the financial liability
extinguished or transferred to another party and the consideration paid, including any
non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
3.7
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and at bank, deposits held at call and short
term highly liquid investments that are subject to an insignificant risk of changes in value and
are used by the Group in the management of their short term commitments. Bank overdrafts
are included within borrowings in the current liabilities section on the statement of financial
position. For the purpose of the statement of cash flows, cash and cash equivalents are
presented net of bank overdrafts and pledged deposits.
3.8
Intangible Assets
Intangible assets comprise licence contracts and related relationships and goodwill.
(a)
Licence Contracts and Related Relationships
On acquisition, value is attributable to non-contractual relationships and other contracts
of long-standing to the extent that future economic benefits are expected to flow from
the relationships. Licence 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 licence contracts and related
relationships is disposed of, the part of the carrying amount of the licence contracts and
related relationships that has been allocated to the component is recognised in profit or
loss. 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
61
properties of which the licence contracts and related relationship is attached to (refer to
Notes 2.3(b), 18 and 21).
(b) Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets.
For the measurement of goodwill at initial recognition, refer to Note 3.1(a). Goodwill
is tested for impairment when there is an indicator of impairment. The Group assesses
the recoverable amount of goodwill by reference to the realisability of the properties of
which the goodwill is attached to (refer to Note 17).
Where it is not possible to estimate the recoverable amount of an intangible asset, the
impairment test is carried out on the smallest Group of assets to which it belongs for
which there are separately identifiable cash flows; its Cash Generating Units (‘CGUs’).
Goodwill is allocated on initial recognition to each of the Group’s CGUs that are
expected to benefit from a business combination that gives rise to the goodwill.
Impairment charges would be included in profit or loss, except to the extent they reverse
gains previously recognised in other comprehensive income. An impairment loss
recognised for goodwill is not reversed.
The carrying values of assets, other than those to which IAS 36-Impairment of Assets
does not apply, are reviewed at the end of each reporting period for impairment when
an annual impairment assessment is compulsory or there is an indication that the assets
might be impaired. Impairment is measured by comparing the carrying values of the
assets with their recoverable amounts. When the carrying amount of an asset exceeds
its recoverable amount, the asset is written down to its recoverable amount and an
impairment loss shall be recognised. The recoverable amount of an asset is the higher
of the asset’s fair value less costs to sell and its value in use, which is measured by
reference to discounted future cash flows using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the
asset. Where it is not possible to estimate the recoverable amount of an individual asset,
the Group determines the recoverable amount of the cash-generating unit to which the
asset belongs.
An impairment loss is recognised in profit or loss immediately unless the asset is carried
at its revalued amount. Any impairment loss of a revalued asset is treated as a
revaluation decrease to the extent of a previously recognised revaluation surplus for the
same asset. Any impairment loss recognised in respect of a cash-generating unit is
allocated first to reduce the carrying amounts of the other assets in the cash-generating
unit on a pro rata basis.
3.9
Inventories
Inventories comprise land held for property development, work-in-progress and stock of
completed units.
Inventories are stated at the lower of cost and net realisable value. Net realisable value
represents the estimated net selling price in the ordinary course of business, less estimated total
costs of completion and the estimated costs necessary to make the sale (refer to Note 2.3(b)).
62
Land held for property development consists of reclaimed land, freehold land, leasehold land
and land use rights on which development work has not been commenced along with related
costs on activities that are necessary to prepare the land for its intended use. Land held for
property development is transferred to work-in-progress when development activities have
commenced.
Work-in-progress comprises all costs directly attributable to property development activities
or that can be allocated on a reasonable basis to these activities.
Upon completion of development, unsold completed development properties are transferred to
stock of completed units.
3.10
Impairment
(a)
Loans and receivables
The Group considers evidence of impairment for loans and receivables at a specific
asset level. All individually significant receivables are assessed for specific
impairment.
An impairment loss in respect of loans and receivables is recognised in profit or loss
and is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that had not been
incurred) discounted at the asset’s original effective interest rate. The carrying amount
of the asset is reduced and the loss is recognised in the statement of comprehensive
income within administrative expenses.
When a subsequent event (e.g. repayment by a debtor) causes the amount of impairment
loss to decrease, the decrease in impairment loss is reversed through profit or loss. The
impairment loss is reversed, to the extent that the debtor’s carrying amount does not
exceed what the carrying amount would have been had the impairment not been
recognised at the date the impairment is reversed.
(b)
Non-financial assets
The carrying amounts of non-financial assets (except for inventories and deferred tax
asset) are reviewed at the end of each reporting date to determine whether there is any
indication of impairment.
If any such indication exists, then the asset’s recoverable amount is estimated. For the
purpose of impairment testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are largely independent of
the cash inflows of other assets or groups of assets (the “cash-generating unit”). The
goodwill acquired in a business combination, for the purpose of impairment testing, is
allocated to cash-generating units that are expected to benefit from the synergies of the
combination. Goodwill is tested for impairment on an annual basis.
The recoverable amount of an asset or cash-generating unit is the greater of its value in
use and its fair value less costs to sell. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that
63
reflects current market assessments of the time value of money and the risks specific to
the asset.
An impairment loss is recognised if the carrying amount of an asset or its cash-
generating unit exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in
respect of cash-generating units are allocated first to reduce the carrying amount of any
goodwill allocated to the units and then to reduce the carrying amount of the other assets
in the unit (groups of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, impairment
losses recognised in prior periods are assessed at the end of each reporting period for
any indications that the loss has decreased or no longer exists. An impairment loss is
reversed if there has been a change in the estimates used to determine the recoverable
amount since the last impairment loss was recognised. An impairment loss is reversed
only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised. Reversals of impairment losses are credited to profit or loss
in the year in which the reversals are recognised.
(c)
Equity instruments
Instruments classified as equity are measured at cost on initial recognition and are not
re-measured subsequently.
(i) Ordinary shares
Ordinary shares are redeemable only at the Company’s options and are classified
as equity. Distributions thereon are recognised as distributions within equity.
(ii) Management shares
Management shares are classified as equity and are non-redeemable.
3.11 Employee Benefits
(a)
Short-term employee benefits
Short-term employee benefit obligations in respect of salaries, annual bonuses, paid
annual leave and sick leave are measured on an undiscounted basis and are expensed
as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus
or profit-sharing plans if the Group has a present legal or constructive obligation to pay
this amount as a result of past service provided by the employee and the obligation can
be estimated reliably.
64
(b)
State plans
Certain companies in the Group maintain a defined contribution plan in Malaysia and
Vietnam for providing employee benefits, which is required by laws in Malaysia and
Vietnam respectively. The retirement benefit plan is funded by contributions from both
the employees and the companies to the employees’ provident fund. The Group’s
contributions to employees’ provident fund are charged to profit or loss in the year to
which they relate.
3.12 Finance Costs
Finance costs directly attributable to the acquisition, construction or production of qualifying
assets, are capitalised to the cost of those assets. Investment income earned on the temporary
investment of specific borrowings pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation.
Any unsold unit is not a qualifying asset because the asset is ready for its intended sale in its
current condition. The unsold unit fails to meet the definition of qualifying asset under IAS 23
and accordingly, no capitalisation of borrowing costs.
All sold units are not a qualifying asset to the developer as the control of the asset has been
transferred to customers over time. No capitalisation borrowing costs relating to assets that it
no longer controls and recognises.
All other finance costs are recognised in profit or loss in the period in which they are incurred
using the effective interest method.
3.13 Commitments and Contingencies
Commitments and contingent liabilities are disclosed in the financial statements and described
in Note 34. They are disclosed unless the possibility of an outflow of resources embodying
economic benefits is remote. A contingent asset is not recognised in the financial statements
but disclosed when an inflow of economic benefits is probable.
3.14 Segment Reporting
Segmental information represents the level at which financial information is reported to the
Board of Directors, being the chief operating decision makers as defined in IFRS 8. The
Directors determine the operating segments based on reports prepared by their staff for
strategic decision making and resource allocation. For management purposes, the Group is
organised into project units as operation segments set out in Note 5.2.
An operating segment is a component of the Group that engages in business activities from
which it may earn revenues and incur expenses, including revenues and expenses that relate to
transactions with any of the Group’s other components
Segment capital expenditure is the total cost incurred during the year to acquire property, plant
and equipment, and intangible assets other than goodwill.
65
3.15 Right-of-use assets and lease liabilities
A right-of-use asset and a lease liability are recognized at the commencement date of a lease.
The right-of-use asset is initially measured at cost comprising the initial amount of the lease
liability plus payments made before the lease commenced and any direct costs less any
incentives received. The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement of the lease to the earlier of the end of the lease term or the
end of the useful life of the asset. The right-of-use asset is also reduced for impairment losses,
if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments at the
commencement date discounted using the Group’s incremental borrowing rate of between 1%
and 6%, and is subsequently measured at amortised cost using the effective interest method.
The lease liability is re-measured when there is a change in the future lease payments, and a
corresponding adjustment is made to the right-of-use asset.
The Group has elected not to recognise right-of-use assets and lease liabilities for short term
leases of plant and machinery that have a lease term of 12 months or less and leases of low
value including leases of office equipment. The lease payments associated with these leases
are recognised as an expense on a straight-line basis over the lease term.
