MCL Preliminary Results

Hongkong Land Hldgs Ld 29 February 2008 To: Business Editor 29th February 2008 For immediate release MCL Land Limited 2007 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 Matheson & Co., Limited Philip Hawkins (020) 7816 8136 GolinHarris Sue So (852) 2501 7984 Weber Shandwick Financial Richard Hews/ Hannah Marwood (020) 7067 0700 29 February 2008 MCL LAND LIMITED 2007 FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT Highlights • Good profit growth following completion of The Calrose • Excellent response to sale launches in Singapore • Entered agreements to acquire five development sites for US$390.2 million 'The current uncertainties in world financial markets have the potential to affect the Singapore residential property sector in the short term, although its longer-term prospects remain positive.The expected completion of The Grange, The Esta and Mera Springs in Singapore should benefit MCL Land's overall performance in 2008.' Y K Pang, Chairman 29 February 2008 Group Results ------------------------------------------------------------------------------------------------------ Financial year ended 31 December ------------------------------------------------------------------------------------------------------ 2007 2006 Change 2007 Change US$m US$m % S$m % ------------------------------------------------------------------------------------------------------ Revenue 391.1 110.8 253 576.9 236 Profit before tax 73.4 33.2 121 106.4 105 Underlying profit attributable to shareholders * 61.0 31.0 97 88.4 82 Profit attributable to shareholders 61.9 30.5 103 89.8 88 ------------------------------------------------------------------------------------------------------ USc USc Sc ------------------------------------------------------------------------------------------------------ Underlying earnings per share * 16.47 8.38 97 23.89 82 Earnings per share 16.73 8.25 103 24.27 88 Gross dividend per share 6.93 3.80 82 10.00 67 ------------------------------------------------------------------------------------------------------ At At At 31.12.2007 31.12.2006 Change 31.12.2007 Change US$m US$m % S$m % ------------------------------------------------------------------------------------------------------ Shareholders' funds 524.2 449.2 17 756.7 10 ------------------------------------------------------------------------------------------------------ US$ US$ S$ ------------------------------------------------------------------------------------------------------ Net asset value per share 1.42 1.21 17 2.05 10 ------------------------------------------------------------------------------------------------------ The exchange rate of US$1=S$1.44 (31.12.2006: US$1=S$1.54) was used for translating assets and liabilities at the balance sheet date and average monthly transaction rates of US$1=S$1.50 (2006: US$1=S$1.58) was used for translating the results for the financial year. The financial results for the financial year ended 31 December 2007 and 31 December 2006 have been prepared in accordance with the International Financial Reporting Standards ('IFRS'). The 2007 results have not been audited or reviewed by the Auditors. The financial results for the financial year ended 31 December 2006 were extracted from the financial statements which were audited in accordance with the Singapore Standards on Auditing. * The basis for calculating underlying profit and earnings is set out in Note 5 of this report. CHAIRMAN'S STATEMENT Overview The residential market in Singapore performed strongly in 2007 as the number of new residential units sold reached an historic high of 14,811, some 33% more than in 2006. Market sentiment turned cautious, however, in the last quarter due to the uncertainties in global financial markets, and the pace of sales activity slowed as developers held back launches following the withdrawal of the deferred payment scheme. New residential sales by developers in the last three months of the year fell to 1,449 units, as compared to an average of 4,454 units in the previous three quarters. The rise in residential property prices in Singapore also moderated in the fourth quarter with an increase of 6.8%, as compared with an increase of 8.3% in the third quarter. For the year as a whole residential property prices rose 31.2 %, compared with a 10.2% increase in 2006. Group Performance MCL Land achieved revenues of US$391.1 million for the year ended 31 December 2007, mainly due to the completion of The Calrose, Mera East and The Metz. The underlying profit for the year was US$61.0 million, compared with US$31.0 million in 2006. An underlying profit of US$60.0 million profit arose upon the completion of The Calrose and Mera East and US$3.7 million on the completion of the Kuala Lumpur Suburban Centre shops in Malaysia. The Metz recorded a loss of US$0.4 million, which had been provided for in prior years. The 2006 comparative included a US$14.7 million profit on the completion of