VNL.L Regulatory News (VNL)

19 Dec 2006 12:30

VinaLand Limited19 December 2006 VinaLand Limited (the "Company") Results for the year ended 30th June 2006 We are pleased to present the annual report for VinaLand Limited (AIM: VNL) andit's subsidiaries for the year ended 30 June 2006. Chairman's Statement The past three months since the launch of the Company has made two substantialinvestments, and we are confident that other deals will be announced in the nearfuture. Vietnam's Gross Domestic Product ("GDP") continued its upward trajectory,increasing by 7.4% in the first half of 2006. Industrial production, exports,and retail sales are all surging, underpinning an economy which is acting as amagnet for overseas investors. Foreign investors have been keen to pick up onthe investment opportunities afforded by such growth, as foreign directinvestment (FDI) surged over the last year. This "second wave" of foreigninvestments marks the end of the FDI lull following the Asian financial crisisof the late nineties. The increased global interest in Vietnam was furtherunderscored by a boom in tourism revenues, which are projected to outperform the2006 target. Government reforms played a key role in the favorable investment and politicalclimate that have characterized the past year. The new Unified Enterprise Lawand the Common Investment Law came into force which represent for major stepstoward a level playing field for foreign and local investors. The 10th PartyCongress held in May has seen a change of leadership ushering in an accelerationof the reform program. Since the admission of the Company to the AIM market of the London StockExchange at the end of March 2006, we have announced one major investment, a46.5% stake in the 21st Century International Development Company worthapproximately US$16.8 million. The company is developing a 55-hectare site inDistrict 2 in Ho Chi Minh City, just across from the central business district.The site will be developed for mixed-use purposes, including residential,commercial, and retail. The NAV at the end of June was US$0.97, which reflectsthe deduction of listing expenses relating to the Company's admission to AIM. Given Vietnam's strong economic performance, the Government's increasingcommitment to reforms, and unprecedented global interest in Vietnam, we believethat the VNL will perform well as the country moves forward. Thank you for your continued interest and support. Horst GeickeChairmanVinaLand Limited18 December 2006 Consolidated Balance Sheet Notes 30 June 2006 30 June 2006 Consolidated Company US$ US$ASSETSCash and cash equivalents 174,787,778 39,050,475Interest receivable 662,068 -Financial assets at fair value through profit or loss 6 4,382,670 -Prepayments 4,316,738 -Investment in associate 5 15,997,102 -Investments in subsidiaries 4 - 3Receivables from subsidiaries - 159,999,997 200,146,356 199,050,475 LIABILITIES AND SHAREHOLDERS' EQUITYLiabilitiesAccounts payable 1,563,235 1,563,235 Shareholders' equityShare capital 7 2,048,448 2,048,448Additional paid in capital 7 196,414,163 196, 414,163Retained earnings (accumulated losses) 120,510 (975,371) 198,583,121 197,487,240 200,146,356 199,050,475 Consolidated Statement of Income For the period from 16 March 2006 to 30 June 2006 Consolidated Company US$ US$RevenueInterest income 1,872,705 776,691 ExpensesManagement fee (1,204,498) (1,204,498)Custodian fee (293) (293)Director fee (29,301) (29,301)Professional fee (469,784) (469,784)Other organisational fee (48,319) (48,186) (1,752,195) (1,752,062) Net income (loss) 120,510 (975,371) Consolidated statement of changes in shareholders' equity For the period from 16 March 2006 to 30 June 2006 Consolidated Company US$ US$Share capital16 March 2006 - -Issue of shares 2,048,448 2,048,448 30 June 2006 2,048,448 2,048,448 Additional paid in capital16 March 2006 - -Issue of shares 202,796,331 202,796,331Transaction costs associated with the share issue (6,382,168) (6,382,168) 30 June 2006 196,414,163 196,414,163 Accumulated losses16 March 2006 - -Profit (loss) for the period 120,510 (975,371) 30 June 2006 120,510 (975,371) Total shareholders' equity 198,583,121 197,487,240 Consolidated statement of cash flows For the period from 16 March 2006 to 30 June 2006 Consolidated Company US$ US$Cash flows from operating activitiesNet profit (loss) 120,510 (975,371)Adjustment for:Interest income (662,068) - Net loss before changes in working capital (541,558) (975,371)Increase in accounts receivable (1,210,637) (159,999,997)Increase in other assets (4,316,738) -Increase in accounts payable 1,562,235 1,563,235 Net cash used in operating activities (4,505,698) (159,412,133) Cash flows from investing activitiesInterest received 1,210,637 -Investment in associate (15,997,102) -Investment in subsidiaries - (3)Investment in financial assets at fair value through profit or loss (4,382,670) - Net cash used in investing activities (19,169,135) (3) Cash flows from financing activitiesProceeds from shares issued 198,462,611 198,462,611 Net cash from financing activities 198,462,611 198,462,611 Net increase in cash and cash equivalents for the period 174,787,778 39,050,475Cash at the beginning of the period - - Cash and cash equivalents at end of the period 174,787,778 39,050,475 Notes to the consolidated financial statements 1. Corporate information VinaLand Limited ("the Company") was incorporated in the Cayman Islands as acompany with limited liability. The registered office of the Company is PO Box309GT, Ugland House, South Church Street, George Town, Grand Cayman, CaymanIslands. The principal activity of the Company is to engage in property investment anddevelopment in Vietnam and the surrounding Asian countries with the objective ofproviding shareholders with an attractive level of income, together with thepotential for income and capital growth, from investing in a diversifiedportfolio of mainly Vietnamese