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VinaLand Limited   -  VNL   

Annual Report & Financial Statements 30 June 2018

Released 09:48 28-Sep-2018

RNS Number : 3158C
VinaLand Limited
28 September 2018
 

VinaLand Limited

Audited financial results for the twelve months ended 30 June 2018

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 2018 ("the Year").

Financial highlights:

·      Net asset value per share at 30 June 2018 of USD0.29 (30 June 2017: USD0.94).

·      Nearly 95 million ordinary shares were purchased and cancelled during the year ended 30 June 2018.

Operational highlights:

·      During the year, VNL completed nine full divestments and one partial divestment, resulting in net proceeds of approximately USD201.2 million. The Company has two remaining assets that it expects to dispose of in the coming months.

·      The Company made three distributions from its paid-in capital totalling USD131.2 million returned to Shareholders.

 

·      In aggregate, as at 30 June 2018 the Company has cancelled 67.3 percent of the total shares in issue prior to the commencement of the share buyback programme.

The financial statements will be posted to shareholders and are available on the Company's website at www.vnl.vinacapital.com.

About VinaCapital:

Founded in 2003, VinaCapital is a leading investment management and real estate development firm headquartered in Vietnam, with a diversified portfolio of USD1.8 billion in assets under management spanning a full range of asset classes including capital markets, private equity, real estate, venture capital, and fixed income.

The company manages two closed-ended funds that trade on the London Stock Exchange including the VinaCapital Vietnam Opportunity Fund Limited, which trades on the Main Market, and VinaLand Limited, which trades on the AIM. Other funds managed by the company include the Forum One - VCG Partners Vietnam Fund (VVF), a UCITS-compliant, long-term, open-ended fund, and the Vietnam Access Fund (VAF), the company's newest fund. The company also offers three funds for Vietnamese investors in equities and fixed income.

VinaCapital's joint ventures include DFJ VinaCapital L.P. (DFJV), our venture capital fund in partnership with noted US firm Draper Fisher Jurvetson, as well as Lodgis Hospitality Holdings, a hospitality platform focused on Southeast Asia in partnership with Warburg Pincus.

More information about VinaCapital may be found at www.vinacapital.com.

Enquiries:

Michael Truong / Joel Weiden

VinaCapital Investment Management Limited

Investor Relations / Communications

+84 28 3821 9930

michael.truong@vinacapital.com / joel.weiden@vinacapital.com

 

 

 

Philip Secrett

Grant Thornton UK LLP, Nominated Adviser

+44 (0)20 7383 5100

philip.j.secrett@uk.gt.com

 

David Benda / Hugh Jonathan

Numis Securities Limited, Broker

+44 (0)20 7260 1000

funds@numis.com

 

 

Chairman's Statement

 

 

 

Dear Shareholders,

 

Vietnam's property market continues to demonstrate growth and, as a result, the business environment has continued to be very positive, enabling VinaLand ("VNL" or "the Company") to substantially complete the sale of the assets in its portfolio over the course of the 2018 financial year ended 30 June 2018. Real estate continues to be in favour among both local and international investors, with the sector being the second-most popular for foreign direct investment.

 

During the financial year, VNL completed ten full divestments, resulting in net proceeds of approximately USD201.2 million. Following the close of the financial year, the Company announced the disposal of two additional projects bringing in an additional USD3.1 million in proceeds and leaving the Company with just two projects yet to be sold. Over the next few months, we are confident that we will be able to reach agreements to sell these remaining assets, after which we will begin the orderly wind up of the Company.

 

Financial results summary

 

During the financial year, VNL made three distributions from its paid-in capital and, thereby, returned a total of USD131.2 million to Shareholders. Additionally, the Company repurchased and cancelled nearly 94.6 million ordinary shares via the buyback programme and a tender offer in October 2017. As at 30 June 2018, the Company has cancelled 67.3 percent of the Fund's total issued shares prior to the commencement of the buyback programme in October 2011.

 

As a consequence, VNL's financial results for the financial year (FY) ended 30 June 2018 show that VNL's audited Net Asset Value (NAV) per share declined from USD0.94 as at 30 June 2017 to USD0.29 as at 30 June 2018. The Company's share price closed FY 2018 at USD0.25 down from USD0.78 as at 30 June 2017. The share price-to-NAV discount narrowed to 12.5 percent from 17.2 percent at the end of FY 2017.

 

Corporate actions

 

On 10 November 2017, the Company conducted its Annual General Meeting (AGM) in Zurich, and all resolutions were passed unanimously. The date, time and location of the Company's 2018 AGM and EGM will be determined and announced at a later date.

 

We are pleased with the substantial progress that has been made over the past 12 months. I believe that the outcomes have been very positive for the Company and its Shareholders. On behalf of your Board of Directors, I would like to express our appreciation of your continued support and feedback.

 

 

Michel Casselman

Chairman

VinaLand Limited

27 September 2018

 

CONSOLIDATED BALANCE SHEET

 

 

 

30 June 2018

30 June 2017

 

Note

USD'000

USD'000

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Non-current

 

 

 

Investment properties

5

-

63,988

Property, plant and equipment

 

-

404

Investments in associates

6

-

20,097

Prepayments for acquisitions of investments

7

-

22,650

Other non-current assets

 

-

65

 

 

─────

──────

Total non-current assets

 

-

107,204

 

 

═════

══════

 

 

 

 

Current

 

 

 

Inventories

 

-

220

Trade and other receivables

8

3,468

1,120

Tax receivables

 

-

314

Receivables from and advances to related parties

26

100

1,786

Short-term investments

 

34

56

Financial assets at fair value through profit or loss

 

-

269

Cash and cash equivalents (excluding bank overdrafts)

9

29,079

88,919

 

 

─────

─────

Total current assets

 

32,681

92,684

 

 

 

 

Assets classified as held for sale

11

 30,308

329,963

 

Total assets

 

─────

62,989

═════

─────

529,851

═════

 

 

 

 

 

 

 

 

 

 

30 June 2018

30 June 2017

 

Note

USD'000

USD'000

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

 

 

 

EQUITY

 

 

 

Equity attributable to equity shareholders of the parent

 

 

 

Share capital

12

1,634

2,580

Additional paid-in capital

13

118,422

332,803

Equity reserve

 

76,283

65,166

Other reserve

 

-

(10)

Translation reserve

 

 (4,327)

(45,443)

Accumulated losses

 

   (145,324)

(113,612)

 

 

──────

──────

 

 

 46,688

241,484

Non-controlling interests

 

243

74,867

 

Total equity

 

─────

  46,931

─────

─────

316,351

─────

LIABILITIES

 

 

 

 

 

 

 

Non-current

 

 

 

Deferred income tax liabilities

14

-

18,762

 

 

─────

────

Total non-current liabilities

 

-

18,762

 

 

 

 

Current

 

 

 

Trade and other payables

15

3,166

56,387

Payables to related parties

26

12,591

13,836

 

 

─────

────

Total current liabilities

 

15,757

70,223

 

 

 

 

Liabilities classified as held for sale

11

301

124,515

 

Total liabilities

 

─────

 16,058

─────

213,500

 

Total equity and liabilities

 

─────

 62,989

─────

529,851

 

 

═════

═════

Net assets per share attributable to equity

 shareholders of the parent (USD per share)

 

22

0.29

0.94

 

 

═══

═══

 

 

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 2017

2,580

332,803

65,166

(10)

(45,443)

(113,612)

241,484

74,867

316,351

Loss for the year

-

-

-

-

-

 (31,712)

(31,712)

5,205  

(26,507)

Currency translation

-

-

-

-

(56)

-

(56)

(13)

(69)

Reclassification of currency translation reserves on disposal of subsidiaries

-

-

-

-

41,172

-

41,172

3,480

 44,652

 

Total comprehensive loss

─────

-

─────

-

─────

-

─────

-

──────

41,116

──────

(31,712)

──────

9,404

──────

8,672

──────

18,076

 

─────

─────

─────

 ─────

──────

──────

─────

──────

──────

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

Repurchase and cancellation of shares (Notes 12, 13)

(946)

(83,146)

11,117

-

-

-

 

(72,975)

-

(72,975)

Distribution to shareholders (Note 13)

-

(131,235)

-

-

-

-

(131,235)

-

(131,235)

Capital contributions in subsidiaries

-

-

-

-

-

-

-

2,767

2,767

Distributions to non-controlling interests

-

-

-

-

-

-

-

(28,043)

(28,043)

Disposals of subsidiaries

-

-

-

10

-

-

10

(58,020)

(58,010)

Balance at 30 June 2018

────

1,634

════

──────

118,422

══════

─────

76,283

═════

────

-

════

─────

 (4,327)

 ═════

──────

(145,324)

 ══════

─────

 46,688

═════

─────

 243

═════

─────

   46,931

═════

 

 

 

 

 

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

Loss for the year

-

-

-

-

-

(23,659)

(23,659)

11,054

(12,605)

Currency translation

-

-

-

-

(2,781)

-

(2,781)

(653)

(3,434)

Reclassification of currency translation reserves on disposal of subsidiaries

-

-

-

-

29,215

-

 

