KUALA LUMPUR: Bursa Malaysia Securities has given EcoWorld International Bhd (EWI) a waiver where it can recognise the sale of its property development projects.
EWI, which derives most of its revenue from the UK and Australia, has cumulative sales of RM7.7bil as at Oct 31, 2017.
It said on Tuesday the waiver from Bursa under the accounting treatment would avoid it being classified as an affected listed issuer for the financial year ended Oct 31, 2017.
To recap, EWI disclosed in its IPO prospectus dated March 9, 2017, revenue from the sale of property in the UK and Australia from an accounting prospective can only be recognised by the subsidiaries and joint ventures of EWI when the risks and rewards of the property sold have been fully transferred to the purchasers.
“Accordingly, EWI will not recognise any revenue from the property development projects or share of profits (where applicable) until the physical completion and handover of vacant possession of the projects,” it had stated in the prospectus.
This is unlike in Malaysia where the sales are recognised progressively.
EWI said the sales generated from property development projects in the UK and Australia as at Oct 31, 2017 showed its capability to generate operating revenue upon completion of the property projects.
EWI also said the construction of all launched blocks was progressing well and it was on track to achieve its maiden handover of two blocks within its London City Island Phase 2 project and one block of the Embassy Gardens Phase 2 project in the financial year ending Oct 31, 2018.
If EWI was deemed a listed issuer, it would be required to assess compliance with Paragraph 8.03A of the Listing Requirements for the FY ending Oct 31, 2018 and thereafter with the inclusion of EWI’s proportionate joint venture revenue in computing “revenue on a consolidated basis”.
EWI said it was expected to generate operating revenue upon handover of the above residential units in the same financial year.
“As a result of the revenue recognition method, EWI is precluded from complying with paragraph 8.03A(2)(b) of the Listing Requirements,” it said.
A listed issuer is a company which does not have adequate level of operations when its business or operations generates revenue on a consolidated basis that represents 5% or less of the share capital based on its latest annual audited or unaudited financial statements.
Elaborating on its strong property sales, EWI said as part of its expansion and growth plans, it has been actively exploring new development opportunities in the United Kingdom and Australia and has announced three acquisitions in 2017.
“Upon completion of the acquisition of its 70% equity stake in Be Living’s residential development business and the new project in Macquarie Park, EWI will have nine projects in the United Kingdom and three projects in Australia.
“This augurs well for its future growth prospects and the long-term viability of its business model as an international developer with a strong local presence in each of its target markets,” EWI said.