TIDMASPL
RNS Number : 4306W
Aseana Properties Limited
27 April 2016
27 April 2016
Aseana Properties Limited
("Aseana" or "the Company")
Full Year Results for the Year Ended 31 December 2015
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 2015*.
Operational highlights
-- Aseana has agreed to dispose of the Aloft Kuala Lumpur Sentral
Hotel ("Aloft") to Prosper Group Holdings for a gross transaction
value of RM418.7 million (approximately US$104.6 million),
which includes the purchase of the entire issued share capital
of ASPL M3B Limited and Iringan Flora Sdn. Bhd. ("the Aloft
Companies"), and assumption of certain debts, assets and
liabilities of the Aloft Companies. The transaction is expected
to complete in Q3 2016.
-- Aseana through its wholly owned subsidiary, ASPL PLB Limited
("ASPL PLB"), disposed of its 55.0% stake in ASPL PLB-Nam
Long Ltd Liability Co, the developer of the Waterside Estates
residential project for a cash consideration of US$8.2 million
and a repayment of shareholder's loan to ASPL PLB Limited
of US$1.0 million. The shareholder's loan was an interest
free advance provided by the Group to ASPL PLB-Nam Long
Ltd Liability Co in previous financial years for working
capital purposes. The shareholder's loan was undertaken
by the buyer as part of the disposal arrangement.
-- Aseana's effective stake in Nam Long reduced to 6.9% as
at 31 December 2015 following the realisation of VND118.6
billion (US$5.4 million) of its investment in Nam Long through
a placement of 5.8 million Nam Long shares in 2015. Following
a subsequent entry of another strategic investor and the
disposals of a further 2.0 million Nam Long shares in April
2016 at VND22,800 per share, raising a further US$2.0 million,
Aseana's stake in Nam Long now stands at 5.5%.
-- Sales at SENI Mont' Kiara ("SENI") progressed to 96.7% to
date based on signed sales and purchase agreements.
-- The RuMa Hotel and Residences ("The RuMa") achieved 52.4%
sales based on sales and purchase agreements signed.
-- Harbour Mall Sandakan ("HMS") was 40.8% let at the end of
2015 and is currently 63.6% occupied. Four Points by Sheraton
Sandakan Hotel ("FPSS") achieved an occupancy rate of 36.4%
as at 31 December 2015 and was 33.9% occupied in the period
to 31 March 2016.
Financial highlights
-- Revenue decreased by 74.0% to US$22.1 million in 2015 (2014:
US$85.1 million), largely due to lack of major asset sales
during the year and lower sales from SENI and Tiffani.
-- The consolidated comprehensive loss for the year ended 31
December 2015 was US$35.7 million compared to a consolidated
comprehensive loss of US$1.24 million in 2014. The former
includes a loss arising from foreign currency translation
differences of US$15.9 million (2014: Loss of US$7.4 million)
due to weakening of Ringgit against the US Dollars fromRM3.5/US$1.0
as at 31 December 2014 to RM4.3/US$1.0 as at 31 December
2015. Since the end of the period, the Ringgit has partially
recovered, the Ringgit US Dollar exchange rate on 15 April
2016 was RM3.9/US$1.0.
-- Cash and cash equivalents stood at US$23.0 million (2014:
US$26.0 million). The cash balance as at 31 December 2015
excludes other receivables of US$7.4 million related to
the disposal of the Group's 55% equity interest in ASPL
PLB-Nam Long Ltd Liability Co, the developer of the Waterside
Estates project.
-- Loss per share of US$0.0744 (2014: Earnings per share of
US$0.0429).
-- Net asset value per share US$0.614 (2014: US$0.757).
First Distribution Update
The Company continues to liaise with its lenders in respect of
the first intended capital distribution of US$10.0 million. It is
the intention of the Manager and the Company to engage further with
the lenders to seek consents for the capital distribution following
the completion of the disposal of Aloft hotel. Consideration will
also be given to make further capital distributions depending on
the availability of surplus cash within the Company and the receipt
of consents from the lenders. A further announcement will be made
when there is further clarity on the progress and timeline of
obtaining these consents.
* 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
2015. The financial statements for 2015 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
AzlanHashim, Chairman of Aseana Properties Limited said:
"The Group's 2015 results have been impacted by the negative
economic and political conditions in Malaysia, which also resulted
in a significant weakening of Ringgit against the US Dollars.
Nevertheless, the Board and the Manager continue to strive to
achieve optimum performance and value for the Group's assets, in
line with the Company's commitment to realise its assets at the
appropriate time and in the appropriate manner. The disposal of the
Aloft hotel in March 2016 represents a significant milestone for
the Group in its divestment strategy. The transaction also
highlights the strength of the Group in developing highly sought
after real estate investment assets."
-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/ Liz Yong (Corporate
Finance)
Sam Greatrex (Sales)
Tavistock 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
In 2015, global growth was moderate and again largely fell short
of general expectations, with the growth rate decreasing to 2.4%
from 2.6% in 2014. The lacklustre performance was mainly caused by
continued deceleration of economic activity in emerging and
developing economies amid weakening global trade, commodity prices
and capital flows. While tumbling commodity prices took the shine
off the big emerging markets such as Russia and Brazil, other
emerging economies like India and Vietnam surprised on the upside.
Growth in advanced economies remains modest and is expected to
continue to be uneven. There are currently three key transitions or
events of uncertainties, which will continue to influence the
global outlook. These include essentially the gradual slowdown and
rebalancing of economic activity in China, away from investment and
manufacturing, towards domestic consumption and services. The
second transition being the steep drop in crude oil and commodities
prices and the third, being the tightening of monetary policy in
the United States ("US"), in the context of a resilient US
recovery, whilst several other major advanced economies continue to
ease monetary policy to promote growth.
Meanwhile, Malaysia grappled with severe headwinds on the
economic front against a backdrop of unanticipated global commodity
and currency shocks, shrinking government revenues and domestic
political upheavals during the year. The drastic drop in the oil
and gas prices had a huge impact on Malaysia's revenue as petroleum
contributes almost 40.0% of the country's total revenue.
Additionally, the Ringgit was battered by declining exports and the
sudden reversal of capital flows in anticipation of the
long-awaited increase in the US Federal Funds Rate. Being China's
largest trading partner in Southeast Asia, the Malaysian economy
has also been stirred by the impact of a decline in the Chinese
economy and stock markets. Malaysia's gross domestic product
("GDP") growth stood at 4.5% in the last quarter of 2015 and at
5.0% for the whole of 2015. However, as a buffer, the weaker
Ringgit should provide a boost to the deflating export sector as
this will translate to a price advantage for Malaysian based
exporters.
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In Vietnam, the economy has grown at its fastest pace in five
years, despite a global trade recession and a slower-growing China,
which adversely impacted economic growth in most parts of Southeast
Asia. Stronger domestic demand, robust export performance, low
inflation and improved confidence had enabled Vietnam to establish
firmer foundations for mid-term growth. Vietnam's surging foreign
investment and strong exports represent the main factors that
fueled economic growth, with its GDP soaring to 6.7% in 2015,
surpassing the government's target of 6.2%. During the year, the
State Bank of Vietnam devalued the Vietnamese Dong on three
occasions, a total reduction of 3.0% over the year, in a bid to
remain competitive against the Chinese exports, which received a
boost from the devalued Yuan. Alongside this, several key trade
deals were signed, including the landmark Trans-Pacific Partnership
Agreement ("TPPA"), which is expected to favour Vietnam. This will
set the scene for the country to strengthen bilateral ties with
regional and international partners. In parallel with Vietnam's
improving performance, the National Assembly of Vietnam has
approved a resolution on the socio-economic development plan for
2016, which sets the goal of a 6.7% increase in the country's GDP
and aims to maintain annual inflation at below 5.0%.
In line with the overall Malaysian economy, the performance of
the property market in Malaysia was soft during 2015. Demand for
residential properties has slowed considerably and is evidenced by
the drop in the number of loans applied for such properties in the
period from June to December 2015. The number of loan applications
declined 16.0% year-on-year and the value of loans applied for
residential properties were down 25.0% year-on-year to RM17.5
billion in December 2015. Similarly, there was a 3.5% drop in the
number of property transactions during the first half of 2015
compared to the same period in 2014. Despite this slowdown
nationwide, average property prices are still on the rise albeit at
a slower pace. A number of property developers had downsized their
launches as well as sales targets, and are focusing on the
affordable housing market. The property market is expected to
remain cautious and challenging in 2016 as demand continues to be
sluggish as a result of rising cost of living, slump in crude oil
prices, the weakened Ringgit as well as depressed consumer
sentiment. However, as of the date of this report, the Ringgit has
rebounded against the backdrop of a dovish tone from Federal
Reserve and better economic data from China. The Ringgit closed at
RM3.9/US$1.0 on 15 April 2016 versus RM4.3/US$1.0 on 31 December
2015.
On the other hand, the Vietnamese property market has witnessed
early signs of recovery, with considerable improvement in 2015.
Majority of the development activities focused around the
residential sector in both Hanoi and Ho Chi Minh City. One of the
key growth drivers is the increased availability of housing credit,
to both developers and homebuyers. More attractive interest rates,
longer grace periods and higher loan-to-value ratios offered by the
banks have also helped to facilitate an overall improvement in
purchasers' confidence, thus alleviating the property market. The
office, retail and industrial sectors have all reported improved
leasing momentum in 2015 too. With the relaxation of the foreign
ownership rules with effect from 1 July 2015, volume of
transactions has increased as the law allows foreign entities and
individuals with valid visas to own properties in Vietnam. However,
there are fears that the rapid growth of the housing and credit
market will pose threats of a property bubble and a rise in bad
debts as previously experienced.
As for the performance of the Group, Aseana Properties
registered a significant decrease in revenue from US$85.1 million
to US$22.1 million, largely due to the lack of sales of major
assets during the year, coupled with lower sales revenue from SENI
Mont' Kiara ("SENI") and Tiffani due to the dampened Malaysian
property market. The Group recorded a net loss before taxation of
US$20.7 million compared to a net profit of US$15.4 million in
2014. The losses are mainly attributed to the operating losses and
financing cost of US$12.3 million on City International Hospital
("CIH") and US$4.6 million on Four Points by Sheraton Sandakan
Hotel ("FPSS") and Harbour Mall Sandakan ("HMS"), together with
US$4.6 million of impairment relating to FPSS. In addition, Aseana
Properties recorded a loss on foreign currency translation
differences of US$15.9 million compared to a loss of US$7.4 million
in 2014, as a result of the weakening of Ringgit against US Dollars
from RM3.5/US$1.0 as at 31 December 2014 to RM4.3/US$1.0 as at 31
December 2015. As highlighted in the paragraph above, the Ringgit
has since strengthened to RM3.9/US$1.0, which will result in a gain
on foreign currency translation differences if this trend continues
to the next financial reporting period.
Progress of property portfolio
Reflecting Malaysia's economic performance and sluggish property
market, sales of properties at SENI and The RuMa Hotel and
Residences ("The RuMa") have been progressing at a slower pace,
amidst depressed consumer and investment sentiments. Sales at SENI
to date progressed to approximately 96.7%. Meanwhile, sales at The
RuMa inched marginally to 52.4% to date, based on sales and
purchase agreements signed. In addition, the business environment
and tourism in Sabah have remained subdued as a result of a series
of kidnapping incidents and the disastrous earthquake which struck
Ranau, near the capital of Kota Kinabalu. FPSS recorded an
occupancy rate of 36.4% for the year ended 31 December 2015, and
slid further to 33.9% to date. The tenancy rate of HMS stands at
63.6% to date. The outlook for HMS is positive with the signing of
a number of new tenants, including a large bookstore chain, a
national cinema chain, and more recently, a local mid-market chain
of supermarkets and a household product retailer. The construction
of the cinema is underway with its opening planned for May 2016. In
March 2016, following the commendable results of the Aloft Kuala
Lumpur Sentral Hotel ("Aloft"), Aseana Properties agreed to dispose
of the Aloft hotel to Prosper Group Holdings Limited for a gross
transaction value of RM418.7 million (approx. US$104.6 million). At
the current exchange rates, Aseana Properties will record a gain of
approximately US$35.9 million from the disposal and the transaction
is expected to complete in Q3 2016. This disposal of one of the key
investments in the Company's portfolio represents a significant
milestone in the divestment investment policy approved by
shareholders on 22 June 2015, pursuant to which the Company is
seeking to realise the Company's assets in a controlled, orderly
and timely manner.
