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ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
Aseana is focused on extracting the maximum value from its ongoing
projects despite challenging, although improving, conditions in the
local property markets. High end residential properties in Malaysia
have fared less well than the markets for mid-priced properties and
prime retail space, but the pace is picking up again. In Vietnam,
government counter-inflationary measures have affected the real estate
sector and the project pipeline has diminished. Share-holders will
decide on continuation of the Company in 2015 by which time Aseana
should have realised substantial value from the portfolio.
Aseana produced an Interim Management Statement for the period 1 January
2013 to 16 May 2013 on 17 May. At the same time, the Company issued its
Quarterly Investor Update for the quarter ended 31 March 2013. This showed
small changes in the Group’s unaudited financial position as measured by its NAV.
The key results showed revenues of US$2.77m for Q1 2013 (Q1 2012:
US$7.47m); unaudited loss before tax of US5.63m (Q1 2012: US$1.80m loss) and
an after tax loss of US$6.09m (Q1 2012: US$1.92m loss). Reduced revenues and
profits were mainly due to slower than anticipated sales of completed properties in
SENI Mont’ Kiara, Aseana’s largest development and a flagship project.
The unaudited Q1 NAV at 31 March 2013 was US$176.74m against US$183.58m
at 31 December 2012. The realisable NAV (RNAV) was US$283.82m at 31 March
2013. Although unaudited, this compares with US$244.84m at 31 December 2012.
The local currency value increased by nearly 16%, largely as a result of the
revaluation of the Aloft Sentral Hotel and there was only a limited effect from
exchange rate movements, the US$ strengthening 1.1% against the Ringgit.
Operational highlights in Q1 included:
o opening for business of Kuala Lumpur Sentral Hotel (Aloft) on 22 March 2013;
o City International Hospital (CIH), Ho Chi Minh City completion (end of March);
o Nam Long Investment Corporation listing on the Ho Chi Minh Stock Exchange
(HOSE) in which Aseana holds a 16.3% share interest (8 April 2013).
Aseana increased its borrowings by over US$21m to US$165.95m by the end of
Q1 to fund two core developments, the Aloft Hotel and CIH. The net debt to equity
gearing ratio has now risen to 79.04% (31 December 2012: 64.19%), but should
decline as the sales backlog declines. Cash of US$15.85m is tightly managed for
deployment to ongoing projects.
The focus of Aseana and its exclusive Development Manager, Ireka Development
Management Sdn Bhd (IDM), is on completing existing projects for planned
disposal and is not proposing at this stage to use the proceeds to replace or
expand the portfolio. The current share price on the LSE of USȼ42.0 stands at
discounts of 50% and 69% respectively to the unaudited 31 March 2013 NAV
(USȼ83.4) and RNAV (USȼ133.9) values.
Year end 31 Dec
Revenue (US$m)
Gr. Profit (US$m)
PBT (US$m)
PAT (US$m)
Dil EPS (US¢)
NAV PS (US¢)
DPS (US¢)
2011A 281.1 44.5 33.1 14.1 7.56 95.7 1.0
2012A 23.7 2.3 (16.6) (18.4) (7.94) 86.6 0.0
2013E* n/a n/a n/a n/a n/a n/a n/a 2014E* n/a n/a n/a n/a n/a n/a n/a * Forecasts from N+1 Singer, the house broker, are under review
SHARE INFORMATION
Code ASPL.L
Market Full List
Sector Real Estate Investment Share price USȼ42
12m high/low USȼ46-37
Issued shares 212.025m
Market cap US$89.05m
Broker N+1 Singer
SHARE PRICE PERFORMANCE
COMPANY DESCRIPTION
Aseana Properties Limited (ASPL) is an externally managed, closed ended property development company, investing in development projects in Malaysia and Vietnam. It recently announced proposals which if approved would result in the internalisation of its management and Aseana becoming an evergreen company.
FINANCIAL INFORMATION (31/03/13) (Unaudited)
Net Asset Value (NAV) unaudited US$176.74m
NAV per share unaudited US¢83.4
RNAV per share unaudited US¢133.9
Gross debt US$165.95m
Cash and bank equiv incl. fin. instruments US$15.85m
Net debt to equity 79.04%
FINANCIAL DIARY
Next interims announcement (tbc) 24 Aug 2013
Next year end 31 Dec 2013
Next half year end 30 Jun 2013
PREVIOUS CITY INSIGHTS REPORTS
Initiation Profile – 6 May 2010
Last Update – 4 July 2012
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
2
MANAGEMENT UPDATE
IMS covers the period 1 January
2013 to 16 May 2013
Following the results announcement on 24 April 2013, Aseana issued an Interim
Management Statement (IMS) covering the period from 1 January to 16 May 2013. It has
also published a Quarterly Investor Update for the Q1 period ended 31 March 2013. This
note covers 2013 Q1 development progress; economic and market conditions in each
country; the audited final results and, finally, the summary and conclusions.
Increased losses in Q1 2013… The IMS shows impact of patchy real estate market conditions as reflected in the
following:
Revenue of US$2.77m for Q1 (2012 Q1: US$7.47m);
Loss before tax US$5.63m (2012 Q1: loss US$1.80m);
Loss after tax US$6.09m (2012 Q1: US$1.92m);
Total comprehensive expense of US$7.20m (2012 Q1: income of US$1.34m);
Unaudited NAV US$176.74m at 31 Mar 2013 (31 Dec 2012: US$183.58m);
Unaudited RNAV US$283.82m at 31 Mar 2013 (31 Dec 2012: US$244.84m).
…due to slower sales of SENI Mont’
Kiara apartments
The revenues were mainly from sales of completed properties in SENI Mont’ Kiara which
has remained at 79% (3% of which are pending collection) of available units as at 30 April
2013 (78% at 31 December). In line with the changes in Aseana’s development strategy
as outlined previously, no new developments were started in the quarter, the focus being
to sell completed units at a time seemed appropriate to maximise the value. The
consolidated comprehensive expense statement reported a loss on foreign currency
translation of US$1.11m in Q1, the US dollar appreciating against the Malaysian Ringgit
(RM). As at 31 March 2013, US$1 = RM 3.093 compared with RM 3.058 at 31 December
2012. The US dollar also appreciated marginally against the Vietnam currency, the Dong,
with US$1 = VND 20,942 at 31 March 2013 against VND 20,840 on 31 December 2012.
No change in local currency values
except for the Aloft Hotel
The reported unaudited cost or market NAV values per share at the end of Q1 were:
NAV/share: USȼ83.4 (31 December 2012: audited USȼ 86.6 per share)
RNAV/share: USȼ133.9 (31 December 2012: USȼ $115.5 per share)
The IMS mentions that, expressed in local currency terms, there was very little change in
the market values of property assets.
