MCL Land Ltd 2008 Financial S

RNS Number : 6255N

Hongkong Land Hldgs Ld

20 February 2009

 

To:   Business Editor                                                                                                     20th February 2009

                                                                                                                                    For immediate release

MCL Land Limited

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

 

20^th February 2009

MCL LAND LIMITED

2008 FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT

Highlights

-	Completions of The Grange, Mera Springs and The Esta
-	Write down of development properties for sale amounted to US$180.2 million
-	Loss attributable to shareholders after write down of development properties for sale amounted to US$107.3 million

'Confidence in the residential property markets in Singapore and Malaysia is extremely weak as a consequence of the current economic downturn with few buyers willing to commit to property purchases. The outlook for the market remains uncertain and 2009 is expected to be a challenging year. Nevertheless, the Group's results for the year should benefit from the completion of three development projects in Singapore, The Fernhill, Tierra Vue and Hillcrest Villa. With strong cash flow generated from the sale of development properties and a healthy balance sheet, the Group is well placed to weather the difficult economic and market conditions.'

Y K Pang, Chairman

20th February 2009

Group Results

				Financial year ended 31 December
				2008	2007	Change	2008	Change
				US$m	US$m	%	S$m	%
Revenue				343.1	391.1	- 12	510.8	- 11
Write down of development properties for sale				(180.2)	-	n/m	(259.4)	n/m
(Loss)/Profit before tax				(93.9)	73.4	n/m	(131.9)	n/m
(Loss)/Profit attributable to shareholders				(107.3)	61.9	n/m	(151.8)	n/m
				US¢	US¢		S¢
(Loss)/Earnings per share				(29.00)	16.73	n/m	(41.03)	n/m
Gross dividend per share				6.95	7.32	- 5	10.00	-
				At 31.12.2008	At  31.12.2007	Change	At  31.12.2008	Change
				US$m	US$m	%	S$m	%
Shareholders' funds				393.9	524.2	- 25	566.9	- 25
				US$	US$		S$
Net asset value per share				1.06	1.42	- 25	1.53	- 25

An exchange rate of US$1=S$1.44 (31.12.2007: US$1=S$1.44) was used for translating assets and liabilities at the balance sheet date and US$1=S$1.41 (2007: US$1=S$1.50) was used for translating the results for the financial year.

The financial results for the financial year ended 31stDecember 2008 and 31stDecember 2007 have been prepared in accordance with the International Financial Reporting Standards ('IFRS'). The 2008 results have not been audited or reviewed by the Auditors. The financial results for the financial year ended 31stDecember 2007 were extracted from the financial statements which were audited in accordance with the Singapore Standards on Auditing.

CHAIRMAN'S STATEMENT

Overview

The residential property markets in Singapore and Malaysia were difficult in 2008 due to the damaging effects of the global financial crisis and prices of residential properties fell in response to the resulting poor market sentiment. Following a strong performance of the residential market in Singapore in 2007, prices of high-end condominiums in the prime district fell by some 20% to 30% in 2008 while the mid-tier in Central areas fell 10% to 15%.

Demand for new residential units weakened further in the fourth quarter with only 419 units being sold, 73% lower than the 1,558 units sold in the third quarter. The total number of new homes sold by developers in 2008 was only 4,264 units, an 18-year low and a significant reduction from the 14,811 units sold in 2007. In contrast to 2007, a higher proportion of the purchasers were upgrading from public housing, albeit on significantly lower volume.

Group Performance

MCL Land recorded revenues of US$343.1 million for the year ended 31st December 2008, mainly arising on the completions of Mera Springs and The Esta. The Grange, a joint venture project, also completed in 2008, but did not contribute to the Group's revenue. Revenue for 2008 was 12% lower than the US$391.1 million recorded in 2007. 

Development profits recognised in 2008 following the completions of The Grange, Mera Springs and The Esta were offset by a write down of development properties for sale of US$180.2 million. This has resulted in the Group recording an overall net underlying loss of US$106.4 million. The underlying profit for 2007 was US$61.0 million. The loss attributable to shareholders for 2008 was US$107.3 million, which included US$0.9 million fair value adjustments to the Group's investment properties, compared with a net profit of US$61.9 million in 2007.

