AGP.L Regulatory News (AGP)

20 August 2012

Asian Growth Properties Limited

Immediate Release

Results for the six months ended 30 June 2012

Asian Growth Properties Limited (the "Company") (AIM Stock Code: AGP), the Hong Kong based China property development and investment company, announces its unaudited consolidated results for the six months ended 30 June 2012 as follows:

Financial Highlights

n Profit attributable to the Company's shareholders of HK$367.4 million (£30.4 million) (2011: HK$998.4 million (£80.3 million))

n Earnings per share for profit attributable to the Company's shareholders of HK41.4 cents (3.4 pence) (2011: HK112.6 cents (9.1 pence))

n Net asset value per share attributable to the Company's shareholders as at 30 June 2012 of HK$12.3 (101.8 pence) (31 December 2011: HK$11.9 (99.2 pence))

n Geographical location of the Group's property assets were as follow:

n Gearing ratio of 11.2% (31 December 2011: 11.5%)

Operational Highlights

n Gross rental income of Dah Sing Financial Centre in Hong Kong was maintained with a high occupancy level.

n The hotel operation results of Crowne Plaza Hong Kong Causeway Bay were satisfactory.

n Major mixed use development projects in Chengdu and Kaifeng, Mainland China are progressing. Site formation works for Phase I of Chengdu project and construction works for Phase I of Kaifeng project are planned to commence later this year.

Notes:

1. Figures in Pounds Sterling are translated from Hong Kong dollars based upon the exchange rates prevailing on the latest practicable business day of the respective accounting periods. The relevant exchange rates adopted are stated as follows:-

2. For Shareholders' information, the exchange rate on 17 August 2012 was £1 = HK$12.1759

Miscellaneous

The results included in this announcement are extracted from the unaudited condensed consolidated financial statements of the Company for the six months ended 30 June 2012, which have been approved by the Board of Directors on 20 August 2012.

The 2012 Interim Report is expected to be posted to shareholders and holders of depositary interests in late September 2012.

For further information, please contact:

If you wish to view the full announcement, please visit the Company's website at:

http://www.asiangrowth.com/html/eng/news.asp

Attached:-

1. Chairman's Review;

2. Executive Directors' Review;

3. Unaudited Condensed Consolidated Income Statement;

4. Unaudited Condensed Consolidated Statement of Comprehensive Income;

5. Unaudited Condensed Consolidated Statement of Financial Position;

6. Unaudited Condensed Consolidated Statement of Changes in Equity;

7. Unaudited Condensed Consolidated Statement of Cash Flows; and

8. Notes to the Unaudited Condensed Consolidated Financial Statements.

CHAIRMAN'S REVIEW

I am pleased to present the unaudited consolidated results of Asian Growth Properties Limited ("AGP" or the "Company", together with its subsidiaries, the "Group") for the first six months of 2012 to the shareholders of the Company.

Results

AGP reported a profit attributable to the Company's shareholders of HK$367.4 million (£30.4 million) for the six months ended 30 June 2012 (2011: HK$998.4 million (£80.3 million)). The reported profit included a revaluation surplus on investment properties net of deferred taxation of HK$359.2 million (£29.7 million) (2011: HK$967.8 million (£77.8 million)). By excluding the net effect of such surplus, the Group's net profit attributable to the Company's shareholders was HK$8.2 million (£0.7 million) (2011: HK$30.6 million (£2.5 million)). 

As at 30 June 2012, the Group's equity attributable to the Company's shareholders amounted to HK$10,881.3 million (£900.5 million), representing an increase of HK$347.5 million (£22.1 million) over 31 December 2011. The net asset value per share as at 30 June 2012 was HK$12.3 (101.8 pence) as compared with HK$11.9 (99.2 pence) as at 31 December 2011.

Figures in Pounds Sterling are translated from Hong Kong dollars based upon the exchange rates prevailing on the latest practicable business day of the respective accounting periods.

Operations 

For the first half of 2012, the Group has continued the development of various property projects in Hong Kong and Mainland China.

The rental income from the investment properties situated in both Hong Kong and Mainland China continue to provide stable returns to the Group. Turnover for the period was mainly from the contribution of rental income of investment properties and income from the hotel operation. Crowne Plaza Hong Kong Causeway Bay performed satisfactorilyduring the period with improvement on room rate.

For details of the Group's operations, please refer to the Executive Directors' Review.

