27th Jul 2020 12:35
(Alliance News) - Aseana Properties Ltd on Monday reported a much wider loss for 2019 in its delayed annual results due to value adjustments on its two Sandakan properties to reflect their trading history and prospects
The Malaysia and Vietnam property developer, headquartered in Jersey, posted a USD28.7 million pretax loss for 2019, far wider than its GBP6.8 million loss in 2018.
Aseana said its worsened loss resulted from net realisable value adjustments of 30%, around USD23 million, to Aseana's two Sandakan properties due to "more realistic valuations reflecting their trading history and prospects" as well as the operating and financing expenses for a number of the company's portfolio projects.
Revenue fell sharply to USD9.7 million from USD33.1 million, while cost of sales increased to USD29.8 million from USD24.6 million, giving a gross loss of USD20.1 million compared to 2018's gross profit of USD8.5 million.
Due mostly to the Covid-19 pandemic, which restricted movement within Malaysia and Vietnam, finalisation of Aseana's annual report and completion of its audit were delayed.
The pandemic added to an already tumultuous time for Aseana, which experienced board upheaval and the resignation of its development manager in 2019.
Although the company did manage to obtain a mandate from shareholders in December to extend the life of the company until May 2021, it was subsequently "struck by the adverse economic effects of Covid-19 resulting in a forced hiatus to our asset divestment efforts which had until then looked promising."
The company has been in "divestment mode", said Chair Gerald Ong Chong Keng, "for some time now". However, this process has been hindered by the pandemic.
"Our divestment efforts have unfortunately been impeded by the increasingly difficult real estate market and economic conditions in Malaysia and from February 2020, the regional lock down and travel restrictions imposed by both Vietnam and Malaysia in their efforts to combat the Covid-19 pandemic. Until that point in time, there had been a lot of preliminary sales interest leading to multiple signings of Non-Disclosure Agreements by prospective buyers and several promising leads and negotiations had commenced on more than one of our assets," the chair said.
"Although we continue to be in discussions with several potential purchasers of our assets, many of the promising leads had been halted by the lockdown and travel restrictions imposed as a result of this pandemic. We are of course re-establishing communications and negotiations with these parties and will intensify efforts now that the said travel restrictions are lifted," he added.
In May 2020, the company announced its board was considering proposals for demerging some assets "in exchange for the buyback and cancellation of a significant percentage of the issued ordinary shares in the capital of the company," Ong said.
He noted that this demerger "would involve buying back shares owned by Ireka Corp Bhd and its concert party Legacy Essence Ltd along with certain other shareholders who in aggregate own approximately 50% of the outstanding shares of the company." A share buyback agreement and global settlement agreement have already been executed with Ireka and Legacy.
"With the completion of the de-merger exercise, our company would emerge leaner and fitter with better cash flows and a significantly lower level of liabilities, putting ourselves in a better position to survive these unprecedented and perilous economic times. Critically it is the strong belief of the board that the de-merger will result in our company achieving a stronger financial position and hence improved negotiating power vis-a-vis potential purchasers of our remaining assets," said Ong.
Shares in Aseana are currently suspended from trading in London.
By Anna Farley; annafarley@alliancenews.com
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