VNL.L Regulatory News (VNL)

31 Mar 2008 10:59

VinaLand Limited31 March 2008 31 March 2008 Vinaland Limited Interim Results Vinaland Limited (the "Company" or "VNL"), the AIM-quoted investment vehicleestablished to target key growth segments within Vietnam's emerging real estatemarket, including residential, office, retail, industrial, and leisure projects,today announces it's interim results for the six months ended 31 December 2007("the Period"). Financial highlights • Profit before tax for the Period of USD 26.3 million. • Basic earnings per share of USD 0.036 for the Period. • Cash and cash equivalents as at 31 December 2007 of USD 170.9 million. • Net asset value at 31 December of USD 700 million representing USD 1.31 per share. Operational highlights • VNL has secured 28 real estate projects in Vietnam with a further 6 projects in the investment pipeline currently being finalised. • Key investments during the period: o Pavilion Square: VinaLand has received an investment license forPavilion Square, a new mixed-use development located on a prime 14,000 sq.m sitein District 1, Ho Chi Minh City. This city-centre location will incorporateapproximately 1,300 residential apartments and a retail component with a totalgross floor area (GFA) of approximately 30,400 sq.m. The Pavilion Square projectis a joint venture between VNL and a local partner, with VNL holding a majoritystake. The retail component will incorporate a cinema and a health club inaddition to a wide range of retailers including a supermarket and other largeanchor tenants. The residential apartments will range from one to four bedroomsas well as penthouses and will incorporate the latest in interior design. Theground breaking ceremony is scheduled for the middle of 2008. o Dai Phuoc Lotus 200ha Urban Project: VinaLand and DevelopmentInvestment Construction Corporation (DIC) obtained an investment licence fromthe Dong Nai People's Committee to develop the Dai Phuoc Lotus 200ha UrbanProject on 28 December 2007. This new USD 400 million township project islocated in Dong Nai province and has a total land area of 200 ha. The Dai PhuocLotus project includes a residential area, high-end apartment buildings,commercial centres and office buildings. The public area will include akindergarten, a school and parks. The project will be developed from 2008 to2016. A new road bridge is currently under construction and upon completion inQ3 2008 it will provide direct access to Ho Chi Minh City. o Novotel Reunification Park Hanoi: On 29 October 2007, VinaLandpurchased a new hotel project in Hanoi, the Novotel Reunification Park Hotel.This 377-room hotel when completed will provide much sought-after high qualityhotel rooms in the nation's capital. This most recent hotel acquisition will bebranded Novotel and managed by the Accor Hotel Management Group. o Vinh Thai township development in Nha Trang: The proposed development will see 157 ha of cleared land close to the Nha Trang beachdeveloped into a mixed-use community including an international school,hospital, retail and entertainment facilities. VinaCapital's stake in theproject is now reflected in the revised investment licence. Commenting, Don Lam, Director: "Our strategy is working well and the first six months of the year have beenextraordinarily active for VNL. We have continued to invest in a number ofexciting investment opportunities which we believe will continue to generatesubstantial shareholder value in the near term. "The Vietnam real estate market remains strong across all sectors and VNL iscurrently benefiting from the continued demand in the leisure sector, withnear-capacity occupancy rates at many of VNL's investee hotels. Furthermore,office and residential rental rates continue to climb as new supply is slow toreach the market. The outlook for the retail market in Vietnam's major centres,in particular Ho Chi Minh City and Hanoi, remains very positive as Vietnam'syoung and increasingly affluent population are drawing the attention of majorforeign retailers." Enquiries: Ms Chi Nguyen +84 8 821 9930VinaCapital Investment Management Limited chi.nguyen@vinacapital.comInvestor Relations Philip Secrett +44 20 7383 5100Grant Thornton Corporate Finance philip.j.secrett@gtuk.comNominated Adviser Hiroshi Funaki +44 20 7845 5960LCF Edmond de Rothschild Securities funds@lcfr.co.ukBroker David Cranmer +44 20 