TIDMVPF
RNS Number : 1235U
Vietnam Property Fund
21 December 2012
VIETNAM PROPERTY FUND LIMITED
("VPF" or the "Company")
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2012
Financial Highlights
As at and for As at and for % change
the year ended the year ended
30 June 2012 30 June 2011
US$ US$
Total net assets 67,496,602 71,476,461 (5.57)%
NAV per share 0.77 0.80 (3.75)%
Net loss (3,426,485) (20,574,327) 83.35%
Net loss per share (0.039) (0.229) 82.97%
Share price (closing
price on LSE)) 0.54 0.71 (23.94)%
Discount (29.60)% (11.27)% (162.64)%
US$/VND exchange
rate - depreciation 20,878 20,592 1.39%
---------------------- ---------------- ---------------- ---------------
As at and for As at and for % change
the year ended the year ended
30 June 2012 30 June 2011
US$ US$
Cash and cash
equivalents 26,703,886 28,078,262 (4.89)%
Bank interest
income 509,447 230,719 120.81%
Loan interest
income 54,791 849,609 (93.55)%
Dividend income 456,648 564,783 (19.15)%
Net changes in
fair value of
financial assets
at fair value
through profit
or loss (337,346) (21,756,267) 98.45%
(Losses)/gains
on disposal of
investments (2,442,065) 1,663,700 (246.79)%
Other income 151,798 - n/a
------------------- ---------------- ---------------- ----------
Total income (1,606,727) (18,447,456) 91.29%
=================== ================ ================ ==========
Portfolio Highlights
As at and for As at and for % change
the year ended the year ended
30 June 2012 30 June 2011
US$ US$
Listed investments
at cost 24,655,110 29,842,145 (17.38)%
Unrealised losses (12,789,114) (14,813,323) 13.66%
-------------------- ---------------- ---------------- ----------
Listed investments
at fair value 11,865,996 15,028,822 (21.05)%
-------------------- ---------------- ---------------- ----------
The directors present their report and the audited consolidated
financial statements of Vietnam Property Fund Limited ("VPF" or the
"Fund" or the "Company") and its subsidiaries (together referred to
as the "Group") for the year ended 30 June 2012.
Principal Activity
The Company is an investment holding company incorporated as an
exempted company with limited liability in the Cayman Islands on 17
October 2007. It had no employees as at 30 June 2012 (30 June 2011:
Nil). 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.
Results and Dividends
The Group's consolidated net loss for the year ended 30 June
2012was US$3,426,485 (net loss for the year ended 30 June 2011:
US$20,574,327). The consolidated financial positions at 30 June
2012 and 2011 are set out in the audited financial statements. The
directors have taken the decision not to pay a dividend in respect
of the year ended 30 June 2012(30 June 2011: Nil).
Chairman's Statement
In the 2011 Annual Report, the Chairman's Statement ended with a
note of caution about predicting timing. 2012 was one of those
years in which nothing quite happened as expected. Hopes were high
that the Government would take firm control over the banks and
address the issue of non-performing loans ("NPLs"), perhaps going
as far as establishing an asset management company (AMC) to clean
up NPLs. The banking restructuring has, however, been delayed and
both a Party Congress and partial power shuffle have given no
additional hope for the immediate future. Inflation remains
slightly below the 10% level and interest rates are still painfully
high.
Real estate market conditions are perhaps at their worst since
the 1997 Asian crisis. Similar to that period, the poor economic
situation was compounded by oversupply in most sectors and crowned
by the spectre of unfinished buildings. It took some time for the
market to take up the existing buildings, followed by stalled
projects that resumed construction before new development could
begin again. But because property development is a long term
business, there were then, as there are now, pockets of opportunity
for the brave-hearted and well researched. An example would be
President Place, one of the only new office buildings to come to
the market in Ho Chi Minh City this year which has remarkably
managed to find pre-commitments for as much as 50% of its space.
Vietnam Property Fund Limited will be seeking such niche
opportunities.
Dragon Capital Management Limited (the "Investment Manager") has
been patiently waiting for distressed opportunities to arise for
some time now, but while these were expected during 2012, they
failed to materialise. Recovery always seemed to be just around the
corner and so it was worthwhile for developers to cling on.
Meanwhile, the banks themselves lacked a clear mechanism to proceed
with foreclosures. As hopes of an immediate market rebound are
fading and projects are stalling while bleeding heavy interest
payments, truly distressed projects will inevitably start appearing
and it is for these opportunities that VPF retains approximately
40% of its net asset value ("NAV") in cash.
At the same time, it is critical that VPF's own projects do not
join ranks of the distressed and therefore much time has been
spent, and it would appear successfully, putting in plans to deal
with these difficult market conditions. At SDI, the Investment
Manager has led an initiative to implement various changes to the
management structure and operations, while also considering design
changes to control construction and interest costs. SSR are primed
to start construction with all the planning and design in place
but, with fairly little debt, the project can easily be put on hold
until conditions are appropriate. The PDD Office Building actually
maintained its value despite lower occupancy due to steady rent and
reduced management costs.
