TIDMVNLZ
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 info@vinacapital.com.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
jonathan.luu@vinacapital.com
Joel Weiden
VinaCapital Investment Management Limited
Communications
+84 8 3821 9930
joel.weiden@vinacapital.com
Philip Secrett
Grant Thornton UK LLP, Nominated Adviser
+44 (0)20 7383 5100
philip.j.secrett@uk.gt.com
David Benda / Hugh Jonathan
Numis Securities Limited, Broker
+44 (0)20 7260 1000
funds@numis.com
Daniel Jason
Peregrine Communications, Public Relations (London)
+44 (0) 20 3040 0872
daniel.jason@peregrinecommunications.com
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 30 June
2016 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 30 June
2016 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
-------------- --------------
465,249 574,012
Total equity -------------- --------------
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
--------------------------------------------------------------------------------------------------------------
Total
equity
attributable
Additional to owners Non-
Share paid-in Equity Revaluation Other Translation Accumulated of the controlling Total
capital capital reserve reserve reserve reserve losses Company interests equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 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
-----------------------------------------------------------------------------------------------------------
Total equity
attributable
Additional to owners Non-
Share paid-in Equity Other Translation Accumulated of the controlling Total
capital capital reserve reserve reserve losses Company interests equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Balance at 1 July
2015 4,301 521,088 30,706 (57) (83,209) (81,638) 391,191 182,821 574,012
Loss for the year - - - - (8,315) (8,315) 3,677 (4,638)
Currency
translation - - - - (4,218) - (4,218) (1,784) (6,002)
Reclassification
of currency
translation
reserves on
disposal
of subsidiaries - - - - 15,550 - 15,550 - 15,550
Total
comprehensive ---------- ---------- ---------- ---------- ------------ ------------ ------------ ------------ ------------
loss - - - - 11,332 (8,315) 3,017 1,893 4,910
---------- ---------- ---------- ---------- ------------ ------------ ---------- ------------ ------------
Transactions with
owners in their
capacity as owners:
Repurchase and
cancellation of
shares (Notes
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 30 June
2016 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 30 June
2016 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 30 June
2016 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 27,
losses, net 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 (5,894) (22,734)
activities ------------ ------------
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 132,362 -
in associates
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 174,662 13,030
activities ------------ ------------
Year ended
--------------------------------
30 June 30 June
2016 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 (105,500) (22,288)
activities -------------- ------------
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 Hospitality Mixed use Total
buildings
USD'000 USD'000 USD'000 USD'000 USD'000
Revenue - 43,157 - - 43,157
Cost of sales - (36,363) - - (36,363) a
------------ ------------ ------------ ------------ ------------
Gross 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 Hospitality Mixed use Total
buildings
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 Hospitality Mixed Cash and Total
and office use deposits
buildings
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Investment properties 4,350 211,200 - 174,150 - 389,700
Property, plant and equipment - 66 - 434 - 500
Intangible assets - - - 3 - 3
Investments in associates 17,513 25,768 4,432 - - 47,713
Prepayments for acquisitions of investments - 25,425 - 2,347 - 27,772
Inventories - 51,550 - 2,892 - 54,442
Trade, tax and other receivables 98 12,955 5,344 2,213 - 20,610
Short-term investments - - - - 9,806 9,806
Financial assets at fair value through profit or loss (*) - - - 269 - 269
Restricted cash - - - - 3,392 3,392
Cash and cash equivalents - - - - 76,903 76,903
Assets classified as held for sale - 18,628 - - - 18,628
Other assets 197 4,432 - 33 - 4,662
------------ -------------- ------------ -------------- ------------ --------------
Total assets 22,158 350,024 9,776 182,341 90,101 654,400
Total assets include:
* Addition to non-current assets (other than financial
instruments and deferred tax assets) 1,950 16,064 - 10,341 - 28,355
As at 30 June 2015
----------------------------------------------------------------------------------------------
Commercial Residential Hospitality Mixed Cash and Total
and office use deposits
buildings
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Investment properties 4,500 291,866 - 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 Sensitivity on management's estimates
(probability-weighted
average)
------------- ------------- ---------------------------------------- --------------------------------------------------------------------------
Segment Valuation Valuation Discount Cap Valuation Sensitivities Sensitivities in discount
technique (USD'000) rate rate per in sales price and cap rates (USD'000)
