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VinaLand Limited  -  VNL   

Interim results

Released 09:44 29-Mar-2017

RNS Number : 8727A
VinaLand Limited
29 March 2017
 

29 March 2017

VinaLand Limited                         

Interim results for the six months ended 31 December 2016

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 interim results for the six months ended 31 December 2016 ("the Period").

Financial highlights:

·             Net Asset Value ("NAV") of USD 318.2 million (30 June 2016: USD336.8 million); and,

·             NAV per share of USD0.89 (30 June 2016: USD0.86).

Operational highlights:

During the Period, VNL has completed the divestment of three projects and made considerable progress on other pending disposals. The three projects sold were:

·             The Resort Project, located in Danang, resulting in net cash proceeds of USD7.0 million to the Company;

·             Project Ceana in Quang Nam, resulting in net cash proceeds of USD7.6 million to the Company; and,

·             Project BD in Binh Duong, resulting in net cash proceeds of USD10.9 million to the Company.

Notes to Editors:

VinaCapital is a leading investment management and real estate development firm headquartered in Vietnam, with a diversified portfolio of USD1.8 billion in assets under management.

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-fund.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

 

Chairman's Statement

 

Dear Shareholders,

 

I am pleased to report that VinaLand Limited (the "Company", "VNL") has continued to make steady progress during the interim period from 1 July 2016 to 31 December 2016, both in terms of securing shareholder approval for a new strategy at the EGM, as well as in disposing of projects and making distributions to shareholders. 

 

EGM/AGM              

 

In November, the Company held an Extraordinary General Meeting ("EGM") and an Annual General Meeting ("AGM"). Shareholders approved all four AGM resolutions, while at the EGM shareholders supported Resolutions 1, 2, and 3, but not Resolution 4, and as a result Resolution 5 was not put to a vote. In summary, shareholders supported the Company's new continuation strategy, under which the divestment of projects will continue in a controlled and orderly manner and the funds received will be distributed to shareholders.

 

Project divestments and distributions

 

During the period the Company made good progress with the complete disposal of three projects and considerable work undertaken on several other pending disposals. The three projects sold were:

·     The Resort Project (August 2016): the Company disposed of its entire stake at a total valuation 1.0% below the 30 June 2016 unaudited net asset value ("NAV"). The Company received net cash proceeds of USD7.0 million from the sale.

·     Project Ceana (November 2016): the Company disposed of its stake in this project at a valuation 12.9% above the 30 September 2016 unaudited NAV. VNL received net proceeds of USD7.6 million from the sale.

·     Project BD (December 2016): the Company disposed of its stake in this project at a valuation 17.4% below the unaudited net asset value at the time of VNL's recent extraordinary general meeting (EGM) in November 2016. VNL received net proceeds of USD10.9 million from the sale.

Furthermore, during the six-month period, VNL distributed USD23.6 million to shareholders by way of share buybacks undertaken at an average share price discount to NAV of 24%.

 

ZDP redemption

 

The full redemption of the VinaLand Zero Dividend Preference (ZDP) shares occurred in December 2016, and the ZDP shares are no longer traded. Following the redemption, the Company's debt is limited to loans obtained at the project level.  These will continue to decline as projects are sold. 

 

Fund performance

 

The NAV per share (reviewed by the auditors) was USD0.89 at 31 December 2016, an increase of 3.95% from the audited NAV per share at 30 June 2016.  During this period, the Company's share price increased to USD0.69, narrowing the share price discount to NAV to 24% from 33% at 30 June 2016.

 

 

 

 

 

Board changes

 

During the period, Board Directors Nicholas Allen and Nicholas Brooke announced their resignations effective on 20 October 2016 and 31 December 2016, respectively. I would like to thank them for their diligence and support over the last few years.

 

As the Company's portfolio is reducing the Board has decided that four directors are sufficient to enable the Board to carry out its duties.  With this consideration in mind, Ian Lydall joined the Board in October 2016.

 

Vietnam's property market continues to remain buoyant and the Company continues to evaluate opportunities to dispose of projects when appropriate and practicable. We are confident that the Company's new strategy is aligned with the current positive trends in both the Vietnam economy and real estate markets and that, as a result, we can maximise returns to shareholders over the coming years. On behalf of the Board, I appreciate your continued feedback and support. 

 

 

 

Michel Casselman

Chairman

VinaLand Limited

28 March 2017

 

CONDENSED INTERIM CONSOLIDATED BALANCE SHEET

 

 

 

31 December 2016

30 June

2016

 

Note

USD'000

USD'000

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Non-current

 

 

 

Investment properties

6

424,231

389,700

Property, plant and equipment

7

461

500

Intangible assets

 

2

3

Investments in associates

8

49,285

47,713

Prepayments for acquisitions of investments

9

26,550

27,772

Deferred income tax assets

10

3,212

3,638

Other non-current assets

 

94

1,024

 

 

───────

───────

Total non-current assets

 

503,835

470,350

 

 

═══════

═══════

 

 

 

 

Current

 

 

 

Inventories

11

43,141

54,442

Trade and other receivables

12

4,509

17,581

Tax receivables

 

2,563

1,985

Receivables from related parties

30

1,348

1,044

Short-term investments

 

2,235

9,806

Financial assets at fair value through profit or loss

 

268

384

Restricted cash

13

-

3,392

Cash and cash equivalents

14

58,416

76,903

 

 

───────

───────

Total current assets

 

112,480

165,537

 

 

 

 

Assets classified as held for sale

15

3,784

18,628

 

Total assets

 

───────

620,099 ═══════

───────

654,515

═══════

 

 

 

 

 

 

31 December 2016

30 June

2016

 

Note

USD'000

USD'000

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

 

 

 

EQUITY

 

 

 

Equity attributable to equity shareholders of the parent

 

 

 

Share capital

16

3,579

3,938

Additional paid-in capital

17

422,067

452,680

Equity reserve

 

49,384

42,115

Other reserve

 

(67)

(67)

Translation reserve

 

(67,106)

(71,877)

Accumulated losses

 

(89,615)

(89,953)

 

 

───────

───────

 

 

318,242

336,836

Non-controlling interests

 

126,342

128,413

 

Total equity

 

───────

444,584

───────

───────

465,249 

───────

LIABILITIES

 

 

 

 

 

 

 

Non-current

 

 

 

Borrowings and debts

18

81,309

47,416

Deferred income tax liabilities

19

21,795

16,358

 

 

───────

───────

Total non-current liabilities

 

103,104

63,774

 

 

 

 

Current

 

 

 

Borrowings and debts

18

2,080

25,704

Trade and other payables

20

68,888

77,174

Payables to related parties

30

984

10,228

Financial liabilities at fair value through profit or loss

 

-

6,945

Tax payables

 

55

 176

 

 

───────

───────

Total current liabilities

 

72,007

120,227

 

 

 

 

Liabilities classified as held for sale

15

404

 5,265

 

Total liabilities

 

───────

175,515

───────

189,266

 

Total equity and liabilities

 

───────

620,099

───────

654,515

 

 

═══════

═══════

Net assets per share attributable to equity

 shareholders of the parent (USD per share)

 

28(c)

0.89

0.86

 

 

═══════

═══════

 

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

            Equity attributable to equity shareholders of the Company

 

 

 

 

 

Share

capital

 

Additional paid-in capital

 

 

Equity reserve

 

 

Other reserve

 

 

Translation reserve

 

 

Accumulated losses

Total equity attributable to owners of the Company

 

Non-

controlling interests

 

 

Total
equity

 

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2016

3,938

452,680

42,115

(67)

(71,877)

(89,953)

336,836

128,413

465,249

Profit for the period

-

-

-

-

-

338

338

10,486

10,824

Currency translation

-

-

-

-

(4,007)

-

(4,007)

(2,887)

(6,894)

Reclassification of currency translation reserve on disposal of subsidiaries

-

-

-

-

8,778

 

8,778

-

8,778

 

─────

─────

─────

─────

─────

─────

──────

───────

──────

Total comprehensive income

 

-

─────

-

─────

-

─────

-         ─────

4,771

─────

338

─────

5,109

──────

7,599

──────

12,708

─────

Transactions with owners in their

  capacity as owners:

 

 

 

 

 

 

 

 

 

Repurchase and cancellation of shares

(359)

(30,613)

7,269

-

-

-

(23,703)

-

(23,703)

Disposal of subsidiaries

-

-

-

-

-

-

-

(3,903)

(3,903)

Capital contribution in a subsidiary

-

-

-

-

-

-

-

41

41

Distribution to non-controlling interests

-

-

-

-

-

-

-

(5,808)

(5,808)

 

─────

───────

──────

──────

──────

──────

──────

──────

──────

Balance at 31 December 2016

3,579

422,067

49,384

(67)

(67,106)

(89,615)

318,242

126,342

444,584

 

═════

═══════

══════

══════

══════

══════

══════

══════

══════

                         

 

 

 

 

 

 

 

 

 

