Aseana Prop. Regulatory News (ASPL)

27 September 2019

Aseana Properties Limited("Aseana", the "Company" or, the "Group")

Half-Year Results for the Six Months Ended 30 June 2019

Aseana Properties Limited (LSE: ASPL), a property developer investing 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 2019.

Operational highlights:

·; The RuMa Residences achieved approximately 68% sales based on sale and purchase agreements signed.

·; The RuMa Hotel achieved an average occupancy rate of approximately 22% for the period to 30 June 2019 and 24% to date, based on available rooms.

·; Four Points by Sheraton Sandakan Hotel achieved an average occupancy rate of approximately 41% for the period to 30 June 2019 and 43% to date.

·; The Harbour Mall Sandakan's occupancy stood at about 83% to date.

·; The City International Hospital has shown improvement in its operational performance, with outpatient and inpatient volumes increasing by approximately 18% and 29% respectively as compared to same period in 2018.

Financial highlights:

·; Revenue of US$5.7 million (H1 2018: US$15.9 million)

·; Loss before tax of US$5.2 million (H1 2018: loss of US$4.1 million)

·; Loss after tax of US$5.8 million (H1 2018: loss of US$4.6 million)

·; Consolidated comprehensive loss of US$5.9 million (H1 2018: loss of US$4.8 million)

·; Net asset value of US$132.3 million (31 December 2018 (audited): US$136.4 million) or US$0.67 per share (31 December 2018 (audited): US$0.69 per share)

·; Realisable net asset value of US$184.6 million (31 December 2018 (unaudited): US$193.1 million) or US$0.93 per share (31 December 2018 (unaudited): US$0.97 per share)

Commenting on the results, Gerald Ong, Chairman of Aseana, said:

"The H1 2019 results are reflective of the challenging market conditions in Malaysia. Nonetheless, the Company is working towards improving the operational performance and narrowing the losses of its operating assets. It remains focused on realising the remaining assets in a controlled, orderly and timely manner." 

For further information:

Notes to Editors:

London-listed Aseana Properties Limited (LSE: ASPL) is a property developer with investments in Malaysia and Vietnam.

CHAIRMAN'S STATEMENT

Introduction

I am pleased to report on the results of Aseana Properties and its group of companies for the six months ended 30 June 2019.

The global economy experienced sluggish growth for the first six months of 2019. Growing trade tension between the US and China as well as prolonged uncertainty on Brexit continues to be the dominant factor for global market uncertainty.

Malaysia registered a slower GDP growth of 4.7% in the first half of 2019 compared to 4.9% in the same period last year. Although Malaysian economy is expected to remain healthy from the continuous support of steady domestic demand, challenges persist due to uncertain external factors. On the Malaysian property front, the market continued to soften in the first half of 2019 due to various factors including macroeconomic uncertainties and weak domestic consumer sentiment. Challenges such as stringent lending policies, a development approval freeze by the Government on selected commercial and high-end residential developments, property oversupply and price unaffordability continue to dampen the property market. In May 2019, Bank Negara Malaysia reduced the Overnight Policy Rate by 25-basis points to 3.0% which has managed to ease borrowing for potential home buyers. Sabah experienced a slight increase in the number of tourists in the first six months of 2019 compared to the same period in 2018. Total arrivals to Sabah for the first six months was 2.02 million, with visitors from China being the largest group at 0.32 million. However, eastern Sabah is still affected by adverse travel advisory notices from countries including Australia, New Zealand, Canada, United States of America and the United Kingdom.

Despite a softer global economy, Vietnam maintained strong second quarter GDP growth of 6.7%. On the back of a GDP growth of 7.1% in 2018, Vietnam sustained its economic growth with extensive market-oriented and outward-looking economic policies. Vietnam has emerged as one of the fastest growing countries in Asia over the last decade. Ongoing trade tariffs imposed on China by the United States will continue to dampen global economic growth. However, Vietnam will likely benefit from the ongoing trade tensions as firms are moving manufacturing from China to countries such as Vietnam, to avoid tariffs.

Results

For the six months ended 30 June 2019, the Group recorded an unaudited revenue of US$5.7 million (H1 2018: US$15.9 million), which is mainly attributable to the sale of completed units in SENI Mont' Kiara. No major asset sales were recorded during the period.

The Group recorded an unaudited loss before tax for the period of US$5.2 million (H1 2018: loss of US$4.1 million), mainly due to operating losses and financing costs of US$1.4 million for City International Hospital, US$0.6 million for Four Points by Sheraton Sandakan Hotel and Harbour Mall Sandakan, and US$2.3 million for The RuMa Hotel.

