28 April 2023

 

Aseana Properties Limited

("Aseana" or the "Company")

 

Full Year Results for the year ended 31 December 2022

 

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 2022.

 

For further information:

 

Grant Thornton UK LLP 

Philip Secrett / Samuel Littler   +44(0)20 7383 5100

 

CHAIRMAN'S STATEMENT

 

 

Dear Shareholders,

 

INTRODUCTION

 

Asia began its recovery from the COVID-19 pandemic from the middle of 2022 onwards, as both Malaysia and Vietnam (where we used to own properties) steadily lifted their restrictions on population movement and international travel. As a result, economic activity, and most importantly, the movement of first the domestic populations and then foreign tourists began to accelerate. These are very important to the Company as our assets comprised a hospital and development land in Vietnam (which have now been sold), a 5-star hotel and luxury residential apartments in Kuala Lumpur, a shopping mall and a hotel in Sandakan and undeveloped beachfront land in Sabah.

 

COMMENTARY ON THE YEAR

 

Our focus has 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 significantly reduced the project debts, reducing our debt servicing costs.

 

I am pleased that 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 2022, the Malaysian economy recorded growth of 8.7% (2021: 3.1%) according to the Malaysian government as the economy rebounded from the easing of COVID-19 restrictions but this forecast is expected to slow to 4.0% in 2023 according to the World Bank.

 

PERFORMANCE REVIEW

 

During 2022, the Company recorded a net loss after finance costs and before taxation of US$17.6 million compared to a net loss before taxation of US$5.8 million (restated) for the previous financial year.  The Net Loss attributable to equity holders was US$15.9 million for FY 2022, (2021 (restated): US$5.8 million), and the loss per share was US cents 7.99 (2021 (restated): US cents 2.90).

 

Our NAV per Share as at 31 December 2022 fell to US cents 37 (2021 (restated): US cents 46).

 

Our net cash inflow for the year was US$0.1 million (2021 (restated): US$1.7 million) which reflected foreign exchange gain effect of US$ 2.9 million (2021 (restated): US$1.1 million loss effect), net cash outflows from operating activities of US$4.5 million (2021 (restated): US$9.8 million) offset by a cash inflow from investing and financing activities of US$1.7 million (2021 (restated): US$12.7 million).

 

 

OUR ASSET DIVESTMENT PROGRAMME

 

Progress on asset sales had been very difficult during the Covid restrictions but in March 2022, we completed the sale of our two assets in Vietnam for a gross price of US$95 million.  We received a gross consideration of US$18.3 million in cash of which US$8.9 million was used to pay down project debts owed in Malaysia.  The balance was used for working capital purposes within the Group.

 

Although we had to terminate a conditional agreement to sell the unsold apartments in The RuMa Residences in August 2022, other potential buyers have since appeared, and progress is being made to sell these and our other major assets.  Announcements will be made about these when such discussions convert into detailed sale terms and signed commitments.

 

DIS-CONTINUATION VOTE IN MAY

 

The Company is required to hold another dis-continuation vote by the end of May 2023 so that shareholders can vote on the future of the Company. The Directors therefore intend to call an Extraordinary General Meeting on 30 May 2023 and current expectations are to also hold the Annual General Meeting on the same date.

 

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.

 

On 3 March 2023, Hock Chye Tan joined the Board of Directors and the Audit Committee as an independent non-executive Director based in Malaysia.  He is a corporate and finance professional bringing valuable expertise as a qualified accountant.

 

Thank you.