2013 may prove not be a better year than 2012, but it may be a
year in which truly interesting distressed opportunities could
arise and VPF's patience may be rewarded. We are unlikely to see a
sudden rebound in the property markets of Vietnam, but we might be
able to confidently point at a bottom, albeit probably an extended
one. Many of Vietnam's economic woes are solvable and with healthy
foreign reserves and assets in some blue chip listed companies, the
Government does have some options to tackle the current crises.
Meanwhile, there are still businesses requiring space and people
needing housing, many of whom have funds available but are also
waiting for the market to bottom before committing. Perhaps things
will get worse before they get better but the market will
eventually recover and the result will be a more discerning
customer and a cleaner field for the professionals, such as the
Vietnam Property Fund Limited, to operate.
Due to an administrative oversight following VPF's change of
custodian, administrator and registrar last year, the Company did
not hold an Annual General Meeting ("AGM"), and accordingly the
audited financial statements for the year ended 30 June 2011 have
not yet been presented to members for adoption. We apologise for
this oversight and intend to present the 2011 financial statements
to members for adoption at the AGM to be held during the first
quarter of 2013, at which time the audited financial statements for
the year ended 30 June 2012 will also be presented to members for
approval, as well as dealing with other items of both general and
special business. A notice of the AGM will be circulated in due
course.
As shareholders are well aware, VPF's share price has seen a
disappointing performance as ongoing selling pressure from small
investors has resulted in a widening discount gap between NAV and
the prevailing share price. The Company's buyback programme has
been successful in reducing this gap only temporarily. It appears
that the inherent mechanisms of AIM make the share price extremely
susceptible to even a single seller, notwithstanding the buyback
programme. For this reason the Investment Manager has suggested
that the Company considers a relisting on the Irish Stock Exchange
(ISE). The Company is currently taking this option under
consideration as to whether this is an appropriate course of action
to pursue, and further information will be included as appropriate
in the notice of AGM referred to above.
Investment Manager's Statement
The past twelve months have provided amongst the worst trading
conditions for real estate in Vietnam since the financial crisis in
Asia in 1997/98. Whilst we quietly hoped for a recovery in
residential sales and commercial rents, the reality has been the
bursting of the credit fuelled property bubble which up to now has
been slowly deflating since 2007. The ability of the majority of
investors, developers and land owners to hold on in the hope of
recovery has been admirable but a grim realisation has finally
dawned that this will not happen any time soon. As a consequence,
we believe we are about to enter a phase of distress in the coming
six to twelve months.
The performance of VPF's portfolio holdings has not been
particularly strong with listed equity performing poorly in the
second half of 2011 as reduced sales, heavily curtailed revenue
targets and debt burdens dragged the whole sector into a downward
spiral. However, given that we continue having faith in the
fundamentals in the medium to long term of the companies VPF owns,
we did not sell into this downward trend, especially as their land
banks have an intrinsic value considering the scarcity of land in
Vietnam and as such we have no selling pressure. The first three
months in 2012 saw a surprising bounce for most real estate stocks
with strong performances from the likes of Hoang Anh Gia Lai and
Sacomreal providing increases well in excess of 100% from their
Christmas lows. Since then, however, the market has been tracking
sideways.
VPF's projects have fared a little better as we have made every
attempt to avoid distress, manage costs and delay product launch
dates until sales recover. Nonetheless, VPF felt it is prudent to
reflect the delays to the timing of sales, interest charges and a
generally weak property market into the discounted free cash flow
to equity, which led to the write down of $1.9m or 11.8% to the
investment into Saigon Development and Investment Corporation (golf
course and villa project in District 2, Ho Chi Minh City). The golf
course will be completed during 2013 which will allow launching the
first phase of residential.
Looking forward, with distress just around the corner we believe
the interesting times are about to come in Vietnam. In fact, we are
already seeing some keenly priced deals from funds and companies
looking to make a quick exit from projects. Unfortunately, the
majority of projects are not what we would consider clean, with
land compensation, planning approvals and land use fees/taxes still
needing to be dealt with. This makes them unattractive to VPF as we
prefer to concentrate on cleaner transactions. At the time of
publication, there are already two strong candidates for
investments at distressed prices.
We have been mulling over the differentiators that make a good
developer here in Vietnam. The main elements that set a good
developer apart from the field are expertise, flexibility and
attention to detail. In terms of expertise, it is only a matter of
time before more local developers can build good projects. The
issue we have faced when selecting development partners is that the
majority in Vietnam have never experienced a downturn and
consequently have little experience on which to draw. This is where
flexibility is of paramount importance. For a developer, to
recognise the changing market environment and to amend or rework
projects to appeal to buyers in more difficult conditions takes
skill, foresight and often the acceptance of a dent to their pride.
