Source - RNS
RNS Number : 1372M
Vinaland ZDP Ltd
10 October 2016
 

VinaLand ZDP Ltd                                      

VinaLand Limited audited financial results for the twelve months ended 30 June 2016

VinaLand ZDP Ltd, admitted to the main market of the London Stock Exchange, announces that today its parent company VinaLand Limited ("VNL") made the following announcement:

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 2016 ("the Period").

Financial highlights:

·      Net asset value per share at 30 June 2016 of USD0.86 (30 June 2015: USD0.91).

·      36.3 million shares outstanding were repurchased and cancelled during the period ended 30 June 2016.

Operational highlights:

·      Since EGM 2012, the Company completed seventeen full divestments and two partial for combined net proceeds of USD231 million.  

·      In aggregate VNL has spent USD60.2 million overall repurchasing 106.2 million ordinary shares which have been cancelled, representing 21.23 percent of the total shares in issue prior to the commencement of the share buyback program.

·      In June 2016, VNL made a distribution of capital from Share Premium Account of the Company of approximately USD35 million or 8.76 cents per share to its shareholders.  

Notes to Editors:

VinaCapital is a leading investment management and real estate development firm headquartered in Vietnam, with a diversified portfolio of USD1.3 billion in assets under management.

Founded in 2003, VinaCapital boasts an unrivalled local network, providing the company with access to unique investment opportunities. VinaCapital's mission is to continue to offer institutional solutions for a variety of clients that can best extract the dynamic development taking place in Vietnam and the ASEAN region as a whole. This mission is instilled in each of VinaCapital's industry-leading asset class teams covering capital markets, private equity, fixed income, venture capital, real estate and infrastructure.

VinaCapital has managed three closed-end funds trading on the AIM Market of the London Stock Exchange, VinaCapital Vietnam Opportunity Fund Limited, VinaLand Limited and Vietnam Infrastructure Limited. In addition, VinaCapital co-manages the DFJ VinaCapital L.P. technology venture capital fund with Draper Fisher Jurvetson and also holds a stake in VinaWealth, a locally incorporated fund management company. Further, VinaCapital manages an open ended UCITS fund called the Forum One - VCG Partners Vietnam Fund, Vietnam's largest open-ended UCITS-compliant fund.

VinaCapital employs a bottom-up, fundamental analysis approach to valuation within a disciplined risk management framework, and possesses one of Vietnam's leading in-house research teams to uncover value opportunities.

With offices in Ho Chi Minh City, Hanoi, Danang and Singapore, VinaCapital offers insight, expertise and an on the ground presence unrivalled in the ASEAN region. For more information about VinaCapital, please visit www.vinacapital.com or reach out directly to [email protected].The financial statements will be posted to shareholders and are available on the Company's website at www.vnl-fun.com .

 Enquiries:

Jonathan Viet Luu

VinaCapital Investment Management Limited

Investor Relations

+84 8 3821 9930

[email protected]

 

Joel Weiden

VinaCapital Investment Management Limited

Communications

+84 8 3821 9930

[email protected]

 

Philip Secrett

Grant Thornton UK LLP, Nominated Adviser

+44 (0)20 7383 5100

[email protected]

 

David Benda / Hugh Jonathan

Numis Securities Limited, Broker

+44 (0)20 7260 1000

[email protected]

 

Daniel Jason

Peregrine Communications, Public Relations (London)

+44 (0) 20 3040 0872

[email protected]



 

Dear Shareholders,

Following several challenging years for business in Vietnam its GDP growth surpassed 6.0% in 2014, further increasing to 6.7% in 2015 and has remained comfortably above 6% during 2016.  Meanwhile inflation remained below 2.0% during the reporting period, very low for such a high growth environment.  These continued stable macroeconomic conditions in Vietnam coupled with a real estate market that remained robust during H2 2015 and into 2016 has supported the positive evolution of VinaLand ("VNL").  The country's banking sector continued to provide liquidity into the real estate market which has fueled both new developments and enabled more buyers to purchase real estate properties.  The confidence in the real estate market allowed VNL to continue its realization program which commenced nearly four years ago, following approval by shareholders at the EGM held in November 2012 ("2012 EGM") and extended by one year in November 2015.

In accordance with the strategy VNL will not make any new investments and will distribute surplus cash to shareholders.  Since the 2012 EGM and up to 30 June 2016, VNL has completed seventeen full divestments and two partial divestments, with gross total sales value of USD312 million and net proceeds after settling non-controlling interests and project level debt of approximately USD231 million, which, in aggregate, was an average of 6.2% above NAV at the time of the closures. With these divestments completed and further disposals underway, the collection of exit proceeds will continue to support further distributions to shareholders.  Over this period the Company also reduced its own debt from USD88 million (as at 31 December 2012) to USD73 million (as at 30 June 2016) and returned USD86 million to shareholders.  These distributions were executed through share buybacks (59%) and a capital distribution (41%).

A key factor that has helped to create a stronger real estate market in Vietnam has been the significant improvement in liquidity across the property sector.  This has provided developers with the opportunity to borrow from banks to acquire new development sites and commence new development projects, while home buyers have also been able to access mortgage lending during 2015 and 2016.  Furthermore, Foreign Direct Investment ("FDI") has increased as more foreign real estate companies have entered the Vietnam market over the past year to eighteen months and this has resulted in an increase in demand for real estate land and properties.  Should these conditions continue across the remainder of 2016 and 2017 then this should enable VNL to continue to realize projects within the portfolio in a timely manner and make further distributions to shareholders.

Financial results summary

The financial results of VNL for the fiscal year ended 30 June 2016 show that VNL's audited NAV per share declined 5.5%, from USD0.91 as at 30 June 2015 to USD0.86 as at 30 June 2016.  However after adjusting for the USD0.0876 distribution of capital from the share premium account, the NAV per share increased by 4.1% year-on-year. The Company's share price closed on 30 June 2016 at USD0.58 per share, an increase of 12.4% and, again after adjusting for the distribution of capital, increased by 29% from USD0.52 per share as at 30 June 2015. As a result, VNL's share price to NAV discount narrowed to 32.2% from 43.2% between 30 June 2015 and 2016.

During the financial year, VNL repurchased and cancelled 36.3 million ordinary shares, a 26.9% increase from the 28.6 million shares repurchased and cancelled in the previous fiscal year. As at 30 June 2016 the Company has cancelled 106.2 million ordinary shares, representing 21.23% of the total shares in issue prior to the commencement of the share buyback program. 

Corporate actions

On 25 September 2015, the Board of Directors appointed Mr. Tran Trong Kien as a new Independent Non-executive Director.  Mr. Tran replaced Mr. Daniel McDonald, who resigned from the VNL Board with effect from the same date. Mr. Tran's experience in owning, developing and guiding both property investments and commercial enterprises in Vietnam and the region over the last 20 years is assisting VNL as it seeks to develop and realise its property portfolio.

On 24 November 2015, the Company conducted its third Annual General Meeting. At the meeting two of the five standing Directors being Mr. Tran Trong Kien and Mr. Nicholas Brooke were voted by shareholders for reappointment.

During the current one year extension of the realization strategy, both the Board and the Manager remain focused on the objectives set forth at the 2015 EGM, and with a number of divestments completed and further disposals underway, the collection of exit proceeds will continue enabling further distributions to shareholders. 

Another EGM and AGM will be convened in Zurich later this year where shareholders will review the performance over the past year and vote upon a revised strategy, which will continue to focus on further realizations and the distribution of proceeds to shareholders.  This new strategy will be similar to the current strategy and will require shareholders to vote on a special resolution for how the Company is to continue at the EGM. All shareholders are encouraged to participate in the vote on this important issue. 

 

Michel Casselman

Chairman

VinaLand Limited

6 October 2016



 

 

 

CONSOLIDATED BALANCE SHEET

 



30 June 2016

30 June 2015


Note

USD'000

USD'000





ASSETS








Non-current




Investment properties

5

389,700

 479,454

Property, plant and equipment

6

500

9,263

Intangible assets


3

 19

Investments in associates

7

47,713

 165,205

Prepayments for acquisitions of investments

8

27,772

  26,572

Long-term investments


-

 4,296

Deferred income tax assets

9

3,638

  6,572

Other non-current assets


1,024  

 1,395



───────

───────

Total non-current assets


470,350

692,776 



═══════

═══════





Current




Inventories

10

54,442   

98,911 

Trade and other receivables

11

17,581  

5,402

Tax receivables


1,985

2,360

Receivables from related parties

34

1,044

2,121

Short-term investments


9,806

3,116

Financial assets at fair value through profit or loss


384  

283

Restricted cash

12

3,392

-

Cash and cash equivalents (excluding bank overdrafts)

13

76,903  

21,820



───────

───────

Total current assets


165,537

134,013





Assets classified as held for sale

15

18,628  

13,233

 

Total assets


───────

654,515

═══════

───────

840,022

═══════

 

 

 

 



 

 



30 June 2016

30 June 2015


Note

USD'000

USD'000





EQUITY AND LIABILITIES








EQUITY




Equity attributable to equity shareholders of the parent




Share capital

16

3,938

4,301

Additional paid-in capital

17

452,680

521,088

Equity reserve


42,115

30,706

Other reserve


(67)

(57)

Translation reserve


(71,877)

(83,209)

Accumulated losses


(89,953)

(81,638)



───────

───────



336,836

391,191

Non-controlling interests


128,413

182,821

 

Total equity


───────

465,249    

───────

───────

574,012

───────

LIABILITIES








Non-current




Borrowings and debts

18

47,416

85,243

Trade and other payables

 

-

31,162

Financial liabilities at fair value through profit or loss

19

-

2,405

Deferred income tax liabilities

20

16,358

28,184



───────

───────

Total non-current liabilities


63,774

146,994 





Current




Borrowings and debts

18

25,704

8,982

Trade and other payables

21

77,174

73,203

Payables to related parties

34

10,228

35,292

Financial liabilities at fair value through profit or loss

19

6,945

-

Tax payables


 176  

1,021



───────

───────

Total current liabilities


120,227

118,498





Liabilities classified as held for sale

15

   5,265

518

 

Total liabilities


───────

189,266

───────

266,010

 

Total equity and liabilities


───────

654,515

───────

840,022



═══════

═══════

Net assets per share attributable to equity

   shareholders of the parent (USD per share)