29,215

-

29,215

 

Total comprehensive loss

─────

-

─────

-

─────

-

─────

-

──────

26,434

──────

(23,659)

──────

2,775

──────

10,401

──────

13,176

 

─────

─────

─────

 ─────

──────

──────

─────

──────

──────

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

Repurchase and cancellation of shares (Notes 12, 13)

(1,358)

(119,877)

23,051

-

-

-

 

(98,184)

-

(98,184)

Capital contributions in subsidiaries

-

-

-

-

-

-

-

364

364

Disposals of subsidiaries

-

-

-

57

-

-

57

(52,506)

(52,449)

Distributions to non-controlling interests

-

-

-

-

-

-

-

(11,805)

(11,805)

Balance at 30 June 2017

────

2,580

════

──────

332,803

══════

─────

65,166

═════

────

(10)

════

──────

(45,443)

 ══════

──────

(113,612)

══════

──────

241,484

══════

─────

74,867

═════

──────

 316,351

══════

 

 

 

CONSOLIDATED INCOME STATEMENT

 

 

 

Year ended

 

 

30 June 2018

30 June 2017

 

Note

USD'000

USD'000

 

 

 

 

Revenue

 

48

6,562

Cost of sales

 

(38)

(7,371)

 

 

──

────

Gross profit/(loss)

 

10

(809)

 

 

 

 

Net (loss)/gain on fair value adjustments of investment properties

 

5, 16

(319)

30,122

Selling and administration expenses

17

 (5,924)

(20,062)

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

 

 

-

(115)

Loss on disposals of investments, net

18

 (18,104)

(12,938)

(Impairment)/reversal of impairment of assets

 

(498)

204

Finance income

 

1,078

908

Finance expenses

19

 (780)

(6,673)

Gain from acquisition of a subsidiary

 

-

9,721

Shares of losses of associates

6(a)

(1,260)

(2,445)

Shares of gains of associates classified as held for sale

 

165

-

Gain due to dilution of ownership in an associate

6(a)

-

1,670

Other income

 

 30

367

Other expenses

 

(317)

(1,829)

 

 

─────

─────

Loss before income tax from operations

 

 (25,919)

(1,879)

Income tax

20

(588)

(10,726)

 

 

─────

─────

Net loss from operations

 

(26,507)

(12,605)

Attributable to equity shareholders of the parent

 

(31,712)

(23,659)

Attributable to non-controlling interests

 

 5,205

11,054

 

 

─────

─────

Net loss for the year

 

 (26,507)

(12,605)

 

 

═════

═════

Loss per share

-     basic and diluted (USD per share)

 

22

(0.16)

(0.07)

 

 

────

────

  

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

Year ended

 

 

30 June 2018

30 June 2017

 

Note

USD'000

USD'000

 

 

 

 

Net loss for the year

 

 (26,507)

(12,605)

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

Items that may be reclassified subsequently

 

 

 

 to profit or loss:

 

 

 

 Exchange differences on translating foreign operations

 

(69)

(3,434)

Reclassification of currency translation reserve on disposal of subsidiaries

 

 

44,652

 

29,215

 

 

─────

─────

Other comprehensive income for the year

 

44,583

25,781

 

 

─────

─────

Total comprehensive income for the year

 

18,076

13,176

 

 

─────

─────

 

 

 

 

Attributable to equity shareholders of the parent

 

9,404

2,775

Attributable to non-controlling interests

 

8,672

10,401

 

 

─────

─────

 

 

18,076

13,176

 

 

═════

═════

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

 

 

30 June 2018

30 June 2017

 

Note

USD'000

USD'000

 

 

 

 

Operating activities

 

 

 

Loss before tax

 

 (25,919)

(1,879)

Adjustments for:

 

 

 

Depreciation and amortisation

 

14

50

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

 

 

 

-

 

(6,831)

Net loss/(gain) on fair value adjustments of investment properties

 

16

 

319

 

(30,122)

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

 

 

 

-

 

1,802

Losses on sales of subsidiaries

18

 18,775

13,653

Gains on sales of assets classified as held for sales

18

(671)

-

Gains on sales of investment properties

18

-

(715)

Impairment/(reversal of impairment) of assets

 

498

(204)

Shares of losses of associates

6(a)

1,260

2,445

Shares of gains of associates classified as held for sale

 

(165)

-

Gain from acquisition of a subsidiary

 

-

(9,721)

Gain due to dilution of ownership in an associate

6(a)

-

(1,670)

Unrealised foreign exchange losses, net

19

7

922

Interest expense

19

771

4,065

Interest income

 

(985)

(561)

 

Net loss before changes in working capital

 

────

(6,096)

─────

(28,766)

 

 

────

─────

Change in trade receivables and other current assets

 

(3,987)

(2,628)

Change in inventories

 

-

446

Change in trade payables and other current liabilities

 

 26,863

32,623

 

Net cash inflow from operating activities

 

─────

16,780

─────

────

  1,675

────

Investing activities

 

 

 

Interest received

 

995

578

Purchases of investment properties and prepayments for acquisitions of investments

 

 

(13,041)

 

(25,345)

Proceeds from sales of subsidiaries

 

168,882

112,053

Proceeds from disposals of investment properties

 

-

10,635

Proceeds from disposals of assets classified as held for sale

 

7,970

3,609

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

 

 

269

 

-

Collection of a prepayment for acquisition of investment

 

-

2,955

Investments in associates

6(a)

(10,718)

(2,014)

Cash acquired on acquisition of a subsidiary

 

-

26

Net proceeds from short-term investments

 

22

7,591

 

Net cash inflow from investing activities

 

──────

154,379 ──────

──────

110,088

──────

 

 

 

 

 

 

 

 

 

Year ended

 

 

30 June 2018

30 June 2017

 

Note

USD'000

USD'000

 

 

 

 

Financing activities

 

 

 

Additional capital contributions from non-controlling interests

 

2,767

364

Ordinary shares acquired by the Company                           

12

(72,975)

(98,184)

Distribution to shareholders                                                

13

(131,235)

-

Loan proceeds from banks

 

-

58,763

Loan repayments to banks

 

-

(9,924)

Repayment of zero-dividend preference shares

 

-

(25,118)

Interest paid

 

(771)

(9,559)

Distributions to non-controlling interests

 

(28,043)

(11,805)

 

Net cash outflow from financing activities

 

──────

(230,257)

──────

─────

 (95,463)

─────

Net changes in cash and cash equivalents for the year

 

(59,098)

16,300

Cash and cash equivalents at the beginning of the year

 

88,919

76,903

Cash and cash equivalents classified as held for sale

 

(742)

(4,284)

 

Cash and cash equivalents at the end of the year           

 

9

─────

29,079

═════

─────

88,919

═════

 

Major non-cash transactions included capital gains tax of USD20.3 million crystalised during the year (the year ended 30 June 2017: USD4.7 million) resulting from realised gains on divestments. The tax amounts due were withheld from disposal proceeds due to the Group by the buyers and remitted to the tax authorities and, as a result, these amounts are excluded from proceeds from disposal of subsidiaries, and disposals included in the consolidated statement of cash flows.

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

1          GENERAL INFORMATION

 

VinaLand Limited ("the Company") is a limited liability company incorporated in the Cayman Islands. The registered office of the Company is PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands. The Company's primary objective is to focus on key growth segments within Vietnam's emerging real estate market, namely residential, office, retail, industrial and leisure projects in Vietnam and the surrounding countries in Asia. The Company is listed on the AIM Market of the London Stock Exchange under the ticker symbol VNL.

 

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

 

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

 

·      The Third Amended and Restated Investment Management Agreement introduces a new fee structure composed of disposal and alignment fees, prepayment advances and a retention account to ensure that the Investment Manager is incentivised to meet the investing policy (Note 26).

 

On 23 July 2018, the Company announced that it had disposed of substantially all of its assets. In accordance with paragraph 5.6 of the AIM Note for Investing Companies, which forms part of the AIM Rules, the Company has 12 months to begin an orderly wind up of the Company and cancellation of its shares from trading on AIM, ultimately resulting in a voluntary liquidation. If this is not fulfilled, the Company's shares will be suspended from trading on AIM in July 2019.

 

The consolidated financial statements for the year ended 30 June 2018 were approved for issue

by the Company's Board of Directors on 27 September 2018.

 

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 2018 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").

 

Going concern

 

On 23 July 2018, the Company announced that it had disposed of substantially all of its assets. In accordance with paragraph 5.6 of the AIM Note for Investing Companies, which forms part of the AIM Rules, the Company has 12 months to begin an orderly wind up of the Company and cancellation of its shares from trading on AIM, ultimately resulting in a voluntary liquidation. If this is not fulfilled, the Company's shares will be suspended from trading on AIM in July 2019. As a consequence, these consolidated financial statements have been prepared using the liquidation basis, as the going concern basis is no longer considered appropriate. The Company continues to apply the same IFRS accounting policies as have been used in prior years as the Board of Directors does not believe there is a material difference in the accounting measurement basis that would be applied using a going concern basis of accounting versus what would apply under a liquidation basis of accounting.

