Audited results for the 12 months ended 30 June 13
25 October 2013
VinaCapital Vietnam Opportunity Fund Limited
Audited financial results for the twelve months ended 30 June 2013
VinaCapital Vietnam Opportunity Fund Limited (the "Company" or "VOF"), an investment company focused on Vietnam, today announces its full year results for the twelve months ended 30 June 2013 ("the Period").
Financial highlights:
1 Net Asset Value ("NAV") of USD752.4 million (30 June 2012: USD765.6 million)
2 NAV per share of USD2.88 (30 June 2012: USD2.45).
3 Net profit of USD90.1 million (30 June 2012: net profit of USD28.4 million).
4 Earnings per share of USD0.31 (30 June 2012: Earnings per share of USD0.09).
5 Cash and equivalents at 30 June 2013 of USD53.4 million.
6 No debt at the fund level.
Operational highlights:
7 Divested the Company's equity stake in Prime Group, Transimex, Cofico, the Legend Hotel and exercised put options on Hoan My Hospital and International School of HCMC.
8 As at 30 June 2013, the Company has spent USD114.0 million repurchasing 63.2 million shares, representing 19.5 percent of total shares in issue.
9 Appointment of Steven Bates as an Independent Non-Executive Chairman and Martin Adams as an Independent Non-Executive Director.
Commenting, Andy Ho, Managing Director of VinaCapital Vietnam Opportunity Fund Limited's Investment Manager, said:
"VOF performed well during the fiscal year in conjunction with an improved economic environment of mild inflation and a stable domestic currency. VOF's audited net asset value per share increased by 17.6 percent to USD2.88, from USD2.45 a year ago. We made a number of successful divestments, including Prime Group, Transimex (TMS), and Cofico during the year, with net proceeds going towards the ongoing share buyback programme and investments into undervalued listed shares."
Notes to Editors:
VinaCapital is the leading investment management and real estate development firm in Vietnam, with a diversified portfolio of USD1.6 billion in assets under management. VinaCapital was founded in 2003 and boasts a team of managing directors who bring extensive international finance and investment experience to the firm. Our mission is to produce superior returns for investors by using our experience and knowledge to identify the key trends and opportunities that emerge as Vietnam continues to develop its economy. To achieve this, VinaCapital has industry-leading asset class teams covering capital markets, private equity, fixed income, venture capital, real estate and infrastructure.
VinaCapital manages three closed-end funds trading on the AIM Market of the London Stock Exchange. These funds are: VinaCapital Vietnam Opportunity Fund Limited (VOF), VinaLand Limited (VNL), and Vietnam Infrastructure Limited (VNI). VinaCapital also co-manages the USD32 million DFJ VinaCapital L.P. technology venture capital fund with Draper Fisher Jurvetson.
VinaCapital has offices in Ho Chi Minh City, Hanoi, Danang, Nha Trang and Singapore. More information about VinaCapital is available at www.vinacapital.com.
More information on VinaCapital Vietnam Opportunity Fund Limited is available at www.vinacapital.com/vof
Enquiries:
David Dropsey
VinaCapital Investment Management Limited
Investor Relations/Communications
+84 8 821 9930
Philip Secrett
Grant Thornton UK LLP, Nominated Adviser
+44 (0)20 7383 5100
Hiroshi Funaki
Edmond de Rothschild Securities, Broker
+44 (0)20 7845 5960
David Benda / Hugh Jonathan
Numis Securities Limited
+44 (0)20 7260 1000
Andrew Walton
FTI Consulting, Public Relations (London)
+44 20 7269 7204
andrew.walton@fticonsulting.com
Dear Shareholder,
This is my first statement to you as Chairman of VOF and it has been an eventful few months since I took over from Bill Vanderfelt on his retirement. I would like to take this opportunity to thank Bill on behalf of the Board for his nine years of service which saw the Company grow from an initial USD10 million of assets to one of the largest closed end funds focused on Vietnam.
I want to set out a number of important issues facing VOF. In order to cover these fully, I intend to break this statement down into sections, each covering one important area. I will comment on returns including a review of the portfolio and the issues surrounding valuations; the continuation vote; corporate governance; and the discount to NAV at which the shares trade.
Returns
During the fiscal year, the NAV per share rose by 17.6 percent from USD2.45 to USD2.88, while the share price rose 43.9 percent from USD1.50 to USD2.13, reflecting a narrowing of the discount from 38.8 percent to 26.0 percent. Over the same period, the VN index rose by 13.9 percent in US Dollar terms. It is obviously pleasing to be able to report these good results, which reflect a robust investment management performance. Net assets at 30 June 2013 were valued at USD752.4 million. The portfolio comprises three main segments, described below, which account for 83.4 percent of net assets. The balance is held in cash and bonds to be used for new opportunities and to finance the buyback.
Listed Portfolio (47.4 percent of NAV)
The bulk of the return over the year is down to the performance of the listed equity segment of the portfolio. Here, the single most important contributor to return was VOF's largest listed holding, Vinamilk, an excellent company whose share price rose 132 percent over the year. This asset alone represents 15.4 percent of VOF's total assets and 32.5 percent of the listed portion of the fund.
Decisions on whether and when to reduce the size of this position are hotly debated within the investment team, and centre on the trade-off between the quality of the business and the level of valuation. Over the past year, the Investment Manager, VinaCapital Investment Management Limited ("VCIM" or "the Investment Manager"), has sold 1,750,000 shares, at a weighted average premium to the quoted price of 15.4 percent, as Vinamilk, along with many other companies in the portfolio, has a limit on the percentage of shares which can be owned by foreigners, and this quota is often full. This premium is not reflected in the NAV but may be a source of hidden value for the Company. In addition to holdings in the consumer goods sector (which includes Vinamilk), the listed assets are also heavily represented in the financial services and agribusiness sectors, and are focused on companies which the Investment Manager believes are sound businesses at reasonable valuations.
Real Estate Portfolio (25.4 percent of NAV)
As there are limited opportunities in Vietnam to invest in completed quality property developments for yield and capital gains, of necessity VOF's exposure to real estate has had to take the form of development with all of the risks and issues that entails. Conceptually, the original investment strategy was to invest as a developer and sell rather than to hold completed buildings for the longer term. In practice, for a variety of reasons development periods have been much longer than the Investment Manager expected. Nevertheless, the Investment Manager believes that real estate has attractive longer term prospects in a fast growing country such as Vietnam, which requires all manner of quality property developed to international standards. Real estate is the largest single sector weighting in the fund. About half these assets are direct investments held in projects jointly with VinaLand Limited ("VNL") another closed end AIM-listed company managed by VinaCapital Investment Management (VCIM). The majority of projects consist of land earmarked or partially developed as residential, 'villa' projects, rather than condominiums, office, commercial or industrial development. The Investment Manager believes that this represents the best ongoing strategy. A further 9 percent is invested in hotels, the lion's share of which is VOF's flagship hotel asset, the Sofitel Legend Metropole Hanoi (Metropole Hotel), which continues to deliver excellent operating results on the back of high room rates and occupancy levels. The balance of 6 percent is invested in indirect property assets, mostly in listed equities exposed to the sector, and including a position in VNL itself. Despite the Investment Manager's belief in the longer term attraction of real estate investment, the shorter term has seen lacklustre performance. During the year, we took further write-downs on our direct holdings, so this part of the portfolio contributed negatively to the year's results. All of our real estate investments are valued independently by internationally recognised real estate valuers on the basis either of discounted cash flow analysis or of appropriate comparable assets, depending on the circumstances.
VNL is in the process of realising assets in order to return capital to its investors and it is likely that this exercise will involve the sale over a period of time of some or all of the projects jointly owned with VOF. The decision to sell VOF's interest in a jointly held project is independent of VNL's, but VOF itself has neither the desire nor the capacity to manage the developments and risks which would be associated with standing aside in circumstances where VNL sells its (usually controlling) stake. For this reason, your Board is looking to strengthen its relationship with the Board of VNL, in order to minimise the conflicts of interest which could arise in these circumstances. Although there is no pressure on us to sell assets at depressed prices, in practical terms, we are limiting the amount of new capital available to VNL-controlled joint projects except where follow-on capital is required to protect our investment and the next three years or so is likely to see an overall reduction in our exposure.
Private Equity and OTC Portfolio (4.2 and 6.4 percent of NAV respectively)
VOF made some important sales from its private equity portfolio, earning good returns from Prime Group, a construction materials company sold in April 2013 at a multiple of 2.4x cost for an IRR of 34 percent and TMS, a transport and logistics company sold in March 2013 at a multiple of 1.4x cost for an IRR of 9 percent. Redeploying assets into attractive private equity opportunities is an important challenge and opportunity in the year ahead. While there is a new deal pipeline valued at over USD100 million, the likelihood is that only a small proportion of that will be investable at attractive valuations. Sectors under review include food processing, media and education.
VOF has made excellent returns over the years from assets in this segment, buying into companies, supporting the business restructuring and building before selling on to trade buyers, mostly from outside Vietnam. The Investment Manager continues to believe that although returns from both OTC and private equity investments will be good, the challenge rests in developing the deal flow, and making investments of a scale that 'move the dial'.
While OTC companies are traded and quoted prices are available, many of them trade rarely and have private equity characteristics. The bulk of the 6 percent in OTC assets is invested in a manufacturer and distributor of crop protection chemicals called An Giang Plant Protection, a company which the Investment Manager believes has excellent prospects. The Investment Manager is looking for new OTC investment targets and the supply is largely determined by the pace of privatisation of state owned enterprises.
Our investments in OTC companies are valued using the last quoted market price. Private equity investments are fair valued on the basis of cost less any impairment, except those which VOF controls and whose results are consolidated into our balance sheet, where periodic impairment tests are applied.
In part because we are obliged under accounting rules to consolidate the balance sheets of those companies where VOF has a controlling stake, VOF's accounts remain unusually complex for a closed ended fund. For this reason, our balance sheet includes, for example, inventories of birds' nests associated with our holding in Yen Viet, despite the fact that this confuses rather than enlightens the picture for shareholders. The accounting rules on this are in the process of changing and we hope to be able to produce financial statements that are easier to interpret, as they will then just account for the fair value of the investment in those companies that are currently consolidated.
Continuation
Every fifth year, the Board is obliged to put to shareholders a resolution as to whether they wish to discontinue the fund. In July 2013, shareholders voted against discontinuing the fund, by a majority of 75 percent of those voting. This time, the Board went through an extensive consultation process with shareholders prior to the vote and negotiated a revised investment management agreement with the Investment Manager. There were inevitably many views about how the fund should organise its affairs but the majority wanted VOF broadly to maintain its strategy of investing across the range of opportunities in Vietnam. This diversified approach has delivered good returns over time compared to more specialised approaches while offering a smoother ride in terms of volatility.
The new Investment Management Agreement entered into with VCIM and effective from 1 July 2013 incorporates current best market practices and current market fee arrangements. The Board agreed to cut both base and incentive fees by 25 percent in exchange for a reduction of the high water mark above which the incentive fee would be payable. We also agreed to split the portfolio into two parts, one containing the direct real estate holdings, the other the balance of the assets. To enhance the alignment of interest between the Investment Manager and the Shareholders, the Investment Manager will only earn an incentive fee on the realization value on the sales of direct real estate holdings. The total value of the assets which have been allocated to the real estate pool is just over USD200 million, or around 25 percent of VOF's aggregate net assets. This includes the projects jointly owned with VNL, a small number of other direct investments and the hospitality assets, including the Metropole Hotel in Hanoi, which is VOF's single largest real estate asset, but excludes some 5 percent of assets in the real estate sector which are listed on the stock market. Incentive fees are often criticised because they don't work as an incentive and are excessively complicated. Unfortunately, it is impossible to devise a simple structure which works as an incentive without disadvantaging shareholders. VOF's is a complex arrangement, but your Board believes it will function as an incentive for the Investment Manager, while capping the amounts that can be earned at a reasonable level. Details of the fee arrangements are provided in note 32 to the financial statements.
