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MCL Land Ltd 2008 Financial Statements

20th Feb 2009 09:23

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

20th 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.

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.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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