3.16 Asset held for sale and discontinued operation
(a)
Asset held for sale
An asset (or disposal group) is classified as held for sale if it is highly probable that its
carrying amount will be recovered through a sale transaction rather than through
continuing use and the asset (or disposal group) is available for sale in its present
condition. A disposal group is a group of assets to be disposed of together as a group in
a single transaction, and liabilities directly associated with those assets that will be
transferred in the transaction.
When the Group is committed to a sale plan involving loss of control of a subsidiary,
all the assets and liabilities of that subsidiary are classified as held for sale when the
above criteria for classification as held for sale are met, regardless of whether the group
will retain a non-controlling interest in the subsidiary after the sale.
Immediately before classification as held for sale, the measurement of the assets (and
all individual assets and liabilities in a disposal group) is brought up-to-date in
accordance with the accounting policies before the classification. Then, on initial
classification as held for sale and until disposal, the noncurrent assets (except for certain
assets as explained below), or disposal groups, are recognised at the lower of their
carrying amount and fair value less costs to sell. The principal exceptions to this
measurement policy so far as the financial statements of the Group and the Company
are concerned are deferred tax assets, assets arising from employee benefits, financial
assets (other than investments in subsidiaries, associates and joint ventures) and
investment properties. These assets, even if held for sale, would continue to be
measured in accordance with the policies set out elsewhere in Note 1.
66
Impairment losses on initial classification as held for sale, and on subsequent
remeasurement while held for sale, are recognised in profit or loss. As long as a current
asset is classified as held for sale, or is included in a disposal group that is classified as
held for sale, the asset is not depreciated or amortised.
(b)
Discontinued operation
A discontinued operation is a component of the Group’s business, the operations and
cash flows of which can be clearly distinguished from the rest of the Group and which
represents a separate major line of business or geographical area of operations, or is part
of a single co-ordinated plan to dispose of a separate major line of business or
geographical area of operations, or is a subsidiary acquired exclusively with a view to
resale.
Classification as a discontinued operation occurs upon disposal or when the operation
meets the criteria to be classified as held for sale (see (i) above), if earlier. It also occurs
if the operation is abandoned.
Where an operation is classified as discontinued, a single amount is presented on the
face of the statement of profit or loss, which comprises:
-
-
the post-tax profit or loss of the discontinued operation; and
the post-tax gain or loss recognised on the measurement to fair value less costs to
sell, or on the disposal of the assets, or disposal group(s) constituting the
discontinued operation.
4
FINANCIAL INSTRUMENTS
The Group’s principal financial instruments comprise cash and cash equivalents, trade and
other receivables, trade and other payable, amount due to non-controlling interest, medium
term notes, loan and borrowings. The Group’s accounting policies and method adopted,
including the criteria for recognition, the basis on which income and expenses are recognised
in respect of each class of financial assets, financial liability and equity instrument are set out
in Note 3.6.
4.1
Financial Risk Management Objectives and Policies
The Group’s international operations and debt financing arrangements expose it to a variety of
financial risks: credit risk, liquidity risk and price risk (including foreign exchange risk, and
interest rate risk). The Group’s financial risk management policies and their implementation
on a group-wide basis are under the direction of the Board of Aseana Properties Limited.
The Group’s treasury policies are formulated to manage the financial impact of fluctuations in
interest rates and foreign exchange rates to minimise the Group’s financial risks. The Group
has not used derivative financial instruments, principally interest rate swaps and forward
foreign exchange contracts for hedging transactions. The Group does not envisage using these
derivative hedging instruments in the short term as it is the Group’s policy to borrow in the
currency to match the revenue stream to give it a natural hedge against foreign currency
fluctuation. The derivative financial instruments will only be used under the strict direction of
67
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 2021, 100% (2020 (re-presented): 100%) of deposits and cash
balances were placed at banks and financial institutions with credit ratings of no less than A
(Moody’s Rating Agency Malaysia) and nil (2020 (re-presented): Nil) with local banks, in the
case of Vietnam. Management does not expect any counterparty to fail to meet its obligations.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which
uses a lifetime expected loss allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped
based on shared credit risk characteristics and the days past due. The contract assets relate to
unbilled work in progress and have substantially the same risk characteristics as the trade
receivables for the same types of contracts. The Group has therefore concluded that the
expected loss rates for trade receivables are a reasonable approximation of the loss rates for the
contract assets.
In respect of credit exposures to customers, the Group receives progress payments from sales
of commercial and residential properties to individual customers prior to the completion of
transactions. In the event of default by customers, the Group companies undertake legal
proceedings to recover the properties. The Group has limited its credit exposure to customers
due to secured bank loans taken by the purchasers. At 31 December 2021, 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$13.5 million (2020 (re-presented): US$15.0 million). The Group’s exposure to credit risk
arising from deposits and balances with banks is set out in Note 22 and totals US$7.1 million
(2020 (re-presented): US$5.4 million).
Financial guarantees
The Company provides unsecured financial guarantee to banks in respect of banking facilities
granted to certain subsidiaries, as set out in Note 30.
At the end of the reporting period, the maximum exposure to credit risk as represented by the
outstanding banking and credit facilities of the subsidiaries is as follows:
Company
Financial institutions for bank facilities granted
to its subsidiaries
2021
US$’000
2020
(Re-presented)
US$’000
43,998
42,313
68
At the end of the reporting period there was no indication that any subsidiary would default on
repayment.
4.3
Liquidity Risk
The Group raises funds as required on the basis of budgeted expenditure and inflows for the
next twelve months with the objective of ensuring adequate funds to meet commitments
associated with its financial liabilities. When funds are sought, the Group balances the costs
and benefits of equity and debt financing against the developments to be undertaken. At 31
December 2021 the Group’s borrowings to fund the developments had terms of less than ten
years.
Cash flows are monitored on an on-going basis. The Group manages its liquidity needs by
monitoring scheduled debt servicing payments for long term and short term financial liabilities
as well as cash out flows due in its day-to-day operations while ensuring sufficient headroom
on its undrawn committed borrowing facilities at all times so that borrowing limits and
covenants are not breached. Capital investments are committed only after confirming the
source of funds, e.g. securing financial liabilities.
Management is of the opinion that most of the bank borrowings can be renewed or re-financed
based on the strength of the Group’s earnings, cash flow and asset base.
It is not expected that the cash flows included in the maturity analysis could occur significantly
earlier, or at a significantly different amount.
69
The maturity profile of the Group’s financial liabilities at the statement of financial position date, based on the contracted undiscounted
payments, were as follows:
At 31 December 2021
Finance lease liabilities
Interest bearing loans and borrowings
Trade and other payables
Amount due to non-controlling interests
At 31 December 2020 (re-presented)
Finance lease liabilities
Interest bearing loans and borrowings
Trade and other payables
Amount due to non-controlling interests
Carrying
amount
US$’000
Contractual
interest rate
Contractual
cash flows
US$’000
Under
1 year
US$’000
1 - 2 years
US$’000
2 - 5 years
US$’000
More than
5 years
US$’000
14
43,998
13,824
1,952
59,788
2.50%-3.50%
4.5%-12.0%
-
-
-
181
41,943
26,182
1,906
70,212
2.50% - 3.50%
6.50% - 12.0%
-
-
-
14
46,122
13,824
1,952
61,912
184
45,165
26,182
1,906
73,437
14
46,122
13,824
1,952
61,912
183
45,165
26,182
1,906
73,436
-
-
-
-
-
1
-
-
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The above table excludes current tax liabilities and contract liabilities
70
4.4 Market Risk
(a)
Foreign Exchange Risk
Entities within the Group are exposed to foreign exchange risk from future commercial
transactions and net monetary assets and liabilities that are denominated in a currency
that is not the entity’s functional currency. The foreign currency exposure is not
hedged.
The Group maintains a natural hedge, whenever possible, by borrowing in the currency
of the country in which the property or investment is located or by borrowing in
currencies that match the future revenue stream to be generated from its investments.
Management monitors the foreign currency exposure closely and takes necessary
actions in consultation with the bankers to avoid unfavourable exposure.
The Group is exposed to foreign currency risk on cash and cash equivalents which are
denominated in currencies other than the functional currencies of the relevant Group
entities.
The Group’s exposure to foreign currency risk on cash and cash equivalents in
currencies other than the functional currencies of the relevant Group entities at year end
are as follows:
US Dollar
Ringgit Malaysia
Others
2021
US$’000
2,870
4,244
-
7,114
2020
(Re-presented)
US$’000
400
4,988
-
5,388
At 31 December 2021, if cash and cash equivalents denominated in a currency other
than the functional currencies of the Group entities strengthened/ (weakened) by 10%
and all other variables were held constant, the effects on the Group’s profit or loss and
equity expressed in US$ would have been US$424,400/ (US$424,400) (2020 (re-
presented): US$498,800/ (US$498,800)).
Currency risks as defined by IFRS 7 arise on account of monetary assets and liabilities
being denominated in a currency that is not the functional currency. Differences
resulting from the translation of financial statements into the Group’s presentation
currency are not taken into consideration.
Subsequent to year end, there are no significant monetary balances held by group
companies that are denominated in a non-functional currency.
