ASEANA PROPERTIES LIMITED ANNUAL REPORT 2023 1 CONTENTS 3 Corporate Information 13 Corporate Social Responsibility 4 Corporate Strategy 5 Chairman’s Statement 15 Board of Directors 17 Directors’ Report 8 Property Portfolio 23 Report of Directors’ Remuneration 9 Performance Summary 25 Corporate Governance Statement 10 Financial Review 33 Independent Auditor’s Report FINANCIAL STATEMENTS 39 Consolidated Statement of Comprehensive Income 40 Consolidated Statement of Financial Position 42 Consolidated Statement of Changes In Equity 43 Consolidated Statement of Cash Flows 45 Notes to the Financial Statements 2 CORPORATE INFORMATION NON-EXECUTIVE CHAIRMAN Nicholas John Paris (Independent) NON-EXECUTIVE DIRECTORS Thomas Holland (Independent) Robert Donald Minty (Independent) Hock Chye Tan (Independent) Helen Wong Siu Ming (Non-independent) ALTERNATE DIRECTOR Mark George Nisbet, an alternate director to Robert Minty COMPANY SECRETARY AND REGISTERED OFFICE ICECAP (Secretaries) Limited Osprey House, Old Street, St. Helier Jersey JE2 3RG 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 ADVISER 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 Domicile Shares Issued Shares Held in Treasury Voting Share Capital Share Denomination Admission Date : London Stock Exchange Main Market : ASPL : Reuters - ASPL.L Bloomberg - ASPL:LN : Jersey : 173,187,498 : 13,334,000 : 159,853,498 : 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. 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. The Company will hold another discontinuation vote at a general meeting in May 2025, meanwhile the Company continues to seek for disposal of its assets in a measured manner. 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 change to an alternative strategy. To the extent that the Company has not disposed of all of its assets by May 2025, Shareholders will be provided with an opportunity to review the future of the Company, which would include the option for shareholders to vote for the continuation of the Company. Despite the plan to realise the Group’s investments in an orderly manner, the Directors, after assessing the current circumstances of the Company including its progress in asset sales and working capital requirements, have decided the financial accounts should be prepared on a non-going concern basis at this time. For details, please refer to Note 2.1 to the financial statements. 4 CHAIRMAN’S STATEMENT Dear Shareholders, INTRODUCTION While Asia is showing a recovery from Covid-19, Malaysian GDP growth was below target. Economic conditions are trending stronger, and tourism numbers are rebounding; however, tourism visits have yet to achieve pre-Covid-19 levels. As a result, prices of high end residential apartments appear to be forming a floor, and there is growing interest by prospective purchasers. However, the increase in demand has been tempered by a robust supply in Kuala Lumpur, higher interest rates since early 2023, and tighter borrowing restrictions imposed by banks on new borrowers. In spite of these challenges, the Divestment team continues to diligently focus on selling the remaining assets. COMMENTARY ON THE YEAR Our focus has again been to minimise operating costs and net cash outflows at each of our properties whilst our Asset Divestment team seeks to dispose of them at reasonable prices. The sale of our Vietnam assets in 2022 significantly reduced our project debts, reducing our debt servicing costs even in the higher rate environment. All of our shareholders are co-operating in the common aim of selling the Group’s assets and returning as much capital as possible to all shareholders. ECONOMIC OVERVIEW In 2023, the Malaysian economy recorded growth of 3.7% (2022: 8.7%) according to the Malaysian government as demand for its exports, which the country’s economy heavily relies on, slowed amid the tough global economic environment and weak commodity prices. But the growth is expected to edge up to 4.3% in 2024 according to the World Bank. PERFORMANCE REVIEW During 2023, the Company recorded a net loss after finance costs and before taxation of US$10.7 million compared to US$17.6 million for the previous financial year. The Net Loss attributable to equity holders was US$8.7 million for FY 2023 (2022: US$15.9 million), and the loss per share was US cents 4.39 (2022: US cents 7.99). Our NAV per Share as at 31 December 2023 fell to US cents 32 (2022: US cents 37). Our net cash outflow for the year was US$3.0 million (2022: US$0.1 million inflow) which reflected foreign exchange gain effect of US$3.2 million (2022: US$2.9 million gain effect), net cash outflow from operating activities of US$5.5 million (2022: US$4.5 million) coupled with a cash outflow from investing and financing activities of US$0.7 million (2022: US$1.7 million inflow). 5 OUR ASSET DIVESTMENT PROGRAMME Progress on asset sales continues, but it has proven difficult in the context of a rapidly rising interest rate environment, lack of liquidity in the market and its impact on the Malaysian economy. The Malaysian economy delivered 3.7% GDP growth in 2023, well below the target growth rate. Malaysia GDP is expected to improve further in 2024, but the growth outlook is subject to downside risks emanating from weaker-than-expected external demand, a further escalation in geopolitical conflicts, and declines in commodity production. In 2023, there was a contraction in fund raising in the Malaysian equity and corporate bond markets along with negative capital flows in 2023 indicating a tighter liquidity environment. On 30 June 2023, ICSD Ventures Sdn Bhd, an indirect subsidiary of the Company entered into a binding conditional agreement to sell the Sandakan Hotel Asset and the Harbour Mall Sandakan (collectively, the “Sandakan Assets”). Although the transaction was supposed to be completed by 30 September 2023 upon certain conditions being met, the transaction did not complete due to certain technicalities and subsequently, on 8 December 2023, Silver Sparrow Berhad (“SSB”), the issuer of the Medium Term Notes (the “SSB MTNs” or “MTNs”) received a Notice of Default from the facility agent for the outstanding principal amount of approximately RM60.9 million (US$13.3 million). The proceeds of the MTNs were used to finance the development of the Sandakan Assets. Although SSB is still in default, it has kept current any and all default interest due. On 6 April 2024, a Supplemental Sale and Purchase Agreement (the “Supplemental”) was signed with the original purchaser mainly to extend the completion date in order to finalize the sale of the Sandakan Assets. The Sandakan Assets have a gross sale consideration of MYR 165 million (approximately US$35 million) against the carrying amount of MYR 200 million (approximately US$43 million); an impairment of MYR 35 million (approximately US$7.7 million) was therefore recognized in the financial year. The proceeds of the sale will be used to repay the outstanding principal. According to the terms of the Supplemental, the purchaser shall bear the interest due in relation to the MTNs from the date of the Notice of Default to the date of repayment. The repayment is expected to be made in approximately 30 days from the date of the signing of the Supplemental and the transaction is estimated to complete in 45 days from such repayment date. We continue to work on the asset divestment program and expect progress in 2024. NON-GOING CONCERN STATUS OF THE COMPANY The Company has been winding up its assets since May 2015. The Sandakan Assets are the subject of an ongoing sale process but the Medium Term Note programme which financed those assets has been in default since the capital was not repaid on the final repayment date of 8 December 2023. In addition, the Company is experiencing a shortfall of working capital for which Directors have raised US$1 million in loans and have sought, but not received, further support from shareholders. As a result, the Directors decided to have the financial statements prepared on a non-going concern basis at this time. They do however expect this status to revert to a going concern again once the asset sales in Sandakan complete as the proceeds from them will enable the Sandakan MTN to be repaid in full along with all other debts owed by the Company. 6 DIS-CONTINUATION VOTE IN MAY 2025 The Company is required to hold another dis-continuation vote by the end of May 2025 so that shareholders can vote on the future of the Company. The Directors therefore intend to call an Extraordinary General Meeting by the end of May 2025. ACKNOWLEDGMENTS Once again, I would like to thank my colleagues on the Company’s Board of Directors, the staff operating at the level of the Group and the staff working at each of the properties that we own for their tireless work on behalf of the Group and its shareholders. In addition, our external advisors and service providers provide invaluable assistance to the Company. Thank you. NICHOLAS JOHN PARIS Chairman 30 April 2024 7 PROPERTY PORTFOLIO AS AT 31 DECEMBER 2023 Project Completed projects Type Effective Ownership Approximate Gross Floor Area (sq m) Approximate Land Area (sq m) The RuMa Hotel and Residences Kuala Lumpur, Malaysia Luxury residential tower and bespoke hotel 70.0% 40,000 4,000 Sandakan Harbour Square Sandakan, Sabah, Malaysia Undeveloped projects Hotel and retail mall 100.0% 126,000 48,000 Kota Kinabalu Seafront resort & residences Land parcel approved for development of: (i) Boutique resort hotel and resort villas (ii) Resort homes 80.0% n/a 172,900 8 PERFORMANCE SUMMARY Total Returns since listing Ordinary share price FTSE All-share index FTSE 350 Real Estate Index One Year Returns Ordinary share price FTSE All-share index FTSE 350 Real Estate Index Capital Values Total assets less current liabilities (US$ 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 Per Share Loss per ordinary share - basic (US cents) - diluted (US cents) Year ended 31 December 2023 Year ended 31 December 2022 -91.50% 27.02% -54.13% -39.29% 3.85% 7.85% 98.13 0.35 0.085 430.26 -86.00% 22.31% -57.47% -30.00% -3.16% -35.67% 104.24 0.41 0.140 398.93 116.18% 108.61% 102.21% 91.50% (4.39) (4.39) (7.99) (7.99) 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% 9 FINANCIAL REVIEW INTRODUCTION The Group recorded a consolidated comprehensive loss of US$11.2 million for the financial year ended 31 December 2023 (year ended 31 December 2022: US$20.4 million), largely due to the impairment to the carrying amount of Sandakan Assets, and the finance cost incurred in relation to The RuMa Hotel & Residences and the Sandakan Assets. STATEMENT OF COMPREHENSIVE INCOME The Group recognised revenue of US$1.2 million (2022: US$1.0 million). Revenue of US$34.9 million has been deferred until control of sold units in the leaseback program is passed to the buyer. The Group recorded a net loss before taxation of US$10.7 million (2022: US$17.6 million). The loss was largely due to the impairment to the carrying amount of Sandakan Assets and the finance cost incurred in relation to The RuMa Hotel & Residences and the Sandakan Assets. Net loss attributable to equity holders of the parent company was US$8.7 million (2022: US$15.9 million). Tax recoverable for the year was US$0.2 million (2022: US$0.3 million tax expense). The consolidated comprehensive loss was US$11.2 million (2022: US$20.3 million), which included a loss of US$0.8 million (2022: US$2.5 million) attributable to foreign currency translation differences from Malaysian operations due to a depreciation of the Malaysian Ringgit against the US Dollar during the year. Basic and diluted loss per share were both US cents 4.39 (2022: US cents 7.99). STATEMENT OF FINANCIAL POSITION Total assets were US$137.4 million (2022: US$157.2 million), representing a decrease of US$19.8 million. This was mainly due to an impairment to the carrying amount of Sandakan Assets for US$7.6 million and the decrease in the carrying amount in inventories due to the depreciation in Malaysian Ringgit. Total liabilities were US$80.9 million (2022: US$89.4 million), representing a decrease of US$8.5 million. This was mainly due to a decrease of US$4.7 million in in trade and other payables. Net Asset Value per share was US$0.32 (31 December 2022: US$0.37). CASH FLOW AND FUNDING Cash used in operations before interest and tax paid was US$0.2 million (2022: US$1.1 million cash generation). The Group generated net cash flow of US$0.2 million from investing activities (2022: US$10.5 million). 10 Some of the borrowings of the Group were repaid during the year. As at 31 December 2023, the Group’s gross borrowings stood at US$30.7 million (31 December 2022: US$32.9 million). Net debt- to-equity ratio was 110.2% (31 December 2022: 91.5%). Finance income was US$1.9 million for financial year ended 31 December 2023 (2022: US$2.0 million) which included accrued income of US$1.7 million (2022: US$1.5 million). Finance costs were US$2.9 million (2022: US$3.3 million), which were mostly incurred by its operating assets. EVENTS AFTER STATEMENT OF FINANCIAL POSITION DATE Settlement with Ireka Corporation Bhd (“ICB”) The Group filed a claim against ICB on 21 October 2022 in the Malaysian Courts in relation to the Joint Venture Agreement with respect to the RuMa Hotel & Residences. On 26 January 2024, a conditional settlement was reached between the Group and ICB, whereby: • • • • ICB will transfer 38,837,504 shares of the Company held by it back to the Company; ICB will also transfer its 30% shareholding in Urban DNA Sdn Bhd and The RuMa Hotel KL Sdn Bhd to the Group; In return, the Company agreed to withdraw its claim against ICB; and the settlement shall constitute the full and final settlement of all claims and debts between the parties. The settlement agreement was conditional upon both parties obtaining their respective approvals. It was duly approved by the shareholders of the Company in an Extraordinary General Meeting held on 27 February 2024. And on 25 March 2024, ICB received the approval for the settlement from the Winding Up Court in Malaysia. The conditions were thus satisfied and the settlement agreement had become binding. Sandakan Assets sale On 30 June 2023, ICSD Ventures Sdn Bhd, an indirect subsidiary of the Company entered into a binding conditional agreement to sell the Sandakan Assets, which comprises the Sandakan Hotel and the Harbour Mall Sandakan. Although completion of the transaction was to take place by 30 September 2023 according to the agreement, it was still not completed on 31 December 2023 due to certain technicalities. On 8 December 2023, Silver Sparrow Berhad (“SSB”), the issuer of Medium Term Notes (the “SSB MTNs” or “MTNs”) received notice of default from the facility agent for the outstanding principal amount of approximately RM60.9 million (US$13.3 million). The proceeds of the SSB MTNs were used to finance the development of the Sandakan Assets. Although SSB is still in default, it has kept current any and all default interest due. On 6 April 2024, a Supplemental Sale and Purchase Agreement (the “Supplemental”) was signed with the original purchaser mainly to extend the completion date in order to finalize the sale of the Sandakan Assets. The proceeds of the sale will be used to repay the outstanding principal. According to the terms of the Supplemental, the purchaser shall bear the interest due in relation to the SSB MTNs from the date of Notice of Default to the date of repayment. The repayment is expected to be made in approximately 30 days from the date of the signing of the Supplemental and the transaction is estimated to complete 11 in 45 days from such repayment date. The repayment is therefore expected to take place in May 2024 with the first payment made from the purchaser. However, should the Group be unable repay the outstanding principal, the guarantors of the SSB MTN will have title over the pledged assets including the Sandakan Assets, as well as the other operating assets, rights, interests and benefits in relation to the Sandakan Assets. The details of the security given by the Group under the SSB MTNs are disclosed in Note 30 to the financial statements. Sale of RuMa Residences Units On 29 April 2024, the Group entered into Sale and Purchase Agreements to sell 10 RuMa Residences units (the “Units”) for a gross consideration of RM15.4 million (approximately US$3.3 million). The Units were pledged for commercial paper and/or medium term notes for a principal amount of RM12.5 million (US$2.7 million), which will be repaid by the proceeds of the sale. The completion of sale is expected to take place 90 days from the signing date of the Sale and Purchase Agreements. A deposit of RM1.5 million (US$0.3 million), representing 10% of the consideration, has been received by the Group. DIVIDEND No dividend was declared or paid in the financial years 2023 and 2022. PRINCIPAL RISKS AND UNCERTAINTIES A review of the principal risks and uncertainties facing the Group is set out in the Directors’ Report of the Annual Report. TREASURY AND FINANCIAL RISK MANAGEMENT The Group undertakes risk assessments and identifies the principal risks that affect its activities. The responsibility for the management of each key risk has been clearly identified and has been managed by the Board of Directors and the Board are closely involved in the day-to-day operation of the Group. A comprehensive discussion on the Group’s financial risk management policies is included in the notes to the financial statements of the Annual Report. NICHOLAS JOHN PARIS Director 30 April 2024 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. In 2023, a number of initiatives covering sustainability and social impact were implemented at the RuMa Hotel, such as switching to biodegradable bathroom amenities sourced locally, upgraded to refillable and larger-sized bottles for bathroom amenities, recycling coffee capsules, replaced plastic drinking bottles with glass bottles, and converted guest room vanity lights to LED. All the green initiatives recently culminated in the Global Sustainable Tourism Council (GSTC) certification awarded to the RuMa Hotel, making it the first hotel in Peninsular Malaysia to achieve this recognition. Globally recognized, the certification evaluates a hotel’s ability to maintain the highest levels of sustainability by examining the policies, practices, and overall impact on the environment, local culture, and communities. This accolade underscores the management’s dedication to advancing sustainability and resilience. More recently, The RuMa Hotel is also focused on sustaining its efforts through initiatives such as composting coffee grounds, implementing wet and dry waste segregation, and transitioning to biodegradable bedroom slippers. In addition, it is upgrading its hotel car park facilities by installing charging stations to cater to hybrid and electric vehicles. Furthermore, it is also introducing a contactless and ticketless interfaces at the car park to enhance convenience and efficiency , as well as reducing carbon footprint by digitizing the internal paperwork. Community Furthermore, The RuMa Hotel is committed to promoting staff engagement and well-being through various activities such as sports activities, departmental decoration competitions, and CSR initiatives. The RuMa Hotel's CSR initiatives aim to foster community engagement and social responsibility. Zoo Visitation involves staff members in habitat cleaning activities, promoting environmental awareness, while the “CSR Raya Shopping” activity aimed at connecting staff members with the community, especially those in need during the Hari Raya season and fostering empathy. Mental Health Screening & Breast Cancer Awareness Talks address mental health issues and promote awareness among all the associates, aligning with social impact objectives. Visiting native villages to creates job opportunities and promotes cultural understanding, preserving and celebrating cultural diversity. Employment Apart from creating a positive workplace culture, encouraging team spirit, and fostering overall wellness among the staff members, recently The RuMa Hotel engaged in CSR events such as "Back to School with Orphans” and “Underprivileged Children's Home" in collaboration with the local esteemed organizations. Additionally, the International Women's Day was also celebrated by highlighting the contributions of female staff members at all levels within the hotel. Aseana Properties understands the importance of community engagement both for the communities themselves but also for giving staff more meaningful experiences by tapping into their professional skills and capabilities. 