Last checked at 28 Aug 2008 09:30
Date: 28 August 2008
On behalf of: Aseana Properties Limited ("Aseana Properties" or the "Group" or the
"Company")
Embargoed until: 0700hrs
Aseana Properties Limited
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008
Aseana Properties Limited (LSE: ASPL), an Asian property developer on the Official List of the London Stock Exchange investing in Malaysia and Vietnam, is pleased to announce its interim results for the six month period ended 30 June 2008.
Highlights
Commenting on the Company's results, Dato' Mohammed Azlan bin Hashim, Chairman of Aseana Properties Limited, said:
"We are pleased with the results to 30 June 2008 and the progress we have made since our admission to the Official List of the London Stock Exchange.
"Despite the challenging global economic environment, we believe that the medium and long term economic fundamentals in Malaysia and Vietnam remain solid and will favour players with a strong balance sheet and cash in hand, like Aseana Properties, who are well positioned to capitalise on the investment opportunities at attractive valuations. Aseana Properties' recent investments in Vietnam are a testament to this. We believe these investments will drive the Group's earnings in the coming years.
"The Board looks forward to the remainder of the financial year and providing our investors and the market with further progress on our investment and development pipeline."
Enquiries:
| Ireka Development Management Sdn Bhd - Manager | Tel: 603 2094 0133 / 6203 6688 |
| Monica Lai / Chan Chee Kian / Frankie Heng | Email: aseana@ireka.com.my |
| Redleaf Communications Samanatha Robbins / Adam Leviton / Kathryn Hurford | Tel: 020 7822 0200 Email: aseana@redleafpr.com |
| Fairfax I.S. PLC | Tel: 020 7598 5368 |
| James King | Email: jking@fairfaxis.com |
CHAIRMAN'S STATEMENT
Introduction
For the period to June 2008, the Group has recorded revenue of US$51.734 million, and an operating profit of US$2.024 million, an increase of US$41.7 million and US$1.7 million respectively compared to the same period in 2007.
The increase in revenue is the result of positive contributions from all projects under development in Malaysia, namely i-ZEN@Kiara I, Tiffani by i-ZEN, one Mont Kiara by i-ZEN, SENI Mont' Kiara and Sandakan Harbour Square.
For the period under review, the Group has achieved commendable successes in expanding its property portfolio in Vietnam. Aseana Properties has received its first Investment License in Vietnam for the Queen's Place project in Ho Chi Minh City, and has acquired a strategic minority stake in an established and leading property developer in Ho Chi Minh City, Nam Long Investment Corporation.
An Overview of Investment Climate in Malaysia and Vietnam
Aseana Properties entered 2008 with considerable uncertainties in the global economy, driven by the credit crisis and rising global inflation. These uncertainties, coupled with recent developments, have affected the investment climate in Malaysia and Vietnam.
Vietnam is faced with rising inflation as a result of high prices of food, imported commodities and refined oil products. The Vietnam inflation rate touched a high of 27% in June 2008. The Government's move of widening the trading band of the Vietnamese Dong at the end of May 2008 has been met with some volatility in the spot exchange rate, prompting fears of a widespread currency and balance-of-payment crisis among the financial community.
The Vietnamese Government has moved swiftly by addressing the global financial community in a live conference call, and re-emphasising its priority in fighting and controlling inflation through various fiscal and monetary policies. These fears have now largely abated as the effects of the Government policies are felt resulting in slower credit growth and hence GDP growth. Inflation is however expected to continue to rise in the near term before easing in early 2009, given the Government's decision to increase fuel prices by 31% in July 2008.
Malaysia has largely been shielded from the extremities of the global credit crisis. However, high oil prices and rising food prices have pushed the Malaysian inflation rate to a 26-year high of 7.7% in June 2008. Malaysia at the present time is also facing a fair amount of political volatility on the back of the opposition alliance winning an unprecedented number of seats of more than one-third in the Malaysian Parliament in the general election in March. Many Malaysians have viewed this as a positive change as the country transitions itself into a more matured democratic system.
On the back of these global and local conditions, the property markets in Malaysia and Vietnam in general has seen growth stabilising. In some instances in Vietnam, land values have decreased by up to 30% from its speculative highs. These dynamics represent the cyclical characteristics of property markets. However, Aseana Properties believes that the fundamentals of the economies in Vietnam and Malaysia are robust and will continue to drive the growth of the property market in the medium to long term.