During the year, Aseana Properties has also divested its 55.0%
stake in ASPLPLB-Nam Long Ltd Liability Co, the developer of the
Waterside Estates residential project in Vietnam, to Nam Long
Investment Corporation ("Nam Long") and Nam Khang Construction
Investment Development Limited Liability Company ("Nam Khang") for
a cash consideration of US$8.2 million and a repayment of
shareholder's loan to ASPL PLB Limited of US$1.0 million. The
shareholder's loan was an interest free advance provided by the
Group to ASPL PLB-Nam Long Ltd Liability Co in previous financial
years for working capital purposes. The shareholder's loan was
undertaken by the buyer as part of the disposal arrangement. Apart
from this, Aseana Properties has also successfully realised a total
of VND118.6 billion (US$5.4 million) of its investment in Nam Long
through a placement of 5.8 million shares of Nam Long as at end of
2015. In April 2016, Aseana Properties has successfully disposed of
a further 2.0 million Nam Long shares at VND22,800 per share,
raising a further US$2.0 million. Following a subsequent entry of
another strategic investor and the disposals to date, Aseana
Properties' stake in Nam Long now stands at 5.5%. On the back of
its continuous success in the affordable homes market, Nam Long
shares have been on a gradual upward trend closing at VND22,600 per
share on 15 April 2016. On the operations side, the performance of
CIH has seen steady improvement over the year, with a 74.7%
increase in outpatient volumes, and 79.1% increase in inpatient
volumes compared to 2014. In line with the Manager's long-term
strategy to improve cost effectiveness and to increase doctors and
patients engagement, Parkway Pantai Limited ceased to be the
operator of CIH with effect from the end of 2015 and Dr. Le Quoc
Su, an experienced Chief Executive Officer with a proven track
record in the Vietnamese healthcare sector, has been appointed to
lead the operations team at CIH.
Further information on each of the Company's properties is set
out in the Manager's report on pages 7 to 9.
First distribution update
The Company continues to liaise with its lenders in respect of
the first intended capital distribution of US$10.0 million.
Following completion of the disposal of the Aloft hotel, expected
in Q3 2016, the Manager and the Company will engage further with
the lenders to seek necessary consents for the capital
distribution. Consideration will then be given to make further
capital distributions based on the availability of surplus cash
within the Company and the receipt of consents from the lenders. A
further announcement will be made when there is further clarity on
the progress and timeline of obtaining these consents.
Outlook
2015 has been yet another challenging year for the Company.
Although we are not spared the unfavourable economic and political
conditions in Malaysia, we have nevertheless continued to improve
the performance of the operating assets of the Company to prepare
them for divestment in the near future.
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The Company has achieved a significant milestone in its
divestment strategy with the recent announcement of the sale of the
Aloft hotel. This transaction underlines the Company's commitment
to divest its remaining assets at the right time and in the right
manner. Following the completion of this divestment, the net
gearing position of the Company will reduce from 1.3 to 0.5,
placing the Group in a stronger financial position to better
withstand any uncertainties in the economic situation going
forward.
On a personal note, I would like to take this opportunity to
thank my fellow Directors and the Manager for their invaluable
commitment and support throughout the year. I would also like to
extend my sincere gratitude to the Government authorities,
financiers, shareholders and business associates for being
supportive of our business endeavours.
MOHAMMED AZLAN HASHIM
Chairman
26 April 2016
DEVELOPMENT MANAGER'S REVIEW
BUSINESS OVERVIEW
2015 was another challenging year for Aseana Properties. The
slowdown of the Malaysian property market is evident in the
declining volume of transactions, amidst poor overall economic
conditions and the lingering political uncertainties. In addition,
the waning demand for commodities during the year which caused a
sharp decline in revenues from key exports, particularly the oil
and gas along with the weakening of the Malaysian Ringgit against
the United States ("US") Dollar and other major currencies, have
both affected Malaysia's business confidence and investment
sentiments. Despite these economic headwinds, the Board and the
Manager of Aseana Properties remain strongly committed to working
towards realising the Group's assets, in line with the impending
cash distributions to shareholders in 2016.
During the year, the Aloft Kuala Lumpur Sentral Hotel ("Aloft")
was awarded the Gold Winner of the International Real Estate
Federation ("FIABCI") World Prix d'Excellence Awards 2015 in the
hotel category. On the back of strong operating performance for the
past three years since its opening, Aseana Properties had received
numerous offers from prospective buyers. In March 2016, Aseana
Properties entered into an agreement to dispose of the Aloft hotel
to Prosper Group Holdings Limited. The gross transaction value of
the sale is RM418.7 million (approximately US$104.6 million), which
includes the purchase of the entire issued share capital of ASPL
M3B Limited and Iringan Flora Sdn. Bhd. (the "Aloft Companies"),
and assumption of certain debts, assets and liabilities of the
Aloft Companies. At the current exchange rate, Aseana Properties
will record a gain of approximately US$35.9 million on completion
of the disposal. The transaction is expected to complete in Q3
2016. The disposal represents a significant milestone in the
divestment policy of the Company which was approved by Shareholders
on 22 June 2015, pursuant to which the Company is seeking to
realise the Company's assets in a controlled, orderly and timely
manner.
However, in line with the broader market, the sales of the
Group's other development properties were affected by the slower
paced economy. Sales of properties at SENI Mont' Kiara ("SENI")
progressed to approximately 96.7% to date. Meanwhile, sales at The
RuMa Hotel and Residences ("The RuMa") progressed marginally to
52.4% to date based on signed sales and purchase agreements.
In Vietnam, Aseana Properties through its 100.0% owned
subsidiary, disposed of its 55.0% stake in ASPL PLB-Nam Long Ltd
Liability Co to Nam Long Investment Corporation ("Nam Long") and
Nam Khang Construction Investment Development Limited Liability
Company ("Nam Khang"), for a cash consideration of US$8.2 million
and a repayment of shareholder's loan to ASPL PLB Limited of US$1.0
million. The shareholder's loan was an interest free advance
provided by the Group to ASPL PLB-Nam Long Ltd Liability Co in
previous financial years for working capital purposes. The
shareholder's loan was undertaken by the buyer as part of the
disposal arrangement. ASPLPLB-Nam Long, a 55:45 joint venture
company between Aseana Properties and Nam Long, is the developer of
the Waterside Estates residential project in District 9, Ho Chi
Minh City, Vietnam. Separately, Aseana Properties has to date,
successfully realised VND164.2 billion (US$7.5 million) of its
investment in Nam Long, through the placement of 7.8 million shares
of Nam Long. Aseana Properties' stake in Nam Long has reduced from
6.9% (as at 31 December 2015) to 5.5% (to date), subsequent to the
disposal of 2.0 million shares in April 2016. The disposal reflects
Aseana Properties' on-going effort to strategically divest its
holding in Nam Long at the appropriate time and price.
During the year, shareholders of Aseana Properties approved the
proposals for the continuation of Aseana Properties for the next
three years to June 2018, adoption of a new divestment policy and
its intention to make capital distributions to shareholders.
Shareholders' approval on the compulsory redemption mechanism to
return cash has also been obtained and the Manager has submitted
applications for lenders' consents over the first distribution of
US$10.0 million. Consents from certain lenders for the first
distribution remain outstanding at the date of this publication as
a result of the uncertain economic condition and outlook in
Malaysia. Following the announcement of the disposal of Aloft, the
Company continues to liaise with its lenders in respect of the
first intended capital distribution of US$10.0 million.
Consideration will then be given to make further capital
distributions depending on the availability of surplus cash within
the Company and the receipt of consents from the lenders. A further
announcement will be made when there is further clarity on the
progress and timeline of obtaining these consents.
Malaysia Economic Update
Malaysia had a tumultuous year in 2015 with the seemingly
bottomless decline in oil prices and also the dim global economic
outlook. With contracting growth, rising inflation, continuous high
levels of capital flight, declining currency as well as poor
consumer and investor's confidence, the outlook for the year ahead
does seem to be a gloomy one. The Malaysian economy grew at a
moderate pace achieving a 4.5% gross domestic product ("GDP")
growth for the last quarter of 2015 and a 5.0% growth for the whole
of 2015. This is 1.0% lower than the GDP growth of 6.0% recorded
back in 2014. In this economic environment, the Malaysian economy
is expected to experience more moderate growth in 2016. In tandem
with the declining GDP growth, the Ringgit has been crippled by
contracting exports and capital flight in anticipation of the
Federal Reserve rate hike as well as the slowdown in China. The
Ringgit experienced its biggest annual drop since 1997, falling
19.0% in 2015 to RM4.3/US$1.0. This has further been exacerbated by
the political headwinds in the country due to the widely publicised
issues at 1MDB's sovereign investment fund. However, the Ringgit
has rebounded, closing at RM3.9/US$1.0 on 15 April 2016 versus
RM4.3/US$1.0 on 31 December 2015. On a side note, the
implementation of the Goods and Services Tax ("GST") in April 2015
and the removal of the fuel subsidy system during the year were
actually blessings in disguise for the country as they provided
strong fiscal safeguards and acted as built-in stabilisers for the
country's economy. On the back of a slower economic growth, the
Malaysian Government has recently announced a revised 2016 Budget
in a bid to optimise the country's development and operational
expenditures.
Despite the headwinds faced by the economy, Fitch Ratings has
affirmed Malaysia's Long-Term Foreign- and Local-Currency Issuer
Default Ratings ("IDRs") at "A-" and "A" respectively, with "Stable
Outlooks". Likewise, Moody's Investors Service has also affirmed
Malaysia's issuer and senior unsecured bond ratings at "A3".
However, Moody's has cut the outlook on the sovereign rating to
"stable" from "positive", due to the negative impact of changes in
the external environment on the growth of the nation's economy.
Malaysia has recently signed the Trans-Pacific Partnership
Agreement ("TPPA") which involves 12 Pacific Rim countries. The
TPPA is aimed at promoting economic integration through
liberalisation of trade and investment as well as to spur economic
growth and social benefits. Among other things, the agreement
contains measures to lower trade barriers such as tariffs and
measures to establish an investor-state dispute settlement
mechanism. The TPPA will provide Malaysian-owned businesses wider
access to international markets and it will support the objective
of the government of Malaysia to attract more foreign direct
investment ("FDI") going forward. Malaysia is currently the third
largest recipient of foreign direct investment in the Association
of Southeast Asian Nations ("ASEAN") and in 2015, the net inflow
from FDI amounted to a total of RM39.5 billion as compared to
RM35.3 billion last year.
Vietnam Economic Update
In contrast to most of the sub-regional economies, the recovery
in the Vietnamese economy gained noticeable momentum in 2015, with
solid GDP growth of 6.7%. The robust growth exceeded the target of
6.2% and is the highest growth recorded over the past five years.
This has been supported by the record-high foreign investment,
buoyant domestic consumption and strong exports which rose 8.1% to
achieve a turnover of US$162.4 billion in 2015. Additionally,
decisive efforts and remedial measures taken by the Vietnamese
Government have indeed helped to solidify the macroeconomic
stability in spite of the turbulence in the external environment.
In 2015, Vietnam signed four significant trade pacts which are
expected to bring great benefits to the country's export market.
The deals include the TPPA with the United States and ten other
nations in the Pacific Rim, the free trade agreement with the
Russia-led Eurasian Economic Union and the trade accords with the
European Union and South Korea. The TPPA is expected to bring
significant
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benefits to Vietnam once the deal takes effect and will serve as
a critical anchor for the next phase of structural reforms in
Vietnam.
Vietnam's consumer price index ("CPI") posted a year-on-year
rise of 0.6% in 2015, marking the lowest increase in 14 years,
largely as a result of tumbling crude oil prices. This also
underlines the effectiveness of measures taken by the Vietnamese
Government to ensure macroeconomic stability over the last few
years. Benign inflation leads to low interest rates and will curb
pressures for inflation-linked wage increases. These in turn will
aid to shape a stable economic environment that is appealing to
foreign investors. Furthermore, the aggressive move by the State
Bank of Vietnam ("SBV") to devalue the Dong by 1.0% against the US
Dollar for the third time in 2015, has been seen as an attempt to
keep the country's exports competitive in the wake of the surprise
devaluation of the Chinese Yuan. Despite the devaluations in 2015,
the Vietnamese Dong has been one of the more resilient emerging
market currencies in Asia, most of which have been experiencing
downward trends in recent months.
Additionally, Vietnam is also getting a lift from its record
high FDI in 2015, underpinned by the country's burgeoning
attractiveness as an investment destination in view of its
geographic advantage, low labour and operating costs as well as
Vietnam's participation in the various trade pacts. In 2015,
Vietnam successfully attracted foreign investments of US$22.8
billion and a total disbursed capital of US$14.5 billion. This
represents a surge of 12.5% and 17.4% respectively compared to
2014. The manufacturing and processing sector emerged as the most
attractive sector to foreign investors, taking a 67.0% share of the
total registered FDI, followed by the energy production and
distribution sector at 12.4% and the real estate sector at
10.5%.
PORTFOLIO REVIEW
MALAYSIA
Property Market Review
Plagued by domestic and external headwinds, it is understandable
that the performance of the Malaysian property market in almost all
regions was lacklustre during the year. Despite the falling number
of transactions and flat market sales, property prices continued to
increase, albeit at a slower rate, driven by higher costs and also
as a result of the implementation of GST in April 2015. The
country's property market has been further softened by the weak
Ringgit and plunging oil and commodity prices. The once resilient
market has now turned into a market filled with hesitancy as many
potential buyers and investors are adopting the "wait and see"
approach. As a result of various cooling measures, softening demand
and a slowdown in the economy, market sentiment for residential
properties remains cautious going forward.