 

 

 

            Equity attributable to equity shareholders of the Company

 

 

 

 

 

Share

capital

 

Additional paid-in capital

 

 

Equity reserve

 

 

Other reserve

 

 

Translation reserve

 

 

Accumulated losses

Total equity attributable to owners of the Company

 

Non-

controlling interests

 

 

Total
equity

 

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

 

 

 

 

Balance at 1 July 2015

4,301

521,088

30,706

(57)

(83,209)

(81,638)

391,191

182,821

574,012

Profit for the period

-

-

-

-

-

5,966

5,966

5,878

11,844

Currency translation

-

-

-

-

(8,523)

-

(8,523)

(2,566)

(11,089)

Reclassification of currency translation reserve on disposal of subsidiaries

-

-

-

-

3,022

-

3,022

-

3,022

 

─────

─────

─────

─────

─────

───────

────────

──────

──────

Total comprehensive (loss)/income

 

-

─────

-

─────

-

─────

         -

─────

(5,501)

─────

 5,966

───────

465

────────

 3,312

──────

3,777

──────

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

Repurchase and cancellation of shares

(133)

(11,978)

4,111

-

-

-

(8,000)

-

(8,000)

Disposal of subsidiaries

-

-

-

-

-

-

-

(14,641)

(14,641)

Capital contributions in subsidiaries

 

 

 

-

-

-

-

2,947

2,947

Distribution to non-controlling interests

-

-

-

-

-

-

-

(518)

(518)

Acquisition of non-controlling interests in a subsidiary

-

-

-

(10)

-

-

(10)

(890)

(900)

 

─────

───────

──────

──────

──────

───────

───────

───────

──────

Balance at 31 December 2015

4,168

509,110

34,817

(67)

(88,710)

(75,672)

383,646

173,031

556,677

 

═════

═══════

══════

══════

══════

═══════

═══════

═══════

══════

                         

 

 

 

 

CONDENSED INTERIM CONSOLIDATED INCOME STATEMENT

 

 

 

Six months ended

 

 

31 December 2016

31 December 2015

 

Note

USD'000

USD'000

 

 

 

 

Revenue

21

4,508

30,384

Cost of sales

22

(5,338)

(24,848)

 

 

──────

──────

Gross (loss)/profit

 

(830)

5,536

 

 

 

 

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

 

 

23

 

 

41,667

 

 

20,485

Selling and administration expenses

24

(5,188)

(8,905)

Net change in fair value of financial assets at fair value through profit or loss

 

 

 

-

 

(173)

Net (loss)/gain on disposals of investments

8

(13,852)

7,609

Reversal of impairment/(impairment) of assets

25

682  

(15,470)

Finance income

 

365

536

Finance expenses

26

(4,302)

(3,403)

Share of (losses)/gains of associates, net

8

(1,921)

1,573

Gain due to dilution of ownership in an associate

8

1,613

-

Other income

 

330

1,781

Other expenses

 

(1,078)

(155)

 

 

──────

──────

Income from operations before income tax

 

17,486

9,414

Income tax

27

(6,662)

2,430

 

 

──────

──────

Income from operations

 

10,824

11,844

 

 

 

 

Attributable to equity shareholders of the Company

 

338

5,966

Attributable to non-controlling interests

 

10,486

5,878

 

 

──────

──────

Net income for the period

 

10,824

11,844

 

 

══════

══════

Earning per share

-  basic and diluted (USD per share)

 

28(a)

 

0.00

 

0.01

 

 

──────

──────

 

 

 

CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

Six months ended

 

 

31 December 2016

31 December 2015

 

 

USD'000

USD'000

 

 

 

 

Net income for the period

 

10,824

11,844

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

 

Reclassification of currency translation reserve on

 disposal of subsidiaries

 

 

8,778

 

3,022

Exchange differences on translating foreign operations

 

(6,894)

(11,089)

 

 

──────

──────

 

 

 

 

Other comprehensive income/(loss) for the period

 

1,884

(8,067)

 

 

──────

──────

Total comprehensive income for the period

 

12,708

3,777

 

 

════

════

 

 

 

 

Attributable to equity shareholders of the Company

 

5,109

465

Attributable to non-controlling interests

 

7,599

3,312

 

 

────

12,708

════

────

3,777

════

 

 

 

 

 

 

 

 

 

 

 

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

Six months ended

 

 

 

31 December

2016

31 December

2015

 

Note

USD'000

USD'000

 

 

 

 

Operating activities

 

 

 

Net operating profit before tax

 

17,486

9,414

Adjustments for:

 

 

 

Depreciation and amortisation

 

27

333

Net change in fair values of financial assets at fair value

  through profit or loss

 

 

(6,831)

 

173

Net gain on fair value adjustments of investment properties

 and revaluations of property, plant and equipment

 

23

 

(41,667)

 

(20,485)

Loss/(gain) on disposals of investments, net

8

13,852

(7,609)

(Reversal)/allowance for impairment of assets

25

(682)

15,470

Share of losses/(gain) of associates, net

8

1,921

(1,573)

Gain due to dilution in ownership of associate

8

(1,613)

-

Net loss on disposals of fixed assets

 

-

56

Unrealised foreign exchange losses

 

2

855

Interest expense

 

4,130

2,519

Interest income

 

(239)

(474)

 

Net loss before changes in working capital

 

──────

(13,614)

──────

(1,321)

 

 

 

 

Change in trade receivables and other current assets

 

(852)

1,510

Change in inventories

 

1,953

18,347

Change in trade payables and other current liabilities

 

(4,179)

(1,402)

Income tax paid

 

-

(278)

 

Net cash (outflow)/inflow from operating activities

 

──────

(16,692)

──────

──────

16,856

──────

 

 

 

 

Investing activities

 

 

 

Interest received

 

206

467

Purchases of investment properties, property, plant and

  equipment, and other non-current assets

 

 

(12,980)

 

(14,265)

Additional investments in associates

 

(1,880)

(668)

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

 

 

1,954

 

10,500

Proceeds from sales of subsidiaries

 

26,357

29,412

Collection of prepayment for acquisition

 

2,955

-

Net proceeds in short-term deposits

 

7,352

94

Net proceeds in long-term deposits

 

-

14

 

Net cash inflow from investing activities

 

──────

23,964

──────

──────

25,554

──────

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

 

 

 

31 December

2016

31 December

2015

 

 

Note

USD'000

USD'000

 

 

 

 

 

Financing activities

 

 

 

Additional capital contributions from non-controlling interests

 

41

2,947

Loan proceeds from banks                       

 

36,309

13,793

Loan repayments to banks

 

(1,028)

(9,471)

ZDP repayment

 

(25,118)

-

Ordinary shares acquired by the Company

16

(23,703)

(8,000)

Interest paid

 

(6,514)

(5,223)

Acquisition of non-controlling interests in a subsidiary

 

-

(900)

Capital refunded to non-controlling interests

 

(5,808)

(518)

Net cash outflow to financing activities

 

──────

(25,821)

──────

──────

(7,372)

──────

Net changes in cash and cash equivalents for the period

 

(18,549)

35,038

Cash and cash equivalents at the beginning of the period

 

76,903

21,820

Cash and cash equivalents classified as held for sale

 

-

(862)

Exchange differences on cash and cash equivalents

 

62

-

 

Cash and cash equivalents at the end of the period

 

14

──────

58,416

══════

──────

55,996

══════

 

During the period, major non-cash transactions included capital gains tax of USD0.8 million which crystalised during the period (six months ended 31 December 2016: USD2.6 million) resulting from realised gains on divestments. The tax amounts due were withheld from disposal proceeds due to the Group by the buyers and remitted to the tax authorities and as a result these amounts are excluded from proceeds from disposal of subsidiaries, and disposals of investment properties and investments in associates, included in the consolidated statement of cash flows.

 

 

 

 

 

NOTES TO THE CONDENSED INTERIM 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 original objective of the Company was to focus on key growth segments within Vietnam's emerging real estate market, namely residential, office, retail, industrial and leisure projects in Vietnam and the surrounding countries in Asia. The Company is listed on the AIM Market of the London Stock Exchange under the ticker symbol VNL.

 

At an Extraordinary General Meeting ("EGM") held on 21 November 2012 the shareholders approved a proposal that the Company make no new investments and dispose of a portion of its investments in a controlled and orderly manner so as to maximise returns to shareholders.  At a subsequent EGM held on 18 November 2016 this strategy was expanded to include the disposal of all remaining investments. The key changes impacting these financial statements are summarised as follows:

 

·      The new strategy involves the orderly sell down of investments in conjunction with ongoing development of selected projects to maximise returns to shareholders. All projects will be realised over a period of approximately three years and the proceeds collected, less operating costs, will be returned to shareholders.

 

·      The Third Amended and Restated Investment Management Agreement introduces a new fee structure composed of disposal and alignment fees, prepayment advances and a retention account to ensure that the Investment Manager is incentivised to meet the investing policy (Note 30).

