TIDMWPR
RNS Number : 5710T
West Pioneer Properties Limited
08 December 2011
Press Release 8 December 2011
West Pioneer Properties Limited
("West Pioneer" or the "Company")
Interim Results
West Pioneer Properties Limited (AIM:WPR), a leading developer and operator of shopping malls and mixed use developments in west and south India, announces its interim results for the 6 months ended 30 September 2011.
Highlights
Trading and footfall figures at Metro Junction Mall in Kalyan
-- continue to perform well with 74% retail leasing
Residential development at Kalyan behind schedule but apartment
-- sales continue to progress well with over 85% of available
units already sold at prices approximately 50% higher than
launch price
Ground break of Commercial Plaza at Kalyan in November 2011
-- with strong pre-launch bookings for approximately 30% of
the area received and at an average sale price approximately
50% higher than the residential sale price
Risk of material delay at Nashik project due to complications
-- caused by delays in receiving development approvals
Development and eventual sale of Aurangabad project on schedule
-- and expected to generate sale proceeds of US$15.2 million
over the next 12 months subject to contract
Balance sheet remains robust as a result of prudent cash
-- management and low gearing with year end cash and cash equivalents
of $1.76 million; also funding of US$5 million available
from a sanctioned but unutilised debt facility
Commenting on the results, Amit Jatia, Chairman of West Pioneer, said: "This has been a challenging period not only for the Company but for all Indian real estate developers coping with a tightening of the country's monetary policies to counter inflation and slow project approvals by government bodies. However, I am confident that our persistent and focused efforts to position the Kalyan mall as a leading value shopping and lifestyle destination will produce significant results in the near future. The mall continues to cement its position as the most appealing shopping and entertainment destination for the local population in its catchment area.
"We are committed to the delivery of quality development of Residential and Commercial projects with ever strengthening support from our customers. The recent agreement to develop and sell the Company's Aurangabad asset will boost our ability to accelerate progress at the more value generating projects at Kalyan and Nashik. The Board remains optimistic in its ability to seek out further opportunities in the retail, hospitality, residential and commercial sectors which will bring best value to our shareholders going forward."
-Ends-
For further information:
Evolution Securities Limited, NOMAD
and Joint Broker
Jeremy Ellis Tel: +44 (0) 20 7071
4300
Religare Capital Markets plc, Joint
Broker
Daniel Briggs, Director, Corporate Tel: +44 (0) 20 7444
Broking 0503
Media enquiries:
Abchurch Communications
Mark Dixon / Oliver Baxendale Tel: +44 (0) 20 7398
7729
mark.dixon@abchurch-group.com www.abchurch-group.com
Chairman's Statement
In the period ended 30 September 2011, West Pioneer achieved revenue and other income of $2.4 million (2010: $2.2 million), including property rentals and other operating income of $2.3 million (2010: $2.0 million). Loss before tax of $0.6 million (2010: loss of $0.4 million) and basic loss per share was $0.003 (2010: loss of $0.007). Net assets were $61.0 million (2010: $63.0 million), including cash and cash equivalents of $1.12 million (2010: $1.68 million). Interest bearing loans and borrowings decreased from $7.8 million to $7.4 million during the period, inclusive of debt repayments.
Indian Economy
Whilst the macro-economic fundamentals of the Indian economy remain attractive, persistently high inflation rates and ensuing tightening of monetary policy by the Central Bank are contributing to lower than expected rates of growth. With Q1 and Q2 GDP growth at 7.7% and 6.9% respectively, the Central Bank has revised the growth estimate downward from 8% to 7.6% for the year 2011/12. West Pioneer's low gearing has ensured that its cash flows have not been badly affected by the resulting higher interest rates. The Board will however, as a result of the increased risk free rate in the country, be keeping under review the appropriateness of the discount rates it is using in valuing the Company's investment properties and this could lead to an impairment in the carrying value of these properties being recognized in the 31 March 2012 results.
Impact of depreciation of Rupee
During recent months the Indian Rupee has fallen in value by more than 10% against the US Dollar, falling from 45.7 rupees dollar as at 31 March 2011 to 49.7 rupees to the dollar as at 30 September 2011. This has negatively impacted the Company's reported Net Asset Value by US$ 5.76 million during the 6 months ended 30 September 2011. The value has fallen even further to 51.5 rupees as of today and if this is not reversed by the end of the Company's financial year in 31 March 2012 then there would be a further fall in the Company's reported Net Asset Value as at the year end.
