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AFI Properties Ltd. Interim / Quarterly Report 2020
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Interim / Quarterly Report
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National Storage Mechanism | Additional information 
RNS Number : 8731Z
Aseana Properties Limited
23 September 2020
23 September 2020
Aseana Properties Limited
("Aseana", the "Company" or, the "Group")
Half-Year Results for the Six Months Ended 30 June 2020
Aseana Properties Limited (LSE: ASPL), a property developer with investments in Malaysia and Vietnam, listed on the Main Market of the London Stock Exchange, announces its unaudited half-year results for the six-month period ended 30 June 2020.
Operational highlights:
· The RuMa Residences achieved approximately 70% sales to date based on sale and purchase agreements signed.
· Prior to the Movement Control Order ("MCO") issued on 18th March 2020 in Malaysia, The RuMa Hotel achieved an average occupancy rate of approximately 55% in January and about 40% in February. The hotel was closed in March 2020 and is targeted to re-open in October 2020.
· As reported in our Annual Report issued 24th July, 2020, Four Points by Sheraton Sandakan Hotel was closed in early 2020 due to the MCO in Malaysia and the decision to permanently close was taken when Marriott International terminated its hotel management agreement.
· The Harbour Mall Sandakan has slowly re-opened after the gradual lifting of the MCO, its performance has exceeded expectations with occupancy rates at about 94%, however the mall operator has had to rebate rental lease payments to tenants for the duration of the MCO when the mall was mostly closed.
· The City International Hospital ("CIH") has shown a decline in its operational performance due to the impact of the COVID virus, with outpatient and inpatient volumes decreasing by approximately 12% and 26% respectively compared to the same period in 2019. Additionally, in late July CIH had a patient who tested positive for the COVID virus which led to a temporary closure of the hospital until the Ministry of Health issued a "clean bill of health". Unfortunately, this temporary closure will exacerbate the already negatively impacted financial performance. The hospital reopened on 11th August, 2020.
Financial highlights:
· Other Income of US$8.6 million (H1 2019: US$11.0 million)
· Loss before tax of US$8.2 million (H1 2019: loss of US$5.2 million)
· Loss after tax of US$8.3 million (H1 2019: loss of US$5.8 million)
· Consolidated comprehensive loss of US$11.1 million (H1 2019: loss of US$5.9 million)
· Net asset value of US$100.3 million (31 December 2019 (audited): US$109.6 million) or US$0.50 per share (31 December 2019 (audited): US$0.55 per share)
Commenting on the results, Nick Paris, Chairman of Aseana, said:
"The H1 2020 results are reflective of the challenging market conditions in Malaysia and Vietnam resulting from the negative impact of COVID 19 and the actions taken by the respective governments to contain the spread of the virus. Nonetheless, the Company is focused on improving the operational performance and narrowing the losses of its operating assets to improve the sale prospects of the remaining assets and to realise the sale of those assets in a controlled, orderly and timely manner".
For further information:
| Aseana Properties Limited | Tel: 020 3325 7050 |
| Nick Paris (Chairman) | Email: nick.paris@limadvisors.com |
| Liberum Capital | Tel: 020 3100 2000 |
| Gillian Martin/Owen Matthews | [email protected] |
Notes to Editors:
London-listed Aseana Properties Limited (LSE: ASPL) is a property developer with investments in Malaysia and Vietnam which is in the process of realising its assets.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report on the results of Aseana Properties Limited and its Group of companies for the six months ended 30 June 2020.
The global economy experienced a significant growth shock during the first six months of 2020 triggered by the spread of the COVID virus around Asia and the measures put in place to control it. These severely curtailed the movement of people between and within countries which then impacted the hospitality and services businesses on which Aseana concentrates. Malaysia registered a GDP growth of 0.7% in Q1 2020 but a GDP decrease of 17.1% in Q2 2020 compared to growth of 4.7% for the six months period last year (1H 2019). Vietnam experienced two quarters of weak growth and overall 1H 2020 growth of 1.81% compared to growth of 6.7% in the same period last year.
Interim Results for the Half Year ended 30th June 2020
Our interim results in this period reflect the significant impact of the COVID virus on our businesses particularly after the governments of both Malaysia and Vietnam introduced movement controls on their citizens and on foreign visitors in March. As a result our two hotels had to shut, our shopping mall had to close for all but essential shopping and our hospital in Ho Chi Minh saw a reduction in elective surgeries and overall patient admissions. Our revenue on all of our assets was severely reduced and despite significant cost cutting initiatives which were undertaken by the Board, operating losses and increased cash outflows were inevitable. As a result the consolidated loss for Aseana for the half year increased to US$11.1 million (1H 2019 - US$5.9 million).
The movement controls also severely hampered our asset sale activities as prospective buyers were unable to carry out their on the ground due diligence. Nevertheless, we did sell two of our three plots of undeveloped beachfront land in Kota Kinabalu in July for a price representing 90% of their carrying value and completion of those sales is still expected in October. We are working hard to restart sale discussions on our other assets but as yet the movement controls have still not been relaxed sufficiently to permit prospective foreigner buyers to enter either Malaysia or Vietnam.
The Board undertakes annual revaluations of the Group's properties and this was last done in connection with the Annual Report for the year ended 31st December 2019. The next full valuation will be carried out at this financial year end and your Directors have not made any impairments to the carrying value of the assets in these Interim results as they believe that it is not yet possible to gauge the impact of the virus on their long term business models or the appetite of potential investors for our remaining assets. Nevertheless, the loss which we are reporting for the six months ended 30th June 2020 has reduced our Net Asset Value per Share from US$0.55 to US$0.50.
An update on our Assets
The RuMa Hotel has not yet been re-opened although preparations have been made to do so. However, an important component of its target market comprises foreign tourists and business people and they are still not permitted to enter Malaysia.
Local movement controls have recently been reduced within Malaysia and we have therefore fully re-opened our shopping mall in Sandakan and occupancy of it has been re-built to previous levels. Our hotel in Sandakan remains shut following the resignation of Marriott International as its operator and running costs have been cut to the minimum required to maintain the condition and security of the building. We now intend to re-market the hotel as a standalone entity which can be more easily absorbed by another hotel group without the need to remove an incumbent manager.
Our hospital in Ho Chi Minh remains open but recent virus outbreaks starting in central and southern Vietnam have made the local population wary of attending medical facilities. It will therefore take time to re-build business levels.
The Demerger Proposal
As Shareholders will know, we are proposing a demerger of the interests of Ireka and Legacy Essence and other related parties from those of Aseana and I thank our Shareholders for their support at our own EGM which was held on 18 August. We now await approval from the shareholders of Ireka and from our bankers and we hope to complete the demerger in October. Once the demerger completes, Aseana will divest two assets being The RuMa Hotel & Residences and the remaining plot of undeveloped land in Kota Kinabalu and will have four assets remaining. The Aseana shares owned by the demerging Shareholders will be bought back from them in exchange for demerging the nominated assets to a new investment vehicle and those Shares will then be cancelled by the Company. As a result, the number of Aseana Shares will be reduced by approximately half and our market capitalisation on the London Stock Exchange will fall by the same percentage.
