30 April 2024

Aseana Properties Limited

("Aseana" or the "Company")

Full Year Results for the year ended 31 December 2023

Aseana Properties Limited (LSE: ASPL), a property developer in Malaysia, listed on the Main Market of the London Stock Exchange, announces its full year results for the year ended 31 December 2023.

For further information:

Aseana Properties Limited

Nick Paris, Non-Executive Chairman             [email protected]

                                                                        +44 (0)7738 470550

Grant Thornton UK LLP

Philip Secrett                                                   +44 (0)207 383 5100

CHAIRMAN'S STATEMENT

 

 

Dear Shareholders,

 

INTRODUCTION

 

While Asia is showing a recovery from Covid-19, Malaysian GDP growth was below target.  Economic conditions are trending stronger, and tourism numbers are rebounding; however, tourism visits have yet to achieve pre-Covid-19 levels.  As a result, prices of high end residential apartments appear to be forming a floor, and there is growing interest by prospective purchasers. However, the increase in demand has been tempered by a robust supply in Kuala Lumpur, higher interest rates since early 2023, and tighter borrowing restrictions imposed by banks on new borrowers.  In spite of these challenges, the Divestment team continues to diligently focus on selling the remaining assets.

 

COMMENTARY ON THE YEAR

 

Our focus has again been to minimise operating costs and net cash outflows at each of our properties whilst our Asset Divestment team seeks to dispose of them at reasonable prices. The sale of our Vietnam assets in 2022 significantly reduced our project debts, reducing our debt servicing costs even in the higher rate environment.

 

All of our shareholders are co-operating in the common aim of selling the Group's assets and returning as much capital as possible to all shareholders.

 

ECONOMIC OVERVIEW

 

In 2023, the Malaysian economy recorded growth of 3.7% (2022: 8.7%) according to the Malaysian government as demand for its exports, which the country's economy heavily relies on, slowed amid the tough global economic environment and weak commodity prices. But the growth is expected to edge up to 4.3% in 2024 according to the World Bank.

 

PERFORMANCE REVIEW

 

During 2023, the Company recorded a net loss after finance costs and before taxation of US$10.7 million compared to US$17.6 million for the previous financial year.  The Net Loss attributable to equity holders was US$8.7 million for FY 2023 (2022: US$15.9 million), and the loss per share was US cents 4.39 (2022: US cents 7.99).

 

Our NAV per Share as at 31 December 2023 fell to US cents 32 (2022: US cents 37).

 

Our net cash outflow for the year was US$3.0 million (2022: US$0.1 million inflow) which reflected foreign exchange gain effect of US$3.2 million (2022: US$2.9 million gain effect), net cash outflow from operating activities of US$5.5 million (2022: US$4.5 million) coupled with a cash outflow from investing and financing activities of US$0.7 million (2022: US$1.7 million inflow).

 

OUR ASSET DIVESTMENT PROGRAMME

 

Progress on asset sales continues, but it has proven difficult in the context of a rapidly rising interest rate environment, lack of liquidity in the market and its impact on the Malaysian economy.  The Malaysian economy delivered 3.7% GDP growth in 2023, well below the target growth rate.  Malaysia GDP is expected to improve further in 2024, but the growth outlook is subject to downside risks emanating from weaker-than-expected external demand, a further escalation in geopolitical conflicts, and declines in commodity production.  In 2023, there was a contraction in fund raising in the Malaysian equity and corporate bond markets along with negative capital flows in 2023 indicating a tighter liquidity environment.

 

On 30 June 2023, ICSD Ventures Sdn Bhd, an indirect subsidiary of the Company entered into a binding conditional agreement to sell the Sandakan Hotel Asset and the Harbour Mall Sandakan (collectively, the "Sandakan Assets").  Although the transaction was supposed to be completed by 30 September 2023 upon certain conditions being met, the transaction did not complete due to certain technicalities and subsequently, on 8 December 2023, Silver Sparrow Berhad ("SSB"), the issuer of the Medium Term Notes (the "SSB MTNs" or "MTNs") received a Notice of Default from the facility agent for the outstanding principal amount of approximately RM60.9 million (US$13.3 million).  The proceeds of the MTNs were used to finance the development of the Sandakan Assets.  Although SSB is still in default, it has kept current any and all default interest due.

 

On 6 April 2024, a Supplemental Sale and Purchase Agreement (the "Supplemental") was signed with the original purchaser mainly to extend the completion date in order to finalize the sale of the Sandakan Assets.

 

The Sandakan Assets have a gross sale consideration of MYR 165 million (approximately US$35 million) against the carrying amount of MYR 200 million (approximately US$43 million); an impairment of MYR 35 million (approximately US$7.7 million) was therefore recognized in the financial year.

 

The proceeds of the sale will be used to repay the outstanding principal.  According to the terms of the Supplemental, the purchaser shall bear the interest due in relation to the MTNs from the date of the Notice of Default to the date of repayment.  The repayment is expected to be made in approximately 30 days from the date of the signing of the Supplemental and the transaction is estimated to complete in 45 days from such repayment date.

 

We continue to work on the asset divestment program and expect progress in 2024.

 

NON-GOING CONCERN STATUS OF THE COMPANY

 

The Company has been winding up its assets since May 2015.  The Sandakan Assets are the subject of an ongoing sale process but the Medium Term Note programme which financed those assets has been in default since the capital was not repaid on the final repayment date of 8 December 2023.  In addition, the Company is experiencing a shortfall of working capital for which Directors have raised US$1 million in loans and have sought, but not received, further support from shareholders.  As a result, the Directors decided to have the financial statements prepared on a non-going concern basis at this time.  They do however expect this status to revert to a going concern again once the asset sales in Sandakan complete as the proceeds from them will enable the Sandakan MTN to be repaid in full along with all other debts owed by the Company.

 

DIS-CONTINUATION VOTE IN MAY 2025

 

The Company is required to hold another dis-continuation vote by the end of May 2025 so that shareholders can vote on the future of the Company.  The Directors therefore intend to call an Extraordinary General Meeting by the end of May 2025.

 

ACKNOWLEDGMENTS

 

Once again, I would like to thank my colleagues on the Company's Board of Directors, the staff operating at the level of the Group and the staff working at each of the properties that we own for their tireless work on behalf of the Group and its shareholders.  In addition, our external advisors and service providers provide invaluable assistance to the Company.

 

Thank you.

 

 

 

NICHOLAS JOHN PARIS

Chairman

 

30 April 2024

 

PROPERTY PORTFOLIO AS AT 31 DECEMBER 2023

 

 

Project	Type	Effective Ownership	Approximate Gross  Floor Area (sq m)	Approximate Land Area (sq m)
Completed projects
The RuMa Hotel and Residences Kuala Lumpur, Malaysia	Luxury residential tower and bespoke hotel	70.0%	40,000	4,000
Sandakan Harbour Square Sandakan, Sabah, Malaysia	Hotel and retail mall	100.0%	126,000	48,000
Undeveloped projects
Kota Kinabalu Seafront resort & residences	Land parcel approved for development of: (i) Boutique resort hotel and resort villas (ii) Resort homes	80.0%	n/a	172,900

 

 

PERFORMANCE SUMMARY

 

 

	Year ended 31 December 2023	Year ended 31 December 2022
Total Returns since listing
Ordinary share price	-91.50%	-86.00%
FTSE All-share index	27.02%	22.31%
FTSE 350 Real Estate Index	-54.13%	-57.47%
One Year Returns
Ordinary share price	-39.29%	-30.00%
FTSE All-share index	3.85%	-3.16%
FTSE 350 Real Estate Index	7.85%	-35.67%
Capital Values
Total assets less current liabilities (US$ million)	98.13	104.24
Net asset value per share (US$)	0.35	0.41
Ordinary share price (US$)	0.085	0.140
FTSE 350 Real Estate Index	430.26	398.93
Debt-to-equity ratio
Debt-to-equity ratio 1	116.18%	102.21%
Net debt-to-equity ratio 2	108.61%	91.50%
Loss Per Share
Loss per ordinary share    - basic (US cents)	(4.39)	(7.99)
- diluted (US cents)	(4.39)	(7.99)

 

Notes:

¹ Debt-to-equity ratio = (Total Borrowings ÷ Total Equity) x 100%

² Net debt-to-equity ratio = (Total Borrowings less Cash and Cash Equivalents ÷ Total Equity) x 100%

 

 

FINANCIAL REVIEW

 

 

INTRODUCTION

 

The Group recorded a consolidated comprehensive loss of US$11.2 million for the financial year ended 31 December 2023 (year ended 31 December 2022: US$20.4 million), largely due to the impairment to the carrying amount of Sandakan Assets, and the finance cost incurred in relation to The RuMa Hotel & Residences and the Sandakan Assets.