MeraPrime, a gain of US$8.3 million from land sales in Malaysia and US$5.8 million from the write-back of provisions. The profit attributable to shareholders for 2007 was US$61.9 million, benefiting from modest fair value adjustments to the Group's investment properties, compared with US$30.5 million in 2006. Shareholders' funds were US$524.2 million at the end of 2007, US$75.0 million higher than at the prior year end. Sales proceeds from development projects during the year reduced the Group's net debt from US$262 million to US$244 million producing net gearing of 47% at the end of 2007, compared with 58% at the end of 2006. Dividends The Board is recommending a one-tier first and final dividend of Sc10.00 per share payable on 27 May 2008 (2006: Sc2.20 per share less 18% income tax and a one-tier dividend of Sc4.30 per share). Properties There was an excellent response to the Group's Singapore development property launches in the year. The Fernhill, a 25-unit apartment block at Fernhill Road; Tierra Vue, a 129-unit condominium at St. Patrick's Road; and Waterfall Gardens, a 132-unit condominium at Farrer Road/Holland Road, were all fully sold. Hillcrest Villa, a 163-unit cluster housing development at Hillcrest Road, also achieved strong interest with only two units remaining uncommitted at the end of the year. Work on the Group's other fully-sold developments is progressing well. The Calrose, Mera East and The Metz obtained their Temporary Occupation Permits during 2007. The Grange is due to complete in the first quarter of 2008, while The Esta and Mera Springs are expected to complete in the second half of 2008. Completions of The Fernhill, Tierra Vue and Hillcrest Villa are scheduled for 2009, with Waterfall Gardens in 2010. The Group's joint venture developments in Malaysia have also performed well. The 300 shop units at Kuala Lumpur Suburban Centre, which completed in June 2007, were 96% sold at end of the year. The sales launch of the 391-unit condominium development, Riana Green Phase 1 in Malaysia, a joint venture development of our joint venture company, MSL Properties Sdn Bhd, was also well received with over 55% of the units sold. Progress has also made in the sales of the joint venture development in Seremban with Sunrise Berhad comprising 110 terrace houses, 41 bungalows and 15 bungalow lots, where 69 terrace houses, 18 bungalows and three bungalow lots had been sold as at the end 2007. Acquisitions Acquisitions of Nob Hill at Ewe Boon Road, Dynasty Garden Court 1 at Sixth Avenue and Holland Hill Mansions at Holland Hill, for a total cost of US$305.7 million, were completed in 2007. The acquisition of Nim Park at Nim Road for US$54.8 million was completed in January 2008. The Group's offer to purchase Casa Nassau and an adjoining bungalow at Upper East Coast Road for US$29.7 million remains subject to approvals from the Strata Titles Board and the Controller of Residential Property. With the addition of these new sites, the Group's land bank will generate some 780 residential units with gross floor area of approximately 1.4 million sq. ft. Prospects The current uncertainties in world financial markets have the potential to affect the Singapore residential property sector in the short term, although its longer-term prospects remain positive. The expected completion of The Grange, The Esta and Mera Springs in Singapore should benefit MCL Land's overall performance in 2008. Y K Pang Chairman 29 February 2008 ------------------------------------------------------------------------------------------------------ MCL Land Limited Consolidated Profit and Loss Account for the financial year ended 31 December ------------------------------------------------------------------------------------------------------ 2007 2006 Change Note US$'000 US$'000 % Revenue 2 391,115 110,816 253 Cost of sales (317,096) (81,024) 291 ----------------------------------- Gross profit 74,019 29,792 148 Other operating income 6,375 4,842 32 Property related expenses (2,578) (1,150) 124 Administrative expenses (6,219) (1,535) 305 Financing charges - (109) - 100 Share of joint ventures' results 1,815 1,371 32 ----------------------------------- Profit before tax 2 73,412 33,211 121 Tax 3 (11,521) (2,677) 330 ----------------------------------- Profit after tax attributable to shareholders 61,891 30,534 103 ----------------------------------- ------------------------------------------------------------------------------------------------------ USc USc % ------------------------------------------------------------------------------------------------------ Earnings per share ('EPS') attributable to shareholders - basic and diluted* 5 16.73 8.25 103 ------------------------------------------------------------------------------------------------------ * Diluted EPS is the same as basic EPS, as there were no outstanding share options. ------------------------------------------------------------------------------------------------------ MCL