(b)
Interest Rate Risk
The Group’s policy is to minimise interest rate risk on bank loans and borrowings using
a mix of fixed and variable rate debts that represent market rates. The Group prefers to
71
maintain flexibility on the desired mix of fixed and variable interest rates as this will
depend on the economic environment, the type of borrowings available and the funding
requirements of the project when a decision is to be made.
The interest rate profile of the Group’s significant interest-bearing financial instrument,
based on carrying amounts at the end of the reporting period was:
Fixed rate instruments:
Financial assets
Financial liabilities
Floating rate instruments:
Financial liabilities
2020
2021
US$’000
(Re-presented)
US$’000
2,470
44,012
2,517
42,124
-
-
The Group’s exposure to the risk of changes in market interest rates relates primarily
to the Group’s liabilities with a floating interest rate. The fixed and floating interest
rates were not hedged and would therefore expose the Group to cash flow interest rate
risk. Borrowings at fixed rate represent 100% (2020 (re-presented): 100%) of the
Group’s total borrowings at 31 December 2021.
Interest rate risk is reported internally to key management personnel via a sensitivity
analysis, which is prepared based on the exposure to variable interest rates for non-
derivative instruments at the statement of financial position date. For variable rate
borrowings, the analysis is prepared assuming that the amount of liabilities outstanding
at the statement of financial position date will be outstanding for the whole year. A 100
basis point increase or decrease is used and represents the management’s assessment of
the reasonable possible change in interest rate.
Sensitivity analysis for floating rate instrument
At 31 December 2021, if the interest rate had been 100 basis point lower/ higher and
all other variables were held constant, this would (decrease)/increase the Group loss for
the year by approximately (US$ Nil)/US$ Nil (2020 (re-presented): would (decrease)/
increase the Group loss for the year by approximately (US$ Nil)/US$ Nil.
4.5
Fair Values
The carrying amount of trade and other receivables, deposits, cash and cash equivalents, trade
and other payables and accruals of the Group approximate their fair values in the current and
prior years due to relatively short term nature of these financial instruments.
72
The table below analyses financial instruments carried at fair value and those not carried at fair value, along with their carrying amounts
shown in the statement of financial position:
2021
US$’000
Fair value of financial instruments carried at
fair value
Fair value of financial instruments
not carried at fair value
Total
fair Carrying
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
value
amount
Financial liabilities
Amount due to non-controlling
interests
Bank loans and borrowings
Finance lease liabilities
Medium term notes
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,952)
(1,681)
(14)
(42,317)
(1,952)
(1,681)
(14)
(42,317)
(1,952)
(1,681)
(14)
(42,317)
(1,952)
(1,681)
(14)
(42,317)
(45,964)
(45,964)
(45,964)
(45,964)
2020 (Re-presented)
US$’000
Fair value of financial instruments carried at
fair value
Fair value of financial instruments
not carried at fair value
Total
fair Carrying
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
value
amount
Financial liabilities
Amount due to non-controlling
interests
Bank loans and borrowings
Finance lease liabilities
Medium term notes
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,906)
(1,742)
(181)
(40,200)
(1,906)
(1,742)
(181)
(40,200)
(1,906)
(1,742)
(181)
(40,200)
(1,906)
(1,742)
(181)
(40,200)
(44,029)
(44,029)
(44,029)
(44,029)
73
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 (2020: 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 (2020: 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 2021, the interest rate used to discount estimated cash
flows of the medium term notes is 7.00% (2020: 7.90%).
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:
74
Cash and cash equivalents
Loans and borrowings and finance lease liabilities
Medium term notes
Equity attributable to equity holders of the parent
Total capital
2021
US$’000
7,114
(1,695)
(42,317)
(92,658)
(129,556)
2020
(Re-presented)
US$’000
5,388
(1,923)
(40,200)
(101,337)
(138,072)
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts.
Consistent with others in the industry, the Group monitors capital on the basis of net debt-to-
equity ratio.
Net debt-to-equity ratio is calculated as a total of interest-bearing borrowings less held-for-trading
financial instrument and cash and cash equivalents to the total equity.
The net debt-to-equity ratios at 31 December 2021 and 31 December 2020 were as follows:
Total borrowings and finance lease liabilities
Less: Cash and cash equivalents (Note 22)
Net debt
Total equity
Net debt-to-equity ratio
5
REVENUE AND SEGMENTAL INFORMATION
2021
US$’000
44,012
(7,114)
36,898
90,980
0.41
2020
(Re-presented)
US$’000
42,123
(5,388)
36,735
94,460
0.39
The Group’s operating revenue for the year was mainly attributable to the sale of completed units in
Malaysia.
Income earned from hotel, mall and hospital operations are included in other income in line with
management’s intention to dispose of the properties.
5.1
Revenue recognised during the year as follows:
Sale of completed units
2021
US$’000
595
595
2020
(Re-presented)
US$’000
1,329
1,329
75
5.2
Segmental Information
Timing of revenue recognition
Properties transferred at a point in time
Properties transferred over time
2021
US$’000
595
595
2020
(Re-presented)
US$’000
1,329
-
1,329
Segmental information represents the level at which financial information is reported to the Board
of Directors, being the chief operating decision makers as defined in IFRS 8. The Directors
determine the operating segments based on reports reviewed and used by their staff for strategic
decision making and resource allocation. For management purposes, the Group is organised into
project units.
The Group’s reportable operating segments are as follows:
(i)
Investment Holding Companies – investing activities;
(ii)
Ireka Land Sdn. Bhd. – developed Tiffani (“Tiffani”) by i-ZEN;
(iii)
ICSD Ventures Sdn. Bhd. – owns and operates Harbour Mall Sandakan (“HMS”) and the
Sandakan hotel asset (formerly Four Points by Sheraton Sandakan Hotel) (“SHA”);
(iv) Amatir Resources Sdn. Bhd. – developed SENI Mont’ Kiara (“SENI”);
(v)
Urban DNA Sdn. Bhd.– developed The RuMa Hotel and Residences (“The RuMa”); and
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 2021
and 2020.
Information regarding the operations of each reportable segment is in Note 5.3. The Directors
monitor the operating results of each segment for the purpose of performance assessments and
making decisions on resource allocation. Performance is based on segment gross profit/(loss)
and profit/(loss) before taxation, which the Executive Management believes are the most relevant
in evaluating the results relative to other entities in the industry. Segment assets and liabilities
are presented inclusive of inter-segment balances and inter-segment pricing is determined on an
arm’s length basis.
The Group’s revenue generating development projects are in Malaysia.
76
5.3 Analysis of the Group’s reportable operating segments is as follows:-
Operating Segments – year ended 31 December 2021
Continuing operations
Investment
Holding
Companies
US$’000
Ireka
Land Sdn.
Bhd.
US$’000
ICSD
Ventures
Sdn. Bhd.
US$’000
Amatir
Resources
Sdn. Bhd.
US$’000
The RuMa
Hotel KL
Sdn. Bhd.
US$’000
Urban
DNA
Sdn. Bhd.
S$’000
Total
continuing
operations
US$’000
Discontinued
Operations
US$’000
Total
US$’000
Segment (loss)/profit before taxation
(3,113)
(2)
(580)
360
(1,637)
(2,030)
(7,003)
(3,087)
(10,089)
Included in the measure of segment
(loss)/profit are:
Revenue
Other income from hotel operations
Other income from mall operations
Other income from hospital operations
Expenses from hotel operations
Expenses from mall operations
Expenses from hospital operations
Depreciation of property, plant and equipment
Finance costs
Finance income
Segment assets
Segment liabilities
-
-
-
-
-
-
-
-
(172)
-
6,837
3,659
-
-
-
-
-
-
-
-
-
-
78
3
-
-
2,007
-
(255)
(1,072)
-
(43)
(1,290)
45
-
-
-
-
-
-
-
-
(203)
600
-
2,679
-
-
(4,042)
-
-
(164)
(2)
-
595
-
-
-
-
-
-
-
(1,909)
20
595
2,679
2,007
-
(4,297)
(1,072)
-
(207)
(3,576)
665
-
-
-
12.768
-
-
(11,144)
-
(5,358)
335
595
2,679
2,007
12,768
(4,297)
(1,072)
(11,144))
(207)
(8,934)
1,000
58,322
3,212
703
95,243
164,395
100,812
265,207
1,589
2,785
1,824
44,246
54,106
86,347
140,453
77
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items
Profit or loss
Total loss for reportable segments
Other non-reportable segments
Finance income
Finance costs
Consolidated loss before taxation
US$’000
(7,003)
2,157
(45)
45
4,846
US$’000
Total reportable segment
Other non-reportable segments
Consolidated total
Revenue
595
-
595
Depreciation
(207)
109
(98)
Finance costs
(3,576)
(45)
(3,621)
Finance
income
665
45
710
Segment
assets
164,395
24,712
189,107
Segment
liabilities
54,106
44,021
98,127
Additions to
non-current
assets
42
-
42
78
Operating Segments – year ended 31 December 2020 (re-presented)
Continuing operations
Investment
Holding
Companies
US$’000
Ireka
Land Sdn.
Bhd.
US$’000
ICSD
Ventures
Sdn. Bhd.
US$’000
Amatir
Resources
Sdn. Bhd.
US$’000
The RuMa
Hotel KL
Sdn. Bhd.