 

The condensed interim consolidated financial statements for the six months ended 31 December 2016 were approved for issue by the Company's Board of Directors on 28 March 2017.

 

These condensed interim consolidated financial statements have been reviewed, not audited.

 

2          BASIS OF PREPARATION

 

The Company and its subsidiaries herein are referred to as the Group.

 

These condensed interim consolidated financial statements are for the six months ended 31 December 2016. They have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" as issued by the International Accounting Standards Board ("IASB"). They do not include all of the information required in the annual consolidated financial statements which are prepared in accordance with International Financial Reporting Standards ("IFRSs"). Accordingly, these financial statements are to be read in conjunction with the annual consolidated financial statements of the Group for the year ended 30 June 2016, which have been prepared in accordance with IFRSs.

 

3          ACCOUNTING POLICIES

 

These condensed interim consolidated financial statements (the "interim financial statements") have been prepared in accordance with the accounting policies, methods of computation and presentation adopted in the last annual consolidated financial statements for the year ended 30 June 2016.

 

4          CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

 

When preparing the condensed interim consolidated financial statements, management undertakes a number of 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 effect on recognition and measurement of assets, liabilities, income and expenses were the same as those that applied to the last annual consolidated financial statements for the year ended 30 June 2016.

 

4.1        Fair value of investment properties

           

The investment properties of the Group are stated at fair value in accordance with accounting policies 2.5 of the annual consolidated financial statements for the year ended 30 June 2016. 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 made public by the local authority at the province where the property is located.

 

As at 31 December 2016, if the discount rates used had been 1% higher/lower (30 June 2016: 1%), the total carrying values of the Group's investment properties would have been USD13.6 million lower/USD14.7 million higher (30 June 2016: USD13.6 million lower/USD15.2 million higher).

 

4.2        Prepayments 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 of the annual consolidated financial statements for the year ended 30 June 2016.
 

 

5          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 short-term investments.

 

Detail of activities undertaken by each segment and how each segment is managed and monitored, can be found in Note 4 to the annual consolidated financial statements of the Group for the year ended 30 June 2016.

 

There is no measure of segment liabilities regularly reported to the Investment Manager; therefore, liabilities are not disclosed in the sector analysis. Segment information can be analysed as follows for the reporting periods under review:

 

(a)        Condensed Interim Consolidated Income Statement

 

 

Six months ended 31 December 2016

 

 

 

Commercial

Residential and office buildings

 

 

Hospitality

 

 

Mixed use

 

 

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

Revenue

-

4,508

-

-

4,508

Cost of sales

-

(5,338)

-

-

(5,338)

 

──────

──────

─────

─────

──────

Gross profit

-

(830)

-

-

(830)

Net loss on disposals of investments

-

(13,852)

-

-

(13,852)

Finance income

-

205

3

157

365

Net (loss)/gain on fair value adjustments of investment properties and revaluations of property, plant and equipment

 

 

(1,045)

 

 

8,950

 

 

-

33,762

 

 

41,667

Share of gains/(losses) of associates, net

102

(2,068)

45

-

(1,921)

Loss due to dilution in ownership of associate

 

-

 

1,613

 

-

 

-

 

1,613

(Impairment)/reversal of impairment of assets

 

-

 

74

 

-

 

608

 

682

Other income

8

286

-

36

330

 

──────

──────

─────

─────

──────

Total (loss)/profit before unallocatable expenses

 

(935)

 

(5,622)

 

48

 

34,563

 

28,054

Selling and administration expenses

 

 

 

 

(5,188)

Finance expenses

 

 

 

 

(4,302)

Other expenses

 

 

 

 

(1,078)

 

Income before tax

 

 

 

 

─────

17,486

Income tax

 

 

 

 

(6,662)

 

Net income for the period

 

 

 

 

 

─────

10,824

═════

 

 

 

Six months ended 31 December 2015

 

 

 

Commercial

Residential and office buildings

 

 

Hospitality

 

 

Mixed use

 

 

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

Revenue

-

30,384

-

-

30,384

Cost of sales

-

(24,848)

-

-

(24,848)

 

──────

──────

─────

─────

──────

Gross profit

-

5,536

-

-

5,536

Net gain on disposals of investments

-

 1,149

 6,460

-

 7,609

Finance income

-

286

73

177

536

Net (loss)/gain on fair value adjustments of investment properties and revaluations of property, plant and equipment

 

 

 

 (20)

 

 

 

 15,866

 

 

 

77

 

 

 

4,562

 

 

 

 20,485

Share of (losses)/gains of associates, net

(322)

 2,574

 40

 (719)

 1,573

Impairment of assets

-

 (15,470)

-

-

(15,470)

Other income

4

1,031

687

59

1,781

 

──────

──────

─────

─────

──────

Total (loss)/profit before unallocatable expenses

 

(338)

 

 10,972

 

7,337

 

4,079

 

22,050

Net change in fair value of financial assets at fair value through profit or loss

 

 

 

 

 

 

 

(173)

Selling and administration expenses

 

 

 

 

(8,905)

Finance expenses

 

 

 

 

(3,403)

Other expenses

 

 

 

 

(155)

 

Profit before tax

 

 

 

 

─────

9,414

Income tax

 

 

 

 

2,430

 

Net profit for the period

 

 

 

 

 

─────

11,844

═════

 

 

 

 

 

 

Condensed Interim Consolidated Balance Sheet

 

 

As at 31 December 2016

 

 

 

Commercial

Residential and office buildings

 

 

Hospitality

 

Mixed

use

 

Cash and deposits

 

 

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

 

Investment properties

3,200

217,981

-

203,050

-

424,231

Property, plant and equipment

 

-

 

53

 

-

 

408

 

-

 

461

Intangible assets

-

-

-

2

-

2

Investments in associates

16,471

28,337

4,477

-

-

49,285

Prepayments for acquisitions of investments

 

-

 

26,550

 

-

 

-

 

-

 

26,550

Inventories

-

42,879

-

262

-

43,141

Trade, tax and other receivables

 

26

 

6,574

 

-

 

1,820

 

-

8,420

Short-term investments

-

-

-

-

2,235

2,235

Financial assets at fair value through profit or loss

 

-

 

-

 

-

 

268

 

-

 

268

Cash and cash equivalents

-

-

-

-

58,416

58,416

Assets classified as held for sale

 

-

 

3,784

 

-

 

-

 

-

 

3,784

Other assets

14

3,258

-

34

-

3,306

 

Total assets

──────

    19,711 

══════

───────

329,416

═══════

──────

4,477

══════

───────

205,844

═══════

──────

60,651

══════

───────

620,099

═══════

Total assets include:

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

1,880

20,063

-

1,505

-

23,448

 

 

 

 

 

 

 

 

 

           

 

 

 

 

 

 

 

As at 30 June 2016

 

 

 

Commercial

Residential and office buildings

 

 

Hospitality

 

Mixed

use

 

Cash and deposits

 

 

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

 

Investment properties

4,350

211,200

-

174,150

-

389,700

Property, plant and equipment

-

66

-

434

-

500

Intangible assets

-

-

-

3

-

3

Investments in associates

17,513

25,768

4,432

-

-

47,713

Prepayments for acquisitions of investments

 

-

 

25,425

 

-

 

2,347

 

-

 

27,772

Inventories

-

51,550

-

2,892

-

54,442

Trade, tax and other receivables

 

98

 

12,955

 

5,344

 

2,213

 

-

 

20,610

Short-term investments

-

-

-

-

9,806

9,806

Financial assets at fair value through profit or loss

 

-

 

-

 

-

 

269

 

-

 

269

Restricted cash

-

-

-

-

3,392

3,392

Cash and cash equivalents

-

-

-

-

76,903

76,903

Assets classified as held for sale

 

-

 

18,628

 

-

 

-

 

-

 

18,628

Other assets

197

4,432

-

33

-

4,662

 

Total assets

──────

     22,158

══════

───────

350,024 

═══════

──────

9,776

══════

───────

182,341

═══════

──────

90,101

══════

───────

654,400

═══════

Total assets include:

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

1,950

16,064

-

10,341

-

28,355

 

 

 

 

 

 

 

6          INVESTMENT PROPERTIES

 

 

31 December 2016

30 June

 2016

 

USD'000

USD'000

 

 

 

Opening balance (1 July 2016/1 July 2015)

389,700

479,454

Additions

17,926

25,697

Disposals

(18,647)

(119,738)

Transfers to inventories (Note 11)

-

(9,240)

Exchange of inventories for investment properties

-

2,969

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

-

(5,586)

Net gain from fair value adjustments (Note 23)

41,667

24,187

Translation differences

(6,415)

(8,043)

 

Closing balance

───────

424,231

═══════

───────

389,700

═══════

 

The Group's investment properties were revalued during the period 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 are secured by investment properties with a fair value of USD235.5 million (30 June 2016: USD102.9 million). During the period, the Group capitalised borrowing costs amounting to USD2.2 million (year ended 30 June 2016: USD4.9 million) in investment properties.