We believe that these suppressed property markets will favour players with a strong balance sheet and cash in hand like Aseana Properties, who are well positioned to capitalise swiftly on the investment opportunities at attractive valuations. Aseana Properties' recent investments in Vietnam are a testament to this. We believe these investments will drive the Group's earnings in the coming years.
Review of Aseana Properties' Property Portfolio
For the period under review, Aseana Properties has successfully completed the construction and commenced the handover process of the 302-units i-ZEN@Kiara I luxury serviced residences in Mont' Kiara, Kuala Lumpur.
Despite the difficult business conditions, sales of launched projects continue to be encouraging. The first phase of the luxurious SENI Mont' Kiara development has reached over 80%, prompting the launch of the second phase of the development. Combined sales of the SENI Mont' Kiara development is now approximately 45%. Sales of the Tiffani by i-ZEN, another luxurious condominium, and the retail lots at Phase Two of Sandakan Harbour Square continue to make positive progress as illustrated below. The following projects comprise the initial portfolio (the "Initial Portfolio").
| Projects | % Sales As At August 2008 |
| i-ZEN@Kiara I | 99% |
| Tiffani by i-ZEN | 87% |
| one Mont' Kiara by i-ZEN - bz hub | 100% |
| Sandakan Harbour Square Phase 1 retail lots Phase 2 retail lots | 92% 54% |
| SENI Mont' Kiara - Phase I & 2 | 45% |
The Group's other investments that are under development in Malaysia namely KL Sentral Project, TM Mont Kiara Project and the Kota Kinabalu sea-front resort & residential Project are all going through rigorous development planning stages. These projects when launched will ensure continuity of the Group's current portfolio of investments in Malaysia over the next four to five years.
In the previous financial year, Aseana Properties announced its two maiden investments in Vietnam in the Nam Khang Resort & Residences in the coastal city of Danang, and the prime office development of Wall Street Centre in District 1 of Ho Chi Minh City. These two projects are currently undergoing development planning and an authorities' approval process. For the financial year to date, the Group has recently concluded two other new investments in Vietnam.
We are pleased to have received our first Investment License in Vietnam for the Queen's Place project in June 2008. Queen's Place is a mixed development project consisting of two residential towers; an office-serviced apartment tower and a retail mall with a total gross floor area of approximately 92,500 m2. Queens's Place is strategically located at the periphery of District Four, adjacent to District One, the central business district of Ho Chi Minh City. Aseana Properties will undertake this development jointly with Binh Duong Corporation, a Vietnam property development company. The Group will own 65% of the venture and is expected to invest approximately US$11.5 million in the development. With the Investment License in place, development of Queen's Place is expected to commence in the fourth quarter of 2008.
In July 2008, Aseana Properties also announced the acquisition of a strategic minority stake in Nam Long Investment Corporation ("Nam Long") for approximately US$18 million. Nam Long, a private property development company established in 1992, is a leading player in the real estate market in Ho Chi Minh City, Vietnam. Over the years, Nam Long has completed projects in Ho Chi Minh City such as Tan Thuan Dong, a mixed residential and commercial development in District Seven of Ho Chi Minh City and the Phuoc Long B residential development in District Nine. Nam Long currently has over 500 hectares of land bank mainly in Ho Chi Minh City and neighbouring provinces.
Through this partnership, Aseana Properties is expected to co-develop at least four property development projects with Nam Long in Ho Chi Minh City in the immediate term. Aseana Properties has also secured the option to develop future high-end projects with Nam Long.
We believe our investment in Nam Long strengthens and anchors our presence in Vietnam. Nam Long being an established property development company, with a sizeable land bank, is well positioned to capitalise on the growth opportunities in Vietnam.
Aseana Properties also announced on 27 August 2008 that it has acquired a 51% interest in the development of the International Hi-Tech Health Park in the Binh Tan District of Ho Chi Minh City, Vietnam. Aseana Properties will invest approximately US$27.6 million for the development, which has a total gross development cost of approximately of US$420 million. The project was licensed and approved by the People's Committee of Ho Chi Minh City on 10 July 2008 and is expected to commence development in the fourth quarter of 2008.
Located on 37.54 hectares of prime land, the International Hi-Tech Health Park will consist of world class private hospitals, mixed commercial, hospitality and residential developments with a healthcare theme. The project will be developed over five phases. The first phase of the development will be anchored by an international standard tertiary care, teaching hospital and supporting residences. The next phases will include medical centres, serviced apartments, offices, a retail mall and hotel, completing the integrated nature of the project. The various development components of the project have already attracted a number of well-known, international healthcare investors. Aseana Properties will perform the role of a master developer through the consortium, responsible for planning, developing and marketing the International Hi-Tech Health Park.