property. The Company has its primary listing in the AIM, a market operated by the LondonStock Exchange Plc. 2. Principal accounting policies Basis of presentation The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as developed and published by theInternational Accounting Standards Board (IASB). The financial statements havebeen prepared on the historical cost convention, as modified by the revaluationof land and buildings, available-for-sale financial assets, and financial assetsand financial liabilities at fair value through profit or loss. The preparation of financial statements in accordance with IFRS requires the useof certain accounting estimates and assumptions. Although these estimates arebased on management's best knowledge of current events and actions, actualresults may ultimately differ from those estimates. Consolidation Subsidiaries are all entities over which the Group has the power to control thefinancial and operating policies. Company obtains and exercises control throughvoting rights. The consolidated financial statements of the Group incorporatethe financial statements of the parent company as well as those entitiescontrolled by the Group by full consolidation. In addition, acquiredsubsidiaries are subject to application of the purchase method. This involvesthe revaluation at fair value of all identifiable assets and liabilities,including contingent liabilities of the subsidiary, at the acquisition date,regardless of whether or not they were recorded in the financial statements ofthe subsidiary prior to acquisition. On initial recognition, the assets andliabilities of the subsidiary are included in the consolidated balance sheet attheir revalued amounts, which are also used as the bases for subsequentmeasurement in accordance with the Group accounting policies. Goodwillrepresents the excess of acquisition cost over the fair value of the Group'sshare of the identifiable net assets of the acquired subsidiary at the date ofacquisition. Entities whose economic activities are controlled jointly by the Group and byother venturers independent of the Group are accounted for using equityconsolidation. Associates are those entities over which the Group is able to exert significantinfluence but which are neither subsidiaries nor interests in a joint venture.Investments in associates are initially recognised at cost and subsequentlyaccounted for using the equity method. Acquired investments in associates arealso subject to purchase accounting. However, any goodwill or fair valueadjustment attributable to the share in the associate is included in the amountrecognised as investment in associates. All subsequent changes to the share ofinterest in the equity of the associate are recognised in the Group's carryingamount of the investment. Changes resulting from the profit or loss generated bythe associate are recorded in the Group's consolidated income statement andtherefore affect net results of the Group. These changes include subsequentdepreciation, amortisation or impairment of the fair value adjustments of assetsand liabilities. Items that have been directly recognised in the associate'sequity, for example, resulting from the associate's accounting foravailable-for-sale securities, are recognised in consolidated equity of theGroup. Any non-income related equity movements of the associate that arise, forexample, from the distribution of dividends or other transactions with theassociate's shareholders, are charged against the proceeds received or granted.No effect on the Group's net result or equity is recognised in the course ofthese transactions. However, when the Group's share of losses in an associateequals or exceeds its interest in the associate, including any other unsecuredreceivables, the Group does not recognise further losses, unless it has incurredobligations or made payments on behalf of the associate. Unrealised gains ontransactions between the Group and its associates are eliminated to the extentof the Group's interest in the associates. Unrealised losses are also eliminatedunless the transaction provides evidence of an impairment of the assettransferred. Accounting policies of associates have been changed where necessaryto ensure consistency with the policies adopted by the Group. Functional and presentation currency The financial statements are presented in United States Dollars ("thepresentation currency"). The currency of the primary economic environment inwhich the Group operates ("the functional currency") is the Vietnamese Dong. Thereasons for using the United States Dollar as the presentation currency ratherthan the functional currency are that the shareholders are more familiar withthe United States Dollar and certain transactions of the Group are in the UnitedStates Dollar. Foreign currency translation The accounting records of the Group are maintained in United States Dollars.Transactions in currencies other than the United States Dollar are translated atthe exchange rates that approximate those prevailing on transaction dates.Monetary assets and liabilities denominated in currencies other than the UnitedStates Dollar are translated at the balance sheet date into United StatesDollars at exchange rates that approximate those prevailing on that date. Allexchange gains and losses are recognized separately in the statement of income. Financial assets The Group's financial assets include cash and financial instruments. Financialassets, other than hedging instruments, can be divided into the followingcategories: loans and receivables, financial assets at fair value through profitor loss, available-for-sale financial assets and held-to-maturity investments.Financial assets are assigned to the different categories by management oninitial recognition, depending on the purpose for which the investments wereacquired. The designation of financial assets is re-evaluated at every reportingdate