MCL Land 3rd Quarter Results

RNS Number : 5833H

Hongkong Land Hldgs Ld

06 November 2008

 

To:    Business Editor                                                          6th November 2008

                                                                                          For immediate release

MCL Land Limited

Third Quarter 2008 Financial Statements and Dividend Announcement

The following announcement was issued today by the Company's 77%-owned subsidiary, MCL Land Limited.

For further information, please contact:

Hongkong Land Limited

Y K Pang                                                                                                                     (852) 2842 8428

G M Brown                                                                                                                  (852) 2842 8138

                                                                                                                                     (852) 9612 3496

GolinHarris 

Sue So                                                                                                                          (852) 2501 7984

6th November 2008
MCL LAND LIMITED
THIRD QUARTER 2008 FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT
Highlights
·	Mera Springs completed in the third quarter
·	Preview of D'Pavilion and The Peak@Balmeg received encouraging response
'The current global financial crisis is having an adverse impact on the residential property market in Singapore and the deteriorating sentiment will put downward pressure on short to medium-term prices. The results for 2008 will benefit from the completions of three development projects in Singapore, namely The Grange, Mera Springs and The Esta. The overall performance of MCL Land may, however, be affected by downward movements in the carrying values of development properties.'
Y K Pang, Chairman
6th November 2008
Group Results
				Nine months ended 30th September
				2008	2007	Change	2008	Change
				US$m	US$m	%	S$m	%
Revenue				78.8	159.0	- 50	112.6	- 53
Profit before tax				25.0	5.0	396	35.4	360
Underlying profit attributable to shareholders *				21.5	4.6	367	30.3	327
Profit attributable to shareholders				21.5	5.4	298	30.3	265
				US¢	US¢		S¢
Underlying earnings per share *				5.81	1.25	365	8.18	328
Earnings per share				5.81	1.46	298	8.18	267
				At 30.9.2008	At 31.12.2007	Change	At 30.9.2008	Change
				US$m	US$m	%	S$m	%
Shareholders' funds				523.7	524.2	-	748.9	11
				US$	US$		S$
Net asset value per share				1.42	1.42	-	2.02	10
The exchange rate of US$1=S$1.43 (31.12.2007: US$1=S$1.44) was used for translating assets and liabilities at the balance sheet date and average monthly transaction rates of US$1=S$1.39 (2007: US$1=S$1.52) was used for translating the results for the financial period.
The financial results for the nine months ended 30thSeptember 2008 and 30thSeptember 2007 have been prepared based on the International Financial Reporting Standards ('IFRS'). These financial results have not been audited or reviewed by the Auditors.
* The basis for calculating underlying profit and earnings is set out in Note 4 of this report.

CHAIRMAN'S STATEMENT

Overview

Residential sales activity remained low in the third quarter of this year due to the uncertainties in global financial markets and the traditionally quiet lunar seventh month. There were 2,244 new residential units launched for sale in the third quarter, of which 1,558 units were sold.  3,845 units of new homes were sold by developers in the nine months ended 30th September, as compared to 13,362 units in the same period in 2007. The official index of residential property prices fell for the first time in four years, reducing 2.4% in the third quarter of 2008 as compared to a marginal increase of 0.2% in the second quarter. As the financial crisis continues, increasingly cautious sentiment can be expected to put further downward pressure on residential property prices in the near term.

Group Performance

The Group recorded revenue of US$78.8 million in the nine months ended 30th September 2008, primarily from the completion of Mera Springs. The revenue for the corresponding period in 2007 of US$159.0 million was mainly from the completions of The Metz and Mera East. The Group's underlying profit for the first nine months of 2008 was US$21.5 million, mainly attributable to a profit of US$20.9 million recognised on the completion of Mera Springs and The Grange, compared with an underlying profit of US$4.6 million for the corresponding period in 2007. The Group's profit attributable to shareholders for the period was also US$21.5 million, compared with US$5.4 million in the first nine months of 2007. Shareholders' funds were substantially unchanged at US$524 million at 30th September 2008 compared with 31st December 2007. The Group's net debt increased from US$244 million at the last year end to US$359 million at 30th September following the payment of US$181.1 million for the purchase of Yishun Avenue 1 and Casa Nassau partially offset by progress billings from development projects. Net gearing was 69% at 30th September, up from 47% at the end of 2007.

Dividend

The Board is not recommending the payment of an interim dividend for the nine months ended September 2008 (2007: nil).