7831 3113Financial Dynamics david.cranmer@fd.comPublic Relations Notes to Editors: VinaLand (VNL), is a closed-end property fund listed on the London StockExchange (AIM). The fund focuses on the key growth segments within Vietnam'semerging real estate market, including residential, office, retail, industrial,and leisure projects. The manager's objective is to provide shareholders with anattractive level of income as well as creating a potential for capital growth.The fund is managed by VinaCapital Investment Management, with VinaCapital RealEstate acting as development adviser. Chairman's Statement Dear Shareholders, We are pleased to present the half-year financial statements of VinaLand Limited(AIM: VNL) for the six months ended 31 December 2007. Real estate prices continued to climb across all sectors during the second halfof 2007, particularly in major cities such as Hanoi and Ho Chi Minh City. Theeconomy continued to grow at a rapid pace, but the capital markets went througha difficult period that saw investors shift their money to gold and property -further fuelling an already overheated market. In most property sectors there is still a 12-18 month window before significantnew supply will come online. Hotel occupancy rates sit at 90-95 percent and theDepartment of Tourism says Ho Chi Minh City needs 10,000 more rooms in the nextfive years. Demand for grade A and B office space is at an all time high andrents are increasing even outside central business districts. Many companiesreport having to move outside the city centre as a result of rising rents. Despite what continues to be very positive medium and long-term outlooks for thereal estate sector, there are some dark clouds on the horizon for the next sixmonths. In the last few months interest rates have been rising and bank lendinghas tightened as the government has sought to reign in inflation. This wasforeseeable as Vietnam's economy was bound to come under pressure after itsstellar run for the last five years. Notwithstanding this possible slowdown, Iam very pleased to advise that VinaLand is well positioned to weather suchchallenges and is ready to capitalise on the opportunities that arise. VinaLand has built up a portfolio of excellent projects across all real estatesectors - hospitality, residential and office/retail - with a total of 28projects at end December 2007, and a further six projects in the pipelinecurrently being finalised. The last six months have seen investment licensesissued for the Pavilion Square mixed-use project in central Ho Chi Minh City,the Dai Phuoc Lotus township in Dong Nai province, and the Novotel ReunificationPark Hanoi Hotel in the nation's capital. Based on current invested projects and committed future investments, the Group'stotal assets exceeded USD810 million at 31 December 2007. At the end of Decemberthe Net Asset Value (NAV) had risen by 10.1 percent to USD 1.31 per share, fromUSD 1.19 per share at the end of June. Over the next six months we expect to commence construction on approximatelyeight projects; yet another milestone for the fund. We remain confident that thefuture for the fund remains very bright. Thank you for your continued support. Horst Geicke Chairman VinaLand Limited 28 March 2008 Condensed Interim Balance Sheet Note 31 December 2007 30 June 2007 USD'000 USD'000ASSETSNon-currentInvestment properties 6 184,772 97,185Property, plant and equipment 133,654 114,048Investments in associates 1,001 -Deferred tax assets 323 356Loan receivables 6,818 6,818Prepayments for operating leases 12,962 13,297 339,530 231,704 CurrentInventories 267 276Receivables from related parties 9,514 22,825Trade and other receivables 48,556 33,199Financial assets at fair value through profit or 35,687 29,460lossDeposits for acquisitions of investments 7 209,074 72,729Cash and cash equivalents 170,886 350,898 473,984 509,387Total assets 813,514 741,091 31 December 2007 30 June 2007 Notes USD'000 USD'000EQUITYEquity attributable to equity shareholders ofthe CompanyShare capital 8 4,999 4,999Additional paid-in capital 588,870 588,870Revaluation reserve 10,670 777Translation reserve 322 (530)Retained earnings 52,613 34,756 657,474 628,872 Minority interests 71,356 54,011Total equity 728,830 682,883 LIABILITIESNon-current liabilitiesLong-term borrowings 22,976 4,705Other liabilities 939 578 23,915 5,283Current liabilitiesPayables