Cash lower and gearing higher due
to work in progress
Cash and cash equivalents, including funds placed in held-for-trading financial
instruments, stood at US$15.85m at 31 March 2013 (31 Dec 2012: US$16.75m). This
decline was due planned investment in project work in progress and ongoing operating
expenses in three projects:
Four Points by Sheraton Sandakan hotel (FPSS)
Harbour Mall Sandakan (HMS)
Aloft hotel
The same factors led to an increase in Aseana’s borrowings to US$165.95m (31 Dec
2012: US$144.33m). The net debt to equity gearing ratio rose to 79.04% at the 31 March
(31 December 2012: 64.19%).
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
3
PORTFOLIO UPDATE
Portfolio progress now picking up The table below shows the portfolio constituents, their valuations, the basis for those
assigned values, and a reminder of the expected GDV for each project which have not
changed. Project NAVs are nearly all lower than a year ago. The listed Malaysian projects
(excluding Kota Kinabalu Seafront resort and residences which Aseana intends to dispose
of) have an NAV of US$125.25m compared with US$139.9m on the 31 March 2012, a fall
of 10.5%. For Vietnam, the active projects were valued at US$40.36m against US$50.0m
a year ago, a decline of 19.3%. One of these projects is a stake in Nam Long Investment
Corporation, seen as a means of accessing the real estate market in Vietnam. Of the
other Vietnam projects, only the International Hi-Tech Healthcare Park (IHTHP) and
Waterside Estates (formerly the Phuoc Long B project) remain within the Company’s
portfolio. Two other projects, Tan Thuan Dong and Queen’s Place, have been exited.
ASEANA PROPERTY PORTFOLIO AND VALUATIONS AS AT 31 MARCH 2013
Project Type NAV RNAV
Ratio Val. % GDV
(US$m) (US$m) basis owned (US$m)
Tiffani by i-ZEN, Kuala Lumpur Luxury condominiums 9.20 9.20 1.0 1 100 124
1 Mont’ Kiara by i-ZEN, Kuala Lumpur
Offices, tower and mall
4.95 4.95 1.0 1 100 166
Sandakan Harbour Square Retail mall and hotel 20.04 32.02 1.6 4 100 170
SENI Mont’ Kiara, Kuala Lumpur High end apartments 75.87 86.45 1.1 3 100 490
KL Sentral Office Towers & Hotel Office towers and a business hotel
0.83 6.67 8.0 3 40 256
Aloft' Kuala Lumpur Sentral Hotel Business hotel 3.24 45.06 13.9 4 100 132
The RuMa Hotel and Residences (Kia Peng project)
Boutique hotel and residences
11.12 11.12 1.0 1 70 197
Total Malaysia 125.25 195.47 1.6
1,535
Equity Invest. in Nam Long Inv. Corp.**
Private equity invest. 12.58 12.58 1 5 16.3 -
Internat. Hi-Tech Healthcare Park, HCMC
Healthcare plus comm./residential
18.90 51.75 2.7 4 66.8 670
Waterside Estates, District 9, HCMC
Villas and high rise apartments
8.88 8.88 1 1 55 100
Total Vietnam
40.36 73.21 1.8
770
Projects exited
Kota Kinabalu resort & residences, Sabah
Resort homes, hotel and villas
13.00 17.01 1.3 4 90.00* 170
Queen’s Place, Ho Chi Minh City (HCMC)
Residential, offices and retail mall
0.04 0.04 1.0 1 65 115
Tan Thuan Dong Project, HCMC# Apartments and comm. devel.
0.15 0.15 1.0 1 80 91
Total including projects exited 178.80 285.88 1.6
2,681
1 Projects at cost
2 Manager's estimate prior to accounts finalisation
3 Market value at 31 Dec using DCF methods
4 Market values based on residual/comparison/investment method of land value by international independent valuers
5 Fair value with reference to prevailing factors as at 31 March 2013 and including the economic and market conditions of the HOSE
* Average of 80% ownership interest for resort homes and 100% for resort hotel and villas
** Nam Long listed on the Ho Chi Minh Stock Exchange on 8 April 2013
# Project agreed to be terminated by jv partners, Aseana and Nam Long
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
4
RNAV measures considered more
realistic than historic...
RNAV measures are considered more realistic. The formula used for the RNAV of each
project SPV (or company) is the sum of:
Cash at company level + NAV/ market value of the project + net other assets/ liabilities
All taxes, corporate and property based, which in the first instance are removed by the
independent valuer, are later re-included by Aseana.
Figures in US$m NAV RNAV *
Total Portfolio 178.8 285.88
Cash and cash equivalents 0.09 0.09
Other assets and liabilities -2.15 -2.15
Total 176.74 283.82
On a per share basis (USȼ) 83.4 133.9
* At cost or measured by DCF or residual/comparative valuation methods.
NAV and RNAV as at 31 March 2013
...and 60% higher than NAV for the
active portfolio
The table on the previous page shows RNAV is 60% higher than NAV both for Malaysia
and overall. Six projects are at NAV, which is cost or on a fair value basis. Two others,
SENI Mont’ Kiara and the KL Sentral office towers and hotel are at market value using
DCF calculations carried out by international independent valuers on the estimated cash
flows. Those estimates exclude all taxes, both corporate and property based, but Aseana
then re-includes them. Those estimates were made on the 31 December 2012 but are
considered still to be valid.
Differences greatest for the Aloft
hotel and the IHTHP...
The Aloft hotel itself which, unlike the office towers, has yet to be sold, offers a more
striking difference between the NAV of US$3.24m and RNAV of US$45.06m. In the
hotel’s case, the latter valuation was again obtained by international independent valuers
using residual, investment or comparison method to arrive at market value. Ultimately, the
fairness of this depends on how close the comparator investment projects are. Apart from
the Aloft hotel, the method was also used for Sandakan Harbour Square, the Kota
Kinabalu Seafront resort and residences and the IHTHP. In the latter case, the RNAV of
US$51.75m is substantially above the NAV of US$18.90m. The dates of those valuations
are not stated but, in general, the independent valuers’ work for Aseana is done at the
end of each quarter unless otherwise stated.
...and Nam Long’s market value has
risen 40% since 31 March
Finally, in the case of the 16.3% effective ownership interest of its investment in Nam
Long, this would have simply been based on the market price quoted on the Ho Chi Minh
Stock Exchange on the 31 March, except that Nam long was not listed until the 8 April
Thus Aseana based a fair value of US$12.58m for its investment on the basis of the
prevailing economic and market conditions of the Stock Exchange. While the share price
subsequently declined after the listing, at the current share price of VND 23,800, Aseana’s
stake has risen 40% in value to US$17.61m. This is still a loss of US$4.44m on the
revalued amount of $22.05m set in December 2010, determined by reference to the price
paid by a new institutional investor in May 2010.
