TIDMVNL
RNS Number : 3933U
VinaLand Limited
24 October 2017
VinaLand Limited
Audited financial results for the twelve months ended 30 June
2017
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 full
year results for the twelve months ended 30 June 2017 ("the
Year").
Financial highlights:
-- Net asset value per share at 30 June 2017 of USD0.94 (30 June 2016: USD0.86).
-- 135.8 million ordinary shares outstanding were repurchased
and cancelled during the year ended 30 June 2017.
Operational highlights:
-- During the year, VNL completed five full divestments and one
partial divestment, with a gross total sales value of USD129.7
million and net proceeds of approximately USD120.8 million.
-- In May 2017, VNL announced a USD40 million tender offer to
purchase ordinary shares, which was paid out on 30 June 2017.
-- In aggregate, as at 30 June 2017 the Company has cancelled
242.0 million ordinary shares, representing 48.4 percent of the
total shares in issue prior to the commencement of the share
buyback programme.
Notes to Editors:
Founded in 2003, 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
spanning a full range of asset classes including capital markets,
private equity, real estate, venture capital, and fixed income.
The company manages three closed-ended funds that trade on the
London Stock Exchange including the VinaCapital Vietnam Opportunity
Fund Limited, which trades on the Main Market, and VinaLand
Limited, which trades on the AIM. Other funds managed by the
company include the Forum One - VCG Partners Vietnam Fund (VVF), a
UCITS-compliant, long-term, open-ended fund, and the Vietnam Equity
Special Access Fund (VESAF), the company's newest fund, which
invests in equities and is unencumbered by foreign restrictions or
size. The company also offers two funds for Vietnamese investors in
equities and fixed income.
VinaCapital's joint ventures include DFJ VinaCapital L.P.
(DFJV), our venture capital fund in partnership with noted US firm
Draper Fisher Jurvetson, as well as Lodgis Hospitality Holdings, a
new hospitality platform focused on Southeast Asia in partnership
with Warburg Pincus.
More information about VinaCapital may be found at
www.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 / Joel Weiden
VinaCapital Investment Management Limited
Investor Relations / Communications
+84 28 3821 9930
jonathan.luu@vinacapital.com / 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
Dear Shareholders,
During the 2017 fiscal year VinaLand ("VNL" or "the Company")
continued its focus on the realization of its portfolio and made a
number of asset sales in accordance with the strategy approved by
shareholders at the EGM in November 2016. The country's
macroeconomic environment continues to be one of the strongest in
the region, with solid GDP growth, manageable inflation and robust
foreign direct investment, all supporting the real estate sector
that continues to be one of the most attractive sectors within
Vietnam. The past year has seen both new and existing foreign
developers significantly increase their investments in the
residential, commercial and infrastructure segments of the market
and merger & acquisition activity has increased. This foreign
intervention has underpinned the momentum in the market and
maintained pressure on the local Vietnamese developers to close the
acquisition of new development projects notwithstanding the
tightening of bank lending into this sector.
During the financial year, VNL completed five full divestments
and one partial divestment, with a gross total sales value of
USD129.7 million and net proceeds of approximately USD120.8
million. These divestments enabled the Company to proceed with
further distributions to shareholders, via both the ongoing share
buyback programme and a USD40 million tender offer to purchase
ordinary shares announced on 17 May 2017 and paid out on 30 June
2017.
Subsequent to the close of the fiscal year, the Company
announced another tender offer to purchase shares at USD0.83 per
ordinary share on 7 September 2017 and USD42.95m was paid out on 13
October 2017.
The positive dynamics in the real estate market over the past 12
months have continued into the new fiscal year, creating an
environment which supports the Company's objective to negotiate the
sale of the Company's remaining assets in a controlled and orderly
manner. While there can be no guarantees, the confidence in the
market should allow the realisation process to proceed in a way
that will allow for further distributions to shareholders during
the current fiscal year.
Financial results summary
VNL's financial results for the fiscal year ended 30 June 2017
show VNL's audited NAV per share enhanced from USD0.86 as at 30
June 2016 to USD0.94 as at 30 June 2017. The Company's share price
closed FY 2017 at USD0.78 per share, a 34.8 percent increase year
on year. VNL's share price to NAV discount has narrowed
considerably to 17.2 percent from 32.2 percent at the end of FY
2016.
During the financial year, VNL repurchased and cancelled 135.8
million ordinary shares, an increase of almost four times when
compared to the 36.3 million shares repurchased and cancelled in
the previous fiscal year. VNL did so via ongoing share buybacks and
the USD40 million tender offer announced in May 2017. As at 30 June
2017 the Company has cancelled 242.0 million ordinary shares,
representing 48.4% of the total shares in issue prior to the
commencement of the share buyback programme and has 258.0 million
ordinary shares still outstanding.
In December 2016, the VinaLand Zero Dividend Preference (ZDP)
shares were redeemed, and the ZDP's listing was cancelled by the
London Stock Exchange on 19 December 2016. This reduced the debt at
the Company (Fund) level to zero, while debt at the portfolio
project level remained at 25.1% of NAV as at 30 June 2017. As
further projects are divested, the level of debt at project level
will continue to diminish.
Corporate actions
On 25 October 2016, Mr. Nicholas Allen resigned from the Board
of Directors and was replaced by Mr. Ian Lydall, who brings nearly
40 years of experience as a UK chartered accountant, primarily with
PwC, with extensive experience in Vietnam and Southeast Asia.
On 31 December 2016, Mr. Nicholas Brooke resigned from the Board
after a decade of service. The Board determined that no replacement
would be named in an acknowledgement that the Company's portfolio
is reducing and to control administrative costs. The Board of
Directors now consists of four members.
On behalf of the Board of Directors I would like to express our
gratitude to both Nick Allen and Nick Brooke for their
contributions both in knowledge and significant experience over a
number of years.
On 18 November 2016, the Company conducted its Annual General
Meeting (AGM) and Extraordinary General Meeting (EGM) in Zurich at
which time the revised strategy to focus on further realisations
with a revised distribution and incentive fee policy among other
matters, were supported by shareholders.
The Company's performance during the 2017 fiscal year was sound
and we look forward to continuing on this path in the year ahead.
On behalf of your Board of Directors, I want to thank you for your
continued support.
Michel Casselman
Chairman
VinaLand Limited
23 October 2017
CONSOLIDATED BALANCE SHEET
30 June 30 June
2017 2016
Note USD'000 USD'000
ASSETS
Non-current
Investment properties 5 63,988 389,700
Property, plant and equipment 404 500
Intangible assets - 3
Investments in associates 6 20,097 47,713
Prepayments for acquisitions
of investments 7 22,650 27,772
Deferred income tax assets 8 - 3,638
Other non-current assets 65 1,024
-------------- --------------
Total non-current assets 107,204 470,350
Current
Inventories 9 220 54,442
Trade and other receivables 10 1,120 17,581
Tax receivables 314 1,985
Receivables from and advances
to related parties 32 1,786 1,044
Short-term investments 56 9,806
Financial assets at fair
value through profit or
loss 269 384
Restricted cash - 3,392
Cash and cash equivalents
(excluding bank overdrafts) 11 88,919 76,903
-------------- --------------
Total current assets 92,684 165,537
Assets classified as held
for sale 13 329,963 18,628
-------------- --------------
Total assets 529,851 654,515
30 June 30 June
2017 2016
Note USD'000 USD'000
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity
shareholders of the parent
Share capital 14 2,580 3,938
Additional paid-in capital 15 332,803 452,680
Equity reserve 65,166 42,115
Other reserve (10) (67)
Translation reserve (45,443) (71,877)
Accumulated losses (113,612) (89,953)
-------------- --------------
241,484 336,836
Non-controlling interests 74,867 128,413
-------------- --------------
316,351 465,249
Total equity -------------- --------------
LIABILITIES
Non-current
Borrowings and debts 16 - 47,416
Deferred income tax liabilities 17 18,762 16,358
-------------- --------------
Total non-current liabilities 18,762 63,774
Current
Borrowings and debts 16 - 25,704
Trade and other payables 18 56,387 77,174
Payables to related parties 32 13,836 10,228
Financial liabilities at fair
value through profit or loss - 6,945
Tax payables - 176
-------------- --------------
Total current liabilities 70,223 120,227
Liabilities classified as
held for sale 13 124,515 5,265
-------------- --------------
Total liabilities 213,500 189,266
-------------- --------------
Total equity and liabilities 529,851 654,515
Net assets per share attributable
to equity
shareholders of the parent
(USD per share) 28 0.94 0.86
Equity attributable to equity shareholders of
the Company
------------------------------------------------------------------------------------------------
Total equity
attributable
Share Additional to owners Non-
capital paid-in Equity Other Translation Accumulated of the controlling Total
capital reserve reserve reserve losses Company interests equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Balance at 1 July
2016 3,938 452,680 42,115 (67) (71,877) (89,953) 336,836 128,413 465,249
Loss for the year - - - - - (23,659) (23,659) 11,054 (12,605)
Currency
translation - - - - (2,781) - (2,781) (653) (3,434)
Reclassification
of currency
translation
reserves on
disposal
of subsidiaries - - - - 29,215 - 29,215 - 29,215
---------- ---------- ---------- ---------- ------------ ------------ ---------- ------------ ------------
Total comprehensive
loss - - - - 26,434 (23,659) 2,775 10,401 13,176
---------- ---------- ---------- ---------- ------------ ------------ ---------- ------------ ------------
Transactions with
owners in their
capacity as owners:
Repurchase and
cancellation of
shares (Notes
14, 15) (1,358) (119,877) 23,051 - - - (98,184) - (98,184)
Capital
contributions
in subsidiaries - - - - - - - 364 364
Disposals of
subsidiaries - - - 57 - - 57 (52,506) (52,449)
Distributions
to
non-controlling
interests - - - - - - - (11,805) (11,805)
Balance at 30 ---------- -------------- ------------ -------- ------------ ------------ -------------- -------------- --------------
June 2017 2,580 332,803 65,166 (10) (45,443) (113,612) 241,484 74,867 316,351
'
Equity attributable to equity shareholders of
the Company
----------------------------------------------------------------------------------------------------------
Total equity
attributable
Share Additional to owners Non-
capital paid-in Equity Other Translation Accumulated of the controlling Total
capital reserve reserve reserve losses Company interests equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Balance at 1 July
2015 4,301 521,088 30,706 (57) (83,209) (81,638) 391,191 182,821 574,012
Loss for the year - - - - (8,315) (8,315) 3,677 (4,638)
Currency
translation - - - - (4,218) - (4,218) (1,784) (6,002)
Reclassification
of currency
translation
reserves on
disposal
of subsidiaries - - - - 15,550 - 15,550 - 15,550
Total
comprehensive ---------- ---------- ---------- ---------- ------------ ------------ ------------ ------------ ------------
loss - - - - 11,332 (8,315) 3,017 1,893 4,910
---------- ---------- ---------- ---------- ------------ ------------ ---------- ------------ ------------
Transactions with
owners in their
capacity as owners:
Repurchase and
cancellation of
shares (Notes
14, 15) (363) (33,348) 11,409 - - - (22,302) - (22,302)
Distribution to
shareholders (Note
15) - (35,060) - - - - (35,060) - (35,060)
Capital
contributions
in subsidiaries - - - - - - - 6,874 6,874
Disposals of
subsidiaries - - - - - - - (27,105) (27,105)
Distributions
to
non-controlling
interests - - - - - - - (35,180) (35,180)
Acquisitions of
non-controlling
interests in
subsidiaries - - - (10) - - (10) (890) (900)
Balance at 30 ---------- -------------- ------------ -------- ------------ ------------ -------------- -------------- --------------
June 2016 3,938 452,680 42,115 (67) (71,877) (89,953) 336,836 128,413 465,249
CONSOLIDATED INCOME STATEMENT
Year ended
--------------------------------
30 June 30 June
2017 2016
Note USD'000 USD'000
Revenue 19 6,562 43,157
Cost of sales 20 (7,371) (36,363)
------------ ------------
Gross (loss)/profit (809) 6,794
Net gain on fair value adjustments
of investment
properties and revaluations
of property, plant and 6,
equipment 21 30,122 22,384
Selling and administration
expenses 22 (20,062) (16,378)
Net changes in fair value
of financial assets and financial
liabilities at fair value
through profit or loss (115) (161)
Gain/(loss) on disposals
of investments, net 23 (12,938) 6,477
Reversal of impairment/(impairment)
of assets 24 204 (18,210)
Finance income 908 1,247
Finance expenses 25 (6,673) (6,251)
Gain from acquisition of
a subsidiary 6 9,721 -
Share of losses of associates 6 (2,445) (3,563)
Gain due to dilution of ownership
in an associate 6 1,670 -
Other income 367 3,552
Other expenses 26 (1,829) (373)
-------------- --------------
Loss before income tax from
operations (1,879) (4,482)
Income tax 27 (10,726) (156)
-------------- --------------
Net loss from operations (12,605) (4,638)
Attributable to equity shareholders
of the parent (23,659) (8,315)
Attributable to non-controlling
interests 11,054 3,677
-------------- --------------
Net loss for the year (12,605) (4,638)
Loss per share
* basic and diluted (USD per share) 28 (0.07) (0.02)
-------------- --------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended
----------------------------
30 June 30 June
2017 2016
Note USD'000 USD'000
Net loss for the year (12,605) (4,638)
Other comprehensive income
Items that may be reclassified
subsequently
to profit or loss:
Exchange differences on translating
foreign operations (3,434) (6,002)
Reclassification of currency
translation reserve on disposal
of subsidiaries 29,215 15,550
------------ ------------
25,781 9,548
------------ ------------
Other comprehensive income for
the year 25,781 9,548
Total comprehensive income
for the year 13,176 4,910
------------ ------------
Attributable to equity shareholders
of the parent 2,775 3,017
Attributable to non-controlling
interests 10,401 1,893
---------- ----------
13,176 4,910
Year ended
------------------------------
30 June 30 June
2017 2016
Note USD'000 USD'000
Operating activities
Loss before tax (1,879) (4,482)
Adjustments for:
Depreciation and amortisation 50 1,118
Net changes in fair value of
financial assets and financial
liabilities at fair value through
profit or loss (6,831) 161
Net gain on fair value adjustments
of investment properties and
revaluations of property, plant
and equipment 22 (30,122) (22,384)
Net loss on disposal of fixed
assets and written-off account
balances 26 1,802 90
Loss/(gain) on disposals of
investments, net 23 13,653 (6,477)
Gain on disposals of investment
properties 23 (715) -
Impairment of assets 24 (204) 18,210
Share of losses of associates 6 2,445 3,563
Gain from acquisition of assets 6 (9,721) -
Loss due to dilution of ownership
in an associate 6 (1,670) -
Unrealised foreign exchange
losses, net 25 922 809
Interest expense 25 4,065 3,973
Interest income (561) (1,025)
Net loss before changes in ------------ ------------
working capital (28,766) (6,444)
------------ ------------
Change in trade receivables
and other current assets (2,628) 17,765
Change in inventories 446 23,184
Change in trade payables and
other current liabilities 32,623 (40,237)
Income tax paid - (162)
------------ ------------
Net cash inflow/(outflow) from 1,675 (5,894)
operating activities ------------ ------------
Investing activities
Interest received 578 1,012
Purchases of investment properties,
property, plant and equipment,
and prepayments for acquisitions
of investments (25,345) (21,508)
Proceeds from sales of subsidiaries 112,053 54,522
Proceeds from disposals of
investment properties 10,635 8,694
Proceeds from disposals of
investment in associates - 123,668
Proceeds from disposals of assets/liabilities
classified as held for sale 3,609 12,715
Collection of a prepayment 2,955 -
for acquisition
Investments in associates (2,014) (1,829)
Cash acquired on acquisition 26 -
of a subsidiary
Net proceeds from long-term
investments - 463
Net proceeds/(deposits) from
short-term investments 7,591 (3,075)
------------ ------------
Net cash inflow from investing 110,088 174,662
activities ------------ ------------
Year ended
----- --------------------------------
30 June 30 June
2017 2016
Note USD'000 USD'000
Financing activities
Additional capital contributions
from non-controlling interests 364 6,874
Ordinary shares acquired by
the Company 14 (98,184) (22,302)
Distribution to shareholders - (34,972)
Acquisition of non-controlling
interests in subsidiaries - (900)
Loan proceeds from banks 58,763 19,114
Loan repayments to banks (9,924) (25,271)
Repayment of zero-dividend (25,118) -
preference shares
Loan repayments to a related
party - (2,296)
Interest paid (9,559) (10,567)
Distributions to non-controlling
interests (11,805) (35,180)
-------------- ------------
Net cash outflow from financing (95,463) (105,500)
activities -------------- ------------
Net changes in cash and cash
equivalents for the year 16,300 63,268
Cash and cash equivalents at
the beginning of the year 76,903 21,820
Cash and cash equivalents classified
as held for sale (4,284) (8,189)
Exchange differences on cash
and cash equivalents - 4
Cash and cash equivalents at ------------ ------------
the end of the year 11 88,919 76,903
Major non-cash transactions included capital gains tax of USD4.7
million crystalised during the year (the year ended 30 June 2016:
USD9.0 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 included in the consolidated statement
of cash flows.
