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West Pioneer Props (WPR)

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Tuesday 28 June, 2011

West Pioneer Props

Preliminary Results

RNS Number : 2357J
West Pioneer Properties Limited
28 June 2011
 



Press Release

28 June 2011

 

West Pioneer Properties Limited

("West Pioneer" or the "Company")

 

Preliminary Results

 

West Pioneer Properties Limited (AIM:WPR), a leading developer and operator of shopping malls and mixed use developments in west and south India, announces its preliminary results for the year ended 31 March 2011.

Highlights

·    

Trading and footfall figures at Metro Junction Mall in Kalyan continue to perform well, with retailer and visitor responses improving

·    

Mall leasing levels increased to 74% with a leading national departmental store signed as a tenant during the period. Negotiations continue with additional retailers on desirable terms to increase leasing levels further

·    

Continuing focus on quality of tenants and tenant mix to position the Metro Junction  Mall as a leading value and lifestyle destination

·    

Residential development at Kalyan continues to progress well with over 80% of available units already sold.  Units are now being sold at prices approximately 48% higher than launch price

·    

Commercial Plaza at Kalyan received pre-launch bookings for approximately 20% of the area designated for sale, with the average sale price at approximately a 50% premium on the current residential sale price

·    

Design plans finalised at Nashik, with ground break expected to commence in the next six months. The Company is currently in advanced negotiations with a number of anchor tenants with a view to pre-leasing space in the mall

·    

Balance sheet remains robust as a result of prudent cash management and low gearing  with year end cash and cash equivalents of $2.2m

·    

Ability to finance Nashik development through proceeds from pre-sales of further residential units at Kalyan and a principally approved funding facility of US$5m

·    

Management actively investing cash and resources in exploring  and evaluating opportunities to generate value in the retail, residential, commercial and leisure spaces  

 

Commenting on the results, Amit Jatia, Chairman of West Pioneer, said:  "I am pleased to report a year of significant progress at West Pioneer. At our Kalyan development, good steps have been made in diversifying the tenant mix to position the mall as a leading value shopping and lifestyle destination combined with strong progress made in sales and leasing at the residential, retail and commercial developments.  The Board is excited about the future of the Nashik development now that design plans have been finalised and with construction due to commence in the current financial year.  We remain confident in our ability to deliver value to shareholders from our retail, hospitality, residential and commercial developments."

 

-Ends-

For further information:

Evolution Securities


Jeremy Ellis / Chris Clarke

Tel: +44 (0) 20 7071 4300

 

Media enquiries:

Abchurch Communications


Sarah Hollins / Mark Dixon

Tel: +44 (0) 20 7398 7729

mark.dixon@abchurch-group.com

www.abchurch-group.com

 



Chairman's Statement

 

Indian Economy

The medium and long term prospects for the Indian economy continue to be optimistic with the country witnessing GDP growth of 8.5% in 2010/11 and 8% growth estimated in 2011/12.  Domestic consumption has been steady over the period and foreign direct investment in the retail sector is expected to be relaxed offering West Pioneer potential partnership opportunities with leading Western brands looking to gain exposure to the Indian retail market.  However, inflation levels of 10% continue to be an issue for the economy, resulting in pressures being placed on consumption patterns.

Retail

The outlook for the organised retail sector in India remains promising with levels expected to rise from the current 6% to 11% by 2013 according to Knight Frank.  Increasingly, the focus of retailers is shifting towards value as a growth driver rather than volume driven growth, with West Pioneer expected to benefit from this shift due to its mix of tenants and customers. With the onset of the global financial crisis, retailers began to increasingly reassess their business models which in turn led to renegotiation of rentals deals in order to focus on operational efficiencies, resizing and the closing down of unprofitable stores.  Some sense of stability is now returning with both retailers and developers (including West Pioneer) looking at partnership models with revenue sharing deals incorporating minimum rental guarantees and long term sustainability as key terms.