 

STATEMENT OF COMPREHENSIVE INCOME

 

The Group recognised revenue of US$1.2 million (2022: US$1.0 million).  Revenue of US$34.9 million has been deferred until control of sold units in the leaseback program is passed to the buyer.

 

The Group recorded a net loss before taxation of US$10.7 million (2022: US$17.6 million).  The loss was largely due to the impairment to the carrying amount of Sandakan Assets and the finance cost incurred in relation to The RuMa Hotel & Residences and the Sandakan Assets.

 

Net loss attributable to equity holders of the parent company was US$8.7 million (2022: US$15.9 million).  Tax recoverable for the year was US$0.2 million (2022: US$0.3 million tax expense).

 

The consolidated comprehensive loss was US$11.2 million (2022: US$20.3 million), which included a loss of US$0.8 million (2022: US$2.5 million) attributable to foreign currency translation differences from Malaysian operations due to a depreciation of the Malaysian Ringgit against the US Dollar during the year.

 

Basic and diluted loss per share were both US cents 4.39 (2022: US cents 7.99).

 

STATEMENT OF FINANCIAL POSITION

 

Total assets were US$137.4 million (2022: US$157.2 million), representing a decrease of US$19.8 million.  This was mainly due to an impairment to the carrying amount of Sandakan Assets for US$7.6 million and the decrease in the carrying amount in inventories due to the depreciation in Malaysian Ringgit.

 

Total liabilities were US$80.9 million (2022: US$89.4 million), representing a decrease of US$8.5 million.  This was mainly due to a decrease of US$4.7 million in in trade and other payables.

 

Net Asset Value per share was US$0.32 (31 December 2022: US$0.37).

 

CASH FLOW AND FUNDING

 

Cash used in operations before interest and tax paid was US$0.2 million (2022: US$1.1 million cash generation).

 

The Group generated net cash flow of US$0.2 million from investing activities (2022: US$10.5 million).

 

Some of the borrowings of the Group were repaid during the year.  As at 31 December 2023, the Group's gross borrowings stood at US$30.7 million (31 December 2022: US$32.9 million).  Net debt-to-equity ratio was 110.2% (31 December 2022: 91.5%).

 

Finance income was US$1.9 million for financial year ended 31 December 2023 (2022: US$2.0 million) which included accrued income of US$1.7 million (2022: US$1.5 million).  Finance costs were US$2.9 million (2022: US$3.3 million), which were mostly incurred by its operating assets.

 

EVENTS AFTER STATEMENT OF FINANCIAL POSITION DATE

 

Settlement with Ireka Corporation Bhd ("ICB")

 

The Group filed a claim against ICB on 21 October 2022 in the Malaysian Courts in relation to the Joint Venture Agreement with respect to the RuMa Hotel & Residences.

 

On 26 January 2024, a conditional settlement was reached between the Group and ICB, whereby:

·    ICB will transfer 38,837,504 shares of the Company held by it back to the Company;

·    ICB will also transfer its 30% shareholding in Urban DNA Sdn Bhd and The RuMa Hotel KL Sdn Bhd to the Group;

·    In return, the Company agreed to withdraw its claim against ICB; and

·    the settlement shall constitute the full and final settlement of all claims and debts between the parties.

 

The settlement agreement was conditional upon both parties obtaining their respective approvals.  It was duly approved by the shareholders of the Company in an Extraordinary General Meeting held on 27 February 2024.  And on 25 March 2024, ICB received the approval for the settlement from the Winding Up Court in Malaysia.  The conditions were thus satisfied and the settlement agreement had become binding.

 

Sandakan Assets sale

 

On 30 June 2023, ICSD Ventures Sdn Bhd, an indirect subsidiary of the Company entered into a binding conditional agreement to sell the Sandakan Assets, which comprises the Sandakan Hotel and the Harbour Mall Sandakan.  Although completion of the transaction was to take place by 30 September 2023 according to the agreement, it was still not completed on 31 December 2023 due to certain technicalities.  On 8 December 2023, Silver Sparrow Berhad ("SSB"), the issuer of Medium Term Notes (the "SSB MTNs" or "MTNs") received notice of default from the facility agent for the outstanding principal amount of approximately RM60.9 million (US$13.3 million).  The proceeds of the SSB MTNs were used to finance the development of the Sandakan Assets.  Although SSB is still in default, it has kept current any and all default interest due.

 

On 6 April 2024, a Supplemental Sale and Purchase Agreement (the "Supplemental") was signed with the original purchaser mainly to extend the completion date in order to finalize the sale of the Sandakan Assets.

 

The proceeds of the sale will be used to repay the outstanding principal.  According to the terms of the Supplemental, the purchaser shall bear the interest due in relation to the SSB MTNs from the date of Notice of Default to the date of repayment.  The repayment is expected to be made in approximately 30 days from the date of the signing of the Supplemental and the transaction is estimated to complete in 45 days from such repayment date.  The repayment is therefore expected to take place in May 2024 with the first payment made from the purchaser.

 

However, should the Group be unable repay the outstanding principal, the guarantors of the SSB MTN will have title over the pledged assets including the Sandakan Assets, as well as the other operating assets, rights, interests and benefits in relation to the Sandakan Assets.

 

The details of the security given by the Group under the SSB MTNs are disclosed in Note 30 to the financial statements.

 

Sale of RuMa Residences Units

 

On 29 April 2024, the Group entered into Sale and Purchase Agreements to sell 10 RuMa Residences units (the "Units") for a gross consideration of RM15.4 million (approximately US$3.3 million). The Units were pledged for commercial paper and/or medium term notes for a principal amount of RM12.5 million (US$2.7 million), which will be repaid by the proceeds of the sale.  The completion of sale is expected to take place 90 days from the signing date of the Sale and Purchase Agreements.  A deposit of RM1.5 million (US$0.3 million), representing 10% of the consideration, has been received by the Group.

 

DIVIDEND

 

No dividend was declared or paid in the financial years 2023 and 2022.

 

PRINCIPAL RISKS AND UNCERTAINTIES

 

A review of the principal risks and uncertainties facing the Group is set out in the Directors' Report of the Annual Report.

 

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 has been managed by the Board of Directors and the Board are closely involved in the day-to-day operation of the Group. 

 

A comprehensive discussion on the Group's financial risk management policies is included in the notes to the financial statements of the Annual Report.

 

 

 

NICHOLAS JOHN PARIS

Director

 

30 April 2024

 

 

CORPORATE SOCIAL RESPONSIBILITY ("CSR")

 

 

Aseana Properties is committed to making a positive difference in the world, whether it is for the local community or whether it is building a better working environment.  The Company believes that being socially and environmentally responsible is good for people, the planet and for business.  The following six core principles define the essence of corporate citizenship for the Company.

 

Managing Corporate Responsibility

The Board of Directors at Aseana Properties has oversight mechanisms, through corporate-level policies and standards to ensure an effective CSR programme is delivered in the interest of its employees, shareholders and the community at large.  It is determined to ensure that its CSR programme acts legally and responsibly on all matters and that the highest ethical standards are maintained.  The Board recognizes this as a key part of its risk, management strategy to protect the reputation of Aseana Properties and shareholders values are enhanced.