14 BOARD OF DIRECTORS NICHOLAS JOHN PARIS NON-EXECUTIVE INDEPENDENT CHAIRMAN Nicholas (Nick) John Paris was re-appointed as a Non-Executive Director of Aseana Properties Limited in September 2019 and became Chairman on 29 July 2020 following the retirement of Gerald Ong. He had previously been a Non-Executive Director of Aseana from 22 June 2015 to 20 March 2019. Nick is a fellow of the Institute of Chartered Accountants England & Wales and a Chartered Alternative Investment Analyst. Nick is currently a Managing Director of Dolphin Capital Investors Limited which is quoted on the AIM market of the London Stock Exchange and a Non-Executive Director of Fondul Proprietatea, a fund listed on the Bucharest and London Stock Exchanges. THOMAS HOLLAND NON-EXECUTIVE INDEPENDENT DIRECTOR Thomas (Tom) Holland was appointed as a Non-Executive Independent Director of Aseana Properties Limited in November 2020. Tom has been based in Asia for 27 years with experience working in leadership positions in a number of financial firms. Prior to founding his current platform, Development Finance Asia, a boutique investment firm, Tom was head of Asia for Cube Capital and a senior investment manager for Income Partners Asset Management. Tom has a track record of successfully managing and transacting in private investments in Vietnam, Malaysia, China, Indonesia, Myanmar, Mongolia and Cambodia. ROBERT DONALD MINTY NON-EXECUTIVE INDEPENDENT DIRECTOR Robert (Bob) Minty was appointed as a Non-executive Independent Director of Aseana Properties in August 2023. Bobby is an experienced commercial and finance professional and a qualified chartered accountant. Resides and educated in Jersey, he became a chartered accountant and possesses the Certificate in ESG Investing awarded by the CFA Institute. Bobby was a founding shareholder in ICECAP Limited, a regulated corporate service provider in Jersey. As part of his role within ICECAP, Bobby has extensive experience as a board member on a wide variety of Jersey companies ranging from funds to property holding companies. He also has extensive knowledge of cross-jurisdictional structures in Jersey and Africa through his 10 years of experience within the ICECAP group as investor and financial controller. Before founding ICECAP, he worked in PricewaterhouseCoopers in Jersey with a range of businesses from property holding groups to listed venture capital funds. More recently, Bobby assisted an ultra-high-net-worth private family office to establish a significant and sustainable operating business overseas. 15 HOCK CHYE TAN NON-EXECUTIVE INDEPENDENT DIRECTOR Hock Chye Tan was appointed as a Non-Executive Independent Director of Aseana Properties in March 2023. Hock Chye is a Chartered Global Management Accountant (CGMA) of the Association of International Certified Professional Accountants, a Fellow Member (FCMA) of the Chartered Institute of Management Accountants and a Chartered Accountant (CA(M)) with the Malaysian Institute of Accountants. He obtained an MBA from Oklahoma City University and has attended a Harvard Premier Management Program. He also holds a Diploma in Commerce from the TAR University College. He has worked in Papua New Guinea, Singapore and Malaysia in both private and public companies and held senior management and Board positions. Currently, he is the National Assistant Treasurer of SME Association of Malaysia, Treasurer of the Malaysia Cross Border E-Commerce Association and a member of the Finance and Capital Market Committee of the Chinese Chamber of Commerce and Industry of Kuala Lumpur and Selangor. HELEN WONG SIU MING NON-EXECUTIVE NON-INDEPENDENT DIRECTOR Helen Wong Siu Ming was first appointed as a Non-Executive Independent Director of Aseana Properties in June 2019 and as its Divestment Director in September 2019. In 2021, the Nomination and Remuneration Committee developed an incentive scheme for the Divestment team. As a result, her status has changed to Divestment Director. Helen has over 29 years of financial and operational experience in the United States and Asia. She is Chief Executive Officer and founder of LAPIS Global Limited, a Hong Kong based investment management and advisory firm. She was formerly the CEO of Cushman & Wakefield Capital Asia where she established the Asia Investment Management and Investment Banking platform. In addition, Helen has held numerous executive positions including Chief Operating Officer of Lazard Asia Investment Management HK Limited, Managing Director of IFIL Asia (renamed EXOR S.p.A), where she was responsible for the Asian direct investment activities and Chief Financial Officer of the Singapore listed investment vehicle, Pacific Century Regional Developments Limited. Helen also has extensive experience in infrastructure and transport through her prior roles at the Provisional Airport Authority, Hong Kong and the Port Authority of New York & New Jersey. 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 2023. PRINCIPAL ACTIVITIES The principal activities of the Group were the development of upscale residential and hospitality projects in Malaysia. The Group is now focused on carrying out its divestment program which consists of selling the Group’s remaining Malaysian assets, repaying its debts and distributing the remaining proceeds to its shareholders. BUSINESS REVIEW AND FUTURE DEVELOPMENTS The consolidated statement of comprehensive income for the year is set out on page 39. A review of the development and performance of the business has been set out in the Chairman’s Statement and the Financial Review reports. OBJECTIVES AND STRATEGY When the Company was launched in 2007, the Board considered it desirable that Shareholders should have an opportunity to review the future of the Company at appropriate intervals. The Company will hold another discontinuation vote at a general meeting in May 2025, meanwhile the Company continues to seek for disposal of its assets in a measured manner. To the extent that the Company has not disposed of all of its assets by May 2025, Shareholders will be provided with an opportunity to review the future of the Company, which would include the option for shareholders to vote for the continuation of the Company. PRINCIPAL RISKS AND UNCERTAINTIES The Group’s business was property development in Malaysia and Vietnam. Since exiting Vietnam, its principal risks are therefore related solely to the property market in Malaysia. More detailed explanations of these risks and the way they are managed are contained under the heading of Financial and Capital Risk Management Objectives and Policies in Note 4.1 to the financial statements. 17 Other risks faced by the Group in Malaysia include the following: Economic Strategic Regulatory Law and regulations Tax regimes Management and control Operational Financial Inflation, economic recessions and movements in interest rates could affect property development activities. Incorrect strategy, including timing, 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. Failure of the Company’s internal financial reporting system and disruption to the business, or to that of third party service providers, could lead to an inability to provide accurate reporting and monitoring leading to a loss of confidence from the shareholders. Inadequate controls by the Company or third party service providers could lead to a misappropriation of assets. Inappropriate accounting policies or failure to comply with accounting standards could lead to misreporting or breaches of regulations or a qualified audit report. The Board seeks to mitigate and manage these risks through continual review, policy setting and enforcement of contractual rights and obligations. It also regularly monitors the economic and investment environment in Malaysia, its only remaining market. Details of the Group’s internal controls are described on page 30. 18 LITIGATION Claim Against Ireka Corporation Bhd (“ICB”) A claim was filed in the Malaysian Courts on 21 October 2022 by ASPL M9 Limited (“ASPL M9”), a subsidiary of the Company, against ICB in relation to the Joint Venture Agreement between ASPL M9 Limited, ICB and Urban DNA Sdn Bhd (the latter being an indirect subsidiary of the Company) for the development and construction of the RuMa Hotel & Residences. On 26 January 2024, the Company (including ASPL M9) reached a conditional settlement with ICB whereby ICB will transfer 38,837,504 shares in the Company including its 30% shareholdings in the two joint venture companies that own and operate The Ruma Hotel & Residences in Kuala Lumpur to the Company. In exchange, the Company agreed to withdraw its claim against ICB. The settlement shall constitute the full and final settlement of all claims and debts owed between the parties. The settlement agreement was conditional upon both parties obtaining their respective approvals. The Company held its EGM on 27 February 2024, in which the settlement was duly approved by the shareholders. On 25 March 2024, ICB received its approval for the settlement from the Winding Up Court in Malaysia. The conditions were thus satisfied and the settlement agreement had become binding. Details of the conditional settlement and the results of the EGM were announced by the Company on 29 January and 27 February 2024 respectively. Claim Against Ireka Engineering & Construction Sdn Bhd (“IECSB”) A claim was filed in the Malaysian Courts on 2 August 2022 by Amatir Resources Sdn Bhd (“ARSB”, an indirect wholly owned subsidiary of the Company) against IECSB (a wholly owned subsidiary of ICB). Since filing the claim, an interim liquidator was appointed for IECSB on 27 March 2023 with the view to commence the creditor’s voluntary winding up process. On 19 April 2023, ARSB obtained Judgment in Default against IECSB for the sum of RM7,198,890 (approximately US$1.6 million) and interest thereon at the rate of 8% per annum calculated on a daily basis from 1st January 2020 to the date of full payment. A Statement of Affairs of IECSB was provided by the Liquidators at a Creditor Meeting held on 11 May 2023. As an unsecured creditor, it became clear that recovering the sums obtained by ARSB in the Judgment in Default would not be feasible. This amount had been fully impaired in the year ended 31 December 2022. RESULTS AND DIVIDENDS The results for the year ended 31 December 2023 are set out in the attached financial statements. No dividends were declared nor paid during the financial year under review. SHARE CAPITAL No shares were issued in 2023. Further details on share capital are stated in Note 23 to the financial statements. 19 DIRECTORS The following were Directors of Aseana who held office throughout the financial year and up to the date of this report: • Nicholas John Paris - Chairman • Thomas Holland • Monica Lai Voon Huey (not re-elected at the Company’s AGM on 30 May 2023) • Robert Donald Minty (appointed 25 August 2023) • Hock Chye Tan (appointed 3 March 2023) • Helen Wong Siu Ming • Mark George Nisbet (alternate director to Robert Minty and appointed 27 February 2024) DIRECTORS’ INTERESTS None of the directors in office at the end of the financial year had any interest in shares in the Company during the financial year. MANAGEMENT The routine operations of the Company are supervised by the Chairman and the Board with a small team of finance professionals directly engaged to run our finances and operations. Ms Helen Wong was nominated as the Divestment Director with a specific focus to sell the Company’s remaining assets, in line with the Divestment Policy. EMPLOYEES The Company had no executive Directors during the year, and a team of four finance professionals were engaged to run our finances and operations. The subsidiaries of the Group had a total of 244 employees as at 31 December 2023, of which 22 and 218 were employed by (i) the Sandakan hotel asset and Harbour Mall Sandakan, and (ii) The RuMa Hotel and Residences in Kuala Lumpur respectively. NON-GOING CONCERN The Company will continue until May 2025 at which time another continuation vote will be held by shareholders. In connection with, or at the same time as, the proposal that the Company be wound up voluntarily the Board shall be entitled to make proposals for the reconstruction of the Company. Until then, the Company will continue to seek to dispose of its assets in an orderly manner. As explained in Note 2.1 to the financial statements, it refers to the assessment made by the Directors including the uncertainties regarding the divestment of certain assets will be completed as planned and the loans and borrowing can be discharged in a timely manner, that it may not be appropriate to prepare the financial statements on the going concern basis but instead on a non-going concern basis at this time. CREDITORS PAYMENT POLICY The Group’s operating companies are responsible for agreeing on the terms and conditions under which business transactions with their suppliers are conducted. It is the Group’s policy that payments 20 to suppliers are made in accordance with all relevant terms and conditions. Trade creditors at 31 December 2023 amounted to 320 days (2022: 349 days) of property development cost and interest expenses accrued by the Group. FINANCIAL INSTRUMENTS The Group’s principal financial instruments comprise cash balances, balances with related parties, other payables, receivables and loans and borrowings that arise in the normal course of business. The Group’s Financial and Capital Risk Management Objectives and Policies are set out in Note 4.1 to the financial statements. DIRECTORS’ LIABILITIES Subject to the conditions set out in the Companies (Jersey) Law 1991 (as amended), the Company has arranged appropriate Directors’ and Officers’ liability insurance to indemnify the Directors against liability in respect of proceedings brought by third parties. Such provisions remain in force at the date of this report. STATEMENT OF DIRECTORS’ RESPONSIBILITIES The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Companies (Jersey) Law 1991 requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the financial statements in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities, financial position and of the profit or loss of the Group for that year. In preparing these financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable, relevant and reliable; • ensure that the financial statements comply with IFRSs; and • prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Group and the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and to enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. The Directors are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for the maintenance and integrity of the Company’s website on the internet. However, information is accessible in many different countries where legislation governing the preparation and dissemination of financial statements may differ from that applicable in the United Kingdom and Jersey. 21 The Directors of the Company confirm that to the best of their knowledge that: • • the financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and the sections of this Report, including the Chairman’s Statement, Director’s Review, Financial Review and Principal Risks and Uncertainties, which constitute the management report include a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. DISCLOSURE OF INFORMATION TO AUDITOR So far as each person who was a Director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. Having made enquiries of fellow Directors, each Director has taken all the steps that he is obliged to take as a Director in order to have made himself aware of any relevant audit information and to establish that the auditor is aware of that information. RE-APPOINTMENT OF AUDITOR The auditor, PKF Littlejohn LLP, has expressed their willingness to continue in office. A resolution proposing their re-appointment will be tabled at the forthcoming Annual General Meeting. BOARD COMMITTEES Information on the Audit Committee is included in the Corporate Governance section of the Annual Report on pages 25 to 32. ANNUAL GENERAL MEETING The tabling of the 2023 Annual Report and Financial Statements to shareholders will be at an Annual General Meeting (“AGM”) that is currently expected to be held by 31 July 2024. During the AGM, investors will be given the opportunity to question the board and to meet with them thereafter. They will be encouraged to participate in the meeting. On behalf of the Board THOMAS HOLLAND Non-Executive Independent Director 30 April 2024 22 REPORT OF DIRECTORS’ REMUNERATION DIRECTORS’ EMOLUMENTS The Company has no executive Directors, solely a few employees who are mainly focused on the divestment process. The Independent Directors in the Board of Directors are responsible for setting the framework and reviewing compensation arrangements for all non-executive Directors before recommending the same to the Board for approval. The Independent Directors assess the appropriateness of the emoluments on an annual basis by reference to comparable market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high calibre Board. During the year, the Directors received the following emoluments in the form of fees from the Company: Directors Nicholas John Paris (Chairman of the Board) Helen Wong Siu Ming5 (Chairlady of the Audit Committee) Thomas Holland Monica Lai Voon Huey2 Christopher Henry Lovell1 Robert Donald Minty3 Hock Chye Tan4 Year ended 31 December 2023 (US$) Year ended 31 December 2022 (US$) 59,000 70,000 77,000 48,000 19,912 - - 39,867 77,000 48,000 48,000 22,286 - - 1 Christopher Lovell was not re-elected at the Company’s 2022 Annual General Meeting on 17 June 2022. 2 Monica Lai was not re-elected at the Company’s 2023 Annual General Meeting on 30 May 2023. 