 

30

0.86

                                   0.91



═══════

═══════

 

 


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 


Equity attributable to equity shareholders of the Company




 

 

 

Share

capital

 

 

Additional paid-in capital

 

 

 

Equity reserve

 

 

 

Revaluation reserve

 

 

 

Other

reserve

 

 

 

Translation reserve

 

 

Accumulated losses

Total equity attributable to owners of the Company

 

 

Non-

controlling interests

 

 

 

Total
equity


USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000












Balance at 1 July 2014

4,587

546,992

20,496

8,022

(1,804)

(92,570)

(65,589)

420,134

182,372

602,506

Loss for the year

-

-

-

-

-

-

(22,267)

(22,267)

3,851

(18,416)

Currency translation

-

-

-

-

-

(10,427)

-

(10,427)

(3,632)

(14,059)

Reclassification of currency translation  reserve on loss of control of a subsidiary

-

-

-

-

-

19,693

-

 

 

19,693

3,153

22,846

Reclassification of currency translation reserves on disposal of subsidiaries

-

-

-

-

-

95

-

 

95

-

95

 

Total comprehensive loss

─────

-

─────

-

─────

-

─────

-

─────

-

─────

9,361

──────

(22,267)



──────

(12,906)

─────

3,372

──────

(9,534)


─────

─────

─────

─────

─────

─────

──────


──────

─────

──────

Transactions with owners in their capacity as owners:











Repurchase and cancellation of shares (Notes 16, 17)

(286)

(25,904)

10,210

 

-

-

-

-

 



(15,980)

-

(15,980)

Capital contributions in subsidiaries

-

-

-

-

-

-

-

-

6,044

6,044

Disposals of subsidiaries

-

-

-

(8,022)

1,804

-

6,218

-

 (4,113)

(4,113)

Distributions to non-controlling interests

-

-

-

-

-

-

-

-

(4,729)

(4,729)

Acquisitions of non-controlling interests in subsidiaries

-

-

-

-

(57)

-

-

 



(57)

(125)

(182)

Balance at 30 June 2015

─────

4,301

═════

───────

521,088

═══════

──────

30,706

══════

────

-

════

────

(57)

════

──────

(83,209)

══════

──────

(81,638)

══════

───────

391,191 

═══════

───────

182,821

═══════

───────

574,012

═══════

 

 


Equity attributable to equity shareholders of the Company




 

 

 

Share

capital

 

 

Additional paid-in capital

 

 

Equity

reserve

 

 

 

Other

reserve

 

 

 

Translation reserve

 

 

Accumulated losses

Total equity attributable to owners of the Company

 

 

Non-

controlling interests

 

 

 

Total
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 16, 17)

(363)

(33,348)

11,409

-

-

-

 



(22,302)

-

(22,302)

Distribution to shareholders (Note 17)

-

(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 2016

30 June 2015


Note

USD'000

USD'000





Revenue

22

43,157

20,057

Cost of sales

23

(36,363)

(18,557)



──────

──────

Gross profit


6,794

1,500





Net gain on fair value adjustments of investment

  properties and revaluations of property, plant and

  equipment

 

 

24

22,384

45,662

Selling and administration expenses

25

(16,378)

(18,937)

Net changes in fair value of financial assets and financial liabilities at fair value through profit or loss

 

 

(161)

142  

Reclassification of currency translation reserve on loss of control of a subsidiary


-

(22,846)

Gain/(loss) on disposals of investments, net


6,477

(3,187)

Impairment of assets

26

(18,210)

(7,680)

Finance income

27

1,247

2,048 

Finance expenses

28

(6,251)

(7,073)

Share of losses of associates

7

(3,563)

 (926)

Other income


3,552

2,043

Other expenses


(373)

(1,095)



───────

───────

Loss before income tax from operations


(4,482)

(10,349)

Income tax

29

(156)

(8,067)



───────

───────

Net loss from operations


(4,638)

(18,416)

Attributable to equity shareholders of the parent


(8,315)

(22,267)

Attributable to non-controlling interests


3,677

3,851



───────

───────

Net loss for the year


(4,638)

(18,416)



═══════

═══════

Loss per share

-     basic and diluted (USD per share)

 

30

(0.01)  

(0.05)



───────

───────

 

 

 

 

 

 

 

 


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 



Year ended



30 June 2016

30 June 2015


Note

USD'000

USD'000





Net loss for the year


(4,638)

(18,416)





Other comprehensive income








Items that may be reclassified subsequently




 to profit or loss:




   Exchange differences on translating foreign operations


(6,002)

(14,059)

Reclassification of currency translation reserve on disposal of subsidiaries


 

15,550

 

95

Reclassification of currency translation reserve on loss of control of a subsidiary


 

-

 

22,846



──────

──────



9,548

8,882



──────

──────

Other comprehensive income for the year

9,548

8,882

Total comprehensive income/(loss) for the year


4,910

(9,534)



──────

──────





Attributable to equity shareholders of the parent


3,017

(12,906)

Attributable to non-controlling interests


1,893

3,372



─────

─────



4,910

(9,534)



═════

═════

 

 

  

 

 



CONSOLIDATED STATEMENT OF CASH FLOWS

(Indirect method)



Year ended



30 June 2016

30 June 2015


Note

USD'000

USD'000





Operating activities




Loss before tax


(4,482)

(10,349)

Adjustments for:




Depreciation and amortisation


1,118

1,171

Net changes in fair value of financial assets and financial liabilities at fair value through profit or loss

 

 

 

161

 

(142)

Net gain on fair value adjustments of investment properties and revaluations of property, plant and equipment

 

24

 

(22,384)

 

(45,662)

Loss on amortisation of realisation fees

28

-

920

Net loss on disposal of fixed assets and written-off account balances


 

90

 

371

Reclassification of currency translation reserve on loss of

   control of a subsidiary


 

-

 

22,846

(Gain)/loss on disposals of investments, net


(6,477)

3,187

Impairment of assets

26

18,210

7,680

Share of losses of associates

7

3,563

926

Unrealised foreign exchange losses, net

27, 28

809

1,028

Interest expense

28

3,973

5,017

Interest income

27

(1,025)

(787)

 

Net loss before changes in working capital


──────

(6,444)

──────

(13,794)



──────

──────

Change in trade receivables and other current assets


17,765

(1,839)

Change in inventories


23,184

6,589

Change in trade payables and other current liabilities


(40,237)

(13,642)

Income tax paid


(162)

(48)

 

Net cash outflow to operating activities


──────

(5,894)

──────

──────

(22,734)

──────

Investing activities




Interest received


1,012

782

Dividends received


-

57

Purchases of investment properties, property, plant and equipment, and prepayments for acquisitions of investments


 

(21,508)

 

(11,495)

Proceeds from loss of control of subsidiaries


54,522

11,580

Proceeds from disposals of investment properties and investment in associates


 

132,362

 

-

Proceeds from disposals of assets/liabilities classified as held for sale


12,715

16,454

Proceeds from disposals of financial assets at fair value through profit or loss


 

-

 

629

Investments in associates


(1,829)

(2,503)

Net proceeds/(deposits) in long-term investments


463

(2,927)

Net (deposits)/proceeds in short-term investments


(3,075)

453

 

Net cash inflow from investing activities


──────

    174,662       

──────

──────

13,030

──────



 

 



Year ended



30 June 2016

30 June 2015


Note

USD'000

USD'000





Financing activities



Additional capital contributions from non-controlling interests

6,874

6,044

Ordinary shares acquired by the Company                                 16

(22,302)

(15,980)

Distribution to shareholders                                                       17

(34,972)

-

Acquisition of non-controlling interests in subsidiaries

(900)

(182)

Loan proceeds from banks

19,114

25,806

Loan repayments to banks

(25,271)

(22,144)

Loan repayments to a related party

(2,296)

-

Interest paid

(10,567)

(11,103)

Distributions to non-controlling interests

(35,180)

(4,729)

 

Net cash outflow from financing activities

───────

(105,500)

───────

──────

(22,288)

──────

Net changes in cash and cash equivalents for the year

63,268

(31,992)

Cash and cash equivalents at the beginning of the year

21,820

53,894

Cash and cash equivalents classified as held for sale

(8,189)

(130)

Exchange differences on cash and cash equivalents

4

48

 

Cash and cash equivalents at the end of the year                 13

──────

76,903

══════

──────

21,820

══════

 

During the year, major non-cash transactions included:

 

(1)  a USD11.5 million loan was derecognised by the Group during the year upon the Group's disposal of a subsidiary. This amount is excluded from loan repayments to banks included in the consolidated statement of cash flows; and

 

(2)  capital gains tax of USD9 million was crystalised during the year (the year ended 30 June 2015: nil) as a result of realised gains recorded by the Group on divestments. The tax amounts due were withheld by the buyers from disposal proceeds due to the Group and therefore these amounts are excluded from proceeds from loss of control of subsidiaries and disposals of investment properties and investment in associates 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 the Extraordinary General Meeting ("EGM") held on 21 November 2012, the shareholders supported both recommendations put forth by the Board regarding the continuation of the Company. As a result, the Special Resolution which called for the continuation of the Company as presently constituted was not passed and the Ordinary Resolution to restructure the Company was passed with over a two-thirds approval rate.

 

The Ordinary Resolution established the framework to restructure the Company including changes to the Company's investment strategy, distribution policy, the Investment Manager's remuneration and corporate governance.  Key changes impacting these financial statements are summarised as follows:

 

·      During the three-year period until 21 November 2015 ("the Cash Return Period") the Company would make no new investments, save that it could invest in existing projects within its existing portfolio of assets. The Company would instead implement a realisation strategy whereby the Company's existing assets would be developed (if necessary) and/or divested in a controlled, orderly and timely manner.

 

·      Net proceeds of these realisations would be returned to shareholders, subject to the Board's discretion and consideration in respect of the Company's working capital requirements, the need to invest in existing projects, and the cost/tax efficiency of such transactions/distributions.

 

·      Once the Cash Return Period had ended, shareholders would be given the opportunity to reassess the strategy of the Company through another continuation resolution.

 

·      The fees payable to the Investment Manager had been amended as discussed in Note 34 to these consolidated financial statements.