at which a choice of classification or accounting treatment is available. All financial assets are recognised on their settlement date. All financialassets that are not classified as at fair value through profit or loss areinitially recognised at fair value, plus transaction costs. Derecognition offinancial instruments occurs when the rights to receive cash flows from theinvestments expire or are transferred and substantially all of the risks andrewards of ownership have been transferred. An assessment for impairment isundertaken at least at each balance sheet date whether or not there is objectiveevidence that a financial asset or a group of financial assets is impaired.Non-compounding interest and other cash flows resulting from holding financialassets are recognised in profit or loss when received, regardless of how therelated carrying amount of financial assets is measured. Held-to-maturity investments are non-derivative financial assets with fixed ordeterminable payments and a fixed date of maturity. Investments are classifiedas held-to maturity if it is the intention of the Company's management to holdthem until maturity. Held-to-maturity investments are subsequently measured atamortised cost using the effective interest method. In addition, if there isobjective evidence that the investment has been impaired, the financial asset ismeasured at the present value of estimated cash flows. Any changes to thecarrying amount of the investment are recognised in profit or loss. Financial assets at fair value through profit or loss include financial assetsthat are either classified as held for trading or are designated by the entityto be carried at fair value through profit or loss upon initial recognition. Inaddition, derivative financial instruments that do not qualify for hedgeaccounting are classified as held for trading. Subsequent to initialrecognition, the financial assets included in this category are measured at fairvalue with changes in fair value recognised in profit or loss. Financial assetsoriginally designated as financial assets at fair value through profit or lossmay not subsequently be reclassified. Available-for-sale financial assets include non-derivative financial assets thatare either designated to this category or do not qualify for inclusion in any ofthe other categories of financial assets. All financial assets within thiscategory are subsequently measured at fair value, unless otherwise disclosed,with changes in value recognised in equity, net of any effects arising fromincome taxes. Gains and losses arising from securities classified asavailable-for-sale are recognised in the income statement when they are sold orwhen the investment is impaired. In the case of impairment, any loss previouslyrecognised in equity is transferred to the income statement. Losses recognisedin the income statement on equity instruments are not reversed through theincome statement. Losses recognised in prior period income statements resultingfrom the impairment of debt securities are reversed through the incomestatement. Loans and receivables are non-derivative financial assets with fixed ordeterminable payments that are not quoted in an active market. They arise whenthe Company provides money, goods or services directly to a debtor with nointention of trading the receivables. Loans and receivables are subsequentlymeasured at amortised cost using the effective interest method, less provisionfor impairment. Any change in their value is recognised in profit or loss. Tradereceivables are provided against when objective evidence is received that theCompany will not be able to collect all amounts due to it in accordance with theoriginal terms of the receivables. The amount of the write-down is determined asthe difference between the asset's carrying amount and the present value ofestimated future cash flows. Cash and cash equivalents Cash and cash equivalents include cash in bank and short-term, highly liquidinvestments readily convertible to known amounts of cash and which are subjectto insignificant risk of changes in value. Interest and dividend income Interest income is recognized on an accrual or if applicable effective yieldbasis. Dividend income is recorded when the stockholders' right to receive thedividend is established. Equity Share capital is determined using the nominal value of shares that have beenissued. Additional paid-in capital includes any premiums received on the initialissuing of the share capital. Any transaction costs associated with the issuingof shares are deducted from additional paid-in capital. Retained earnings include all current and prior period results as disclosed inthe income statement. 3. Risk management objectives and policies The Group invests in listed and unlisted equity instruments, debt instruments,assets and other opportunities in Vietnam and surrounding countries with theobjective of achieving medium to long-term capital appreciation and providinginvestors with an attractive level of investment income from interest anddividends. The Group is exposed to a variety of financial risks which result from both itsoperating and investing activities. The Group's risk management is coordinatedby its Investment Manager who manages the distribution of the assets to achievethe investment objectives. The most significant financial risks to which theGroup is exposed are described below: Foreign currency risk While the Group seeks to make investments which are US Dollar based whenpossible, the Group make investments in and earn income denominated in localcurrencies. The Vietnamese Dong is not freely convertible into other currencies.Exchange rate fluctuations and local currency devaluation could have a materialeffect on the value of that portion of the Group's assets or liabilitiesdenominated in Vietnamese Dong. The Group may seek to hedge against a decline inthe value of the Group's Dong denominated