to related parties 46,645 40,583Trade and other payables 13,827 11,062Short-term borrowings 297 1,280 60,769 52,925Total liabilities 84,684 58,208Total equity and liabilities 813,514 741,091 1.31 1.26 Net assets per share ($ per share) Condensed Interim Statement of Changes in Equity Equity attributable to equity holders of the Group Minority Total interests equity Share Additional Translation Revaluation Retained capital paid-in reserve reserve earnings capital USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 1 July 2006 2,048 196,414 - - 121 - 198,583Profit for the period - - - - 1,283 - 1,283ended 31 December 2006Total gain for the period - - - - 1,283 - 1,28331 December 2006 2,048 196,414 - - 1,404 - 199,866 1 July 2007 4,999 588,870 (530) 777 34,756 54,011 682,883Currency translation - - 852 - - - 852Revaluation reserves of - - - 9,893 - 8,952 18,845PPENet income recognised - - 852 9,893 - 8,952 19,697directly in equityProfit for the period - - - - 18,307 6,893 25,200ended 31 December 2007Total recognised income - - 852 9,893 18,307 15,845 44,897and expenses for theperiodDividend distributions - - - - (450) - (450)Acquisition of - - - - - 1,500 1,500subsidiaries31 December 2007 4,999 588,870 322 10,670 52,613 71,356 728,830 Condensed Interim Statement of Income Notes Half-year ended 31 December 2007 31 December 2006 USD'000 USD'000 Revenue 18,350 -Cost of sales (6,115) -Gross profit 12,235 - Other income 139 -Management fee and administration expenses 9 (13,568) (2,460)Other operating expenses (579) -Gain on fair value adjustment of investment 10 17,266 -propertiesProfit/(loss) from operations 15,493 (2,460) Financial income 11,680 3,744Finance costs (867) -Share of profit of associate 1 - 10,814 3,744Profit before tax 26,307 1,284Income tax 11 (1,107) -Net profit 25,200 1,284 Attributable to shareholders 18,307 1,284Attributable to minority interests 6,893 -Earnings per share (continuing operations and 12 0.037 0.006total EPS)- basic and diluted($ per share) Condensed Interim Statement of Cash Flow Half-year ended 31 December 2007 31 December 2006 USD'000 USD'000Operating activities Net profit before tax 26,307 1,284Adjustment for:Depreciation and amortisation 1,745 -Gain on revaluation of investment properties (17,266) -Share of associate's profit (1) -Unrealised foreign exchange losses 99 -Interest expense 867 -Interest income (11,680) (500)Net profit before changes in working capital 71 784Change in trade and other receivables 3,396 (3,237)Change in inventory 9 3,916Change in trade and other payables 9,189 925Corporate income tax paid (797) - 11,868 2,388Investing activitiesInterest received 6,606 3,237Purchases of property, plant and equipment and other non-current (2,404) -fixed assetsAcquisition of a subsidiary, net of cash (4,238) -Deposit for acquisition of investments (136,345) (27,676)Purchases of financial assets (6,227) (3,272)Acquisition of investment properties (64,542) (64,808)Investment in associate (1,000) 12,160Loans repayments (2,931) (5,815) (211,081) (86,174) Half-year ended 31 December 2007 31 December 2006 USD'000 USD'000Financing activitiesLoan proceeds 20,218 -Dividend paid to minority interest (150) -Interest paid (867) - 19,201 0Net change in cash and cash equivalents for the period (180,012) (83,786)Cash and cash equivalents at the beginning of the period 350,898 174,788Cash and cash equivalents at end of the period 170,886 91,002 Notes to the Condensed Interim Financial Statements 1 General information VinaLand Limited is a limited liability company incorporated in the CaymanIslands. The registered office of the Company is PO Box 309GT, Ugland House,South Church Street, George Town, Grand Cayman, Cayman Islands. The Company'sprimary objective is to focus on key growth segments within Vietnam's emergingreal estate market, namely residential, office, retail, industrial and leisureprojects in Vietnam and the surrounding countries in Asia. The Company islisted on the AIM Market of the London Stock Exchange under the ticker symbolVNL. The condensed interim financial statements for the six-month period ended 31December 2007 were approved for issue by the Board of Directors on 28 March2008. 