 

 

 

NICHOLAS JOHN PARIS

Chairman

 

28 April 2023

 

 

PROPERTY PORTFOLIO AS AT 31 DECEMBER 2022

 

 

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
Divested projects
Phase 1: City International Hospital, International Healthcare Park, Ho Chi Minh City, Vietnam	Private general hospital	73.04%	48,000	25,000
Other developments in International Healthcare Park, Ho Chi Minh City, Vietnam (formerly International Hi-Tech Healthcare Park)	Commercial development with healthcare theme	73.04%	972,000	351,000

 

 

PERFORMANCE SUMMARY

 

 

	Year ended 31 December 2022	Year ended 31 December 2021
Total Returns since listing
Ordinary share price	-86.00%	-80.00%
FTSE All-share index	22.31%	-26.30%
FTSE 350 Real Estate Index	-57.47%	-33.88%
One Year Returns
Ordinary share price	-30.00%	-37.50%
FTSE All-share index	-3.16%	14.55%
FTSE 350 Real Estate Index	-35.67%	26.19%
Capital Values (2021 restated)
Total assets less current liabilities (US$ million)	104.24	126.09
Net asset value per share (US$)	0.41	0.45
Ordinary share price (US$)	0.14	0.20
FTSE 350 Real Estate Index	398.93	620.13
Debt-to-equity ratio (2021 restated)
Debt-to-equity ratio 1	102.21%	92.52%
Net debt-to-equity ratio 2	91.50%	84.52%
(Loss)/ Earnings Per Share (2021 restated)
Earnings per ordinary share - basic (US cents)	-7.99	-2.90
- diluted (US cents)	-7.99	-2.90

 

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$20.4 million for the financial year ended 31 December 2022 (year ended 31 December 2021 (restated): US$12.6 million), largely due to impairment provided to inventory and amount due from a related party.

 

STATEMENT OF COMPREHENSIVE INCOME

 

The Group recognised revenue of US$1.0 million (2021 (restated): US$0.6 million).  Revenue of US$36.4 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$17.6 million (2021 (restated): US$5.8 million).  The loss was largely due to impairment provided to inventory and amount due from a related party.

 

Net loss attributable to equity holders of the parent company was US$15.9 million (2021 (restated): US$5.8 million).  Tax expenses for the year was US$0.3 million (2021 (restated): US$0.1 million).

 

The consolidated comprehensive loss was US$20.3 million (2021 (restated): US$12.6 million), which included a loss of US$2.5 million (2021 (restated): US$3.6 million) attributable to foreign currency translation differences for foreign operations due to an appreciation of the US Dollar against the Ringgit, during the year.

 

Basic and diluted loss per share were both US cents 7.99 (2021 (restated): US cents 2.90).

 

STATEMENT OF FINANCIAL POSITION

 

Total assets were US$157.2 million (2021 (restated): US$190.4 million), representing a decrease of US$31.9 million.  This was mainly due to disposal of asset held for sale with a carrying amount of US$14.5 million and a decrease of US$14.5 million in inventories that includes an impairment of US$8.6 million.

 

Total liabilities were US$89.4 million (2021 (restated): US$101.4 million), representing a decrease of US$12.0 million.  This was mainly due to a decrease of US$11.1 million in medium term notes which was partially repaid during the year.

 

Net Asset Value per share was US$0.37 (31 December 2021 (restated): US$0.46).

 

 

CASH FLOW AND FUNDING

 

Cash generated from operations before interest and tax paid was US$1.1 million (2021 (restated): US$6.2 million cash used).

 

The Group generated net cash flow of US$10.5 million from investing activities (2021 (restated): US$0.7 million).

 

Some of the borrowings of the Group were repaid from divestment proceeds.  As at 31 December 2022, the Group's gross borrowings stood at US$32.9 million (31 December 2021 (restated): US$44.0 million).  Net debt-to-equity ratio was 91.50% (31 December 2021 (restated): 84.52%).

 

 

Finance income was US$2.0 million for financial year ended 31 December 2022 (2021 (restated): US$2.0 million) which included accrued income of US$1.5 million (2021 (restated): US$1.3 million).  Finance costs were US$3.3 million (2021 (restated): US$3.6 million), which were mostly incurred by its operating assets.

 

DIVIDEND

 

No dividend was declared or paid in the financial years 2022 and 2021.

 

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

 

28 April 2023

 

 

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.

