TIDMASPL
RNS Number : 4623L
Aseana Properties Limited
28 April 2015
28 April 2015
Aseana Properties Limited
("Aseana" or "the Company")
Full Year Results for the Year Ended 31 December 2014
Aseana Properties Limited (LSE: ASPL), a property developer in
Malaysia and Vietnam listed on the Main Market of the London Stock
Exchange, is pleased to announce its audited results for the year
ended 31 December 2014*.
Operational highlights
-- SENI Mont' Kiara ("SENI") won the prestigious World Silver
Award at the International Real Estate Federation ("FIABCI")
World Prix d'Excellence Awards 2014 in the residential (High
Rise) category. SENI has recorded sales of 94.9% based on
Sales and Purchase Agreement signed as at end of March 2015.
-- The Aloft Kuala Lumpur Sentral Hotel ("Aloft") was awarded
the FIABCI Malaysia Property Award for the Hotel category
in November 2014. Occupancy at Aloft reached 65.4% at the
end of 2014 and achieved a monthly high of 85.5% in March
2015.
-- The RuMa Hotel and Residences ("The RuMa") achieved 48.0%
sales based on sales and purchase agreements signed.
-- Aseana disposed of its 40% stake in Excellent Bonanza Sdn.
Bhd. ("EBSB") to Malaysian Resources Corporation Berhad
for RM17.0 million (US$5.3 million) being the sales consideration.
In addition, RM3.0 million (US$0.9 million) was repaid for
the amount due from EBSB during the financial year.
-- Harbour Mall Sandakan ("HMS") was 51.0% let at the end of
last year and is currently 53.0% occupied. Four Points by
Sheraton Sandakan Hotel ("FPSS") achieved an occupancy rate
of 41.8% as at 31 December 2014 and is currently 35.7% occupied.
-- The City International Hospital ("CIH") in Ho Chi Minh City
opened to patients on 24 September 2013 with the official
opening being held on 5 January 2014.
-- Sold a 4.7 hectare plot with development rights at the International
Healthcare Park ("IHP") (previously International Hi-Tech
Healthcare Park) to AEON Vietnam Co. Ltd. ("AEON Vietnam")
for US$23.0 million. The transaction was completed in August
2014.
-- Sold two plots of vacant land totalling 3.2 hectare for
a total sales consideration of US$6.3 million to a third
party purchaser.
-- Aseana's stake in Nam Long Investment Corporation ("Nam
Long") reduced to 11.6% following the issuance of 12.95
million new shares by Nam Long in a share swap with three
of its subsidiaries' minority shareholders during the final
quarter of 2014. Nam Long shares closed at VND19,900 per
share on 24 April 2015.
Financial highlights
-- Increase in revenue to US$85.1 million in 2014 (2013: US$29.3
million), largely attributed to the sale of vacant plots
of land at IHP and the increased level of sales at SENI
Mont' Kiara and Tiffani.
-- Net profit before taxation of US$15.4 million (2013: Net
loss before taxation of US$18.8 million) includes profit
attributed to SENI Mont' Kiara and Tiffani of US$16.7 million,
a gain on disposal of land at IHP to AEON Vietnam of US$10.8
million, a gain on disposal of two pieces of vacant land
at IHP of US$4.1 million and a gain on disposal of the 40%
stake in EBSB of US$5.3 million during the year. These gains
were offset by operating losses and financing costs of FPSS
and HMS totalling US$5.4 million, together with operating
losses and financing costs of CIH of US$9.8 million.
-- Earnings per share of US$0.0429 (2013: Loss per share of
US$0.0896).
-- Net asset value per share US$0.757 (2013: US$0.748).
Corporate Highlights
-- Continuation vote
When the Company was launched in 2007, the Board considered
it desirable that Shareholders should have an opportunity
to review the future of the Company at appropriate intervals.
Accordingly, and as required under the Company's Articles
of Association, at the 2015 Annual General Meeting ("AGM"),
the Company must propose an ordinary resolution for Aseana
to cease trading as presently constituted (the "Discontinuation
Resolution").
However, the Board firmly believes that ceasing to trade
and placing the Company in liquidation at this time would
have a significant adverse effect upon shareholder value.
Whilst the Board is obliged to put forward the Discontinuation
Resolution at the 2015 AGM, it does not consider that ceasing
to trade at this time is in the best interests of Shareholders.
Instead, the Board believes that a policy of orderly realisation
of the Company's assets over a period of up to three years
is a more appropriate approach in order to maximise the
value of the Company's assets and returns to Shareholders,
both up to and upon eventual liquidation of the Company.
Ahead of the 2015 AGM, the Board is considering proposals
to amend the Company's investment policy to enable a realisation
of its assets in a controlled, orderly and timely manner,
with the objective of achieving a balance between periodically
returning cash to Shareholders and maximising the realisation
value of the Company's investments. If the Proposals are
adopted, the Board aims to complete the disposal of the
Company's assets by June 2018.
The Proposals will require the approval of shareholders
and the Board intends to convene an Extraordinary General
Meeting, to be held immediately prior to the 2015 AGM, to
consider the Proposals. The Board intends to recommend to
shareholders that they vote for the Proposals at the EGM
and against the Discontinuation Resolution at the Company's
2015 AGM. Further detail of the Proposals is expected to
be posted to the Company's shareholders soon.
* These results have been extracted from the Annual Report and
financial statements, and do not constitute the Group's Annual
Report and financial statements for the year ended 31 December
2014. The financial statements for 2014 have been prepared under
International Financial Reporting Standards. The auditors, KPMG
LLP, have reported on those financial statements. Their report was
unqualified and did not include a reference to any matters to which
the auditors draw attention by way of emphasis without qualifying
their report.
Commenting on the Company's results and outlook, Mohammed Azlan
Hashim, Chairman of Aseana Properties Limited said:
"The Company has continued to make a concerted effort to achieve
optimum value for all of its assets despite global economic
headwinds and challenging conditions in both the Malaysian and
Vietnamese property markets. The Company will seek to realise its
assets in a controlled, orderly and timely manner, with the
objective of achieving a balance between returning cash to the
shareholders and maximising the realisation value of the Company's
assets. The Company aims to complete the disposal of its assets by
June 2018."
-Ends-
For further information:
Aseana Properties Limited Tel: +603 6411 6388
Chan Chee Kian Email: cheekian.chan@ireka.com.my
N+1 Singer Tel: 020 7496 3000
James Maxwell (Corporate Finance)/Sam
Greatrex (Sales)
Tavistock Communications Tel: 020 7920 3150
Jeremy Carey / James Verstringhe Email: jcarey@tavistock.co.uk
Notes to Editors:
London-listed Aseana Properties Limited (LSE: ASPL) is a
property developer investing in Malaysia and Vietnam.
Ireka Development Management Sdn Bhd ("IDM") is the exclusive
Development Manager for Aseana. It is a wholly-owned subsidiary of
Ireka Corporation Berhad, a company listed on the Bursa Malaysia
since 1993, which has over 48 years experience in construction and
property development. IDM is responsible for the day-to-day
management of Aseana's property portfolio and the introduction and
facilitation of new investment opportunities.
CHAIRMAN'S STATEMENT
The global economy continued to expand at a moderate and uneven
pace in 2014. Both advanced and emerging economies have struggled
to gain momentum amid significant economic uncertainty. In contrast
to the accelerating growth of the United States economy, Japan's
consumption tax hike caused its economy to fall into recession as
China's growth slowed. A combination of restrictive fiscal and
monetary policy accompanying weak export growth caused the European
economy to stall. In addition, global growth experienced further
downside risk following geopolitical developments in Eastern Europe
and the Middle East as well as rising concerns over the growth
prospects of commodity-producing emerging economies. While the
reduction in Crude oil prices since mid-2014 has helped stimulate
growth in oil-importing developing economies, it has also had the
effect of dampening growth prospects for oil-exporting countries,
including Malaysia.
Meanwhile, Aseana Properties' core markets, Malaysia and
Vietnam, have experienced higher than expected Gross Domestic
Product ("GDP") growth in 2014. Malaysia's economy, although shaken
by the sharp drop in global oil prices, has defied the more general
slide in commodities and oil prices to grow at its fastest pace
since 2010, up 6.0% in 2014 compared with 4.7% in 2013. The
positive growth was primarily driven by the continued strength of
domestic demand and supported by an improvement in external trade
performance. The Malaysian economy's steady growth has however been
interrupted by the depreciation of the Ringgit, which was partially
caused by the strengthening of the US Dollar in anticipation of the
Federal Reserve raising interest rates. The Malaysian Ringgit hit a
near six-year low after the government adjusted its economic
targets to cope with sliding oil prices. Nevertheless, the
Malaysian economy is expected to remain resilient in 2015 and
withstand the challenges of the global economic environment,
largely because of the country's diversified economic structure,
low inflation, a strong and well-capitalised banking system and
well-developed financial markets.
The economy in Vietnam has been stable for the past two years
and GDP grew 6.0% in 2014. This was despite a volatile period at
the start of the year as a result of a territorial dispute with
China and the impact of weaker global economic conditions in the
second half of 2014. Inflation and interest rates fell dramatically
while exports maintained a relatively high rate of growth. In
addition, the economic outlook has been further enhanced by the
revamping of Vietnam's laws on foreign property ownership. In early
2015, The State Bank of Vietnam ("SBV") devalued the Vietnam Dong
against the US Dollar by 1.0% to VND21,458, a move that will make
Vietnam's exports more competitive compared to regional peers as
the US Dollar strengthens. In addition, the National Assembly of
Vietnam has set a GDP growth target of 6.2% and inflation rate of
5.0% for 2015.
With regard to the property market, measures introduced by the
central bank have succeeded in cooling the Malaysian property
market. Stricter lending conditions coupled with an interest rate
rise in July 2014 have increased the cost of mortgage financing and
rejection rates for home buyers applying for new home loans. As a
result, the annual rate of increase in property prices has slowed
down compared to the same period in 2013 according to Bank Negara
Malaysia's House Price indicators. The number of successful
transactions was also lower compared to the same period in 2013.
The market is expected to continue its lacklustre performance into
2015 amid uncertainties around the implementation of the Goods and
Services Tax ("GST") in April 2015. Buying sentiment will also be
muted due to the potential hike in property prices as well as the
heightened cost of living after the implementation of GST, which is
further compounded by a weaker Ringgit. Property buyers are likely
to adopt a "wait and see" approach when it comes to property
investment decisions.
Meanwhile, the performance of the property market in Vietnam
improved, especially in the residential sector. Stalled building
projects have restarted and construction progress has accelerated
due to cheaper and more readily available funding. In 2014, the
real estate market ranked second in terms of total foreign direct
investment into Vietnam, accounting for 12.6% of the total.
Furthermore, the amended housing and real estate laws that take
effect in July 2015 are likely increase market activities as
foreigners are now able to purchase units in housing projects.
Concrete efforts by the Vietnamese government to boost an ailing
real-estate market and accelerate economic growth bode well for the
sector in the coming years.
Progress of the property portfolio
2014 was an exciting year for Aseana Properties Limited ("Aseana
Properties" or "Aseana"). In May 2014, SENI Mont' Kiara ("SENI")
bagged the prestigious World Silver Award at the International Real
Estate Federation ("FIABCI") World Prix d'Excellence Awards 2014 in
the residential (High Rise) category. Sales at SENI increased from
85.0% at the beginning of 2014 to 94.9% to date. In a similar
positive move, the Aloft Kuala Lumpur Sentral Hotel ("Aloft") was
awarded the FIABCI Malaysia Property Award for the Hotel category
in November 2014, in recognition of its development concept and
design, marketing appeal and sustainability. Aloft closed the year
in 2014 with an occupancy rate of 65.4%, which was commendable for
a hotel that started operating only two years ago. Continuing into
2015, Aloft achieved its highest-to-date monthly occupancy rate of
85.5% in March 2015, and is on track to achieve its target for the
year. In Sabah, the Harbour Mall Sandakan ("HMS") is 51.0%
tenanted, while the Four Points by Sheraton Sandakan Hotel ("FPSS")
recorded an occupancy rate of 41.8% as at 31 December 2014. The
Manager is constantly looking at ways to improve efficiency and
performance of these assets as the Company moves towards the
realisation of its completed property portfolio. At the RuMa Hotel
and Residences ("The RuMa"), the only project currently under
development, sales of units progressed at a moderate pace,
currently at 48.0%.
For Aseana Properties' portfolio in Vietnam, operation of City
International Hospital ("CIH") is still going through a period of
stabilisation. In 2014, CIH's poor performance was largely caused
by challenges in human resources, lower patient volumes and lack of
awareness of the hospital. The Manager is working closely with
Parkway Pantai Limited, the operator of CIH to improve the
performance of the hospital through concerted marketing campaigns,
introduction of new service lines and targeted sales. Nam Long
Investment Corporation ("Nam Long"), in which Aseana owns a
strategic minority stake, issued 12.95 million new shares in a
share swap with three of its subsidiaries' minority shareholders
during the final quarter of 2014. The share swap has aligned
interests between Nam Long and its subsidiaries. As a result of the
share swap, Aseana's stake in Nam Long was diluted to 11.6%. On the
back of positive financial results in 2014 and its leadership
position in the affordable homes market, Nam Long's share price has
increased gradually from VND17,600 per share on 31 December 2014 to
VND19,900 per share on 24 April 2015.
Aseana Properties recorded positive results for the financial
year ended 31 December 2014, mainly due to the sale of vacant plots
of land at the International Healthcare Park ("IHP") (formerly
International Hi-Tech Healthcare Park) as well as increased sales
at both SENI Mont' Kiara and Tiffani. The Group registered an
increase in revenue from US$29.3 million in 2013 to US$85.1 million
in 2014 and recorded a net profit before taxation of US$15.4
million compared to a net loss of US$18.8 million in 2013. The net
profit before tax includes profit attributable to SENI Mont' Kiara
and Tiffani of US$16.7 million, a gain on disposal of land to AEON
Vietnam of US$10.8 million, a gain on disposal of two pieces of
vacant land at IHP of US$4.1 million and a gain on disposal of the
40% stake in EBSB of US$5.3 million during the year. These gains
were offset by operating losses and financing costs of Four Points
by Sheraton Sandakan Hotel and Harbour Mall Sandakan, which
totalled US$5.4 million, together with operating losses and
financing costs of the City International Hospital, which totalled
US$9.8 million.
