VNL.L Regulatory News (VNL)

29 March 2017

VinaLand Limited

Interim results for the six months ended 31 December 2016

VinaLand Limited ("the Company" or "VNL"), the AIM-quoted investment vehicle established to target strategic segments within Vietnam's emerging real estate market, today announces its interim results for the six months ended 31 December 2016 ("the Period").

Financial highlights:

· Net Asset Value ("NAV") of USD 318.2 million (30 June 2016: USD336.8 million); and,

· NAV per share of USD0.89 (30 June 2016: USD0.86).

Operational highlights:

During the Period, VNL has completed the divestment of three projects and made considerable progress on other pending disposals. The three projects sold were:

· The Resort Project, located in Danang, resulting in net cash proceeds of USD7.0 million to the Company;

· Project Ceana in Quang Nam, resulting in net cash proceeds of USD7.6 million to the Company; and,

· Project BD in Binh Duong, resulting in net cash proceeds of USD10.9 million to the Company.

Notes to Editors:

VinaCapital is a leading investment management and real estate development firm headquartered in Vietnam, with a diversified portfolio of USD1.8 billion in assets under management.

Founded in 2003, VinaCapital boasts an unrivalled local network, providing the company with access to unique investment opportunities. VinaCapital's mission is to continue to offer institutional solutions for a variety of clients that can best extract the dynamic development taking place in Vietnam and the ASEAN region as a whole. This mission is instilled in each of VinaCapital's industry-leading asset class teams covering capital markets, private equity, fixed income, venture capital, real estate and infrastructure.

VinaCapital has managed three closed-end funds trading on the AIM Market of the London Stock Exchange, VinaCapital Vietnam Opportunity Fund Limited, VinaLand Limited and Vietnam Infrastructure Limited. In addition, VinaCapital co-manages the DFJ VinaCapital L.P. technology venture capital fund with Draper Fisher Jurvetson and also holds a stake in VinaWealth, a locally incorporated fund management company. Further, VinaCapital manages an open ended UCITS fund called the Forum One - VCG Partners Vietnam Fund, Vietnam's largest open-ended UCITS-compliant fund.

VinaCapital employs a bottom-up, fundamental analysis approach to valuation within a disciplined risk management framework, and possesses one of Vietnam's leading in-house research teams to uncover value opportunities.

With offices in Ho Chi Minh City, Hanoi, Danang and Singapore, VinaCapital offers insight, expertise and an on the ground presence unrivalled in the ASEAN region. For more information about VinaCapital, please visit www.vinacapital.com or reach out directly to info@vinacapital.com.

The financial statements will be posted to shareholders and are available on the Company's website at www.vnl-fund.com

 Enquiries:

Jonathan Viet Luu

VinaCapital Investment Management Limited

Investor Relations

+84 8 3821 9930

jonathan.luu@vinacapital.com

Joel Weiden

VinaCapital Investment Management Limited

Communications

+84 8 3821 9930

joel.weiden@vinacapital.com

Philip Secrett

Grant Thornton UK LLP, Nominated Adviser

+44 (0)20 7383 5100

philip.j.secrett@uk.gt.com

David Benda / Hugh Jonathan

Numis Securities Limited, Broker

+44 (0)20 7260 1000

funds@numis.com

Daniel Jason

Peregrine Communications, Public Relations (London)

+44 (0) 20 3040 0872

daniel.jason@peregrinecommunications.com

Chairman's Statement

Dear Shareholders,

I am pleased to report that VinaLand Limited (the "Company", "VNL") has continued to make steady progress during the interim period from 1 July 2016 to 31 December 2016, both in terms of securing shareholder approval for a new strategy at the EGM, as well as in disposing of projects and making distributions to shareholders.

EGM/AGM

In November, the Company held an Extraordinary General Meeting ("EGM") and an Annual General Meeting ("AGM"). Shareholders approved all four AGM resolutions, while at the EGM shareholders supported Resolutions 1, 2, and 3, but not Resolution 4, and as a result Resolution 5 was not put to a vote. In summary, shareholders supported the Company's new continuation strategy, under which the divestment of projects will continue in a controlled and orderly manner and the funds received will be distributed to shareholders.

Project divestments and distributions

During the period the Company made good progress with the complete disposal of three projects and considerable work undertaken on several other pending disposals. The three projects sold were:

· The Resort Project (August 2016): the Company disposed of its entire stake at a total valuation 1.0% below the 30 June 2016 unaudited net asset value ("NAV"). The Company received net cash proceeds of USD7.0 million from the sale.