 

At 31 December 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 each investment licence.

 

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 period (year ended 30 June 2016: none).

 

 

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

 

 

 

Level 3 - Range of unobservable inputs

(probability-weighted average)

 

Sensitivity on management's estimates

Segment

Adopted

valuation technique

Valuation

(USD'000)

Discount rate

Cap rate

Valuation per square metre (USD)

Sensitivities in sales price per square metre (USD'000)

Sensitivities in discount and cap rates (USD'000)

Residential and office buildings (*)

Discounted cash flows

 

92,028

19% - 20.5%

N/A

N/A

 

 

 

Change in discount rate

 

 

-1%

0

1%

 

 

 

 

 

 

 

 

 

 

 

94,634

92,028

89,542

Residential and office buildings

Direct comparisons

 

125,953

N/A

N/A

30 - 6,853

Change in sales price per square metre

 

 

 

 

 

 

 

 

 

-10%

0

10%

 

 

 

N/A

 

 

 

 

 

 

 

113,358

125,953

138,548

 

 

 

 

 

Mixed use

Discounted cash flows

118,100

17%

8.5%

N/A

 

 

 

 

 

Change in discount rate

 

 

 

 

 

-1%

0

1%

 

 

 

 

 

 

 

 

 

Change in cap rate

-1%

142,300

129,100

117,100

 

 

 

 

 

 

 

 

 

0%

130,200

118,100

107,000

 

 

 

 

 

 

 

 

 

1%

120,700

109,400

98,900

Mixed use

Direct comparisons

84,950

N/A

N/A

117 - 1,350

Change in sales price per square metre

 

 

 

 

 

 

 

 

 

-10%

0

10%

 

 

 

N/A

 

 

 

 

 

 

 

76,455

84,950

93,445

 

 

 

 

 

Commercial

Direct comparisons

3,200

N/A

N/A

1,293

Change in sales price per square metre

 

 

 

 

 

 

 

 

 

-10%

0

10%

 

 

 

N/A

 

 

 

 

 

 

 

2,880

3,200

3,520

 

 

 

 

 

 

For the comparative balance sheet date:

 

 

 

Level 3 - Range of unobservable inputs

(probability-weighted average)

 

Sensitivity on management's estimates

Segment

Valuation technique

Valuation (USD'000)

Discount rate

Cap rate

Valuation per square metre (USD)

Sensitivities in sales price per

 square metre (USD'000)

Sensitivities in discount and cap rates (USD'000)

Residential and office buildings (*)

Discounted

cash flows

102,140

19% - 21.5%

N/A

N/A

 

 

 

Change in discount rate

 

 

-1%

0%

1%

 

 

 

 

 

 

 

 

 

 

 

105,031

102,140

99,202

Residential and office buildings

Direct comparisons

 

109,060

N/A

N/A

30 - 5,845

Change in sales price per

square metre

 

 

 

 

 

 

 

 

 

-10%

0%

10%

 

 

 

 

 

 

 

 

 

 

 

98,154

109,060

119,966

 

 

 

 

 

Mixed use

Discounted

cash flows

 

 

 

 

 

 

 

 

Change in discount rate

103,350

17%

8.5%

N/A

 

 

 

 

     -1%

0%

1%

 

 

 

 

 

 

 

 

 

Change in cap rate

-1%

127,815

114,762

102,915

 

 

 

 

 

 

 

 

 

0%

115,666

103,350

92,673

 

 

 

 

 

 

 

 

 

1%

106,127

94,882

84,641

Mixed use

Direct comparisons

70,800

N/A

N/A

258 - 1,040

Change in sales price per

square metre

 

 

 

 

 

 

 

 

 

-10%

0%

10%

 

 

 

 

 

 

 

 

 

 

 

63,720

70,800

77,880

 

 

 

 

 

Commercial

Direct comparisons

4,350

N/A

N/A

1,758

Change in sales price per

square metre

 

 

 

 

 

 

 

 

 

-10%

0%

10%

 

 

 

 

 

 

 

 

 

 

 

3,915

4,350

4,785

 

 

 

 

 

                               

 

(*)      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.

 

7          PROPERTY, PLANT AND EQUIPMENT

 

 

 

Buildings

Machinery, plant and  equipment

Furniture, fixtures and office equipment

 

Motor vehicles

 

       Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

Gross carrying amount

 

 

 

 

 

At 1 July 2016

517

54

44

207

822

Disposals

-

-

(15)

-

(15)

Translation differences

(10)

(1)

(1)

(4)

(16)

 

At 31 December 2016

─────

507

─────

    ────

53       

    ────

      ────

     28

      ────

    ────

   203

    ────

   ─────

  791  

   ─────

 

 

 

Depreciation

 

 

 

 

 

At 1 July 2016

(104)

(53)  

(43)

(122)

(322)

Charge for the period

(12)

-

-

(15)

(27)

Disposals

-

-

14

-

14

Translation differences

2

1

1

1

5

 

At 31 December 2016

─────

(114)

─────

  ────

(52)

   ────

    ────

           (28)

      ────

    ────

    (136)

   ────

   ─────

     (330)

   ─────

 

 

 

 

 

 

Carrying value

 

 

 

 

 

At 1 July 2016

413

1

1

85

500

 

At 31 December 2016

═════

393

═════

    ════

          1

    ════

      ════

-       

    ════

    ════

       67

    ════

   ═════

461

   ═════

 

There was no impairment charge to property, plant and equipment during the period ended 31 December 2016 (the year ended 30 June 2016: USD0.8 million).

 

 

For the comparative balance sheet date:

 

 

 

Buildings and golf course

Machinery, plant and  equipment

Furniture, fixtures and office equipment

 

Motor vehicles

 

       Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

Gross carrying amount

 

 

 

 

 

At 1 July 2015

12,040

274

678

867

13,859

Additions

567

18

8

-

593

Impairment charges

(819)

-

-

-

(819)

Disposals

(10,217)

(196)

(587)

(598)

(11,598)

Write-offs

(399)

(5)

(5)

-

(409)

Transfers to assets classified as held for sale

 

(606)

 

(35)

 

(46)

 

(56)

 

(743)

Translation differences

(49)

(2)

(4)

(6)

(61)

 

At 30 June 2016

─────

517

─────

    ────

54     

    ────

      ────

     44

      ────

    ────

   207

    ────

   ─────

  822  

   ─────

 

 

 

Depreciation

 

 

 

 

 

At 1 July 2015

(4,037)

(105)

(212)

(242)

(4,596)

Charge for the year

(1,037)

(11)

(21)

(41)

(1,110)

Disposals

4,297

38

161

130

4,626

Write-offs

304

5

5

-

314

Transfers to assets

  classified as held for sale

 

356

 

19

 

22

 

28

 

425

Translation differences

13

1

2

3

19

 

At 30 June 2016

─────

(104)

─────

  ────

 (53)

   ────

    ────

           (43)

      ────

    ────

    (122)

   ────

   ─────

     (322)

   ─────

 

 

 

 

 

 

Carrying value

 

 

 

 

 

At 1 July 2015

8,003

169

466

625

9,263

 

At 30 June 2016

═════

413

═════

    ════

          1

    ════

      ════

 1       

    ════

    ════

       85

    ════

   ═════

500

   ═════

 

 

 

 

 

 

8          SUBSIDIARIES AND ASSOCIATES

 

(a)        Investments in associates

 

 

 

31 December 2016

30 June

2016

 

 USD'000

USD'000

 

 

 

Opening balance (1 July 2016/1 July 2015)

47,713

165,205

Additions

1,880

1,829

Disposals

-

(115,758)

Share of losses of associates

(1,921)

(3,563)

Gain due to dilution of ownership in an associate

1,613

-

 

Closing balance

───────

49,285

═══════

───────

47,713

═══════

 

Particulars of material operating associates and their summarised financial information, extracted from their financial statements as at 31 December 2016 and 30 June 2016, are as follows:

 

As at 31 December 2016

 

 


 

 

Incorporation

 

 

 

Principal activity

 

 

 

 

Assets

 

 

 

 

Liabilities

 

 

 

 

Revenue

 

 

 

(Loss)/ profit

 

Share of (losses)/ profits to the Group

 

Equity interest held

 

 

 

USD'000

USD'000

USD'000

USD'000

USD'000

%

 

 

 

 

 

 

 

 

 

Aqua City Joint

Stock Company

 

Vietnam

 

Property

 

53,107

 

  1,538

 

-

   

 (4,320)

 

  (2,068)

 

48

Other associates

 

Vietnam

Property/

Hospitality

 

67,009

 

24,814

 

3,098

 

38

 

147

 

 

 

 

 120,116

  26,352

  3,098

     (4,282)

  (1,921)

 

 

As at 30 June 2016

 

 


 

 

Incorporation

 

 

 

Principal activity

 

 

 

 

Assets

 

 

 

 

Liabilities

 

 