The International Hi-Tech Health Park, when completed will have approximately 1.01 million square metres of gross floor area, providing a world class integrated healthcare and commercial hub in a well designed park setting. The park will serve the population of some 8 million people in Ho Chi Minh City and is also expected to draw people from all over Vietnam and across from neighbouring Indochina countries.
The outlook for the second half of 2008 will see higher contributions from the existing projects as construction gathers pace and gross margin maintained at existing levels as the costs have been locked in.
We are looking forward to a busy and exciting second half of the year for Aseana Properties in both Malaysia and Vietnam. I look forward to reporting to you again further progress in our investments and developments in the annual report at the end of the financial year.
Dato' Mohammed Azlan bin Hashim
Non-executive Chairman
28 August 2008
REPORT OF THE MANAGER
Vietnam Economic Update
Gross domestic product ("GDP") in the first half of 2008 is expected to increase by 6.5% compared to the same period last year; the agriculture, forestry and fishery sector increased by 3%; the industry and construction sector by 7% and the service sector by 7.6%.
The Consumer Price Index ("CPI") in June 2008 was recorded at 27% year-on-year against 26.8% in June 2007. The monthly rise in June prices was the slowest since November [2007], and it was primarily due to a smaller rise in food prices relative to previous months. Consumer prices grew by 18.44%, of which grain-food rose by 59.4%; foodstuff by 21.83%; housing and building materials by 14.34%; and transportation and post by 10.58%.
Foreign direct investments ("FDI") continue to grow. During the first half of the year, 478 new FDI projects were granted licenses with a total registered capital of US$ 30.9 billion.
The State Bank of Vietnam has undertaken a series of monetary and credit tightening measures to counter inflation and slow credit growth. Since January 2008, the State Bank has lifted official interest rates by 375bp to 12% as of 17 May and also raised the bank reserve requirements from 10% to 11%. Banks were also directed to be more cautious in extending loans for investment in shares and real estate. The authorities also instructed Government ministries to halt construction of non-essential projects.
Overview of Property Market in Vietnam
Residential
Offices
Retail
Hospitality
Source: Company research, General Statistics Office of Vietnam, CBRE Vietnam Reports
Malaysia Economic Update
The Malaysian economy registered strong growth of 7.1% in the first quarter of 2008. The growth momentum was led by double digit expansion in private and public consumption spending, while investment activities remained resilient. Growth was further supported by a strong contribution from external demand, following stronger growth in exports, while imports moderated further during the quarter.
Headline inflation rose to 7.7% in June (May 2008: 3.8%) due to the substantial price increases in the transport and food and non-alcoholic beverages categories. Following the restructuring of the fuel subsidy on 4 June 2008, prices in the transport category rose by 19.6% (May 2008: 0.9%). Prices in the food and non-alcoholic beverages category rose by 10% (May 2008: 8.2%) reflecting higher prices in both the food at home and food away from home sub-categories.
Despite the high inflation rate, Bank Negara kept its overnight policy rate unchanged at 3.5%. Due to the increases in fuel and electricity prices, Malaysia's consumer sentiment index declined to an all-time low of 70.5 from 110.1 in December 2007.
During the period 1 June to 30 July 2008, the Ringgit fluctuated between RM3.2145 to RM3.2740 against the US Dollar due to shifting market expectations about the likely direction of the Federal Funds rates following the softer US economic data and the continued turmoil in US financial markets. For the period as a whole, the ringgit appreciated against the Japanese yen (1.7%) but depreciated against the euro (-1.0%), pound sterling (-0.8%) and the US dollar (-0.6%).
Growth in the construction industry in the second half of 2008 may be dampened due to the continuous increase in fuel, construction materials and building materials prices in the construction industry. According to the Master Builders Association Malaysia ("MBAM"), many property developers are delaying new projects due to the rising cost of construction materials as they are unable to fix prices for their development due to the current uncontrollable increase in building material prices. MBAM is urging the Government to enable contractors to request for contract prices to be adjusted according to the market prices.