 

Employees

In the current changing economic environment, with competing demands and stress, the welfare of employees is critical in order to ensure they are productive, creative and innovative.  This is also in order to achieve the highest standard in the workplace.  The Board works hard to ensure that employees are treated fairly and with dignity because it is the right thing to do and also to get the best out of them.

 

Health and Safety

Aseana Properties considers Health and Safety to be important because it protects the well-being of employees, visitors and clients.  Looking after Health and Safety makes good business sense and the Company works hard to provide a healthy workplace environment for its staff, contractors and visitors.

 

Some of the organized efforts and procedures for reducing workplace accidents, risks and hazards, exposure to harmful solutions include:

·      Paying particular attention to the regular maintenance of equipment, plant and systems to ensure a safe working environment.

·      Providing sufficient information, instruction, training and supervision to enable all employees to avoid hazards and to contribute positively to their own safety and safe performance at work.

 

Stakeholders

Aseana Properties works collaboratively with its stakeholders to improve services and to ensure client satisfaction.  The Company is committed to meaningful dialogue and encourages stakeholder participation through stakeholder events, roadshows, briefings, conference calls and timely release of annual reports.  Aseana Properties also maintains an updated and informative website, www.aseanaproperties.com that is accessible to stakeholders and members of the public.

 

Environmental Management

Aseana Properties believes that any commitment to a more environmentally sustainable world has to start at home, and to this end, it challenges itself to work in an environmentally responsible manner and to find new ways to reduce its carbon footprint.  It also works with consultants such as architects to look at how they can be more environmentally friendly by incorporating natural elements such as water, greenery, light and air into its projects.  Maintaining and sustaining local Malaysian heritage is the essence of the RuMa Hotel so decorative elements like batik prints throughout are recycled from a local batik factory.  The Kelelai (a type of bamboo) ornaments and ceiling panels at the pool area of Level 6 of the hotel are cultivated from a dying weaving art by Kelantanese women.

 

The RuMa Hotel and Residences have both been separately awarded the Green Building Index (GBI) Provisional Gold Rating having successfully met all the GBI Criteria under each category for Energy Efficiency, Indoor Environment Quality, Sustainable Site Planning & Management, Materials & Resources, Water Efficiency and Innovation.  The GBI is Malaysia's industry recognized green rating tool for buildings to promote sustainability in the building industry.

 

In 2023, a number of initiatives covering sustainability and social impact were implemented at the RuMa Hotel, such as switching to biodegradable bathroom amenities sourced locally, upgraded to refillable and larger-sized bottles for bathroom amenities, recycling coffee capsules, replaced plastic drinking bottles with glass bottles, and converted guest room vanity lights to LED.

 

All the green initiatives recently culminated in the Global Sustainable Tourism Council (GSTC) certification awarded to the RuMa Hotel, making it the first hotel in Peninsular Malaysia to achieve this recognition.  Globally recognized, the certification evaluates a hotel's ability to maintain the highest levels of sustainability by examining the policies, practices, and overall impact on the environment, local culture, and communities.  This accolade underscores the management's dedication to advancing sustainability and resilience.

 

More recently, The RuMa Hotel is also focused on sustaining its efforts through initiatives such as composting coffee grounds, implementing wet and dry waste segregation, and transitioning to biodegradable bedroom slippers.  In addition, it is upgrading its hotel car park facilities by installing charging stations to cater to hybrid and electric vehicles.  Furthermore, it is also introducing a contactless and ticketless interfaces at the car park to enhance convenience and efficiency , as well as reducing carbon footprint by digitizing the internal paperwork.

 

Community

Furthermore, The RuMa Hotel is committed to promoting staff engagement and well-being through various activities such as sports activities, departmental decoration competitions, and CSR initiatives.  The RuMa Hotel's CSR initiatives aim to foster community engagement and social responsibility.  Zoo Visitation involves staff members in habitat cleaning activities, promoting environmental awareness, while the "CSR Raya Shopping" activity aimed at connecting staff members with the community, especially those in need during the Hari Raya season and fostering empathy.  Mental Health Screening & Breast Cancer Awareness Talks address mental health issues and promote awareness among all the associates, aligning with social impact objectives.  Visiting native villages to creates job opportunities and promotes cultural understanding, preserving and celebrating cultural diversity.

 

Employment

Apart from creating a positive workplace culture, encouraging team spirit, and fostering overall wellness among the staff members, recently The RuMa Hotel engaged in CSR events such as "Back to School with Orphans" and "Underprivileged Children's Home" in collaboration with the local esteemed organizations.  Additionally, the International Women's Day was also celebrated by highlighting the contributions of female staff members at all levels within the hotel.

 

Aseana Properties understands the importance of community engagement both for the communities themselves but also for giving staff more meaningful experiences by tapping into their professional skills and capabilities.

 

 

 

BOARD OF DIRECTORS

 

 

NICHOLAS JOHN PARIS

NON-EXECUTIVE INDEPENDENT CHAIRMAN

 

Nicholas (Nick) John Paris was re-appointed as a Non-Executive Director of Aseana Properties Limited in September 2019 and became Chairman on 29 July 2020 following the retirement of Gerald Ong.  He had previously been a Non-Executive Director of Aseana from 22 June 2015 to 20 March 2019.

 

Nick is a fellow of the Institute of Chartered Accountants England & Wales and a Chartered Alternative Investment Analyst.

 

Nick is currently a Managing Director of Dolphin Capital Investors Limited which is quoted on the AIM market of the London Stock Exchange and a Non-Executive Director of Fondul Proprietatea, a fund listed on the Bucharest and London Stock Exchanges.

 

 

THOMAS HOLLAND

NON-EXECUTIVE INDEPENDENT DIRECTOR

 

Thomas (Tom) Holland was appointed as a Non-Executive Independent Director of Aseana Properties Limited in November 2020.  Tom has been based in Asia for 27 years with experience working in leadership positions in a number of financial firms.  Prior to founding his current platform, Development Finance Asia, a boutique investment firm, Tom was head of Asia for Cube Capital and a senior investment manager for Income Partners Asset Management.  Tom has a track record of successfully managing and transacting in private investments in Vietnam, Malaysia, China, Indonesia, Myanmar, Mongolia and Cambodia.

 

 

ROBERT DONALD MINTY

NON-EXECUTIVE INDEPENDENT DIRECTOR

 

Robert (Bob) Minty was appointed as a Non-executive Independent Director of Aseana Properties in August 2023.  Bobby is an experienced commercial and finance professional and a qualified chartered accountant.  Resides and educated in Jersey, he became a chartered accountant and possesses the Certificate in ESG Investing awarded by the CFA Institute.

 

Bobby was a founding shareholder in ICECAP Limited, a regulated corporate service provider in Jersey.  As part of his role within ICECAP, Bobby has extensive experience as a board member on a wide variety of Jersey companies ranging from funds to property holding companies.  He also has extensive knowledge of cross-jurisdictional structures in Jersey and Africa through his 10 years of experience within the ICECAP group as investor and financial controller.

 

Before founding ICECAP, he worked in PricewaterhouseCoopers in Jersey with a range of businesses from property holding groups to listed venture capital funds.

 

More recently, Bobby assisted an ultra-high-net-worth private family office to establish a significant and sustainable operating business overseas.

HOCK CHYE TAN

NON-EXECUTIVE INDEPENDENT DIRECTOR

 

Hock Chye Tan was appointed as a Non-Executive Independent Director of Aseana Properties in March 2023.  Hock Chye is a Chartered Global Management Accountant (CGMA) of the Association of International Certified Professional Accountants, a Fellow Member (FCMA) of the Chartered Institute of Management Accountants and a Chartered Accountant (CA(M)) with the Malaysian Institute of Accountants.  He obtained an MBA from Oklahoma City University and has attended a Harvard Premier Management Program.  He also holds a Diploma in Commerce from the TAR University College.

 

He has worked in Papua New Guinea, Singapore and Malaysia in both private and public companies and held senior management and Board positions.  Currently, he is the National Assistant Treasurer of SME Association of Malaysia, Treasurer of the Malaysia Cross Border E-Commerce Association and a member of the Finance and Capital Market Committee of the Chinese Chamber of Commerce and Industry of Kuala Lumpur and Selangor.