 

  At the EGM held on 24 November 2015, the Company's shareholders supported the reorganisation recommendation proposed by the Board regarding extending the Cash Return Period by 12 months to 21 November 2016.

 

The Company will organise no later than November 2016 a general meeting of shareholders to vote on the Company's strategy after that date. The Board of Directors and the Investment Manager are currently considering several continuation proposals, one of which will be presented to shareholders for approval at the meeting. The Directors' view is that the continuation will be approved at the meeting, hence these consolidated financial statements are prepared on a going concern basis.

 

The consolidated financial statements for the year ended 30 June 2016 were approved for issue

by the Company's Board of Directors on 6 October 2016.

 

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 2016 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 2015 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 is yet to assess IFRS 9's full impact and intends to adopt IFRS 9 no later than the financial year ending 30 June 2019.


 

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.

 

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.

 

(c)        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: 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. Discount rates from 17% to 21.5% are considered appropriate for properties in different locations (30 June 2015: 14.5% to 22%).

 

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 including golf course 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                                                            8 to 25 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                                                             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      Revaluation reserve

 

The revaluation reserve arises from the revaluation of buildings and leasehold land improvements including hotels and golf courses. The revaluation policy is consistent with the fair value policy as described in Note 3. Any increase in the carrying amount arising on revaluation is recognised in profit or loss to the extent that it reverses a provision for impairment loss, with any remaining increase recognised in other comprehensive income and shown as revaluation reserve in shareholders' equity. Decreases that offset previous increases of the same asset are

charged to other comprehensive income and debited against revaluation reserve directly in equity; all remaining decreases are charged to profit or loss.

 

 

 

 

2.21      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.

 

2.22      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.

 

2.23      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.

 

2.24      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.

 

 

2.25      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 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.

 

2.26      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.

 

2.27      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.

 

2.28      Realisation fee

 

In accordance with the management agreement effective 21 November 2012 (the "Amended Management Agreement"), the Investment Manager is entitled to receive a share of any realisations of the Group, up to a total amount equalling the previously accrued performance fee payable. The Investment Manager may receive its share of these realisations on a deal-by-deal basis throughout the Cash Return Period. In accordance with the Amended Management Agreement, the amount of performance fees due to the Investment Manager, is re-assessed at each reporting date, taking into account the future expected realisation strategy of the Company. The change in performance fees due to the Investment Manager during the period is included as

"realisation fee (expense)/recovery" in the consolidated income statement and is further described in Note 34 to these consolidated financial statements. An expense results from an increase in the realisation fee liability to the Investment Manager, and a recovery of previously expensed realisation fees results from a decrease in the realisation fee liability to the Investment Manager at the reporting date.

 

The realisation fee liability is initially recognised at fair value, and subsequently measured based on the realisable value of the investments of the Group on which the realisation fee would be ultimately crystallised, which is estimated using the fair values of those investments at the reporting date. Realisation fees are paid when the relevant investments are sold and proceeds distributed to the Company's shareholders.

 

2.29      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.

 

2.30       Derivative financial instruments and hedging activities

 

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either:

 

(a)    Hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge);

(b)    Hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge); or

(c)    Hedges of a net investment in a foreign operation (net investment hedge).

 

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of the hedged items.

 

The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.

 

In the case of a derivative that qualifies for cash flow hedge, the effective portion of changes in its fair value is recognised in other comprehensive income. The gain or loss is removed from equity and included in profit or loss in the same period and periods during which the hedged items affects profit or loss. In the case of a derivative that qualifies for fair value hedge, the effective portion of changes in its fair value is recognised in the consolidated income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedge risk.

 

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity.

 

2.31      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.

 

As at 30 June 2016, if the discount rates used had been 1% higher/lower (30 June 2015: 1%), the total carrying values of the Group's investment properties would have been USD13.6 million lower/USD15.2 million higher (30 June 2015: USD15.8 million lower/USD17.4 million higher).

 

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        Realisation fee

 

As of the consolidated balance sheet date, the Company had paid to the Investment Manager USD20.8 million of the USD28.2 million realisation fee accrued as at 30 June 2015. Management has assessed that the fair value of the outstanding realisation fee liability under the restructured terms is USD7.4 million as at 30 June 2016. Payment of this amount is contingent upon the Group's disposal of certain investments and making distributions to the shareholders of the Company. Given that the Group was able to complete a number of major divestments during the year, management believes that it is reasonable to assume that the remaining realisation fees will be paid to the Investment Manager.

 

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 2016

 

 

 

Commercial

Residential and office buildings

 

 

Hospitality

 

Mixed use

 

 

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

Revenue

-

43,157

-

-

43,157

Cost of sales

-

(36,363)

-

-

(36,363) a

 

──────

──────

──────

──────

──────

Gross margin

-

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)

══════

 



 

 


Year ended 30 June 2015

 

 

 

Commercial

Residential and office buildings

 

 

Hospitality

 

Mixed use

 

 

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

Revenue

-

20,057

-

-

20,057

Cost of sales

-

(18,557)

-

-

(18,557)

 

──────

──────

──────

──────

──────

Gross margin

-

1,500

-

-

1,500

Net gain on fair value adjustments of investment properties and revaluations of property, plant and equipment

99

13,918

872

30,773

45,662

Reclassification of currency translation reserve on loss control of a subsidiary

-  

(22,846)

-  

-  

(22,846)

Net gain/(loss) from disposal of investments

-

782

2,656

(6,625)

(3,187)

Impairment of assets

-  

(1,612)

(4,656)

(1,412)

(7,680)

Finance income

1

1,119

57

871

2,048

Share of (losses)/profits of associates

(674)

(261)

59

(50)

(926)

Other income

-

653

(596)

1,986

2,043

 

──────

──────

──────

──────

──────

Total (loss)/profit before unallocatable expenses

(574)

(6,747)

(1,608)

25,543

16,614

Selling and administration expenses

 

 

 

 

(18,937)

Net changes in fair value of financial assets and financial liabilities at fair value through profit or loss

 

 

 

 

142

Finance expenses

 

 

 

 

(7,073)

Other expenses

 

 

 

 

(1,095)

 

 

 

 

 

──────

Loss before tax

 

 

 

 

(10,349)

Income tax

 

 

 

 

(8,067)

 

Net loss for the year

 

 

 

 

──────

(18,416)

══════

 

 

 

 

 

 

 

(b)        Consolidated balance sheet

 

 

As at 30 June 2016

 

 

 

Commercial

Residential and office buildings

 

 

Hospitality

 

Mixed

use

 

Cash and deposits

 

 

Total

 

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

             



 

 

 

As at 30 June 2015

 

 

 

Commercial

Residential and office buildings

 

 

Hospitality

 

Mixed

use

 

Cash and deposits

 

 

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

 

Investment properties

 4,500

 291,866

 -

 183,088

 -

 479,454

Property, plant and equipment

 

-

 

1,322

 

 7,323

 

 618

 

 -

 

 9,263

Intangible assets

-

 5

8  

 6

 -

 19

Investments in associates

 17,925

 140,517

 4,759

 2,004

 -

 165,205

Prepayments for acquisitions of investments

 

 -

 

24,225

 

 -

 

 2,347

 

 -

 

 26,572

Long-term investments

 -

 -

 -

 -

 4,296

 4,296

Inventories

 -

 85,395

-

 13,516

 -

 98,911

Trade, tax and other receivables

 

 31

 

 6,692

 

 854

 

2,306

 

 -

 

 9,883

Short-term investments

 -

 -

 -

 -

 3,116

 3,116

Financial assets at fair value through profit or loss (*)

 

 -

 

 -

 

 -

 

 271

 

 -

 

 271

Cash and cash equivalents

 -

 -

 -

 -

 21,820

 21,820

Assets classified as held for sale

 

 -

 

 12,382

 

 -

 

 851

 

 -

 

 13,233

Other assets

 173

 4,686

79  

 3,029

 -

 7,967

 

Total assets

──────

      22,629     

══════

───────

         567,090

═══════

──────

13,023

══════

───────

208,036

═══════

──────

        29,232

══════

───────

840,010

═══════

Total assets include:

-   Addition to non-current assets (other than financial instruments and deferred tax assets)

-

15,771

3,221

92

-

19,084

 

(*)   The amounts presented in the tables above do not include the fair value of the call options which give the Group the rights to early redeem the ZDP shares. The Investment Manager does not manage the ZDP shares and call options under any particular segment.

 

 

 

 

5          INVESTMENT PROPERTIES

 


30 June 2016

30 June 2015


USD'000

USD'000




Opening balance

479,454

514,796

Additions

25,697

15,519

Disposals

(119,738)

(13,100)

Deemed disposal

-

(73,084)

Transferred to inventories (Note 10)

(9,240)

(2,483)

Exchange of inventories for investment properties (Note 10)

2,969

-

Transferred to non-current assets classified as held for sale   (Note 15)

(5,586)

(12,080)

Transferred from prepayments for acquisitions of investments (Note 8)

-

13,514

Net gain from fair value adjustments (Note 24)

24,187

48,960

Translation differences

(8,043)

(12,588)

 

Closing balance

───────

389,700

═══════

───────

479,454

═══════

 

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.

 

Bank borrowings of USD43.1 million are secured by investment properties with a fair value of USD102.9 million (30 June 2015: USD168.0 million). During the year, the Group capitalised borrowing costs amounting to USD4.9 million (year ended 30 June 2015: USD4.9 million) into investment properties.

 

At 30 June 2016, 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 (2015: none).


