TIDMVPF
RNS Number : 6750Z
Vietnam Property Fund
20 March 2012
VIETNAM PROPERTY FUND LIMITED
("VPF" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011
Financial Highlights
31 December 2011 30 June 2011
Total net assets US$64,426,322 US$71,476,461
NAV per share US$0.73 US$0.80
Share price (mid-price) US$0.50 US$0.71
Discount 31.51% 11.36%
US$/VND exchange rate 21,049 20,592
Six Months Ended Six Months Ended
31 December 2011 31 December 2010
Net Loss US$( 6,496,765) US$(6,468,656)
Net loss per ordinary US$0.073 US$0.072
share
------------------------- ------------------ ------------------
Six Months Ended Six Months Ended
31 December 2011 31 December 2010
US$ US$
Cash and cash equivalents 27,170,826 27,283,245
Interest income 386,305 41,504
Dividend income 153,121 358,613
Loan interest income 39,110 86,211
Net changes in fair value
of financial assets at
fair value through profit
or loss (6,079,764) (6,040,747)
Other income 747 208,588
---------------------------- ------------------ ------------------
Total (5,500,481) (5,345,831)
============================ ================== ==================
Portfolio Highlights
31 December 2011 30 June 2011
US$ US$
Listed investments at
cost 29,842,145 29,842,145
Unrealised losses (20,435,818) (14,813,323)
----------------------- ----------------- -------------
Listed investments at
fair value 9,406,327 15,028,822
----------------------- ----------------- -------------
31 December 2011 30 June 2011
US$ US$
Unlisted investments at
cost 28,776,340 24,976,340
Unrealised losses (1,335,985) (878,716)
------------------------- ----------------- -------------
Unlisted investments at
fair value 27,440,355 24,097,624
------------------------- ----------------- -------------
Investment Manager's Statement
2011 REVIEW - RENTS, SALES AND ROCK BOTTOM
The second half of 2011 was without doubt the most challenging
time in the Vietnam real estate market since Vietnam Property Fund
Limited (the "Company" or "VPF") was established back in April
2008. There have been some significant ups and downs during this
period but the past six months have seen the most pain amongst all
players in real estate from land owners and developers to advisors
and service providers.
In general the property market has suffered from decreased
demand and over supply, especially in the residential for sale and
office sectors. This in turn has led to falling office rents,
reduced sale prices and, perhaps more importantly, sale volumes in
the residential for sale sector. Those land owners, developers or
landlords who did not learn from the global financial crisis
borrowed heavily against their property assets are now struggling
to service their loan repayments due to a significant shortfall in
revenue. This is leading to the first signs of distress.
It is true that loans that are technically in default can often
avoid being declared as non performing loans ("NPL") as banks are
prepared to roll over the termination date or restructure the loan
in order to keep their NPL percentage as low as possible. This has,
however, become increasing difficult as the State Bank of Vietnam
has implemented significant limits on annual credit growth - as low
as 15% for some banks - putting pressure on developers and
landlords.
The macro factors that have plagued the economy over the past
year started to improve towards the end of 2011 with inflation
coming down month on month from a peak of 23% in August. If this
continues, which many commentators and economists, including Dragon
Capital, think will happen, then interest rates will follow suit In
fact the first 1% interest rate cut has just happened in early
March 2012. It is not just the enormous cost of debt that is
crippling the real estate market at the moment, it is the fact that
depositors can earn 14% or more in interest on deposits making
investment in any other asset class seem too risky for the
returns.
At VPF the challenging market of the last six months has
affected our portfolio in three very different ways as follows.
1. The Good Case - Cash is King
In terms of acquisition and disposal activity, the second half
of 2011 was not the most active time for VPF. That is not to say
Dragon Capital Management Limited (the "Investment Manager" or
"we") was not busy and whilst everything from listed share prices
to office rents were falling there were no major signs of distress
visible yet. We therefore decided to sit tight and watch the market
carefully, holding onto and protecting our cash reserves for the
inevitable value that is now starting to appear in the market. 2012
will be a good time to deploy some of our remaining funds as
sentiment is that the market will improve but not quickly enough to
save everyone. There are fewer and fewer investors, particularly
international investors, active in the Vietnam market today so
there will be a smaller number of buyers to fight over the good
value deals that we see.