Residential

India's growing middle class and the associated increasing levels of disposable income are generating demand for residential housing and second homes.  This demand for residential housing has in turn led to volume and price increases over the last six months with a degree of stabilisation now being experienced.

 

Company Strategy

West Pioneer's strategy is to become a leading developer and operator of shopping malls and mixed use developments in west and south India.  By capitalising on the synergies created through building and operating mixed use developments, the Company is not solely a mall developer and operator but also one that deals with consumers directly through its residential and commercial projects.  By leveraging this mixed use development strategy, West Pioneer is in a strong position to create value, generate sustainable operating income and achieve breakeven economics at project launch levels through pre-leasing and advance sale bookings. The Company continues to focus its activities in tier II cities where rapid growth and competitive land pricing is more achievable than in established tier I cities. In addition, West Pioneer's favoured route of entering into agreements through joint development or joint venture methods successfully reduces capital expenditure requirements.

 

Financial Review

In the year ended 31 March 2011, West Pioneer achieved revenue and other income of US$8.7m (2010: US$7.9m), including property rentals and other operating income of US$4.4m (2010: US$3.2m). Profit before tax was US$3.15m (2010: US$3m) and basic earnings per share was US$0.053 (2010: US$0.016). Net assets at the year end were US$67.1m (2010: US$63.3m), including cash and short term deposits of US$2.2m (2010: US$3.9m). Interest bearing loans and borrowings increased from US$7.6m to US$7.9m during the period, inclusive of debt repayments.

 

Operating Review

Kalyan

Good progress has been made during the year at the Company's development in Kalyan.  As a mixed use development, the Company has the benefit of dealing directly with consumers through the residential and commercial projects which in turn offers valuable consumer insight and synergies for use in the mall itself.  As a result of these insights, the strategic focus for the mall is now based on consumer value, with the successful positioning of the mall as a value and lifestyle destination. 

Phase I of the 500,000 sq. ft. mall has been developed as planned and includes a fully functional food court and entertainment zone on the second floor along with three restaurants and a five screen multiplex cinema.  In February 2011 the Company announced that one of India's leading department store operators had entered into an agreement to lease 43,750 sq. ft. of retail space.  As a result, leasing at the mall increased to 74% and the Company is currently in negotiation with a number of major brands to lease the remaining retail space.  The mall continues to experience a steady growth of walk-in footfall with over 8 million visitors to the mall during the year.  As detailed last year, there is an increasing number of people visiting the mall by car, which not only reflects the relative affluence of the customer as well as their intention to purchase, but also generates income for the Company from other revenue streams including income from car parking, advertising and kiosks.

Phase II of the development at Kalyan, the three-tower residential project of 560,000 sq. ft., has continued to progress well over the period.  80% of units have been pre-sold in the first two towers and pre-sales in the third tower are expected to commence later this year.The residential development maintains its status as the most premium development in the Kalyan area and units have achieved a 48% escalation from their sale price at launch. The project is expected to generate net profit of US$17m within the next three to four years.

Phase III of the development, a commercial plaza of 68,000 sq. ft., has been pre-launched with small commercial units for leasing on the ground floor and for sale on the first and second floors, with a target market of self-employed professionals such as doctors, lawyers and architects. Response to marketing the development has been very positive with 20% of the sale space already booked at a c.50% premium over current residential sale rates, which is in line with management's strategy to take advantage of opportunities where premium value can be generated. The project, entitled 'Metro Plaza', is expected to lead to a net cash inflow of US$2m over next two years from unit sales.  In addition, when fully leased, rental from commercial space on the ground floor is expected to yield US$0.5m per annum following launch.

 

Nashik & Aurangabad

During the period, the Company finalised design plans for Nashik. The development will include a 300,000 sq. ft. shopping mall and the Company is currently in advanced negotiations with a number of anchor tenants with a view to pre-leasing space in the mall.  Further potential has been identified for a hotel on the site with a management agreement with InterContinental Hotels Group in place for the development of a Holiday Inn hotel.

The development of land at Aurangabad will follow the development of Nashik.