On the flip side, the challenging market conditions have brought
greater levels of creativeness in marketing strategies and product
innovations with more projects offering 'easy' or installment
payment schemes to purchasers to boost sales. The on-going and
upcoming infrastructure works that include the Light Rail Transit
("LRT") extension lines and Mass Rail Transit ("MRT") lines will
aid more transit oriented developments along these transportation
routes. Furthermore, Kuala Lumpur City Hall ("DBKL") has announced
a 50.0% discount on development charges for high-density projects
commencing September 2015. This discount will serve as an incentive
to encourage developers to continue building in the city despite
the unfavourable economy and market conditions. In order to obtain
the discount, developers are required to fulfill two qualifying
criteria which include an increase in allowable density, whereby
the approved development's density or plot ratio must be more than
the standard set in the Kuala Lumpur Draft Plan 2020, and an
upgrade in land use zoning, which involves the change of land use
to a higher status in the zoning hierarchy.
The retail market was soft in 2015 as consumer sentiment
weakened following the implementation of the GST in April 2015,
coupled with the weak local currency and road toll hikes. Occupancy
rates for the last quarter of 2015 fell to 82.5% while the market
rentals and prices remained stable. The majority of retailers are
adopting a cautious approach in their expansion plans amid poor
sales performance and reduced profitability.
Meanwhile, the hospitality sector of Malaysia experienced a
slump in 2015 due to the slowdown in the global and local
economies, which resulted in numerous companies reducing their
business travelling, meetings and seminars. In addition, the
adverse economic conditions have also affected the holiday patterns
of Malaysians with a large proportion cutting back on travelling
budgets. During the first ten months of 2015, Malaysia recorded a
total of 21.1 million tourists, representing a decrease of 7.6%
compared to the same period in 2014. In a bid to boost the
country's tourism industry, the Malaysian Government will be
introducing new measures such as e-visa applications and increasing
promotional activities in target markets. Furthermore, the
Government has also launched a visa-free entry programme for
tourists from China since October 2015. With slow demand and a
healthy pipeline of future supply, in February 2016, the Government
decreed that DBKL will no longer issue licences for construction of
new hotels in the federal capital until further notice. The ruling
applies to all types of hotels ranging from the 6-star
establishments to budget hotels. However, hotels that have already
received planning permission but have yet to start construction
will not be affected.
Aseana Properties has six investments 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.
Sales at SENI Mont' Kiara have progressed to 96.7% 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, 99.7% of the 399 residential units have been sold. The debt
on the project has been fully repaid.
-- The RuMa Hotel and Residences
This project is strategically located in the heart of Kuala
Lumpur City Centre ("KLCC") on JalanKia 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 project
consists of 199 units of luxury residences, The RuMa Residences,
and a 253-room luxury bespoke hotel, The RuMa Hotel, on the 43,559
sqft 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 of the main building is underway and completion is
expected 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, the total
sales at both The RuMa Hotel and Residences have increased
marginally to approximately 52.4% based on the sales and purchase
agreements signed. A further 3.1% has been booked with
depositspaid. The Manager has conducted various marketing and
advertising campaigns during the year to boost sales, both locally
and internationally and is now planning for more similar activities
in 2016.
The land was part financed by a term-loan facility of RM65.3
million (US$15.2 million), which was fully drawn down. RM29.4
million (US$6.8 million) of the term loan was repaid during 2015
thus reducing the outstanding loan to RM35.9 million (US$8.4
million) as at 31 December 2015. The development of the project is
funded by progressive payments from buyers.
-- Aloft Kuala Lumpur Sentral Hotel
The Aloft Kuala Lumpur Sentral Hotel ("Aloft") is part of the
Kuala Lumpur Sentral project which consists of two office towers
and a business class hotel, centrally located in Kuala Lumpur's
urban transportation hub and was jointly developed by Aseana
Properties and Malaysian Resources Corporation Berhad ("MRCB") on a
40:60 basis. The 482-room Aloft hotel is managed by Starwood Asia
Pacific Hotels & Resort Pte Ltd under the "Aloft" brand name
and operations of the hotel commenced on 22 March 2013.
During the year, the Aloft hotel bagged several awards
signifying its notable performance such as the Gold Award at the
FIABCI World Prix d'Excellence Awards 2015 in the hotel category,
Malaysia's Expatriate Lifestyle Magazine Best Short Stay and Best
Hotel Experience Excellence Awards 2015, TripAdvisor's Certificate
of Excellence Winner 2015 and TripAdvisor's Travellers' Choice
Winner 2015.
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In March 2016, Aseana Properties announced that it agreed to
dispose of the Aloft hotel to Prosper Group Holdings Limited for a
gross transaction value of RM418.7 million (approximately US$104.6
million), which included the purchase of the entire issued share
capital of ASPL M3B Limited and Iringan Flora Sdn. Bhd. (the "Aloft
Companies"), and assumption of certain debts, assets and
liabilities of the Aloft Companies. Aseana Properties will be
recording a gain of approximately US$35.9 million on the completion
of the disposal and the proceeds from the disposal will be used to
fully repay the Medium Term Note ("MTN") issued for the Aloft
hotel, and to partly repay the MTNs issued for Harbour Mall
Sandakan ("HMS") and Four Points by Sheraton Sandakan ("FPSS"). The
transaction is expected to complete in Q3 2016.
-- 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, whereby 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.
HMS and FPSS commenced business in July and May 2012
respectively. The occupancy rate at the Harbour Mall Sandakan is
currently recorded at 63.6%. Notable tenants in the mall include
Popular Bookstore, Levi's, The Body Shop, Watson's and McDonald's
amongst others. In addition, a national cinema chain, Lotus Five
Star, is also due to open its first cinema in Sandakan at HMS in
May 2016. The Manager has also recently secured the tenancies of
TKS Grocer, a local mid-market chain of supermarkets and Mr. DIY, a
household product retailer. Leasing activities at Harbour Mall
Sandakan to both local and international retailers are still
ongoing. Meanwhile, FPSS recorded an occupancy rate of 33.9% to
date, with an ADR of RM222.9. 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 condition in Sabah continues to suffer from a number of
unfortunate events during the year. The disastrous earthquake which
struck Ranau, near the capital city of Kota Kinabalu and also a
number of kidnapping incidents have brought on negative sentiments
to Sabah's business environment and tourism. 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$57.1 million) which is part of the RM515.0 million
(US$119.9 million) MTN programme announced in November 2011. The
MTNs were fully issued as at 31 December 2011. It is envisaged that
approximately RM125.0 million (US$29.1 million) from the disposal
proceeds of Aloft Hotel will be used to settle a portion of the MTN
of Sandakan Harbour Square, upon completion of the Aloft Hotel sale
transaction in Q3 2016.
-- Kota Kinabalu Seafront resort & residences
Facing the South China Sea, this project is intended to be 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. Marketing efforts to dispose of the land are
on-going. However, similar to the Sandakan Harbour Square
properties, the prospects have been affected by the subdued
business environment and tourism in Sabah.
VIETNAM
Property Market Review
The Vietnamese property market has achieved significant growth
in the last year, as reflected in the rising number of successful
transactions, new projects, decreasing inventories and availability
of credit. Driven largely by the strong domestic growth and steady
progress in restructuring the economy, the recent developments in
the market are undoubtedly positive. In addition, with the
implementation of the 2014 Law on Housing and Real Estate Business
on 1 July 2015, foreign individuals and companies are able to buy
and own residential property in the country as long as they have a
valid visa. However, due to the rapid growth of real estate loans,
the SBV has issued a guideline to all banks and credit institutions
to enforce greater scrutiny on loans given to property purchasers
to safeguard the quality of credit growth.
The residential market showed remarkable recovery in 2015, with
numerous property launches, positive sales volume and improved
prices, particularly for the mid-to-high end properties in both
Hanoi and Ho Chi Minh City ("HCMC"). 2015 saw more than 41,787
units of condominium being launched from 78 projects mostly in the
East (47.0%) and the South (27.0%) of HCMC, an increase of 122.0%
year-on-year. Meanwhile, in Hanoi, more than 28,300 units of
apartment were up for sale in 2015, an increase of 70.0% compared
to 2014. The overall market sentiment remained encouragingly
positive throughout the year. 2015 ended with a record high sales
volume with an estimated 36,160 units being sold in HCMC, up by
98.0% year-on-year, and more than 21,200 units were sold in
Hanoi.
Likewise, the Vietnamese office market's average occupancy
peaked at 94.0% in the last quarter of 2015, its best performance
in the last five years. In addition, total supply of offices
increased by 4.0% quarter-on-quarter and 8.0% year-on-year to 1.6
million square metres. The increase in demand reflects growth in
the country's GDP and FDI capital which were helped by the
introduction of the revised real estate law and the signing of
trade agreements. On the retail front, retail stock in HCMC
increased by 7.0% quarter-on-quarter as a result of the opening of
a few shopping centres, namely the Pearl Plaza at Binh Thanh
District and Vincom Mega Mall Thao Dien at District 2. In parallel
with rising FDI, foreign retailing giants are establishing large
shopping centres and are offering aggressive rents which raised the
occupancy rate to approximately 94.0%. However, average rental rate
in the last quarter of 2015 dropped by 6.0% quarter-on-quarter due
to the entrance of new projects offering competitive rents. With
the easing tariffs under the TPPA, Vietnam's attractiveness to
international retailers will be further enhanced.
Vietnam welcomed 7.9 million international visitors in 2015, a
slight drop of 0.2% as compared to the same period last year. The
lingering concerns over the anti-Chinese protests back in 2014
together with a slowing Chinese economy have caused a drop in the
number of visitors from Vietnam's largest single tourist market,
China. However, the Vietnamese Government introduced its visa
exemption policy on 1 July 2015, offering waivers to 22 countries
in Europe and Asia, including Britain, France, Germany, Russia and
the nine other ASEAN member states, for visits of 15 days or less.
Additionally, the government will be looking to further relax visa
regulations via regional cooperation agreements to boost tourist
arrivals.
Aseana Properties currently has three investments in Vietnam.
The highlights are as follow:
-- International Healthcare Park and City International Hospital
The International Healthcare Park ("IHP") is a planned mixed
development over 37.5 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 71.1% 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 have been
allocated for residential developments. Out of a total of 19 plots
of land, to date three plots have been sold.
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). Parkway Pantai Limited has ceased to
be the operator of CIH with effect from 31 December 2015. This is
in line with the Manager's long-term strategy to localise the
management of the hospital to optimise operating costs and to
improve doctors and patients engagement for CIH. The hospital has
appointed Dr. Le Quoc Su as the Chief Executive Officer ("CEO") to
lead the operations team. Prior to joining CIH, Dr. Su was the
Group CEO of Hoan My Medical Corporation, Vietnam's largest
healthcare group.
To part finance the payment for the land and working capital,
the joint venture companies have secured total loan facilities of
US$24.7 million, of which US$19.4 million had been drawn down and
remains outstanding as at 31 December 2015. 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$41.6 million remains outstanding as at 31 December
2015.
-- Nam Long Investment Corporation
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In 2008, Aseana Properties acquired a strategic minority stake
in Nam Long, a private property development company in Vietnam with
market leadership in the low to medium-end segment of the market.
Nam Long was subsequently listed on the Ho Chi Minh Stock Exchange
on 8 April 2013. To date, Aseana Properties has successfully
realised VND164.2 million (US$7.5 million) of its investment in Nam
Long, through the placement of 7.8 million shares of Nam Long.
Aseana Properties' stake in Nam Long has reduced from 6.9% (as at
31 December 2015) to 5.5% (to date), subsequent to the disposal of
2.0 million shares in April 2016. The other notable foreign
shareholders in Nam Long are Keppel Land, Goldman Sachs, Mekong
Capital and International Finance Corporation.
The business performance of Nam Long continues to be on a
positive track with the "E-homes" being its main revenue driver.
Nam Long is one of the pioneer developers of affordable housing in
Vietnam and "E-homes" is a well recognised brand for affordable
apartments in Vietnam. Nam Long achieved a year-on-year net profit
increase of 113.0% and has also successfully sold 691 units of
affordable housing during last quarter of 2015, raking in a total
of 1,969 units of total sales in 2015 which represents an increase
of 47.0% compared to 2014. On 14 January 2016, the Board of
Directors of Nam Long approved the issuance of convertible bonds to
strategic investors to fund its land bank and project expansion.
For the year ended 2015, Nam Long reported an unaudited revenue of
VND1,258.5 billion (US$55.9 million) and its unaudited net profit
after tax stood at VND208.5 billion (US$9.3 million).