Shareholders' funds were US$393.9 million at the end of 2008, US$130.3 million lower than at the prior year end. The Group's net debt decreased from US$244 million at the end of 2007 to US$181 million at the end of 2008 following the receipt of progress payments from development projects partially offset by the payment of US$231 million for the acquisition of the Nim Park, Yishun Avenue 1 and Casa Nassau sites. Net gearing was 46%, marginally down from 47% at the end of 2007.

Dividends

The Board is recommending a first and final dividend of S¢10.00 per share payable on 26 May 2009 (2007: first and final dividend of S¢10.00 per share).

Properties 

D'Pavilion, a 50-unit apartment development at Upper Serangoon Road, met with a good response upon its soft launch in July with 28% of the units committed as at the end of 2008. The Peak@Balmeg, a 180-unit condominium development, also received an encouraging response on its launch in September with 25% of the units committed by the year end. All projects previously launched prior to these have been fully pre-sold, with the exception of two units at Hillcrest Villa. 

Construction of the Group's various projects progressed well during the year. The Grange, a joint venture development in Singapore, Mera Springs and The Esta all obtained their Temporary Occupation Permits in 2008. The Fernhill, Tierra Vue and Hillcrest Villa are on track to complete in 2009.  Waterfall Gardens and D'Pavilion are scheduled to complete in 2010, while The Peak@Balmeg is scheduled to complete in 2011. In addition, the Group has seven development projects in Singapore with a total gross floor area of about 158,000 square metres that are at various stages of planning approval. These development projects are planned to be launched progressively over the next few years.

The Group's joint venture developments in Malaysia made good sales progress in the year. The launch of the 391-unit condominium development, Riana Green Phase 1, was successful with 89% of the units being sold. Sales of the joint venture development in Seremban continued with 139 of the 270 terrace houses, bungalows, bungalow lots and shop offices having been sold by the end of 2008.

Construction of Wangsa Walk in Kuala Lumpur, a retail mall development by the Group's joint venture company, MSL Properties, is progressing well. The development will complete in 2009 with an estimated net lettable area of some 25,000 square metres, of which some 81% had been pre-committed as at year end.

Against the backdrop of continuing difficult financial and economic condition, property prices have fallen significantly and the outlook for the residential property market in Singapore has become increasingly uncertain. International Financial Reporting Standards require development properties for sale to be carried at the lower of cost or estimated net realisable value. With the advice of professional valuers, the Board has reviewed the carrying value of development properties for sale in Singapore that have yet to be launched or sold and has decided to write down the carrying value by US$180.2 million.

Acquisitions

The acquisitions of Nim Park at Nim Road, a 99-year leasehold land parcel in Yishun Avenue 1 and Casa Nassau at Upper East Coast Road, for total consideration of US$240 million, were completed during the year.

Prospects

Confidence in the residential property markets in Singapore and Malaysia is extremely weak as a consequence of the current economic downturn with few buyers willing to commit to property purchases. The outlook for the market remains uncertain and 2009 is expected to be a challenging year. Nevertheless, the Group's results for the year should benefit from the completion of three development projects in Singapore, The Fernhill, Tierra Vue and Hillcrest Villa. With strong cash flow generated from the sale of development properties and a healthy balance sheet, the Group is well placed to weather the difficult economic and market conditions.

Y K Pang

Chairman

20th February 2009

MCL Land Limited

Consolidated Profit and Loss Account for the financial year ended 31 December

			2008		2007	Change
		Note	US$'000		US$'000	%
Revenue		2	343,056		391,115	- 12
Cost of sales			(261,795)		(317,096)	- 17
Gross profit			81,261		74,019	10
Other operating (expenses)/income		3	(174,173)		6,375	n/m
Property related expenses			(2,215)		(2,578)	- 14
Administrative expenses			(2,949)		(6,219)	- 53
Share of joint ventures' results			4,128		1,815	127
(Loss)/Profit before tax		2	(93,948)		73,412	n/m
Tax		4	(13,340)		(11,521)	16
(Loss)/Profit after tax attributable to shareholders			(107,288)		61,891	n/m
			US¢		US¢	%
(Loss)/Earnings per share ('EPS') attributable to shareholders
	- basic and diluted*	6	(29.00)		16.73	n/m