 

 

Information about fair value measurements using unobservable inputs (Level 3) is set out below:

 

As at 30 June 2016

 



Level 3 - Range of unobservable inputs

(probability-weighted average)

 

Sensitivity on management's estimates

Segment

Valuation technique

Valuation (USD'000)

Discount rate

Cap rate

Valuation per square metre (USD)

Sensitivities in sales price per

 square metre (USD'000)

Sensitivities in discount and cap rates (USD'000)

Residential and office buildings (*)

Discounted

cash flows

102,140

19% - 21.5%

N/A

N/A




Change in discount rate



-1%

0%

1%












105,031

102,140

99,202

Residential and office buildings

Direct comparisons

 

109,060

N/A

N/A

30 - 5,845

Change in sales price per

square metre










-10%

0%

10%












98,154

109,060

119,966






Mixed use

Discounted

cash flows









Change in discount rate

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

Mixed use

Direct comparisons

70,800

N/A

N/A

258 - 1,040

Change in sales price per

square metre










-10%

0%

10%












63,720

70,800

77,880






Commercial

Direct comparisons

4,350

N/A

N/A

1,758

Change in sales price per

square metre










-10%

0%

10%












3,915

4,350

4,785






 

 



 

 

For the comparative balance sheet date:

 



Level 3 - Range of unobservable inputs

(probability-weighted average)

 

Sensitivity on management's estimates

Segment

Valuation technique

Valuation (USD'000)

Discount rate

Cap rate

Valuation per square metre (USD)

Sensitivities in sales price per

 square metre (USD'000)

Sensitivities in discount and cap rates (USD'000)

Residential and office buildings (*)

Discounted

cash flow

218,284

18% - 21.5%

N/A

N/A




Change in discount rate



-1%

0%

1%












223,602

218,284

213,584

Residential and office buildings

Direct comparison

73,582

N/A

N/A

2,440 - 6,499

Change in sales price per

square metre










-10%

0%

10%












63,872

73,582

83,292






Mixed use

Discounted

cash flow









Change in discount rate

99,980

14.5% - 17%

8.5%

N/A





           -1%

0%

1%










Change in cap rate

-1%

123,468

110,759

99,107










0%

111,734

99,980

89,217










1%

102,431

91,452

81,375

Mixed use

Direct comparison

83,108

N/A

N/A

618 - 1,348

Change in sales price per

square metre










-10%

0%

10%












71,978

83,108

94,238






Commercial

Direct comparison

4,500

N/A

N/A

1,818

Change in sales price per square metre










-10%

0%

10%












4,050

4,500

4,950






 

(*)   The valuations of these investment properties assume that they will be developed and sold within a definite time period; therefore, no capitalisation rates are used in such valuations.


 

6          PROPERTY, PLANT AND EQUIPMENT

 

 

 

Buildings and golf course

Machinery, plant

and equipment

Furniture, fixtures and office equipment

 

Motor vehicles

 

 

Total


USD'000

USD'000

USD'000

USD'000

USD'000







Gross carrying amount






At 1 July 2015

12,040

274

678

867

13,859

Additions

567

18

8

-

593

Impairment charges (Note 26)

(819)

-

-

-

(819)

Disposals

(10,217)

(196)

(587)

(598)

(11,598)

Write-offs

(399)

(5)

(5)

-

(409)

Transferred to assets classified as held for sale (Note 15)

(606)

(35)

(46)

(56)

(743)

Translation differences

(49)

(2)

(4)

(6)

(61)

 

At 30 June 2016

──────

517

──────

────

54

────

────

44

────

────

207

────

─────

822

─────







Depreciation






At 1 July 2015

(4,037)

(105)

(212)

(242)

(4,596)

Charge for the year

(1,037)

(11)

(21)

(41)

(1,110)

Disposals

4,297

38

161

130

4,626

Write-offs

304

5

5

-

314

Transferred to assets classified as held for sale (Note 15)

356

19

22

28

425

Translation differences

13

1

2

3

19

 

At 30 June 2016

─────

(104)  

─────

────

      (53)      

────

────

(43)

────

────

(122)

────

─────

(322)

─────







Carrying value






At 1 July 2015

8,003

169

466

625

9,263

 

At 30 June 2016

─────

413

═════

────

       1  

════

────

1

════

────

85

════

─────

500

═════

 

 

Total impairment charges to property, plant and equipment amounted to USD0.8 million during the year ended 30 June 2016 (the year ended 30 June 2015: USD4.7 million).

 

 

 

 

 

For the comparative year:

 

 

Buildings and golf course

Machinery, plant

and equipment

Furniture, fixtures and office equipment

 

Motor vehicles

 

 

Total


USD'000

USD'000

USD'000

USD'000

USD'000







Gross carrying amount






At 1 July 2014

16,409

642 

734

701

18,486

Additions

106 

90

4

570

770

Revaluation gains (Note 25)

872

-

-

-

872

Impairment charges

(4,656)

-

-

-

(4,656)

Disposals

--

-

(2)

(3)

(5)

Write-offs

-

(415)

(62)

(385)

(862)

Translation differences

(691)

(43)

4

(16)

(746)

 

At 30 June 2015

──────

12,040

──────

────

274

────

────

678

────

────

867

────

─────

13,859

─────







Depreciation






At 1 July 2014

(3,242)

(277)

    (186)

(348)

(4,053)

Charge for the year

(856)

(121)

(62)

(99)

(1,138)

Disposals

-

-

1

-

1

Write-offs

-

267

40

188

495

Translation differences

61

26

(5)

17

99

 

At 30 June 2015

─────

(4,037)

─────

────

              (105)

────

────

              (212)

────

────

(242)

────

─────

(4,596)

─────







Carrying value






At 1 July 2014

13,167

       365

548

353

14,433

 

At 30 June 2015

─────

8,003

═════

────

             169

════

────

466

════

────

625

════

─────

9,263

═════



 

 

7          SUBSIDIARIES AND ASSOCIATES

 

(a)        Investments in associates

 


30 June 2016

30 June 2015


 USD'000

USD'000




Opening balance

165,205

49,736

Additions

1,829

2,503

Disposals

(115,758)

-

Addition due to loss of control of a subsidiary

-

113,938

Dividends received

-

                       (46)

Share of losses of associates

(3,563)

                   (926)

 

Closing balance

───────

47,713

═══════

──────

165,205

══════

 

      Disposal of The 21st Century International Development Company Limited

 

During the year, the Group disposed of its 49% equity interest in the 21st Century International Development Company Limited with total consideration of USD127.2 million. The carrying value of the investment at the disposal date was USD113.8 million, resulting in a gain of USD13.4 million for the Group which was recognised in the consolidated income statement.

 

      Disposal of Danang Marina Company Limited

 

During the year, the Group disposed of its 49% equity interest in Danang Marina Company Limited. The total consideration is USD1.3 million. The carrying value of the investment at the disposal date was USD2.0 million, resulting in a loss of USD0.7 million for the Group which was recognised in the consolidated income statement.

 

Particulars of material operating associates and their summarised financial information, extracted from their financial statements as at 30 June 2016 and 30 June 2015, are as follows:

 

As at 30 June 2016


 



Incorporation

 

 

Principal activity

 

 

 

Assets

 

 

 

Liabilities

 

 

 

Revenue

 

 

 

Loss

 

Share of losses to the Group

 

Equity interest held




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 associates

Vietnam

Property/

Hospitality

65,501

25,872

3,984

 (3,138)

  (1,946)





124,733

34,814

3,984

(6,004)

(3,379)


               

During the year ended 30 June 2016, the Group also had shares of losses of USD178,500 and USD5,500 from The 21st Century International Development Company Limited and Danang Marina Company Limited, respectively. These are associates of the Group which were disposed of during the year.

 

 



 

 


As at 30 June 2015


 



Incorporation

 

 

Principal activity

 

 

 

Assets

 

 

 

Liabilities

 

 

 

Revenue

 

 

 

Loss

Share of losses

 to the Group

 

Equity interest held




USD'000

USD'000

USD'000

USD'000

USD'000

%










The 21st Century

  International Development 

  Company Limited

 

 

Vietnam

 

 

Property

 

 

294,207

 

 

61,679

 

 

-

 

 

-

 

 

-

 

 

49

Aqua City Joint Stock

Company (*)

 

Vietnam

 

Property

 

62,485

 

9,329

 

-

 

(522)

 

 (261)

 

50

Other associates

Vietnam

Property/Hospitality

71,244

26,340

6,121

(990)

(665)





427,936

97,348

6,121

  (1,512)

(926)


 

(*)   The Group has a 50% equity interest in Aqua City Joint Stock Company but does not have the ability to use its voting interests to appoint a majority of directors so does not and cannot control the board of this company. Therefore, management considers it appropriate to treat the interest as investment in an associate.

 

Reconciliation of summarised financial information for material associates:

 


Aqua City Joint Stock Company


    For the year ended 30 June


2016

2015


USD'000

USD'000




Summarised balance sheet



Current assets



          Cash and cash equivalents

5

41

          Other current assets

-

46


──────

──────

Total current assets

5

87

Non-current assets

59,227

62,398

Current liabilities



        Financial liabilities (excluding trade payables)

-

33

          Other current liabilities

8,942

9,296


──────

──────

Total current liabilities

8,942

9,329

Net assets

50,290

53,156


──────

──────

 

 



 

 

 


Aqua City Joint Stock Company

 


    For the year ended 30 June

 


2016

2015

 


USD'000

USD'000

 




 

Reconciliation to carrying amounts:



 

Opening net assets

53,156

48,672

Capital contribution during the year

-

5,006

Loss for the year

(2,866)

(522)


──────

──────

Closing net assets

50,290

53,156


──────

──────




Group's share in %

                    50%

                    50%

Group's share in USD

25,145

26,578


──────

──────

Carrying amount

25,145

26,578


──────

──────




Summarised statement of comprehensive income



Administration expenses

(27)

(24)

Loss on fair value adjustments of investment properties

 (2,794)

(493)

Other expenses

(45)

(5)


──────

──────

Loss for the year

(2,866)

(522)


──────

──────

 


 

 

(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 2016 and 30 June 2015:

 



30 June 2016


30 June 2015


 

Name

Country of incorporation and place of business

Percentage interest held by the Group

Percentage interest held by non-controlling interests


Percentage interest held by the Group

Percentage interest held by non-controlling interests

 

Nature of business









VinaCapital Hoi An Resort Limited

Vietnam

100%

0%


100%

-

Hospitality

VinaCapital Danang Resort Limited

Vietnam

75%

25%


75%

25%

Property investment

VinaCapital Commercial Center Limited (Vietnam) (*)

Vietnam

38.2%

62%


38.2%

61.8%

Property investment

Mega Assets Company Limited (Vietnam)

Vietnam

75%

25%


75%

25%

Property investment

SIH Real Este Limited Company (Vietnam)

Vietnam

75%

25%


75%

25%

Property investment

Dien Phuoc Long Real Estate Company Limited

Vietnam

100%

-


100%

-

Property investment

VinaCapital Phuoc Dien Co. Limited

Vietnam

100%

-


100%

-

Property investment

Dong Binh Duong Urban Development Co. Limited

Vietnam

70%

30%


70%

30%

Property investment

Vina Dai Phuoc Corporation Limited

Vietnam

54%

46%


54%

46%

Property investment

Viet Land Development Corporation Limited

Vietnam

90%

10%


90%

10%

Property investment

Vinh Thai Urban Development Corporation Limited

Vietnam

53.3%

46.7%


53.3%

46.7%

Property investment

Thang Long Property Company Limited

Vietnam

65%

35%


65%

35%

Property investment

Hoang Phat Investment Joint Stock Company

Vietnam

60%

40%


60%

40%

Hospitality

AA VinaCapital  Co. Limited

Vietnam

80%

20%


80%

20%

Property investment

Vina Alliance Company Limited (*)

Vietnam

46.5%

53.5%


46.5%

53.5%

Property investment

Phu Hoi City Company Limited

Vietnam

52.5%

47.5%


52.5%

47.5%

Property investment

VinaCapital Danang Golf Course Limited

Vietnam

-

-


75%

25%

Property investment

Nam Phat Villas and Hotel Company Limited

Vietnam

-

-


100%

-

Hospitality

Orchid House Co. Limited

Vietnam

-

-


55.6%

44.4%

Hospitality

Metropolis Hanoi Company Limited

Vietnam

-

-


44.6%

55.4%

Hospitality

 

(*)           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.

