MCL Land Interim Results

RNS Number : 3021A

Hongkong Land Hldgs Ld

31 July 2008

 



To: Business Editor	31st July 2008
	For immediate release

MCL Land Limited

First Half 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

31st July 2008
MCL LAND LIMITED
FIRST HALF 2008 FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT
Highlights
Profit recognised on completion of The Grange in the first quarter Acquisitions of sites at Nim Park and Yishun Avenue 1 completed in the first half, and Casa Nassau in July 2008
'The current uncertain economic conditions have led to a slowdown in the residential property market in Singapore.  Medium to longer-term prospects however, remain positive. The completions of Mera Springs and The Esta in  Singapore in the second half of the year should benefit MCL Land's overall performance in 2008.'
Y K Pang, Chairman
31st July 2008
Group Results
									Six months ended 30th June
									2008						2007		Change	2008	Change
									US$m						US$m		%	S$m	%
Revenue									0.7						133.9		- 99	1.0	- 100
Profit before tax									8.2						2.9		180	11.3	151
Underlying profit attributable to shareholders *									8.2						2.4		242	11.3	205
Profit attributable to shareholders									8.2						3.2		157	11.3	131
									US¢						US¢			S¢
Underlying earnings per share									2.22						0.65		242	3.04	207
Earnings per share									2.22						0.86		158	3.04	130
									At 30.6.2008						At 31.12.2007		Change	At 30.6.2008	Change
									US$m						US$m		%	S$m	%
Shareholders' funds									536.0						524.2		2	730.1	-4
									US$						US$			S$
Net asset value per share									1.45						1.42		2	1.97	-4
The exchange rate of US$1=S$1.36 (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$1.38 (2007: US$1=S$1.53) was used for translating the results for the financial period.
The financial results for the six months ended 30th June 2008 and 30th June 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
Inflationary pressures and difficulties in the international finance sector are affecting sentiment in the residential property market in Singapore. Sales activity has fallen as property launches are deferred and buyers remain cautious. Some 1,525 new residential units were sold in the second quarter of 2008, double the number sold in the first quarter, but the total of 2,287 units sold in the first half of 2008 is well down from the 9,912 units sold in the same period last year. Prices of residential properties rose marginally by 0.2% in the second quarter, bringing to 3.9% the growth for the first six months of 2008 compared with an increase of 13.5% in the first half of 2007.
Group Performance
The Group recorded revenue of US$0.7 million in the first half of 2008, being primarily rental income from investment properties. This compares with revenue of US$133.9 million for the same period in 2007 mainly in relation to the completion of The Metz. The Group's underlying profit for first half of 2008 was US$8.2 million, which is mainly attributable to the completion in March of The Grange, the Group's joint venture project in Singapore, a write-back of provision of US$2.7 million and the sales of the remaining twelve shops at the Kuala Lumpur Suburban Centre ('KLSC'), the Group's joint venture project in Malaysia. The underlying profit for the first half of 2007 was US$2.4 million, which included a gain of US$3.7 million arising from the completion of KLSC and the write-back of provision of US$0.8 million.
The Group's profit attributable to shareholders for the first half of 2008 was also US$8.2 million, compared with US$3.2 million in the first half of 2007, which included a US$0.8 million fair value gain of an investment property.
Shareholders' funds were US$536 million at the end of June 2008, 2% higher than the US$524 million at 31st December 2007 following the payment of a one-tier first and final dividend. The Group's net debt at 30th June was US$343 million, having increased from US$244 million at the prior year end after the payment of US$154.7 million for the purchase of Yishun Avenue 1 partially offset by the receipt of progress billings of US$52.8 million from development projects. Net gearing was 64% at 30th June 2008, compared with 47% at the end of 2007.
Dividend
The Board is not recommending the payment of an interim dividend for the first half of 2008 (2007: nil).
Properties
Construction work on the Group's development projects is progressing well. The Grange obtained its Temporary Occupation Permit in March 2008. Mera Springs and The Esta are expected to complete in the third and fourth quarters of 2008 respectively.
No new development projects were launched in Singapore during the period under review. All projects previously launched are 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 300 shop units at Kuala Lumpur Suburban Centre are now fully sold. The launch of the 391-unit condominium development, Riana Green Phase 1, received a good response with over 74% of the units sold. Progress continued with the sales at the joint venture development in Seremban with 116 of the 270 terrace houses, bungalows, bungalow lots and shop offices sold by the end of June 2008.
Construction of Wangsa Walk, a retail mall development by the Group's joint venture company, MSL, is progressing well. The development has an estimated net lettable area of 275,000 sq. ft and will be held for investment by the joint venture upon its completion in the first half of 2009.
Acquisitions
The Group's acquisitions of Nim Park at Nim Road for US$54.8 million and the 99-year leasehold land parcel in Yishun Avenue 1 for US$154.7 million completed in January and June 2008 respectively. The Group's purchase of Casa Nassau at Upper East Coast Road for US$29.7 million was approved by the Strata Titles Board in April 2008 and completed in July 2008.
Prospects
The current uncertain economic conditions have led to a slowdown in the residential property market in Singapore. Medium to longer-term prospects however, remain positive. The completions of Mera Springs and The Esta in Singapore in the second half of the year should benefit MCL Land's overall performance in 2008.
Y K Pang
Chairman
31st July 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 six months ended 30th  June 2008 to be false or misleading in any material respect.