US$’000
Urban
DNA
Sdn. Bhd.
US$’000
Total
continuing
operations
US$’000
Discontinued
operations
US$’000
Total
US$’000
Segment (loss)/profit before taxation
(1,483)
14
(1,314)
171
(2,774)
(1,976)
(7,361)
(4,208)
(11,570)
Included in the measure of segment
(loss)/profit are:
Revenue
Other income from hotel operations
Other income from mall operations
Other income from hospital operations
Expenses from hotel operations
Expenses from mall operations
Expenses from hospital operations
Depreciation of property, plant and equipment
Finance costs
Finance income
Segment assets
Segment liabilities
-
-
-
-
-
-
-
-
-
310
-
-
-
-
-
-
-
-
-
-
-
655
1,754
-
(1,814)
(1,380)
-
-
(1,517)
68
-
-
-
-
-
-
-
-
(326)
456
-
2,323
-
-
(4,638)
-
-
(48)
-
-
1,329
-
-
-
-
-
-
-
(1,635)
22
1,329
2,978
1,754
-
(6,452)
(1,380)
-
(48)
(3,478)
856
-
-
-
11,800
-
-
(11,094)
(47)
(6,425)
1,218
1,329
2,978
1,754
11,800
(6,452)
(1,380)
(11,094)
(95)
(9,903)
2,074
4,427
203
60,999
3,094
1,255
104,524
174,502
86,206
260,708
581
3
1,911
1,138
2,277
51,087
56,997
75,862
132,859
79
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items
Profit or loss
Total loss for reportable segments
Other non-reportable segments
Finance income
Finance costs
Consolidated loss before taxation
US$’000
(7,361)
(1,760)
1,249
(1,249)
(9,121)
US$’000
Total reportable segment
Other non-reportable segments
Consolidated total
Revenue
1,329
-
1,329
Depreciation
(461)
366
(95)
Finance
costs
(3,478)
(1,249)
(4,727)
Finance
income
856
1,249
2,105
Segment assets
174,502
20,494
194,996
Segment
liabilities
56,997
43,539
100,536
Additions to
non-current
assets
39
-
39
80
Geographical Information – year ended 31 December 2021
Continuing
operations
Malaysia
US$’000
595
5,662
Total
continuing
operations
US$’000
595
5,662
Discontinued
operation
US$’000
-
3,919
Total
US$’000
595
9,581
Revenue
Non-current assets
In the financial year ended 31 December 2021, no single customer exceeded 10% of the
Group’s total revenue.
Geographical Information – year ended 31 December 2020 (re-presented)
Continuing
operations
Malaysia
US$’000
1,329
5,970
Total
continuing
operations
US$’000
1,329
5,970
Discontinued
operation
US$’000
-
3,963
Total
US$’000
1,329
9,933
Revenue
Non-current assets
In the financial year ended 31 December 2020, no single customer exceeded 10% of the
Group’s total revenue.
6
COST OF SALES
Direct costs attributable to:
Completed units (Note 20)
7
OTHER INCOME
Rental income
Other income from hotel operations (a)
Other income from mall operations (b)
Sundry income
2021
US$’000
2020
(Re-presented)
US$’000
318
950
2021
US$’000
78
2,679
2,007
913
5,677
2020
(Re-presented)
US$’000
27
2,978
1,753
1,122
5,880
(a) Other income from hotel operations
The income in 2020 relates to the hotel operations of the SHA which is owned by a
subsidiary of the Company, ICSD Ventures Sdn. Bhd. The income earned from hotel
81
operations is included in other income in line with management’s intention to dispose
of the hotel.
(b) Other income from mall operations
The income relates to the operation of 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.
8
FOREIGN EXCHANGE GAIN/(LOSS)
Foreign exchange gain/(loss) comprises:
Realised foreign exchange loss
Unrealised foreign exchange gain/(loss)
9
STAFF COSTS
Wages, salaries and others (including key management
personnel)
Employees’ provident fund, social security and other
pension costs
2021
US$’000
2020
(Re-presented)
US$’000
(1)
346
345
(31)
(1,109)
(1,140)
2021
US$’000
2020
(Re-presented)
US$’000
2,817
40
2,857
3,979
104
4,083
The Company has no executive Directors or employees under its employment. As of the year
ended 31 December 2021, the subsidiaries of the Group have a total of 573 (2020: 620)
employees.
10
FINANCE INCOME/(COSTS)
Interest income from banks
Accrued interest
Interest on bank loans
Lease interest
Interest on medium term notes
2021
US$’000
588
122
(841)
(2)
(2,778)
(2,911)
2020
(Re-presented)
US$’000
1,795
310
(1,836)
(5)
(2,886)
(2,622)
Accrued interest represents interest on a contract payment by a subsidiary of Ireka Corporation
Berhad. For more detailed information see Note 32.
82
11
NET LOSS BEFORE TAXATION
Net loss 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
Unrealised foreign exchange (gain)/loss
Realised foreign exchange loss
Disposal of subsidiaries
12
TAXATION
Current tax expense – Current year
– Prior year
Deferred tax charge – Current year
– Prior year
Total tax expense/(income) for the year
2021
US$’000
171
291
54
4,298
1,405
(346)
1
-
2020
(Re-presented)
US$’000
161
233
48
6,452
1,380
1,109
31
784
2021
US$’000
70
119
2020
(Re-presented)
US$’000
20
119
-
(48)
141
48
-
187
83
The numerical reconciliation between the income tax (income)/expense and the product of
accounting results multiplied by the applicable tax rate is computed as follows:
Net loss before taxation
Income tax at a rate of 24% (2020: 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
Under provision in respect of prior period/year
Total tax expense/(income) for the year
202(cid:1)
US$’000
2020
(Re-presented)
US$’000
4,846
(1,163)
(9,121)
(2,189)
1,666
787
-
(1,220)
71
141
3,781
3,076
162
(3,752)
119
187
The applicable corporate tax rate in Malaysia is 24% (2020: 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% (2020: 17%
and 20%) respectively.
A Goods and Services Tax was introduced in Jersey in May 2008. The Company has been
registered as an International Services Entity so it does not have to charge or pay local GST.
The cost for this registration is £200 per annum.
13
OTHER COMPREHENSIVE (LOSS)/INCOME
Items that are or may be reclassified subsequently to
profit or loss, net of tax
Foreign currency translation differences for foreign
operations
Gain/(losses) arising during the year
2021
US$’000
2020
(Re-presented)
US$’000
(3,584)
(3,584)
2,078
2,078
84
14
LOSS PER SHARE
Basic and diluted loss per ordinary share
The calculation of basic and diluted loss per ordinary share for the year ended 31 December
2021 was based on the loss attributable to equity holders of the parent and ordinary shares
outstanding and held by shareholders of the Company, calculated as below:
Loss attributable to equity holders of the parent
- continuing operations
- discontinued operations
2021
US$’000
2020
(Re-presented)
US$’000
(3,850)
(1,632)
(5,482)
(7,830)
(2,430)
(10,260)
Number of shares (thousand shares) *
198,691
198,691
Loss per share
Basic and diluted (US cents)
- continuing operations
- discontinued operations
(1.94)
(0.82)
(2.76)
(3.94)
(1.22)
(5.16)
* The Company currently holds 13,334,000 Treasury Shares which are deducted from the total
number of shares for the purpose of calculating loss per share. For details of the Treasury
Shares, please refer to the description at Note 24.
The diluted loss per share was not applicable as there were no dilutive potential ordinary shares
outstanding at the end of the reporting period.
85
15
NON-CONTROLLING INTERESTS
Non-controlling interests in subsidiaries
The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:
2021
NCI percentage of ownership
interest and voting interest
Carrying amount of NCI
Loss allocated to NCI
Urban DNA
Sdn. Bhd.
US$’000
The RuMa
Hotel KL
Sdn. Bhd.
US$’000
Other
individually
immaterial
subsidiaries
US$’000
Total
US$’000
30%
1,277
(645)
30%
(3,870)
(491)
915
(1,456)
(1,678)
(2,592)
Summarised financial information before intra-group elimination
As at 31 December 2021
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Year ended 31 December 2021
Revenue
Loss for the year
Total comprehensive loss
Cash flows used in operating activities
Cash flows from/(used in) investing activities
Cash flows (used in)/from financing activities
Net increase in cash
and cash equivalents
Urban DNA
Sdn. Bhd.
US$’000
The RuMa
Hotel KL
Sdn. Bhd.
US$’000
522
94,212
(84,570)
(5,907)
4,257
595
(2,149)
(2,149)
(532)
1,702
(1,107)
68
635
(11,779)
(1,824)
12,900
-
(1,637)
(1,637)
(1,780)
(37)
1,828
63
11
86
2020 (re-presented)
NCI percentage of ownership
interest and voting interest
Carrying amount of NCI
Loss allocated to NCI
Urban DNA
Sdn. Bhd.
US$’000
The RuMa
Hotel KL
Sdn. Bhd.
US$’000
Other
individually
immaterial
subsidiaries
US$’000
Total
US$’000
30%
1,988
(643)
30%
(3,506)
(832)
(5,359)
(1,781)
(6,877)
(3,256)
Summarised financial information before intra-group elimination
As at 31 December 2020
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Year ended 31 December 2020
Revenue
Loss for the year
Total comprehensive loss
Cash flows used in operating activities
Cash flows from/(used in) investing activities
Cash flows (used in)/from financing activities
Net increase in cash and
cash equivalents
Urban DNA
Sdn. Bhd.