Overview of Property Market in Malaysia
Residential
Offices
Retail
Hospitality
Source: Bank Negara Malaysia website, Jones Lang Wotton Q2 report, CBRE, Various publications
Ireka Development Management Sdn Bhd
Manager
28 August 2008
CONSOLIDATED INCOME STATEMENT
Six months ended 30 June 2008
| Unaudited | Unaudited | Audited | ||
| Notes | Six months | Six months | 15 months | |
| ended 30 June | ended 30 June | ended 31 December | ||
| 2008 | 2007 | 2007 | ||
| US$ | US$ | US$ | ||
| Continuing activities | ||||
| Revenue | 51,734,040 | 10,012,490 | 45,176,071 | |
| Cost of sales | 5 | (45,736,586) | (8,165,143) | (46,239,698) |
| ----------------------- | ----------------------- | ------------------------ | ||
| Gross profit / (loss) | 5,997,454 | 1,847,347 | (1,063,627) | |
| ----------------------- | ----------------------- | ------------------------ | ||
| Other income | 312,194 | 43,023 | 1,084,430 | |
| Administrative expenses | (474,001) | (42,944) | (976,293) | |
| Management fee | (2,362,968) | (772,319) | (3,631,693) | |
| Other operating expenses | (1,449,109) | (772,736) | (848,064) | |
| ----------------------- | ----------------------- | ------------------------ | ||
| Operating profit / (loss) | 2,023,570 | 302,371 | (5,435,247) | |
| Investment income | 2,736,428 | 1,529,405 | 4,320,485 | |
| Finance costs | (123,636) | (18,898) | (132,689) | |
| Impairment loss on other investment | 6 |
(1,956,233) | - | - |
| Share of results of associated company | (743) | - | - | |
| ----------------------- | ----------------------- | ------------------------ | ||
| Net profit / (loss) before taxation | 2,679,386 | 1,812,878 | (1,274,451) | |
| Taxation | 7 |
(2,897,846) | (488,454) | (1,982,731) |
| ----------------------- | ----------------------- | ------------------------ | ||
| Net (loss) / profit after taxation | (218,460) | 1,324,424 | (3,230,182) | |
| Equity minority interest |
(686,350) | 53,832 | (29,998) | |
| ----------------------- | ----------------------- | ------------------------ | ||
| (Loss) / profit for the period attributable to the equity holders of the parent | (904,810) | 1,378,256 | (3,260,180) | |
| ============ | ============ | ============= | ||
| Earnings per share attributable to shareholders of the parent - US cents per share | ||||
| - Basic | 8 | (0.36) | 1.47 | (1.76) |
| - Diluted | 8 | (0.36) | 1.47 | (1.76) |
CONSOLIDATED BALANCE SHEET
As at 30 June 2008
| Unaudited | Unaudited | Audited | ||
| Notes | As at 30 June | As at 30 June | As at 31 December | |
| 2008 | 2007 | 2007 | ||
| US$ | US$ | US$ | ||
| Non-current assets | ||||
| Property, plant & equipment | 386,883 | 346,169 | 389,556 | |
| Investment in associate | 9 | 610,317 | - | 12 |
| Other investment |
| 682 | - | - |
| Prepaid land lease payment |
| 2,365,136 | - | 2,300,663 |
| Land held for property development |
|
17,651,807 | 5,799,101 | 16,798,134 |
| Long term receivables |
| 6,122,000 | 2,676,950 | 6,048,000 |
|
|
|
------------------------ | -------------------------- | ----------------------- |
| Total non-current assets |
| 27,136,825 | 8,822,220 | 25,536,365 |
|
|
|
============= | ============= | ============ |
| Current assets
|
| |||
|
|
|
|
|
|
| Inventories at cost |
| - | 2,134,410 | - |
|
Property development costs |
|
219,908,578 | 203,979,228 | 213,585,677 |
| Trade and other receivables |
| 20,000,970 | 10,218,279 | 18,609,214 |
| Amount owing by associate |
| - | 270,270 | - |
| Cash and cash equivalents |
| 114,812,166 | 126,268,516 | 122,890,641 |
|
|
|
-------------------------- | -------------------------- | ----------------------- |
| Total current assets |
| 354,721,714 | 342,870,703 | 355,085,532 |
|
|
|
-------------------------- | -------------------------- | ----------------------- |
| Total assets |
| 381,858,539 | 351,692,923 | 380,621,897 |
|
|
|
============= | ============= | ============ |
| Equity | ||||
| Share capital |
| 12,500,000 | 12,500,000 | 12,500,000 |
| Share premium |
| 227,233,267 | 228,190,484 | 227,233,267 |
| Share based payment reserve |
| 117,799 | - | 117,799 |
| Exchange fluctuation reserves |
| 576,444 | (166,154) | 469,497 |
| Retained earnings |
| (3,630,253) | 1,378,256 | (2,725,443) |
|
|
| -------------------------- | -------------------------- | ----------------------- |
| Shareholders' equity |
| 236,797,257 | 241,902,586 | 237,595,120 |
