Interim Results for the 6 mon
26 March 2010
VinaCapital Vietnam Opportunity Fund Limited
Interim results for the 6 months ended 31 December 2009
VinaCapital Vietnam Opportunity Fund Limited ("the Company" or "VOF") (VOF.L), an AIM-quoted investment vehicle focused on Vietnam, today announces its interim results for the six months ended 31 December 2009 ("the Period").
Financial highlights
· Net profit of USD99.96 million (HY08: net loss of USD78.07 million)
· Net profit per share of USD0.31 (HY08: loss of USD0.25 per share)
· Cash and cash equivalents as at 31 December 2009 of USD63.22 million (30 June 2009: USD69.69 million)
· Net asset value at 31 December 2009 USD780 million representing USD2.42 per share
Operational highlights
· Sale of stake in the Hilton Hanoi Opera Hotel, resulting in an IRR of 23 percent and an exit at 10 percent above the carrying value of the asset
· Sale of stake in the A&B Tower office project in Ho Chi Minh City, resulting in an IRR of 17.5 percent over the four years the asset was held
· IPOs of several investees, including Eximbank, one of Vietnam's leading joint stock banks, and DIC Corp. one of Vietnam's leading real estate developers.
· Investment in Hoan My Medical Corporation, Vietnam's top private hospital owner and operator. Hoan My expects earnings growth of over 40 percent yearly for the next three years.
Commenting, Andy Ho, VinaCapital Managing Director & Head of Investment said:
"Vietnam's economic growth looks set to continue into 2010, with our substantial capital position making us well placed for any new investment opportunities. In particular we expect to see private equity deal activity increase significantly over the coming year as more private companies look for strategic investors in response to tightening bank lending. We also hope to build on our gains from the healthy OTC market, which has benefitted from higher expectations of IPO activity."
Notes to Editors:
VinaCapital Groupis a leading asset management, investment banking and real estate consulting firm with unrivalled experience in the Vietnamese market. VinaCapital Group was founded in 2003 and has grown from a single USD10 million fund to a diversified investment firm with over USD1.7 billion in assets under management as of December 2009.
VinaCapital manages three closed-end funds trading on the London Stock Exchange's Alternative Investment Market (AIM). These are: VinaCapital Vietnam Opportunity Fund (VOF); VinaLand Limited (VNL); and Vietnam Infrastructure Limited (VNI).
VinaCapital also co-manages the DFJ VinaCapital technology venture capital fund with Draper Fisher Jurvetson. More information is available at www.vinacapital.com.
More information on VinaCapital Vietnam Opportunity Fund Limited is available at www.vinacapital.com/vof
Enquiries:
Ms Chi Nguyen
VinaCapital Investment Management Limited
Investor Relations
+84 8 821 9930
Philip Secrett
Grant Thornton Corporate Finance, Nominated Adviser
+44 20 7383 5100
Hiroshi Funaki +44 20 7845 5960
LCF Edmond de Rothschild Securities, Broker
Alastair Hetherington
Financial Dynamics, Public Relations (Hong Kong)
+852 3716 9802
Andrew Walton
Financial Dynamics, Public Relations (London)
+44 2072697204
Chairman's Statement
Dear shareholders,
We are pleased to present the interim financial statements of VinaCapital Vietnam Opportunity Fund Limited (AIM: VOF) for the six month period ended 31 December 2009.
In the second half of 2009, Vietnam continued its recovery from the 2008 and early 2009 economic crisis that saw GDP growth fall to a low of 3.9 percent annualised during Q1 2009. Under the impact of the government stimulus package, GDP growth for 2009 rebounded to 5.3 percent, including 6.8 percent annualised in the final quarter.
With liquidity returning to the economy, Vietnam's capital markets saw a strong performance in 2009, with the benchmark VN Index returning 56.8 percent for 2009.
For VOF, the first half of the 2009-10 financial year saw the fund grow increasingly active in response to the market recovery, including the close of several material real estate and private equity deals. The fund saw several key holdings IPO during the period, including Eximbank and DIC Corp. Over the 2009 calendar year, 14 VOF holdings listed on the Hanoi and Ho Chi Minh stock exchanges.
VOF's net asset value rose 14.4 percent to USD780 million (2.40 per share) at 31 December 2009, from USD682 million (2.10 per share) at 30 June 2009. VOF's share price at 31 December 2009 was USD1.51, up from USD1.43 at 30 June, resulting in a discount to NAV of 37.1 percent.
During the period, VOF sold its stakes in the Hilton Hanoi Opera Hotel and A&B office tower project in Ho Chi Minh City. The sales generated IRRs of 23.0 and 17.5 percent, respectively, and came as part of efforts to decrease the fund's exposure to illiquid real estate projects. With the proceeds, VOF invested in OTC and listed real estate equities, which were among Vietnam's top performing stocks in 2009.
In private equity, the period saw VOF invest in Hoan My Medical Corporation, Vietnam's top private hospital owner and operator. Hoan My expects earnings growth of over 40 percent yearly for the next three years given its strong market position and plans for expansion, and the intrinsic growth in per capita spending on healthcare.