-- Waterside Estates
The Waterside Estates was initially planned as 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. As part of the realisation plan announced
in 2015, Aseana Properties disposed of its 55.0% stake in the
project for a cash consideration of US$8.2 million and a repayment
of shareholder's loan to ASPL PLB Limited of US$1.0 million, with a
gain of US$0.7 million. The shareholder's loan is an interest free
advance provided by the Group to ASPL PLB-Nam Long Ltd Liability Co
in previous financial years for working capital purposes. The
shareholder's loan was undertaken by the buyer as part of the
disposal arrangement.
OUTLOOK
Despite a tough 2015, the Manager, together with the Board of
Directors of Aseana Properties, continued to remain focused on
divesting investments in its portfolio and enhancing the value of
its operating assets through diligent management. The Board of
Directors and Manager are strongly committed to returning capital
to shareholders, as iterated earlier, as soon as lenders' consents
are received.
The market conditions in Malaysia are expected to remain
sluggish due to a number of factors, namely the falling Ringgit,
political uncertainty as well as reducing oil and commodity prices.
The pace of the economy in both the external and internal markets
is affecting all economic sectors and the property sector is no
exception. In line with the lacklustre 2016 Budget and with
continuous cautious lending practices by local banks, most property
developers will foresee a somewhat bleak property market this year.
On the flip side, the conditions in Vietnam have been recovering
well and 2015 has marked a new turning point for Vietnam's economy,
hence creating a solid foundation for the country towards achieving
greater and more sustainable growth. This will hopefully benefit
Aseana Properties' investments in Vietnam as we look to divest them
in a timely and strategic manner.
In closing, we would like to thank the Board of Aseana
Properties, our advisers and business associates for their support
and guidance throughout 2015.
LAI VOON HON
President / Chief Executive Officer
Ireka Development Management Sdn. Bhd.
Development Manager
26 April 2016
PERFORMANCE SUMMARY
Year ended Year ended
31 December2015 31 December2014
--------------------------------------- ----------------- -----------------
Total Returns since listing
Ordinary share price -55.00% -55.00%
FTSE All-share index 3.38% 6.03%
FTSE 350 Real Estate Index -37.33% -42.09%
One Year Returns
Ordinary share price 0.00% 2.27%
FTSE All-share index -2.50% -2.13%
FTSE 350 Real Estate Index 8.22% 15.72%
Capital Values
Total assets less current liabilities
(US$ million) 197.75 310.16
Net asset value per share (US$) 0.61 0.76
Ordinary share price (US$) 0.45 0.45
FTSE 350 Real Estate Index 587.81 543.17
Debt-to-equity ratio
Debt-to-equityratio(1) 142.74% 127.64%
Net debt-to-equityratio(2) 125.28% 110.04%
Earnings Per Share
Earnings per ordinary share - basic
(US cents) (7.44) 4.29
- diluted (US cents) (7.44) 4.29
Notes:
(1) Debt-to-equityratio = (Total Borrowings Ö Total Equity) x
100%
(2) Net debt-to-equityratio = (Total Borrowings less Cash and
Cash Equivalents less Held-For-Trading Financial Instrument Ö Total
Equity) x 100%
FINANCIAL REVIEW
INTRODUCTION
The Group recorded comprehensive losses for the financial year
ended 31 December 2015, mainly due to losses of its operating
assets and foreign currency translation differences for foreign
operations.
STATEMENT OF COMPREHENSIVE INCOME
The Group registered a decrease in revenue from US$85.1 million
in 2014 to US$22.1 million in 2015; and a net loss before taxation
of US$20.7 million as compared to a net profit before taxation of
US$15.4 million in 2014. The net loss included operating losses
attributable to City International Hospital of about US$12.3
million, Four Points by Sheraton Sandakan Hotel and Harbour Mall
Sandakan totalling about US$4.6 million, together with impairment
loss on cost of acquisition and goodwill in relation to Four Points
by Sheraton Sandakan Hotel totalling US$4.6 million.
Net loss attributable to equity holders of the parent was
US$15.8 million in 2015, compared to a net profit of US$9.1 million
in 2014. Tax charge for 2015 was lower at US$1.3 million (2014:
US$9.4 million) due to corresponding lower revenue.
The consolidated comprehensive loss for the year ended 31
December 2015 was US$35.7 million compared to a consolidated
comprehensive loss of US$1.2 million in 2014. The former included
losses arising from foreign currency translation differences for
foreign operations of US$15.9 million (2014: Loss of US$7.4
million) due to weakening of Ringgit against US Dollars from 3.4965
as at 31 December 2014 to 4.2937 as at 31 December 2015; and an
increase in the fair value of shares in Nam Long Investment
Corporation ("Nam Long") of US$2.19 million (2014: Increase of
US$0.13 million). The carrying amount of shares in Nam Long was
US$9.9 million as at 31 December 2015 (2014: US$12.8 million),
following the disposal of 5,800,000 number of shares for a
consideration of US$5,359,000, recording a gain on disposal of
US$806,000.
Basic and diluted loss per share for the year ended 31 December
2015 were both US cents 7.44 (2014: Earnings per share of US cents
4.29).
STATEMENT OF FINANCIAL POSITION
Total assets at 31 December 2015 were US$368.9 million, compared
to US$445.4 million for 2014, representing a decrease of US$76.5
million. The decrease was mainly due to a decrease in inventories
following the disposal of completed units of SENI Mont' Kiara and
Tiffani, the disposal of the ASPL PLB Limited's 55% equity interest
in ASPL PLB-Nam Long Ltd Liability Co, a subsidiary of the Group
owning the Waterside Estates project, the disposal of some shares
in Nam Long and translation effect due to weaker Ringgit against US
Dollars. Cash and cash equivalents were lower at US$23.0 million
(2014: US$26.0 million).Included in the other receivables at 31
December 2015 is US$6.4 million representing the balance of
consideration receivable for the disposal of the Group's 55% equity
interest in ASPL PLB-Nam Long Ltd Liability Co, a subsidiary of the
Group. Other receivables also includes an interest free advance of
US$1.0 million which was provided by the Group to ASPL PLB-Nam Long
Ltd Liability Co in previous financial years in the form of a
shareholder's loan for working capital purposes. The shareholder's
loan was undertaken by the buyer as part of the disposal
arrangement.
The balance of consideration receivable of US$6.4 million was
subsequently received on 13 January 2016, while US$0.9 million out
of the US$1.0 million shareholder's loan was received on 3 March
2016.
Total liabilities have decreased from US$274.7 million in 2014
to US$237.4 million in 2015, a decrease of US$37.3 million. This
was mainly due to translation differences for the Medium Term Notes
("MTNs") due to weakening of Ringgit against US Dollars during the
financial year. Net Asset Value per share at 31 December 2015 was
US cents 61.4 (2014: US cents 75.7).
CASH FLOW AND FUNDING
Cash flow from operation was negative at US$10.9 million in
2015, compared to a negative cash flow of US$3.5 million in 2014.
The negative cash flow was attributable to losses recorded in the
year, mainly by City International Hospital, Four Points by
Sheraton Sandakan Hotel and Harbour Mall Sandakan.
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During the year, the Group generated net cash flow of US$8.9
million (2014: US$3.1 million) from investing activities, mainly
due to disposal of 5,800,000 number of shares in Nam Long.
The Group's subsidiaries borrow to fund property development
projects. At 31 December 2015, the Group had gross borrowings of
US$187.8 million (2014:US$217.9 million), a decrease of 13.8% over
the previous year. However, net debt-to-equity ratio increased from
110.0% in 2014 to 125.0% in 2015 basing on a reduced shareholders'
funds due to losses incurred during the year.
Finance income was US$0.4 million in 2015 compared to US$0.6
million in 2014. Finance costs decreased from US$13.8 million in
2014 to US$11.0 million in 2015. The financing costs were mainly
attributable to City International Hospital, Aloft Kuala Lumpur
Sentral Hotel("Aloft Hotel"),Four Points by Sheraton Sandakan Hotel
and Harbour Mall Sandakan.
event after statement of financial position date
Subsequent to year end, the Group entered into a sale and
purchase agreement to dispose of the Aloft Hotel to Prosper Group
Holdings Limited ("Prosper Group"). The gross transaction value is
approximately RM418.70 million (US$104.60 million), which includes
the purchase of the entire issued share capital of ASPL M3B Limited
and Iringan Flora Sdn. Bhd. ("Aloft Companies"), and assumption of
certain debts, assets and liabilities of the Aloft Companies. The
transaction, which is expected to complete in Quarter 3, 2016, is
conditional upon satisfactory completion of a due diligence review
by Prosper Group, and certain consents being obtained from Starwood
Asia Pacific Hotels & Resorts Pte Ltd, the operator of the
Aloft Hotel, and consents from the Company's financiers for the
Aloft Hotel. All proceeds received from the sale will be used to
repay the MTNs issued for the Aloft Hotel and to partly repay the
MTNs issued for the Harbour Mall Sandakan and Four Points Sheraton
Sandakan Hotel. This will significantly reduce the gearing of the
Group.
DIVIDEND
No dividend was declared or paid in 2015.
PRINCIPAL RISKS AND UNCERTAINTIES
A review of the principal risks and uncertainties facing the
Group is set out in the Directors' Report of the Annual Report.
TREASURY AND FINANCIAL RISK MANAGEMENT
The Group undertakes risk assessments and identifies the
principal risks that affect its activities. The responsibility for
the management of each key risk has been clearly identified and
delegated to the senior management of the Development Manager. The
Development Manager's senior management team is involved in the
day-to-day operation of the Group.
A comprehensive discussion on the Group's financial risk
management policies is included in the notes to the financial
statements of the Annual Report.
MONICA LAI VOON HUEY
Chief Financial Officer
Ireka Development Management Sdn. Bhd.
Development Manager
26 April 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 DECEMBER 2015
2015 2014
Continuing activities Notes US$'000 US$'000
---------------------------------------------- ------ --------- ---------
Revenue 3 22,096 85,102
Cost of sales 5 (21,612) (51,821)
---------------------------------------------- ------ --------- ---------
Gross profit 484 33,281
Other income 6 29,561 27,369
Administrative expenses (1,787) (1,193)
Foreign exchange (loss)/ gain 7 (2,915) 716
Management fees 8 (3,115) (3,344)
Marketing expenses (288) (823)
Other operating expenses (31,916) (32,715)
---------------------------------------------- ------ --------- ---------
Operating (loss)/ profit (9,976) 23,291
--------- ---------
Finance income 355 577
Finance costs (11,031) (13,760)
--------- ---------
Net finance costs 9 (10,676) (13,183)
Gain on disposal of investment in
associate 14 - 5,641
Share of loss of equity-accounted
associate, net of tax 14 - (335)
--------- ---------
Net (loss)/ profit before taxation 10 (20,652) 15,414
Taxation 11 (1,278) (9,387)
---------------------------------------------- ------ --------- ---------
(Loss)/ profit for the year (21,930) 6,027
---------------------------------------------- ------ --------- ---------
Other comprehensive income/ (expense), net
of tax
Items that are or may be reclassified subsequently
to profit or loss
Foreign currency translation differences
for foreign
operations (15,920) (7,388)
Increase in fair value of available-for-sale
investments 15 2,190 125
---------------------------------------------- ------ --------- ---------
Total other comprehensive expense
for the year 12 (13,730) (7,263)
---------------------------------------------- ------ --------- ---------
Total comprehensive loss for the year (35,660) (1,236)
====================================================== ========= =========
The notes to the financial statements form an integral part of
the financial statements.
2015 2014
Continuing activities Notes US$'000 US$'000
---------------------------------------- ------- --------- --------
(Loss)/ profit attributable to:
Equity holders of the parent (15,784) 9,091
Non-controlling interests (6,146) (3,064)
---------------------------------------- ------- --------- --------
Total (21,930) 6,027
======================================== ======= ========= ========
Total comprehensive loss attributable
to:
Equity holders of the parent (29,748) 2,074
Non-controlling interests (5,912) (3,310)
---------------------------------------- ------- --------- --------
Total (35,660) (1,236)
======================================== ======= ========= ========
(Loss)/ earnings per share
Basic and diluted (US cents) 13 (7.44) 4.29
============================== ====== ======= =====
The notes to the financial statements form an integral part of
the financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 DECEMBER 2015
2015 2014
Notes US$'000 US$'000
--------------------------------------- ------ --------- ---------
Non-current assets
Property, plant and equipment 861 1,018
Investment in an associate 14 - -
Available-for-sale investments 15 9,917 12,822
Intangible assets 16 7,233 8,798
Deferred tax assets 17 1,337 1,683
--------------------------------------- ------ --------- ---------
Total non-current assets 19,348 24,321
--------------------------------------- ------ --------- ---------
Current assets
Inventories 18 307,328 381,778
Held-for-trading financial instrument 19 - 4,041
Trade and other receivables 17,741 8,359
Prepayments 218 337
Current tax assets 1,360 513
Cash and cash equivalents 22,978 26,011
Total current assets 349,625 421,039
--------------------------------------- ------ --------- ---------
TOTAL ASSETS 368,973 445,360
======================================= ====== ========= =========
Equity
Share capital 20 10,601 10,601
Share premium 21 218,926 218,926
Capital redemption reserve 22 1,899 1,899
Translation reserve (26,401) (10,247)
Fair value reserve 2,441 251
Accumulated losses (77,301) (60,932)
--------------------------------------- ------ --------- ---------
Shareholders' equity 130,165 160,498
Non-controlling interests 1,433 10,187
--------------------------------------- ------ --------- ---------
Total equity 131,598 170,685
--------------------------------------- ------ --------- ---------
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April 27, 2016 02:00 ET (06:00 GMT)
The notes to the financial statements form an integral part of
the financial statements.