NOTES TO THE 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 Company's primary objective
is 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 32).
The consolidated financial statements for the year ended 30 June
2017 were approved for issue
by the Company's Board of Directors on 23 October 2017.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of the Group for the year
ended 30 June 2017 comprise the Company and its subsidiaries
(together, the "Group") and the Group's interests in
associates.
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB").
The consolidated financial statements have been prepared using
the historical cost convention, as modified by the revaluation of
investment properties, property, plant and equipment, financial
assets and financial liabilities at fair value through profit or
loss, the measurement bases of which are described in the
accounting policies below.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed in Note 3.
2.2 Changes in accounting policy and disclosures
(a) New and amended standards adopted by the Group
There are no standards, interpretations or amendments to
existing standards that are effective for the first time for the
financial year beginning 1 July 2016 that have had a material
impact on the Group.
(b) New standards, amendments and interpretations issued but not
yet effective and not early adopted
At the date of authorisation of these consolidated financial
statements, certain new standards, amendments and interpretations
to existing standards have been published but are not yet
effective, and have not been early adopted by the Group.
The Board anticipates that all such pronouncements will be
adopted in the Group's accounting policies for the first period
beginning after the effective dates of these pronouncements.
Information on new standards, amendments and interpretations that
are expected to be relevant to the Group's consolidated financial
statements is provided below. Certain other new standards and
interpretations have been issued but are not expected to have a
material impact on the Group's consolidated financial
statements.
IFRS 9, "Financial instruments", addresses the classification,
measurement and recognition of financial assets and financial
liabilities. IFRS 9 was completed in July 2014 and it is effective
for annual periods beginning on or after 1 January 2018. It
replaces the parts of IAS 39 that relate to the classification and
measurement of financial instruments. IFRS 9 requires financial
assets to be
classified into two measurement categories: those measured as at
fair value and those measured at amortised cost. The determination
is made at initial recognition. The classification depends on the
entity's business model for managing its financial instruments and
the contractual cash flow characteristics of the instrument. For
financial liabilities, the standard retains most of the IAS 39
requirements. The main change is that, in cases where the fair
value option is taken for financial liabilities, the part of a fair
value change due to an entity's own credit risk is recorded in
other comprehensive income rather than the income statement, unless
this creates an accounting mismatch. The Group expects the adoption
of the new standard will affect classifications of its financial
assets only. Its loans and receivables are expected to satisfy the
conditions for classification as financial assets at amortised
cost. Equity investments currently measured at fair value through
profit or loss will continue to be measured on the same basis under
IFRS 9. The Group's classifications of financial liabilities will
remain the same.
IFRS 15, "Revenue from contracts with customers", was issued on
28 May 2015 and it is effective for annual periods beginning on or
after 1 January 2018. It establishes a comprehensive framework for
determining when to recognise revenue and how much revenue to
recognise. The core principle in that framework is that an entity
should recognise revenue upon the transfer of promised goods and
services to a customer in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those
goods and services. The Group is yet to assess IFRS 15's full
impact and intends to adopt the standard no later than the
financial year ending 30 June 2019.
Amendments to IAS 140 "Investment Property" that was issued in
December 2016 and effective for annual reporting periods beginning
on or after 1 January 2018. The amendment clarified that to
transfer to, or from, investment properties there must be a change
in use. To conclude if a property has changed use there should be
an assessment of whether the property meets the definition. This
change must be supported by evidence. The Board confirmed that a
change in intention, in isolation, is not enough to support a
transfer. The issue arose from confusion over whether an entity
transfer's property under development from inventory to investment
property when there is evidence of a change in use that was not
explicitly included in the standard. The list of evidence was
therefore recharacterised as a non-exhaustive list of examples to
help illustrate the principle. The examples were expanded to
include assets under construction and development and not only
transfers of completed properties.
IFRS 16, "Leases", the new leasing standard establishes
principles for the recognition, measurement, presentation and
disclosure of leases, with the objective of ensuring that lessees
and lessors provide relevant information that faithfully represents
those transactions. IFRS 16 was issued in January 2016 and
effective for annual reporting periods beginning on or after 1
January 2019. For lessees, the new standard brings most leases
(with limited exceptions) on-balance sheet, eliminating the
distinction between operating and finance leases. IFRS 16
introduces a single lessee accounting model and requires a lessee
to recognise assets and liabilities for all leases with a term of
more than 12 months, unless the underlying asset is of low value
(as further defined in the standard with examples including tablet
and personal computers, small items of office furniture and
telephones.). A lessee is required to recognise a right-of-use
asset representing its right to use the underlying leased asset and
a lease liability representing its obligation to make lease
payments. Lessor accounting remains largely unchanged and the
distinction between operating and finance leases is retained. IFRS
16 requires enhanced disclosures to be provided by lessors that
will improve information disclosed about a lessor's risk exposure.
The Group is yet to assess IFRS 16's full impact and intends to
adopt the standard no later than the financial year ending 30 June
2020.
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
2.3 Consolidation
(a) Subsidiaries
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
group. They are deconsolidated from the date that control
ceases.
The majority of the Group's subsidiaries have a reporting date
of 30 June. For those subsidiaries with a different reporting date,
the Group consolidates management information prepared for the year
to 30 June.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the
acquisition date fair value of the acquirer's previously held
equity interest in the acquiree is remeasured to fair value at the
acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not remeasured, and its subsequent settlement is
accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
in profit or loss.
Gain on bargain purchase is immediately allocated to the
consolidated income statement as at the acquisition date.
Inter-company transactions, balances, income and expenses on
transactions between the Group's companies are eliminated. Profits
and losses resulting from inter-company transactions that are
recognised in assets are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(b) Changes in ownership interests in subsidiaries without change of control
Changes in ownership of interests in a subsidiary that do not
result in loss of control of the subsidiary are accounted for as
equity transactions whereby the difference between the
consideration paid and the proportionate change in the parent
entity's interest in the carrying value of the subsidiary's net
assets is recorded in equity and attributable to the owners. No
adjustment is made to the carrying value of the subsidiary's net
assets as reported in the consolidated financial statements.
(c) Disposal of subsidiaries
When the Group ceases to have control any retained interest in
the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount recognised in
profit or loss. The fair value is the initial carrying amount for
the purposes of subsequently accounting for the retained interest
as an associate, joint venture or financial asset. In addition, any
amounts previously recognised in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may
mean that amounts previously recognised in other comprehensive
income are reclassified to profit or loss.
(d) Associates
Associates are all entities over which the Group has significant
influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. Investments in associates
are accounted for using the equity method of accounting, after
initially being recognised at cost. Under the equity method, the
carrying amount of the investment is increased or decreased to
recognise the Group's share of the profit or loss of the investee
after the date of acquisition. The Group's investments in
associates include goodwill identified on acquisition.
If the ownership interest in an associate is reduced but
significant influence is retained, only a proportionate share of
the amounts previously recognised in other comprehensive income is
reclassified to profit or loss where appropriate.
The Group's share of post-acquisition profit or loss of an
associate is recognised in the consolidated income statement, and
its share of post-acquisition movements in other comprehensive
income is recognised in other comprehensive income with a
corresponding adjustment to the carrying amount of the investment.
When the Group's share of losses in an associate equals or exceeds
its interest in the associate, including any other unsecured
receivables, the Group does not recognise further losses, unless it
has incurred legal or constructive obligations or made payments on
behalf of the associate.
The Group determines at each reporting date whether there is any
objective evidence that the investment in the associates is
impaired. If this is the case, the Group calculates the amount of
impairment as the difference between the recoverable amount of the
associate and its carrying value and recognises the amount as
'share of profit/(loss) of associates' in the consolidated income
statement.
Profits and losses resulting from upstream and downstream
transactions between the Group and its associates are recognised in
the Group's consolidated financial statements only to the extent of
unrelated investors' interests in the associates. Unrealised losses
are eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Dilution gains and losses arising in investments in associates
are recognised in the consolidated income statement.
2.4 Foreign currency translation
(a) Functional and presentation currency
The Group's consolidated financial statements are presented in
United States Dollars ("USD") ("the presentation currency"). The
financial statements of each consolidated entity are initially
prepared in the currency of the primary economic environment in
which the entity operates ("the functional currency"), which for
most of the Group's investments is Vietnam Dong ("VND"). The
financial statements prepared using VND are then translated into
the presentation currency of USD. USD is used as the presentation
currency because it is the primary basis for the measurement of the
performance of the Group (specifically changes in the net asset
value of the Group) and a large proportion of significant
transactions of the Group are denominated in USD.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the consolidated income statement.
Non-monetary items measured at historical cost are translated
using the exchange rates at the date of the transaction.
Non-monetary items measured at fair value are translated using the
exchange rates at the date when fair value was determined.
Translation differences on non-monetary financial assets and
liabilities such as equities held at fair value through profit or
loss are recognised in profit or loss as part of the fair value
gain or loss. Translation differences on non-monetary financial
assets, such as equities classified as available for sale, are
included in other comprehensive income.
(a) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyper-inflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
(i) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
(ii) income and expenses for each income statement are
translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and
expenses are translated at the rate on the dates of the
transactions); and
(iii) all resulting exchange differences are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate. Exchange
differences arising are recognised in other comprehensive
income.
2.5 Investment property
Investment properties are properties owned or held under finance
leases to earn rentals or capital appreciation, or both, or land
held for a currently undetermined use.
Property under construction or development for future use as
investment property is treated as investment property and is
measured at fair value where the fair value of the investment
property under construction or development for future use can be
reliably determined.
Investment properties are stated at fair value. At the end of
each quarter of the financial year, the fair values of a selection
of investment properties are assessed by the Board such that the
fair values of all investment properties are assessed at least once
each financial year. At the date of assessment, two independent
valuation companies with appropriately recognised professional
qualifications and relevant experience in the location and category
being valued undertake a valuation of each property selected.
Exceptions to engaging two independent valuers are made in the
following circumstances:
-- For any project whose value is equal to or is below USD5
million: Only one valuer is engaged to perform a valuation of the
property, and subsequently an updated valuation.
-- For projects being divested with (i) sales and purchase
agreement ("SPA") signed, (ii) a deposit received and (iii)
conditions precedent readily achievable. Their fair value is based
on the agreed selling price and only one independent valuation is
obtained if required by the Valuation Committee.
The fair value is estimated by the independent valuation
companies assuming there is an agreement between a willing buyer
and a willing seller in an arm's length transaction after proper
marketing; wherein the parties have each acted knowledgeably,
prudently and without compulsion. The valuations by the independent
valuation companies are prepared based upon direct comparison with
sales of other similar properties in the area and the expected
future discounted cash flows of a property using a yield that
reflects the risks inherent therein. The estimated fair values
provided by the independent valuation companies are used by the
Valuation Committee as the primary basis for estimating each
property's fair value. In addition to the reports of the
independent valuation companies the valuation committee considers
information from other sources, including those sources referred to
in Note 3, before recommending each property's estimated fair value
to the Board for approval.