Going forward for 2010, we expect to see private equity deal terms improve as bank lending tightens and potential investees look for strategic support prior to IPOs. We expect a significant rebalancing of the portfolio toward PE and OTC holdings. The fund manager will look to exit mature assets that no longer have high growth prospects or have not made significant progress with sustainable earnings growth.
Thank you for your continued support.
William Vanderfelt
Chairman
VinaCapital Vietnam Opportunity Fund Limited
26 March 2010
Consolidated Financial Statements
Condensed Consolidated Interim Balance Sheet
|
|
Note |
31 December 2009 |
30 June 2009 |
|
|
|
|
USD'000 |
USD'000 |
|
|
ASSETS |
|
|
|
|
|
Non-current |
|
|
|
|
|
Investment properties |
|
6,784 |
6,906 |
|
|
Investments in associates |
6 |
179,871 |
148,435 |
|
|
Property, plant and equipment |
|
61 |
321 |
|
|
Intangible assets |
|
18 |
17 |
|
|
Long-term loan receivables from related parties |
|
53,696 |
58,615 |
|
|
Long-term investments |
|
7,005 |
2,331 |
|
|
Other long-term financial assets |
|
12,524 |
15,314 |
|
|
Other non-current assets |
|
141 |
249 |
|
|
Non-current assets |
|
260,100 |
232,188 |
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
Inventories |
|
2,248 |
2,071 |
|
|
Trade and other receivables |
|
9,428 |
8,012 |
|
|
Receivables from related parties |
|
11,369 |
15,478 |
|
|
Financial assets at fair value through statement of income |
7 |
443,481 |
352,389 |
|
|
Short-term investments |
|
5,912 |
452 |
|
|
Cash and cash equivalents |
|
63,219 |
69,691 |
|
|
Current assets |
|
535,657 |
448,093 |
|
|
|
|
|
|
|
|
Assets classified as held for sale |
|
2,543 |
37,742 |
|
|
Total assets |
|
798,300 |
718,023 |
|
|
Note |
31 December 2009 |
30 June 2009 |
|
|
|
USD'000 |
USD'000 |
|
EQUITY AND LIABILITIES |
|
|
|
|
EQUITY |
|
|
|
|
Equity attributable to shareholders of the parent: |
|
|
|
|
Share capital |
8 |
3,246 |
3,246 |
|
Additional paid-in capital |
9 |
722,064 |
722,064 |
|
Revaluation reserve |
10 |
23,724 |
25,958 |
|
Translation reserve |
|
(3,107) |
(2,088) |
|
Retained earnings |
|
34,388 |
(67,268) |
|
|
|
780,315 |
681,912 |
|
|
|
|
|
|
Non-controlling interests |
|
6,272 |
13,676 |
|
Total equity |
|
786,587 |
695,588 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Non-current |
|
|
|
|
Other long-term liabilities |
|
483 |
484 |
|
Non-current liabilities |
|
483 |
484 |
|
|
|
|
|
|
Current |
|
|
|
|
Trade and other payables |
|
6,815 |
8,167 |
|
Payables to related parties |
|
4,415 |
3,118 |
|
Current liabilities |
|
11,230 |
11,285 |
|
|
|
|
|
|
Liabilities classified as held for sale |
|
- |
10,666 |
|
Total liabilities |
|
11,713 |
22,435 |
|
Total equity and liabilities |
|
798,300 |
718,023 |
|
Net assets per share attributable to equity shareholders of the parent (USD per share) |
15 |
2.40 |
2.10 |
Condensed Consolidated Interim Statement of Changes in Equity
|
|
Equity attributable to shareholders of the parent |
Non-controlling interests |
Total |
|||||
|
|
Share capital |
Additional paid-in capital |
Revaluation reserve |
Translation reserve |
Retained earnings |
|
|
|
|
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
|
|
Balance at 1 July 2008 |
3,246 |
722,064 |
18,463 |
(846) |
(74,050) |
34,117 |
702,994 |
|
|
Acquisition of subsidiaries |
- |
- |
- |
- |
- |
(16,153) |
(16,153) |
|
|
(Loss)/gain for the period |
- |
- |
- |
- |
(79,997) |
1,860 |
(78,137) |
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
- Exchange differences on translation of foreign operations |
- |
- |
- |
157 |
- |
- |
157 |
|
|
- Share of revaluation gains on associates' properties for the period |
- |
- |
9,859 |
- |
- |
- |
9,859 |
|
|
Total other comprehensive income |
- |
- |
9,859 |
157 |
- |
- |
10,016 |
|
|
Total comprehensive income |
- |
- |
9,859 |
157 |
(79,997) |
1,860 |
(68,121) |
|
|
Balance at |
3,246 |
722,064 |
28,322 |
(689) |
(154,047) |
19,824 |
618,720 |
|
|
Balance at 1 July 2009 |
3,246 |
722,064 |
25,958 |
(2,088) |
(67,268) |
13,676 |
695,588 |
|
Disposal of associate |
- |
- |
(2,403) |
- |
2,403 |
- |
- |
|
Disposal of assets and liabilities held for sale |
- |
- |
- |
- |
- |
(7,978) |
(7,978) |
|
Profit for the period from 1 July 2009 to 31 December 2009 |
- |
- |
- |
- |
99,253 |
602 |
99,855 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
- Exchange differences on translation of foreign operations |
- |
- |
- |
(1,019) |
- |
(28) |
(1,047) |
|
- Share of revaluation gains on associates' properties for the period (Note 10) |
- |
- |
169 |
- |
- |
- |
169 |
|
Total other comprehensive income |
- |
- |
169 |
(1,019) |
- |
(28) |
(878) |
|
Total comprehensive income |
- |
- |
169 |
(1,019) |
99,253 |
574 |
98,977 |
|
Balance at 31 December 2009 |
3,246 |
722,064 |
23,724 |
(3,107) |
34,388 |
6,272 |
786,587 |
Condensed Consolidated Interim Statement of Income
|
|
Note |
Six month period ended |
|
|
|
|
31 December 2009 |
