Last checked at 17 Apr 2009 07:00
Date: 17 April 2009
On behalf of: Aseana Properties Limited
Embargoed until: 0700hrs
ASEANA PROPERTIES LIMITED
FULL YEAR RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
The Board of Directors (the "Board") of Aseana Properties Limited (the "Company"), an Asian property developer investing in Malaysia and Vietnam and quoted on the Official List of the London Stock Exchange, is pleased to announce the audited results of the Company and its subsidiaries (the "Group" or "Aseana Properties") for the year ended 31 December 2008. These results have been audited by the Company's auditors, Mazars LLP, in accordance with the International Financial Reporting Standards and the consolidated Financial Statements according to the IAS Regulations.
For comparison purposes, the results for 2007 were for the fifteen month period ended 31 December 2007, although the trading subsidiaries were only acquired in May 2007.
Group Highlights
Group revenue increased by 116% to US$97.895 million (2007: US$45.176 million) attributable to five projects in Malaysia
Invested 54.8% of the US$162 million raised at the time of the Company's listing and the remaining funds are committed to projects in Malaysia and Vietnam
Consolidated loss of US$13.334 million (2007: US$3.260 million), which includes unrealised foreign exchange loss of US$9.9 million (2007: US$0.09 million - foreign exchange gain) and management fees of US$4.744 million (2007: US$3.632 million)
A loss per share of US Cents 5.33 (2007: US Cents 1.76)
Ongoing projects gross development value ("GDV") totalled US$1.063 billion
The Group's current overall portfolio of investments includes 12 projects in the cities of Kuala Lumpur, Kota Kinabalu and Sandakan in Malaysia, and Ho Chi Minh City in Vietnam
Operational Highlights
Completion and successful handover of 305 units of serviced residences at i-ZEN@Kiara I, Aseana's maiden development, in June 2008
Construction of Sandakan Harbour Square Phases 3 and 4, being the retail mall and hotel, commenced in the third quarter of 2008
Investment Licence awarded in June 2008 for the Queen's Place project, a residential, hospitality and commercial development in District 4, Ho Chi Minh City
Investment Licence awarded in July 2008 for the International Hi-Tech Healthcare Park, a planned mixed development consisting of world-class private hospitals, mixed commercial, hospitality and residential developments in the Binh Tan District, Ho Chi Minh City
Acquisition of a strategic investment stake in Nam Long Investment Corporation, a leading private property development company in Ho Chi Minh City, with over 500 hectares of land bank in the city and neighbouring provinces
Commenting on the Company's results, Dato' Mohammed Azlan bin Hashim, Chairman of Aseana Properties Limited, said:
"Aseana Properties has made significant progress in delivering on its strategy in the 2008 financial year, largely through positioning itself as an investment gateway to the real estate markets in Malaysia and Vietnam. We have successfully completed a development project in Malaysia and have further strengthened our presence in Vietnam through three investments.
"2009 will be a challenging year for real estate development in Malaysia and Vietnam. The Group has therefore taken a cautious approach in its investment activities to seek to ensure that the Group maintains a healthy balance sheet and a strong cash flow position during these volatile fiscal times and into the foreseeable future."
Enquiries:
| Aseana Properties Limited | Contactable via Redleaf |
| Redleaf Communications Samanatha Robbins / Adam Leviton / Kathryn Hurford | Tel: 020 7566 6700 Email: aseana@redleafpr.com |
| Fairfax I.S. PLC | Tel: 020 7598 5368 |
| James King/ Gillian McCarthy | Email: jking@fairfaxis.com |
Notes to Editors
Ireka Development Management, the Development Manager, is a wholly-owned subsidiary of Ireka Corporation Berhad, a company listed on the Bursa Malaysia since 1993, which has more than 40 years of experience in construction and property development.
The Company typically invests in development projects at the pre-construction stage, with a primary focus on location within the major cities of Malaysia and Vietnam.
Investments are made in projects where it is believed there will be a minimum 30% annualised return on equity ("ROE") on investments in Vietnam and a minimum 20% ROE on investments in Malaysia.
No one underlying single asset will account for more than 30% of the gross assets of the Company at the time of investment.
The Directors believe the following factors should provide sustainable growth in the real estate sectors of both Malaysia and Vietnam:
An increasing standard of living and urbanisation driven by a burgeoning young and middle class population
Clear Government role in encouraging participation of private sectors in real estate development, as well as encouraging and promoting land and property ownership
Improving availability of mortgages to encourage property ownership
Favoured Foreign Direct Investment (FDI) destinations driving demand for commercial and industrial properties.
CHAIRMAN'S STATEMENT
Aseana Properties made significant progress in delivering on its strategy in the 2008 financial year, largely through positioning itself as an investment gateway to the real estate markets in Malaysia and Vietnam. We have successfully completed a development project in Malaysia and have further strengthened our presence in Vietnam through three investments.
Aseana Properties' key achievements include:
Completion and successful handover of 305 units of serviced residences at i-ZEN@Kiara I, with a total gross development value of RM135 million (US$39 million) in June 2008.
Investment Licence awarded by the People's Committee of Ho Chi Minh City in June 2008 for the Queen's Place project, a residential, hospitality and commercial development in District 4. The project has an estimated gross development value of US$195 million.
Investment Licence awarded by the People's Committee of Ho Chi Minh City in July 2008 for the International Hi-Tech Healthcare Park, a planned mixed development consisting of world-class private hospitals, mixed commercial, hospitality and residential developments in the Binh Tan District. The project has an estimated gross development value of US$770 million. Aseana Properties has also secured the Land Use Rights Certificate for this 37.54 hectares site in January 2009.
Acquisition of a strategic investment stake in Nam Long Investment Corporation, a leading private property development company in Ho Chi Minh City, with over 500 hectares of land bank in the city and neighbouring provinces. As part of the transaction, Aseana Properties has secured options to develop high-end projects with Nam Long.
Amidst these positive achievements, Aseana Properties and its group of companies are fully aware that the global economic environment has changed tremendously over the course of the last year, and is likely to remain challenging for the year ahead. The Board has therefore decided to adopt a cautious approach in its activities in three key areas: (a) ensuring sufficient financing facilities are readily available for all ongoing projects; (b) accelerating the realisation of cash flows from ongoing projects; and (c) deferring or rescinding uncommitted projects which have long gestation periods. These measures are essential in ensuring that the Group maintains a healthy balance sheet and a strong cash flow position during these volatile fiscal times and into the foreseeable future.
As at the end of December 2008, the Group maintained a cash balance of approximately US$67.3 million, which has been allocated to projects in the portfolio. During this financial year, revenue for the Group has more than doubled from that of the previous period from US$45.2 million to US$97.9 million. This is the result of strong sales from ongoing projects in Malaysia. The recorded net loss before tax of US$8.8 million is largely attributable to the unrealised foreign exchange loss, due to the strengthening of the US Dollar against the foreign currency holdings in the Group. In order to enhance shareholder value, the Board has resolved to implement a share buyback scheme.
I am confident that, for the year ahead, the Group remains well-capitalised to complete and deliver on the development projects in our portfolio, with construction expected to be completed by the fourth quarter of 2010, namely Tiffani by i-ZEN, SENI Mont' Kiara, one Mont' Kiara by i-ZEN and Sandakan Harbour Square (Phases 3 and 4). These projects will provide sustainable revenue and earnings for the Group over the next two to three years. We are also committed to embarking on several projects within the existing portfolio in Malaysia and Vietnam. We are well-positioned to capture the upturn in the real estate market once overall global economic conditions improve.