investments resulting from currencyfluctuations but only when suitable hedging instruments are available on atimely basis and on acceptable terms. The Group's exposure to fluctuations in foreign currency exchange rates at thebalance sheet date was as follows: 30 June 2006 US$Assets denominated in Vietnamese Dong 57,638,560Liabilities denominated in Vietnamese Dong - Price risk Price risk is the risk that value of the instrument will fluctuate as a resultof changes in market prices, whether caused by factors specific to an individualinvestment, its issuer or all factors affecting all instruments traded in themarket. As the majority of the Group's financial instruments are carried at fairvalue with fair value changes recognised in the income statement, all changes inmarket conditions will directly affect net investment income. Price risk ismitigated by the Group's Investment Manager by constructing a diversifiedportfolio of listed and unlisted instruments. In addition, price risk may behedged using derivative financial instruments such as options or futures. Credit risk The carrying amounts of financial assets shown on the face of the balance sheetbest represent the maximum credit risk exposure at the balance sheet date. Therewere no significant concentrations of credit risk to counter-parties at 30 June2006. The Group's trade and other receivables are actively monitored to avoidsignificant concentrations of credit risk. In addition, for a significantproportion of sales, advance payments are received to mitigate credit risk. TheGroup has adopted a no-business policy with customers lacking an appropriatecredit history where credit records are available. Cash flow and fair value interest rate risks The majority of the Group's financial assets are non-interest-bearing. The Groupcurrently has no financial liabilities with floating interest rates. As aresult, the Group is subject to limited exposure to cash flow and fair valueinterest rate risk. Cash flow and fair value interest rate risks are managed bymeans of derivative financial instruments, where necessary, to ensure short- tomedium term liquidity. 4. Subsidiaries During the period the Group acquired equity interests in the following entities,with details are as follows: Name of subsidiaries Acquisition date Cost of acquisition Proportion of ownership interest Onshine Investments Limited 3 February 2006 US$1 100%Vietnam Property Ltd 10 March 2006 US$1 100%Vietnam Property Holdings Ltd 10 March 2006 US$1 100% All these entities are incorporated in the British Virgin Islands and theprincipal activity is to engage in property investment and development inVietnam and the surrounding Asian countries. At the date of acquisition theseentities had no assets, liabilities or contingent liabilities. 5. Investment in associate On 30 June 2006 the Group acquired a 46.5% equity interest in Henry EnterpriseCompany Inc., a company incorporated in the British Virgin Islands. HenryEnterprise Group Ltd. exclusively holds 100% equity interest in 21st CenturyInternational Development Company Inc., a company incorporated in Vietnam. Theprincipal activity of 21st Century International Development Company Inc. is toengage in property investment and development in Vietnam. The investment isaccounted for under the equity method. The shares of Henry Enterprise Company Inc. are not publicly listed on a stockexchange and hence the fair value of its shares cannot be determined. As at thedate of this financial statement the financial information of the associate asat and for the year ended 30 June 2006 is not available. 6. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss represents the bondpurchased from the Bank for Investment and Development of Vietnam. Theinstrument generates simple interest at 9.8% per annum and will mature in 10years from the issuance date of 19 May 2006. 7. Paid-in capital Consolidated Company US$ US$ Authorized: 500,000,000 ordinary shares with par value of 2,048,448 2,048,448US$0.01; issued and fully paid: 204,844,779 sharesAdditional paid in capital 196,414,163 196,414,163 198,462,611 198,462,611 8. Taxation The Company is exempt from income tax pursuant to the Tax Concessions Law (1999Revision) of the Cayman Islands. 9. Related party transactions During the period, the following transactions with related parties wererecorded: Related party Relation Transaction US$VinaCapital Investment Management Ltd. Investment manager Investment management fees 1,204,498 At 30 June 2006 the following balances were outstanding with related parties: Related party Relation Payable US$ VinaCapital Investment Management Ltd. Investment manager 1,204,498 10. Commitments The Group is committed under cancellable agreements in the annual amount ofUS$306,800. 11. Subsequent event On 17 July 2006 the Group acquired 37,500 shares of US$1 each, which represent75% of the equity interest in Prosper Big Investments Limited. The cost ofacquisition consists of cash consideration of US$37,500. Prosper Big Investments Limited is incorporated in the British Virgin Islandsand its principal activity is to engage in property investment and developmentin Vietnam and the surrounding Asian countries. At the date of acquisitionProsper Big Investments Limited had no assets, liabilities or contingentliabilities. The financial information set out in this announcement does not constitute theGroup's statutory accounts for the period ended 30 June 2006 but is derived fromthose accounts. The full audited accounts of VinaLand Limited for the year ended30 June 2006 will be posted to shareholders shortly and will be available for aperiod of one month to the public at the offices of VinaCapital InvestmentManagement Ltd, 17/F, Sun-Wah Tower, Ho Chi Minh City, Vietnam , for a period of30 days from the date of this announcement. This information is provided by RNS The company news service from the London Stock Exchange