Discount Management
As the Board went through the shareholder consultation process, the common feedback was that the share price discount to NAV remained too high. Shareholders feel that the underlying value of the assets is either inefficiently represented by the share price and/ or that the investments are overvalued. In theory, it ought to be simple to deal with a discount by having a robust discount control mechanism which is consistently applied. Since the start of the share buyback programme, VOF has bought back 63.2 million shares at an average weighted discount of 28.2 percent, spending USD113.7 million. Given the scale of the buyback, which over the last year was amongst the largest of any London Main Market or AIM listed closed end fund, the Board is disappointed that the discount has not fallen further. At one level, this simply reflects an imbalance of supply over demand, but the reasons why that is the case are complex. Many shareholders bought into VOF at the higher levels of discount which prevailed in the past. This group has seen a narrowing of the discount and a good increase in Vietnamese equity markets, which has offered a selling opportunity even at comparatively high levels of discount. Other factors include: risk aversion in developing markets, with some shareholders reallocating capital to 'safer' assets; the level of discounts for Vietnamese funds generally; management of shareholder expectations and the inherent risk in NAV where a proportion of the assets are not priced by the market and are largely illiquid.
Whatever the reasons, your Board has decided to continue with its buyback programme over the long run, with the goal of gradually reducing the volatility and absolute level of the discount on a continuing basis and allowing the shareholder base to adjust over time. The Board takes full responsibility for the discount policy and as part of the new investment management agreement have removed what was a significant disincentive for the Investment Manager to support buybacks as they will benefit from NAV accretion. The Board is also attempting to be more transparent to our shareholders through improved corporate governance and communication. The goal has to be to ensure that over time there are more buyers than sellers, even when the only buyer is the Company.
Corporate Governance
This topic is about trying to give you, our shareholders, more of a voice in your Company. We, as your Board are pursuing a number of initiatives:
1. AGM - at our first ever AGM, which we are now committing to hold every year towards the end of November or beginning of December, you will have a chance to vote, inter alia, on the election of Directors and the adoption of the financial statements. This year, the AGM will be held in Zurich on 28th November. Andy Ho, the head of VOF's investment management team, will be giving a portfolio update and all shareholders are welcome to attend;
2. Articles of Association - this year, we will be asking at the AGM for one change to our Articles. This involves the reduction of the percentage of shares required to call an EGM from 25 percent to 10 percent. The Board believes this would be a significant advance in shareholder enfranchisement and will undoubtedly give you more control over what is, after all, your Company. This change requires approval by a special resolution of two thirds majority of those voting, and I urge you to vote in favour of this resolution;
3. Remuneration cap - We will also be putting an ordinary resolution to the meeting to increase the cap on Directors' fees from USD300,000 to USD500,000. This increase is to ensure that we have the capacity to add at least one further independent Director, as well as to allow an increase in fees to reflect market levels and the workload involved in this complex company. We have also foregone the subsidy to Directors' fees historically provided by the Investment Manager, as we believe this has the potential to create a conflict with regard to the independence of the Directors not employed by the Investment Manager;
4. Directors' Report - in these financial statements, we give considerable detail about the workings of the Board and its Committees. At our Board meeting on 9 July 2013, we decided to merge the Audit Committee with the Valuation Committee to reflect the increasing involvement of the valuation processes in determining the accounts. Michael Gray is the Chairman. We have also set up separate committees to deal with Management Engagement, Remuneration and Nomination;
5. Directorate - during the past year, Martin Adams and I have both joined the Board. Martin is a veteran of investment in Vietnam and is a specialist in private equity, with a wealth of board experience in complicated funds. My background is as an emerging markets investor with a long history in the closed end fund world. We are also committing to a policy of director rotation, where each independent Director will put himself up for re-election every year. Don Lam, who is, of course, the CEO of the Investment Manager and therefore non-independent, will put himself forward for re-election as he will every year at the AGM. As this will be the first time that shareholders will be given the opportunity to vote on the Board, all Directors will offer themselves for election;
6. Regulation - there are two possible regulatory developments lurking in the wings. The first is the Alternative Investment Funds Directive (AIFMD), a piece of EU legislation which is aimed at hedge funds and private equity vehicles but inadvertently captures certain closed end funds. The second is FATCA, a US initiative which attempts to extend the reach of the US tax authorities into the investing world outside the US. We are taking advice on both of these, and the current view is that while we may need to register with certain regulatory bodies, neither will affect the operation of the Company. Nevertheless, the advancing regulatory tide we are witnessing globally makes it likely that at some point VOF will be caught in new reporting requirements;
7. Shareholder Communication - all of us on the Board are available to shareholders. We will be present at the AGM to answer questions in person, and can be contacted through either of the Company's brokers or through the Investment Manager. We also intend to continue with the provision of timely information through announcements to the market, the Company's website and the reports of the Investment Manager.
Outlook
Your Investment Manager comments at length on the outlook for the Vietnamese market in the Investment Manager's Report which follows. The Board is optimistic about the prospects for markets in Vietnam in the medium term, but acknowledges that there are some short term headwinds which may cause uncertainty. These blow from outside the country as well as from within. In particular, the likely shift in the developed world to more conventional monetary conditions is likely to cause increased volatility in markets generally as liquidity tightens. The flipside of this, of course, is that the anaemic growth in developed countries may improve somewhat and reduce one of the factors limiting growth in the developing Asian region. Inside Vietnam, weak banks are in need of major restructuring and the business environment remains difficult for companies which seek free and open markets with the accompanying profitability. Nevertheless, the Board agrees with the Investment Manager that attractive opportunities exist across the asset classes in which VOF invests and that the VinaCapital team are well placed to take advantage of these opportunities.
Steven Bates
Chairman
VinaCapital Vietnam Opportunity Fund Limited
25 October 2013
CONSOLIDATED BALANCE SHEET
|
|
|
30 June 2013 |
30 June 2012 |
|
|
Note |
USD'000 |
USD'000 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
Non-current |
|
|
|
|
Plant and equipment |
|
3,093 |
800 |
|
Investment properties |
|
3,722 |
1,785 |
|
Interests in associates |
6 |
182,090 |
199,137 |
|
Prepayments for acquisition of investment properties |
7 |
8,239 |
7,500 |
|
Financial assets at fair value through profit or loss |
12 |
4,697 |
- |
|
Available-for-sale financial assets |
8 |
5,784 |
6,111 |
|
Long-term loan to an associate |
30(d) |
1,325 |
- |
|
Other non-current assets |
|
207 |
583 |
|
Total non-current assets
|
|
────── 209,157 ────── |
────── 215,916 ────── |
|
|
|
|
|
|
Current |
|
|
|
|
Inventories |
10 |
7,413 |
6,090 |
|
Trade and other receivables |
11 |
17,918 |
14,611 |
|
Short-term loans to related parties |
30(d) |
7,501 |
10,771 |
|
Financial assets at fair value through profit or loss |
12 |
467,762 |
425,281 |
|
Available-for-sale financial assets |
8 |
8,700 |
28,450 |
|
Cash and cash equivalents (excluding bank overdraft) |
13 |
53,392 |
42,209 |
|
Total current assets
|
|
────── 562,686 ────── |
────── 527,412 ────── |
|
|
|
|
|
|
Assets classified as held for sale |
14 |
- |
32,127 |
|
Total assets
|
|
────── 771,843 ══════ |
────── 775,455 ══════ |
|
|
|
30 June 2013 |
30 June 2012 |
|
|
Note |
USD'000 |
USD'000 |
|
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
EQUITY |
|
|
|
|
Equity attributable to owners of the parent |
|
|
|
|
Share capital |
15 |
3,246 |
3,246 |
|
Additional paid-in capital |
722,064 |
722,064 |
|
|
Treasury shares |
16 |
(113,639) |
(17,785) |
|
Revaluation reserve |
17 |
31,376 |
28,602 |
|
Available-for-sale financial assets reserve |
4,336 |
14,180 |
|
|
Translation reserve |
(18,763) |
(17,011) |
|
|
Retained earnings |
123,823 |
32,349 |
|
|
Total equity |
|
────── 752,443 ────── |
────── 765,645 ────── |
|
Non-controlling interests |
1,089 |
- |
|
|
Total equity |
|
────── 753,532 ────── |
────── 765,645 ────── |
|
LIABILITIES |
|
||
|
Non-current |
|
||
|
Deferred tax liabilities |
- |
101 |
|
|
Other long-term liabilities |
236 |
175 |
|
|
Total non-current liabilities
|
|
────── 236 ────── |
────── 276 ────── |
|
Current |
|||
|
Short-term bank borrowings |
18 |
2,261 |
2,588 |
|
Trade and other payables |
19 |
13,658 |
4,787 |
|
Payable to related parties |
30(c) |
2,156 |
2,159 |
|
Total current liabilities
|
|
────── 18,075 ────── |
────── 9,534 ────── |
|
Total liabilities
|
|
18,311 ────── |
9,810 ────── |
|
Total equity and liabilities
|
|
771,843 ══════ |
775,455 ══════ |
|
Net asset value, USD per share |
27(c) |
2.88 |
2.45 |
|
══════ |
══════ |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|
|
Attributable to equity holders of the Company |
|
|
|||||||
|
|
Share capital |
Additional paid-in capital |
Treasury shares |
Revaluation reserve |
Available-for-sale financial assets reserve |
Translation reserve |
Retained earnings |
Total |
Non-controlling interests |
Total |
|
|
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 July 2011 |
3,246 |
722,064 |
- |
27,513 |
- |
(4,834) |
3,917 |
751,906 |
- |
751,906 |
|
|
Profit for the year |
- |
- |
- |
- |
- |
- |
28,432 |
28,432 |
- |
28,432 |
|
|
Other comprehensive income/(loss) |
- |
- |
- |
1,089 |
14,180 |
(12,177) |
- |
3,092 |
- |
3,092 |
|
|
|
───── |
─────── |
───── |
────── |
────── |
────── |
────── |
─────── |
────── |
─────── |
|
|
Total comprehensive income/(loss) for the year |
- |
- |
- |
1,089 |
14,180 |
(12,177) |
28,432 |
31,524 |
- |
31,524 |
|
|
Shares buy-back (Note 16) |
- |
- |
(17,785) |
- |
- |
- |
- |
(17,785) |
- |
(17,785) |
|
|
Balance at 30 June 2012 |
───── 3,246 ═════ |
─────── 722,064 ═══════ |
────── (17,785) ══════ |
────── 28,602 ══════ |
────── 14,180 ══════ |
────── (17,011) ══════ |
────── 32,349 ══════ |
─────── 765,645 ═══════ |
────── - ══════ |
─────── 765,645 ═══════ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 July 2012 |
3,246 |
722,064 |
(17,785) |
28,602 |
14,180 |
(17,011) |
32,349 |
765,645 |
- |
765,645 |
|
|
Profit for the year |
- |
- |
- |
- |
- |
- |
90,254 |
90,254 |
(202) |
90,052 |
|
|
Disposal of associate |
- |
- |
- |
(1,220) |
- |
- |
1,220 |
- |
- |
- |
|
|
Other comprehensive income/(loss) |
- |
- |
- |
3,994 |
(9,844) |
(1,752) |
- |
(7,602) |
(151) |
(7,753) |
|
|
|
───── |
─────── |
───── |
────── |
────── |
────── |
────── |
─────── |
────── |
─────── |
|
|
Total comprehensive income/(loss) for the year |
- |
- |
- |
2,774 |
(9,844) |
(1,752) |
91,474 |
82,652 |
(353) |
82,299 |
|
|
Acquisition of subsidiary (Note 5) |
- |
- |
- |
- |
- |
- |
- |
- |
1,442 |
1,442 |
|
|
Shares buy-back (Note 16) |
- |
- |
(95,854) |
- |
- |
- |
- |
(95,854) |
- |
(95,854) |
|
|
Balance at 30 June 2013 |
──── 3,246 ════ |
────── 722,064 ══════ |
────── (113,639) ══════ |
───── 31,376 ═════ |
────── 4,336 ══════ |
───── (18,763) ═════ |
───── 123,823 ═════ |
────── 752,443 ══════ |
──── 1,089 ════ |
────── 753,532 ══════ |
|
CONSOLIDATED INCOME STATEMENT
|
|
|
Year ended |
|
|
|
|
30 June 2013 |