3 Robert Minty was appointed on 25 August 2023 and did not have director fee entitlement during the year. He is also a director in ICECAP (Secretaries) Limited (“ICECAP”), the company secretary of the Company; therefore, the company secretarial fee paid to ICECAP was regarded as a related party transaction and amounted to US$13,333 during the relevant period, despite that such fee was negotiated on an arm’s length basis. 4 Hock Chye Tan was appointed on 3 March 2023. 5 Apart from director fee, Helen Wong received additional remuneration of US$300,000 (2022: US$300,000) in relation to her service in the Company’s asset divestment program. ASSET DIVESTMENT EXPENSES In 2022, the independent Directors of the Company approved a programme aimed at incentivising and retaining the Company's key personnel (including Ms. Helen Wong who is the Divestment Director). 23 This fee is calculated at 1.1% of the gross proceeds less any agent commissions, if any have been used, from sale of asset and is payable in cash once the Company receives the sale proceeds to those personnel who have been involved in that transaction. SHARE OPTIONS The Company did not operate any share option schemes during the years ended 31 December 2022 and 2023. SHARE PRICE INFORMATION • High for the year • Low for the year • Close for the year - - - US$0.140 US$0.080 US$0.085 PENSION SCHEMES No pension schemes exist in the Company. SERVICE CONTRACTS There are no service contracts in existence between the Company and any of the Directors. Each Director was appointed by a letter of appointment that states their appointment subject to the Articles of Association of the Company which set out the main terms of their appointment. THOMAS HOLLAND Non-executive Independent Director 30 April 2024 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. Helen Wong is currently classified as a non-independent Director. The brief biographies of the following Directors appear on pages 15 to 16 of this Annual Report: • Nicholas John Paris (Non-Executive Chairman) • Thomas Holland • Robert Donald Minty (appointed 25 August 2023) • Hock Chye Tan (appointed 3 March 2023) • Helen Wong Siu Ming The routine operations of the Company are supervised by the Chairman and the Board and a team of finance professionals were directly engaged to run our finances and operations. Ms Helen Wong was nominated as the Divestment Director with a specific focus to sell the Company’s remaining assets, in line with the Divestment Policy. ROLE OF THE BOARD OF DIRECTORS The Board’s role is to provide entrepreneurial leadership to the Company, within a framework of prudent and effective controls, enabling risks to be assessed and managed. The Board sets the Company’s strategic objectives, monitors and reviews the Company’s operational and financial performance, ensures the Company has sufficient funding, and examines and approves disposal of the Company’s assets in a controlled, orderly and timely manner. The Board also sets the Company’s values and standards and ensures that its obligations to its shareholders and other stakeholders are met. The Board has adopted a divestment strategy since 2015. Appropriate level of directors’ and officers’ liability insurance is maintained by the Company. The Board currently has the power to make purchases on behalf of the Company of its own Ordinary Shares provided up to a maximum aggregate 29,783,780 Ordinary Shares (representing approximately 14.99 percent of the Company’s issued ordinary share capital (excluding ordinary shares held in treasury)). 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 2023, the Board met seven (7) times and their respective attendance are as follows: Name of Directors Attendance Nicholas John Paris Thomas Holland Monica Lai Voon Huey (not re-elected at the Company’s AGM) Robert Donald Minty (appointed 25 August 2023) Hock Chye Tan (appointed 3 March 2023) Helen Wong Siu Ming 7/7 7/7 6/6 1/1 4/4 7/7 To enable the Board to discharge its duties effectively, all Directors receive accurate, timely and clear information, in an appropriate form and quality, including Board papers distributed in advance of Board meetings. The Board periodically will receive presentations at Board meetings relating to the Company’s business and operations, significant financial, accounting and risk management issues. All Directors have access to the advice and services of the Company Secretary and advisers, who are responsible to the Board on matters of corporate governance, board procedures and regulatory compliance. BOARD BALANCE AND INDEPENDENCE Following the resignation of our former Development Manager as of 30 June 2019, a Chief Executive Officer was appointed and a consulting/secondment agreement was signed between Aseana and the former Development Manager. In January 2020, the CEO resigned, a de-merger exercise was proposed and as a result, the consulting/secondment agreement was terminated with effect from 31 May 2020. Since then, ASEANA became a self-managed company. The Board consists solely of non-executive directors of which Nicholas Paris is the non-executive Chairman. The Board considers the majority of Directors to be independent, being independent of management and also having no business relationships which could interfere materially with the exercise of their judgement. The Chairman is responsible for leadership of the Board, ensuring effectiveness in all aspects of its role and setting its agenda. Matters referred to the Board are considered by the Board as a whole and no individual has unrestricted powers of decision. Together, the Directors bring a wide range of experience and expertise in business, law, finance and accountancy, which are required to successfully direct and supervise the business activities of the Company. PERFORMANCE APPRAISAL The Board undertakes an annual evaluation of its own performance and that of its Committees and individual Directors. During 2023, the evaluation concluded that the performance of the Board, its Committees and each individual Director was and remains effective and that all Directors demonstrate full commitment in their respective roles. The Directors are encouraged to continually attend training courses at the Company’s expense to enhance their skills and knowledge in matters that are relevant to their role on the Board. The Directors also receive updates on developments of corporate governance, the state of economy, management strategies and practices, laws and regulations, to enable effective functioning of their roles as Directors. 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 30 May 2023, Monica Lai retired by rotation and offered herself for re-election by the shareholders. She was not re-elected at the AGM. At the forthcoming Annual General Meeting, Robert Minty will be offering himself for re-election having recently been appointed, Thomas Holland and Helen Wong will be retiring by rotation and offering themselves for re-election. BOARD COMMITTEES The Board has established the Audit Committee which deals with the specific aspect of the Company’s affairs, under a written term of reference which is reviewed annually. Necessary recommendations are then made to the Board for its consideration and decision-making. No one, other than the committee chairman and members of the relevant committee, is entitled to be present at a meeting of board committees, but others may attend at the invitation of the board committees for presenting information concerning their areas of responsibility. Copies of the terms of reference are kept by the Company Secretary and are available on request at the Company’s registered office at Osprey House, Old Street, St. Helier, Jersey, JE2 3RG, Channel Islands. AUDIT COMMITTEE The Audit Committee consists of three members and is currently chaired by Helen Wong. The other members are Thomas Holland and Hock Chye Tan (appointed in March 2023). It is intended that Hock Chye Tan will become the Chairman of the Committee during 2024. The Committee members have no links with the Company’s external auditor; Thomas Holland and Hock Chye Tan are independent Directors. The Board considers that collectively the Audit Committee has sufficient recent and relevant financial experience with the ability to discharge its duties properly, through extensive service on the Boards and Audit Committees of other listed companies. MEETINGS OF THE AUDIT COMMITTEE The Committee meets at least twice a year and at such other times as the Chairman of the Audit Committee shall require. Any member of the Audit Committee or the auditor may request a meeting if they consider that one is necessary. The Committee met three times during the year and their respective attendance are as follows: Name Helen Wong Siu Ming Hock Chye Tan Thomas Holland Representatives of the auditor may attend by invitation. Attendance 3/3 3/3 3/3 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 2023, the Audit Committee performed its duties as set out in the terms of reference. The main activities carried out by the Audit Committee encompassed the following: • • • • • • reviewing the audit plan with the Group’s Auditor; reviewing and discussing the Audit Committee Report with the Group’s Auditor; reviewing the draft Audited Financial Statements as contained in the draft Annual Report together with the Group’s Auditor before tabling to the Board for consideration and approval; reviewing other published financial information including the half year results and results announcements before tabling to the Board for consideration and approval; considering the independence of the auditor; and reviewing the auditor’s performance and made a recommendation for the reappointment of the Group’s auditor by shareholders. 28 The Significant Issues The Audit Committee considered the following key issues in relation to the Group’s financial statements during the year: • • • Valuation of inventory assets - The Audit Committee considered and discussed the valuation of the Group’s inventory assets as at 31 December 2023 and to identify potential impairment. Receivables from a related party - The Audit Committee noted the financial distress in Ireka Corporation Berhad, a related party to the Group and which the Group maintained a net receivable from. The Audit Committee assessed the potential impairment; however, no impairment was considered necessary as such balance is believed to be recoverable through the in-kind settlement pursuant to the settlement agreement. Details of the settlement were explained under Events After Statement of Financial Position Date in Financial Review section of the Annual Report. Non-going concern - The Audit Committee considered both the current circumstances of Company and its financial requirements for the 12 months from the approval date of the financial statements and have concluded that there are uncertainties on the Company’s ability to remain as a going concern. Consequently, the financial statements have been prepared on a non-going concern basis at this time. For details, please refer to Note 2.1 to the financial statements. NOMINATION & REMUNERATION COMMITTEE (“NRC”) The responsibilities of the NRC were integrated into the Board’s responsibilities. Given the Company is currently in its divestment phase, all Directors are non-executive on fixed fees, save for the asset divestment incentive where appropriate. During the year ended 31 December 2023, the Board of Directors carried out the functions which are summarised below: • • • • • regularly reviewing the structure, size and composition (including diversity, skills, knowledge and experience) of the Board and making recommendations to the Board with regard to any change; considering succession plans for Directors and the re-appointment or re-election of any Directors at the conclusion of their specified term of office or retiring in accordance with the Company’s Articles of Association; identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise; considering any matter relating to the continuation in office of any Director at any time; determining and agreeing with the Board the framework for the remuneration of the Directors; and 29 • setting the remuneration for all Directors albeit since all Directors are non-executive, the principles of the Code in respect of executive directors’ remuneration are not applicable and as such there is no policy for executive compensation. As a Standard Listed entity, the Group is now subject to certain Diversity and Inclusion targets. These include (i) at least 40% of the individuals on its board of directors are women, (ii) at least one senior position (chair, chief executive, senior independent director or chief financial officer) on its board of directors is held by a woman, and (iii) at least one individual on its board of directors is from a minority ethnic background. Whilst some of these requirements were met for all or part of the financial period, given the Group is in divestment phase, no formal diversity policy has been adopted. FINANCIAL REPORTING The Board aims to present a fair, balanced and understandable assessment of the Company’s position and prospects in all reports to shareholders, investors and regulatory authorities. This assessment is primarily provided in the half-yearly report and the Annual Report through the Chairman’s Statement, Financial Review Statement and Directors’ Report. The Audit Committee has reviewed the significant reporting issues and judgements made in connection with the preparation of the Group’s financial statements including significant accounting policies, significant estimates and judgements. The Audit Committee has also reviewed the clarity, appropriateness and completeness of disclosures in the financial statements. INTERNAL AUDIT The Board has confirmed that the systems and procedures employed, provide sufficient assurance that a sound system of risk management and internal control is maintained. An internal audit function specific to the Company is therefore considered not necessary given the Company is in divestment phase of its life. However, the Directors will continue to monitor if such need is required. AUDITOR The Audit Committee’s responsibilities include monitoring and reviewing the performance and independence of the Company’s Auditor, PKF Littlejohn LLP who had been re-appointed on 13 November 2023. Pursuant to audit and ethical standards, the auditor is required to assess and confirm to the Board their independence, integrity and objectivity. The Auditor had carried out this assessment and considered themselves to be independent, objective and in compliance with the Ethical Standard for Auditors published by the UK Financial Reporting Council and the Code of Ethics issued by the Institute of Chartered Accountants in England and Wales. RISK MANAGEMENT AND INTERNAL CONTROL The Board is responsible for the effectiveness of the Company’s risk management and internal control systems and is supplied with information to enable it to discharge its duties. Such systems are designed to meet the particular needs of the Company and to manage rather than eliminate the risk of failure to meet business objectives and can only provide reasonable, and not absolute, assurance against material misstatement or loss. 30 During the year, the Board discharged its responsibility for risk management and internal control through the following key procedures: • • • • clearly defined delegation of responsibilities to employees of the Company, including authorisation levels for all aspects of the business; regular and comprehensive information provided to the Board covering financial performance and key business indicators; a detailed system of budgeting, planning and reporting which is approved by the Board and monitoring of results against budget with variances being followed up and action taken, where necessary; and regular visits to operating units and projects by the Board. The Board has established frameworks, policies and procedures to comply with the requirement of the Bribery Act 2010 (the “Bribery Act”) and Market Abuse Regulation (“MAR”). In respect of the former, the Company has a legal and compliance function for the purposes of implementing the anti- corruption and anti-bribery policy. Training and briefing sessions were conducted for the senior management and employees. Compliance reviews are carried out as and when required to ensure the effectiveness of the policy. In respect of dealing by employees and Directors of the Company, the Company has a Dealing Code which imposes restrictions on dealings in its securities by Persons Discharging Managerial Responsibilities (“PDMR”) and certain employees who have been told the clearance procedures apply to them. The Company also has a Group-Wide Dealing Policy and a Dealing Procedures Manual. These policies have been designed to ensure that the PDMR and other employees of the Company and its subsidiaries do not misuse or place themselves under suspicion of misusing information about the Group which they have and which is not public. RELATIONSHIP WITH SHAREHOLDERS The Board is committed to maintaining good communications with shareholders and has designated the Chairman and certain members of its Board as the principal spokespersons with investors, analysts, fund managers, the press and other interested parties. The Board is informed of material information provided to shareholders and is advised on their feedback. The Board has also developed an understanding of the views of major shareholders about the Company through meetings and teleconferences conducted by the financial adviser. In addition, the Company seeks to regularly update shareholders through stock exchange announcements, press releases and participation in roadshows. To promote effective communication, the Company has a website, www.aseanaproperties.com through which shareholders and investors can access relevant information. 31 SUBSTANTIAL SHAREHOLDERS The Board was aware of the following direct and indirect interests comprising a significant amount of more than 3% issued share capital of the Company as at 31 December 2023: 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. Nicholas John Paris, non-executive Chairman, Mr. Thomas Patrick Holland and Ms. Helen Siu Ming Wong, attended the 2023 AGM in person, which was held on 30 May 2023 at the Company’s registered office. Notices of the AGM and related papers are sent out to shareholders in good time to allow for full consideration prior to the AGM. Each item of special business included is accompanied by an explanation of the purpose and effect of a proposed resolution. The Chairman declares the number of votes received for, against and withheld in respect of each resolution after the shareholders and proxies present have voted on each resolution. An announcement confirming whether all the resolutions have been passed at the AGM is made through the London Stock Exchange. On behalf of the Board NICHOLAS JOHN PARIS Chairman 30 April 2024 32 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ASEANA PROPERTIES LIMITED Opinion We have audited the consolidated financial statements of Aseana Properties Limited and its subsidiaries (the ‘group’) for the year ended 31 December 2023 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the consolidated financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. In our opinion, the consolidated financial statements: • give a true and fair view of the state of the group’s affairs as at 31 December 2023 and of its loss for the year then ended; • have been properly prepared in accordance with IFRS as adopted by the European Union; and • have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of matter – basis of preparation We draw attention to note 2.1 to consolidated financial statements of the group which explain the directors reasons for preparing the consolidated financial statements on a basis other than a going concern. Our opinion is not modified in respect of this matter. Our application of materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate, on the consolidated financial statements as a whole. 