On a final note, I would like to thank my fellow Directors for their commitment and invaluable support over the year. I also wish to extend my gratitude to the shareholders, Government authorities, financiers and business associates for their continued support and confidence in the Group.
DATO' MOHAMMED AZLAN BIN HASHIM
CHAIRMAN
17 April 2009
DEVELOPMENT MANAGER'S REVIEW
BUSINESS OVERVIEW
The 2008 financial year represented a year of both successes and challenges for Aseana Properties. The Group has continued to make good progress on construction and sales of its ongoing projects in Malaysia. At the same time, the Group has gained a stronger foothold in Vietnam through the award of Investment Licences for two prestigious projects and the acquisition of a strategic investment stake in a local real estate company. Amidst these notable achievements, the challenging global economic conditions have presented a tough operating environment for the Group. Throughout the year, the Development Manager has worked closely with the Board to optimise all aspects of investments and operations to ensure that the Group remains strong and resilient in this difficult climate.
In January 2009, Aseana Properties' Development Manager, Ireka Development Management Sdn. Bhd., was awarded with the MS ISO 9001:2000 Quality Management System certification from SIRIM QAS International and UKAS Quality Management for its property development and management services, covering residential, commercial, industrial and institutional properties. This quality certification will ensure that all development processes meet the stringent guidelines and requirements of international governing bodies, ensuring that the end product has all the ingredients to meet the demands of the discerning target segments.
During the financial year, the Group completed its maiden development, i-ZEN@Kiara I, a high-end serviced residential project, which was handed over to its buyers in June 2008. The Group's latest luxury condominium development, SENI Mont' Kiara, has registered relatively good sales despite a tough operating environment. Construction of all ongoing projects in Malaysia is also progressing well.
In addition, the Group has gained significant headway in Vietnam where two of its projects, Queen's Place and the International Hi-Tech Healthcare Park, both in Ho Chi Minh City, received their Investment Licences in June and July respectively. Aseana Properties also acquired a strategic minority stake in Nam Long Investment Corporation, a leading private real estate developer in Ho Chi Minh City. These investments place the Group in a stronger position to capitalise on the growth opportunities in Vietnam over the medium to long term.
The global financial slowdown has not spared the economies of both Malaysia and Vietnam. As such, we remain cautious of the immediate to short term business climate in 2009. Over the medium term, the Group's development portfolio has unrealised sales of some RM663 million (US$191 million) (as at the date of this report). The Group is optimistic of the longer term outlook in these economies, and we are confident that the market will withstand the current difficulties. Until then, we will continue to take an opportunistic approach in our involvement in these markets, so that we can leverage on the prospects when market conditions improve.
Malaysia Economic Update
Growth in the Malaysian economy in 2008 was recorded at a growth rate of 4.6% against the forecast growth rate of 5.3%. The momentum gained from 2007 continued to flow into 2008, with domestic consumption remaining resilient throughout the early part of the year. However, the business climate in general was somewhat dampened by the political uncertainties brought about by an unprecedented low margin victory by the ruling coalition in the country's General Election in March 2008. Also, in the midst of this, was the weakening global business sentiment, which saw the Kuala Lumpur Composite Index record a four-year low of 829 points in October 2008. Consumer and business confidence indices have both dropped sharply below the 100-point mark in the final quarter of 2008. Local sentiments did, however, improve towards the end of 2008 as the Government outlined a clear leadership succession plan.
The Malaysian economy is expected to rely on public spending and the services sector in the coming year as the manufacturing sector is facing direct negative effects from the slowdown in the US economy. Economists are predicting a slowdown of the Malaysian economy in 2009 and the Government has also taken a cautionary stance by revising the GDP growth forecast to a range of -1% to 1% in March 2009. Amidst the bleak outlook, a trend reversal in the prices of commodities and raw materials, in particular oil, steel bars and cement, will bode well for the construction and building industry in the short to medium term. To stimulate domestic demand and cushion the effects of the economic slowdown, the Government has recently announced a stimulus package totalling RM67 billion (US$19 million) to be implemented over the next two years.
Vietnam Economic Update
The Vietnamese economy grew by 6.2% in 2008, down from 8.5% in 2007, and from the earlier forecasted 7% growth rate. The reduced rate was due to the Government's effort to rein in inflationary pressures, which was subsequently exacerbated by a slowdown in the global economy. Vietnam's growth rate however remains one of the highest in the region, after China and India.
The economic performance of Vietnam in 2008 is a story of two halves. In the first half of the year, the rising inflation rate reached 28.3% in August 2008, which led to speculation of the sustainability of Vietnam's growth rate and its widening trade deficit, bringing about fear of a looming balance of payment crisis. This fear culminated at the end of May 2008 with a sudden drop in the spot and unofficial market rates for the Vietnam Dong by as much as 11% in reaction to the Government's decision to widen the trading band of the currency to 2%. Non-deliverable forwards for the currency were trading with an anticipation of the currency devaluing more than 20% over the next year. Shortly thereafter, both Fitch and Standard & Poor's, the international rating agencies, moved to downgrade Vietnam's sovereign credit rating.
To prevent further speculation and negative reporting, the Government of Vietnam moved swiftly to engage the investment community by holding an open dialogue with international investors and fund managers. The Government outlined its various fiscal and monetary policies in combating inflation, which included a directive to state-owned enterprises to eliminate investments in non-core businesses, imposing import restrictions on non-essential goods, increasing the reserve ratio of financial institutions and increasing prime interest rates. The prime interest rate in Vietnam was increased three times in 2008 from 8.5% culminating to a high of 14% in the third quarter of 2008. The issues faced by Vietnam in the first half of 2008 highlighted the growing pains of an emerging economy that has received significant attention from the investment community.
As the global economic slowdown sets in towards the second half of 2008, the Vietnamese economy was also beginning to feel the dampening effects of the Government's earlier policy measures. With credit growth tightening, the real estate industry, often considered a barometer of an emerging economy, experienced a slowdown. Transaction volumes for both the primary and secondary markets fell sharply and in some cases high-end property prices dropped by as much as 40%.
Recognising that the Vietnamese economy would not be spared from the global economic slowdown, the Government decisively reversed its credit tightening policy by cutting prime interest rates five times since October 2008 to 8.5% by December 2008 and a further reduction to 7% in January 2009, effectively unwinding all the previous increases. The Government has also reduced the reserve ratio requirement in the hope of spurring credit growth to support the fledging real estate and manufacturing sectors. In a move to provide further support to local businesses, in particular small to medium-sized enterprises, the Government has announced a 4% interest subsidy policy in February 2009.
The Government's swift policy decisions in 2008 and early 2009 demonstrate that it is prepared to actively manage the economy during these volatile times. Despite the challenges in 2008, Vietnam has attracted approximately US$64 billion in Foreign Direct Investment ("FDI") commitments, eclipsing 2007 commitments by 315%. The Government has stated that it expects disbursements of these FDI commitments to be slower, given the global economic conditions. However, this achievement nevertheless represents investors' continued confidence in the Vietnamese economy.
We firmly believe that there has been little change to the fundamentals that have attracted Aseana Properties to Vietnam. Vietnam's large and young population makes it a natural choice for multinationals expanding their footprint in South East Asia and at the same time the Government has continued to show that it is prepared to adapt its economy to welcome future investors. These factors will all contribute positively to the long term growth of the real estate market in Vietnam.