Our Business Focus and Property Divestments
Our current business focus for the Group is on reducing our costs to preserve our cash balances and on improving the operational performances of our remaining assets. The sale of the land plots in July and completion of the demerger transaction should bring in some modest cash inflows and we will use these to finance the operations of the remaining assets whilst we seek to sell them.
The impact of the COVID virus stopped all active sale discussions on our assets in March and the ongoing effect on operating revenues and costs at our assets is difficult at this stage for prospective buyers to quantify. However, we have already restarted sale discussions on some of those assets in order to seek to realise them in a controlled, orderly and timely manner and to return surplus sale proceeds after repaying their attributable borrowings to our remaining Shareholders.
Acknowledgements
I would like to take this opportunity to thank my colleagues on the Board and throughout our Group and our external advisors, bankers and service providers for their tireless efforts on behalf of the Group and its Shareholders. This has been a very challenging period in the corporate life of Aseana and the proposed demerger transaction will mark a major watershed point. Assuming that it completes, our Group will undergo a significant transformation for the better - leaner but with significantly improved cash-flows and we can concentrate on the task of selling our remaining assets.
NICK PARIS
Chairman
23 September 2020
PROPERTY PORTFOLIO AS AT 30 JUNE 2020
| Project | Type | Effective Ownership | Approximate Gross Floor Area (sq m) |
Approximate Land Area (sq m) |
| The RuMa Hotel & Residences Kuala Lumpur, Malaysia |
Luxury residential tower and bespoke hotel | 70.0% | 40,000 | 4,000 |
| Sandakan Harbour Square Sandakan, Sabah, Malaysia |
Hotel and retail mall | 100.0% | 126,000 | 48,000 |
| City International Hospital, International Healthcare Park, Ho Chi Minh City, Vietnam |
Private general hospital | 72.9%* | 48,000 | 25,000 |
| Undeveloped projects | ||||
| Other developments in International Healthcare Park, Ho Chi Minh City, Vietnam (formerly International Hi-Tech Healthcare Park) |
Commercial and residential development with healthcare theme | 72.9%* | 972,000 | 351,000 |
| Kota Kinabalu Seafront resort & residences Kota Kinabalu, Sabah, Malaysia |
(i) Boutique resort hotel and resort villas (ii) Resort homes |
100.0% 80.0% |
n/a | 327,000 |
*Shareholding as at 30 June 2020
n/a: Not available/ Not applicable
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2020
| Unaudited | Unaudited | Audited | ||
| Six months | Six months | Year | ||
| Notes | ended 30 June |
ended 30 June |
ended 31 December |
|
| 2020 | 2019 | 2019 | ||
| Continuing activities | US$'000 | US$'000 | US$'000 | |
| Revenue | 3 | - | 5,653 | 9,725 |
| Cost of sales | 5 | (3) | (4,990) | (29,799) |
| Gross profit/(loss) | (3) | 663 | (20,074) | |
| Other income | 8,581 | 11,045 | 26,989 | |
| Administrative expenses | (637) | (290) | (1,122) | |
| Foreign exchange gain | 6 | (1,023) | (67) | 287 |
| Management fees | - | (497) | (1,157) | |
| Marketing expenses | (11) | (94) | (171) | |
| Other operating expenses | (11,647) | (12,748) | (29,688) | |
| Operating loss | (4,740) | (1,988) | (24,936) | |
| Finance income | 882 | 492 | 5,793 | |
| Finance costs | (4,426) | (3,727) | (9,514) | |
| Net finance costs | (3,544) | (3,235) | (3,721) | |
| Net loss before taxation | (8,284) | (5,223) | (28,657) | |
| Taxation | 7 | (4) | (602) | (1,349) |
| Loss for the period/year | (8,288) | (5,825) | (30,006) | |
| Other comprehensive (loss)/ income, net of tax Items that are or may be reclassified subsequently to profit or loss Foreign currency translation differences |
||||
| for foreign operations | (2,873) | (67) | (615) | |
| Total other comprehensive | ||||
| loss for the period/year | (2,873) | (67) | (615) | |
| Total comprehensive loss | ||||
| for the period/year | (11,161) | (5,892) | (29,391) | |
| Loss attributable to: Equity holders of the parent |
(6,485) | (4,055) | (27,106) | |
| Non-controlling interests | (1,803) | (1,770) | (2,900) | |
| Total | (8,288) | (5,825) | (30,006) | |
| Total comprehensive loss | ||||
| attributable to: | ||||
| Equity holders of the parent | (9,345) | (4,095) | (26,485) | |
| Non-controlling interests | (1,816) | (1,797) | (2,906) | |
| Total | (11,161) | (5,892) | (29,391) | |
| (Loss)/Earnings per share Basic and diluted (US cents) |
8 | (3.26) | (2.04) | (13.64) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
| Notes | Unaudited | Unaudited | Audited | |
| As at 30 June |
As at 30 June |
As at 31 December |
||
| 2020 | 2019 | 2019 | ||
| US$'000 | US$'000 | US$'000 | ||
| Non-current assets | ||||
| Property, plant and equipment | 593 | 664 | 620 | |
| Intangible assets | 4,097 | 4,085 | 4,097 | |
| Right of use | 360 | - | 544 | |
| Deferred tax assets | 4,842 | 4,828 | 5,066 | |
| Total non-current assets | 9,892 | 9,577 | 10,327 | |
| Current assets | ||||
| Inventories | 232,753 | 263,526 | 238,863 | |
| Trade and other receivables | 17,746 | 14,578 | 12,902 | |
| Prepayments | 606 | 598 | 524 | |
| Current tax assets | 3 | 143 | 3 | |
| Cash and cash equivalents | 5,226 | 6,791 | 7,615 | |
| Total current assets | 256,334 | 285,636 | 259,907 | |
| TOTAL ASSETS | 266,226 | 295,213 | 270,234 | |
| Equity | ||||
| Share capital | 10,601 | 10,601 | 10,601 | |
| Share premium | 208,925 | 208,925 | 208,925 | |
| Capital redemption reserve | 1,899 | 1,899 | 1,899 | |
| Translation reserve | (24,504) | (22,305) | (21,644) | |
| Accumulated losses | (96,630) | (66,841) | (90,135) | |
| Shareholders' equity | 100,291 | 132,279 | 109,646 | |
| Non-controlling interests | (5,654) | (2,734) | (3,848) | |
| Total equity | 94,637 | 129,545 | 105,798 | |
