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23 May 2005
The Manager
Company Announcements
Australian Stock Exchange Limited
20 Bridge Street
Sydney NSW 2000
Dear Sir or Madam
SUSPENSION OF TRADING REQUEST – VILLAGE LIFE LTD
The Directors of Village Life Ltd (VLL) request a voluntary suspension of trading of VLL shares with
immediate effect.
The Directors have become aware of information that leads them to believe that the financial forecasts
announced to the market on 9 May 2005 for the year ending 30 June 2005 will not be achieved. The
Directors believe that the voluntary suspension is necessary until they can provide clarity to the market
about the financial performance of the company for this period.
Background – arrangements with ING
On 9 May 2005, the Directors announced a revised forecast net profit after tax for the financial year
ending 30 June 2005 of between $4.5 million and $4.7 million.
This was announced in conjunction with a significant transaction with ING Real Estate Investment
Management Australia Pty Ltd (“ING”) and was based on a proposal to sell 10 new villages to the
Village Life Trust (“VTR”), partly financed by a placement to ING of approximately 15% of the issued
units in VTR. That placement was made last week. As foreshadowed in the 9 May 2005
announcement ING has requested VLL to convene a meeting to consider ING’s appointment as
responsible entity of VTR.
Pending the unitholder meeting, VLL in its capacity as responsible entity of the Village Life Trust today
appointed ING to provide management services to VTR, subject to approval from the Trust’s financiers.
Forecasts for the Financial Year ending 30 June 2005
The forecasts released by the Directors on 9 May 2005 included a contribution from the anticipated sale
of 10 new villages to VTR. The Directors, in preparing the forecasts, assumed certain development and
construction costs, and those assumptions were reviewed by a Quantity Surveyor.
The Directors subsequently received construction tenders for the development of a village at Sunshine
Ave, Victoria, one of the properties that were to be sold to VTR. The construction costs included within
that tender were substantially higher than those assumed by the Directors. As a result of these cost
increases, the Directors have concluded this property is uneconomic to develop in accordance with the
current development plan.
The Sunshine Ave property was designed to be a larger, two-storey village with the capacity for 182
units. A multi-storey development at Bribie Island, Queensland had previously been developed by a
Village Life licensee developer at a much lower cost.
Multi-storey villages were also planned for two other properties proposed to be sold to VTR
(Sydenham, Victoria, and Welcome Inn 2, Tasmania). Although construction tenders are yet to be
received for those properties, it now appears likely that similar higher costs may eventuate. Therefore,
three of the proposed properties may not be able to be delivered to VTR under the current development
plan.
The development plans for the villages at Sydenham, Sunshine Ave, and Welcome Inn 2 are currently
being reviewed to ensure that they become viable projects for the company in FY06.
As a result, the revised net profit forecast of $4.5 million to $4.7 million for the financial year ending 30
June 2005 will not be achieved.
Strategic and Operational Review
The Directors continue to have confidence in the fundamentals of the VLL model, which incorporates
both development and operational arms.
On the 9th of May 2005 the company announced its’ intention to undertake a detailed and extensive
external review of the business operations of the company focussing on certain identified issues. The
scope of the review will cover financial performance of the Company, review the future business
strategy, and establish key priorities for the Company such as improving occupancy across its village
portfolio, and improving aspects of its development pipeline
I
t is anticipated that the review will also encompass the potential for strategic alliances with a group or
groups with appropriate skills to allow the company to focus on its core management skills.
The Directors are working on detailed financial forecasts for the company Following the release of
these forecasts, the Directors expect to request that ASX lift the voluntary suspension and trading in
VLL shares will recommence.
Further Information:
John Krimmer Tony Roberts
Joint Managing Director Joint Managing Director