Further information on each of the Company's properties is set
out in the Manager's report on pages 11 to 15.
Continuation Vote
When the Company was launched in 2007, the Board considered it
desirable that Shareholders should have an opportunity to review
the future of the Company at appropriate intervals. Accordingly,
and as required under the Company's Articles of Association, at the
2015 Annual General Meeting ("AGM"), the Company must propose an
ordinary resolution for Aseana to cease trading as presently
constituted (the "Discontinuation Resolution").
However, the Board firmly believes that ceasing to trade and
placing the Company in liquidation at this time would have a
significant adverse effect upon shareholder value. Whilst the Board
is obliged to put forward the Discontinuation Resolution at the
2015 AGM, it does not consider that ceasing to trade at this time
is in the best interests of Shareholders. Instead, the Board
believes that a policy of orderly realisation of the Company's
assets over a period of up to three years is a more appropriate
approach in order to maximise the value of the Company's assets and
returns to Shareholders, both up to and upon eventual liquidation
of the Company. Ahead of the 2015 AGM, the Board is considering
proposals to amend the Company's investment policy to enable a
realisation of its assets in a controlled, orderly and timely
manner, with the objective of achieving a balance between
periodically returning cash to Shareholders and maximising the
realisation value of the Company's investments. If the Proposals
are adopted, the Board aims to complete the disposal of the
Company's assets by June 2018.
The Proposals will require the approval of shareholders and the
Board intends to convene an Extraordinary General Meeting, to be
held immediately prior to the 2015 AGM, to consider the Proposals.
The Board intends to recommend to shareholders that they vote for
the Proposals at the EGM and against the Discontinuation Resolution
at the Company's 2015 AGM. Further detail of the Proposals is
expected to be posted to the Company's shareholders soon.
Outlook
As we progress into 2015, efforts to dispose of the remaining
units at SENI Mont' Kiara and to increase the sale of The RuMa
Hotel and Residences will continue. The Manager will also focus on
improving the performance of the operating assets in preparation
for their eventual sale.
Last but not least, I would like to extend my sincere
appreciation to my fellow Directors and The Manager for their
continuous commitment and support throughout the year. Our
heartfelt gratitude also goes out to the Government authorities,
financiers, shareholders and business associates for their
continuous support in our business undertakings.
MOHAMMED AZLAN HASHIM
Chairman
27 April 2015
DEVELOPMENT MANAGER'S REVIEW
BUSINESS OVERVIEW
Looking back, 2014 proved to be yet another busy year for Aseana
Properties. The City International Hospital ("CIH") was officially
opened for business on 5 January 2014, offering comprehensive
services including Gynecology, Cardiology, Medical Oncology,
Neurology, Pediatrics, Ophthalmology and ENT. With the opening of
CIH, the Group currently has a total of four assets operating in
Malaysia and Vietnam. Meanwhile, the construction of the main
building at The RuMa Hotel and Residences ("The RuMa") is
progressing despite challenging market conditions and is now
targeted to be completed by Q3 2017. The year ahead promises to be
another busy one as we work towards realising the Group's assets,
in line with the upcoming continuation vote and proposed new
investment policy for the second half of 2015 onwards.
In May 2014, SENI Mont' Kiara ("SENI") was awarded the
prestigious World Silver Award at the International Real Estate
Federation ("FIABCI") World Prix d'Excellence Awards 2014 in the
residential (High Rise) category. This award represents outstanding
achievement and recognises the project that has demonstrated
excellence across all the real estate disciplines. On the back of
this achievement, SENI has recorded 94.9% of sales to date, with a
target that the remaining units will be sold by end of 2015. In the
meantime, sales at The RuMa have increased to 48.0% to date, based
on sales and purchase agreements signed. Sales at The RuMa have
been affected by the cooling measures implemented by the Malaysian
Government, to address the accelerating house prices and property
speculation. Aseana also entered into a share sale agreement with
Malaysian Resources Corporation Berhad ("MRCB") to dispose of its
40% stake in Excellent Bonanza Sdn. Bhd. ("EBSB") for RM17.0
million (US$5.3 million) being the sales consideration. In
addition, RM3.0 million (US$0.9 million) was repaid for the amount
due from EBSB during the financial year. The transaction was
completed in August 2014. The disposal represents an early exit and
realisation of profits from the project which was originally
planned for December 2015.
In Vietnam, Aseana, through its 68%-owned subsidiary, Hoa Lam
Shangri-La 3 Limited Liability Company ("HLSL3"), has entered into
an agreement with AEON Vietnam Co., Ltd. ("AEON Vietnam") to
dispose a 4.7 hectares (11 acres) of retail mall land at the
International Healthcare Park ("IHP") (formerly known as
International Hi-Tech Healthcare Park) and also to transfer the
development rights of the retail mall to AEON Vietnam. The
transaction was completed in August 2014 and has contributed
positively to Aseana's FY2014 results. Separately, during the last
quarter of 2014, Nam Long issued 12.95 million new shares for the
purpose of a share swap with three of its subsidiaries' minority
shareholders. Through the share swap, interests between Nam Long
and its subsidiaries are further aligned and corporate governance
was improved. Following the share swap, Aseana's stake in Nam Long
was further diluted to 11.6%.
Malaysia Economic Update
Despite moderate but uneven growth exhibited by the global
economy in 2014, the Malaysian economy grew at a stronger pace,
assisted by the continued strength in private domestic demand and
positive growth in net exports. Malaysia's gross domestic product
("GDP") for the last quarter of 2014 stood at 5.8% while for the
whole of 2014, growth was at 6.0% compared to 4.7% in 2013. After
seven years of negative contribution, net exports in Malaysia have
turned around to contribute positively to growth following the
recovery in the advanced economies and the sustained demand from
regional economies which have benefitted Malaysia. In spite of the
positive GDP growth, the Ringgit depreciated towards the end of the
year as it was impacted by the plummeting crude oil prices amid a
strengthening US Dollar. The Ringgit has depreciated by 6.1% to
RM3.4950 against the US Dollar during the year as a whole. In 2015
to date, the Ringgit has continued to decline against the US
Dollar, closing at RM3.5995 as at 24 April 2015. There were also
concerns over the Government's revision of the economic growth
forecast to 4.5% - 5.5% for 2015 from 5.0% - 6.0% and the fiscal
deficit target to 3.2% of GDP from 3.0% during the Special Address
by the Prime Minister in January 2015.
The Overnight Policy Rate ("OPR") remained unchanged at 3.25%,
since its last increment in July 2014. This move is to support
economic activity following a weaker global growth outlook amid
moderating domestic inflation. Malaysia's inflation rose by 3.2%
during the year mainly driven by domestic cost factors arising from
the adjustments in the prices of several price-controlled items
since late 2013. After rising in the earlier part of the year,
inflation moderated during the last four months due to lower food
inflation and the downward adjustments in fuel prices following the
implementation of the managed-float fuel-pricing mechanism.
Although it appears that the implementation of the Goods and
Services Tax ("GST") in April 2015 may be tempered by the
substantial exemption list, some temporary impact on inflation is
believed to be inevitable.
In tandem with the Ringgit's depreciation and falling crude oil
prices, business confidence during the last quarter of 2014 appears
subdued. According to the Malaysian Institute of Economic Research
("MIER"), Business Conditions Index ("BCI") slipped to 86.4 points
in Q4 2014, largely attributed to slower domestic and export
orders, continued deterioration in sales, slowdown in manufacturing
activities coupled with higher inventories. Similarly, the Consumer
Sentiment Index ("CSI") plunged to 83.0 points in the fourth
quarter of 2014, mainly caused by looming concerns over the
financial outlook of Malaysia and also the impact of the
implementation of GST in April 2015.
Malaysia moved up from 20(th) position to 18(th) in the World
Bank's Doing Business 2015 Report, ahead of countries such as
Taiwan, Switzerland, Thailand, the Netherlands and Japan. In Asia,
Malaysia ranked 4(th) , after Singapore, Hong Kong and South Korea.
The improvements reflect the initiatives undertaken by the
government through the Government Transformation and Economic
Programme as well as the work undertaken by the Joint
Public-Private Sector Task force to facilitate businesses. In line
with this, Malaysia recorded a net inflow of RM10.2 billion (US$2.9
billion) of Foreign Direct Investment ("FDI") during the last
quarter of 2014 with countries such as Singapore, Netherlands and
Japan being the top investors. The majority of the FDI inflows were
channeled into manufacturing, financial and insurance as well as
mining sectors. For the whole of 2014, total cumulative FDI stood
at RM35.1 billion (US$10.0 billion), which was RM3.1 billion
(US$0.9 billion) shy of the 2013 cumulative FDI of RM38.2 billion
(US$10.9 billion).
Vietnam Economic Update
Although suffering from a slower start at the beginning of the
year and the negative effect of the political tensions with China,
Vietnam's economy rebounded and its recovery is now back on track.
Vietnam's GDP growth for 2014 was 6.0%, surpassing the Vietnamese
government's target of 5.8% and the highest since 2011. Continued
macroeconomic stability has helped underpin growth in Vietnam and a
new cycle of economic growth was further confirmed by a number of
positive indicators such as the recovery of the property market,
strong external accounts, accelerating retail sales, a pick-up in
credit expansion and improving bank balance sheets. Likewise, the
Vietnamese Government has implemented remedial measures that have
helped boost the economy such as, actions to reduce inflation,
stabilisation of the foreign exchange market and strengthening of
external accounts.
Vietnam's inflation has eased significantly over recent years on
the back of government's measures to curb demand. In 2014,
Vietnam's average CPI grew at 4.1%, lower than the set target of
7.0%. The easing inflation has provided the State Bank of Vietnam
("SBV") with the needed room to further ease monetary policy to
support growth, encourage consumer spending in productive sectors
and help enterprises reduce their borrowing costs. Meanwhile,
Vietnam has recorded trade surpluses for 3 consecutive years and
reached its highest value at US$2.0 billion in 2014. Further to
that, the SBV devalued the Vietnamese Dong against the US dollar by
1.0% to VND 21,458 in January 2015 in a bid to spur Vietnam's
exports and to sustain growth relative to other South East Asian
economies.
Foreign Direct Investment ("FDI") remained as the largest
contributor to the trade surplus, accounting for 68.0% of total
export revenue. It is expected that FDI in 2015 will continue its
upside growth fuelled by an accommodating monetary policy, recovery
of the banking sector, improving domestic demand, the lower oil
price and a pick-up in export manufacturing. The EU-Vietnam Free
Trade Agreement, when ratified in 2015, will provide a positive
impetus to FDI, to exports and to consumer confidence.
On the back of improved macroeconomic stability and stronger
external balances, Fitch Ratings upgraded Vietnam's Long-Term
Foreign and Local Currency Issuer Default Ratings from "B+" to
"BB-", and Vietnam's outlook has been revised from "Positive" to
"Stable".
PORTFOLIO REVIEW
MALAYSIA
Property Market Review
Malaysia's property market which was seen to be bullish in the
past couple of years has slowed down noticeably throughout 2014.
The series of cooling measures implemented under the 2014 budget by
the Government, such as the increase in the Real Property Gains Tax
("RPGT"), the loan-to-value and prohibition of the Developer
Interest Bearing Scheme ("DIBS"), have worked well to arrest the
steep rise in property prices in the middle-end market and reduced
speculative activity. With the implementation of the Goods and
Services Tax ("GST") in April 2015, buyers will likely adopt a
"wait-and-see" approach for at least the next six to nine months.
Amid the rising costs of doing business, tighter monetary policy
and the impact of the new tax system, the property market is
expected to remain challenging going forward. The recent plunge in
crude oil prices and lower trade surplus could further undermine
the country's economy and its property market especially if they
are prolonged.
The Malaysian Government has introduced the Youth Housing
Scheme, a smart partnership between the government, Bank Simpanan
Nasional, Employees Provident Fund ("EPF") and Cagamas. With this
scheme, it is announced that more housing units will be built under
the 1 Malaysia People's Housing Programme ("PRIMA") and extended
the 50% stamp duty exemption until 31 December 2016. These are
amongst the measures introduced by the government to assist the
young and first-time home buyers who are facing difficulties in
affording a home.
On the commercial office front, the Klang Valley office market
continues to favour tenants and was resilient in 2014. During the
year, total supply of commercial office space in the Klang Valley
increased to 107.7 million sq. ft. Amid the widening gap between
supply and demand, the overall occupancy rate increased marginally
to 82.0% while market rents have remained stable with limited
growth prospects. Meanwhile, the average occupancy rate for the
retail sector in the Klang Valley stood at 82.9% during the last
quarter of 2014. Market prices as well as rents in the retail
sector have generally remained stable. However, consumers' spending
power has been affected as a result of the removal of fuel subsidy,
the plunge in the CSI to below-100 points threshold, the hike in
the OPR from 3.0% to 3.2%, coupled with the implementation of GST
in April 2015. The outlook for the retail sector's performance is
expected to be moderate.
Despite some major setbacks during the year, including the two
Malaysian aircraft tragedies, Malaysia's tourism industry continued
to show a sustainable growth trend, contributed by Tourism
Malaysia's aggressive promotional efforts together with the support
of other industrial players in conjunction with "Visit Malaysia
Year 2014". Hotel supply in the Klang Valley was up 6.2% compared
to 2013. Looking forward, the weakening of the Malaysian currency
will spur tourists' inflow as visiting and spending in Malaysia has
become relatively cheap and affordable. A wide range of traditional
and cultural festivals have been planned for 2015 in conjunction
with the Malaysia Year of Festivals ("MyFest") campaign. MyFest
will be implemented in 2015 to boost the tourism sector as
announced by the Malaysian Government in Budget 2015.
Aseana Properties has six development projects in Malaysia,
ranging from residential properties, hotels, commercial offices to
a retail mall:
-- SENI Mont' Kiara
Owned 100.0% by Aseana Properties, SENI Mont' Kiara is an
upmarket condominium development situated on one of the highest
points in Mont' Kiara. Construction was completed in 2011. The
project consists of two 12-storey blocks and two 40-storey blocks,
comprising 605 residential units. The majority of units command
impressive views of the city skyline including the 88-storey
Petronas Twin Towers and the KL Tower.