| Non-current liabilities | ||||
| Trade and other payable | 37,518 | 38,638 | 39,253 | |
| Loans and borrowings | 9 | 25,318 | 14,043 | 18,968 |
| Total non-current liabilities | 62,836 | 52,681 | 58,221 | |
| Current liabilities | ||||
| Trade and other payables | 30,681 | 28,676 | 23,549 | |
| Amount due to non-controlling interests | 10,923 | 9,728 | 10,587 | |
| Loans and borrowings | 9 | 28,182 | 43,701 | 34,713 |
| Medium term notes | 10 | 37,878 | 29,506 | 36,142 |
| Current tax liabilities | 1,089 | 1,376 | 1,224 | |
| Total current liabilities | 108,753 | 112,987 | 106,215 | |
| Total liabilities | 171,589 | 165,668 | 164,436 | |
| TOTAL EQUITY AND LIABILITIES | 266,226 | 295,213 | 270,234 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the SIX MONTHS ended 30 JuNE 2020 - Unaudited
| Redeemable Ordinary Shares US$'000 |
Management Shares US$'000 |
Share Premium US$'000 |
Capital Redemption Reserve US$'000 |
Translation Reserve US$'000 |
Accumulated Losses US$'000 |
Total Equity Attributable to Equity Holders of the Parent US$'000 |
Non- Controlling Interests US$'000 |
Total Equity US$'000 |
|
| 1 January 2020 | 10,601 | - | 208,925 | 1,899 | (21,644) | (90,135) | 109,646 | (3,848) | 105,798 |
| Loss for the period | - | - | - | - | - | (6,485) | (6,485) | (1,803) | (8,288) |
| Total other comprehensive loss | - | - | - | - | (2,860) | - | (2,860) | (13) | (2,873) |
| Total comprehensive loss | - | - | - | - | (2,860) | (6,485) | (9,345) | (1,816) | (11,161) |
| Change in ownership of subsidiaries | - | - | - | - | - | (10) | (10) | 10 | - |
| Shareholders' equity at 30 June 2020 | 10,601 | - | 208,925 | 1,899 | (24,504) | (96,630) | 100,291 | (5,654) | 94,637 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the SIX MONTHS ended 30 JuNE 2019 - Unaudited
| Redeemable Ordinary Shares US$'000 |
Management Shares US$'000 |
Share Premium US$'000 |
Capital Redemption Reserve US$'000 |
Translation Reserve US$'000 |
Accumulated Losses US$'000 |
Total Equity Attributable to Equity Holders of the Parent US$'000 |
Non- Controlling Interests US$'000 |
Total Equity US$'000 |
|
| 1 January 2019 | 10,601 | - | 208,925 | 1,899 | (22,265) | (62,786) | 136,374 | (937) | 135,437 |
| Loss for the period | - | - | - | - | - | (4,055) | (4,055) | (1,770) | (5,825) |
| Total other comprehensive loss | - | - | - | - | (40) | - | (40) | (27) | (67) |
| Total comprehensive loss | - | - | - | - | (40) | (4,055) | (4,095) | (1,797) | (5,892) |
| Shareholders' equity at 30 June 2019 | 10,601 | - | 208,925 | 1,899 | (22,305) | (66,841) | 132,279 | (2,734) | 129,545 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019 - audited
| Consolidated | Redeemable Ordinary Shares US$'000 |
Management Shares US$'000 |
Share Premium US$'000 |
Capital Redemption Reserve US$'000 |
Translation Reserve US$'000 |
Accumulated Losses US$'000 |
Total Equity Attributable to Equity Holders of the Parent US$'000 |
Non- Controlling Interests US$'000 |
Total Equity US$'000 |
|
| Balance at 1 January 2018 | 10,601 | - | 208,925 | 1,899 | (20,996) | (57,898) | 142,531 | 331 | 142,862 | |
| Changes in ownership interests in subsidiaries (Note 32) | - | - | - | - | - | (3) | (3) | 3 | - | |
| Non-controlling interests contribution | - | - | - | - | - | - | - | 63 | 63 | |
| Loss for the year | - | - | - | - | - | (4,885) | (4,885) | (1,521) | (6,406) | |
| Total other comprehensive loss for the year | - | - | - | - | (1,269) | - | (1,269) | 187 | (1,082) | |
| Total comprehensive loss for the year | - | - | - | - | (1,269) | (4,885) | (6,154) | (1,334) | (7,488) | |
| As at 31 December 2018/ 1 January 2019 | 10,601 | - | 208,925 | 1,899 | (22,265) | (62,786) | 136,374 | (937) | 135,437 | |
| Impact of change in accounting policy (Note 36) | - | - | - | - | - | (219) | (219) | (29) | (248) | |
| Adjusted balance at 31 December 2018/ 1 January 2019 | 10,601 | - | # | 208,925 | 1,899 | (22,265) | (63,005) | 136,155 | (966) | 135,189 |
| Changes in ownership interests in subsidiaries (Note 32) | - | - | - | - | - | (24) | (24) | 24 | - | |
| Non-controlling interests contribution | - | - | - | - | - | - | - | - | - | |
| Loss for the year | - | - | - | - | - | (27,106) | (27,106) | (2,900) | (30,006) | |
| Total other comprehensive loss for the year | - | - | - | - | 621 | - | 621 | (6) | 615 | |
| Total comprehensive loss for the year | - | - | - | - | 621 | (27,106) | (26,485) | (2,906) | (29,391) | |
| Shareholders' equity at 31 December 2019 | 10,601 | - | # | 208,925 | 1,899 | (21,644) | (90,135) | 109,646 | (3,848) | 105,798 |
represents 2 management shares at US$0.05 each
| CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||
| FOR THE SIX MONTHS ENDED 30 JUNE 2020 | |||||||
| Unaudited | Unaudited | Audited | |||||
| Six months | Six months | Year | |||||
| ended 30 June |
ended 30 June |
ended 31 December |
|||||
| 2020 | 2019 | 2019 | |||||
| US$'000 | US$'000 | US$'000 | |||||
| Cash Flows from Operating Activities | |||||||
| Net loss before taxation | (8,284) | (5,223) | (28,657) | ||||
| Finance income | (882) | (492) | (5,793) | ||||
| Finance costs | 4,426 | 3,727 | 9,514 | ||||
| Unrealised foreign exchange gain | 998 | (14) | (292) | ||||
| Write down/Impairment of goodwill | - | 62 | 51 | ||||
| Depreciation of property, plant and equipment | 46 | 56 | 105 | ||||
| Net realisation value adjustments of inventory | - | - | 23,287 | ||||
| Operating (loss)/profit before changes in working capital | (3,696) | (1,884) | (1,785) | ||||
| Changes in working capital: | |||||||
| Decrease /(Increase) in inventories | (4,287) | 3,387 | 6,931 | ||||
| Decrease /(Increase) in trade and other receivables and prepayments | (5,442) | 2,453 | 7,949 | ||||
| (Decrease) /Increase in trade and other payables | 6,929 | (4,911) | (10,794) | ||||
| Cash used in operations | (6,496) | (955) | 2,294 | ||||
| Interest paid | (4,426) | (3,727) | (9,514) | ||||