In addition to the annual revaluation cycle, at the end of each
quarter the Investment Manager reviews the entire portfolio to
determine if there are any material changes to investment
properties or other indicators that might mean that the value of an
investment property has materially changed. Subject to the results
of this review a more detailed assessment of those properties may
be performed. If there is an indication that an investment
property's value has increased then the investment property will be
included in the independent valuation program. If there is an
indication that an investment property's value has declined then an
assessment will be made in respect to quantifying the fall in
value. This involves either obtaining an independent valuation of
the investment property or determining the change in value of each
property based on an internal assessment. Based upon the analysis
performed by the Investment Manager or the independent valuation
report, the Valuation Committee determines whether any valuation
adjustments should be recommended to the Board for approval.
Any gain or loss arising from a change in fair value of
investment properties is recognised in the consolidated income
statement.
When an item of property, plant and equipment is transferred to
investment property following a change in its use, any differences
arising at the date of transfer between the carrying amount of the
item immediately prior to transfer and its fair value is treated in
the same way as a revaluation under IAS 16. Any resulting increase
in the carrying amount of the property is recognised in profit or
loss to the extent that it reverses a previous impairment loss,
with remaining increase recognised in other comprehensive income
and increase directly to equity in revaluation surplus. Any
resulting decrease in the carrying amount of the property is
initially
charged in other comprehensive income against any previous
recognised revaluation surplus, with any remaining decrease charged
to profit or loss
If an investment property becomes owner-occupied, it is
reclassified as property, plant and equipment, its fair value at
the date of reclassification becomes its cost for subsequent
accounting purposes. Where an investment property undergoes a
change in use, evidenced by commencement of development with a view
to sale, the property is transferred to inventories. A property's
deemed cost for subsequent accounting as inventories is its fair
value at the date of change in use.
All costs directly associated with the purchase and construction
of an investment property, and all subsequent capital expenditures
for the development, which qualify as acquisition costs, are
capitalised.
Borrowing costs for property under construction or development
are capitalised if they are directly attributable to the
acquisition, construction or production of that qualifying
asset.
Capitalisation of borrowing costs commences when the activities
to prepare the asset are in progress and expenditures and borrowing
costs are being incurred. Capitalisation of borrowing costs
continues until the assets are substantially ready for their
intended use. If the resulting carrying amount of the asset exceeds
its recoverable amount, an impairment loss is recognised. The
capitalisation rate is arrived at by reference to the actual rate
payable on borrowings for development purposes or, with regard to
that part of the development cost financed out of general funds, to
the average rate.
2.6 Leases
Leases under the terms of which the Group assumes substantially
all the risks and rewards of ownership are classified as finance
leases. Finance leases are capitalised at the leases' commencement
at the lower of the fair value of the leased property and the
present value of the minimum lease payments.
Leases which do not transfer substantially all the risks and
rewards of ownership to the
Group are classified as operating leases, unless they are
treated as investment properties as described in Note 2.5. Where
the Group has the use of an asset held under an operating lease,
payments made under the lease are charged to the consolidated
income statement on a straight line basis over the term of the
lease. Prepayments for operating leases represent properties held
under operating leases where a portion, or all, of the lease
payments have been paid in advance, and the properties cannot be
classified as investment properties.
2.7 Property, plant and equipment
All property, plant and equipment, except buildings and
leasehold land improvements, are stated at cost less accumulated
depreciation and impairment losses as set out in Note 2.14. The
cost of self-constructed assets includes the cost of materials,
direct labour, overheads and the initial estimate of the costs of
dismantling and removing the items and restoring the site on which
they are located.
Buildings and leasehold land improvements are revalued to fair
value in accordance with the methods and processes as set out in
Note 2.5. Any surplus arising on the revaluation is recognised in a
revaluation reserve within equity, except to the extent that the
surplus reverses a previous revaluation deficit on the building
charged to the consolidated income statement, in which case a
credit to that extent is recognised in the consolidated income
statement. Any deficit on revaluation is charged in the
consolidated income statement except to the extent that it reverses
a previous revaluation surplus on a building, in which case it is
taken directly to the revaluation reserve. Any revaluation surplus
remaining in equity on disposal of the asset is transferred to
accumulated losses.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
The Group recognises in the carrying amount of an item of
property, plant and equipment the cost of replacing part of such an
item when that cost is incurred if it is probable that the future
economic benefits embodied with the item will flow to the Group and
the cost of the item can be measured reliably. The carrying values
of any parts replaced as a result of such replacements are expensed
at the time of replacement. All other costs associated with the
maintenance of property, plant and equipment are recognised in the
consolidated income statement as incurred.
Depreciation is charged to the consolidated income statement on
a straight-line basis over the estimated useful lives of property,
plant and equipment, and major components that are accounted for
separately. The estimated useful lives are as follows:
Buildings 7 to 45 years
Machinery, plant and equipment 4 to 20 years
Furniture, fixtures and office equipment 3 to 5 years
Motor vehicles 5 to 10 years
Material residual value estimates and estimates of useful lives
are reviewed at least annually, irrespective of whether assets are
revalued.
Assets held under finance leases which do not transfer title to
the assets to the Group at the end of the leases are depreciated
over the shorter of the estimated useful lives shown above and the
terms of the leases.
2.8 Intangible assets
Intangible assets represent software. Intangible assets acquired
separately are measured initially at cost. The cost of an
intangible asset acquired in a business combination is the asset's
fair value at the date of acquisition. Following initial
acquisition, intangible assets are measured at cost less any
accumulated amortisation and accumulated impairment losses. The
carrying values of the assets are reviewed annually for
impairment.
Intangible assets with finite useful lives are amortised over
the estimated useful lives and assessed for impairment whenever
there is an indication that they may be impaired. The amortisation
period and method are reviewed at least at each financial year end.
The estimated useful lives are as follows:
Software 3 to 5 years
2.9 Non-current assets (or disposal groups) and liabilities held for sale
Non-current assets (or disposal groups) are classified as assets
held for sale when their carrying amount is to be recovered
principally through a sale transaction and a sale is considered
highly probable at the reporting date. They are presented
separately in the consolidated balance sheet. They are measured at
the lower of their carrying amounts immediately prior to their
classification as held for sale and their fair values less costs to
sell. Assets held for sale are not subject to depreciation or
amortisation subsequent to their classification as held for
sale.
Liabilities are classified as held for sale and presented as
such in the consolidated balance sheet if they are directly
associated with a disposal group.
2.10 Financial assets
(a) Classification
The Group classifies its financial assets in the following
categories: at fair value through profit or loss and loans and
receivables. The classification depends on the purpose for which
the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include
financial assets that are either classified as held for trading or
designated by management to be carried at fair value through profit
or loss at inception. Financial assets at fair value through profit
or loss held by the Group include unlisted equity securities.
Derivatives are also categorised as held for trading unless they
are designated as hedges. Assets in this category are classified as
current assets if expected to be settled within 12 months;
otherwise they are classified as non-current.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the end of the reporting period,
which
are classified as non-current assets. The Group's loans and
receivables comprise 'trade and other receivables' and 'cash and
cash equivalents' in the consolidated balance sheet.
(b) Recognition and measurement
Purchases or sales of financial assets are recognised on the
trade-date, being the date on which the Group commits to purchase
or sell the asset.
Investments are initially recognised at fair value plus
transaction costs for all financial assets not carried at fair
value through profit or loss. Financial assets carried at fair
value through profit or loss are initially recognised at fair
value, and transaction costs are expensed in the consolidated
income statement. Financial assets are derecognised when the rights
to receive cash flows from the investments have expired or have
been transferred and the Group has transferred substantially all
risks and rewards of ownership. Loans and receivables are
subsequently carried at amortised cost using the effective interest
method.
Net changes in fair value of financial assets at fair value
through profit or loss includes net unrealised gains in fair value
of financial assets and net gains from realisation of financial
assets during the year.
Gains or losses arising from changes in the fair value of the
'financial assets at fair value through profit or loss' category
are presented in the consolidated income statement within 'net
changes in fair value of financial assets at fair value through
profit or loss' in the period in which they arise.
2.11 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount
reported in the consolidated balance sheet when there is a legally
enforceable right to offset the recognised amounts and there is an
intention to settle on a net basis or realise the asset and settle
the liability simultaneously.
2.12 Prepayments for acquisitions of investments
These represent prepayments made by the Group to vendors for
land compensation and other related costs including professional
fees directly attributed to an investment property, where the final
transfer of the property is pending the approval of the relevant
authorities and/or is subject to either the Group or the vendors
completing certain performance conditions. Such prepayments are
measured initially at cost until such time as the approval is
obtained or conditions are met at which point they are transferred
to the appropriate investment accounts.
2.13 Impairment of assets
The Group's goodwill, operating lease prepayments, property,
plant and equipment, intangible assets, trade and other
receivables, prepayments for acquisitions of investments, and
interests in associates are subject to impairment testing.
For the purpose of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows (cash-generating units). As a result, some assets are tested
individually for impairment and some are tested at a
cash-generating unit level. Goodwill in particular is allocated to
those cash-generating units that are expected to benefit from
synergies of the related business combination and represent the
lowest level within the Group at which management controls the
related cash flows.
Goodwill and intangible assets with indefinite lives are tested
for impairment annually, while other assets are tested when there
is an indicator of impairment.
An impairment loss is recognised as an expense immediately for
the amount by which an asset's carrying amount exceeds its
recoverable amount unless the relevant asset is carried at a
revalued amount under the Group's accounting policy, in which case
the impairment loss is treated as a revaluation decrease, but only
to the extent of the revaluation surplus for that same asset
according to that policy. The recoverable amount is the higher of
fair value, reflecting market conditions less costs to sell, and
value in use.
2.14 Inventories
The Group's inventories arise where there is a change in use of
investment properties evidenced by the commencement of development
with a view to sale, and the properties are reclassified as
inventories at their deemed cost, which is the fair value at the
date of reclassification. They are subsequently carried at the
lower of cost and net realisable value. Net realisable value is the
estimated selling price in the ordinary course of business less
costs to complete redevelopment and selling expenses.
2.15 Trade receivables
Trade receivables are amounts due from customers for merchandise
sold or services performed in the ordinary course of business. If
collection is expected in one year or less (or in the norm
operating cycle of the business if longer), they are classified as
current assets. If not, they are presented as non-current
assets.
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
2.16 Cash and cash equivalents
Cash and cash equivalents include cash in banks and on hand as
well as short term highly liquid investments such as money market
instruments and bank deposits with original maturity terms of not
more than three months.
2.17 Short-term investments
Short-term investments include bank deposits with original
maturity terms of between three and twelve months.
2.18 Share capital
Ordinary shares are classified as equity. Share capital is
determined using the nominal value of shares that have been issued.
Additional paid-in capital includes any premiums received on the
initial issuance of the share capital. Incremental costs directly
attributable to the issue of new ordinary shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.19 Ordinary shares acquired by the Company
Shares which are repurchased by the Company are cancelled and
whilst the amount of the authorised share capital is not affected,
the issued share capital is reduced accordingly.
If the cost of purchasing ordinary shares is less than the net
asset value attributable to the shares acquired, the difference is
transferred to the Company's equity reserve. If the cost of
purchasing ordinary shares is greater than the net asset value of
the shares, i) the amount of any equity reserve, additional paid-in
capital account or fully paid share capital of the Company, and ii)
any amount representing unrealised profits of the Company for the
time being standing to the credit of any revaluation reserve
maintained by the Company may be reduced by a sum not exceeding the
amount by which the repurchase payment exceeds the net asset value
of the shares.
2.20 Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Trade payables are classified as current liabilities if
payment is due within one year or less (or in the normal operating
cycle of the business if longer). If not, they are presented as
non-current liabilities.
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
2.21 Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
profit or loss over the period of the borrowings using the
effective interest method.
2.22 Borrowing costs
General and specific borrowing costs directly attributable to
the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time
to get ready for their intended use or sale, are added to the cost
of those assets, until such time as the assets are substantially
ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in
the period in which they are incurred.
2.23 Current and deferred income tax
The tax expense for the year comprises current and deferred tax.
Tax is recognised in the consolidated income statement, except to
the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
Current income tax assets and/or liabilities comprise claims
from or obligations to fiscal authorities relating to the current
or prior reporting periods that are not yet settled at the
reporting date. They are calculated according to the tax rates and
tax laws applicable to the fiscal periods to which they relate
based on the taxable profit for the year. All changes to current
tax assets or liabilities are recognised as a component of tax
expense in the consolidated income statement.
Deferred income taxes are calculated using the liability method
on temporary differences. This involves the comparison of the
carrying amounts of assets and liabilities in the consolidated
financial statements with their respective tax bases. In addition,
tax losses available to be carried
forward as well as other income tax credits to the Group are
assessed for recognition as deferred tax assets.
However, deferred tax is not provided on the initial recognition
of goodwill, or on the initial recognition of an asset or liability
unless the related transaction is a business combination or affects
tax or accounting profit. Deferred tax on temporary differences
associated with shares in subsidiaries and associates is not
provided if reversal of these temporary differences can be
controlled by the Group and it is probable that reversal will not
occur in the foreseeable future. Deferred tax liabilities are
always provided for in full. Deferred tax assets are recognised to
the
extent that it is probable that they will be able to be offset
against future taxable income.
Deferred tax assets and liabilities are calculated, without
discounting, at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or
substantively enacted at the reporting date. Most changes in
deferred tax assets or liabilities are recognised as a component of
tax expense in the consolidated income statement. Only changes in
deferred tax assets or liabilities that relate to a change in value
of assets or liabilities that is charged directly to other
comprehensive income are charged or credited directly to other
comprehensive income.
2.24 Provisions, contingent liabilities and contingent assets
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events; it is probable
that an outflow of resources will be required to settle the
obligation; and the amount has been reliably estimated. Provisions
are not recognised for future operating losses.
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events; it is probable
that an outflow of resources will be required to settle the
obligation; and the amount has been reliably estimated. Provisions
are not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to
settle the present obligation, based on the most reliable evidence
available at the reporting date, including the risks and
uncertainties associated with the present obligation and there is
uncertainty about the timing or amount of the future expenditure
require in settlement. Where there are a num-ber of similar
obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as
a whole. Long-term pro-vi-sions are discounted to their present
values, where the time value of money is material.