 

 

HELEN WONG SIU MING

NON-EXECUTIVE NON-INDEPENDENT DIRECTOR

 

Helen Wong Siu Ming was first appointed as a Non-Executive Independent Director of Aseana Properties in June 2019 and as its Divestment Director in September 2019.  In 2021, the Nomination and Remuneration Committee developed an incentive scheme for the Divestment team.  As a result, her status has changed to Divestment Director.  Helen has over 29 years of financial and operational experience in the United States and Asia.  She is Chief Executive Officer and founder of LAPIS Global Limited, a Hong Kong based investment management and advisory firm.  She was formerly the CEO of Cushman & Wakefield Capital Asia where she established the Asia Investment Management and Investment Banking platform.

 

In addition, Helen has held numerous executive positions including Chief Operating Officer of Lazard Asia Investment Management HK Limited, Managing Director of IFIL Asia (renamed EXOR S.p.A), where she was responsible for the Asian direct investment activities and Chief Financial Officer of the Singapore listed investment vehicle, Pacific Century Regional Developments Limited.

 

Helen also has extensive experience in infrastructure and transport through her prior roles at the Provisional Airport Authority, Hong Kong and the Port Authority of New York & New Jersey.

 

 

 

 

DIRECTORS' REPORT

 

 

The Directors present their report together with the audited financial statements of Aseana Properties Limited (the "Company") and its subsidiary undertakings (together with the "Group") for the year ended 31 December 2023.

 

Principal Activities

 

The principal activities of the Group were the development of upscale residential and hospitality projects in Malaysia.  The Group is now focused on carrying out its divestment program which consists of selling the Group's remaining Malaysian assets, repaying its debts and distributing the remaining proceeds to its shareholders.

 

Business Review and Future Developments

 

The consolidated statement of comprehensive income for the year is set out on page 39.  A review of the development and performance of the business has been set out in the Chairman's Statement and the Financial Review reports.

 

Objectives and Strategy

 

When the Company was launched in 2007, the Board considered it desirable that Shareholders should have an opportunity to review the future of the Company at appropriate intervals.  The Company will hold another discontinuation vote at a general meeting in May 2025, meanwhile the Company continues to seek for disposal of its assets in a measured manner.

 

To the extent that the Company has not disposed of all of its assets by May 2025, Shareholders will be provided with an opportunity to review the future of the Company, which would include the option for shareholders to vote for the continuation of the Company.

 

Principal Risks and Uncertainties

 

The Group's business was property development in Malaysia and Vietnam.  Since exiting Vietnam, its principal risks are therefore related solely to the property market in Malaysia.  More detailed explanations of these risks and the way they are managed are contained under the heading of Financial and Capital Risk Management Objectives and Policies in Note 4.1 to the financial statements.

 

 

Other risks faced by the Group in Malaysia include the following:

 

Economic	Inflation, economic recessions and movements in interest rates could affect property development activities.
Strategic	Incorrect strategy, including timing, could lead to poor returns for shareholders.
Regulatory	Breach of regulatory rules could lead to suspension of the Company's Stock Exchange listing and financial penalties.
Law and regulations	Changes in laws and regulations relating to planning, land use, development standards and ownership of land could have adverse effects on the business and returns for the shareholders.
Tax regimes	Changes in the tax regimes could affect the tax treatment of the Company and/or its subsidiaries in these jurisdictions.
Management and control	Changes that cause the management and control of the Company to be exercised in the United Kingdom could lead to the Company becoming liable to United Kingdom taxation on income and capital gains.
Operational	Failure of the Company's internal financial reporting system and disruption to the business, or to that of third party service providers, could lead to an inability to provide accurate reporting and monitoring leading to a loss of confidence from the shareholders.
Financial	Inadequate controls by the Company or third party service providers could lead to a misappropriation of assets.  Inappropriate accounting policies or failure to comply with accounting standards could lead to misreporting or breaches of regulations or a qualified audit report.

 

The Board seeks to mitigate and manage these risks through continual review, policy setting and enforcement of contractual rights and obligations.  It also regularly monitors the economic and investment environment in Malaysia, its only remaining market.  Details of the Group's internal controls are described on page 30.

 

 

LITIGATION

 

Claim Against Ireka Corporation Bhd ("ICB")

 

A claim was filed in the Malaysian Courts on 21 October 2022 by ASPL M9 Limited ("ASPL M9"), a subsidiary of the Company, against ICB in relation to the Joint Venture Agreement between ASPL M9 Limited, ICB and Urban DNA Sdn Bhd (the latter being an indirect subsidiary of the Company) for the development and construction of the RuMa Hotel & Residences.

 

On 26 January 2024, the Company (including ASPL M9) reached a conditional settlement with ICB whereby ICB will transfer 38,837,504 shares in the Company including its 30% shareholdings in the two joint venture companies that own and operate The Ruma Hotel & Residences in Kuala Lumpur to the Company.  In exchange, the Company agreed to withdraw its claim against ICB.  The settlement shall constitute the full and final settlement of all claims and debts owed between the parties.

 

The settlement agreement was conditional upon both parties obtaining their respective approvals.  The Company held its EGM on 27 February 2024, in which the settlement was duly approved by the shareholders.  On 25 March 2024, ICB received its approval for the settlement from the Winding Up Court in Malaysia.  The conditions were thus satisfied and the settlement agreement had become binding.

 

Details of the conditional settlement and the results of the EGM were announced by the Company on 29 January and 27 February 2024 respectively.

 

Claim Against Ireka Engineering & Construction Sdn Bhd ("IECSB")

 

A claim was filed in the Malaysian Courts on 2 August 2022 by Amatir Resources Sdn Bhd ("ARSB", an indirect wholly owned subsidiary of the Company) against IECSB (a wholly owned subsidiary of ICB).  Since filing the claim, an interim liquidator was appointed for IECSB on 27 March 2023 with the view to commence the creditor's voluntary winding up process.

 

On 19 April 2023, ARSB obtained Judgment in Default against IECSB for the sum of RM7,198,890 (approximately US$1.6 million) and interest thereon at the rate of 8% per annum calculated on a daily basis from 1st January 2020 to the date of full payment.

 

A Statement of Affairs of IECSB was provided by the Liquidators at a Creditor Meeting held on 11 May 2023.  As an unsecured creditor, it became clear that recovering the sums obtained by ARSB in the Judgment in Default would not be feasible.  This amount had been fully impaired in the year ended 31 December 2022.

 

Results and Dividends

 

The results for the year ended 31 December 2023 are set out in the attached financial statements.

 

No dividends were declared nor paid during the financial year under review.

 

Share Capital

 

No shares were issued in 2023.  Further details on share capital are stated in Note 23 to the financial statements.

Directors

 

The following were Directors of Aseana who held office throughout the financial year and up to the date of this report:

 

·    Nicholas John Paris - Chairman

·    Thomas Holland

·    Monica Lai Voon Huey (not re-elected at the Company's AGM on 30 May 2023)

·    Robert Donald Minty (appointed 25 August 2023)

·    Hock Chye Tan (appointed 3 March 2023)

·    Helen Wong Siu Ming

·    Mark George Nisbet (alternate director to Robert Minty and appointed 27 February 2024)

 

Directors' Interests

 

None of the directors in office at the end of the financial year had any interest in shares in the Company during the financial year.

 

Management

 

The routine operations of the Company are supervised by the Chairman and the Board with a small team of finance professionals directly engaged to run our finances and operations.  Ms Helen Wong was nominated as the Divestment Director with a specific focus to sell the Company's remaining assets, in line with the Divestment Policy.

 

Employees

 

The Company had no executive Directors during the year, and a team of four finance professionals were engaged to run our finances and operations.  The subsidiaries of the Group had a total of 244 employees as at 31 December 2023, of which 22 and 218 were employed by (i) the Sandakan hotel asset and Harbour Mall Sandakan, and (ii) The RuMa Hotel and Residences in Kuala Lumpur respectively.