 

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


8,679

        Inventories


4,774

        Trade and other receivables


1,498

          Other current assets


2,025



──────

Total current assets


16,976

Non-current assets



        Investment properties


111,044

        Property, plant and equipment


6,970

        Other non-current assets


107



──────

Total non-current assets


118,121

Current liabilities



        Trade and other payables


(10,335)

        Short-term borrowings


(583)

          Other current liabilities


(106)



──────

Total current liabilities


(11,024)

Non-current liabilities



        Long-term trade and other payables


(12,855)

        Long-term borrowings


(10,899)



──────

Total non-current liabilities


(23,754)



──────

Net assets at the date when control is lost


100,319



──────

Net assets attributable to the Company


73,214

Net assets attributable to non-controlling interests


27,105



──────

Total consideration


82,520

Capital gains tax withheld by buyers


(8,729)

Consideration not yet received as at 30 June 2016


(10,590)



──────

 

 

 

 

 



Year ended

30 June 2016



USD'000




  Consideration received due to loss of control of subsidiaries


63,201

  Less: Cash and cash equivalents of disposed subsidiaries


(8,679)



──────

  Cash received due to loss of control of subsidiaries


54,522



──────

 

Details of the loss on disposals of subsidiaries were as follows:

 



Year ended

30 June 2016

 



USD'000




Total consideration


82,520

Carrying amount of net assets sold attributable to the Company


(73,214)



──────

Gain on disposals before reclassification of currency translation reserve

9,306

Reclassification of currency translation reserve


(15,550)



──────

Loss on disposals of subsidiaries


(6,244)



──────

 

Disposal of Metropolis Hanoi Company Limited

 

During the year, the Group disposed of its 44.6% equity interest in Metropolis Hanoi Company

Limited for a total consideration of USD19.1 million. The book value of the net assets at the disposal date was USD13.4 million and the reclassification of translation reserve on loss of control was USD0.4 million, resulting in a gain of USD5.3 million.

 

Disposal of Nam Phat Villas and Hotel Company Limited

 

During the year, the Group disposed of its 100% equity interest in Nam Phat Villas and Hotel

Company Limited for a total consideration of USD19.8 million. The book value of the net assets at the disposal date was USD15.6 million and the reclassification of translation reserve on loss of control was USD2.6 million, resulting in a gain of USD1.6 million.

 

Disposal of VinaCapital Danang Golf Course Limited

 

During the year, the Group disposed of its 75% equity interest in VinaCapital Danang Golf

Course Limited for a total consideration of USD43 million. The book value of the net assets at the disposal date was USD43.5 million and the reclassification of translation reserve on loss of control was USD12.2 million, resulting in a loss of USD12.7 million.

 

Disposal of Orchid House Company Limited

 

During the year, the Group disposed of its 55.6% equity interest in Orchid House Company Limited for a total consideration of USD0.6 million. The book value of the net assets at the disposal date was USD0.7 million and the reclassification of translation reserve on loss of control was USD0.3 million, resulting in a loss of USD0.4 million.

 

Summarised financial information of subsidiaries with material non-controlling interests

 

The total value of non-controlling interests as at 30 June 2016 is USD128.4 million (30 June 2015: USD182.8 million), allocated as below:

 


30 June 2016

30 June 2015


USD'000

USD'000




Vina Alliance Company Limited ("Vina Square")

40,613

39,091

Vina Dai Phuoc Corporation Limited ("Dai Phuoc Lotus")

30,529

31,291

Phu Hoi City Company Limited ("Phu Hoi")

14,563

13,621

Thang Long Property Company Limited ("Time Square")

14,361

14,055

Prosper Big Investments Limited

-

29,412

VinaCapital Danang Golf Course Limited ("Danang Golf")

-

12,785

Others

28,347

42,566


───────

128,413 ═══════

───────

182,821

═══════

 

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

Dai Phuoc Lotus

Phu Hoi

Time Square


As at 30 June

As at 30 June

As at 30 June

As at 30 June


2016

2015

2016

2015

2016

2015

2016

2015


USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

Current









Assets

 26

113

21,134

24,004

118

97

8,944

9,352

Liabilities

(67,250)

(41,161)

(16,951)

(18,121)

(468)

(374)

(31,476)

(31,479)

Total current net (liabilities)/assets

(67,224)

(41,048)

4,183

5,883

(350)

(277)

(22,532)

(22,127)

Non-current









Assets

103,368

99,026

62,740

63,074

26,794

26,360

41,610

40,000

Liabilities

(4,920)

(28,634)

(2)

(4)

1,624

-

(3,259)

(2,911)

Total non-current net assets

98,448

70,392

62,738

63,070

28,418

26,360

38,351

37,089

Net assets

31,224

29,344

66,921

68,953

28,068

26,083

15,819

14,962

 

Summarised income statements

 


Vina Square

Dai Phuoc Lotus

Phu Hoi

Time Square


Year ended 30 June

Year ended 30 June

Year ended 30 June

Year ended 30 June


2016

2015

2016

2015

2016

2015

2016

2015


USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000










Revenue

-

-

4,489

3,510

-

-

-

-

Profit/(loss) before income tax

4,332

15,312

(676)

5,363

3,216

415

2,195

3,717

Income tax (expense)/income

(861)

(4,059)

150

(1,033)

(742)

(186)

(348)

(517)

Post-tax profit/(loss) from continuing operations

 

3,471

 

11,253

 

(526)

 

4,330

 

2,474

 

229

 

1,847

 

3,200

Other comprehensive (loss)/income

(1,591)

(1,290)

(1,506)

(1,406)

(489)

(491)

(990)

(1,598)

Total comprehensive income/(loss)

1,880

9,963

(2,032)

2,924

1,985

(262)

857

1,602  

Total comprehensive income/(loss)
allocated to non-controlling interests

1,148

4,534

(762)

1,264

942

(124)

306

561  

 

 

 

 

 

 

 

 

 

 

 

 

Summarised cash flow statements

 


Vina Square

Dai Phuoc Lotus

Phu Hoi

Time Square


Year ended 30 June

Year ended 30 June

Year ended 30 June

Year ended 30 June


2016

2015

2016

2015

2016

2015

2016

2015


USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

Net cash flows from operating activities

(99)

11

2,767

1,503

(39)

(33)

(510) 

(466)

Net cash flows from investing activities

(53)

(90)

570

(1,346)

-

(40)

134

195

Net cash flows from financing activities

80

8

538

49

60

59

471

106

Net (decrease)/increase in cash and cash equivalents

(72)

(71)

3,875

206

21

14

95 

(165)

 

8          PREPAYMENTS FOR ACQUISITIONS OF INVESTMENTS

 


30 June 2016

30 June 2015


USD'000

USD'000




Prepayments for acquisitions of investments

43,839

57,713

Transferred to investment properties (Note 5)

-

(13,514)


──────

──────


43,839

44,199

Allowance for impairment

(16,067)

(17,627)


──────

──────


27,772

26,572


══════

══════

 

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 2016, the accumulated impairment allowances amounted to USD16.1 million (30 June 2015: USD17.6 million). During the year, there was a reversal of USD1.6 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 2015: none). As at 30 June 2016, the sales prices per square meter used ranged from USD21 to USD64 (30 June 2015: USD21 to USD60). 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 2016

30 June 2015


USD'000

USD'000




Opening balance

26,572

41,148

Additions

128

293

Reversal of impairment/(impairment) (Note 26)

1,560

(622)

Write-off

-

(150)

Translation differences

(488)

(583)

Transferred to investment properties (Note 5)

-

(13,514)


──────

──────

Closing balance

27,772

26,572


══════

══════

 

9          DEFERRED INCOME TAX ASSETS

 


30 June 2016

30 June 2015


USD'000

USD'000

 

Opening balance

6,572

7,820

Net change during the year (*)

(2,779)

(1,248)

Reclassified to non-current assets classified as held for

sales (Note 15)

(155)

-

 

Closing balance

─────

3,638

═════

─────

6,572

═════

Deferred income tax assets to be recovered after more than

  12 months

3,638

6,417 

Deferred income tax assets to be recovered within 12 months

-

155


─────

─────


3,638

6,572


═════

═════

 

(*)    The net change mainly arose from changes for tax provisions on fair value adjustments of investment properties during the year.

 

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 2016 of USD25.6 million (30 June 2015: USD33.9 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 2016

30 June 2015


USD'000

USD'000




2016

-

4,472

2017

2,627

4,035

2018

2,534

5,945 

2019

3,328

5,653

2020

11,119

13,809

2021

6,017

-


──────

──────


25,625

33,914


══════

══════

 

10         INVENTORIES

 

                                 

30 June 2016

30 June 2015


USD'000

USD'000

 

Opening balance

98,911

  104,869

Additions

9,744

  8,124

Transferred to cost of sales

(30,868)

  (13,048)

Write-down (Note 26) (*)

(18,951)

  (2,402)

Sold as part of property disposals (Note 7b)

(4,774)

-

Transferred from investment properties (Note 5)

9,240

  2,483

Exchanged for investment property (Note 5) (**)

(2,969)

-

Reclassified as held for sale (Note 15)

(4,585)

-

Translation differences

(1,306)

  (1,115)


───────

───────


54,442

  98,911


═══════

═══════

 

During the year, the Group capitalised borrowing costs amounting to USD0.8 million (2015: USD0.6 million) into the value of inventories.