33 Overall materiality Performance materiality Basis of materiality Rationale Consolidated financial statements 2023 US$750,000 US$450,000 c. 0.5% of gross assets Consolidated financial statements 2022 US$1,200,000 US$720,000 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 given that it is a key metric used by management, investors, analysts and lenders. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was between US$412,000 and US$749,000 (2022: between US$5,000 and US$630,000). Certain components were audited to a local statutory audit materiality that was also less than our overall group materiality. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above US$37,500 (2022: US$60,000) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons. Our approach to the audit As part of designing our audit, we determined materiality and assessed risk of material misstatement in the consolidated financial statements. In particular, we looked at areas involving significant accounting estimate and judgment by the directors and considered future events that are inherently uncertain such as the carrying value of inventory. We also addressed the risk of management override of controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. The group has eight trading companies consolidated within in the group financial statements, all of which are based in Malaysia. We identified two significant components, which were subject to a full scope of audit. Significant Malaysian components were audited by the PKF network firm in Malaysia under our direction and supervision. We reviewed component audit working papers electronically. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 34 How our scope addressed this matter Our work in this area included: We reviewed the signed Sale Purchase Agreement (and subsequent Supplemental Agreement) stating the potential buyer’s in purchasing Sandakan assets. interest Further, we assessed the buyer’s credentials using publicly available information; and We compared recent land sales which had similar characteristics to the land asset held by the entity and assessed whether there were any indicators that the land asset was impaired. Based on the audit work performed: • • there is inherent uncertainty in relation to the completion of the sale process for the Sandakan assets until such time as the proceeds are received, the Sandakan assets are being recorded at net realisable value; and there are no indicators of impairment to the year-end carrying value of the above noted inventories. Key Audit Matter Carrying value of inventories Refer to note 20 Inventories. The group owns a portfolio of land held for property development and completed property units in Malaysia. The total carrying value of inventories for the group was US$118.4 million. Of the year-end inventories the following two assets were not subject to a third-party valuation: Harbour Mall Sandakan and Sandakan Hotel Asset (‘Sandakan assets’) c.US$36m in The carrying value of the Sandakan assets at the year end is written down to the agreed purchase price at c.US$36m with an impairment loss of US$7.7m recognised the Consolidated Statement of Comprehensive Income. A Sales Purchase Agreement was signed on 30 June 2023 by an interested party, the timeline of which was not adhered to thus rendering the agreement null and void. A Supplemental Agreement was signed on 6 April 2024 with the intention to complete the sales transaction within 75 days from the signing of the Supplemental Agreement (Note 35). As at the date of this audit report, the sales transaction is ongoing and no deposit nor form of payment has been made. Land asset c.US$5.4m The land asset with a carrying value of c.US$5.4 million as at 31 December 2023 was valued by management. of the valuation The above-mentioned inventories requires significant judgment and estimation by management. Inaccuracies in key assumptions and inputs could result in a material misstatement in the consolidated financial statements. Due to the significance of the estimates and judgements involved, we deemed the carrying value of the above-mentioned inventories to be a significant risk and a key audit matter. 35 Other information The other information comprises the information included in the annual report, other than the consolidated financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the consolidated financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the consolidated financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion: • proper accounting records have not been kept by the parent company, or proper returns • adequate for our audit have not been received from branches not visited by us; or the consolidated financial statements are not in agreement with the accounting records and returns. Responsibilities of directors As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the consolidated financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the directors are responsible for assessing the group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the consolidated financial statements Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: 36 • We obtained an understanding of the group and the sector in which it operates to identify laws and regulations that could reasonably be expected to have a direct effect on the consolidated financial statements. We obtained our understanding in this regard through discussions with management, industry research, and application of cumulative audit knowledge and experience of the sector. We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including the significant component audit team, and remained alert to any indicators of fraud or non-compliance with laws and regulations throughout the audit. • We determined the principal laws and regulations relevant to the group in this regard to be those arising from: o The Companies (Jersey) Law 1991; o Disclosure Guidance and Transparency Rules; o The Bribery Act 2010; o Market Abuse Regulation; o Anti-money laundering legislations; o Local tax and employment law; and o IFRSs as adopted by European Union. • We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group with those laws and regulations. These procedures included, but were not limited to: o Making enquiries of management; o Reviewing minutes of board meetings; o Reviewing accounting ledgers; and o Reviewing Regulatory News Service announcements • We also identified the risks of material misstatement of the consolidated financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the carrying value of inventory could indicate potential management bias. We addressed this by challenging the key assumptions and judgements made by management when auditing that significant accounting estimate. • As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. In our audit procedures, we have considered matters of non-compliance with laws and regulations, including fraud at the group and component levels. We have performed audit procedures on all material components within the group. • Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the consolidated financial statements or non- compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the consolidated financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 37 Use of our report This report is made solely to the company’s members, as a body, in accordance with our engagement letter dated 13 November 2023. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Mark Ling (Engagement Partner) For and on behalf of PKF Littlejohn LLP Recognised Auditor 30 April 2024 15 Westferry Circus Canary Wharf London E14 4HD 38 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2023 Notes 2023 US$’000 2022 US$’000 5 6 7 11 11 11 Continuing operations Revenue Cost of sales Gross profit Other income Administrative expenses Other operating expenses Impairment of inventory Gain on sale of discontinued operations Foreign exchange loss Operating loss Finance income Finance costs Net finance costs Net loss before taxation Taxation Loss for the year Other comprehensive income/(loss), net of tax Items that are or may be reclassified subsequently to profit or loss Foreign currency translation differences 10 11 12 8 13 13 14 15 for foreign operations Total other comprehensive loss for the year Total comprehensive loss for the year Loss attributable to: Equity holders of the parent company Non-controlling interests Loss for the year Total comprehensive loss attributable to: Equity holders of the parent company Non-controlling interests Total comprehensive loss for the year Loss per share Basic and diluted (US cents) 1,205 (677) 528 14,544 (1,069) (13,989) (7,668) - (1,976) (9,630) 1,860 (2,912) (1,052) (10,682) 209 (10,473) 980 (640) 340 10,971 (2,433) (17,465) (8,620) 2,702 (1,695) (16,200) 1,970 (3,344) (1,374) (17,574) (302) (17,876) (755) (2,459) (755) (2,459) (11,228) (20,335) (8,732) (1,741) (10,473) (9,696) (1,532) (11,228) (15,867) (2,009) (17,876) (18,451) (1,884) (20,335) (4.39) (7.99) The notes to the financial statements form an integral part of the financial statements. 39 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023 Notes 2023 US$’000 2022 US$’000 Non-current assets Property, plant and equipment Intangible assets Right of use Deferred tax assets Total non-current assets Current assets Inventories Trade and other receivables Prepayments Current tax assets Cash and cash equivalents Total current assets TOTAL ASSETS Equity Share capital Share premium Capital redemption reserve Translation reserve Accumulated losses Shareholders’ equity Non-controlling interests Total equity Non-current liabilities Trade and other payable Total non-current liabilities Current liabilities Trade and other payables Amount due to non-controlling interests Loans and borrowings Medium term notes Total current liabilities Total liabilities 16 17 18 19 20 21 22 23 24 25 26 15 27 27 28 29 30 198 578 - 4,518 5,294 118,351 9,078 141 221 4,273 132,064 79 578 - 4,723 5,380 132,573 11,575 376 10 7,259 151,793 137,358 157,173 10,601 208,925 1,899 (26,524) (131,513) 63,388 (6,936) 56,452 - - 48,281 1,891 1,471 29,263 80,906 80,906 10,601 208,925 1,899 (25,436) (122,781) 73,208 (5,404) 67,804 36,440 36,440 18,089 1,981 1,595 31,264 52,929 89,369 TOTAL EQUITY AND LIABILITIES 137,358 157,173 40 The financial statements were approved on 30 April 2024 and authorised for issue by the Board and were signed on its behalf by THOMAS HOLLAND Director 30 April 2024 HELEN SIU MING WONG Director The notes to the financial statements form an integral part of the financial statements. 41 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023 Consolidated Balance at 1 January 2022 (restated) Loss for the year Total other comprehensive loss for the year Total comprehensive loss for the year Disposal of subsidiaries Redeemable Ordinary Shares US$’000 10,601 - - - - As at 31 December 2022/ 1 January 2023 10,601 Loss for the year Total other comprehensive (loss)/income for the year Total comprehensive loss for the year Disposal of subsidiaries Sale of discontinued operations - - - - - Shareholders’ equity at 31 December 2023 10,601 # Represents 2 management shares at US$0.05 each Management Shares US$’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$’000 -# - - - - -# - - - - - -# 208,925 1,899 (22,852) (106,914) 91,659 - (15,867) (15,867) (2,646) (2,009) 89,013 (17,876) - - - - - - - - (2,584) - (2,584) 125 (2,459) (2,584) (15,867) (18,451) (1,884) (20,335) - - - 208,925 1,899 (25,436) (122,781) 73,208 - - - - - - - - - - - (8,732) (964) (964) (124) - - (8,732) - - (8,732) (964) (9,696) (124) - (874) (5,404) (874) 67,804 (1,741) (10,473) 209 (755) (1,532) (11,228) - - (124) - 208,925 1,899 (26,524) (131,513) 63,388 (6,936) 56,452 The notes to the financial statements form an integral part of the financial statements. 42 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023 Cash Flows from Operating Activities Net loss before taxation Impairment of amount due from a related party Bad debt written off Impairment of inventory Finance income Finance costs Loss on disposal of subsidiaries Unrealised foreign exchange loss/(gain) Depreciation of property, plant and equipment and right-of-use asset Operating loss before changes in working capital Changes in working capital: Decrease/(Increase) in inventories Decrease in trade and other receivables and prepayments Decrease in trade and other payables Cash (used in)/generated from operations Interest paid Tax (refunded)/paid Net cash used in operating activities Cash Flows From Investing Activities Purchase of property, plant and equipment Proceeds from the sale of discontinued operations Finance income received Net cash from investing activities 2023 US$’000 2022 US$’000 (10,682) 219 318 7,668 (1,860) 2,912 (121) 1,940 32 426 843 3,567 (7,460) (2,624) (3) (2,854) (5,481) (154) - 130 (24) (17,574) 2,755 - 8,620 (1,970) 3,344 (2,702) 1,688 60 (5,779) (1,671) 15,985 (7,448) 1,087 (6,034) 428 (4,519) (39) 10,045 508 10,514 43 CONSOLIDATED STATEMENT OF CASH FLOWS (CONT’D) FOR THE YEAR ENDED 31 DECEMBER 2023 Cash Flows From Financing Activities Advances from non-controlling interests Repayment of finance lease liabilities Repayment of loans and borrowings Net cash used in financing activities Net changes in cash and cash equivalents during the year Effect of changes in exchange rates Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year (i) 2023 US$’000 2022 US$’000 - - (693) (693) (6,198) 3,212 7,259 4,273 129 (14) (8,884) (8,769) (2,774) 2,919 7,114 7,259 (i) Cash and Cash Equivalents Cash and cash equivalents included in the consolidated statement of cash flows comprise the following consolidated statement of financial position amounts: Cash and bank balances Short term bank deposits Less: Deposits pledged (ii) Cash and cash equivalents 2023 US$’000 1,882 2,391 4,273 (2,377) 1,896 2022 US$’000 4,786 2,473 7,259 (2,473) 4,786 (ii) Included in short term bank deposits and cash and bank balance is US$2,377,000 (2022: US$2,473,000) pledged for loans and borrowings and Medium Term Notes of the Group. The notes to the financial statements form an integral part of the financial statements. 44 NOTES TO THE FINANCIAL STATEMENTS 1 GENERAL INFORMATION Aseana Properties Limited (the “Company”) was incorporated in Jersey as a limited liability par value company. The Company’s registered office is Osprey House, Old Street, St Helier, Jersey JE2 3RG. The consolidated financial statements comprise the financial information of the Company and its subsidiary undertakings (together the “Group”). Details of the entities of the Group are described in Note 32. The principal activities of the Group were the development of upscale residential and hospitality projects, sale of development land and operation and sale of hotel and mall assets in Malaysia. It is currently carrying out its divestment program which consists of selling the Group’s remaining Malaysian assets, repaying its debts and distributing the remaining proceeds to its shareholders. The financial statements are presented in US Dollar (“US$”), which is the Group’s presentation currency. All financial information is presented in US$ and has been rounded to the nearest thousand (US$’000), unless otherwise stated. 2 BASIS OF PREPARATION The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by European Union (“EU”), and IFRIC interpretations issued, and effective, or issued and early adopted, at the date of these financial statements. As permitted by Companies (Jersey) Law 1991 only the consolidated financial statements are presented. The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. The Board has reviewed the accounting policies set out below and considers them to be the most appropriate to the Group’s business activities. 2.1 Non-going Concern Financial statements are normally prepared on a going concern basis where there is neither the intention nor need to suspend operations of an entity. Where such an intention or need exists, the accounting standards preclude the preparation of financial statements on a going concern basis. During the year, due to the unexpected delay in the completion of the sale of the Sandakan Hotel Asset and the Harbour Mall Sandakan (collectively, the “Sandakan Assets”), the Group was unable to repay the outstanding Medium Term Notes which were used to finance the 45 development of the Sandakan Assets and issued by Silver Sparrow Berhad. As a result, on 8 December 2023, Silver Sparrow Berhad received a Notice of Default from the facility agent for the outstanding principal amount of approximately RM60.9 million (US$13.3 million). Such principal amount remained outstanding as at 31 December 2023 and on 30 April 2024. Its eventual repayment depends upon the first payment to be made by the purchaser of the Sandakan Asset, which has yet to take place (for details of the sale, refer to Note 35). Apart from the Medium Term Notes, the Group had an outstanding principal repayment for a bank loan for RM750,000 (US$163,000), which was required by the bank, that had remained outstanding as at 31 December 2023 and on 30 April 2024. The Group is engaged in discussion with the bank and the Directors are of the opinion that the outstanding amount can be repaid by the proceeds from the sale of Sandakan Assets. Moreover, the Directors have borrowed short term loans to cover the working capital requirement during the period of delay in the above sale, but only US$1 million have been raised in loans and have sought, but not received, further support from shareholders. The circumstances as outlined above cast uncertainties on the Company’s ability to remain as a going concern, although the Directors are of the opinion that such uncertainties will be removed once the sale of the Sandakan Asset completes, the proceeds from the sale will enable the Company and the Group to meet its financial obligations. As a result, the financial statements have not been prepared on the going concern basis but instead on a non-going concern basis. Adoption of the non-going concern basis means that assets are measured at their net realisable value. Any gains or losses resulting from measuring at net realisable value are recognised in the surplus or deficit; however, no material change to the values of assets and liabilities has been noted. Moreover, all liabilities are also classified as current due to the uncertainty over when they will become due. In adopting the non-going concern basis, the Group continues to apply disclosure requirements of the IFRSs to the extent that they are relevant and modified when considered appropriate. Apart from the anticipated completion of sale of Sandakan Assets, the Directors also anticipate the sale of the Group’s remaining assets, comprising a plot of development land in Kota Kinabalu and the hotel and the remaining unsold residential units in Kuala Lumpur. The Company is continuing its efforts in asset sales in order to raise sufficient resources to enable the repayment of the Group’s debts. In addition, as described in Note 2.1.1 below, on 30 May 2023, shareholders voted to extend the life of the Company by a further two years to May 2025 and a further dis-continuation vote will be put to shareholders by the end of May 2025. 