On a more positive note, India's central government has reiterated its commitment to reforming Foreign Direct Investment ("FDI") policy by proposing FDI in multi-brand retail and also increasing the FDI limit in single-brand retail to 100%. The plan by the government to open up the Indian retail market to global retail chains is a positive undertaking for all participants in the sector. However, the proposals have met with strong resistance and are currently on hold.
Operating Review
Nashik
The Company continues with its planned development of a 300,000 sq. ft. shopping mall and has been in advanced negotiations with a number of anchor tenants with a view to pre-leasing space in the mall. Further potential has been identified for a hotel on the site with a management agreement with InterContinental Hotels Group in place for the development of a Holiday Inn hotel.
However, in the past few months there has been slow progress in processing project approvals by government bodies. Unfortunately for West Pioneer, due to the need for on going regulatory and government approvals, property developers have been among the worst hit by the slow movement in decision making and progress at the Company's Nashik project has slowed significantly as a result of this. However, the Board is hopeful of a resolution in the near future.
Aurangabad
Since the period end and as announced on 7 November 2011, the Company entered into a non-binding Memorandum of Understanding ("MoU") to develop and sell, subject to contract, its asset in Aurangabad, India ("Aurangabad") to Golden Crown Realtors Limited Liability Partnership ("GCR") for a total cash consideration of approximately $15.2 million. The Company has started developing the project in three phases which, when completed, will include built up retail space of approximately 148,000 square feet and built up warehousing space of approximately 398,000 square feet as per GCR's requirement on the site prior to completing the transaction. West Pioneer will fund the construction costs up to a maximum amount of approximately $2.8 million, with all further costs being borne by the purchaser.
The proposal to develop and sell the Aurangabad asset follows the Board's decision to focus efforts and resources on the projects on which it has the greatest visibility and those which it considers will generate the most value for shareholders, namely its mixed use development in Kalyan and its development project in Nashik. Accordingly, the sale proceeds will be used to accelerate and expand the existing projects at Nashik and Kalyan.
Kalyan
Phase I - Retail
West Pioneer's efforts to reposition the Kalyan mall as leading value and lifestyle destination are showing positive results with a number of leading national Indian lifestyle brands expressing strong interest in occupying the remaining space in the mall. The mall is currently 74% leased. Other key performance indicators such as trading density and footfall numbers have remained positive over the period.
Phase II - Kalyan residential
The Company is disappointed to report that the three-tower residential project of 560,000 sq. ft., construction of residential towers (A and B) has not progressed at the desired pace in the last few months on account of delays in approvals from local authorities and a temporary shortage of manpower. These problems have now been resolved and the Company has regained momentum in the construction of both towers.
Customer response to the project has been very encouraging with 85% of the apartments sold and with current sale rates commanding approximately a 50% premium to the launch rate.
Phase III - Commercial Plaza
The Company is pleased to report that the development of the three story commercial plaza of 68,000 sq. ft. has begun with ground break in November 2011. The plaza will consist of three floors, ground, first and second. The ground floor will be leased and the first and second floor offices will be sold. The development has achieved pre-sales of 30% of the space available for sale. The current sale rate commands a premium of around 50% over prevailing residential sale rates.
Directorate changes
The Company was pleased to announce on 23 September 2011 that Chris Hough, aged 52, joined the Board as a Non-Executive Director. Chris qualified as a Chartered Surveyor and has worked on a wide range of construction projects both in the UK and overseas for last 34 years. He is one of the founding members of the Association of Project Management, a registered charity in the United Kingdom which aims to develop and promote the professional disciplines of project management and currently has over 19,000 individual members and 500 corporate members.
In recent years, Chris has acted as Project Manager on a $2 billion leisure development in Zanzibar, the $20 million Central Bank in Mauritius and provided programming advice for the new $25 million Hilton Hotel, also in Mauritius. In 2007 he was the lead Project Director on a EUR120 million retail mall development in Romania. In the UK, Chris has a range of experience on new build and refurbishment projects in both public and private sectors, including the Broadgate Development and the Imperial War Museum. Most recently Chris has been providing development and project management advice to a development and finance company working in London. We are confident that his knowledge and expertise will be invaluable to the West Pioneer as we continue to make progress on the Company's developments.
The Company also announced that Mihir Thacker, Non-Executive Director of the Company stepped down from the Board at the same time in order to pursue other business interests. The Board would also like to thank Mihir Thacker for his contribution to the Company over the years and wish him well in the future.