All provisions are reviewed at each reporting date and adjusted
to reflect the current best estimate of the Group's management.
The Group does not recognise a contingent liability but
discloses its existence in the financial statements. A contingent
liability is a possible obligation that arises from past events
whose existence will be confirmed by uncertain future events beyond
the control of the Group or a present obligation that is not
recognised because it is not probable that an outflow of resources
will be required to settle the obligation. A contingent liability
also arises in the rare circumstance where there is a liability
that cannot be recognised because it cannot be measured
reliably.
A contingent asset is a possible asset that arises from past
events, whose existence will be confirmed by uncertain future
events beyond the control of the Group. The Group does not
recognise contingent assets but discloses their existence when
inflows of economic benefits are probable, but not virtually
certain.
2.25 Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable, and
represents amounts receivable for goods supplied, stated net of
discounts, returns and value
added taxes. The Group recognises revenue when the amount of
revenue can be reliably measured; when it is probable that future
economic benefits will flow to the entity; and when specific
criteria have been met for each of the Group's activities, as
described below.
(a) Sales of real estate
Deposits received from buyers to reserve rights to buy houses
are recognised as a liability on the consolidated balance sheet.
These amounts are recorded as unearned revenue when the house's
foundation is completed and a sales and purchase agreement is
signed with the buyer. Unearned revenue is recorded as revenue when
the construction is completed and the house is handed over to the
buyer.
Revenue on sales of apartments is recognised when the Company
has transferred to the buyer the significant risks and rewards of
the ownership in a transaction that is in substance a sale and does
not have a substantial continuing involvement with the
property.
(b) Interest income
Interest income is recognised using the effective interest
method. When a loan and receivable is impaired, the Group reduces
the carrying amount to its recoverable amount, being the estimated
future cash flow discounted at the original effective interest rate
of the instrument, and continues unwinding the discount as interest
income. Interest income on impaired loan and receivables is
recognised using the original effective interest rate.
(c) Dividend income
Dividend income is recognised when the right to receive payment
is established.
2.26 Related parties
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or operational
decisions.
Enterprises and individuals that directly, or indirectly through
one or more immediately, control, or are controlled by, or under
common control with, the Company, including holding Company,
subsidiaries and fellow subsidiaries are related parties of the
Company. Associates and individuals owing directly, or indirectly,
an interest in the voting power of the Company that give them
significant influence over the Company, key management personnel,
including directors and officers of the Company and the close
members of the family. In considering each possible related party
relationship, attention is directed to the substance of the
relationship, and not merely the legal form.
2.27 Disposal fee and alignment fee
The disposal fee and alignment fee liabilities are designated as
financial liabilities at fair value through profit or loss, net of
any prepayment advances received up to the date of the balance
sheet. Management estimates the fees' fair value at each balance
sheet date using a discounted cash flow model developed by an
independent valuation company and based on the Company's projected
completion, collections of proceeds from sales of the remaining
properties and distributions to shareholders. The change in
liabilities due to the Investment Manager during the year is
included as "disposal fee and alignment fee (expense)/recovery" in
the consolidated income statement and is further described in Note
32 to these consolidated financial statements. An expense results
from an increase in the liabilities to the Investment Manager, and
a recovery of previously expensed disposal fee and alignment fee
results from a decrease in the disposal fee and alignment fee
liability to the Investment Manager at the reporting date.
2.28 Loss per share and net asset value per share
The Group presents basic loss per share for its ordinary shares.
Basic loss per share is calculated by dividing the profit or loss
attributable to the ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the
year.
Diluted loss per share is calculated by adjusting the weighted
average number of ordinary shares outstanding during the year to
assume conversion of all dilutive potential ordinary shares.
Net asset value ("NAV") per share is calculated by dividing the
net asset value attributable to ordinary shareholders of the
Company by the number of outstanding ordinary shares as at the
reporting date. NAV is determined as total assets less total
liabilities and non-controlling interests.
2.29 Segment reporting
An operating segment is a component of the Group:
-- that engages in investment activities from which it may earn revenues and incur expenses;
-- whose operating results are based on internal management
reporting information that is regularly reviewed by the Investment
Manager to make decisions about resources to be allocated to the
segment and assess its performance; and
-- for which discrete financial information is available.
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
When preparing the consolidated financial statements, the Group
undertakes a number of accounting 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 significant effect on recognition and measurement of assets,
liabilities, income and expenses are discussed below.
3.1 Fair value of investment properties
The investment properties of the Group are stated at fair value
in accordance with accounting policies 2.5. 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 public by local authority at the
province where the property is located.
Sensitivity analyses are provided in the respective note
disclosures on investment properties.
3.2 Impairment of prepayment 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.
3.3 Disposal fee and alignment fee
The liabilities of the Group are stated at fair value in
accordance with accounting policy 2.28. Their fair value is
estimated at each balance sheet date by an independent valuation
company. The valuation is based on certain assumptions which are
subject to uncertainty and might materially differ from the actual
results, including:
(i) the timing and amount of disposals;
(ii) development expenditure and operating expenses of the Group;
(iii) the timing and amount of distributions to shareholders using a variety of methods;
4 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 deposits.
The activities undertaken by the commercial segment include the
development and operation of investment properties. Apartments and
villas properties which are developed for sale, land and office
buildings are included in the residential and office buildings
segment. The hospitality segment includes the development and
operation of hotels and related services. The mixed-use segment
includes multi-purpose projects. Strategic decisions are made on
the basis of segment operating results.
Each of the operating segments is managed and monitored
separately by the Investment Manager as each requires different
resources and approaches. The Investment Manager assesses segment
profit or loss using a measure of operating profit or loss from the
investment assets. Although IFRS 8 requires measurement of
segmental profit or loss, the majority of expenses are common to
all segments and therefore cannot be individually allocated. There
have been no changes from prior periods in the measurement methods
used to determine reported segment profit or loss.
There is no measure of segment liabilities regularly reported to
the Investment Manager; therefore, liabilities are not disclosed in
the sector analyses.
Segment information can be analysed as follows for the reporting
years:
(a) Consolidated income statement
Year ended 30 June 2017
----------------------------------------------------------------------------------------
Commercial Residential and office Hospitality Mixed use Total
buildings
USD'000 USD'000 USD'000 USD'000 USD'000
Revenue - 6,562 - - 6,562
Cost of sales - (7,371) - - (7,371)
------------ ------------ ------------ ------------ ------------
Gross loss - (809) - - (809)
Net (loss)/gain on fair
value adjustments of
investment properties and
revaluations of property,
plant and equipment (1,301) 720 - 30,703 30,122
Net gain/(loss) from
disposal of investments, - (22,441) - 9,503 (12,938)
Gain from acquisition of an
asset - 9,721 - - 9,721
Gain due to dilution in
ownership of associate - 1,670 - - 1,670
Impairment of assets - (404) - 608 204
Finance income 2 730 3 173 908
Share of losses of
associates (50) (2,249) (146) - (2,445)
Other income 8 358 - 1 367
------------ ------------ ------------ ------------ ------------
Total (loss)/profit before
unallocatable expenses (1,341) (12,704) (143) 40,988 26,800
Selling and administration
expenses (20,062)
Net changes in fair value
of financial assets and
financial liabilities at
fair value through
profit or loss (115)
Finance expenses (6,673)
Other expenses (1,829)
------------
Loss before tax (1,879)
Income tax (10,726)
------------
Net loss for the year (12,605)
Year ended 30 June 2016
----------------------------------------------------------------------------------------
Commercial Residential and office Hospitality Mixed use Total
buildings
USD'000 USD'000 USD'000 USD'000 USD'000
Revenue - 43,157 - - 43,157
Cost of sales - (36,363) - - (36,363) a
------------ ------------ ------------ ------------ ------------
Gross profit - 6,794 - - 6,794
Net (loss)/gain on fair
value adjustments of
investment properties and
revaluations of property,
plant and equipment (171) 13,403 - 9,152 22,384
Net gain/(loss) from
disposal of investments - 1,513 5,627 (663) 6,477
Impairment of assets - (18,210) - - (18,210)
Finance income 1 911 110 225 1,247
Share of losses of
associates (1,619) (1,612) (327) (5) (3,563)
Other income 582 1,495 - 1,475 3,552
------------ ------------ ------------ ------------ ------------
Total (loss)/profit before
unallocatable expenses (1,207) 4,294 5,410 10,184 18,681
Selling and administration
expenses (16,378)
Net changes in fair value
of financial assets and
financial liabilities at
fair value through
profit or loss (161)
Finance expenses (6,251)
Other expenses (373)
------------
Loss before tax (4,482)
Income tax (156)
------------
Net loss for the year (4,638)
(b) Consolidated balance sheet
As at 30 June 2017
--------------------------------------------------------------------------------------------
Commercial Residential Hospitality Mixed Cash and Total
and office use deposits
buildings
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Investment properties - 33,700 - 30,288 - 63,988
Property, plant and equipment - - - 404 - 404
Intangible assets - - - - - -
Investments in associates 20,097 - - - - 20,097
Prepayments for acquisitions of investments - 22,650 - - - 22,650
Inventories - 220 - - - 220
Trade, tax and other receivables - 1,254 - 1,966 - 3,220
Short-term investments - - - - 56 56
Financial assets at fair value through profit or loss - - - 269 - 269
Cash and cash equivalents - - - - 88,919 88,919
Assets classified as held for sale 3,017 193,373 4,287 129,286 - 329,963
Other assets - 35 - 30 - 65
------------ -------------- ------------ ------------ ------------ --------------
Total assets 23,114 251,232 4,287 162,243 88,975 529,851
Total assets include:
* Addition to non-current assets (other than financial
instruments and deferred tax assets) 2,026 66,584 - 73 - 68,683
As at 30 June 2016
--------------------------------------------------------------------------------------------
Commercial Residential Hospitality Mixed Cash and Total
and office use deposits
buildings
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Investment properties 4,350 211,200 - 174,150 - 389,700
Property, plant and equipment - 66 - 434 - 500
Intangible assets - - - 3 - 3
Investments in associates 17,513 25,768 4,432 - - 47,713
Prepayments for acquisitions of investments - 25,425 - 2,347 - 27,772
Inventories - 51,550 - 2,892 - 54,442
Trade, tax and other receivables 98 12,955 5,344 2,213 - 20,610
Short-term investments - - - - 9,806 9,806
Financial assets at fair value through profit or loss (*) - - - 269 - 269
Restricted cash - - - - 3,392 3,392
Cash and cash equivalents - - - - 76,903 76,903
Assets classified as held for sale - 18,628 - - - 18,628
Other assets 197 4,432 - 33 - 4,662
------------ -------------- ------------ ------------ ------------ --------------
Total assets 22,158 350,024 9,776 182,341 90,101 654,400
Total assets include:
* Addition to non-current assets (other than financial
instruments and deferred tax assets) 1,950 16,064 - 10,341 - 28,355
(*) The amount presented in the table for 30 June 2016 above did
not include the fair value of the call options which gave the Group
the rights to early redeem the ZDP shares. The Investment Manager
did not manage the ZDP shares and call options under any particular
segment.
5 INVESTMENT PROPERTIES
30 June 2017 30 June 2016
USD'000 USD'000
Opening balance 389,700 479,454
Additions 66,514 25,697
Disposals (130,255) (119,738)
Transferred to inventories - (9,240)
Exchange of inventories for investment properties - 2,969
Transferred to assets classified as held for sale (Note 13) (287,058) (5,586)
Net gain from fair value adjustments (Note 21) 30,122 24,187
Translation differences (5,035) (8,043)
-------------- --------------
Closing balance 63,988 389,700
The Group's investment properties were revalued during the year
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.
There were no bank borrowings secured by investment properties
as at 30 June 2017 (30 June 2016: USD102.9 million). During the
year, the Group capitalised borrowing costs amounting to USD4.9
million (year ended 30 June 2016: USD4.9 million) into investment
properties.
At 30 June 2017, 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 investment
licences.
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 year (2016:
none).
Information about fair value measurements using unobservable
inputs (Level 3) is set out below:
Level 3 - Range of unobservable Sensitivity on management's
inputs estimates
------------------------ ----------------------------------------- --------------------------------
Segment Valuation Valuation Valuation Sensitivities in sales
technique (USD'000) per square price per
metre square metre (USD'000)
(USD)
------------------------ -------------- ----------- ------------ --------------------------------
Residential and office Direct Change in sales price per
buildings comparisons 33,700 30 square metre
--------------------------------
-10% 0% 10%
---------- --------- ---------
30,330 33,700 38,070
--------------------------------------- ----------- ------------ ---------- --------- ---------
Direct 785 - Change in sales price per
Mixed use comparisons 30,288 938 square metre
--------------------------------
-10% 0% 10%
---------- --------- ---------
24,908 30,288 35,668
--------------------------------------- ----------- ------------ ---------- --------- ---------
For the comparative balance sheet date:
Level 3 - Range of
unobservable inputs Sensitivity on management's estimates
(probability-weighted
average)
------------- ------------- ---------------------------------------- --------------------------------------------------------------------------
Segment Valuation Valuation Discount Cap Valuation Sensitivities Sensitivities in discount
technique (USD'000) rate rate per in sales price and cap rates (USD'000)
square per
metre square metre
(USD) (USD'000)
------------- ------------- ---------- --------- ----- ---------- --------------------------- ---------------------------------------------
Change in discount
rate
Residential
and office Discounted
buildings cash 19%
(*) flows 102,140 - 21.5% N/A N/A -1% 0% 1%
--------- -------- --------
105,031 102,140 99,202
Residential Change in sales
and office Direct 30 - price per
buildings comparisons 109,060 N/A N/A 5,845 square metre
---------------------------
-10% 0% 10%
------- -------- --------
98,154 109,060 119,966
--------------------------- ---------- --------- ----- ---------- ------- -------- -------- ------- ----- --------- -------- --------
Mixed Discounted Change in discount
use cash rate
flows
103,350 17% 8.5% N/A -1% 0% 1%
Change
in
cap
rate -1% 127,815 114,762 102,915
-------
0% 115,666 103,350 92,673
-------
1% 106,127 94,882 84,641
--------------------------- ---------- --------- ----- ---------- ------- -------- -------- ------- ----- --------- -------- --------
Change in sales
Mixed Direct 258 price per
use comparisons 70,800 N/A N/A - 1,040 square metre
---------------------------
-10% 0% 10%
------- -------- --------
63,720 70,800 77,880
--------------------------- ---------- --------- ----- ---------- ------- -------- -------- ------- ----- --------- -------- --------
Change in sales
Direct price per
Commercial comparisons 4,350 N/A N/A 1,758 square metre
---------------------------
-10% 0% 10%
------- -------- --------
3,915 4,350 4,785
--------------------------- ---------- --------- ----- ---------- ------- -------- -------- ------- ----- --------- -------- --------
(*) The valuations of these investment properties assumed that
they would be developed and sold within a definite time period;
therefore, no capitalisation rates were used in such
valuations.