| Tax paid | (122) | (602) | (1,568) | ||||
| Net cash used in operating activities | (11,044) | (5,284) | (8,788) | ||||
| Cash Flows From Investing Activities | |||||||
| Proceeds from disposal of property, plant and equipment |
6 | 6 | 6 | ||||
| Purchase of property, plant and equipment |
(25) | (50) | (54) | ||||
| Finance income received | 882 | 492 | 2,221 | ||||
| Net cash from investing activities | 863 | 448 | 2,173 | ||||
| CONSOLIDATED STATEMENT OF CASH FLOWS (CONT'D) | |||||||
| FOR THE SIX MONTHS ENDED 30 JUNE 2020 | |||||||
| Unaudited | Unaudited | Audited | |||||
| Six months | Six months | Year | |||||
| ended June |
ended 30 June |
ended 31 December |
|||||
| 2020 | 2019 | 2019 | |||||
| US$'000 | US$'000 | US$'000 | |||||
| Cash Flows From Financing Activities | |||||||
| (Repayment)/Advances from non-controlling interests | 578 | (3,435) | (2,666) | ||||
| Issuance of ordinary shares of subsidiaries to non-controlling interests (i) | - | - | - | ||||
| Finance lease liabilities | (40) | - | (873) | ||||
| Repayment of loans and borrowings | (2,496) | (7,338) | (12,612) | ||||
| Drawdown of loans and borrowings and medium term notes | 9,603 | 9,820 | 17,448 | ||||
| Net (increase)/decrease in pledged deposits for loans and borrowings and Medium Term Notes | 1,703 | (2,306) | (1,651) | ||||
| Net cash from/(used in) financing activities | 9,348 | (3,259) | 96 | ||||
| Net changes in cash and cash equivalents during the period/year | (833) | (8,095) | (6,519) | ||||
| Effect of changes in exchange rates | 322 | 11 | (109) | ||||
| Cash and cash equivalents at the beginning of the period/year (i) | 3,235 | 9,863 | 9,863 | ||||
| Cash and cash equivalents at the end of the period/year (i) | 2,724 | 1,779 | 3,235 | ||||
| (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 | 2,105 | 1,235 | 2,380 | ||||
| Short term bank deposits | 3,121 | 5,556 | 5,235 | ||||
| 5,226 | 6,791 | 7,615 | |||||
| Less: Deposits pledged (ii) | (2,502) | (5,012) | (4,380) | ||||
| Cash and cash equivalents | 2,724 | 1,779 | 3,235 | ||||
(ii) Included in short term bank deposits and cash and bank balance is US$2,502,000 (31 December 2019:US$4,380,000; 30 June 2019: US$5,012,000) pledged for loans and borrowings and Medium Term Notes of the Group.
The notes to the financial statements form an integral part of the financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2020
1 General Information
The principal activities of the Group are the development of upscale residential and hospitality projects, sale of development land and operation and sale of hotels, a shopping mall and a hospital in Malaysia and Vietnam.
2 Summary of Significant Accounting Policies
2.1 Basis of Preparation
The interim condensed consolidated financial statements for the six months ended 30 June 2020 have been prepared in accordance with IAS 34, Interim Financial Reporting.
The interim condensed consolidated financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2019 which have been prepared in accordance with IFRS.
Taxes on income in the interim period are accrued using the tax rate that would be applicable to expected total annual earnings.
The interim results have not been audited nor reviewed and do not constitute statutory 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 accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2019 as described in those annual financial statements.
The interim report and financial statements were approved by the Board of Directors on 23 September 2020.
3 SegmentAL Information
The Group's assets and business activities were managed by Ireka Development Management Sdn. Bhd. ("IDM") as the Development Manager under a Management Agreement dated 27 March 2007. IDM resigned on 21 March 2019 and served out their notice period until 30 June 2019. Following that date, the Company has been managed by its Board of Directors with the assistance of certain staff seconded to the Company by Ireka and a Chief Executive Officer who resigned in January 2020. On 31 May 2020 the Company terminated the Services Agreement and also the staff secondment arrangements with Ireka and has engaged a few staff directly to run its finances and operations.
Segmental information represents the level at which financial information is reported to the Board of Directors, being the chief operating decision makers as defined in IFRS 8. The Directors determine the operating segments based on reports reviewed and used by their staff for strategic decision making and resource allocations. For management purposes, the Group is organised into project units.
The Group's reportable operating segments are as follows:
(i) Investment Holding Companies - investing activities;
(ii) Ireka Land Sdn. Bhd. - developed Tiffani ("Tiffani") by i-ZEN;
(iii) ICSD Ventures Sdn. Bhd. - developed, owns and operates Harbour Mall Sandakan ("HMS") and Four Points by Sheraton Sandakan Hotel ("FPSS");
(iv) Amatir Resources Sdn. Bhd. - developed SENI Mont' Kiara ("SENI");
(v) The RuMa Hotel KL Sdn Bhd - operates The RuMa Hotel
(vi) Urban DNA Sdn. Bhd.- developed and owns The RuMa Hotel and Residences ("The RuMa") and
(vii) Hoa Lam-Shangri-La Healthcare Group - master developer of International Healthcare Park ("IHP"); developed, owns and operates the City International Hospital ("CIH").
Other non-reportable segments comprise the Group's other development projects. None of these segments meets any of the quantitative thresholds for determining reportable segments in 2020 and 2019.
Information regarding the operations of each reportable segment is included below. The Board of Directors 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 Directors believes are the most relevant in evaluating the results relative to other entities in the industry. Segment assets 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 located in Malaysia and Vietnam.