Amit Jatia
Chairman
8 December 2011
Interim consolidated income statement
for the six month period ended 30(th) September 2011
2011 2010
Unaudited
---------------------------
$ $
Revenue
Property rentals 1,147,780 1,037,680
Other operating income 1,153,868 1,008,497
------------ -------------
Total Revenue 2,301,648 2,046,177
Finance and other income 106,812 189,862
Total Income 2,408,460 2,236,039
Expenses
Property revaluation (46,943) -
Direct operating expenses for
rent-earning properties (1,132,494) (1,028,378)
Administrative expenses (1,010,806) (756,482)
Selling and distribution costs (232,322) (330,377)
Finance costs (585,817) (513,111)
------------ -------------
Total expenses (3,008,382) (2,628,348)
Loss before tax (599,922) (392,309)
Income tax credit / (expense) 335,092 (163,373)
Loss after tax (264,830) (555,682)
============ =============
Attributable to:
Equity holders (264,830) (555,682)
Earnings per share (attributable
to equity holders)
Basic (0.0033) (0.0069)
Diluted (0.0033) (0.0069)
Interim consolidated statement of comprehensive income
for the six month period ended 30(th) September 2011
2011 2010
------------ -----------
Unaudited
-------------------------
$ $
Loss for the period (264,830) (555,682)
============ ===========
Exchange (loss) / gain on
translation of foreign operations (5,759,269) 190,724
Other comprehensive (loss)
/income for the period,
net of tax (5,759,269) 190,724
------------ -----------
Total comprehensive loss
for the period, net of tax (6,024,099) (364,958)
============ ===========
Attributable to:
Equity holders (6,024,099) (364,958)
(6,024,099) (364,958)
============ ===========
Interim consolidated statement of financial position
As at 30(th) September 2011
30(th) September 31(st) March
2011 2010(*) 2011
------------- ------------ -------------
Unaudited Audited
$ $ $
Assets
Non-current assets
Property, plant and equipment 3,151,545 3,670,707 3,455,261
Investment properties 68,557,254 73,458,395 75,018,955
Intangible assets 8,385 17,316 12,755
Other financial assets 289,769 312,820 313,781
Advance income tax 292,369 454,320 482,167
72,299,322 77,913,558 79,282,919
------------- ------------ -------------
Current assets
Inventories 10,081,640 6,524,397 9,953,710
Investments - held for trading 435,120 636,888 549,527
Trade and other receivables 1,068,846 1,252,253 1,121,141
Other non financial assets 250,818 207,610 262,755
Prepayments 175,867 59,369 50,210
Cash and short-term deposits 1,760,516 1,676,822 2,191,013
13,772,807 10,357,339 14,128,356
------------- ------------ -------------
Total Assets 86,072,129 88,270,897 93,411,275
============= ============ =============
Equity and liabilities
Equity attributable to the
equity holders
Issued capital 7,996,130 7,996,130 7,996,130
Share premium 45,717,870 45,717,870 45,717,870
Retained earnings 17,325,675 12,650,260 17,449,183
Employee equity benefit
reserve 554,104 663,133 690,216
Foreign currency translation
reserve (10,502,064) (4,041,978) (4,742,795)
------------- ------------ -------------
61,091,715 62,985,415 67,110,604
------------- ------------ -------------
Non current liabilities
Interest bearing loans and
borrowings - 4,733,699 3,744,675
Advance from sale of units 5,493,409 3,567,573 5,001,611
Other financial liabilities 1,018,516 1,105,199 1,076,772
Other non-financial liabilities 15,300 73,889 28,276
Employee benefit liability 49,139 49,193 51,900
Deferred tax liability 7,918,438 10,395,746 9,013,315
14,494,802 19,925,299 18,916,549
------------- ------------ -------------
Current liabilities
Trade and other payables 1,848,949 2,298,928 2,151,057
Interest bearing loans and
borrowings 7,423,863 2,139,436 4,116,708
Other financial liabilities 1,182,870 904,424 1,066,790
Other non-financial liabilities 29,930 17,395 49,567
10,485,612 5,360,183 7,384,122
------------- ------------ -------------
Total Liabilities 24,980,414 25,285,482 26,300,671
------------- ------------ -------------
Total Equity and Liabilities 86,072,129 88,270,897 93,411,275
============= ============ =============
(*) Adjusted for the effects of
IAS 17 - amendment
Interim consolidated statement of changes in equity
for the six month period ended 30(th) September 2011
Attributable to equity holders
----------------------------------------------------------------------------------------------------------------------------------