 

 

Revenue

 

 

 

(Loss)/ profit

 

Share of (losses)/ profits to the Group

 

Equity interest held

 

 

 

USD'000

USD'000

USD'000

USD'000

USD'000

%

 

 

 

 

 

 

 

 

 

Aqua City Joint

Stock Company

 

Vietnam

 

Property

 

59,232

 

8,942

 

-

 

   (2,866)

 

(1,433)

 

50

Other associates

 

Vietnam

Property/

Hospitality

 

65,501

 

25,872

 

3,984

 

(3,138)

 

(1,946)

 

 

 

 

 124,733

34,814

3,984

(6,004)

(3,379)

 

 

 

 

Reconciliation of summarised financial information for a material associate:

 

 

Aqua City Joint Stock Company

 

For the period/year ended

 

31 December 2016

30 June

2016

 

USD'000

USD'000

 

 

 

Summarised balance sheet

 

 

Current assets

 

 

Cash and cash equivalents

78

5

Other current assets

1

-

 

──────

──────

Total current assets

79

5

Non-current assets

53,028

59,227

Current liabilities

 

 

   Other current liabilities

1,538

8,942

 

──────

──────

Total current liabilities

1,538

8,942

Net assets

51,569

50,290

 

──────

──────

 

 

 

Reconciliation to carrying amounts:

 

 

Opening net assets

50,290

53,156

Capital contribution

5,599

-

Loss for the period/year

(4,320)

(2,866)

 

──────

──────

 

51,569

50,290

 

──────

──────

 

 

 

Group's share in %

                48%

         50%

Group's share in USD

24,690

25,145

 

──────

──────

Carrying amount

24,690

25,145

 

──────

──────

 

 

 

Summarised statement of comprehensive income

 

 

General and administration expenses

(4,320)

(27)

Loss on fair value adjustments of investment properties

-

 (2,794)

Other expenses

-

(45)

 

──────

──────

Loss for the period/year

(4,320)

(2,866)

 

──────

──────

 

(b)        Principal subsidiaries

 

The Group had the following principal subsidiaries which are held through special purpose vehicles established outside of Vietnam as at at 31 December 2016 and 30 June 2016:

 

 

 

31 December 2016

30 June 2016

 

 

Name

Country of incorporation and place of business

Percentage interest held by the Group

Percentage interest held by non-controlling interests

Percentage interest held by the Group

Percentage interest held by non-controlling interests

 

Nature of business

 

 

 

 

 

 

 

VinaCapital Hoi An Resort Limited

Vietnam

-

-

100.0%

-

Hospitality

VinaCapital Danang Resort Limited

Vietnam

-

-

75.0%

25.0%

Property investment

VinaCapital Commercial Center Limited  (*)

Vietnam

38.2%

61.8%

38.2%

62.0%

Property investment

Mega Assets Company Limited

Vietnam

75.0%

25.0%

75.0%

25.0%

Property investment

SIH Real Estate Limited Company

Vietnam

75.0%

25.0%

75.0%

25.0%

Property investment

Dien Phuoc Long Real Estate Company Limited

Vietnam

100.0%

-

100.0%

-

Property investment

VinaCapital Phuoc Dien Company Limited

Vietnam

100.0%

-

100.0%

-

Property investment

Dong Binh Duong Urban Development Company Limited

Vietnam

-

-

70.0%

30.0%

Property investment

Vina Dai Phuoc Corporation Limited

Vietnam

54.0%

46.0%

54.0%

46.0%

Property investment

Viet Land Development Corporation Limited

Vietnam

90.0%

10.0%

90.0%

10.0%

Property investment

Vinh Thai Urban Development Corporation Limited

Vietnam

53.3%

46.7%

53.3%

46.7%

Property investment

Thang Long Property Company Limited

Vietnam

65.0%

35.0%

65.0%

35.0%

Property investment

Hoang Phat Investment Joint Stock Company

Vietnam

60.0%

40.0%

60.0%

40.0%

Hospitality

AA VinaCapital Co. Limited

Vietnam

83.2%

16.8%

83.2%

16.8%

Property investment

Vina Alliance Company Limited (*)

Vietnam

46.5%

53.5%

46.5%

53.5%

Property investment

Phu Hoi City Company Limited

Vietnam

52.5%

47.5%

52.5%

47.5%

Property investment

 

(*)       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 control because it is exposed to variable returns from its involvement with these companies and can affect those returns through its power over them.

 

 

 

 

All subsidiary undertakings are included in the consolidation. 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 except the cases mentioned above. The Group further does not have any shareholding in the preference shares of subsidiary undertakings included in the Group.

 

During the period, the Group sold several subsidiaries, details of which are provided on the following pages. The assets and liabilities held by the subsidiaries sold were as follows:

 

 

 

As at the date of disposal

 

 

USD'000

Current assets

 

 

        Cash and cash equivalents

 

15,385

        Inventories

 

4,920

        Trade and other receivables

 

23,921

        Other current assets

 

347

 

 

──────

Total current assets

 

44,573

Non-current assets

 

 

        Investment properties

 

18,669

        Property, plant and equipment

 

7,638

        Other non-current assets

 

1,309

 

 

──────

Total non-current assets

 

27,616

Current liabilities

 

 

        Trade and other payables

 

(24,656)

        Other current liabilities

 

(319)

 

 

──────

Total current liabilities

 

(24,975)

Non-current liabilities

 

 

        Long-term trade and other payables

 

(8,579)

 

 

──────

Total non-current liabilities

 

(8,579)

 

 

──────

Net assets at the date when subsidiaries were sold

 

38,635

 

 

──────

Net assets attributable to the Company

 

33,368

Net assets attributable to non-controlling interests

 

5,267

 

 

──────

Total consideration

 

28,294

Capital gains tax withheld by buyers

 

(799)

Consideration not yet received as at 31 December 2016

 

(1,760)

 

 

──────

Consideration received from sales of subsidiaries

25,735

 

 

 

 

 

Period ended

31 December 2016

 

 

 

USD'000

 

 

 

 

 

Consideration received from sales of subsidiaries

 

25,735

 

Less: Cash and cash equivalents of subsidiaries sold

 

(15,385)

 

 

 

──────

 

Cash received from sales of subsidiaries

 

 

──────

 

           

 

Details of the losses from sales of subsidiaries are as follows:

 

 

Period ended

31 December 2016

 

 

USD'000

 

 

 

Total consideration

 

28,294

Carrying amount of net assets sold attributable to the Company

 

(33,368)

 

 

──────

Loss on sales of subsidiaries before reclassification of currency translation reserve

(5,074)

Reclassification of currency translation reserve

 

(8,778)

 

 

──────

Loss on sales of subsidiaries

 

(13,852)

 

 

──────

         

 

Sale of VinaCapital Danang Resort Limited

 

During the period the Group sold its 75% equity interest in VinaCapital Danang Resort Limited for a total consideration of USD7.0 million. The book value of the net assets at the sale date was USD10.5 million and the reclassification of translation reserve on disposal was USD1.5 million, resulting in a loss of USD5.0 million.

 

Sale of VinaCapital Hoi An Resort Limited

 

During the period the Group sold its 100% equity interest in VinaCapital Hoi An Resort Limited for a total consideration of USD7.8 million. The book value of the net assets at the sale date was USD6.6 million and the reclassification of translation reserve on disposal was USD1.2 million, resulting in no gain/(loss) on this disposal.

 

Sale of Dong Binh Duong Urban Development Company Limited

 

During the period the Group sold its 70% equity interest in Dong Binh Duong Urban Development Company Limited for a total consideration of USD13.5 million. The book value of the net assets at the sale date was USD16.3 million and the reclassification of translation reserve on disposal was USD6.1 million, resulting in a loss of USD8.9 million.

 

 

 

Summarised financial information of subsidiaries with material non-controlling interests

 

The total non-controlling interests as at 31 December 2016 is USD126.3 million (30 June 2016: USD128.4 million), allocated as below:

 

 

31 December 2016

     30 June

        2016

 

USD'000

     USD'000

 

 

 

Vina Alliance Company Limited ("Vina Square")

44,232

40,613

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

32,591

30,529

Thang Long Property Company Limited ("Times Square")

17,756

14,361

Phu Hoi City Company Limited ("Phu Hoi")

14,549

14,563

Others

17,214    

28,347

 

───────

126,342

═══════

───────

128,413 ═══════

 

Set out below is summarised financial information for each of the subsidiaries with non-controlling interests that are material to the Group.