6 SUBSIDIARIES AND ASSOCIATES
(a) Investments in associates
30 June 30 June
2017 2016
USD'000 USD'000
Opening balance 47,713 165,205
Additions 2,014 1,829
Gain due to dilution of
ownership in an associate 1,670 -
Disposals (*) (24,568) (115,758)
Reclassified as held for
sale (**) (4,287) -
Share of losses of associates (2,445) (3,563)
-------------- ------------
Closing balance 20,097 47,713
(*) During the year, the Group completed its structuring plan
regarding Aqua City Joint Stock Company. As a result, the company
was split into two companies which are Aqua City Joint Stock
Company and Aqua Dona City Company Limited. Aqua City Joint Stock
Company became a wholly-owned subsidiary of the Group from 15 March
2017.
(**) During the year, assets and liabilities of Romana Services
- Trading - Investment Joint Stock Corporation were reclassified to
held for sales following the signing of a sale and purchase
agreement (Note 13).
Particulars of material operating associates and their
summarised financial information, extracted from their financial
statements as at 30 June 2017 and 30 June 2016, are as follows:
As at 30 June 2017
Share Equity
Principal of interest
activity Assets Liabilities Revenue Loss losses held
Incorporation to
the
Group
USD'000 USD'000 USD'000 USD'000 USD'000 %
Thang
Loi Textile
Garment
Joint
Stock
Company
(***) Vietnam Property 49,101 7,893 2,925 (80) (50) 65
============= ================ ============= ========= ============= ========== ======== ========= ===========
As at 30 June 2016
Share Equity
Principal of interest
activity Assets Liabilities Revenue Loss losses held
Incorporation to
the
Group
USD'000 USD'000 USD'000 USD'000 USD'000 %
Aqua City
Joint
Stock
Company
(*) Vietnam Property 59,232 8,942 - (2,866) (1,433) 50
Other Property/
associates Vietnam Hospitality 65,501 25,872 3,984 (3,138) (1,946)
------------ ---------------- ------------- --------- ------------- --------- ---------- ---------- ----------
124,733 34,814 3,984 (6,004) (3,379)
=========================================== ========= ============= ========= ========== ========== ==========
(***) As at the reporting date, the Group has 65% equity
interest in Thang Loi Textile Garment Joint Stock Company.
Management considers the interest an investment in an associate as
the Group does not have control over the investee. The Group and a
co-investor have significant influence over this investee.
(b) Principal subsidiaries
The Group had the following principal subsidiaries which are
held through special purpose vehicles established outside of
Vietnam as at 30 June 2017 and 30 June 2016:
30 June 2017 30 June 2016
------------------------------ ------------------------------
Percentage Percentage
Country Percentage interest Percentage interest
of incorporation interest held by interest held by
and place held by non-controlling held by non-controlling Nature
Name of business the Group interests the Group interests of business
VinaCapital Hoi
An
Resort Limited Vietnam - - 100.0% - Hospitality
VinaCapital
Danang Property
Resort Limited Vietnam - - 75.0% 25.0% investment
VinaCapital
Commercial
Center Limited
(Vietnam) Property
(*() Vietnam 38.2% 61.8% 38.2% 61.8% investment
Mega Assets
Company
Limited Property
(Vietnam) Vietnam 75.0% 25.0% 75.0% 25.0% investment
SIH Real Estate
Limited
Company Property
(Vietnam) Vietnam 75.0% 25.0% 75.0% 25.0% investment
Dien Phuoc Long
Real
Estate Company Property
Limited Vietnam 100.0% - 100.0% - investment
VinaCapital
Phuoc
Dien Co. Property
Limited Vietnam 100.0% - 100.0% - investment
Dong Binh Duong
Urban
Development Co. Property
Limited Vietnam - - 70.0% 30.0% investment
Vina Dai Phuoc
Corporation Property
Limited Vietnam - - 54.0% 46.0% investment
Viet Land
Development
Corporation Property
Limited Vietnam 90.0% 10.0% 90.0% 10.0% investment
Vinh Thai Urban
Development
Corporation Property
Limited Vietnam 53.3% 46.7% 53.3% 46.7% investment
Thang Long
Property Property
Company Limited Vietnam - - 65.0% 35.0% investment
Hoang Phat
Investment
Joint Stock
Company Vietnam 60.0% 40.0% 60.0% 40.0% Hospitality
AA VinaCapital
Co. Property
Limited Vietnam 83.2% 16.8% 83.2% 16.8% investment
Vina Alliance
Company Property
Limited (*() Vietnam 46.5% 53.5% 46.5% 53.5% investment
Phu Hoi City
Company Property
Limited Vietnam 52.5% 47.5% 52.5% 47.5% investment
Aqua City Joint
Stock Property
Company (**) Vietnam 100.0% - 50.0% 50.0% investment
(*) At the reporting date, the Group has 38.2% and 46.5% equity
interests in VinaCapital Commercial Center Limited (Vietnam) and
Vina Alliance Company Limited, respectively. Management considers
these companies as subsidiaries as the Group has de facto control
through the majority voting rights in these companies.
All subsidiaries are included in the consolidated financial
statements. The proportion of the voting rights in the subsidiary
undertakings held directly by the Group does not differ from the
proportion of ordinary shares held. The Group does not hold any
preference shares of the subsidiaries included in the Group.
(**) Acquisition of Aqua City Joint Stock Company
During the year, the Group completed its restructuring of Aqua
City Joint Stock Company, which was split into two separate
entities. The group became the sole owner of the new Aqua Joint
Stock company, while the other shareholders of the original company
acquired the other entity. As a result, Aqua City Joint Stock
Company became a wholly-owned subsidiary of the Group on 15 March
2017.
For three and a half months ended 30 June 2017, Aqua City Joint
Stock Company attributed no revenue but losses of USD33 thousand to
the Group's results.
The following reconciliation table summarises the derecognition
of investment in an associate and the fair value of assets acquired
and liabilities assumed at the acquisition date.
USD'000
Identifiable assets acquired and
liabilities assumed
Cash and cash equivalents 26
Short-term investments 44
Trade and other receivables 605
Other assets 2
Investment properties 33,700
Short-term borrowings (88)
----------
Total identifiable net assets acquired 34,289
Derecognition of investment in an
associate (Note 6(a)) 24,568
Gain from acquisition of a subsidiary 9,721
----------
34,289
During the year, the Group lost control of a number of
subsidiaries, details of which are provided on the following pages.
The major assets and liabilities in the subsidiaries over which
control is lost were as follows:
As at the
date of
loss of
control
USD'000
Current assets
Cash and cash equivalents 9,401
Short-term investments 2,203
Inventories 23,109
Trade and other receivables 3,432
Other current assets 445
Assets classified as held for
sale 14,845
------------
Total current assets 53,435
Non-current assets
Investment properties 123,713
Property, plant and equipment 52
Other non-current assets 11
------------
Total non-current assets 123,776
Current liabilities
Trade and other payables (14,424)
Short-term borrowings (3,623)
Liabilities classified as held
for sale (4,861)
------------
Total current liabilities (22,908)
------------
Net assets at the date when
control is lost 154,303
------------
Net assets attributable to the
Company 103,338
Net assets attributable to non-controlling
interests 50,965
------------
Total consideration 118,900
Capital gains tax withheld by
buyers (3,610)
------------
Consideration received due to loss
of control of subsidiaries 115,290
Less: Cash and cash equivalents
of disposed subsidiaries (9,401)
------------
Cash received due to loss of control
of subsidiaries 105,889
------------
Details of the loss on disposals of subsidiaries were as
follows:
Year ended
30 June
2017
USD'000
Total consideration 118,900
Carrying amount of net assets sold
attributable to the Company (103,338)
------------
Gain on disposals before reclassification
of currency translation reserve 15,562
Reclassification of currency translation
reserve (29,215)
------------
Loss on disposals of subsidiaries (13,653)
------------
Sale of VinaCapital Danang Resort Limited
During the period the Group sold its 75% equity interest in
VinaCapital Danang Resort Limited for a total consideration of
USD7.0 million. The book value of the net assets at the sale date
was USD10.5 million and the reclassification of translation reserve
on disposal was USD1.5 million, resulting in a loss of USD5.0
million.
Sale of Dong Binh Duong Urban Development Company Limited
During the period the Group sold its 70% equity interest in Dong
Binh Duong Urban Development Company Limited for a total
consideration of USD11.6 million. The book value of the net assets
at the sale date was USD14.4 million and the reclassification of
translation reserve on disposal was USD6.1 million, resulting in a
loss of USD8.9 million.
Sale of VinaCapital Hoi An Resort Limited
During the period the Group sold its 100% equity interest in
VinaCapital Hoi An Resort Limited for a total consideration of
USD7.8 million. The book value of the net assets at the sale date
was USD6.6 million and the reclassification of translation reserve
on disposal was USD1.2 million, resulting in no gain/(loss) on this
disposal.
Sale of Vina Dai Phuoc Corporation Limited
During the year the Group sold its 54% equity interest in Vina
Dai Phuoc Corporation Limited for a total consideration of USD48.8
million. The book value of the net assets at the sale date was
USD43.8 million and the reclassification of translation reserve on
disposal was USD14.3 million, resulting in a loss of USD9.3
million.
Sale of Thang Long Property Company Limited
During the year the Group sold its 65% equity interest in Thang
Long Property Company Limited for a total consideration of USD43.7
million. The book value of the net assets at the sale date was
USD28.0 million and the reclassification of translation reserve on
disposal was USD6.2 million, resulting in a gain of USD9.5
million.
Summarised financial information of subsidiaries with material
non-controlling interests
The total value of non-controlling interests as at 30 June 2017
is USD74.9 million (30 June 2016: USD128.4 million), allocated as
below:
30 June 30 June
2017 2016
USD'000 USD'000
Vina Alliance Company Limited
("Vina Square") 42,394 40,613
Phu Hoi City Company Limited
("Phu Hoi") 14,871 14,563
Vina Dai Phuoc Corporation
Limited ("Dai Phuoc Lotus") - 30,529
Thang Long Property Company
Limited ("Time Square") - 14,361
Others 17,602 28,347
------------ --------------
74,867 128,413
Set out below is the summarised financial information of each
material subsidiary of the Group with non-controlling interests.
The information below is before inter-company eliminations.
Summarised balance sheets
Vina Square Phu Hoi
-------------------- ------------------
As at 30 June As at 30 June
2017 2016 2017 2016
USD'000 USD'000 USD'000 USD'000
Current
Assets 418 26 4,238 118
Liabilities (42,018) (67,250) (6,577) (468)
Total current net
(liabilities)/assets (41,600) (67,224) (2,339) (350)
--------- --------- -------- --------
Non-current
--------- --------- -------- --------
Assets - 103,368 - 26,794
Liabilities (12,015) (4,920) - 1,624
Total non-current
net assets (12,015) 98,448 - 28,418
--------- --------- -------- --------
Classified as held
for sales
--------- --------- -------- --------
Assets 129,286 - 30,221 -
--------- --------- -------- --------
Liabilities (29,462) - (1) -
--------- --------- -------- --------
Total net assets
classified as held
for sales 99,824 - 30,220 -
--------- --------- -------- --------
Net assets 46,209 31,224 27,881 28,068
--------- --------- -------- --------
Summarised income statements
Vina Square Phu Hoi
------------------------ ------------------
Year ended Year ended
30 June 30 June
2017 2016 2017 2016
USD'000 USD'000 USD'000 USD'000
Revenue - - - -
Profit before income
tax 24,578 4,332 3,707 3,216
Income tax expense (8,168) (861) (3,418) (742)
Post-tax profit from
continuing operations 16,410 3,471 289 2,474
Other comprehensive
loss (1,425) (1,591) (476) (489)
Total comprehensive
income/(loss) 14,985 1,880 (187) 1,985
-------------- -------- -------- --------
Total comprehensive
income
allocated to non-controlling
interests 9,110 1,148 308 942
-------------- -------- -------- --------
Summarised cash flow statements
Vina Square Phu Hoi
------------------- ------------------
Year ended Year ended
30 June 30 June
2017 2016 2017 2016
USD'000 USD'000 USD'000 USD'000
Net cash flows from/(used
in) operating activities 21,047 (99) 6,114 (39)
Net cash flows used
in investing activities (296) (53) (76) -
Net cash flows (used
in)/from financing
activities (21,100) 80 - 60
Cash and cash equivalents
classified as held
for sale (52) - (1,858) -
--------- -------- -------- --------
Net (decrease)/increase
in cash and cash equivalents (401) (72) 4,180 21
--------- -------- -------- --------
7 PREPAYMENTS FOR ACQUISITIONS OF INVESTMENTS
30 June 30 June
2017 2016
USD'000 USD'000
Prepayments for acquisitions
of investments 26,218 43,839
Allowance for impairment (3,568) (16,067)
------------ ------------
22,650 27,772
Prepayments are made by the Group to property vendors where the
final transfer of the property is pending the approval of the
relevant authorities and/or is subject to either the Group or the
vendor completing certain performance conditions set out in
agreements.