2 Basis of preparation of condensed interim financialstatements The condensed interim financial statements for the half-year ended 31 December2007 are condensed interim financial statements that have been prepared inaccordance with International Accounting Standard 34, 'Interim FinancialReporting' as issued by International Accounting Standards Board (IASB). The condensed interim financial statements do not include all the notes of thetype normally included in an annual financial report. Accordingly, this reportis to be read in conjunction with the annual financial statements for the yearended 30 June 2007. The condensed interim financial statements are presented in United StatesDollars. 3 Accounting policies The accounting policies adopted are consistent with those of the previousfinancial year and corresponding interim report, as described in the annualaudited financial statements for the year ended 30 June 2007. 4 Segment reporting Segment information is presented in respect to the Group's investment andgeographical segments. The primary reporting format, investment segments, isbased on the investment manager's management and monitoring of investments.Investments are allocated into five main segments: four real estate sectors:commercial; residential; hospitality; and mixed use, and cash (including termdeposits and bonds). The Group's secondary reporting format, geographicalsegments, includes north, central and south Vietnam, and the regions outsideVietnam. For the half-year ended 31 December 2007 Vietnam Outside Total Vietnam North Central South USD'000 USD'000 USD'000 USD'000 USD'000IncomeReal estate Commercial - - 3,189 - 3,189 Residential - - - - - Hospitality 11,847 22 6,669 201 18,739 Mixed used - 14,077 - - 14,077Cash - - 6,710 4,721 11,431 11,847 14,099 16,568 4,922 47,436 Total assetsReal estate Commercial 12,569 - 5,464 - 18,033 Residential 15,005 - 20,142 - 35,147 Hospitality 99,947 25,065 40,644 - 165,656 Mixed used 47,411 75,397 300,661 - 423,469Cash 5,778 16,813 106,567 41,728 170,886 180,710 117,275 473,478 41,728 813,191 For the half-year ended 31 December 2006IncomeReal estate Commercial - - - - - - - - -Residential - - - - -Hospitality Mixed used - - - - -Cash - - 3,112 632 3,744 - - 3,112 632 3,744 Total assets At 30 June 2007Real estate Commercial 10,029 - - - 10,029 7,500 - 8,475 - 15,975Residential 78,966 21,949 36,386 - 137,301Hospitality Mixed used 45,083 51,094 130,354 - 226,531Cash 4,047 663 84,676 261,513 350,899 145,625 73,706 259,891 261,513 740,735 To determine the geographical segments for investments and cash the followingrules have been applied: • Real estate - location of property; and • Cash - place of deposit. 5 Acquisition of subsidiaries and associates Acquisition of Novotel Hanoi Hotel project On 29 October 2007, the Group acquired 52.5% interest in Novotel Hanoi Hotelproject. The principal activity of the project is to construct and manage afour-star hotel in Hanoi. The total cost of the acquisition was USD4,500,000,which was settled in cash. The fair value amounts recognised for each class of the acquiree's assets,liabilities and contingent liabilities at the acquisition date were as follows: Current assets USD'000 Current liabilities USD'000 Cash and cash equivalents 280 Trade and other payables 56Other receivable 6 286 56Non-current assetsInvestment property 5,770 Minority interest 1,500 6,056 1,556 Acquisition of Orchid House Co,. Ltd On 13 December 2007, the Group acquired 30% of Orchid House Co., Ltd., which isincorporated in Vietnam. This company owns and manages an apartment complex with21 luxury units in District 1, Ho Chi Minh City, Vietnam. The total cost of theacquisition was USD1,000,000, which was settled in cash. Additional acquisition of Sheraton Nha Trang Hotel project As at 30 June 2007, the Group held 51% interest in the Sheraton Nha Trang Hotelproject. The principal activity of this project is to construct and manage thefive-star hotel in Nha Trang. On 5 July 2007, the Group acquired an additional4.27% interest in this project. As a result, the total interest of the Group inthis project has increased to 55.27%. 