 

Summarised balance sheets

 

 

Vina Square

Dai Phuoc Lotus

Phu Hoi

Times Square

 

As at

As at

As at

As at

 

31.12.2016

   30.06.2016

31.12.2016

 30.06.2016

31.12.2016

   30.06.2016

31.12.2016

   30.06.2016

 

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

Current

 

 

 

 

 

 

 

 

Assets

2,460

 26

19,612

21,134

2,122

118

13,712

8,944

Liabilities

(44,820)

(67,250)

(16,838)

(16,951)

(2,495)

(468)

(36,543)

(31,476)

Total current net (liabilities)/assets

(42,360)

(67,224)

2,774

4,183

(373)

(350)

(22,831)

(22,532)

Non-current

 

 

 

 

 

 

 

 

Assets

118,114

103,368

70,664

62,740

28,412

28,418

54,007

41,610

Liabilities

(34,326)

(4,920)

(938)

(2)

-

-

(5,762)

(3,259)

Total non-current net assets

83,788

98,448

69,726

62,738

28,412

28,418

48,245

38,351

Net assets

41,428

31,224

72,500

66,921

28,039

28,068

25,414

15,819

 

 

Summarised income statements

 

 

Vina Square

Dai Phuoc Lotus

Phu Hoi

Times Square

 

Period ended

31 December

Period ended

31 December

Period ended

31 December

Period ended

31 December

 

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

-

-

1,593

3,301

-

-

-

-

Profit before income tax

15,222

2,376

7,866

1,122

674

3,425

13,011

16,742

Income tax expense

(3,493)

(336)

(938)

(316)

(206)

(813)

(2,503)

(8)

Post-tax profit from continuing operations

11,729

2,040

6,928

806

468

2,612

10,508

16,734

Other comprehensive loss

(1,525)

(2,123)

(1,349)

(1,813)

(497)

(664)

(913)

(1,341)

Total comprehensive income/(loss)

10,204

(83)

5,579

(1,007)

(29)

1,948

9,595

15,393

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

5,464

(44)

2,062

(633)

(14)

924

3,395

4,286

 

Summarised cash flow statements

 

 

Vina Square

Dai Phuoc Lotus

Phu Hoi

Times Square

 

Period ended

31 December

Period ended

31 December

Period ended

31 December

Period ended

31 December

 

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

(1,641)

196

(97)

1,221

(21)

36

670

54

Net cash flows from investing activities

(24,034)

(273)

(663)

(420)

1,954

(19)

880

(27)

Net cash flows from financing activities

27,981

-

-

(558)

72

-

-

-

Net increase/(decrease) in cash and cash equivalents

2,306

(77)

(760)

243

2,005

17

1,550

27

 

The information above is before inter-company eliminations.

 

9          PREPAYMENTS FOR ACQUISITIONS OF INVESTMENTS

 

 

31 December 2016

30 June

2016

 

USD'000

USD'000

 

 

 

Prepayments for acquisitions of investments

35,663

43,839

Allowance for impairment

(9,113)

(16,067)

 

──────

──────

 

26,550

27,772

 

══════

══════

           

Prepayments are made by the Group to property vendors where the final transfer of the property is pending the approval of the relevant authorities and/or is subject to either the Group or the vendor completing certain performance conditions set out in agreements.

 

As at 31 December 2016, the accumulated impairment allowances amounted to USD9.1 million (30 June 2016: USD16.1 million). During the period, there was a reversal of USD2.5 million due to improvement of market conditions. The relevant recoverable amounts are the fair values of the underlying properties less the costs to sell which have been estimated by independent professional qualified valuers who hold recognised relevant professional qualifications and have recent experience in the locations and categories of the properties upon which these prepayments have been made.

 

The valuations performed by the independent valuation companies, as adopted by the Group, are prepared using the direct comparison method. All of these fair value less the costs to sell valuations are in Level 3 of the fair value hierarchy and there were no transfers between levels during the period (year ended 30 June 2016: none). As at 31 December 2016, the sales prices per square meter used ranged from USD21 to USD67 (30 June 2016: USD21 to USD64). 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 period/year were as follows:

 

 

31 December 2016

30 June

2016

 

USD'000

USD'000

 

 

 

Opening balance (1 July 2016/1 July 2015)

27,772

26,572

Additions

191

128

Reversal of impairment (Note 25)

2,487

1,560

Collection of prepayment

(2,955)

-

Other decrease

(326)

-

Translation differences

(619)

(488)

 

──────

──────

Closing balance

26,550

27,772

 

══════

══════

 

10         DEFERRED TAX ASSETS

 

 

31 December 2016

30 June

2016

 

USD'000

USD'000

 

 

 

Opening balance (1 July 2016/1 July 2015)

3,638

6,572

Net change in the period/year (*)

(426)

(2,779)

Reclassified to non-current assets classified as held for

sales (Note 15)

-

(155)

 

Closing balance

─────

3,212

═════

─────

3,638

═════

Deferred income tax assets to be recovered after more than

 12 months

-

3,638

Deferred income tax assets to be recovered after within

 12 months

3,212

-

 

─────

─────

 

3,212

3,638

 

═════

═════

 

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

 

11         INVENTORIES

 

                                 

31 December 2016

30 June

2016

 

USD'000

USD'000

 

Opening balance (1 July 2016/1 July 2015)

54,442

98,911

Additions

3,110

9,744

Transferred to cost of sales

(4,754)

(30,868)

Write-down (Note 25)

(1,805)

(18,951)

Sold as part of property disposals (Note 8(b))

(6,600)

(4,774)

Transferred from investment properties (Note 6)

-

9,240

Exchanged for investment property

-

(2,969)

Reclassified as held for sale (Note 15)

-

(4,585)

Translation differences

(1,252)

(1,306)

 

───────

───────

 

43,141

54,442

 

═══════

═══════

 

During the period, the Group capitalised borrowing costs amounting to USD0.3 million (year ended 30 June 2016: 0.8 million) into the value of inventories.

 

Inventories which belong to Vinh Thai Urban Development Corporation Limited with a total carrying value of USD25.4 million as at 31 December 2016 (30 June 2016: USD21.2 million) are pledged as security for bank borrowings of USD5.2 million disclosed in Note 18.

 

 

12         TRADE AND OTHER RECEIVABLES

 

 

31 December 2016

30 June

2016

 

USD'000

USD'000

 

 

 

Trade receivables

976

1,409

Receivables from disposals of subsidiaries (*)

2,302

14,806

Interest receivables

60

27

Prepayments to suppliers

583

726

Short-term prepaid expenses

-

434

Advances to employees

452

20

Other receivables

136

159

 

──────

4,509

══════

──────

17,581

══════

 

(*)   Receivables from disposals of subsidiaries represent the final settlements upon completion of the transfer of ownership of subsidiaries to the buyers in accordance with the relevant sale and purchase agreements.

 

All current 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 condensed interim consolidated balance sheet.

 

13         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 consolidated balance sheet.

 

14         CASH AND CASH EQUIVALENTS

 

31 December

2016

30 June

2016

 

USD'000

USD'000

 

 

 

Cash on hand

49

44

Cash at banks

51,618

70,510

Cash equivalents

6,749

6,349

 

──────

──────

 

58,416

76,903

 

══════

══════

 

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

 

At 31 December 2016, cash and cash equivalents held at the Company level amounted to USD46.5 million (30 June 2016: USD69 million). The remaining balance of cash and cash equivalents is held by subsidiaries in Vietnam. Cash held in Vietnam is subject to restrictions imposed by co-investors and the Vietnamese government and therefore it cannot be transferred out of Vietnam unless those restrictions are satisfied.

 

 

 

15         ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE

 

 

31 December 2016

 

 

 

 

Attributable to

 

 

Assets classified as held for sale

Liabilities classified as held for sale

Net assets classified as held for sale

Non-controlling interests

Equity shareholders of the parent

 

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

Vinh Thai Parcel 3

3,784

(404)

3,380

1,580

1,800

 

════

═══

════

════

════

 

The assets and liabilities of 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.

 

It is the Group's view that all of its assets and liabilities classified as held for sales are in Level 3 of the fair value hierarchy. The major classes of assets and liabilities and their movements during the period/year are as follows:

 

 

1 July

 2016

 

 

Disposals

 

31 December 2016

 

USD'000

USD'000

USD'000

Assets classified as held for sale

 

 

 

Available for sales financial assets

-

-

-

Investment properties

3,784

-

3,784

Property, plant and equipment (net of accumulated depreciation)

 

318

(318)

 

-

Intangible assets (net of accumulated amortisation)

9

(9)

-

Deferred income tax assets

155

(155)

-

Other current assets

41

(41)

-

Other non-current assets

468

(468)

-

Inventories

4,585

(4,585)

-

Trade and other receivables

860

(860)

-

Short term investments

219

(219)

-

Cash and cash equivalents

8,189

(8,189)

-

 

─────

─────

─────

 

18,628

(14,844)

3,784

 

─────

─────

─────

Liabilities classified as held for sale

 

 

 

Long-term trade and other payable

2,602

(2,602)

-

Accruals and other current liabilities

319

(319)

-

Trade and other payables

2,344

(1,940)

404

 

─────

─────

─────

 

5,265

(4,861)

404

 

─────

─────

─────

Net assets classified as held for sale

13,363

 ═════

(9,983)

═════

3,380

═════

 

 

 

 

For the comparative year:

 