2.1.1 May 2023 Resolution At a general meeting of the Company held on 30 May 2023, Shareholders voted in favour of the Board’s proposals to reject the 2023 Discontinuation Resolution and enabled the Company to continue to pursue its Divestment Investment Policy, rather than placing the Company into liquidation. This should enable the realisation of the Company’s assets in a controlled, orderly and timely manner, with the objective of achieving a balance between periodically returning cash to Shareholders and maximising the realisation value of the Company’s investments. 46 2.2 Statement of Compliance A number of new standards and amendments to standards and interpretations have been issued by International Accounting Standards Board but are not yet effective and in some cases have not yet been adopted by the EU. The Directors do not expect that the adoption of these standards will have a material impact on the financial statements of the Group in future periods. 2.3 Use of estimates and judgements and errors The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements are discussed below: (a) Non-going concern As described in Note 2.1, the Directors consider the Company at this time to be a non- going concern due to the current circumstances explained therein. (b) Net realisable value of inventories The Group assesses the net realisable value of inventories under development, land held for development and completed properties held for sale according to their recoverable amounts with reference to the realisability of these properties, taking into account estimated net sales based on prevailing market conditions supported by external valuations, as well as indicative market transaction prices on an arm’s length basis. Provision is made when events or changes in circumstances indicate that the carrying amounts may exceed net realisable value. The assessment requires the use of judgement and estimates in relation to factors such as sales prices, comparable market transactions, occupancy levels, projected growth rates, and discount rates. The methods and key assumptions in relation to the calculation of the net realisable value of inventories are described in Note 20. At 31 December 2023, the carrying value of inventories were approximately US$118 million (31 December 2022: US$133 million). 47 (c) Revenue – sale and leaseback arrangements The Group entered into agreements with the buyers of The RuMa Hotel Suites in a sale and leaseback arrangement. The sold hotel suites will be leased back to the Group for the hotel operation over the lease term period of 10 years. The Group considers that the control of the sold hotel suites, under the sale and leaseback arrangement, has yet to be transferred to the buyer and the transfer of the asset is therefore not a sale. No revenue is recognised in the financial statements. The nature of this leaseback transaction represents, in substance, a temporary financing arrangement. Any contractual payment made to the buyer was recognised as finance costs. The proceeds of the revenue received from these buyers were recognised as amounts owed to contract buyers, amounted to US$34.9 million and is disclosed in Note 27. (d) Classification of assets as inventory The Directors apply judgements in determining the classification of the properties held by the Group. As the Group’s principal activity was property development, the Group continues to classify its completed developments, namely the two hotels, and mall as inventories, in line with the Group’s intention to dispose of these assets rather than hold them for rental or capital appreciation. The Group operates these inventories temporarily to stabilise its operation while seeking a potential buyer. As described in the Notes 3.3(c) and (d), as a result of this classification all income generating from the operations of these developments is recognised as other income in Note 6. (e) Global economic uncertainty The ongoing conflicts in Ukraine, Middle East, and the high inflation continued cast doubt on the pace of the economic recovery. The Group exercises judgement, in light of all facts and circumstances, to assess what event in this series of events provides additional evidence about the condition that existed at the reporting date and therefore affects the recognition and measurement of the Group’s assets and liabilities at 31 December 2023. 48 3 SIGNIFICANT ACCOUNTING POLICIES 3.1 Basis of Consolidation (a) Business combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. For new acquisitions, the Group measures the cost of goodwill at the acquisition date as: • • • • the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are recognised in profit or loss. Transaction costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss. (b) Subsidiaries Subsidiaries are entities controlled by the Group. The financial information of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group also considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return. 49 (c) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but to the extent that there is no evidence of impairment. (d) Acquisition of non-controlling interests Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary. 3.2 Foreign Currencies (a) Foreign currency transactions The consolidated financial statements are presented in United States Dollar (“US$”), which is the Group’s presentation currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity investments, which are recognised in other comprehensive income. (b) Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to US$ at exchange rates at the reporting date. The income and expenses of foreign operations are translated to US$ at exchange rates at the dates of the transactions. Foreign currency differences are recognised in other comprehensive income and presented in the foreign currency translation reserve (“translation reserve”) in equity. However, if the foreign operation is a non-wholly owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling 50 interest. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Group disposes of only part of its investment in an associate that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented in the translation reserve in equity. 3.3 Revenue Recognition and Other Income Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: (a) Sale of completed properties Revenue from sale of completed properties is recognised when effective control of ownership of the properties is transferred to the purchasers which is when the completion certificate or occupancy permit has been issued. (b) Sale of development properties Revenue from sale of development properties is recognised as and when the control of the asset is transferred to the buyer and it is probable that the Group will collect the consideration to which it will be entitled in exchange for the asset that will be transferred to the buyer. In light of the terms of the contract and the laws that apply to the contract, control of the asset is transferred over time as the Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date. Revenue is recognised over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. This is determined based on the actual cost incurred to date to estimated total cost for each contract. Where the outcome of a contract cannot be reliably estimated, revenue is recognised to the extent of contract costs incurred that are likely to be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. 51 (c) Rental income Rental income is recognised in profit or loss on a straight-line basis over the lease term. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental income is recognised as other income. (d) Income from hotel and mall operations Income from the hotel operations, which include provision of rooms, food and beverage, other departments sales and laundry service fees are recognised when services are rendered. Income from hotel operations is recognised as other income. Income from mall operations is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Where a rent-free period is included in a lease, the rental income foregone is allocated evenly over the period from the date the lease commencement to the earliest termination date. Income from mall operations is recognised as other income. (e) Interest income Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs. 3.4 Property, Plant and Equipment All property, plant and equipment are stated at cost less depreciation unless otherwise stated. Cost includes all relevant external expenditure incurred in acquiring the asset. The estimates for the residual values, useful lives and related depreciation charges for the property and equipment are based on commercial factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions. The Group anticipates that the residual values of its property and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amount of property and equipment as at the reporting date is disclosed in Note 16 to the financial statements. The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimates amount for which a property could be exchanged between knowledgeable willing parties in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items when available and replacement cost when appropriate. 52 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% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount as described in Note 3.10(b). The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” and “other operating expenses” respectively in profit or loss. 3.5 Income Tax Income tax expense comprises current tax and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, and the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. 53 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. 54 Other financial liabilities comprise loans and borrowings, bank overdrafts, and trade and other payables. Accounting for interest income and finance cost are discussed in Notes 3.3(e) and 3.12 respectively. (c) De-recognition A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On de-recognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss. A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expire. On de-recognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. 3.7 Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand and at bank, deposits held at call and short term highly liquid investments that are subject to an insignificant risk of changes in value and are used by the Group in the management of their short term commitments. Bank overdrafts are included within borrowings in the current liabilities section on the statement of financial position. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits. 3.8 Intangible Assets Intangible assets comprise licence contracts and related relationships and goodwill. (a) Goodwill Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. For the measurement of goodwill at initial recognition, refer to Note 3.1(a). Goodwill is tested for impairment when there is an indicator of impairment. The Group assesses the recoverable amount of goodwill by reference to the realisability of the properties of which the goodwill is attached to (refer to Note 17). Where it is not possible to estimate the recoverable amount of an intangible asset, the impairment test is carried out on the smallest Group of assets to which it belongs for which there are separately identifiable cash flows; its Cash Generating Units (‘CGUs’). Goodwill is allocated on initial recognition to each of the Group’s CGUs that are expected to benefit from a business combination that gives rise to the goodwill. Impairment charges would be included in profit or loss, except to the extent they reverse 55 gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed. The carrying values of assets, other than those to which IAS 36-Impairment of Assets does not apply, are reviewed at the end of each reporting period for impairment when an annual impairment assessment is compulsory or there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. When the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount and an impairment loss shall be recognised. The recoverable amount of an asset is the higher of the asset’s fair value less costs to sell and its value in use, which is measured by reference to discounted future cash flows using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where it is not possible to estimate the recoverable amount of an individual asset, the Group determines the recoverable amount of the cash-generating unit to which the asset belongs. An impairment loss is recognised in profit or loss immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previously recognised revaluation surplus for the same asset. Any impairment loss recognised in respect of a cash-generating unit is allocated first to reduce the carrying amounts of the other assets in the cash-generating unit on a pro rata basis. 3.9 Inventories Inventories comprise land held for property development, work-in-progress and stock of completed units. Inventories are stated at the lower of cost and net realisable value. Net realisable value represents the estimated net selling price in the ordinary course of business, less estimated total costs of completion and the estimated costs necessary to make the sale (refer to Note 2.3(b)). Land held for property development consists of reclaimed land, freehold land, leasehold land and land use rights on which development work has not been commenced along with related costs on activities that are necessary to prepare the land for its intended use. Land held for property development is transferred to work-in-progress when development activities have commenced. Work-in-progress comprises all costs directly attributable to property development activities or that can be allocated on a reasonable basis to these activities. Upon completion of development, unsold completed development properties are transferred to stock of completed units. 56 3.10 Impairment (a) Loans and receivables The Group considers evidence of impairment for loans and receivables at a specific asset level. All individually significant receivables are assessed for specific impairment. An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that had not been incurred) discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced and the loss is recognised in the statement of comprehensive income within administrative expenses. When a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. The impairment loss is reversed, to the extent that the debtor’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. (b) Non-financial assets The carrying amounts of non-financial assets (except for inventories and deferred tax asset) are reviewed at the end of each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination. Goodwill is tested for impairment on an annual basis. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised if the carrying amount of an asset or its cash- generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis. 57 An impairment loss in respect of goodwill is not reversed. For other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognised. (c) Equity instruments Instruments classified as equity are measured at cost on initial recognition and are not re-measured subsequently. (i) Ordinary shares Ordinary shares are redeemable only at the Company’s options and are classified as equity. Distributions thereon are recognised as distributions within equity. (ii) Management shares Management shares are classified as equity and are non-redeemable. 3.11 Employee Benefits (a) Short-term employee benefits Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (b) State plans Certain companies in the Group maintain a defined contribution plan in Malaysia and Vietnam for providing employee benefits, which is required by laws in Malaysia and Vietnam respectively. The retirement benefit plan is funded by contributions from both the employees and the companies to the employees’ provident fund. The Group’s contributions to employees’ provident fund are charged to profit or loss in the year to which they relate. 58 3.12 Finance Costs Finance costs directly attributable to the acquisition, construction or production of qualifying assets, are capitalised to the cost of those assets. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Any unsold unit is not a qualifying asset because the asset is ready for its intended sale in its current condition. The unsold unit fails to meet the definition of qualifying asset under IAS 23 and accordingly, no capitalisation of borrowing costs. All sold units are not a qualifying asset to the developer as the control of the asset has been transferred to customers over time. No capitalisation borrowing costs relating to assets that it no longer controls and recognises. All other finance costs are recognised in profit or loss in the period in which they are incurred using the effective interest method. 3.13 Commitments and Contingencies Commitments and contingent liabilities are disclosed in the financial statements and described in Note 33. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but disclosed when an inflow of economic benefits is probable. 3.14 Segment Reporting Segmental information represents the level at which financial information is reported to the Board of Directors, being the chief operating decision makers as defined in IFRS 8. The Directors determine the operating segments based on reports prepared by their staff for strategic decision making and resource allocation. For management purposes, the Group is organised into project units as operation segments set out in Note 5.2. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill. 3.15 Right-of-use assets and lease liabilities A right-of-use asset and a lease liability are recognized at the commencement date of a lease. The right-of-use asset is initially measured at cost comprising the initial amount of the lease liability plus payments made before the lease commenced and any direct costs less any incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement of the lease to the earlier of the end of the lease term or the end of the useful life of the asset. The right-of-use asset is also reduced for impairment losses, if any, and adjusted for certain re-measurements of the lease liability. 