Outlook

With deep trouble in the world's financial markets, there is much to be concerned about. The American economy appears to be slowing with stubbornly high job vacancies. The European financial system is suffering from political inertia with the situation in Spain getting worse by the moment and Greek default imminent. The momentum on economic growth in Germany and China is also slowing down. In Europe, more banks are being involved in the recent scandal on LIBOR and class actions starting to occur from customers as these banks manipulate the system to their advantage with their customers suffering.

In Mainland China, the GDP growth rate was 7.8% for the first half of 2012 which is the lowest in almost three years. While conditions in the external environment pose a significant challenge, recent monetary easing initiatives should help to sustain domestic demand. Reduced inflationary pressures may provide room for further monetary policy easing and supportive fiscal measures, though it is likely to be modest given continuing concerns over speculation in the property sector.

The Group is nonetheless extremely cautious about the state of the global financial markets and economies and will continue to adopt a conservative policy. The Board believes that this turmoil will bring about opportunity and is prepared to act to accelerate the development projects or consider new opportunities once a clearer pattern emerges from the current hiatus.

Interim Dividend

The Board does not propose the payment of an interim dividend for the six months ended 30 June 2012 (2011: Nil).

Acknowledgement

The Board would like to take this opportunity to thank the executive and management team for the execution of the Board's strategy and their ongoing support.

Richard Prickett

Non-Executive Chairman

England, 20 August 2012

executive directors' Review

FINANCIAL SUMMARY

Turnover for the six months ended 30 June 2012 amounted to HK$291.9 million (£24.2 million) (2011: HK$296.5 million (£23.8 million)). The turnover was principally attributable to the recognition of rental income from investment properties, revenue from hotel operation and the sales of residential units in The Morrison and The Forest Hills.

Profit attributable to the Company's shareholders for the period amounted to HK$367.4 million (£30.4 million) (2011: HK$998.4 million (£80.3 million)), equivalent to a basic earnings per share of HK41.4 cents (3.4 pence) (2011: HK112.6 cents (9.1 pence)). The reported profit included a revaluation surplus on investment properties net of deferred taxation of HK$359.2 million (£29.7 million) (2011: HK$967.8 million (£77.8 million)). By excluding the effect of such surplus, the Group's net profit attributable to the Company's shareholders was HK$8.2 million (£0.7 million) (2011: HK$30.6 million (£2.5 million)), equivalent to HK0.9 cents (0.1 pence) (2011: HK3.5 cents (0.3 pence)) per share. 

As at 30 June 2012, the Group's equity attributable to the Company's shareholders amounted to HK$10,881.3 million (£900.5 million) (31 December 2011: HK$10,533.8 million (£878.4 million)). The net asset value per share attributable to the Company's shareholders as at 30 June 2012 was HK$12.3 (101.8 pence) as compared with HK$11.9 (99.2 pence) as at 31 December 2011.

For Shareholders' information, figures in Pounds Sterling are translated from Hong Kong dollars based upon the exchange rates prevailing on the latest practicable business day of the respective accounting periods and the relevant exchange rates adopted are stated as follows:-

For 30 June 2012: £1 = HK$12.0836

For 31 December 2011: £1 = HK$11.9923; and

For 30 June 2011: £1 = HK$12.4390

BUSINESS REVIEW

Property Investment and Development

The Group continues in focusing on the development and investment projects in Hong Kong and Mainland China. It is the Group's approach to review and optimize the project portfolios from time to time.

Hong Kong

The office leasing market was stable during the period. The rental income generated from Dah Sing Financial Centre, a 39-storey commercial building, has been stable and satisfactory and its occupancy rate remains at a high level of approximately 99% as at 30 June 2012.

During the period, the Group continued to sell the remaining units of the developed properties. The sale of remaining residential units and residents' car parking spaces of The Forest Hills and residential units (which are presently leased) of The Morrison are continuing.

The proposed development project at Fo Tan envisages, among other facilities, residential units, car parks, educational facilities and a bus terminus and has a site area of approximately 20,092 square metres. The revised general building plan was approved by the Buildings Department in October 2011 and the foundation works started in June 2012.

Mainland China

Chengdu, Sichuan Province

During the period, the occupancy rate for the two 30-storey office towers of Plaza Central improved substantially and its retail podium with a gross floor area of about 29,000 square metres has been fully let principally to Chengdu New World Department Store on a long-term lease. As at 30 June 2012, the aggregate occupancy rate for the two office towers and the retail podium was approximately 93%. Leasing activities for the remaining areas of Plaza Central continue.