In May 2014, SENI Mont' Kiara was awarded the prestigious World
Silver Award at the FIABCI World Prix d'Excellence Awards 2014 in
the residential (High Rise) category. On the back of this
achievement, sales at SENI Mont' Kiara have progressed to 94.9% to
date.
The bridging loan for the project was fully repaid in 2013.
-- Tiffani by i-ZEN
Tiffani by i-ZEN, wholly-owned by Aseana Properties, is a
completed luxury condominium project located in Mont' Kiara. To
date, 98.7% of the 399 residential units have been sold. The debt
on the project has been fully repaid. The Manager has decided to
partially fit out two remaining penthouses at Tiffani by i-ZEN to
offer buyers and dwellers a hassle-free experience of owning an
apartment unit.
-- The RuMa Hotel and Residences
This project is strategically located in the heart of Kuala
Lumpur City Centre ("KLCC") on Jalan Kia Peng, near neighbouring
landmarks such as the Grand Hyatt Kuala Lumpur, KLCC Convention
Centre, Suria KLCC shopping mall, KLCC Park and the world famous
Petronas Twin Towers. Aseana Properties owns 70.0% of this project
and 30.0% is owned by Ireka Corporation Berhad. The Group plans to
develop 199 units of luxury residences, The RuMa Residences, and a
253-room luxury bespoke hotel, The RuMa Hotel, on the 43,559 sq.
ft. of development land. The RuMa Hotel will be managed by Urban
Resort Concepts, a renowned bespoke hotel management company based
in Shanghai, which created and now operates the award-winning The
Puli Hotel in Shanghai.
Construction work commenced in February 2013 and is estimated to
complete in Q3 2017. The sales launch for The RuMa Hotel and
Residences was held on 8 March 2013. Sales at The RuMa Hotel and
Residences have been affected by the cooling measures imposed by
the Government to curb property speculation. To date, sales at The
RuMa Hotel and Residences have increased to approximately 48.0%
based on the sales and purchase agreements signed.
The land was part financed by a term-loan facility of RM65.3
million (US$18.7 million), which was fully drawn down. The
development of the project is funded by progressive payments from
buyers.
-- Kuala Lumpur Sentral Project and Aloft Kuala Lumpur Sentral Hotel
Kuala Lumpur Sentral project is a mixed commercial and
hospitality development project consisting of two office towers and
a business class hotel, centrally located in Kuala Lumpur's urban
transportation hub. The project is owned and developed by Excellent
Bonanza Sdn. Bhd. ("EBSB"), which was jointly owned by Aseana
Properties and Malaysian Resources Corporation Berhad on a 40:60
basis.
In June 2014, Aseana entered into a share sale agreement with
Malaysian Resources Corporation Berhad ("MRCB") to dispose of its
40% stake in Excellent Bonanza Sdn. Bhd. ("EBSB") for RM17.0
million (US$5.3 million) being the sales consideration. In
addition, RM3.0 million (US$0.9 million) was repaid for the amount
due from EBSB during the financial year. The transaction completed
in August 2014.
At the commencement of the project, Aseana Properties
conditionally agreed to purchase the hotel component from EBSB for
a total consideration of approximately RM217.0 million (or US$62.1
million). The sale and purchase of the 482-room Aloft Kuala Lumpur
Sentral Hotel was completed in April 2013 and operations commenced
on 22 March 2013. Aseana Properties entered into a Management
Agreement appointing Starwood Asia Pacific Hotels & Resort Pte
Ltd as the operator of Kuala Lumpur Sentral Hotel under the 'Aloft'
brand name.
The purchase of the Aloft Kuala Lumpur Sentral Hotel together
with fit-out expenses were financed by guaranteed medium term notes
of RM270.0 million (US$77.2 million) which is part of the RM515.0
million (approximately US$147.3 million) MTN programme announced in
November 2011, of which RM15.0 million was drawn down as at 31
December 2012. The remaining RM254.0 million (US$72.6 million) was
fully drawn down in April 2013 to complete the acquisition of the
Aloft Kuala Lumpur Sentral Hotel.
The Aloft Kuala Lumpur Sentral Hotel has been awarded the winner
of the prestigious FIABCI Malaysia Property Awards in the Hotel
category in recognition of its development concept and design,
marketing appeal and sustainability back in November 2014. On top
of that, the hotel was also awarded with a number of other awards
during the year such as the Best Short Stay Excellence Award by
Expatriate Lifestyle for the Best of Malaysia Travel Awards and the
Kuala Lumpur Mayor's Tourism Awards for 4-star hotel category. The
Aloft hotel has to date in year 2015 achieved an occupancy rate of
73.5%, and an Average Daily Rate ("ADR") of RM324.8.
-- Sandakan Harbour Square
Sandakan Harbour Square, which is wholly-owned by Aseana
Properties, is an urban redevelopment project in the commercial
centre of Sandakan, Sabah. Sandakan is a 'Nature City' with a
population of approximately 500,000, with eco-tourism and palm oil
plantations as the main drivers of the local economy. The Sandakan
Harbour Square project consisted of four phases, of which Phases
one and two comprised 129 shop lots that are now fully sold, while
Phases three and four consist of the first retail mall (Harbour
Mall Sandakan) and the first international four-star hotel in
Sandakan, known as the Four Points by Sheraton Sandakan Hotel.
The Harbour Mall Sandakan ("HMS") and Four Points by Sheraton
Sandakan Hotel ("FPSS") commenced business in July and May 2012
respectively. The occupancy rate at the Harbour Mall Sandakan is
currently 53.0%. Notable tenants in the mall include Parkwell
Departmental Store, Levi's, The Body Shop, GNC and McDonald's
amongst others and leasing activities at Harbour Mall Sandakan to
both local and international retailers are still ongoing.
Meanwhile, FPSS recorded an occupancy rate of 35.7% to date, with
an ADR of RM204. The management of FPSS continues to improve the
efficiency of its operations and to work with the relevant
authorities to improve tourist arrivals to Sandakan. The business
conditions in Sabah continue to suffer from the impact of two
airline tragedies in the surrounding area and several kidnapping
cases off the east coast of Sabah during 2014. These events have
affected the performance of both HMS and FPSS during the past
twelve months.
The project is funded by guaranteed medium term notes of RM245.0
million (US$70.1 million) which is part of the RM515.0 million
(US$147.3 million) MTN programme announced in November 2011. The
MTNs were fully issued as at 31 December 2011.
-- Kota Kinabalu Seafront resort & residences
Facing the South China Sea, this project is a resort-themed
development consisting of a boutique resort hotel, resort villas
and resort homes at the seaside area in Kota Kinabalu, Sabah.
Aseana Properties acquired three adjoining plots of land amounting
in aggregate to approximately 80 acres in September 2008 with the
intention of developing a hotel, villas and resort homes. Various
marketing efforts were conducted in 2014 to dispose of the land.
However, similar to the Sandakan Harbour Square properties, the
prospects have been affected by the impact of the two flight
tragedies on the tourism market.
VIETNAM
Property Market Review
A larger number of successful transactions and the rising prices
provide evidence that the Vietnamese property market is on its path
to recovery, especially the residential market. In the early months
of 2014, the number of successful transactions doubled over the
same period in 2013. Policies introduced by the Vietnamese
Government, such as extending housing loan channels, lowering
interest rates, the performance and support package of VND30.0
trillion and the favourable changes in housing law, have stimulated
and supported the recovery process of the residential market. Based
on the revised housing law, which will come into effect from July
2015, foreigners will be allowed to purchase project-based houses
and condominiums. On top of that, expatriate Vietnamese will also
have ownership rights equal to those of local Vietnamese.
2014 saw a sharp increase in the number of new development
launches for the residential market in both Hanoi and Ho Chi Minh
City ("HCMC"). There were a total of 14,807 new units launched in
HCMC, which was 3.2 times higher than 2013. In Hanoi a total of
16,253 new units were released, which was 2.1 times higher than
that of 2013. It is expected that the market will continue to look
positive in 2015 as more stalled projects restart and there will be
more new launches.
On the back of improving economic indicators, demand in the HCMC
office market has risen, with limited supply helping to support
rents and lower the vacancy rate. Overall occupancy stood at 90.0%
in 2014, the highest in the last five years. In retail, 2014 saw
the opening of two shopping centres in HCMC by the Japanese AEON
Group. AEON Group has set a target to operate up to 20 shopping
malls in Vietnam by 2020. In addition, the Korean Lotte Group also
announced a plan to open 60 supermarkets in Vietnam by 2020. During
the year, local retailers actively expanded, with the most notable
acquisition being that of a supermarket chain from Ocean Retail
Group by Vingroup. Vingroup plans to construct or purchase 100
VinMart supermarkets and 1,000 VinMart convenience stores by 2017
as well as an additional nine shopping centers across the country.
On the whole, Vietnam's retail and service sectors have maintained
an average growth rate above 10%, despite the economic downturn. As
a result of this performance, continuing strong economic growth and
a rising middle class population, the retail sector is expected to
perform well in 2015.
Vietnam's tourism industry has experienced some setbacks during
the early part of the year as a result of a political rift with
China. As a result, the total number of international visitors in
2014 was recorded at only 7.9 million, up 4.0% compared to 2013 and
was much lower than the growth of 10.6% back in 2013.
Aseana Properties has one equity investment and two development
projects in Vietnam - the latter comprising one residential project
with its development partner, Nam Long Investment Corporation and
an integrated healthcare development. The highlights are as
follow:
-- International Healthcare Park (formerly known as
International Hi-Tech Healthcare Park) and City International
Hospital
The International Healthcare Park ("IHP") is a planned mixed
development over 37.54 hectares of land comprising world-class
private hospitals, mixed commercial, hospitality and residential
developments. This development is located in the Binh Tan District,
close to Chinatown and is approximately 11 km from District 1, the
central business and commercial district of HCMC. Aseana Properties
has a 68.1% stake in this development and its joint venture
partner, Hoa Lam Group holds a significant minority stake together
with a consortium of investors from Singapore, Malaysia and
Vietnam. Approximately 20 hectares will be dedicated to the
hospital and commercial developments and five hectares has been
allocated for residential developments. Out of a total 19 plots of
land, three plots have been sold to date.
Construction commenced with the first phase of the 320-bed City
International Hospital ("CIH") in May 2010 and completed in March
2013. CIH commenced business on 24 September 2013 and its official
opening was subsequently held on 5 January 2014. CIH is a modern
private care hospital conforming to international standards with
320 beds (Phase 1: 168 beds) and is managed by Parkway Pantai
Limited, Asia's leading private healthcare group with a network of
more than 3,300 beds across Singapore, Malaysia, the Middle East
and India. The operations of CIH are expected to go through a
period of stabilisation before reaching optimal performance.
To part finance the payment for the land and working capital,
the joint venture companies have secured total loan facilities of
US$16.3 million, of which US$13.2 million had been drawn down as at
31 December 2014. The development of City International Hospital is
funded by a syndicated term loan of US$43.3 million and a revolving
credit facility of US$1.0 million, of which US$41.0 million was
drawn down as at 31 December 2014.
-- Nam Long Investment Corporation
In 2008, Aseana Properties acquired a strategic minority stake
in Nam Long Investment Corporation ("Nam Long"), a private property
development company in Vietnam with market leadership in the low to
medium-end segment of the market. Nam Long was subsequently listed
on the Ho Chi Minh Stock Exchange on 8 April 2013. In February
2014, Nam Long completed a placing of 25,500,000 new shares at
VND18,000 (approximately US$0.855) per share to a prominent list of
institutional investors including International Finance Corporation
(investment arm of World Bank), which saw the dilution of Aseana
Properties' effective stake in Nam Long to 12.9% from 16.3%. Aseana
Properties' stake was further diluted to 11.6% in the last quarter
of 2014 following the issuance of 12.95 million new shares in a
share swap with three of Nam Long's subsidiaries' minority
shareholders. The swap improves corporate governance and alignment
of interests between Nam Long and its subsidiaries.
In 2014, the International Finance Corporation ("IFC"), a member
of the World Bank Group, has awarded its first "Excellence in
Design for Greater Efficiencies" ("EDGE") certifications in Vietnam
to building designs developed by Nam Long. IFC's EDGE is a new
building resource efficiency certification system created for
emerging markets which provides clients with technical solutions
for going green and captures capital costs and projected
operational savings. Nam Long, being the first EDGE-awarded real
estate developer in Vietnam, is showing strong commitment to
developing affordable and environmentally friendly residences with
high quality of life.
Nam Long's affordable housing projects, branded as "E-homes",
continue to be their main revenue driver. The high quality and low
prices have made its E-homes brand the preferred brand among
prospective home buyers in Vietnam. Nam Long currently owns a land
bank of more than 560 hectares, mainly in HCMC and its neighbouring
provinces, making it one of the largest property developers by land
bank in HCMC. For the year ended 2014, Nam Long reported a total
revenue of VND866.9 billion (US$40.5 million) and its net profit
after tax stood at VND103.6 billion (US$4.8 million).
-- Waterside Estates
Waterside Estates was initially planned for a low density
development comprising 37 villas (Phase 1) and 460 apartment units
(Phase 2) set in a lush green landscape, with the river-front view
of the Rach Chiec River. The project was to be developed jointly by
Aseana Properties and Nam Long on a 55:45 basis. However, due to
the challenging conditions of the high-end real estate market in
Vietnam and with Aseana Properties approaching its maturity, the
board has now decided to assess the market for opportunities to
divest this project.
OUTLOOK
Having pulled through another challenging year in 2014, Aseana
Properties is now looking to continue its focus on stabilising the
operations of its assets to achieve optimum capital value and at
the same time concentrate on realising remaining assets as the date
for the continuation vote draws closer. Ahead of a potential sale
of assets in the portfolio, Aseana Properties remains committed to
a regime of prudent management, ensuring an optimum capital value
for the portfolio.
The Malaysian property market is expected to remain challenging
as there are looming uncertainties in the outlook for the property
market arising from the impending GST implementation and the effect
of the stringent measures introduced by the Government of Malaysia.
On the contrary, Vietnam's economy has shown signs of continued
growth through 2014. The Vietnamese Government has undertaken a
number of important legal and regulatory changes to improve the
market situation and encourage foreign investment. Nevertheless,
the Manager is currently working closely with the Board to improve
the performances of the assets of the company in preparation for
their eventual sale in view of the maturity of Aseana
Properties.