| Minority interests |
| 2,536,015 | 1,709,637 | 1,845,682 |
|
|
|
-------------------------- | -------------------------- | ----------------------- |
| Total equity |
| 239,333,272 | 243,612,223 | 239,440,802 |
|
|
|
============= | ============= | ============ |
| Current liabilities | ||||
| Trade and other payables |
| 62,059,618 | 32,729,004 | 58,269,002 |
| Finance lease liabilities |
| 24,231 | 22,695 | 23,939 |
| Bank loans and borrowings | 10 | 10,984,343 | 7,384,226 | 17,381,300 |
| Current tax liabilities |
| 3,455,814 | 2,549,595 | 2,986,364 |
|
|
|
-------------------------- | -------------------------- | ----------------------- |
| Total current liabilities |
| 76,524,006 | 42,685,520 | 78,660,605 |
|
|
|
============= | ============= | ============ |
| Non-current liabilities | ||||
| Finance lease liabilities |
| 30,180 | 45,214 | 41,971 |
| Bank loans | 11 | 26,623,358 | 35,855,490 | 26,584,146 |
| Long term loans | 12 | 39,343,951 | 29,477,705 | 35,890,646 |
| Deferred tax liabilities |
| 3,772 | 16,771 | 3,727 |
|
|
| -------------------------- | -------------------------- | ----------------------- |
| Total non-current liabilities |
| 66,001,261 | 65,395,180 | 62,520,490 |
|
|
| -------------------------- | -------------------------- | ----------------------- |
| Total liabilities |
| 142,525,267 | 108,080,700 | 141,181,095 |
|
|
|
-------------------------- | -------------------------- | ----------------------- |
| Total equity and liabilities |
| 381,858,539 | 351,692,923 | 380,621,897 |
|
|
|
============= | ============= | ============ |
Statement of Changes in Equity
For the period ended 30 June 2008 - Unaudited
| Retained Earnings
US$ | Share Capital
US$ | Share Premium
US$ | Share-based Payment Reserve
US$ | Exchange Fluctuation Reserve
US$ | Total
US$ | |
| As at 1 January 2008 | (2,725,443) | 12,500,000 | 227,233,267 | 117,799 | 469,497 | 237,595,120 |
| Loss for the financial period | (904,810) | - | - | - | - | (904,810) |
| Currency translation differences
| - | - | - | - | 106,947 | 106,947 |
| Shareholders' equity as at 30 June 2008 | _________ (3,630,253) ========= | _________ 12,500,000 ========= | __________ 227,233,267 ========== | ________ 117,799 ========= | __________ 576,444 ========== | __________ 236,797,257 ========== |
For the period ended 30 June 2007 - Unaudited
| 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 |
| Profit for the financial period | 1,378,256 | - | - | - | 1,378,256 |
| Share issue costs | - | - | (9,309,516) | - | (9,309,516) |
| Currency translation differences
| - | - | - | (166,154) | (166,154) |
| Shareholders' equity as at 30 June 2007 | ___________ 1,378,256 =========== | __________ 12,500,000 ========== | __________ 228,190,484 ========== | __________ (166,154) =========== | ___________ 241,902,586 =========== |
Statement of Changes in EquityFor the period ended 31 December 2007 - Audited
| Retained Earnings US$ | Share Capital US$ | Share Premium US$ | Share-based Payment Reserve 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) |
| Fair value of share options granted | - | - | (652,536) | 652,536 | - | - |
| Fair value of share options exercised | 534,737 | - | - | (534,737) | - | - |
| Share issue costs | - | - | (9,614,197) | - | - | (9,614,197) |
| Currency translation differences didifferences | - | - | - | - | 469,497 | 469,497 |
| Shareholders' equity as at 31 December 2007 | __________ (2,725,443) ==========
| __________ 12,500,000 ========== | __________ 227,233,267 ========== | ________ 117,799 ======== | _________ 469,497 ========= | __________ 237,595,120 ========== |
Consolidated Cash Flow Statement
| Six months ended 30 June 2008 | Unaudited | Unaudited | Audited |
| Six months | Six months | 15 months | |
| to 30 June | to 30 June | ended 31 December | |
| 2008 | 2007 | 2007 | |
| US$ | US$ | US$ | |
| Cash Flows from Operating Activities | |||
| Net profit / (loss) for the period | 2,679,386 | 1,812,878 | (1,247,451) |
| Depreciation of property plant & equipment | 24,709 | 11,204 | 30,953 |
| Amortisation of leasehold land payment | 13,808 | - | 9,916 |
| Impairment loss on other investment | 1,956,233 | - | - |
|
| ---------------------- | -------------------------- | -------------------------- |
| Operating profit / (loss) before working capital changes | 4,674,136 | 1,824,082 | (1,206,582) |