On behalf of the Directors

Y K Pang

Chairman

Hassan Abas

Director

31st July 2008

MCL Land Limited
Consolidated Profit and Loss Account
				Three months ended																Six months ended
				30.6.2008			30.6.2007						Change							30.6.2008			30.6.2007		Change
			Note	US$'000			US$'000						%							US$'000			US$'000		%
Revenue				353			133,471								-100					718			133,864		- 99
Cost of sales				-			(133,068)								-100					-			(133,068)		- 100
Gross profit				353			403								-12					718			796		- 10
Other operating income				3,108			515								n/m					3,618			2,820		28
Property related expenses				13			(205)								n/m					(164)			(437)		- 62
Administrative expenses				(1,116)			(987)								13					(1,631)			(1,407)		16
Marketing expenses				(365)			(445)								-18					(365)			(1,457)		- 75
Share of joint ventures' results				1,131			2,987								-62					6,072			2,632		131
Profit before tax			2	3,124			2,268								38					8,248			2,947		180
Tax			3	60			(65)								n/m					(50)			242		n/m
Profit after tax attributable to shareholders				3,184			2,203								45					8,198			3,189		157
				US¢	US¢											%					US¢		US¢		%
Earnings per share ('EPS')
	- basic and diluted*	4		0.86	0.60											43					2.22		0.86		158
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
								30.6.2008		31.12.2007
						Note		US$'000		US$'000
Non-current assets 1
Plant and equipment								294		354
Investment properties								18,067		17,675
Investments in joint ventures								38,742		30,743
Deferred tax assets								406		319
								57,509		49,091
Current assets 2
Development properties for sale								1,092,484		761,363
Amounts owing by joint ventures								67,391		100,763
Debtors and prepayments								32,595		169,953
Bank balances								65,118		78,419
								1,257,588		1,110,498
Total assets								1,315,097		1,159,589
Non-current liabilities 3
Borrowings						5		364,559		227,863
Deferred tax liabilities								794		958
Retention money payable								8,835		6,337
								374,188		235,158
Current liabilities
Borrowings						5		44,053		94,760
Amounts owing to joint ventures								485		139
Creditors								350,979		290,385
Current tax liabilities								9,362		14,974
								404,879		400,258
Total liabilities								779,067		635,416
Net assets								536,030		524,173
Equity:
Share capital and reserves
Share capital								276,657		276,657
Translation reserve								135,978		105,228
Retained earnings								123,395		142,288
Shareholders' funds								536,030		524,173
Net asset value per share								US$1.45		US$1.42
Explanatory notes on material variances:
1	The increase in non-current assets at 30.6.2008 as compared to 31.12.2007 is mainly due to the strengthening of S$ against US$ and 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 30.6.2008 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 June
		Attributable to shareholders
		Share		Translation		Retained			Total
		capital		reserve		earnings			equity
		US$'000		US$'000		US$'000			US$'000
2008
Balance at 1 April		276,657		129,364		147,302			553,323
Net gain recognised directly in equity - translation difference		-		6,614		-			6,614
Profit for the financial period		-		-		3,184			3,184
Total recognised gain for the financial period		-		6,614		3,184			9,798
Dividend		-		-		(27,091)			(27,091)
Balance at 30 June		276,657		135,978		123,395			536,030
2007
Balance at 1 April		276,657		83,094		96,140			455,891
Net loss recognised directly in equity - translation difference		-		(4,128)		-			(4,128)
Profit for the financial period		-		-		2,203			2,203
Total recognised gain/(loss) for the financial period		-		(4,128)		2,203			(1,925)
Dividend		-		-		(14,757)			(14,757)
Balance at 30 June		276,657		78,966		83,586			439,209