· Project Ceana (November 2016): the Company disposed of its stake in this project at a valuation 12.9% above the 30 September 2016 unaudited NAV. VNL received net proceeds of USD7.6 million from the sale.

· Project BD (December 2016): the Company disposed of its stake in this project at a valuation 17.4% below the unaudited net asset value at the time of VNL's recent extraordinary general meeting (EGM) in November 2016. VNL received net proceeds of USD10.9 million from the sale.

Furthermore, during the six-month period, VNL distributed USD23.6 million to shareholders by way of share buybacks undertaken at an average share price discount to NAV of 24%.

ZDP redemption

The full redemption of the VinaLand Zero Dividend Preference (ZDP) shares occurred in December 2016, and the ZDP shares are no longer traded. Following the redemption, the Company's debt is limited to loans obtained at the project level. These will continue to decline as projects are sold.

Fund performance

The NAV per share (reviewed by the auditors) was USD0.89 at 31 December 2016, an increase of 3.95% from the audited NAV per share at 30 June 2016. During this period, the Company's share price increased to USD0.69, narrowing the share price discount to NAV to 24% from 33% at 30 June 2016.

Board changes

During the period, Board Directors Nicholas Allen and Nicholas Brooke announced their resignations effective on 20 October 2016 and 31 December 2016, respectively. I would like to thank them for their diligence and support over the last few years.

As the Company's portfolio is reducing the Board has decided that four directors are sufficient to enable the Board to carry out its duties. With this consideration in mind, Ian Lydall joined the Board in October 2016.

Vietnam's property market continues to remain buoyant and the Company continues to evaluate opportunities to dispose of projects when appropriate and practicable. We are confident that the Company's new strategy is aligned with the current positive trends in both the Vietnam economy and real estate markets and that, as a result, we can maximise returns to shareholders over the coming years. On behalf of the Board, I appreciate your continued feedback and support.

Michel Casselman

Chairman

VinaLand Limited

28 March 2017

CONDENSED INTERIM CONSOLIDATED BALANCE SHEET

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONDENSED INTERIM CONSOLIDATED INCOME STATEMENT

CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

During the period, major non-cash transactions included capital gains tax of USD0.8 million which crystalised during the period (six months ended 31 December 2016: USD2.6 million) resulting from realised gains on divestments. The tax amounts due were withheld from disposal proceeds due to the Group by the buyers and remitted to the tax authorities and as a result these amounts are excluded from proceeds from disposal of subsidiaries, and disposals of investment properties and investments in associates, included in the consolidated statement of cash flows.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1 GENERAL INFORMATION

VinaLand Limited ("the Company") is a limited liability company incorporated in the Cayman Islands. The registered office of the Company is PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands. The original objective of the Company was to focus on key growth segments within Vietnam's emerging real estate market, namely residential, office, retail, industrial and leisure projects in Vietnam and the surrounding countries in Asia. The Company is listed on the AIM Market of the London Stock Exchange under the ticker symbol VNL.

At an Extraordinary General Meeting ("EGM") held on 21 November 2012 the shareholders approved a proposal that the Company make no new investments and dispose of a portion of its investments in a controlled and orderly manner so as to maximise returns to shareholders. At a subsequent EGM held on 18 November 2016 this strategy was expanded to include the disposal of all remaining investments. The key changes impacting these financial statements are summarised as follows:

· The new strategy involves the orderly sell down of investments in conjunction with ongoing development of selected projects to maximise returns to shareholders. All projects will be realised over a period of approximately three years and the proceeds collected, less operating costs, will be returned to shareholders.

· The Third Amended and Restated Investment Management Agreement introduces a new fee structure composed of disposal and alignment fees, prepayment advances and a retention account to ensure that the Investment Manager is incentivised to meet the investing policy (Note 30).

The condensed interim consolidated financial statements for the six months ended 31 December 2016 were approved for issue by the Company's Board of Directors on 28 March 2017.

These condensed interim consolidated financial statements have been reviewed, not audited.

2 BASIS OF PREPARATION

The Company and its subsidiaries herein are referred to as the Group.

These condensed interim consolidated financial statements are for the six months ended 31 December 2016. They have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" as issued by the International Accounting Standards Board ("IASB"). They do not include all of the information required in the annual consolidated financial statements which are prepared in accordance with International Financial Reporting Standards ("IFRSs"). Accordingly, these financial statements are to be read in conjunction with the annual consolidated financial statements of the Group for the year ended 30 June 2016, which have been prepared in accordance with IFRSs.