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
						31.12.2008		31.12.2007
				Note		US$'000		US$'000
Non-current assets 1
Plant and equipment						212		354
Investment properties						15,985		17,675
Investments in joint ventures						34,739		30,743
Deferred tax assets						874		319
						51,810		49,091
Current assets 2
Development properties for sale						683,534		761,363
Amounts owing by joint ventures						62,018		100,763
Debtors and prepayments						80,797		169,953
Bank balances						131,800		78,419
						958,149		1,110,498
Total assets						1,009,959		1,159,589
Non-current liabilities 3
Borrowings				8		298,242		227,863
Deferred tax liabilities						459		958
Retention money payable						7,137		6,337
						305,838		235,158
Current liabilities 4
Borrowings				8		14,871		94,760
Amounts owing to joint venture						459		139
Creditors						277,437		290,385
Current tax liabilities						17,405		14,974
						310,172		400,258
Total liabilities						616,010		635,416
Net assets						393,949		524,173
Equity:
Share capital and reserves
Share capital						276,657		276,657
Translation reserve						109,383		105,228
Retained earnings						7,909		142,288
Shareholders' funds						393,949		524,173
Net asset value per share						US$1.06		US$1.42

1	The increase in non-current assets at 31.12.2008 as compared to 31.12.2007 is mainly due to the profit contribution from the Group's joint ventures, partially offset by a US$1.0 million fair value loss for investment properties.
2	The decrease in current assets is mainly due to the US$180.2 million write down of the Group's development properties for sale, repayment of advances from the Group's joint ventures and progress billings collected from the Group's completed projects. This is partially offset by the acquisitions of land at Yishun Avenue 1, Nim Park and Casa Nassau which are included in the development properties for sale.
3	The higher non-current liabilities at 31.12.2008 as compared to 31.12.2007 arose mainly from long-term loans drawn down during the financial year to finance the land purchases.
4	The lower current liabilities at 31.12.2008 as compared to 31.12.2007 arose mainly due to the repayment of short-term borrowings and payment to creditors.

MCL Land Limited
Consolidated Statement of Changes in Equity for the financial year ended 31 December

		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	-	4,155	-	4,155
Loss for the financial year		-	-	(107,288)	(107,288)
Total recognised gain/(loss) for the financial year		-	4,155	(107,288)	(103,133)
Dividend (net) (Note 5)		-	-	(27,091)	(27,091)
Balance at 31 December		276,657	109,383	7,909	393,949

2007
Balance at 1 January		276,657	77,370	95,154	449,181
Net gain recognised directly in equity
	- translation difference	-	27,858	-	27,858
Profit for the financial year		-	-	61,891	61,891
Total recognised gain for the financial year		-	27,858	61,891	89,749
Dividend (net) (Note 5)		-	-	(14,757)	(14,757)
Balance at 31 December		276,657	105,228	142,288	524,173

The number of issued ordinary shares as at 31 December 2008 is 369,985,977 (2007: 369,985,977) and the Company did not hold any treasury shares as at 31 December 2008 and 2007.

MCL Land Limited

Company Balance Sheet

						At		At
						31.12.2008		31.12.2007
						US$'000		US$'000
Non-current assets
Plant and equipment						182		304
Interests in subsidiaries						58,909		103,650
Investments in joint ventures						27,773		27,684
						86,864		131,638
Current assets
Amounts owing by subsidiaries						353,289		460,975
Amounts owing by joint ventures						62,018		99,558
Debtors and prepayments						280		201
Bank balances						70,916		3,029
						486,503		563,763
Total assets						573,367		695,401
Non-current liability
Borrowings						45,170		45,025
Current liabilities
Borrowings						9,034		94,760
Amounts owing to subsidiaries						35,564		93,128
Amounts owing to joint venture						459		139
Creditors						3,336		5,101
Current tax liabilities						2,284		2,276
						50,677		195,404
Total liabilities						95,847		240,429
Net assets						477,520		454,972
Equity:
Share capital and reserves
Share capital						276,657		276,657
Translation reserve						96,048		93,361
Retained earnings						104,815		84,954
Shareholders' funds						477,520		454,972
Net asset value per share						US$1.29		US$1.23