 

30 June 2016

 

 

 

 

Attributable to

 

 

Assets classified as held for sale

Liabilities classified as held for sale

Net assets classified as held for sale

Non-controlling interests

Equity shareholders of the parent

 

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

VinaCapital Danang Resort Limited

14,844

(4,861)

9,983

3,045

6,938

Vinh Thai Parcel 3

3,784

(404)

3,380

1,580

1,800

 

──────

18,628

══════

─────

(5,265)

═════

──────

13,363

 ══════

─────

4,625

 ═════

──────

8,738

══════

 

 

1 July

 2015

Transferred in

Fair value adjustment

 

Disposals

30 June

2016

 

USD'000

USD'000

USD'000

USD'000

USD'000

Assets classified as held for sale

 

 

 

 

 

Available for sales financial assets

851

-

-

(851)

-

Investment properties (Note 6)

12,080

5,587

(1,803)

(12,080)

3,784

Property, plant and equipment (net of accumulated depreciation) (Note 7)

 

-

 

318

 

-

 

-

 

318

Intangible assets (net of accumulated amortisation)

 

-

9

 

-

-

 

9

Deferred income tax assets (Note 10)

-

155

-

-

155

Other current assets

-

41

-

-

41

Other non-current assets

-

468

-

-

468

Inventories (Note 11)

-

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

══════

 

 

 

16         SHARE CAPITAL

 

 

31 December 2016

30 June 2016

 

Number of shares

 

 

USD'000

Number of shares

 

USD'000

Authorised:

Ordinary shares of USD0.01 each

 

500,000,000

──────────

 5,000

─────

 500,000,000

──────────

 5,000

─────

 

 

 

 

 

Issued and fully paid:

 

 

 

 

Opening balance (1 July 2016/

1 July 2015)

393,808,479

3,938

430,132,220

4,301

Shares purchased and cancelled

(35,869,000)

(359)

(36,323,741)

(363)

 

Closing balance

──────────

 357,939,479

══════════

─────

 3,579

═════

──────────

393,808,479

══════════

─────

3,938

═════

 

The Company considers investors holding more than a 10% beneficial interest in the ordinary shares of the Company as major shareholders. As at 31 December 2016, there were two investors that held more than 10% of the ordinary shares of the Company (30 June 2016: two).

 

During the period, the Company purchased and cancelled 35,869,000 of its ordinary shares (year ended 30 June 2016: 36,323,741 shares) for a total cash consideration of USD23.7 million (year ended 30 June 2016: USD22.3 million) at an average cost USD0.661 per share (year ended 30 June 2016: USD0.614 per share). The difference between the cost of the shares repurchased and their net asset value has been recorded in an equity reserve.

 

17         ADDITIONAL PAID-IN CAPITAL

 

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

 

 

31 December 2016

30 June

2016

 

USD'000

USD'000

 

 

 

Opening balance (1 July 2016/1 July 2015)

452,680

521,088

Shares repurchased and cancelled

(30,613)

(33,348)

Distribution to shareholders

-

(35,060)

 

Closing balance

───────

422,067

═══════

───────

452,680

═══════

 

 

 

 

18         BORROWINGS AND DEBTS

 

 

31 December

2016

30 June

2016

 

USD'000

USD'000

 

 

 

Long-term borrowings:

 

 

Bank borrowings

82,135

48,276

Loans from non-controlling interests

475

804

Less:

 

 

Current portion of long-term borrowings

(1,301)

(1,664)

 

──────

81,309

──────

──────

47,416

──────

Short-term borrowings:

 

 

Loans from non-controlling interests

779

-

Zero dividend preference shares

-

24,040

Current portion of long-term borrowings

1,301

1,664

 

──────

2,080

──────

──────

25,704

──────

Total borrowings and debts

83,389

══════

73,120

══════

 

Borrowings

 

Borrowings mature on a range of dates until December 2019 and bear average annual interest rates of 9.8% for amounts in VND (30 June 2016: 10.1% for amounts in VND). USD46.6 million of the Group's borrowings bears fixed interest rates, while the remaining is subject to floating interest rates (30 June 2016: USD38.2 million).

 

All borrowings are secured by certain investment properties and inventories of the Group (Notes 6 and 11).

 

During the period, the Group capitalised borrowing costs amounting to USD2.5 million in qualifying assets (year ended 30 June 2016: USD5.7 million) (Notes 6 and 11).

 

The maturity of the Group's borrowings at the end of the reporting period is as follows:

 

 

31 December

2016

30 June

2016

 

USD'000

USD'000

 

 

 

6 months or less

528

539

6-12 months

1-5 years

1,552

81,309

1,125

47,416

 

──────

83,389

══════

──────

49,080

══════

 

The fair value of current borrowings equals their carrying amounts, as the impact of discounting is not significant. The fair value of long-term borrowings is USD81.3 million (30 June 2016: USD47.4 million). These are Level 2 fair values which are estimated using the discounted cash flow method.

 

The Group's borrowings are denominated in Vietnamese Dong.

 

During the period, the Group's subsidiaries borrowed USD36.3 million (six months ended 31 December 2015: USD13.8 million) from banks to finance working capital and property development activities.

 

The Group fully paid off its zero dividend preference shares on 19 December 2016.

 

19         DEFERRED TAX LIABILITIES

 

 

31 December

2016

30 June

2016

 

USD'000

USD'000

 

 

 

Opening balance (1 July 2016/1 July 2015)

16,358

28,184

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

5,437

(11,826)

 

Closing balance

──────

21,795

══════

──────

16,358

══════

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

3,996

7,211

Deferred income tax liabilities to be recovered within 12 months

17,799

9,147

 

──────

──────

 

21,795

16,358

 

══════

══════

 

Deferred tax liabilities are the amounts of income tax to be settled in future periods in respect of temporary differences between the carrying amounts of revalued assets and their tax bases.

 

 

 

 

 

 

 

20         CURRENT TRADE AND OTHER PAYABLES

 

 

31 December

2016

30 June

2016

 

USD'000

USD'000

 

 

 

Trade payables

1,343

1,388

Payables for property acquisitions and land compensation

14,600

36,636

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

 

-

 

1,603

Deposits from property buyers

22,239

4,952

Deposits from customers of residential projects

28,988

28,370

Interest payable

526

1,557

Other accrued liabilities

-

501

Other payables

1,192

2,167

 

──────

68,888

══════

──────

77,174

══════

 

All trade and other payables are short-term in nature. Their carrying values approximate their fair values as at the date of the condensed interim consolidated balance sheet.

 

21         REVENUE

 

 

Six months ended

 

31 December

2016

 

USD'000

USD'000

 

 

 

Sales of residential projects 

 

4,508

══════

30,384

══════

 

22         COST OF SALES

 

 

Six months ended

 

31 December

2016

31 December

2015

 

USD'000

USD'000

 

 

 

 Residential projects

5,338

══════

24,848

══════

 

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

 

 

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

 

 

Six months ended

 

31 December 2016

31 December

2015

 

USD'000

USD'000

 

 

 

Investment properties

 

 

By real estate sector:

 

 

- Commercial

(1,045)

(20)

- Residential and office buildings

8,950

15,866

- Mixed use

33,762

4,562

 

──────

──────

 

41,667

20,408

Property, plant and equipment

 

 

Hospitality

-

77

 

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

 

──────

 

 

41,667

══════

──────

 

 

20,485

══════

 

24         SELLING AND ADMINISTRATION EXPENSES

 

 

Six months ended

 

31 December 2016

31 December

2015

 

USD'000

USD'000

 

 

 

Management fees (Note 30)

1,822

2,968

Fees paid to the Investment Manager (Note 30)

266

-

Professional fees (*)

1,586

2,307

Depreciation and amortisation (**)

56

326

General and administration expenses (**)

767

2,190

Staff costs (**)

328

764

Outside service costs (**)

363

350

 

─────

5,188

═════

─────

8,905

═════

                           

(*)  These expenses primarily relate to the operating activities of the Company such as legal and professional fees, audit fees, valuation fees, fund administrative and custodian fees, directors fees.

(**) These expenses primarily relate to the operating activities of the Group's subsidiaries.

 

 

25         REVERSAL OF IMPAIRMENT/(IMPAIRMENT) OF ASSETS

 

 

Six months ended

 

31 December 2016

31 December

2015

 

USD'000

    USD'000

 

 

 

Reversal of impairment of prepayments for acquisitions of investments (Note 9)

2,487

1,822

Impairment of property, plant and equipment (Note 7)

-

(1,112)

Write-down on inventories (Note 11)

(1,805)

(16,059)

Impairment of non-current assets classified as held for sale (Note 15)

-

(121)

 

─────

─────

 

682

(15,470)

 

═════

═════

 

 

 

26         FINANCIAL EXPENSES

 

           

Six months ended

 

31 December

2016

31 December

2015

 

USD'000

USD'000

 

 

 

Realised foreign exchange losses

170

29

Unrealised foreign exchange losses

2

855

Interest expense

4,130

2,519

 

─────

─────

 

4,302

3,403

 

═════

═════

 

27         INCOME TAX

 

VinaLand Limited is domiciled in the Cayman Islands. Under the current laws of the Cayman Islands, there are no income, corporation, capital gains or other taxes payable by the Company.