2. The Holding Case - Avoiding Distress
Whilst we continue to hold cash, we have also made investments
in real estate developments and assets and it has been our priority
to ensure that we maintain/protect value and do not become a
distressed seller ourselves. The projects that we have require debt
but the facilities are either in place like in the case of Saigon
South Residences Project or can be re-financed in the case of
Saigon Golf & Country Club and Residences Project ("SDI") due
to the quality of the development. We are positioning ourselves to
take advantage of the market when a recovery is more ascertained by
having all approvals in place and marketing materials ready in
order to launch into a rising market. Our valuations are generally
quite conservative although we have managed to maintain value due
to clear activity with the projects.
3. The Base Case - Equity Performance
The last six months has seen a significant reduction in the
value of our listed equity portfolio. Whilst we may have seen some
questionable performance from some of our investee companies we are
still, in general, happy with the underlying fundamentals of these
companies. They mostly have low gearing, a large land bank but are
struggling to generate revenue from their assets. By the end of the
year the stock market was beginning to tick up with increased
trading volumes which have started to and which will hopefully
continue into 2012. The first two months of 2012 have seen an
increase in the VN Index of approximately 25%. We have not realised
losses on our listed equity portfolio and the strengthening in the
market may even signal a buy opportunity for VPF.
In summary, VPF has come through a very difficult property
market in Vietnam relatively well and is in good shape to make
investments at realistic or distressed prices for the first time
since launch. The macro picture in Vietnam still has some
challenges ahead but the policies in place appear to be gaining
traction. We are positive about the next twelve months and look
forward to making more investments and improving returns.
INVESTMENT STRATEGY
The investment landscape for real estate in Vietnam has changed
in the past six months. The expectation that the real estate market
could only rise is well and truly behind us. At VPF we take a
degree of satisfaction from our patient and conservative attitude
to deployment of funds and look forward to investing into a
potentially rising market. Our focus has moved away from a timing
based allocation to concentration on value and alternative sectors.
Our experience is that property prices in all sectors are linked to
basic supply and demand principles. We are therefore considering
sectors that are under supplied and not always on every investor's
radar. Value will be found in the mainstream sectors of
residential, office and listed equities but we are also looking at
debt, education and healthcare.
1. Listed Equities - Potential for Recovery
The VN Index has hit the lowest level since the dark days of
2008 (when the VN Index fell around 80%) towards the end of 2011.
It is true that the majority of real estate companies were
suffering from falling revenues as sales and rental income dried up
but all seem to be trading at an attractive discount to our
estimated net asset value ("NAV"). Whilst we expect a reasonable
recovery in the VN Index this year it is likely that the real
estate sector will lag behind the wider market. We will watch the
first months of 2012 with interest although we expect a bumpy ride
for investors. We have noted an increase in our listed holdings of
over 40% as at 9 March 2012 which is very positive. If there is a
marked improvement in sales and a reduction in inflation and
interest rates this year then we will give strong consideration to
an averaging down strategy
2. Value and Distress
It is almost with a sense of relief that there is finally some
realism returning to the real estate market. Most of the projects
we are seeing that are in dire need of cash are often not worth
investing in, even at very low prices, but it is good to be able to
consider projects that are realistic. We are finding more and more
opportunities to invest in projects via mezzanine debt which, in
some cases, can be considered due to strong security or even
punitive default provisions. There is still a reluctance to sell
off projects at deep discounts and often the only way to gain
access to distressed projects is through convertible debt
instruments. We have done this successfully before and are now
familiar and comfortable with the process for registering and
structuring the default provisions on such loans. It is mostly
residential for sale projects that are suffering and offering these
opportunities due to the fact that the pre-sale of apartments was
meant to fund the construction process. Lack of sales means that
the contractors don't get paid and the projects grind to a halt.
There is more pain to come in this sector and we will be watching
closely.
3. Alternative Assets
Whilst the office and residential sectors are struggling,
Vietnam still suffers from a structural undersupply of schools and
hospitals. In terms of education, the Vietnamese government
education policy is to provide every child with at least a primary
school education. This is becoming increasingly difficult and the
publicly funded schools today are full to bursting with large class
sizes and few new schools planned. The private alternative has
mainly been very costly international schools for expats and
wealthy Vietnamese. There is, as a result, strong demand for
schools that provide lower cost private education for the growing
middle classes and we are trying to source opportunities to fund
the construction of such schools in return for a rental stream.