The Group's unaudited loss after tax stood at US$5.8 million (H1 2018: loss of US$4.6 million). The Group's unaudited consolidated comprehensive loss for the period of US$5.9 million (H1 2018: loss of US$4.8 million) included a foreign currency translation loss of US$0.1 million (H1 2018: loss of US$0.1 million).

The unaudited net asset value for the Group 30 June 2019 decreased to US$132.3 million (31 December 2018 (audited): US$136.4 million) due to losses incurred during the period. This translates to US$0.666 per voting share (31 December 2018 (audited): US$0.686 per voting share). Meanwhile, the unaudited realisable net asset value for the Group stood at US$184.6 million at 30 June 2019 (31 December 2018 (unaudited): US$193.1 million). This is equivalent to US$0.929 per voting share (31 December 2018 (unaudited): US$0.972 per voting share).

Changes to the Board of Directors

During 2019, there were a number of changes to the composition of the Board of Directors as we sought to position the Group for the final phase of the disposal of its assets. I would like to thank Dato Azlan Hashim who had been Chairman since launch, Ferheen Mahomed who had been a non-executive Director since May 2015 and Richard Boleat for their wise counsel and advice to ASEANA. I also welcome our new Directors:

·; Monica Lai who is the Chief Financial Officer of our former Development Manager based in Kuala Lumpur and connected to Ireka and Legacy Essence who collectively are the largest shareholder in ASEANA, and

·; Christopher Lovell who returns to the Board and who was a corporate lawyer and is based in Jersey and therefore serves a particularly valuable purpose of linking us with our regulatory base, and 

·; Helen Wong who is an Asian property specialist based in Hong Kong, will serve as our Divestment Director.

·; Nick Paris who is a representative of LIM Advisors based in London and whose clients are the second largest shareholders in ASEANA, resigned from the Board in March and was re-appointed in early September.

Internalisation of Management

Ireka Development Management Sdn Bhd who served as our Development Manager from launch resigned from their appointment in March. They finished their role on 30th June and thereafter day to day management of the Group was taken over by Mr Chan Say Yeong who is based in Kuala Lumpur and who joined ASEANA as its Chief Executive Officer on 3rd June.

Property disposals and Realisable Net Asset Value ("RNAV")

In order to dispose of the remaining assets owned by ASEANA, the revised Board have been re-evaluating their likely disposal values particularly in the light of increasingly competitive market conditions for luxury hotels in Kuala Lumpur and continuing challenging market conditions in Sandakan in East Malaysia. This work is ongoing and will be reviewed by our external valuers and no conclusions have been reached at this stage. The Directors will inform Shareholders of the impact on the RNAV when they conclude this process. The Board will however continue to publish NAV and RNAV figures for the fund in the Annual and Semi-Annual accounts, however believe that it is in shareholder's interests to cease publishing valuations for individual assets whilst it concentrates on selling those properties. Each sales process involves extensive discussion and the handover of a lot of detailed information often requiring Non-Disclosure Agreements ("NDA's") to be signed, and it is felt that all information on a property is best delivered under this process rather than piecemeal from public disclosures by your Company.

The revised Board has made a lot of progress at improving the sales and due diligence information available to prospective purchasers for our properties and has been re-marketing them with particular priority being placed on those where there is likely to be the most demand and therefore the fastest possibility of a completed disposal. A fair number of NDA's have been signed on some of the assets and there is renewed interest which we are exploring diligently. It is however too early to reveal the details of these discussions and the negotiations are ongoing.

Investor Reporting

The Board believes that the quarterly Tracker newsletters t are no longer an appropriate means of relaying progress to its shareholders now that our principal focus is to expedite property sale negotiations and turn them into completed transactions. It has therefore been decided to discontinue these, however prompt announcements will be made whenever a significant step in a property sales process has been made. These updates will be supplemented by portfolio updates in the Annual and Interim accounts and the updated corporate presentations that accompany them.

The next ASEANA Dis-continuation Vote

Shareholders extended the life of the Group for 18 months at an EGM that was held in April 2018 in order to realise the remaining assets in the portfolio. A further dis-continuation vote is therefore required to be held at an EGM in December 2019 and the Directors will be publishing their recommendations to Shareholders ahead of that meeting as the disposal process is not likely to be completed by then.