Properties  Construction work of the Group's development projects is progressing well. The Grange, the Group's joint venture project in Singapore and Mera Springs obtained their Temporary Occupation Permits in March and September respectively. The Esta is scheduled to complete in the fourth quarter of 2008. D'Pavilion, a 50-unit apartment development at Upper Serangoon Road achieved good sales on its soft launch in July 2008, and 26% had been committed as at the end of September. Similarly, The Peak@Balmeg, a 180-unit condominium, received a positive response with 26% committed by the period end. All projects previously launched have been fully pre-sold, with the exception of two units at Hillcrest Villa. The Group's joint ventures in Malaysia made good progress in the sales of their developments. The launch of the 391-unit condominium development, Riana Green Phase 1, was well received with over 87% of the units sold. Progress continued with the sales at the joint venture development in Seremban with 133 of the 270 terrace houses, bungalows, bungalow lots and shop offices sold by the end of September. Construction of Wangsa Walk, a retail mall development by the Group's joint venture company, MSL, is progressing well. The development will complete in 2009 and has an estimated net lettable area of about 270,000 sq. ft, of which some 65% has been committed. Acquisitions The development site acquisitions of Nim Park at Nim Road, the 99-year leasehold land parcel in Yishun Avenue 1 and Casa Nassau at Upper East Coast Road, for total consideration of US$239.8 million were completed.  Prospects The current global financial crisis is having an adverse impact on the residential property market in Singapore and the deteriorating sentiment will put downward pressure on short to medium-term prices. The results for 2008 will benefit from the completions of three development projects in Singapore, namely The Grange, Mera Springs and The Esta. The overall performance of MCL Land may, however, be affected by downward movements in the carrying values of development properties. Y K Pang Chairman 6th November 2008

Statement pursuant to Rule 705(4) of the Listing Manual The directors confirm that, to the best of their knowledge, nothing has come to the attention of the Board of Directors which may render the accompanying unaudited financial results for the nine months ended 30th September 2008 to be false or misleading in any material respect. On behalf of the Directors Y K Pang Chairman Hassan Abas Director 6th November 2008

MCL Land Limited Consolidated Profit and Loss Account
			Three months ended							Nine months ended
			30.9.2008		30.9.2007		Change			30.9.2008		30.9.2007	Change
		Note	US$'000		US$'000		%			US$'000		US$'000	%
Revenue			78,072		25,179			210		78,790		159,043	-	50
Cost of sales			(57,542)		(21,490)			168		(57,542)		(154,558)	-	63
Gross profit			20,530		3,689			457		21,248		4,485		374
Other operating income			274		228			20		3,892		3,048		28
Property related expenses			(74)		(383)		-	81		(238)		(820)	-	71
Administrative expenses			(1,017)		(852)			19		(2,648)		(2,259)		17
Marketing expenses			(1,536)		(164)			n/m		(1,901)		(1,621)		17
Share of joint ventures' results			(1,377)		(416)			231		4,695		2,216		112
Profit before tax		2	16,800		2,102			n/m		25,048		5,049		396
Tax		3	(3,516)		110			n/m		(3,566)		352		n/m
Profit after tax attributable to shareholders			13,284		2,212			n/m		21,482		5,401		298
			US¢		US¢			%		US¢		US¢		%
Earnings per share ('EPS')
	- basic and diluted*	4	3.59		0.60			498		5.81		1.46		298
n/m = not meaningful
* Diluted EPS is the same as basic EPS, as there were no outstanding share options.

MCL Land Limited Consolidated Balance Sheet
				At		At
				30.9.2008		31.12.2007
		Note		US$'000		US$'000
Non-current assets 1
Plant and equipment				248		354
Investment properties				17,103		17,675
Investments in joint ventures				35,509		30,743
Deferred tax assets				659		319
				53,519		49,091
Current assets 2
Development properties for sale				1,050,856		761,363
Amounts owing by joint ventures				62,133		100,763
Debtors and prepayments				71,808		169,953
Bank balances				59,690		78,419
				1,244,487		1,110,498
Total assets				1,298,006		1,159,589
Non-current liabilities 3
Borrowings		5		288,735		227,863
Deferred tax liabilities				752		958
Retention money payable				8,725		6,337
				298,212		235,158
Current liabilities
Borrowings		5		130,340		94,760
Amounts owing to joint ventures				462		139
Creditors				337,442		290,385
Current tax liabilities				7,870		14,974
				476,114		400,258
Total liabilities				774,326		635,416
Net assets				523,680		524,173
Equity:
Share capital and reserves
Share capital				276,657		276,657
Translation reserve				110,344		105,228
Retained earnings				136,679		142,288
Shareholders' funds				523,680		524,173
Net asset value per share				US$1.42		US$1.42
Explanatory notes on material variances:
1	The increase in non-current assets at 30.9.2008 as compared to 31.12.2007 is mainly due to the profit contribution from the Group's joint ventures.
2	The increase in current assets is mainly due to the new acquisitions of land at Yishun Avenue 1 and Nim Park, partially offset by repayment of advances from the Group's joint ventures and progress billings collected from the completed project, The Calrose.
3	The higher non-current liabilities at 30.9.2008 as compared to 31.12.2007 arose mainly from long-term loans drawn down during the period to finance the land purchases.