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
5
Payment by instalments an option to
facilitate sales of SENI Mont’ Kiara....
The table does not convey the time scale for development and sales which are better
shown in the table below. In Malaysia, the luxury condominiums listed as Tiffany by i-Zen
are already 96% sold but, given a sluggish high end residential property market, the
remaining fifteen units may take up to a further eighteen months to clear. Aseana has
decided to fully fit and furnish these to make them easier to sell. In the case of the higher
value units in SENI Mont’Kiara, 79% of these expensive apartments are now sold, a lower
percentage than expected after one major buyer for a parcel of units was unable to obtain
mortgage financing. Within the development, 127 units are unsold but 61 have been
reserved, 49 with one investment buyer. Given an average price of these high end units
(the smallest are 2,300 sq. ft.) in the range RM2m to RM3m, if 60 units were sold in 2013,
they could provide c.US$40m plus in revenue. The Company are looking at ways to
structure payment by instalments for block purchasers to ease potential financing
problems.
...and the former could provide most
of Aseana’s revenue in 2013
There is a final receipt of US$0.8m from 1 Mont’ Kiara expected at the end of the current
Q2 and Aseana is also now selling residential units and hotel suites off-plan from its
RuMa hotel and residences (RuMa) development. By the end of the year, the Company
will also start to make off-plan sales of its Waterside Estates residences in Ho Chi Minh
City, Vietnam, even though construction will not be completed until 2016. This is the same
construction time scale as for the RuMa project. The inference is that SENI Mont’ Kiara is
likely to be the main revenue driver in 2013.
...but revenues may take time to
build
That said, revenue may not be the key to measuring progress because it is not booked
until sales are finally completed. Meanwhile, stage payments or deposits may have been
made as reflected in the cash flow statement. What may adversely affect the reported
results, as has happened in the case of the Sandakan retail mall and hotel, are when
revenues may be insufficient to cover marketing, general administration and finance costs
due to slow build up of business or external events. Losses may then occur if other project
revenues are insufficient to fill the gap.
EXPECTED DATES OF FINAL PROJECT SALES AND CONSTRUCTION
2013 2014 2015 2016
Malaysia
Tiffani by i-ZEN
100% by year end
1 Mont ' Kiara by i-ZEN End of Q2 for owner-ship titles. Final payment due of US$0.8m
SENI Mont' Kiara 95% by end of Q4
Sandakan Harbour Square
Sale by end 2015
Aloft Kuala Lumpur Sentral Hotel
Sale by end 2014
The RuMa Hotel & Residences Sales off-plan now
Construction completed by year end
Vietnam
Internat. Hi-Tech Healthcare Park Sale of two plots and 49%
stake in City Hospital Sale in 2016
Waterside Estates Sales launch by Q4
Construction completed
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
6
MALAYSIA
Improved conditions but with more
properties in the market
The backdrop to Aseana’s development in the past year comprises three strands:
1. Generally benign economic conditions with the GDP growth rate edging up from 5.1%
in 2011 to 5.6% and the outlook is improving;
2. Stricter lending conditions imposed by banks to curb speculative purchasers of
residential properties;
3. A surplus of commercial office properties came on to the market. In 2012, 6.7m sq. ft.
In 27 separate developments with a take-up of only 3.3m, and a further 7m is
expected in 2013.
Economy driven by domestic
consumption and infrastructure
investments
Growth of the economy has been largely driven by consumption and infrastructure
investments including the important Economic Transformation Programme (ETP). This
incorporates 161 discrete projects totalling RM210bn (US$68.4bn) and aims to lift the
economy to high income status by 2020. Inward direct investment in 2012 declined to RM
29.1bn (US$9.52bn) from US$36.6bn in the previous year, but still sizeable in maintaining
the economic momentum. The year 2012 ended strongly with GDP increasing by 6.4%
although this has not continued into the current year. In Q1 GDP growth was down to
4.1%, the lowest level for more than three years due to lower exports (60% of the
economy). That said, Bank Negara Malaysia expects GDP growth of 5%-6% for 2013 with
a strong domestic economy driven by domestic consumption and investment. Uncertainty
has also been removed after the re-election of the Barisian Nasional coalition for a 57th
successive term of office, and fully committed to the infrastructure investment drive.
…which should be the pattern for
2013
Malaysia’s Bank Negara Malaysia, the central bank, confirms that the domestic economy
is healthy, underpinned by firm investment activity and private consumption. The latter is
supported by sustained income growth and stable labour markets while investment
activity is led by capital spending in both domestic sectors and infrastructure projects.
With inflation at 1.5% in Q1, though expected to rise later in the year, the central bank has
held the key Overnight Policy Rate at 3% following the Monetary Policy Committee
meeting held on 9 May.
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
7
Slower trends in residential property
markets…
The outlook for property developers in 2013 has been rendered uncertain for two
reasons:
Central bank action to curb speculation
Impact of new space in the market
Net residential yields have fallen below 2% p.a. in some areas but, for Aseana’s SENI
Mont’ Kiara, 5-6% is obtainable. This is the attraction for investors and the central bank
has targeted these, setting a LTV cap of 70% on loan applications for a third property or
beyond. From 1 January 2013, the Real Property Gains Tax (RPGT) has been raised
from 10% to 15% for properties disposed of within two years, but full exemption applies
for individuals and corporations if properties are held for over five years. In fact, the
number of property transactions has already started to slow as a result of rising prices,
particularly in the hot spots around Kuala Lumpur City Centre, Bangsar and Mont’ Kiara.
…for the owner occupier market The owner occupier market in the prime areas has also slowed as a result of price/income
ratios moving outside the long term average. Historically, the ratios of residential
properties to gross annual household incomes averaged 4 to 4.5 times, but since 2008
have risen well beyond this in the prime areas. Low interest rates have encouraged
demand but rising prices are now choking off some demand. Affordable housing, which is
generally considered to be units of less than 2,000 sq. ft. and priced at less than RM1m,
has not been given the same attention by developers who have favoured prestige
buildings and vertical blocks.
Sandakan Harbour developments… For Aseana, major developments in the past year included:
Harbour Mall Sandakan (HMS) and Four Points by Sheraton Sandakan Hotel (FPSS)
both commenced business. The 299 room hotel, operated by Starwood, opened for
business a year ago on 30 May 2012. The retail side comprising 129 shops (Phases 1
and 2 of the development) and a 200,000 sq. ft. retail mall (phases 3 and 4) opened for
trading in July 2012. The complex, the largest commercial development in the city, was
formally launched in October 2012. All the shops have been fully sold while 42% of the
retail space in the mall is now tenanted.