 

The bathroom amenities at The RuMa Hotel were designed with sustainability in mind and incorporated biodegradable materials such as bamboo, corn starch, and recycled paper for dry amenities like toothbrushes, cotton swabs, soap dishes, and shower caps.  Additionally, the wet amenities range was created exclusively for The RuMa Hotel and is both eco-friendly and able to be disposed of in an environmentally responsible manner.  By opting for biodegradable bathroom amenities, we can contribute to the protection of our planet and the promotion of a more sustainable future.

 

The RuMa Hotel recognizes that promoting gender equality is crucial to our sustainability efforts, and we have incorporated the promotion of gender equality in the workplace as a key component of our sustainability initiatives.  Our aim is to foster a more diverse, inclusive, and equitable work environment by implementing clear policies and guidelines that promote gender equality, such as equal pay for equal work, flexible work arrangements, and a workplace that is free from harassment and discrimination.  We are committed to providing our employees with training and education on gender equality issues, including unconscious bias and gender sensitivity, to ensure that everyone in our organization understands the importance of this initiative.

 

Community

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 Managing Director of Myanmar Investments International Limited and a Managing Director of Dolphin Capital Investors Limited of which both are 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 on 23 November 2020.  Tom has been based in Asia for 25 years with experience working in leadership positions in a number of financial firms.  Tom has been active in Vietnam since 2006, having led the investments in large real estate developments as well as privatising state owned enterprises.  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 private investments in Vietnam, Malaysia, China, Indonesia, Myanmar, Mongolia and Cambodia.

 

He holds a number of non-executive director roles for financial services, logistics and consumer companies across Asia.

 

 

MONICA LAI VOON HUEY

NON-EXECUTIVE NON-INDEPENDENT DIRECTOR

 

Monica Lai was appointed as a Non-Executive Non- Independent Director of Aseana Properties Limited in September 2019.  Monica is the Group Chief Executive Officer of Eccaz Sdn Bhd which is involved in property development and urban transportation solutions.

 

Monica graduated from City University, London with a Bachelor of Science (Hons) Degree in Accountancy and Economics and worked for EY London and KPMG Hong Kong.  Her professional qualifications include The Institute of Chartered Accountants England & Wales, The Malaysian Institute of Accountants and the Malaysian Institute of Taxation.

 

 

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 CFO of SEATech Ventures Corp., a start-up company listed on the US OTC Pink Market.  He is also the National Assistant Treasurer of SME Association of Malaysia and Treasurer of the Malaysia Cross Border E-Commerce Association.

 

 

HELEN WONG SIU MING

NON-EXECUTIVE INDEPENDENT DIRECTOR

 

Helen Wong Siu Ming was appointed as a Non-Executive Independent Director of Aseana Properties in June 2019.  Helen has over 28 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 2022.

 

Principal Activities

 

The principal activities of the Group were the development of upscale residential and hospitality projects in Malaysia and Vietnam. 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 40.  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 2023, 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 2023, 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 divesting its assets in Vietnam in 2022, 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	The COVID-19 pandemic and many related movement control measurements in Malaysia lasted until 2022, which continued to affect our key properties as our hotel suffered closure and low occupancy rates and our retail mall was also forced to close; at times, only food operations were permissible at our shopping mall.  The overall effect of low occupancy rates and reduced operating income had a negative impact on our revenues, costs and valuations.  Failure of the Company's accounting 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 shareholders' confidence.
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.
Going Concern	Failure to sell the assets in a timely manner may result in inadequate financial resources to continue operational existence and to meet financial liabilities and commitments.

 

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 29.

 

 

LITIGATION

 

Claim Against Ireka Corporation Bhd ("ICB")

 

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

 

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

 

A civil suit 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 has been appointed for IECSB according to the announcement at the Bursa Malaysia dated 27 March 2023 with reference to a creditor's voluntary winding up.  For details, please refer to the aforementioned announcement at:

 

https:/www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3339385

 

On 19 April 2023, ARSB obtained Judgment in Default against IECSB for the sum of RM 7,198,890 (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. 