Operating Segments ended 30 June 2020 - Unaudited
| Investment Holding Companies | Ireka Land Sdn. Bhd. |
ICSD Ventures Sdn. Bhd. | Amatir Resources Sdn. Bhd. | The RuMa Hotel KL Sdn. Bhd. | Urban DNA Sdn. Bhd. |
Hoa Lam-Shangri-La Healthcare Group | Total | |
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |
| Segment (loss)/profit before taxation | (1,660) | 4 | (1,470) | 18 | (1,518) | (1,227) | (2,397) | (8,250) |
| Included in the measure of segment profit/(loss) are: | ||||||||
| Revenue | - | - | - | - | - | - | - | - |
| Revenue from hotel operations | - | - | 647 | - | 1,504 | - | - | 2,151 |
| Revenue from mall operations | - | - | 731 | - | - | - | - | 731 |
| Revenue from hospital operations | - | - | - | - | - | - | 5,615 | 5,615 |
| Disposal of intangible assets | - | - | - | - | - | - | - | - |
| Impairment of goodwill | - | - | - | - | - | - | - | - |
| Marketing expenses | - | - | - | - | - | (11) | - | (11) |
| Expenses from hotel operations | - | - | (1,744) | - | (2,814) | - | - | (4,558) |
| Expenses from mall operations | - | - | (473) | - | - | - | - | (473) |
| Expenses from hospital operations | - | - | - | - | - | - | (5,680) | (5,680) |
| Depreciation of property, plant and equipment | - | - | - | - | (23) | - | (23) | (46) |
| Finance costs | - | - | (701) | (169) | - | (1,383) | (2,173) | (4,426) |
| Finance income | - | 1 | 49 | 209 | - | 21 | 7 | 287 |
| Segment assets | 3,833 | 351 | 57,231 | 6,025 | 1,486 | 82,387 | 86,754 | 238,067 |
| Segment liabilities | 164 | 180 | 2,783 | 3,867 | 2,399 | 9,993 | 66,857 | 86,243 |
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items
| Profit or loss | US$'000 |
| Total loss for reportable segments | (8,250) |
| Other non-reportable segments | (34) |
| Consolidated loss before taxation | (8,284) |
Operating Segments ended 30 June 2019 - Unaudited
| Investment Holding Companies | Ireka Land Sdn. Bhd. |
ICSD Ventures Sdn. Bhd. | Amatir Resources Sdn. Bhd. | The RuMa Hotel KL Sdn. Bhd. | Urban DNA Sdn. Bhd. |
Hoa Lam-Shangri-La Healthcare Group | Total | |
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |
| Segment (loss)/profit before taxation | (692) | - | (636) | 1,059 | (2,343) | (602) | (1,736) | (4,950) |
| Included in the measure of segment profit/(loss) are: | ||||||||
| Revenue | - | - | - | 6,464 | - | (811) | - | 5,653 |
| Revenue from hotel operations | - | - | 1,761 | - | 1,098 | - | - | 2,859 |
| Revenue from mall operations | - | - | 931 | - | - | - | - | 931 |
| Revenue from hospital operations | - | - | - | - | - | - | 7,022 | 7,022 |
| Disposal of intangible assets | - | - | - | (1,154) | - | - | - | (1,154) |
| Impairment of goodwill | - | - | - | (62) | - | - | - | (62) |
| Marketing expenses | - | - | - | (1) | - | (94) | - | (94) |
| Expenses from hotel operations | - | - | (2,000) | - | (3,185) | - | - | (5,185) |
| Expenses from mall operations | - | - | (641) | - | - | - | - | (641) |
| Expenses from hospital operations | - | - | - | - | - | - | (6,475) | (6,475) |
| Depreciation of property, plant and equipment | - | - | - | - | (19) | - | (37) | (56) |
| Finance costs | - | - | (770) | (266) | - | (664) | (2,027) | (3,727) |
| Finance income | - | 1 | 53 | 422 | - | 6 | 10 | 492 |
| Segment assets | 242 | 583 | 82,085 | 9,077 | 582 | 96,689 | 86,934 | 276,192 |
| Segment liabilities | 270 | 220 | 2,420 | 4,905 | 918 | 14,942 | 64,736 | 88,411 |
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items
| Profit or loss | US$'000 |
| Total loss for reportable segments | (4,950) |
| Other non-reportable segments | (273) |
| Consolidated loss before taxation | (5,223) |
Operating Segments - Year ended 31 December 2019 - Audited
| Investment Holding Companies | Ireka Land Sdn. Bhd. | ICSD Ventures Sdn. Bhd. | Amatir Resources Sdn. Bhd. | The RuMa Hotel KL Sdn. Bhd. | Urban DNA Sdn. Bhd. |
Hoa Lam Shangri-La Healthcare Group | Total | |
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |
| Segment (loss)/profit before taxation | 1,354 | 94 | (23,929) | 1,205 | (3,962) | 491 | (3,862) | (28,609) |
| Included in the measure of segment (loss)/profit are: | ||||||||
| Revenue | - | - | - | 6,427 | - | 3,298 | - | 9,725 |
| Other income from hotel operations | - | - | 3,909 | - | 3,882 | - | - | 7,791 |
| Other income from mall operations | - | - | 1,880 | - | - | - | - | 1,880 |
| Other income from hospital operations | - | - | - | - | - | - | 15,092 | 15,092 |
| Provision for allowance of inventory | - | - | (22,355) | (932) | - | - | - | (23,287) |
| Disposal of intangible assets | - | - | - | (50) | - | - | - | (50) |
| Marketing expenses | - | - | - | (1) | - | (170) | - | (171) |
| Expenses from hotel operations | - | - | (3,879) | - | (6,970) | - | - | (10,849) |
| Expenses from mall operations | - | - | (1,326) | - | - | - | - | (1,326) |
| Expenses from hospital operations | - | - | - | - | - | - | (13,454) | (13,454) |
| Depreciation of property, plant and equipment | - | - | - | - | (35) | - | (70) | (105) |
| Finance costs | (180) | (14) | (1,634) | (678) | (40) | (1,009) | (5,960) | (9,515) |
| Finance income | - | 1 | 104 | 708 | - | 45 | 969 | 1,827 |
| Segment assets | 3,973 | 481 | 60,217 | 6,318 | 1,085 | 85,571 | 86,511 | 244,156 |
| Segment liabilities | 251 | 196 | 2,735 | 4,099 | 1,626 | 5,379 | 65,222 | 79,508 |
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items
| Profit or loss | US$'000 |
| Total loss for reportable segments | (28,609) |
| Other non-reportable segments | (441) |
| Finance income | 393 |
| Consolidated loss before taxation | (28,657) |
| Six months ended 30 June 2020 - Unaudited US$'000 |
Revenue | Depreciation | Finance costs | Finance income | Segment assets | Segment liabilities | Addition to non-current assets |
| Total reportable segment | - | (46) | (4,426) | 287 | 238,067 | 86,243 | - |
| Other non-reportable segments | - | - | - | 595 | 28,159 | 85,346 | 25 |
| Consolidated total | - | (46) | (4,426) | 882 | 266,226 | 171,589 | 25 |
| Six months ended 30 June 2019 - Unaudited US$'000 |
Revenue | Depreciation | Finance costs | Finance income | Segment assets | Segment liabilities | Addition to non-current assets |
| Total reportable segment | 5,653 | (56) | (3,485) | 492 | 276,192 | 88,411 | - |
| Other non-reportable segments | - | - | (242) | - | 19,021 | 77,257 | 50 |
| Consolidated total | 5,653 | (56) | (3,727) | 492 | 295,213 | 165,668 | 50 |
| Year ended 31 December 2019 -Audited US$'000 |
Revenue | Depreciation | Finance costs | Finance income | Segment assets | Segment liabilities | Additions to non-current assets |
| Total reportable segment | 9,725 | (105) | (9,514) | 1,827 | 244,156 | 79,508 | - |
| Other non-reportable segments | - | - | - | 394 | 26,078 | 84,928 | 54 |
| Consolidated total | 9,725 | (105) | (9,514) | 2,221 | 270,234 | 164,436 | 54 |
Geographical Information - six months ended 30 June 2020 - Unaudited
| Malaysia | Vietnam | Consolidated | |
| US$'000 | US$'000 | US$'000 | |
| Revenue | - | - | - |
| Non-current assets | 5,907 | 3,985 | 9,892 |
Geographical Information - six months ended 30 June 2019 - Unaudited
| Malaysia | Vietnam | Consolidated | |
| US$'000 | US$'000 | US$'000 | |
| Revenue | 5,653 | - | 5,653 |
| Non-current assets | 5,536 | 4,041 | 9,577 |
Geographical Information - year ended 31 December 2019 - Audited
| Malaysia | Vietnam | Consolidated | |
| US$'000 | US$'000 | US$'000 | |
| Revenue | 9,725 | - | 9,725 |
| Non-current assets | 6,319 | 4,008 | 10,327 |
In the financial period/year ended 30 June 2020; 30 June 2019; 31 December 2019, no single customer exceeded 10% of the Group's total revenue.