31 December 2008 |
|
|
|
USD'000 |
USD'000 |
|
|
|
|
(Reclassified) |
|
Revenue |
|
6,281 |
5,714 |
|
Cost of sales |
|
(4,518) |
(4,955) |
|
Gross profit |
|
1,763 |
759 |
|
|
|
|
|
|
Selling, general and administration expenses |
11 |
(10,978) |
(9,768) |
|
Net changes in fair value of financial assets at fair value through statement of income |
12 |
97,612 |
(64,658) |
|
Net gain from fair value adjustments of investment properties |
|
- |
2,938 |
|
Other income |
|
64 |
3,159 |
|
Other expenses |
|
(1,800) |
(9,515) |
|
Operating profit/(loss) |
|
86,661 |
(77,085) |
|
|
|
|
|
|
Finance income |
|
7,236 |
15,234 |
|
Finance costs |
|
(1,149) |
(3,268) |
|
Finance income - net |
13 |
6,087 |
11,966 |
|
Share of profits/(losses) of associates |
|
7,209 |
(12,949) |
|
|
|
13,296 |
(983) |
|
Profit/(loss) before tax for the period from continuing and total operations |
|
99,957 |
(78,068) |
|
Withholding taxes imposed on investment income |
14 |
(102) |
(69) |
|
Income tax |
14 |
- |
- |
|
Net profit/(loss) for the period from continuing and total operations |
|
99,855 |
(78,137) |
|
|
|
|
|
|
Attributable to equity shareholders of the parent |
|
99,253 |
(79,997) |
|
Attributable to non-controlling interests |
|
602 |
1,860 |
|
|
|
99,855 |
(78,137) |
|
Earnings/(loss) per share (continuing and total operations) - basic and diluted (USD per share) |
15 |
0.31 |
(0.25) |
Condensed Consolidated Interim Statement of Comprehensive Income
|
|
Note |
Six month period ended |
|
|
|
|
31 December 2009 |
31 December 2008 |
|
|
|
USD'000 |
USD'000 |
|
|
|
|
|
|
Profit/(loss) for the period |
|
99,855 |
(78,137) |
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
- Share of other comprehensive income of associates |
10 |
169 |
9,859 |
|
- Exchange differences on translating foreign operations |
|
(1,047) |
157 |
|
Other comprehensive income for the period |
|
(878) |
10,016 |
|
Total comprehensive income for the period |
|
98,977 |
(68,121) |
|
|
|
|
|
|
Attributable to equity shareholders of the parent |
|
98,403 |
(69,981) |
|
Attributable to non-controlling interests |
|
574 |
1,860 |
|
|
|
98,977 |
(68,121) |
Condensed Consolidated Interim Statement of Cash Flows
|
|
Six month period ended |
|
|
|
31 December 2009 |
31 December 2008 |
|
|
USD'000 |
USD'000 |
|
|
|
(Reclassified) |
|
Operating activities |
|
|
|
Net profit/(loss) before tax |
99,957 |
(78,068) |
|
Adjustments for: |
|
|
|
Depreciation and amortisation |
242 |
192 |
|
Unrealised net (gain)/loss from revaluation of financial assets at fair value through statement of income |
(71,540) |
71,974 |
|
Net gains from realisation of financial assets at fair value through statement of income |
(26,072) |
(7,316) |
|
Impairment and write-off of assets |
1,794 |
9,400 |
|
Gain on revaluation of investment properties |
- |
(2,938) |
|
Gain on acquisition of a non-controlling interest |
- |
(2,779) |
|
Share of (profits)/losses of associates |
(7,209) |
12,949 |
|
Unrealised foreign exchange losses |
178 |
1,389 |
|
Dividend income |
(5,757) |
(9,361) |
|
Interest income |
(1,121) |
(5,849) |
|
Net loss before changes in working capital |
(9,528) |
(10,407) |
|
Change in trade and other receivables |
1,102 |
6,258 |
|
Change in inventories |
(177) |
817 |
|
Change in trade and other payables |
2,034 |
(6,779) |
|
Withholding taxes imposed on investment income paid |
(102) |
(69) |
|
|
(6,671) |
(10,180) |
|
|
|
|
|
Investing activities |
|
|
|
Interest received |
1,282 |
5,938 |
|
Dividends received |
6,313 |
9,421 |
|
Purchases of property, plant, equipment and other non-current assets |
(144) |
(331) |
|
Acquisition of a non-controlling interest, net of cash |
- |
(13,340) |
|
Purchases of financial assets |
(72,947) |
(8,728) |
|
Additions of investment property |
- |
(2,531) |
|
Acquisitions of long-term investments |
(1,910) |
(2,263) |
|
Investments in associates |
(14,319) |
(1,789) |
|
Proceeds from disposals of financial assets |
75,512 |
53,609 |
|
Deposits/(proceeds) from short-term investments |
(5,460) |
1,653 |
|
Proceeds from shareholder loans refunded |
4,579 |
- |
|
Proceeds from disposals of investments |
12,751 |
3,087 |
|
Shareholder loans provided |
(5,458) |
(17,751) |
|
|
199 |
26,975 |
|
|
Six month period ended |
|
|
|
31 December 2009 |
31 December 2008 |
|
|
USD'000 |
USD'000 |
|
Financing activities |
|
|
|
Loan proceeds from bank |
- |
1,989 |
|
Loan repayments to bank |
- |
(64) |
|
|
- |
1,925 |
|
Net (decrease)/increase in cash and cash equivalents for the period |
(6,472) |
18,720 |
|
Cash and cash equivalents at the beginning of the period |
69,691 |
24,286 |
|
Cash and cash equivalents at the end of the period |
63,219 |
43,006 |
Notes to the Condensed Consolidated Interim 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 condensed interim consolidated financial statements for the period from 1 July 2009 to 31 December 2009 were approved for issue by the Board of Directors on 25 March 2010.