 

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.

 

2.1        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 2017 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.

 

(b)        New standards, amendments and interpretations issued but not yet effective and not early adopted (continued)

IFRS 9, "Financial instruments", addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was completed in July 2014 and it is effective for annual periods beginning on or after 1 January 2018. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The Group expects the adoption of the new standard will affect classifications of its financial assets only. Its loans and receivables are expected to satisfy the conditions for classification as financial assets at amortised cost. The new impairment model requires the recognition of impairment provisions based on expected credit losses ("ECL") rather than only incurred credit losses as is the case under IAS 39. Based on the assessments undertaken to date, the Group expects no impairment provision for financial assets at amortised cost as at 30 June 2018. Equity investments currently measured at fair value through profit or loss will continue to be measured on the same basis under IFRS 9. The Group's classifications of financial liabilities will remain the same.

 

IFRS 15, "Revenue from contracts with customers", was issued on 28 May 2015 and it is effective for annual periods beginning on or after 1 January 2018. It establishes a comprehensive framework for determining when to recognise revenue and how much revenue to recognise. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The standard permits either a full retrospective or a modified retrospective approach for the adoption. Management has assessed the effects of applying the new standard on the Group's consolidated financial statements and has identified that there would be no significant impact. The Group intends to adopt the standard for the financial year ending 30 June 2019 using the modified retrospective approach.

 

Amendments to IAS 40, "Investment Property", that was issued in December 2016 and effective for annual reporting periods beginning on or after 1 January 2018. The amendment clarified that to transfer to, or from, investment properties there must be a change in use. To conclude if a property has changed use there should be an assessment of whether the property meets the definition. This change must be supported by evidence. The Board confirmed that a change in intention, in isolation, is not enough to support a transfer. The issue arose from confusion over whether an entity transfer's property under development from inventory to investment property when there is evidence of a change in use that was not explicitly included in the standard. The list of evidence was therefore recharacterised as a non-exhaustive list of examples to help illustrate the principle. The examples were expanded to include assets under construction and development and not only transfers of completed properties.

 

IFRS 16, "Leases", the new leasing standard establishes principles for the recognition, measurement, presentation and disclosure of leases, with the objective of ensuring that lessees and lessors provide relevant information that faithfully represents those transactions. IFRS 16 was issued in January 2016 and effective for annual reporting periods beginning on or after 1 January 2019. For lessees, the new standard brings most leases (with limited exceptions) on-balance sheet, eliminating the distinction between operating and finance leases. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value (as further defined in the standard with examples including tablet and personal computers, small items of office furniture and telephones.). A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Lessor accounting remains largely unchanged and the distinction between operating and finance leases is retained. IFRS 16 requires enhanced disclosures to be provided by lessors that will improve information disclosed about a lessor's risk exposure. The Group is yet to assess IFRS 16's full impact and intends to adopt the standard no later than the financial year ending 30 June 2020.

 

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

 

2.2        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.

 

2.3        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. Their fair value is based on the agreed selling price and only one independent valuation is obtained if required by the Valuation Committee.

 

The fair value is estimated by the independent valuation companies assuming there is an agreement between a willing buyer and a willing seller in an arm's length transaction after proper marketing; wherein the parties have each acted knowledgeably, prudently and without compulsion. The valuations by the independent valuation companies are prepared based upon direct comparison with sales of other similar properties in the area and the expected future discounted cash flows of a property using a yield that reflects the risks inherent therein. The estimated fair values provided by the independent valuation companies are used by the Valuation Committee as the primary basis for estimating each property's fair value. In addition to the reports of the independent valuation companies the valuation committee considers information from other sources, including those sources referred to in Note 3, before recommending each property's estimated fair value to the Board for approval.

 

In addition to the annual revaluation cycle, at the end of each quarter the Investment Manager reviews the entire portfolio to determine if there are any material changes to investment properties or other indicators that might mean that the value of an investment property has materially changed. Subject to the results of this review a more detailed assessment of those properties may be performed. If there is an indication that an investment property's value has increased then the investment property will be included in the independent valuation program. If there is an indication that an investment property's value has declined then an assessment will be made in respect to quantifying the fall in value. This involves either obtaining an independent valuation of the investment property or determining the change in value of each property based on an internal assessment. Based upon the analysis performed by the Investment Manager or the independent valuation report, the Valuation Committee determines whether any valuation adjustments should be recommended to the Board for approval.

 

Any gain or loss arising from a change in fair value of investment properties is recognised in the consolidated income statement.

 

When an item of property, plant and equipment is transferred to investment property following a change in its use, any differences arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is treated in the same way as a revaluation under IAS 16. Any resulting increase in the carrying amount of the property is recognised in profit or loss to the extent that it reverses a previous impairment loss, with remaining increase recognised in other comprehensive income and increase directly to equity in revaluation surplus. Any resulting decrease in the carrying amount of the property is initially charged in other comprehensive income against any previous recognised revaluation surplus, with any remaining decrease charged to profit or loss

 

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting purposes. Where an investment property undergoes a change in use, evidenced by commencement of development with a view to sale, the property is transferred to inventories. A property's deemed cost for subsequent accounting as inventories is its fair value at the date of change in use.

 

All costs directly associated with the purchase and construction of an investment property, and all subsequent capital expenditures for the development, which qualify as acquisition costs, are capitalised.

 

Borrowing costs for property under construction or development are capitalised if they are directly attributable to the acquisition, construction or production of that qualifying asset.

 

Capitalisation of borrowing costs commences when the activities to prepare the asset are in progress and expenditures and borrowing costs are being incurred. Capitalisation of borrowing costs continues until the assets are substantially ready for their intended use. If the resulting carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognised. The capitalisation rate is arrived at by reference to the actual rate payable on borrowings for development purposes or, with regard to that part of the development cost financed out of general funds, to the average rate.

 

2.6        Leases

 

Leases under the terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the leases' commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.

 

Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases, unless they are treated as investment properties. 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 2.11. 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.

 

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:

 

Furniture, fixtures and office equipment                 3 to 5 years

            Computer software                                               3 to 5 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        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.

 

2.9        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.

 

2.10      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.

 

2.11      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.

 

2.12      Impairment of assets

 

The Group's 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.

 

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.

 

2.13      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.

 

2.14      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.

 

 

 

2.15      Short-term investments

 

Short-term investments include bank deposits with original maturity terms of between three and twelve months.

 

2.16      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.

 

2.17      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.

 

2.18      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.

 

2.19      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.

 

2.20      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.

 

2.21      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 services

 

Revenue from the sale of services is recognised in the income statement when the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. Revenue from the sale of services is only recognised when all four (4) following conditions are satisfied:

 

·       The amount of revenue can be measured reliably;

·       It is probable that the economic benefits associated with the transaction will flow to the Company;

·       The percentage of completion of the transaction at the balance sheet date can be measured reliably; and

·       The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

 

(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.

 

2.22      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.

 

2.23      Disposal fee and alignment fee

 

The disposal fee and alignment fee liabilities are designated as financial liabilities at fair value through profit or loss, net of any prepayment advances received up to the date of the balance sheet. Management estimates the fees' fair value at each balance sheet date using a discounted cash flow model based on the Company's projected completion, collections of proceeds from sales of the remaining properties and distributions to shareholders. The change in liabilities due to the Investment Manager during the year is included as "disposal fee and alignment fee (expense)/recovery" in the consolidated income statement and is further described in Note 26 to these consolidated financial statements. An expense results from an increase in the liabilities to the Investment Manager, and a recovery of previously expensed disposal fee and alignment fee results from a decrease in the disposal fee and alignment fee liability to the Investment Manager at the reporting date.

 

 

 

 

2.24      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.

 

2.25      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        Impairment of prepayment for acquisitions of investments

 

The Group estimates the fair value of these properties based on the fair value of the underlying properties for which these prepayments have been made.

 

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 below:

 

These independent 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.

 

(vi)        prices contained in recent sales and purchase agreements entered into by the Company with prospective buyers.

 

(vii)       the uncertainty surrounding the final closing terms and conditions of on-going disposals as this may impact the final proceeds and timing of these transactions. In emerging markets, it is not uncommon for commercial and contractual terms to vary from what was initially agreed on.

 

3.2        Disposal fee and alignment fee

 

The liabilities of the Group are stated at fair value in accordance with accounting policy 2.23. Their fair value is estimated at each balance sheet date by the Investment Manager. The valuation is based on certain assumptions which are subject to uncertainty and might materially differ from the actual results, including:

 

(i)         the timing and amount of disposals;

 

(ii)         development expenditure and operating expenses of the Group;

 

(iii)        the timing and amount of distributions to shareholders using a variety of methods;

 

4          SEGMENT ANALYSIS

 

In identifying its operating segments, management generally follows the Group's sectors of investment which are based on internal management reporting information for the Investment Manager's management, monitoring of investments and decision making. The operating segments by investment portfolio include commercial, residential and office buildings, hospitality, mixed-use segments and cash and deposits.