 

Non-going concern

 

The Company will continue until May 2025 at which time another continuation vote will be held by shareholders.  In connection with, or at the same time as, the proposal that the Company be wound up voluntarily the Board shall be entitled to make proposals for the reconstruction of the Company.  Until then, the Company will continue to seek to dispose of its assets in an orderly manner.

 

As explained in Note 2.1 to the financial statements, it refers to the assessment made by the Directors including the uncertainties regarding the divestment of certain assets will be completed as planned and the loans and borrowing can be discharged in a timely manner, that it may not be appropriate to prepare the financial statements on the going concern basis but instead on a non-going concern basis at this time.

 

Creditors Payment Policy

 

The Group's operating companies are responsible for agreeing on the terms and conditions under which business transactions with their suppliers are conducted.  It is the Group's policy that payments to suppliers are made in accordance with all relevant terms and conditions.  Trade creditors at 31 December 2023 amounted to 320 days (2022: 349 days) of property development cost and interest expenses accrued by the Group.

 

Financial Instruments

 

The Group's principal financial instruments comprise cash balances, balances with related parties, other payables, receivables and loans and borrowings that arise in the normal course of business.  The Group's Financial and Capital Risk Management Objectives and Policies are set out in Note 4.1 to the financial statements.

 

Directors' Liabilities

 

Subject to the conditions set out in the Companies (Jersey) Law 1991 (as amended), the Company has arranged appropriate Directors' and Officers' liability insurance to indemnify the Directors against liability in respect of proceedings brought by third parties.  Such provisions remain in force at the date of this report.

 

Statement of Directors' Responsibilities

 

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.  Companies (Jersey) Law 1991 requires the Directors to prepare financial statements for each financial year.  Under that law the Directors are required to prepare the financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by European Union.

 

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities, financial position and of the profit or loss of the Group for that year.  In preparing these financial statements, the Directors are required to:

 

·    select suitable accounting policies and then apply them consistently;

·    make judgements and estimates that are reasonable, relevant and reliable;

·    ensure that the financial statements comply with IFRSs; and

·    prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Group and the Company will continue in business.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and to enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991.  The Directors are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The Directors are also responsible for the maintenance and integrity of the Company's website on the internet.  However, information is accessible in many different countries where legislation governing the preparation and dissemination of financial statements may differ from that applicable in the United Kingdom and Jersey.

 

 

The Directors of the Company confirm that to the best of their knowledge that:

 

·    the financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and

 

·    the sections of this Report, including the Chairman's Statement, Director's Review, Financial Review and Principal Risks and Uncertainties, which constitute the management report include a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

 

 

Disclosure of Information to Auditor

 

So far as each person who was a Director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware.  Having made enquiries of fellow Directors, each Director has taken all the steps that he is obliged to take as a Director in order to have made himself aware of any relevant audit information and to establish that the auditor is aware of that information.

 

Re-appointment of Auditor

 

The auditor, PKF Littlejohn LLP, has expressed their willingness to continue in office.  A resolution proposing their re-appointment will be tabled at the forthcoming Annual General Meeting.

 

Board Committees

 

Information on the Audit Committee is included in the Corporate Governance section of the Annual Report on pages 25 to 32.

 

Annual General Meeting

 

The tabling of the 2023 Annual Report and Financial Statements to shareholders will be at an Annual General Meeting ("AGM") that is currently expected to be held by 31 July 2024.

 

During the AGM, investors will be given the opportunity to question the board and to meet with them thereafter.  They will be encouraged to participate in the meeting.

 

On behalf of the Board

 

 

 

THOMAS HOLLAND

Non-Executive Independent Director

 

30 April 2024

 

REPORT OF DIRECTORS' REMUNERATION

 

 

Directors' Emoluments

 

The Company has no executive Directors, solely a few employees who are mainly focused on the divestment process.  The Independent Directors in the Board of Directors are responsible for setting the framework and reviewing compensation arrangements for all non-executive Directors before recommending the same to the Board for approval.  The Independent Directors assess the appropriateness of the emoluments on an annual basis by reference to comparable market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high calibre Board.

 

During the year, the Directors received the following emoluments in the form of fees from the Company:

 

Directors	Year ended 31 December 2023 (US$)	Year ended 31 December 2022 (US$)
Nicholas John Paris (Chairman of the Board)	59,000	70,000
Helen Wong Siu Ming5 (Chairlady of the Audit Committee)	77,000	77,000
Thomas Holland	48,000	48,000
Monica Lai Voon Huey2	19,912	48,000
Christopher Henry Lovell1	-	22,286
Robert Donald Minty3	-	-
Hock Chye Tan4	39,867	-

 

1	Christopher Lovell was not re-elected at the Company's 2022 Annual General Meeting on 17 June 2022.
2	Monica Lai was not re-elected at the Company's 2023 Annual General Meeting on 30 May 2023.
3	Robert Minty was appointed on 25 August 2023 and did not have director fee entitlement during the year.  He is also a director in ICECAP (Secretaries) Limited ("ICECAP"), the company secretary of the Company; therefore, the company secretarial fee paid to ICECAP was regarded as a  related party transaction and amounted to US$13,333 during the relevant period, despite that such fee was negotiated on an arm's length basis.
4	Hock Chye Tan was appointed on 3 March 2023.
5	Apart from director fee, Helen Wong received additional remuneration of US$300,000 (2022: US$300,000) in relation to her service in the Company's asset divestment program.

 

ASSET DIVESTMENT EXPENSES

 

In 2022, the independent Directors of the Company approved a programme aimed at incentivising and retaining the Company's key personnel (including Ms. Helen Wong who is the Divestment Director).  This fee is calculated at 1.1% of the gross proceeds less any agent commissions, if any have been used, from sale of asset and is payable in cash once the Company receives the sale proceeds to those personnel who have been involved in that transaction.

 

Share Options

 

The Company did not operate any share option schemes during the years ended 31 December 2022 and 2023.

 

Share Price Information

 

·    High for the year         -           US$0.140

·    Low for the year         -           US$0.080

·    Close for the year        -           US$0.085

 

Pension SchemeS

 

No pension schemes exist in the Company.

 

Service Contracts

 

There are no service contracts in existence between the Company and any of the Directors.  Each Director was appointed by a letter of appointment that states their appointment subject to the Articles of Association of the Company which set out the main terms of their appointment.

 

 

 

THOMAS HOLLAND

Non-executive Independent Director

 

30 April 2024

 

 

CORPORATE GOVERNANCE STATEMENT

 

 

The Financial Conduct Authority requires all companies with a Premium Listing to comply with The UK Corporate Governance Code (the "Code").  Aseana Properties is a Jersey incorporated company with a Standard Listing on the UK Listing Authority's Official List and is therefore not subject to the Code.  The following explains how the principles of governance are applied to the Company.

 

THE BOARD

 

The Company currently has a Board of five non-executive directors, including the non-executive Chairman.  Helen Wong is currently classified as a non-independent Director.

 

The brief biographies of the following Directors appear on pages 15 to 16 of this Annual Report:

 

·    Nicholas John Paris (Non-Executive Chairman)

·    Thomas Holland

·    Robert Donald Minty (appointed 25 August 2023)

·    Hock Chye Tan (appointed 3 March 2023)

·    Helen Wong Siu Ming

 

The routine operations of the Company are supervised by the Chairman and the Board and a team of finance professionals were directly engaged to run our finances and operations.  Ms Helen Wong was nominated as the Divestment Director with a specific focus to sell the Company's remaining assets, in line with the Divestment Policy.

 

 

Role of the Board of Directors

 

The Board's role is to provide entrepreneurial leadership to the Company, within a framework of prudent and effective controls, enabling risks to be assessed and managed.  The Board sets the Company's strategic objectives, monitors and reviews the Company's operational and financial performance, ensures the Company has sufficient funding, and examines and approves disposal of the Company's assets in a controlled, orderly and timely manner.  The Board also sets the Company's values and standards and ensures that its obligations to its shareholders and other stakeholders are met.  The Board has adopted a divestment strategy since 2015.

 

Appropriate level of directors' and officers' liability insurance is maintained by the Company.

