West Pioneer Properties Limited Trading Update (9087G)

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RNS Number : 9087G

West Pioneer Properties Limited

04 July 2012

 
 Press Release   4 July 2012 
 

West Pioneer Properties Limited

("West Pioneer" or "the Company")

Trading Update

West Pioneer Properties Limited (AIM:WPR), a leading developer and operator of shopping centres and mixed use developments in west and south India, provides the following trading update ahead of its preliminary results for the 12 months ended 31 March 2012 which will be released in mid July 2012.

As indicated in the interim results announced in December 2011, the Company's performance has continued to be impacted by a number of factors as outlined below:

Indian Economy

Whilst the macro-economic fundamentals of the Indian economy have remained and continue to remain attractive, persistently high inflation rates and ensuing tightening of monetary policy by the Central Bank are contributing to lower than expected rates of growth. The Central Bank has, since the release of the Company's interim results revised the growth estimate for India downward from 7.6% to 6.5% for the financial year 2011/12.

Impact on change of discount rate

The Board has, as a result of the increased risk free rate in the country, kept under review the appropriateness of the discount rates it is using in valuing the Company's investment properties. As a result of an increase in the discount rate from 13% to 14% there has been a material impairment in the carrying value of these properties being recognised in the 31 March 2012 results.

Impact of depreciation of Rupee

During the current financial year the Indian Rupee has fallen in value significantly depreciating by more than 5% against the US Dollar, falling from 49.7 rupees to the US Dollar as at 30 September 2011 to 52.08 rupees as at 31 March 2012. This has also materially impacted the Company's reported Net Asset Value during the 12 months ended 31 March 2012. The Indian Rupee has continued to depreciate since the year end which will further impact on the Net Asset Value going forward.

General Trading

Trading conditions have deteriorated during the latter half of the financial year, however as previously reported, West Pioneer's low gearing and operational efficiencies have mitigated the impact on the Company's cash flows.

As previously reported, the Company has continued to focus its efforts on positioning the Kalyan mall as a leading value shopping and lifestyle destination. This has led to re-engineering the tenant mix towards larger lifestyle retailers which has had a short term impact on rental income, however the Board believes the benefits will flow through in the longer term.

As a result of the impact of each of the above, the Company expects to report that revenues and profits are substantially down on market expectations.

The Company is encouraged by the strong progress made across some of its key projects and the Board remains confident in its long term ability to deliver growth from retail, residential and commercial developments.

-Ends-

For further information:

 
 West Pioneer Properties Limited 
 Nitin Dattani, Executive Director   Tel: [phone] 
                                                     0690 
 
 
 Shore Capital & Corporate Limited 
 Anita Ghanekar / Edward Mansfield   Tel: [phone] 
                                                     4090 
 

Media enquiries:

 
 Abchurch Communications 
 Sarah Hollins / Joanne Shears        Tel: [phone] 
                                                      7709 
 [e-mail]   www.abchurch-group.com 
 

Notes to Editors

West Pioneer Properties Limited (AIM:WPR) is a leading developer and operator of retail-led, mixed use developments in west and southern India, primarily in Tier II cities. West Pioneer was established to capitalise on the virtually unpenetrated organised retail environment in India, the rapidly increasing middle class, greater transparency in the property market, and improved infrastructure development which provides access to the market.

The retail side to West Pioneer acquires the land and then develops, leases and manages the shopping malls. The residential development segment develops and sells residential property. West Pioneer currently has three developments in Kalyan, Aurangabad and Nashik.

West Pioneer's first shopping mall, The Metro Centre, in Kalyan, 30 miles north-east of Mumbai is fully operational. Leasing at the mall stands at approximately 74 per cent, and the mall is operationally profitable and generating surplus cash. The residential development at Kalyan currently consists of two towers, which are under construction. Each tower consists of 178 apartments and as of 31 January 2011, a total of 267 apartments have been sold. The Company is nearing completion on the design of Metro Plaza, the commercial office space development at Kalyan.

This information is provided by RNS

The company news service from the London Stock Exchange

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