…has suffered a temporary
setback…
It was anticipated that the time to maturity for
both mall and hotel would be two years but
the process, which had been fairly slow
during the second half of 2012, has been put
back about six months by a local disturbance
in Sabah state. An armed ‘invasion’ by a
small band of 200 individuals occurred on 1
March 2013. Local media reported that
violence erupted between followers of Sulu
Sultan Jamalul Kiram III and the Malaysian
police and military in three locations on the
east coast of Sabah.
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
8
…but a full recovery is expected next
year
The intruders were pursuing a claim to Sabah staked by the Sulu Sultanate since 1962,
although Sabah is legally one of the fourteen states and territories of the independent
sovereign Malaysian Federation. The situation is under control by the authorities and,
while this problem may have been a ‘storm in a tea cup’, it did result in some cancellation
of bookings, occupancy declining to 26% at the end of April 2013 although now up to
36%, but Q2 revenues are unlikely to have covered expenses in this period. A 65%
occupancy rate might normally be achieved 12 months after opening but, with some
governments warning tourists about the dangers in visiting Sabah, 50% occupancy by
year end is now expected with full recovery not until 2014.
Sentral office towers sold but with
three year deferred payment
condition
Kuala Lumpur Sentral Office Towers and Aloft Hotel
Physical completion of the office towers was in December 2012 but the 482-room Aloft
Hotel slipped into January 2013. Neither is relevant to the results of 2012 and the hotel
opened for business only on 22 March 2013. This project is owned and developed by
Excellent Bonanza Sdn Bhd (EBSB) in which Aseana holds a 40% share interest and the
other 60% by the Malaysian Resources Corporation Berhad. The two office towers were
conditionally sold to a Korean pension fund for RM623m (US$196.6m) with a guaranteed
rental income written in to sale agreement. The buyer wants to defer payment for three
years, meaning that Aseana’s 40% share of the development profits, US$6.67m, would
be delayed, but the quid pro quo for this is dropping the guaranteed rental income clause.
Aloft hotel opened for business in
March 2013
In line with the original agreement, the hotel was
acquired by Aseana from EBSB in April 2013 for
RM217m (US$68.5m). The four star hotel,
managed by Starwood, opened for business in
March 2013. It had a first month average
occupancy rate of 42% based on opened rooms
(currently lower at 20% based on all 482 rooms)
but is expected to be c.50% by the first
anniversary. The hotel is in a prime position at the
heart of the capital and is likely to attract corporate
accounts. Planned sale is likely to be towards the
end of 2014. If the US$132m GDV is achieved,
with debt outstanding of US$87m, Aseana would
realise its RNAV of US$45m.
The RuMa off-plan sales launch The RuMa Hotel and Residences, Kula Lumpur
Originally the Kuala Lumpur Kia Peng City Centre project, this development comprises
200 high end apartments and a 253-room boutique hotel to be managed by Urban Resort
Concepts. Small apartments of 900-1,800 sq. ft., are pitched to young professionals
rather than families, unlike SENI Mont’ Kiara, and the largest units are expected to sell for
c.RM1.6m. Aseana has a 70% share interest in this project with the remainder owned by
Ireka Corporation Berhad. Construction of the project, which has a GDV of US$197m,
commenced in February 2013 and will not be physically completed until late 2016 or early
2017. A formal sales launch of apartments took place on 8 March 2013 to encourage
buying off-plan and Aseana has indicated that 70% of the units could be sold by year end.
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
9
VIETNAM
Credit tightening measures
restricted growth…
The Vietnam economy’s GDP grew at 5.0% in 2012, down from 5.9% in 2011 and the
lowest rate since 1999. The country averaged growth of 6.5% in 2006-2011 and 7.8% in
2001-06. The weaker performance has been ascribed to inefficiencies in state enterprises
and stricter lending conditions imposed by banks to dampen domestic demand and
inflationary pressures. In 2010 bank lending increased by 32% year-on-year, 14% in 2011
but only 6.5% in 2012 according to IMF statistics.
…but inward foreign investment is
healthy
Vietnam still attracted a higher level of foreign direct investment (FDI) pledges in 2012
compared with 2011. Pledged FDI amounted to US$16.3bn with US$10.3bn actually
disbursed. Nevertheless the weaker economy’s credit rating was cut by Moody’s due to
increased bad debts in the banking system and weakened state enterprises, both factors
limiting the scope for measures to boost growth.
The banking system’s bad debt ratio
is still high
Serious weaknesses in the banking system and the need to recapitalise banks have been
cited by the World Bank. In this difficult credit environment, the government stated in
December 2012 that the real estate market was stagnant with no signs of recovery, and
the number of insolvent businesses was rising, over 70% of companies ‘posting losses’ in
2012. That accounted for the banking sector’s bad debt ratio rising to c.4.5% of
outstanding loans although the Central Bank’s estimate is higher at 8.75%, one of the
highest bad debt levels in Southeast Asia. The outlook for 2013 is therefore uncertain
although, with an improving trade balance, GDP could grow by 5.5%.
…and this is limiting options to
boost the economy
More importantly, measures to deal with structural inefficiencies, to recapitalise the banks
and to clean up the sector through the creation of an asset management company,
effective 9 July, to acquire non-performing loans from lenders (those with bad debt ratios
above 3%) may improve the outlook for the longer term. Meanwhile, with inflation coming
under control, the central bank has been able to reduce the inter-bank discount rate from
13% at the start of the year to 5%.
Unhelpful conditions have led to
abandonment of two projects
In the context of these conditions, Aseana has decided to put on hold its involvement with
the mixed development, Queen’s Place in District 4 of HCMC. The Company has a 65%
share interest in the project which has suffered delays and Aseana is now looking to exit
the project. Aseana has also decided to terminate its involvement in the Tan Thuan Dong
residential development (in which it has an 80% share interest) in District 7 of the same
city. An official termination approval was received in March 2013 and final documentations
are underway to effect the termination of this project. That leaves only the IHTHP and
Waterside Estates in District 9 of HCMC.
City International Hospital to open in
June 2013…
International Hi-Tech Healthcare Park, Vietnam
This project is a planned mixed development close to the centre of Ho Chi Minh City
(HCMC) and the centre piece is the 320-bed City International Hospital (CIH) which was
structurally completed in March 2013. The hospital has undergone testing by its operator,
Parkway Pantai Limited, and if all operating approvals are in place, it is due to commence
operations in Q3 2013. Of the US$18.9m NAV, the bulk of this is accounted for by CIH.