On a final note, we would like to take this opportunity to thank
the Board of Aseana Properties, our advisers and business
associates for their support and guidance throughout the year.
LAI VOON HON
President / Chief Executive Officer
Ireka Development Management Sdn. Bhd.
Development Manager
27 April 2015
PERFORMANCE SUMMARY
Year ended Year ended
31 December 2014 31 December 2013
--------------------------------------- ------------------ ------------------
Total Returns since listing
Ordinary share price -55.00% -56.00%
FTSE All-share index 6.03% 8.34%
FTSE 350 Real Estate Index -42.09% -49.95%
One Year Returns
Ordinary share price 2.27% 10.69%
FTSE All-share index -2.13% 16.69%
FTSE 350 Real Estate Index 15.72% 19.10%
Capital Values
Total assets less current liabilities
(US$ million) 310.16 361.63
Net asset value per share (US$) 0.76 0.75
Ordinary share price (US$) 0.45 0.44
FTSE 350 Real Estate Index 543.17 469.38
Debt-to-equity-ratio
Debt-to-equity-ratio (1) 127.64% 134.94%
Net debt-to-equity-ratio (2) 110.04% 120.25%
Earnings Per Share
Earnings per ordinary share - basic
(US cents) 4.29 -8.96
- diluted (US cents) 4.29 -8.96
Notes:
(1) Debt-to-equity-ratio = (Total Borrowings ÷ Total Equity) x
100%
(2) Net debt-to-equity-ratio = (Total Borrowings less Cash and
Cash Equivalents less Held-For-Trading Financial Instrument ÷ Total
Equity) x 100%
FINANCIAL REVIEW
INTRODUCTION
The Group has recorded positive operating results for financial
year ended 31 December 2014, mainly attributable to the increased
level of sales at SENI Mont' Kiara, sale of three plots of lands at
the International Healthcare Park ("IHP") and disposal of the
Company's 40% stake in an associated company, Excellent Bonanza
Sdn. Bhd ("EBSB").
STATEMENT OF COMPREHENSIVE INCOME
The Group registered an increase in revenue from US$29.3 million
in 2013 to US$85.1 million in 2014; and a net profit before
taxation of US$15.4 million as compared to a net loss of US$18.8
million in 2013. The net profit included profit attributable to
SENI Mont' Kiara and Tiffani of US$16.7 million, gains on disposal
of one plot of land at IHP to AEON Vietnam Co. Ltd. of US$10.8
million, gains on disposal of another two plot of lands at IHP of
US$4.1 million and also the disposal of the 40% stake in EBSB of
US$5.3 million during the financial year. These profits are offset
by operating losses and financing costs largely attributable to
Four Points by Sheraton Sandakan Hotel and Harbour Mall Sandakan
totalling US$5.4 million, together with operating losses and
financing costs of City International Hospital of US$9.8 million.
Finance cost for these three operating assets together with those
of Aloft Kuala Lumpur Sentral Hotel totalled US$11.6 million.
Net profit attributable to equity holders of the parent was
US$9.1 million in 2014, compared to a net loss of US$19.0 million
in 2013. Tax charge for 2014 was higher at US$9.4 million (2013:
US$2.9 million) due to corresponding higher revenue.
The consolidated comprehensive loss for the year ended 31
December 2014 was US$1.24 million compared to a consolidated
comprehensive loss of US$27.7million in 2013. The former includes a
loss arising from foreign currency translation differences for
foreign operations of US$7.4 million (2013: Loss of US$6.2 million)
due to weakening of Ringgit against US Dollars during the year; and
an increase in the fair value of shares in Nam Long of US$0.13
million (2013: Increase of US$ 0.13 million). The carrying amount
of shares in Nam Long was US$12.8million as at 31 December 2014
(2013: US$ 12.7 million).
Basic and diluted earnings per share for the year ended 31
December 2014 were both US cents 4.29 (2013: Loss per share of US
cents 8.96).
STATEMENT OF FINANCIAL POSITION
Total assets at 31 December 2014 were US$445.4 million, compared
to US$494.8 million for 2013, representing a decrease of US$49.4
million. The decrease was mainly due to a decrease in inventories
following the disposal of completed units of SENI Mont' Kiara and
Tiffani, and disposal of three plots of lands at IHP. Cash and cash
equivalents (excluding the impact of deposit pledged) were higher
at US$26.0 million (2013: US$24.6 million) mainly due to higher
collection from SENI Mont' Kiara and proceeds from sale of lands in
IHP.
Total liabilities have decreased from US$324.8 million in 2013
to US$274.7 million in 2014, a decrease of US$50.1 million. The
decrease was mainly due to a decrease of trade and other payables
from US$83.6 million in 2013 to US$40.5 million in 2014. Net Asset
Value per share at 31 December 2014 was US cents 75.7 (2013: US
cents 74.8).
CASH FLOW AND FUNDING
Changes in cash flow in 2014 were positive at US$3.4 million,
compared to the positive cash flow of US$8.8 million in 2013.
The Group's subsidiaries borrow to fund property development
projects. At 31 December 2014, the Group had gross borrowings of
US$217.9 million (2013: US$229.4 million), a decrease of 5.0% over
the previous year. Net debt-to-equity ratio decreased from 120.3%
in 2013 to 110.0% in 2014. Moving forward, the Group will focus on
parring down its borrowings.
Finance income was US$0.6 million in 2014 compared to US$0.4
million in 2013. Finance costs increased from US$9.8 million in
2013 to US$13.8 million in 2014. The increase was mainly
attributable to Aloft Kuala Lumpur Sentral Hotel, City
International Hospital and IHP.
DIVIDEND
No dividend was declared or paid in 2014.
PRINCIPAL RISKS AND UNCERTAINTIES
A review of the principal risks and uncertainties facing the
Group is set out in the Directors' Report of the Annual Report.
TREASURY AND FINANCIAL RISK MANAGEMENT
The Group undertakes risk assessments and identifies the
principal risks that affect its activities. The responsibility for
the management of each key risk has been clearly identified and
delegated to the senior management of the Development Manager. The
Development Manager's senior management team is involved in the
day-to-day operation of the Group.
A comprehensive discussion on the Group's financial risk
management policies is included in the notes to the financial
statements of the Annual Report.
MONICA LAI VOON HUEY
Chief Financial Officer
Ireka Development Management Sdn. Bhd.
Development Manager
27 April 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 DECEMBER 2014
2014 2013
Continuing activities Notes US$'000 US$'000
--------------------------------------------- ------- --------- ---------
Revenue 3 85,102 29,269
Cost of sales 5 (51,821) (22,768)
--------------------------------------------- ------- --------- ---------
Gross profit 33,281 6,501
Other income 6 27,369 16,122
Administrative expenses (1,193) (1,622)
Foreign exchange gain/ (loss) 7 716 (1,105)
Management fees 8 (3,344) (3,762)
Marketing expenses (823) (1,953)
Other operating expenses (32,715) (23,635)
--------------------------------------------- ------- --------- ---------
Operating profit/ (loss) 23,291 (9,454)
--------- ---------
Finance income 577 424
Finance costs (13,760) (9,766)
--------- ---------
Net finance costs 9 (13,183) (9,342)
Gain on disposal of investment in
associate 14 5,641 -
Share of loss of equity-accounted
associate, net of tax 14 (335) -
--------- ---------
Net profit/ (loss) before taxation 10 15,414 (18,796)
Taxation 11 (9,387) (2,854)
--------------------------------------------- ------- --------- ---------
Profit/ (loss) for the year 6,027 (21,650)
--------------------------------------------- ------- --------- ---------
Other comprehensive income/ (expense), net
of tax
Items that are or may be reclassified subsequently
to profit or loss
Foreign currency translation differences
for foreign operations (7,388) (6,220)
Increase in fair value of available-for-sale
investments 15 125 126
------------------------------------------------------ --------- ---------
Total other comprehensive expense
for the year 12 (7,263) (6,094)
--------------------------------------------- ------- --------- ---------
Total comprehensive loss for the year (1,236) (27,744)
====================================================== ========= =========
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 DECEMBER 2014(cont'd)
2014 2013
Continuing activities Notes US$'000 US$'000
--------------------------------------- ------ -------- ---------
Profit/ (loss) attributable to:
Equity holders of the parent 9,091 (19,006)
Non-controlling interests (3,064) (2,644)
--------------------------------------- ------ -------- ---------
Total 6,027 (21,650)
======================================= ====== ======== =========
Total comprehensive loss attributable
to:
Equity holders of the parent 2,074 (24,971)
Non-controlling interests (3,310) (2,773)
--------------------------------------- ------ -------- ---------
Total (1,236) (27,744)
Earnings/ (loss) per share
Basic and diluted (US cents) 13 4.29 (8.96)
======================================= ====== ======== ===========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 DECEMBER 2014
2014 2013
Notes US$'000 US$'000
--------------------------------------- ------ --------- ---------
Non-current assets
Property, plant and equipment 1,018 1,146
Investment in an associate 14 - 2,252
Available-for-sale investments 15 12,822 12,697
Intangible assets 16 8,798 13,525
Deferred tax assets 17 1,683 595
--------------------------------------- ------ --------- ---------
Total non-current assets 24,321 30,215
--------------------------------------- ------ --------- ---------
Current assets
Inventories 18 381,778 428,609
Held-for-trading financial instrument 19 4,041 375
Trade and other receivables 8,359 9,654
Prepayments 337 258
Amount due from an associate 20 - 853
Current tax assets 513 233
Cash and cash equivalents 26,011 24,585
Total current assets 421,039 464,567
--------------------------------------- ------ --------- ---------
TOTAL ASSETS 445,360 494,782
======================================= ====== ========= =========
Equity
Share capital 21 10,601 10,601
Share premium 22 218,926 218,926
Capital redemption reserve 23 1,899 1,899
Translation reserve (10,247) (3,105)
Fair value reserve 251 126
Accumulated losses (60,932) (69,876)
--------------------------------------- ------ --------- ---------
Shareholders' equity 160,498 158,571
Non-controlling interests 10,187 11,429
--------------------------------------- ------ --------- ---------
Total equity 170,685 170,000
--------------------------------------- ------ --------- ---------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 DECEMBER 2014(cont'd)
Notes 2014 2013
US$'000 US$'000
----------------------------------------- ------- --------- ---------
Non-current liabilities
Amount due to non-controlling interests 24 1,120 1,440
Loans and borrowings 25 53,364 49,309
Medium term notes 26 84,993 140,877
----------------------------------------- ------- --------- ---------
Total non-current liabilities 139,477 191,626
----------------------------------------- ------- --------- ---------
Current liabilities
Trade and other payables 40,510 83,640
Amount due to non-controlling interests 24 10,222 9,008
Loans and borrowings 25 19,274 25,466
Medium term notes 26 60,237 13,739
Current tax liabilities 4,955 1,303
----------------------------------------- ------- --------- ---------
Total current liabilities 135,198 133,156
----------------------------------------- ------- --------- ---------
Total liabilities 274,675 324,782
----------------------------------------- ------- --------- ---------
TOTAL EQUITYAND LIABILITIES 445,360 494,782
========================================= ======= ========= =========
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the year ended 31 december 2014
Total Equity
Attributable
to Equity
Capital Fair Holders Non-
Share Share Redemption Translation Value Accumulated of the Controlling Total
Capital Premium Reserve Reserve Reserve Losses Parent Interests Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------- --------- --------- ------------ ------------- --------- ------------- ------------- ------------- ---------
1 January 2013 10,626 218,926 1,874 2,986 - (50,828) 183,584 13,063 196,647
Changes in
ownership
interests in
subsidiaries
(Note 29) - - - - - (42) (42) 42 -
Non-controlling
interests
contribution - - - - - - - 1,097 1,097
--------- --------- ------------ ------------- --------- ------------- ------------- ------------- ---------
Loss for the
year - - - - - (19,006) (19,006) (2,644) (21,650)
Total other
comprehensive
expense - - - (6,091) 126 - (5,965) (129) (6,094)
--------- --------- ------------ ------------- --------- ------------- ------------- ------------- ---------
Total
comprehensive
loss
Cancellation of - - - (6,091) 126 (19,006) (24,971) (2,773) (27,744)
shares (25) - 25 - - - - - -
At 31 December
2013/
1 January 2014 10,601 218,926 1,899 (3,105) 126 (69,876) 158,571 11,429 170,000
Changes in
ownership
interests in
subsidiaries
(Note 29) - - - - - (147) (147) 147 -
Non-controlling
interests
contribution - - - - - - - 1,921 1,921
--------- --------- ------------ ------------- --------- ------------- ------------- ------------- ---------
Profit for the
year - - - - - 9,091 9,091 (3,064) 6,027
Total other
comprehensive
expense - - - (7,142) 125 - (7,017) (246) (7,263)
--------- --------- ------------ ------------- --------- ------------- ------------- ------------- ---------
Total
comprehensive
loss - - - (7,142) 125 9,091 2,074 (3,310) (1,236)
Shareholders'
equity
at 31 December
2014 10,601 218,926 1,899 (10,247) 251 (60,932) 160,498 10,187 170,685
================= ========= ========= ============ ============= ========= ============= ============= ============= =========
CONSOLIDATED Statement OF Cash FlowS
For the year ended 31 december 2014
2014 2013
s US$'000 US$'000
Cash Flows from Operating Activities
Net profit/( loss) before taxation 15,414 (18,796)
Finance income (577) (424)
Finance costs 13,760 9,766
Unrealised foreign exchange (gain)/ loss (291) 1,065
Impairment of goodwill 4,727 320
Depreciation of property, plant and equipment 122 114
Gain on disposal of investment in an associate (5,641) -
Gain on disposal of property, plant and equipment (3) -
Property, plant and equipment written off - 7
Share of loss of equity-accounted associate, 335 -
net of tax
Fair value gain on amount due to non-controlling (320) -
interests
Fair value (gain)/loss on held-for-trading
financial instrument (39) 5
Operating profit/(loss) before changes in working
capital 27,487 (7,943)
Changes in working capital:
Decrease/ (increase) in inventories 29,437 (96,690)
Decrease in trade and other receivables and
prepayments 647 2,063
(Decrease)/ increase in trade and other payables (40,615) 28,884
--------------------------------------------------- --------- ---------
Cash generated from/ (used in) operations 16,956 (73,686)
Interest paid (13,760) (9,766)
Tax paid (6,679) (4,029)
--------------------------------------------------- --------- ---------
Net cash used in operating activities (3,483) (87,481)
--------------------------------------------------- --------- ---------
Cash Flows from Investing Activities
Repayment from/(advances to) associate 853 (630)
Proceeds from disposal of investment in an 5,306 -
associate
Proceeds from disposal of property, plant and 12 -
equipment
(Purchase of)/disposal of held-for-trading
financial instrument (3,651) 899
Purchase of property, plant and equipment (20) (154)
Finance income received 577 424
Net cash generated from investing activities 3,077 539
--------------------------------------------------- --------- ---------
CONSOLIDATED Statement OF Cash FlowS
For the year ended 31 december 2014 (cont'd)
2014 2013
US$'000 US$'000
Cash Flows from Financing Activities
Advances from non-controlling interests 1,635 1,081
Issuance of ordinary shares of subsidiaries to
non-controlling interests 1,921 1,097
Repayment of loans and borrowings (16,858) (17,341)
Drawdown of loans and borrowings 17,108 110,860
Decrease in pledged deposits placed in licensed
banks - 77
-------------------------------------------------- --------- -----------
Net cash generated from financing activities 3,806 95,774
-------------------------------------------------- --------- -----------
Net changes in cash and cash equivalents during
the year 3,400 8,832
Effect of changes in exchange rates (1,355) (248)
Cash and cash equivalents at the beginning of
the year 14,166 5,582
Cash and cash equivalents at the end of the year 16,211 14,166
-------------------------------------------------- --------- -----------
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 12,057 11,498
Short term bank deposits 13,954 13,087
--------------------------- -------- ---------
26,011 24,585
Less: Deposits pledged (9,800) (10,419)
--------------------------- -------- ---------
Cash and cash equivalents 16,211 14,166
--------------------------- -------- ---------
In the previous financial year, the Group acquired property,
plant and equipment with an aggregate cost of US$194,000 of which
US$40,000 was acquired by means of finance leases.