 

The majority of the Group's subsidiaries are domiciled in the British Virgin Islands ("BVI") and so have a tax exempt status. A number of subsidiaries are established in Vietnam and Singapore and are subject to corporate income tax in those countries. Deferred tax assets/liabilities of these subsidiaries are estimated based on the tax legislation of each jurisdiction and included in the deferred income tax assets/liabilities on the balance sheet.

 

As is the case with many other developing countries, Vietnam is in the process of implementing comprehensive tax regulations.  As a result, the administration of tax regulations by government agencies may be subject to considerable discretion, and in many areas, the legal framework is uncertain and subject to interpretation.  The Group has provided for all taxes expected to be payable by it under the current tax regulations in Vietnam.  There is, however, an ongoing risk that government agencies might seek to impose additional taxes on the Group based on different interpretations of the regulations or through the restrospective application of new regulations.

 

On 19 June 2014, the Vietnamese National Assembly approved a new corporate income tax law. Under the new law, the standard corporate income tax was reduced from 25% to 22% effective 1 January 2015. A further reduction in tax rate to 20% became effective on 1 January 2016. No provision has been made for corporate income tax payable by the Vietnamese subsidiaries for the period because these subsidiaries do not have taxable income in Vietnam (period from 01 July 2015 to 31 December 2015: USD9 thousand).

 

The relationship between the expected tax expense based on the applicable tax rate of 0% and the tax expense actually recognised in the condensed interim consolidated income statement can be reconciled as follows:

 

 

Six months ended

 

31 December 2016

31 December 2015

 

USD'000

 USD'000

 

 

 

Current income tax

 

 

Group's gain before tax        

17,486

9,414

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

-

-

Effect of higher tax rate in Vietnam

-

(9)

Capital gains tax

(799)

-

 

─────

─────

Total current tax expense

(799)

(9)

 

─────

─────

Deferred income tax

 

 

Decrease in deferred tax assets (*)

(426)

(1,550)

(Increase)/decrease in deferred tax liabilitites (*)

(5,437)

3,989

 

─────

─────

Deferred income tax

(5,863)

2,439

 

─────

─────

Tax (expense)/income

(6,662)

2,430

 

═════

═════

           

(*) This amount represents the net deferred income tax income/(expense) which arose from the gains/(losses) on fair value adjustments of investment properties and property, plant and equipment and the reversal of deferred tax assets/liabilities as a result of changes to valuation assumptions during the period.

 

28         EARNINGS AND NET ASSET VALUE PER SHARE

 

(a)        Basic

 

 

Six months ended

 

31 December

2016

31 December

2015

 

 

 

Net income attributable to owners of the Company

 

 

 from continuing and total operations (USD'000)

338

5,966

Weighted average number of ordinary shares in issue

386,050,076

428,515,232

Basic earnings per share from continuing and total

 

 

 operations (USD per share)   

0.00

0.01

 

──────────

──────────

 

(b)        Diluted

 

Diluted earnings 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 earnings per share is equal to basic earnings per share.

 

(c)        Net asset value per share

 

 

31 December

2016

30 June

2016

 

 

 

Net asset value (USD'000)

318,242

336,836

Number of outstanding ordinary shares in issue

357,939,479

393,808,479

Net asset value per share (USD/share)

0.89

0.86

 

──────────

──────────

 

29         COMMITMENTS

 

As at 31 December 2016, the Group was committed under lease agreements to paying the following future amounts:

 

 

31 December

2016

30 June

2016

 

USD'000

USD'000

 

 

 

Within one year

340

52

From two to five years

170

306

Over five years

-

2,284

 

─────

─────

 

510

2,642

 

═════

═════

As at 31 December 2016, the Group was also committed under construction agreements to pay USD18.6 million (30 June 2016: USD12.7 million) for future construction work of the Group's properties held by its 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 many of these arrangements is at the Group's discretion. The Investment Manager has estimated that, based on the agreements signed and the development plan for each project, approximately USD26.3 million (30 June 2016: USD32.1 million) will be used to fund these projects over the next three years.

 

30         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 this agreement the management fee from 21 November 2012 was fixed at USD8.25 million for the subsequent 12 months, USD7.5 million for the next 12 months and USD6.5 million for the next 12 months.

 

Under the Second Amended and Restated Investment Management Agreement effective from 21 November 2015 (the "Second Amended Management Agreement") the management fee from 21 November 2015 until 21 November 2016 was revised to USD390,000 per month.

 

Total management fees for the period amounted to USD1.8 million (six months ended 31 December 2015: USD3.0 million) which had been fully settled by the date of the condensed interim consolidated balance sheet. Under the Third Amended and Restated Investment Management Agreement effective from 14 December 2016 no further management fees shall be charged by the Investment Manager to the Company.

 

Realisation fees

 

In accordance with the Amended Management Agreement and Seconded Amended Management Agreement, the Investment Manager 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 which were signed prior to 21 November 2015 and the proceeds of which were received by 21 November 2016.

Of the USD28.2 million realisation fees, USD27.3 million had been paid to the Investment Manager, leaving USD0.9 million outstanding as at 31 December 2016 (30 June 2016: USD7.4 million).

 

Disposal fees and alignment fees

 

Under the Third Amended and Restated Investment Management Agreement effective from 14 December 2016 the Investment Manager will receive a disposal fee and an alignment fee. The disposal fee is calculated at the rate of 3.00% of distributable funds realised in the year starting 22 November 2016, 2.75% in the second year and 2.25% in the third year. The alignment fee is calculated on distributions to shareholders over USD265.0 million during the 3-year period starting 22 November 2016.  The Investment Manager will receive 10% of distributions over USD265.0 million and up to USD279.0 million, 15% of distributions over USD279.0 million, and up to USD313.0 million, and 20% of distributions over USD313.0 million. A non-refundable monthly advance of USD200,000 in the year starting 22 November 2016, USD150,000 in the second year, and USD100,000 in the third year, will be paid to the Investment Manager. These advances will be offset against disposal fees and alignment fees. During the period advances of USD0.3 million (30 June 2016: nil) were paid to the Investment Manager.

 

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

 

 

 

 

31 December 2016

30 June

2016

 

Relationship

Balances

USD'000

USD'000

 

 

 

 

 

 

VinaCapital Investment

 Management Ltd.

Investment Manager

Realisation fees

902

7,428

 

 

 

Disposal fees

-

139

 

 

 

Development fees and advances for real estate projects

50

391

 

 

 

 

 

 

 

VinaCapital Vietnam

 Opportunity Fund Limited ("VOF")

Under common management

Payments on behalf

32

31

 

Disposals of real estate projects

-

2,239

 

 

 

 

──────

──────

 

 

 

 

984

10,228

 

 

 

 

══════

══════

 

 

As at 31 December 2016 and 30 June 2016, receivables from related parties mainly comprise of amounts due from VOF as advance to 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

 

31 December

2016

30 June

2016

 

Number of shares

 

 

Vietnam Master Holding 2 Limited (*)

28,666,326

36,216,326

Asia Investment and Finance Limited (**)

19,860,250

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 31 December 2016, a subsidiary of the Investment Manager, Asia Investment and Finance Limited, had bought a total of 19,860,250 ordinary shares of the Company (30 June 2016: 2,372,500 ordinary shares).

 

31         FINANCIAL RISK MANAGEMENT

 

(a)        Financial risk factors

 

The Group holds a diversified property portfolio in Vietnam.  As a result 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 condensed interim consolidated financial statements do not include all financial risk management information and disclosures required in the annual consolidated financial statements, and should be read in conjunction with the Group's annual consolidated financial statements as at 30 June 2016. There have been no major changes in the risk management department of the Investment Manager and risk management policies since the most recent year end.

 

(b)        Fair value estimation

 

The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:

 

·      Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

·      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) (Level 2); and

·      Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

 

The following table presents the Group's assets and liabilities that are measured at fair value at 31 December 2016:

 

 

Level 1

Level 2

Level 3

Total

As at 31 December 2016

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

Financial assets held at fair value through profit or loss

 

 

 

 

- Ordinary shares - unlisted

-

269

-

269

 

═══

══════

═══

══════

 

 

 

 

 

 

Level 1

Level 2

Level 3

Total

 

As at 30 June 2016

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

 

Financial assets held at fair value through profit or loss

 

 

 

 

- Ordinary shares - unlisted

-

269

-

269

- Derivatives

-

115

-

115

Financial liabilities

- Derivatives

 

-

 

(6,945)

 

-

 

(6,945)

 

═══

══════

═══

══════

 

There were no significant transfers between levels during the period (year ended 30 June 2016: none).


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Interim results - RNS