Notes 2015 2014
US$'000 US$'000
----------------------------------------- ------- --------- ---------
Non-current liabilities
Amount due to non-controlling interests 23 - 1,120
Loans and borrowings 24 55,823 53,364
Medium term notes 25 10,330 84,993
----------------------------------------- ------- --------- ---------
Total non-current liabilities 66,153 139,477
----------------------------------------- ------- --------- ---------
Current liabilities
Trade and other payables 37,336 40,510
Amount due to non-controlling interests 23 10,014 10,222
Loans and borrowings 24 13,500 19,274
Medium term notes 25 108,190 60,237
Current tax liabilities 2,182 4,955
----------------------------------------- ------- --------- ---------
Total current liabilities 171,222 135,198
----------------------------------------- ------- --------- ---------
Total liabilities 237,375 274,675
----------------------------------------- ------- --------- ---------
TOTAL EQUITYAND LIABILITIES 368,973 445,360
========================================= ======= ========= =========
Included in the other receivables at 31 December 2015 is
US$6,400,000 representing the balance of consideration receivable
for the disposal of the Group's 55% equity interest in ASPL PLB-Nam
Long Ltd Liability Co, a subsidiary of the Group. Other receivables
also includes an interest free advance of US$1,000,000 which was
provided by the Group to ASPL PLB-Nam Long Ltd Liability Co in
previous financial years in the form of a shareholder's loan for
working capital purposes. The shareholder's loan was undertaken by
the buyer as part of the disposal arrangement.
The balance of consideration receivable of US$6,400,000 was
subsequently received on 13 January 2016, while US$880,000 out of
the US$1,000,000 shareholder's loan was received on 3 March
2016.
The notes to the financial statements form an integral part of
the financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 december 2015
Total Equity
Attributable
to Equity
Redeemable Capital Fair Holders Non-
Ordinary Management Share Redemption Translation Value Accumulated of the Controlling Total
Shares Shares Premium Reserve Reserve Reserve Losses Parent Interests Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------- ------------ ----------- --------- ------------ ------------- --------- ------------- ------------- ------------- ---------
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 28) - - - - - - (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)
At 31 December
2014/
1 January 2015 10,601 - 218,926 1,899 (10,247) 251 (60,932) 160,498 10,187 170,685
Issuance of
management
shares (Note 20) - - * - - - - - - - - *
Changes in
ownership
interests in
subsidiaries
(Note 28) - - - - - - (585) (585) (5,340) (5,925)
Non-controlling
interests
contribution - - - - - - - - 2,498 2,498
------------ ----------- --------- ------------ ------------- --------- ------------- ------------- ------------- ---------
Loss for the
year - - - - - - (15,784) (15,784) (6,146) (21,930)
Total other
comprehensive
expense - - - - (16,154) 2,190 - (13,964) 234 (13,730)
------------ ----------- --------- ------------ ------------- --------- ------------- ------------- ------------- ---------
Total
comprehensive
loss - - - - (16,154) 2,190 (15,784) (29,748) (5,912) (35,660)
Shareholders'
equity
at 31 December
2015 10,601 - * 218,926 1,899 (26,401) 2,441 (77,301) 130,165 1,433 131,598
================= ============ =========== ========= ============ ============= ========= ============= ============= ============= =========
* represents 2 management shares at US$0.05 each
The notes to the financial statements form an integral part of
the financial statements.
CONSOLIDATED Statement OF Cash FlowS
For the year ended 31 december 2015
2015 2014
Notess US$'000 US$'000
Cash Flows from Operating Activities
Net (loss)/ profit before taxation (20,652) 15,414
Finance income (355) (577)
Finance costs 11,031 13,760
Unrealised foreign exchange loss/ (gain) 2,544 (291)
Impairment of goodwill 1,565 4,727
Depreciation of property, plant and equipment 105 122
Gain on disposal of available-for-sale investments (806) -
Gain on disposal of investment in an associate - (5,641)
Gain on disposal of property, plant and equipment - (3)
Gain on disposal of a subsidiary (675) -
Share of loss of equity-accounted associate,
net of tax - 335
Fair value loss/ (gain) on amount due to non-controlling
interests 320 (320)
Fair value gain on held-for-trading financial
instrument - (39)
Operating (loss)/ profit before changes in
working capital (6,923) 27,487
Changes in working capital:
Decrease in inventories 8,245 29,437
(Increase)/ Decrease in trade and other receivables
and prepayments (4,105) 647
Increase/ (Decrease) in trade and other payables 7,249 (40,615)
---------------------------------------------------------- --------- ---------
Cash generated from operations 4,466 16,956
Interest paid (11,031) (13,760)
Tax paid (4,321) (6,679)
---------------------------------------------------------- --------- ---------
Net cash used in operating activities (10,886) (3,483)
---------------------------------------------------------- --------- ---------
Cash Flows from Investing Activities
Repayment from associate - 853
Proceeds from disposal of available-for-sale 5,359 -
investments
Net cash outflow from disposal of a subsidiary (146) -
28
Proceeds from disposal of investment in an
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associate - 5,306
Proceeds from disposal of property, plant and
equipment - 12
Disposal/ (purchase) of held-for-trading financial
instrument 3,291 (3,651)
Purchase of property, plant and equipment - (20)
Finance income received 355 577
Net cash generated from investing activities 8,859 3,077
---------------------------------------------------------- --------- ---------
2015 2014
Notes US$'000 US$'000
Cash Flows from Financing Activities
Advances from non-controlling interests 1,067 1,635
Issuance of ordinary shares of subsidiaries to
non-controlling interests (ii) 1,058 1,921
Issuance of management shares - * -
Repayment of loans and borrowings (15,854) (16,858)
Drawdown of loans and borrowings 16,046 17,108
Increase in pledged deposits placed in licensed (1,537) -
banks
-------------------------------------------------- --------- -----------
Net cash generated from financing activities 780 3,806
-------------------------------------------------- --------- -----------
Net changes in cash and cash equivalents during
the year (1,247) 3,400
Effect of changes in exchange rates (1,632) (1,355)
Cash and cash equivalents at the beginning of
the year (i) 16,211 14,166
Cash and cash equivalents at the end of the year
(i) 13,332 16,211
-------------------------------------------------- --------- -----------
(i) Cash and Cash Equivalents
Cash and cash equivalents included in the consolidated statement
of cash flows comprise the following consolidated statement of
financial position amounts:
Cash and bank balances 9,143 12,057
Short term bank deposits 13,835 13,954
--------------------------- -------- --------
22,978 26,011
Less: Deposits pledged (9,646) (9,800)
--------------------------- -------- --------
Cash and cash equivalents 13,332 16,211
--------------------------- -------- --------
(ii) During the financial year, US$2,498,000 (2014:
US$1,921,000) of ordinary shares of subsidiaries were issued to
non-controlling shareholders, of which US$1,058,000 (2014:
US$1,921,000) was satisfied via cash consideration. The remaining
amount of US$1,440,000 was satisfied via capitalisation of amount
due to non-controlling interests.
* represents 2 management shares at US$0.05 each
The notes to the financial statements form an integral part of
the financial statements.
Notes to the Financial Statements
1 General Information
The principal activities of the Group and the Company are the
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, along with the adequacy of bank loans and medium term notes
and refinancing of these medium term notes (as described in Notes
24 and 25).
Subsequent to year end, the Group entered into a sale and
purchase agreement in relation to the sale of a completed inventory
for a consideration of approximately US$104.60 million (RM418.70
million). The consideration receivable from the sale of the
completed inventory will be used to repay a significant portion of
medium term notes of the Group.
The Directors expect to "roll-over" the remaining 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 backed by two remaining completed inventories of the Group with
carrying amount of US$78.24 million as at 31 December 2015.
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 also 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 two
remaining completed inventories that guaranteed the medium term
notes, the proceeds from the disposal will be used to expire the
notes.
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 the 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 Issued/Revised Effective Date
Reporting Standards
------------------------------------------------------------ --------------- ----------------------
IFRS 5 Non-current Amendments resulting from September Annual periods
Assets Held September 2014 Annual Improvements 2014 beginning on
for Sale and to IFRSs or after 1
Discontinued January 2016
Operations
---------------------- ------------------------------------ --------------- ----------------------
IFRS 7 Financial Amendments resulting from September Annual periods
Instruments: September 2014 Annual Improvements 2014 beginning on
Disclosures to IFRSs or after 1
January 2016
---------------------- ------------------------------------ --------------- ----------------------
IFRS 9 Financial Finalised version, incorporating July 2014 Effective for
Instruments requirements for classification annual periods
and measurement, impairment, beginning on
general hedge accounting or after 1
and derecognition January 2018
---------------------- ------------------------------------ --------------- ----------------------
IFRS 10 Consolidated Amendments regarding applying December Annual periods
Financial Statements the consolidation exception 2014 beginning on
or after 1
January 2016
---------------------- ------------------------------------ --------------- ----------------------
IFRS 10 Consolidated Amendments regarding the December Deferred indefinitely
Financial Statements sale or contribution of 2015
assets between an investor
and its associate or joint
venture
---------------------- ------------------------------------ --------------- ----------------------
IFRS 11 Joint Amendments regarding the May 2014 Annual periods
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Arrangements accounting for acquisitions beginning on
of an interest in a joint or after 1
operation January 2016
---------------------- ------------------------------------ --------------- ----------------------
IFRS 12 Disclosure Amendments regarding applying December Annual periods
of Interests the consolidation exception 2014 beginning on
in Other Entities or after 1
January 2016
---------------------- ------------------------------------ --------------- ----------------------
IFRS 14 Regulatory Original Issue January 2014 Annual periods
Deferral Accounts beginning on
or after 1
January 2016
---------------------- ------------------------------------ --------------- ----------------------
IFRS 15 Revenue IASB defers effective date April 2016 Applies to
from Contracts to annual periods beginning an entity's
with Customers on or after 1 January 2018 first annual
IFRS financial
statements
for a period
beginning on
or after 1
January 2018
---------------------- ------------------------------------ --------------- ----------------------
IFRS 16 Leases Original Issue January 2016 Annual periods
beginning on
or after 1
January 2019
---------------------- ------------------------------------ --------------- ----------------------
IAS 1 Presentation Amendments resulting from December Annual periods
of Financial the disclosure initiative 2014 beginning on
Statements or after 1
January 2016
---------------------- ------------------------------------ --------------- ----------------------
IAS 7 Statement Amendments resulting from January 2016 Annual periods
of Cash Flows the disclosure initiative beginning on
or after 1
January 2017
---------------------- ------------------------------------ --------------- ----------------------
IAS 12 Income Amendments regarding the January 2016 Annual periods
Taxes recognition of deferred beginning on
tax assets for unrealised or after 1
losses January 2017
---------------------- ------------------------------------ --------------- ----------------------
IAS 16 Property, Amendments regarding the May 2014 Annual periods
Plant and Equipment clarification of acceptable beginning on
methods of depreciation or after 1
and amortisation January 2016
---------------------- ------------------------------------ --------------- ----------------------
IAS 16 Property, Amendments bringing agriculture June 2014 Annual periods
Plant and Equipment bearer plants from the beginning on
scope of IAS 41 into the or after 1
scope of IAS 16 so that January 2016
they are accounted for
in the same way as property,
plant and equipment
---------------------- ------------------------------------ --------------- ----------------------
IAS 19 Employee Amendments resulting from September Annual periods
Benefits September 2014 Annual Improvements 2014 beginning on
to IFRSs or after 1
January 2016
---------------------- ------------------------------------ --------------- ----------------------
IAS 27 Separate Amendments reinstating August 2014 Annual periods
Financial Statements the equity method as an beginning on
(as amended accounting option for investments or after 1
in 2011) in subsidiaries, joint January 2016
ventures and associates
in an entity's separate
financial statements
---------------------- ------------------------------------ --------------- ----------------------
IAS 28 Investments Amendments regarding the December Annual periods
in Associates application of the consolidation 2014 beginning on
and Joint Ventures exception or after 1
January 2016
---------------------- ------------------------------------ --------------- ----------------------
IAS 28 Investments Amendments regarding the December Deferred indefinitely
in Associates sale or contribution of 2015
and Joint Ventures assets between an investor
and its associate or joint
venture
---------------------- ------------------------------------ --------------- ----------------------
IAS 38 Intangible Amendments regarding the May 2014 Annual periods
Assets clarification of acceptable beginning on
methods of depreciation or after 1
and amortisation January 2016
---------------------- ------------------------------------ --------------- ----------------------
IAS 41 Agriculture Amendments bringing agriculture June 2014 Annual periods
bearer plants from the beginning on
scope of IAS 41 into the or after 1
scope of IAS 16 so that January 2016
they are accounted for
in the same way as property,
plant and equipment
---------------------- ------------------------------------ --------------- ----------------------
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.