square per
metre square metre
(USD) (USD'000)
------------- ------------- ---------- --------- ----- ---------- --------------------------- ---------------------------------------------
Change in discount
rate
Residential
and office Discounted
buildings cash 19%
(*) flows 102,140 - 21.5% N/A N/A -1% 0% 1%
--------- -------- --------
105,031 102,140 99,202
Residential Change in sales
and office Direct 30 - price per
buildings comparisons 109,060 N/A N/A 5,845 square metre
---------------------------
-10% 0% 10%
------- -------- --------
98,154 109,060 119,966
--------------------------- ---------- --------- ----- ---------- ------- -------- -------- ------- ----- --------- -------- --------
Mixed Discounted Change in discount
use cash rate
flows
103,350 17% 8.5% N/A -1% 0% 1%
Change
in
cap
rate -1% 127,815 114,762 102,915
-------
0% 115,666 103,350 92,673
-------
1% 106,127 94,882 84,641
--------------------------- ---------- --------- ----- ---------- ------- -------- -------- ------- ----- --------- -------- --------
Change in sales
Mixed Direct 258 price per
use comparisons 70,800 N/A N/A - 1,040 square metre
---------------------------
-10% 0% 10%
------- -------- --------
63,720 70,800 77,880
--------------------------- ---------- --------- ----- ---------- ------- -------- -------- ------- ----- --------- -------- --------
Change in sales
Direct price per
Commercial comparisons 4,350 N/A N/A 1,758 square metre
---------------------------
-10% 0% 10%
------- -------- --------
3,915 4,350 4,785
--------------------------- ---------- --------- ----- ---------- ------- -------- -------- ------- ----- --------- -------- --------
For the comparative balance sheet date:
Level 3 - Range of
unobservable inputs Sensitivity on management's estimates
(probability-weighted
average)
------------- ------------ ---------------------------------------- ------------------------------------------------------------------------
Segment Valuation Valuation Discount Cap Valuation Sensitivities Sensitivities in discount
technique (USD'000) rate rate per in sales price and cap rates (USD'000)
square per
metre square metre
(USD) (USD'000)
------------- ------------ ---------- --------- ----- ---------- ------------------------- ---------------------------------------------
Change in discount
rate
Residential
and office Discounted
buildings cash 18%
(*) flow 218,284 - 21.5% N/A N/A -1% 0% 1%
--------- -------- --------
223,602 218,284 213,584
Residential Change in sales
and office Direct 2,440 price per
buildings comparison 73,582 N/A N/A - 6,499 square metre
-------------------------
-10% 0% 10%
------- ------- -------
63,872 73,582 83,292
-------------------------- ---------- --------- ----- ---------- ------- ------- ------- ------- ----- --------- -------- --------
Mixed Discounted Change in discount
use cash rate
flow
14.5%
99,980 - 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
-------------------------- ---------- --------- ----- ---------- ------- ------- ------- ------- ----- --------- -------- --------
Change in sales
Mixed Direct 618 price per
use comparison 83,108 N/A N/A - 1,348 square metre
-------------------------
-10% 0% 10%
------- ------- -------
71,978 83,108 94,238
-------------------------- ---------- --------- ----- ---------- ------- ------- ------- ------- ----- --------- -------- --------
Change in sales
Direct price per square
Commercial comparison 4,500 N/A N/A 1,818 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 Furniture,
and Machinery, fixtures
golf plant and office Motor
course and equipment equipment 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)
------------ -------- -------- -------- ----------
517 54 44 207 822
At 30 June 2016 ------------ -------- -------- -------- ----------
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
---------- -------- -------- -------- ----------
(104) (53) (43) (122) (322)
At 30 June 2016 ---------- -------- -------- -------- ----------
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 Furniture,
and Machinery, fixtures
golf plant and office Motor
course and equipment equipment 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)
------------ -------- -------- -------- ----------
12,040 274 678 867 13,859
At 30 June 2015 ------------ -------- -------- -------- ----------
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
---------- -------- -------- -------- ----------
(4,037) (105) (212) (242) (4,596)
At 30 June 2015 ---------- -------- -------- -------- ----------
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 30 June
2016 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
Share Equity
Principal of interest
activity Assets Liabilities Revenue Loss losses held
Incorporation to
the
Group
USD'000 USD'000 USD'000 USD'000 USD'000 %
Aqua
City
Joint
Stock
Company
(*() Vietnam Property 59,232 8,942 - (2,866) (1,433) 50
Other Property/
associates Vietnam Hospitality 65,501 25,872 3,984 (3,138) (1,946)
124,733 34,814 3,984 (6,004) (3,379)
=========================================== ========= ============= ========= ========== ========== ==========
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
Share
of Equity
Principal losses interest
activity Assets Liabilities Revenue Loss to held
Incorporation the
Group
USD'000 USD'000 USD'000 USD'000 USD'000 %