We are also looking closely at smaller hospitals. Private
healthcare is on the rise although several billion dollars are
still spent every year on travelling to Singapore or Bangkok for
treatment. If the highest standards can be provided in Vietnam this
leakage will stop quickly. Vietnam is in desperate need of better
healthcare and there are returns to be made from this potentially
lucrative sector.
We are still seeking opportunities in the hotel sector with a
strong bias towards three and four star business hotels in good
locations as opposed to the five star or resort sub-sector. Many
operators are keen to come to Vietnam, the occupancy assumptions
are robust and supply is low. We are also following up
opportunities with high serviced apartment content in Ho Chi Minh
City as the existing supply is either fully occupied for the best
developments or old and tired at the lower end.
We also favour industrial parks as the supply of good industrial
land in Vietnam is tight. We are not so much looking to invest in
large long term industrial parks but are considering single unit
build to suit project where a tenant will take a long lease (10 to
15 years) in return for VPF funding and managing the build process.
Foreign companies, especially US based, are keen not to hold large
assets but want to rent in order to keep operational liabilities
small and off balance sheet for US Generally Accepted Accounting
Principles.
2011 saw our first revenues generated from our golf course
project, SDI, with the first golf memberships being sold. Our
residential sales have been delayed due to the poor market but 2012
will be a big year for SDI as the golf course will be finished
towards the end of the year and all our hard work will begin to
bear fruit.
Full updates on the VPF and copies of this document as well as
further details on its investment activities can be found on the
website: www.vietnampropertyfund.com.
ENQUIRIES:
Rachel Hill
Dragon Capital Markets (Europe) Limited | Tel: +44 79 71 214 852
Freddy Crossley / Tom Sheldon / Jacqui Briscoe
Seymour Pierce Limited (Nominated Adviser and Broker) | Tel: +44
20 7107 8000
VIETNAM PROPERTY FUND LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31
DECEMBER 2011 (UNAUDITED)
31 December
2011 30 June 2011
US$ US$
ASSETS
Financial assets at fair value
through profit or loss 36,846,682 42,926,446
Other receivables 62,966 274,307
Cash and cash equivalents 27,170,826 28,078,262
------------- -------------
CURRENT ASSETS 64,080,474 71,279,015
Loan receivables 528,600 400,000
------------- -------------
NON-CURRENT ASSETS 528,600 400,000
LIABILITIES
Accrued expenses 166,533 202,554
Other payables 16,219 -
------------- -------------
CURRENT LIABILITIES 182,752 202,554
NET ASSETS 64,426,322 71,476,461
============= =============
EQUITY
Issued share capital 882,225 893,225
Share premium 84,389,841 84,932,215
Accumulated losses (20,845,744) (14,348,979)
------------- -------------
TOTAL EQUITY 64,426,322 71,476,461
============= =============
NUMBER OF ORDINARY SHARES IN ISSUE 88,221,459 89,321,459
============= =============
NET ASSET VALUE PER ORDINARY SHARE 0.73 0.80
============= =============
VIETNAM PROPERTY FUND LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 (UNAUDITED)
For the six months For the six months
ended 31 December ended 31 December
2011 2009
US$ US$
INCOME
Dividend income 153,121 358,613
Bank interest income 386,305 41,504
Loan interest income 39,110 86,211
Net change in fair value of
financial assets at fair value
through profit and loss (6,079,764) (6,040,747)
Other income 747 208,588
TOTAL LOSS (5,500,481) (5,345,831)
--------------------- ---------------------
EXPENSES
Management fees (692,270) (884,735)
Legal and professional fees (8,871) (130,104)
Directors' fees (84,501) (57,664)
Administration and custodian
fees (44,127) (43,778)
Other operating expenses (91,051) (103,031)
TOTAL EXPENSES (920,820) (1,219,312)
--------------------- ---------------------
NET LOSS BEFORE EXCHANGE (LOSS)/GAIN (6,421,301) (6,565,143)
EXCHANGE (LOSS)/GAIN
Exchange (loss)/gain (75,464) 96,487
--------------------- ---------------------
LOSS FOR THE PERIOD (6,496,765) (6,468,656)
Other comprehensive income for - -
the period
--------------------- ---------------------
TOTAL COMPREHENSIVE LOSS (6,496,765) (6,468,656)
===================== =====================
BASIC LOSS PER ORDINARY SHARE (0.073) (0.072)
===================== =====================
VIETNAM PROPERTY FUND LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 (UNAUDITED)
(Accumulated
Issued Share losses)/retained
capital premium earnings Total
US$ US$ US$ US$
At 30 June 2011 893,225 84,932,215 (14,348,979) 71,476,461