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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.
3.1 Revenue recognised during the year as follows:
2015 2014
US$'000 US$'000
-------------------------------------------- -------- --------
Sale of completed units 22,096 55,762
Sale of land held for property development - 29,340
-------------------------------------------- -------- --------
22,096 85,102
-------------------------------------------- -------- --------
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 the City
International Hospital.
Other non-reportable segments comprise the Group's development
projects. None of these segments meets any of the quantitative
thresholds for determining reportable segments in 2015 and
2014.
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 are as follows:-
Operating Segments - ended 31 December 2015
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$'000
-------------- ------------ ---------- ---------- ----------- ---------- ----------- --------------- ---------
Segment
profit/
(loss)
before
taxation (297) 79 (9,168) 4,156 1,621 (863) (16,090) (20,562)
============== ============ ========== ========== =========== ========== =========== =============== =========
Included in
the measure
of segment
profit/
(loss)
are:
Revenue - 1,322 - 20,774 - - - 22,096
Revenue from
hotel
operations - - 3,701 - 18,314 - - 22,015
Revenue from
mall
operations - - 1,033 - - - - 1,033
Revenue from
hospital
operations - - - - - - 4,244 4,244
Cost of
acquisition
written
down # - (103) (3,199) (3,089) - - - (6,391)
Impairment of
goodwill - - (1,397) (168) - - - (1,565)
Marketing
expenses - - - (57) - (231) - (288)
Expenses from
hotel
operations - - (4,256) - (12,351) - - (16,607)
Expenses from
mall
operations - - (1,401) - - - - (1,401)
Expenses from
hospital
operations - - - - - - (11,110) (11,110)
Depreciation
of property,
plant and
equipment - - (7) - (7) - (90) (104)
Finance costs - - (3,635) - (4,133) - (3,263) (11,031)
Finance
income 19 2 268 19 4 7 34 353
============== ============ ========== ========== =========== ========== =========== =============== =========
Segment
assets 26,589 3,903 80,392 22,271 62,112 56,776 98,362 350,405
Included in
the measure
of segment
assets are:
Addition to
non-current
assets other
than
financial
instruments
and deferred
tax assets - - - - - - - -
============== ============ ========== ========== =========== ========== =========== =============== =========
# Cost of acquisition relates to the fair value adjustment in
relation to the inventories upon the acquisition of certain
subsidiaries of the Group. The cost of acquisition written down is
charged to profit or loss as part of cost of sales upon the sales
of these inventories.
Reconciliation of reportable segment revenues, profit or loss,
assets and liabilities and other material items
Profit or loss US$'000
----------------------------------- ---------
Total lossfor reportable segments (20,562)
Other non-reportable segments (91)
Depreciation (1)
Finance cost -
Finance income 2
Consolidated lossbefore taxation (20,652)
=================================== =========
Operating Segments - ended 31 December 2014
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 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
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April 27, 2016 02:00 ET (06:00 GMT)
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$'000
-------------------------------------- --------
Total profit for reportable segments 14,831
Other non-reportable segments 587
Depreciation (4)
Consolidated profit before taxation 15,414
====================================== ========
2015 Addition to
US$'000 non-current
Revenue Depreciation Finance costs Finance income Segment assets assets
-------------------------- -------- ------------- -------------- --------------- --------------- -------------
Total reportable segment 22,096 (104) (11,031) 353 350,405 -
Other non-reportable
segments - (1) - 2 18,568 -
-------------------------- -------- ------------- -------------- --------------- --------------- -------------
Consolidated total 22,096 (105) (11,031) 355 368,973 -
========================== ======== ============= ============== =============== =============== =============
2014 Addition to
US$'000 non-current
Revenue Depreciation Finance costs Finance income Segment assets assets
-------------------------- -------- ------------- -------------- --------------- --------------- -------------
Total reportable segment 85,102 (118) (13,760) 577 407,806 20
Other non-reportable
segments - (4) - - 37,554 -
-------------------------- -------- ------------- -------------- --------------- --------------- -------------
Consolidated total 85,102 (122) (13,760) 577 445,360 20
========================== ======== ============= ============== =============== =============== =============
Geographical Information - ended 31 December 2015
Malaysia Vietnam Consolidated
US$'000 US$'000 US$'000
-------------------- --------- -------- -------------
Revenue 22,096 - 22,096
Non-current assets 2,172 17,176 19,348
==================== ========= ======== =============
In 2015, no single customer exceeded 10% of the Group's total
revenue.
Geographical Information - ended 31 December 2014
Malaysia Vietnam Consolidated
US$'000 US$'000 US$'000
-------------------- --------- -------- -------------
Revenue 55,762 29,340 85,102
Non-current assets 4,104 20,217 24,321
==================== ========= ======== =============
For the year ended 31 December 2014, one customer exceeded 10%
of the Group's
total revenue as follows:
US$'000 Segments
---------------------- -------------- -------------------
AEON Vietnam Co. Ltd. Hoa Lam-Shangri-La
22,991 Healthcare Group
====================== ============== ===================
4 SEASONALITY
The Group's business operations are not materially affected by
seasonal factors for the period under review.
5 Cost of Sales
2015 2014
US$'000 US$'000
----------------------------------------- -------- --------
Direct costs attributable to: Completed
units 20,047 36,856
Land held for property development - 10,238
Impairment of intangible assets (Note
16) 1,565 4,727
21,612 51,821
----------------------------------------- -------- --------
6 Other Income
2015 2014
US$'000 US$'000
-------------------------------------------------- -------- --------
Dividend income 293 409
Fair value gain on amount due to non-controlling
interests - 320
Fair value gain on held-for-trading financial
instrument - 39
Gain on disposal of available-for-sale
investments 806 -
Gain on disposal of property, plant and
equipment - 3
Gain on disposal of a subsidiary (a) 675 -
Late payment interest income 5 52
Rental income 115 196
Revenue from hotel operations (b) 22,015 22,494
Revenue from mall operations (c) 1,033 1,027
Revenue from hospital operations (d) 4,244 2,525
Sundry income 375 304
29,561 27,369
-------------------------------------------------- -------- --------
(a) Gain on disposal of a subsidiary
The Group entered into an agreement with Nam Long Investment
Corporation and Nam Khang Construction Investment Development One
Member Ltd Liability Co on 10 September 2015 to dispose of ASPL PLB
Limited's 55% equity interest in ASPL PLB-Nam Long Ltd Liability
Co, a subsidiary of the Group for a consideration of US$8,227,000
(VND185,165,679,414). A gain on disposal of US$675,000 was
recognised from the disposal of the subsidiary (see Note 28).
(b) Revenue from hotel operations
The revenue relates to the operations of two hotels - Four
Points by Sheraton Sandakan Hotel and Aloft Kuala Lumpur Sentral
Hotel, which are owned by subsidiaries of the Company, ICSD
Ventures Sdn. Bhd. and Iringan Flora Sdn. Bhd. respectively. The
revenue earned from hotel operations is included in other income in
line with management's intention to dispose of the hotels.
(c) Revenue from mall operations
The revenue relates to the operation of Harbour Mall Sandakan
which is owned by a subsidiary of the Company, ICSD Ventures Sdn.
Bhd..The revenue earned from mall operations is included in other
income in line with management's intention to dispose of the
mall.
(d) Revenue from hospital operations
The revenue relates to the operation of City International
Hospital which is owned by a subsidiary of the Company, City
International Hospital Company Limited. The revenue earned from
hospital operations is included in other income in line with
management's intention to dispose of the hospital.
7 Foreign exchange (LOSS)/ GAIN
2015 2014
US$'000 US$'000
------------------------------------------ -------- --------
Foreign exchange (loss)/ gain comprises:
Realised foreign exchange (loss)/ gain (371) 425
Unrealised foreign exchange (loss)/ gain (2,544) 291
------------------------------------------ -------- --------
(2,915) 716
------------------------------------------ -------- --------
8 Management Fees
2015 2014
US$'000 US$'000
------------------ -------- --------
Management fees 3,115 3,344
------------------ -------- --------
(MORE TO FOLLOW) Dow Jones Newswires
April 27, 2016 02:00 ET (06:00 GMT)
The management fees payable to the Development Manager are based
on 2% per annum of the Group's net asset value calculated on the
last business day of June and December of each calendar year and
payable quarterly in advance. The management fees were allocated to
the subsidiaries and Company based on where the service was
provided.
In addition to the annual management fee, the Development
Manager is entitled to a performance fee calculated at 20% of the
out performance net asset value over a total compounded return
hurdle rate of 10% per annum. No performance fee has been paid or
accrued during the year (2014: US$ Nil).
9 Finance (Costs)/ INCOME
2015 2014
US$'000 US$'000
Interest income from banks 355 577
Agency fees (83) (104)
Annual trustees monitoring fee - (5)
Bank guarantee commission (49) -
Interest on bank loans (3,214) (4,526)
Interest on financial liabilities at amortised
cost (2) (2)
Interest on medium term notes (7,683) (9,123)
(10,676) (13,183)
------------------------------------------------ --------- ---------
10 net (Loss)/ PROFIT BEFORE TAXATION
2015 2014
US$'000 US$'000
----------------------------------------------------------- -------- --------
Net(loss)/ profit before taxation is stated after charging/(crediting):
-- Auditors remuneration
- current year 226 244
-- Directors' fees 317 317
-- Depreciation of property, plant and equipment 105 122
-- Expenses of hotel operations 16,607 17,006
-- Expenses of mall operations 1,401 1,789
-- Expenses of hospital operations 11,110 9,702
-- Fair value loss/ (gain) on amount due to non-
controlling interests 320 (320)
-- Fair value gain on held-for-trading financial
instrument
- (39)
-- Impairment of amount due from subsidiary - -
- -
-- Impairment of investment in subsidiary
-- Unrealised foreign exchange loss/ (gain) 2,544 (291)
-- Realised foreign exchange loss/ (gain) 371 (425)
-- Impairment of goodwill 1,565 4,727
(806) -
-- Gain on disposal of available-for-sale investments
- (3)
-- Gain on disposal of property, plant and equipment (675) -
15 25
-- Gain on disposal of a subsidiary
-- Tax services
11 TAXATION
2015 2014
US$'000 US$'000
Current tax expense - Current year 1,468 9,008
- Prior year (227) 1,579
Deferred tax expense/ (credit) - Current
year 678 654
- Prior year (641) (1,854)
----------------------------------------------- ------------------ ------------------
Total tax expense for the year 1,278 9,387
----------------------------------------------- ------------------ ------------------
The numerical reconciliation between the income tax expenses and
the product of accounting results multiplied by the applicable tax
rate is computed as follows:
2015 2014
US$'000 US$'000
--------------------------------------------------- --------- --------
Net (loss)/ profit before taxation (20,652) 15,414
Income tax at a rate of 25% (5,163) 3,853
Add :
Tax effect of expenses not deductible in
determining taxable profit 3,689 2,819
Current year losses and other tax benefits
for which no deferred tax asset was recognised 2,449 2,621
Tax effect of different tax rates in subsidiaries 2,703 1,784
Less :
Tax effect of income not taxable in determining
taxable profit (1,532) (1,415)
(Over)/ under provision in respect of prior
years (868) (275)
--------------------------------------------------- --------- --------
Total tax expense for the year 1,278 9,387
--------------------------------------------------- --------- --------
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 rates in Singapore and Vietnam are
17% and 22% respectively.
A subsidiary of the Group, City International Hospital Co Ltd is
granted preferential corporate tax rate of 10% for the results of
the hospital operations. The preferential income tax is given by
the government of Vietnam due to the subsidiary's involvement in
the healthcare industry.
A Goods and Services Tax was introduced in Jersey in May 2008.