PORTFOLIO REVIEW
MALAYSIA
Residential Property Market
The growth of the high-end residential market in Malaysia in the past few years was largely driven by the increasing affluence of young Malaysians demanding high quality residences in popular residential addresses as well as the significant growth in foreign demand, due to attractive real estate pricing in Malaysia relative to its neighbouring countries. With the global economy entering into recession, demand for high-end properties in the last quarter of 2008 has tapered and is expected to remain soft for 2009. Nevertheless, the high-end residential market in Malaysia has shown resilience compared to other Asian markets such as Singapore, Hong Kong and Shanghai, with capital values remaining largely stable with only very few real estate transactions executed below 20% from their peak. Kuala Lumpur City Centre, Mont' Kiara, Bangsar and Damansara Heights will remain choice areas for investors and buyers.
In 2008, the Group completed its maiden development, i-ZEN@Kiara I, where 305 units of serviced residences in Mont' Kiara were handed over to buyers in June 2008. The Group currently has two other high-end residential projects in Malaysia:
- Tiffani by i-ZEN
Tiffani by i-ZEN is a luxury condominium project in Mont' Kiara that has attracted a number of international celebrity owners. 88% of the total units have been sold to date and the project is expected to complete in the second quarter of 2009.
- SENI Mont' Kiara
SENI Mont' Kiara is a luxury condominium project situated on one of the highest point in Mont' Kiara. Towering some 40-storeys above this vantage point, a majority of the units in the project command an impressive view of the Kuala Lumpur city skyline, which includes the 88-storey Petronas Twin Towers and the KL Tower. The project consists of 605 units of residences, of which 51% has been sold to date. Completion of this project is expected in the fourth quarter of 2010.
Commercial Office and Retail
The first three quarters of 2008 saw relatively active sale and leasing activities for commercial office and retail buildings in Kuala Lumpur, culminating with the announcement of two major transactions in the second and third quarter, being the sale of Kenanga International Building for RM157.5 million (US$45.5 million) and Menara Citibank for RM733 million (US$211.6 million). However, in the fourth quarter, the global economic crisis proved to be a dampener as these transactions failed to complete. Efforts to launch real estate investment trusts by a number of local and foreign players have also been delayed due to the weakening market conditions.
Despite these setbacks, the office market in Kuala Lumpur remains fundamentally strong with low vacancies and stable yields, as there is limited new supply of prime offices in the city centre and its vicinity. Rental growth and absorption rate of new supply in 2009 are however expected to soften as businesses will remain wary of making any major leasing decisions or in some cases as a result of businesses scaling down.
The retail market has generally been subdued with inflation hitting an all-time high of 8.5% in the third quarter of 2008. Whilst prime retail malls in the city centre and suburban areas, such as Suria KLCC and Mid Valley Megamall, are expected to continue enjoying high occupancy and modest rental rate growth, rental rates in new and secondary malls are expected to come under pressure in 2009.
The Group currently has three ongoing commercial projects in Kuala Lumpur and Sandakan (Sabah). With respective completion expected between 2010 and 2012, the Group believes that these projects are well-positioned to capture the upturn in the commercial property market:
- one Mont' Kiara by i-ZEN
one Mont' Kiara by i-ZEN is an integrated commercial development consisting of a 33-storey office suite tower, a 20-storey office tower and a 5-level retail complex.
137 office suite units out of 179 units have been launched for sale, all of which have been sold. The remaining 42 units were held back for sale at a later date. The office tower and the retail complex are planned for block sale after completion.
Located in the heart of Mont' Kiara commercial precinct, this development is expected to be the hub of commercial activities for Mont' Kiara, as well as for the surrounding affluent neighbourhoods of Sri Hartamas, Bangsar and Damansara Heights.
- Sandakan Harbour Square
Sandakan Harbour Square is an urban redevelopment project in the commercial centre of Sandakan, Sabah. Phases 1 and 2 consist of 129 units of shop lots, of which Phase 1 has been completed and fully sold and Phase 2 is due to be completed in April 2009. Phases 3 and 4 are a retail mall and an International 4-star hotel respectively, with expected completion in the fourth quarter of 2010.
The Company has recently entered into an agreement with Starwood Hotels & Resorts Worldwide Inc., a leading hospitality and leisure group, where Starwood will manage the proposed hotel at Sandakan Harbour Square under the 'Four Points by Sheraton' brand.
- Kuala Lumpur Sentral Project
Kuala Lumpur Sentral project is a mixed commercial and hospitality development project consisting of two office towers and a business-class hotel situated in the heart of Kuala Lumpur's urban transportation hub. Kuala Lumpur Sentral is currently the most sought after commercial centre in Kuala Lumpur with a number of multinational companies such as General Electric and PriceWaterhouseCoopers locating their headquarters here. Piling works for this project commenced in March 2009, with completion expected in 2012.
Hospitality & Resort
In 2008, Malaysia recorded an all-time high of 22.05 million in tourist arrivals, an increase of 5.1% compared to 2007. This achievement is on the back of a successful second annual "Visit Malaysia" programme organised by the Government, and is testament to Malaysia's rising popularity as a holiday destination of choice. However, the tourism industry is expected to experience a slowdown in 2009.
The Group currently has three hospitality and resort development projects in Malaysia, two of which, Sandakan Harbour Square and Kuala Lumpur Sentral Project, are described above. In 2007, the Group acquired a pristine section of the beach front in Kota Kinabalu (Sabah), a popular tourist destination in Malaysia. Whilst development planning is currently underway, the Group will assess market conditions prior to its launch.
Despite the setback due to the global economic crisis, we remain confident that the hospitality and resort sector in Malaysia will be an attractive investment asset-class in the medium to long term.
VIETNAM
Residential Property Market
The activities in the residential property market of Ho Chi Minh City are closely correlated to the movements of the economy in Vietnam in 2008. The buoyant market seen in the residential property sector in 2007 was somewhat subdued in 2008 as prime interest rates and corresponding lending rates peaked at 14% and 21% respectively in the third quarter of the year. This resulted in a drop in capital values of high-end residential properties, in particular the secondary market, as demand from new and existing buyers dwindled. However, supply of high-end properties is expected to remain tight in 2009 as a result of delays and deferments of a number of projects.
The low and mid-end residential properties sectors have, however, remained robust with a number of projects launched in Ho Chi Minh City in 2008 registering a strong sales take-up. With a considerable population of approximately 7 million people in Ho Chi Minh City, primary demand for housing in the coming years is expected to bode well for this segment of the market.
As a result of scarcity of good-sized development land in District 1, the focus of residential development has shifted primarily to District 7, District 2, District 4 and Saigon South.
Commercial Office and Retail
The demand for commercial office and retail space in Ho Chi Minh City remained strong throughout 2008, mainly as a result of limited supply of prime developments in the market. The availability of Grade A office is low at a mere 81,000 square metres in 2008, with a vacancy rate of approximately 1%. Gross rental rates have reached an average of US$71 psm per month from about US$60 psm per month recorded a year earlier. However the slowing economy, resulting in the reduction of new entrants to Vietnam, is expected to limit the rise of rental rates in the coming year. Additionally, approximately 117,000 square metres of new supply of Grade B offices entering the market in 2009 should enable commercial tenants hoping to reduce overhead costs to trade down from occupying Grade A offices. Grade B offices are currently achieving rents of approximately US$45 psm per month.
Similar to the office market, the prime retail market is also facing a shortage of good quality retail space, particularly in Ho Chi Minh City. Vacancy rates at prime retail centres remained low at 2% to 3%, with rental rates moving up steadily to the region of US$84 psm per month. International retailers have also resorted to converting traditional shop houses or bungalows for their boutiques, providing an eclectic mix of street side and mall shopping experience in Ho Chi Minh City.