Land Limited Consolidated Balance Sheet ------------------------------------------------------------------------------------------------------ At At 31.12.2007 31.12.2006 Note US$'000 US$'000 Non-current assets ----------------------------------- Plant and equipment 354 1,576 Investment properties 17,675 25,365 Investments in joint ventures 30,743 27,776 Deferred tax assets 319 - ----------------------------------- 49,091 54,717 Current assets ----------------------------------- Development properties for sale 761,363 737,681 Amounts owing by joint ventures 100,763 76,341 Debtors and prepayments 169,953 22,645 Bank balances 78,419 48,801 ----------------------------------- 1,110,498 885,468 ----------------------------------- Total assets 1,159,589 940,185 ----------------------------------- Non-current liabilities ----------------------------------- Borrowings 7 227,863 258,405 Deferred tax liabilities 958 999 Retention money payable 6,337 3,593 ----------------------------------- 235,158 262,997 Current liabilities ----------------------------------- Borrowings 7 94,760 52,376 Amounts owing to joint ventures 139 130 Creditors 290,385 168,071 Current tax liabilities 14,974 7,430 ----------------------------------- 400,258 228,007 ----------------------------------- Total liabilities 635,416 491,004 ----------------------------------- Net assets 524,173 449,181 ----------------------------------- Equity: Share capital and reserves Share capital 276,657 276,657 Translation reserve 105,228 77,370 Retained earnings 142,288 95,154 ----------------------------------- Shareholders' funds 524,173 449,181 =================================== Net asset value per share US$1.42 US$1.21 ------------------------------------------------------------------------------------------------------ MCL Land Limited Consolidated Statement of Changes in Equity for the financial year ended 31 December ------------------------------------------------------------------------------------------------------ Attributable to shareholders ----------------------------------------------------- Share Share Translation Retained Total capital premium reserve earnings equity US$'000 US$'000 US$'000 US$'000 US$'000 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 4) - - - (14,757) (14,757) ----------------------------------------------------- Balance at 31 December 276,657 - 105,228 142,288 524,173 ===================================================== 2006 Balance at 1 January 200,034 76,623 43,802 75,853 396,312 Effect of Companies (Amendment) Act 2005 * 76,623 (76,623) - - - ----------------------------------------------------- Net gain recognised directly in equity - translation difference - - 33,568 - 33,568 Profit for the financial year - - - 30,534 30,534 ----------------------------------------------------- Total recognised gain for the financial year - - 33,568 30,534 64,102 Dividend (net) (Note 4) - - - (11,233) (11,233) ----------------------------------------------------- Balance at 31 December 276,657 - 77,370 95,154 449,181 ===================================================== The number of issued ordinary shares as at 31 December 2007 is 369,985,977 (2006: 369,985,977) and the Company did not hold any treasury shares as at 31 December 2007 and 2006. * Under the Companies (Amendment) Act 2005 that came into effect on 30 January 2006, the concept of par value was abolished and the amount of share premium account as at 30 January 2006, is required to become part of the company's share capital. ------------------------------------------------------------------------------------------------------ MCL Land Limited Company Balance Sheet ------------------------------------------------------------------------------------------------------ At At 31.12.2007 31.12.2006 US$'000 US$'000 Non-current assets ----------------------------------- Plant and equipment 304 377 Interests in subsidiaries 103,650 97,608 Investments in joint ventures 27,684 27,029 ----------------------------------- 131,638 125,014 Current assets ----------------------------------- Amounts owing by subsidiaries 460,975 384,089 Amounts owing by joint ventures 99,558 75,209 Debtors and prepayments 201 410 Bank balances 3,029 429 ----------------------------------- 563,763 460,137 ----------------------------------- Total assets 695,401 585,151 ----------------------------------- Non-current liability Borrowings 45,025 16,286 Current liabilities ----------------------------------- Borrowings 94,760 52,376 Amounts owing to subsidiaries 93,128 83,712 Amounts owing to joint ventures 139 130 Creditors 5,101 2,029 Current tax liabilities 2,276 2,140 ----------------------------------- 195,404 140,387 ----------------------------------- Total liabilities 240,429 156,673 ----------------------------------- Net assets 454,972 428,478 =================================== Equity: Share capital and reserves Share capital 276,657 276,657 Translation reserve 93,361 67,077 Retained