TOTAL COMPREHENSIVE
LOSS FOR THE PERIOD:
Net loss for the
period - - (6,496,765) (6,496,765)
TRANSACTION WITH
SHAREHOLDERS:
Shares repurchased (11,000) (542,374) - (553,374)
At 31 December 2011 882,225 84,389,841 (20,845,744) 64,426,322
--------- ----------- ------------------ ------------
At 30 June 2010 900,010 85,441,995 6,225,348 92,567,353
TOTAL COMPREHENSIVE
LOSS FOR THE PERIOD:
Net loss for the
period - - (6,468,656) (6,468,656)
TRANSACTION WITH
SHAREHOLDERS:
Shares repurchased (200) (14,600) - (14,800)
At 31 December 2010 899,810 85,427,395 (243,308) 86,083,897
-------- ----------- ------------ ------------
VIETNAM PROPERTY FUND LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 (UNAUDITED)
For the six For the six
months ended months ended
31 December 31 December
2011 2010
================================================= ============== ==============
US$ US$
================================================= ============== ==============
CASH FLOWS FROM OPERATING ACTIVITIES
================================================= ============== ==============
Loss for the period (6,496,765) (6,468,656)
================================================= ============== ==============
Adjustments for:
================================================= ============== ==============
Dividend income (153,121) (358,613)
================================================= ============== ==============
Bank interest income (386,305) (41,504)
================================================= ============== ==============
Loan interest income (39,110) -
================================================= ============== ==============
Net change in fair value of financial assets
at fair value through profit and loss 6,079,764 6,040,747
================================================= ============== ==============
(995,537) (828,026 )
================================================= ============== ==============
Change in trade and other receivables 27,936 (758,585)
================================================= ============== ==============
Change in accounts payable and accrued expenses (19,802) (19,092)
================================================= ============== ==============
(987,403) (1,605,703)
================================================= ============== ==============
Acquisition of investments (3,800,000) (16,316,691)
================================================= ============== ==============
Withdrawal of term deposit 3,800,000 -
================================================= ============== ==============
Loan disbursement (1,100,000) -
================================================= ============== ==============
Loan received 1,000,000 -
================================================= ============== ==============
Dividends received 231,736 231,736
================================================= ============== ==============
Bank interest received 501,605 43,394
================================================= ============== ==============
Net cash used in operating activities (354,062) (17,647,734)
================================================= ============== ==============
CASH FLOWS FROM FINANCING ACTIVITIES
================================================= ============== ==============
Repurchase of own shares (553,374) (14,800)
================================================= ============== ==============
Net cash used in financing activities (553,374) (14,800)
================================================= -------------- --------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (907,436) (17,662,534)
================================================= ============== ==============
Cash and cash equivalents at the beginning
of the period 28,078,262 44,945,779
================================================= -------------- --------------
CASH AND CASH EQUIVALENTS AT THE END OF
THE PERIOD 27,170,826 27,283,245
================================================= ============== ==============
VIETNAM PROPERTY FUND LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 (UNAUDITED)
1. The Company
The Company is a close-ended investment company incorporated
under the laws of the Cayman Islands. The investment objective of
the Company is to provide shareholders with attractive capital
returns over the mid to long term by investing in a portfolio of
real estate investments, primarily in Vietnam.
2. Preparation of Financial Statements
The condensed consolidated interim financial statements of the
Company and its subsidiaries (together referred to as the "Group")
have been prepared in accordance with International Accounting
Standard ("IAS") 34 Interim Financial Reporting.