4 Seasonality
The Group's business operations were not materially affected by seasonal factors for the period
under review but was affected by the MCO resulting from the Covid 19 pandemic.
5 Cost of Sales
| Unaudited | Unaudited | Audited | |
| Six months | Six months | Year | |
| ended 30 June |
ended 30 June |
ended 31 December |
|
| 2020 | 2019 | 2019 | |
| US$'000 | US$'000 | US$'000 | |
| Direct costs attributable to: | |||
| Completed Units | 3 | 3,774 | 6,461 |
| Impairment of inventory | - | 62 | - |
| Impairment of intangible assets | - | 1,154 | 51 |
| Net realisable value adjustment of inventories | - | - | 23,287 |
| 3 | 4,990 | 29,799 |
6 Foreign exchange (LOSS)/GAIN
| Unaudited | Unaudited | Audited | |
| Six months | Six months | Year | |
| ended 30 June |
ended 30 June |
ended 31 December |
|
| 2020 | 2019 | 2019 | |
| US$'000 | US$'000 | US$'000 | |
| Foreign exchange (loss)/gain comprises: | |||
| Realised foreign exchange gain/(loss) | (25) | (81) | (6) |
| Unrealised foreign exchange gain/(loss) | (998) | 14 | 293 |
| (1,023) | (67) | 287 |
7 Taxation
| Unaudited | Unaudited | Audited | |
| Six months | Six months | Year | |
| ended 30 June |
ended 30 June |
ended 31 December |
|
| 2020 | 2019 | 2019 | |
| US$'000 | US$'000 | US$'000 | |
| Current tax expense | 4 | 241 | 172 |
| Deferred tax credit | - | 361 | 1,177 |
| Total tax expense/(income) for the period/year | 4 | 602 | 1,349 |
The numerical reconciliation between the income tax expense and the product of accounting results multiplied by the applicable tax rate is computed as follows:
| Unaudited | Unaudited | Audited | |
| Six months | Six months | Year | |
| ended 30 June |
ended 30 June |
Ended 31 December |
|
| 2020 | 2019 | 2019 | |
| US$'000 | US$'000 | US$'000 | |
| Net loss before taxation | (8,284) | (5,223) | (28,657) |
| Income tax | (1,988) | (1,253) | (6,878) |
| Add : | |||
| Tax effect of expenses not deductible in determining taxable profit | 3,274 | 1,223 | 1,327 |
| Current year losses and other tax benefits for which no deferred tax asset was recognised | 687 | 1,899 | 4,911 |
| Tax effect of different tax rates in subsidiaries | 476 | 370 | 713 |
| Less : | |||
| Tax effect of income not taxable in determining taxable profit | (2,064) | (949) | (2,997) |
| (Under)/Over provision in respect of prior period/year | (381) | 81 | 4,273 |
| Total tax expense for the period/year | 4 | 518 | 1,349 |
The applicable corporate tax rate in Malaysia is 24%.
The applicable corporate tax rates in Singapore and Vietnam are 17% and 20% respectively.
A subsidiary of the Group, CIH is granted preferential corporate tax rate of 10% for the results of the hospital operations. The preferential income tax is given by the government of Vietnam due to the subsidiary's involvement in the healthcare industry.
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 Company is also registered as an International Services Entity so it does not have to charge or pay local Goods and Services Tax. The cost for this registration is £200 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.
8 (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 period/year ended 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:
| Unaudited | Unaudited | Audited | |
| Six months | Six months | Year | |
| ended 30 June |
ended 30 June |
ended 31 December |
|
| 2020 | 2019 | 2019 | |
| (Loss)/earnings attributable to equity holders of the parent (US$'000) | (6,485) | (4,055) | (27,106) |
| Weighted average number of shares | 198,691,000 | 198,691,000 | 198,691,000 |
| (Loss)/earnings per share | |||
| Basic and diluted (US cents) | (3.26) | (2.04) | (13.64) |
9 Loans and Borrowings
| Unaudited | Unaudited | Audited | ||
| As at 30 June |
As at 30 June |
As at 31 December |
||
| 2020 | 2019 | 2019 | ||
| US$'000 | US$'000 | US$'000 | ||
| Non-current | ||||
| Bank loans | 25,165 | 14,043 | 18,789 | |
| Finance lease liabilities | 153 | - | 179 | |
| 25,318 | 14,043 | 18,968 | ||
| Current | ||||
| Bank loans | 27,949 | 43,701 | 34,281 | |
| Finance lease liabilities | 233 | - | 432 | |
| 28,182 | 43,701 | 34,713 | ||
| 53,500 | 57,744 | 53,681 |
The effective interest rates on the bank loans and finance lease arrangement for the period ranged from 5.55% to 11.30% (30 June 2019: 5.25% to 12.50%; 31 December 2019: 5.55% to 11.30%) per annum and 2.50% (30 June 2019: 2.50%; 31 December 2019: 2.50%) per annum respectively.
Borrowings are denominated in Malaysian Ringgit, United States Dollars and Vietnamese Dong.
Bank loans are repayable by monthly, quarterly or semi-annual instalments.
Bank loans are secured by land held for property development, work-in-progress, operating assets of the Group, pledged deposits and some by the corporate guarantee of the Company.
