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.
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