The 21(st)
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
------------------------------ ------------------------------
Percentage Percentage
Country Percentage interest Percentage interest
of incorporation interest held by interest held by
and place held by non-controlling held by non-controlling Nature
Name of business the Group interests the Group interests of business
VinaCapital Hoi
An Resort
Limited Vietnam 100% 0% 100% - Hospitality
VinaCapital
Danang Property
Resort Limited Vietnam 75% 25% 75% 25% investment
VinaCapital
Commercial
Center Limited
(Vietnam) Property
(*() Vietnam 38.2% 62% 38.2% 61.8% investment
Mega Assets
Company
Limited Property
(Vietnam) Vietnam 75% 25% 75% 25% investment
SIH Real Este
Limited
Company Property
(Vietnam) Vietnam 75% 25% 75% 25% investment
Dien Phuoc Long
Real Estate
Company Property
Limited Vietnam 100% - 100% - investment
VinaCapital
Phuoc
Dien Co. Property
Limited Vietnam 100% - 100% - investment
Dong Binh Duong
Urban
Development Property
Co. Limited Vietnam 70% 30% 70% 30% investment
Vina Dai Phuoc
Corporation Property
Limited Vietnam 54% 46% 54% 46% investment
Viet Land
Development
Corporation Property
Limited Vietnam 90% 10% 90% 10% investment
Vinh Thai Urban
Development
Corporation Property
Limited Vietnam 53.3% 46.7% 53.3% 46.7% investment
Thang Long
Property Property
Company Limited Vietnam 65% 35% 65% 35% investment
Hoang Phat
Investment
Joint Stock
Company Vietnam 60% 40% 60% 40% Hospitality
AA VinaCapital
Co. Property
Limited Vietnam 80% 20% 80% 20% investment
Vina Alliance
Company Property
Limited (*() Vietnam 46.5% 53.5% 46.5% 53.5% investment
Phu Hoi City
Company Property
Limited Vietnam 52.5% 47.5% 52.5% 47.5% investment
VinaCapital
Danang
Golf Course Property
Limited Vietnam - - 75% 25% 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 30 June
2016 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
Dai Phuoc
Vina Square Lotus Phu Hoi Time Square
-------------------- -------------------- ------------------ --------------------
As at 30 As at 30 As at 30 As at 30
June June June 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
Dai Phuoc
Vina Square Lotus Phu Hoi Time Square
------------------- ------------------ ------------------ ------------------
Year ended Year ended Year ended Year ended
30 June 30 June 30 June 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
Dai Phuoc
Vina Square Lotus Phu Hoi Time Square
------------------ ------------------ ------------------ ------------------
Year ended Year ended Year ended Year ended
30 June 30 June 30 June 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 30 June
2016 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 30 June
2016 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 30 June
2016 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 30 June
2016 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 30 June
2016 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 (4,774) -
disposals (Note 7b)
Transferred from investment
properties (Note 5) 9,240 2,483
Exchanged for investment (2,969) -
property (Note 5) (**)
Reclassified as held for (4,585) -
sale (Note 15)
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 30 June
2016 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 30 June
2016 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
Assets
Loans at fair
and receivables value Total
through
profit
or loss
USD'000 USD'000 USD'000
Assets
Current:
Trade receivables 1,409 - 1,409
Receivables from disposal
of subsidiaries 14,806 - 14,806
Interest receivables 27 - 27
Receivables from related
parties 1,044 - 1,044
Short-term investments 9,806 - 9,806
Financial assets at fair
value through profit or
loss - 384 384
Restricted cash 3,392 - 3,392
Cash and cash equivalents 76,903 - 76,903
------------ -------- ------------
Total 107,387 384 107,771
Liabilities
at fair
Other financial value
liabilities through
at amortised profit
cost or loss Total
USD'000 USD'000 USD'000
Liabilities
Non-current:
Bank borrowings and debts 47,416 - 47,416
Current:
Bank borrowings and debts 25,704 - 25,704
Payables to related parties 10,228 - 10,228
Trade payables 1,388 - 1,388
Proceeds payables to
a co-investor on disposal
of an investment 1,603 - 1,603
Payables for property
acquisitions and land
compensation 36,636 - 36,636
Interest payables 1,557 - 1,557
Other accrued liabilities 413 - 413
Distribution to shareholders 88 - 88
Other payables 2,167 - 2,167
Financial liabilities
at fair value through
profit or loss - 6,945 6,945
-------------- ---------- ------------
Total 127,200 6,945 134,145
As at 30 June 2015
Assets
Loans at fair
and receivables value Total
through
profit
or loss
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
Liabilities
Other at fair
financial value
liabilities through
at amortised profit
cost 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 Liabilities Net Non-controlling Equity
classified classified assets interests shareholders
as held as held classified of the
for sale for as held parent
sale for
sale
USD'000 USD'000 USD'000 USD'000 USD'000
VinaCapital
Danang Resort
Limited 14,844 (4,861) 9,983 3,045 6,938
Vinh Thai Parcel
3 3,784 (404) 3,380 1,580 1,800
------------ -------- ------------ ---------- ------------
18,628 (5,265) 13,363 4,625 8,738