59 The lease liability is initially measured at the present value of the lease payments at the commencement date discounted using the Group’s incremental borrowing rate of between 1% and 6%, and is subsequently measured at amortised cost using the effective interest method. The lease liability is re-measured when there is a change in the future lease payments, and a corresponding adjustment is made to the right-of-use asset. The Group has elected not to recognise right-of-use assets and lease liabilities for short term leases of plant and machinery that have a lease term of 12 months or less and leases of low value including leases of office equipment. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term. 4 FINANCIAL INSTRUMENTS The Group’s principal financial instruments comprise cash and cash equivalents, trade and other receivables, trade and other payable, amount due to non-controlling interest, medium term notes, loan and borrowings. The Group’s accounting policies and method adopted, including the criteria for recognition, the basis on which income and expenses are recognised in respect of each class of financial assets, financial liability and equity instrument are set out in Note 3.6. 4.1 Financial Risk Management Objectives and Policies The Group’s operations and debt financing arrangements expose it to a variety of financial risks: credit risk, liquidity risk and price risk (including foreign exchange risk, and interest rate risk). The Group’s financial risk management policies and their implementation on a group- wide basis are under the direction of the Board of Aseana Properties Limited. The Group’s treasury policies are formulated to manage the financial impact of fluctuations in interest rates and foreign exchange rates to minimise the Group’s financial risks. The Group has not used derivative financial instruments, principally interest rate swaps and forward foreign exchange contracts for hedging transactions. The Group does not envisage using these derivative hedging instruments in the short term as it is the Group’s policy to borrow in the currency to match the revenue stream to give it a natural hedge against foreign currency fluctuation. The derivative financial instruments will only be used under the strict direction of the Board. It is also the Group’s policy not to enter into derivative transactions for speculative purposes. 60 4.2 Credit Risk The Group’s credit risk is primarily attributable to deposits with banks and credit exposures to customers. The Group has credit policies in place and the exposures to these credit risks are monitored on an ongoing basis. The Group manages its deposits with banks and financial institutions by monitoring credit ratings and limiting the aggregate risk to any individual counterparty. At 31 December 2023, 100% (2022: 100%) of deposits and cash balances were placed at banks and financial institutions with credit ratings of no less than A (Moody’s Rating Agency Malaysia). Management does not expect any counterparty to fail to meet its obligations. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets. In respect of credit exposures to customers, the Group receives progress payments from sales of commercial and residential properties to individual customers prior to the completion of transactions. In the event of default by customers, the Group companies undertake legal proceedings to recover the properties. The Group has limited its credit exposure to customers due to secured bank loans taken by the purchasers. At 31 December 2023, there was no significant concentration of credit risk within the Group. The Group’s exposure to credit risk arising from total debtors was set out in Note 21 and totals US$9.1 million (2022: US$11.6 million). The Group’s exposure to credit risk arising from deposits and balances with banks is set out in Note 22 and totals US$4.3 million (2022: US$7.3 million). Financial guarantees The Company provides unsecured financial guarantee to banks in respect of banking facilities granted to certain subsidiaries, as set out in Note 30. At the end of the reporting period, the maximum exposure to credit risk as represented by the outstanding banking and credit facilities of the subsidiaries is as follows: Company Financial institutions for bank facilities granted to its subsidiaries 2023 US$’000 2022 US$’000 30,734 32,859 The Company defaulted on their SSB medium term notes in the financial year as disclosed in Note 30. 61 4.3 Liquidity Risk The Group raises funds as required on the basis of budgeted expenditure and inflows for the next twelve months with the objective of ensuring adequate funds to meet commitments associated with its financial liabilities. When funds are sought, the Group balances the costs and benefits of equity and debt financing against the developments to be undertaken. At 31 December 2023 the Group’s borrowings to fund the developments had terms of less than ten years. Cash flows are monitored on an on-going basis. The Group manages its liquidity needs by monitoring scheduled debt servicing payments for long term and short term financial liabilities as well as cash out flows due in its day-to-day operations while ensuring sufficient headroom on its undrawn committed borrowing facilities at all times so that borrowing limits and covenants are not breached. Capital investments are committed only after confirming the source of funds, e.g. securing financial liabilities. Management is of the opinion that significant portion of the borrowings can be renewed or re- financed based on the strength of the Group’s earnings, cash flow and asset base, while the rest can be repaid by utilizing the proceeds from asset sales. It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at a significantly different amount. 62 The maturity profile of the Group’s financial liabilities at the statement of financial position date, based on the contracted undiscounted payments, were as follows: At 31 December 2023 Interest bearing loans and borrowings Trade and other payables Amount due to non-controlling interests At 31 December 2022 Interest bearing loans and borrowings Trade and other payables Amount due to non-controlling interests Carrying amount US$’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$’000 30,734 48,281 1,891 80,906 32,859 18,089 1,981 52,929 9.9-12.0% - - - 5.5%-12.0% - - - 31,581 48,281 1,891 81,753 34,417 18,089 1,981 54,487 31,581 48,281 1,891 81,753 34,417 18,089 1,981 54,487 - - - - - - - - - - - - - - - - - - - - - - - - The above table excludes current tax liabilities and contract liabilities. 63 4.4 Market Risk (a) Foreign Exchange Risk Entities within the Group are exposed to foreign exchange risk from future commercial transactions and net monetary assets and liabilities that are denominated in a currency that is not the entity’s functional currency. The foreign currency exposure is not hedged. The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which the property or investment is located or by borrowing in currencies that match the future revenue stream to be generated from its investments. Management monitors the foreign currency exposure closely and takes necessary actions in consultation with the bankers to avoid unfavourable exposure. The Group is exposed to foreign currency risk on cash and cash equivalents which are denominated in currencies other than the functional currencies of the relevant Group entities. The Group’s exposure to foreign currency risk on cash and cash equivalents in currencies other than the functional currencies of the relevant Group entities at year end are as follows: US Dollar Ringgit Malaysia Others 2023 US$’000 365 3,908 - 4,273 2022 US$’000 3,018 4,241 - 7,259 At 31 December 2023, if cash and cash equivalents denominated in a currency other than the functional currencies of the Group entities strengthened/ (weakened) by 10% and all other variables were held constant, the effects on the Group’s profit or loss and equity expressed in US$ would have been US$391,000/ (US$391,000) (2022: US$424,000/ (US$424,000)). Currency risks as defined by IFRS 7 arise on account of monetary assets and liabilities being denominated in a currency that is not the functional currency. Differences resulting from the translation of financial statements into the Group’s presentation currency are not taken into consideration. Subsequent to year end, there are no significant monetary balances held by group companies that are denominated in a non-functional currency. (b) Interest Rate Risk The Group’s policy is to minimise interest rate risk on bank loans and borrowings using a mix of fixed and variable rate debts that represent market rates. The Group prefers to maintain flexibility on the desired mix of fixed and variable interest rates as this will 64 depend on the economic environment, the type of borrowings available and the funding requirements of the project when a decision is to be made. The interest rate profile of the Group’s significant interest-bearing financial instrument, based on carrying amounts at the end of the reporting period was: Fixed rate instruments: Financial assets Financial liabilities Floating rate instruments: Financial liabilities 2023 US$’000 2,377 30,734 2022 US$’000 2,473 32,859 - - The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s liabilities with a floating interest rate. The fixed and floating interest rates were not hedged and would therefore expose the Group to cash flow interest rate risk. Borrowings at fixed rate represent 100% (2022: 100%) of the Group’s total borrowings at 31 December 2023. Interest rate risk is reported internally to key management personnel via a sensitivity analysis, which is prepared based on the exposure to variable interest rates for non- derivative instruments at the statement of financial position date. For variable rate borrowings, the analysis is prepared assuming that the amount of liabilities outstanding at the statement of financial position date will be outstanding for the whole year. A 100 basis point increase or decrease is used and represents the management’s assessment of the reasonable possible change in interest rate. Sensitivity analysis for floating rate instrument At 31 December 2023, if the interest rate had been 100 basis points lower/ higher and all other variables were held constant, this would (decrease)/increase the Group loss for the year by approximately (US$ Nil)/US$ Nil (2023: would (decrease)/ increase the Group loss for the year by approximately (US$ Nil)/US$ Nil). 65 4.5 Fair Values The carrying amount of trade and other receivables, deposits, cash and cash equivalents, trade and other payables and accruals of the Group approximate their fair values in the current and prior years due to relatively short term nature of these financial instruments. The table below analyses financial instruments carried at fair value and those not carried at fair value, along with their carrying amounts shown in the statement of financial position: 2023 US$’000 Fair value of financial instruments carried at fair value Fair value of financial instruments not carried at fair value Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Total fair Carrying amount value Financial liabilities Amount due to non-controlling interests Bank loans and borrowings Medium term notes - - - - - - - - - - - - - - - - - - - - - - - - 1,891 1,471 29,263 32,625 1,891 1,471 29,263 32,625 2022 US$’000 Fair value of financial instruments carried at fair value Fair value of financial instruments not carried at fair value Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 1,891 1,471 29,263 32,625 1,891 1,471 29,263 32,625 Total fair Carrying amount value Financial liabilities Amount due to non-controlling interests Bank loans and borrowings Medium term notes - - - - - - - - - - - - - - - - - - - - - - - - (1,981) (1,595) (31,264) (1,981) (1,595) (31,264) (1,981) (1,595) (31,264) (1,981) (1,595) (31,264) (34,840) (34,840) (34,840) (34,840) 66 Policy on transfer between levels The fair value on an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer. Level 1 fair value Level 1 fair value is derived from quoted price (unadjusted) in an active market for identical financial assets or liabilities that the entity can access at the measurement date. Level 2 fair value Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the financial assets or liabilities, either directly or indirectly. Level 3 fair value Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities. Transfers between Level 1 and Level 2 fair values There has been no transfer between Level 1 and 2 fair values during the financial year (2022: no transfer in either direction). Transfers between Level 2 and Level 3 fair values There has been no transfer in either direction during the financial year (2022: no transfer in either direction). Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. At 31 December 2023, the interest rate used to discount estimated cash flows of the medium term notes is 10.24% (2022: 7.48%). 4.6 Capital Management The Group’s objectives when managing capital are to safeguard the Group’s ability to realise its assets in an orderly manner while meeting the finance obligations, in order to provide returns to shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce cost of capital. The capital structure of the Group consisted of cash and cash equivalents, loans and borrowings, medium term notes and equity attributable to equity holders of the parent, comprising issued share capital and reserves, were as follows: 67 Cash and cash equivalents Loans and borrowings and finance lease liabilities Medium term notes Equity attributable to equity holders of the parent Total capital 2023 US$’000 4,273 (1,471) (29,263) (63,388) (89,849) 2022 US$’000 7,259 (1,595) (31,264) (73,208) (98,808) In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts. Consistent with others in the industry, the Group monitors capital on the basis of net debt-to- equity ratio. Net debt-to-equity ratio is calculated as a total of interest-bearing borrowings less held-for-trading financial instrument and cash and cash equivalents to the total equity. The net debt-to-equity ratios at 31 December 2023 and 31 December 2022 were as follows: 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 2023 US$’000 30,734 (4,273) 26,461 56,452 0.47 2022 US$’000 32,859 (7,259) 25,600 67,804 0.38 The Group’s operating revenue for the year was mainly attributable to the sale of completed units in Malaysia. Income earned from hotel and mall operations are included in other income in line with management’s intention to dispose of the properties. 5.1 Revenue recognised during the year as follows: Sale of completed units 2023 US$’000 1,205 1,205 2022 US$’000 980 980 68 5.2 Segmental Information Timing of revenue recognition Properties transferred at a point in time Properties transferred over time 2023 US$’000 1,205 - 1,205 2022 US$’000 980 - 980 Segmental information represents the level at which financial information is reported to the Board of Directors, being the chief operating decision makers as defined in IFRS 8. The Directors determine the operating segments based on reports reviewed and used by their staff for strategic decision making and resource allocation. For management purposes, the Group is organised into project units. The Group’s reportable operating segments are as follows: Investment Holding Companies – investing activities; (i) Ireka Land Sdn. Bhd. – developed Tiffani (“Tiffani”) by i-ZEN; (ii) ICSD Ventures Sdn. Bhd. – owns and operates Harbour Mall Sandakan (“HMS”) and the (iii) Sandakan hotel asset (“SHA”); (iv) Amatir Resources Sdn. Bhd. – developed SENI Mont’ Kiara (“SENI”); and (v) Urban DNA Sdn. Bhd.– developed The RuMa Hotel and Residences (“The RuMa”). Other non-reportable segments comprise the Group’s development projects. None of these segments meets any of the quantitative thresholds for determining reportable segments in 2023 and 2022. Information regarding the operations of each reportable segment is in Note 5.3. The Directors monitor the operating results of each segment for the purpose of performance assessments and making decisions on resource allocation. Performance is based on segment gross profit/(loss) and profit/(loss) before taxation, which the Executive Management believes are the most relevant in evaluating the results relative to other entities in the industry. Segment assets and liabilities are presented inclusive of inter-segment balances and inter-segment pricing is determined on an arm’s length basis. The Group’s revenue generating development projects are in Malaysia. 69 5.3 Analysis of the Group’s reportable operating segments is as follows: Operating Segments – Year ended 31 December 2023 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 US$’000 Segment (loss)/profit before taxation (231) (139) (7,815) (2,299) 15 700 (9,769) Included in the measure of segment (loss)/profit are: Revenue Other income from hotel operations Other income from mall operations Expenses from hotel operations Expenses from mall operations Depreciation of property, plant and equipment Finance costs Finance income Segment assets Segment liabilities - - - - - - - 1,730 8,123 600 - - - - - - - - 61 4 - - 2,254 (346) (1,277) (20) (978) 60 1,205 - - - - - (192) 1 - 11,308 - (11,219) - (12) - - - - - - - - (1,683) 1 1,205 11,308 2,254 (11,565) (1,277) (32) (2,853) 1,792 37,341 275 990 81,533 128,323 1,232 1,531 6,579 39,389 49,335 70 Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items Profit or loss Total loss for reportable segments Other non-reportable segments Depreciation Finance income Finance costs Consolidated loss before taxation US$’000 (9,769) (921) - (60) 68 (10,682) US$’000 Total reportable segment Other non-reportable segments Consolidated total Revenue 1,205 - 1,205 Depreciation (32) - (32) Finance costs (2,853) (59) (2,912) Finance income 1,792 68 1,860 Segment assets 128,323 9,035 137,358 Segment liabilities 49,335 31,571 80,906 Additions to non-current assets 154 - 154 71 Operating Segments – Year ended 31 December 2022 Investment Holding Companies US$’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$’000 Total US$’000 Segment (loss)/profit before taxation 826 (5) (9,061) (1,789) (1,792) (4,898) (16,719) Included in the measure of segment (loss)/profit are: Revenue Other income from hotel operations Other income from mall operations Expenses from hotel operations Expenses from mall operations Depreciation of property, plant and equipment Finance costs Finance income Segment assets Segment liabilities - - - - - - - 1,462 9,331 459 - - - - - - - - 60 3 - - 2,098 (310) (1,251) (10) (1,172) 47 - - - - - - (192) 413 - 8,169 - (9,859) - (50) - - 980 - - - - - (1,933) 1 980 8,169 2,098 (10,169) (1,251) (60) (3,297) 1,923 46,882 704 965 89,571 147,513 1,294 2,511 6,758 45,205 56,230 72 Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items Profit or loss Total loss for reportable segments Other non-reportable segments Depreciation Finance income Finance costs Consolidated loss before taxation US$’000 (16,719) (856) 1 (47) 47 (17,574) US$’000 Total reportable segment Other non-reportable segments Consolidated total Revenue 980 - 980 Depreciation (60) 1 (59) Finance costs (3,297) (47) (3,344) Finance income 1,923 47 1,970 Segment assets 147,513 9,660 157,173 Segment liabilities 56,230 33,139 89,369 Additions to non-current assets 39 - 39 73 Geographical Information – Year ended 31 December 2023 Revenue Non-current assets Malaysia US$’000 1,205 5,294 Total US$’000 1,205 5,294 In the financial years ended 31 December 2023, no single customer exceeded 10% of the Group’s total revenue. Geographical Information – Year ended 31 December 2022 Revenue Non-current assets Malaysia US$’000 980 5,380 Total US$’000 980 5,380 In the financial year ended 31 December 2022, no single customer exceeded 10% of the Group’s total revenue. 