During the financial year, US$1,921,000 (2013: US$1,097,000) of
ordinary shares of subsidiaries were issued to non-controlling
shareholders, which was satisfied via cash consideration.
Notes to the Financial Statements
1 General Information
The principal activities of the Group and the Company are
acquisition, development and redevelopment of upscale residential,
commercial, hospitality and healthcare projects in the major cities
of Malaysia and Vietnam. The Group typically invests in development
projects at the pre-construction stage and may also selectively
invest in projects in construction and newly completed projects
with potential capital appreciation.
2 BASIS OF PREPARATION
2.1 Statement of compliance and going concern
The Group and the Company financial statements have been
prepared in accordance with International Financial Reporting
Standards ("IFRS"), and IFRIC interpretations issued, and
effective, or issued and early adopted, at the date of these
financial statements.
The preparation of financial statements in conformity with IFRS
requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of expenses during
the reporting period. Although these estimates are based on
management's best knowledge of the amount, event or actions, actual
results ultimately may differ from those estimates. The Board has
reviewed the accounting policies set out below and considers them
to be the most appropriate to the Group's business activities.
The financial statements have been prepared on the historical
cost basis except for available-for-sale investments and
held-for-trading financial instruments which are measured at fair
value and on the assumption that the Group and the Company are
going concerns.
The Group has prepared and considered prospective financial
information based on assumptions and events that may occur for at
least 12 months from the date of approval of the financial
statements and the possible actions to be taken by the Group.
Prospective financial information includes the Group's profit and
cash flow forecasts for the ongoing projects. In preparing the cash
flow forecasts, the Directors have considered the availability of
cash and held-for-trading financial instruments, along with the
adequacy of bank loans and medium term notes and refinancing of
these medium term notes (as described in Notes 25 and 26).
The Directors expect to fully "roll-over" the medium term notes
which are due to expire in the next 12 months, as the notes are
rated AAA (a highly sought after investment in Malaysia) and are
guaranteed by three completed inventories of the Group with
carrying amount of US$170.54 million as at 31 December 2014.
Included in the terms of the medium term notes programme is an
option for the Group to refinance the notes as provided on the
onset of the programme. The option is available until 2021. The
forecasts incorporate current payables, committed expenditure and
other future expected expenditure, along with substantial sales of
completed inventories, in addition to the disposal of certain land
held for property development and available-for-sale investments.
In the event that the Group disposes any of the three completed
inventories that guaranteed the medium term notes, the proceeds
from the disposal will reduce the amount of notes the Group seeks
to "roll-over".
Based on these forecasts, cash resources and existing credit
facilities, the Directors consider that the Group and the Company
have adequate resources to continue in business for the foreseeable
future. For this reason, the Directors continue to adopt going
concern basis in preparing the financial statements.
The Group and the Company have not applied the following
new/revised accounting standards that have been issued by
International Accounting Standards Board but are not yet
effective.
New/Revised International Financial Reporting Issued/ Effective Date
Standards Revised
------------------------------------------------------------------- ---------- -----------------------
IFRS 1 First-time Amendments resulting from Annual December Annual periods
Adoption Improvements 2011-2013 Cycle 2013 beginning on
of International (meaning of effective IFRSs) or after 1 July
Financial 2014
Reporting
Standards
----------------------- ------------------------------------------ ---------- -----------------------
IFRS 2 Share-based Amendments resulting from Annual December Annual periods
payment Improvements 2010-2012 Cycle 2013 beginning on
(definition of "vesting condition") or after 1 July
2014
----------------------- ------------------------------------------ ---------- -----------------------
IFRS 3 Business Amendments resulting from Annual December Annual periods
Combinations Improvements 2010-2012 Cycle 2013 beginning on
(accounting for contingent or after 1 July
consideration) 2014
----------------------- ------------------------------------------ ---------- -----------------------
IFRS 3 Business Amendments resulting from Annual December Annual periods
Combinations Improvements 2011-2013 Cycle 2013 beginning on
(scope exception for joint or after 1 July
ventures) 2014
----------------------- ------------------------------------------ ---------- -----------------------
IFRS 5 Non-current Amendments resulting from September September Annual periods
Assets Held 2014 Annual Improvements to 2014 beginning on
for Sale IFRSs or after 1 January
and Discontinued 2016
Operations
----------------------- ------------------------------------------ ---------- -----------------------
IFRS 7 Financial Amendments resulting from September September Annual periods
Instruments: 2014 Annual Improvements to 2014 beginning on
Disclosures IFRSs or after 1 January
2016
----------------------- ------------------------------------------ ---------- -----------------------
IFRS 8 Operating Amendments resulting from Annual December Annual periods
Segments Improvements 2010-2012 Cycle 2013 beginning on
(aggregation of segments, reconciliation or after 1 July
of segment assets) 2014
----------------------- ------------------------------------------ ---------- -----------------------
IFRS 9 Financial Finalised version, incorporating July Effective for
Instruments requirements for classification 2014 annual periods
and measurement, impairment, beginning on
general hedge accounting and or after 1 January
derecognition 2018
----------------------- ------------------------------------------ ---------- -----------------------
IFRS 10 Consolidated Amendments regarding the sale September Annual periods
Financial or contribution of assets between 2014 beginning on
Statements an investor and its associate or after 1 January
or joint venture 2016
----------------------- ------------------------------------------ ---------- -----------------------
IFRS 11 Joint Amendments regarding the accounting May 2014 Annual periods
Arrangements for acquisitions of an interest beginning on
in a joint operation or after 1 January
2016
----------------------- ------------------------------------------ ---------- -----------------------
IFRS 13 Fair Amendments resulting from Annual December Annual periods
Value Measurement Improvements 2011-2013 Cycle 2013 beginning on
(scope of the portfolio exception or after 1 July
in paragraph 52) 2014
----------------------- ------------------------------------------ ---------- -----------------------
IFRS 15 Revenue Original issue May 2014 Applies to an
from Contracts entity's first
with Customers annual IFRS financial
statements for
a period beginning
on or after 1
January 2017
----------------------- ------------------------------------------ ---------- -----------------------
IAS 1 Presentation Amendments resulting from the December Annual periods
of Financial disclosure initiative 2014 beginning on
Statements or after 1 January
2016
--------------------- -------------------------------------------- ---------- -----------------------
IAS 16 Property, Amendments resulting from Annual December Annual periods
Plant and Improvements 2010-2012 Cycle 2013 beginning on
Equipment (proportionate restatement or after 1 July
of accumulated depreciation 2014
on revaluation)
----------------------- ------------------------------------------ ---------- -----------------------
IAS 16 Property, Amendments regarding the clarification May 2014 Annual periods
Plant and of acceptable methods of depreciation beginning on
Equipment and amortisation or after 1 January
2016
----------------------- ------------------------------------------ ---------- -----------------------
IAS 19 Employee Amendments to clarify the requirements November Annual periods
Benefits that relate to how contributions 2013 beginning on
from employees or third parties or after 1 July
that are linked to service 2014
should be attributed to period
of service
----------------------- ------------------------------------------ ---------- -----------------------
IAS 19 Employee Amendments resulting from September September Annual periods
Benefits 2014 Annual Improvements to 2014 beginning on
IFRSs or after 1 January
2016
----------------------- ------------------------------------------ ---------- -----------------------
IAS 24 Related Amendments resulting from Annual December Annual periods
Party Disclosures Improvements 2010-2012 Cycle 2013 beginning on
(management entities) or after 1 July
2014
----------------------- ------------------------------------------ ---------- -----------------------
IAS 27 Separate Amendments reinstating the August Annual periods
Financial equity method as an accounting 2014 beginning on
Statements option for investments in subsidiaries, or after 1 January
(as amended joint ventures and associates 2016
in 2011) in an entity's separate financial
statements
----------------------- ------------------------------------------ ---------- -----------------------
IAS 28 Investments Amendments regarding the sale September Annual periods
in Associates or contribution of assets between 2014 beginning on
and Joint an investor and its associate or after 1 January
Ventures or joint venture 2016
----------------------- ------------------------------------------ ---------- -----------------------
IAS 28 Investments Amendments regarding the application December Annual periods
in Associates of the consolidation exception 2014 beginning on
and Joint or after 1 January
Ventures 2016
----------------------- ------------------------------------------ ---------- -----------------------
IAS 38 Intangible Amendments resulting from Annual December Annual periods
Assets Improvements 2010-2012 Cycle 2013 beginning on
(proportionate restatement or after 1 July
of accumulated depreciation 2014
on revaluation)
----------------------- ------------------------------------------ ---------- -----------------------
IAS 38 Intangible Amendments regarding the clarification May 2014 Annual periods
Assets of acceptable methods of depreciation beginning on
and amortisation or after 1 January
2016
----------------------- ------------------------------------------ ---------- -----------------------
IAS 40 Investment Amendments resulting from Annual December Annual periods
Property Improvements 2011-2013 Cycle 2013 beginning on
(inter-relationship between or after 1 July
IFRS 3 and IAS 40) 2014
----------------------- ------------------------------------------ ---------- -----------------------
The Directors anticipate that the adoption of the above
standards, amendments and interpretations in future periods will
have no material impact on the financial information of the Group
or Company except as mentioned below.
(a) IFRS 9, Financial instruments
IFRS 9, which becomes mandatory for the Group's 2018
Consolidation Financial Statements, could change the classification
and measurement of financial assets. The Directors are currently
determining the impact of IFRS 9.
(b) IFRS 15, Revenue from contracts with customers
IFRS 15 replaces the guidance in IFRS 11, Construction
Contracts, IFRS 18, Revenue, IC Interpretation 13, Customer Loyalty
Programmes, IC Interpretation 15, Agreements for Construction of
Real Estate, IC Interpretation 18, Transfer of Assets from
Customers and IC Interpretation 131, Revenue - Barter Transactions
Involving Advertising Services.
The Directors are currently determining the impact of IFRS
15.
3 revenue AND SEGmeNTAL information
The gross revenue represents the sales value of development
properties where the effective control of ownership of the
properties is transferred to the purchasers when the completion
certificate or occupancy permit has been issued.
The Company is an investment holding company and has no
operating revenue. The Group's operating revenue for the year was
mainly attributable to the sale of completed units in Malaysia and
land held for property development in Vietnam.
3.1 Revenue recognised during the year as follows:
2014 2013
US$'000 US$'000
-------------------------------- --- -------- --------
Sale of completed units 55,762 29,269
Sale of land held for property
development 29,340 -
-------------------------------- --- -------- --------
85,102 29,269
------------------------------------ -------- --------
3.2 Segmental Information
The Group's assets and business activities are managed by Ireka
Development Management Sdn. Bhd. ("IDM") as the Development Manager
under a management agreement dated 27 March 2007.
Segmental information represents the level at which financial
information is reported to the Executive Management of IDM, being
the chief operating decision maker as defined in IFRS 8. The
Executive Management consists of the Chief Executive Officer, the
Chief Financial Officer, Chief Operating Officer and Chief
Investment Officer of IDM. The management determines the operating
segments based on reports reviewed and used by the Executive
Management for strategic decision making and resource allocation.
For management purposes, the Group is organised into project
units.
The Group's reportable operating segments are as follows:
(i) Investment Holding Companies - investing activities;
(ii) Ireka Land Sdn. Bhd. - develops Tiffani by i-ZEN;
(iii) ICSD Ventures Sdn. Bhd. - owns and operates Harbour Mall
Sandakan and Four Points by Sheraton Sandakan Hotel;
(iv) Amatir Resources Sdn. Bhd. - develops SENI Mont' Kiara;
(v) Iringan Flora Sdn. Bhd. - owns and operates Aloft Kuala Lumpur Sentral Hotel;
(vi) Urban DNA Sdn. Bhd.- develops The RuMa Hotel and Residences; and
(vii) Hoa Lam-Shangri-La Healthcare Group - master developer of
International Healthcare Park; owns and operates City International
Hospital.
Other non-reportable segments comprise the Group's other
development projects. None of these segments meets any of the
quantitative thresholds for determining reportable segments in 2014
and 2013.
Information regarding the operations of each reportable segment
is included below. The Executive Management monitors the operating
results of each segment for the purpose of performance assessments
and making decisions on resource allocation. Performance is based
on segment gross profit/(loss) and profit/ (loss) before taxation,
which the Executive Management believes are the most relevant in
evaluating the results relative to other entities in the industry.