US$’000
The RuMa
Hotel KL
Sdn. Bhd.
US$’000
5,161
100,317
(39,789)
(59,063)
6,626
1,329
(2,143)
(2,143)
(525)
1,679
(1,092)
236
719
-
(12,580)
(11,625)
-
(2,716)
(2,716)
(1,756)
(37)
1,803
62
10
87
16
PROPERTY, PLANT AND EQUIPMENT
Cost
At 1 January 2021
Exchange adjustments
Addition
At 31 December 2021
Accumulated Depreciation
At 1 January 2021
Exchange adjustments
Charge for the year
At 31 December 2021
Net carrying amount at
31 December 2021
Cost
At 1 January 2020 (re-presented)
Exchange adjustments
Addition
At 31 December 2020 (re-presented)
Accumulated Depreciation
At 1 January 2020 (re-presented)
Exchange adjustments
Charge for the year
At 31 December 2020 (re-presented)
Net carrying amount at
31 December 2020 (re-presented)
Furniture,
Fittings &
Equipment
US$’000
Motor
Vehicles
US$’000
Total
US$’000
239
(9)
42
272
120
(4)
54
170
102
196
4
39
239
69
3
48
120
119
30
(1)
-
29
28
(1)
-
27
2
30
-
-
30
27
1
-
28
2
269
(10)
42
301
148
(5)
54
197
104
226
4
39
269
96
4
48
148
121
88
17
INTANGIBLE ASSETS
Cost
At 1 January 2020 (re-presented)/ 31 December 2020 (re-presented)/
31 December 2021
Accumulated impairment
At 1 January 2020 (re-presented)
Disposals
At 31 December 2020 (re-presented)/
1 January 2021
Disposals
At 31 December 2021
Carrying amount
At 31 December 2020 (re-presented)
At 31 December 2021
Goodwill
US$’000
6,479
5,901
-
5,901
-
5,901
578
578
For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions
which represent the lowest level within the Group at which the goodwill is monitored for
internal management purposes.
The aggregate carrying amounts of intangible assets allocated to each unit are as follows:
Goodwill
SENI Mont’ Kiara
Sandakan Harbour Square
2021
US$’000
2020
(Re-presented)
US$’000
28
550
578
28
550
578
The recoverable amount of goodwill has been tested by reference to underlying profitability of
the ongoing operations of the developments using discounted cash flow projections (refer to
Note 20).
89
18
RIGHT OF USE
Cost
At 1 January 2020 (re-presented)
Exchange adjustments
At 31 December 2020 (re-presented)/ 1 January 2021
Exchange adjustments
Disposal
At 31 December 2021
Depreciation charges
At 1 January 2020 (re-presented)
Charge for the year
At 31 December 2020 (re-presented)/ 1 January 2021
Charge for the year
Disposal
At 31 December 2021
NET BOOK VALUE
At 31 December 2020 (re-presented)
At 31 December 2021
US$’000
4,436
-
4,436
-
(12)
4,424
3,892
384
4,276
157
(10)
4,423
160
1
Lease liabilities include in the consolidated statement of financial position
Current
Non-Current
Total
Amount recognized in the consolidated income statement
Depreciation charges on right-of-use
Interest on lease liabilities
Total
2021
US$’000
14
-
14
2020
(Re-presented)
US$’000
180
1
181
2021
US$’000
157
2
159
2020
(Re-presented)
US$’000
384
47
431
A decrease in depreciation charges of right-of-use assets and interest charges of lease liabilities
by US$227,000 and US$45,000 respectively, for the financial year ended 31 December 2021.
90
19
DEFERRED TAX ASSETS
At 1 January
Exchange adjustments
Deferred tax credit relating to origination of
temporary differences during the year
At 31 December
The deferred tax assets comprise:
Taxable temporary differences between accounting
profit and taxable profit of property development
units sold
At 31 December
2021
US$’000
5,111
(180)
48
4,979
2020
(Re-presented)
US$’000
5,066
93
(48)
5,111
2021
US$’000
2020
(Re-presented)
US$’000
4,978
4,979
5,111
5,111
Deferred tax assets have not been recognised in respect of unused tax losses of US$42 million
(31 December 2020 (re-presented): US$7 million) which are available for offset against future
taxable profits. The unrecognised deferred tax asset at effective tax rates of the Group would
be approximately US$10 million (31 December 2020 (re-presented): US$2 million).
20
INVENTORIES
Land held for property development
Stock of completed units, at cost
Consumables
At 31 December
Carrying amount of inventories pledged as
security for Loans and borrowings and
Medium Term Notes
Notes
(a)
(b)
Notes
2021
US$’000
6,628
140,300
120
147,048
2021
US$’000
2020
(Re-presented)
US$’000
6,871
150,120
142
157,133
2020
(Re-presented)
US$’000
124,660
133,926
91
(a)
Land held for property development
At 1 January
Add :
Exchange adjustments
Additions
Disposals
At 31 December
Less:
Costs recognised as expenses in the
consolidated statement of comprehensive
income during the year
At 31 December
(b)
Stock of completed units, at cost
At 1 January
Transfer (to)/from work in progress
Less :
Exchange adjustments
Disposals
Costs recognised as expenses in the
consolidated statement of comprehensive
income during the year
At 31 December
2021
US$’000
6,871
2020
(Re-presented)
US$’000
10,749
(243)
-
-
6,628
(45)
-
(3,736)
6,968
-
6,628
(97)
6,871
2021
US$’000
150,120
-
(5,292)
-
2020
(Re-presented)
US$’000
148,389
-
2,741
(663)
(4,528)
140,300
(347)
150,120
The net realisable value of completed units have been tested by reference to underlying
profitability of the ongoing operations of the developments using discounted cash flow
projections and/or comparison method with the similar properties within the local
market which provides an approximation of the estimated selling price that is expected
to be achieved in the ordinary course of business.
Included in the stock of completed units are SENI units as well as the following
completed units:
Sandakan hotel asset (“SHA”)
The recoverable amount of SHA was determined based on a valuation by an external,
independent valuer with appropriate recognised professional qualification. The
recoverable amount of US$27,131,000 (RM113,000,000) (2020 (re-presented):
US$28,126,000 (RM113,000,000)) for SHA was determined to approximate with its
carrying amount.
92
The valuation of SHA was determined by discounting the future cash flows expected
to be generated from the continuing operations of comparable hotels and was based on
the following key assumptions:
(1)
(2)
(3)
(4)
Cash flows were projected based on past experience, past actual operating
results of the asset and a 10 years operating results projection;
The occupancy rate of SHA will improve to 78% in 10 years which is when the
hotel’s operations are expected to stabilize;
Average daily rates of the hotel will improve to US$100.84 (RM420) in 10 years
which is when the hotel’s operations are expected to stabilise;
Projected gross margin reflects the average historical gross margin, adjusted for
projected market and economic conditions and internal resources efficiency;
and
(5)
Pre-tax discount rate of 8% 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$2,161,000) /
US$2,401,000;
an increase/(decrease) of 1% in occupancy rate throughout the entire projection
term used would have increased/(decreased)the recoverable amount by
approximately US$480,000 / (US$480,000); 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$1,441,000 / (US$1,441,000).
Harbour Mall Sandakan (“HMS”)
The recoverable amount of HMS was determined based on a valuation by an external,
independent valuer with appropriate recognised professional qualification. The
recoverable amount of US$30,012,000 (RM125,000,000) (2020 (re-presented):
US$31,113,000 (RM125,000,000)) for HMS was determined to approximate with its
carrying amount.
The valuation of HMS was determined by the capitalisation of net income expected to
be generated from the continuing operations of HMS (“income approach by discounted
cash flow method”) when the mall operates at an optimum occupancy rate and was
based on the following key assumptions:
93
(1)
Cash flows were projected based on past experience, past actual operating
results of the asset and a 10 years operating results projection;
(2)
Occupancy rate will improve to an optimum rate of 95%;
(3)
Capitalisation rate assumed at 6%; and
(4)
(5)
Capitalisation period of 82 years covering the period of HMS achieving
optimum operations to expiration of the title term.
Pre-tax discount rate of 8% 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 0.25% in capitalization rate used would have
(decreased) /increased the recoverable amount by approximately (US$960,000)
/ US$720,000;
an increase/(decrease) of 1% in optimum occupancy rate throughout the entire
projection term would have increased/(decreased) the recoverable amount by
approximately US$480,000 / (US$720,000); and
an increase/(decrease) of 5% in average rental rate used would have increased
/(decreased) the recoverable amount by approximately US$2,641,000 /
(US$2,641,000).
The RuMa Hotel and Residences (“The RuMa”)
The recoverable amount of The RuMa was determined based on a valuation by an
external, independent valuer with appropriate recognised professional qualification.
The recoverable amount US$101,322,000 (RM422,000,000) (2020 (re-presented):
US$103,095,000 (RM422,000,000)) of The RuMa was determined to be higher than its
carrying amount.