30 June 2012 |
|
|
Note |
USD'000 |
USD'000 |
|
|
|
|
|
|
Revenue |
20 |
9,982 |
8,913 |
|
Cost of sales |
20 |
(7,639) ───── |
(4,867) ───── |
|
Gross profit |
|
2,343 |
4,046 |
|
|
|
|
|
|
Dividend income |
|
23,906 |
20,710 |
|
Interest income |
21(a) |
3,427 |
3,413 |
|
Fair value gain of financial assets at fair value through profit or loss, net |
22 |
89,254 |
27,491 |
|
Fair value loss of investment property |
|
- |
(1,660) |
|
Other income |
23 |
11,122 |
23,565 |
|
Selling, general and administration expenses |
24 |
(20,740) |
(19,498) |
|
Other expenses |
25 |
(9,327) |
(11,622) |
|
Operating profit |
|
───── 99,985 ───── |
───── 46,445 ───── |
|
|
|
|
|
|
Finance income |
21(b) |
89 |
93 |
|
Finance costs |
21(b) |
(1,136) ───── |
(1,059) ───── |
|
Finance costs, net |
|
(1,047) |
(966) |
|
|
|
|
|
|
Share of losses of associates, net of tax |
6 |
(8,214) |
(16,347) |
|
|
|
───── (9,261) ───── |
───── (17,313) ───── |
|
Profit before tax |
|
90,724 |
29,132 |
|
Corporate income tax |
26 |
(16) |
- |
|
Withholding taxes on investment income |
26 |
(656) |
(700) |
|
Profit for the year
|
|
───── 90,052 ═════ |
───── 28,432 ═════ |
|
|
|
|
|
|
Profit attributable to: Owners of the parent |
|
90,254 |
28,432 |
|
Non-controlling interests |
|
(202) |
- |
|
|
|
───── 90,052 ───── |
───── 28,432 ───── |
|
Earnings per share - basic and diluted (USD per share) |
27(a),(b) |
0.31 ═════ |
0.09 ═════ |
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
|
|
|
Year ended |
|
|
|
|
30 June 2013 |
30 June 2012 |
|
|
Note |
USD'000 |
USD'000 |
|
|
|
|
|
|
Profit for the year |
|
90,052 |
28,432 |
|
|
|
────── |
───── |
|
Other comprehensive income |
|
|
|
|
Items that will be reclassified subsequently to profit or loss: |
|
|
|
|
- Change in fair value of available-for-sale financial assets |
|
(9,844) |
14,180 |
|
- Currency translation differences |
|
(1,903) |
(12,177) |
|
|
|
───── |
───── |
|
|
|
(11,747) ───── |
2,003 ───── |
|
Items that will not be reclassified subsequently to profit or loss: |
|
|
|
|
- Share of revaluation reserve of associates |
17 |
3,994 |
1,089 |
|
|
|
───── |
───── |
|
Other comprehensive (loss)/income for the year |
|
(7,753) |
3,092 |
|
|
|
───── |
───── |
|
Total comprehensive income for the year |
|
82,299 |
31,524 |
|
|
|
═════ |
═════ |
|
Attributable to: Owners of the parent |
|
82,652 |
31,524 |
|
Non-controlling interests |
|
(353) |
- |
|
|
|
───── |
───── |
|
|
|
82,299 |
31,524 |
|
|
|
═════ |
═════ |
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
Year ended |
|
|
|
|
30 June 2013 |
30 June 2012 |
|
|
Note |
USD'000 |
USD'000 |
|
Operating activities |
|
|
|
|
Profit before tax |
|
90,724 |
29,132 |
|
Adjustments for: |
|
|
|
|
Depreciation and write off of assets |
|
531 |
299 |
|
Net gain from realisation of financial assets at fair value through profit or loss |
22 |
(34,753) |
(4,571) |
|
Unrealised gain from revaluation of financial assets at fair value through profit or loss |
22 |
(54,501) |
(22,920) |
|
Fair value loss of investment property |
|
- |
1,660 |
|
Loss of acquisition of investment |
|
449 |
445 |
|
Gain on disposal of investments |
23 |
(9,954) |
(10,858) |
|
Loss on disposal of associates |
|
667 |
- |
|
Reversal of impairment loss |
23 |
- |
(9,400) |
|
Impairment of assets |
|
1,937 |
12,493 |
|
Share of losses of associates |
6 |
8,214 |
16,347 |
|
Unrealised losses from foreign exchange differences |
21(b) |
168 |
16 |
|
Interest expense |
21(b) |
281 |
172 |
|
Profit before changes in working capital |
|
───── 3,763 |
───── 12,815 |
|
Change in trade receivables and other assets |
|
2,604 |
(471) |
|
Change in inventories |
|
(238) |
(3,710) |
|
Change in trade payables and other liabilities |
|
3,359 |
(6,728) |
|
Corporate income tax and withholding taxes imposed on investment income |
|
(672) |
(700) |
|
Net cash inflow from operating activities |
|
──── 8,816 |
──── 1,206 |
|
|
|
──── |
──── |
|
Investing activities |
|
|
|
|
Purchases of plant and equipment |
|
(400) |
(284) |
|
Dividends received |
6 |
4,750 |
4,000 |
|
Acquisition of a subsidiary, net of cash acquired |
5 |
(1,235) |
- |
|
Financial assets at fair value through profit or loss: |
|
|
|
|
- Acquisitions of investments |
|
(104,865) |
(82,484) |
|
- Proceeds from disposals |
|
148,843 |
65,785 |
|
Investment in associates: |
|
|
|
|
- Acquisition of investment |
|
(46) |
(22,000) |
|
- Investment refunded |
|
313 |
- |
|
- Capital contribution into associate |
|
- |
(552) |
|
- Proceeds from disposals |
|
- |
14,199 |
|
Available-for-sale financial assets: |
|
- |
|
|
- Acquisition of investment |
8 |
- |
(2,223) |
|
- Proceed from disposals |
|
19,650 |
- |
|
Assets classified as held for sale: |
|
|
|
|
- Proceed from disposals |
|
25,238 |
17,506 |
|
Shareholder loans: |
|
|
|
|
- Advances made |
30(d) |
(1,779) |
(1,259) |
|
- Repayments received |
30(d) |
1,514 |
3,860 |
|
Net cash inflow/(outflow) from investing activities |
|
───── 91,983 |
───── (3,452) |
|
|
|
───── |
───── |
|
|
|
Year ended |
|
|
|
|
30 June 2013 |
30 June 2012 |
|
|
Note |
USD'000 |
USD'000 |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Interest paid |
21(b) |
(281) |
(172) |
|
Payment for buy back of shares |
|
(88,609) |
(17,785) |
|
Repayment to banks |
|
(6,638) |
(3,967) |
|
Loan proceeds from banks, net of bank overdraft |
|
7,087 |
5,380 |
|
|
|
───── |
───── |
|
Net cash outflow from financing activities |
|
(88,441) |
(16,544) |
|
|
|
───── |
───── |
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents for the year |
|
12,358 |
(21,775) |
|
Cash and cash equivalents at the beginning of the year |
13 |
41,034 |
62,968 |
|
Exchange differences on cash and cash equivalents |
|
- |
(159) |
|
|
|
───── |
───── |
|
Cash and cash equivalents at the end of the year |
13 |
53,392 |
41,034 |
|
|
|
═════ |
═════ |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 GENERAL INFORMATION
VinaCapital Vietnam Opportunity Fund 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 undertake various forms of investment primarily in Vietnam, but also in Cambodia, Laos and Southern China. The Company is listed on the AIM market of the London Stock Exchange under the ticker symbol VOF.
The Company does not have a fixed life, but the Board considers it desirable that shareholders should have the opportunity to review the future of the Company at appropriate intervals. Accordingly, the Board intends that a special resolution will be proposed every fifth year that the Company ceases to continue as presently constituted. If the resolution is not passed, the Company will continue to operate. If the resolution is passed, the directors will be required to formulate proposals to be put to shareholders to reorganise, unitise or reconstruct the Company or for the Company to be wound up. The Board tabled such a special resolution on 22 July 2013 and it was not passed, allowing the Company to continue as presently constituted for another five years.
The consolidated financial statements for the year ended 30 June 2013 were approved for issue by the Board of Directors on 25 October 2013.
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.
2.1 Basis of preparation
The consolidated financial statements of VinaCapital Vietnam Opportunity Fund Limited have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The consolidated financial statements have been prepared using the historical cost convention, as modified by the revaluation of properties available-for-sale financial assets, financial assets at fair value through profit or loss and financial liabilities at fair value through profit or loss. The financial statements have been prepared on a going concern basis.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.
2.2 Changes in accounting policy and disclosures
(a) New and amended standards adopted by the Group
The following amendment to a standard is mandatory for the first time for the financial year beginning 1 July 2012 and has been adopted by the Group in these consolidated financial statements:
IAS 1 (amendment) Presentation of Financial Statements - Presentation of Items of Other Comprehensive Income is effective for annual periods beginning on or after 1 July 2012. The amendments include a requirement for entities to present separately the items of other comprehensive income that would be reclassified to profit or loss in the future if certain conditions are met from those that would never be reclassified to profit or loss, and the title of the statement of comprehensive income is changed to "statement of profit or loss and other comprehensive income".
There are no other new IFRS or International Financial Reporting Interpretations Committee ("IFRIC") interpretations that are effective for the first time for the financial year beginning on or after 1 July 2012 that have an impact on the Group.
(b) New standards, amendments and interpretations issued but not yet effective for the financial year beginning on or after 1 July 2012 and not early adopted by the Group
At the date of authorisation of these consolidated financial statements, 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. Information on new standards, amendments and interpretations that are expected to be relevant to the Group's consolidated financial statements is provided below.
IFRS 9, "Financial instruments", addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October 2010. 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 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 Group is yet to assess IFRS 9's full impact and intends to adopt IFRS 9 no later than the accounting year ending 30 June 2016. The Group will also consider the impact of the remaining phases of IFRS 9 when completed by the IASB.
IFRS 10, "Consolidated financial statements" and Amendments to IFRS 10: The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial statements. It sets out how to apply the principle of control to identify whether an investor controls an investee and therefore must consolidate the investee. It also sets out the accounting requirements for the preparation of consolidated financial statements. The amendments to IFRS 10 define an investment entity and introduce an exception from the consolidation requirements for investment entities. The Group is yet to assess IFRS 10's full impact and intends to adopt IFRS 10 and the Amendments to IFRS 10 no later than the effective accounting year ending 30 June 2014 and 30 June 2015, respectively.
IFRS 12, "Disclosures of interests in other entities", includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The Group is yet to assess the full impact of IFRS 12 and intends to adopt IFRS 12 no later than the accounting year ending 30 June 2014.
IFRS 13, "Fair value measurement", aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. The requirements, which are largely aligned between IFRS and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS or US GAAP. The Group is yet to assess the full impact of IFRS 13 and intends to adopt IFRS 13 no later than the accounting year ending 30 June 2014.
There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group's consolidated financial statements.
2.3 Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity, along with contractual arrangements, are taken into consolidation. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are excluded from consolidation from the date that the control ceases. The majority of the Group's subsidiaries have a reporting date of 30 June. For subsidiaries with a different reporting date, the Group consolidates management information up 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.
Inter-company transactions, balances, income and expenses on transactions between group 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) Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20 percent and 50 percent of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss of the investee after the date of acquisition. The Group's interest in associates includes goodwill identified on acquisition and long-term loans to associates which in substance form part of the Group's interest in the associate.
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 is recognised in the 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 long term interest that in substance forms part of the investor's net investment in the associate, 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 interest in the associate 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 adjacent to 'share of profit/(loss) of associates' in the income statement.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group's financial statements only to the extent of unrelated investor's 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 income statement.