 

The activities undertaken by the commercial segment include the development and operation of investment properties. Apartments and villas properties which are developed for sale, land and office buildings are included in the residential and office buildings segment. The hospitality segment includes the development and operation of hotels and related services. The mixed-use segment includes multi-purpose projects. Strategic decisions are made on the basis of segment operating results.

 

Each of the operating segments is managed and monitored separately by the Investment Manager as each requires different resources and approaches. The Investment Manager assesses segment profit or loss using a measure of operating profit or loss from the investment assets. Although IFRS 8 requires measurement of segmental profit or loss, the majority of expenses are common to all segments and therefore cannot be individually allocated. There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss.

 

There is no measure of segment liabilities regularly reported to the Investment Manager; therefore, liabilities are not disclosed in the sector analyses.

 

Segment information can be analysed as follows for the reporting years:

 

(a)        Consolidated income statement

 

 

Year ended 30 June 2018

 

 

 

Commercial

Residential and office buildings

 

 

Hospitality

 

Mixed use

 

 

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

Revenue

-

15

-

33

48

Cost of sales

-

(31)

-

(7)

(38)

 

─────

 ───

────

───

───

Gross (loss)/profit

-

(16)

-

26

10

Net loss on fair value adjustments of investment properties

 

-

 

-

 

-

 

(319)

 

(319)

Net (loss)/gain from disposal of investments

(1,934)

 (7,430)

553

(9,293)

 (18,104)

Impairment of assets

-

-

-

(498)

(498)

Finance income

30

262

-

786

1,078

Shares of losses of associates

(1,260)

-

-

-

(1,260)

Shares of gains of associates classified as held for sale

 

-

 

-

 

165

 

-

 

165

Other income

-

28

-

2

30

 

─────

─────

────

────

────

Total (loss)/profit before unallocatable expenses

 

(3,164)

 

 (7,156)

 

718

 

(9,296)

 

 (18,898)

Selling and administration expenses

 

 

 

 

 (5,924)

Finance expenses

 

 

 

 

(780)

Other expenses

 

 

 

 

(317)

 

 

 

 

 

─────

Loss before tax

 

 

 

 

 (25,919)

Income tax

 

 

 

 

(588)

 

Net loss for the year

 

 

 

 

─────

(26,507)

═════

 

 

 

Year ended 30 June 2017

 

 

 

Commercial

Residential and office buildings

 

 

Hospitality

 

Mixed use

 

 

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

Revenue

-

6,562

-

-

6,562

Cost of sales

-

 (7,371)

-

-

 (7,371)

 

─────

─────

──────

──────

──────

Gross loss

 -

 (809)

 -

 -

 (809)

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

 

 

  (1,301)

 

 

 720

 

 

 -

 

 

 30,703

 

 

 30,122

Net (loss)/gain from disposal of investments

-

 (22,441)

 -

 9,503

 (12,938)

Gain from acquisition of an asset

-

9,721

-

-

9,721

Gain due to dilution in ownership of associate

-

1,670

-

-

1,670

Impairment/(reversal of impairment) of assets

 -

 (404)

 -

 608

204

Finance income

 2

 730

 3

 173

 908

Share of losses of associates

 (50)

 (2,249)

 (146)

 -

 (2,445)

Other income

 8

358

 -

1

 367

 

─────

──────

──────

──────

──────

Total (loss)/profit before unallocatable expenses

 

 (1,341)

 

 (12,704)

 

 (143)

 

40,988

 

26,800

Selling and administration expenses

 

 

 

 

(20,062)

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

 

 

 

 

(115)

Finance expenses

 

 

 

 

(6,673)

Other expenses

 

 

 

 

(1,829)

 

 

 

 

 

─────

Loss before tax

 

 

 

 

(1,879)

Income tax

 

 

 

 

(10,726)

 

Net loss for the year

 

 

 

 

─────

(12,605)

═════

 

 

 

 

 

 

 

 

 

 

(b)        Consolidated balance sheet

             

 

As at 30 June 2018

 

 

 

Commercial

Residential and office buildings

 

 

Hospitality

 

Mixed

use

 

Cash and deposits

 

 

Total

 

USD'000

USD'000

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

 

Trade, tax and other receivables

-

424

-

3,144

-

3,568

Short-term investments

-

-

-

-

34

34

Cash and cash equivalents

-

-

-

-

29,079

29,079

Assets classified as held for sale

29,555

-

-

753

-

30,308

 

Total assets

─────

29,555

═════

────

424

════

────

-

════

────

3,897

════

─────

29,113

═════

─────

62,989

═════

Total assets include:

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

10,722

13,019

-

78

-

23,819

 

 

As at 30 June 2017

 

 

 

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

 -

 33,700

 -

 30,288

 -

63,988

Property, plant and equipment

 -

 -

 -

 404

 -

404

Investments in associates

 20,097

 -

 -

 -

 -

20,097

Prepayments for acquisitions of investments

 

-

 

 22,650

 

-

 

-

 

-

 

22,650

Inventories

-

220

 -

-

-

220

Trade, tax and other receivables

-

1,254

-

1,966

-

3,220

Short-term investments

-

-

-

-

56

56

Financial assets at fair value through profit or loss

 

-

 

-

 

-

 

269

 

-

 

269

Cash and cash equivalents

-

-

-

-

88,919

88,919

Assets classified as held for sale

3,017

 193,373

 4,287

129,286

 -

329,963

Other assets

-

35

-

30

-

65

 

Total assets

─────

23,114

═════

──────

251,232

══════

────

4,287

════

──────

162,243

══════

─────

 88,975

═════

──────

529,851

══════

Total assets include:

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

2,026

66,584

-

73

-

68,683

 

 

 

5          INVESTMENT PROPERTIES

 

 

Year ended

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Opening balance

63,988

389,700

Additions

4,521

66,514

Disposals (Note 6(b))

(67,954)

(130,255)

Transferred to assets classified as held for sale (Note 11)

-

(287,058)

Net (loss)/gain from fair value adjustments (Note 16)

(319)

30,122

Translation differences

(236)

(5,035)

 

Closing balance

─────

 -

═════

─────

63,988

═════

 

As at 30 June 2018, the Group had no investment property.

 

6          SUBSIDIARIES AND ASSOCIATES

 

(a)        Investments in associates

 

 

Year ended

 

30 June 2018

30 June 2017

 

 USD'000

USD'000

 

 

 

Opening balance

20,097

47,713

Additions

10,718

 2,014

Share of losses of associates

(1,260)

 (2,445)

Reclassified as held for sale (*)

(29,555)

 (4,287)

Gain due to dilution of ownership in an associate

-

 1,670

Disposals

-

(24,568)

 

Closing balance

─────

-

═════

─────

20,097

═════

 

(*)    During the year, the investment in Thang Loi Textile Garment Joint Stock Company was reclassified to held for sale following the signing of a sale and purchase agreement (Note 11).

 

 Particulars of Thang Loi Textile Garment Joint Stock Company's summarised financial information, extracted from its financial statements as 30 June 2018 and 30 June 2017, are as follows:

 

As at 30 June 2018

 

 


 

Incorporation

 

 

Principal activity

 

 

 

Assets

 

 

 

Liabilities

 

 

 

Revenue

 

 

 

Loss

 

Share of losses to the Group

 

Equity interest held

 

 

 

USD'000

USD'000

USD'000

USD'000

USD'000

%

 

 

 

 

 

 

 

 

 

Thang Loi Textile Garment Joint Stock Company

 

 

Vietnam

 

 

Property

 

 

 56,823

 

 

 7,545

 

 

452

 

 

 (1,938)

 

 

(1,260)

 

 

65

 

 

 

 

 

As at 30 June 2017

 

 


 

Incorporation

 

 

Principal activity

 

 

 

Assets

 

 

 

Liabilities

 

 

 

Revenue

 

 

 

Loss

 

Share of losses to the Group

 

Equity interest held

 

 

 

USD'000

USD'000

USD'000

USD'000

USD'000

%

 

 

 

 

 

 

 

 

 

Thang Loi Textile Garment Joint Stock Company

 

 

Vietnam

 

 

Property

 

 

 49,101

 

 

 7,893

 

 

 2,925

 

 

 (80)

 

 

 (50)

 

 

65

 

As at 30 June 2018 and 30 June 2017, the Group had a 65% equity interest in Thang Loi Textile Garment Joint Stock Company. Management considers the interest an investment in an associate as the Group does not have control over the investee. The Group and a co-investor have significant influence over this investee.