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
10
…in which a 49% share interest is in
negotiation for sale at an indicated
price of US$15.2m…
In financial terms, the hospital will not
breakeven until its third year of operation,
revenues being lower than the operating
and financial costs. This explains why
Aseana has taken the decision to sell a
49% share interest in CIH at an indicated
price of US$15.2m and the remainder
should be sold in 2016. Apart from the
hospital, the Healthcare park of an overall
91 acres is an operating asset divided into
20 plots of which nine are designated for
various medical uses.
…while two plots of land in the Park
have already been sold…
These will feature the latest medical technology, imaging equipment and other facilities
such as clinics. In June 2013, Aseana has sold two of these plots, one for use as an
oncology centre and the other for cardiology, but the RNAV for these two plots have not
been formally published. The remaining acreage is for affordable homes and retail use
supporting the Park. All plots are for sale or development depending on the opportunity.
…hence a good start has been made
in realising revenue from this
substantial asset
The whole healthcare park including the CIH has a GDV of US$670m but Aseana’s share
interest is 66.8%, the other 33.2% being held by Hoa Lam Group and associates. As at
the 31 March 2013, the RNAV for the healthcare park was US$51.75m after taking into
account the debt outstanding of US$20.63m (for land cost and working capital) and
US$27.23m (to part fund the hospital development). Since the end of Q1 therefore, a
good start has been made in realising revenue from this substantial asset.
High end residential market remains
weak…
Waterside Estates
Situated In District 9 of HCMC, this mixed
project of 37 villas (Phase 1) and 460 high
end apartments (Phase 2) is in the
construction phase. This is a joint
development of Aseana, with a 55% share
interest, and Nam Long Investment
Corporation with 45%.
…but build time is expected to be
three years
Completion time for building is three years with 2016 being the expected finishing time
Aseana will look to begin selling the villas from Q4 of the current year. The delay is to
allow for the current challenging conditions in the high end residential market. To fund the
development, Aseana has now secured a term loan of US$5.5m for the first phase.
Nam Long is a valued co-developer
in the HCMC market… Nam Long Investment Corporation
Aseana has a 16.3% equity share interest in Nam Long Investment Corporation, a
property development company in Vietnam with a leading position in the affordable ‘E-
home’ brand of apartments and focuses on building homes for the low to middle
income segment of the market. Nam Long has an extensive land bank totalling 1,384
acres in HCMC and its neighbouring provinces.
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
11
…whose share price is recovering
after taking a substantial hit
Nam Long was listed on the Ho Chi Minh Stock Exchange on 8 April 2013 at a share price
of VND27,000, valuing Nam Long at VND2,579bn (US$123.82m) with Aseana’s share
interest valued at US$20.18m. Aseana acquired its interest in Nam Long in June 2008 for
$17.14m and other holders include the founders and private equity funds of the company,
Vietnam Azalea Fund and Nam Viet Limited. Aseana's holding in Nam Long was
subsequently re-valued at $22.05m in December 2010 based on fair value determined by
reference to the price that a new institutional investor made in Nam Long in May 2010.
Aseana’s shares in Nam Long were valued at US$12.58m on 31 March 2013.
The intention behind the listing was to increase Nam Long’s liquidity and to gain access to
funds for the pursuit of real estate investment opportunities. That is likely to depend on the
state of the Vietnam property market which has marked time in the past year.
FINAL RESULTS FOR 2012
This section comments on the results for the year ended 31 December 2012.
Highlights of the Comprehensive Income Statement, shown overleaf, were:
Decline in revenue of 92% from US$281.1m to US$23.7m due to fewer sales of
completed units in SENI Mont’ Kiara;
Pre-tax loss of US$16.6m (2011: profit of US$33.1m) largely due to
i) operating losses of Four Points by Sheraton Sandakan Hotel and Harbour Mall
Sandakan, totalling US$8.2m;
ii) reduction in fair value of holding in Nam Long Investment Corporation. Of this
US$4.7m was recognized in the P&L accounts and a further US$4.8m in Other
Comprehensive Income;
Management fees down to US$3.8m (2011: US$4.0m) based on 2% of the quarterly
NAV values at the end of each quarter, payable in advance;
Increase in staff costs US$ 1.8m (2011: US$1.0m);
Increase in finance costs US$4.3m (2011: US$1.1m);
Net loss attributable to equity holders of the parent of US$16.8m (2011: net profit of
US$16.1m);
Basic and diluted loss per share of USȼ7.94 (2011: EPS of USȼ7.56);
A foreign exchange gain of US$0.5m (2011: loss of US$1.0m); a further US$3.4m
foreign currency translation difference was recognised in Other Comprehensive
Income.
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
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STATEMENT OF COMPREHENSIVE INCOME Year ended 31st December (US$’000) 2011 2012
Revenue 281,142 23,732
Cost of sales (236,645) (21,459)
Gross profit/(loss) 44,497 2,273
Other income 2,146 7,051
Administrative expenses (2,053) (2,582)
Foreign exchange (loss)/gain (1,014) 524
Change in fair value of available-for-sale investments 0 (4,653)
Management fees (3,972) (3,799)
Marketing expenses (2,720) (2,164)
Other operating expenses (3,210) (9,389)
Operating profit/(loss) 33,674 (12,739)
Finance income 602 407
Finance costs (1,144) (4,299)
Profit/(loss) before tax 33,132 (16,631)
Tax (18,992) (1,798)
Profit/(loss) for the year 14,140 (18,429)
Attributable to owners of the Company 16,058 (16,839)
Non-controlling interests (1,918) (1,590)
Other comprehensive income net of tax:
Foreign currency translation gains/(losses) (3,364) 3,407
Change in fair value of available-for-sale investments 0 (4,828)
Total comprehensive income/(expense) for year 10,776 (19,850)
Attributable to owners of the Company 12,625 (18,419)
Non-controlling interests (1,849) (1,431)
Profit/(loss) per share US cents 7.56 (7.94)
BALANCE SHEET
The key features of the balance sheet were:
Decrease in available-for- sale assets (Nam Long to US$12.6m (2011: US$22.1m);
Intangible assets decreased to US$13.8m (2011: US$15.0m) due to goodwill
impairment associated with SENI Mont’ Kiara and Sandakan Harbour Square;
Decrease in cash and cash equivalents to US$16.8m (2011: US$32.6m) due to
operating costs of the Four Points by Sheraton Sandakan Hotel, Harbour Mall
Sandakan and the development of the City International Hospital;
Increase in net debt to US$126.2m (2011: US$72.0m), net gearing up to 64.2%
(2011: 34.7%). Net debt is offset by available-for-sale investments;
Decrease in total assets to US$409.7m (2011: US$415.1m) mainly due to the
reduction in the Nam Long investment;
Increase in total liabilities to US$213.0m (2011: US$207.5m) due to the issue of
US$4.9m of Medium term Notes (MTN) to fund Aloft.