2. Basis of preparation of condensed consolidated interim financial statements
These condensed consolidated interim financial statements for the period from 1 July 2009 to 31 December 2009 (the "period") have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" as issued by the International Accounting Standards Board (IASB). They do not include all of the information required in annual financial statements in accordance with International Financial Reporting Standards (IFRS). Accordingly, these reports are to be read in conjunction with the annual consolidated financial statements of the Group for the year ended 30 June 2009.
The revenue, cost of sales and a large proportion of expenses in the condensed consolidated interim statement of income results from the Group's operating subsidiaries.
The condensed consolidated interim financial statements are presented in United States Dollars (USD), and all values are rounded to the nearest thousand ('000) unless otherwise indicated.
3. Significant accounting policies
These condensed consolidated interim financial statements (the interim financial statements) have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 30 June 2009, except for the adoption of:
IAS 1 Presentation of Financial Statements (Revised 2007)
IFRS 8 Operating Segments
IFRS 3 Business Combinations (Revised 2008)
IAS 27 Consolidated and Separate Financial Statements (Revised 2008)
Amendment to IFRS 7 Financial Instruments: Disclosures: Improving disclosures about financial instruments
The adoption of IAS 1 (Revised 2007) makes certain changes to the format and titles of the primary financial statements and to the presentation of some items within these statements. It also gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged. However, some items that were recognised directly in equity are now recognised in the Statement of comprehensive income, for example revaluations of property, plant and equipment and exchange differences on translation of foreign operations. IAS 1 affects the presentation of changes in owners' equity and introduces a "Statement of comprehensive income".
As the changes in the requirements of IAS 1 only impact presentation aspects, there is no impact on the historic, current or future earnings per share ratio. IAS 1 (Revised 2007) requires an entity to present the statement of financial position for two comparative periods in the following situations: where the Group (i) applies an accounting policy retrospectively, (ii) makes a retrospective restatement of items in its financial statements, or (iii) reclassifies items in the financial statements. There have been no such circumstances during the period therefore the Group presents only one comparative period (30 June 2009) in the condensed interim consolidated statement of financial position.
The adoption of IFRS 8 has not affected the identified operating segments for the Group. However, reported segment results are now based on internal management reporting information that is regularly reviewed by the Investment Manager. In the previous annual and interim financial statements, segments were identified by reference to the way the Investment Manager manages and monitors the risks and returns of the Group. As the change in accounting policy only results in additional disclosures, there is no impact on the historic, current or future earnings per share ratio.
The adoption of IFRS 3 Business Combinations (Revised 2008) continues to apply the acquisition method to business combinations, with some significant changes. For example, all acquisition related costs are expensed in the period in which the costs are incurred rather than included in the cost of investment. There is a choice on an acquisition by acquisition basis to measure the non-controlling interest in the acquiree at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets. All payments to purchase a business are recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the statement of income. The Group have applied IFRS 3 (Revised 2008) prospectively to all business combinations from 1 July 2009.
The adoption of IAS27 (Revised 2008) introduces the changes in accounting for additional acquisition interests in subsidiaries and for the loss control of a subsidiary. Where the Group increases or decreases its interest in subsidiaries but there is no change in control, the effects of all transactions between the Group with non-controlling interests no longer result in goodwill or any gains or losses, but are recorded in equity. When control is lost, any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in the statement of income.
The revaluation surpluses of disposed subsidiaries previously recognised in equity are transferred directly to retained earnings when control is lost. The Group applied IAS 27 (Revised 2008) prospectively to transactions with non-controlling interests and disposals of subsidiaries from 1 July 2009.