 

 

 

(b)        Principal subsidiaries

 

The Group had the following principal subsidiaries which are held through special purpose vehicles established outside of Vietnam as at 30 June 2018 and 30 June 2017:

 

 

 

30 June 2018

 

30 June 2017

 

 

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 Commercial Center Limited (Vietnam) (*)

Vietnam

38.2%

61.8%

 

38.2%

61.8%

Property investment

SIH Real Estate Limited Company (Vietnam)

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

Mega Assets Company Limited (Vietnam)

Vietnam

-

-

 

75.0%

25.0%

Property investment

AA VinaCapital Company Limited

Vietnam

-

-

 

83.2%

16.8%

Property investment

Aqua City Joint Stock Company

Vietnam

-

-

 

100.0%

-

Property investment

Hoang Phat Investment Joint Stock Company

Vietnam

-

-

 

60.0%

40.0%

Hospitality

Viet Land Development Corporation Limited

Vietnam

-

-

 

90.0%

10.0%

Property investment

VinaCapital Phuoc Dien Company Limited

Vietnam

-

-

 

100.0%

-

Property investment

Vinh Thai Urban Development Corporation Limited

Vietnam

-

-

 

53.3%

46.7%

Property investment

Vina Alliance Company Limited

Vietnam

-

-

 

46.5%

53.5%

Property investment

Phu Hoi City Company Limited

Vietnam

-

-

 

52.5%

47.5%

Property investment

 

(*)           At the reporting date, the Group had a 38.2% equity interests in VinaCapital Commercial Center Limited (Vietnam). Management considers this company as a subsidiary as the Group has de facto control through its majority voting rights in this company.

 

 

 

 

 

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 sold of a number of subsidiaries, details of which are provided on the following pages. The major assets and liabilities in the subsidiaries disposed of were as follows:

 

 

 

As at the dates of loss of control

 

 

USD'000

Current assets

 

 

         Cash and cash equivalents

 

419

Prepayment to suppliers

 

2,264

Short-term investments

 

3,033

        Inventories

 

220

        Trade and other receivables

 

2,353

Assets classified as held for sale

 

330,244

 

 

──────

Total current assets

 

338,533

Non-current assets

 

 

        Investment properties (Note 5)

 

67,954

        Prepayments for acquisitions (Note 7)

 

22,697

 

 

──────

Total non-current assets

 

90,651

Current liabilities

 

 

        Trade and other payables

 

(18,589)

Short-term borrowings

 

(2,961)

Other current liabilities

 

(7)

Liabilities classified as held for sale

 

(133,612)

 

 

──────

Total current liabilities

 

(155,169)

 

 

──────

Net assets at the dates when control is lost

 

274,015

 

 

──────

Net assets attributable to the Company

 

216,767

Net assets attributable to non-controlling interests

 

57,248

 

 

──────

Total consideration

 

242,644

Capital gains tax withheld by buyers

 

(20,353)

Outstanding consideration as at 30 June 2018 (Note 8)

 

(3,143)

 

 

──────

  Consideration received due to sales of subsidiaries

 

219,148

  Less: Cash and cash equivalents of disposed subsidiaries

 

(3,987)

 

 

──────

  Cash received due to sales of subsidiaries

 

215,161

 

 

──────

             

 

 

 

 

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

 

 

 

Year ended

30 June 2018

 

 

USD'000

 

 

 

Total consideration

 

242,644

Carrying amount of net assets sold attributable to the Company

 

(216,767)

 

 

─────

Gain on disposals before reclassification of currency translation reserve

Reclassification of currency translation reserve

 

(44,652)

 

 

─────

Loss on disposals of subsidiaries (Note 18)

 

(18,775)

 

 

─────

           

 

Sale of Vina Alliance Company Limited

 

During the year the Group sold its 46.5% equity interest in Vina Alliance Company Limited for a total consideration of USD61.7 million. The book value of the net assets at the sale date was USD61.6 million and the reclassification of translation reserve on disposal was USD9.3 million, resulting in a loss of USD9.2 million.

 

Sale of Phu Hoi City Company Limited

 

During the year the Group sold its 52.5% equity interest in Phu Hoi City Company Limited for a total consideration of USD21.2 million. The book value of the net assets at the sale date was USD20.8 million and the reclassification of translation reserve on disposal was USD5.3 million, resulting in a loss of USD4.9 million.

 

Sale of Vinh Thai Urban Development Corporation Limited

 

During the year the Group sold its 53.3% equity interest in Vinh Thai Urban Development Corporation Limited for a total consideration of USD5.9 million. The book value of the net assets at the sale date was USD5.8 million and the reclassification of translation reserve on disposal was USD7.1 million, resulting in a loss of USD7.0 million.

 

Sale of VinaCapital Phuoc Dien Company Limited

 

During the year the Group sold its 100% equity interest in VinaCapital Phuoc Dien Company Limited for a total consideration of USD25.3 million. The book value of the net assets at the sale date was USD22.2 million and the reclassification of translation reserve on disposal was USD1.6 million, resulting in a gain of USD1.5 million.

 

Sale of Viet Land Development Corporation Limited

 

During the year the Group sold its 90% equity interest in Viet Land Development Corporation Limited for a total consideration of USD40.5 million. The book value of the net assets at the sale date was USD35.6 million and the reclassification of translation reserve on disposal was USD13.6 million, resulting in a loss of USD8.7 million.

 

 

 

 

 

Sale of Aqua City Joint Stock Company

 

During the year the Group sold its 100% equity interest in Aqua City Joint Stock Company for a total consideration of USD48.9 million. The book value of the net assets at the sale date was USD34.2 million and the reclassification of translation reserve on disposal was USD3.8 million, resulting in a gain of USD10.9 million.

 

Sale of Mega Assets Company Limited (Vietnam)

 

During the year the Group sold its 75% equity interest in Mega Assets Company Limited (Vietnam) for a total consideration of US34.2 million. The book value of the net assets at the sale date was USD33.2 million and the reclassification of translation reserve on disposal was USD1.2 million, resulting in a loss of USD0.2 million.

 

Sale of AA VinaCapital Company Limited

 

During the year the Group sold its 83.2% equity interest in Avila for a total consideration of USD2.3 million. The book value of the net assets at the sale date was USD2.3 million and the reclassification of translation reserve on disposal was USD1.9 million, resulting in a loss of USD1.9 million.

 

Sale of Hoang Phat Investment Joint Stock Company

 

During the year the Group sold its 60% equity interest in Hoang Phat for a total consideration of USD2.6 million. The book value of the net assets at the sale date was USD1.1 million and the reclassification of translation reserve on disposal was USD0.9 million, resulting in a gain of USD0.6 million.

 

Summarised financial information of subsidiaries with material non-controlling interests

 

There was no subsidiary with significant balance of non-controlling interests as at 30 June 2018.

 

 

 

 

 

7          PREPAYMENTS FOR ACQUISITIONS OF INVESTMENTS

 

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Prepayments for acquisitions of investments

-

26,218

Accumulated impairment allowances

-

(3,568)

 

──────

─────

 

-

22,650

 

══════

═════

 

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.

 

Movements in the balance during the year were as follows:

 

 

Year ended

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Opening balance

22,650

27,772

Additions

47

76

Disposal (Note 6(b))

(22,697)

-

Reversal of impairment

-

1,176

Collection of prepayment

-

(2,955)

Reclassified as held for sale

-

(3,077)

Translation differences

-

(342)

 

─────

─────

Closing balance

-

22,650

 

═════

═════

 

8          TRADE AND OTHER RECEIVABLES

 

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Receivables from disposals of subsidiaries (*)

 3,143

252

Short-term loan receivable from third parties

 263

-

Trade receivables

-

217

Other receivables

62

 651

 

────

 3,468

════

────

1,120

════

 

(*)      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.

 

 

 

 

9          CASH AND CASH EQUIVALENTS

 

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Cash on hand

-

6

Cash at banks

29,035

80,217

Cash equivalents

44

8,696

 

─────

─────

 

29,079

88,919

 

═════

═════

 

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

 

At 30 June 2018, cash and cash equivalents held at the Company level amounted to USD27.8 million (30 June 2017: USD71.0 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.

 

Under the Third Amended and Restated Investment Management Agreement, 20% of any disposal fee and/or alignment fees payable to the Investment Manager is to be deposited into a separate bank account under the Company's name (the "Retention Account"). These funds will be distributed upon the performance of certain milestones by the Investment Manager. The Company has no specific rights to these funds. Included in cash and cash equivalents as at 30 June 2018 (30 June 2017: nil) was USD0.7 million and USD0.5 million transferred into the Retention Account in January 2018 and July 2018, respectively. This balance of USD1.2 million equals 20% of disposal fee and alignment fee payable to the Investment Manager during the year.