 

Results and Dividends

 

The results for the year ended 31 December 2022 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 2022.  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

·    Hock Chye Tan (appointed 3 March 2023)

·    Helen Wong Siu Ming

 

Directors' Interests

 

The interests of the directors in the Company's shares as at 31 December 2022 and as at the date of this report were as follows:

 

DIRECTOR	ORDINARY SHARES OF US$0.05 EACH
	As at 31 Dec 2021	As at 31 Dec 2022
Nicholas John Paris	26,644,192	-
Christopher Henry Lovell	48,000	-
Monica Lai Voon Huey	36,628,282	36,628,282

 

Notes: Nicholas John Paris is no longer associated with the holdings of clients of LIM Advisors Limited.  Christopher Henry Lovell ceased to be a director during the year.  Monica Lai Voon Huey is associated with the holdings of Legacy Essence Limited.

 

None of the other 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 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.

 

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 239 employees as at 31 December 2022, of which 22 and 213 were employed by (i) the Sandakan hotel asset and Harbour Mall Sandakan, and (ii) The RuMa Hotel and Residences in Kuala Lumpur respectively.

 

going concern

 

The Company will continue until May 2023 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 a measured manner.

 

As disclosed in Note 2.1 to the financial statements, it refers to the assumptions made by the Directors including the uncertainty regarding the divestment of certain assets will be completed as planned and the loans and borrowing can be discharged in a timely manner when concluding that it remains appropriate to prepare the financial statements on the going concern basis.

 

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 2022 amounted to 349 days (2021: 591 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 all information required to be disclosed by the Disclosure and Transparency Rules 4.1.8 to 4.1.11 issued by the Financial Services Authority of the United Kingdom.

 

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 24 to 31.

 

Annual General Meeting

 

The tabling of the 2022 Annual Report and Financial Statements to shareholders will be at an Annual General Meeting ("AGM") that is currently expected to be held on 30 May 2023.

 

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

 

28 April 2023

 

 

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 2022 (US$)	Year ended 31 December 2021 (US$)
Nicholas John Paris (Chairman of the Board)	70,000	70,000
Helen Wong Siu Ming (Chairman of the Audit Committee)	77,000	77,105
Thomas Holland	48,000	48,058
Monica Lai Voon Huey	48,000	48,000
Christopher Henry Lovell1	22,286	48,082

 

1	Christopher Lovell was not re-elected at the Company's 2022 Annual General Meeting on 17 June 2022.

 

Share Options

 

The Company did not operate any share option schemes during the years ended 31 December 2021 and 2022.

 

 

Share Price Information

 

·    High for the year         -           US$0.20

·    Low for the year         -           US$0.12

·    Close for the year        -           US$0.14

 

Pension SchemeS

 

No pension schemes exist in the Company.

 

Service Contracts

 

In view of the non-executive nature of the directorships, 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 his appointment subject to the Articles of Association of the Company which set out the main terms of his appointment.

 

 

 

THOMAS HOLLAND

Non-executive Independent Director

 

28 April 2023

 

 

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.

 

The brief biographies of the following Directors appear on pages 14 to 15 of this Annual Report:

 

·    Nicholas John Paris (Non-Executive Chairman)

·    Thomas Holland

·    Monica Lai Voon Huey

·    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 2022, the Board met ten (10) times and their respective attendance are as follows:

 

Name of Directors	Attendance
Nicholas John Paris	10/10
Thomas Holland	9/9 *
Monica Lai Voon Huey	9/9 *
Christopher Henry Lovell	5/5
Helen Wong Siu Ming	9/9 *

 

*   Each of Thomas Holland, Monica Lai Voon Huey, Helen Wong Siu Ming were excused from one of the meetings during the year due to potential conflicts of interest

 

Hock Chye Tan was appointed to the Board in March 2023 and therefore does not appear in the above.