| Changes in working capital: | |||
| Decrease in inventories | - | 33,188 | 2,167,598 |
| Increase in property development costs | (6,322,901) | (5,093,941) | (3,743,106) |
| Increase in leasehold land payment | (78,281) | - | (2,300,663) |
| Share of results from associated company | 743 | - | - |
| (Increase) / decrease in receivables | (1,465,756) | 634,064 | (5,079,922) |
| Increase in payables | 3,794,644 | 11,071,180 | 12,155,747 |
|
| ---------------------- | -------------------------- | ------------------------- |
| Net cash from operations | 602,585 | 8,468,573 | 1,993,072 |
| Tax paid |
(2,428,396) | (71,572) | (1,142,124) |
|
| ---------------------- | -------------------------- | ------------------------- |
| Net cash flows (used in) / from operating activities | (1,825,811) | 8,397,001 | 850,948 |
|
| ============= | =============== | ============== |
| Cash Flows From Investing Activities | |||
| Acquisition of subsidiaries, net of cash | - | (47,909,198) | (37,883,066) |
| Acquisition of land held for property | (853,673) | - | (13,212,866) |
| (Advances to) / Repayment from associate | - | (18,251) | 252,019 |
| Purchase of property, plant and equipment | (22,036) | - | (49,467) |
| Purchase of shares in associate | (611,048) | - | (12) |
| Purchase of other investment | (1,956,915) | - | - |
|
| ------------------------ | ------------------------- | ------------------------- |
| Net cash used in investing activities | (3,443,672) | (47,927,449) | (50,893,392) |
| ============== | ============== | ============== | |
| Cash Flows From Financing Activities | |||
| Net Proceeds of issues of share capital | - | 152,690,484 | 152,385,803 |
| Repayment of bank borrowings | (6,541,170) | (32,121,543) | (22,774,397) |
| Drawdown of borrowings | 3,453,305 | 43,926,194 | 41,067,791 |
| Repayment of finance lease liabilities | (11,499) | (94,087) | (96,086) |
| Repayment to amount owing to directors | - | (889,021) | (889,021) |
|
| ------------------------ | ------------------------- | ------------------------- |
| Net cash flows (used in) / from financing activities | (3,099,364) | 163,512,027 | 169,694,090 |
|
| ============== | ============== | ============== |
| NET CHANGE IN CASH AND CASH EQUIVALENTS DURING THE FINANCIAL PERIOD | (8,368,847) | 123,981,579 | 119,651,646 |
| Effect of changes in exchange rates | 106,947 | - | 469,497 |
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL PERIOD | 120,121,143 | - | - |
|
| ------------------------ | ------------------------- | ------------------------- |
| CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL PERIOD | 111,859,243 | 123,981,579 | 120,121,143 |
|
|
=========== | =========== | ============= |
NOTES TO THE INTERIM FINANCIAL STATEMENTS
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 Walkers House, 28-34 Hill Street, St. Helier, JE4 8PN. 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 Vietnam and Malaysia. The Group will typically invest in development projects at the pre-construction stage and also selectively invest in projects in construction and newly completed projects with potential capital appreciation.
2 Summary of Significant Accounting Policies
2.1 Basis of Preparation
The interim consolidated 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 interim consolidated financial statements have been prepared under the historical cost convention as modified for financial assets and financial liabilities at fair value.
The interim consolidated financial statements for the six months ended 30 June 2008 has been prepared in accordance with IAS 34, Interim Financial Reporting.
The interim consolidated financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2007 which has been prepared in accordance with IFRS.
Taxes on income in the interim periods 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 accounts.
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 2007 as described in those annual financial statements.
The goodwill of US$125.6 million as reported in the 30 June 2007 period has been reclassified as property development cost for the five property development assets in Malaysia, identified as the initial portfolio, and written down over the life of the development assets and when necessary, review for impairment.
The interim report and financial statements were approved by the Board of Directors on 15 August 2008.