Reconciliation of movement of loans and borrowings to cash flows arising from financing activities:
| As at 1 January 2020 | Drawdown of loan | Repayment of loan | Foreign exchange movements | As at 30 June 2020 | |
| Unaudited | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
| Bank loans | 53,070 | 6,998 | (2,496) | (4,072) | 53,500 |
| Total | 53,070 | 6,998 | (2,496) | (4,072) | 53,500 |
| As at 1 January 2019 | Drawdown of loan | Repayment of loan | Foreign exchange movements | As at 30 June 2019 | |
| Unaudited | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
| Bank loans | 61,272 | 4,293 | (7,338) | (483) | 57,744 |
| Total | 61,272 | 4,293 | (7,338) | (483) | 57,744 |
| As at 1 January 2019 | Drawdown of loan | Repayment of loan | Foreign exchange movements | As at 31 December 2019 | |
| Audited | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
| Bank loans | 61,272 | 5,343 | (12,162) | (1,383) | 53,070 |
| Total | 61,272 | 5,343 | (12,162) | (1,383) | 53,070 |
| As at 1 January 2020 | Initial Application | Repayment of lease payment |
Interest expenses | Foreign exchange movements | As at 30 June 2020 |
||
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | ||
| Lease Liabilities | 611 | - | (224) | - | (1) | 386 | |
| Total | 611 | - | (224) | - | (1) | 386 |
| As at 1 January 2019 | Initial Application | Repayment of lease payment |
Interest expenses | Foreign exchange movements | As at 30 June 2019 |
||
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | ||
| Lease Liabilities | - | - | - | - | - | - | |
| Total | - | - | - | - | - | - |
| As at 1 January 2019 | Initial Application | Repayment of lease payment |
Interest expenses | Foreign exchange movements | As at 31 December 2019 | ||
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | ||
| Lease Liabilities | - | 1,491 | (873) | 59 | (66) | 611 | |
| Total | - | 1,491 | (873) | 59 | (66) | 611 |
10 Medium Term Notes
| Unaudited | Unaudited | Audited | |
| As at | As at | As at | |
| 30 June | 30 June | 31 December | |
| 2020 | 2019 | 2019 | |
| US$'000 | US$'000 | US$'000 | |
| Outstanding medium term notes | (38,060) | 29,717 | 36,535 |
| Net transaction costs | (182) | (211) | (393) |
| Less: | |||
| Repayment due within twelve months* | (37,878) | (29,506) | (36,142) |
| Repayment due after twelve months | - | - | - |
Reconciliation of movement of medium term notes to cash flows arising from financing activities:
| As at 1 January 2020 | Drawdown of loan | Repayment of loan | Foreign exchange movements | As at 30 June 2020 | |
| Unaudited | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
| Medium Term Notes | 36,142 | 2,605 | - | (869) | 37,878 |
| As at 1 January 2019 | Drawdown of loan | Repayment of loan | Foreign exchange movements | As at 30 June 2019 | |
| Unaudited | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
| Medium Term Notes | 23,761 | 5,527 | - | 218 | 29,506 |
| As at 1 January 2019 | Drawdown of loan | Repayment of loan | Foreign exchange movements | As at 31 December 2019 | |
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |
| Medium Term Notes | 23,761 | 12,105 | - | 276 | 36,142 |
* Includes net transaction costs in relation to medium term notes due within twelve months of US$0.18 million. (30 June 2019: US$0.21million; 31 December 2019: US$0.39 million)
The tenure of the medium term notes programme relating to the hotel and mall in Sandakan is ten (10) years which expires on 7 December 2021. SSB secured a "roll-over" of the remaining medium term notes of US$23.35mil (RM100 million) on 10 December 2019 and these are due for repayment on 10 December 2020 but are expected to be rolled over for one last year.
The medium term notes are rated AAA.
No repayments were made in the current financial period.
The weighted average interest rate of the medium term notes was 5.85% per annum at the statement of financial position date. The effective interest rates of the medium term notes and their outstanding amounts are as follows:
| Maturity Dates | Interest rate % per annum | US$'000 | |
| Series 1 Tranche FGI | 10 Dec 2020 | 5.85 | 10,041 |
| Series 1 Tranche BG | 10 Dec 2020 | 5.85 | 13,310 |
| 23,351 |
The medium term notes are secured by way of:
(i) bank guarantee from two financial institutions in respect of the BG Tranches;
(ii) financial guarantee insurance policy from Danajamin Nasional Berhad ("Danajamin") in respect to the FG Tranches;
(iii) a first fixed and floating charge over the present and future assets and properties of Silver Sparrow Berhad and ICSD Ventures Sdn. Bhd. by way of a debenture;
(iv) a third party first legal fixed charge over ICSD Ventures Sdn. Bhd.'s assets and
land;
(v) a corporate guarantee by Aseana Properties Limited;
(vi) a letter of undertaking from Aseana Properties Limited to provide financial and other forms of support to ICSD Ventures Sdn. Bhd. to finance any cost overruns associated with the development of the Sandakan Harbour Square;
(vii) assignment of all its present and future rights, interest and benefits under the ICSD Ventures Sdn. Bhd.'s Put Option Agreements in favour of Danajamin, Malayan Banking Berhad and OCBC Bank (Malaysia) Berhad (collectively as "the guarantors") where once exercised, the sale and purchase of HMS and FPSS shall take place in accordance with the provision of the Put Option Agreement; and the
proceeds from HMS and FPSS will be utilised to repay the MTNs;
(viii) assignment over the disbursement account, revenue account, operating account, sale proceed account, debt service reserve account and sinking fund account of Silver Sparrow Berhad; revenue account of ICSD Venture Sdn. Bhd. and escrow account of Ireka Land Sdn. Bhd.;
(ix) assignment of all ICSD Ventures Sdn. Bhd's present and future rights, title, interest and benefits in and under the insurance policies; and
(x) a first legal charge over all the shares of Silver Sparrow Berhad, ICSD Ventures Sdn. Bhd. and any dividends, distributions and entitlements.
Potensi Angkasa Sdn Bhd ("PASB"), a subsidiary incorporated on 25 February 2019, has secured a commercial paper and/or medium term notes programme of not exceeding US$21.02 mil (RM90.0 million) ("CP/MTN Programme") to fund a project known as The RuMa Hotel and Residences. PASB may, from time to time, issue commercial paper and/or medium term notes ("Notes") whereby the nominal value of outstanding Notes shall not exceed US$21.02 mil (RM90.0 million) at any one time. As at 31 December 2019, a total of US$11.58mil (RM49.6 million) was issued. Subsequently an additional of US$3.58mil (RM15.35 million) was issued on 25 February 2020.
As at 10 June 2020, the initial tranches of US$5.35mil (RM22.9 million) matured and two tranches amounting to US$0.44mil (RM1.90 million) were redeemed. The remaining tranches of US$4.90mil (RM21.0 million) are subsequently rolled-over for another one year.