 

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, ASEANA has been a self-managed company.  The Board consists solely of non-executive directors of which Nicholas Paris is the non-executive Chairman.  Monica Lai Voon Huey is a representative of Legacy Essence Limited and she was a representative of Ireka Corporation Berhad until her resignation from the latter's Board in November 2021; she is therefore classified as a Non-Independent Non-Executive Director of the Company.  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 2022, 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 17 June 2022, Christopher Lovell retired by rotation and offered himself for re-election by the shareholders. He was not re-elected at the AGM.

 

At the forthcoming Annual General Meeting, Hock Chye Tan will be offering himself for re-election having recently been appointed, and Nicholas John Paris will be retiring by rotation and offering himself for re-election.

 

Board Committees

 

The Board has established Audit Committees 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).  The Committee members have no links with the Company's external auditor and Helen Wong, 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 two times during the year and their respective attendance are as follows:

 

 

Name	Attendance
Helen Wong Siu Ming Christopher Henry Lovell (Not re-elected on 17 June 2022) Thomas Holland	2/2 1/1 2/2

 

Hock Chye Tan was appointed to the Audit Committee in March 2023 and therefore does not appear in the above.

 

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 2022, 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 2022 and to identify potential impairment.

 

·          impairment of receivables from a related party - The Audit Committee noted that a related party to the Group, which the Group maintained receivable balances with, had entered Judicial Management due to financial distress. Consequently, the recoverability of the balances was considered doubtful and full impairment has been made on the balances.

 

·          going concern - The Audit Committee considered the Company's financial requirements for the next 12 months and concluded that it has sufficient resources to meet its commitments and any outstanding loan covenants. Consequently, the financial statements have been prepared on a going concern basis.

 

Nomination & REMUNERATION Committee ("NRC")

 

The Nomination & Remuneration Committee was chaired by Christopher Lovell.  The other committee members were Monica Lai Voon Huey and Nicholas Paris.  The responsibilities of the NRC are stated below and upon Christopher Lovell's departure in June 2022 were integrated into the Board's responsibilities.  Given the Company is currently in its divestment phase, all Directors are non-executive on fixed fees.  For the same reason, a specific diversity and inclusion policy has not been applied.  However, it is considered that the Board has suitable gender balance and is suitably diverse.

 

During the year ended 31 December 2022, the Nomination & Remuneration Committee carried out its functions as set out in its terms of reference 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.

 

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 8 December 2022.

 

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 2022:

 

 

	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 and Mr. Christopher Lovell, non-executive independent director, attended the 2022 AGM, either in person or by telephone, which was held on 17 June 2022 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

 

28 April 2023

 

 

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

 

Opinion

 

We have audited the financial statements of Aseana Properties Limited and its subsidiaries (the 'group') for the year ended 31 December 2022 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 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 financial statements:

 

·    give a true and fair view of the state of the group's affairs as at 31 December 2022 and of its loss for the year then ended;

·    have been properly prepared in accordance with IFRSs 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 public interest 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.

 

Material uncertainty related to going concern

 

We draw attention to note 2.1 in the financial statements, which indicates that the success of the group relies on its ability to raise sufficient funds through project divestments in order to finance the operation of the group, as well as the result of the members' dis-continuation vote to be held at the end of May 2023.

 

As at 31 December 2022, the group's loans, borrowings and medium term notes amounted to USD $32.9 million, of which the entirety is due for repayment by 8 December 2023.

 

The economic consequences of the global pandemic have continued to adversely impact the interest of prospective buyers for the group's remaining assets. Therefore, there is no certainty that the sale of the remaining assets will be completed as planned and the loans, borrowings including medium term notes can be repaid in a timely manner.

 

As stated in note 2.1, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the group's ability to continue as a going concern.

 

Our opinion is not modified in respect of this matter.

 

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the group's ability to continue to adopt the going concern basis of accounting included a review of management's assessment of the going concern status of the group, including a cash flow forecast for the twelve months from the anticipated approval of the group financial statements. Our audit procedures included challenging the integrity of the underlying formulas and calculations within the going concern model; and reviewing the reasonableness of the key assumptions used by the directors to prepare the cash flow forecast.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

 

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 financial statements as a whole.