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
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The consolidated balance sheet is as shown below.
BALANCE SHEET
As at 31st December (US$'000) 2011 2012 Change
Property, plant and equipment 4,629 1,113 (3,516)
Available-for-sale investments 22,052 12,571 (9,481)
Intangible assets 15,003 13,845 (1,158)
Deferred tax assets/others 691 - (691)
Non-current assets 42,375 27,529 (14,846)
Inventories 285,006 350,822 65,816
Trade and other receivables 33,485 12,725 (20,760)
Amount due from associate/other 21,648 1,846 (19,802)
Cash and cash equivalents 32,610 16,752 (15,858)
Current assets 372,749 382,145 9,396
Total assets 415,124 409,674 (5,450)
Trade and other payables 74,338 56,764 (17,574)
Bank loans and borrowings 37,393 20,687 (16,706)
Amount due to non-controlling interests - 9,807 9,807
Current tax liabilities/deferred revenue 4,118 2,097 (2,021)
Current liabilities 115,849 89,355 (26,494)
Amount due to non-controlling interests 3,006 - (3,006)
Bank term loans 12,889 40,497 27,608
Medium term notes 75,734 83,175 7,441
Non-current liabilities 91,629 123,672 32,043
Total liabilities 207,478 213,027 5,549
Shareholders' funds = Net assets 207,646 196,647 (10,999)
Non-controlling interests 4,276 13,063 8,787
Equity of parent company 203,370 183,584 (19,786)
Project debt finance not a cause for
concern
The increase in net debt and gearing is not a cause for concern. There are no covenants
to breach and the projects are separately funded, albeit in some cases with Aseana
providing corporate guarantees. Two projects are financed in stages by draw down of the
MTN loan facility originally set up in November 2011, and the other projects from
syndicated term loan facilities. The borrowings, which are secured on land held for
property development and work-in-progress, are denominated in Malaysian Ringgit, US
dollars and Vietnam Dong. The table overleaf shows the details. It is expected that the
debts will be fully repaid out of the sale proceeds from the projects.
As at the 31 December 2012, the amounts outstanding under the MTN totaled US$85.0m
with maturities extending out to December 2015. The weighted average interest rate was
5.42% per annum. The effective interest rate for the other bank loans and hire purchase
arrangement for the year 2012 ranged from 5.20% p.a. to 23% p.a.
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
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ASEANA - PROJECT DEBT AS AT 31 MARCH 2013
Project Total debt limit
(US$m) Unutilised
debt (US$m) Utilised (US$m)
Tiffany by i-ZEN - - Fully paid
SENI Mont' Kiara 6.8 - 6.8
The RuMa hotel and residences Term loan plus other
37.3 16.2 21.1
Aloft Kuala Lumpur Sentral Hotel MTN 87.0 74.3 12.7
Sandakan Harbour Square MTN 78.8 - 78.8
International Hi Tech Healthcare Park Term loan 20.6 - 20.6
City International Hospital Term loan 43.3 16.1 27.2
Waterside Estates Term loan 5.5 5.5 -
Total for projects 279.3 112.1 167.2
Term loan facility of US$5.5m funding for Waterside Estates drawn after period end
CASH FLOW
The cash flow statement is shown overleaf. The key points were:
Large swing in the operating line before working capital movement, from US$36.6m
to a deficit of US$7.6m due to the weaker sales performance in 2012;
Within working capital, inventories increased to US$350.8m (2011: US$285.0m)
mainly as a result of the stock of completed units increasing to US$209.0m (2011:
US$113.5m);
Net cash used in operating activities increased from US$56.8m to US$64.6m;
Net cash generated from investing activities was positive at US$29.3m due to net
disposals of available-for-sale financial instruments compared with net purchases in
2011;
Financing activities produced a cash surplus of US$16.8m compared with a deficit of
US$39.0m in 2011. Loan draw down exceeded repayments in 2012, the reverse
being the case in 2011;
Repurchase of 500,000 shares between 4 and 24 January at an average price of
USȼ34.93 costing US$175,000 held as treasury shares;
No dividend paid in 2012 compared with the interim dividend of US$0.01 per share
paid in 2011;
Overall net reduction in cash and cash equivalents of US$18.6m in 2012 compared
with a reduction of US$115.1m in the previous year;
Cash and cash equivalents at year end down to US$5.6m from US$22.8m in 2011.
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
15
CASH FLOW
Year ended 31st December (US$'000) 2011 2012
Net (loss)/profit before tax 33,132 (16,631)
Net finance income 542 3,892
Depreciation of property, plant and equipment 142 190
Impairments and write-offs 2,746 833
Change in fair value of available-for-sale fin. instruments (26) 4,734
Unrealised foreign exchange (gain)/loss 20 (642)
Op profit/(loss) before working cap. changes 36,556 (7,624)
Working capital movement (79,597) (48,057)
Interest and tax (13,721) (8,933)
Cash flows from /(used in) operating activities (56,762) (64,614)
Acquisitions from non-controlling interests 1,782 9,347
Fixed assets acquired net of disposals (591) (278)
Net purchases of held-for-trading financial instruments (21,358) 19,933
Finance income received/advances/repayments/other 862 290
Net cash flows from investing activities (19,305) 29,292
Repayment of borrowings (131,822) (12,080)
Drawdown of borrowings 104,732 30,390
Dividend paid (2,125) --
Deposits placed in banks (9,799) (1,371)
Share buy back - (175)
Net cash flows from financing activities (39,014) 16,764
Cash and cash equivalents at beginning of period 140,929 22,811
Effect of changes in exchange rates (3,037) 1,329
Net increase/(decrease) in cash and cash equivalents (115,081) (18,558)
Cash and cash equivalents at end of period 22,811 5,582
SUMMARY AND CONCLUSIONS
Aseana has three operating assets, a hotel and retail mall at Sandakan, another hotel
in Kuala Lumpur Sentral and the City International Hospital in HCMC. Three main
residential assets are at SENI Mont’ Kiara and RuMa in Kula Lumpur and Waterside
Estates in HCMC. All assets are being developed for sale with the likely time scale
stretching beyond 2015, the date when shareholders must vote on Aseana’s
continuation. Thus the future of Aseana beyond this point remains unclear.
Q1 results marked down NAV, RNAV, revenue and profit. Prospects appear stronger
in H2 as economic and market conditions are improving, more obviously in Malaysia
than Vietnam. This should facilitate sales of SENI Mont’ Kiara and RuMa. Aseana is
seeking to accelerate remaining residential sales by fully fitting out properties.