6 COST OF SALES 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) Forfeiture of deposit Sundry income 2023 US$’000 2022 US$’000 677 640 2023 US$’000 43 11,309 2,254 791 147 14,544 2022 US$’000 121 8,169 2,098 - 583 10,971 (a) Other income from hotel operations The income relates to the hotel operations of the RuMa Hotel and Residences which is operated by a subsidiary of the Company, The RuMa Hotel KL Sdn. Bhd. The income earned from hotel operations is included in other income in line with management’s intention to dispose of the hotel. (b) Other income from mall operations The income relates to the operation of Harbour Mall Sandakan which is owned by a subsidiary of the Company, ICSD Ventures Sdn. Bhd. The income earned from mall operations is included in other income in line with management’s intention to dispose of the mall. 74 8 FOREIGN EXCHANGE GAIN/(LOSS) Foreign exchange gain/(loss) comprises: Realised foreign exchange loss Unrealised foreign exchange loss 9 STAFF COSTS Wages, salaries and others (including key management personnel) Employees’ provident fund, social security and other pension costs 2023 US$’000 2022 US$’000 (36) (1,940) (1,976) (6) (1,689) (1,695) 2023 US$’000 2022 US$’000 4,302 47 4,349 5,259 46 5,305 The Company had no executive Directors. As of the year ended 31 December 2023, the subsidiaries of the Group had a total of 244 (2022: 235) employees. 10 FINANCE INCOME/(COSTS) Interest income from banks Accrued interest Interest on bank loans Interest on medium term notes 2023 US$’000 130 1,730 (252) (2,660) (1,052) 2022 US$’000 508 1,462 (239) (3,105) (1,374) Accrued interest represents interest on a contract payment by Ireka Corporation Berhad. For more detailed information see Note 31. 75 11 NET LOSS BEFORE TAXATION Net loss before taxation is stated after charging/(crediting): Auditor’s remuneration Directors’ fees/emoluments Divestment expenses Depreciation of property, plant and equipment Expenses of hotel operations Expenses of mall operations Unrealised foreign exchange loss/(gain) Realised foreign exchange loss Impairment of amount due from a related party Bad debt written off Impairment of inventory Gain on sale of discontinued operations 12 TAXATION Current tax expense – Current year – Prior year Deferred tax charge – Current year – Prior year Total tax (recoverable)/expense for the year 2023 US$’000 105 244 - 32 11,565 1,277 1,940 36 219 318 7,668 - 2023 US$’000 15 (224) - - (209) 2022 US$’000 96 265 1,088 58 10,170 1,251 1,689 6 4,778 - 8,620 (2,702) 2022 US$’000 85 217 - - 302 The numerical reconciliation between the income tax (recoverable)/expense and the product of accounting results multiplied by the applicable tax rate is computed as follows: Net loss before taxation Income tax at a rate of 24% (2022: 24%) Add: Tax effect of expenses not deductible in determining taxable profit Current year losses and other tax benefits for which no deferred tax asset was recognised Tax effect of different tax rates in subsidiaries Less: Tax effect of income not taxable in determining taxable profit (Over)/under-provision in respect of prior period/year Total tax (recoverable)/expense for the year 76 2023 US$’000 (10,682) (2,564) 2022 US$’000 (17,574) (4,218) 1,212 2,569 - (1,202) (224) (209) 2,379 3,670 - (1,746) 217 302 The applicable corporate tax rate in Malaysia is 24% (2022: 24%). The Company is treated as a tax resident of Jersey for the purpose of Jersey tax laws and is subject to a tax rate of 0% (2022: 0%). A Goods and Services Tax was introduced in Jersey in May 2008. The Company has been registered as an International Services Entity so it does not have to charge or pay local GST. The cost for this registration is £200 per annum. 13 OTHER COMPREHENSIVE (LOSS)/INCOME Items that are or may be reclassified subsequently to profit or loss, net of tax Foreign currency translation differences for foreign 2023 US$’000 2022 US$’000 operations Losses arising during the year 14 LOSS PER SHARE Basic and diluted loss per ordinary share (755) (755) (2,440) (2,440) The calculation of basic and diluted loss per ordinary share for the year ended 31 December 2023 was based on the loss attributable to equity holders of the parent and ordinary shares outstanding and held by shareholders of the Company, calculated as below: Loss attributable to equity holders of the parent Number of shares (thousand shares) * Loss per share Basic and diluted (US cents) 2023 US$’000 (8,732) 198,691 2022 US$’000 (15,867) 198,691 (4.39) (7.99) * The Company currently holds 13,334,000 Treasury Shares which are deducted from the total number of shares for the purpose of calculating loss per share. For details of the Treasury Shares, please refer to the description at Note 24. The diluted loss per share was not applicable as there were no dilutive potential ordinary shares outstanding at the end of the reporting period. 77 15 NON-CONTROLLING INTERESTS Non-controlling interests in subsidiaries The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows: 2023 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% (2,016) (1,741) 30% (4,950) 5 30 (5) (6,936) (1,741) Summarised financial information before intra-group elimination As at 31 December 2023 Non-current assets Current assets Non-current liabilities Current liabilities Net assets Year ended 31 December 2023 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$’000 The RuMa Hotel KL Sdn. Bhd. US$’000 736 81,023 (81,956) (3,768) (3,965) - (5,804) (5,854) (1,104) - (1,112) 8 84 906 (10,952) (6,538) (16,500) - 15 767 (4) (73) (65) (142) 78 2022 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% (259) (1,536) 30% (5,180) (342) 35 (6) (5,404) (1,884) Summarised financial information before intra-group elimination As at 31 December 2022 Non-current assets Current assets Non-current liabilities Current liabilities Net assets Year ended 31 December 2022 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$’000 The RuMa Hotel KL Sdn. Bhd. US$’000 827 84,833 (84,590) (3,957) (2,887) 980 (4,898) (5,121) (1,203) - 991 (212) 24 941 (11,518) (6,657) (17,210) - (1,792) (1,142) (63) (9) 299 227 79 16 PROPERTY, PLANT AND EQUIPMENT Cost At 1 January 2023 Exchange adjustments Addition At 31 December 2023 Accumulated Depreciation At 1 January 2023 Exchange adjustments Charge for the year At 31 December 2023 Net carrying amount at 31 December 2023 Cost At 1 January 2022 Exchange adjustments Addition At 31 December 2022 Accumulated Depreciation At 1 January 2022 Exchange adjustments Charge for the year At 31 December 2022 Net carrying amount at 31 December 2022 Furniture, Fittings & Equipment US$’000 Motor Vehicles US$’000 Total US$’000 298 (13) 154 439 221 (10) 32 243 196 272 (13) 39 298 170 (8) 59 221 77 28 (1) - 27 26 (1) - 25 2 29 (1) - 28 27 (1) - 26 2 326 (14) 154 466 247 (11) 32 268 198 301 (14) 39 326 197 (9) 59 247 79 80 17 INTANGIBLE ASSETS Cost At 1 January 2022/ 31 December 2022/ 31 December 2023 Accumulated impairment At 1 January 2022 Disposals At 31 December 2022/ 1 January 2023 Disposals At 31 December 2023 Carrying amount At 31 December 2022 At 31 December 2023 Goodwill US$’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 2023 US$’000 2022 US$’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). 81 18 RIGHT OF USE Cost At 1 January 2022 Exchange adjustments Disposal At 31 December 2022/ 1 January 2023 Exchange adjustments Disposal At 31 December 2023 Depreciation charges At 1 January 2022 Exchange adjustments Charge for the year Disposal At 31 December 2022/ 1 January 2023 Exchange adjustments Charge for the year Disposal At 31 December 2023 NET BOOK VALUE At 31 December 2022 At 31 December 2023 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 2023 US$’000 - - - 2023 US$’000 - - - US$’000 4,424 - (3) 4,421 (256) (3) 4,162 4,423 - 1 (3) 4,421 (256) - (3) 4,162 - - 2022 US$’000 - - - 2022 US$’000 1 - 1 There is a decrease in depreciation charges of right-of-use assets by US$1,000 for the financial year ended 31 December 2023. 82 19 DEFERRED TAX ASSETS At 1 January Exchange adjustments Deferred tax credit relating to origination of temporary differences during the year At 31 December The deferred tax assets comprise: Taxable temporary differences between accounting profit and taxable profit of property development units sold At 31 December 2023 US$’000 4,723 (205) - 4,518 2022 US$’000 4,979 (256) - 4,723 2023 US$’000 2022 US$’000 4,518 4,518 4,723 4,723 Deferred tax assets have not been recognised in respect of unused tax losses of US$47 million (31 December 2022: US$48 million) which are available for offset against future taxable profits. The unrecognised deferred tax asset at effective tax rates of the Group would be approximately US$11.5 million (31 December 2022: US$11.6 million). 20 INVENTORIES Land held for property development Stock of completed units, at cost Consumables At 31 December Carrying amount of inventories pledged as security for Loans and borrowings and Medium Term Notes Notes (a) (b) Notes 2023 US$’000 5,401 112,862 88 118,351 2023 US$’000 2022 US$’000 6,288 126,181 104 132,573 2022 US$’000 111,896 119,956 83 (a) Land held for property development At 1 January Less: Exchange adjustments Additions Disposals Costs recognised as expenses in the consolidated statement of comprehensive income during the year At 31 December (b) Stock of completed units, at cost At 1 January Transfer (to)/from work in progress Less: Exchange adjustments Disposals Impairment Costs recognised as expenses in the 2023 US$’000 6,288 2022 US$’000 6,628 (274) - - (613) 5,401 2023 US$’000 126,181 - (5,432) - (7,668) (340) - - - 6,288 2022 US$’000 140,300 2,321 (7,180) - (8,620) consolidated statement of comprehensive income during the year At 31 December (219) 112,862 (640) 126,181 The net realisable value of completed units have been tested by reference to underlying profitability of the ongoing operations of the developments using discounted cash flow projections and/or comparison method with the similar properties within the local market which provides an approximation of the estimated selling price that is expected to be achieved in the ordinary course of business. Included in the stock of completed units are the following completed units: Sandakan hotel asset (“SHA”) and Harbour Mall Sandakan (“HMS”) The aggregate recoverable amount of SHA and HMS was determined based on market transaction price on an arm’s length basis. The aggregate recoverable amount of US$35,948,000 (RM165,000,000) (2022: US$45,558,000 (RM200,000,000)) for both assets was determined to approximate with their carrying amount. 84 The RuMa Hotel and Residences (“The RuMa”) The recoverable amount of The RuMa was determined based on a valuation by an external, independent valuer with appropriate recognised professional qualification. The recoverable amount US$84,314,000 (RM387,000,000) (2022: US$83,599,000 (RM367,000,000)) of The RuMa was determined to be higher than its carrying amount. The valuation of The RuMa Hotel was determined by discounting the future cash flows expected to be generated from the continuing operations of The RuMa and was based on the following key assumptions: (1) (2) (3) (4) Cash flows were projected based on the 10 years projection of The RuMa Hotel; The occupancy rate of The RuMa Hotel will improve to 78% in year 10 which is when the hotel’s operations are expected to stabilise; Average daily rates of the hotel will improve to US215.03 (RM987) in year 10 which is when the hotel’s operations are expected to stabilise; Projected gross margin reflects the industry average historical gross margin, adjusted for projected market and economic conditions and internal resources efficiency; and (5) Pre-tax discount rate of 9% was applied in discounting the cash flows. The discount rate takes into the prevailing trend of the hotel industry in Malaysia. The valuation of The RuMa Residences was determined based on the Comparison Approach as the sole method of valuation. 21 TRADE AND OTHER RECEIVABLES Trade receivables Other receivables Sundry deposits 2023 US$’000 754 8,095 229 9,078 2022 US$’000 4,401 6,842 332 11,575 Trade receivables represent progress billings receivable from the sale of completed units and land held for property development. Progress billings receivable from the sale of completed units are generally due for settlement within 30 days from the date of invoice and are recognised and carried at the original invoice amount less allowance for any uncollectible amounts. They are recognised at their original invoice amounts on initial recognition less provision for impairment where it is required. 85 The loss allowance as at 31 December 2023 and 31 December 2022 was determined as follows for both trade receivables and contract assets: 31 December 2023 Current Past due 0 – 60 days 61 –120 days More than 120 days 31 December 2022 Current Past due 0 – 60 days 61 –120 days More than 120 days Trade receivable US$’000 752 Contract asset US$’000 - Loss allowance US$’000 - Total US$’000 752 - - 2 754 - - - - - - - - - - 2 754 Trade receivable US$’000 4,399 Contract asset US$’000 - Loss allowance US$’000 - - - 2,035 6,434 - - - - - - (2,033) (2,033) Total US$’000 4,399 - - 2 4,401 The Group uses the simplified approach to estimate credit loss allowance for all trade receivables and contract assets, which will be based on the past payment trends, existing market conditions and adjusts for qualitative and quantitative reasonable and supportable forward- looking information. The loss allowances are also based on assumptions about risk of default. The quantum of any probability of an expected credit loss will occur to be low or not material. No provision is recognised in these financial statements. Included in other receivables was an amount due from Ireka Corporation Berhad in relation to the interest owed on the unpaid shareholder advances to the construction of The RuMa Hotel and Residences, as described in Note 31. The maximum exposure to credit risk is represented by the carrying amount in the statement of financial position. The Group monitors the repayment of the customers regularly and are confident of the ability of the customers to repay the balance outstanding. 86 22 CASH AND CASH EQUIVALENTS Cash and bank balances Short term bank deposits Less: Deposits pledged Cash and cash equivalents 2023 US$’000 1,882 2,391 4,273 (2,377) 1,896 2022 US$’000 4,786 2,473 7,259 (2,473) 4,786 Included in short term bank deposits and cash and bank balance is US$2,377,000 (31 December 2022: US$2,473,000) pledged for loans and borrowings and Medium Term Notes of the Group. The interest rate on cash and cash equivalents, excluding deposit pledged with licensed bank of US$2,377,000 (31 December 2022: US$2,473,000), pledged for loans and borrowings and Medium Term Notes of the Group, ranges from 2.10% to 2.80% per annum (31 December 2022: 1.05% to 2.85% per annum). The interest rate on short term bank deposits and cash and bank balance pledged for loans and borrowings and Medium Term Notes of the Group, ranges from 2.10% to 2.80% per annum (31 December 2022: 1.05% to 2.85% per annum). 23 SHARE CAPITAL 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$0.05 each Number of shares 2023 ’000 Amount 2023 US$’000 Number of shares 2022 ’000 2,000,000 - * 2,000,000 100,000 - * 100,000 2,000,000 - * 2,000,000 Amount 2022 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. 87 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) (ii) The holders of the management shares shall be paid an amount equal to the paid- up capital on such management shares; and 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. 88 24 SHARE PREMIUM Share premium represents the excess of proceeds raised on the issuance of shares over the nominal value of those shares. The costs incurred in issuing shares were deducted from the share premium. In 2017, the Shareholders of the Company at an Extraordinary General Meeting approved a proposal to return US$10,000,500 or US$0.75 per share for 13,334,000 shares representing 6.29 per cent of the Company’s share capital to Shareholders. The capital distribution was completed on 10 January 2017 and the repurchased shares of 13,334,000 are currently held as Treasury Shares. The issued and paid up share capital of the Company remains unchanged at 212,025,002. 25 CAPITAL REDEMPTION RESERVE The capital redemption reserve was incurred after the Company cancelled its 37,475,000 and 500,000 ordinary shares of US$0.05 per share in 2009 and 2013 respectively. 26 TRANSLATION RESERVE The translation reserve comprises foreign currency differences arising from the translation of the financial statements of foreign operations. 27 TRADE AND OTHER PAYABLES Non-current Amount due to contract buyers Current Trade payables Other payables Amount due to contract buyers Deposits refundable Accruals 2023 US$’000 2022 US$’000 - - 630 4,357 34,852 732 7,710 48,281 48,281 36,440 36,440 5,609 3,944 778 7,758 18,089 54,529 89 Amount owed to contract buyer is of funding received, by way of non-refundable deposits, in advance of completion of the hotel suites which are at 31 December 2023 still effectively controlled by the Group. Trade payables represent trade purchases and services rendered by suppliers as part of the normal business transactions of the Group. The credit terms granted by trade suppliers range from 30 to 90 days. Included in the other payable comprise of the accrued costs for the development of the RuMa project amounted to US$0.6 million (31 December 2022: US$0.7 million). Deposits and accruals are from normal business transactions of the Group. 28 AMOUNT DUE TO NON-CONTROLLING INTERESTS 2023 US$’000 2022 US$’000 Minority Shareholder of Bumiraya Impian Sdn. Bhd.: - Global Evergroup Sdn. Bhd. 1,081 1,129 Minority Shareholder of Urban DNA Sdn. Bhd. and The RuMa Hotel KL Sdn. Bhd.: - Ireka Corporation Berhad 810 1,891 852 1,981 The current amount due to non-controlling interests amounting to US$1,891,000 (31 December 2022: US$1,981,000) is unsecured, interest free and repayable on demand. 29 LOANS AND BORROWINGS Current Bank loans Lease liabilities LEASE LIABILITIES Future minimum lease payment Within one year Between one and five years Over five years 2023 US$’000 2022 US$’000 1,471 - 1,471 1,595 - 1,595 2023 US$,000 - - - - 2022 US$’000 - - - - The effective interest rates on the bank loans for the year is 12% (31 December 2022: 12%) per annum. 