The valuation of The RuMa Hotel was determined by discounting the future cash flows
expected to be generated from the continuing operations of The RuMa and was based
on the following key assumptions:
(1)
Cash flows were projected based on the 10 years projection of The RuMa Hotel;
(2)
(3)
The occupancy rate of The RuMa Hotel will improve to 78% in year 10 which
is when the hotel’s operations are expected to stabilise;
Average daily rates of the hotel will improve to US$248.02 (RM1,033) in year
10 which is when the hotel’s operations are expected to stabilise;
94
(4)
Projected gross margin reflects the industry average historical gross margin,
adjusted for projected market and economic conditions and internal resources
efficiency; and
(5)
Pre-tax discount rate of 9% was applied in discounting the cash flows. The
discount rate takes into the prevailing trend of the hotel industry in Malaysia.
The valuation of The RuMa Residences was determined based on the Comparison
Approach as the sole method of valuation.
21
TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Sundry deposits
2021
US$’000
2,343
10,965
232
13,540
2020
(Re-presented)
US$’000
2,571
12,124
304
14,999
Trade receivables represent progress billings receivable from the sale of completed units and
land held for property development. Progress billings receivable from the sale of completed
units are generally due for settlement within 30 days from the date of invoice and are
recognised and carried at the original invoice amount less allowance for any uncollectible
amounts. They are recognised at their original invoice amounts on initial recognition less
provision for impairment where it is required.
The loss allowance as at 31 December 2021 and 31 December 2020 (on adoption of IFRS 9)
was determined as follows for both trade receivables and contract assets:
31 December 2021
Current
Past due
0 – 60 days
61 –120 days
More than 120 days
31 December 2020 (re-presented)
Current
Past due
0 – 60 days
61 –120 days
More than 120 days
Trade
receivable
US$’000
248
Contract
asset
US$’000
-
Loss
allowance
US$’000
-
-
-
2,095
2,343
-
-
-
-
-
-
-
-
Trade
receivable
US$’000
704
Contract
asset
US$’000
-
Loss
allowance
US$’000
-
-
-
-
-
-
-
-
-
-
-
1,867
2,571
95
Total
US$’000
248
-
-
2,095
2,343
Total
US$’000
704
-
-
1,867
2,571
The Group uses the simplified approach to estimate credit loss allowance for all trade
receivables and contract assets, which will be based on the past payment trends, existing market
conditions and adjusts for qualitative and quantitative reasonable and supportable forward-
looking information. The loss allowances are also based on assumptions about risk of default.
The quantum of any probability of an expected credit loss will occur to be low or not material.
No provision is recognised in these financial statements.
Included in trade receivables is US$2,005,000 representing 86% of the Group’s trade
receivables which are due from a subsidiary of Ireka Corporation Berhad for the acquisition of
SENI units (31 December 2020 (re-presented): US$1,953,000, representing 76% of the
Group’s trade receivables, for the acquisition of SENI units and expenses paid on behalf).
Other than the abovementioned customers, the Group has a large number of customers whose
property purchases are mainly secured by personal bank financing.
Included in other receivables US$ Nil (31 December 2020 (re-presented): US$135,000) due
from Ireka Corporation Berhad for rental expenses paid on its behalf. Furthermore, there was
an amount due from Ireka Corporation Berhad in relation to the interest owed on the unpaid
shareholder advances to the construction of The RuMa Hotel and Residences, as described in
The maximum exposure to credit risk is represented by the carrying amount in the statement
of financial position. The Group monitors the repayment of the customers regularly and are
confident of the ability of the customers to repay the balance outstanding.
22
CASH AND CASH EQUIVALENTS
Cash and bank balances
Short term bank deposits
Less: Deposits pledged
Cash and cash equivalents
2021
US$’000
4,644
2,470
7,114
2020
(Re-presented)
US$’000
2,871
2,517
5,388
(2,470)
4,644
(2,240)
3,148
Included in short term bank deposits and cash and bank balance is US$2,470,000 (31 December
2020 (re-presented): US$2,240,000) pledged for loans and borrowings and Medium Term
Notes of the Group.
The interest rate on cash and cash equivalents, excluding deposit pledged with licensed bank
of US$2,470,000 (31 December 2020 (re-presented): US$2,240,000), pledged for loans and
borrowings and Medium Term Notes of the Group, ranges from 1.60% to 1.85% per annum
(31 December 2020: 1.25% to 3.25% per annum).
The interest rate on short term bank deposits and cash and bank balance pledged for loans and
borrowings and Medium Term Notes of the Group, ranges from 1.60% to 1.85% per annum
(31 December 2020 (re-presented): 1.20% to 3.25% per annum).
96
23
SHARE CAPITAL
Authorised Share Capital
Ordinary shares of US$0.05 each
Management shares of US$0.05 each
Issued Share Capital
Ordinary shares of US$0.05 each
Management shares of US$0.05 each
Number
of shares
2021
’000
Amount
2021
US$’000
Number
of shares
2020
’000
2,000,000
- *
2,000,000
100,000
- *
100,000
2,000,000
- *
2,000,000
Amount
2020
US$’000
100,000
- *
100,000
212,025
- #
212,025
10,601
- #
10,601
212,025
- #
212,025
10,601
- #
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
US$100,000,000.50 by the creation of 10 management shares of US$0.05 each for cash.
its authorised share capital
from US$100,000,000
increased
to
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
97
(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.
24
SHARE PREMIUM
Share premium represents the excess of proceeds raised on the issuance of shares over the
nominal value of those shares. The costs incurred in issuing shares were deducted from the
share premium.
In 2017, the Shareholders of the Company at an Extraordinary General Meeting approved a
proposal to return US$10,000,500 or US$0.75 per share for 13,334,000 shares representing
6.29 per cent of the Company’s share capital to Shareholders. The capital distribution was
completed on 10 January 2017 and the repurchased shares of 13,334,000 are currently held as
Treasury Shares. The issued and paid up share capital of the Company remains unchanged at
212,025,002.
25
CAPITAL REDEMPTION RESERVE
The capital redemption reserve was incurred after the Company cancelled its 37,475,000 and
500,000 ordinary shares of US$0.05 per share in 2009 and 2013 respectively.
26
TRANSLATION RESERVE
The translation reserve comprises foreign currency differences arising from the translation of
the financial statements of foreign operations.
98
27
TRADE AND OTHER PAYABLES
Non-current
Amount owed to contract buyers
Current
Trade payables
Other payables
Contract liabilities
Deposits refundable
Accruals
2021
US$’000
2020
(Re-presented)
US$’000
38,339
3,219
7,537
-
705
2,363
13,824
52,163
39,789
39,789
1,089
10,913
-
715
4,000
16,717
56,506
Trade payables represent trade purchases and services rendered by suppliers as part of the
normal business transactions of the Group. The credit terms granted by trade suppliers range
from 30 to 90 days.
Included in the other payable comprise of the accrued costs for the development of the RuMa
project amounted to US$1.0 million (31 December 2020: US$2.8 million).
Contract liabilities represent proceeds received from purchasers of development properties i.e.
SENI and The RuMa Residences which are pending transfer of vacant possession.
Revenue recognised in the period from:
Amounts included in contract liability at
the beginning of the period
Performance obligations satisfied in
previous period
2021
US$’000
2020
(Re-presented)
US$’000
596
-
1,329
-
Amount owed to contract buyer is of funding received, by way of non-refundable deposits, in
advance of completion of the hotel suites which are at 31 December 2021 still controlled by
the Group.
Deposits and accruals are from normal business transactions of the Group.
99
28
AMOUNT DUE TO NON-CONTROLLING INTERESTS
2021
US$’000
2020
(Re-presented)
US$’000
Minority Shareholder of Bumiraya Impian Sdn. Bhd.:
- Global Evergroup Sdn. Bhd.
1,190
1,234
Minority Shareholder of Urban DNA Sdn. Bhd. and
The RuMa Hotel KL Sdn. Bhd.:
- Ireka Corporation Berhad
762
1,952
672
1,906
The current amount due to non-controlling interests amounting to US$1,952,000 (31 December
2020 (re-presented): US$1,951,000) is unsecured, interest free and repayable on demand.
29
LOANS AND BORROWINGS
Non-current
Lease liabilities
Current
Bank loans
Lease liabilities
2021
US$’000
2020
(Re-presented)
US$’000
-
1
1,681
14
1,695
1,695
1,742
180
1,922
1,923
100
LEASE LIABILITIES
Future minimum lease payment
Within one year
Between one and five years
Over five years
2021
US$,000
14
-
-
14
2020
(Re-presented)
US$’000
180
1
-
181
The effective interest rates on the bank loans for the year is 12% (31 December 2020 (re-
presented): ranged from 6.10% to 11.30%) per annum.
Borrowings are denominated in Ringgit Malaysia.
Bank loans are repayable by monthly, quarterly or semi-annual instalments.
Bank loans are secured by land held for property development, work-in-progress, operating
assets of the Group, pledged deposits and some are secured by the corporate guarantee of the
Company.