 

 

 

 

 

10         FINANCIAL INSTRUMENTS BY CATEGORY

 

As at 30 June 2018

 

 

Loans and receivables

 

Total

 

USD'000

USD'000

 

 

 

Assets

 

 

 

 

 

Current:

 

 

Loan receivables

263

263

Receivables from disposal of subsidiaries

3,143

3,143

Other receivables

62

62

Receivables from related parties

100

100

Short-term investments

34

34

Cash and cash equivalents

29,079

29,079

 

Total

─────

32,681

─────

32,681

 

═════

═════

 

 

Other financial liabilities at amortised cost

Liabilities at fair value through profit or loss

Total

 

USD'000

USD'000

USD'000

Liabilities

 

 

 

 

 

 

 

 

 

 

Current:

 

 

 

Payables to related parties

565

12,026

12,591

Trade payables

 3,154

-

 3,154

Other payables

12

-

12

 

Total

────

3,731

────

12,026

────

15,757

 

════

════

════

         
 

 

 

 

As at 30 June 2017

 

 

 

 

Loans and receivables

Assets at fair value through profit or loss

 

 

Total

 

USD'000

USD'000

USD'000

 

 

 

 

Assets

 

 

 

 

 

 

 

Current:

 

 

 

Trade receivables

217

-

217

Receivables from disposal of subsidiaries

252

-

252

Interest receivables

10

-

10

Other receivables

607

-

607

Receivables from related parties

1,786

-

1,786

Short-term investments

56

-

56

Financial assets at fair value through profit or loss

-

269

269

Cash and cash equivalents

88,919

-

88,919

 

Total

─────

91,847

───

269

─────

92,116

 

═════

═══

═════

 

 

Other financial liabilities at amortised cost

Liabilities at fair value through profit or loss

Total

 

USD'000

USD'000

USD'000

Liabilities

 

 

 

 

 

 

Current:

 

 

 

Payables to related parties

832

13,004

13,836

Trade payables

15

-

15

Payables for property acquisitions and land compensation

 

2,685

-

 

2,685

Other accrued liabilities

31

-

31

Other payables

1,182

-

1,182

 

Total

────

4,745

─────

13,004

────

17,749

 

════

═════

════

         
 

 

 

 

11         ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE

 

 

 

30 June 2018

 

 

 

 

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

 

 

 

 

 

 

Thang Loi Textile Garment Joint Stock Company

 

29,555

 

-

 

29,555

-

 

29,555

VinaCapital Commercial Center Limited (Vietnam)

 

726

 

(274)

 

452

 

243

 

209

SIH Real Estate Limited Company (Vietnam)

 

27

 

(27)

 

-

 

-

 

-

 

─────

30,308

═════

───

(301)

 ═══

─────

30,007 ═════

───

243

 ═══

─────

29,764

═════

 

As at 30 June 2018, the assets and liabilities of SIH Real Estate Limited Company (Vietnam) and Thang Loi Textile Garment Joint Stock Company have been presented as held for sale following the signing of relevant sale and purchase agreements. The Group is also actively marketing the sale of VinaCapital Commercial Center Limited (Vietnam) at year end. Final terms and pricing are being negotiated with a potential buyer. The sales of these subsidiaries are expected to be completed by the end of 2018.

 

For the comparative year:

 

 

30 June 2017

 

 

 

 

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

 

 

 

 

 

 

Phu Hoi City Company Limited

30,221

(1)

30,220

14,603

15,617

AA VinaCapital Co. Limited

3,017

(59)

2,958

498

2,460

Viet Land Development Corporation Limited

 

112,150

 

(60,224)

 

51,926

 

3,966

 

47,960

Vinh Thai Urban Development Corporation Limited

 

45,263

 

(34,452)

 

10,811

 

5,054

 

5,757

Vina Alliance Company Limited

129,286

(29,462)

99,824

53,406

46,418

Romana Services - Trading Investment JS Corporation

 

4,287

 

-

 

4,287

 

-

 

4,287

Hoang Phat Investment Joint Stock Company

 

2,662

 

(317)

 

2,345

 

779

 

1,566

Long Truong Site

3,077

-

3,077

-

3,077

 

──────

329,963 ══════

──────

(124,515) ══════

──────

205,448 ══════

─────

78,306 ═════

──────

127,142

══════

 

 

 

 

 

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 2017

Change in carrying amount

 

 

Transferred in

 

 

Disposals

 

 

30 June 2018

 

USD'000

USD'000

USD'000

USD'000

USD'000

Assets classified as held for sale

 

 

 

 

 

Investment properties

287,058

8,474

-

(295,532)

-

Property, plant and equipment (net of accumulated depreciation)

 

11

 

(1)

 

-

 

(10)

 

-

Prepayment for acquisitions

3,077

(10)

-

(3,067)

-

Other non-current assets

14

-

-

(14)

-

Other current assets

4

10

-

(14)

-

Inventories

29,584

8

-

(29,592)

-

Trade and other receivables

1,645

(131)

11

(1,514)

11

Cash and cash equivalents

4,283

(715)

742

(3,568)

742

Investments in associates (Note 6(a))

4,287

35

29,555

(4,322)

29,555

 

──────

────

─────

──────

─────

 

329,963

7,670

30,308

(337,633)

30,308

 

──────

────

────

──────

─────

Liabilities classified as held for sale

 

 

 

 

 

Long-term borrowings and debts

78,247

2,742

-

(80,989)

-

Short-term borrowings and debts

18,828

1,114

-

(19,942)

-

Accruals and other current liabilities

35

247

-

(282)

-

Trade and other payables

27,405

4,994

301

(32,399)

301

 

──────

──────

─────

──────

─────

 

124,515

9,097

301

(133,612)

301

 

──────

──────

─────

──────

─────

Net assets classified as held for sale

205,448

══════

(1,427)

══════

30,007

 ═════

(204,021)

══════

30,007

═════

             

 

 

 

 

 

For the comparative year:

 

 

1 July 2016

Transferred in

Disposals

30 June 2017

 

USD'000

USD'000

USD'000

USD'000

Assets classified as held for sale

 

 

 

 

Investment properties (Note 5)

3,784

287,058

(3,784)

287,058

Property, plant and equipment (net of accumulated depreciation)

 

319

 

11

 

(318)

 

11

Intangible assets (net of accumulated amortisation)

9

-

(9)

-

Prepayments for acquisitions

-

3,077

-

3,077

Deferred income tax assets

155

-

(155)

-

Other non-current assets

468

14

(468)

14

Other current assets

41

3

(41)

3

Inventories

4,585

29,584

(4,585)

29,584

Trade and other receivables

860

1,645

(860)

1,645

Short term investments

219

-

(219)

-

Cash and cash equivalents

8,189

4,284

(8,189)

4,284

Investments in associates (Note 6(a))

-

4,287

-

4,287

 

─────

──────

──────

──────

 

18,628

329,963

(18,628)

329,963

 

─────

──────

──────

──────

Liabilities classified as held for sale

 

 

 

 

Long-term borrowings and debts

-

78,248

-

78,248

Long-term trade and other payable

2,602

33

(2,602)

33

Short-term borrowings and debts

-

18,829

-

18,829

Accruals and other current liabilities

319

-

(319)

-

Trade and other payables

2,344

27,405

(2,344)

27,405

 

─────

──────

─────

──────

 

5,265

124,515

(5,265)

124,515

 

─────

──────

─────

──────

Net assets classified as held for sale

13,363 ═════

205,448 ══════

(13,363)

═════

205,448 ══════

 

 

 

 

 

 

12         SHARE CAPITAL

 

 

30 June 2018

 

30 June 2017

 

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

257,987,620

2,580

 

393,808,479

3,938

Shares purchased and cancelled

(94,587,732)

(946)

 

(135,820,859)

(1,358)

 

Closing balance

────────

163,399,888

════════

────

1,634

════

 

────────

257,987,620

════════

────

2,580

════

 

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 2018, four investors held more than 10% of the ordinary shares of the Company (30 June 2017: two).

 

During the year, the Company purchased and cancelled 94,587,732 of its ordinary shares (30 June 2017: 135,820,859 shares) for a total cash consideration of USD73.0 million (30 June 2017: USD98.2 million) at an average cost of USD0.772 per share (30 June 2017: USD0.723 per share). The difference between the cost of the shares repurchased and their net asset value has been recorded in an equity reserve.

 

13         ADDITIONAL PAID-IN CAPITAL

 

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

 

 

Year ended

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Opening balance

332,803

452,680

Shares repurchased and cancelled

(83,146)

(119,877)

Distributions to shareholders (*)

(131,235)

-

 

Closing balance

──────

118,422

══════

──────

332,803

══════

 

 

 

 

 

(*)     During the year, the Company made the following distributions from its additional paid-in capital:

 

Announcement date

Settlement date

Distribution per ordinary share

Distributed amount

 

 

USD

USD'000

 

 

 

 

7 December 2017

19 December 2017

0.33

60,434

5 April 2018

18 April 2018

0.10

16,879

13 June 2018

28 June 2018

0.33

53,922

 

 

 

 

──────

131,235

══════

 

  As at 30 June 2018, these amounts had been fully distributed.

 

14         DEFERRED INCOME TAX LIABILITIES

 

 

Year ended

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Opening balance

18,762

16,358

Net change during the year from fair value adjustments of investment properties

(18,762)

2,404

 

Closing balance

─────

-

═════

─────

18,762

═════

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

-

3,976

Deferred income tax liabilities to be recovered within 12 months

-

14,786

 

─────

─────

 

-

18,762

 

═════

═════

 

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 and expected capital gains tax on disposal of its subsidiaries.

 

 

 

 

15         TRADE AND OTHER PAYABLES

 

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Professional fees

 3,154

-

Deposits from property buyers

-

52,174

Payables for property acquisitions and land compensation

-

2,685

Deposits from customers of residential projects

-

300

Trade payables

-

15

Other accrued liabilities

-

31

Other payables

12

1,182

 

────

3,166

════

─────

56,387

═════

 

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.