The Company has been registered as an International Services Entity
so it does not have to charge or pay local GST. The cost for this
registration is 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 2015 2014
subsequently to profit or loss, net of US$'000 US$'000
tax
--------------------------------------------- --------- ---------
Foreign currency translation differences
for foreign operation
--------- ---------
Loss arising during the year (15,374) (7,388)
Reclassification to profit or loss on
disposal of subsidiary (546) -
--------- ---------
(15,920) (7,388)
Fair value of available-for-sale investment
--------- ---------
Gain arising during the year 2,680 125
Reclassification adjustments for gain
on disposal included
in profit or loss (490) -
--------- ---------
2,190 125
(13,730) (7,263)
--------------------------------------------- --------- ---------
13 (LOSS)/ EARNINGS Per Share
Basic and diluted (loss)/ earnings per ordinary share
The calculation of basic and diluted (loss)/ earnings per
ordinary share for the year ended 31 December 2015 was based on the
(loss)/ profit attributable to equity holders of the parent and a
weighted average number of ordinary shares outstanding, calculated
as below:
2015 2014
US$'000 US$'000
--------------------------------------- --------- ---------
(Loss)/ profit attributable to equity
holders of the parent (15,784) 9,091
Weighted average number of shares 212,025 212,025
(Loss)/ earnings per share
Basic and diluted (US cents) (7.44) 4.29
--------------------------------------- --------- ---------
14 Investment in AN Associate
2015 2014
US$'000 US$'000
----------------------------------- --------- --------
At cost - unquoted shares - 611
Share of post-acquisition reserve - 1,306
Disposal of associate - (1,917)
At 31 December - -
----------------------------------- --------- --------
(MORE TO FOLLOW) Dow Jones Newswires
April 27, 2016 02:00 ET (06:00 GMT)
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.
In the previous financial year, the Group entered into a Sale
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 shares was
effected and payment of the sale proceeds were received.
The Group recognised a gain on disposal of US$5,641,000 from the
sale of the associate. The details are as follows:
2014
US$'000
-------------------------------------- --------
Sales consideration 5,306
Carrying value of associate as
at 20 August 2014 (1,917)
Realisation of previously unrealised
profit in relation to sale of Aloft
Kuala Lumpur Sentral Hotel 2,252
-------------------------------------- --------
Gain on disposal 5,641
-------------------------------------- --------
The unrealised profit of US$2,252,000 in relation to the sale of
Aloft Kuala Lumpur Sentral Hotel to a subsidiary of the Group was
realised as EBSB is no longer an associate of the Group.
15 Available-for-Sale Investments
The available-for-sale investments represent the investment
in shares of Nam Long Investment Corporation ("Nam Long") which
the Group acquired over four tranches in 2008 and 2009.
2015 Quoted Shares
US$'000
--------------------------------------------------- ----------------
1 January - fair value 12,822
Disposal (4,553)
Exchange adjustments (542)
Recognised in other comprehensive income 2,190
At 31 December - fair value 9,917
----------------------------------------------------- ----------------
Quoted Shares
2014 US$'000
------------------------------------------ ----- ----------------
1 January - fair value 12,697
Recognised in other comprehensive income 125
-------------------------------------------- --- --------------
At 31 December - fair value 12,822
-------------------------------------------------- ----------------
During the financial year, the Group disposed of 5,800,000
number of shares in Nam Long for a consideration of US$5,359,000 at
a market price of US$0.92 per share. The Group recognised a gain on
disposal of US$806,000.
At 31 December 2015, an increase in fair value of US$2.19
million (2014: US$0.125 million) has been recognised in other
comprehensive income. The Directors have considered various
prevailing factors at year end, including the economic and market
conditions of Vietnam in assessing the fair value of the
investment.
16 Intangible Assets
Licence Contracts
and Related Relationships Goodwill Total
US$'000 US$'000 US$'000
--------------------------------- --------------------------- --------- --------
Cost
At 1 January 2014 / 31 December
2014 / 31 December 2015 10,695 6,479 17,174
--------------------------------- --------------------------- --------- --------
Accumulated impairment losses
At 1 January 2014 - 3,649 3,649
Impairment loss 4,276 451 4,727
--------------------------------- --------------------------- --------- --------
At 31 December 2014 / 1 January
2015 4,276 4,100 8,376
Impairment loss - 1,565 1,565
--------------------------------- --------------------------- --------- --------
At 31 December 2015 4,276 5,665 9,941
--------------------------------- --------------------------- --------- --------
Carrying amounts
At 31 December 2014 6,419 2,379 8,798
--------------------------------- --------------------------- --------- --------
At 31 December 2015 6,419 814 7,233
--------------------------------- --------------------------- --------- --------
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:
2015 2014
US$'000 US$'000
--------------------------------------------- --------- ---------
Licence contracts and related relationships
International Healthcare Park 6,419 6,419
============================================== ========= =========
Goodwill
SENI Mont' Kiara 264 432
Sandakan Harbour Square 550 1,947
---------------------------------------------- --------- ---------
814 2,379
============================================= ========= =========
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 amounts.
Impairment losses of US$1,397,000 (2014: US$Nil), US$168,000
(2014: US$451,000) and US$Nil (2014: US$4,276,000) in relation to
the Four Points by Sheraton Sandakan Hotel, 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 amounts.
The recoverable amount of goodwill has been tested by reference
to underlying profitability of the developments using discounted
cash flow projections.
Impairment losses - Four Points by Sheraton Sandakan Hotel
("FPSS")
The recoverable amount of FPSS was based on the valuation by an
external, independent valuer with appropriate recognised
professional qualification. The carrying amount of FPSS including
the attached goodwill was determined to be higher than its
recoverable amount of US$40,949,000 and impairment losses of
US$1,397,000 and US$3,200,000 in relation to the goodwill and
inventory amounts were recognised. The impairment losses were
included in cost of sales.
The valuation of FPSS was determined by discounting the future
cash flows expected to be generated from the continuing operations
of FPSS and was based on the following key assumptions:
(1) Cash flows were projected based on past experience, actual
operating results in 2015 and the 10 years budget of FPSS adjusted
by the valuer;
(2) Cash flows for a further 76 years were based on an optimum
occupancy level of 78% in 2026 onwards;
(3) Projected gross margin reflects the average historical gross
margin, adjusted for projected market and economic conditions and
internal resources efficiency; and
(4) Pre-tax discount rate of 9% was applied in discounting the
cash flows. The discount rate takes into the prevailing trend of
the hotel industry in Malaysia.
Sensitivity analysis
The above estimates are particularly sensitive in an
increase/(decrease) of the discount rate used. A 1% point
increase/(decrease) in the discount rate used would have
(decreased)/ increased the recoverable amount by approximately
(US$5,598,000)/US$5,598,000.
17 Deferred Tax Assets
2015 2014
US$'000 US$'000
--------------------------------------------- --------- ---------
At 1 January 1,683 595
Exchange adjustments (309) (112)
Deferred tax credit relating to origination
and reversal of
temporary differences during the year (37) 1,200
At 31 December 1,337 1,683
--------------------------------------------- --------- ---------
(MORE TO FOLLOW) Dow Jones Newswires
April 27, 2016 02:00 ET (06:00 GMT)
The deferred tax assets comprise:
2015 2014
US$'000 US$'000
------------------------------------------ --------- ---------
Taxable temporary differences between
accounting profit and taxable profit of
property development units sold 1,337 1,683
At 31 December 1,337 1,683
------------------------------------------ --------- ---------
Deferred tax assets have not been recognised in respect of
unused tax losses of US$55,000,000(2014: US$35,288,000) 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$3,100,000(2014: US$3,462,000) which are
available for offset against future taxable profits. Deferred tax
assets have not been recognised due to the uncertainty of the
recovery of the losses.
18 INVENTORIES
2015 2014
Note US$'000 US$'000
------------------------------------ ------ -------- --------
Land held for property development (a) 23,223 40,560
Work-in-progress (b) 53,182 55,332
Stock of completed units, at cost 230,436 285,234
Consumables 487 652
At 31 December 307,328 381,778
-------------------------------------------- -------- --------
(a) Land held for property development
2015 2014
US$'000 US$'000
---------------------------------------- --------- ---------
At 1 January 40,560 24,403
Add :
Exchange adjustments (3,466) (849)
Additions 451 2,710
Transfer from work-in-progress - 24,534
Disposal of subsidiary (Note 28) (14,322) -
---------------------------------------- --------- ---------
23,223 50,798
Less: Costs recognised as expenses in
the statement of comprehensive income
during the year - (10,238)
----------------------------------------- --------- ---------
At 31 December 23,223 40,560
----------------------------------------- --------- ---------
(b) Work-in-progress
2015 2014
US$'000 US$'000
------------------------------------------------ --------- ---------
At 1 January 55,332 73,134
Add :
Exchange adjustments (10,273) (3,464)
Work-in-progress incurred during the year 8,123 10,196
Transfer to land held for property development
# - (24,534)
At 31 December 53,182 55,332
------------------------------------------------ --------- ---------
The above amounts included borrowing cost capitalised at
interest rate ranging from 5.50% to 10.00% per annum (2014: 7.53%
to 12.62% per annum) of US$1,670,000 during the financial year
(2014: US$1,799,000).
# 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
In the previous financial year, the financial asset represents a
placement in money market fund ("Fund"), which was 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 and US$0.29
respectively.
The Fund is permitted under the Deed to invest in the
following:
(i) Bank deposits;
(ii) Money market instruments such as treasury bills, bankers'
acceptance, negotiable certificates of deposits, Bank Negara
Malaysia bills, Bank Negara Malaysia negotiable notes, Negotiable
Instruments of Deposit and Negotiable Islamic Debt Certificate with
maturities not exceeding one (1) year; and
(iii) Malaysian Government Securities and/or securities
guaranteed by the Government of Malaysia and/or notes/securities
issued by Bank Negara Malaysia with maturity not exceeding two (2)
years.
20 Share Capital
Number Amount Number of Amount
of shares 2015 shares 2014
2015 '000 US$'000 2014 '000 US$'000
------------------------------ ----------- --------- ----------- ---------
Authorised Share Capital
Ordinary shares of US$0.05
each 2,000,000 100,000 2,000,000 100,000
Management shares of US$0.05 - *
each - * - -
------------------------------ ----------- --------- ----------- ---------
2,000,000 100,000 2,000,000 100,000
------------------------------ ----------- --------- ----------- ---------
Issued Share Capital
Ordinary shares of US$0.05
each 212,025 10,601 212,025 10,601
Management shares of US$0.05 - #
each - # - -
------------------------------ ----------- --------- ----------- ---------
212,025 10,601 212,025 10,601
------------------------------ ----------- --------- ----------- ---------
*represents 10 management shares at US$0.05 each
# represents 2 management shares at US$0.05 each
On 27 August 2015, the shareholders of the Company approved the
creation and issuance of management shares by the Company as well
as a compulsory redemption mechanism that was proposed by the
Board.
The Company increased its authorised share capital from
US$100,000,000 to US$100,000,000.50 by the creation of 10
management shares of US$0.05 each for cash.
The Company also increased its issued and paid-up share capital
from US$212,025,000 to US$212,025,000.10 by way of an allotment of
2 new management shares of US$0.05 each at par via cash
consideration.
In accordance with the compulsory redemption scheme, the
Company's ordinary shares were converted into redeemable ordinary
shares.
The ordinary shares and the management shares shall have
attached thereto the rights and privileges, and shall be subjected
to the limitations and restrictions, as are set out below:
(a) Distribution of dividend:
(i) The ordinary shares carry the right to receive all the
profits of the Company available for distribution by way of interim
or final dividend at such times as the directors may determine from
time to time; and
(ii) The management shares carry no right to receive dividends
out of any profits of the Company.
(b) Winding-up or return of capital:
(i) The holders of the management shares shall be paid an amount
equal to the paid-up capital on such management shares; and
(ii) Subsequent to the payment to holders of the management
shares, the holders of the ordinary shares shall be repaid the
surplus assets of the Company available for distribution.
(c) Voting rights:
(i) The holders of the ordinary shares and management shares
shall have the right to receive notice of and to attend and vote at
general meetings of the Company; and
(ii) Each holder of ordinary shares and management shares being
present in person or by a duly authorised representative (if a
corporation) at a meeting shall upon a show of hands have one vote
and upon a poll each such holder present in person or by proxy or
by a duly authorised representative (if a corporation) shall have
one vote in respect of every full paid share held by him.
21 Share Premium
Share premium represents the excess of proceeds raised on the
issuance of shares over the nominal value of those shares. The
costs incurred in issuing shares were deducted from the share
premium.
2015 2014
US$'000 US$'000
-------------------------- --------- ---------
At 1 January/31 December 218,926 218,926
--------------------------- --------- ---------
22 CAPITAL REDEMPTION RESERVE
The capital redemption reserve was incurred after the Company
cancelled its 37,475,000 and 500,000 ordinary shares of US$0.05 per
share in 2009 and 2013 respectively.