As at 30 June 2017, the accumulated impairment allowances
amounted to USD3.6 million (30 June 2016: USD16.1 million). During
the year, there was a reversal of USD1.2 million due to improvement
of market conditions. The relevant recoverable amounts are the fair
values of the underlying properties less the costs to sell which
have been estimated by independent professional qualified valuers
who hold recognised relevant professional qualifications and have
recent experience in the locations and categories of the properties
upon which these prepayments have been made.
The valuations performed by the independent valuation companies,
as adopted by the Group, are prepared using the direct comparison
method. All of these fair value less the costs to sell valuations
are in Level 3 of the fair value hierarchy and there were no
transfers between levels during the period (year ended 30 June
2016: none). As at 30 June 2017, the sales prices per square meter
used was USD89 (30 June 2016: ranged from USD21 to USD85). If the
sales prices of similar properties have increased/decreased, it is
expected that the recoverable amounts of these prepayments would
have moved up/down accordingly.
Management's view is that all of the Group's prepayments for
acquisitions of investments are in Level 3 of the fair value
hierarchy. Movements in the balance during the year were as
follows:
30 June 30 June
2017 2016
USD'000 USD'000
Opening balance 27,772 26,572
Additions 76 128
Reversal of impairment (Note
23) 1,176 1,560
Collection of prepayment (2,955) -
Reclassified as held for sale
(Note 13) (3,077) -
Translation differences (342) (488)
------------ ------------
Closing balance 22,650 27,772
8 DEFERRED INCOME TAX ASSETS
30 June 30 June
2017 2016
USD'000 USD'000
Opening balance 3,638 6,572
Net change during the year - (2,779)
Reclassified to non-current
assets classified as held for
sale - (155)
Written off (*) (3,638) -
---------- ----------
Closing balance - 3,638
Deferred income tax assets
to be recovered after more
than
12 months - 3,638
Deferred income tax assets to
be recovered within 12 months - -
---------- ----------
- 3,638
(*) As at 30 June 2017, Phu Hoi project was reclassified to
assets and liabilities classified as held for sales. The deferred
tax assets arising from fair value adjustment was written off as
the recoverability of this deferred tax assets is determined to be
remote.
Deferred income tax assets are the amounts of income taxes to be
recovered in future periods in respect of temporary differences
between the carrying amounts of revalued assets and their tax
bases.
Deferred income tax assets relating to the accumulated tax
losses as at 30 June 2017 of USD17.8 million (30 June 2016: USD25.6
million) of the Group's subsidiaries subject to corporate income
tax in Vietnam have not been recognised due to uncertainties as to
the timing of their recoverability. Estimated tax losses available
for offset against future taxable income are as follows:
Years of expiration
30 June 30 June
2017 2016
USD'000 USD'000
2017 - 2,627
2018 1,593 2,534
2019 1,857 3,328
2020 9,655 11,119
2021 3,875 6,017
2022 845 -
------------ ------------
17,825 25,625
9 INVENTORIES
30 June 30 June
2017 2016
USD'000 USD'000
Opening balance 54,442 98,911
Additions 7,201 9,744
Transferred to cost of sales (6,693) (30,868)
Write-down (Note 24) (972) (18,951)
Sold as part of property disposals
(Note 6(b)) (23,109) (4,774)
Transferred from investment
properties (Note 5) - 9,240
Exchanged for investment property
(Note 5) - (2,969)
Reclassified as held for sale
(Note 13) (29,584) (4,585)
Translation differences (1,065) (1,306)
-------------- --------------
220 54,442
During the year, the Group capitalised borrowing costs amounting
to USD0.9 million (2016: USD0.8 million) into the value of
inventories.
There were no inventories pledged as security for bank
borrowings. As of 30 June 2016, inventories which belonged to Vinh
Thai Urban Development Corporation Limited with a total carrying
value of USD21.2 million were pledged as security for bank
borrowings of USD5.2 million.
10 TRADE AND OTHER RECEIVABLES
30 June 30 June
2017 2016
USD'000 USD'000
Trade receivables 217 1,409
Receivables from disposals
of subsidiaries (*) 252 14,806
Interest receivables 10 27
Prepayments to suppliers 17 726
Short-term prepaid expenses 5 434
Advances to employees 8 20
Other receivables 611 159
------------ ------------
1,120 17,581
(*) Receivables from disposals of subsidiaries represent the
final settlements upon completion of the transfer of ownership of
subsidiaries to the buyers in accordance with the relevant sale and
purchase agreements.
All trade and other receivables are short-term in nature and
their carrying values, after allowances for impairment, approximate
their fair values at the date of the consolidated balance
sheet.
11 CASH AND CASH EQUIVALENTS
30 June 30 June
2017 2016
USD'000 USD'000
Cash on hand 6 44
Cash at banks 80,217 70,510
Cash equivalents 8,696 6,349
------------ ------------
88,919 76,903
Cash equivalents include short-term highly liquid investments
with original maturities of three months or less.
At 30 June 2017, cash and cash equivalents held at the Company
level amounted to USD71 million (30 June 2016: USD69 million). The
remaining balance of cash and cash equivalents is held by
subsidiaries in Vietnam. Cash held in Vietnam is subject to
restrictions imposed by co-investors and the Vietnamese government
and therefore cannot be transferred out of Vietnam unless such
restrictions are satisfied.
12 FINANCIAL INSTRUMENTS BY CATEGORY
As at 30 June 2017
Assets
Loans at fair
and receivables value Total
through
profit
or loss
USD'000 USD'000 USD'000
Assets
Current:
Trade receivables 217 - 217
Receivables from disposal
of subsidiaries 252 - 252
Interest receivables 10 - 10
Other receivables 607 - 607
Receivables from related
parties 1,786 - 1,786
Short-term investments 56 - 56
Financial assets at fair
value through profit or
loss - 269 269
Cash and cash equivalents 88,919 - 88,919
------------ -------- ------------
Total 91,847 269 92,116
Liabilities
at fair
Other financial value
liabilities through
at amortised profit
cost or loss Total
USD'000 USD'000 USD'000
Liabilities
Non-current:
Bank borrowings and debts - - -
Current:
Bank borrowings and debts - - -
Payables to related parties 832 13,004 13,836
Trade payables 15 - 15
Payables for property
acquisitions and land
compensation 2,685 - 2,685
Other accrued liabilities 31 - 31
Other payables 1,182 - 1,182
------------ ------------ ------------
Total 4,745 13,004 17,749
As at 30 June 2016
Assets
Loans at fair
and receivables value Total
through
profit
or loss
USD'000 USD'000 USD'000
Assets
Current:
Trade receivables 1,409 - 1,409
Receivables from disposal
of subsidiaries 14,806 - 14,806
Interest receivables 27 - 27
Receivables from related
parties 1,044 - 1,044
Short-term investments 9,806 - 9,806
Financial assets at fair
value through profit or
loss - 384 384
Restricted cash 3,392 - 3,392
Cash and cash equivalents 76,903 - 76,903
------------ -------- ------------
Total 107,387 384 107,771
Liabilities
at fair
Other financial value
liabilities through
at amortised profit
cost or loss Total
USD'000 USD'000 USD'000
Liabilities
Non-current:
Bank borrowings and
debts 47,416 - 47,416
Current:
Bank borrowings and
debts 25,704 - 25,704
Payables to related
parties 10,228 - 10,228
Trade payables 1,388 - 1,388
Proceeds payables to
a co-investor on disposal
of an investment 1,603 - 1,603
Payables for property
acquisitions and land
compensation 36,636 - 36,636
Interest payables 1,557 - 1,557
Other accrued liabilities 413 - 413
Distribution to shareholders 88 - 88
Other payables 2,167 - 2,167
Financial liabilities
at fair value through
profit or loss - 6,945 6,945
-------------- ---------- ------------
Total 127,200 6,945 134,145
13 ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE
30 June 2017
-------------------------------------------------------------------------------
Attributable
to
Assets Liabilities Net Non-controlling Equity
classified classified assets interests shareholders
as held as held classified of the
for sale for as held parent
sale for
sale
USD'000 USD'000 USD'000 USD'000 USD'000
Phu Hoi City
Company Limited 30,221 (1) 30,220 14,603 15,617
AA VinaCapital
Co. Limited 3,017 (59) 2,958 498 2,460
Viet Land Development
Corporation
Limited 112,150 (60,224) 51,926 3,966 47,960
Vinh Thai Urban
Development
Corporation
Limited 45,263 (34,452) 10,811 5,054 5,757
Vina Alliance
Company Limited 129,286 (29,462) 99,824 53,406 46,418
Romana Services
- Trading Investment
JS Corporation 4,287 - 4,287 - 4,287
Hoang Phat Investment
Joint Stock
Company 2,662 (317) 2,345 779 1,566
Long Truong
Site 3,077 - 3,077 - 3,077
------------ -------------- ------------ ------------ ------------
329,963 (124,515) 205,448 78,306 127,142
As at 30 June 2017, the assets and liabilities of followings
project companies had been presented as held for sale following the
signing of relevant sale and purchase agreements:
- Phu Hoi City Company Limited
- AA VinaCapital Co. Limited
- Viet Land Development Corporation Limited
- Vinh Thai Urban Development Corporation Limited
- Vina Alliance Company Limited
- Romana Services - Trading Investment JS Corporation
- Hoang Phat Investment Joint Stock Company
- Long Truong Site
For the comparative year:
30 June 2016
----------------------------------------------------------------------------
Attributable
to
Assets Liabilities Net Non-controlling Equity
classified classified assets interests shareholders
as held as held classified of the
for sale for as held parent
sale for
sale
USD'000 USD'000 USD'000 USD'000 USD'000
VinaCapital
Danang Resort
Limited 14,844 (4,861) 9,983 3,045 6,938
Vinh Thai Parcel
3 3,784 (404) 3,380 1,580 1,800
------------ ---------- ------------ ---------- ------------
18,628 (5,265) 13,363 4,625 8,738
Management's view is that all of the Group's assets and
liabilities classified as held for sale are in Level 3 of the fair
value hierarchy. The major classes of assets and liabilities and
their movements during the year are as follows:
1 July Transferred Disposals 30 June
2016 in 2017
USD'000 USD'000 USD'000 USD'000
Assets classified
as held for sale
Investment properties
(Note 5) 3,784 287,058 (3,784) 287,058
Property, plant and
equipment (net of
accumulated depreciation) 318 11 (318) 11
Intangible assets
(net of accumulated
amortisation) 9 - (9) -
Prepayment for acquisitions - 3,077 - 3,077
Deferred income tax
assets 155 - (155) -
Other current assets 41 3 (41) 3
Other non-current
assets 468 14 (468) 14
Inventories (Note
9) 4,585 29,584 (4,585) 29,584
Trade and other receivables 860 1,645 (860) 1,645
Short term investments 219 - (219) -
Cash and cash equivalents 8,189 4,284 (8,189) 4,284
Investment in associates
(Note 6(a)) - 4,287 - 4,287
------------ ------------ -------------- ------------
18,628 329,963 (18,628) 329,963
------------ ------------ -------------- ------------
Liabilities classified
as held for sale
Long-term borrowings
and debts (Note 16) - 78,248 - 78,248
Short-term borrowings
and debts (Note 16) - 18,829 - 18,829
Long-term trade and
other payable 2,602 33 (2,602) 33
Accruals and other
current liabilities 319 - (319) -
Trade and other payables 2,344 27,405 (2,344) 27,405
------------ ------------ -------------- ------------
5,265 124,515 (5,265) 124,515
------------ ------------ -------------- ------------
Net assets classified
as held for sale 13,363 205,448 (13,363) 205,448
As at 30 June 2017, bank borrowing of USD64.6 million (30 June
2016: nil) are secured by investment properties held for sale with
a total fair value of USD253.4 million and inventories held for
sale with a total carrying value of USD29.6 million.
For the comparative year:
1 July Transferred Fair 30 June
2015 in value Disposals 2016
adjustment
USD'000 USD'000 USD'000 USD'000 USD'000
Assets classified
as held for sale
Available for
sales financial
assets 851 - - (851) -
Investment properties
(Note 5) 12,080 5,587 (1,803) (12,080) 3,784
Property, plant
and equipment
(net of accumulated
depreciation) - 318 - - 318
Intangible assets
(net of accumulated
amortisation) - 9 - - 9
Deferred income
tax assets - 155 - - 155
Other current
assets - 41 - - 41
Other non-current
assets - 468 - - 468
Inventories (Note
9) - 4,585 - - 4,585
Trade and other
receivables 172 860 - (172) 860
Short term investments - 219 - - 219
Cash and cash
equivalents 130 8,189 - (130) 8,189
------------ ------------ ------------ -------------- ------------
13,233 20,431 (1,803) (13,233) 18,628
------------ ------------ ------------ -------------- ------------
Liabilities classified
as held for sale
Long-term trade
and other payable - 2,602 - - 2,602
Accruals and other
current liabilities 17 319 - (17) 319
Trade and other
payables 501 2,344 - (501) 2,344
------------ ------------ ------------ -------------- ------------
518 5,265 - (518) 5,265
------------ ------------ ------------ -------------- ------------
Net assets classified
as held for sale 12,715 15,166 (1,803) (12,715) 13,363
14 SHARE CAPITAL
30 June 2017 30 June 2016
----------------------------------- ------------------------------------
Number Number
of shares USD'000 of shares USD'000
Authorised:
Ordinary shares 500,000,000 5,000 500,000,000 5,000
of USD0.01 each ------------------ ---------- ------------------ ----------
Issued and fully
paid:
Opening balance 393,808,479 3,938 430,132,220 4,301
Shares purchased
and cancelled (135,820,859) (1,358) (36,323,741) (363)
------------------ ---------- ------------------ ----------
Closing balance 257,987,620 2,580 393,808,479 3,938
The Company considers investors holding more than a 10%
beneficial interest in the ordinary shares of the Company as major
shareholders. As at 30 June 2017, there were two investors that
held more than 10% of the ordinary shares of the Company (30 June
2016: two).