The final element of attention to detail is not difficult. By this,
we mean keeping a building site in good order for potential buyers
or tenants to view, good landscaping, managing the sales and
leasing process and strong management of costs and consultants. It
is not hard to do but is often overlooked in Vietnam leaving
unattractive, half-finished projects with no continuity or empty
land plots where no construction has happened. This stands in stark
contrast to the fully developed projects by the likes of Keppel
Land from Singapore for which the environment is so much better and
the prices on the primary and secondary markets reflect this. It is
for these reasons that we plan to make a strategic investment with
a developer called Sapphire who fulfils all of the above
disciplines with great aptitude.
The next six months will probably see us experience the bottom
of the cycle and the distressed deals we will see will make this
the most exciting time for VPF since inception. It has been a rocky
ride since 2008 but we believe we are finally seeing the bargains
that will make the patience worthwhile.
Full updates on VPF and its investment activities will be
available shortly on the website: www.vietnampropertyfund.com.
ENQUIRIES:
Rachel Hill
Dragon Capital Markets (Europe) Limited | Tel: +44 79 71 214 852
Tom Sheldon, Richard Thompson
Seymour Pierce Limited (Nominated Adviser and Broker) | Tel: +44 20 7107 8000
VIETNAM PROPERTY FUND LIMITED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AS AT 30 JUNE 2012
30 June 2012 30 June 2011
US$ US$
CURRENT ASSETS
Financial assets at fair value
through profit or loss 37,881,969 42,926,446
Short term loan receivable 2,400,000 -
Other receivables 182,295 274,307
Cash and cash equivalents 26,703,886 28,078,262
------------- ---------------
67,168,150 71,279,015
NON-CURRENT ASSETS
Loan receivables 528,600 400,000
------------- ---------------
528,600 400,000
TOTAL ASSETS 67,696,750 71,679,015
============= ===============
CURRENT LIABILITIES
Accrued expenses 200,148 202,554
------------- ---------------
200,148 202,554
NET ASSETS 67,496,602 71,476,461
============= ===============
EQUITY
Issued share capital 882,225 893,225
Share premium 84,389,841 84,932,215
Accumulated losses (17,775,464) (14,348,979)
------------- ---------------
TOTAL EQUITY 67,496,602 71,476,461
============= ===============
NET ASSET ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS 67,496,602 71,476,461
NUMBER OF ORDINARY SHARES IN ISSUE 88,221,459 89,321,459
============= ===============
NET ASSET VALUE PER ORDINARY SHARE 0.77 0.80
============= ===============
VIETNAM PROPERTY FUND LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2012
For the year For the year
ended ended
30 June 2012 30 June 2011
US$ US$
INCOME
Bank interest income 509,447 230,719
Loan interest income 54,791 849,609
Dividend income 456,648 564,783
Net changes in fair value of financial
assets at fair value through profit
or loss (337,346) (21,756,267)
(Losses)/gains on disposals of
investments (2,442,065) 1,663,700
Other income 151,798 -
TOTAL INCOME (1,606,727) (18,447,456)
---------------- ----------------
EXPENSES
Administration and custodial fees (94,429) (77,362)
Directors' fees (204,751) (154,164)
Investment management fees (1,362,178) (1,665,358)
Legal and professional fee (42,703) (166,321)
Other operating expenses (212,110) (247,978)
TOTAL EXPENSES (1,916,171) (2,311,183)
---------------- ----------------
NET LOSS BEFORE EXCHANGE GAINS (3,522,898) (20,758,639)
EXCHANGE GAINS
Net foreign exchange gains 96,413 184,312
---------------- ----------------
LOSS BEFORE TAX (3,426,485) (20,574,327)
Income tax - -
---------------- ----------------
NET LOSS FOR THE YEAR (3,426,485) (20,574,327)
Other comprehensive income - -
----------------
TOTAL COMPREHENSIVE LOSS FOR THE
YEAR (3,426,485) (20,574,327)
================
NET LOSS AND COMPREHENSIVE INCOME
FOR THE YEAR ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS (3,426,485) (20,574,327)
================
BASIC LOSS PER ORDINARY SHARE (0.039) (0.229)
================ ================
VIETNAM PROPERTY FUND LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2012
Retained earnings/
Issued Share (accumulated
capital premium losses) Total
US$ US$ US$ US$
Balance at 1 July
2010 900,010 85,441,995 6,225,348 92,567,353
TOTAL COMPREHENSIVE
LOSS FOR THE YEAR:
Net loss for the
year - - (20,574,327) (20,574,327)
TRANSACTION WITH
SHAREHOLDERS, RECOGNISED
DIRECTLY IN EQUITY:
Repurchase of own
shares (6,785) (509,780) - (516,565)
Balance at 1 July
2011 893,225 84,932,215 (14,348,979) 71,476,461
TOTAL COMPREHENSIVE
LOSS FOR THE YEAR:
Net loss for the
year - - (3,426,485) (3,426,485)
TRANSACTION WITH
SHAREHOLDERS, RECOGNISED
DIRECTLY IN EQUITY:
Repurchase of own
shares (11,000) (542,374) - (553,374)
Balance at 30 June
2012 882,225 84,389,841 (17,775,464) 67,496,602
========= =========== =================== =============
VIETNAM PROPERTY FUND LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2012
For the year For the year
ended ended