 

16         NET (LOSS)/GAIN ON FAIR VALUE ADJUSTMENTS OF INVESTMENT PROPERTIES

 

 

Year ended

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

By real estate sector:

 

 

- Commercial

-

(1,301)

- Residential, office buildings and undetermined use

-

720

- Mixed use

(319)

30,703

 

Net (loss)/gain on fair value adjustments of investment

 properties

 

───

 

(319)

═══

─────

 

30,122

═════

 

17         SELLING AND ADMINISTRATION EXPENSES

 

 

Year ended

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Disposal and alignment fee under the Third Amended and Restated Investment Management Agreement (Note 26)

 

4,083

 

13,004

Management fees under the Second Amended and Restated Investment Management Agreement (Note 26)

 

-

 

1,822

Accrued liquidation cost

274

-

Professional fees (*)

986

2,795

General and administration expenses (**)

332

1,858

Staff costs (**)

162

450

Outside service costs (**)

85

121

Depreciation and amortisation (**)

2

12

 

────

5,924

════

─────

20,062

═════

 

 

 

 

 

(*)    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.

 

18         LOSS/(GAIN) ON DISPOSAL OF INVESTMENTS, NET

 

 

Year ended

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Loss on sales of subsidiaries (Note 6(b))

18,775

13,653

Gain on sales of assets classified as held for sale

(671)

-

Gain on sales of investment properties

-

(715)

 

─────

18,104

═════

─────

12,938

═════

 

19         FINANCE EXPENSES

 

 

Year ended

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Interest expense

 771

4,065

Unrealised foreign exchange losses

7

922

Realised foreign exchange losses

2

184

Others

-

1,502

 

───

780

═══

────

6,673

════

 

20         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 consolidated 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 retrospective application of new regulations.

 

 

 

 

No provision has been made for corporate income tax payable by the Vietnamese subsidiaries for the year because these subsidiaries do not have taxable income in Vietnam (30 June 2017: nil).

 

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 2087

30 June 2017

 

USD'000

 USD'000

 

 

 

Current tax

 

 

Group's loss before tax

 (25,919)

(1,879)

 

 

 

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

-

-

Effect of higher tax rate in Vietnam

-

-

Capital gains tax

(19,350)

(4,684)

 

─────

─────

Total current tax expense

(19,350)

(4,684)

 

─────

─────

Deferred income tax

 

 

Decrease in deferred tax assets (*)

-

(3,638)

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

18,762

(2,404)

 

─────

─────

Deferred income tax

18,762

(6,042)

 

─────

─────

Tax expense

(588)

(10,726)

 

═════

═════

 

(*)   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.

 

21         DEFERRED INCOME TAX ASSETS

 

Deferred income tax assets relating to the accumulated tax losses as at 30 June 2018 of USD4.9 million (30 June 2017: USD17.8 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 2018

30 June 2017

 

USD'000

USD'000

 

 

 

2018

-

1,593

2019

13

1,857

2020

1,699

9,655

2021

210

3,875

2022

2,416

845

2023

550

-

 

────

4,888

════

─────

17,825

═════

 

 

 

22         LOSS AND NET ASSET VALUE PER SHARE

 

(a)        Basic

 

 

Year ended

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

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

 (31,712)

(23,659)

Weighted average number of ordinary shares in issue

195,261,249

351,765,215

Basic loss per share from continuing and total operations (USD/share)

(0.16)

(0.07)

 

────

────

 

(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 2018

30 June 2017

 

 

 

Net asset value (USD'000)

46,688

241,484

Number of outstanding ordinary shares in issue

163,399,888

257,987,620

Net asset value per share (USD/share)

0.29

0.94

                                                               

───

───

 

23         TOTAL EXPENSE RATIO

 

1     

For the year ended

 

30 June 2018

30 June 2017

 

 

 

Total expense ratio

0.95%

1.73%

 

────

────

 

The total expense ratio ("TER") has been calculated in accordance with the Association of Investment Companies ("AIC") recommended methodology dated May 2012, which excludes disposal and alignment fees from the calculation. It is the ratio of annualised ongoing charges over the average undiluted net asset value during the year.

 

            The total expense ratio includes 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.

 

 

 

 

24         COMMITMENTS

 

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

 

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Within one year

6

46

From two to five years

-

11

 

──

 

6

57

 

══

 

As at 30 June 2018, there is no commitment for future construction work of the Group's properties held by subsidiaries (30 June 2017: USD6.7 million).

 

The Company's subsidiaries and associates have a broad range of commitments relating to investment projects under agreements it has entered into and investment licences it has received.

 

25         DIRECTORS' FEES AND MANAGEMENT'S REMUNERATION

 

The aggregate annual directors' fees amounted to USD260,000 (year ended 30 June 2017: USD284,986) of which there were no outstanding payables at the reporting date (30 June 2017: nil).

 

The details of annual remuneration by director are summarised below:

 

 

Year ended

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Michel Casselman

75.0

72.8

Charles Isaac

60.0

57.0

Tran Trong Kien

60.0

57.5

Ian Lydall

65.0

48.6

Nicholas Allen (*)

-

19.1

Nicholas Brooke (**)

-

30.0

 

────

260.0

════

────

285.0

════

 

(*)          Nicholas Allen resigned on 25 October 2016.

(**)        Nicholas Brooke resigned on 31 December 2016.

 

 

 

 

 

 

 

26         RELATED PARTY TRANSACTIONS AND BALANCES

 

Management, disposal and alignment fees

 

The Group is managed by VinaCapital Investment Management Limited (the "Investment Manager"), an investment management company incorporated in the Cayman Islands.

 

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 (30 June 2017: USD1.8 million). The Investment Manager receives a disposal fee and an alignment fee. The disposal fee is calculated at the rate of 3.00% of distributable funds realised in the year starting 22 November 2016, 2.75% in the second year and 2.25% in the third year. The alignment fee is calculated on distributions to shareholders over USD265.0 million during the 3-year period starting 22 November 2016. The Investment Manager will receive 10% of distributions over USD265.0 million and up to USD279.0 million, 15% of distributions over USD279.0 million, and up to USD313.0 million, and 20% of distributions over USD313.0 million. A non-refundable monthly advance of USD200,000 in the year starting 22 November 2016, USD150,000 in the second year, and USD100,000 in the third year, will be paid to the Investment Manager. These advances will be offset against disposal fees and alignment fees. During the year, advances of USD2.0 million (30 June 2017: USD1.5 million) were paid to the Investment Manager.

 

Details of disposal fees and alignment fees accrued/payable at the balance date were as follows:

 

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

2,995

5,820

733

-

Alignment fees accrued

7,766

7,184

Alignment fees payable

532

-

 

─────

─────

Total fees expensed/accrued during the year

12,026

13,004

Advance payments to be offset against fees payable

 -

(1,466)

 

─────

─────

Net accrual/payable of disposal and alignment fees

12,026

11,538

 

═════

═════

 

(*)   Movement in accrual/payable disposal and alignment fees during the year were as follows:

 

 

Year ended

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Opening balance

11,538

-

Charge for the year (Note 17)

4,083

13,004

Amounts settled

(3,595)

(1,466)

 

Closing balance

──────

12,026

══════

──────

11,538

══════

 

During the year, the Group sold its 16.22% interest in Saigon Phu Yen Joint Stock Company for a total consideration of USD0.3 million to Crescent Bay Developments PTE Limited, which is wholly owned by VinaCapital Holdings Ltd, a company controlled by VinaCapital Group Limited. The book value of the investment at the sale date was USD0.3 million. Therefore, there was no gain or loss from disposal.

 

 

 

 

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

 

 

 

 

30 June 2018

30 June 2017

 

Relationship

Balances

USD'000

USD'000

 

 

 

 

 

VinaCapital Investment Management Ltd.

Investment Manager

Accrued disposal fee and alignment fee

10,761

13,004

 

Disposal fee and alignment fee payable

1,265

-

 

 

 

 

 

VinaCapital Vietnam Opportunity Fund Limited ("VOF")

Under common management

Disposals of real estate projects

565

131

 

Reimbursed expenses on behalf of the Company

-

17

 

 

 

 

 

Bi Vi Investment Corporation

Under common management

Loan payable

-

684

 

 

 

─────

─────

 

 

 

12,591

13,836

 

 

 

═════

═════

 

As at 30 June 2018, receivables from related party are mainly interest receivables from a company under common management.

 

Advances to related parties as at 30 June 2018 were the non-refundable advances described under the section "Disposal fee and alignment fee" above.

 

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

 

 

As at

 

30 June 2018

30 June 2017

 

Number of shares

 

 

Vietnam Investment Partners Ltd (*)

22,286,457

1,877,573

VinaCapital Group Limited

608,553

608,553

Asia Investment and Finance Limited

-

20,360,332

VinaCapital Investment Management Limited

-

48,552

Vietnam Master Holding 2 Limited

-

5,309,327

 

───────

───────

 

(*)    In accordance with the Second Amended and Restated Investment Management Agreement, the Investment Manager was required to use 50% of the realisation fee arising from the contracted divestment proceeds collected to make market purchases of the Company's ordinary shares within three months of the receipt of the realisation fee. The shares acquired are subject to lockups of between one and two year from the date of acquisition. Included in 22,286,457 ordinary shares held by Vietnam Investment Partners Ltd was 20,360,332 shares which was purchased by the Investment Manager under aforementioned scheme. As at 30 June 2018, 7,039,279 was ordinary shares still under lockup.