The adoption of IFRS 7 (Revised 2007) requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy to be disclosed in the annual consolidated financial statements. As the change in accounting policy only results in additional disclosures, there is no impact on the historic, current or future earnings per share ratio.
The accounting policies have been applied consistently throughout the Group for the purposes of the preparation of these condensed interim consolidated financial statements.
4. Critical accounting estimates and judgements
When preparing the condensed interim consolidated financial statements, the Group undertakes a number of judgements, estimates and assumptions about the 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:
Fair value of investment properties, land and buildings
The investment properties, leasehold land and buildings held by subsidiaries and associates of the Group are stated at fair value in accordance with accounting policy 3.11 of the annual consolidated financial statements. The fair values of investment properties, leasehold land and buildings have been determined by independent professional valuers including: CB Richard Ellis, Savills, Jones Lang LaSalle, Colliers, Sallmanns and HVS. These valuations are based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results. Valuations are reviewed by the Valuation Committee and approved by the Board of Directors. Discount rates in the range from 13% to 16% are considered appropriate for properties in different locations. Where the Valuation Committee considers the discount rate applied by the independent valuers to be too low or if there are factors that the external independent valuers have not considered in their determination of a property's fair value, they will adjust the discount rate and other assumptions in the discounted cash flow projections, whereby decreasing the property's valuation. In making its judgement, the Valuation Committee considers information from a variety of sources, including:
(i) current prices in an active market for properties of different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect those differences;
(ii) recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices;
(iii) recent developments and changes in laws and regulations that might affect zoning and/or the Group's ability to exercise its rights in respect to properties and therefore fully realise the estimated values of such properties; and
(iv) discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of external evidence such as current market rents and sales prices for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.
Fair value of financial assets
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.
Impairment
Impairment of investment properties, leasehold land and buildings
Whenever there is an indication of impairment of an investment property, leasehold land and buildings, the Valuation Committee and Group's management will assess the need for an impairment adjustment. The estimation of impairment adjustments is based on the same principles used to adjust the periodic independent valuations as mentioned above.
In the process of reviewing for impairment the Group's management makes assumptions about future cash flows and discount rates associated with market risk and asset specific risk factors. The impairment assessment is an estimate and consequently the actual results achieved if the assets were disposed at the reporting date may differ to the current carrying value recorded by the Group.
5. Segment analysis
In identifying its operating segments, management generally follows the Group's investment portfolio and geographical segments. The investment portfolio segments are based on the Investment Manager's management and monitoring of investments and include capital markets (category by consumer staples construction, financial services, rubber and fertiliser, energy, minerals and petroleum, pharmaceuticals, post office and telecommunication), real estate (real estate and hospitality), private equity and cash (including cash and cash equivalents, bonds, and term deposits) sectors. The Group's geographical segments include Vietnam and the regions outside Vietnam.
These operating segments are managed and monitored individually by the Investment Manager. The adoption of IFRS 8 has not affected the identified operating segments for the Group compared to the recent annual consolidated financial statements but affects the presentation of the operating segments presented in the follow tables. Under IFRS 8, reported segments are based on internal management reporting information that is regularly reviewed by the Investment Manager, and is reconciled to Group profit or loss on the following page. 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, expenses are common to all segments therefore cannot be individually allocated. The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its condensed interim consolidated financial statements.
|
|
Six month period ended 31 December 2009 |
|||
|
|
Capital markets |
Real estate |
Private equity |
Total |
|
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
|
Vietnam |
|
|
|
|
|
Revenue |
- |
- |
6,281 |
6,281 |
|
Finance income |
7,170 |
- |
66 |
7,236 |
|