The condensed consolidated interim financial statements were not
audited. The condensed consolidated interim financial statements do
not include all the information and disclosures required in the
annual financial statements, and should be read in conjunction with
the Company's annual financial statements for the year ended 30
June 2011. The accounting policies and basis of preparation adopted
in the preparation of the condensed consolidated interim financial
statements are the same as those used in the annual financial
statements for the year ended 30 June 2011.
A number of new standards, amendments to standards and
interpretations are effective for annual periods beginning after 1
January 2012, and have not been applied in preparing these
financial statements. The Group does not intend to early adopt
these standards and the extent of the impact has not been
determined
3. Issued Share Capital
31 December
2011 30 June 2011
Authorised:
1,000,000,000 ordinary shares at par
value of US$0.01 each 10,000,000 10,000,000
1,000 management shares at par value
of US$0.01 each 10 10
------------ --------------
10,000,010 10,000,010
============ ==============
Issued and fully paid:
88,221,459 (30 June 2011: 89,321,459
) ordinary shares at par value of US$0.01
each 882,215 893,215
1,000 management shares at par value
of US$0.01 each 10 10
------------ --------------
Issued share capital 882,225 893,225
============ ==============
All ordinary shares have the same rights, whether in regard to
voting, dividends, return of share capital or otherwise. The
management shares do not carry any right to dividends and, in a
winding up, are entitled only to a return of paid-up nominal
capital out of the assets of the Group after the return of nominal
capital paid up on ordinary shares.
4. Net Asset Value per Ordinary Share
The calculation of the NAV per ordinary share is based on the
net assets attributable to the ordinary shares as at 31 December
2011 of US$64,426,322 (30 June 2011: US$71,476,461) and the number
of ordinary shares in issue as at that date of 88,221,459 (30 June
2011: 89,321,459 ordinary shares).
5. Basic Loss per Ordinary Share
The calculation of basic loss per ordinary share for the period
is based on the loss for the period attributable to the ordinary
shares of US$ 6,496,765 (six months ended 31 December 2010: loss of
US$ 6,468,656) and the weighted average number of ordinary shares
of 89,257,412 (six months ended 31 December 2010: 89,998,634
ordinary shares) in issue during the period.
6. Contingencies
Although the Company and its subsidiaries are incorporated in
the Cayman Islands and British Virgin Islands respectively where
tax is exempt, their activities are primarily focused on Vietnam.
In accordance with the prevailing tax regulations in Vietnam, if an
entity was treated as having a permanent establishment, or as
otherwise being engaged in a trade or business in Vietnam, income
attributable to or effectively connected with such permanent
establishment or trade or business may be subject to tax in
Vietnam. As at the date of this report the following information is
uncertain:
-- whether the Company and its subsidiaries are considered as
having permanent establishments in Vietnam; and
-- the amount of tax that may be payable, if the income is subject to tax; and
-- whether tax liabilities (if any) will be applied retrospectively.
The implementation and enforcement of tax regulations in Vietnam
can vary depending on numerous factors, including the identity of
the tax authority involved. The administration of laws and
regulations by government agencies may be subject to considerable
discretion, and in many areas, the legal framework is vague,
contradictory and subject to interpretation. The Directors believe
that it is unlikely that the Group will be exposed to tax
liabilities in Vietnam.
VIETNAM PROPERTY FUND LIMITED
("VPF" or the "Company")
INTERIM REPORTS AND ACCOUNTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2011
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the six months
ended 31 December 2011, but is derived from those accounts. Full
sets of accounts are available by contacting either from the
offices of Dragon Capital Markets (Europe) Limited or Seymour
Pierce Limited, contactable at the addresses detailed below. The
Company has today posted its Interim Report and Accounts to
shareholders. Alternatively the Interim Report and Accounts may be
viewed and downloaded from the Company website,
www.vietnampropertyfund.com, and were published on 20 March
2012.
Dragon Capital Markets (Europe) Limited
The Tramshed
Beehive Yard
Walcot Street
Bath BA1 5BB
Tel: +44 (0) 1225 731402
Seymour Pierce Limited
20, Old Bailey
London EC4M 7EN
Tel: +44 (0) 207 107 8000
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUWGWUPPUBU
Grafico Azioni Vietnam Prop. (LSE:VPF)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Vietnam Prop. (LSE:VPF)
Storico
Da Giu 2023 a Giu 2024