 

	Group financial statements 2022	Group financial statements 2021
Overall materiality	USD $1,200,000	USD $1,400,000
Performance materiality	USD $720,000	USD $840,000
Basis of materiality	c. 0.7% 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 USD $5,000 (2021: USD $40,000) and USD $630,000 (2021: USD $720,000). 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 USD $60,000 (2021: USD $70,000) 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 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 nine trading companies consolidated within in the group financial statements, all of which are based in Malaysia. We identified seven significant components, which were subject to a full scope of audit. Significant Malaysian components were audited by the PKF network firm in Malaysia. We reviewed component audit working papers electronically. In addition to this, significant components were subject to audits under our direction and supervision.

 

Key audit matters

 

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the material uncertainty related to going concern section we have determined the matters described below to be the key audit matters to be communicated in our report.

 

Key Audit Matter	How our scope addressed this matter
Carrying value of inventory
Refer to note 20 Inventory.   The group owns a portfolio of land held for property development and completed property units in Malaysia. The total carrying value of inventory for the group was USD $132.6 million. Inventory amounted to USD $126.2 million was valued by third party valuers C H Williams Talhar & Wong Sdn Bhd ("CBRE WTW") and Knight Frank Malaysia Sdn Bhd ("Knight Frank"), together "the valuers" who are engaged by the directors.   The valuation report issued by Knight Frank dated 13 February 2023 shows a write down of c. USD $13.8 million (2021: c. USD $14.7 million) in the carrying value of Sandakan Harbour Square located in Malaysia. The valuation report issued by CBRE WTW dated 23 March 2023 shows a write down of c. USD $1.8m in the carrying value of RuMa Hotel (excluding Services Residences).   The directors had been in discussions with a party leading up to the year end and on 17 January 2023 the directors of Aseana Properties Limited received a signed Letter of Intent ("LOI") to purchase Sandakan Harbour Square and RuMa Hotel & Services Residences, subject to normal due diligence ("the Offer Price"). The Offer Price indicated an impairment of c. USD $8.6 million to the carrying value of the Sandakan Harbour Square and no impairment in respect of the RuMa Hotel & Services Residences. The directors are of the opinion that the Offer Price included in the LOI indicates a fair price and that both parties are actively seeking to agree contractual terms. The directors considered the Offer Price as an appropriate carrying value of the inventory at the year end. Directors do not plan to dispose any of the inventory with a price lower that that indicated by the LOI. As a result, an impairment charge of c. USD $8.6 million is recognised against the carrying value of the Sandakan Harbour Square.   At 31 December 2022, goodwill valued at USD $578,000 arose from the acquisition of ICSD Ventures Sdn. Bhd (the owner of the Sandakan Harbour Square) in 2009 was not impaired. Directors are of the opinion that the value of goodwill can be recovered via the disposal of the Sandakan Harbour Square despite the impairment charge stated above.   A parcel of land located in Kota Kinabalu, Sabah in Malaysia with a carrying value of USD $6.3 million as at 31 December 2022 was not valued by any third party valuer. In addition to this, and consistent with the market conditions observed, we note there continued to be a higher level of judgement associated with certain asset valuations, notably those with a significant retail and hospitality element. The continuing economic consequences of COVID-19 further increased judgment in relation to assumptions around:   -      occupier demand and solvency; -      asset liquidity; and -      the relative impact on the different sectors including retail, hospitality and leisure.   In determining the carrying value of inventory, the valuers take into account property specific information such as the current lease agreements and occupancy rates. They apply assumptions for yields and expected future income growth rates, which are influenced by prevailing market yields and comparable market transactions, to arrive at final valuation.   The valuation of inventory requires significant judgment and estimation by management and their valuers. Inaccuracies in inputs or unreasonable bases used in these judgements could result in a material misstatement in the financial statements. There is also a risk that management may influence the significant judgments and estimates in respect of inventory valuations in order to meet market expectations.   The significance of the estimates and judgements involved, coupled with the fact that only a small percentage difference in individual valuations, when aggregated, could result in a material misstatement, warranted specific audit focus in this area.	We performed testing of the inventory valuation and critically assessed the key assumptions and estimates made. The procedures performed are summarised below:   We assessed the valuers' qualifications and expertise and read their terms of engagement with the group to determine whether there are matters that might have affected their objectivity or may have imposed limitation of scope upon their work. We also considered fees and other contractual arrangements that might exist between the group and the valuers. We found no evidence to suggest that the objectivity of the valuers was compromised.   We read all valuation reports including workings which support the net realisable value assessment of inventory.   Tested the underlying data used by the valuers in forming their valuation including benchmarking, validating key assumptions to supporting third party evidence or market activity and considering contrary evidence.   Assessed and challenged the key estimates and assumptions used in the valuation methodology, noted and performed analysis on changes from prior year where relevant.   Evaluated a range of key estimates and assumptions used in the valuations and profit and cash flow forecasts.   In addition to the above work on the valuation reports, we reviewed the signed letter of intent stating the potential buyer's interest in purchasing Sandakan Harbour Square and Ruma Hotel and Service Residences. Further, we assessed the buyer's credentials using publicly available information.   In respect of the land located in Kota Kinabalu, Sabah in Malaysia with a carrying value of USD $6.3 million as at 31 December 2022 where no third party valuation has been carried out, our comparison to recent sales transactions of land assets of similar characteristics resulted in the conclusion of no indicator of impairment to the year-end carrying value existed.   Except for the issues identified in relation to Sandakan Harbour Square, RuMa Hotel and Service Residences as well as the land located in Kota Kinabalu, Sabah, we concluded that the directors' year end carrying value is supportable in light of the evidence. We note that the LOI is not a contractual document. Contractual terms (in any) may differ materially from the Offer Price.