Outlook

West Pioneer's key near term goals are to maintain the positioning of the Kalyan as a value and lifestyle destination in order to drive further footfall and maximise rental values and quality of tenants and tenant mix rather than short-term occupancy. The Company will also continue to develop Kalyan's commercial plaza alongside the development of the residential site and its corresponding sales plan.

The Company also expects to make significant advances in the development of the Nashik site in the current financial year and will update shareholders on progress going forward.  West Pioneer is making good progress in its objective of developing a brand that is recognised by retailers and consumers alike for quality and attractive pricing which it expects to lead to desirable returns for shareholders from income growth and asset value.



For the year ended 31st March 2011



Year ended 31st March



2011

2010

                        


$

$

Revenue




Property rentals


2,100,805

   1,612,256

Other operating income


2,272,500

1,656,311

Total Revenue


4,373,305

3,268,567

Property revaluation


4,117,148

3,897,005

Finance and other income


184,749

   831,174

Total Income


8,675,202

7,996,746





Expenses




Direct operating expenses for  rent-earning properties


(2,063,289)

(1,671,845)

Administrative expenses


(1,922,748)

(1,722,812)

Selling and distribution costs


(490,176)

(454,217)

Finance costs


(1,048,174)

(1,109,192)

Total expenses


(5,524,387)

        (4,958,066)

 

Profit before tax


3,150,815

3,038,680

Income tax


1,092,426

(1,767,376)





Profit after tax


4,243,241

     1,271,304





Attributable to:




Equity holders


4,243,241

1,271,304

 

 

 




Earnings per share (attributable to equity holders)




Basic


0.053

0.016

Diluted


0.053

0.016

 



For the year ended 31st March 2011



Year ended 31st March



2011

2010



$

$

Profit for the year


4,243,241

1,271,304





Exchange gain/ (loss) on translation of foreign operations


(510,093)

7,992,191





Other comprehensive income/ (loss) for the year, net of tax


(510,093)

7,992,191





Total comprehensive income for the year, net of tax


3,733,148

9,263,495





Attributable to:




Equity holders


3,733,148

9,263,495

 



As at 31st March 2011



As at 31st  March



2011

2010



$

$

 Assets




 Non current assets




 Property, plant and equipment


3,455,261

3,648,449

 Investment properties


75,018,955

73,059,060

 Intangible assets


12,755

21,984

 Other financial assets


313,781

306,572

 Advance income tax


482,167

355,305

 Deferred tax asset


3,166,099

-



82,449,018

77,391,370

 Current assets




 Inventories


9,953,710

5,382,042

 Investments - held for trading


549,527

639,615

 Trade and other receivables


1,383,896

1,450,130

 Prepayments


50,210

70,450

 Cash and short-term deposits 


2,191,013

3,966,039



14,128,356

11,508,276

 Total Assets


96,577,374

88,899,646

 Equity and Liabilities




 Equity attributable to the equity holders




 Issued capital


7,996,130

7,996,130

 Share premium


45,717,870

45,717,870

 Retained earnings


17,449,183

13,192,220

 Employee equity benefit reserve


690,216

650,152

 Foreign currency translation reserve


(4,742,795)

(4,232,702)



67,110,604

63,323,670

 Non current liabilities




 Interest bearing loans and borrowings


3,744,675

5,662,879

 Advance from sale of residential units


5,001,611

2,296,616

 Other financial liabilities


1,076,772

1,056,036

 Other non-financial liabilities


28,276

88,755

 Employee benefit liability


51,900

48,113

 Deferred tax liability


12,179,414

10,199,789



22,082,648

19,352,188

 Current liabilities




 Trade and other payables


2,151,057

3,421,657

 Interest bearing loans and borrowings


4,116,708

1,931,473

 Other financial liabilities


1,066,790

828,629

 Other non-financial liabilities


49,567

42,029



7,384,122

6,223,788

Total Liabilities


29,466,770

25,575,975

Total Equity and Liabilities


96,577,374

88,899,646


For the year ended 31st March 2011


Attributable to equity holders of the parent


Issued

Share

Retained

Employee equity benefits

Foreign currency translation

Total


capital

premium

earnings

reserve

 reserve

equity


$

$

$

$

$

$

Balance as at 1st April 2010

7,996,130

45,717,870

 13,192,220

650,152

(4,232,702)