3 ACCOUNTING POLICIES

These condensed interim consolidated financial statements (the "interim financial statements") have been prepared in accordance with the accounting policies, methods of computation and presentation adopted in the last annual consolidated financial statements for the year ended 30 June 2016.

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

When preparing the condensed interim consolidated financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and may not equal the estimated results.

Information about significant judgements, estimates and assumptions that have the most effect on recognition and measurement of assets, liabilities, income and expenses were the same as those that applied to the last annual consolidated financial statements for the year ended 30 June 2016.

4.1 Fair value of investment properties

The investment properties of the Group are stated at fair value in accordance with accounting policies 2.5 of the annual consolidated financial statements for the year ended 30 June 2016. The fair values of investment properties are based on valuations by independent professional valuers including CB Richard Ellis, Savills, Jones Lang LaSalle and Cushman & Wakefield. These valuations are based on certain assumptions which are subject to uncertainty and might materially differ from the actual results. The estimated fair values provided by the independent professional valuers are used by the Valuation Committee as the primary basis for estimating each property's fair value for recommendation to the Board. 

In making its judgement, the Valuation Committee considers information from a variety of sources including:

(i) current prices in an active market for properties of different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect those differences;

(ii) recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the dates of those transactions;

(iii) recent developments and changes in laws and regulations that might affect zoning and/or the Group's ability to exercise its rights in respect to properties and therefore fully realise the estimated values of such properties;

(iv) discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of external evidence such as current market rents and sales prices for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows; and

(v) recent compensation prices made public by the local authority at the province where the property is located.

As at 31 December 2016, if the discount rates used had been 1% higher/lower (30 June 2016: 1%), the total carrying values of the Group's investment properties would have been USD13.6 million lower/USD14.7 million higher (30 June 2016: USD13.6 million lower/USD15.2 million higher).

4.2 Prepayments for acquisitions of investments

The Group estimates the recoverable amounts of significant prepayments for acquisitions of investments either based on management's internal assessment or by engaging independent valuers in accordance with the valuation methods and processes as set out in Notes 2.5 and 3.1 of the annual consolidated financial statements for the year ended 30 June 2016. 

5 SEGMENT ANALYSIS

In identifying its operating segments, management generally follows the Group's sectors of investment which are based on internal management reporting information for the Investment Manager's management, monitoring of investments and decision making. The operating segments by investment portfolio include commercial, residential and office buildings, hospitality, mixed-use segments and cash and short-term investments.

Detail of activities undertaken by each segment and how each segment is managed and monitored, can be found in Note 4 to the annual consolidated financial statements of the Group for the year ended 30 June 2016.

There is no measure of segment liabilities regularly reported to the Investment Manager; therefore, liabilities are not disclosed in the sector analysis. Segment information can be analysed as follows for the reporting periods under review:

(a) Condensed Interim Consolidated Income Statement

Condensed Interim Consolidated Balance Sheet

6 INVESTMENT PROPERTIES

The Group's investment properties were revalued during the period by independent professionally qualified valuers who hold recognised relevant professional qualifications and have recent experience in the locations and categories of the investment properties valued.

Bank borrowings are secured by investment properties with a fair value of USD235.5 million (30 June 2016: USD102.9 million). During the period, the Group capitalised borrowing costs amounting to USD2.2 million (year ended 30 June 2016: USD4.9 million) in investment properties.

At 31 December 2016, land use rights certificates have not been fully issued for certain portions of the Group's investment properties as final issuance is subject to the completion of a number of administrative steps required by local authorities and/or the settlement of any outstanding land taxes. In the Investment Manager's view, the lack of land use rights certificates does not have any material impact on the existence and valuation of the investment properties as land use rights over the land area for each project have been specifically granted under each investment licence.

The Group's policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. All of the Group's investment properties are in Level 3 of the fair value hierarchy. There were no transfers between levels during the period (year ended 30 June 2016: none).

Information about fair value measurements using unobservable inputs (Level 3) is set out below:

For the comparative balance sheet date:

(*) The valuations of these investment properties assume that they will be developed and sold within a definite time period; therefore, no capitalisation rates are used in such valuations.

7 PROPERTY, PLANT AND EQUIPMENT

There was no impairment charge to property, plant and equipment during the period ended 31 December 2016 (the year ended 30 June 2016: USD0.8 million).

For the comparative balance sheet date:

8 SUBSIDIARIES AND ASSOCIATES

(a) Investments in associates

Particulars of material operating associates and their summarised financial information, extracted from their financial statements as at 31 December 2016 and 30 June 2016, are as follows:

As at 31 December 2016