The weighted average interest rate of the loan was 6.0% per annum at the statement of financial position date. The effective interest rates of the medium term notes and their outstanding amounts were as follows:
Maturity
| Maturity Dates | Interest rate % per annum | US$'000 | |
| Tranche 24-31 | 29 Sep 2020 | 6.0 | 2,241 |
| Tranche 32-49 | 6 Oct 2020 | 6.0 | 3,993 |
| Tranche 50-62 | 25 Feb 2021 | 6.0 | 3,584 |
| Tranche 50-61 | 10 Jun 2021 | 6.0 | 4,891 |
| 14,709 |
Security for CP/MTN Programme
(a) A legal charge over the Designated Accounts by the PASB and/or the Security Party (as defined below) (as the case may be) and assignment of the rights, titles, benefits and interests of the PASB and/or the Security Party (as the case may be) thereto and the credit balances therein on a pari passu basis among all Notes, subject to the following:
(i) In respect of the 75% of the sale proceeds of a Secured Asset ("Net Sale Proceeds") arising from the disposal of a Secured Asset, the Noteholders of the relevant Tranche secured by such Secured Asset shall have the first ranking security over such Net Sale Proceeds;
(ii) In respect of the insurance proceeds from the Secured Assets ("Insurance Proceeds"), the Noteholders of the relevant Tranche secured by such Secured Asset shall have the first ranking security over such Insurance Proceeds;
(iii) In respect of the sale deposits from the Secured Assets ("Sale Deposits"), the Noteholders of the relevant Tranche secured by such Secured Asset shall have the first ranking security over such Sale Deposits;
(iv) In respect of the amount at least equivalent to an amount payable in respect of any coupon payment of that particular Tranche for the next six (6) months to be maintained by the Issuer ("Issuer's DSRA Minimum Required Balance"), the Noteholders of the relevant Tranche shall have the first ranking security over such Issuer's DSRA Minimum Required Balance;
(v) In respect of the proceeds from the Collection Account ("CA Proceeds"), the Noteholders of the relevant Tranche shall have the first ranking security over such CA Proceeds; and
(vi) In respect of any amount deposited by the Guarantor which are earmarked for the purposes of an early redemption of a particular Tranche of the Notes and/or principal payment of a particular Tranche of the Notes ("Deposited Amount"), the Noteholders of the relevant Tranche shall have the first ranking security over such Deposited Amount;
(b) An irrevocable and unconditional guarantee provided by the Urban DNA Sdn Bhd for all payments due and payable under the CP/MTN Programme ("Guarantee"); and
(c) Any other security deemed appropriate and mutually agreed between the PASB and the Principal Adviser/Lead Arranger ("PA/LA"), the latter being Kenanga Investment Bank Berhad.
Security for each medium term note:
Each Tranche shall be secured by assets ("Secured Assets") to be identified prior to the issue date of the respective Tranche.
Such Secured Assets may be provided by third party(ies), (which, together with the Guarantor, shall collectively be referred to as "Security Parties" and each a "Security Party") and/or by the PASB. Subject always to final identification of the Secured Asset prior to the issue date of the respective Tranche, the security for any particular Tranche may include but not limited to the following:
(a) Legal assignment and/or charge by the PASB and/or the Security Party (as the case may be) of the Secured Assets;
(b) An assignment over all the rights, titles, benefits and interests of the PASB and/or the Security Party (as the case may be) under all the sale and purchase agreements executed by end-purchasers and any subsequent sale and purchase agreement to be executed in the future by end-purchaser (if any), in relation to the Secured Assets;
(c) A letter of undertaking from Aseana Properties Limited to, amongst others, purchase the Secured Assets ("Letter of Undertaking"); and/or
(d) Any other security deemed appropriate and mutually agreed between the Issuer and the PA/LA and/or Lead Manager prior to the issuance of the relevant Tranche.
The security for each Tranche is referred to as "Tranche Security".
11. Related Party Transactions
Transactions between the Group with Ireka Corporation Berhad ("ICB") and its group of companies are classified as related party transactions based on ICB's 23.07% shareholding in the Company.
Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group, and certain members of senior management of the Group.
| Unaudited | Unaudited | Audited | |
| Six months | Six months | Year | |
| ended 30 June |
ended 30 June |
ended 31 December |
|
| 2020 | 2019 | 2019 | |
| US$'000 | US$'000 | US$'000 | |
| ICB Group of Companies | |||
| Accounting and financial reporting services fee charged by an ICB subsidiary | 208 | 25 | 96 |
| Accrued interest on shareholders advance payable by ICB | - | - | 3,572 |
| Construction progress claim charged by ICB subsidiary | 604 | - | 4,733 |
| Reversal of liquidated ascertained damages ("LAD") claims | - | - | (1,209) |
| Provisions for construction delay claims by ICB subsidiary | - | - | (2,052) |
| Hosting and IT support services charged by an ICB subsidiary | 38 | 29 | 66 |
| Management fees charged by an ICB subsidiary | - | 497 | 1,157 |
| Marketing commission charged by an ICB subsidiary | 8 | 22 | 139 |
| Project staff costs reimbursed to an ICB subsidiary | - | 248 | 280 |
| Rental expenses charge by an ICB subsidiary | 36 | 11 | 16 |
| Rental expenses paid on behalf of ICB | - | 253 | 489 |
| Secretarial and administrative services fee charged by an ICB subsidiary | 371 | 25 | 85 |
| Key management personnel | |||
| Remuneration of key management personnel - Directors' fees | 312 | 48 | 186 |
| Remuneration of key management personnel - Salaries | 47 | 47 | 95 |
The above transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.
Transactions between the Group and other significant related parties are as follows:
| Unaudited | Unaudited | Audited | |
| Six months | Six months | Year | |
| ended 30 June |
ended 30 June |
ended 31 December |
|
| 2020 | 2019 | 2019 | |
| US$'000 | US$'000 | US$'000 | |
| Non-controlling interests | |||
| Advances - non-interest bearing | 578 | (3,435) | (2,666) |
The outstanding amounts due from/ (to) ICB and its group of companies as at 30 June 2020, 30 June 2019 and 31 December 2019 are as follows:
| Unaudited As at 30 June 2020 US$'000 |
Unaudited As at 30 June 2019 US$'000 |
Audited As at 31 December 2019 US$'000 |
|
| Net amount due from an ICB subsidiary | 4,555 | 3,361 | 5,120 |
| Net amount due from ICB | 3,692 | 185 | 3,807 |
The outstanding amounts due from/ (to) the other significant related parties as at 30 June 2020, 30 June 2019 and 31 December 2019 are as follows:
| Unaudited As at 30 June |
UnauditedAs at 30 June |
Audited As at 31 December |
|
| 2020 | 2019 | 2019 | |
| US$'000 | US$'000 | US$'000 | |
| Non-controlling interests | |||
| Advances - non-interest bearing | (10,923) | (9,728) | (10,587) |
Transactions between the parent company and its subsidiaries are eliminated in these consolidated financial statements.
12 Dividends
The Company has not paid or declared any dividends during the financial period ended 30 June 2020.
13 Interim Statement
Copies of this interim statement are available on the Company's website www.aseanaproperties.com or from the Company's registered office at 12 Castle Street, St. Helier, Jersey, JE2 3RT, Channel Islands.
Principal Risks and Uncertainties
The Board has overall responsibility for risk management and internal control. The following have been identified previously as the areas of principal risk and uncertainty facing the Company, and they remain relevant in the second half of the year.
· Economic
· Strategic
· Regulatory
· Law and regulations
· Tax regimes
· Management and control
· Operational
· Financial
· Going concern
For greater detail, please refer to page 16 of the Company's Annual Report for 2019, a copy of which is available on the Company's website www.aseanaproperties.com.
RESPONSIBILITY STATEMENT
The Directors of the Company confirm that to the best of their knowledge that:
a) The condensed consolidated financial statements have been prepared in accordance with IAS 34 (Interim Financial Reporting);
b) The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
c) The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).
On behalf of the Board
Nicholas John Paris
Director
23 September 2020
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