2.4 Foreign currency translation
(a) Functional and presentation currency
The Group's consolidated financial statements are presented in United States Dollars (USD) ("the presentation currency"). The financial statements of each consolidated entity are initially prepared in the currency of the primary economic environment in which the entity operates ("the functional currency"), which for most investments is the Vietnamese Dong. The financial statements prepared using the Vietnamese Dong are then translated into the presentation currency. USD is used as the presentation currency because it is the primary basis for the measurement of the performance of the Group.
(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 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 equity.
2.5 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. The assets are classified as "asset held for sale" and 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.
2.6 Financial assets
2.6.1 Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
(a) 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 the 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 listed and unlisted securities and bonds. 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.
(b) 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. These are classified as non-current assets. The Group's loans and receivables comprise "Trade receivables" and "Cash and cash equivalents" in the consolidated balance sheet (Notes 2.11 and 2.12).
(c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period. The Group's available-for-sale financial assets are investments in private entities.
2.6.2 Recognition and measurement
Purchases or sales of financial assets are recognised on 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 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. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.
If the investments do not have a quoted market price in an active market and whose fair value cannot be reliably measured, such investments shall be measured at cost, less provision for impairment.
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 income statement within "fair value gain/(loss)of financial assets at fair value through profit or loss" in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the income statement when the Group's right to receive payments is established.
Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income.
When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as 'gains and losses from investment securities'.
Interest on available-for-sale securities calculated using the effective interest method is recognised in the income statement as part of other income. Dividends on available-for-sale equity instruments are recognised in the income statement as part of other income when the Group's right to receive payments is established.
2.7 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the 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.
2.8 Prepayments for acquisition of investments
These represent prepayments made by the Group to investment/property vendors for land compensation and other related costs, and professional fees directly attributed to the projects, where the final transfer of the investment/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. 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 appropriate investment accounts.
2.9 Impairment of assets
(a) Impairment of non-financial assets
Assets that have an indefinite useful life, for example, prepayment for acquisition of investment, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
(b) Impairment of financial assets
Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future
cash flows of the financial asset or group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
For loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument's fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.
Assets classified as available-for-sale
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. For debt securities, the Group uses the criteria referred to in (a) above. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale
financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in profit or loss. Impairment losses recognised in the consolidated income statement on equity instruments are not reversed through the consolidated income statement. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event
occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the consolidated income statement.
2.10 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of finished goods includes all expenses directly attributable to the manufacturing process as well as suitable portions of related pro-duction overheads, based on normal operating capacity. It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
2.11 Trade receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
2.12 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the consolidated balance sheet, bank overdrafts are shown within borrowings in current liabilities.
2.13 Share capital
2.14 Treasury shares
Where any group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company's equity holders until the shares are cancelled or reissued.
Repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When such treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/from retained earnings.
2.15 Revaluation reserve
2.16 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 recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
2.17 Current and deferred income tax
(a) Corporate income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the 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.
Gains and losses from changes in fair value of properties of the associates are accounted for using the equity method of accounting.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, authorities relating to the current or prior reporting periods that are unpaid 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 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.
(b) Withholding taxes on investment income
The Group currently incurs withholding taxes imposed by local jurisdictions on investment income. Such income is recorded gross of withholding taxes in the consolidated income statement.
2.18 Provisions
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.
2.19 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) Sale of goods
Revenue from sale of goods is recognised in the consolidated income statement when the significant risks and rewards of ownership of goods have passed to the buyer. Revenue is measured by reference to the fair value of consideration received or receivable by the Group for goods supplied, excluding sales taxes, rebates, and trade discounts.
(b) Interest income
Interest income is recognised using the effective interest method. When a loan 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 receivables is recognised using the original effective interest rate.
(c) Dividend income
Dividend income is recognised when the right to receive payment is established.
2.20 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 intermediary, control, or are controlled by, or under common control with, the Company, including, 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 entity, key management personnel, including directors and officers of the Company, the investment manager and the close members of the family. In consider each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.
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 Critical accounting estimates and assumptions
Fair value of properties within the Group and the associates
Properties within the Group and the associates are stated at fair value. Two independent valuation firms with appropriately recognised professional qualifications and recent experience in the location and category being valued undertake a valuation of every property each year on the same valuation date. The fair value is estimated by the independent valuation firms, including: CB Richard Ellis, Savills, Jones Lang LaSalle and HVS, 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.
These valuations are based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results. The valuations by the independent valuation firms 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 firms 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 firms, the valuation committee considers information from other sources, including those sources as below, before concluding on each property's estimated fair value.
a) 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;
b) Recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices;
c) 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; and
d) Discounted cash flow projections based on 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.
Discount rates ranging from 14 percent to 22 percent (30 June 2012: 14 percent to 22 percent) are considered appropriate by independent valuation firms for properties in different locations. Gains and losses from changes in fair value of properties of the Group are recognised in the consolidated income statement. Gains and losses from changes in fair value of properties of the associates are accounted for using the equity method of accounting.
Fair value of financial assets
Listed securities are quoted at the bid price at each reporting date. For unlisted securities which are traded in an active market, the fair value is the average quoted bid price obtained from a minimum sample of three reputable securities companies at the reporting date.
The fair value of financial assets that are not traded in an active market (for example, unlisted securities where market prices are not readily available) is determined by using valuation techniques. The Group uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at each reporting date. Independent valuations are also obtained from appropriately qualified independent valuation firms to evaluate and adjust valuations. The outcomes may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date.
3.2 Critical judgement in applying the Group's accounting policies
Equity investments
When the Group has interest in the voting power of the investee of between 20 percent and 50 percent, significant influence over the investee is presumed. There are situations, however, where it can be clearly demonstrated that an interest held by the Group is less than 20 percent, but significant influence exists; and conversely an interest held of more than 20 percent where there is no significant influence.
At the reporting date, the Group has interests in certain investees with less than 20 percent voting power but these are accounted for as associates of the Group (Note 6) based on the following criteria:
a) The Group has representation on the Board of Directors of the investee;
b) The Group participates in policy-making processes, including decisions about dividends or other distributions;
c) There was interchange of managerial personnel; or
d) The Group provides essential technical information.
Those investments where the Group has more than 20 percent interest but does not have significant influence, are accounted for as investments (Note 12).
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 capital markets, real estate (real estate and hospitality), private equity and cash (including cash and cash equivalents, and short-term deposits) sectors.
Each of the operating segments is managed and monitored individually 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 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. Segment information can be analysed as follows:
Revenue and other segment profit and loss
|
|
Capital markets |
Real estate |
Private equity |
Cash |
Total |
|
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
|
Year ended 30 June 2013 |
|
|
|
|
|
|
Revenue |
- |
- |
9,982 |
- |
9,982 |
|
Cost of sales |
- |
- |
(7,639) |
- |
(7,639) |
|
Dividend income |
23,906 |
- |
- |
- |
23,906 |
|
Interest income |
- |
- |
- |
3,427 |
3,427 |
|
Share of losses of associates |
- |
(8,214) |
- |
- |
(8,214) |
|
Selling and other expenses |
- |
- |
(3,330) |
- |
(3,330) |
|
Finance income |
- |
- |
89 |
- |
89 |
|
Other income |
- |
11,150 |
(28) |
- |
11,122 |
|
Fair value gain of financial assets at fair value through profit or loss |
89,254 |
- |
- |
- |
89,254 |
|
|
────── 113,160 ══════ |
────── 2,936 ══════ |
──── (926) ════ |
───── 3,427 ═════ |
────── 118,597 ══════ |
|
Less: Unallocated expenses |
|
|
|
|
(27,873) ────── |
|
Profit before tax |
|
|
|
|
90,724 ══════ |
|
Year ended 30 June 2012 |
|
|
|
|
|
|
Revenue |
- |
- |
8,913 |
- |
8,913 |
|
Cost of sales |
- |
- |
(4,867) |
- |
(4,867) |
|
Dividend income |
20,710 |
- |
- |
- |
20,710 |
|
Interest income |
- |
- |
- |
3,413 |
3,413 |
|
Share of losses of associates |
- |
(16,347) |
- |
- |
(16,347) |
|
Selling and other expenses |
- |
- |
(1,806) |
- |
(1,806) |
|
Finance income |
- |
- |
93 |
- |
93 |
|
Other income |
- |
12,301 |
11,264 |
- |
23,565 |
|
Fair value loss of investment property |
- |
(1,660) |
- |
- |
(1,660) |
|
Fair value gain of financial assets at fair value through profit or loss |
27,491 |
- |
- |
- |
27,491 |
|
|
────── 48,201 ══════ |
───── (5,706) ═════ |
────── 13,597 ══════ |
───── 3,413 ═════ |
────── 59,505 ══════ |
|
Less: Unallocated expenses |
|
|
|
|
(30,373) ───── |
|
Profit before tax |
|
|
|
|
29,132 ═════ |
Assets
|
|
Capital markets |
Real estate |
Private equity |
Cash |
Total |
|
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
|
As at 30 June 2013 |
|
|
|
|
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
- Non-current |
- |
- |
4,697 |
- |
4,697 |
|
- Current |
439,830 |
- |
10,180 |
17,752 |
467,762 |
|
Investment property |
- |
3,722 |
- |
- |
3,722 |
|
Interests in associates |
- |
181,969 |
121 |
- |
182,090 |
|
Prepayment for acquisition of investment property |
- |
8,239 |
- |
- |
8,239 |
|
Available-for-sale financial assets: |
|
|
|
|
|
|
- Non-current |
- |
5,784 |
- |
- |
5,784 |
|
- Current |
- |
- |
8,700 |
- |
8,700 |
|
Other non-current assets |
- |
1,325 |
3,300 |
- |
4,625 |
|
Cash and cash equivalents |
- |
- |
- |
53,392 |
53,392 |
|
Inventories |
- |
- |
7,413 |
- |
7,413 |
|
Other current assets |
1,423 |
11,234 |
6,302 |
6,460 |
25,419 |
|
|
────── |
────── |
───── |
───── |
────── |
|
Total assets |
441,253 |
212,273 |
40,713 |
77,604 |
771,843 |
|
|
══════ |
══════ |
═════ |
═════ |
══════ |
|
Total assets include: additions to non-current assets |
- |
484 |
400 |
- |
884 |
|
|
══════ |
═══ |
════ |
═════ |
════ |
|
As at 30 June 2012 |
|||||
|
Financial assets at fair value through profit or loss |
394,369 |
- |
5,000 |
25,912 |
425,281 |
|
Investment property |
- |
1,785 |
- |
- |
1,785 |
|
Interests in associates |
- |
193,611 |
5,526 |
- |
199,137 |
|
Prepayment for acquisition of investment property |
- |
7,500 |
- |
- |
7,500 |
|
Available-for-sale financial assets: |
|
|
|
|
|
|
- Non-current |
- |
6,111 |
- |
- |
6,111 |
|
- Current |
- |
- |
28,450 |
- |
28,450 |
|
Other non-current assets |
- |
- |
1,383 |
- |
1,383 |
|
Cash and cash equivalents |
- |
- |
- |
42,209 |
42,209 |
|
Inventories |
- |
- |
6,090 |
- |
6,090 |
|
Other current assets |
3,412 |
15,527 |
6,443 |
- |
25,382 |
|
Assets classified as held for sale |
- |
27,227 |
4,900 |
- |
32,127 |
|
|
────── |
────── |
───── |
───── |
────── |
|
Total assets |
397,781 |
251,761 |
57,792 |
68,121 |
775,455 |
|
|
══════ |
══════ |
═════ |
═════ |
══════ |
|
Total assets include: additions to non-current assets |
- |
22,107 |
284 |
- |
22,391 |
|
|
══════ |
═════ |
═════ |
═════ |
═════ |
10 BUSINESS COMBINATION
Acquisition of controlling interest in Yen Viet Joint Stock Company ('Yen Viet')
At 30 June 2012, the Group held a 23 percent equity interest in Yen Viet which at the time was carried as an associate. The principal activity of this company is to collect and process raw birds-nests and to sell birds-nests consumer products.