GERALD ONG

Chairman

27 September 2019

PROPERTY PORTFOLIO AS AT 30 JUNE 2019

*Shareholding as at 30 June 2019

n/a: Not available/ Not applicable

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2019

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the PERIOD ended 30 JuNE 2019 - Unaudited

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the PERIOD ended 30 JuNE 2018 - Unaudited

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2018 - audited

# represent 2 management shares at US$0.05 each

(i) On 30 June 2018 and 31 December 2018, US$63,000 of ordinary shares of subsidiaries were issued to non-controlling shareholders, of which was satisfied via cash consideration.

(ii) Included in short term bank deposits and cash and bank balance is US$5,012,000 (31 December 2018:US$2,710,000; 30 June 2018: US$2,839,000) 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 2019

1 General Information

The principal activities of the Group are development of upscale residential and hospitality projects, sale of development land and operation and sale of hotels, mall and 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 2019 has 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 2018 which has 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 2018 as described in those annual financial statements.

The interim report and financial statements were approved by the Board of Directors on 27 September 2019.

3 SegmentAL Information

The Group's assets and business activities are managed by Ireka Development Management Sdn. Bhd. ("IDM") as the Development Manager under a management agreement dated 27 March 2007.

Segmental information represents the level at which financial information is reported to the Executive Management of IDM, being the chief operating decision maker as defined in IFRS 8. The Executive Management consists of the Chief Executive Officer, the Chief Financial Officer, Chief Operating Officer and Chief Investment Officer of IDM. The management determines the operating segments based on reports reviewed and used by the Executive Management for strategic decision making and resource allocation. For management purposes, the Group is organised into project units.

On 22 March 2019, the Company announced that IDM, the current Development Manager of Aseana, had on 21 March 2019, submitted a notice to terminate its appointment under the Management Agreement. Unless otherwise agreed, IDM's resignation is subject to a three months notice period which will enable the orderly transition of operations currently carried out by IDM to the Company itself or to third parties. On 19 June 2019, the Company further announced that the notice period was extended to 30 June 2019.

The Group's reportable operating segments are as follows:

(i) Investment Holding Companies - investing activities;

(ii) Ireka Land Sdn. Bhd. - develops 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 2019 and 2018.

Information regarding the operations of each reportable segment is included below. The Executive Management monitors the operating results of each segment for the purpose of performance assessments and making decisions on resource allocation. Performance is based on segment gross profit/(loss) and profit/(loss) before taxation, which the Executive Management believes are the most relevant in evaluating the results relative to other entities in the industry. Segment assets presented inclusive of inter-segment balances and inter-segment pricing is determined on an arm's length basis.

The Group's revenue generating development projects are in Malaysia and Vietnam.

Operating Segments - ended 30 June 2019- Unaudited

Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items

Operating Segments - ended 30 June 2018- Unaudited

Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items

Operating Segments - ended 31 December 2018 - Audited

Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items

Geographical Information - ended 30 June 2019 - Unaudited

Geographical Information - ended 30 June 2018 - Unaudited

Geographical Information - ended 31 December 2018 - Audited

In the financial period/year ended 30 June 2019; 30 June 2018; 31 December 2018, no single customer exceeded 10% of the Group's total revenue.

4 Seasonality

The Group's business operations are not materially affected by seasonal factors for the period

under review.

5 Cost of Sales

6 Foreign exchange (LOSS)/GAIN

7 Taxation

The numerical reconciliation between the income tax expense and the product of accounting results multiplied by the applicable tax rate is computed as follows:

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:

9 Loans and Borrowings

The effective interest rates on the bank loans and finance lease arrangement for the period ranged from 5.25% to 12.50% (30 June 2018: 5.00% to 12.50%; 31 December 2018: 5.55% to 11.30%) per annum and 2.50% (30 June 2018: 2.50%; 31 December 2018: 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-annually instalments.

Bank loans are secured by land held for property development, work-in-progress, operating assets of the Group, pledged deposits and some by the corporate guarantee of the Company.

Reconciliation of movement of loans and borrowings to cash flows arising from financing activities:

10 Medium Term Notes

Reconciliation of movement of medium term notes to cash flows arising from financing activities:

* Includes net transaction costs in relation to medium term notes due within twelve months of US$0.21 million. (30 June 2018: US$0.21million; 31 December 2018: US$0.42 million)

The tenure of the medium term notes programme is ten(10) years which expires on 7 December 2021. SSB has secured a "roll-over" of the remaining medium term notes of US$24.19mil (RM100 million) on 10 December 2018 which is due on 10 December 2019.

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 6.00% 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:

The medium term notes are secured by way of:

(i) bank guarantee from two financial institutions in respect of the BG Tranches;