earnings 84,954 84,744 ----------------------------------- Shareholders' funds 454,972 428,478 =================================== Net asset value per share US$1.23 US$1.16 ------------------------------------------------------------------------------------------------------ MCL Land Limited Company Statement of Changes in Equity for the financial year ended 31 December ------------------------------------------------------------------------------------------------------ Share Share Translation Retained Total capital premium reserve earnings equity US$'000 US$'000 US$'000 US$'000 US$'000 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) (Note4) - - - (14,757) (14,757) ----------------------------------------------------- Balance at 31 December 276,657 - 93,361 84,954 454,972 ===================================================== 2006 Balance at 1 January 200,034 76,623 36,247 54,349 367,253 Effect of Companies (Amendment) Act 2005 * 76,623 (76,623) - - - ----------------------------------------------------- Net gain recognised directly in equity - translation difference - - 30,830 - 30,830 Profit for the financial year - - - 41,628 41,628 ----------------------------------------------------- Total recognised gain for the financial year - - 30,830 41,628 72,458 Dividend (net) (Note 4) - - - (11,233) (11,233) ----------------------------------------------------- Balance at 31 December 276,657 - 67,077 84,744 428,478 ===================================================== The number of issued ordinary shares as at 31 December 2007 is 369,985,977 (2006: 369,985,977) and the Company did not hold any treasury shares as at 31 December 2007 and 2006. * Under the Companies (Amendment) Act 2005 that came into effect on 30 January 2006, the concept of par value was abolished and the amount of share premium account as at 30 January 2006, is required to become part of the company's share capital. --------------------------------------------------------------------------------------- MCL Land Limited Consolidated Statement of Cash Flows for the financial year ended 31 December --------------------------------------------------------------------------------------- 2007 2006 US$'000 US$'000 Profit before tax 73,412 33,211 Non-cash items ---------------------- Interest income (1,521) (1,158) Financing charges - 109 Share of joint ventures' results (1,815) (1,371) Depreciation 201 296 Fair value (gains)/losses for investment properties (1,238) 470 Unrealised translation (gains)/losses (83) 141 (Profit)/Loss on disposal of plant and equipment (2) 15 ---------------------- (4,458) (1,498) ---------------------- Operating profit before working capital changes 68,954 31,713 Changes in working capital ---------------------- Development properties for sale 36,422 (267,219) Amount owing by joint ventures (18,969) (9,395) Debtors and prepayments (144,256) (6,649) Creditors 108,777 62,131 ---------------------- (18,026) (221,132) ---------------------- Cash flows generated from/(used in) operations 50,928 (189,419) ---------------------- Interest paid (11,945) (7,557) Interest received 1,733 1,372 Income tax paid (3,200) (99) ---------------------- (13,412) (6,284) ---------------------- Net cash flows generated from/(used in) operating activities 37,516 (195,703) Cash flows from investing activities ---------------------- Purchase of plant and equipment (56) (295) Purchase of shares in joint ventures - (326) Net proceeds from sale of plant and equipment 2 123 Net proceeds from sale of investment property 11,432 - ---------------------- Net cash flows provided by/(used in) investing activities 11,378 (498) Cash flows from financing activities ---------------------- Dividend paid (net) (14,757) (11,233) Drawdown of loans 180,942 238,404 Repayment of loans (189,970) (11,217) ---------------------- Net cash flows (used in)/provided by financing activities (23,785) 215,954 ---------------------- Net change in cash and cash equivalents 25,109 19,753 Cash and cash equivalents at the beginning of the financial year 48,801 26,098 Effect of exchange rate changes 4,509 2,950 ---------------------- Cash and cash equivalents at the end of the financial year 78,419 48,801 ====================== ------------------------------------------------------------------------------------------------------ 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 2007 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. In 2007, the Group adopted the following standards and interpretation to existing standards which are relevant to its operations: IFRS 7 Financial Instruments: Disclosures Amendment to IAS 1 Presentation of Financial Statements - Capital Disclosures IFRIC 9 Reassessment of Embedded Derivatives IFRIC 10 Interim Financial Reporting and Impairment There have been no changes to the Group's accounting policies set out in the 2006 annual financial statements as a result of the adoption of these standards and interpretations. 