In line with its WTO commitment, Vietnam has introduced a further relaxation of its retail licensing laws allowing 100% foreign-owned retailers to operate in Vietnam from January 2009 onwards. Despite the global slowdown, this is expected to continue to spur demand for prime retail areas in the coming years as international retailers seek to diversify into an emerging and burgeoning consumer market like Vietnam.
Aseana Properties marked its entrance into the property market in Ho Chi Minh City in 2008 following the award of Investment Licences for two of its projects, Queen's Place and the International Hi-Tech Healthcare Park. The Group has also acquired a strategic minority interest in a leading real estate developer in Ho Chi Minh City, Nam Long Investment Corporation.
- Queen's Place
Queen's Place is a planned mixed residential, hospitality and commercial development consisting of two residential towers, a hotel, serviced apartment tower and a retail mall. Queen's Place is strategically located at the periphery of District 4, adjacent to District 1, the central business and commercial district of Ho Chi Minh City. With land area of approximately 8,400 square metres, the development is expected to have a gross development value of approximately US$195 million. Aseana Properties is developing this project jointly with Binh Duong Corporation, a Vietnam property development company, on a 65:35 basis. Resettlement planning is currently underway for this project.
- International Hi-Tech Healthcare Park
International Hi-Tech Healthcare Park is a planned mixed development over 37.54 hectares of land consisting of world-class private hospitals, mixed commercial, hospitality and residential developments. The project has an estimated gross development value of US$770 million. Approximately 4.9 hectares in the International Hi-Tech Healthcare Park has been allocated for residential development. This development is located in the Binh Tan District and close to Chinatown, the most affluent district in Ho Chi Minh City. Aseana Properties has a 51% stake in this development.
- Nam Long Investment Corporation
Nam Long is a leading private property development company in Vietnam, with a strong presence in the low to medium-end segment of the market. Their brand of low to medium housing called 'e-homes' has continued to register almost sold-out sales for launches throughout 2008 despite the tough economic environment. Nam Long currently has over 500 hectares of land bank mainly in Ho Chi Minh City and its neighbouring provinces. Through this partnership, Aseana Properties is expected to co-develop at least three high-end projects with Nam Long in Ho Chi Minh City in the immediate to medium term. Aseana Properties has also secured the option to develop future high-end projects with Nam Long.
Apart from the residential component of our projects, we are confident that the retail development components in Queen's Place and the International Hi-Tech Healthcare Park will benefit from this sustained demand in the retail market trend.
Aside from these two projects, Aseana Properties also received conditional approval in early 2008 from the People's Committee of District 1, Ho Chi Minh City, to develop a Grade A office development in the heart of the financial district of Ho Chi Minh City. The proposed development, the "Wall Street Centre", will comprise of two prime office towers and an office suite tower and is expected to have an estimated gross development value of US$131 million. Development planning is currently underway to secure the full development rights from the authorities.
In line with Aseana Properties' current strategy to optimise all of its investments in Vietnam and focusing only on projects which have potential to launch in the short to medium term, the Company has decided to discontinue the pursuit of the Nam Khang Resort Project in Danang, Vietnam.
FUTURE OUTLOOK
Having successfully navigated through three past recessions and financial downturns in Malaysia, the Development Manager is confident of steering the Group through what will be a challenging year for the global real estate industry. The Group's current quality and mix of property portfolio will not only enable it to weather the tough business conditions in the short term but also strongly position it to capitalise on the real estate markets in Malaysia and Vietnam over the medium to long term.
We believe deeply that when the global financial market recovers, the international investment community will once again acknowledge the strong economic fundamentals and high growth potential of Vietnam and Malaysia. Aseana Properties will reaffirm its position as one of the most attractive listed investment vehicles on the London Stock Exchange. Meanwhile, the Group will continue to be prudent in its operations and cash flow management to ensure timely and cost-efficient delivery of all its projects.
On a final note, we would like to thank the Board of Aseana Properties, our advisors and business associates for their support and guidance throughout the year.
LAI VOON HON
CHIEF EXECUTIVE OFFICER
Ireka Development Management Sdn. Bhd.
The Development Manager
17 April 2009
PERFORMANCE SUMMARY
| Year ended 31 December 2008 | Period ended 31 December 2007 | |
| Total Returns | ||
| Ordinary share price | -78.50% | 4.25% |
| FTSE All-share index | -33.39% | 5.32% |
| FTSE Real Estate Index | -67.51% | -36.80% |
| One Year Returns | ||
| Ordinary share price | -79.29% | 4.25% |
| FTSE All-share index | -32.78% | 5.32% |
| FTSE Real Estate Index | -48.90% | -36.80% |
| Capital Values | ||
| Total assets less current liabilities (US$ M) | 325.49 | 301.96 |
| Net asset value per share (US$) | 0.89 | 0.95 |
| Ordinary share price (US$) | 0.22 | 1.04 |
| FTSE Real Estate Index | 1,853.87 | 3,627.60 |
| Gearing | ||
| Gearing (Note 1) | 43.87% | 33.64% |
| Gearing (net of cash) | 13.66% | -18.08% |
| Earnings Per Share | ||
| Earnings per ordinary share | ||
| - basic (US$) | -5.33 | -1.76 |
| - diluted (US$) | -5.33 | -1.76 |
| Total Expenses Ratio | ||
| As a percentage of total assets less current liabilities (Note 2) | 2.30% | 1.81% |
Notes
1. Gearing: Total Borrowings ÷ Shareholders' Fund
2. Total expense ratio: Management Fees, Operating and Administrative Expenses ÷ Total Assets less Current Liabilities
FINANCIAL REVIEW
RESULTS FOR THE YEAR
Loss For The Year
The consolidated loss after tax for the year ended 31 December 2008 was US$13.334 million (2007: US$3.260 million). The results for 2007 are for the fifteen months ended 31 December 2007, although the trading subsidiaries were only acquired in May 2007.
The results include the following key expenses:-
Unrealised foreign exchange loss of US$9.9 million (2007: US$0.09 million - foreign exchange gain) due to strengthening of US Dollars against foreign currency holdings in the Group;
Management fees of US$4.744 million (2007: US$3.632 million), based on 2% of the net asset value of the Group payable on a quarterly basis;
Write down of cost of acquisition of Initial Portfolio assets of US$8.272 million (2007: US$8.145 million), based on percentage of profit before tax recognised post acquisition compared to the budgeted post acquisition profit; and
Marketing expenses and sales commissions of US$14.306 million (2007: US$1.606 million) included in cost of sales.
Revenue
Group revenue for the year ended 31 December 2008 was US$97.895 million, an increase of 116.7% compared to US$45.176 million in the seven and a half month period ended 31 December 2007. The revenue was mainly contributed by increased billings from sales of properties in Malaysia as follows:
| i-ZEN@Kiara I, Mont' Kiara, Kuala Lumpur | US$11.439 million |
| Tiffani by i-ZEN, Mont' Kiara, Kuala Lumpur | US$40.291 million |
| Office Suites at one Mont' Kiara by i-ZEN, Mont' Kiara, Kuala Lumpur | US$ 4.287 million |
| SENI Mont' Kiara, Kuala Lumpur | US$32.189 million |
| Phase 2 of Sandakan Harbour Square, Sandakan, Sabah | US$ 9.689 million |
| Total | US$97.895 million |
Operating Loss
The Group's current projects are based on progressive recognition of profits in accordance with stage billings and construction schedules for all projects sold off the plan. Some properties under construction were kept for en-bloc sales after completion and no profits were recognised. The Group has four projects that were under planning stage, and these are expected to generate income over the next two to five years.
Finance costs and investment income
Finance costs for the year ended 31 December 2008 were US$0.357 million (2007: US$0.133 million). These were mainly related to interest payable on overdraft, revolving credit facility and hire purchase facilities.
