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¢



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.



This information is provided by RNS
The company news service from the London Stock Exchange
 
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