During the year, the Company purchased and cancelled 135,820,859
of its ordinary shares (30 June 2016: 36,323,741 shares) for a
total cash consideration of USD98.2 million (30 June 2016: USD22.3
million) at an average cost of USD0.723 per share (30 June 2016:
USD0.614 per share). The difference between the cost of the shares
repurchased and their net asset value has been recorded in an
equity reserve.
15 ADDITIONAL PAID-IN CAPITAL
Additional paid-in capital represents the excess of
consideration received over the par value of shares issued.
30 June 30 June
2017 2016
USD'000 USD'000
Opening balance 452,680 521,088
Shares repurchased and
cancelled (119,877) (33,348)
Distribution to shareholders - (35,060)
-------------- --------------
Closing balance 332,803 452,680
16 BORROWINGS AND DEBTS
30 June 30 June
2017 2016
USD'000 USD'000
Long-term borrowings:
Bank borrowings 81,731 48,276
Loans from non-controlling
interests 239 804
Less:
Current portion of long-term
borrowings (3,722) (1,664)
Reclassified to held for
sales (Note 13) (78,248) -
------------ ------------
- 47,416
------------ ------------
Short-term borrowings:
Bank borrowings - -
Loans from non-controlling
interests 779 -
Loans from third party 14,328 -
Zero dividend preference
shares - 24,040
Current portion of long-term
borrowings 3,722 1,664
Reclassified to held for
sales (Note 13) (18,829) -
------------ ------------
- 25,704
------------ ------------
Total borrowings and debts - 73,120
During the year the Group capitalised borrowing costs amounting
to USD5.8 million
(2016: USD5.7 million) in qualifying assets (Notes 5 and 9).
The maturities of the Group's borrowings at the end of the
reporting year are as follows:
30 June 30 June
2017 2016
USD'000 USD'000
6 months or less - 539
6-12 months - 1,125
1-5 years - 47,416
------------ --------------
- 49,080
The Group's borrowings are denominated in Vietnamese Dong.
During the year, the Group's subsidiaries borrowed USD47.9
million (30 June 2016: USD19.1 million) from banks and USD10.9
million from non-controlling interests (30 June 2016: nil) to
finance working capital and property development activities.
The Group fully paid of its zero dividend preference shares on
19 December 2016.
17 DEFERRED INCOME TAX LIABILITIES
30 June 30 June
2017 2016
USD'000 USD'000
Opening balance 16,358 28,184
Net change during the year
from fair value adjustments
of investment properties and
property, plant and equipment 2,404 (11,826)
------------ ------------
Closing balance 18,762 16,358
Deferred income tax liabilities
to be recovered after more
than 12 months 3,976 7,211
Deferred income tax liabilities
to be recovered within 12
months 14,786 9,147
------------ ------------
18,762 16,358
Deferred income tax liabilities relate to income taxes for
settlement in future periods in respect of temporary differences
between the carrying amounts of revalued assets and their tax
bases.
18 TRADE AND OTHER PAYABLES
30 June 30 June
2017 2016
USD'000 USD'000
Deposits from property buyers 52,174 4,952
Payables for property acquisitions
and land compensation 2,685 36,636
Deposits from customers of
residential projects 300 28,370
Proceeds payables to a co-investor
on disposal of an investment - 1,603
Trade payables 15 1,388
Interest payable - 1,603
Other accrued liabilities 31 413
Distribution to shareholders 88
Other payables 1,182 2,121
------------ ------------
56,387 77,174
All trade and other payables are short-term in nature. Their
carrying values approximate their fair values as at the date of the
consolidated balance sheet.
19 REVENUE
Year ended
------------------
30 June 30 June
2017 2016
USD'000 USD'000
Sales of residential projects 6,562 43,157
20 COST OF SALES
Year ended
------------------
30 June 30 June
2017 2016
USD'000 USD'000
Residential projects 7,371 36,363
The analysis of cost of sales based on nature of expenses is as
follows:
Year ended
----------------------------
30 June 30 June
2017 2016
USD'000 USD'000
Raw materials and consumables
used - 583
Construction costs 4,468 24,906
Land costs 1,804 5,283
Depreciation and amortisation 33 480
Staff costs 60 1,794
Outside service costs 1,005 1,351
Other expenses 1 1,966
------------ ------------
7,371 36,363
21 NET GAIN ON FAIR VALUE ADJUSTMENTS OF INVESTMENT PROPERTIES
AND REVALUATIONS OF PROPERTY, PLANT AND EQUIPMENT
Year ended
----------------------------
30 June 30 June
2017 2016
USD'000 USD'000
Investment properties
By real estate sector:
* Commercial (1,301) (171)
* Residential, office buildings and undetermined use 720 15,206
* Mixed use 30,703 9,152
------------ ------------
30,122 24,187
Investment properties classified
as held for sale
* Residential, office buildings and undetermined use - (1,803)
Net gain on fair value adjustments
of investment ------------ ------------
properties and revaluations
of property, plant and equipment 30,122 22,384
22 SELLING AND ADMINISTRATION EXPENSES
Year ended
----------------------------
30 June 30 June
2017 2016
USD'000 USD'000
Disposal and alignment fee
under the Third Amended and 13,004 -
Restated Investment Management
Agreement (Note 32)
Management fees under the
Second Amended and Restated
Investment Management Agreement
(Note 32) 1,822 5,305
Disposal fees under the Second
Amended and Restated Investment
Management Agreement (Note
32) - 139
Professional fees (*) 2,795 4,767
Depreciation and amortisation
(*) 12 638
General and administration
expenses (*) 1,858 3,338
Staff costs (*) 450 1,514
Outside service costs (*) 121 677
------------ ------------
20,062 16,378
(*) These expenses primarily relate to the operating activities
of the Group's subsidiaries. Note 32 contains further information
in respect to the ongoing charges incurred by the Company.
23 LOSS/(GAIN) ON DISPOSAL OF INVESTMENTS, NET
Year ended
----------------------------
30 June 30 June
2017 2016
USD'000 USD'000
Loss on sales of subsidiaries
(Note 6(b)) 13,653 (6,477)
Gain on sales of investment (715) -
properties
------------ ------------
12,938 (6,477)
24 (REVERSAL OF IMPAIRMENT)/IMPAIRMENT OF ASSETS
Year ended
--------------------------
30 June 30 June
2017 2016
USD'000 USD'000
Reversal of impairment of
prepayments for acquisitions
of investments (Note 7) (1,176) (1,560)
Write-down on inventories
(Note 9) 972 18,951
Impairment of property, plant
and equipment - 819
------------ ----------
(204) 18,210
25 FINANCE EXPENSES
Year ended
------------------------
30 June 30 June
2017 2016
USD'000 USD'000
Realised foreign exchange
losses 184 1,515
Unrealised foreign exchange
losses 922 763
Interest expense 4,065 3,973
Others 1,502 -
---------- ----------
6,673 6,251
26 OTHER EXPENSES
Year ended
------------------------
30 June 30 June
2017 2016
USD'000 USD'000
Write-off of assets 1,802 -
Other expenses 27 373
---------- ----------
1,829 373
27 INCOME TAX
VinaLand Limited is domiciled in the Cayman Islands. Under the
current laws of the Cayman Islands, there are no income,
corporation, capital gains or other taxes payable by the
Company.
The majority of the Group's subsidiaries are domiciled in the
British Virgin Islands ("BVI") and so have a tax exempt status. A
number of subsidiaries are established in Vietnam and Singapore and
are subject to corporate income tax in those countries.
As is the case with many other developing countries, Vietnam is
in the process of implementing comprehensive tax regulations. As a
result, the administration of tax regulations by government
agencies may be subject to considerable discretion, and in many
areas, the legal framework is uncertain and subject to
interpretation. The Group has provided for all taxes expected to be
payable by it under the current tax regulations in Vietnam. There
is, however, an ongoing risk that government agencies might seek to
impose additional taxes on the Group based on different
interpretations of the regulations or through the restrospective
application of new regulations.
On 19 June 2014, the Vietnamese National Assembly approved a new
corporate income tax law. Under the new law, the standard corporate
income tax was reduced from 25% to 22% effective 1 January 2015. A
further reduction in tax rate to 20% became effective on 1 January
2016. No provision has been made for corporate income tax payable
by the Vietnamese subsidiaries for the year because these
subsidiaries do not have taxable income in Vietnam (30 June 2016:
USD0.2 million).
The relationship between the expected tax expense based on the
applicable tax rate of 0% and the tax expense actually recognised
in the consolidated income statement can be reconciled as
follows:
Year ended
------------------------
30 June 30 June
2017 2016
USD'000 USD'000
Current tax
Group's loss before tax (1,879) (4,482)
Group's loss multiplied by
applicable tax rate (0%) - -
Effect of higher tax rate
in Vietnam - (163)
Capital gains tax (4,684) (9,040)
---------- ----------
Total current tax expense (4,684) (9,203)
---------- ----------
Deferred income tax
Decrease in deferred tax assets
(*) (3,638) (2,779)
(Increase)/decrease in deferred
tax liabilities (*) (2,404) 11,826
---------- ----------
Deferred income tax (6,042) 9,047
---------- ----------
Tax expense (10,726) (156)
(*) Those amounts represent the deferred income tax
income/(expense) which arises from the gains and losses on fair
value adjustments of investment properties and property, plant and
equipment and the reversal of deferred income tax assets and
liabilities as a result of changes to assumptions during the
year.
28 LOSS AND NET ASSET VALUE PER SHARE
(a) Basic
Year ended
------------------------------------
30 June 2017 30 June 2016
USD'000 USD'000
Loss attributable to owners of the Company from continuing and total operations
(USD'000) (23,659) (8,315)
Weighted average number of ordinary shares in issue 351,765,215 416,601,627
Basic loss per share from continuing
and total operations (USD/share) (0.07) (0.02)
---------------- ----------------
(b) Diluted
Diluted loss per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion
of all dilutive potential ordinary shares. The Group has no
category of potential dilutive ordinary shares. Therefore, diluted
loss per share is equal to basic loss per share.
(c) Net asset value per share
As at
----------------------------------------
30 June 2017 30 June 2016
Net asset value (USD'000) 241,484 336,836
Number of outstanding ordinary shares in issue 257,987,620 393,808,479
Net asset value per share (USD/share) 0.94 0.86
------------------ ------------------
29 TOTAL EXPENSE RATIO
1 For the year ended
----------------------------
30 June 2017 30 June 2016
Total expense ratio 1.73% 2.31%
------------ ------------
The total expense ratio ("TER") has been calculated in
accordance with the Association of Investment Companies ("AIC")
recommended methodology dated May 2012, which excludes disposal and
alignment fees from the calculation. It is the ratio of annualised
ongoing charges over the average undiluted net asset value during
the year.
The total expense ratio includes management fees, directors'
fees and expenses, recurring audit and tax services, custody and
fund administration services, fund accounting services, secretarial
services, registrars' fees, public relations fees, insurance
premiums, regulatory fees and similar charges.
30 COMMITMENTS
As at the balance sheet date, the Group was committed under
lease agreements to pay the following future amounts:
30 June 2017 30 June 2016
USD'000 USD'000
Within one year 46 52
From two to five years 11 306
Over five years - 2,284
---------- ----------
57 2,642
As at 30 June 2017, commitment for future construction work of
the Group's properties held by subsidiaries at 30 June 2017 is
USD6.7 million (30 June 2016: USD12.7 million).
The Company's subsidiaries and associates have a broad range of
commitments relating to investment projects under agreements it has
entered into and investment licences it has received.
31 DIRECTORS' FEES AND MANAGEMENT'S REMUNERATION
The aggregate annual directors' fees amounted to USD284,986
(year ended 30 June 2016: USD300,640) of which there were no
outstanding payables at the reporting date (30 June 2016: nil).
The details of annual remuneration by director are summarised
below:
Year ended
----------------------------
30 June 2017 30 June 2016
USD'000 USD'000
Michel Casselman 72.8 70.5
Charles Isaac 57.0 54.0
Tran Trong Kien 57.5 41.9
Ian Lydall (*) 48.6 -
Nicholas Allen (**) 19.1 60.5
Nicholas Brooke (***) 30.0 60.0
Daniel McDonald - 13.8
---------- ----------
285.0 300.7
(*) Ian Lydall was appointed on 25 October 2016.
(**) Nicholas Allen resigned on 25 October 2016.
(***) Nicholas Brooke resigned on 31 December 2016.
32 RELATED PARTY TRANSACTIONS AND BALANCES
Management fees
The Group is managed by VinaCapital Investment Management
Limited (the "Investment Manager"), an investment management
company incorporated in the Cayman Islands.
Under a management agreement effective 21 November 2012 (the
"Amended Management Agreement") the management fee from 21 November
2012 was fixed at USD8.25 million for the subsequent 12 months,
USD7.5 million for the next 12 months and USD6.5 million for the
next 12 months. Under the Second Amended and Restated Investment
Management Agreement effective from 21 November 2015 (the "Second
Amended Management Agreement") the management fee from 21 November
2015 is revised to USD390,000 per month.
Total management fees for the year amounted to USD1,822,132 (30
June 2016: USD5,305,143), which were fully settled to the
Investment Manager at the date of the consolidated balance sheet.
Under the Third Amended and Restated Investment Management
Agreement effective from 14 December 2016 (the "Third Amended
Management Agreement") no further management fees shall be charged
by the Investment Manager to the Company.
Realisation fees
In accordance with the Amended Management Agreement and Seconded
Amended Management Agreement, the Investment Manager was entitled
to a realisation fee of up to USD28,218,000 based upon the level of
distributions made to shareholders from contracted divestments of
assets which were signed prior to 21 November 2015 and the proceeds
of which were received by 21 November 2016. These realisation fees
had been fully settled by 30 June 2017.