Investment income for the year ended 31 December 2008 was US$4.534 million (2007: US$4.320 million).
Taxation
The Company is an exempt company registered in Jersey.
Certain companies within the Group are residents of Malaysia and taxable profits in these companies are subject to Malaysian income tax.
Non-current assets
Non-current assets comprised mainly land held for property development and prepaid land lease of US$17.419 million (2007: US$19.099 million), of which US$2.595 million (2007: US$13.223 million) were acquired during the year for future development.
Current assets
Current assets comprised mainly property development costs of US$224.380 million (2007: US$213.586 million), which were attributed to five projects in Malaysia and two projects in Vietnam.
The trade and other receivables mainly consisted of progress billings receivable from buyers of properties, amounting to US$9.003 million (2007: US$16.084 million) and a deposit amounting to US$5.772 million (2007: US$Nil) paid to the People's Committee of District 1, Ho Chi Minh City, Vietnam to secure the development rights of a prime site in District 1 (Wall Street Centre) project of Ho Chi Minh City.
The Group had cash and cash equivalents totalling US$67.252 million (2007: US$122.891 million) as at 31 December 2008.
Loans and borrowings
As at 31 December 2008, US$46.348 million (2007: US$40.742 million) had been utilised from the Group's loan facilities. The Group drew down funds of US$32.093 million (2007: US$41.068 million) and repaid loans of US$14.065 million (2007: US$22.774 million) during the year. The Group had also repaid its bank overdraft by US$0.253 million (2007: US$Nil) during the year.
Current liabilities
Trade and other payables consisted mainly of amounts due to suppliers of US$15.607 million (2007: US$18.370 million), progress billings received in advance of US$3.169 million (2007: US$8.655 million), balance payments to vendors for the acquisition of land of US$1.964 million (2007: US$11.044 million) and deposits received in advance from property purchasers of US$0.199million (2007: US$1.319 million).
Share capital and share premium
As at 31 December 2008, the Company has issued share capital of US$12.5 million (2007: US$12.5 million) comprising 250,000,000 ordinary shares with a nominal value of US$0.05. The share premium account was US$227.233 million (2007: US$227.233 million) as at 31 December 2008.
Loss Per Share
The Company recorded a basic loss per share for the year ended 31 December 2008 of US cents 5.33 (2007: US cents 1.76) and a diluted loss per share of US cents 5.33 (2007: US cents 1.76).
Dividends
No dividend was declared nor paid for the year ended 31 December 2008.
Dividend Policy
The Company's objective is to provide shareholders with an attractive overall return to be achieved primarily through capital appreciation. To the extent that the Company has realisable profits, the Directors intend to achieve an appropriate balance between re-investing capital for future growth in accordance with the Company's investment strategy and paying dividends to shareholders. The Directors will update the shareholders on the timing of any dividend payments. Notwithstanding, following the fifth anniversary of listing, the Company will only re-invest capital with the sanction of an ordinary resolution in a general meeting of the Company.
Gearing
As at 31 December 2008, the Group has a gearing ratio of 44% (2007: 34%).
Cash Flows
The Group utilised US$51.093 million cash flows from operating activities during the year ended 31 December 2008. The Group generated US$0.851 million cash flows from operating activities during the period ended 31 December 2007.
During the year, US$23.714 million (2007: US$50.893 million) was used for investing activities while US$18.002 million (2007: US$169.694 million) was generated from financing activities.
FINANCIAL POSITION
As at 31 December 2008, the Group has US$67.252 million (2007: US$122.891 million) cash and cash equivalents, of which US$44.963 million (2007: US$95.945 million) was mainly in short term deposits and investments held by the Company. In addition, the Group has a bank overdraft of US$2.516 million (2007: US$2.769 million).
Key Performance Indicators
Property development is a long-term business. Investment decisions taken to create value will affect the initial years' earnings, so the Board will measure the performance of each investment project over a three to five years' time horizon.
In measuring and benchmarking performance, a number of key performance indicators are used to measure the results of the Development Manager's recommendations. At the Company level, the indicators relied upon are 'shareholders' total return', 'capital values', 'earnings per share growth', 'total expenses ratio' and 'gearing' to reflect the performance of the business. Benchmarking is undertaken against our major quoted peers and the FTSE Real Estate Index.
The Company will only invest in projects where, at the time the investment is made, both the Company and the Manager reasonably believe that there will be a minimum 30% annualised Return on Equity ("ROE") where the Company makes investments in Vietnam and a minimum 20% ROE where the Company makes investments in Malaysia.
Capital Structure
The Group will consider further equity issuance of shares when the funds raised from the initial listing are fully committed for investments, and when commercial consideration and investment opportunities merit it.
The Group employs a mix of floating and fixed interest rates from banks to finance the operating subsidiaries' property development projects which are secured against the projects' assets. The debt to equity ratio is generally expected to be between 60% and 80% of the total gross development value of the project. The extent of the borrowings and the terms thereof will depend on the Company's ability to obtain credit facilities and the lenders' estimate of the attractiveness of the development.
Liquidity
The Group's Treasury takes a prudent approach to liquidity management by maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the property development businesses, the Group's Treasury aims to maintain flexibility in funding by keeping committed credit lines available.
Going Concern
The Directors are confident that the Group has adequate financial resources to continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis in preparing the financial statements.
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 has close involvement with the day-to-day operation matters of the Group.
MONICA LAI VOON HUEY
CHIEF FINANCIAL OFFICER
Ireka Development Management Sdn. Bhd.