Reconciliation of movement of loan and borrowings to cash flows arising from financing
activities:
As at 1
January 2021
US$’000
1,742
1,742
Drawdown
of loan
US$’000
-
-
Repayment
of loan
US$’000
-
-
As at 1
January 2020
(Re-presented)
US$’000
2,932
2,932
Drawdown
of loan
US$’000
-
-
Repayment
of loan
US$’000
(1,245)
(1,245)
As at 1
January 2021
US$’000
Repayment
of lease
payment
US$’000
Interest
expense
US$’000
Foreign
exchange
movements
US$’000
(61)
(61)
Foreign
exchange
movements
US$’000
55
55
Foreign
exchange
movements
US$’000
181
181
(163)
(163)
3
3
(7)
(7)
As at 31
December
2021
US$’000
1,681
1,681
As at 31
December
2020
(Re-presented)
US$’000
1,742
1,742
As at 31
December
2021
US$’000
14
14
Bank loans
Total
Bank loans
Total
Lease
liabilities
Total
101
As at 1
January 2020
(Re-presented)
US$’000
Repayment
of lease
payment
US$’000
Interest
expense
US$’000
Foreign
exchange
movements
US$’000
As at 31
December
2020
(Re-presented)
US$’000
611
611
(463)
(463)
23
23
10
10
181
181
Lease
liabilities
Total
30 MEDIUM TERM NOTES
Outstanding medium term notes
Net transaction costs
Less:
Repayment due within twelve months *
Repayment due after twelve months
2021
US$’000
42,317
-
(42,317)
-
2020
(Re-presented)
US$’000
40,570
(370)
(40,200)
-
* Includes net transaction costs in relation to medium term notes due within twelve months of
US$ Nil (31 December 2020: US$0.37 million).
Reconciliation of movement of medium term notes to cash flows arising from financing
activities:
As at 1
January 2021
US$’000
Drawdown
of loan
US$’000
Repayment
of loan
US$’000
Foreign
exchange
movements
US$’000
As at 31
December
2021
US$’000
40,200
3,559
-
(1,443)
42,316
As at 1
January 2020
(Re-presented)
US$’000
Drawdown
of loan
US$’000
Repayment
of loan
US$’000
Foreign
exchange
movements
US$’000
As at 31
December
2020
(Re-presented)
US$’000
36,142
3,378
-
680
40,200
Medium Term
Notes
Medium Term
Notes
The medium term notes (“MTNs”) were issued pursuant to a programme with a tenor of ten
(10) years from the first issue date of the notes. The MTNs were issued by a subsidiary, to
fund two development projects known as Sandakan Harbour Square and Aloft Kuala Lumpur
Sentral (“AKLS”) in Malaysia.
Following the completion of the sale of the AKLS by the Group in 2016. The net adjusted
price value for the sale of AKLS, which included the sale of the entire issued share capital of
ASPL M3B Limited and Iringan Flora Sdn. Bhd. (the “Aloft Companies”) were used to redeem
the MTN Series 2 and Series 3. Following the completion of the disposal of AKLS, US$96.25
102
million (RM394.0 million) of MTN associated with the AKLS (Series 3) and the Four Points
Sheraton Sandakan (Series 2) were repaid on 19 August 2016. The charges in relation to AKLS
was also discharged following the completion of the disposal.
The Group completed the “roll-over” for the remaining MTNs of US$24.43 million which is
due on 10 December 2020 and 2021, it is now repayable on 8 December 2022. The MTNs are
rated AAA.
The weighted average interest rate of the MTN was 4.50% per annum at the statement of
financial position date. The effective interest rates of the MTN and their outstanding amounts
are as follows:
Series 1 Tranche FG
Series 1 Tranche BG
Maturity Dates
8 December 2021
8 December 2021
Interest rate %
per annum
4.50
4.50
As at 31
December 2021
US$’000
13,686
10,324
24,010
The medium term notes are secured by way of:
(i)
bank guarantee from two financial institutions in respect of the BG Tranches;
(ii)
(iii)
financial guarantee insurance policy from Danajamin Nasional Berhad (“Danajamin”)
in respect to the FG Tranches;
a first fixed and floating charge over the present and future assets and properties of
Silver Sparrow Berhad and ICSD Ventures Sdn. Bhd. by way of a debenture;
(iv)
a third party first legal fixed charge over ICSD Ventures Sdn. Bhd.’s assets and land;
(v)
a corporate guarantee by the Company;
(vi)
(vii)
letter of undertaking from the Company to provide financial and other forms of support
to ICSD Ventures Sdn. Bhd. to finance any cost overruns associated with the
development of the Sandakan Harbour Square;
assignment of all its present and future rights, interest and benefits under the ICSD
Ventures Sdn. Bhd.’s Put Option Agreements in favour of Danajamin, Malayan
Banking Berhad and OCBC Bank (Malaysia) Berhad (collectively as “the guarantors”)
where once exercised, the sale and purchase of HMS and SHA shall take place in
accordance with the provision of the Put Option Agreement; and the proceeds from
HMS and SHA will be utilised to repay the MTNs;
(viii) assignment over the disbursement account, revenue account, operating account, sale
proceed account, debt service reserve account and sinking fund account of Silver
Sparrow Berhad, revenue account of ICSD Ventures Sdn. Bhd. and escrow account of
Ireka Land Sdn. Bhd.;
103
(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.
Potensi Angkasa Sdn. Bhd. (“PASB”), a subsidiary incorporated on 25 February 2019, has
secured a commercial paper and/or medium term notes programme of not exceeding US$21.99
million (RM90.0 million) (“CP/MTN Programme”) to fund a project known as The RuMa
Hotel and Residences. PASB may, from time to time, issue commercial paper and/or medium
term notes (“Notes”) whereby the nominal value of outstanding Notes shall not exceed
US$21.99 million (RM90.0 million) at any one time.
The details of the drawdown schedule were as follows:
Initial Issue
First Rolled-over
Second Rolled-over
Tranche
Number
Tranche
1-23
Tranche
24-31
Tranche
32-49
Tranche
50-62
Tranche
123
Date
10 Jun
2019
30 Sep
2019
7 Oct
2019
25 Feb
2020
9 Jun
2021
RM
(’000)
22,850
9,600
17,100
15,350
18,100
Tranche
Number
Tranche
63-83
Tranche
84-91
Tranche
92-109
Tranche
110-122
Date
10 Jun
2020
30 Sep
2020
7 Oct
2020
25 Feb
2021
RM
(’000)
20,950
9,600
17,100
15,350
Tranche
Number
Tranche
124-142
Tranche
143-147
Tranche
148-165
Tranche
166-178
Date
10 Jun
2021
1 Oct
2021
8 Oct
2021
28 Feb
2022
RM
(’000)
19,050
4,750
17,100
15,350
The weighted average interest rate of the loan was 8.89% per annum at the statement of
financial position date. The effective interest rates of the medium term notes and their
outstanding amounts were as follows:
Tranches 110-122
Tranche 123
Tranches 124-142
Tranches 143-147
Tranches 148-165
Maturity Dates
28 February 2022
10 June 2022
13 June 2022
3 October 2022
10 October 2022
Interest rate %
per annum
8.50
10.00
8.50
8.50
8.50
As at 31
December 2021
US$’000
3,685
4,802
4,574
1,140
4,106
18,307
Security for CP/MTN Programme
(a)
A legal charge over the Designated Accounts by the PASB and/or the Security Party
(as defined below) (as the case may be) and assignment of the rights, titles, benefits and
interests of the PASB and/or the Security Party (as the case may be) thereto and the
credit balances therein on a pari passu basis among all Notes, subject to the following:
104
(b)
(i)
In respect of the 75% of the sale proceeds of a Secured Asset (“Net Sale
Proceeds”) arising from the disposal of a Secured Asset, the Noteholders of the
relevant Tranche secured by such Secured Asset shall have the first ranking
security over such Net Sale Proceeds;
(ii)
In respect of the insurance proceeds from the Secured Assets (“Insurance
Proceeds”), the Noteholders of the relevant Tranche secured by such Secured
Asset shall have the first ranking security over such Insurance Proceeds;
(iii)
(iv)
(v)
(vi)
In respect of the sale deposits from the Secured Assets (“Sale Deposits”), the
Noteholders of the relevant Tranche secured by such Secured Asset shall have
the first ranking security over such Sale Deposits;
In respect of the amount at least equivalent to an amount payable in respect of
any coupon payment of that particular Tranche for the next six (6) months to be
maintained by the Issuer (“Issuer’s DSRA Minimum Required Balance”), the
Noteholders of the relevant Tranche shall have the first ranking security over
such Issuer’s DSRA Minimum Required Balance;
In respect of the proceeds from the Collection Account (“CA Proceeds”), the
Noteholders of the relevant Tranche shall have the first ranking security over
such CA Proceeds; and
In respect of any amount deposited by the Guarantor which are earmarked for
the purposes of an early redemption of a particular Tranche of the Notes and/or
principal payment of a particular Tranche of the Notes (“Deposited Amount”),
the Noteholders of the relevant Tranche shall have the first ranking security over
such Deposited Amount;
(c)
(d)
An irrevocable and unconditional guarantee provided by the Urban DNA Sdn Bhd for
all payments due and payable under the CP/MTN Programme (“Guarantee”); and
Any other security deemed appropriate and mutually agreed between the PASB and the
Principal Adviser/Lead Arranger (“PA/LA”), the latter being Kenanga Investment
Bank Berhad.
Security for each medium term note:
Each Tranche shall be secured by assets ("Secured Assets") to be identified prior to the issue
date of the respective Tranche.