On 30 November 2012, the Group became entitled to increase the existing interest from 23.0 percent to 55.0 percent due to certain conditions in the sale and purchase agreement not being met. On 30 November 2012, the Group also acquired an additional 10.0 percent equity interest in Yen Viet for USD1.4 million in cash. Therefore, the interest of the local partners decreased from 67.0 percent to 35.0 percent and the Group's interest in Yen Viet increased from 33.0 percent to 65.0 percent which resulted in Yen Viet becoming a subsidiary of the Group.
The following table summarises the consideration paid for Yen Viet, and the amount of the assets acquired and liabilities assumed recognised at the acquisition date.
|
|
30 November 2012 |
|
|
USD'000 |
|
|
|
|
Cash paid, representing consideration paid by the Group |
1,440 |
|
Fair value of equity interest in Yen Viet held before the business combination |
1,829 |
|
Total consideration |
────── 3,269 |
|
|
══════ |
|
Recognised amounts of identifiable assets acquired and liabilities assumed |
|
|
Provisional fair value |
|
|
Cash and cash equivalents |
205 |
|
Plant and equipment |
1,733 |
|
Trade and other receivables |
2,326 |
|
Inventories |
1,085 |
|
Borrowings |
(413) |
|
Payables |
(674) |
|
|
────── |
|
Total identifiable net assets |
4,262 |
|
Non-controlling interests |
(1,442) |
|
|
────── |
|
Goodwill |
449 |
|
|
────── |
|
|
3,269 |
|
|
══════ |
For cash flow statement purpose, net cash paid for the acquisition of the subsidiary is as follows:
|
Cash paid |
1,440 |
|
Less: cash acquired |
(205) |
|
|
────── |
|
|
1,235 |
|
|
══════ |
The revenue included in the consolidated income statement from 30 November 2012 to 30 June 2013 contributed by Yen Viet was USD1.2 million. Yen Viet also contributed a loss of USD0.6 million over the same period.
Had Yen Viet been consolidated from 1 July 2012, the consolidated income statement for the year ended 30 June 2013 would show a proforma revenue of USD3.0 million and proforma loss of USD0.8 million.
There are no contingent liabilities arising on the acquisition of Yen Viet.
The fair value of trade and other receivables is USD2.3 million and includes trade receivables with a fair value of USD0.2 million. The gross contractual amount for trade receivables due is USD0.3 million of which USD0.1 million is expected to be uncollectible.
The non-controlling interests have been recognised at a proportion to the net assets acquired.
6 INTERESTS IN ASSOCIATES
|
|
30 June 2013 |
30 June 2012 |
||
|
|
USD'000 |
USD'000 |
||
|
|
|
|
||
|
Investments in associates |
146,966 |
172,341 |
||
|
Long-term loan receivables (Note 30(d)) |
35,124 |
35,733 |
||
|
Interests in associates |
────── 182,090 |
────── 208,074 |
||
|
Less: Provision for impairment losses (*) |
- |
(8,937) |
||
|
Total |
────── 182,090 ══════ |
────── 199,137 ══════ |
||
|
The movement in investments in associates is analysed as follows:
|
|
|
||
|
Opening balance |
172,341 |
199,579 |
||
|
Additions |
484 |
22,107 |
||
|
Share of losses, net of tax |
(8,214) |
(16,347) |
||
|
Share of change in revaluation reserve |
3,994 |
(112) |
||
|
Transfer to asset held for sale (Note 14) |
- |
(24,700) |
||
|
Long-term loan converted to equity shares |
- |
12,550 |
||
|
Transfer (to subsidiary)/from available-for-sale financial assets (Note 8) |
(8,058) |
8,165 |
||
|
Dividends received |
(4,750) |
(4,000) |
||
|
Disposals |
(7,088) |
(13,041) |
||
|
Share of translation differences |
(1,743) |
(11,860) |
||
|
Closing balance |
────── 146,966 ══════ |
────── 172,341 ══════ |
||
(*) The reversal of impairment losses during the year was due to disposals of associates.
The Group's interest in significant associates, and the aggregated assets (including goodwill) and liabilities at 30 June 2013 and their performance during the year was as follows:
|
Name
|
Country of incorporation
|
% of group interest
|
Assets USD'000
|
Liabilities USD'000
|
Revenue USD'000
|
Profit/ (loss) USD'000
|
||
|
30 June 2013: |
|
|
|
|
|
|
||
|
S.E.M Thong Nhat Hotel Metropole |
Vietnam |
50.00 |
42,138 |
6,992 |
35,748 |
8,504 |
||
|
Hung Vuong Corporation |
Vietnam |
33.33 |
36,800 |
19,220 |
8,527 |
2,052 |
||
|
VinaCapital Danang Golf Course Ltd. |
Vietnam |
25.00 |
82,658 |
26,355 |
4,166 |
(14,574) |
||
|
Prosper Big Ltd. |
BVI |
25.00 |
154,738 |
139,075 |
- |
(2,261) |
||
|
VinaCapital Danang Resorts Ltd. |
Vietnam |
25.00 |
55,375 |
22,506 |
10,050 |
(7,045) |
||
|
Vinh Thai Co. Ltd. |
Vietnam |
25.00 |
61,151 |
39,976 |
78 |
(10,286) |
||
|
Vina Alliance Limited (*) |
Vietnam |
15.50 |
96,382 |
26,394 |
2 |
(15,805) |
||
|
Saigon Golf JSC |
Vietnam |
20.00 |
11,393 |
3,178 |
92 |
(316) |
||
|
Vina Dai Phuoc Corporation (*) |
Vietnam |
18.00 |
89,992 |
33,643 |
14,511 |
(4,883) |
||
|
Phu Hoi City Company Limited (*) |
Vietnam |
17.50 |
24,594 |
6 |
5 |
(6,222) |
||
|
|
|
════ |
═════ |
═════ |
═════ |
═════ |
||
|
|
|
|
|
|
||||
|
30 June 2012: |
|
|
|
|
|
|
||
|
S.E.M Thong Nhat Hotel Metropole |
Vietnam |
50.00 |
45,374 |
9,224 |
35,044 |
7,351 |
||
|
Hung Vuong Corporation |
Vietnam |
33.33 |
37,393 |
21,639 |
8,249 |
1,128 |
||
|
VinaCapital Danang Golf Course Ltd. |
Vietnam |
25.00 |
97,542 |
25,783 |
5,463 |
(10,594) |
||
|
Prosper Big Ltd. |
BVI |
25.00 |
162,166 |
144,152 |
- |
(14,617) |
||
|
VinaCapital Danang Resorts Ltd. |
Vietnam |
25.00 |
93,458 |
31,770 |
32,013 |
(1,146) |
||
|
Vinh Thai Co. Ltd. |
Vietnam |
25.00 |
67,369 |
36,342 |
- |
(24,561) |
||
|
Vina Alliance Limited (*) |
Vietnam |
15.50 |
117,006 |
30,185 |
- |
(32,332) |
||
|
Saigon Golf JSC |
Vietnam |
20.00 |
11,865 |
3,232 |
- |
(212) |
||
|
Vina Dai Phuoc Corporation (*) |
Vietnam |
18.00 |
103,746 |
41,573 |
- |
(12,858) |
||
|
Phu Hoi City Company Limited (*) |
Vietnam |
17.50 |
31,224 |
15 |
- |
(6,928) |
||
|
|
|
════ |
═════ |
═════ |
═════ |
═════ |
||
(*) Although the Group holds less than 20% of the equity shares in Vina Alliance Limited, Vina Dai Phuoc Corporation and Phu Hoi City Company Limited, the Group exercises significant influence by having the power to participate in the financial and operating policy decisions of these entities and therefore these investments are treated as associates of the Group.
The Group has discontinued the recognition of its shares of losses of those associates which have been written down to zero and to which the Group has no continuing obligation. The amount of unrecognised share of losses for the year ended 30 June 2013 and cumulatively are USD0.9 million and USD3.9 million (year ended 30 June 2012 and cumulatively were USD2.5 million and USD3.0 million) respectively.
7 PREPAYMENTS FOR ACQUISITION OF INVESTMENT PROPERTIES
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Opening balance |
8,986 |
8,986 |
|
Transfer from asset classified as held for sale (Note 14) |
1,989 |
- |
|
Less: cumulative provision for impairment losses |
(2,736) |
(1,486) |
|
|
──── |
──── |
|
Closing balance |
8,239 |
7,500 |
|
|
════ |
════ |
Movement of cumulative provision for impairment
losses is as follows:
|
|
|
|
|
Opening balance |
1,486 |
- |
|
Charge for the year |
1,250 |
1,486 |
|
|
──── |
──── |
|
Closing balance |
2,736 |
1,486 |
|
|
════ |
════ |
These prepayments relate to payments made by the Group to property vendors where the final transfers of the properties are pending the approval of the relevant authorities as at the balance sheet date.
As at 30 June 2013 and 30 June 2012, due to market conditions, the recoverable amounts of the properties which were assessed based on fair value less cost to sell were lower than its carrying values.
8 AVAILABLE-FOR-SALE FINANCIAL ASSETS
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Opening balance |
34,561 |
16,923 |
|
Addition during the year |
- |
2,223 |
|
Disposal during the year |
(20,077) |
- |
|
Transfer to investments in associates (Note 6) |
- |
(8,165) |
|
Fair value gain on financial asset |
- |
23,580 |
|
Closing balance |
───── 14,484 ───── |
───── 34,561 ───── |
|
Less: current portion |
(8,700) |
(28,450) |
|
|
───── |
───── |
|
Non-current portion |
5,784 |
6,111 |
|
═════ |
═════ |
|
|
|
|
|
|
Available-for-sale financial assets |
14,484 |
34,760 |
|
Less: Cumulative provision for impairment losses |
- |
(199) |
|
|
───── |
───── |
|
Total
|
14,484 ═════ |
34,561 ═════ |
9 FINANCIAL INSTRUMENTS BY CATEGORY
|
|
Loans and receivables |
Financial assets at fair value through profit or loss |
Available-for-sale financial assets |
Total |
|||
|
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
|||
|
As at 30 June 2013 |
|
|
|
|
|||
|
Available-for-sale financial assets |
- |
- |
14,484 |
14,484 |
|||
|
Long-term loan included in interest in associates |
35,124 |
- |
- |
35,124 |
|||
|
Short-term loan to an associate |
7,501 |
- |
- |
7,501 |
|||
|
Long-term loan to an associate |
1,325 |
- |
- |
1,325 |
|||
|
Trade and other receivables |
17,918 |
- |
- |
17,918 |
|||
|
Financial assets at fair value through profit or loss |
- |
472,459 |
- |
472,459 |
|||
|
Cash and cash equivalents |
53,392 |
- |
- |
53,392 |
|||
|
Total |
────── 115,260 ══════ |
────── 472,459 ══════ |
───── 14,484 ═════ |
────── 602,203 ══════ |
|||
|
|
|
|
|
|
|||
|
Financial assets denominated in: |
|
|
|
|
|||
|
- USD |
6,346 |
20,907 |
- |
27,253 |
|||
|
- VND |
108,895 |
450,938 |
14,484 |
574,317 |
|||
|
- Other currency |
19 |
614 |
- |
633 |
|||
|
|
────── 115,260 ══════ |
────── 472,459 ══════ |
───── 14,484 ═════ |
────── 602,203 ══════ |
|||
|
|
|
|
|
|
|
||
|
As at 30 June 2012 |
|
|
|
|
|
||
|
Available-for-sale financial assets |
- |
- |
34,561 |
34,561 |
|
||
|
Long-term loan included in interest in associates |
35,733 |
- |
- |
35,733 |
|
||
|
Short-term loan to an associate |
10,771 |
|
|
10,771 |
|
||
|
Trade and other receivables |
14,611 |
- |
- |
14,611 |
|
||
|
Financial assets at fair value through profit or loss |
- |
425,281 |
- |
425,281 |
|
||
|
Cash and cash equivalents |
42,209 |
- |
- |
42,209 |
|
||
|
Total |
────── 103,324 ══════ |
────── 425,281 ══════ |
───── 34,561 ═════ |
────── 563,166 ══════ |
|
||
|
|
|
|
|
|
|
||
|
Financial assets denominated in: |
|
|
|
|
|
||
|
USD |
10,955 |
23,321 |
29,600 |
63,876 |
|
||
|
VND |
92,329 |
401,960 |
4,961 |
499,250 |
|
||
|
Other currency |
40 |
- |
- |
40 |
|
||
|
|
────── 103,324 ══════ |
────── 425,281 ══════ |
───── 34,561 ═════ |
────── 563,166 ══════ |
|
||
All financial liabilities are classified as financial liabilities carried at amortised cost. As at the balance sheet date, the financial liabilities denominated in USD and in VND are USD10.4 million and USD6.0 million (30 June 2012: USD1.2 million and USD7.6 million), respectively.