The Development Manager
17 April 2009
Consolidated Income Statement
For the year ENDED 31 December 2008
| Continuing activities | Notes | Year ended 31 December 2008 US$ | Fifteen months ended 31 December 2007 US$ |
| Revenue | 3 | 97,894,616 | 45,176,071 |
| Cost of sales | (91,367,018) | (46,239,698) | |
| Gross profit/ (loss) | 6,527,598 | (1,063,627) | |
| Other income | 82,480 | 995,033 | |
| Administrative expenses | (1,382,449) | (976,293) | |
| Foreign exchange (loss)/ gain | 4 | (10,170,627) | 89,397 |
| Management fees | 5 | (4,743,880) | (3,631,693) |
| Other operating expenses | (1,365,863) | (848,064) | |
| Operating loss | (11,052,741) | (5,435,247) | |
| Investment income | 3 | 4,534,122 | 4,320,485 |
| Finance costs | (357,168) | (132,689) | |
| Impairment of investment in associate | 8 | (1,956,718) | - |
| Share of results of associated company | (3,863) | - | |
| Net loss before taxation | (8,836,368) | (1,247,451) | |
| Taxation | 6 | (3,820,493) | (1,982,731) |
| Net loss for the year/period | (12,656,861) | (3,230,182) | |
| Equity minority interest | (677,125) | (29,998) | |
| Loss for the year/period attributable to the equity holders of the company | (13,333,986) | (3,260,180) | |
| Loss per share attributable to shareholders of the company - US cents per share | |||
| Basic | 7 | (5.33) | (1.76) |
| Diluted | 7 | (5.33) | (1.76) |
ConsolidateD Balance Sheet as at 31 December 2008
| Assets | Notes | 2008 US$ | 2007 US$ |
| Non-current assets | |||
| Property, plant and equipment | 347,597 | 389,556 | |
| Investment in associate | 8 | 573,537 | 12 |
| Available-for-sale investments | 9 | 13,023,572 | - |
| Intangible assets | 10 | 10,694,446 | - |
| Prepaid land lease payment | - | 2,300,663 | |
| Land held for property development | 17,418,710 | 16,798,134 | |
| Long term receivables | 7,217,500 | 6,048,000 | |
| Deferred tax assets | 120,586 | - | |
| Total non-current assets | 49,395,948 | 25,536,365 | |
| Current assets | |||
| Property development costs | 224,380,241 | 213,585,677 | |
| Trade and other receivables | 18,703,053 | 18,609,214 | |
| Cash and cash equivalents | 67,252,282 | 122,890,641 | |
| Total current assets | 310,335,576 | 355,085,532 | |
| TOTAL ASSETS | 359,731,524 | 380,621,897 | |
| Equity and Liabilities Equity | |||
| Share capital | 12,500,000 | 12,500,000 | |
| Share premium | 227,233,267 | 227,233,267 | |
| Exchange fluctuation reserve | (1,150,503) | 469,497 | |
| Retained earnings | (15,941,630) | (2,607,644) | |
| Shareholders' equity | 222,641,134 | 237,595,120 | |
| Minority interests | 8,257,045 | 1,845,682 | |
| Total equity | 230,898,179 | 239,440,802 | |
| Current liabilities | |||
| Trade and other payables | 29,257,923 | 58,269,002 | |
| Finance lease liabilities | 20,553 | 23,939 | |
| Bank loans and borrowings | 11 | 3,062,611 | 17,381,300 |
| Current tax liabilities | 1,904,698 | 2,986,364 | |
| Total current liabilities | 34,245,785 | 78,660,605 | |
| Notes | 2008 US$ | 2007 US$ | |
| Non-current liabilities | |||
| Finance lease liabilities | 19,517 | 41,971 | |
| Bank term loans | 12 | 45,801,429 | 26,584,146 |
| Long term loans | 13 | 48,766,614 | 35,890,646 |
| Deferred tax liability | - | 3,727 | |
| Total non-current liabilities | 94,587,560 | 62,520,490 | |
| Total liabilities | 128,833,345 | 141,181,095 | |
| TOTAL EQUITY AND LIABILITIES | 359,731,524 | 380,621,897 |
Consolidated Statement of Changes in Equity
For the year ended 31 December 2008
| Retained Earnings US$ | Share Capital US$ | Share Premium US$ | Exchange Fluctuation Reserve US$ | Total US$ | |
| Balance as at 1 January 2008 | (2,607,644) | 12,500,000 | 227,233,267 | 469,497 | 237,595,120 |
| Loss for the financial year | (13,333,986) | - | - | - | (13,333,986) |
| Currency translation differences
| - | - | - |
(1,620,000) | (1,620,000) |
| Shareholders' equity as at 31 December 2008 | (15,941,630) | 12,500,000 | 227,233,267 | (1,150,503) | 222,641,134 |
Consolidated Statement of Changes in Equity
For the period ended 31 December 2007
| Retained Earnings US$ | Share Capital US$ | Share Premium US$ | Exchange Fluctuation Reserve US$ | Total US$ | |
| Issue of shares | - | 12,500,000 | 237,500,000 | - | 250,000,000 |
| Loss for the financial period | (3,260,180) | - | - | - | (3,260,180) |
| Share options | 652,536 | - | - | - | 652,536 |
| Share issue costs | - | - | (10,266,733) | - | (10,266,733) |
| Currency translation differences | - | - | - | 469,497 | 469,497 |
| Shareholders' equity as at 31 December 2007 | (2,607,644) | 12,500,000 | 227,233,267 | 469,497 | 237,595,120 |
Consolidated Cash Flow Statement
For the year ended 31 December 2008
| 2008 US$ | 2007 US$ | |
| Cash Flows from Operating Activities | ||
| Net loss before taxation for the financial year/period | (8,836,368) | (1,247,451) |
| Unrealised foreign exchange loss/ (gain) | 9,914,487 | (87,091) |
| Depreciation of property, plant and equipment | 54,952 | 30,953 |
| Amortisation of leasehold land payment | - | 9,916 |
| Impairment of investment in associate | 1,956,718 | - |
| Operating profit/ (loss) before working capital changes | 3,089,789 | (1,293,673) |
| Changes in working capital: | ||
| Decrease in inventories | - | 2,167,598 |
| Increase in property development costs | (12,518,925) | (3,743,106) |
| Decrease/ (increase) in leasehold land payment | 2,196,181 | (2,300,663) |
| Share of results from associated company | 3,863 | - |
| Increase in receivables | (1,263,339) | (5,079,922) |
| (Decrease)/ increase in payables | (27,942,654) | 12,155,747 |
| Net cash (used in)/ generated from operations | (36,435,085) | 1,905,981 |
| Tax paid | (4,743,431) | (1,142,124) |
| Net cash flows (used in)/ from operating activities | (41,178,516) | 763,857 |
| Cash Flows From Investing Activities | ||
| Acquisition of subsidiaries, net of cash | (4,831,774) | (37,883,066) |
| Acquisition of land held for property development | (1,382,184) | (13,212,866) |
| Advances to associate | - | 252,019 |
| Purchase of property, plant and equipment | (28,517) | (49,467) |
| Purchase of shares in associate | (2,567,962) | (12) |
| Purchase of available-for-sale investments | (13,023,572) | - |
| Placement of short term bank deposits | (1,880,189) | - |
| Net cash used in investing activities | (23,714,198) | (50,893,392) |
| Cash Flows From Financing Activities | ||
| Net proceeds from issue of shares | - | 152,385,803 |
| Repayment of borrowings | (14,064,981) | (22,774,397) |
| Drawdown of borrowings | 32,093,251 | 41,067,791 |
| Repayment of finance lease liabilities | (25,840) | (96,086) |
| Repayment of amount owing to directors | - | (889,021) |
| Net cash flows generated from financing activities | 18,002,430 | 169,694,090 |
| 2008 US$ | 2007 US$ | |
| NET CHANGE IN CASH AND CASH EQUIVALENTS DURING THE FINANCIAL YEAR/PERIOD | (46,890,284) | 119,564,555 |
| Effect of changes in exchange rates | (10,374,556) | 556,588 |
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR/PERIOD | 120,121,143 | - |
| CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR/PERIOD | 62,856,303 | 120,121,143 |
1 General Information
Aseana Properties Limited was incorporated in Jersey on 22 September 2006 under the laws of Jersey. The Company was registered under the number 94592. The Company's registered office is located at 12 Castle Street, St. Helier, Jersey, JE2 3RT, Channel Islands. The Company is domiciled in Jersey.
On 5 April 2007, the Company was listed on the main market of the London Stock Exchange.
The principal activities of the Group are acquisition, development and redevelopment of upscale residential, commercial and hospitality projects in the major cities of Malaysia and Vietnam. The Group typically invests in development projects at the pre-construction stage and also selectively invest in projects in construction and newly completed projects with potential capital appreciation.
The financial information set out in this announcement does not constitute the Company's statutory financial statements for the years ended 31 December 2008 and 2007 but has been extracted from these financial statements. Whilst the financial information included in these full year results has been prepared in accordance with International Financial Reporting Standards (IFRS) this announcement itself does not contain sufficient financial information to comply with IFRS. A copy of the statutory financial statements prepared under IFRS for the year ended 31 December 2007 has been delivered to the Registrar of Companies and those for the year ended 31 December 2008 will be issued to shareholders prior to the Company's Annual General Meeting. The announcement has been agreed with the auditors and was approved by the Board of Directors on 15 April 2009. The auditors have reported on the statutory financial statements for the year ended 31 December 2008; their report was unqualified. The auditors have reported on the statutory financial statements for the period ended 31 December 2007; their report was unqualified.