 

The Board currently has the power to make purchases on behalf of the Company of its own Ordinary Shares provided up to a maximum aggregate 29,783,780 Ordinary Shares (representing approximately 14.99 percent of the Company's issued ordinary share capital (excluding ordinary shares held in treasury)).

 

 

Meetings of the Board of Directors

 

The Board meets at least four (4) times a year and at such other times as the Chairman shall require.  During the year ended 31 December 2023, the Board met seven (7) times and their respective attendance are as follows:

 

Name of Directors	Attendance
Nicholas John Paris	7/7
Thomas Holland	7/7
Monica Lai Voon Huey (not re-elected at the Company's AGM)	6/6
Robert Donald Minty (appointed 25 August 2023)	1/1
Hock Chye Tan (appointed 3 March 2023)	4/4
Helen Wong Siu Ming	7/7

 

To enable the Board to discharge its duties effectively, all Directors receive accurate, timely and clear information, in an appropriate form and quality, including Board papers distributed in advance of Board meetings.  The Board periodically will receive presentations at Board meetings relating to the Company's business and operations, significant financial, accounting and risk management issues.  All Directors have access to the advice and services of the Company Secretary and advisers, who are responsible to the Board on matters of corporate governance, board procedures and regulatory compliance.

 

Board Balance and Independence

 

Following the resignation of our former Development Manager as of 30 June 2019, a Chief Executive Officer was appointed and a consulting/secondment agreement was signed between Aseana and the former Development Manager.  In January 2020, the CEO resigned, a de-merger exercise was proposed and as a result, the consulting/secondment agreement was terminated with effect from 31 May 2020.  Since then, ASEANA became a self-managed company.  The Board consists solely of non-executive directors of which Nicholas Paris is the non-executive Chairman.  The Board considers the majority of Directors to be independent, being independent of management and also having no business relationships which could interfere materially with the exercise of their judgement.

 

The Chairman is responsible for leadership of the Board, ensuring effectiveness in all aspects of its role and setting its agenda.  Matters referred to the Board are considered by the Board as a whole and no individual has unrestricted powers of decision.  Together, the Directors bring a wide range of experience and expertise in business, law, finance and accountancy, which are required to successfully direct and supervise the business activities of the Company.

 

Performance Appraisal

 

The Board undertakes an annual evaluation of its own performance and that of its Committees and individual Directors.  During 2023, the evaluation concluded that the performance of the Board, its Committees and each individual Director was and remains effective and that all Directors demonstrate full commitment in their respective roles.  The Directors are encouraged to continually attend training courses at the Company's expense to enhance their skills and knowledge in matters that are relevant to their role on the Board.  The Directors also receive updates on developments of corporate governance, the state of economy, management strategies and practices, laws and regulations, to enable effective functioning of their roles as Directors.

Re-election of Directors

 

The Company's Articles of Association states that all Directors shall submit themselves for election at the first opportunity after their appointment, and shall not remain in office for longer than three years since their last election or re-election without submitting themselves for re-election.  At the Annual General Meeting held on 30 May 2023, Monica Lai retired by rotation and offered herself for re-election by the shareholders.  She was not re-elected at the AGM.

 

At the forthcoming Annual General Meeting, Robert Minty will be offering himself for re-election having recently been appointed, Thomas Holland and Helen Wong will be retiring by rotation and offering themselves for re-election.

 

Board Committees

 

The Board has established the Audit Committee which deals with the specific aspect of the Company's affairs, under a written term of reference which is reviewed annually.  Necessary recommendations are then made to the Board for its consideration and decision-making.  No one, other than the committee chairman and members of the relevant committee, is entitled to be present at a meeting of board committees, but others may attend at the invitation of the board committees for presenting information concerning their areas of responsibility.  Copies of the terms of reference are kept by the Company Secretary and are available on request at the Company's registered office at Osprey House, Old Street, St. Helier, Jersey, JE2 3RG, Channel Islands.

 

Audit Committee

 

The Audit Committee consists of three members and is currently chaired by Helen Wong.  The other members are Thomas Holland and Hock Chye Tan (appointed in March 2023).  It is intended that Hock Chye Tan will become the Chairman of the Committee during 2024.  The Committee members have no links with the Company's external auditor; Thomas Holland and Hock Chye Tan are independent Directors.  The Board considers that collectively the Audit Committee has sufficient recent and relevant financial experience with the ability to discharge its duties properly, through extensive service on the Boards and Audit Committees of other listed companies.

 

Meetings of THE AUDIT COMMITTEE

 

The Committee meets at least twice a year and at such other times as the Chairman of the Audit Committee shall require.  Any member of the Audit Committee or the auditor may request a meeting if they consider that one is necessary.  The Committee met three times during the year and their respective attendance are as follows:

 

Name	Attendance
Helen Wong Siu Ming	3/3
Hock Chye Tan	3/3
Thomas Holland	3/3

 

Representatives of the auditor may attend by invitation.

 

 

The Committee is responsible for:

 

·          monitoring, in discussion with the auditor, the integrity of the financial statements of the Company, any formal announcements relating to the Company's financial performance and reviewing significant financial reporting judgements contained in them;

 

·          reviewing the Company's internal financial controls and risk management systems;

 

·          making recommendations to the Board in relation to the appointment, re-appointment and removal of the external auditor and approving the remuneration and terms of engagement of the external auditor to be put to the shareholders for their approval in general meetings;

 

·          reviewing and monitoring the external auditor's independence and objectivity and effectiveness of the audit process, the Audit Committee recognises that the Code and AIC Code provisions for FTSE 350 companies to put the external audit contract out to tender at least every 10 years.  Though the Company is not a member of the FTSE 350, the Audit Committee considers this to be best practice (the current auditor has been the auditor since 2020);

 

·          developing and implementing policy on engagement of the external auditor to supply non-audit services; and

 

·          reporting to the Board any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken.

 

Since the start of the financial year ending 31 December 2023, the Audit Committee performed its duties as set out in the terms of reference.  The main activities carried out by the Audit Committee encompassed the following:

 

·          reviewing the audit plan with the Group's Auditor;

 

·          reviewing and discussing the Audit Committee Report with the Group's Auditor;

 

·          reviewing the draft Audited Financial Statements as contained in the draft Annual Report together with the Group's Auditor before tabling to the Board for consideration and approval;

 

·          reviewing other published financial information including the half year results and results announcements before tabling to the Board for consideration and approval;

 

·          considering the independence of the auditor; and

 

·          reviewing the auditor's performance and made a recommendation for the reappointment of the Group's auditor by shareholders.

 

 

The Significant Issues

 

The Audit Committee considered the following key issues in relation to the Group's financial statements during the year:

 

·          Valuation of inventory assets - The Audit Committee considered and discussed the valuation of the Group's inventory assets as at 31 December 2023 and to identify potential impairment.

 

·          Receivables from a related party - The Audit Committee noted the financial distress in Ireka Corporation Berhad, a related party to the Group and which the Group maintained a net receivable from.  The Audit Committee assessed the potential impairment; however, no impairment was considered necessary as such balance is believed to be recoverable through the in-kind settlement pursuant to the settlement agreement.  Details of the settlement were explained under Events After Statement of Financial Position Date in Financial Review section of the Annual Report.

 

·          Non-going concern - The Audit Committee considered both the current circumstances of Company and its financial requirements for the 12 months from the approval date of the financial statements and have concluded that there are uncertainties on the Company's ability to remain as a going concern.  Consequently, the financial statements have been prepared on a non-going concern basis at this time.  For details, please refer to Note 2.1 to the financial statements.

 

Nomination & REMUNERATION Committee ("NRC")

 

The responsibilities of the NRC were integrated into the Board's responsibilities.  Given the Company is currently in its divestment phase, all Directors are non-executive on fixed fees, save for the asset divestment incentive where appropriate.