MCL Land Limited Consolidated Statement of Changes in Equity for the three months ended 30 September
		Attributable to shareholders
		Share	Translation	Retained	Total
		capital	reserve	earnings	equity
		US$'000	US$'000	US$'000	US$'000
2008
Balance at 1 July		276,657	135,978	123,395	536,030
Net loss recognised directly in equity - translation difference		-	(25,634)	-	(25,634)
Profit for the financial period		-	-	13,284	13,284
Total recognised gain/(loss) for the financial period		-	(25,634)	13,284	(12,350)
Balance at 30 September		276,657	110,344	136,679	523,680
2007
Balance at 1 July		276,657	78,966	83,586	439,209
Net gain recognised directly in equity - translation difference		-	11,895	-	11,895
Profit for the financial period		-	-	2,212	2,212
Total recognised gain for the financial period		-	11,895	2,212	14,107
Balance at 30 September		276,657	90,861	85,798	453,316

MCL Land Limited Consolidated Statement of Changes in Equity for the nine months ended 30 September
		Attributable to shareholders
		Share	Translation	Retained	Total
		capital	reserve	earnings	equity
		US$'000	US$'000	US$'000	US$'000
2008
Balance at 1 January		276,657	105,228	142,288	524,173
Net gain recognised directly in equity - translation difference		-	5,116	-	5,116
Profit for the financial period		-	-	21,482	21,482
Total recognised gain for the financial period		-	5,116	21,482	26,598
Dividend		-	-	(27,091)	(27,091)
Balance at 30 September		276,657	110,344	136,679	523,680
2007
Balance at 1 January		276,657	77,370	95,154	449,181
Net gain recognised directly in equity - translation difference		-	13,491	-	13,491
Profit for the financial period		-	-	5,401	5,401
Total recognised gain for the financial period		-	13,491	5,401	18,892
Dividend		-	-	(14,757)	(14,757)
Balance at 30 September		276,657	90,861	85,798	453,316

MCL Land Limited Company Balance Sheet
	At		At
	30.9.2008		31.12.2007
	US$'000		US$'000
Non-current assets
Plant and equipment	213		304
Interests in subsidiaries	61,121		103,650
Investments in joint ventures	27,946		27,684
	89,280		131,638
Current assets
Amounts owing by subsidiaries	507,839		460,975
Amounts owing by joint ventures	62,133		99,558
Debtors and prepayments	185		201
Bank balances	3,165		3,029
	573,322		563,763
Total assets	662,602		695,401
Non-current liability
Borrowings	45,451		45,025
Current liabilities
Borrowings	78,316		94,760
Amounts owing to subsidiaries	96,464		93,128
Amounts owing to joint ventures	462		139
Creditors	4,061		5,101
Current tax liabilities	2,298		2,276
	181,601		195,404
Total liabilities	227,052		240,429
Net assets	435,550		454,972
Equity:
Share capital and reserves
Share capital	276,657		276,657
Translation reserve	98,753		93,361
Retained earnings	60,140		84,954
Shareholders' funds	435,550		454,972
Net asset value per share	US$1.18		US$1.23

MCL Land Limited Company Statement of Changes in Equity for the three months ended 30 September
		Share	Translation	Retained	Total
		capital	reserve	earnings	equity
		US$'000	US$'000	US$'000	US$'000
2008
Balance at 1 July		276,657	120,545	60,750	457,952
Net loss recognised directly in equity - translation difference		-	(21,792)	-	(21,792)
Loss for the financial period		-	-	(610)	(610)
Total recognised loss for the financial period		-	(21,792)	(610)	(22,402)
Balance at 30 September		276,657	98,753	60,140	435,550
2007
Balance at 1 July		276,657	68,015	69,735	414,407
Net gain recognised directly in equity - translation difference		-	11,644	-	11,644
Profit for the financial period		-	-	2,461	2,461
Total recognised gain for the financial period		-	11,644	2,461	14,105
Balance at 30 September		276,657	79,659	72,196	428,512

