 Sino's Comments: Re: Canada Land Ltd ("CDL"): 30 September 1998 Interim Results Please find attached CDL’s financial results for the six month period ended 30 September, 1998, for your reference. The Company reported a loss of A$410,000 for the period due to the slowdown in the Asian economies and resulting uncertainty in the property market. The key to the recovery in CDL’s earnings is, in our view, the commencement of the sale of the ancestral memorial plates at the Wong Tai Seen Temple in Guangzhou. Construction of the temple is well underway and the official opening ceremony is scheduled for 11 February, 1999, immediately prior to Chinese New Year, after which the plate sales will commence. The plates will provide CDL with a significant and recurring source of earnings over the next several years. Accordingly, we expect the long-awaited recovery in earnings to commence in the 1999/2000 financial year. We recommend CDL for long term accumulation for its leveraged exposure to the significantly oversold property sector of southern China. ASX Announcement: REPORT TO THE AUSTRALIAN STOCK EXCHANGE LIMITED FOR THE HALF YEAR ENDED SEPTEMBER 30, 1998 The Board of Directors of Canada Land Limited (the "Company") is pleased to announce its unaudited financial results for the six months ended September 30, 1998, and provide an update on the progress of its current projects.
The Company recorded a loss of A$410,000 for the period due to a slow down in the economies in the region and uncertainties in the property market. Accordingly it is proposed that no interim dividend be declared. However, the Company's financial position continues to improve. Our cash balance stands at A$2.4 million while we continue to have only a small amount of debt. Furthermore the Net Tangible Assets of the Company at September 30, 1998, were A$0.83 per share (1997 - A$0.72) an increase of 15% over the past twelve months. Unless otherwise stated all amounts in the Appendix 4B have been translated at the rate of A$l = HK$4.80 prevailing at September 30,1998 (September 30,1997 - A$l = HK$5.568).
Investors will recall my comments in the Company's Annual Report at March 31, 1998, regarding the impact of housing and related banking reforms underway in China. Investors will also be aware, through the press and other media, that the pace of these reforms has slowed somewhat as China successfully wards off the negative effects of the financial "crisis" in most of south-east Asia. Also, the reform of state owned enterprises has led to some uncertainly about job security, something which western economies are accustomed to, but which is new to China. This has had a direct impact on the Company, but I and my Board still see the reforms gaining ground in the mainland and confidence growing. There has been a psychological impact amongst potential buyers which has undoubtedly made them more cautious before taking what for many may be a first step into the housing market.
The Canview Building Although the Company's joint venture operation in China has achieved further sales in its current principle project, the Canview Building, and the building is now 95% completed, the sales value of the units sold in the period was lower than previously anticipated. Although the project is still expected to be profitable, the Board has taken the prudent decision to record no additional profit for the period. To March 31, 1998 an accumulated profit of A$955,000 was recorded and booked to the Company's accounts. The Board, while believing that the property market in China, which has been slow during the past few months, is now starting to respond to the reforms being put in place in the country, recognises that price levels have dropped and the pace of recovery is uncertain. This view supported by a recent property show in Guangzhou in which the Company participated and which demonstrated a continuing interest in the acquisition of residential units by mainland Chinese residents. The Board therefore believes it to be prudent to record further profits on the project only when it is fully completed and sold during the remainder of the current financial year. Wong Tal Seen Temple Construction of the temple has proceeded rapidly this year. A formal opening ceremony will be held shortly before Chinese New Year (mid-February 1999) after which the temple will be open to the public. Following advice from experts in the field of the various religions to be represented at the temple (Taoism, Confucianism, Buddhism), the Company decided to further delay the sale of ancestral memorial plates until the opening of the temple. Continued expressions of interest have been received from the public in both China and Hong Kong to acquire these plates and the Company remains confident that sales will proceed steadily as soon as marketing begins after the opening. FangCun Metro Station West This project remains in the design stage. In view of the uncertainties as to how quickly the property market will return to a more healthy position the Company does not believe that it is prudent to invest significant funds until the market shows clear signs of sustained improvement.
As stated above I and my Board remain confident that the property market in China is one which, over the long term, will be very profitable for cautious and experienced participants. The market is still in its infancy, but it is our belief, and this is supported by third parties, that it will mature into a solid market as in western countries.
Dr W S L Yip
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