MCL Land Limited
Consolidated Statement of Changes in Equity for the six months ended 30 June
		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		-	30,750	-	30,750
Profit for the financial period		-	-	8,198	8,198
Total recognised gain for the financial period		-	30,750	8,198	38,948
Dividend		-	-	(27,091)	(27,091)
Balance at 30 June		276,657	135,978	123,395	536,030
2007
Balance at 1 January		276,657	77,370	95,154	449,181
Net gain recognised directly in equity - translation difference		-	1,596	-	1,596
Profit for the financial period		-	-	3,189	3,189
Total recognised gain for the financial period		-	1,596	3,189	4,785
Dividend		-	-	(14,757)	(14,757)
Balance at 30 June		276,657	78,966	83,586	439,209

MCL Land Limited
Company Balance Sheet
							At		At
							30.6.2008		31.12.2007
							US$'000		US$'000
Non-current assets
Plant and equipment							254		304
Interests in subsidiaries							110,598		103,650
Investments in joint ventures							29,343		27,684
							140,195		131,638
Current assets
Amounts owing by subsidiaries							496,734		460,975
Amounts owing by joint ventures							67,391		99,558
Debtors and prepayments							206		201
Bank balances							2,580		3,029
							566,911		563,763
Total assets							707,106		695,401
Non-current liability
Borrowings							47,724		45,025
Current liabilities
Borrowings							44,054		94,760
Amounts owing to subsidiaries							150,485		93,128
Amounts owing to joint ventures							484		139
Creditors							3,994		5,101
Current tax liabilities							2,413		2,276
							201,430		195,404
Total liabilities							249,154		240,429
Net assets							457,952		454,972
Equity:
Share capital and reserves
Share capital							276,657		276,657
Translation reserve							120,545		93,361
Retained earnings							60,750		84,954
Shareholders' funds							457,952		454,972
Net asset value per share							US$1.24		US$1.23

MCL Land Limited
Company Statement of Changes in Equity for the three months ended 30 June
		Share	Translation	Retained	Total
		capital	reserve	earnings	equity
		US$'000	US$'000	US$'000	US$'000
2008
Balance at 1 April		276,657	114,402	84,610	475,669
Net gain recognised directly in equity - translation difference		-	6,143	-	6,143
Profit for the financial period		-	-	3,231	3,231
Total recognised gain for the financial period		-	6,143	3,231	9,374
Dividend		-	-	(27,091)	(27,091)
Balance at 30 June		276,657	120,545	60,750	457,952
2007
Balance at 1 April		276,657	72,233	85,687	434,577
Net loss recognised directly in equity - translation difference		-	(4,218)	-	(4,218)
Loss for the financial period		-	-	(1,195)	(1,195)
Total recognised loss for the financial period		-	(4,218)	(1,195)	(5,413)
Dividend		-	-	(14,757)	(14,757)
Balance at 30 June		276,657	68,015	69,735	414,407

MCL Land Limited
Company Statement of Changes in Equity for the six months ended 30 June
		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		-	27,184	-	27,184
Profit for the financial period		-	-	2,887	2,887
Total recognised gain for the financial period		-	27,184	2,887	30,071
Dividend		-	-	(27,091)	(27,091)
Balance at 30 June		276,657	120,545	60,750	457,952
2007
Balance at 1 January		276,657	67,077	84,744	428,478
Net gain recognised directly in equity - translation difference		-	938	-	938
Loss for the financial period		-	-	(252)	(252)
Total recognised gain/(loss) for the financial period		-	938	(252)	686
Dividend		-	-	(14,757)	(14,757)
Balance at 30 June		276,657	68,015	69,735	414,407