MCL Land Limited Company Statement of Changes in Equity for the nine months ended 30 September
		Share	Translation	Retained	Total
		capital	reserve	earnings	equity
		US$'000	US$'000	US$'000	US$'000
2008
Balance at 1 January		276,657	93,361	84,954	454,972
Net gain recognised directly in equity - translation difference		-	5,392	-	5,392
Profit for the financial period		-	-	2,277	2,277
Total recognised gain for the financial period		-	5,392	2,277	7,669
Dividend		-	-	(27,091)	(27,091)
Balance at 30 September		276,657	98,753	60,140	435,550
2007
Balance at 1 January		276,657	67,077	84,744	428,478
Net gain recognised directly in equity - translation difference		-	12,582	-	12,582
Profit for the financial period		-	-	2,209	2,209
Total recognised gain for the financial period		-	12,582	2,209	14,791
Dividend		-	-	(14,757)	(14,757)
Balance at 30 September		276,657	79,659	72,196	428,512

MCL Land Limited Consolidated Statement of Cash Flows
			Three months ended				Nine months ended
			30.9.2008		30.9.2007		30.9.2008		30.9.2007
			US$'000		US$'000		US$'000		US$'000
Profit before tax			16,800		2,102		25,048		5,049
Non-cash items
	Interest income		(241)		(341)		(1,051)		(1,089)
	Share of joint ventures' results		1,377		416		(4,695)		(2,216)
	Depreciation		41		66		127		221
	Fair value gain for an investment property		-		-		-		(1,100)
	Unrealised translation gain		(4)		(6)		(13)		(4)
	Profit on disposal of plant and equipment		-		-		-		(2)
			1,173		135		(5,632)		(4,190)
Operating profit before working capital changes			17,973		2,237		19,416		859
Changes in working capital
	Development properties for sale		(10,139)		(61,998)		(287,967)		(22,331)
	Amounts owing by joint ventures		2,012		3,288		41,708		3,065
	Debtors and prepayments		(40,704)		7,172		103,509		(29,329)
	Creditors		3,465		22,322		48,345		88,587
			(45,366)		(29,216)		(94,405)		39,992
Cash flows generated from/(used in) operations			(27,393)		(26,979)		(74,989)		40,851
	Interest paid		(2,056)		(2,120)		(6,489)		(8,653)
	Interest received		250		332		1,096		1,286
	Income tax paid		(4,922)		(1,297)		(11,721)		(3,297)
			(6,728)		(3,085)		(17,114)		(10,664)
	Net cash flows generated from/(used in) operating activities 4		(34,121)		(30,064)		(92,103)		30,187
Cash flows from investing activities
	Purchase of plant and equipment		(6)		(26)		(16)		(53)
	Net proceeds from sale of plant and equipment		1		-		1		2
	Net cash flows used in investing activities		(5)		(26)		(15)		(51)
Cash flows from financing activities
	Drawdown of loans		55,324		62,900		262,192		118,065
	Repayment of loans		(23,904)		(46,027)		(164,383)		(101,793)
	Dividend paid		-		-		(27,091)		(14,757)
	Net cash flows provided by financing activities 5		31,420		16,873		70,718		1,515
Net change in cash and cash equivalents			(2,706)		(13,217)		(21,400)		31,651
Cash and cash equivalents at the beginning of the financial period			65,118		93,589		78,419		48,801
Effect of exchange rate changes			(2,722)		1,940		2,671		1,860
Cash and cash equivalents at the end of the financial period			59,690		82,312		59,690		82,312
Explanatory notes on material variances:
	4	The net cash used in operating activities for the nine months ended 30 September 2008 relates mainly to the new acquisitions of land at Yishun Avenue 1 and Nim Park, partially offset by progress billing collected and repayment of advances from joint ventures.
	5	The net cash flows provided by financing activities for the nine months ended 30 September 2008 relates to the higher long-term loans drawn down to finance the land purchase, partially offset by dividend paid on 27 May 2008.