Disposal fee and alignment fee
Under the Third Amended Management Agreement the Investment
Manager will receive a disposal fee and an alignment fee. The
disposal fee is calculated at the rate of 3.00% of distributable
funds realised in the year starting 22 November 2016, 2.75% in the
second year and 2.25% in the third year. The alignment fee is
calculated on distributions to shareholders over USD265.0 million
during the 3-year period starting 22 November 2016. The Investment
Manager will receive 10% of distributions over USD265.0 million and
up to USD279.0 million, 15% of distributions over USD279.0 million
and up to USD313.0 million, and 20% of distributions over USD313.0
million. A non-refundable monthly advance of USD200,000 in the year
starting 22 November 2016, USD150,000 in the second year, and
USD100,000 in the third year, will be paid to the Investment
Manager. These advances will be offset against disposal fees and
alignment fees. During the year advances of USD1.5 million (30 June
2016: nil) were paid to the Investment Manager. The Company accrued
USD5.8 million of disposal fees and USD7.2 million of alignment
fees during the year based on the current value of the portfolio
and expected timing of asset disposals.
30 June 2017 30 June 2016
USD'000 USD'000
Disposal fees 5,820 -
Alignment fees 7,184 -
---------- ----------
Total fees expensed/accrued during the year (note 22) 13,004 -
Advance payments to be offset against fees payable (1,466) -
---------- ----------
Net accrual of disposal and alignment fees 11,538 -
Details of payables and accruals to related parties at the date
of the consolidated balance sheet are as below:
30 June 30 June
2017 2016
Relationship Balances USD'000 USD'000
VinaCapital
Investment
Management Investment Realisation
Ltd. Manager fees - 7,428
Disposal
fees - 139
Development
fees and
advances
for real
estate projects - 391
Accrued disposal
fee and alignment
fee 13,004 -
VinaCapital
Vietnam
Opportunity Under Reimbursed
Fund Limited common on behalf
("VOF") management of the Company 17 31
Disposals
of real estate
projects 131 2,239
Loan payable 683 -
------------ ----------
13,835 10,228
As at 30 June 2017 and 30 June 2016, receivables from related
parties mainly relate to amounts due from VOF pertaining to
advances for jointly invested real estate projects and advances to
related parties. Advances to related parties as at 30 June 2017
were the non-refundable advances described under the section
"Disposal fee and alignment fee" above.
The interests of the related parties in the shares, underlying
shares and debentures of the Company are as follows:
As at
----------------------------------------
30 June 2017 30 June 2016
Number of shares
Vietnam Master Holding 2 Limited (*) 5,309,327 36,216,326
Asia Investment and Finance Limited (**) 20,360,332 2,372,500
VinaCapital Group Limited 608,553 993,333
VinaCapital Investment Management Limited 48,552 79,250
Vietnam Investment Partners Ltd 1,877,573 -
------------------ ------------------
(*) Vietnam Master Holding 2 Limited is a wholly-owned subsidiary of VOF.
(**) In accordance with the Second Amended Management Agreement,
the Investment Manager was required to use 50% of the realisation
fee arising from the contracted divestment proceeds collected to
make market purchases of the Company's ordinary shares In
accordance with this requirement by 30 June 2017, a subsidiary of
the Investment Manager, Asia Investment and Finance Limited, had
purchased a total of 20,045,043 ordinary shares of the Company (30
June 2016: 2,372,500). The shares acquired are subject to lockups
of between one and two years from the date of acquisition.
2,057,211 ordinary shares were sold during the first tender dated
17 May 2017 and settled on 30 June 2017.
33 FINANCIAL RISK MANAGEMENT
Financial risk factors
The Group invests in a diversified property portfolio in Vietnam
with the objective to provide shareholders with a potential capital
growth.
The Group is exposed to a variety of financial risks: market
risk (including price risk, currency risk and interest rate risk);
credit risk; and liquidity risk. The Group's overall risk
management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the
Group's financial performance. The Group's risk management is
coordinated by its Investment Manager who manages the distribution
of the assets to achieve the investment objectives. The most
significant financial risks to which the Group is exposed are
described below.
Foreign exchange risk
The Group's exposure to risk resulting from changes in foreign
currency exchange rates is moderate as although transactions in
Vietnam are settled in the VND, the value of the VND has
historically been closely linked to that of the USD, the
presentation currency. The value of real estate in Vietnam is based
on pricing that is a combination of VND, USD and gold. For this
reason, a decline in the value of the VND against the USD does not
necessarily mean proportionately lower prices will be obtained in
USD.
The Group has not entered into any other hedging mechanism as
the estimated benefits of available instruments outweigh their
cost. On an ongoing basis the Investment Manager analyses the
current economic environment and expected future conditions and
decides the optimal currency mix considering the risk of currency
fluctuation, interest rate return differentials and transaction
costs. The Investment Manager updates the Board regularly and
reports on any significant changes for further actions to be
taken.
The Group's financial assets' and liabilities' exposures to risk
of fluctuations in exchange rates at the reporting dates are as
follows:
Short-term exposure Long-term exposure
-------------------------- --------------------------
30 June 2017 VND USD VND USD
(USD as (VND as (USD as (VND as
functional functional functional functional
currency) currency) currency) currency)
USD'000 USD'000 USD'000 USD'000
Financial
assets 1,068 1,266 - -
Financial
liabilities (881) - - -
---------- ---------- ------ ------
Net exposure 187 1,266 - -
Short-term exposure Long-term exposure
-------------------------- --------------------------
30 June 2016 VND USD VND USD
(USD as (VND as (USD as (VND as
functional functional functional functional
currency) currency) currency) currency)
USD'000 USD'000 USD'000 USD'000
Financial
assets 10,848 1,583 - -
Financial
liabilities - (9,021) - -
---------- ---------- ------ ------
Net exposure 10,848 (7,438) - -
The functional currency of the Company is the USD. The
functional currencies of the Group's subsidiaries in the BVI and
Singapore are the USD while those of its Vietnamese subsidiaries
are the VND. The Group's exposure to currency risk arises from VND
denominated balances at the BVI and Singapore levels and USD
denominated balances at the Vietnamese level.
At 30 June 2017, if the VND weakened/strengthened by 5% (30 June
2016: 5%), post-tax loss for the year would not have been
materially impacted (30 June 2016: USD0.4 million
higher/lower).
Price risk sensitivity
Price risk is the risk that the value of the instrument will
fluctuate as a result of changes in market prices, whether caused
by factors specific to an individual investment, its issuer or all
factors affecting all instruments traded in the market. As the
majority of the Group's financial instruments are carried at fair
value with fair value changes recognised in the consolidated income
statement, all changes in market conditions will directly affect
net investment income.
The Group invests in real estate projects and is exposed to
market price risk. If the prices of real estate had
increased/decreased by 10%, post-tax loss for the year would have
been USD5.2 million lower/higher (30 June 2016: USD30.8
million).
Cash flow and fair value interest rate sensitivity
The Group's exposure to interest rate risk is not material as
the balance of loan and borrowings of the Group was immaterial at
year end.
Credit risk analysis
Credit risk is the risk that a counterparty will be unable to
pay amounts in full when due. Impairment provisions are provided
for losses that have been incurred by the Group at the reporting
date.
The Investment Manager maintains a list of approved banks for
holding deposits and set aggregate limits for deposits or exposures
to individual banks. While this list is formally reviewed at least
monthly, it is updated to reflect developments in the market on a
timely basis as information becomes available.
The Group's exposure to credit risk is limited to the carrying
amounts of financial assets recognised at the reporting date,
analysis by credit quality is as follows:
30 June 30 June
2017 2016
USD'000 USD'000
Neither past due nor impaired 91,595 107,202
Past due but not impaired, - -
less than 6 months
Past due but not impaired,
more than 6 months 252 185
Past due and impaired - -
------------ --------------
91,847 107,387
Less: Allowance for impairment - -
------------ --------------
Total 91,847 107,387
30 June 30 June
2017 2016
USD'000 USD'000
Neither past due nor impaired:
Long-term investments - -
Short-term investments 56 9,806
Restricted cash - 3,392
Cash and cash equivalents 88,919 76,903
Receivable from a related
party 1,786 1,044
Trade receivables 217 1,409
Receivables from disposals
of subsidiaries - 14,621
Interest receivables 10 27
Other receivables 607 -
------------ ------------
91,595 107,202
Past due but not impaired:
Receivables from disposals
of subsidiaries 252 185
------------ ------------
252 185
Less: Allowance for impairment - -
Total trade and other receivables, ------------ ------------
net of provision for impairment 91,847 107,387
As at 30 June 2017, the Group did not set aside a provision for
receivables from disposal of subsidiaries (30 June 2016: nil)
because it expects to receive them in the next 12 months. The
credit quality of financial assets that are neither past due nor
impaired is assessed by management for each period end. This
assessment takes into account the financial health of the buyers,
or history of payments and defaults of existing buyers of the
Group. Debtors and amounts due from a related party that are
neither past due nor impaired are substantially companies with good
collection track records with the Group. Bank deposits are mainly
transacted with banks of high credit ratings assigned by
international credit-rating agencies.
Cash and cash equivalents and deposits are held at international
and local banks and financial institutions which do not have
histories of default.
The Group has no other significant concentrations of credit
risk.
In accordance with the Group's policy, the Investment Manager
continuously monitors the Group's credit position on a monthly
basis, identified either individually or by group, and incorporates
this information into its credit controls.
The Investment Manager reconsiders the valuations of financial
assets that are impaired or overdue at each reporting date based on
the payment status of the counterparties, recoverability of
receivables, and prevailing market conditions.
Liquidity risk analysis
Liquidity risk is the risk that the Group will experience
difficulty in either realising assets or otherwise raising
sufficient funds to satisfy commitments associated with investments
and financial instruments. There is an inherent liquidity risk
associated with the Company's primary business, being property
investment. As a consequence, the value of the majority of the
Company's investments cannot be realised as quickly as other
investments such as cash or listed equities. Furthermore, the
development and realisation of the Company's property investments
will normally require access to debt financing at a reasonable cost
or shareholder loans from the Company's surplus funds and its
co-investors.
The Company seeks to minimise liquidity risk through:
-- Preparing and monitoring cash flow forecasts for each investment project and the Company;
-- Arranging financing to fund real estate developments as required; and
-- Providing ample lead times for the disposal of assets and realisation of cash.
At year end, the contractual undiscounted cash flows of the
Group's financial liabilities have contractual maturities
summarised as follows:
Current Non-current
Within 6 to From Over
30 June 2017 6 months 12 months 1 to 5 years
5 years
USD'000 USD'000 USD'000 USD'000
Group
Financial liabilities:
Trade and other payables 3,913 - - -
Payables to related
parties 3,958 576 9,302 -
Loans from non-controlling - - - -
interests
------------ ---------- ---------- ------------
7,871 576 9,302 -
Current Non-current
Within 6 to From Over
30 June 2016 6 months 12 months 1 to 5 years
5 years
USD'000 USD'000 USD'000 USD'000
Group
Financial liabilities:
Trade and other payables 7,216 36,636 - -
Short-term borrowings 2,602 2,572 - -
Payables to related
parties 10,197 31 - -
Long-term borrowings - - 56,758 -
and debts
Zero dividend preference 25,067 - - -
shares
Loans from non-controlling
interests - 727 217 -
------------ ------------ ------------ ------------
45,082 39,966 56,975 -
Derivative financial
liabilities:
Gross settled currency
swap
- Receipts (25,034) - - -
- Payments 31,979 - - -
------------ ------------ ------------ ------------
6,945 - - -
The above contractual maturities reflect the gross cash flows,
which may differ from the carrying value of the liabilities at year
end.
Capital management
The Group's capital management objectives are:
-- To ensure the Group's ability to continue as a going concern;
-- To provide investors with an attractive level of investment income; and
-- To preserve a potential capital growth level.
The Group considers the capital to be managed as equal to the
net assets attributable to the equity shareholders of the parent.
The Group is not subject to any externally imposed capital
requirements. The Group has engaged the Investment Manager to
allocate the net assets in such a way so as to generate a
reasonable investment returns for its shareholders and to ensure
that there is sufficient funding available for the Company to
continue as a going concern.
Capital as at year end is summarised as follows:
30 June 30 June
2017 2016
USD'000 USD'000
Net assets attributable to
the equity shareholders of
the parent 241,484 336,836
Fair value estimation
The table below analyses financial instruments carried at fair
value, by valuation method. The difference levels have been defined
as follows:
-- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
-- Level 2: Inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from
prices); and
-- Level 3: Inputs for the asset or liability that are not based on observable market data
(that is, unobservable inputs).
The level within which the financial asset is classified is
determined based on the lowest level of significant input to the
fair value measurement.
The financial assets and financial liabilities measured at fair
value in the consolidated balance sheet are grouped into the fair
value hierarchy as follows:
Level Level Level Total
1 2 3
As at 30 June 2017 USD'000 USD'000 USD'000 USD'000
Financial assets
held at fair value
through profit
or loss
* Ordinary shares - unlisted - 269 - 269
Financial liabilities
* Disposal fee and alignment fee - - (13,004) (13,004)
Level Level Level Total
1 2 3
As at 30 June 2016 USD'000 USD'000 USD'000 USD'000
Financial assets
held at fair value
through profit
or loss
* Ordinary shares - unlisted - 269 - 269
* Derivatives - 115 - 115
Financial liabilities
* Derivatives - (6,945) - (6,945)
There were no significant transfers between levels during the
year.
34 SUBSEQUENT EVENT AFTER THE BALANCE SHEET DATE
On 7 September 2017, the Company announced that it would conduct
a distribution of up to USD60 million (the "Tender Value Cap") to
shareholders through a tender offer to purchase the Company's
ordinary shares of USD0.01 each in the Company (the "Tender
Offer"). The Tender Offer was offered to all shareholders at a
fixed price of USD0.83 per share. Shareholders could either elect
to accept or decline participation in this Tender Offer. The Tender
Offer was undersubscribed. As a result, the shareholders who
participated in the Tender Offer were paid the full offer price for
each of the shares tendered, resulting in 71.59% of the Tender
Value Cap or USD42.95 million paid out in cash on 13 October 2017.
The accretive impact of the tender on the remaining shares in issue
after the tender is approximately USD2.66 cents per share. Loss per
share amounts are not adjusted for transactions occurring after the
reporting period because they do not affect the amount of capital
used to produce profit or loss for the period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UOUARBVARUUA
(END) Dow Jones Newswires
October 24, 2017 02:00 ET (06:00 GMT)
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