6 Investment properties 31 December 2007 30 June 2007 USD'000 USD'000 1 July 2007/ 1 July 2006 97,185 -Acquisition of subsidiaries 5,770 32,529Additions during the period 64,551 26,126Net gain on fair value adjustments (Note 10) 17,266 38,53031 December 2007/ 30 June 2007 184,772 97,185 Additions during the period include acquisitions of investment properties;additional project expenditures of and fair value adjustments to existinginvestment properties as at 31 December 2007. Details of these changes in thevalue of investment properties are as follows: 31 December 2007 30 June 2007 USD'000 USD'000 Vina Dai Phuoc Corporation 39,748 -VinaCapital Commercial Center Limited 18,606 -VinaCapital Assets Limited 15,004 -AA VinaCapital Ltd 7,148 -SAS Hanoi Royal Hotel Ltd 5,779VinaCapital Hoi An Resort 370 4,687VinaCapital Phuoc Dien Limited 353 2,278VinaCapital Danang Resorts Limited 218 12,402VinaCapital Long Dien Limited 134 2,529VinaCapital Danang Golf Course Limited 162 19,691Thang Long Tungshing JV Company 65 12,43321st Century International Development Company Inc. - 43,165 87,587 97,185 7 Deposits for acquisitions of investments 31 December 2007 30 June 2007 USD'000 USD'000 Deposits for acquisitions of investments 209,074 72,729 209,074 72,729 These deposits pertain to payments made by the Group to property vendors wherethe final transfer of the property is pending the approval of the relevantauthorities and/or is subject to either the Group or the vendor completingcertain performance conditions set out in agreements. 8 Share capital 31 December 2007 30 June 2007 Number of USD'000 Number of USD'000 shares sharesAuthorised: Ordinary shares of USD0.01 each 500,000,000 5,000,000 500,000,000 5,000,000 Issued and fully paid:At 1 July 2007/ 1 July 2006 499,967,622 4,999 204,844,779 2,048New shares issued in the period/ - - 295,122,843 2,951yearAt 31 December 2007/ 30 June 2007 499,967,622 4,999 499,967,622 4,999 9 Management fee and Administration expenses Half-year ended Half-year ended 31 December 2007 31 December 2006 USD'000 USD'000 Management fee 6,498 1,995Custodian fee 486 150Professional fees 352 72General administration expenses 6,232 243 13,568 2,460 10 Gain on fair value adjustment of investment properties Half-year ended Half-year ended 31 December 2007 31 December 2006 USD'000 USD'000 Net gain on fair value adjustments of investment 17,266 -properties 17,266 - The net gain on fair value adjustments of investment properties relates to therevaluation of certain properties held by subsidiaries, which were revalued on31 December 2007 by independent professionally qualified valuers, including CBRichard Ellis, Sallmanns, Colliers International and Savills. These valuationsare based on certain assumptions, which are subject to uncertainty and mightmaterially differ from the actual results. Properties that were not revalued as at 31 December 2007, were either revaluedas at 30 June 2007 or were acquired during the reporting period. 11 Corporate income tax VinaLand Limited is domiciled in the Cayman Islands. Under the current laws ofthe Cayman Islands, there is no income, State, corporation, capital gains orother taxes payable by the Company. The majority of the Group's subsidiaries are domiciled in the British VirginIslands (BVI) and so have a tax exempt status. A number of subsidiaries areestablished in Vietnam and are subject to corporate income tax in Vietnam. Aprovision of USD1,106,666 has been made for these Vietnamese subsidiaries of theGroup for the half-year ended 31 December 2007. The relationship between the expected tax expense based on the effective taxrate of the operating subsidiaries in Vietnam at 20% and the tax expenseactually recognised in the statement of income can be reconciled as follows: 31 December 2007 31 December 2006 USD'000 USD'000 Group profit before tax 26,307 1,284Group profit multiplied by effective tax rate (20%) 5,261 1,284Effect ofProfit exempted from tax in British Virgin Islands (4,154) (1,284)Corporate income tax expense 1,107 - 12 Earnings per share (a) Basic Basic earnings per share is calculated by dividing the profit attributable toshareholders of the Group by the weighted average number of ordinary shares onissue during the period. Half-year ended Half-year ended 31 December 2007 31 December 2006 Profit attributable to equity holders of the Company 18,307 1,284(USD'000)Weighted average number of ordinary shares on issue 499,967,622 204,844,779Basic earnings per share ($ per share) 0.037 0.006 (b) Diluted Diluted earnings per share is calculated by adjusting the weighted averagenumber of ordinary shares outstanding to assume conversion of all dilutivepotential ordinary shares. The Group has no category of potential dilutiveordinary shares. Therefore, diluted earnings per share are equal to basicearnings per share. 