Segment assets and liabilities are presented inclusive of
inter-segment balances and inter-segment pricing is determined on
an arm's length basis.
The Group's revenue generating development projects are in
Malaysia and Vietnam.
3.3 Analysis of the group's reportable operating segments is as follows:-
Operating Segments - ended 31 December 2014
Ireka ICSD Iringan Hoa
Investment Land Ventures Amatir Flora Urban Lam-Shangri-La
Holding Sdn. Sdn. Resources Sdn. DNA Healthcare
Companies Bhd. Bhd. Sdn. Bhd. Bhd. Sdn. Bhd. Group Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------- ------------ ---------- ---------- ----------- ---------- ----------- --------------- ---------
Segment
profit/
(loss)
before
taxation 3,100 99 (5,436) 16,607 569 (1,474) 1,366 14,831
============== ============ ========== ========== =========== ========== =========== =============== =========
Included in
the measure
of segment
profit/
(loss)
are:
Revenue - 4,839 - 50,923 - - 29,340 85,102
Revenue from
hotel
operations - - 4,323 - 18,171 - - 22,494
Revenue from
mall
operations - - 1,027 - - - - 1,027
Revenue from
hospital
operations - - - - - - 2,525 2,525
Cost of
acquisition
written
down # - (150) - (8,329) - - - (8,479)
Impairment of
goodwill - - - (451) - - (4,276) (4,727)
Marketing
expenses - - - (266) - (557) - (823)
Expenses from
hotel
operations - - (4,507) - (12,499) - - (17,006)
Expenses from
mall
operations - - (1,789) - - - - (1,789)
Expenses from
hospital
operations - - - - - - (9,702) (9,702)
Depreciation
of property,
plant and
equipment - - (10) - (9) - (99) (118)
Finance costs - - (4,328) - (4,906) - (4,526) (13,760)
Finance
income 24 11 312 115 20 14 81 577
============== ============ ========== ========== =========== ========== =========== =============== =========
Segment
assets 19,471 5,150 100,570 45,938 76,447 58,587 101,643 407,806
Included in
the measure
of segment
assets are:
Addition to
non-current
assets other
than
financial
instruments
and deferred
tax assets - - - - - 1 19 20
============== ============ ========== ========== =========== ========== =========== =============== =========
# Cost of acquisition relates to the fair value adjustment in
relation to the inventories upon the acquisition of certain
subsidiaries of the Group. The cost of acquisition written down is
charged to profit or loss as part of cost of sales upon the sales
of these inventories.
Reconciliation of reportable segment revenues, profit or loss,
assets and liabilities and other material items
Profit or loss US$'000
-------------------------------------- --------
Total profit for reportable segments 14,831
Other non-reportable segments 587
Depreciation (4)
-------------------------------------- --------
Consolidated profit before taxation 15,414
====================================== ========
Operating Segments - ended 31 December 2013
Investment Ireka ICSD Amatir Iringan Urban Hoa Total
Holding Land Ventures Resources Flora DNA Lam-Shangri-La
Companies Sdn. Sdn. Sdn. Bhd. Sdn. Sdn. Bhd. Healthcare
Bhd. Bhd. Bhd. Group
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------- ------------ ---------- ---------- ----------- ---------- ----------- --------------- ---------
Segment
profit/
(loss)
before
taxation (2,217) (323) (5,927) 4,169 (4,382) (2,126) (7,559) (18,365)
============== ============ ========== ========== =========== ========== =========== =============== =========
Included in
the measure
of segment
profit/
(loss)
are:
Revenue - 1,278 433 27,558 - - - 29,269
Revenue from
hotel
operations - - 3,409 - 10,089 - - 13,498
Revenue from
mall
olperations - - 954 - - - - 954
Revenue from
hospital
operations - - - - - - 179 179
Cost of
acquisition
written -
down # - (33) (68) (5,918) - - - (6,019)
Impairment of
goodwill - - - (320) - - - (320)
Marketing
expenses - - - (711) - (1,242) - (1,953)
Expenses from
hotel
operations - - (3,833) - (10,112) - - (13,945)
Expenses from
mall
operations - - (1,659) - - - - (1,659)
Expenses from
hospital
operations - - - - - - (4,538) (4,538)
Depreciation
of property,
plant and -
equipment - (2) (10) (1) (7) - (91) (111)
Finance costs - - (4,464) (252) (3,841) - (1,209) (9,766)
Finance
income 7 4 301 28 44 13 27 424
============== ============ ========== ========== =========== ========== =========== =============== =========
Segment assets 18,273 9,703 105,954 81,743 79,231 49,696 110,545 455,145
Included in the measure
of segment assets are:
Addition to non-current
assets other than financial
instruments and deferred
tax assets - - 5 - 44 - 145 194
============================== ======= ====== ======== ======= ======= ======= ======== ========
# Cost of acquisition relates to the fair value adjustment in
relation to the inventories upon the acquisition of certain
subsidiaries of the Group. The cost of acquisition written down is
charged to profit or loss as part of cost of sales upon the sales
of these inventories.
Reconciliation of reportable segment revenues, profit or loss, assets
and liabilities and other material items
Profit or loss US$'000
---------------------------------------------- ---------
Total profit or loss for reportable segments (18,365)
Other non-reportable segments (428)
Depreciation (3)
Consolidated loss before taxation (18,796)
============================================== =========
2014 Addition to
US$'000 non-current
Revenue Depreciation Finance costs Finance income Segment assets assets
-------------------------- -------- ------------- -------------- --------------- --------------- -------------
Total reportable segment 85,102 (118) (13,760) 577 407,806 20
Other non-reportable
segments - (4) - - 37,554 -
-------------------------- -------- ------------- -------------- --------------- --------------- -------------
Consolidated total 85,102 (122) (13,760) 577 445,360 20
========================== ======== ============= ============== =============== =============== =============
2013 Addition to
US$'000 non-current
Revenue Depreciation Finance costs Finance income Segment assets assets
-------------------------- -------- ------------- -------------- --------------- --------------- -------------
Total reportable segment 29,269 (111) (9,766) 424 455,145 194
Other non-reportable
segments - (3) - - 39,637 -
-------------------------- -------- ------------- -------------- --------------- --------------- -------------
Consolidated total 29,269 (114) (9,766) 424 494,782 194
========================== ======== ============= ============== =============== =============== =============
Geographical Information - ended 31 December 2014
Malaysia Vietnam Consolidated
US$'000 US$'000 US$'000
-------------------- --------- -------- -------------
Revenue 55,762 29,340 85,102
Non-current assets 4,104 20,217 24,321
==================== ========= ======== =============
Major customer exceeded 10% of the Group's total revenues is as
follows:
Revenue
US$'000 2014 2013 Segments
----------------------- ------------------- ----------- -------------------
Hoa Lam-Shangri-La
Healthcare
AEON Vietnam Co. Ltd. 22,991 - Group
======================= =================== =========== ===================
Geographical Information - ended 31 December 2013
Malaysia Vietnam Consolidated
US$'000 US$'000 US$'000
-------------------- --------- -------- -------------
Revenue 29,269 - 29,269
Non-current assets 5,741 24,474 30,215
==================== ========= ======== =============
In 2013, no single customer exceeded 10% of the Group's total
revenue.
4 SEASONALITY
The Group's business operations are not materially affected by
seasonal factors for the period under review.
5 Cost of Sales
2014 2013
US$'000 US$'000
--------------------------------------- -------- --------
Direct costs attributable to:
Completed units 36,856 22,448
Land held for property development 10,238 -
Impairment of intangible assets (Note
16) 4,727 320
--------------------------------------- -------- --------
51,821 22,768
--------------------------------------- -------- --------
6 Other Income
2014 2013
US$'000 US$'000
----------------------------------------------- -------- --------
Dividend income 409 15
Fair value gain on held-for-trading financial -
instrument 39
Gain on disposal of property, plant and -
equipment 3
Investment income - 92
Late payment interest income 52 9
Novation fee (a) - 641
Rental income 196 209
Revenue from hotel operations (b) 22,494 13,498
Revenue from mall operations (c) 1,027 954
Revenue from hospital operations (d) 2,525 179
Sundry income 624 525
27,369 16,122
----------------------------------------------- -------- --------
(a) Novation fee
The amount relates to income receivable from a third party for
assigning the rights, title, interests, benefits and obligation
and/or liabilities under a Sales and Purchase Agreement for
acquisition of carpark bays in Nu Towers by a subsidiary of the
Group.
(b) Revenue from hotel operations
The revenue relates to the operations of two hotels - Four
Points by Sheraton Sandakan Hotel and Aloft Kuala Lumpur Sentral
Hotel which are owned by subsidiaries of the Company, ICSD Ventures
Sdn. Bhd. and Iringan Flora Sdn. Bhd. respectively. The revenue
earned from hotel operations is included in other income in line
with management's intention to dispose of the hotels.
(c) Revenue from mall operations
The revenue relates to operation of Harbour Mall Sandakan which
is owned by a subsidiary of the Company, ICSD Ventures Sdn. Bhd..
The revenue earned from mall operations is included in other income
in line with management's intention to dispose of the mall.
(d) Revenue from hospital operations
The revenue relates to operation of City International Hospital
which is owned by a subsidiary of the Company, City International
Hospital Company Limited. The revenue earned from hospital
operations is included in other income in line with management's
intention to dispose of the hospital.
7 Foreign exchange GaiN/ (LOSS)
2014 2013
US$'000 US$'000
--------------------------------- -------- --------
Foreign exchange gain/ (loss)
comprises:
Realised foreign exchange gain/
(loss) 425 (40)
Unrealised foreign exchange
gain/ (loss) 291 (1,065)
----------------------------------- -------- --------
716 (1,105)
--------------------------------- -------- --------
8 Management Fees
2014 2013
US$'000 US$'000
------------------ ---- ------------ --------
Management fees 3,344 3,762
------------------------- ------------ --------
The management fees payable to the Development Manager are based
on 2% per annum of the Group's net asset value calculated on the
last business day of June and December of each calendar year and
payable quarterly in advance. The management fees were allocated to
the subsidiaries and Company based on where the service was
provided.
In addition to the annual management fee, the Development
Manager is entitled to a performance fee calculated at 20% of the
out performance net asset value over a total compounded return
hurdle rate of 10% per annum. No performance fee has been paid or
accrued during the year (2013: US$ Nil).
9 Finance (Costs)/ INCOME
2014 2013
US$'000 US$'000
------------------------------------------------ --------- --------
Interest income from banks 577 424
Agency fees (104) (25)
Annual trustees monitoring fee (5) (7)
Bank guarantee commission - (4)
Interest on bank loans (4,526) (1,460)
Interest on financial liabilities at amortised
cost (2) (1)
Interest on medium term notes (9,123) (8,269)
(13,183) (9,342)
------------------------------------------------ --------- --------
10 net PROFIT/ (Loss) BEFORE TAXATION
2014 2013
US$'000 US$'000
--------------------------------------------------------------- ---------- --------
Net profit/ (loss) before taxation is stated after charging/(crediting):
* Auditor's remuneration
- current year 244 238
* under provision in prior year - 2
* Directors' fees 317 317
* Depreciation of property, plant and equipment 122 114
* Expenses of hotel operations 17,006 13,945
* Expenses of mall operations 1,789 1,659
* Expenses of hospital operations 9,702 4,538
* Fair value (gain)/ loss on held-for-trading financial
instrument (39) 5
* Unrealised foreign exchange (gain)/loss (291) 1,065
* Realised foreign exchange (gain)/loss (425) 40
* Impairment of goodwill 4,727 320
* Gain on disposal of property, plant and equipment (3) -
* Property, plant and equipment written off - 7
* Tax services 25 11
11 TAXATION
2014 2013
US$'000 US$'000
Current tax expense 10,587 3,470
Deferred tax credit (1,200) (616)
-------------------------------- -------------------- ------------------
Total tax expense for the year 9,387 2,854
-------------------------------- -------------------- ------------------
The numerical reconciliation between the income tax expenses and
the product of accounting results multiplied by the applicable tax
rate is computed as follows:
2014 2013
US$'000 US$'000
--------------------------------------------------- -------- ---------
Accounting profit/ (loss) 15,414 (18,796)
Income tax at a rate of 25% 3,853 (4,699)
Add :
Tax effect of expenses not deductible
in determining taxable profit 2,063 4,989
Movement of unrecognised deferred tax
benefits 2,621 1,833
Tax effect of different tax rates in subsidiaries 1,784 960
Less :
Tax effect of income not taxable in determining
taxable
Profit (1,415) (377)
Under provision in respect of prior years 481 148
--------------------------------------------------- -------- ---------
Total tax expense for the year 9,387 2,854
--------------------------------------------------- -------- ---------
The applicable corporate tax rate in Malaysia is 25%.
The Company is treated as a tax resident of Jersey for the
purpose of Jersey tax laws and is subject to a tax rate of 0%.
The applicable corporate tax rate in Singapore and Vietnam is
17% and 22% respectively.
A subsidiary of the Group, Hoa Lam-Shangri-La Healthcare Ltd
Liability Co is granted preferential corporate tax rate of 10% for
the results of the hospital operations. The preferential income tax
is given by the government of Vietnam due to the subsidiary's
involvement in the healthcare and education industries.
A Goods and Services Tax was introduced in Jersey in May 2008.
The Company has been registered as an International Services Entity
so it does not have to charge or pay local GST. The cost for this
registration is GBP200 per annum.
The Directors intend to conduct the Group's affairs such that
the central management and control is not exercised in the United
Kingdom and so that neither the Company nor any of its subsidiaries
carries on any trade in the United Kingdom. The Company and its
subsidiaries will thus not be residents in the United Kingdom for
taxation purposes. On this basis, they will not be liable for
United Kingdom taxation on their income and gains other than income
derived from a United Kingdom source.