2 Basis of Preparation
The Group financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), and IFRIC interpretations issued, and effective, or issued and early adopted, as at the date of these financial statements. The Group financial statements have been prepared under the historical cost convention as modified for financial assets and financial liabilities at fair value.
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 Group financial information has been prepared in accordance with the accounting policies adopted by the Group which are consistent with those adopted in the financial statements for the year ended 31 December 2008 and with the recognition and measurement criteria of International Financial Reporting Standard (IFRS).
The Group has not adopted certain standards in the preparation of financial statements as they are either not effective as at 31 December 2008 or not applicable to the Group's business.
3 Revenue and Segmental Information
The gross revenue represents the proportionate sales value of development properties attributable to the work in progress performed for the year.
The Company is an investment holding company and has no operating revenue. The Group's operating revenue for the year was attributable to the sale of development properties in Malaysia. The Company's property development investments in Vietnam have not commenced business as at 31 December 2008.
| Revenue | 2008 | 2007 |
| US$ | US$ | |
| Sale of development properties | 97,894,616 | 43,073,785 |
| Sale of completed units | - | 2,102,286 |
| 97,894,616 | 45,176,071 |
| Investment Income | 2008 | 2007 |
| US$ | US$ | |
| Bank interest receivable | 4,534,122 | 4,320,485 |
| 4,534,122 | 4,320,485 |
The Directors consider that the Group has only one reportable business and geographical segment and the results and position of this segment is as disclosed in the Consolidated Income Statement and Consolidated Balance Sheet. The business and geographical segment of the Group are property development and Malaysia respectively.
4 Foreign exchange (loss)/ gain
| Group | ||
| 2008 | 2007 | |
| US$ | US$ | |
| Foreign exchange (loss)/ gain comprises: | ||
| Unrealised foreign exchange (loss)/ gain on foreign currency denominated cash and cash equivalents and long term loans | (9,914,487) | 87,091 |
| Realised foreign exchange (loss)/ gain | (256,140) | 2,306 |
| (10,170,627) | 89,397 | |
5 Management Fees
Under the Management Agreement between the Company and Ireka Development Management Sdn. Bhd. dated 27 March 2007, the Development Manager is entitled to a fee in respect of managing the assets of the Group and other obligations undertaken by it under the Management Agreement at the rate of 2% per annum of the net asset value, calculated on the last business day of March, June, September and December of each calendar year, and payable quarterly in advance.
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 return hurdle rate of 10%. No performance fee has been paid during the year (2007: US$Nil).
6 Taxation
| 2008 | 2007 | |
| US$ | US$ | |
| Current year/period | 3,949,625 | 1,997,209 |
| Deferred tax | (129,132) | (14,478) |
| Total tax expense for the year/period | 3,820,493 | 1,982,731 |
The numerical reconciliation between the income tax expenses and the product of accounting profit multiplied by the applicable tax rate is computed as follows:
| 2008 | 2007 | |
| US$ | US$ | |
| Accounting loss | (8,836,368) | (1,247,451) |
| Income tax at a rate of 26% | (2,297,456) | (324,337) |
| Add : | ||
| Tax effect of expenses not deductible in determining taxable profit | 7,182,643 | 3,683,488 |
|
| ||
| Less : | ||
| Tax effect of income not taxable in determining taxable profit | (1,064,694) | (1,376,420) |
| Total tax expense for the year/period | 3,820,493 | 1,982,731 |
The Company has been granted exempt company status within the meaning of Article 123A of the Income Tax (Jersey) Law 1961 (as amended). The effect of such special status is that the Company is treated as non-resident company for the purpose of Jersey tax laws and is therefore exempt from Jersey income tax on its profits arising outside Jersey, and, by concession, on bank deposit interest arising in Jersey and from any obligation to withhold Jersey income tax from any interest or dividend payments made by it. This status is renewable on an annual basis upon payment of a fee of £600 to the Comptroller of Income Tax in Jersey, and it is the Company's intention to maintain this status.
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.
The tax payable arose out of the Malaysian subsidiary companies.
7 Loss Per Share
| 2008 US$ | 2007 US$ | |
| Loss for the year/period attributable to the equity holders of the company | (13,333,986) | (3,260,180) |
| Weighted average number of shares: | ||
| Basic and diluted | 250,000,000 | 185,616,440 |
| Loss per share (US cents) : | ||
| Basic | 5.33 | 1.76 |
| Diluted | 5.33 | 1.76 |
Basic loss per share is calculated by dividing the net loss for the year/period of the Company by the weighted average number of ordinary shares in issue during the year/period.
For diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potential dilutive options over ordinary shares. Potential ordinary shares resulting from the exercise of share options have an anti-dilutive effect.
8 Investment in Associates
| 2008 | 2007 | |
| US$ | US$ | |
| As at 1 January | 12 | - |
| Acquisition of ordinary shares | 611,048 | 12 |
| Acquisition of redeemable preference shares | 1,956,914 | - |
| Share of loss | (3,863) | - |
| Exchange differences | (33,856) | - |
| Impairment of investment in associate | (1,956,718) | - |
| As at 31 December | 573,537 | 12 |
The Company, via a wholly-owned subsidiary ASPL M3A Limited, acquired 40% of the ordinary shares of a company known as Excellent Bonanza Sdn. Bhd., a company incorporated in Malaysia, which is a special purpose vehicle set up to undertake a commercial development in Kuala Lumpur, Malaysia. The remaining 60% is owned by Malaysian Resources Corporation Berhad, a Government-linked corporation in Malaysia.
During the financial year, ASPL M3A increased its shareholding in Excellent Bonanza Sdn. Bhd. by subscribing for of ordinary shares of RM1.00 each at a cost of RM1,999,960 (US$611,048). This increased the number of ordinary shares owned by the Company from 40 in 2007 to 2,000,000 in 2008.
During the financial year, ASPL M3A Limited also subscribed for 62,406 redeemable preference shares in Excellent Bonanza Sdn. Bhd. at a cost of RM6,240,600 (US$1,956,914). The redeemable preference shares were issued at par value of RM0.01 with a premium of RM99.99, and redeemable at RM0.01 per share. This resulted in an impairment of investment in associate of RM6,239,976 (US$1,956,718).
9 Available-for-Sale Investments
| 2008 | 2007 | |
| US$ | US$ | |
| Unquoted shares, at cost | 13,023,572 | - |
The Directors review the carrying amounts of available-for-sale investments at each balance sheet date to determine whether there is an indication of impairment in value other than temporary. The Directors' assessment on whether there is an indication is mainly based on the latest available financial statements of these investee companies. The available-for-sale investment includes unquoted equity instruments whose fair value could not be reliably measured, and which were therefore recognised at cost in the amount of US$13,023,572 (2007: US$Nil).
10 Intangible Assets
| Group | Licence Contracts and related relationships US$ |
| Cost | |
| At 1 January 2008 | - |
| Additions through acquisition of subsidiaries | 10,694,446 |
| As at 31 December 2008 | 10,694,446 |
| Accumulated amortisation and impairment losses | |
| At 1 January 2008 and 31 December 2008 | - |
| Amortisation recognised | - |
| As at 31 December 2008 | - |
| Net carrying amount as at 31 December 2008 | 10,694,446 |
| Net carrying amount as at 31 December 2007 | - |
Licence contracts and related relationships will be fully amortised according to the future economic benefits of the relationships.