10 INVENTORIES
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
At cost: |
|
|
|
Finished goods |
4,593 |
3,424 |
|
Raw materials |
1,651 |
1,487 |
|
Work in progress |
264 |
155 |
|
Spares and tools |
905 |
1,000 |
|
Goods on consignment |
- |
24 |
|
Total
|
───── 7,413 ═════ |
───── 6,090 ═════ |
The cost of inventories recognised as expenses and included in cost of sales amounted to USD5.5 million (year ended 30 June 2012: USD4.3 million) during the year.
11 TRADE AND OTHER RECEIVABLES
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Trade receivables |
1,730 |
1,293 |
|
Receivable from matured bonds |
9,888 |
3,404 |
|
Interests receivables |
1,030 |
1,839 |
|
Dividend receivables |
371 |
948 |
|
Receivable from disposals of investments |
2,963 |
3,518 |
|
Payment on behalf of related parties (Note 30(c)) |
2,059 |
2,941 |
|
Short-term loans to third parties |
1,271 |
- |
|
Deposit for shares tender |
1,152 |
3,293 |
|
Other receivables |
2,555 |
1,121 |
|
|
───── |
───── |
|
|
23,019 |
18,357 |
|
Less: Cumulative provision for impairment of receivables |
(5,101) |
(3,746) |
|
|
───── 17,918 ═════ |
───── 14,611 ═════ |
The movement in the cumulative provision for impairment of receivables is analysed as follows:
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Opening balance |
3,746 |
4,225 |
|
Provision for impaired receivables (Note 25) |
1,355 |
- |
|
Reversal of unused provision |
- |
(479) |
|
Closing balance |
──── 5,101 ════ |
──── 3,746 ════ |
|
Provision balance is in respect of: |
|
|
|
- Trade receivables |
625 |
342 |
|
- Receivable from matured bonds |
3,428 |
3,404 |
|
- Others |
1,048 |
- |
|
|
──── 5,101 ════ |
──── 3,746 ════ |
The creation and release of the provision for impaired receivables have been included in 'other expenses' in the income statement.
The credit quality of the trade and other receivables as at the reporting date is as follows:
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Trade receivables: |
|
|
|
- Current within the credit period and not impaired |
672 |
626 |
|
- Past due but not impaired |
433 |
325 |
|
- Past due and impaired |
625 |
342 |
|
Other receivables: |
|
|
|
- Current and not impaired |
16,813 |
13,660 |
|
- Past due and impaired |
4,476 |
3,404 |
|
Total
|
───── 23,019 ═════ |
───── 18,357 ═════ |
The amounts of trade receivables past due and assessed as impaired relate to receivables from sales agents of subsidiaries. The amounts past due but assessed as not impaired at the balance sheet date relate to a number of customers with whom there is no recent history of default.
As at both reporting dates, there is no significant concentration of credit risk relating to any single customer.
Other than the provision for impairment of receivables disclosed above based on management's assessments, the other classes within the trade and other receivables do not contain impaired assets.
As all trade and other receivables are short term in nature, their carrying values are considered reasonable approximation of their fair values at the reporting date.
12 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Financial assets in Vietnam: |
|
|
|
Ordinary shares - listed |
356,438 |
297,074 |
|
Ordinary shares - unlisted |
76,748 |
78,974 |
|
Corporate bonds |
- |
8,500 |
|
Government bonds |
17,752 |
17,412 |
|
|
────── |
────── |
|
|
450,938 |
401,960 |
|
Financial assets in countries other than Vietnam: |
|
|
|
Ordinary shares - listed |
21,521 |
23,321 |
|
Total |
────── 472,459 ══════ |
────── 425,281 ══════ |
|
Less: non-current portion |
(4,697) |
- |
|
Current portion |
────── 467,762 ══════ |
────── 425,281 ══════ |
|
|
|
|
Corporate bonds carry fixed interest rates ranging from 7.0 percent to 8.0 percent (30 June 2012: 8.0 percent to 9.6 percent). The government bonds carry a fixed interest rate of 8 percent (30 June 2012: 9.8 percent). Government bonds have a Moody's rating of B2 in March 2013.
As at the reporting date, the Group holds more than a 20 percent equity interest in the following entities but for which the Group determines that it has no significant influence:
|
|
Equity interest (%) as at |
|
|
|
30 June 2013 |
30 June 2012 |
|
Listed entities: |
|
|
|
- Thu Duc Water Supply Joint Stock Company |
30.0% |
30.0% |
|
- Khang Dien House Trading and Investment Joint Stock Company |
23.6% |
26.5% |
|
|
═════ |
═════ |
|
Unlisted entities: |
|
|
|
- An Giang Plant Protection Joint Stock Company |
24.7% |
24.7% |
|
- Cau Tre Export Goods Processing Joint Stock Company |
36.4% |
19.3% |
|
- Vina Construction Machine Joint Stock Company |
30.0% |
30.0% |
|
- Saigon Petroleum Service Company |
22.2% |
22.2% |
|
|
═════ |
═════ |
The details of financial assets at fair value through profit or loss by industry are as follows:
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Consumer staples |
163,169 |
106,559 |
|
Construction |
45,849 |
39,559 |
|
Financial services |
61,343 |
77,416 |
|
Agriculture, rubber and fertiliser |
83,673 |
73,502 |
|
Energy, minerals and petroleum |
24,737 |
21,916 |
|
Pharmaceuticals |
19,388 |
12,567 |
|
Real estate |
48,036 |
49,589 |
|
Other securities |
8,512 |
18,261 |
|
Bonds |
17,752 |
25,912 |
|
Total |
────── 472,459 ══════ |
────── 425,281 ══════ |
13 CASH AND CASH EQUIVALENTS
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Cash on hand |
26 |
18 |
|
Cash in banks |
28,987 |
16,277 |
|
Cash equivalents |
24,379 |
25,914 |
|
|
───── 53,392 ═════ |
───── 42,209 ═════ |
Cash equivalents represent short-term deposits with annual interest rates of 0.5 percent and 7.0 percent for USD and VND accounts (30 June 2012: 0.5 percent and 9.0 percent for USD and VND accounts), respectively. The majority of these deposits have maturity terms from one to two months from the reporting date.
As at the balance sheet date, the cash and cash equivalents are denominated in the following currencies:
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Cash and cash equivalents in USD |
15,046 |
9,177 |
|
Cash and cash equivalents in VND |
38,326 |
32,987 |
|
Cash and cash equivalents in other currencies |
20 |
45 |
|
Total |
───── 53,392 ═════ |
───── 42,209 ═════ |
|
For the purpose of the statement of cash flows, cash and cash equivalents include bank overdrafts: |
||
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Cash and cash equivalents |
53,392 |
42,209 |
|
Bank overdraft (Note 18) |
- |
(1,175) |
|
|
───── 53,392 ═════ |
───── 41,034 ═════ |
14 ASSETS CLASSIFIED AS HELD FOR SALE
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Opening balance |
32,127 |
12,349 |
|
Disposed of during the year |
(25,238) |
(7,449) |
|
Transfer to financial assets at fair value through profit or loss |
(4,900) |
- |
|
Transfer from loan to a related party (Note 30(d)) |
- |
2,527 |
|
Transfer from investments in associates (Note 6) |
- |
24,700 |
|
Transfer to prepayments for acquisition of investment properties (Note 7) (*) |
(1,989) |
- |
|
|
────── |
────── |
|
Closing balance |
- |
32,127 |
|
|
══════ |
══════ |
(*) The balance of USD1.99 million relates to a sale under which the conditions precedent were not met by the buyer. The sale did not complete and accordingly the asset has been reclassified to its original asset class.
15 SHARE CAPITAL
|
|
30 June 2013 |
|
30 June 2012 |
||
|
|
Number of shares |
USD'000 |
|
Number of shares |
USD'000 |
|
|
|
|
|
|
|
|
Ordinary shares of USD0.01 each: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Authorised |
500,000,000 |
5,000 |
|
500,000,000 |
5,000 |
|
|
════════ |
════ |
|
════════ |
════ |
|
Issued and fully paid |
324,610,259 |
3,246 |
|
324,610,259 |
3,246 |
|
|
════════ |
════ |
|
════════ |
════ |
16 TREASURY SHARES
|
|
30 June 2013 |
|
30 June 2012 |
||
|
|
Number of shares |
USD'000 |
|
Number of shares |
USD'000 |
|
|
|
|
|
|
|
|
Opening balance |
12,074,663 |
17,785 |
|
- |
- |
|
Shares buy-back during the year |
51,159,325 |
95,854 |
|
12,074,663 |
17,785 |
|
|
──────── |
───── |
|
──────── |
──── |
|
Closing balance |
63,233,988 |
113,639 |
|
12,074,663 |
17,785 |
|
|
════════ |
═════ |
|
════════ |
════ |
|
|
|
||||
During the year, the Group purchased a further 51,159,325 of its ordinary shares (30 June 2012: 12,074,663 shares) for a total cash consideration of USD88.7 million (30 June 2012: USD17.8 million) and payable of USD7.2mil at year end (30 June 2012: nil) at an average cost of USD1.87 per share (30 June 2012: USD1.47 per share).
The total number of shares acquired represents 19.48 percent (30 June 2012: 3.72 percent) of the Company's 324,610,259 ordinary shares in issue and as a result, total voting rights in the Company have been reduced to 261,376,271 shares (30 June 2012: 312,535,596 shares).
17 REVALUATION RESERVE
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Opening balance |
28,602 |
27,513 |
|
Share of associates' change in revaluation reserve |
3,994 |
1,089 |
|
Disposal of an associate |
(1,220) |
- |
|
|
───── |
───── |
|
Closing balance |
31,376 |
28,602 |
|
|
═════ |
═════ |
The Group's share of the revaluation gains relates to the revaluation of associates' hospitality properties.
18 SHORT-TERM BANK BORROWINGS
Included in bank borrowings as at 30 June 2013 and 30 June 2012 are bank overdraft of nil and USD1.2 million respectively (Note 13).
Bank borrowings are not secured and their fair values at the reporting date are equal to the carrying amounts due to their short term nature.
Bank borrowings are denominated in VND and are repayable within 12 months. They are subject to interest rates ranging from 10.0 percent to 11.5 percent per annum (30 June 2012: from 10.5 percent to 17.5 percent per annum).
19 TRADE AND OTHER PAYABLES
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Trade payables |
1,841 |
1,987 |
|
Withholding taxes payable |
1,093 |
785 |
|
Unearned revenue |
1,526 |
1,616 |
|
Payables to brokers |
7,245 |
- |
|
Professional fees payables |
739 |
41 |
|
Other payables |
1,214 |
358 |
|
Total
|
───── 13,658 ═════ |
───── 4,787 ═════ |
All trade and other payables are short-term in nature. Therefore, their carrying values are considered a reasonable approximation of their fair values.
20 REVENUE AND COST OF SALES
The Group's revenue and cost of sales represent the sales of goods and cost of sales of its operating subsidiaries, American Home Vietnam Co. Ltd and Yen Viet Joint Stock Company. All revenues are derived from external customers and there was no significant concentration of sales to any single customer.
