Investor Relations


Latest Results

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 2012.


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Highlights

Highlights

  • Major boost to Indian retail sector as Foreign Direct Investment ("FDI") in multi-brand retail approved by Parliament on 7 December 2012. This has improved confidence in the retail sector
  • Steady progress being made in the Company's commercial and residential development projects at Kalyan
  • Repositioning of the Kalyan Mall into a lifestyle/value mall progressing well but has led to a short term fall in rental income over the period
  • The Company has successfully negotiated a new debt facility of US$11.83 million to fund capital expenditure at the Kalyan Mall, construction of commercial plaza, towers 3 and 4 at Kalyan and construction work at Aurangabad.  The facility will be drawn down in phases, as required, over the next 1-2 years
  • 20% depreciation in average value of Indian Rupee against the US Dollar for the period compared to the financial year ended 31 March 2012, materially affecting the reported profit
  • Balance sheet remains robust as a result of prudent cash management with period end cash and cash equivalents of US$0.97million, while maintaining good levels of ongoing investment into inventory, together with an additional US$11.42 million unutilised bank facilities in place
  • Development approvals at Nashik being pursued. Ground break plans will be announced once approvals are available.

Commenting on the results, Amit Jatia, Chairman of West Pioneer, said: "The period has been one of mixed news for the Company as its retail operations have been affected, as envisaged, by the ongoing re-engineering of the tenant mix in the Kalyan Mall.  This is reflected in the fall in rental income which is expected to continue in the current financial year.  However, once the re-positioning is completed this is likely to result in a rise in rental income.

"The Mall is therefore well placed to take advantage of increased confidence in the retail sector following the approval by Parliament of the relaxation of restrictions in Foreign Direct Investment.  Progress in the residential and commercial development is continuing steadily and this should result in improved financial performance for the Company in the near future.

"The results, particularly the income statement, have been materially affected by depreciation in the value of Indian Rupee against the US Dollar over the last year.

"Although moving at slower pace, we remain confident of the intrinsic underlying values in the Aurangabad and Nashik properties.  The Company is confident of making further progress on these sites in the future."

 

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Chairman's statement

Indian Economy

Challenges from sluggish economic growth and high inflation continue with GDP expected to rise at 5.7% in the year to March 2013 and inflation currently running at 7.2%, well above the Central Bank's target of 5%. Business confidence has been boosted by recent steps taken by Central government allowing Foreign Direct Investment ("FDI") in the retail, aviation and insurance sectors. However, concerns in relation to rising levels of fiscal deficit and risk of spill-over of global economic slowdown still loom over the Indian economy.

Impact of depreciation of Rupee

The Indian Rupee has depreciated by around 20% against the US Dollar from the average exchange rate for the financial year ended 31 March 2012compared to the accounting period in the six months to 30 September 2012. This has had a material impact the income statement. 

Retail

With the relaxation of FDI in multi-brand retail, retailers are preparing to scale up their operations. Many prominent international brands have expressed intentions to enter the Indian retail market revalidating strength and attractiveness of this largely unexploited industry. The policy aims to deploy FDI capital in retail infrastructure and other auxiliary industries. In addition to helping penetration of organised retail, this will also provide impetus to overall economic growth.

Residential

This sector is growing steadily on both volume and price fronts. In established markets, developers are producing luxury developments with ultra modern amenities. As units are becoming more expensive in established markets, further projects are being launched in extended suburbs to meet the demand in middle and lower segments. The outlook of the residential sector remains positive with ample opportunities in various micro markets catering to different income levels. 
 
Financial Review

In the period ended 30 September 2012, West Pioneer achieved revenue and other income of US$1.7million (2011: US$2.4million), including property rentals and other operating income of US$1.6million (2011: US$2.3million). Loss before tax was US$(1.7million) (2011: US$(0.6) million) and basic loss per share was US$(0.0191) (2011: Loss US$(0.0033)). Net assets at the period end were US$55.4million (2011: US$61.1million), including cash and short term deposits of US$1.0 million (2011: US$1.8 million). Interest bearing loans and borrowings increased from US$10.0 million to US$10.2million during the period, inclusive of debt repayments.

The Company has also continued to manage its working capital carefully and after having invested US$2.9 million in increasing its inventory, the Board is pleased to still be able to report US$1.0 million of cash on its balance sheet.

Operating Review

Kalyan

The Company has been successful in implementing its retail-led mixed use development model at Kalyan (the "Mall"). As a mixed use development, West Pioneer has the benefit of direct access to consumers through the residential and commercial projects, which in turn offers valuable consumer insight and synergies for use in the Mall itself. As previously announced, these insights have resulted in the strategic focus for the Mall shifting to consumer value and the successful positioning of the Mall as a value and lifestyle destination.

Kalyan - Retail

Phase I of the 500,000 sq. ft. Mall includes a fully functional food court and entertainment zone on the second floor, along with other retail offerings on Lower Ground and Ground floors. The repositioning exercise undertaken which is focused on establishing the Mall as a leading value shopping and lifestyle destination is in progress.  This has led to a short term loss of income.  Capital and other expenditure is also being incurred as part of this exercise which is aimed at improving the look and feel of the Mall and upgrading infrastructure at the premises. 