11 Bank Loans and Borrowings
| 2008 | 2007 | |
| Secured | US$ | US$ |
| Revolving credit facility | - | 453,600 |
| Bank term loans | 546,821 | 14,158,202 |
| Bank overdraft | 2,515,790 | 2,769,498 |
| 3,062,611 | 17,381,300 |
The effective interest rates of the borrowings for the year ranged from 4.79% to 8.25% (2007: 5.60% to 9.00%) per annum.
The borrowings are secured by landed properties and corporate guarantee by the Company.
The borrowings are denominated in Malaysia Ringgit.
The bank term loans are repayable by monthly or quarterly instalments and the overdraft is repayable on demand.
The carrying amount of borrowings approximates its fair value at balance sheet date.
12 Bank Term Loans
| 2008 | 2007 | |
| US$ | US$ | |
| Secured | ||
| Outstanding term loans | 46,348,250 | 40,742,348 |
| Less: | ||
| Repayments due within twelve months | (546,821) | (14,158,202) |
| Repayment due after twelve months | 45,801,429 | 26,584,146 |
The effective interest rates of the term loan borrowings for the year ranged from 4.79% to 8.25% (2007: 7.75% to 9.00%) per annum.
The borrowings are secured by landed properties and corporate guarantee by the Company.
The term loans are denominated in Malaysia Ringgit.
The bank term loans are repayable by monthly or quarterly instalments.
13 Long Term Loans
| 2008 US$ | 2007 US$ | |
| Advance | 45,326,014 | 33,890,646 |
| Concessional loan | 2,000,000 | 2,000,000 |
| Long term loan from minority shareholders of a subsidiary | 1,440,600 | - |
| 48,766,614 | 35,890,646 |
The advance is from a special purpose vehicle and used to fund a development project known as one Mont' Kiara, Kuala Lumpur, Malaysia. The weighted interest rate of the loan was 6.98% (2007: 8.01%) as at 31 December 2008.
The concessional loan of US$2,000,000 is provided by the joint venture partner for one of the Mont' Kiara projects for working capital purposes.
The long term loan from minority shareholders of a subsidiary - Shangri-La Healthcare Investment Pte Ltd - is to finance the investment in Hoa Lam Shangri-La Healthcare Limited Liability Company.
14 Acquisition of Business
Aseana Properties Limited is the parent company of a group of companies involved in property development business.
(a) Acquisition of Shangri-La Healthcare Investment Pte Ltd
On 29 May 2008, the Group acquired 51% of the issued share capital of Shangri-La Healthcare Investment Pte Ltd for a total consideration of US$3.821 million. The transaction is accounted for using the purchase method of accounting.
The assets and liabilities at the date of acquisition arising from the acquisition are as follows:
| Provisional fair value
US$ | Acquiree's carrying amount US$ | |
| Current assets | 1,173,682 | 1,173,682 |
| Cash and cash equivalents | 9,826 | 9,826 |
| Accruals | (351) | (351) |
| Licence contracts and related relationships | 6,309,588 | - |
| Net assets | 7,492,745 | 1,183,157 |
| Minority interest | (3,671,445) | |
| Net assets acquired | 3,821,300 |
| Satisfied by: | ||
| Cash consideration | 3,821,300 | |
| Cash consideration | 3,821,300 | |
| Less : Cash and cash equivalents acquired | (9,826) | |
| Net cash outflow arising on acquisition (see Note 14 (b)) | 3,811,474 |
If the acquisition of Shangri-La Healthcare Investment Pte Ltd had occurred on 1 January 2008, this would have increased the Group's loss before tax for the year by approximately US$1,121.
(b) Acquisition of Hoa Lam Services Company Limited
On 29 May 2008, the Group acquired 51% of the issued share capital of Hoa Lam Services Company Limited for a total consideration of US$2.280 million. The transaction is accounted for using the purchase method of accounting.
The assets and liabilities at the date of acquisition arising from the acquisition are as follows:
| Provisional fair value US$ | Acquiree's carrying amount US$ | |
| Cash and cash equivalents | 1,260,000 | 1,260,000 |
| Licence contracts and related relationships | 3,211,176 | - |
| Net assets | 4,471,176 | 1,260,000 |
| Minority interest | (2,190,876) | - |
| Net assets acquired | 2,280,300 |
| Satisfied by: |
| |
| Cash consideration | 2,280,300 | |
| Cash consideration | 2,280,300 | |
| Less : Cash and cash equivalents acquired | (1,260,000) | |
| Net cash outflow arising on acquisition | 1,020,300 |
The acquisition of Shangri-La Healthcare Investment Pte Ltd and Hoa Lam Services Company Ltd amounted to a total cash consideration of US$6,101,600. Therefore, the net cash outflow arising from these two acquisitions is:
| US$ | |
| Cash consideration | 6,101,600 |
| Less : Cash and cash equivalents acquired | (1,269,826) |
| Net cash outflow arising on acquisition | 4,831,774 |
(c) Acquisition of Hoa Lam - Shangri-La Healthcare Limited Liability Company
On 29 May 2008, the Group acquired 51% of the issued share capital of Hoa Lam - Shangri-La Healthcare Limited Liability Company ("HLSHLLC") for a total consideration of US$5.370 million, via Shangri-La Healthcare Investment Pte Ltd and Hoa Lam Services Company Limited between them acquiring a total of 100% of HLSHLLC. The transaction is accounted for using the purchase method of accounting.
The assets and liabilities at the date of acquisition arising from the acquisition are as follows:
| Provisional fair value US$ | Acquiree's carrying amount US$ | |
| Cash and cash equivalents | 4,200,000 | 4,200,000 |
| Licence contracts and related relationships | 1,173,682 | - |
| Net assets | 5,373,682 | 4,200,000 |
| Minority interest | - | |
| Net assets acquired | 5,373,682 |
| Satisfied by: |
| |
| Directly attributable costs | 1,173,682 | |
| Cash consideration | 4,200,000 | |
| 5,373,682 | ||
| Cash consideration | 4,200,000 | |
| Less : Cash and cash equivalents acquired | (4,200,000) | |
| Net cash outflow arising on acquisition | - |
(d) Acquisition of Aseana-BDC Company Limited
On 25 June 2008, the Group acquired 65% of the issued share capital of Aseana-BDC Company Limited. No capital contribution has been paid to the company as at 31 December 2008.
15 Dividends
The Company has not paid or declared any dividends during the financial year ended 31 December 2008.
16 Events After The Balance Sheet Date
On 12 January 2009, the Company has, via its wholly-owned subsidiary ASPL M2 Limited, entered into a conditional Sale and Purchase Agreement to acquire the remaining 40% stake in ICSD Ventures Sdn. Bhd. from Geo Fusion Resources Sdn. Bhd. for RM15 million (US$4.330 million) comprising 70% cash and 30% in the form of completed properties at the Sandakan Harbour Square Project ("SHSP"). The completion date for the acquisition shall be thirty three months from 21 September 2008 or upon obtaining the certificate of fitness for Phases 3 and 4 of SHSP, whichever is earlier.
On 15 January 2009, the Company's 51% subsidiary Hoa Lam - Shangri-La Healthcare Limited Liability Company has secured the Land Use Rights Certificate for its 37.54 hectares site to develop a mixed commercial, hospitality and residential development known as the International Hi-Tech Healthcare Park in the Binh Tan District, Ho Chi Minh City.
On 30 March 2009, the Company, via its wholly-owned subsidiary ASPL M8 Limited acquired 851 ordinary shares, representing 85.1% of the issued shares, of RM1.00 each for RM851.00 in Legolas Capital Sdn. Bhd.
17 REPORT CIRCULATION
Copies of the Annual Report and Accounts will be sent to shareholders for approval at the Annual General Meeting ("AGM") to be held on 2 June 2009.