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COMPANY UPDATE 12 JULY 2013
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On the financial front, net debt and gearing have edged up at the end of Q1 (net
debt/equity 79.04%) with the funding of the Aloft hotel and the CIH. Management
does not perceive this as a problem. There are no bank covenants to breach in
respect of the overall debt to equity ratio of the Company. Aseana operates a
disciplined cash management policy tailoring development funding requirements to
receipts from asset sales as appropriate although has very adequate unutilised debt
facilities in place totalling US$112.1m (as at 31 March 2013) to use as required. It is
not always possible to foresee accurately the dates for completion of asset disposals.
In the near term, Aseana has cash and cash equivalents, net of overdrafts, of
US$15.9m, plus available-for-sale investments.
COMPANY HISTORY & OVERVIEW
Main market listing in April 2007 Aseana Properties Limited (‘ASPL’)
was incorporated in Jersey in early
2007 to invest in property
development projects in Malaysia
and Vietnam. It was listed on the
Main Market of the London Stock
Exchange in April 2007 via a
placing of 162 million shares at
US$1 per share.
Target properties are residential,
commercial and hospitality
Aseana’s original business model
set out its intention to acquire,
develop and redevelop upscale
residential, commercial and
hospitality projects. It was also
prepared to invest both as the sole
principal and, where appropriate, in
joint arrangements with third
parties, but retaining management
control. These aims have since
been modified so that no new
investments are undertaken, only
reinvestment in existing projects.
Manager is part of Malaysian listed Ireka
Group Ireka Development Management Sdn Bhd (IDM) is the Property Manager with day-to-day
management responsibility. It is a wholly-owned subsidiary of Ireka Corporation Berhad
(ICB), a company listed on the Bursa Malaysia (formerly the Kuala Lumpur Stock
Exchange) since 1993 and which has over 40 years of construction and property
development experience. ICB acquired 48.9 million shares or 19.56% in Aseana in
exchange for the Company’s first five properties at listing. In addition to managing the
property portfolio, IDM has had responsibility for the introduction and facilitation of new
investment opportunities. A quarterly management fee of 2% p.a. of Aseana’s NAV is
payable for these activities.
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
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DIRECTORS ASEANA PROPERTIES
NON-EXECUTIVE
CHAIRMAN
Mohammed Azlan bin Hashim 1 2
Azlan was appointed NEC in March 2007. Currently, Azlan is also NEC of Parkway Pantai Limited,
Asiasons Capital Limited and Chaswood Resources Holdings Ltd, all based in Singapore. He is also
a Non-Executive Director of Acibadem Saglik Hizmetleri Ve Ticaret A.S., a company listed in
Istanbul. In Malaysia, Azlan serves as Chairman of several listed companies on Bursa Malaysia
Securities Berhad, including D&O Green Technologies Berhad and SILK Holdings Berhad. He also
serves as a Board Member of various government related organisations.
NON-EXECUTIVE
DIRECTOR
Christopher Henry Lovell 1
Mr Lovell is lawyer who has practised in Jersey since 1979. He was a partner in Theodore Goddard
between 1983 and 1993 before setting up his own legal practice in Jersey. In 2000 he was one of the
founding principals of Channel House Trustees Limited, a Jersey regulated trust company, which
was acquired by Capita Group plc in 2005, when he became a director of Capita’s Jersey regulated
trust company. He joined Governance Partners LP, an independent corporate governance practice,
on his retirement from Capita in January 2010. His other current NED positions include Public
Service Properties Investments Limited and a number of EMAC Illyrian property funds listed on the
Channel Islands Stock Exchange.
NON-EXECUTIVE
DIRECTOR
David Harris 2 3
Mr Harris is currently Chief Executive of InvaTrust Consultancy Ltd, a company that specialises in the
provision of investment marketing services to the Financial Services Industry in both the UK and
Europe. He was formerly Managing Director of Chantrey Financial Management Ltd, an investment
and fund management company linked to Chartered Accountants, Chantrey Vellacott. From 1995 to
2000 he was Director of the Association of Investment Companies overseeing marketing and
technical training. He is currently a non-executive director of a number of quoted companies in the
UK including Character Group plc, Small Companies Dividend Trust plc, F&C Managed Portfolio
Trust plc and Manchester & London Investment Trust plc.
NON-EXECUTIVE
DIRECTOR
Ismail Shahudin 1 3
Ismail was appointed to the Board of Aseana in March 2007. Ismail is chairman of Maybank Islamic
Berhad, Opus Group Berhad and also serves as Independent Non-Executive board member of
several Malaysia listed companies including Malayan Banking Berhad (Malaysia's largest bank),
Nadayu Properties Berhad, EP Manufacturing Berhad, UEM Group Berhad which is a non-listed
wholly-owned subsidiary of Khazanah Nasional Berhad, one of the Malaysia government's
investment arms. He is also a Non-Independent Non-Executive Director of New Zealand listed Opus
International Consultants Limited and is a director of MCB Bank Limited in Pakistan.
NON-EXECUTIVE
DIRECTOR
John Lynton Jones 2 3
Lynton is chairman of Bourse Consult, a consultancy that advises clients on initiatives relating to
exchange trading, regulation, clearing and settlement. He has an extensive background as a chief
executive of several exchanges in London, including the International Petroleum Exchange, the OM
London Exchange and Nasdaq International (whose operations he set up in Europe in the late
1980s). He was a board member of London's Futures and Options Association, the London Clearing
House and was the founding chairman of the Dubai International Financial Exchange (now known as
Nasdaq Dubai). He is an advisor to the City of London Corporation.
NON-EXECUTIVE
DIRECTOR
Gerald Ong Chong Keng 2
Gerald is the CEO of Singapore based PrimePartners Corporate Finance Group and has over 20
years of corporate finance related experience at various financial institutions providing a wide variety
of services such as advisory, M&A activities and fund raising exercises.
1 – Audit Committee 2 – Nomination Committee 3 – Remuneration Committee
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
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MANAGEMENT TEAM IREKA DEVELOPMENT MANAGEMENT
CHIEF EXECUTIVE OFFICER Lai Voon Hon
He is the CEO of IDM and Executive Director of Ireka Corporation which he joined in 1994 as the
Group General Manager. He was appointed to the Board of Directors in 1996 and is also a Director
of several subsidiaries within the Ireka Group. An architect by profession, he has practiced in
London, Hong Kong and Malaysia prior to joining Ireka. He is a registered Professional Architect with
the Board of Architects, Malaysia.
CHIEF FINANCIAL OFFICER Lai Voon Huey Monica
She is the CFO of IDM and Executive Director of Ireka Corporation which she joined as the Group
Financial Controller in 1993. She was appointed to the Board of Directors in 1999 and is also a
Director of several subsidiaries within the Ireka Group. She worked for Ernst & Young in England and
KPMG in Hong Kong prior to joining Ireka. She is a fellow member of several institutes that include
the Institute of Chartered Accountants, England and Wales; Chartered Accountants, Malaysia; and
the Malaysian Institute of Taxation.