The shopping arcade of New Century Plaza with a gross floor area of about 16,300 square metres has been fully let to a furniture retailer on a medium-term lease.

The Group is now finalising the master layout plan of the Longquan project, which has a site area of 506,000 square metres, and targets to submit the master layout plan to the local government before the end of this year. Preliminary site works of the project have been completed and site formation works for Phase I are being planned to commence before the end of this year.

Kaifeng, Henan Province

The project in Kaifeng, known as "Nova City", has a site area of 735,000 square metres and it is proposed to be developed into an integrated complex in Zheng-Kai District, a new town in Kaifeng. The proposed development has a gross floor area of approximately 3,000,000 square metres envisages shopping mall, premium offices, exhibition hall, hotel, serviced apartments and residential towers. Master layout plans are being revised to incorporate the latest government comments in order for re-submission. Preliminary site works have been completed while construction works of Phase I of the project are planned to start later this year.

Guangzhou, Guangdong Province

As at 30 June 2012, the occupancy rate of the 14-storey office tower of Westmin Plaza Phase II of about 16,100 square metres was approximately 86% with more than one-third of the total office space being leased to AIA. Leasing activities for the 3-storey shopping arcade of Westmin Plaza Phase II with a total gross floor area of about 26,400 square metres are in progress.

Huangshan, Anhui Province

The project in Huangshan has a site area of about 333,500 square metres comprising about 66,700 square metres of land owned by the Group and about 266,800 square metres of land leased from the local authority. An overall development plan for a hotel, serviced apartments and resort villas in the integrated resort site has been prepared and conceptual design has been completed. 

Chi Shan, Nanjing, Jiangsu Province

The Group has established two 51%-owned joint venture companies to participate in the tenant relocation arrangements and excavation and infrastructure works on certain pieces of lands in Chi Shan. The Group intended to acquire such lands through land auctions and has submitted master layout plans for these lands for the government's assessment.

Hotel Operation

Crowne Plaza Hong Kong Causeway Bay is a 29-storey five-star hotel comprising 263 guest rooms with ancillary facilities and is presently managed by the InterContinental Hotels Group. It has achieved satisfactory occupancy and room rates for the period under review.

WORKING CAPITAL AND LOAN FACILITIES

As at 30 June 2012, the Group's total cash balance was HK$1,483.8 million (31 December 2011: HK$2,008.7 million) and unutilised facilities were HK$750.0 million (31 December 2011: HK$620.0 million).

The gearing ratio as at 30 June 2012, calculated on the basis of net interest bearing debts minus cash and restricted and pledged deposits as a percentage of total property assets, was 11.2% (31 December 2011: 11.5%). 

As at 30 June 2012, the maturity of the Group's outstanding borrowings was as follows:

Pledge of Assets

For the Company's subsidiaries operating in Hong Kong and Mainland China, the total bank loans drawn as at 30 June 2012 amounted to HK$2,869.1 million (31 December 2011: HK$3,392.3 million), which comprised of secured bank loans of HK$2,519.1 million (31 December 2011: HK$3,162.3 million) and unsecured bank loans of HK$350.0 million (31 December 2011: HK$230.0 million). The secured bank loans were secured by properties valued at HK$9,850.5 million (31 December 2011: HK$9,509.1 million) and fixed deposits of HK$0.8 million (31 December 2011: HK$0.8 million). 

Treasury Policies

The Group adheres to prudent treasury policies. As at 30 June 2012, all of the Group's borrowings were raised through its wholly-owned or substantially controlled subsidiaries on a non-recourse basis.

International Financial Reporting Standards ("IFRS")

The Group has adopted IFRS and the unaudited condensed consolidated financial statements accompanying this Review have been prepared in accordance with IFRS.

OUTLOOK

The Mainland China housing market has seen signs of bottoming out after a period of government intervention to suppress prices. House buying in the eastern cities was particularly strong in July with a 6.7% increase in national sales over June. However, the PRC government is likely to intervene again if the market economy is improving. In the meantime, the PRC government is trying to tread a fine line between giving stimulus to a slowing economy and keeping a lid on house prices.

In Hong Kong, there has been a change of chief executive and his cabinet since 1 July 2012. The new cabinet has pledged to increase the housing stock particularly at the lower end of the market but we believe that the measures will take some time to implement. In the meantime, property prices remain fairly flat.

Our investment properties in Hong Kong continue to do well. Dah Sing Financial Centre has maintained a high occupancy level with good rental rates being achieved although rents in the central business district have been softening. Crowne Plaza Hong Kong Causeway Bay is enjoying high occupancy whilst the room rates are slightly better than last year.

