Euro Asia Announced Results for the Fiscal Period Ending December 31st, 2010

Weifang, People’s Republic of China, 21 March 2011

Euro Asia Premier Real Estate Company Limited (ISIN: VGG3223A1057, ISIN: VGG3223A1131) today announced the preliminary financial results according to IFRS in Chinese Yuan Renmimbi (RMB), for the12 months and 15 months period ended December 31st, 2010. The non traditional length of the period under review is due to the change of the Company’s financial year end, as announced on November 15th, 2010. The period of 2009/2010 was the Company’s first full financial year.

Financial Highlights
  • Revenues for the 15 month period under review were RMB 95.7 million (approx. Euro 10.5 million*). For the 12 months ending December 31st 2010, this was 91 million RMB (approx. Euro 10.0 million).
  • RMB 23.8 million (Euro 2.6 m) of rental income was recorded for the 15 month period.
  • RMB 72 million (Euro 7.9 million) was generated through the sale of a property, that achieved a RMB 8 million (Euro 0.88 million) profit before tax.
  • Earnings before interest, taxes, depreciation and amortization (EBITDA), for the full period under review was RMB 21.8 million (Euro 2.4 million) in line with expectations.
  • Net book value of properties as of December 31st,2010 was RMB 193.2 million (Euro 21.3 m).
  • An updated independent appraisal report by DTZ has valued the Company’s properties at RMB 602 million (Euro 66.2 million), as of December 31st, 2010. Assuming receipt of full zoning approval for two other properties in the portfolio, the valuation will increase to RMB 903 million (Euro 99.3 million). This value as compared to the appraisal value as of December 2009 of RMB 803.5 million (Euro 88.33 million). This increase is not reflected in operational income.
  • As of December 31st, 2010, the Company had cash and cash equivalents to the amount of RMB 218k (Euro 24,000) and was free of bank debt and had an equity ratio of 93 %.
  • Current assets increased to RMB 102,326,429 (Euro 11.3 Million) from RMB 9,637,695 ( Euro 1.06 Million) from September 30th, 2009 to December 31st, 2010.
Operational Highlights
  • Successful IPO on the Deutsche Boerse Entry Standard on May 26th, 2010, with placement of one million new shares at Euro 5.00.
  • Completion of major construction stage on the Training and Exhibition Center, operations to be transferred to a Joint Venture partner for a fixed management fee. The agreement is currently under negotiation.
  • First level of zoning approval for 100,000 m2 of 200,000 m2 received for luxury town house development at Jiulongjian. The full approval is expected to be received in the second quarter of 2011.
  • Demand based feedback resulted in a tripling of the originally planned size for the China Agricultural Machinery Market. The phase I foundations were completed in March 2011. The potential increase in project size is to be incorporated into a multi-phased construction programme and to match cash inflow with capital commitment.
  • Sale of German Hotel.
  • Acceleration of business model through new projects with Joint Venture partnerships.
  • As of December 31st, 2010, the Company had a total rental space of 39,265 m2, 32,023 m2 of space under development and 456,285 m2 of land banking for future development. Outlook for 2011 will accelerate the pace for growth.

Management Discussion
Patrick P.L. Chan, Vice Chairman for the Company, stated, “Following our successful IPO, we set to work on delivering on our business plan. What we found in the last year, is that due to our dominant position in the Weifang area, our unrivalled access to land banking opportunities and our extensive network, we were in a position to adjust our business model and accelerate the delivery of shareholder returns significantly, while at the same time transferring risk to third parties. We entered into negotiations with a number of partners, who had recognized the real and demand driven opportunities of project development in third tier cities like Weifang, as opposed to tier one cities like Beijing and Shanghai.”

“We now have a number of in principal agreements in which we have managed to sell specific plots of land designated for development, at a profit, to our Joint Venture partners. Furthermore, our prospect partners will be committed to taking on all development costs, in return for a percentage, generally 50%, in the Joint Venture. This structure means that firstly we are accelerating our cash flow, which will enable us to work on new projects, sooner than would have been the case had we taken on all development ourselves. Secondly, the financial risks are transferred to our partner. In this way we will end up with a significant stake in prime properties in a strongly developing and demand driven area, without taking on debt and without incurring additional financial risk.”

“In addition to this type of signature deal, we will still act as the sole developer in certain choice projects. The financing of these projects will generally be provided through the pre-sale of part of the development, again mitigating risk. A good example of this type of deal, of which we intend to do more, is the Cloud Lake development, which was announced in January of 2011.”

“We feel that our ability to negotiate deals as described above shows the dynamics of property development in third tier cities like Weifang, and furthermore testifies to our strong position in the area. The central authorities are now actively engaged in changing the dynamics of urbanization, where settlement in second and third tier cities, such as Weifang, is promoted and settlement in first tier cities, such as Beijing, is discouraged. As the local economy in Weifang is strong already, this urbanization drive will only increase the real demand for properties such as we are developing. This will make us a preferred partner for outside developers who are attracted by the large and more certain returns that can be achieved here, but who do not have easy access to land banking opportunities and who do not have the essential network.”

“We have only just started and have access to very significant further land bank opportunities. The cash flow generated from the projects we are engaged in at present will allow us to accelerate the number of developments we take on. 2011 should see a six times increase in property under development from 32,023 m2 to 202,057 m2 to accelerate short and medium term cash flow, whereas our land bank should increase from 456,285 m2 to 756,618 m2.

The audited financial statement approved from the shareholders will be published on the website on Monday the 28th of March following the AGM.

* Conversion rate: RMB 1.00 = Euro 0.11

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