MCL Land Limited

Company Statement of Changes in Equity for the financial year ended 31 December

		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	-	2,687	-	2,687
Profit for the financial year		-	-	46,952	46,952
Total recognised gain for the financial year		-	2,687	46,952	49,639
Dividend (net) (Note 5)		-	-	(27,091)	(27,091)
Balance at 31 December		276,657	96,048	104,815	477,520
2007
Balance at 1 January		276,657	67,077	84,744	428,478
Net gain recognised directly in equity
	- translation difference	-	26,284	-	26,284
Profit for the financial year		-	-	14,967	14,967
Total recognised gain for the financial year		-	26,284	14,967	41,251
Dividend (net) (Note 5)		-	-	(14,757)	(14,757)
Balance at 31 December		276,657	93,361	84,954	454,972

The number of issued ordinary shares as at 31 December 2008 is 369,985,977 (2007: 369,985,977) and the Company did not hold any treasury shares as at 31 December 2008 and 2007.

MCL Land Limited

Consolidated Statement of Cash Flows for the financial year ended 31 December

					2008		2007
			Note		US$'000		US$'000
(Loss)/Profit before tax					(93,948)		73,412
Non-cash items
		Interest income			(1,361)		(1,521)
		Share of joint ventures' results			(4,128)		(1,815)
		Depreciation			165		201
		Write down of development properties for sale	3		180,245		-
		Fair value losses/(gains) for investment properties			1,030		(1,238)
		Unrealised translation gains			(13)		(83)
		Loss/(Profit) on disposal of plant and equipment			2		(2)
					175,940		(4,458)
Operating profit before working capital changes					81,992		68,954
Changes in working capital
		Development properties for sale			(123,643)		24,477
		Amount owing by joint ventures			41,444		(18,969)
		Debtors and prepayments			95,956		(144,256)
		Creditors			(7,166)		108,777
					6,591		(29,971)
Cash flows generated from operations					88,583		38,983
		Interest received			1,419		1,733
		Income tax paid			(12,897)		(3,200)
					(11,478)		(1,467)
		Net cash flows generated from operating activities 5			77,105		37,516
Cash flows from investing activities
		Purchase of plant and equipment			(24)		(56)
		Net proceeds from sale of plant and equipment			1		2
		Net proceeds from sale of investment property			-		11,432
		Net cash flows (used in)/provided by investing activities			(23)		11,378
Cash flows from financing activities
		Dividend paid (net)	5		(27,091)		(14,757)
		Drawdown of loans			287,556		180,942
		Repayment of loans			(290,779)		(189,970)
		Net cash flows used in by financing activities 6			(30,314)		(23,785)
Net change in cash and cash equivalents					46,768		25,109
Cash and cash equivalents at the beginning  of the financial year					78,419		48,801
Effect of exchange rate changes					6,613		4,509
Cash and cash equivalents at the end of the  financial year					131,800		78,419

Explanatory notes on material variances:

5	The net cash generated from operating activities for the financial year ended 31 December 2008 relates mainly to progress billing collected from the Group's development properties and repayment of advances from joint ventures, partially offset by the acquisitions of land at Yishun Avenue 1, Nim Park and Casa Nassau.
6	The net cash flows used in financing activities for the financial year ended 31 December 2008 relates to dividend paid on 27 May 2008 and higher long-term loans repaid from the progress billings collected.

MCL Land Limited

Notes

1	Accounting policies and basis of preparation
	The financial statements contained in this announcement are based on the results for the financial year ended 31 December 2008 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 to existing standards 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	Revenue and (Loss)/Profit
				Group
For the financial year ended 31 December				2008		2007		Change
				US$'000		US$'000		%
Revenue:
1st half				718		133,864		- 99
2nd half				342,338		257,251		33
				343,056		391,115		- 12
(Loss)/Profit after tax:
1st half				8,198		3,189		157
2nd half				(115,486)		58,702		n/m
				(107,288)		61,891		n/m
(Loss)/Profit before tax is determined after including:
Write down of development properties for sale (Note 3)				(180,245)		-		n/m
Fair value (losses)/gains for investment properties				(1,030)		1,238		n/m
Net exchange gain/(loss)				13		(125)		n/m
Rental income				1,303		1,502		- 13
Interest income				1,361		1,521		- 11
Depreciation on plant and equipment				(165)		(201)		- 18
(Loss)/Profit on disposal of plant and equipment				(2)		2		n/m