MCL Land Limited Notes
1	Accounting policies and basis of preparation The financial statements contained in this announcement are consistent with those set out in the 2007 audited accounts which have been prepared in conformity with International Financial Reporting Standards ('IFRS'), including International Accounting Standards ('IAS') and interpretations adopted by the International Accounting Standards Board. There have been no changes to the accounting policies set out in the 2007 audited accounts except for the adoption of the following interpretations which are relevant to its operations: IFRIC 11 Group Treasury Share Transactions IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction The adoption of the above interpretations did not have a material impact on the results of the Group.
2	Profit
				Group
				Three months ended						Nine months ended
				30.9.2008	30.9.2007			Change		30.9.2008		30.9.2007		Change
				US$'000	US$'000			%		US$'000		US$'000		%
	Profit before tax is determined after including:
	Fair value gain for an investment property			-		-		-		-		1,100	-	100
	Net exchange gain/(loss)			-		(127)	-	100		12		(124)		n/m
	Rental income			303		373	-	19		1,021		1,126	-	9
	Interest income			241		341	-	29		1,051		1,089	-	3
	Depreciation on plant and equipment			(41)		(66)	-	38		(127)		(221)	-	43
	Profit on disposal of plant and equipment			-		-		-		-		2	-	100
	n/m = not meaningful
3	Tax
	The provision for income tax is based on the statutory tax rates prevailing in the respective countries in which Group companies operate after taking into account expenses which are not tax deductible, income not subject to tax and Group tax relief.

4	Earnings per share *
				Group
				Three months ended				Nine months ended
				30.9.2008		30.9.2007		30.9.2008		30.9.2007
	Basic earnings per share*
	Profit attributable to shareholders (US$'000)			13,284		2,212		21,482		5,401
	Weighted average number of ordinary shares in issue ('000)			369,986		369,986		369,986		369,986
	Basic earnings per share (US¢)			3.59		0.60		5.81		1.46
	Underlying earnings per share
	Underlying profit attributable to shareholders (US$'000)			13,284		2,212		21,482		4,609
	Basic underlying earnings per share (US¢)			3.59		0.60		5.81		1.25
	A reconciliation of the underlying profit and profit attributable to shareholders is as follows:
				Group
				Three months ended				Nine months ended
				30.9.2008		30.9.2007		30.9.2008		30.9.2007
				US$'000		US$'000		US$'000		US$'000
	Profit attributable to shareholders			13,284		2,212		21,482		5,401
	Fair value gain of an investment property (net of tax)			-		-		-		(792)
	Underlying profit attributable to shareholders			13,284		2,212		21,482		4,609
	* Diluted EPS is the same as basic EPS, as there were no outstanding share options.
5	Group borrowings
								Group
								At		At
								30.9.2008		31.12.2007
								US$'000		US$'000
	Borrowings due within one year
		- unsecured						78,316		94,760
		- secured						52,024
								130,340		94,760
	Borrowings due after one year
		- unsecured						45,451		45,025
		- secured						243,284		182,838
								288,735		227,863
								419,075		322,623
	Certain subsidiaries of the Company have mortgaged their development properties as security for bank loans. The net book value of properties mortgaged as at 30 September 2008 was US$521.1 million (31 December 2007: US$325.8 million).

6	Interested person transactions
				Aggregate value of all interested person transactions (excluding transactions less than S$100,000 and transactions conducted under the shareholders' mandate pursuant to Rule 920)				Aggregate value of interested person transactions conducted under shareholders' mandate pursuant to Rule 920 (excluding transactions less than S$100,000)
	Name of interested person
				US$'000				US$'000
	Three months ended 30 September 2008				-				-
	Nine months ended 30 September 2008
	Hongkong Land Limited
	- Management consultancy fee				51				-
7	Issue of shares
	There have been no changes in the issued share capital of the Company since 31 December 2007.
	There are no outstanding convertibles issued or treasury shares held by the Company as at 30 September 2008.
	The total number of issued share capital (excluding treasury shares) as at 30 September 2008 and 31 December 2007 was 369,985,977.
8	Others
	The results do not include any pre-acquisition profits and have not been affected by any item, transaction or event of a material and unusual nature. No significant transaction or event has occurred between 30 September 2008 and the date of this report.
- end -
For further information, please contact:
MCL Land Limited
Steve Chu
Full text of the Financial Statements and Dividend Announcement for the nine months ended 30 September 2008 can be accessed through the internet at www.mclland.com.sg.

 

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