Foundation works have started at our composite development project in Fo Tan while the foundation work for the first phase of our Kaifeng project will commence in the fourth quarter of 2012. The master layout plan for Chengdu project is at final stage and will be submitted to local government for discussion. The office buildings in Chengdu and Guangzhou continue to perform well with good occupancy.

On behalf of Executive Directors

Lu Wing Chi

Executive Director

Hong Kong, 20 August 2012

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2012

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 June 2012

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 June 2012

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION - continued

AT 30 June 2012

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 June 2012

Other reserves comprise (i) a discount on acquisition/assumption of certain assets and liabilities from the intermediate holding company, S E A Holdings Limited ("SEA") and the excess of the consideration over the market closing price of the shares issued for the acquisition. The amounts attributable to those assets and liabilities derecognised in subsequent years will be recognised in profit or loss; and (ii) the excess of the consideration paid for acquisition of additional interest in a subsidiary from non-controlling shareholder over the carrying amount of non-controlling interests.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 June 2012

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 June 2012

1. GENERAL

The Company is a public limited company incorporated in the British Virgin Islands with limited liability and its shares are admitted for trading on the AIM Market of London Stock Exchange plc.

The Company acts as an investment holding company. The principal subsidiaries of the Company are engaged in property investment, property development and hotel operation.

2. BASIS OF PREPARATION

The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34 "Interim Financial Reporting".

3. PRINCIPAL ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared on the historical cost basis except for investment properties and derivative financial instruments, which are measured at fair values.

The accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2012 are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2011 and those due to the application of the new or revised International Financial Reporting Standards ("IFRS"). In addition, the Group has applied the following accounting policies which are applicable to the debt instrument entered during the period.

Financial assets at fair value through profit or loss ("FVTPL")

Financial assets at FVTPL has two subcategories, including financial assets held for trading and those designated as at FVTPL on initial recognition.

A financial asset is classified as held for trading if:

·; it has been acquired principally for the purpose of selling in the near future; or

·; it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

·; it is a derivative that is not designated and effective as a hedging instrument.

3. PRINCIPAL ACCOUNTING POLICIES - continued

Financial assets at fair value through profit or loss ("FVTPL") - continued

Financial assets at FVTPL are measured at fair value, with changes in fair value arising from remeasurement recognised directly in profit or loss in the period in which they arise. The net gain or loss recognised in profit or loss excludes any dividend or interest earned on the financial assets.

Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of the reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

Derivatives embedded in non-derivative host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at fair value with changes in fair value recognised in profit or loss.

Application of amendments to IFRS

In the current interim period, the Group has applied, for the first time, the amendments to IFRS 7 "Disclosures - Transfers of Financial Assets" issued by the International Accounting Standards Board (the "IASB") and the IFRS Interpretations Committee of IASB.

The amendments to IFRS 7 increase the disclosure requirements for transactions involving transfers of financial assets. These amendments are intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of financial assets are not evenly distributed throughout the period.

The application of the above amendments to IFRS in the current interim period has had no material effect on the amounts reported in these condensed consolidated financial statements and/or disclosures set out in these condensed consolidated financial statements.

Amendments to IAS 12 "Income Taxes" which is mandatorily effective for the current period has been applied in advance in the financial statements for the year ended 31 December 2011.

4. SEGMENT INFORMATION

Information reported to the executive directors of the Company, being the chief operating decision maker, for the purposes of resource allocation and assessment of segment performance is mainly focused on the property development, property investment and hotel operation.

Property investment and development activities are in Hong Kong and the People's Republic of China (the "PRC") whereas the hotel operation is in Hong Kong.

4. SEGMENT INFORMATION - continued

The following is an analysis of the Group's revenue and results by reportable segment:

Six months ended 30 June 2012

Six months ended 30 June 2011

Inter-segment sales are at mutually agreed terms.

The accounting policies adopted in preparing the reportable segment information are the same as the Group's accounting policies.

The Group does not allocate interest income, corporate expenses, share of results of jointly controlled entities and finance costs to individual reportable segment profit or loss for the purposes of resource allocation and performance assessment by the chief operating decision maker.

No segment assets and liabilities are presented as the information is not reportable to the chief operating decision maker in the resource allocation and assessment of performance.

5. PROPERTY AND RELATED COSTS

6. OTHER EXPENSES

7. FINANCE COSTS

8. PROFIT BEFORE TAXATION