23 AMOUNT DUE TO NON-CONTROLLING INTERESTS
2015 2014
US$'000 US$'000
Non-current
Minority Shareholders of Shangri-La Healthcare
Investment Pte Ltd:
* Tran Thi Lam - 415
* Econ Medicare Centre Holdings Pte Ltd - 491
* Value Energy Sdn. Bhd. - 147
* ThangShieu Han - 56
* Nguyen QuangDuc - 11
- 1,120
----------------------------------------------------------- -------- --------
Current
Minority Shareholder of Bumiraya Impian
Sdn. Bhd.:
* Global Evergroup Sdn. Bhd. 1,155 1,418
(MORE TO FOLLOW) Dow Jones Newswires
April 27, 2016 02:00 ET (06:00 GMT)
Minority Shareholders of Hoa Lam Services
Co Ltd:
* Tran Thi Lam 1,727 1,725
* Tri Hanh Consultancy Co Ltd 3,257 2,510
* Hoa Lam Development Investment Joint Stock Company 244 188
* Duong Ngoc Hoa 163 126
Minority Shareholder of The RuMa Hotel
KL Sdn. Bhd.:
* Ireka Corporation Berhad 1 -
Minority Shareholder of Urban DNA Sdn.
Bhd.:
* Ireka Corporation Berhad 3,467 4,255
10,014 10,222
----------------------------------------------------------- -------- --------
10,014 11,342
----------------------------------------------------------- -------- --------
The current amount due to non-controlling interests amounting to
US$10,014,000 (2014: US$10,222,000) is unsecured, interest free and
repayable on demand.
During the financial year, amount due to non-controlling
interests amounting to US$1,440,000 was capitalised as share
capital of Shangri-La Healthcare Investment Pte Ltd.
In 2014, the non-current amount due to non-controlling interests
amounting to US$1,120,000 was unsecured, interest free and shall
only be repayable to the respective minority shareholders if the
minority shareholders cease to be a shareholder in Shangri-La
Healthcare Investment Pte Ltd.
24 Loans AND BORROWINGS
2015 2014
US$'000 US$'000
--------------------------- -------- --------
Non-current
Bank loans 55,813 53,338
Finance lease liabilities 10 26
---------------------------- -------- --------
55,823 53,364
--------------------------- -------- --------
Current
Bank loans 13,489 19,262
Finance lease liabilities 11 12
---------------------------- -------- --------
13,500 19,274
--------------------------- -------- --------
69,323 72,638
--------------------------- -------- --------
The effective interest rates on the bank loans and finance lease
arrangement for the year ranged from5.25% to 12.50% (2014: 5.25% to
17.70%) per annum and 2.50% to 3.50% (2014: 2.50% to 3.50%) per
annum respectively.
Borrowings are denominated in Ringgit Malaysia, United State
Dollars and Vietnam Dong.
Bank loans are repayable by monthly, quarterly or semi-annually
instalments.
Bank loans are secured by land held for property development,
work-in-progress, operating assets of the Group, pledged deposits
and some by the corporate guarantee of the Company.
Finance lease liabilities are payable as follows:
Present Present
Future value of Future value of
minimum minimum minimum minimum
lease payment Interest lease payment lease payment Interest lease payment
2015 2015 2015 2014 2014 2014
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------- --------------- --------- --------------- --------------- --------- ---------------
Within
one year 12 1 11 15 3 12
Between
one and
five years 12 2 10 30 4 26
------------- --------------- --------- --------------- --------------- --------- ---------------
24 3 21 45 7 38
------------- --------------- --------- --------------- --------------- --------- ---------------
25 MEDIUM TERM NOTES
2015 2014
US$'000 US$'000
-------------------------------------- ---------- ---------
Outstanding medium term notes 119,711 147,004
Net transaction costs (1,191) (1,774)
Less:
Repayment due within twelve months * (108,190) (60,237)
Repayment due after twelve months 10,330 84,993
-------------------------------------- ---------- ---------
* Includes net transaction costs in relation to medium term
notes due within twelve months of US$1.04 million (2014: 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$57.06 million (RM245.00
million) was drawn down in 2011 for Sandakan Harbour Square.
US$3.49 million (RM15.00 million) was drawn down in 2012 for Aloft
Kuala Lumpur Sentral Hotel and the remaining US$59.16 million
(RM254 million) in 2013. The Group secured a rollover of MTN
amounting US$3.49 million (RM15 million) and US$46.58 million
(RM200 million) which were due for repayment on 1 October 2015 and
8 December 2015 to be repaid on 30 September 2016 and 7 December
2016 respectively. Subsequent to year end, the Group secured a
rollover of MTN amounting US$5.82 million (RM25 million) and
US$53.33 million (RM229 million) which were due for repayment on 29
January 2016 and 8 April 2016 to be repaid on 31 January 2017 and
10 April 2017 respectively.
No repayments were made in the current financial year.
The weighted average interest rate of the MTN was 5.88% per
annum at the statement of financial position date. The effective
interest rates of the MTN and their outstanding amounts are as
follows:
Maturity Dates Interest rate US$'000
% per annum
--------------------- ----------------- -------------- ---------
Series 1 Tranche FG
003 8 December 2017 5.90 5,823
Series 1 Tranche BG
003 8 December 2017 5.85 4,658
Series 1 Tranche FG
004 7 December 2016 6.25 10,480
Series 1 Tranche BG
004 7 December 2016 6.15 6,987
Series 2 Tranche FG
002 7 December 2016 6.25 16,303
Series 2 Tranche BG
002 7 December 2016 6.15 12,809
Series 3 Tranche FG 30 September
004 2016 6.03 2,329
Series 3 Tranche BG 30 September
004 2016 6.00 1,165
Series 3 Tranche FG
002 29 January 2016 5.50 3,494
Series 3 Tranche BG
002 29 January 2016 5.45 2,329
Series 3 Tranche FG
003 8 April 2016 5.65 30,044
Series 3 Tranche BG
003 8 April 2016 5.58 23,290
119,711
--------------------------------------- -------------- ---------
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 Sale
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 Sentra lHotel;
(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.
26 PURCHASE OF OWN SHARES AND CANCELLATION OF SHARES
(MORE TO FOLLOW) Dow Jones Newswires
April 27, 2016 02:00 ET (06:00 GMT)
The shareholders of the Company, by a special resolution passed
in a general meeting held on 22 June 2015, 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.
27 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.
2015 2014
US$'000 US$'000
--------------------------------------------------- --------- ---------
ICB Group of Companies
Accounting and financial reporting services
fee charged by an ICB subsidiary 50 53
Advance payment to the contractors of an
ICB subsidiary 833 1,430
Construction progress claims charged by an
ICB subsidiary 6,423 13,912
Acquisition of SENI Mont' Kiara units by 2,008 -
an ICB subsidiary
Management fees charged by an ICB subsidiary 3,115 3,344
Marketing commission charged by an ICB subsidiary 281 1,226
Project staff costs reimbursed to an ICB
subsidiary 289 544
Rental expenses charged by an ICB subsidiary 4 31
Rental expenses paid on behalf of ICB 512 588
Secretarial and administrative services fee
charged by an ICB subsidiary 50 53
Key management personnel
Remuneration of key management personnel
- Directors' fees 317 317
Remuneration of key management personnel
- Salaries 49 49
Transactions between the Group with other significant related
parties are as follows:
2015 2014
US$'000 US$'000
--------------------------------- -------- ---------
Non-controlling interests
Advances - non-interest bearing
(Note 23) 1,067 1,635
Capitalisation of amount due 1,440 -
to non-
controlling interests as share
capital
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 2015 and 31 December 2014 are as
follows:
2015 2014
Note US$'000 US$'000
Amount due from an ICB subsidiary for
advance payment to its contractors (ii) 1,997 1,430
Amount due to an ICB subsidiary for
construction progress claims charged (i) (38) (891)
Amount due from an ICB subsidiary for
acquisition of SENI Mont' Kiara units (i) 1,840 -
Amount due from an ICB subsidiary for
management fees (ii) 25 -
Amount due to an ICB subsidiary for
marketing commissions (ii) (43) (34)
Amount due to an ICB subsidiary for
reimbursement of project staff costs (ii) (24) (60)
Amount due to an ICB subsidiary for
rental expenses (ii) (3) (2)
Amount due from ICB for rental expenses
paid on behalf (ii) 1,415 1,162
----------------------------------------- ------- --------- ---------
(i) These amounts are trade in nature and subject to normal trade terms.
(ii) These amounts are non-trade in nature and are unsecured,
interest-free and repayable on demand.
The outstanding amounts due from/ (to) the other significant
related parties as at 31 December 2015 and 31 December 2014 are as
follows:
2015 2014
US$'000 US$'000
--------------------------------- ---- --------- -----------
Non-controlling interests
Advances - non-interest bearing
(Note 23) (10,014) (11,342)
---------------------------------------- --------- -----------
Transactions between the parent company and its subsidiaries are
eliminated in these consolidated financial statements.
28 Business COMBINATION
Change in equity interest in subsidiaries
During the financial year, the Group increased its equity
interest in Shangri-La Healthcare Investment Pte Ltd ("SHIPL") from
75.38% to 79.76% (2014: 74.11% to 75.38%) arising from an issue of
new shares in the subsidiary for cash consideration of US$5.3
million and capitalisation of loan from ASPL V7 Limited amounting
to US$9.6 million. Consequently, the Group'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 Morningstar International Preschool Ltd Liability Co
(Formerly known as Hoa Lam - Shangri-La 4 Ltd Liability Co),
subsidiaries of SHIPL, increased to 71.13% (2014:68.07%).
The Group recognised an increase in non-controlling interests of
US$585,000 (2014: US$147,000) and an increase in accumulated losses
of US$585,000 (2014: US$147,000) resulting from the increase in
equity interest in the above subsidiaries. The transaction was
accounted for using the purchase method of accounting.
Disposal of a subsidiary
The Group entered into an agreement with Nam Long Investment
Corporation and Nam Khang Construction Investment Development One
Member Ltd Liability Co on 10 September 2015 to dispose of ASPL PLB
Limited's 55% equity interest in ASPL PLB-Nam Long Ltd Liability
Co, a subsidiary of the Group for a consideration of US$8,227,000
(VND185,165,679,414) and repayment of the shareholder's loan of
US$1,000,000 (VND20,732,443,120). The shareholder's loan was an
interest free advance provided by the Group to ASPL PLB-Nam Long
Ltd Liability Co in previous financial years for working capital
purposes. The shareholder's loan was undertaken by the buyer as
part of the disposal arrangement.
The condition precedent for the completion of the disposal of
ASPL PLB-Nam Long Ltd Liability Co was met on 10 December 2015 when
the transfer of shares was effected.
The disposal of ASPL PLB-Nam Long Ltd Liability Co has no
significant impact on the results of the Group other than the gain
on disposal of US$675,000 recognised during the year.
The details of the gain/ (loss) are as follows:
Analysis of assets and liabilities over which control was
lost:
2015
Notes US$'000
---------------------------------------------- ------ ---------
Current assets
Inventories - Land held for property
development 18 14,322
Trade and other receivables 38
Cash and cash equivalents 1,663
Current liabilities
Trade and other payables (2,856)
Net assets disposed of 13,167
---------------------------------------------- ------ ---------
Gain on disposal of a subsidiary
Consideration receivable 8,227
Incidental expenses (310)
---------------------------------------------- ------ ---------
Net consideration receivable 7,917
Net assets disposed of (13,167)
Non-controlling interests 5,925
---------------------------------------------- ------ ---------
Gain on disposal 675
---------------------------------------------- ------ ---------
Net cash outflow on disposal of a subsidiary
Consideration received * 1,517
Cash and cash equivalent disposed of (1,663)
---------------------------------------------- ------ ---------
(146)
---------------------------------------------- ------ ---------
* Out of the total consideration receivable of US$7,917,000,
US$1,517,000 has been received as at the financial year end. The
remaining outstanding consideration receivable of US$6,400,000 was
received on 13 January 2016.
In the previous financial year, the Group disposed of its entire
interests 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 had no
significant impact on the results of the Group.
29 DIVIDEND
(MORE TO FOLLOW) Dow Jones Newswires
April 27, 2016 02:00 ET (06:00 GMT)
The Company has not paid or declared any dividends during the
financial year ended 31 December 2015.
30 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$119.71
million, Silver Sparrow Berhad ("SSB") had opened a Ringgit
Malaysia debt service reserve account ("DSRA") and shall ensure
that an amount equivalent to RM30.0 million (US$6.99 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.
31 event after statement of financial position date
Subsequent to year end, the Group entered into a sale and
purchase agreement to dispose of the Aloft Kuala Lumpur Sentral
Hotel ("Aloft Hotel") to Prosper Group Holdings Limited ("Prosper
Group"). The gross transaction value for the purchase of the entire
issued share capital of ASPL M3B Limited and Iringan Flora Sdn.
Bhd. (the "Aloft Companies")is approximately US$104.60 million
(RM418.70 million).
The transaction, which is expected to be completed in Quarter 3,
2016, is conditional upon the satisfactory completion of a due
diligence review by Prosper Group, and certain consents being
obtained from Starwood Asia Pacific Hotels & Resorts Pte Ltd,
the operator of the Aloft Hotel, and consents from the Company's
financiers for the Aloft Hotel.
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 2016.
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 Managers 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
26 April 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
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April 27, 2016 02:00 ET (06:00 GMT)
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