63,323,670

Profit for the year

-

-

4,243,241

-

-

4,243,241

Other comprehensive income

-

-

-

-

(510,093)

(510,093)

Total comprehensive income

-

-

4,243,241

-

 (510,093)

3,733,148

Share based payment

-

-

-

53,786

-

53,786

Transfer to retained earnings on options forfeited

-

-

13,722

(13,722)

-

-

Balance as at 31st March  2011

7,996,130

45,717,870

17,449,183

690,216

(4,742,795)

67,110,604








Balance as at 1st April 2009

7,996,130

45,717,870

 11,920,916

515,474

(12,224,893)

53,925,497

Profit for the year

-

-

1,271,304

-

-

1,271,304

Other comprehensive income

-

-

-

-

7,992,191

7,992,191

Total comprehensive income

-

-

 1,271,304

-

7,992,191

9,263,495

Share based payment

-

-

-

134,678

-

134,678

Balance as at 31st March 2010

7,996,130

45,717,870

 13,192,220

650,152

(4,232,702)

63,323,670








 


For the year ended 31st March 2011


Year ended 31st  March


2011

2010


$

$

 Operating activities



 Profit before tax

3,150,815

3,038,680

 Adjustments to reconcile profit before tax to net cash flows



 Depreciation and amortization

       58,036

34,501

 Share based payments expense

53,786

134,678

 (Increase) in fair value of investment properties

 (4,117,148)

(3,897,005)

 (Increase) in value of investments held-for-sale

      (24,462)

(171,994)

 Net (Gain) on sale of investment

             -  

(113)

 Dividend income

       (8,845)

(18,121)

 Interest income

      (72,744)

(142,679)

 Interest expense

   1,040,439

1,101,125

 (Increase)  in other assets (non-current)

          (304)

(54,919)

 (Decrease) in other payables ( non current )

-     

(108,480)

 Increase  in other liabilities ( non current )

   2,665,077

2,467,476


2,744,650

2,383,149

 Working capital adjustments



 Decrease / (Increase)  in prepayments (current)

19,592

(39,829)

 Decrease / (Increase) in trade and other receivables

    1,420,740

(555,231)

 (Increase) in Inventories-Residential

      (2,111,423)

(728,977)

 (Increase) in Inventories-Mall

  (79,770)

(68,186)

 (Decrease) in trade and other payables (current)

   (1,270,559)

(300,004)

 Increase  in other liabilities (current)

292,348  

15,475

 Income tax paid

    (128,986)

(14,922)

 Net cash flows  from operating activities

886,592 

691,475

 Investing activities



 Proceeds from sale of held-for-trading investments

     250,538

850,384

 Purchase of property, plant and equipment and intangible Assets

       (2,930)

(13,189)

 Purchase of held-for-trading investments

    (174,150)

(96,346)

 (Increase)  in prepayments

             -  

(510,438)

 Capital expenditure in investment property

    (713,746)

(1,216,902)

 Dividend income

    6,735

94,591

 Interest received

     22,855

69,111

 Net cash flows (used in) investing activities

(610,698) 

(822,789)

 Financing activities



 Proceeds from issue of shares

260

-

 Proceeds from borrowings

          1,646,012

-

 Repayment of borrowings

(1,388,856)

(1,738,948)

 Interest paid

(931,013)

(1,101,125)

 Net cash flows (used in) financing activities

       (673,597)

(2,840,073)

 Net Increase / (Decrease) in cash and cash equivalents

(397,703)

(2,971,387)

 Net foreign exchange difference

 15,294

101,457

 Cash and cash equivalents at  1st April 2010

      2,573, 422

5,443,352

 Cash and cash equivalents at 31st March  2011

   2,191,013

2,573,422

 


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