 

Inventories which belong to Vinh Thai Urban Development Corporation Limited with a total carrying value of USD21.2 million as at 30 June 2016 (30 June 2015: USD37 million) are pledged as security for bank borrowings of USD5.2 million disclosed in Note 18.

 

(*)    This balance primarily comprises of two events during the year.

 

1.      All of the assets and liabilities of VinaCapital Danang Resort Limited (the "Danang Resort Project") have been reclassified as assets and liabilities held for sale (Note 15) as this project is in the process of being sold at 30 June 2016. The sales proceeds negotiated with the buyer are US$12 million below the carrying amount of the net assets of the project. As the net assets primarily comprise inventory, this shortfall has been recognised as a write-down in inventory in accordance with the relevant accounting standards.



 

 

2.      Management reassessed during the year the methodology used to allocate costs between inventories and investment properties held by Vinh Thai Urban Development Corporation Limited (the "My Gia Project"). This resulted in US$7 million of costs being reclassified from investment properties to inventories. The carrying value of these inventories is based on their net realisable value and this net realisable value did not change as a result of the reclassification of costs. The reclassification resulted in the cost of inventories increasing by US$7 million and therefore, given net realisable value of the inventories remained unchanged, a write down of of US$7 million was recorded in the current year. There was a corresponding fair value gain of US$7 million recorded on investment properties and this is included in the net gain on fair value of investment properties (Note 24).

 

(**)   The value of the additional investment property received was recorded at the deemed cost   of the inventory transferred to the counterparty. 

 

11         TRADE AND OTHER RECEIVABLES

 


30 June 2016

30 June 2015


USD'000

USD'000




Trade receivables

1,409

3,061

Receivables from disposals of subsidiaries (*)

14,806

185

Interest receivables

27

14

Prepayments to suppliers

726

840

Short-term prepaid expenses

434

703

Advances to employees

20

65

Other receivables

159

534


──────

17,581

══════

──────

5,402

══════

 

(*)      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.

 

12        RESTRICTED CASH

 

The balance represents property buyers' deposits. They are held in the accounts of several subsidiaries of the Group. These funds are not available for use until the terms of the relevant property sales agreements have been fulfilled.

 

In cases where sales of properties have not yet been finalised pending the completion of certain conditions set out in the relevant sales and purchase agreements, property buyers' deposits which are placed in third party escrow bank accounts are not part of the Group's assets and are therefore not included in either restricted cash or cash and cash equivalents in the balance sheet.

 

 

 



 

 

13         CASH AND CASH EQUIVALENTS

 


30 June 2016

30 June 2015


USD'000

USD'000




Cash on hand

44

39

Cash at banks

70,510

7,198

Cash equivalents

6,349

14,583


──────

──────


76,903

21,820


══════

══════

 

Cash equivalents include short-term highly liquid investments with original maturities of three months or less.

 

At 30 June 2016, cash and cash equivalents held at the Company level amounted to USD69 million (30 June 2015: USD5.7 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.

 

14         FINANCIAL INSTRUMENTS BY CATEGORY

 

As at 30 June 2016


 

Loans and receivables

Assets at fair value through profit or loss

 

 

Total


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


══════

════

══════

 



 

 

 


Other financial liabilities at amortised cost

Liabilities at fair value through profit 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


═══════

═════

══════

 



 

 

 

As at 30 June 2015

 


 

Loans and receivables

Assets at fair value through profit or loss

 

 

Total


USD'000

USD'000

USD'000





Assets








Non-current:




Long-term investments

4,296

-

4,296





Current:




Trade receivables

3,061

-

3,061

Receivables from disposals of subsidiaries

185

-

 185

Interest receivables

 14

-

 14

Receivables from related parties

 2,121

-

 2,121

Short-term investments

 3,116

-

 3,116

Financial assets at fair value through profit or loss

-

283

 283

Cash and cash equivalents

 21,820

-

 21,820

 

Total

──────

34,613

────

283

──────

34,896


══════

════

══════

 


Other financial liabilities at amortised cost

Liabilities at fair value through profit or loss

Total


USD'000

USD'000

USD'000

Liabilities







Non-current:




Bank borrowings and debts

85,243

-

85,243

Trade and other payables

31,162

-

31,162

Financial liabilities at fair value through profit or loss

-

2,405

2,405





Current:




Bank borrowings and debts

 8,982

-

 8,982

Payables to related parties

 35,292

-

 35,292

Trade payables

 1,016

-

 1,016

Payables for property acquisitions and land compensation

 

 16,693

-

 

 16,693

Interest payables

 478

-

 478

Other accrued liabilities

 651

-

 651

Other payables

 3,049

-

 3,049

 

Total

───────

182,566

─────

2,405

──────

184,971


═══════

═════

══════

 



 

 

15         ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE

 


30 June 2016





Attributable to

 

 

Assets classified as held for sale

Liabilities classified as held for sale

Net assets classified as held for sale

Non-controlling interests

Equity shareholders of the parent


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

══════

 

  The assets and liabilities of VinaCapital Danang Resort Limited and Parcel 3 of Vinh Thai Urban Development Corporation Limited have been presented as held for sale following the signing of relevant sale and purchase agreements.

 

For the comparative year:

 


30 June 2015





Attributable to

 

 

Assets classified as held for sale

Liabilities classified as held for sale

Net assets classified as held for sale

Non-controlling interests

Equity shareholders of the parent


USD'000

USD'000

USD'000

USD'000

USD'000







Vinh Thai Parcel 4

1,364

-

1,364

638

726

Hoi An South

11,018

518

10,500

-

10,500

Riverview Project

851

-

851

525

326


──────

13,233 

══════

────

518

════

──────

12,715

 ══════

─────

1,163

 ═════

──────

11,552

══════



 

 

 

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

 2015

 

Transferred in

 

Fair value adjustment

 

Disposals

 

30 June 2016


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

5,586

(1,803)

(12,080)

3,783

Property, plant and equipment (net of accumulated depreciation) (Note 6)

 

-

 

318

 

-

 

-

 

318

Intangible assets (net of accumulated amortisation)

 

-

9

 

-

-

 

9

Deferred income tax assets (Note 9)

-

155

-

-

155

Other current assets

-

42

-

-

42

Other non-current assets

-

468

-

-

468

Inventories (Note 10)

-

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

══════

 



 

 

For the comparative year:


30 June 2014

 

Transferred in

 

Disposal

30 June 2015


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

-

12,080

Property, plant and equipment (net of accumulated depreciation)

           

27,840

 

-

 

(27,840)

 

-

Intangible assets (net of accumulated amortisation)

              3,262

-

(3,262)

 

-

Prepayment for operating leases

233

-

(233)

-

Deferred income tax assets

385

-

(385)

-

Other non-current assets

93

-

(93)

-

Inventories

64

-

(64)

-

Trade and other receivables

2,048

172

(2,048)

172

Prepayments for acquisitions of investments

16,355

-

(16,355)

-

Cash and cash equivalents

526

130

(526)

130


──────

──────

──────

──────


50,806

13,233

(50,806)

13,233


──────

──────

──────

──────

Liabilities classified as held for sale





Borrowings and debts

15,203

-

(15,203)

-

Accruals and other current liabilities

-

17

-

17

Trade and other payables

4,425

760

(4,684)

501


──────

──────

──────

──────


19,628

777

(19,887)

518


──────

──────

──────

──────

Net assets classified as held for sale

31,178

 ══════

12,456

══════

(30,919)

══════

12,715

══════

 

 

 



 

 

16         SHARE CAPITAL

 


30 June 2016


30 June 2015


Number of shares

 

 

USD'000


Number of shares

 

USD'000

Authorised:

Ordinary shares of USD0.01 each

  500,000,000

──────────

  5,000

─────


 

  500,000,000

──────────

  5,000

─────







Issued and fully paid:






Opening balance

430,132,220

4,301


  458,727,080

  4,587

Shares purchased and cancelled

(36,323,741)

(363)


  (28,594,860)

  (286)

 

Closing balance

──────────

393,808,479  

══════════

─────

3,938  

═════


──────────

    430,132,220

══════════

─────

  4,301

═════

 

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 2016, there were two investors that held more than 10% of the ordinary shares of the Company (30 June 2015: two).

 

During the year, the Company purchased and cancelled 36,323,741 of its ordinary shares (30 June 2015: 28,594,860 shares) for a total cash consideration of USD22.3 million (30 June 2015: USD15.9 million) at an average cost of USD0.614 per share (30 June 2015: USD0.59 per share). The difference between the cost of the shares repurchased and their net asset value has been recorded in an equity reserve.

 

17         ADDITIONAL PAID-IN CAPITAL

 

Additional paid-in capital represents the excess of consideration received over the par value of shares issued.

 


30 June 2016

30 June 2015


USD'000

USD'000




Opening balance

521,088

  546,992

Shares repurchased and cancelled

(33,348)

  (25,904)

Distribution to shareholders (*)

(35,060)

-

 

Closing balance

───────

452,680

═══════

───────

             521,088

═══════

 

(*)       On 23 May 2016, the Company announced that it would make a distribution of capital from  its share premium account or additional paid-in capital approximately USD35 million. As at 30 June 2016, USD88 thousand was outstanding as a payable to shareholders (Note 21).

 



 

 

18         BORROWINGS AND DEBTS

 


30 June 2016

30 June 2015


USD'000

USD'000




Long-term borrowings:



Bank borrowings

48,276

62,251

Loans from non-controlling interests

804

779

Zero dividend preference shares

-

25,951

Less:



Current portion of long-term borrowings

(1,664)

  (3,738)


──────

47,416

──────

──────

      85,243

──────

Short-term borrowings:



Bank borrowings

-

4,025

Loans from non-controlling interests

-

1,219

Zero dividend preference shares

24,040

-

Current portion of long-term borrowings

1,664

3,738


──────

25,704

──────

──────

8,982

──────

Total borrowings and debts

73,120

══════

94,225

══════

 

i)          Borrowings

 

Borrowings mature on a range of dates until December 2019 and bear average annual interest rates of 10.1% for amounts in VND (30 June 2015: 10.6% for amounts in VND and 1.5% for amounts in USD). USD38.2 million of the Group's borrowings bear fixed interest rates, while the remaining are subject to floating interest rates (30 June 2015: USD0.6 million).