Such Secured Assets may be provided by third party(ies), (which, together with the Guarantor,
shall collectively be referred to as “Security Parties” and each a “Security Party”) and/or by
the PASB. Subject always to final identification of the Secured Asset prior to the issue date of
the respective Tranche, the security for any particular Tranche may include but not limited to
the following:
105
(a)
(b)
(c)
(d)
Legal assignment and/or charge by the PASB and/or the Security Party (as the case may
be) of the Secured Assets;
An assignment over all the rights, titles, benefits and interests of the PASB and/or the
Security Party (as the case may be) under all the sale and purchase agreements executed
by end-purchasers and any subsequent sale and purchase agreement to be executed in
the future by end-purchaser (if any), in relation to the Secured Assets;
A letter of undertaking from Aseana Properties Limited to, amongst others, purchase
the Secured Assets (“Letter of Undertaking”); and/or
Any other security deemed appropriate and mutually agreed between the Issuer and the
PA/LA and/or Lead Manager prior to the issuance of the relevant Tranche.
The security for each Tranche is referred to as “Tranche Security”.
31
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 82.49% to 99.00% (2020: 81.66% to 82.49%) arising from
capital reduction of non-controlling interests for US$173,000 (2020: an issue of new shares in
the subsidiary for cash consideration of US$0.76 million). Consequently, the Company’s
effective equity interest in Hoa Lam Shangri-La Healthcare Ltd Liability Co. and City
International Hospital Co. Ltd, subsidiaries of SHIPL, increased to 84.60% (2020: 73.04%).
The Group recognised an decrease in non-controlling interests of US$341,000 (2020: increase
of US$38,000) and an increase in accumulated losses of US$ Nil (2020: US$38,000) resulting
from the increase in equity interest in the above subsidiaries.
32
RELATED PARTY TRANSACTIONS
Transactions between the Group with Ireka Corporation Berhad (“ICB”) and its group of
companies are classified as related party transactions based on ICB’s 23.07% shareholding in
the Company.
In 2009, the Group entered into a Joint Venture Agreement (JVA) with Ireka Corporation
Berhad (ICB) for the construction of The RuMa Hotel and Residences (“RuMa”). Under the
term of that JVA, the joint venture partners are required to make equity contribution in the
proportion to their participating interest for the purpose of the development and construction
of the RuMa. In the opinion of the directors, they have considered the JVA allows for the
equity contribution to be deferred and paid upon the conclusion of construction. At 31
December 2021, the total amount of equity contribution owed by ICB was US$12.2 million.
The recognition of these amount owed by ICB would be offset by the corresponding entry of
the amount owed to ICB, which therefore has no net impact to the consolidated financial
statements.
The equity contributions are non-trade in nature and are unsecured and interest bearing.
Furthermore, the Group was entitled to interest receivable from ICB. The interest receivable
was calculated based on an annual interest rate of 2% above the Malaysia lending rate and
applied to the deferred equity contributions.
106
Related parties also include key management personnel defined as those persons having
authority and responsibility for planning, directing and controlling the activities of the Group
either directly or indirectly. The key management personnel include all the Directors of the
Group, and certain members of senior management of the Group.
ICB Group of Companies
Accrued interest on shareholders advance payable by
ICB
Accrued interest on a contract payment by an ICB
subsidiary
Key management personnel
Remuneration of key management personnel -
Directors’ fees
Remuneration of key management personnel -
Salaries
2021
US$’000
2020
(Re-presented)
US$’000
122
-
291
287
227
83
233
67
Transactions between the Group with other significant related parties are as follows:
Non-controlling interests
Advances – non-interest bearing (Note 28)
Other related parties
Disposal of subsidiaries
2021
US$’000
2020
(Re-presented)
US$’000
121
-
731
3,936
The above transactions have been entered into in the normal course of business and have been
established under negotiated terms.
The outstanding amounts due from/(to) ICB and its group of companies as at 31 December
2021 and 31 December 2020 are as follows:
Net amount due from an ICB subsidiary
Net amount due from ICB
2021
US$’000
2,005
3,178
2020
(Re-presented)
US$’000
1,953
3,381
107
The outstanding amounts due to the other significant related parties as at 31 December 2021
and 31 December 2020 are as follows:
Non-controlling interests
Advances – non-interest bearing (Note 28)
2021
US$’000
2020
(Re-presented)
US$’000
(1,952)
(1,906)
Transactions between the parent company and its subsidiaries are eliminated in these
consolidated financial statements. A list of subsidiaries is provided in Note 33.
33
INVESTMENT IN SUBSIDIARIES
Name
incorporation Principal activities
Country of
Effective
ownership
interest
2021
2020
Subsidiaries
Ireka Land Sdn. Bhd.
Amatir Resources Sdn. Bhd.
Malaysia
Malaysia
Property development 100%
Property development 100%
Hotel and mall
100%
100%
ICSD Ventures Sdn. Bhd.
Malaysia
Priority Elite Sdn. Bhd.
Malaysia
Potensi Angkasa Sdn. Bhd
Malaysia
Silver Sparrow Berhad
Malaysia
ownership and
operation
Project management
services
Participating in the
transactions
contemplated
under the
Guaranteed MTNs
Programme
Participating in the
transactions
contemplated
under the
Guaranteed MTNs
Programme
100%
100%
100%
100%
100%
100%
100%
100%
Bumiraya Impian Sdn. Bhd.
The RuMa Hotel KL Sdn. Bhd.
Urban DNA Sdn. Bhd.
Aseana-BDC Co Ltd
Malaysia
Malaysia
Malaysia
Vietnam
Property development
Investment holding
Property development
Investment holding
80%
70%
70%
65%
80%
70%
70%
65%
108
34
COMMITMENTS AND CONTINGENCIES
Debt service reserve account
In 2017, Silver Sparrow Berhad obtained consent from the lenders to utilise proceeds of
US$4.89 million in the Sales Proceeds Account and Debt Service Reserve Account (“DSRA”)
to partially redeem the MTNs. Thereafter, amount equivalent to RM10.0 million (US$2.40
million) (the “Minimum Deposit”) is maintained in the DSRA at all times and the amount is
disclosed as deposit pledged (refer to Note 22).
In the event the funds in the DSRA falls below the Minimum Deposit, SSB shall within five
(5) Business Days from the date of receipt of written notice from the facility agent or upon
SSB becoming aware of the shortfall, whichever is earlier, deposit such sums of money into
the DSRA to ensure the Minimum Deposit is maintained.
35
DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR
SALE
On 23 August 2021, the Group entered into the sale agreement to divest its operations and
assets of the International Healthcare Park (“IHP”) and the City International Hospital (“CIH”)
(“the Transaction”) for approximately US$18.3 million net total consideration. Accordingly,
all the assets and liabilities held by the relevant subsidiaries that were eventually disposed were
reclassified to assets held for sale as at 31 December 2021. The divestment was completed in
February 2022.
The management assessed that the criteria for the classification of the disposal group held for
sale were fulfilled as at 31 December 2021 based on the fact and circumstances specific to the
Transaction and in accordance with IFRS 5. The net assets related to IHP and CIH have been
presented as assets of a disposal group classified as assets held for sale in aggregate in the
consolidated statement of financial position as at 31 December 2021 and a single amount in
the consolidated statement of comprehensive income was presented in respect of net losses of
IHP and CIH for the year. The presentation of comparative information in respect of the year
ended 31 December 2020 has been restated to show the discontinued operations separately
from continuing operations following the Group’s accounting policy as set out in Note 3.16.
Assets classified as held for sale as at 31 December 2021:
Property, plant and equipment
Intangible assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
Trade and other payable
Loans and borrowings
Current tax liabilities
109
2021
US$’000
400
3,519
80,315
1,250
-
15,329
(54,314)
(32,016)
(17)
14,466
2020
US$’000
444
3,519
80,261
1,422
1
560
(26,049)
(49,814)
-
10,344
Analysis of the results of discontinued operations in relation to IHP and CIH is as follows:
Revenue
Other income
Administrative expenses
Other operating expenses
Foreign exchange (loss)/gain
Operating profit
Finance income
Finance costs
Net finance costs
Net loss before taxation
Taxation
Loss for the year
2021
US$’000
-
12,820
(258)
(11,190)
564
1,936
335
(5,358)
(5,023)
(3,087)
-
(3,087)
2020
US$’000
-
12,391
(265)
(11,216)
89
999
1,218
(6,425)
(5,207)
(4,208)
-
(4,208)
Analysis of the cash flows of discontinued operations in relation to IHP and CIH is as follows:
Net cash generated from operating activities
Net cash used in investing activities
Net cash used in financing activities
Net cash generated from discontinued operations
2021
US$’000
32,537
-
(17,768)
14,769
2020
US$’000
560
-
-
560
36
EVENT AFTER STATEMENT OF FINANCIAL POSITION DATE
On 28 February 2022, the Group completed its sale of its Vietnam assets comprising the City
International Hospital and the adjacent International Healthcare Park in Ho Chi Minh City,
through disposal of the relevant subsidiaries.
Copies of the Annual Report
Copies of the annual report will be available on the Company's website at and from the Company's
registered office, 12 Castle Street, St. Helier, Jersey, JE2 3RT, Channel Islands.
110