  n/m = not meaningful

3	Other operating (expenses)/income
	Included in the operating (expenses)/income is a write down of the Group's development properties for sale amounting to US$180,245,000 (2007: Nil).
4	Tax
	The provision for income tax is based on the statutory tax rates prevailing in the respective countries in which the Group companies operate after taking into account expenses which are not tax deductible, income not subject to tax and the Group tax relief.
5	Dividend (net)
	At the Annual General Meeting to be held on 29 April 2009, a first and final dividend of S¢10.00 per share (amounting to approximately US$25.7 million) in respect of 2008 will be proposed. These financial statements do not reflect this dividend payable, which will be accounted for in shareholders' equity as an appropriation of retained earnings in the financial year ending 31 December 2009.
	The dividends paid in 2008 and 2007 were as follows:

										Group and Company
										2008								2007
										US$'000								US$'000
	One-tier dividend of S¢10.00 per share paid in 2008  (2007: S¢4.30 per share)									27,091								10,396
	Final dividend of S¢2.20 per share paid in 2007  less income tax of 18%									-								4,361
										27,091								14,757
6	(Loss)/Earnings per share*
								Group
	For the financial year ended 31 December								2008										2007
	Basic (loss)/earnings per share*
	(Loss)/Profit attributable to shareholders (US$'000)								(107,288)										61,891
	Weighted average number of ordinary shares in issue ('000)								369,986										369,986
	Basic (loss)/earnings per share (US¢)								(29.00)										16.73
	Underlying (loss)/earnings per share
	Underlying (loss)/profit attributable to shareholders (US$'000)								(106,433)										60,951
	Basic underlying (loss)/earnings per share (US¢)								(28.77)										16.47
	A reconciliation of the underlying (loss)/profit and (loss)/profit attributable to shareholders is as follows:
				Group
	For the financial year ended 31 December								2008										2007
									US$'000										US$'000
	(Loss)/Profit attributable to shareholders								(107,288)										61,891
	Fair value losses/(gains) of investment properties (net of deferred tax)								855										(940)
	Underlying (loss)/profit attributable to shareholders								(106,433)										60,951
	* Diluted EPS is the same as basic EPS, as there were no outstanding share options.

7	Segment information
	No segment information is reported as there is only one reportable business segment and one reportable geographical segment for the financial year ended 31 December 2008.

8		Group Borrowings
									Group
									At				At
									31.12.2008				31.12.2007
									US$'000				US$'000
		Borrowings due within one year
			- unsecured						9,034				94,760
			- secured						5,837				-
									14,871				94,760
		Borrowings due after one year
			- unsecured						45,170				45,025
			- secured						253,072				182,838
									298,242				227,863
									313,113				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 31 December 2008 was US$296.6 million (31 December 2007: US$325.8 million).

9		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
		Twelve months ended 31 December          2008			-				-
		Three months ended 31 December          2008			-				-

10	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 31 December 2008. The total number of issued share capital (excluding treasury shares) as at 31 December 2008 and 31 December 2007 was 369,985,977.
11	Closure of books                                     NOTICE IS HEREBY GIVEN to the members of the Company that the Transfer Books and Register of Members of the Company will be closed on 13 May 2009 for preparation of dividend warrants. Duly completed and stamped transfers received by the Company's share registrars, M&C Services Private Limited at 138 Robinson Road, #17-00, The Corporate Office, Singapore 068906 before 5.00 pm on 12 May 2009 (the 'Books' Closure Date') will be registered to determine shareholders' entitlements to the final dividend. Shareholders (being depositors) whose securities' accounts with The Central Depository (Pte) Limited are credited with shares as at the Books' Closure Date will be entitled to the payment of the first and final dividend which will be paid on 26 May 2009, subject to approval by shareholders at the Annual General Meeting of the Company to be held on 29 April 2009.
12	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 31 December 2008 and the date of this report.
13	Notification pursuant to Rule 704(11) of the listing manual Pursuant to Rule 704(11) of the SGX-ST Listing manual, MCL Land Limited wishes to announce that no person occupying a managerial position in the Company or any of its principal subsidiaries is a relative of a director or the chief executive officer or a substantial shareholder of the Company.

- end -

For further information, please contact:                                    

MCL Land Limited                                    

Steve Chu                                    

Full text of the Financial Statements and Dividend Announcement for the financial year ended 31 December 2008 can be accessed through the internet at www.mclland.com.sg.                                       

 

END

 

 

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