2 Revenue and Profit Group For the financial year ended 31 December 2007 2006 Change US$'000 US$'000 % Revenue: 1st half 133,864 4,143 n/m 2nd half 257,251 106,673 141 ----------------------------------- 391,115 110,816 253 =================================== Profit after tax: 1st half 3,189 6,727 - 53 2nd half 58,702 23,807 147 ----------------------------------- 61,891 30,534 103 =================================== Profit before tax is determined after including: Reversal of write-down of development properties - 3,474 -100 Fair value gains/(losses) for investment properties 1,238 (470) n/m Net exchange loss (125) (7) n/m Rental income 1,502 1,444 4 Interest income 1,521 1,158 31 Interest expense - (109) -100 Depreciation on plant and equipment (201) (296) - 32 Profit/(loss) on disposal of plant and equipment 2 (15) n/m =================================== 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 Dividend (net) At the Annual General Meeting to be held on 29 April 2008, a first and final and one-tier dividend of Sc10.00 per share (amounting to approximately US$25.7 million) in respect of 2007 will be proposed. These financial statements do not reflect this dividend payable, which will be accounted for in shareholders' equity as an appropriation of retained earnings in the financial year ending 31 December 2008. The dividends paid in 2007 and 2006 were as follows: Group and Company 2007 2006 US$'000 US$'000 One-tier dividend of Sc4.30 per share paid in 2007 (2006: Nil) 10,396 - Final dividend of Sc2.20 per share paid in 2007 (2006: Sc6.00 per share) less income tax of 18% (2006: 20%) 4,361 11,233 ---------------------- 14,757 11,233 ====================== 5 Earnings per share * Group For the financial year ended 31 December 2007 2006 Basic earnings per share* Profit attributable to shareholders (US$'000) 61,891 30,534 Weighted average number of ordinary shares in issue ('000) 369,986 369,986 Basic earnings per share (USc) 16.73 8.25 ====================== Underlying earnings per share Underlying profit attributable to shareholders (US$'000) 60,951 31,004 Basic underlying earnings per share (USc) 16.47 8.38 ====================== A reconciliation of the underlying profit and profit attributable to shareholders is as follows: Group For the financial year ended 31 December 2007 2006 US$'000 US$'000 Profit attributable to shareholders 61,891 30,534 Fair value (gains)/losses of investment properties (net of tax) (940) 470 ---------------------- Underlying profit attributable to shareholders 60,951 31,004 ====================== * Diluted EPS is the same as basic EPS, as there were no outstanding share options. 6 Segment information No segment information is reported as there is only one reportable business segment and one reportable geographical segment for the financial year ended 31 December 2007. 7 Group borrowings Group At At 31.12.2007 31.12.2006 US$'000 US$'000 Borrowings due within one year - unsecured 94,760 52,376 Borrowings due after one year ---------------------------- - unsecured 45,025 16,286 - secured 182,838 242,119 ---------------------------- 227,863 258,405 ---------------------------- 322,623 310,781 ============================ 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 2007 was US$325.8 million (31 December 2006: US$400.2 million). 8 Interested person transactions Aggregate value of all interested person transactions Aggregate value of interested (excluding transactions less person transactionsconducted than S$100,000 and under shareholders' mandate transactions conducted under pursuant to Rule 920 (excluding the shareholders' mandate transactions less than Name of interested person pursuant to Rule 920) S$100,000) ---------------------------- -------------------------------------------------------------------- US$'000 US$'000 Twelve months ended 31 December 2007 Sale of two cluster housing units at Hillcrest Villa to directors 3,460 - Sale of three condominium units at Waterfall Gardens to directors 6,065 - Chang See Hiang & Partners - Legal fees 276 - Hongkong Land Limited - Management consultancy fee 560 - Three months ended 31 December 2007 Chang See Hiang & Partners - Legal fees 276 - Hongkong Land Limited - Management consultancy fee 346 - ==================================================================== 9 Issue of shares There were no rights, bonus or equity issues during the period 1 October 2007 to 31 December 2007. 10 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 close on 13 May 2008 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 2008 (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 27 May 2008, subject to approval by shareholders at the Annual General Meeting of the Company to be held on 29 April 2008. 11 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 2007 and the date of this report. 12 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 2007 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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