90 Borrowings are denominated in Ringgit Malaysia. Bank loans are repayable within one year. It was last extended for one year on 31 May 2023. As a condition of the extension, the Group was required make principal repayment for RM1,000,000 (US$218,000) by 30 June 2023. However, RM750,000 (US$163,000) of the required repayment had remained outstanding as at 31 December 2023. The Group is engaged in discussion with the bank and the Directors are of the opinion that the outstanding amount can be repaid by the proceeds from the sale of Sandakan Assets. Bank loans are secured by land held for property development, work-in-progress, operating assets of the Group, pledged deposits and some are secured by the corporate guarantee of the Company. Reconciliation of movement of loan and borrowings to cash flows arising from financing activities: As at 1 January 2023 US$’000 1,595 1,595 As at 1 January 2022 US$’000 1,681 1,681 As at 1 January 2022 US$’000 - - As at 1 January 2022 US$’000 14 14 Drawdown of loan US$’000 - - Repayment of loan US$’000 (54) (54) Drawdown of loan US$’000 - - Repayment of loan US$’000 - - Repayment of lease payment US$’000 - - Repayment of lease payment US$’000 (13) (13) Interest expense US$’000 - - Interest expense US$’000 - - Foreign exchange movements US$’000 (70) (70) Foreign exchange movements US$’000 (86) (86) Foreign exchange movements US$’000 - - Foreign exchange movements US$’000 (1) (1) As at 31 December 2023 US$’000 1,471 1,471 As at 31 December 2022 US$’000 1,595 1,595 As at 31 December 2022 US$’000 - - As at 31 December 2022 US$’000 - - Bank loans Total Bank loans Total Lease liabilities Total Lease liabilities Total 91 30 MEDIUM TERM NOTES Outstanding medium term notes Less: Repayment due within twelve months Repayment due after twelve months 2023 US$’000 29,263 (29,263) - 2022 US$’000 31,264 (31,264) - Reconciliation of movement of medium term notes to cash flows arising from financing activities: As at 1 January 2023 US$’000 31,264 As at 1 January 2022 US$’000 42,316 Drawdown of loan US$’000 Repayment of loan US$’000 Foreign exchange movements US$’000 As at 31 December 2023 US$’000 - (639) (1,362) 29,263 Drawdown of loan US$’000 Repayment of loan US$’000 Foreign exchange movements US$’000 As at 31 December 2022 US$’000 - (8,884) (2,168) 31,264 Medium Term Notes Medium Term Notes Notes issued by Silver Sparrow Berhad The medium term notes (the “SSB MTNs” or “MTNs”) were issued by Silver Sparrow Berhad (“SSB”), an indirect subsidiary of the Company, pursuant to a programme with a tenor of ten (10) years from the first issue date of the notes. The MTNs were issued by a subsidiary, to fund two development projects known as Sandakan Harbour Square and Aloft Kuala Lumpur Sentral (“AKLS”) in Malaysia. Following the completion of the sale of the AKLS by the Group in 2016. The net adjusted price value for the sale of AKLS, which included the sale of the entire issued share capital of ASPL M3B Limited and Iringan Flora Sdn. Bhd. (the “Aloft Companies”) were used to redeem the MTN Series 2 and Series 3. Following the completion of the disposal of AKLS, US$96.25 million (RM394.0 million) of MTN associated with the AKLS (Series 3) and the Four Points Sheraton Sandakan (Series 2) were repaid on 19 August 2016. The charges in relation to AKLS was also discharged following the completion of the disposal. The Group completed “roll-over” for the remaining MTNs of US$24.43 million on their maturity dates on 10 December 2020, 2021. Repayment of US$8.89 million (RM39.0 million) was made on 7 April 2022. Subsequently, they were further “rolled over” and became repayable on 8 December 2023. The MTNs are rated AAA. 92 The MTNs matured on 8 December 2023 however due to the non-completion of the sale of the Sandakan assets, an event of default occurred as evidenced by the receipt of a Notice of Default received from the facility agent. The Group is engaged in discussion with the bank guarantors to apply the sale proceeds of the Sandakan Assets for repayment of the MTNs, the Directors are of the opinion that the repayment will take place in May 2024 with the first payment made from the purchaser. Although the MTNs are in default, the Group has kept current any and all default interest due. For details, please refer to Note 35. The weighted average interest rate of the MTN was 9.88% per annum at the statement of financial position date. The effective interest rates of the MTN and their outstanding amounts are as follows: Series 1 Tranche FG Series 1 Tranche BG Maturity Dates 8 Dec 2023 8 Dec 2023 Interest rate % per annum 9.65 10.20 As at 31 December 2023 US$’000 7,625 5,647 13,272 The medium term notes are secured by way of: (i) (ii) bank guarantee from two financial institutions in respect of the BG Tranches; financial guarantee insurance policy from Bank Pembangunan Malaysia Berhad (“BPMB”, formerly Danajamin Nasional Berhad) in respect to the FG Tranches; (iii) a first fixed and floating charge over the present and future assets and properties of Silver Sparrow Berhad and ICSD Ventures Sdn. Bhd. by way of a debenture; (iv) a third party first legal fixed charge over ICSD Ventures Sdn. Bhd.’s assets and land; (v) a corporate guarantee by the Company; (vi) (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 BPMB, Malayan Banking Berhad and OCBC Bank (Malaysia) Berhad (collectively as “the guarantors”) where once exercised, the sale and purchase of HMS and SHA shall take place in accordance with the provision of the Put Option Agreement; and the proceeds from HMS and SHA will be utilised to repay the MTNs; (viii) assignment over the disbursement account, revenue account, operating account, sale proceed account, debt service reserve account and sinking fund account of Silver Sparrow Berhad, revenue account of ICSD Ventures Sdn. Bhd. and escrow account of Ireka Land Sdn. Bhd.; 93 (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. Notes issued by Potensi Angkasa Sdn. Bhd Potensi Angkasa Sdn. Bhd. (“PASB”), an indirect subsidiary incorporated on 25 February 2019, has secured a commercial paper and/or medium term notes programme of not exceeding US$19.61 million (RM90.0 million) (the “CP/MTN Programme”) to fund a project known as The RuMa Hotel and Residences. PASB may, from time to time, issue commercial paper and/or medium term notes (the “PASB Notes” or “Notes”) whereby the nominal value of outstanding Notes shall not exceed US$19.61 million (RM90.0 million) at any one time. 94 The details of the drawdown schedule were as follows: Initial Issue First Roll-over Second Roll-over Third Roll-over Fourth Roll-over Tranche No. Tranche 1-23 Tranche 24-31 Tranche 32-49 Tranche 50-62 Tranche 123 Date 10 Jun 2019 30 Sep 2019 7 Oct 2019 25 Feb 2020 9 Jun 2021 RM (’000) 22,850 9,600 17,100 15,350 18,100 Tranche No. Tranche 63-83 Tranche 84-91 Tranche 92-109 Tranche 110-122 Tranche 179 Date 10 Jun 2020 30 Sep 2020 7 Oct 2020 25 Feb 2021 10 Jun 2022 RM (’000) 20,950 9,600 17,100 15,350 20,000 Tranche No. Tranche 124-142 Tranche 143-147 Tranche 148-165 Tranche 166-178 Tranche 255 Date 10 Jun 2021 1 Oct 2021 8 Oct 2021 28 Feb 2022 12 Jun 2023 RM (’000) 19,050 4,750 17,100 15,350 20,000 Tranche No. Tranche 203-218 Tranche 180-184 Tranche 185-202 Tranche 219-231 Date 13 Feb 2023 3 Oct 2022 10 Oct 2022 1 Mar 2023 RM (’000) Tranche No. Date RM (’000) 16,200 4,750 17,100 15,350 Tranche 232-236 Tranche 237-254 3 Apr 2023 11 Apr 2023 4,750 17,100 The weighted average interest rate of the Notes was 10.54% per annum at the statement of financial position date. The effective interest rates of the Notes and their outstanding amounts were as follows: Tranches 203-218 Tranches 219-231 Tranches 232-236 Tranches 237-254 Tranche 255 Maturity Dates 15 Feb 2024 1 Mar 2024 3 Apr 2024 12 Apr 2024 12 Jun 2024 Interest rate % per annum 10.00% 10.00% 10.00% 10.00% 12.00% As at 31 December 2023 US$’000 3,529 3,344 1,035 3,726 4,357 15,991 95 Security for CP/MTN Programme (a) A legal charge over the Designated Accounts by the PASB and/or the Security Party (as defined below) (as the case may be) and assignment of the rights, titles, benefits and interests of the PASB and/or the Security Party (as the case may be) thereto and the credit balances therein on a pari passu basis among all Notes, subject to the following: (b) (i) In respect of the 75% of the sale proceeds of a Secured Asset (“Net Sale Proceeds”) arising from the disposal of a Secured Asset, the Noteholders of the relevant Tranche secured by such Secured Asset shall have the first ranking security over such Net Sale Proceeds; (ii) In respect of the insurance proceeds from the Secured Assets (“Insurance Proceeds”), the Noteholders of the relevant Tranche secured by such Secured Asset shall have the first ranking security over such Insurance Proceeds; (iii) (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 (the “Guarantee”); and Any other security deemed appropriate and mutually agreed between the PASB and the Principal Adviser/Lead Arranger (the “PA/LA”), the latter being Kenanga Investment Bank Berhad. 96 Security for each medium term note: Each Tranche shall be secured by assets (the "Secured Assets") to be identified prior to the issue date of the respective Tranche. Such Secured Assets may be provided by third party(ies), (which, together with the Guarantor, shall collectively be referred to as “Security Parties” and each a “Security Party”) and/or by the PASB. Subject always to final identification of the Secured Asset prior to the issue date of the respective Tranche, the security for any particular Tranche may include but not limited to the following: (a) (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 RELATED PARTY TRANSACTIONS Transactions between the Group with Ireka Corporation Berhad (“ICB”) and its group of companies are classified as related party transactions based on ICB’s 23.07% shareholding in the Company. In 2009, the Group entered into a Joint Venture Agreement (JVA) with Ireka Corporation Berhad (“ICB”) for the construction of The RuMa Hotel and Residences (“RuMa”). Under the terms of that JVA, the joint venture partners are required to make equity contribution in the proportion to their participating interest for the purpose of the development and construction of the RuMa. In the opinion of the directors, they have considered that the JVA allows for the equity contribution to be deferred and paid upon the conclusion of construction. At 31 December 2023, the total amount of equity contribution owed by ICB was US$11.6 million (at 31 December 2022: US$11.7 million). The recognition of these amount owed by ICB would be offset by the corresponding entry of the amount owed to ICB, which therefore has no net impact to the consolidated financial statements. The equity contributions are non-trade in nature and are unsecured and interest bearing. Furthermore, the Group was entitled to interest receivable from ICB. The interest receivable was calculated based on an annual interest rate of 2% above the Malaysia lending rate and applied to the deferred equity contributions. 97 Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group, and certain members of senior management of the Group. ICB Group of Companies Accrued interest on shareholders advance payable by ICB Accrued interest on a contract payment by an ICB subsidiary Key management personnel Remuneration of key management personnel - Directors’ fees Remuneration of key management personnel - Consulting fees Remuneration of key management personnel - Divestment expenses Remuneration of key management personnel - Sums paid to third parties * 2023 US$’000 2022 US$’000 1,730 - 244 300 - 13 1,462 131 265 300 816 - * represents company secretarial fee payable to ICECAP (Secretaries) Limited (“ICECAP”), which was negotiated on an arm’s length basis, but was classified as related party transaction nonetheless due to the existence of a common director. Transactions between the Group with other significant related parties are as follows: Non-controlling interests Advances – non-interest bearing 2023 US$’000 2022 US$’000 (5) 129 The above transactions have been entered into in the normal course of business and have been established under negotiated terms. The outstanding amounts due from/(to) ICB and its group of companies as at 31 December 2023 and 31 December 2022 are as follows: Net amount due from ICB # 2023 US$’000 6,948 2022 US$’000 5,461 # Pursuant to the conditional settlement reached between the Group and ICB on 26 January 2024, the amount would be satisfied by in-kind settlement from ICB, for details please refer to Note 35. 98 The outstanding amounts due to the other significant related parties as at 31 December 2023 and 31 December 2022 are as follows: Net amount due to other non-controlling interests (Note 28) 2023 US$’000 2022 US$’000 (1,891) (1,981) Transactions between the parent company and its subsidiaries are eliminated in these consolidated financial statements. A list of subsidiaries is provided in Note 32. 32 INVESTMENT IN SUBSIDIARIES Name incorporation Principal activities Country of Subsidiaries Ireka Land Sdn. Bhd. Amatir Resources Sdn. Bhd. Malaysia Malaysia ICSD Ventures Sdn. Bhd. Malaysia Potensi Angkasa Sdn. Bhd Malaysia Silver Sparrow Berhad Malaysia Bumiraya Impian Sdn. Bhd. The RuMa Hotel KL Sdn. Bhd. Urban DNA Sdn. Bhd. Aseana-BDC Co Ltd Malaysia Malaysia Malaysia Vietnam Property development Property development Hotel and mall ownership and operation Participating in the transactions contemplated under the Guaranteed MTNs Programme Participating in the transactions contemplated under the Guaranteed MTNs Programme Property development Investment holding Property development Investment holding Effective ownership interest 2023 2022 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 80% 70% 70% 65% 80% 70% 70% 65% 99 33 COMMITMENTS AND CONTINGENCIES Debt service reserve account Silver Sparrow Berhad is required to maintain a minimum amount equivalent to RM10.0 million (US$2.18 million) (the “Minimum Deposit”) in the Debt Service Reserve Account (“DSRA”) at all times and the amount is disclosed as deposit pledged (refer to Note 22). In the event the funds in the DSRA falls below the Minimum Deposit, SSB shall within five (5) Business Days from the date of receipt of written notice from the facility agent or upon SSB becoming aware of the shortfall, whichever is earlier, deposit such sums of money into the DSRA to ensure the Minimum Deposit is maintained. 34 DISSOLUTION OF A SUBSIDIARY On 31 December 2023 (the “Dissolution Date”), Priority Elite Sdn Bhd (“PESB”), a subsidiary of the Company that was incorporated in Malaysia, completed the process of member’s voluntary liquidation and had been dissolved. Details of financial position of PESB were as follows: Cash and cash equivalents Trade and other payables Net assets classified as Asset held for Sale 2023 US$’000 5 1 4 2022 US$’000 6 (2) 4 There was no reported profit or loss from PESB during the year up to the Dissolution Date. Analysis of the cash flows of PESB are as follows: Net cash generated from operating activities Net cash used in investing activities Net cash used in financing activities Net changes in cash and cash equivalents during the year 2023 US$’000 - - - 2022 US$’000 (2) - - - (2) 100 Details of the sale of the discontinued operations are as follows: Consideration received or receivable Cash Total disposal consideration Carrying amount of net asset sold Receivables derecognized Loss on sale before income tax Reclassification of foreign currency translation reserve Income tax expense Loss on disposal after income tax 2023 US$’000 - - - (4) - (4) (124) - (128) 2022 US$’000 - - - - - - - - 35 EVENTS AFTER STATEMENT OF FINANCIAL POSITION DATE Settlement with Ireka Corporation Bhd (“ICB”) The Group filed a claim against ICB on 21 October 2022 in the Malaysian Courts in relation to the Joint Venture Agreement with respect to the RuMa Hotel & Residences. On 26 January 2024, a conditional settlement was reached between the Group and ICB, whereby: (a) (b) (c) (d) ICB will transfer 38,837,504 shares of the Company held by it back to the Company; ICB will also transfer its 30% shareholding in Urban DNA Sdn Bhd and The RuMa Hotel KL Sdn Bhd to the Group; In return, the Company agreed to withdraw its claim against ICB; and the settlement shall constitute to the full and final settlement of all claims and debts between the parties. The settlement agreement was conditional upon both parties obtaining their respective approvals. It was duly approved by the shareholders of the Company in an Extraordinary General Meeting held on 27 February 2024. And on 25 March 2024, ICB received the approval for the settlement from the Winding Up Court in Malaysia. The conditions were thus satisfied and the settlement agreement had become binding. Sandakan Assets sale On 30 June 2023, ICSD Ventures Sdn Bhd, an indirect subsidiary of the Company entered into a binding conditional agreement to sell the Sandakan Assets, which comprises the Sandakan Hotel and the Harbour Mall Sandakan. Completion of the transaction was to take place by 30 September 2023 according to the agreement, however the transaction had not completed as at 31 December 2023 due to certain technicalities. On 8 December 2023, Silver Sparrow Berhad, the issuer of the SSB MTNs received a Notice of Default from the facility agent for the outstanding principal amount of approximately RM60.9 million (US$13.3 million). The proceeds of the SSB MTNs were used to finance the development of the Sandakan Assets. Although SSB is still in default, it has kept current any and all default interest due. 101 On 6 April 2024, a Supplemental Sale and Purchase Agreement (the “Supplemental”) was signed with the original purchaser mainly to extend the completion date in order to finalize the sale of the Sandakan Assets. The proceeds of the sale will be used to repay the outstanding principal. According to the terms of the Supplemental, the purchaser shall bear the interest due in relation to the MTNs from the date of Notice of Default to the date of repayment. The repayment is expected to be made in approximately 30 days from the date of the signing of the Supplemental and the transaction is estimated to complete in 45 days from such repayment date. The repayment is therefore expected to take place in May 2024 with the first payment made from the purchaser. However, should the Group be unable to repay the outstanding principal, the guarantors of the SSB MTN will have title over the pledged assets including the Sandakan Assets, as well as the other operating assets, rights, interests and benefits in relation to the Sandakan Assets. For details of the MTN and the security given by the Group, please refer to Note 30. Sale of RuMa Residences Units On 29 April 2024, the Group entered into Sale and Purchase Agreements to sell 10 RuMa Residences units (the “Units”) for a gross consideration of RM15.4 million (approximately US$3.3 million). The Units were pledged for the PASB Notes for a principal amount of RM12.5 million (US$2.7 million), which will be repaid by the proceeds of the sale. The completion of sale is expected to take place 90 days from the signing date of the Sale and Purchase Agreements. A deposit of RM1.5 million (US$0.3 million), representing 10% of the consideration, has been received by the Group. COPIES OF THE ANNUAL REPORT Copies of the annual report will be available on the Company's website at and from the Company's registered office, Osprey House, Old Street, St. Helier, Jersey, JE2 3RG, Channel Islands. 102