13 Contingent liabilities Performance fee In accordance with the Investment Management Agreement between the Company andthe Investment Manager, the Investment Manager is entitled to receive aperformance fee in the event that the year end Net Asset Value is equal to orgreater than the higher of (i) the Net Asset Value on the date the Company wasadmitted ("Admission date") to trading on AIM increased by a compounded annualhurdle rate of eight per cent (the "Hurdle") or (ii) the year end Net AssetValue for the last year in relation to which a performance fee became payable ("the High Water Mark"). In the event that this condition is satisfied theInvestment Manager shall be entitled to a performance fee equivalent to 20 percent of the increased Net Asset Value to be paid as follows: • 0 per cent of the increased Net Asset Value at or below the Hurdle; • 100 per cent of the increased Net Asset Value above the Hurdle butbelow a compounded annual rate of 10 per cent (the "Catch-up"); and • 20 per cent of all increased Net Asset Value above the Catch-up. As at 31 December 2007 the Net Asset Value as at 30 June 2008 is yet to bedetermined. In accordance with the above Investment Management Agreement, theperformance fee should be calculated and accrued on an annual basis. Therefore,the performance fee has not been calculated and recorded in the interimfinancial information. Taxation Although the Company and its direct subsidiaries are incorporated in the CaymanIslands and the British Virgin Islands where they are exempt from tax, theGroup's activities are primarily focused on Vietnam. In accordance with theprevailing tax regulations in Vietnam, if an entity was treated as having apermanent establishment, or as otherwise being engaged in a trade or business inVietnam, income attributable to or effectively connected with such permanentestablishment or trade or business may be subject to tax in Vietnam. As at thedate of this report the following information can not be determined: • Whether the Company and/or its subsidiaries are considered as havingpermanent establishments in Vietnam; and • The amount of tax that may be payable, if the income is subject totax. The implementation and enforcement of tax regulations in Vietnam can varydepending on numerous factors, including the identity of the tax authorityinvolved. The administration of laws and regulations by government agencies maybe subject to considerable discretion, and in many areas, the legal framework isvague, contradictory and subject to interpretation. The Directors believe thatit is unlikely that the Group will be exposed to tax liabilities in Vietnam, andin the worse case, if tax is imposed on income arising in Vietnam it will not beapplied retrospectively. As at 31 December 2007, due to the uncertainties mentioned above, no liabilityin relation to taxation has been recognised in the interim financialinformation. 14 Commitments As at 31 December 2007, the Group was committed under lease agreements to payingthe following future amounts: 31 December 2007 30 June 2007 USD'000 USD'000 Within one year 17,700 700From two to five years 2,800 2,800Over five years 9,450 10,150 29,950 13,650 As at 31 December 2007, the Group was also committed under the constructionagreements to paying USD18,388,689 for future construction works. 15 Subsequent events No significant events have occurred since balance date which would impact on thefinancial position of the Company disclosed in the balance sheet as at 31December 2007 or on the results and cash flows of the Company for the periodended on that date. 16 Comparative figures The comparative figures for the condensed interim statements of income, cashflow, statement of changes in equity and related notes for the period from 1July 2006 to 31 December 2006 were not audited or reviewed by an independentauditor as the interim financial statements were not required to be audited orreviewed. Copies of the interim report will be available, free of charge from the officesof Grant Thornton Corporate Finance, 30 Finsbury Square, London EC2P 2YU or, theoffices of VinaCapital Investment Management Ltd, 17/F, Sun Wah Tower, Ho ChiMinh City, Vietnam and can also be downloaded from the Company's website atwww.vinaland-fund.com. This information is provided by RNS The company news service from the London Stock Exchange