CHIEF INVESTMENT OFFICER Chan Chee Kian
He is the CIO of IDM. He was previously a management and strategy consultant with Accenture in
Singapore, Bangkok and Kuala Lumpur where he advised a broad range of clients including large
multi-national companies, Government-linked agencies and local enterprises throughout the Asia
Pacific region on strategic and operational issues. He graduated from the University of Bristol in
England with First Class Honours in Civil Engineering.
CHIEF OPERATING OFFICER Beh Chun Chong
He is the COO of IDM. A civil engineer by profession, he was involved in the construction and project
management of some high profile projects such as Kuala Lumpur International Airport, the Empire
Hotel of Brunei Darussalam and Kiaraville luxury condominiums. He graduated from the Universiti
Teknologi Malaysia with an honours degree in Civil Engineering and is a member of the Board of
Engineers, Malaysia.
ASEANA PROPERTIES www.aseanaproperties.com
COMPANY UPDATE 12 JULY 2013
19
ASEANA INFORMATION
Registered 12 Castle Street
Address St Helier
Jersey JE2 3RT
Channel Islands
Website www.aseanaproperties.com
IDM INFORMATION
Head office Level 18, Wisma Mont’ Kiara
No 1 Jalan Kiara, Mont’ Kiara
50480 Kuala Lumpur
Malaysia
Telephone +603 6411 6388
LEADING SHAREHOLDERS
As at 13 June 2013 %
Ireka Corporation Berhad 23.07
Legacy Essence Limited 18.43
Henderson Global Investors 12.38
LIM Advisors 11.37
SIX Securities Services 10.45
Funds managed by Cayenne Asset Mgt 6.13
Dr Thong Kok Cheong 5.23
Charlemagne Capital 2.97
Source: Argus Vickers
CITY INSIGHTS CONTACTS
Tony Cooper
Chris Munden
City Insights Limited 131 Finsbury Pavement, London EC2A 1NT Tel: +44 (0) 20 7920 3190
INCOME STATEMENT
Year ended 31st Dec (Fig's in US$'000) 2010 2011 2012
Revenue 179,345 281,142 23,732
Cost of sales (177,184) (236,645) (21,459)
Gross profit/(loss) 2,161 44,497 2,273
Other income 679 2,146 7,051
Administrative expenses (1,017) (2,053) (2,582)
Change in fair value of available-for-sale invests - - (4,653)
Foreign exchange (loss)/gain (670) (1,014) 524
Management fees (3,994) (3,972) (3,799)
Other operating expenses (12,852) (5,930) (11,553)
Operating profit/(loss) (15,693) 33,674 (12,739)
Finance income 794 602 407
Finance costs (534) (1,144) (4,299)
Profit/(loss) before tax (15,433) 33,132 (16,631)
Tax (5,795) (18,992) (1,798)
Profit/(loss) after tax (21,228) 14,140 (18,429)
BALANCE SHEET
Year ended 31st December (Fig's in US$'000) 2010 2011 2012
Property, plant and equipment 4,497 4,629 1,113
Available-for-sale investments 22,052 22,052 12,571
Intangible assets 17,174 15,003 13,845
Deferred tax assets/others 19,400 691 -
Non-current assets 63,123 42,375 27,529
Inventories 431,473 285,006 350,822
Trade and other receivables 31,499 33,485 12,725
Amount due from associate/other 382 21,648 1,846
Cash and cash equivalents 150,385 32,610 16,752
Current assets 613,739 372,749 382,145
Total assets 676,862 415,124 409,674
Trade and other payables 112,940 74,338 56,764
Bank loans and borrowings 68,463 37,393 20,687
Amount due to non-controlling interests - - 9,807
Medium term notes 72,923 - -
Current tax liabilities/deferred revenue 201,099 4,118 2,097
Current liabilities 455,425 115,849 89,355
Amount due to non-controlling interests 3,048 3,006 -
Bank term loans 21,176 12,889 40,497
Medium term notes - 75,734 83,175
Non-current liabilities 24,224 91,629 123,672
Total liabilities 479,649 207,478 213,027
Shareholders' funds = Net assets 197,213 207,646 196,647
Non-controlling interests 4,346 4,276 13,063
Equity of parent company 192,867 203,370 183,584
CASH FLOW
Year ended 31st December (Fig's in US$'000) 2010 2011 2012
Op profit/(loss) before working cap. changes (16,194) 36,556 (7,624)
Working capital movement 94,947 (79,597) (48,057)
Interest and tax (12,372) (13,721) (8,933)
Cash flows from /(used in) operating activities 66,381 (56,762) (64,614)
Acquisitions from non-controlling interests (18) 1,782 9,347
Fixed assets acquired net of disposals (3,556) (591) (278)
Net purchases of held-for-trading financial instruments 0 (21,358) 19,933
Finance income received/advances/repayments/other 1,197 862 290
Net cash flows from investing activities (2,377) (19,305) 29,292
Repayment of borrowings (44,763) (131,822) (12,080)
Drawdown of borrowings 72,590 104,732 30,390
Dividend paid - (2,125) --
Deposits placed in banks - (9,799) (1,371)
Share buy back - - (175)
Net cash flows from financing activities 27,827 (39,014) 16,764
Cash and cash equivalents at beginning of period 46,996 140,929 22,811
Effect of changes in exchange rates 2,102 (3,037) 1,329
Net increase/(decrease) in cash and cash equivalents 91,831 (115,081) (18,558)
Cash and cash equivalents at end of period 140,929 22,811 5,582 This document is designed to 'inform and educate' and is intended for professional advisers. The information contained in this document has been compiled from sources believed to be reliable, but no warranty, expressed or implied, is given that the information is complete or accurate or that it is fit for a particular purpose. All such warranties are expressly disclaimed and excluded. Any opinions, recommendations and forecasts referred to may have been superseded and thus not necessarily be the current opinions, recommendations and forecasts of the relevant analyst/broker.
This document is not an offer to buy or sell, or a solicitation of an offer to buy or sell, the securities mentioned. Any recommendations referred to do not necessarily imply the suitability of particular securities for individual situations. The value of securities and the income from them may fluctuate. It should be remembered that past performance is not necessarily a guide to
future performance and that some companies may be pre-profits and/or pre-revenues, and therefore are high risk situations. You are strongly advised to have a professional adviser and to contact him/her before entering into any contract to buy or sell any security.
By reading this document, I confirm that I have read and understand the above, that I am a professional investment adviser, and that I shall not hold City Insights or any of its members and
connected companies liable for any loss that I may sustain should I decide to buy or sell any of the mentioned securities.