However, the Company is confident that on completion of this exercise the Mall will provide enhanced opportunities to lifestyle retailers, resulting in higher rentals and footfalls in the near future, which is anticipated to have a positive effect on Mall profitability.
 
Leasing levels at the Mall remained steady at 74% during the period and the Company is currently in negotiation with a number of other major brands to lease the remaining retail space.

Kalyan - Residential

The Company is pleased that the development of the first two residential towers of Phase II at Kalyan is progressing well. The first tower is nearing completion with final activities under way. Completion of tower A is expected to be in the first quarter of FY14.  The profits from completion are therefore expected be recognised in the September 2013 interim results. The second tower development is on schedule and is currently completed to the 17th floor. Response from customers remains encouraging with 89% of the units pre-sold in these two towers.

Planning permissions for the fourth tower are in progress and the launch will take place upon receipt of these planning permissions.  The third tower, which is already approved, will be launched together with the fourth tower. The fourth tower will see the total residential area being developed at Kalyan rising to over 810,000 sq. ft.

Kalyan - Commercial plaza

Significant progress has been made in Phase III of the development, a commercial plaza ("Metro Plaza") of 68,000 sq. ft. of office space with the building structure completed recently. Work is progressing well and the development is expected to be completed in the next few months. Metro Plaza will have small commercial units for leasing on the ground floor and units for sale on the first and second floors, with the target market being self-employed professionals such as doctors, lawyers and architects. The response to the development continues to be encouraging with 40% of the space pre-sold at an estimated 50% premium over current residential sale rates.  This is in line with the Company's strategy to take advantage of opportunities where the maximum value can be generated.

Nashik

Development permissions at Nashik are being pursued with various authorities and ground break will be announced once these permissions are in place. The Company is confident of initiating activities on this site in the future and exploiting the intrinsic value the Nashik property carries.

Aurangabad

The Company has commenced development of retail and warehousing space at Aurangabad with an intention to sell on completion.

Outlook

The Company's focus in the near term remains on the repositioning and refurbishment of the Kalyan mall and establishing it as a value and lifestyle destination. This in turn is likely to increase revenues and help support the long term plans of the Company. In addition, the Company is optimistic of earning good rental income from the ground floor space at the Metro Plaza project on completion.  The Development of residential and commercial projects at Kalyan is also a priority and the Company intends to deliver these projects to customers in a phased manner.

The Company is confident of making further progress in the development of the Nashik and Aurangabad sites in the near future and will update shareholders on the progress of these projects. The Board is confident of continuing progress on establishing West Pioneer as a formidable brand standing for quality and transparency among retailers and consumers. The Board believes strongly in the Company's ability to deliver growth over the longer term.

Amit Jatia
Chairman
20 December 2012


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Interim Consolidated Income Statement
for the six month period ended 30th September 2012

       
    2012 2011
  Notes Unaudited
    $ $
       
Revenue      
Property rentals   826,275 1,147,780
Other operating income   818,082 1,153,868
Total Revenue   1,644,357 2,301,648
Finance and other income 6 105,897 106,812
Total Income   1,750,254 2,408,460
       
Expenses      
Property revaluation loss   (669,925) (46,943)
Direct operating expenses for rent-earning properties   (1,138,976) (1,132,494)
Administrative expenses   (757,160) (1,010,806)
Selling and distribution costs   (189,685) (232,322)
Finance costs 7 (734,967) (585,817)
Total expenses   (3,490,713) (3,008,382)
Loss before tax   (1,740,459) (599,922)
Income tax credit 8 216,766 335,092
       
Loss after tax   (1,523,693) (264,830)
       
Attributable to:
Equity holders
  (1,523,693) (264,830)
       
       
Earnings per share (attributable to equity holders) 9    
Basic   (0.0191) (0.0033)
Diluted   (0.0190) (0.0033)

 

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Interim Consolidated Statement of Comprehensive Income
for the six month period ended 30th September 2012

     
  2012 2011
  Unaudited
  $ $
     
Loss for the period (1,523,693) (264,830)
     
Exchange loss on  translation of foreign operations (832,077) (5,759,269)
     
Other comprehensive loss for the period, net of tax (832,077) (5,759,269)
     
Total comprehensive loss for the period, net of tax (2,355,770) (6,024,099)
     
Attributable to:    
Equity holders (2,355,770) (6,024,099)
  (2,355,770) (6,024,099)

 

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Interim Consolidated Statement of Financial Position
As at 30th September 2012

  30 September 31March
2012 2011 2012
Notes Unaudited Audited
$ $ $
Assets  
Non-current assets    
Property, plant and equipment   1,622,635 3,151,545  1,671,041
Investment properties 10 53,810,775 68,557,254 54,329,562
Intangible assets   4,542 8,385 6,321
Other non-financial assets   11,913 - 16,103
Other financial assets   335,388 289,769 322,879
Advance income tax   182,447 292,369 308,076
    55,967,700 72,299,322 56,653,982
Current assets        
Inventories 11 32,551,634 10,081,640 29,557,631
Investments - held for trading 12 - 435,120 438,592
Trade and other receivables 13 920,500 1,068,846  966,668
Other non-financial assets   719,702 250,818 531,693
Prepayments   84,754 175,867 43,501
Cash and short-term deposits 5 967,153 1,760,516 771,640
    35,243,743 13,772,807 32,309,725
Total Assets   91,211,443 86,072,129  88,963,707
         