2.2 Statement of Compliance
The interim consolidated financial statements of Aseana Properties Limited have been prepared in accordance with IFRS.
3 Segmental Information
Since Malaysia is the only location of the Group's current property development portfolio, these financial statements and related notes represent the results and financial position of the Group's primary business segment.
The Directors consider that the Group has only one reportable segment and the results and position of this segment is as disclosed in the Consolidated Income Statement and Consolidated Balance Sheet.
4 Seasonality
The Group's business operations are not materially affected by seasonal factors for the period under review.
5 Cost of Sales
The Initial Portfolio was acquired based on fair value of the development assets on the acquisition date and recorded as cost of acquisition. The cost of acquisition is written over the life of the development assets. The balance of the cost of acquisition is reviewed annually or more frequently and where necessary, further write downs are made for any impairment in value.
The fair value of the projects in the Initial Portfolio acquired in May 2007 for US$125.6 million was written down by US$6.1 million for the period compared to US$8.1 million for the 15 months ended 31 December 2007 and none for the same period last year.
The balance of the fair value of the projects in the Initial Portfolio as at 30 June 2008 is US$111.3 million (also see note 2.1 above).
6 Impairment Loss on Other Investment
The one-off write down of US$1.956 million on the investment of an associate, Excellent Bonanza Sdn. Bhd. is attributable to the redemption of redeemable preference shares by the major shareholder. The write-down will be recovered over the life of the development asset.
Excellent Bonanza Sdn. Bhd. is undertaking the KL Sentral Project comprising two office towers and a business hotel.
7 Taxation
| Six months | Six months | 15 months | |
| ended 30 June | ended 30 June | ended 31 December | |
| 2008 | 2007 | 2007 | |
| US$ | US$ | US$ | |
| Current period | 2,897,846 | 488,454 | 1,997,209 |
| Deferred tax | - | - | (14,478) |
|
|
------------------------ | ------------------------ | ------------------------ |
|
Total tax expense for the period |
2,897,846 |
488,454 |
1,982,731 |
|
|
============== | ============== | ============== |
The numerical reconciliation between the income tax expenses and the product of accounting results multiplied by the applicable tax rate is computed as follows:
| Six months | Six months | 15 months | |
| ended 30 June | ended 30 June | ended 31 December | |
| 2008 | 2007 | 2007 | |
| US$ | US$ | US$ | |
| Accounting profit / (loss) | 2,679,386 | 1,812,878 | (1,247,451) |
|
| ----------------------- | ----------------------- | -------------------------- |
| Income tax at a rate of 26% | 696,640 | 471,348 | (324,337) |
| Add : |
|
|
|
| Tax effect of expenses not deductible in determining taxable profit | 2,993,847 | 409,806 | 3,683,488 |
|
| |||
| Less : |
|
|
|
| Tax effect of income not taxable in determining taxable profit | (792,641) | (392,700) | (1,376,420) |
|
| ----------------------- | ----------------------- | -------------------------- |
| Total tax expense for the period | 2,897,846 | 488,454 | 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 effect on non deductible expenses is higher for this period because expenses at the Company's level have no claimable qualifying deductible taxable income.
Certain subsidiaries in Malaysia are subject to Malaysian income tax on income arising from property
development activities after deduction of allowable expenses.
8 (Loss) / Profit per Ordinary Share
| Six months | Six months | 15 months | |
| ended 30 June | ended 30 June | ended 31 December | |
| 2008 | 2007 | 2007 | |
| US$ | US$ | US$ | |
| (Loss) /profit for the period attributable to the equity holders of the parent | (904,810) | 1,378,256 | (3,260,180) |
| Weighted average number of shares: | |||
| Basic | 250,000,000 | 93,463,862 | 185,616,440 |
| Diluted | 250,584,900 | 93,463,862 | 186,050,708 |
| (Loss) / profit per share (US cents) : | |||
| Basic | (0.36) | 1.47 | (1.76) |
| Diluted | (0.36) | 1.47 | (1.76) |
Basic loss per share is calculated by dividing the net loss for the period of the Company by the weighted average number of ordinary shares in issue during the 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.
9 Investment in Associate
The increase in investment was due to the Group's subscription in the additional ordinary share capital of the Associate, Excellent Bonanza Sdn Bhd.