 

All bank borrowings are secured by specific investment properties and inventories of the Group (Notes 5 and 10).

 

During the year the Group capitalised borrowing costs amounting to USD5.7 million

(2015: USD5.5 million) in qualifying assets (Notes 5 and 10).

The maturities of the Group's borrowings at the end of the reporting year are as follows:

 


30 June 2016

30 June 2015


USD'000

USD'000




6 months or less

539

5,232

6-12 months

1-5 years

1,125

47,416

3,750

48,332 

Over 5 years

-

10,960


──────

49,080

══════

───────

68,274

═══════

 

The fair value of current borrowings approximates to their carrying amounts, as the impact of discounting is not significant. The fair value of long-term bank borrowings is USD47.4 million (30 June 2015: USD59.3 million). These are Level 2 fair values which are estimated using the discounted cash flow method.

 

 

 

 

            The Group's borrowings are denominated in the following currencies:

 


30 June 2016

30 June 2015


USD'000

USD'000




VND

49,080

67,055

USD

-

1,219


──────

  49,080

══════

──────

68,274

══════

 

During the year, the Group's subsidiaries borrowed USD19.1 million (30 June 2015: USD25.8 million) from banks to finance working capital and property development activities.

 

ii)          Zero dividend preference shares

 

VinaLand ZDP Ltd., a subsidiary of the Company, issued 15 million zero dividend preference shares with a par value of GBP1.00 per share on 17 December 2013. Upon issuance the ZDP shares had a three-year term and provided a gross redemption yield of 8%. They were admitted to the standard listing segment of the Official List of the UK Listing Authority and began trading on the London Stock Exchange's main market on 20 December 2013.

 

Each preference share has an issue price of £1 and a final capital entitlement of £1.26 at the end of its term. These shares are classified as liabilities and measured at amortised cost using the effective interest method.

 

The fair value of the ZDP shares as at 30 June 2016 is USD24.7 million (30 June 2015: USD27 million). This is a Level 1 fair value based on market quotes on 30 June 2016 (30 June 2015: Level 1).

 

Embedded within the ZDP Shares are call options which give VinaLand ZDP Limited early redemption rights. The Company does not consider the ZDP Shares and call options to be closely related. Therefore, the call options have been separated from the preference shares and are accounted for as derivatives.

 

19         FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

 

Financial liabilities at fair value through profit or loss represent the fair value of a cross currency swap designated as a fair value hedge. As at 30 June 2016, the fair value of the hedging derivative was USD6.9 million (30 June 2015: USD2.4 million).

 

There was a fair value loss of USD4.5 million (30 June 2015: USD2.1 million) on the hedging instrument, and a fair value gain of USD4.3 million (30 June 2015: USD2.1 million) on the hedged item attributable to the hedged risk, resulting in a net loss for the ineffective portion of approximately USD202 thousand (30 June 2015: USD1 thousand) recognised in the profit or loss.

 

 

20         DEFERRED INCOME TAX LIABILITIES

 


30 June 2016

30 June 2015


USD'000

USD'000




Opening balance

28,184

21,755

Net change during the year from fair value adjustments of investment properties and property, plant and equipment

(11,826)

6,429

 

Closing balance

──────

16,358

══════

──────

     28,184

══════

Deferred income tax liabilities to be recovered after more than 12 months

7,211

16,269

Deferred income tax liabilities to be recovered within 12 months

9,147

11,915


──────

──────


16,358

28,184


══════

══════

 

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.

 

21         TRADE AND OTHER PAYABLES

 


30 June 2016

30 June 2015


USD'000

USD'000




Trade payables

1,388

1,016

Payables for property acquisitions and land compensation

36,636

16,693

Compensation due to a co-investor upon disposal of an investment

-

4,170

Proceeds payables to a co-investor on disposal of an investment

 

1,603

 

-

Deposits from property buyers

4,952  

5,293

Deposits from customers of residential projects

28,370

41,853

Interest payable

1,557

478

Other accrued liabilities

413

651

Distribution to shareholders

88

-

Other payables

2,167

3,049


──────

77,174  

══════

──────

73,203

══════

 

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.

 

22         REVENUE

 


Year ended


30 June 2016

30 June 2015


USD'000

USD'000




Sales of residential projects

43,157

20,057


═════

═════



 

 

 

23         COST OF SALES

 


Year ended


30 June 2016

30 June 2015


USD'000

USD'000




Residential projects

36,363  

18,557


══════

══════

 

Cost of sales includes raw materials and consumables used, construction costs, land costs, depreciation and amortisation, staff costs, outside service costs and other expenses.

 

The analysis of cost of sales based on nature of expenses is as follows:

 


Year ended


30 June 2016

30 June 2015


USD'000

USD'000




Raw materials and consumables used

583

1,040 

Construction costs

24,906

9,231

Land costs

5,283

1,893

Depreciation and amortisation

480

716

Staff costs

1,794

1,876 

Outside service costs

1,351

832

Other expenses

1,966

2,969


──────

──────


36,363

18,557


══════

══════

 

24         NET GAIN ON FAIR VALUE ADJUSTMENTS OF INVESTMENT PROPERTIES AND  REVALUATIONS OF PROPERTY, PLANT AND EQUIPMENT

 


Year ended


30 June 2016

30 June 2015


USD'000

USD'000




Investment properties



By real estate sector:



- Commercial

(171)

99

- Residential, office buildings and undetermined use

15,206

13,918

- Mixed use

9,152  

30,773


──────

──────


24,187

44,790




Investment properties classified as held for sale



- Residential, office buildings and undetermined use

(1,803)

-

 

Property, plant and equipment



- Hospitality

-

872

 

Net gain on fair value adjustments of investment

  properties and revaluations of property, plant and equipment

 

──────

        

22,384

══════

──────

        

45,662

══════

 

 

 

 

 

 

 

 

 

 

 

 

 

25         SELLING AND ADMINISTRATION EXPENSES

 


Year ended


30 June 2016

30 June 2015


USD'000

USD'000




Management fees (Note 34)

5,305

6,995

Professional fees (*)

4,767

5,268

Depreciation and amortisation (*)

638

455

General and administration expenses (*)

3,338

3,599

Staff costs (*)

1,514

2,304

Outside service costs (*)

677

316

Disposal fees (Note 34)

139

-


──────

16,378

══════

──────

18,937

══════

 

(*)    These expenses primarily relate to the operating activities of the Group's subsidiaries. Note 33 contains further information in respect to the ongoing charges incurred by the Company.

 

26         IMPAIRMENT OF ASSETS

 


Year ended


30 June 2016

30 June 2015


USD'000

USD'000




(Reversal of impairment)/impairment of prepayments for acquisitions of investments (Note 8)

(1,560)

622

Write-down on inventories (Note 10)

18,951

2,402

Impairment of property, plant and equipment (Note 6)

819

4,656

 

 

──────

18,210

══════

─────

7,680

═════

 

27         FINANCE INCOME

 


Year ended


30 June 2016

30 June 2015


USD'000

USD'000




Interest income

1,025

787

Realised foreign exchange gains

210

1,250

Unrealised foreign exchange gains

12

-

Dividends

-

11


─────

1,247

═════

─────

2,048

═════

 



 

 

28         FINANCE EXPENSES

 


Year ended


30 June 2016

30 June 2015


USD'000

USD'000




Realised foreign exchange losses

1,515

108

Unrealised foreign exchange losses

763

1,028

Interest expense

3,973

5,017

Loss on amortisation of realisation fees

-

920


─────

6,251

═════

─────

7,073

═════

29         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.

 

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. A provision of USD0.2 million has been made for corporate income tax payable by the Vietnamese subsidiaries for the year (30 June 2015: USD0.4 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 2016

30 June 2015


USD'000

 USD'000




Current tax



Group's loss before tax

(4,483)

(10,349)

Group's loss multiplied by applicable tax rate (0%)

-

-

Effect of higher tax rate in Vietnam

(163)

(390)

Capital gains tax

(9,040)

-


─────

─────

Total current tax expense

(9,203)

(390)


─────

─────

Deferred income tax



Decrease in deferred tax assets (*)

(2,779)

(1,248)

Decrease/(increase) in deferred tax liabilities (*)

11,826

(6,429)


─────

─────

Deferred income tax

9,047

(7,677)


─────

─────

Tax expense

(156)

(8,067)


═════

═════




(*)   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.

 



 

 

30         LOSS AND NET ASSET VALUE PER SHARE

 

(a)        Basic

 


Year ended


30 June 2016

30 June 2015


USD'000

USD'000




Loss attributable to owners of the Company from continuing and total operations (USD'000)

(8,315)

(22,267)

Weighted average number of ordinary shares in issue

416,601,627

438,845,326

Basic loss per share from continuing

  and total operations (USD/share)

(0.02)

(0.05)


──────────

──────────

 

(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 2016

30 June 2015




Net asset value (USD'000)

336,836

391,191

Number of outstanding ordinary shares in issue

393,808,479

430,132,220

Net asset value per share (USD/share)

0.86

0.91


─────────

─────────

 

31         TOTAL EXPENSE RATIO

 

1     

For the year ended


30 June 2016

30 June 2015




Total expense ratio

2.31%

2.56%


──────

──────

 

The total expense ratio ("TER") has been calculated in accordance with the Association of Investment Companies ("AIC") recommended methodology dated May 2012. It is the ratio of annualised ongoing charges over the average undiluted net asset value during the year. The TER decrease mainly resulted from the decrease in management fees, valuation fees and other professional fees during the year ended 30 June 2016.

 

            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.

 

32         COMMITMENTS

 

As at the balance sheet date, the Group was committed under lease agreements to paying the following future amounts:

 


30 June 2016

30 June 2015


USD'000

USD'000




Within one year

52

179

From two to five years

306

483

Over five years

2,284

5,173


─────

─────


2,642

5,835


═════

═════

 

As at 30 June 2016, the Group was also committed under construction agreements to pay USD12.7 million (30 June 2015: USD18.2 million) for future construction work of the Group's properties held by subsidiaries.