12 OTHER COMPRENHENSIVE EXPENSE
Items that are or may be reclassified
subsequently to profit or loss, net of 2014 2013
tax US$'000 US$'000
--------------------------------------------- --------- ---------
Foreign currency translation differences
for foreign operation (7,388) (6,220)
Fair value of available-for-sale investment 125 126
(7,263) (6,094)
--------------------------------------------- --------- ---------
13 EARNINGS/ (LOSS) Per Share
Basic and diluted earnings/ (loss) per ordinary share
The calculation of basic and diluted earnings/ (loss) per
ordinary share for the year ended 31 December 2014 was based on the
profit/ (loss) attributable to equity holders of the parent and a
weighted average number of ordinary shares outstanding, calculated
as below:
2014 2013
US$'000 US$'000
---------------------------------------- --------- ---------
Profit/ (loss) attributable to equity
holders of the parent 9,091 (19,006)
---------------------------------------- --------- ---------
Weighted average number of shares 212,025 212,025
---------------------------------------- --------- ---------
Earnings/ (loss) per share (US cents):
Basic and diluted 4.29 (8.96)
---------------------------------------- --------- ---------
14 Investment in AN Associate
2014 2013
US$'000 US$'000
----------------------------------- -------- --------
At cost - unquoted shares 611 611
Share of post-acquisition reserve 1,306 1,641
Disposal of associate (1,917) -
----------------------------------- -------- --------
At 31 December - 2,252
----------------------------------- -------- --------
The Company, via a wholly-owned subsidiary ASPL M3A Limited, had
a 40% equity interest in a company known as Excellent Bonanza Sdn.
Bhd.("EBSB"), a company incorporated in Malaysia, which is a
vehicle set up to undertake a commercial development in Kuala
Lumpur, Malaysia.
A summary of the current assets, non-current assets, current
liabilities, non-current liabilities, income and expenses of the
associate for the financial year ended 31 December 2013 was as
follows:
2013
Statement of Financial Position US$'000
------------------------------------ ----- ------------------
Non-current assets 148,041
Current assets 5,281
-------------------------------------------- ------------------
Total assets 153,322
-------------------------------------------- ------------------
Non-current liabilities 3,239
Current liabilities 144,452
-------------------------------------------- ------------------
Total liabilities 147,691
Equity 5,631
-------------------------------------------- ------------------
Total Equity and Liabilities 153,322
-------------------------------------------- ------------------
Statement of Comprehensive Income
------------------------------------ ----- ---------------
Revenue 218,452
Finance income 1,627
Cost of sales, expenses including
finance costs and taxation (213,880)
-------------------------------------------- ---------------
Profit 6,199
-------------------------------------------- ---------------
The Group entered into a Sales and Purchase Agreement on 20 June
2014 to dispose of ASPL M3A Limited's interest in EBSB. The sale
consideration was US$5,306,000.
The condition precedent for the completion of the disposal of
EBSB was met on 20 August 2014, when the transfer of share was
effected and payment of the sales proceeds were received.
The Group recognised a gain on disposal of US$5,641,000 from the
sales of the associate. The details are as follows:
2014
US$'000
--------------------------------------------- ---------------------------
Sales consideration 5,306
Carrying value of associate as at 20 August
2014 (1,917)
Realisation of previously unrealised profit
in relation to sales of Aloft Kuala Lmpur
Sentral Hotel 2,252
----------------------------------------------- ---------------------------
Gain on disposal 5,641
----------------------------------------------- ---------------------------
The unrealised profit of US$2,252,000 in relation to the sale of
Aloft Kuala Lumpur Sentral Hotel to a subsidiary of the Group was
realised as EBSB is no longer an associate of the Group.
15 Available-for-Sale Investments
The available-for-sale investments represent the investment
in shares of Nam Long Investment Corporation ("Nam Long") which
the Group acquired over four tranches in 2008 and 2009.
Quoted shares
2014 US$'000
----------------------------------------------------- -------- --- -----------------
1 January - fair value 12,697
Recognised in other comprehensive income 125
At 31 December - fair value 12,822
----------------------------------------------------- -------- --- -----------------
Quoted shares
2013 US$'000
-------------------------------------------------- --------------- -----------------
1 January - fair value 12,571
Recognised in other comprehensive income 126
---------------------------------------------------- ---- ---- ---------------------
At 31 December - fair
value 12,697
---------------------------------------------------------------- -----------------
At 31 December 2014, an increase in fair value of US$0.125
million (2013: US$0.126 million) has been recognised in other
comprehensive income. The Directors have considered various
prevailing factors at year end, including the economic conditions
and market conditions of the Ho Chi Minh Stock Exchange in
assessing the fair value of the investment.
16 Intangible Assets
Licence Contracts
and Related
Relationships Goodwill Total
US$'000 US$'000 US$'000
--------------------------------- -------------------- ----------- --------
Cost
At 1 January 2013 / 31 December
2013 / 31 December 2014 10,695 6,479 17,174
--------------------------------- -------------------- ----------- --------
Accumulated impairment losses
At 1 January 2013 - 3,329 3,329
Impairment loss - 320 320
--------------------------------- -------------------- ----------- --------
At 31 December 2013 / 1 January
2014 - 3,649 3,649
Impairment loss 4,276 451 4,727
--------------------------------- -------------------- ----------- --------
At 31 December 2014 4,276 4,100 8,376
--------------------------------- -------------------- ----------- --------
Carrying amounts
At 31 December 2013 10,695 2,830 13,525
--------------------- ------- ------ -------
At 31 December 2014 6,419 2,379 8,798
--------------------- ------- ------ -------
The licence contracts and related relationships represents the
rights to develop the International Healthcare Park. Other than
Phase 1 of City International Hospital, the rest of the projects
have not commenced development. In 2014, the Group sold its
undeveloped land in International Healthcare Park consisted of Lot
D1, PT1, BV5 and BV6 to third party purchasers.
For the purpose of impairment testing, goodwill and licence
contracts and related relationships are allocated to the Group's
operating divisions which represent the lowest level within the
Group at which the goodwill and licence contracts and related
relationships are monitored for internal management purposes.
The aggregate carrying amounts of intangible assets allocated to
each unit are as follows:
2014 2013
US$'000 US$'000
---------------------------------------------- --------- ---------
Licence, contracts and related relationships
International Healthcare Park 6,419 10,695
----------------------------------------------- --------- ---------
Goodwill
SENI Mont' Kiara 432 883
Sandakan Harbour Square 1,947 1,947
----------------------------------------------- --------- ---------
2,379 2,830
---------------------------------------------- --------- ---------
The recoverable amount of licence, contracts and related
relationships has been tested based on the fair value less cost to
sell of the Land Use Rights ("LUR") owned by the subsidiaries. The
key assumption used is the expected market value of the LUR. The
Group believes that any reasonably possible changes in the above
key assumptions applied is not likely to materially cause the
recoverable amount to be lower than its carrying amount.
Impairment losses of US$451,000 (2013: US$320,000) and
US$4,276,000 (2013: US$Nil) in relation to the SENI Mont' Kiara and
International Healthcare Park projects have been recognised as the
recoverable amount of the cash generating units, estimated based on
fair value less costs to sell is below their carrying amount.
The recoverable amount of goodwill has been tested by reference
to underlying profitability of the developments using discounted
cash flow projections.
17 Deferred Tax Assets
2014 2013
US$'000 US$'000
--------------------------------------------- --------- ---------
At 1 January 595 -
Exchange adjustments (112) (21)
Deferred tax credit relating to origination
and reversal of
temporary differences during the year 1,200 616
At 31 December 1,683 595
--------------------------------------------- --------- ---------
The deferred tax assets comprise:
2014 2013
US$'000 US$'000
------------------------------------------ --------- ---------
Taxable temporary differences between
accounting profit and taxable profit of
property development units sold 1,683 595
At 31 December 1,683 595
------------------------------------------ --------- ---------
Deferred tax assets have not been recognised in respect of
unused tax losses of US$38,821,000 (2013: US$22,983,000) and other
tax benefits which includes temporary differences between net
carrying amount and tax written down value of property, plant and
equipment, accrual of construction costs and other deductible
temporary differences of US$3,722,000 (2013: US$29,000) which are
available for offset against future taxable profits. Deferred tax
assets have not been recognised due to the uncertainty of the
recovery of the losses.
18 INVENTORIES
2014 2013
Note US$'000 US$'000
------------------------------------ ------ -------- --------
Land held for property development (a) 40,560 24,403
Work-in-progress (b) 55,332 73,134
Stock of completed units, at cost 285,234 330,475
Consumables 652 597
At 31 December 381,778 428,609
-------------------------------------------- -------- --------
(a) Land held for property development
2014 2013
US$'000 US$'000
----------------------------------- --------- --------
At 1 January 24,403 24,912
Add:
Exchange adjustments (849) (1,036)
Additions 2,710 1,344
Transfer from work-in-progress 24,534 -
Transfer to stock of completed
units - (817)
------------------------------------ --------- --------
50,798 24,403
Less:
Costs recognised as expenses in
the statement of comprehensive
income during the year (10,238) -
----------------------------------- --------- --------
At 31 December 40,560 24,403
------------------------------------ --------- --------
(b) Work-in-progress
2014 2013
US$'000 US$'000
------------------------------------------------ --------- ----------
At 1 January 73,134 116,876
Add :
Exchange adjustments (3,464) (4,243)
Work-in-progress incurred during the year 10,196 112,390
Transfer to land held for property development (24,534) -
#
Transfer to stock of completed units - (151,889)
At 31 December 55,332 73,134
------------------------------------------------ --------- ----------
The above amounts included borrowing cost capitalised at
interest rate ranges from 7.53% to 12.62% per annum (2013: 7.43% to
13.58% per annum) of US$1,799,000 during the financial year (2013:
US$2,446,000).
# The land was reclassified as land held for property
development from work-in-progress in line with the Group's
intention to dispose of the land held.
19 held-for-trading financial instrument
The financial asset represents a placement in money market fund
("Fund"), which is held as a trading instrument. The market value
and the market price per unit of the Fund at 31 December 2014 were
US$4,041,000 (2013: US$375,000) and US$0.29 (2013: US$0.31)
respectively. During the year, the Group acquired additional
held-for-trading financial instrument for a consideration of
US$3,651,000 at a market price per unit of US$0.29. The Group
recognised a fair value gain of US$39,000 (2013: fair value loss of
US$5,000) in relation to the investment.
The Fund is permitted under the Deed to invest in the
following:
(i) Bank deposits;
(ii) Money market instruments such as treasury bills, bankers
acceptance, negotiable certificates of deposits, Bank Negara
Malaysia bills, Bank Negara Malaysia negotiable notes, Negotiable
Instruments of Deposit and Negotiable Islamic Debt Certificate with
maturities not exceeding one (1) year; and
(iii) Malaysian Government Securities and/or securities
guaranteed by the Government of Malaysia and/or notes/securities
issued by Bank Negara Malaysia with maturity not exceeding two (2)
years.
20 Amount Due from an Associate
The amount due from an associate was unsecured, interest free
and repayable on demand. The amount was repaid during the financial
year.
21 Share Capital
2014 2013
Number of Number of
Shares'000 Shares'000
---------------------------------- ------------ ------------
Authorised Share Capital 2,000,000 2,000,000
----------------------------------- ------------ ------------
Issued Share Capital
At 1 January 212,025 212,525
Cancellation of shares (Note 27) - (500)
----------------------------------- ------------ ------------
At 31 December 212,025 212,025
----------------------------------- ------------ ------------
2014 2013 US$'000
US$'000
------------------------------------- --------- -------------
Authorised Share Capital of US$0.05
each 100,000 100,000
-------------------------------------- --------- -------------
Issued Share Capital of US$0.05 each
At 1 January 10,601 10,626
Cancellation of shares (Note 27) - (25)
-------------------------------------- --------- -------------
At 31 December 10,601 10,601
-------------------------------------- --------- -------------
22 Share Premium
Share premium represents the excess of proceeds raised on the
issuance of shares over the nominal value of those shares. The
costs incurred in issuing shares were deducted from the share
premium.
2014 2013
US$'000 US$'000
-------------------------- --------- ---------
At 1 January/31 December 218,926 218,926
--------------------------- --------- ---------
23 CAPITAL REDEMPTION RESERVE
The capital redemption reserve was incurred after the Company
cancelled its 37,475,000 and 500,000 ordinary shares of US$0.05 per
share in 2009 and 2013 respectively.
24 AMOUNT DUE TO NON-CONTROLLING INTERESTS
2014 2013
US$'000 US$'000
----------------------------------------------------------- -------- --------
Non-current
Minority Shareholders of Shangri-La Healthcare
Investment Pte Ltd:
* Tran Thi Lam 415 533
* Econ Medicare Centre Holdings Pte Ltd 491 632
* Value Energy Sdn. Bhd. 147 189
* Thang Shieu Han 56 72
* Nguyen Quang Duc 11 14
1,120 1,440
----------------------------------------------------------- -------- --------
Current
Minority Shareholder of Bumiraya Impian
Sdn. Bhd.:
* Global Evergroup Sdn. Bhd. 1,418 1,514
Minority Shareholders of Hoa Lam Services
Co Ltd:
* Tran Thi Lam 1,725 1,613
* Tri Hanh Consultancy Co Ltd 2,510 1,191
* Hoa Lam Development Investment Joint Stock Company 188 89
* Duong Ngoc Hoa 126 60
Minority Shareholder of Urban DNA Sdn.
Bhd.:
* Ireka Corporation Berhad 4,255 4,541
10,222 9,008
----------------------------------------------------------- -------- --------
11,342 10,448
----------------------------------------------------------- -------- --------
The current amount due to non-controlling interests amounting to
US$10,222,000 (2013: US$9,008,000) is unsecured, interest free and
repayable on demand.
The non-current amount due to non-controlling interests
amounting to US$1,120,000 (2013: US$1,440,000) is unsecured,
interest free and shall only be repayable to the respective
minority shareholders if the minority shareholders cease to be a
shareholder in Shangri-La Healthcare Investment Pte Ltd.
25 Loans AND BORROWINGS
2014 2013
US$'000 US$'000
--------------------------- -------- --------
Non-current
Bank loans 53,338 49,267
Finance lease liabilities 26 42
---------------------------- -------- --------
53,364 49,309
--------------------------- -------- --------
Current
Bank loans 19,262 25,452
Finance lease liabilities 12 14
---------------------------- -------- --------
19,274 25,466
--------------------------- -------- --------
72,638 74,775
--------------------------- -------- --------
The effective interest rates on the bank loans and finance lease
arrangement for the year ranged from 5.25% to 17.70% (2013: 5.25%
to 17.70%) per annum and 2.50% to 3.50% (2013: 2.50% to 3.50%) per
annum respectively.