Employee
equity Foreign currency
Issued Share Retained benefits translation Total
capital premium earnings reserve reserve Equity
------------------ ------------------ ------------------ ------------------- ------------------- ----------------------------
$ $ $ $ $ $
Balance as at 1(st) April 2011 7,996,130 45,717,870 17,449,183 690,216 (4,742,795) 67,110,604
Loss for the period - - (264,830) - - (264,830)
Other comprehensive loss - - - - (5,759,269) (5,759,269)
------------------ ------------------ ------------------ ------------------- ------------------- -------------------
Total comprehensive loss - - (264,830) - (5,759,269) (6,024,099)
Share based payment - - - 5,210 - 5,210
Transfer to retained earnings
on options forfeited - - 141,322 (141,322) - -
------------------ ------------------ ------------------ ------------------- ------------------- -------------------
Balance as at 30(th) September
2011 (Unaudited) 7,996,130 45,717,870 17,325,675 554,104 (10,502,064) 61,091,715
================== ================== ================== =================== =================== ===================
Balance as at 1(st) April 2010 7,996,130 45,717,870 13,192,220 650,152 (4,232,702) 63,323,670
Loss for the period - - (555,682) - - (555,682)
Other comprehensive income - - - - 190,724 190,724
------------------ ------------------ ------------------ ------------------- ------------------- -------------------
Total comprehensive (loss) - - (555,682) - 190,724 (364,958)
Share based payment - - - 26,703 - 26,703
Transfer to retained earnings
on options forfeited - - 13,722 (13,722) - -
Balance as at 30(th) September
2010 (Unaudited) 7,996,130 45,717,870 12,650,260 663,133 (4,041,978) 62,985,415
================== ================== ================== =================== =================== ===================
Interim consolidated cash flow statement
for the six months ended 30(th) September 2011
2011 2010
Unaudited
------------------------
$ $
Operating activities
Loss before tax (599,922) (392,309)
Adjustments to reconcile loss before tax
to net cash flows
Depreciation and amortisation 14,982 17,650
Provision for doubtful debts 157,222 108,228
Share based payments expense 5,210 26,703
Decrease in fair value of investment properties 46,943 -
Decrease / (Increase) in value of investments
held-for-sale 9,377 (57,997)
Foreign exchange difference 39,428 -
Net gain on sale of investment (5) -
Dividend income (5,229) (5,089)
Interest Income (78,728) (44,552)
Interest expense 536,532 507,918
125,810 160,552
Working Capital adjustments
(Increase) in prepayments (current) (139,325) (264)
(Increase) / Decrease in trade and other
receivables (350,118) 1,298,941
Decrease / (Increase) in other assets
(current) 43,208 (55,145)
(Increase) in other assets (non-current) (3,671) (5,148)
(Increase) in Inventories (1,083,815) (1,093,798)
(Decrease) in trade and other payables
(current) (83,828) (1,012,336)
Increase / (Decrease) in other liabilities
(current) 45,790 (51,212)
Increase in other liabilities (non current) 1,037,428 1,258,837
----------- -----------
(534,331) 339,875
Income tax refund / (paid) 268,877 (98,837)
Net cash flows (used in) / from operating
activities (139,644) 401,590
----------- -----------
Investing activities
Proceeds from sale of held-for-trading
investments 1,528,590 85,079
Purchase of property, plant and equipment
and intangible assets (9,086) (2,516)
Purchase of held-for-trading investments (1,438,428) -
Capital expenditure on Investment Property (101,212) (177,210)
Dividend income 5,229 3,465
Interest received 52,731 19,913
Net cash flows (used in) investing activities 37,824 (71,269)
----------- -----------
Financing activities
Proceeds from borrowings 1,808,283 216,456
Repayment of borrowings (1,668,040) (940,138)
Interest paid (344,089) (507,918)
----------- -----------
Net cash flows (used in) financing activities (203,846) (1,231,600)
----------- -----------
Net (decrease) in cash and cash equivalents (305,666) (901,279)
Net foreign exchange difference (63,883) 4,679
Cash and cash equivalents at 1(st) April 1,492,741 2,573,422
----------- -----------
Cash and cash equivalents at 30(th) September 1,123,192 1,676,822
----------- -----------
This information is provided by RNS
The company news service from the London Stock Exchange
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