 

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.  Further investment in any of these arrangements is at the Group's discretion. Management has estimated that, based on the development plan for each project, approximately USD32.1 million (30 June 2015: USD38.5 million) will be used to fund these projects over the next three years.

 

33        DIRECTORS' FEES AND MANAGEMENT'S REMUNERATION

 

The aggregate annual directors' fees amounted to USD300,640 (year ended 30 June 2015: USD267,857) of which there were no outstanding payables at the reporting date (30 June 2015: nil).

 

The details of annual remuneration by director are summarised below:

 


Year ended


30 June 2016

30 June 2015


USD'000

USD'000




Michel Casselman

70.5

59.7

Nicholas Allen

60.5

53.9

Nicholas Brooke

60.0

53.5

Charles Isaac

54.0

50.1

Tran Trong Kien (*)

41.9

-

Daniel McDonald (**)

13.8

50.7


─────

300.7

═════

─────

267.9

═════

 

(*)  Tran Trong Kien was appointed on 25 September 2015.

(**) Daniel McDonald resigned on 25 September 2015.

 

34         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"). 

 

Under the Amended Investment Management Agreement the management fee from 21 November 2012 is now 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 USD5,305,143 (30 June 2015: USD6,994,251), which were fully settled to the Investment Manager at the date of the consolidated balance sheet.

 

 



 

 

 

Performance fees

 

Under the Former Management Agreement prior to 21 November 2012, the Investment Manager was also entitled to a performance fee equal to 20% of the annual increase in net asset value over the higher of realised returns over an annualised hurdle rate of 8% (30 June 2012: hurdle rate 8%) and a high-water-mark. Under this arrangement, no performance fee was charged for the year (30 June 2015: nil), but USD7,428,247 (30 June 2015: USD28,218,000) of performance fees had been accrued as payable, which had been earned during prior years. On 21 November 2012, under the Amended Management Agreement, the Investment Manager's entitlement to the accrued performance fee and any future performance fees under the Former Management Agreement were cancelled and a new realisation fee, equivalent to the amount of accrued performance fees due and outstanding to the Investment Manager at 20 November 2012, was introduced.

 

Realisation fees

 

In accordance with the Amended Management Agreement, the Investment Manager is 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 signed prior to 21 November 2015. From the inception of the Cash Return Period to 30 June 2016, the Company distributed to shareholders a total of USD83,159,013 either in the form of share repurchases or distribution out of its additional paid-in capital. As a result, the Company paid USD20,789,753 out of the USD28,218,000 realisation fee to the Investment Manager during the year with the remaining amount of USD7,428,247 outstanding as at 30 June 2016 (30 June 2015: USD28,218,000).

 

Disposal fees

 

In accordance with the Seconded Amended Management Agreement, the Investment

Manager is entitled to a disposal fee equal to 2.8% of the distributable proceeds arising from the realisation of those assets which are disposed of after 21 November 2015. An amount of USD139,078 was accrued and outstanding as at 30 June 2016 (30 June 2015: nil).

 

Details of payables to related parties at the date of the consolidated balance sheet are as below:

 




30 June 2016

30 June 2015


Relationship

Balances

USD'000

USD'000






 

VinaCapital Investment

  Management Ltd.

Investment Manager

Realisation fees

7,428

28,218

 



Disposal fees

139

-

 



Management fees

-

676

 


Development fees and advances for real estate projects

391

1,141

 

VinaCapital Vietnam

  Opportunity Fund Limited ("VOF")

Under common management

Payments on behalf

31

959

 


Disposals of real estate projects

2,239

-

 

VinaCapital Corporate

  Finance Vietnam Ltd.

Affiliate of Investment Manager

Loans

Interest

-

-

2,296

2,002

 




──────

─────

 




10,228

35,292

 




══════

═════

 

 

As at 30 June 2016 and 30 June 2015, receivables from related parties mainly relate to amounts due from VOF pertaining to advances for jointly invested real estate projects.

 



 

 

 

The interests of the related parties in the shares, underlying shares and debentures of the Company are as follows:

 


As at


30 June 2016

30 June 2015


Number of shares



Vietnam Master Holding 2 Limited (*)

36,216,326

36,216,326

Asia Investment and Finance Limited (**)

2,372,500

-

VinaCapital Group Limited

993,333

993,333

VinaCapital Investment Management Limited

79,250

79,250


─────────

─────────

 

(*)    Vietnam Master Holding 2 Limited is a wholly-owned subsidiary of VOF.

 

(**)   In accordance with the Second Amended Management Agreement, the Investment Manager is required to use 50% of the realisation fee arising from the contracted divestment proceeds collected by 21 May 2016 to make market purchases of the Company's ordinary shares within three months of the receipt of the realisation fee. As of 30 June 2016, a subsidiary of the Investment Manager, Asia Investment and Finance Limited, had bought a total of 2,372,500 ordinary shares of the Company (30 June 2015: nil).

 

35         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 converted the proceeds from the ZDP share issue from GBP to USD. The Group has entered into a cross currency swap with a bank to hedge its future cash flows against fluctuations in the GBP/USD exchange rate.

 

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 2016

VND

USD


VND

USD


(USD as functional currency)

(VND as functional currency)


(USD as functional currency)

(VND as functional 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)


-

-


═════

═════


═══

═══

  


Short-term exposure


Long-term exposure

30 June 2015

VND

USD


VND

USD


(USD as functional currency)

(VND as functional currency)


(USD as functional currency)

(VND as functional currency)


USD'000

USD'000


USD'000

USD'000







Financial assets

205

3,080


-

-

Financial liabilities

-

(10,205)


-

-


────

─────


───

───

Net exposure

205

(7,125)


-

-


════

═════


═══

═══

 

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 2016, if the VND weakened/strengthened by 5% (30 June 2015: 5%), post-tax loss for the year would have been USD0.4 million (30 June 2015: 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 USD31.0 million lower/higher (30 June 2015: USD37.8 million).

 

Cash flow and fair value interest rate sensitivity

 

The Group's exposure to interest rate risk is related to interest bearing financial assets and financial liabilities. Cash and cash equivalents, bank deposits and bonds are subject to interest at fixed rates. The majority of the Group's financial liabilities bear fixed interest rates which are disclosed in Note 18 to the consolidated financial statements.

 

At 30 June 2016, if interest rates had been 0.5% (30 June 2015: 0.5%) higher/lower with all other variables held constant, post-tax loss for the year would have been USD0.04 million higher/lower (30 June 2015: post-tax loss for the year would have been USD0.26 million lower/higher).

 

The Investment Manager is responsible for the Group's cash flow planning and cash management, including borrowings. While the Group's subsidiaries may work directly with financial institutions to raise project financing, the Investment Manager has the overall responsibility for relations with financial institutions and is kept informed or involved in all financing activities.

 

The Investment Manager is involved from the early stage of the negotiation processes to ensure that the right structure and strategy are set at the beginning of each project. The Investment Manager is also responsible for ensuring the structure, pricing, financial ratios/covenants and other conditions are achievable and that repayment obligations can be met.

 

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 2016

30 June 2015


 USD'000

 USD'000




Neither past due nor impaired

107,202

34,428

Past due but not impaired, less than 6 months

-

-

Past due but not impaired, more than 6 months

185

185

Past due and impaired

-

-


──────

───────


107,387

34,613

Less: Allowance for impairment

-

-

 

Total

 

──────

107,387

══════

───────

    34,613

═══════



 


30 June 2016

30 June 2015


USD'000

USD'000




Neither past due nor impaired:



Long-term investments

-

4,296

Short-term investments

9,806

3,116

Restricted cash

3,392

-

Cash and cash equivalents

76,903

 21,820

Receivable from a related party

1,044

 2,121

Trade receivables

1,409

 3,061

Receivables from disposals of subsidiaries

14,621

-

Interest receivables

27

 14


──────

107,202

══════

──────

34,428

══════

Past due but not impaired:



Receivables from disposals of subsidiaries

185

185


──────

185

══════

──────

185

══════

Less: Allowance for impairment

-

-

 

Total trade and other receivables, net of provision for impairment

──────

107,387

──────

34,613


══════

══════

 

As at 30 June 2016, the Group did not provide impairment for receivables from disposal of subsidiaries (30 June 2015: nil). 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

30 June 2016

Within 6 months

6 to 12 months

From 1 to 5 years

Over  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 and debts

-

-

56,758

-

Zero dividend preference shares

25,067

-

-

-

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

══════

──────

-

══════

──────

-

══════

──────

-

══════

 

 



 

 

 

                                                                                                                        Current                                  Non-current

30 June 2015

Within 6 months

6 to 12 months

From 1 to 5 years

Over  5 years


USD'000

USD'000

USD'000

USD'000






Group





Financial liabilities:





Trade and other payables

5,194

20,863

31,162

-

Short-term borrowings

5,284

3,956

-

-

Payables to related parties

35,292

-

-

-

Long-term borrowings and debts

-

-

65,481

18,373

Zero dividend preference shares

-

-

29,709

-

Loans from non-controlling interests

-

-

923

-

 

 

──────

45,770

══════

──────

24,819

══════

───────

127,275
═══════

──────

18,373

══════

Derivative financial liabilities:





Gross settled currency swap





- Receipts

-

-

      (29,350)

-

- Payments

-

-

       31,755

-


──────

-

══════

──────

-

══════

──────

         2,405

══════

──────

-

══════

                                                                                                                       

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 2016

30 June 2015


USD'000

USD'000




Net assets attributable to the equity shareholders of the parent

336,836

391,191


═══════

═══════

 



 

 

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 1

Level 2

Level 3

Total

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)


═══

══════

═══

══════







Level 1

Level 2

Level 3

Total

 

As at 30 June 2015

USD'000

USD'000

USD'000

USD'000

 






 

Financial assets held at fair value through profit or loss





- Ordinary shares - unlisted

-

271

-

271

- Derivatives

-

12

-

12

Financial liabilities

- Derivatives

 

-

 

(2,405)

 

-

 

(2,405)


═══

══════

═══

══════

 

There were no significant transfers between levels during the year.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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