21 INTEREST INCOME AND FINANCE COSTS, NET
(a) Interest income
|
|
Year ended |
|
|
30 June 2013 |
30 June 2012 |
|
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Interest income comprised interest earned on: |
|
|
|
- cash and term deposits |
1,413 |
1,661 |
|
- government bonds |
1,066 |
636 |
|
- corporate bonds |
184 |
64 |
|
- loans to associates |
590 |
595 |
|
- others |
174 |
457 |
|
Total |
───── 3,427 |
───── 3,413 |
|
|
═════ |
═════ |
|
|
|
|
|
(b) Finance costs, net |
|
|
|
|
Year ended |
|
|
|
30 June 2013 |
30 June 2013 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Other finance income: |
|
|
|
- realised gains on foreign currency differences |
89 |
93 |
|
|
───── |
───── |
|
Finance costs comprised: |
|
|
|
- interest expense |
(281) |
(172) |
|
- realised losses on foreign currency differences |
(687) |
(871) |
|
- unrealised losses on foreign currency differences |
(168) |
(16) |
|
|
───── |
───── |
|
|
(1,136) |
(1,059) |
|
|
───── |
───── |
|
Total, net |
(1,047) |
(966) |
|
|
═════ |
═════ |
22 GAIN FROM FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS, NET
|
|
Year ended |
|
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Financial assets at fair value through profit or loss: |
|
|
|
- Gains from the realisation of financial assets, net |
34,753 |
4,571 |
|
- Unrealised gains |
54,501 |
22,920 |
|
|
───── |
───── |
|
Total |
89,254 |
27,491 |
|
|
═════ |
═════ |
23 OTHER INCOME
|
|
Year ended |
|
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Gains on disposals of investments in: |
|
|
|
- Associate |
- |
1,103 |
|
- Available-for-sale financial assets |
111 |
- |
|
- Assets classified as held for sale |
- |
7,616 |
|
Gain on the disposal of a subsidiary |
- |
2,139 |
|
Transfer from available-for-sale financial assets reserve on disposal of assets |
9,844 |
- |
|
|
───── |
───── |
|
Total gain on disposals of investments |
9,955 |
10,858 |
|
Reversal of impairment loss |
- |
9,400 |
|
Consulting income |
343 |
330 |
|
Other income |
824 |
2,977 |
|
|
───── |
───── |
|
Total |
11,122 |
23,565 |
|
|
═════ |
═════ |
24 SELLING, GENERAL AND ADMINISTRATION EXPENSES
|
|
Year ended |
|
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Management fees (Note 30(a)) |
15,001 |
14,863 |
|
Professional fees |
3,550 |
2,478 |
|
Selling, general and administration expenses (*) |
1,658 |
1,571 |
|
Other expenses |
531 |
586 |
|
Total
|
───── 20,740 ═════ |
───── 19,498 ═════ |
(*) The majority of these expenses relate to operating expenses incurred by the subsidiaries of the Group.
An analysis of ongoing charges is provided in Note 28.
25 OTHER EXPENSES
|
|
Year ended |
|
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Impairments of receivables (Note 11) |
1,355 |
- |
|
Impairments of other assets |
1,937 |
9,408 |
|
Loans written off on disposals of investments in associates (Note 30(d)) |
3,028 |
- |
|
Losses on disposals of investments in associates |
667 |
- |
|
Goodwill impairment (Note 5) |
449 |
- |
|
Others |
1,891 |
2,214 |
|
|
───── |
───── |
|
Total |
9,327 |
11,622 |
|
|
═════ |
═════ |
26 INCOME TAX EXPENSE
VinaCapital Vietnam Opportunity Fund Limited is domiciled in the Cayman Islands. Under the current laws of the Cayman Islands, there is no income, state, 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. Some of the subsidiaries are established in Singapore and have offshore operations in Vietnam. The income from these offshore operations is also tax exempt in Singapore.
A small number of subsidiaries are established in Vietnam and are subject to corporate income tax in Vietnam.
The relationship between the expected income tax expense based on the applicable income tax rate and the tax expense actually recognised in the consolidated statement of income can be reconciled as follows:
|
|
Year ended |
|
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Profit before tax |
90,724 ────── |
29,132 ────── |
|
Profit multiplied by applicable tax rate (0%) |
- |
- |
|
Withholding taxes imposed on investment income |
(656) |
(700) |
|
Income tax on Vietnam subsidiaries |
(16) |
- |
|
Tax expenses |
──── (672) ════ |
──── (700) ════ |
27 EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE
(a) Basic
Basic earnings per share is calculated by dividing the net income attributable to equity shareholders of the Company from operations by the weighted average number of ordinary shares in issue during the year (excluding ordinary shares purchased by the Company and held as treasury shares (Note 16)).
|
|
Year ended |
|
|
|
30 June 2013 |
30 June 2012 |
|
|
|
|
|
Profit for the year (USD'000) |
90,052 |
28,432 |
|
Weighted average number of ordinary shares in issue |
286,648,181 |
321,013,954 |
|
Basic earnings per share (USD per share) |
0.31 |
0.09 |
|
|
══════════ |
═════════ |
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Group has no category of potentially dilutive ordinary shares. Therefore,diluted earnings per share is equal to basic earnings per share.
(c) Net asset value per share
Net asset value (NAV) per share is calculated by dividing the net asset value attributable to equity shareholders of the Company by the number of outstanding ordinary shares in issue as at the reporting date (excluding ordinary shares purchased by the Company and held as treasury shares (Note 16)). Net asset value is determined as total assets less total liabilities.
|
|
As at 30 June 2013 |
As at 30 June 2012 |
|
|
|
|
|
Net asset value attributable to owners of the Company (USD'000) |
752,443 |
765,645 |
|
Number of outstanding ordinary shares on issue |
261,376,271 |
312,535,596 |
|
Net asset value per share (USD/share) |
2.88 ═════════ |
2.45 ══════════ |
28 ONGOING CHARGES
|
|
Year ended |
|
|
|
30 June 2013 |
30 June 2012 |
|
|
|
|
|
Ongoing charges (using AIC recommended methodology) |
2.13% |
2.13% |
|
Performance fee |
- |
- |
|
|
───── 2.13% ═════ |
───── 2.13% ═════ |
Ongoing charges have been calculated in accordance with the Association of Investment Companies ("AIC") recommended methodology dated May 2012. It is the ratio of annualised ongoing charges over the average undiluted net asset value during the year.
Ongoing charges include: management fees, directors' fees and expenses, recurring audit and tax services, custody and fund administration services, fund accounting services, secretarial services, registrars' fees, public relations fees, insurance premiums, regulatory fees and similar charges.
29 DIRECTORS' FEES AND MANAGEMENT'S REMUNERATION
The aggregate directors' fees paid during the year amounted to USD240,833 (year ended 30 June 2012: USD195,000), of which USD45,833 was outstanding as payable as at 30 June 2013 (30 June 2012: nil).
The details of remuneration by director are summarised below:
|
|
Year ended |
|
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Steve Bates |
28 |
- |
|
Martin Adams |
18 |
- |
|
William Vanderfelt |
75 |
75 |
|
Martin Glynn |
60 |
60 |
|
Michael Gray |
60 |
60 |
|
|
──── 241 ════ |
──── 195 ════ |
Directors' fee borne by:
|
|
|
|
|
- The Investment Manager (*) |
79 |
135 |
|
- The Company |
162 |
60 |
|
|
──── 241 ════ |
──── 195 ════ |
(*) For periods from 1 July 2007 to 5 February 2013, the Investment Manager agreed that any fees paid in excess of USD60,000 for services rendered shall result in a corresponding reduction in the management fee paid to VinaCapital Investment Management Limited, the Investment Manager.
30 RELATED PARTIES
(a) Management fees
The Group was managed by VinaCapital Investment Management Limited (the "BVI Investment Manager"), a company incorporated in the British Virgin Islands ("BVI"), under a management agreement dated 24 September 2003 (the "Management Agreement"). From 1 January 2011, the Group was managed by VinaCapital Investment Management Limited (the "Investment Manager"), a 100 percent owned subsidiary company of the BVI Investment Manager incorporated and registered as a licensed fund manager in the Cayman Islands, under the novation agreement between the BVI Investment Manager and the Investment Manager. The Investment Manager receives a fee based on the net asset value of the Group, payable monthly in arrears, at an annual rate of 2 percent (30 June 2012: 2 percent).
Total management fees for the year amounted to USD15.0 million (30 June 2012: USD14.9 million), with USD1.2 million (30 June 2012: USD1.2 million) in the balance payable to the Investment Manager at the reporting date.
(b) Performance fees
The Investment Manager is also entitled to a performance fee equal to 20 percent of the realised returns over an annualised compounding hurdle rate of 8 percent. There was no performance fee payable for the years ended 30 June 2013 and 30 June 2012.
Details of the new management fee and performance fee arrangements under the Amended and Restated Investment Management Agreement, effective from 01 July 2013, are set out in Note 32.
(c) Other balances with related parties
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Payments on behalf of a fund under common Investment Manager |
1,586 |
1,702 |
|
Payment on behalf of Investment Manager |
473 |
- |
|
Receivable from associates |
- |
1,239 |
|
|
──── 2,059 ════ |
──── 2,941 ════ |
|
|
|
|
|
Payable to Investment Manager |
(1,199) |
(1,190) |
|
Payable to a fund under common Investment Manager |
(957) |
(969) |
|
|
──── (2,156) ════ |
───── (2,159) ═════ |
(d) Loans to related parties
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
Long-term loans to: |
|
|
|
- Associates under common management (*) (Note 6) |
35,124 |
35,733 |
|
- An associate |
1,325 |
- |
|
Total long-term loans to related parties |
───── 36,449 |
───── 35,733 |
|
|
─────
|
─────
|
|
Short-term loans to: |
|
|
|
- Current portion of long-term loan to an associate |
568 |
3,845 |
|
- Other associates |
6,933 |
6,926 |
|
Total short-term loans to related parties |
───── 7,501 |
───── 10,771 |
|
|
───── |
───── |
|
Total loans to related parties |
43,950 ═════ |
46,504 ═════ |
(*) Associates under common management refer to associates which have joint investments in real estate projects with VinaLand Limited, another fund managed by VinaCapital Investment Management Limited. These loans form part of the Group's net investment in the associates as settlements are not planned.
The movement of loans to related parties during the year is as follow:
|
|
30 June 2013 |
30 June 2012 |
|
|
|
USD'000 |
USD'000 |
|
|
|
|
|
|
|
Opening balance |
46,504 |
61,443 |
|
|
Loans advanced |
1,779 |
1,259 |
|
|
Loan repayments received |
(1,514) |
(875) |
|
|
Disposals |
(3,028) |
- |
|
|
Reclassifications |
- |
(2,527) |
|
|
Loans converted to equity shares |
- |
(12,550) |
|
|
Interest charged |
724 |
874 |
|
|
Interest received |
(431) |
(649) |
|
|
Impairment of loan receivables |
(84) |
(471) |
|
|
Closing balance |
───── 43,950 ═════ |
───── 46,504 ═════ |
|
The long-term loan to an associate is secured by way of shares of an entity listed on the Vietnam stock exchange. The loan bears interest at the rate of 15.0 percent per annum and has a minimum repayment term of USD0.6 million annually.
The short-term loans to other related parties have prepayment terms within a 12 months period, they are unsecured and carry interest at rates ranging from 1.5 percent to 15.0 percent per annum (30 June 2012: 1.5 percent to 15.0 percent per annum).
No provision is required at 30 June 2013 (30 June 2012: nil) for loans to related parties.
31 FINANCIAL RISK FACTOR
The Group invests in listed and unlisted equity instruments, debt instruments, assets and other opportunities in Vietnam and overseas with the objective of achieving medium to long-term capital appreciation and providing investment income.