Share of profits/(losses) of associates |
- |
5,847 |
1,362 |
7,209 |
|
Other income |
60 |
- |
4 |
64 |
|
Net changes in fair value of financial assets at fair value through statement of income |
|
|
|
|
|
- Listed and unlisted securities |
93,601 |
- |
- |
93,601 |
|
- Corporate bonds |
597 |
- |
- |
597 |
|
Outside Vietnam |
|
|
|
|
|
Net changes in fair value of financial assets at fair value through statement of income |
|
|
|
|
|
- Listed securities |
3,414 |
- |
- |
3,414 |
|
Total |
104,842 |
5,847 |
7,713 |
118,402 |
|
Cost of sales |
|
|
|
(4,518) |
|
Selling, general and administration expenses |
|
|
|
(10,978) |
|
Other expenses |
|
|
|
(1,800) |
|
Finance costs |
|
|
|
(1,149) |
|
Profit/(loss) before tax |
|
|
|
99,957 |
|
Withholding taxes imposed on investment income |
|
|
|
(102) |
|
Net profit/(loss) for the period |
|
|
|
99,855 |
For the comparative period:
|
|
Six month period ended 31 December 2008 |
||||
|
|
Capital markets |
Real estate |
Private equity |
Total |
|
|
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
|
|
Segment financial information |
|
|
|
|
|
|
Vietnam |
|
|
|
|
|
|
Revenue |
- |
- |
5,714 |
5,714 |
|
|
Finance income |
15,008 |
116 |
110 |
15,234 |
|
|
Other income |
61 |
3,025 |
73 |
3,159 |
|
|
Share of profits/(losses) of associates |
- |
(13,120) |
171 |
(12,949) |
|
|
Net changes in fair value of financial assets at fair value through statement of income |
|
|
|
|
|
|
- Listed and unlisted securities |
(64,198) |
- |
- |
(64,198) |
|
|
- Corporate bonds |
(460) |
- |
- |
(460) |
|
|
Net gain from fair value adjustments of investment properties |
- |
2,938 |
- |
2,938 |
|
|
Total |
(49,589) |
(7,041) |
6,068 |
(50,562) |
|
|
Cost of sales |
|
|
|
(4,955) |
|
|
Selling, general and administration expenses |
|
|
|
(9,768) |
|
|
Other expenses |
|
|
|
(9,515) |
|
|
Finance costs |
|
|
|
(3,268) |
|
|
Profit/(loss) before tax |
|
|
|
(78,068) |
|
|
Withholding taxes imposed on investment income |
|
|
|
(69) |
|
|
Net profit/(loss) for the period |
|
|
|
(78,137) |
|
|
|
As at 31 December 2009 |
||||
|
|
Capital markets |
Real estate |
Private equity |
Cash, corporate bonds and short-term investments |
Total |
|
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
|
Total assets |
|
|
|
|
|
|
Vietnam |
|
|
|
|
|
|
Financial assets at fair value through statement of income |
|
|
|
|
|
|
- Consumer staples |
91,816 |
- |
- |
- |
91,816 |
|
- Construction |
51,627 |
- |
- |
- |
51,627 |
|
- Financial services |
84,296 |
- |
- |
- |
84,296 |
|
- Rubber and fertiliser |
29,505 |
- |
- |
- |
29,505 |
|
- Energy, minerals and petroleum |
23,736 |
- |
- |
- |
23,736 |
|
- Pharmaceuticals |
8,668 |
- |
- |
- |
8,668 |
|
- Post office and telecommunication |
2,681 |
- |
- |
- |
2,681 |
|
- Real estate |
81,830 |
- |
- |
- |
81,830 |
|
- Other securities |
38,287 |
- |
- |
- |
38,287 |
|
- Corporate bonds |
- |
- |
- |
4,673 |
4,673 |
|
Real estate and hospitality assets |
- |
235,133 |
27,510 |
- |
262,643 |
|
Cash and cash equivalents |
- |
- |
- |
50,656 |
50,656 |
|
Short-term investments |
- |
- |
- |
5,912 |
5,912 |
|
Other assets |
7,146 |
11,711 |
4,188 |
- |
23,045 |
|
Outside Vietnam |
|
|
|
|
|
|
Cash and cash equivalents |
- |
- |
- |
12,563 |
12,563 |
|
Financial assets at fair value through statement of income |
|
|
|
|
|
|
- Listed securities |
26,362 |
- |
- |
- |
26,362 |
|
|
445,954 |
246,844 |
31,698 |
73,804 |
798,300 |
In comparison with the last period end:
|
|
As at 30 June 2009 |
||||
|
|
Capital markets |
Real estate |
Private equity |
Cash, corporate bonds and short-term investments |
Total |
|
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
USD'000 |
|
Total assets |
|
|
|
|
|
|
Vietnam |
|
|
|
|
|
|
Financial assets at fair value through statement of income |
|
|
|
|
|
|
- Consumer staples |
50,954 |
- |
- |
- |
50,954 |
|
- Construction |
58,390 |
- |
- |
- |
58,390 |
|
- Financial services |
100,526 |
- |
- |
- |
100,526 |
|
- Rubber and fertiliser |
30,162 |
- |
- |
- |
30,162 |
|
- Energy, minerals and petroleum |
8,427 |
- |
- |
- |
8,427 |
|
- Pharmaceuticals |
4,551 |
- |
- |
- |
4,551 |
|
- Post office and telecommunication |
1,420 |
- |
- |
- |
1,420 |
|
- Real estate |
57,940 |
- |
- |
- |
57,940 |
|
- Other securities |
21,766 |
- |
- |
- |
21,766 |
|
- Corporate bonds |
- |
- |
- |
2,047 |
2,047 |
|
Real estate and hospitality assets |
- |
256,993 |
12,937 |
- |
269,930 |
|
Cash and cash equivalents |
- |
- |
- |
56,708 |
56,708 |
|
Short-term investments |
- |
- |
- |
452 |
452 |
|
Other assets |
6,277 |
15,547 |
3,737 |
- |
25,561 |
|
Outside Vietnam |
|
|
|
|
|
|
Cash and cash equivalents |
- |
- |
- |
12,983 |
12,983 |
|
Financial assets at fair value through statement of income |
|
|
|
|
|
|
- Listed securities |
16,206 |
- |
- |
- |
16,206 |
|
|
356,619 |
272,540 |
16,674 |
72,190 |
718,023 |
To determine the geographical segments for financial instruments the following rules have been applied:
· Capital markets (listed shares) − place of primary listing;
· Capital markets (unlisted shares) − place of incorporation of the issuer;
· Private equity − place of incorporation of the issuer;
· Real estate − location of property; and
· Cash, corporate bonds and short-term investments − place of deposit.