 

During the year ended 31 December 2023, the Board of Directors carried out the functions which are summarised below:

 

·          regularly reviewing the structure, size and composition (including diversity, skills, knowledge and experience) of the Board and making recommendations to the Board with regard to any change;

 

·          considering succession plans for Directors and the re-appointment or re-election of any Directors at the conclusion of their specified term of office or retiring in accordance with the Company's Articles of Association;

 

·          identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise;

 

·          considering any matter relating to the continuation in office of any Director at any time;

 

·          determining and agreeing with the Board the framework for the remuneration of the Directors; and

 

·          setting the remuneration for all Directors albeit since all Directors are non-executive, the principles of the Code in respect of executive directors' remuneration are not applicable and as such there is no policy for executive compensation.

 

As a Standard Listed entity, the Group is now subject to certain Diversity and Inclusion targets. These include (i) at least 40% of the individuals on its board of directors are women, (ii) at least one senior position (chair, chief executive, senior independent director or chief financial officer) on its board of directors is held by a woman, and (iii) at least one individual on its board of directors is from a minority ethnic background. Whilst some of these requirements were met for all or part of the financial period, given the Group is in divestment phase, no formal diversity policy has been adopted.

 

Financial Reporting

 

The Board aims to present a fair, balanced and understandable assessment of the Company's position and prospects in all reports to shareholders, investors and regulatory authorities.  This assessment is primarily provided in the half-yearly report and the Annual Report through the Chairman's Statement, Financial Review Statement and Directors' Report.

 

The Audit Committee has reviewed the significant reporting issues and judgements made in connection with the preparation of the Group's financial statements including significant accounting policies, significant estimates and judgements.  The Audit Committee has also reviewed the clarity, appropriateness and completeness of disclosures in the financial statements.

 

Internal Audit

 

The Board has confirmed that the systems and procedures employed, provide sufficient assurance that a sound system of risk management and internal control is maintained.  An internal audit function specific to the Company is therefore considered not necessary given the Company is in divestment phase of its life.  However, the Directors will continue to monitor if such need is required.

 

Auditor

 

The Audit Committee's responsibilities include monitoring and reviewing the performance and independence of the Company's Auditor, PKF Littlejohn LLP who had been re-appointed on 13 November 2023.

 

Pursuant to audit and ethical standards, the auditor is required to assess and confirm to the Board their independence, integrity and objectivity.  The Auditor had carried out this assessment and considered themselves to be independent, objective and in compliance with the Ethical Standard for Auditors published by the UK Financial Reporting Council and the Code of Ethics issued by the Institute of Chartered Accountants in England and Wales.

 

RISK MANAGEMENT AND Internal Control

 

The Board is responsible for the effectiveness of the Company's risk management and internal control systems and is supplied with information to enable it to discharge its duties.  Such systems are designed to meet the particular needs of the Company and to manage rather than eliminate the risk of failure to meet business objectives and can only provide reasonable, and not absolute, assurance against material misstatement or loss.

 

During the year, the Board discharged its responsibility for risk management and internal control through the following key procedures:

 

·          clearly defined delegation of responsibilities to employees of the Company, including authorisation levels for all aspects of the business;

 

·          regular and comprehensive information provided to the Board covering financial performance and key business indicators;

 

·          a detailed system of budgeting, planning and reporting which is approved by the Board and monitoring of results against budget with variances being followed up and action taken, where necessary; and

 

·          regular visits to operating units and projects by the Board.

 

The Board has established frameworks, policies and procedures to comply with the requirement of the Bribery Act 2010 (the "Bribery Act") and Market Abuse Regulation ("MAR").  In respect of the former, the Company has a legal and compliance function for the purposes of implementing the anti-corruption and anti-bribery policy.  Training and briefing sessions were conducted for the senior management and employees.  Compliance reviews are carried out as and when required to ensure the effectiveness of the policy.  In respect of dealing by employees and Directors of the Company, the Company has a Dealing Code which imposes restrictions on dealings in its securities by Persons Discharging Managerial Responsibilities ("PDMR") and certain employees who have been told the clearance procedures apply to them.  The Company also has a Group-Wide Dealing Policy and a Dealing Procedures Manual.  These policies have been designed to ensure that the PDMR and other employees of the Company and its subsidiaries do not misuse or place themselves under suspicion of misusing information about the Group which they have and which is not public.

 

Relationship with Shareholders

 

The Board is committed to maintaining good communications with shareholders and has designated the Chairman and certain members of its Board as the principal spokespersons with investors, analysts, fund managers, the press and other interested parties.  The Board is informed of material information provided to shareholders and is advised on their feedback.  The Board has also developed an understanding of the views of major shareholders about the Company through meetings and teleconferences conducted by the financial adviser.  In addition, the Company seeks to regularly update shareholders through stock exchange announcements, press releases and participation in roadshows.

 

To promote effective communication, the Company has a website, www.aseanaproperties.com through which shareholders and investors can access relevant information.

 

 

Substantial Shareholders

 

The Board was aware of the following direct and indirect interests comprising a significant amount of more than 3% issued share capital of the Company as at 31 December 2023:

 

	NUMBER OF ORDINARY SHARES HELD	PERCENTAGE OF ISSUED SHARE CAPITAL
Ireka Corporation Berhad	45,837,504	23.07%
Legacy Essence Limited and its related parties	36,628,282	18.43%
LIM Advisors	26,644,192	13.41%
SIX SIS	18,366,118	9.24%
Progressive Capital Partners	14,393,372	7.24%
Dr. Thong Kok Cheong	12,775,532	6.43%
Credit Suisse.	12,024,891	6.05%

 

Annual General Meeting ("AGM")

 

The AGM is the principal forum for dialogue with shareholders.  At and after the AGM, investors are given the opportunity to question the Board and seek clarification on the business and affairs of the Group.  Mr. Nicholas John Paris, non-executive Chairman, Mr. Thomas Patrick Holland and Ms. Helen Siu Ming Wong, attended the 2023 AGM in person, which was held on 30 May 2023 at the Company's registered office.

 

Notices of the AGM and related papers are sent out to shareholders in good time to allow for full consideration prior to the AGM.  Each item of special business included is accompanied by an explanation of the purpose and effect of a proposed resolution.  The Chairman declares the number of votes received for, against and withheld in respect of each resolution after the shareholders and proxies present have voted on each resolution.  An announcement confirming whether all the resolutions have been passed at the AGM is made through the London Stock Exchange.

 

On behalf of the Board

 

 

 

NICHOLAS JOHN PARIS

Chairman

 

30 April 2024

 

 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ASEANA PROPERTIES LIMITED

 

Opinion

 

We have audited the consolidated financial statements of Aseana Properties Limited and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the consolidated financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

In our opinion, the consolidated financial statements:

 

·    give a true and fair view of the state of the group's affairs as at 31 December 2023 and of its loss for the year then ended;

·    have been properly prepared in accordance with IFRS as adopted by the European Union; and

·    have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.

 

Basis for opinion

 

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Emphasis of matter - basis of preparation

 

We draw attention to note 2.1 to consolidated financial statements of the group which explain the directors reasons for preparing the consolidated financial statements on a basis other than a going concern.

 

Our opinion is not modified in respect of this matter.

 

Our application of materiality

 

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate, on the consolidated financial statements as a whole.

 

 

	Consolidated financial statements 2023	Consolidated financial statements 2022
Overall materiality	US$750,000	US$1,200,000
Performance materiality	US$450,000	US$720,000
Basis of materiality	c. 0.5% of gross assets	c. 0.7% of gross assets
Rationale	A key determinant of the group's value is property assets held within inventory. Due to this, the key area of focus in the audit is the valuation of inventory. On this basis, we consider gross assets to be a critical financial performance measure for the group given that it is a key metric used by management, investors, analysts and lenders.

 

We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes.

 

For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was between US$412,000 and US$749,000 (2022: between US$5,000 and US$630,000). Certain components were audited to a local statutory audit materiality that was also less than our overall group materiality.

 

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above US$37,500 (2022: US$60,000) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.