The Group is exposed to a variety of financial risks: market risk (including currency risk, interest rate risk, and price risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potentially adverse effects on the Group's financial performance. The Group's risk management is coordinated by the Investment Manager who manages the distribution of the assets to achieve the investment objectives.
The most significant financial risks the Group is exposed to are described below:
(a) Market risk analysis
Foreign currency risk sensitivity
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 Vietnam Dong (VND), the value of the VND has historically been closely linked to that of the USD, the reporting currency.
The Group has not entered into any hedging mechanism as the estimated benefits of available instruments outweigh their costs. 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.
Foreign exchange risk
As at 30 June 2013 and 2012, the Group has foreign currency exposure mainly arising from holding cash and cash equivalents which is not denominated in its functional currency. As the reporting date, had the VND weakened/strengthened by 5 percent in relation to USD, with all other variables held constant, there would be a net exchange loss/profit from the financial assets and liabilities denominated in VND (Note 9) of USD28.4 million (30 June 2012: USD23.3 million).
Price risk
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 factors affecting all instruments traded in the market.
The Group invests in listed and unlisted equity securities and is exposed to market price risk of these securities due to the uncertainties about future values of the investment securities.
The majority of the Group's equity investments are publicly traded on the Vietnam stock exchanges, resulting in a concentration of price risk as the value of the equity investments of the Group are particularly heavily dependent on the performance of the Vietnamese stock exchanges.
As at 30 June 2013, the value of the holding in the equity of Vinamilk was 15.3 percent of the net asset value of the Group (30 June 2012: 7.5 percent). The Group has no other concentration in individual equity positions exceeding 10 percent percent percent of the Group's net assets.
All securities investments present a risk of loss of capital. The Investment Manager manages this risk through the careful selection of securities and other financial instruments within specified limits and by holding a diversified portfolio of listed and unlisted instruments. In addition, the performance of investments held by the Group is monitored by the investment manager on a monthly basis and reviewed by the Board of Directors on a quarterly basis.
If the prices of the securities were to fluctuate by 10 percent, the impact on the net asset value of the Group would be a gain/loss of USD44.0 million (30 June 2012: approximately gain/loss of USD39.4 million).
Cash flow and fair value interest rate risk
The Group's exposure to interest rate risk is related to interest bearing financial assets and financial liabilities. Cash and cash equivalents and bonds are subject to interest at fixed rates. They are exposed to fair value changes due to interest rate changes. The Group has no significant financial liabilities with floating interest rates. As a result, the Group has limited exposure to cash flow and interest rate risk.
(b) 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.
All transactions in listed securities are settled upon delivery using approved brokers. The risk of default is considered low, as delivery of securities sold is only made once the broker has received payment. Payment is made for purchases once the securities have been received by the broker. The trade will be unwound if either party fails to meet its obligations.
The clearing and depository operations for the Group's security transactions are mainly concentrated with one prime custodian, namely HSBC Limited which had a Standard & Poor's ('S&P') rating of short term A-1+, long term AA- and outlook stable at as 30 June 2013. At 30 June 2013, substantially all investments in capital markets are placed in custody with HSBC Limited which may expose to credit risk associated with the custodian.
The carrying amount of trade and other receivables, loan receivables and available-for-sale financial assets represent the Group's maximum exposure to credit risk in relation to its financial assets.
No credit limits were exceeded during the reporting period other than those fully impaired as disclosed in Note 11 and management does not expect any losses from non-performance by these counterparties.
In accordance with the Group's policies, the Investment Manager continuously monitors the Group's credit position, identified either individually or by group, and incorporates this information into its credit controls.
The Group's 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.
The Group's exposure to credit risk is limited to the carrying amounts of financial assets recognised at the reporting date, as summarised below:
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Classes of financial assets - carrying amounts: |
|
|
|
Long-term loan included in interest in associates |
35,124 |
35,733 |
|
Long-term loan to an associate |
1,325 |
- |
|
Short-term loan to related parties |
7,501 |
10,771 |
|
Trade and other receivables |
17,918 |
14,611 |
|
Financial assets at fair value through profit or loss |
22,449 |
25,912 |
|
Cash and cash equivalents |
53,392 |
42,209 |
|
|
────── 137,709 ══════ |
────── 129,236 ══════ |
|
Allowance for impairment |
(5,101) |
(3,746) |
|
|
══════ |
══════ |
Total allowances of USD5.1 million (30 June 2012: USD3.7 million) had been provided for balances that the Group expected to be uncollectible or impaired. These are for receivables in Note 11.
Cash and cash equivalents and short-term investments are held at banks and financial institutions which do not have histories of default.
Of the USD53.4 million cash and cash equivalents as at 30 June 2013, USD27.9 million were deposited with banks that have a Standard and Poors ('S&P') rating of AA- at the reporting date. Another USD18.6 million was deposited with banks that have S&P ratings of between B+ and BB- at the reporting date. The remaining USD6.9 million of the cash and cash equivalents was held with banks that have no credit rating by any rating agencies.
The Group has no other significant concentrations of credit risk.
(c) Liquidity risk analysis
The Group invests in both listed securities that are traded in active markets and unlisted securities that are not actively traded.
The Group's listed securities are considered to be readily realisable, as they are mainly listed on the Vietnam Stock Exchanges. However from time to time the lack of liquidity in the market can lead to delays selling shares, which in turn, could impact the price realised if the shares need to be sold quickly.
Unlisted securities, which are not traded in an organised public market, may be illiquid. As a result, the Group may not be able to quickly liquidate its investments in these instruments at an amount close to fair value in order to respond to its liquidity requirements or to other specific events such as deterioration in the creditworthiness of a particular issuer.
As at the reporting date, the Group's contractual financial liabilities as shown in the consolidated balance sheet as current is repayable with six months (30 June 2012: six months) from the balance sheet date. The long-term contractual financial liability is not material to the Group.
(d) Capital management
The Group's capital management objectives are to achieve capital growth and ensure the Group's ability to continue as a going concern.
The Group considers the capital to be managed as equal to the net assets attributable to the holders of ordinary shares. 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 investment returns that are commensurate with the investment objectives outlined in the Group's offering documents.
(e) 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).
There are no financial liabilities of the Group which were measured using the fair valuation method as at 30 June 2013 and 30 June 2012.
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 measured at fair value in the consolidated balance sheets are grouped into the fair value hierarchy as follows:
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
|
|
|
|
|
|
|
As at 30 June 2013 |
|
|
|
|
|
Financial assets at fair value through profit or loss in Vietnam: |
|
|
|
|
|
- Ordinary shares - listed |
350,694 |
5,744 |
- |
356,438 |
|
- Ordinary shares - unlisted |
4,697 |
66,871 |
5,180 |
76,748 |
|
- Corporate bonds |
- |
- |
- |
- |
|
- Government bonds |
17,752 |
- |
- |
17,752 |
|
Financial assets in countries other than Vietnam: |
|
|
|
|
|
- Ordinary shares - listed |
21,521 |
- |
- |
21,521 |
|
Available-for-sale financial assets: |
|
|
|
|
|
- Private equity investments |
8,700 |
- |
5,784 |
14,484 |
|
|
─────── 403,364 ═══════ |
────── 72,615 ══════ |
────── 10,964 ══════ |
─────── 486,943 ═══════ |
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
|
|
As at 30 June 2012 |
|
|
|
|
|
|
Financial assets at fair value through profit or loss in Vietnam: |
|
|
|
|
|
|
- Ordinary shares - listed |
297,074 |
- |
- |
297,074 |
|
|
- Ordinary shares - unlisted |
- |
65,040 |
13,934 |
78,974 |
|
|
- Corporate bonds |
- |
8,500 |
- |
8,500 |
|
|
- Government bonds |
17,412 |
- |
- |
17,412 |
|
|
Financial assets in countries other than Vietnam: |
|
|
|
|
|
|
- Ordinary shares - listed |
23,321 |
- |
- |
23,321 |
|
|
Available-for-sale financial assets: |
|
|
|
|
|
|
- Private equity investments |
28,450 |
- |
6,111 |
34,561 |
|
|
|
─────── 366,257 ═══════ |
────── 73,540 ══════ |
────── 20,045 ══════ |
─────── 459,842 ═══════ |
|
During the year ended 30 June 2013, the Company transferred two equities that are listed on a stock exchange but thinly traded from level 1 to level 2 (year ended 30 June 2012: no transfers between levels of fair value hierarchy). There were also no reclassifications of financial assets in the current year and or the prior year.
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from the exchange, dealer and broke, and those princes represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level 1. Instruments included in Level 1 comprise the Vietnam stock exchanges equity investments classified as trading securities or available for sale. The level 1 fair value may also include committed prices at the balance sheet date to sell the unlisted equity instrument.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
If one or more of the significant inputs is not based observables market data, the instrument is included in Level 3.
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.
The following table presents the changes in Level 3 financial assets:
Year ended
|
|
30 June 2013 |
30 June 2012 |
|
|
USD'000 |
USD'000 |
|
|
|
|
|
Opening balance |
20,045 |
30,857 |
|
Transfers out of Level 3 (*) |
(14,261) |
(28,450) |
|
Purchases of available-for-sale financial assets (Note 8) |
- |
2,223 |
|
Transferred from/(to) assets held for sales/interest in associate |
4,900 |
(8,165) |
|
Gain recognised in income statement (Note 21) |
280 |
9,400 |
|
Gain recognised in available-for-sale investment reserve |
- |
14,180 |
|
Closing balance
|
────── 10,964 ══════ |
────── 20,045 ══════ |
|
Total gains for the year included in: |
|
|
|
- Income statement |
280 |
9,400 |
|
- Other comprehensive income |
- |
14,180 |
|
|
─── 280 ═══ |
───── 23,580 ═════ |
(*) Transfers out of Level 3 are due to disposals of investments.
Due to numerous uncertainties regarding the future development of these investees, the fair value of the Group's equity interest in these level 3 instruments cannot be reliably measured and therefore have been stated at cost less impairment charges. However, management believes the changing inputs to the Level 3 valuation to a reasonable possible alternative assumption would not change significant amounts recognised in profit or loss, total assets, total liabilities or total equity.
32 EVENTS AFTER THE REPORTING PERIOD
Extraordinary General Meeting and continuation of the Company
The Board convened an Extraordinary General Meeting on 22 July 2013 to consider the Company's future. This was to satisfy the commitment set out in the Admission Document that every five years the Shareholders shall have the opportunity to consider the future of the Company and whether it should continue for a further five year period.
The Board recommended that Shareholders vote against the Resolution "that the Company cease to continue as currently constituted", thus ensuring that the Company will continue for a further five years. The Board also recommended certain changes to be made in the Amended and Restated Investment Management Agreement, in particular the annual management and incentive fee arrangements with the Investment Manager, which were conditional upon Shareholders approving the continuation of the Company for a further five years. Those proposals were set out in a circular distributed to shareholders on 24 June 2013 and available through the Regulatory News Service ("RNS") of the London Stock Exchange. The proposals were supported by shareholders on 22 July 2013. As a result the following the changes will financially impact the Company going forward:
The Company and the Investment Manager have entered into the Amended and Restated Investment Management Agreement which makes changes to, amongst other things, the fees payable to the Investment Manager.
Management Fee
Under the former investment management agreement, the Investment Manager was paid a fee equal to 2 per cent. per annum of the NAV of the Company. From 1 July 2013, the investment management fee has been reduced to 1.5 per cent. per annum of the NAV of the Company, payable monthly in arrears.
Incentive Fees
Under the former investment management agreement, the Investment Manager was paid an incentive fee equal to 20 per cent. of the performance over an 8 per cent. hurdle rate. From 1 July 2013, the level of incentive fee will be reduced to 15 per cent. per annum.
Furthermore, for the purposes of calculating incentive fees, the Company's net assets segregated into a Direct Real Estate Portfolio and a Capital Markets Portfolio. A separate incentive fee will be calculated and operate independently for each portfolio so that for any financial year it will be possible for an incentive fee to become payable in relation to one, both or neither portfolio depending upon the performance of each portfolio.
This information is provided by RNS
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