30 June 2012 30 June 2011
US$ US$
OPERATING ACTIVITIES
Loss for the year (3,426,485) (20,574,327)
Adjustments for:
Bank interest income (509,447) (230,719)
Loan interest income (54,791) (849,609)
Dividend income (456,648) (564,783)
Losses/(gains) on disposals of investments 2,442,065 (1,663,700)
Net changes in fair value of financial
assets at fair value through profit or
loss 337,346 21,756,267
(1,667,960) (2,126,871)
Change in other receivables 27,935 (27,935)
Change in accrued expenses (2,406) (7,116)
(1,642,431) (2,161,922)
Interest received 629,346 948,585
Dividend received 427,017 453,310
Acquisitions of financial assets at fair
value through profit or loss (4,279,904) (20,258,759)
Payments for granting loans (3,500,000) (400,000)
Proceeds from disposals of investments 2,744,970 5,067,834
Withdrawals of term deposits 3,800,000 -
Receipts from loans repayments 1,000,000 -
Net cash used in operating activities (821,002) (16,350,952)
-------------- ------------------
FINANCING ACTIVITIES
Repurchase of own shares (553,374) (516,565)
Net cash used in financing activities (553,374) (516,565)
-------------- ------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,374,376) (16,867,517)
Cash and cash equivalents at the beginning
of the year 28,078,262 44,945,779
-------------- ------------------
CASH AND CASH EQUIVALENTS AT THE END OF
THE YEAR 26,703,886 28,078,262
============== ==================
VIETNAM PROPERTY FUND LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2012
1. Preparation of Financial Statements
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards ("IFRS"). The consolidated financial statements have been
prepared on the accrual basis using the historical cost concept,
except for investments classified as financial assets at fair value
through profit or loss, which are measured at fair value.
The consolidated financial statements are presented in United
State Dollars ("US$"), which is also the functional currency of the
Company. All the financial information presented in US$ has been
rounded to the nearest dollar. Transactions in foreign currencies
are translated to the respective functional currencies of the Group
entities at the exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies
at the reporting date are retranslated into the functional currency
at the exchange rates at that date. Non-monetary assets and
liabilities denominated in foreign currencies that are measured at
fair value are retranslated into the functional currency at the
exchange rate at the date that the fair value was determined.
Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the spot
exchange rate at the date of the transaction.
2. Issued Share Capital
30 June
30 June 2012 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
------------- -----------
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.
3. Net Asset Value per Ordinary Share
The calculation of the NAV per ordinary share was based on the
net asset value attributable to the ordinary shares of the Company
as at 30 June 2012 of US$67,496,602 (30 June 2011: US$71,476,461)
and the number of ordinary shares in issue as at that date of
88,221,459 ordinary shares (30 June 2011: 89,321,459 ordinary
shares).
4. Tax
Under the current law of the Cayman Islands and the British
Virgin Islands, the Company and its subsidiaries are not required
to pay any taxes in the Cayman Islands and the British Virgin
Islands on either income or capital gains and no withholding taxes
will be imposed on distributions by the Company to its shareholders
or on the winding-up of the Company.
The Group is subject to 10% withholding tax on the interest
received from any Vietnamese companies. Dividends remitted by
Vietnamese investee companies to foreign investors are not subject
to withholding tax.
Although the Company and its subsidiaries are not incorporated
in Vietnam, 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;
-- 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, and in the worst case, if tax is imposed on
income which has arisen in Vietnam it will not be applied
retrospectively.
5. Basic Earnings per Ordinary Share
The calculation of basic loss per ordinary share for the year
was based on the net loss for the year attributable to the ordinary
shareholders of US$3,426,485 (net loss for year ended 30 June 2011:
US$20,574,327) and the weighted average number of ordinary shares
outstanding of 88,739,435 (year ended 30 June 2011: 89,696,686
ordinary shares) in issue during the year.
VIETNAM PROPERTY FUND LIMITED
("VPF" or the "Company")
ANNUAL REPORTS AND ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2011
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the year ended 30
June 2012, 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 will post
its Annual Report and Accounts to shareholders before the end of
2012 and make them also available on the Company's website,
www.vietnampropertyfund.com.
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
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