 

 

 

 

 

27         FINANCIAL RISK MANAGEMENT

 

Financial risk factors

 

The Group invests in a diversified property portfolio in Vietnam with the objective to provide shareholders with a potential capital growth.

 

The Group is exposed to a variety of financial risks: market risk (including price risk, currency risk and interest rate risk); credit risk; and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. The Group's risk management is coordinated by its Investment Manager who manages the distribution of the assets to achieve the investment objectives. The most significant financial risks to which the Group is exposed are described below.

 

Foreign exchange risk

 

The Group's exposure to risk resulting from changes in foreign currency exchange rates is moderate as although transactions in Vietnam are settled in the VND, the value of the VND has historically been closely linked to that of the USD, the presentation currency. The value of real estate in Vietnam is based on pricing that is a combination of VND, USD and gold. For this reason, a decline in the value of the VND against the USD does not necessarily mean proportionately lower prices will be obtained in USD.

 

The Group has not entered into any other hedging mechanism as the estimated benefits of available instruments outweigh their cost. On an ongoing basis the Investment Manager analyses the current economic environment and expected future conditions and decides the optimal currency mix considering the risk of currency fluctuation, interest rate return differentials and transaction costs. The Investment Manager updates the Board regularly and reports on any significant changes for further actions to be taken.

 

The Group's financial assets' and liabilities' exposures to risk of fluctuations in exchange rates at the reporting dates are as follows:

       

 

Short-term exposure

 

Long-term exposure

30 June 2018

VND

USD

 

VND

USD

 

(USD as functional currency)

(VND as functional currency)

 

(USD as functional currency)

(VND as functional currency)

 

USD'000

USD'000

 

USD'000

USD'000

 

 

 

 

 

 

Financial assets

5,631

1

 

-

-

Financial liabilities

 (565)

-

 

-

-

 

────

───

 

───

───

Net exposure

 5,066

1

 

-

-

 

════

═══

 

═══

═══

 

 

 

 

 

 

 

Short-term exposure

 

Long-term exposure

30 June 2017

VND

USD

 

VND

USD

 

(USD as functional currency)

(VND as functional currency)

 

(USD as functional currency)

(VND as functional currency)

 

USD'000

USD'000

 

USD'000

USD'000

 

 

 

 

 

 

Financial assets

1,068

1,266

 

-

-

Financial liabilities

(881)

-

 

-

-

 

───

────

 

───

───

Net exposure

187

1,266

 

-

-

 

═══

════

 

═══

═══

 

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 2018, if the VND weakened/strengthened by 5% (30 June 2017: 5%), post-tax loss for the year would have been USD0.25 million higher/lower (30 June 2017: not materially impacted).

 

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.

 

As at 30 June 2018, the Group had no investment property or items of property plant and equipment carried at fair value.

 

Cash flow and fair value interest rate sensitivity

 

The Group's exposure to interest rate risk is not material as the balance of loan and borrowings of the Group was nil at year end.

 

Credit risk analysis

 

Credit risk is the risk that a counterparty will be unable to pay amounts in full when due. Impairment provisions are provided for losses that have been incurred by the Group at the reporting date.

 

            The Investment Manager maintains a list of approved banks for holding deposits and set aggregate limits for deposits or exposures to individual banks. While this list is formally reviewed at least monthly, it is updated to reflect developments in the market on a timely basis as information becomes available.

 

 

 

 

The Group's exposure to credit risk is limited to the carrying amounts of financial assets recognised at the reporting date, analysis by credit quality is as follows:

 

 

30 June 2018

30 June 2017

 

 USD'000

 USD'000

 

 

 

Neither past due nor impaired

32,681

91,595

Past due but not impaired, less than 6 months

-

-

Past due but not impaired, more than 6 months

-

252

Past due and impaired

-

-

 

─────

─────

 

32,681

91,847

Less: Allowance for impairment

-

-

 

Total

 

─────

 32,681

═════

─────

91,847

═════

 

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Neither past due nor impaired:

 

 

Short-term investments

34

56

Cash and cash equivalents

29,079

88,919

Receivable from a related party

100

1,786

Trade receivables

3,406

217

Interest receivables

-

10

Other receivables

62

607

 

─────

32,681

═════

─────

91,595

═════

Past due but not impaired:

 

 

Receivables from disposals of subsidiaries

-

252

 

────

-

════

─────

252

═════

Less: Allowance for impairment

-

-

 

Total financial assets, net of provision for impairment

─────

32,681

─────

91,847

 

═════

═════

       

 

As at 30 June 2018, the Group did not set aside a provision for receivables from the disposal of subsidiaries (30 June 2017: nil) because it expects to recover the balances within 12 months. The credit quality of financial assets that are neither past due nor impaired is assessed by management for each period end. This assessment takes into account the financial health of the buyers, or history of payments and defaults of existing buyers of the Group. Debtors and amounts due from a related party that are neither past due nor impaired are substantially companies with good collection track records with the Group. Bank deposits are mainly transacted with banks of high credit ratings assigned by international credit-rating agencies.

 

Cash and cash equivalents and deposits are held at international and local banks and financial institutions which do not have histories of default.

 

 

 

 

 

            The Group has no other significant concentrations of credit risk.

 

In accordance with the Group's policy, the Investment Manager continuously monitors the Group's credit position on a monthly basis, identified either individually or by group, and incorporates this information into its credit controls.

 

The Investment Manager reconsiders the valuations of financial assets that are impaired or overdue at each reporting date based on the payment status of the counterparties, recoverability of receivables, and prevailing market conditions.

 

Liquidity risk analysis

 

Liquidity risk is the risk that the Group will experience difficulty in either realising assets or otherwise raising sufficient funds to satisfy commitments associated with investments and financial instruments. There is an inherent liquidity risk associated with the Company's primary business, being property investment. As a consequence, the value of the majority of the Company's investments cannot be realised as quickly as other investments such as cash or listed equities. Furthermore, the development and realisation of the Company's property investments will normally require access to debt financing at a reasonable cost or shareholder loans from the Company's surplus funds and its co-investors.

 

The Company seeks to minimise liquidity risk through:

 

·      Preparing and monitoring cash flow forecasts for each investment project and the Company;

·      Arranging financing to fund real estate developments as required; and

·      Providing ample lead times for the disposal of assets and realisation of cash.

 

At year end, the contractual undiscounted cash flows of the Group's financial liabilities have contractual maturities summarised as follows:

                                                                                                                       

 

Current

 

Non-current

 

30 June 2018

Within 6 months

6 to 12 months

 

From 1 to 5 years

Over 5 years

 

USD'000

USD'000

 

USD'000

USD'000

 

 

 

 

 

 

Trade and other payables

 3,166

-

 

-

-

Payables to related parties

12,591

-

 

-

-

 

 

────

15,757

════

────

-

════

 

────

-
════

────

-

════

 

 

 

 

 

 

 

 

 

30 June 2017

Within 6 months

6 to 12 months

 

From 1 to 5 years

Over 5 years

 

 

USD'000

USD'000

 

USD'000

USD'000

 

 

 

 

 

 

 

 

Trade and other payables

3,913

-

 

-

-

 

Payables to related parties

3,958

576

 

9,302

-

 

 

 

────

7,871 ════

───

576

═══

 

────

9,302
════

────

-

════

             

                                                                                                                       

 

 

 

 

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 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.

 

Capital as at year end is summarised as follows: 

 

 

30 June 2018

30 June 2017

 

USD'000

USD'000

 

 

 

Net assets attributable to the equity shareholders of the parent

46,688

241,484

 

═════

══════

 

Fair value estimation

 

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

 

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

·      Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and

·      Level 3: Inputs for the asset or liability that are not based on observable market data

(that is, unobservable inputs).

 

The level within which the financial asset is classified is determined based on the lowest level of significant input to the fair value measurement.

 

 

 

 

The financial assets and financial liabilities measured at fair value in the consolidated balance sheet are grouped into the fair value hierarchy as follows:

 

 

Level 1

Level 2

Level 3

Total

As at 30 June 2018

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

Financial liabilities

 

 

 

 

- Disposal and alignment fees

-

-

(12,026)

(12,026)

 

═══

══════

═════

═════

 

 

 

 

 

 

Level 1

Level 2

Level 3

Total

 

As at 30 June 2017

USD'000

USD'000

USD'000

USD'000

 

 

 

 

 

 

 

Financial assets held at fair value through profit or loss

 

 

 

 

- Ordinary shares - unlisted

-

269

-

269

Financial liabilities

 

 

 

 

- Disposal and alignment fees

-

-

(13,004)

(13,004)

 

═══

══════

══════

══════

 

There were no transfers between levels during the year.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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Annual Report & Financial Statements 30 June 2018 - RNS