10 Bank Loans and Borrowings
| As at | As at | As at | |
| 30 June | 30 June | 31 December | |
| 2008 | 2007 | 2007 | |
| Secured | US$ | US$ | US$ |
| Revolving credit facility | 1,530,500 | - | 453,600 |
| Bank term loans | 6,500,920 | 5,097,289 | 14,158,202 |
| Bank overdraft | 2,952,923 | 2,286,937 | 2,769,498 |
|
| -------------------------- | -------------------------- | -------------------------- |
| 10,984,343 | 7,384,226 | 17,381,300 | |
|
| =============== | =============== | ================ |
The effective interest rates of the borrowings for the period ranged from 5.60% to 8.75% per annum.
The borrowings are secured by landed properties and corporate guarantee by the Company.
The borrowings are denominated in Ringgit Malaysia.
The bank term loans are repayable by monthly or quarterly installments, the revolving credit by bullet repayment on 30 September 2008 and the overdraft is repayable on demand.
The carrying amount of borrowings approximates its fair value at balance sheet date.
11 Bank Loans
| As at | As at | As at | |
| 30 June | 30 June | 31 December | |
| 2008 | 2007 | 2007 | |
| Secured | US$ | US$ | US$ |
| Outstanding bank term loans | 33,124,278 | 40,952,779 | 40,742,348 |
| Less: | |||
| Repayments due within twelve months | (6,500,920) | (5,097,289) | (14,158,202) |
|
| -------------------------- | -------------------------- | --------------------------- |
| Repayment due after twelve months | 26,623,358 | 35,855,490 | 26,584,146 |
|
| ================ | ================ | =============== |
The effective interest rates of the bank term loans for the period ranged from 7.50% to 8.75% per annum.
The bank term loans of the Group are secured by landed properties and corporate guarantee by the Company.
The bank term loans are denominated in Ringgit Malaysia.
The bank term loans are repayable by monthly or quarterly installments.
12 Long Term Loans
| As at | As at | As at | |
| 30 June | 30 June | 31 December | |
| 2008 | 2007 | 2007 | |
| US$ | US$ | US$ | |
| Advance | 37,343,951 | 27,477,705 | 33,890,646 |
| Concessional loan | 2,000,000 | 2,000,000 | 2,000,000 |
|
| ----------------------- | ----------------------- | ----------------------- |
|
| 39,343,951 | 29,477,705 | 35,890,646 |
|
| ============== | ============= | ============= |
The advance is from a special purpose vehicle to fund a development project known as One Mont' Kiara in Malaysia. The weighted interest rate of the loan was 6.04% as at the balance sheet date.
The concessional loan of US$2,000,000 is provided by the joint venture partner for one of the Mont' Kiara project for working capital purposes.
13 Dividends
The Company has not paid or declared any dividends during the financial period ended 30 June 2008.
14 Related Party Transactions
Transactions between the Group and the Company with Ireka Corporation Berhad and its group of companies ("ICB") are classified as related party transactions.
| Group US$ | |
| Advances from an ICB subsidiary | 3,061,000 |
| Interest paid to an ICB subsidiary | 1,397,017 |
| Payment of sales and administration fees to an ICB subsidiary | 96,422 |
| Payment of construction progress claims made by an ICB subsidiary | 34,084,943 |
| Site staff salary and fuel expenses paid to an ICB subsidiary | 227,076 |
| Payment of management fee to an ICB subsidiary | 2,362,968 |
15 Post Balance Sheet Events
On 7 July 2008, Aseana has acquired a strategic minority stake in Nam Long Investment Corporation ("Nam Long") for approximately US$18.03 million and at the same time, established an exclusive agreement with Nam Long to co-develop four projects in Ho Chi Minh City and also secured the option to develop other future high-end projects with Nam Long. Nam Long, a private property development company established in 1992, is a leading player in the real estate market in Ho Chi Minh city, Vietnam.
On 27 August 2008, Aseana has acquired a 51% interest in the development of the International Hi-Tech Health Park in the Binh Tan District of Ho Chi Minh City, Vietnam. Aseana will invest approximately US$27.6 million for the development, which has a total gross development cost of approximately of US$420 million. The project was licensed and approved by the People's Committee of Ho Chi Minh City on 10 July 2008 and is expected to commence development in the fourth quarter of 2008.
16 Directors' Responsibilities
The Directors confirm that this set of interim consolidated financial statements have been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report herein include the fair review of the information required by Disclosure and Transparency Rules 4.2.7 and 4.2.8.
17 Interim Statement
Copies of this interim statement are available on the Company's website www.aseanaproperties.com or from the Company's registered office at Walker House, PO Box 72, 28-34 Hill Street, St. Helier, Jersey, JE4 8PN.