6. Investments in associates
|
|
31 December 2009 |
30 June 2009 |
|
|
USD'000 |
USD'000 |
|
Opening balance (1 July 2009/1 July 2008) |
148,435 |
175,885 |
|
Additions |
16,133 |
3,735 |
|
Share of associates' profits/(losses) |
7,209 |
(35,059) |
|
Share of associates' changes in revaluation reserves (Note 10) |
169 |
7,495 |
|
Classified as held for sale assets |
(2,543) |
(4,059) |
|
Reclassifications from shareholder loan receivables |
11,393 |
2,032 |
|
Dividends received |
(500) |
(1,400) |
|
Written-off on liquidation of associate |
(364) |
- |
|
Translation differences |
(61) |
(194) |
|
Closing balance |
179,871 |
148,435 |
Acquisition of associate interest in Hoan My Medical Corporation JSC
During the period, the Group acquired a 28.88% interest in Hoan My Medical Corporation JSC, a general medical group operating throughout Vietnam. The Group's share in the fair value of the acquired net assets was USD10.1 million which included an intangible asset in the form of a brand name valued at USD4.6 million.
Acquisition of further interest in Thang Loi Textile and Garment JSC
During the period, the Group acquired a further 19% interest in Thang Loi Textile & Garment JSC bringing its total interest to 49%. The consideration paid was approximately equal to the fair value of the share of net assets acquired.
Acquisition of associate interest in Phu Hoi City Company Limited (Licogi 16 project)
The Group had previously paid a deposit of USD3 million in respect of this project which was classified as a prepayment for acquisitions of investments at 30 June 2009. In addition to 7.5% interest in the project held by the Group through the investment licence, in September 2009, the Group acquired a further 10% interest from a local partner which resulted in the deposit of USD1.7 million being reclassified to represent part of the consideration of USD5.3 million. This brings the Group's total interest in the project is 17.5% at the reporting date. The Group has significant influence over this entity through their representation in the project's Board of Management, therefore it is accounted for as an associate.
7. Financial assets held at fair value through statement of income
|
|
31 December 2009 |
30 June 2009 |
|
|
USD'000 |
USD'000 |
|
Designated at fair value through statement of income: |
|
|
|
Financial assets in Vietnam |
|
|
|
Ordinary shares - listed |
319,201 |
177,037 |
|
Ordinary shares - unlisted |
93,245 |
157,099 |
|
Corporate bonds (*) |
4,673 |
2,047 |
|
Financial assets in countries other than Vietnam: |
|
|
|
Ordinary shares - listed (**) |
26,362 |
16,206 |
|
Total financial assets at fair value through statement of income |
443,481 |
352,389 |
(*) Corporate bonds included USD2 million bonds having a fixed interest rate of 9.6% and maturing in 2012 and USD2.7 million interest free convertible bonds.
(**) During the period, the Group purchased a further 8,492,839 ordinary shares of VinaLand Limited for USD6.7 million. As a result, the Group had a 4.65% interest in VinaLand Limited at 31 December 2009.
8. Share capital
|
|
31 December 2008 |
30 June 2008 |
||
|
|
Number of shares |
USD'000 |
Number of shares |
USD'000 |
|
Authorised: Ordinary shares of USD0.01 each |
500,000,000 |
5,000 |
500,000,000 |
5,000 |
|
|
|
|
|
|
|
Issued and fully paid: |
|
|
|
|
|
Opening balance |
324,610,259 |
3,246 |
324,610,259 |
3,246 |
|
Closing balance |
324,610,259 |
3,246 |
324,610,259 |
3,246 |
9. Additional paid-in capital
Additional paid-in capital represents the excess of consideration received over the par value of shares issued.
|
|
31 December 2009 |
30 June 2009 |
|
|
USD'000 |
USD'000 |
|
Opening balance |
722,064 |
722,064 |
|
Closing balance |
722,064 |
722,064 |
10. Revaluation reserve
|
|
31 December 2009 |
30 June 2009 |
|
|
USD'000 |
USD'000 |
|
Opening balance (1 July 2009/1 July 2008) |
25,958 |
18,463 |
|
Share of revaluation gains on associates' properties for the period/year |
169 |
7,495 |
|
Disposal of an associate |
(2,403) |
- |
|
Closing balance |
23,724 |
25,958 |
The Group's share of valuation gains resulting from the revaluation of associates' properties have been recorded directly in the Group's revaluation reserve under shareholders' equity.
11. Selling, general and administration expenses
|
|
Six month period ended |
|
|
|
31 December 2009 |
31 December 2008 |
|
|
USD'000 |
USD'000 |
|
|
|
(Reclassified) |
|
Management fees |
7,938 |
6,710 |
|
Professional fees |
1,507 |
723 |
|
Selling and general administration expenses (*) |
1,533 |
2,335 |
|
|
10,978 |
9,768 |
(*) The majority of these expenses relate to operating expenses of subsidiaries of the Group.
In the prior year, withholding taxes imposed on investment income of USD69,000 were classified within this cost category, however for comparison purpose with the current period, these have been reclassified within the condensed interim consolidated statement of comprehensive income and are now included in Note 14.