MCL Land Limited
Consolidated Statement of Cash Flows
					Three months ended				Six months ended
					30.6.2008		30.6.2007		30.6.2008		30.6.2007
					US$'000		US$'000		US$'000		US$'000
Profit before tax					3,124		2,268		8,248		2,947
Non-cash items
	Interest income				(387)		(386)		(810)		(748)
	Share of joint ventures' results				(1,131)		(2,987)		(6,072)		(2,632)
	Depreciation				43		78		86		155
	Fair value gain for an investment property				-		-		-		(1,100)
	Unrealised translation (gain)/ loss				(10)		1		(9)		2
	Profit on disposal of plant and equipment				-		-		-		(2)
					(1,485)		(3,294)		(6,805)		(4,325)
Operating profit/(loss) before working capital changes					1,639		(1,026)		1,443		(1,378)
Changes in working capital
	Development properties for sale				(191,864)		96,201		(277,828)		39,667
	Amounts owing by joint ventures				39,364		(109)		39,696		(223)
	Debtors and prepayments				30,253		(25,349)		144,213		(36,501)
	Creditors				26,732		8,077		44,880		66,265
					(95,515)		78,820		(49,039)		69,208
Cash flows generated from/(used in) operations					(93,876)		77,794		(47,596)		67,830
	Interest paid				(2,327)		(2,798)		(4,433)		(6,533)
	Interest received				374		685		846		954
	Income tax paid				(6,759)		(1,243)		(6,799)		(2,000)
					(8,712)		(3,356)		(10,386)		(7,579)
	Net cash flows generated from/(used in) operating activities 4				(102,588)		74,438		(57,982)		60,251
Cash flows from investing activities
	Purchase of plant and equipment				-		(3)		(10)		(27)
	Net proceeds from sale of plant and equipment				-		-		-		2
	Net cash flows used in investing activities				-		(3)		(10)		(25)
Cash flows from financing activities
	Drawdown of loans				148,605		22,040		206,868		55,165
	Repayment of loans				(46,136)		(43,579)		(140,479)		(55,766)
	Dividend paid				(27,091)		(14,757)		(27,091)		(14,757)
	Net cash flows provided by/(used in) financing activities 5				75,378		(36,296)		39,298		(15,358)
Net change in cash and cash equivalents					(27,210)		38,139		(18,694)		44,868
Cash and cash equivalents at the beginning of the financial period					91,280		56,105		78,419		48,801
Effect of exchange rate changes					1,048		(655)		5,393		(80)
Cash and cash equivalents at the end of the financial period					65,118		93,589		65,118		93,589
Explanatory notes on material variances:
	4	The net cash used in operating activities for the six months ended 30 June 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 six months ended 30 June 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								Six months ended
					30.6.2008			30.6.2007	Change				30.6.2008			30.6.2007						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)				(2)			2	n/m				12			3						300
	Rental income				353			382	- 8				718			753						- 5
	Interest income				387			386	-				810			748						8
	Depreciation on plant and equipment				(43)			(78)	-  45				(86)			(155)						- 45
	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												Six months ended
								30.6.2008									30.6.2007			30.6.2008					30.6.2007
	Basic earnings per share*
	Profit attributable to shareholders (US$'000)							3,184									2,203			8,198					3,189
	Weighted average number of ordinary shares in issue ('000)							369,986									369,986			369,986					369,986
	Basic earnings per share (US¢)							0.86									0.60			2.22					0.86
	Underlying earnings per share
	Underlying profit attributable to shareholders (US$'000)							3,184									2,203			8,198					2,397
	Basic underlying earnings per share (US¢)							0.86									0.60			2.22					0.65
	A reconciliation of the underlying profit and profit attributable to shareholders is as follows:
								Group
								Three months ended												Six months ended
								30.6.2008									30.6.2007			30.6.2008					30.6.2007
								US$'000									US$'000			US$'000					US$'000
	Profit attributable to shareholders							3,184									2,203			8,198					3,189
	Fair value gain of an investment property (net of tax)							-									-			-					(792)
	Underlying profit attributable to shareholders							3,184									2,203			8,198					2,397
	* Diluted EPS is the same as basic EPS, as there were no outstanding share options.
5	Group borrowings
																		Group
																	At						At
																	30.6.2008						31.12.2007
																	US$'000						US$'000
	Borrowings due within one year
		- unsecured															44,053						94,760
	Borrowings due after one year
		- unsecured															47,724						45,025
		- secured															316,835						182,838
																	364,559						227,863
																	408,612						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 June 2008 was US$543.9 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 June 2008
	Hongkong Land Limited
	- Management consultancy fee			20						-
	Six months ended 30 June 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 June 2008. The total number of issued share capital (excluding treasury shares) as at 30 June 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 June 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 six months ended 30 June 2008  can be accessed through the internet at www.mclland.com.sg.

 

END

 

 

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