 

Our approach to the audit

 

As part of designing our audit, we determined materiality and assessed risk of material misstatement in the consolidated financial statements. In particular, we looked at areas involving significant accounting estimate and judgment by the directors and considered future events that are inherently uncertain such as the carrying value of inventory. We also addressed the risk of management override of controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

 

The group has eight trading companies consolidated within in the group financial statements, all of which are based in Malaysia. We identified two significant components, which were subject to a full scope of audit. Significant Malaysian components were audited by the PKF network firm in Malaysia under our direction and supervision. We reviewed component audit working papers electronically.

 

Key audit matters

 

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

Key Audit Matter	How our scope addressed this matter
Carrying value of inventories
Refer to note 20 Inventories.   The group owns a portfolio of land held for property development and completed property units in Malaysia. The total carrying value of inventories for the group was US$118.4 million.   Of the year-end inventories the following two assets were not subject to a third-party valuation: Harbour Mall Sandakan and Sandakan Hotel Asset ('Sandakan assets') c.US$36m   The carrying value of the Sandakan assets at the year end is written down to the agreed purchase price at c.US$36m with an impairment loss of US$7.7m recognised in the Consolidated Statement of Comprehensive Income. A Sales Purchase Agreement was signed on 30 June 2023 by an interested party, the timeline of which was not adhered to thus rendering the agreement null and void. A Supplemental Agreement was signed on 6 April 2024 with the intention to complete the sales transaction within 75 days from the signing of the Supplemental Agreement (Note 35). As at the date of this audit report, the sales transaction is ongoing and no deposit nor form of payment has been made.   Land asset c.US$5.4m   The land asset with a carrying value of c.US$5.4 million as at 31 December 2023 was valued by management.   The valuation of the above-mentioned inventories requires significant judgment and estimation by management. Inaccuracies in key assumptions and inputs could result in a material misstatement in the consolidated financial statements.   Due to the significance of the estimates and judgements involved, we deemed the carrying value of the above-mentioned inventories to be a significant risk and a key audit matter.	Our work in this area included:   We reviewed the signed Sale Purchase Agreement (and subsequent Supplemental Agreement) stating the potential buyer's interest in purchasing Sandakan assets. Further, we assessed the buyer's credentials using publicly available information; and   We compared recent land sales which had similar characteristics to the land asset held by the entity and assessed whether there were any indicators that the land asset was impaired.   Based on the audit work performed:   ·    there is inherent uncertainty in relation to the completion of the sale process for the Sandakan assets until such time as the proceeds are received, the Sandakan assets are being recorded at net realisable value; and ·    there are no indicators of impairment to the year-end carrying value of the above noted inventories.

 

Other information

 

The other information comprises the information included in the annual report, other than the consolidated financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the consolidated financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the consolidated financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

 

Matters on which we are required to report by exception

 

We have nothing to report in respect of the following matters in relation to which the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:

 

·    proper accounting records have not been kept by the parent company, or proper returns adequate for our audit have not been received from branches not visited by us; or

·    the consolidated financial statements are not in agreement with the accounting records and returns.

 

Responsibilities of directors

 

As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the consolidated financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the consolidated financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

 

Auditor's responsibilities for the audit of the consolidated financial statements

 

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

 

 

·    We obtained an understanding of the group and the sector in which it operates to identify laws and regulations that could reasonably be expected to have a direct effect on the consolidated financial statements. We obtained our understanding in this regard through discussions with management, industry research, and application of cumulative audit knowledge and experience of the sector. We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including the significant component audit team, and remained alert to any indicators of fraud or non-compliance with laws and regulations throughout the audit.

·    We determined the principal laws and regulations relevant to the group in this regard to be those arising from:

o The Companies (Jersey) Law 1991;

o Disclosure Guidance and Transparency Rules;

o The Bribery Act 2010;

o Market Abuse Regulation;

o Anti-money laundering legislations;

o Local tax and employment law; and

o IFRSs as adopted by European Union.

·    We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group with those laws and regulations. These procedures included, but were not limited to:

o Making enquiries of management;

o Reviewing minutes of board meetings;

o Reviewing accounting ledgers; and

o Reviewing Regulatory News Service announcements

·    We also identified the risks of material misstatement of the consolidated financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the carrying value of inventory could indicate potential management bias. We addressed this by challenging the key assumptions and judgements made by management when auditing that significant accounting estimate.

·    As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

·    In our audit procedures, we have considered matters of non-compliance with laws and regulations, including fraud at the group and component levels. We have performed audit procedures on all material components within the group.

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the consolidated financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the consolidated financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

 

Use of our report

 

This report is made solely to the company's members, as a body, in accordance with our engagement letter dated 13 November 2023.  Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

 

 

Mark Ling (Engagement Partner)                                                                         15 Westferry Circus

For and on behalf of PKF Littlejohn LLP                                                                     Canary Wharf

Recognised Auditor                                                                                                    London E14 4HD

 

30 April 2024

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2023

 

			2023	2022
	Notes		US$'000	US$'000
Continuing operations
Revenue	5		1,205	980
Cost of sales	6		(677)	(640)
Gross profit			528	340
Other income	7		14,544	10,971
Administrative expenses	11		(1,069)	(2,433)
Other operating expenses	11		(13,989)	(17,465)
Impairment of inventory	11		(7,668)	(8,620)
Gain on sale of discontinued operations			-	2,702
Foreign exchange loss	8		(1,976)	(1,695)
Operating loss			(9,630)	(16,200)
Finance income			1,860	1,970
Finance costs			(2,912)	(3,344)
Net finance costs	10		(1,052)	(1,374)
Net loss before taxation	11		(10,682)	(17,574)
Taxation	12		209	(302)
Loss for the year			(10,473)	(17,876)

Other comprehensive income/(loss), net of tax

Items that are or may be reclassified subsequently to profit or loss

Foreign currency translation differences for foreign operations	13		(755)	(2,459)
Total other comprehensive loss for the year	13		(755)	(2,459)
Total comprehensive loss for the year			(11,228)	(20,335)
Loss attributable to:
Equity holders of the parent company	14		(8,732)	(15,867)
Non-controlling interests	15		(1,741)	(2,009)
Loss for the year			(10,473)	(17,876)
Total comprehensive loss attributable to:
Equity holders of the parent company			(9,696)	(18,451)
Non-controlling interests			(1,532)	(1,884)
Total comprehensive loss for the year			(11,228)	(20,335)
Loss per share Basic and diluted (US cents)			(4.39)	(7.99)

 

 

 

 

The notes to the financial statements form an integral part of the financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2023

 

			2023	2022
	Notes		US$'000	US$'000
Non-current assets
Property, plant and equipment	16		198	79
Intangible assets	17		578	578
Right of use	18		-	-
Deferred tax assets	19		4,518	4,723
Total non-current assets			5,294	5,380
Current assets
Inventories	20		118,351	132,573
Trade and other receivables	21		9,078	11,575
Prepayments			141	376
Current tax assets			221	10
Cash and cash equivalents	22		4,273	7,259
Total current assets			132,064	151,793
TOTAL ASSETS			137,358	157,173
Equity
Share capital	23		10,601	10,601
Share premium	24		208,925	208,925
Capital redemption reserve	25		1,899	1,899
Translation reserve	26		(26,524)	(25,436)
Accumulated losses			(131,513)	(122,781)
Shareholders' equity			63,388	73,208
Non-controlling interests	15		(6,936)	(5,404)
Total equity			56,452	67,804
Non-current liabilities
Trade and other payable	27		-	36,440
Total non-current liabilities			-	36,440
Current liabilities
Trade and other payables	27		48,281	18,089
Amount due to non-controlling interests	28		1,891	1,981
Loans and borrowings	29		1,471	1,595
Medium term notes	30		29,263	31,264
Total current liabilities			80,906	52,929
Total liabilities			80,906	89,369
TOTAL EQUITY AND LIABILITIES			137,358	157,173

 

 

The financial statements were approved on 30 April 2024 and authorised for issue by the Board and were signed on its behalf by

 

 

 

 

                                                                                                                                                           

THOMAS HOLLAND                                              HELEN SIU MING WONG

Director                                                                        Director

 

30 April 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The notes to the financial statements form an integral part of the financial statements.