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 Liabilities Net Non-controlling Equity
classified classified assets interests shareholders
as held as held classified of the
for sale for as held parent
sale for
sale
USD'000 USD'000 USD'000 USD'000 USD'000
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 Transferred Fair Disposals 30 June
2015 in value 2016
adjustment
USD'000 USD'000 USD'000 USD'000 USD'000
Assets classified
as held for sale
Available for
sales financial
assets 851 - - (851) -
Investment properties
(Note 5) 12,080 5,586 (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 30 June
2014 Transferred Disposal 2015
in
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 Number
of shares USD'000 of shares USD'000
Authorised:
Ordinary shares 500,000,000 5,000 500,000,000 5,000
of USD0.01 each -------------------- ---------- -------------------- ----------
Issued and fully
paid:
Opening balance 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 30 June
2016 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 30 June
2016 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 30 June
2016 2015
USD'000 USD'000
6 months or less 539 5,232
6-12 months 1,125 3,750
1-5 years 47,416 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 30 June
2016 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 GBP1 and a final
capital entitlement of GBP1.26 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 30 June
2016 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 30 June
2016 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 30 June
2016 2015
USD'000 USD'000
Sales of residential projects 43,157 20,057
23 COST OF SALES
Year ended
------------------
30 June 30 June
2016 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 30 June
2016 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 30 June
2016 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 30 June
2016 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 30 June
2016 2015
USD'000 USD'000
Interest income 1,025 787
Realised foreign exchange
gains 210 1,250
Unrealised foreign exchange 12 -
gains
Dividends - 11
---------- ----------
1,247 2,048
28 FINANCE EXPENSES
Year ended
------------------------
30 June 30 June
2016 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 30 June
2016 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 30 June
2016 2015
Relationship Balances USD'000 USD'000
VinaCapital
Investment
Management Investment Realisation
Ltd. Manager 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 Under
Fund Limited common Payments
("VOF") management on behalf 31 959
Disposals
of real
estate
projects 2,239 -
Affiliate
VinaCapital of Investment
Corporate Manager Loans - 2,296
Finance Vietnam
Ltd. Interest - 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 (VND as (USD as (VND as
functional functional functional functional
currency) currency) currency) currency)
USD'000 USD'000 USD'000 USD'000
Financial
assets 10,848 1,583 - -
Financial - -
liabilities - (9,021)
---------- ---------- ------ ------
Net exposure 10,848 (7,438) - -
Short-term exposure Long-term exposure
-------------------------- --------------------------
30 June 2015 VND USD VND USD
(USD as (VND as (USD as (VND as
functional functional functional functional
currency) currency) currency) currency)
USD'000 USD'000 USD'000 USD'000
Financial
assets 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 30 June
2016 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 30 June
2016 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 14,621 -
of subsidiaries
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 to From Over
6 months 12 months 1 to 5 years
5 years
USD'000 USD'000 USD'000 USD'000
Group
Financial liabilities:
Trade and other payables 7,216 36,636 - -
Short-term borrowings 2,602 2,572 - -
Payables to related
parties 10,197 31 - -
Long-term borrowings - - 56,758 -
and debts
Zero dividend preference 25,067 - - -
shares
Loans from non-controlling
interests - 727 217 -
------------ ------------ -------------- ------------
45,082 39,966 56,975 -
Derivative financial
liabilities:
Gross settled currency
swap
- Receipts (25,034) - - -
- Payments 31,979 - - -
------------ ------------ ------------ ------------
6,945 - - -
Current Non-current
30 June 2015 Within 6 to From Over
6 months 12 months 1 to 5 years
5 years
USD'000 USD'000 USD'000 USD'000
Group
Financial liabilities:
Trade and other payables 5,194 20,863 31,162 -
Short-term borrowings 5,284 3,956 - -
Payables to related 35,292 - - -
parties
Long-term borrowings
and debts - - 65,481 18,373
Zero dividend preference - - 29,709 -
shares
Loans from non-controlling - - 923 -
interests
------------ ------------ -------------- ------------
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 30 June
2016 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 Level Level Total
1 2 3
As at 30 June USD'000 USD'000 USD'000 USD'000
2016
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 Level Level Total
1 2 3
As at 30 June USD'000 USD'000 USD'000 USD'000
2015
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
FR LLFFLIALILIR
(END) Dow Jones Newswires
October 10, 2016 08:00 ET (12:00 GMT)
Grafico Azioni Vinaland (LSE:VNLZ)
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Grafico Azioni Vinaland (LSE:VNLZ)
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