 

Other information

 

The other information comprises the information included in the annual report, other than the 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 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 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 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:

 

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

·    the financial statements and the part of the directors' remuneration report to be audited are not in agreement with the accounting records and returns; or

·    certain disclosures of directors' remuneration specified by law are not made; or

·    we have not received all the information and explanations we require for our audit.

 

Responsibilities of directors

 

As explained more fully in the directors' report, the directors are responsible for the preparation of the 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 financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the 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 financial statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 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 financial statements. We obtained our understanding in this regard through discussions with management, industry research, 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 and Transparency Rules;

o The Bribery Act 2010;

o Market Abuse Regulations;

o Anti-Money Laundering Legislation;

o Local Tax and Employment Law; and

o International Financial Reporting Standards ("IFRSs") as adopted by European Union ("EU")

 

·    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 of minutes of board meetings;

o Reviewing of accounting ledgers; and

o Reviewing of RNS announcements

 

·    We also identified the risks of material misstatement of the 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. The potential for management bias was identified in relation to the carrying value of the inventory and we addressed this by challenging the 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; and reviewing transactions through bank statements to identify potentially large and unusual transactions that do not appear to be in line with our understanding of the business operations.

 

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 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 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 group's members, as a body, in accordance with our engagement letter dated 8 December 2022.  Our audit work has been undertaken so that we might state to the group'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 group and the group'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

Registered Auditor                                                                                                     London E14 4HD

 

28 April 2023

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2022

 

			2022	2021 Restated *
	Notes		US$'000	US$'000
Continuing operations
Revenue	5		980	595
Cost of sales	6		(640)	(318)
Gross profit			340	277
Other income	7		10,971	5,677
Administrative expenses	11		(2,433)	(1,408)
Other operating expenses	11		(26,085)	(9,013)
Gain on sale of discontinued operations	34		2,702	-
Foreign exchange (loss)/gain	8		(1,695)	345
Operating loss			(16,200)	(4,122)
Finance income			1,970	1,969
Finance costs			(3,344)	(3,621)
Net finance costs	10		(1,374)	(1,652)
Net loss before taxation from continuing operations	11		(17,574)	(5,774)
Taxation	12		(302)	(141)
Loss for the year from continuing operations			(17,876)	(5,915)
Discontinued operations
Loss for the year from discontinued operations			-	(3,087)
Loss for the year			(17,876)	(9,002)