12. Net changes in fair value of financial assets at fair value through statement of income
|
|
Six month period ended |
|
|
|
31 December 2009 |
31 December 2008 |
|
|
USD'000 |
USD'000 |
|
Unrealised gain/(loss) in fair value of financial assets, net |
71,540 |
(71,974) |
|
Gains from realisation of financial assets during the year, net |
26,072 |
7,316 |
|
|
97,612 |
(64,658) |
13. Finance income and costs
|
|
Six month period ended |
|
|
31 December 2009 |
31 December 2008 |
|
|
|
USD'000 |
USD'000 |
|
Interest income |
1,121 |
5,849 |
|
Dividend income |
5,757 |
9,361 |
|
Realised gains on foreign currency exchange differences |
358 |
24 |
|
Finance income |
7,236 |
15,234 |
|
|
|
|
|
Realised losses on foreign currency exchange differences |
(971) |
(144) |
|
Loan interests |
- |
(1,735) |
|
Unrealised losses on foreign currency exchange differences |
(178) |
(1,389) |
|
Finance costs |
(1,149) |
(3,268) |
|
Net finance income |
6,087 |
11,966 |
14. Corporate income tax
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, however no provision for corporate income tax has been made for these Vietnamese subsidiaries of the Group for the period from 1 July 2009 to 31 December 2009 (period from 1 July 2008 to 31 December 2008: nil). All of the Vietnamese subsidiaries are in a position where there are no corporate income taxes payable because they either have incurred losses, or have recognized tax holidays, or have sufficient carry-forward tax losses to offset any taxable income.
The relationship between the expected income tax expense based on the applicable income tax rate (stated below) and the tax expense actually recognized in the consolidated statement of income can be reconciled as follows:
|
|
Six month period ended |
|
|
|
31 December 2009 |
31 December 2008 |
|
|
USD'000 |
USD'000 |
|
|
|
(Reclassified) |
|
Group profit/(loss) before tax |
99,957 |
(78,068) |
|
Group profit/(loss) multiplied by applicable tax rate (0%) |
- |
- |
|
Withholding taxes imposed on investment income |
(102) |
(69) |
|
Income tax on Vietnamese subsidiaries |
- |
- |
|
Tax expense |
(102) |
(69) |
15. Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit/(loss) attributable to equity shareholders of the Company from continuing and total operations by the weighted average number of ordinary shares in issue during the period.
|
|
Six month period ended |
|
|
|
31 December 2009 |
31 December 2008 |
|
Profit/(loss) attributable to equity shareholders of the Company from continuing and total operations (USD'000) |
99,253 |
(79,997) |
|
Weighted average number of ordinary shares in issue |
324,610,259 |
324,610,259 |
|
Basic earnings/(loss) per share from continuing and total operations (USD per share) |
0.31 |
(0.25) |
(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 ordinary shareholders of the Company by the weighted average number of outstanding ordinary shares in issue as at the reporting date. Net asset value is determined as total assets less total liabilities and non-controlling interests.
|
|
As at 31 December 2009 |
As at 30 June 2009 |
|
Net asset value attributable to equity shareholders of the Company (USD'000) |
780,315 |
681,912 |
|
Weighted average number of ordinary shares in issue |
324,610,259 |
324,610,259 |
|
Net asset value per share (USD/share) |
2.40 |
2.10 |
16. Seasonality
The Group's management believes that the impact of seasonality on the condensed financial information is not material.
17. Contingent liabilities
Taxation
Although the Company and a majority of its subsidiaries are incorporated in the Cayman Islands and the British Virgin Islands where they are exempt from tax, the Group's activities are primarily focused on Vietnam. In accordance with the prevailing tax regulations in Vietnam, if an entity was treated as having a permanent establishment, or as otherwise being engaged in a trade or business in Vietnam, income attributable to or effectively connected with such permanent establishment or trade or business may be subject to tax in Vietnam. As at the date of this report the following information is uncertain:
· Whether the Company and/or its subsidiaries are considered as having permanent establishments in Vietnam; and
· The amount of tax that may be payable, if the income is subject to tax.
The implementation and enforcement of tax regulations in Vietnam can vary depending on numerous factors, such as the interpretation of the tax rules by the specific tax authority involved. The administration of laws and regulations by the local or provincial tax departments may be subject to considerable discretion. The Directors believe that it is unlikely that the Company and/or the subsidiaries incorporated in the Cayman Islands and the British Virgin Islands will be exposed to tax liabilities in Vietnam.
As at 31 December 2009, due to the uncertainties mentioned above, except for the withholding taxes imposed on investment income as disclosed in Note 14, no liability in relation to corporate income taxation has been recognized in the interim financial information.
18. Commitments
The Group has a broad range of commitments under investment licences it has received for the real estate projects jointly invested with VinaLand Limited, a related party under common management, and other agreements it has entered into, to acquire and develop, or make additional investments in investment properties and leasehold land in Vietnam. Further investments in any of these arrangements are at the Group's discretion.
19. Subsequent events after the reporting date
Subsequent to the reporting date, the Group purchased 6,711,858 ordinary shares of Vietnam Infrastructure Limited, a related party under common management, for USD2.5 million which represents a 1.67% holding in Vietnam Infrastructure Limited.
This information is provided by RNS
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