Borrowings are denominated in Ringgit Malaysia, United State
Dollars and Vietnam Dong.
Bank loans are repayable by monthly, quarterly or semi-annually
instalments.
Bank loans are secured by land held for property development,
work-in-progress, operating assets of the Group, pledged deposits
and some by the corporate guarantee of the Company.
Finance lease liabilities are payable as follows:
Future Present Present
minimum value of Future value of
lease minimum minimum minimum
payment Interest lease payment lease payment Interest lease payment
2014 2014 2014 2013 2013 2013
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------- --------- --------- --------------- --------------- --------- ---------------
Within
one year 15 3 12 16 2 14
Between
one and
five years 30 4 26 49 7 42
------------- --------- --------- --------------- --------------- --------- ---------------
45 7 38 65 9 56
------------- --------- --------- --------------- --------------- --------- ---------------
26 MEDIUM TERM NOTES
2014 2013
US$'000 US$'000
------------------------------------- --------- ---------
Outstanding medium term notes 147,004 156,924
Net transaction costs (1,774) (2,308)
Less:
Repayment due within twelve months* (60,237) (13,739)
Repayment due after twelve months 84,993 140,877
------------------------------------- --------- ---------
* Includes net transaction costs in relation to medium term
notes due within twelve months of US$1.25 million.
The medium term notes ("MTN") were issued pursuant to a
programme with a tenure of ten (10) years from the first issue date
of the notes. The MTN were issued by a subsidiary, to fund two
development projects known as Sandakan Harbour Square and Aloft
Kuala Lumpur Sentral Hotel in Malaysia. US$70.07 million (RM245.00
million) was drawn down in 2011 for Sandakan Harbour Square.
US$4.29 million (RM15.00 million) was drawn down in 2012 for Aloft
Kuala Lumpur Sentral Hotel and the remaining US$72.64 million
(RM254 million) in 2013. The Group secured a rollover of MTN
amounting US$12.87 million (RM45 million) which was due for
repayment on 8 December 2014 to be repaid on 8 December 2017. No
repayments were made in the current financial year.
The weighted average interest rate of the MTN was 5.56% per
annum at the statement of financial position date. The effective
interest rates of the MTN and their outstanding amounts are as
follows:
Interest rate US$'000
Maturity Dates % per annum
--------------------- ----------------- -------------- ---------
Series 1 Tranche FG
003 8 December 2017 5.90 7,150
Series 1 Tranche BG
003 8 December 2017 5.85 5,720
Series 1 Tranche FG
002 8 December 2015 5.46 12,870
Series 1 Tranche BG
002 8 December 2015 5.41 8,580
Series 2 Tranche FG
001 8 December 2015 5.46 20,020
Series 2 Tranche BG
001 8 December 2015 5.41 15,730
Series 3 Tranche FG
001 1 October 2015 5.40 2,860
Series 3 Tranche BG
001 1 October 2015 5.35 1,430
Series 3 Tranche FG
002 29 January 2016 5.50 4,290
Series 3 Tranche BG
002 29 January 2016 5.45 2,860
Series 3 Tranche FG
003 8 April 2016 5.65 36,894
Series 3 Tranche BG
003 8 April 2016 5.58 28,600
147,004
--------------------------------------- -------------- ---------
The medium term notes are secured by way of:
(i) bank guarantee from two financial institutions in respect of the BG Tranches;
(ii) financial guarantee insurance policy from Danajamin
Nasional Berhad in respect to the FG Tranches;
(iii) a first fixed and floating charge over the present and
future assets and properties of Silver Sparrow Berhad, ICSD
Ventures Sdn. Bhd. and Iringan Flora Sdn. Bhd. by way of a
debenture;
(iv) a third party first legal fixed charge over ICSD Ventures Sdn. Bhd.'s assets and land;
(v) assignment of all Iringan Flora Sdn. Bhd.'s present and
future rights, title, interest and benefits in and under the Sales
and Purchase Agreement to purchase the Aloft Kuala Lumpur Sentral
Hotel from Excellent Bonanza Sdn. Bhd.;
(vi) first fixed land charge over the Aloft Kuala Lumpur Sentral
Hotel and the Aloft Kuala Lumpur Sentral Hotel's Land (to be
executed upon construction completion);
(vii) a corporate guarantee by Aseana Properties Limited;
(viii) letter of undertaking from Aseana Properties Limited to
provide financial and other forms of support to ICSD Ventures Sdn.
Bhd. to finance any cost overruns associated with the development
of the Sandakan Harbour Square;
(ix) assignment of all its present and future rights, interest
and benefits under the ICSD Ventures Sdn. Bhd.'s and Iringan Flora
Sdn. Bhd.'s Put Option Agreements and the proceeds from the Harbour
Mall Sandakan, Four Points by Sheraton Sandakan Hotel and Aloft
Kuala Lumpur Sentral Hotel;
(x) assignment over the disbursement account, revenue account,
operating account, sale proceed account, debt service reserve
account and sinking fund account of Silver Sparrow Berhad; revenue
account of ICSD Venture Sdn. Bhd. and escrow account of Ireka Land
Sdn. Bhd.;
(xi) assignment of all ICSD Ventures Sdn. Bhd.'s and Iringan
Flora Sdn. Bhd.'s present and future rights, title, interest and
benefits in and under the insurance policies; and
(xii) a first legal charge over all the shares of Silver Sparrow
Berhad, ICSD Ventures Sdn. Bhd. and Iringan Flora Sdn. Bhd. and any
dividends, distributions and entitlements.
27 PURCHASE OF OWN SHARES AND CANCELLATION OF SHARES
The shareholders of the Company, by a special resolution passed
in a general meeting held on 25 June 2014, approved the Company's
plan to repurchase its own shares.
There was no repurchase of issued share capital in the current
financial year.
Cancellation of treasury shares
The shares repurchased in the prior year were cancelled and an
amount equivalent to their nominal value was transferred to the
capital redemption reserve in accordance with the requirement of
Section 61 of the Companies (Jersey) Law 1991. The transfer to
capital redemption reserve and the premium paid on the shares
repurchased were made out of the share premium.
28 Related Party Transactions
Transactions between the Group and the Company with Ireka
Corporation Berhad ("ICB") and its group of companies are
classified as related party transactions based on ICB's 23.07%
shareholding in the Company.
Related parties also include key management personnel defined as
those persons having authority and responsibility for planning,
directing and controlling the activities of the Group either
directly or indirectly. The key management personnel includes all
the Directors of the Group, and certain members of senior
management of the Group.
Group 2014 2013
US$'000 US$'000
--------------------------------------------------- --------- ---------
ICB Group of Companies
Group 2014 2013
US$'000 US$'000
--------------------------------------------------- --------- ---------
ICB Group of Companies
Accounting and financial reporting services
fee charged by an ICB subsidiary 53 53
Construction progress claims charged by an
ICB subsidiary 13,912 11,035
Management fees charged by an ICB subsidiary 3,344 3,762
Marketing commission charged by an ICB subsidiary 1,226 330
Project management fee for interior fit out
works charged by an ICB subsidiary - 90
Project staff costs reimbursed to an ICB
subsidiary 544 682
Rental expenses charged by an ICB subsidiary 31 -
Sales and administrative fee charged by an
ICB subsidiary - 50
Secretarial and administrative services fee
charged by an ICB subsidiary 53 53
Key management personnel
Remuneration of key management personnel
- Directors' fees 317 317
Remuneration of key management personnel
- Salaries 49 40
--------------------------------------------------- --------- ---------
Transactions between the Group with other significant related
parties are as follows:
2014 2013
US$'000 US$'000
-------------------------------------- -------- ---------
Non-controlling interests
Advances - non-interest bearing
(Note 24) 1,635 1,081
Associate - Excellent Bonanza
Sdn. Bhd.
Advances - non-interest bearing - 630
Settlement of purchase consideration
of Aloft Kuala Lumpur Sentral
Hotel - 63,867
--------------------------------------- -------- ---------
The above transactions have been entered into in the normal
course of business and have been established under negotiated
terms.
The outstanding amounts due from/ (to) ICB and its group of
companies as at 31 December 2014 and 31 December 2013 are as
follows:
2014 2013
US$'000 US$'000
--------------------------------------------------- --------- ---------
Amount due to an ICB subsidiary for accounting
and financial reporting services fee - 53
Amount due to an ICB subsidiary for construction
progress claims charged (2013: Net of LAD's
recoverable US$6,046,000) 891 965
Amount due to an ICB subsidiary for management
fees - 2,343
Amount due to an ICB subsidiary for marketing
commissions 34 151
Amount due to an ICB subsidiary for reimbursement
of project staff costs 60 488
Amount due to an ICB subsidiary for rental 2 -
expenses
Amount due to an ICB subsidiary for secretarial
and administrative services fee - 80
--------------------------------------------------- --------- ---------
The outstanding amounts due from/ (to) the other significant
related parties as at 31 December 2014 and 31 December 2013 are as
follows:
2014 2013
US$'000 US$'000
--------------------------------- --------- ---------
Non-controlling interests
Advances - non-interest bearing
(Note 24) (11,342) (10,448)
Associate - Excellent Bonanza
Sdn. Bhd.
Advances - non-interest bearing - 853
---------------------------------- --------- ---------
Transactions between the parent company and its subsidiaries are
eliminated in these consolidated financial statements.
29 Business COMBINATION
During the financial year, the Group increased its equity
interest in Shangri-La Healthcare Investment Pte Ltd ("SHIPL") from
74.11% to 75.38% (2013: 73.50% to 74.11%) resulting from an issue
of new shares in the subsidiary. Consequently, the Company's
effective equity interest in Hoa Lam-Shangri-La Healthcare Ltd
Liability Co, City International Hospital Co Ltd, Hoa
Lam-Shangri-La 3 Ltd Liability Co and Hoa Lam - Shangri-La 4 Ltd
Liability Co, subsidiaries of SHIPL, increased to 68.07% (2013:
67.20%).
The Group recognised an increase in non-controlling interests of
US$147,000 (2013: US$42,000) and an increase in accumulated losses
of US$147,000 (2013: US$42,000) resulting from the increase in
equity interest in the above subsidiaries. The transaction was
accounted for using the purchase method of accounting.
During the financial year, the Group disposed of its entire
interest in Hoa Lam-Shangri-La 2 Ltd Liability Co, a subsidiary of
the Group for a consideration of US$500,000 (VND10.50 billion). The
disposal of Hoa Lam-Shangri-La 2 Ltd Liability Co. has no
significant impact on the results of the Group.
30 DIVIDEND
The Company has not paid or declared any dividends during the
financial year ended 31 December 2014.
31 cOMMITMENTS AND Contingencies
The Group and Company do not have any contingencies at the
statement of financial position date except as follows:
Debt service reserve account
Under the medium term notes programme of up to US$147 million,
Silver Sparrow Berhad ("SSB") had opened a Ringgit Malaysia debt
service reserve account ("DSRA") and shall ensure that an amount
equivalent to RM30.0 million (US$8.58 million) (the "Minimum
Deposit") be maintained in the DSRA at all times. In the event the
funds in the DSRA falls below the Minimum Deposit, SSB shall within
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.
32 REPORT CIRCULATION
Copies of the Annual Report and Financial Statements will be
sent to shareholders for approval at the Annual General Meeting
("AGM") to be held in June 2015.
Principal Risks and Uncertainties
The Group's business is property development in Malaysia and
Vietnam. Its principal risks are therefore related to the property
market in these countries in general, and also the particular
circumstances of the property development projects it is
undertaking. More detailed explanations of these risks and the way
they are managed are contained under the heading of Financial and
Capital Risk Management Objectives and Policies in the Annual
Report.
Other risks faced by the Group in Malaysia and Vietnam include
the following:
Economic Inflation, economic recessions and movements in
interest rates could affect property development
activities.
-------------------- ---------------------------------------------------------
Strategic Incorrect strategy, including sector and geographical
allocations and use of gearing, could lead to
poor returns for shareholders.
-------------------- ---------------------------------------------------------
Regulatory Breach of regulatory rules could lead to suspension
of the Company's Stock Exchange listing and financial
penalties.
-------------------- ---------------------------------------------------------
Law and regulations Changes in laws and regulations relating to planning,
land use, development standards and ownership
of land could have adverse effects on the business
and returns for the shareholders.
-------------------- ---------------------------------------------------------
Tax regimes Changes in the tax regimes could affect the tax
treatment of the Company and/or its subsidiaries
in these jurisdictions.
-------------------- ---------------------------------------------------------
Management Changes that cause the management and control
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.
-------------------- ---------------------------------------------------------
Operational Failure of the Development Manager's accounting
system and disruption to the Development Manager's
business, or that of a third party service providers,
could lead to an inability to provide accurate
reporting and monitoring leading to a loss of
shareholders' confidence.
-------------------- ---------------------------------------------------------
Financial Inadequate controls by the Development Manager
or third party service providers could lead to
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.
-------------------- ---------------------------------------------------------
Going Concern Failure of property development projects due to
poor sales and collection, construction delay,
inability to secure financing from banks may result
in inadequate financial resources to continue
operational existence and to meet financial liabilities
and commitments.
-------------------- ---------------------------------------------------------
The Board seeks to mitigate and manage these risks through
continual review, policy setting and enforcement of contractual
rights and obligations. It also regularly monitors the economic and
investment environment in countries that it operates in and the
management of the Group's property development portfolio. Details
of the Group's internal controls are described in the Annual
Report.
RESPONSIBILITY STATEMENT
The Directors of the Group and the Company confirm that to the
best of their knowledge that:
(a) the consolidated financial statement have been prepared in
accordance with International Financial Reporting Standards,
including International Accounting Standards and Interpretations
adopted by the International Accounting Standards Board; and
(b) the sections of this Report, including the Chairman's
Statement, Development Manager's Review, Financial Review and
Principal Risks and Uncertainties, which constitute the management
report include a fair review of all information required to be
disclosed by the Disclosure and Transparency Rules 4.1.8 to 4.1.11
issued by the Financial Services Authority of the United
Kingdom.
On behalf of the Board
Mohammed Azlan Hashim Christopher Henry Lovell
Director Director
27 April 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGURGCUPAGMM
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