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   15,140,782 17,325,675   16,664,475
Employee equity benefit reserve   561,185 554,104 559,427
Foreign currency translation reserve   (14,009,168) (10,502,064) (13,177,091)
    55,406,799 61,091,715 57,760,811
Non current liabilities        
Interest bearing loans and borrowings 17 7,534,519 - 4,453,381
Advance from sale of units   12,520,340 5,493,409 8,269,352
Other financial liabilities   4,108,163 1,018,516 3,817,688
Other non-financial liabilities   34,394 15,300 6,282
Employee benefit liability   51,341 49,139 48,620
Deferred tax liability   6,174,691 7,918,438 6,488,338
    30,423,448 14,494,802 23,083,661
Current liabilities        
Trade and other payables   1,050,446 1,848,949 1,442,463
Interest bearing loans and borrowings 17 2,691,491 7,423,863 5,552,766
Other financial liabilities   1,614,613 1,182,870 1,107,284
Other non-financial liabilities   24,646 29,930 16,722
    5,381,196 10,485,612 8,119,235
Total Liabilities   35,804,644 24,980,414 31,202,896
Total Equity and Liabilities   91,211,443 86,072,129 88,963,707

 

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Interim Consolidated Statement of Changes in Equity
For the six months ended 30th September 2012

    Attributable to equity holders
  Issued Share Retained Employee equity benefits Foreign currency translation Total
  capital premium earnings reserve  reserve Equity
  $ $ $ $ $ $
Balance as at 1 April 2012 7,996,130 45,717,870 16,664,475 559,427 (13,177,091) 57,760,811
Loss for the period - (1,523,693) - - (1,523,693)
Other comprehensive loss  - - - - (832,077) (832,077)
Total comprehensive loss - - (1,523,693) - (832,077) (2,355,770)
Share based payment - - - 1,758 - 1,758
Balance as at 30 September 2012 7,996,130 45,717,870 15,140,782 561,185 (14,009,168) 55,406,799
             
             
Balance as at 1 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 September 2011 7,996,130 45,717,870 17,325,675 554,104 (10,502,064) 61,091,715

 

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Interim Consolidated Cash Flow Statement
For the six months ended 30th September 2012

    2012 2011
  Notes Unaudited
    $ $
Operating activities      
 Loss before tax     (1,740,459) (599,922)
 Adjustments to reconcile loss  before tax to net cash flows      
 Depreciation and amortisation   10,114 14,982
 Provision for doubtful debts   81,696 157,222
 Share based payments expense   1,758 5,210
 Decrease in fair value of investment properties   669,925 46,943
 Decrease / (Increase) in value of investments held-for-sale   27,633 9,377
 Foreign exchange difference   (54,325) 39,428
 Net gain on sale of investment   (106) (5)
 Dividend income   (12,573) (5,229)
 Interest income   (26,849) (78,728)
 Interest expense   702,771 536,532
    (340,415) 125,810
Working Capital adjustments      
 (Increase) in prepayments (current)   (32,700) (139,325)
 (Increase) / Decrease in trade and other receivables   (82,700) (350,118)
 (Increase) / Decrease in other assets (current)   (191,762) 43,208
 (Increase) in other assets (non-current)   (16,276) (3,671)
 (Increase) in inventories   (3,105,278) (1,083,815)
 (Decrease) in trade and other payables (current)   (273,132) (83,828)
 Increase / (Decrease) in other liabilities (current)   425,407 45,790
 Increase in other liabilities (non current)   4,337,247 1,037,428
    1,060,806 (534,331)
 Income tax refund / (paid)   149,639 268,877
 Net cash flows from/ (used in)  operating activities   870,030 (139,644)
       
 Investing activities      
 Proceeds from sale of held-for-trading investments   3,712,808 1,528,590
 Purchase of property, plant and equipment and intangible assets   (2,517) (9,086)
 Purchase of held-for-trading investments   (3,247,785) (1,438,428)
 Capital expenditure on Investment Property   (829,586) (101,212)
 Dividend income   12,573 5,229
 Interest received   26,849 52,731
 Net cash flows (used in)/from investing activities   (327,658) 37,824
 Financing activities      
 Proceeds from borrowings   5,807,143 1,808,283
 Repayment of  borrowings   (5,683,236) (1,668,040)
 Interest paid   (460,216) (344,089)
 Net cash flows (used in) financing activities   (336,309) (203,846)
Net increase/(decrease) in cash and cash equivalents   206,063 (305,666)
 Net foreign exchange difference   (10,717) (63,883)
 Cash and cash equivalents at 1st April   752,868 1,492,741
 Cash and cash equivalents at 30th September (See Note 5)   948,214 1,123,192