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		(2,459)	(3,584)
Total other comprehensive
income for the year	13		(2,459)	(3,584)
Total comprehensive loss
for the year			(20,335)	(12,586)

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONT'D)

FOR THE YEAR ENDED 31 DECEMBER 2022

 

			2022	2021 Restated *
	Notes		US$'000	US$'000
Loss attributable to:
Equity holders of the parent company
Loss for the year from continuing operations			(15,867)	(4,122)
Loss for the year from discontinued operations			-	(1,632)
Loss for the year attributable to equity holders of the parent company	14		(15,867)	(5,754)
Non-controlling interests
Loss for the year from continuing operations			(2,009)	(1,793)
Loss for the year from discontinued operations			-	(1,455)
Loss for the year attributable to non-controlling interests	15		(2,009)	(3,248)
Loss for the year			(17,876)	(9,002)
Total comprehensive loss attributable to:
Equity holders of the parent company
Loss for the year from continuing operations			(18,451)	(6,232)
Loss for the year from discontinued operations			-	(2,719)
Total comprehensive loss attributable to equity holders of the parent company			(18,451)	(8.951)
Loss for the year from continuing operations			(1,884)	(1,736)
Loss for the year from discontinued operations			-	(1,899)
Total comprehensive loss attributable to non-controlling interests			(1,884)	(3,635)
Total comprehensive loss for the year			(20,335)	(12,586)
Loss per share Basic and diluted (US cents)	14
- from continuing operations			(7.99)	(2.08)
- from discontinued operations			-	(0.82)
			(7.99)	(2.90)

 

* See Note 2.3(f) for details regarding the restatement as a result of an error.

 

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022

 

			2022	2021 Restated*	1 Jan 2021 Restated*
	Notes		US$'000	US$'000	US$'000
Non-current assets
Property, plant and equipment	16		79	104	121
Intangible assets	17		578	578	578
Right of use	18		-	1	160
Deferred tax assets	19		4,723	4,979	5,111
Total non-current assets			5,380	5,662	5,970
Current assets
Inventories	20		132,573	147,048	157,133
Trade and other receivables	21		11,575	14,799	14,999
Prepayments			376	496	206
Current tax assets			10	781	956
Assets held for sale	34		-	14,466	10,344
Cash and cash equivalents	22		7,259	7,114	5,388
Total current assets			151,793	184,704	189,026
TOTAL ASSETS			157,173	190,366	194,996
Equity
Share capital	23		10,601	10,601	10,601
Share premium	24		208,925	208,925	208,925
Capital redemption reserve	25		1,899	1,899	1,899
Translation reserve	26		(25,436)	(22,852)	(19,655)
Accumulated losses			(122,781)	(106,904)	(101,160)
Shareholders' equity			73,208	91,659	100,610
Non-controlling interests	15		(5,404)	(2,646)	(7,189)
Total equity			67,804	89,013	93,421
Non-current liabilities
Trade and other payable	27		36,440	38,339	39,789
Loans and borrowings			-	-	1
Total non-current liabilities			36,440	38,339	39,790
Current liabilities
Trade and other payables	27		18,089	17,050	17,757
Amount due to non-controlling interests	28		1,981	1,952	1,906
Loans and borrowings	29		1,595	1,695	1,922
Medium term notes	30		31,264	42,317	40,200
Total current liabilities			52,929	63,014	61,785
Total liabilities			89,369	101,353	101,575
TOTAL EQUITY AND LIABILITIES			157,173	190,366	194,996

 

* See Note 2.3(f) for details regarding the restatement as a result of an error.

The financial statements were approved on 28 April 2023 and authorised for issue by the Board and were signed on its behalf by

 

 

 

 

                                                                                                                                                           

THOMAS HOLLAND                                              HELEN SIU MING WONG

Director                                                                        Director

 

28 April 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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