TIDMVOF
31 March 2016
VinaCapital Vietnam Opportunity Fund Limited
Interim results for the six months ended 31 December 2015
VinaCapital Vietnam Opportunity Fund Limited (the "Company" or "VOF"), an
investment company focused on Vietnam, today announces its interim results for
the six months ended 31 December 2015 ("the Period").
Financial highlights:
1 Net Asset Value ("NAV") of USD710.5 million (30 June 2015:
USD718.7 million)
2 NAV per share of USD3.31 (30 June 2015: USD3.27).
Operational highlights:
3 The Company held an Extraordinary General Meeting on 27 October
2015, where shareholders voted to allow VOF to migrate from the Cayman Islands
to Guernsey, a move that would ultimately allow the Company to change its
listing from the Alternative Investment Market to the Main
Market of the London Stock Exchange. The Company began trading on the Main
Market on 30 March 2016.
4 In December 2015 VOF announced the appointment of a new fund
administrator, Northern Trust Corporation. The Company is now administered from
Northern Trust's Guernsey office.
Enquiries:
Jeremy Greenberg
VinaCapital Investment Management Limited
Investor Relations
+84 8 3821 9930
jeremy.greenberg@vinacapital.com
Joel Weiden
VinaCapital Investment Management Limited
Communications
+84 8 3821 9930
joel.weiden@vinacapital.com
Franczeska Hanford / Martin Bourgaize
Northern Trust International Fund Administration Services (Guernsey) Limited
Company Secretary
+44 (0)1481 745918 / +44 (0)1481 745819
fk26@ntrs.com / meb16@ntrs.com
David Benda / Hugh Jonathan
Numis Securities Limited, Broker
+44 (0)20 7260 1000
funds@numis.com
Daniel Jason
Peregrine Communications, Public Relations (London)
+44 (0) 20 3040 0872
daniel.jason@peregrinecommunications.com
Chairman's Statement
It has been a busy six months for your Company, despite very little movement in
the Net Asset Value (NAV) per share. In this half year report, I will comment
on each sub section of the portfolio, update you on our migration process and
touch on governance.
During the first six months of the 2016 Fiscal Year, which covers the period
from 1st July 2015 to 31 December 2015, the NAV per share of VinaCapital
Vietnam Opportunity Fund (the "Company" or "VOF") increased by 1.2%, which
compares with a decline in the Vietnam Stock Index of 5.3% in USD terms.
Turning first to the portfolio:
Portfolio Review
Listed Stocks - 49.2% of assets, compared with 52.4% at 30th June 2015
This, the largest component of the portfolio, fell by 0.4% over the period,
significantly outperforming the market. As has been the case for a while, the
weakest sectors in the market have been oil and gas, and banking, in which the
portfolio is significantly underweight. By contrast, the largest position,
Vinamilk, which represents 15% of the overall portfolio and around 30% of the
listed assets, rose by 35% during the period and was by some margin the largest
contributor to return. The position was reduced somewhat at a premium of 17% to
the quoted price, partly because of the unusually large premium at that time,
but also for reasons of prudence given the scale of the holding. The Manager
remains of the view that Vinamilk is one of Vietnam's most attractive
businesses, with an ability to continue growing profits at a rate in the
mid-teens. It currently sells at approximately 16 times this year's earnings
forecast, as compared to an overall market multiple that is closer to 12 times.
During the half year, the portfolio became more concentrated, with the number
of holdings having been reduced from 22 to 19 stocks, a process which is
consistent with the Manager's approach of investing large stakes in attractive
companies and then engaging constructively to improve returns.
OTC Stocks - 6.1% of assets, compared with 4.9% at 30th June 2015
This category covers holdings which are going through the privatisation process
and which are en route to a stock market listing. The Manager would like to
deploy more capital in this area as it has been the source of some very
successful investments for the portfolio in the past, but their ability to do
so depends in large part on the rate at which companies are 'equitised', as the
process is known, the quality and prospects of those companies, as well as the
valuation at which these transactions occur. During the period, an investment
of USD10.5 million was made into the Airports Corporation of Vietnam,
effectively the monopoly airport operator. Other significant OTC holdings
include QNS, a food and drinks business and Vietnam's leading soy milk
producer, representing around 2% of net assets, and Vinatex, a leading textile
and garment producer, which makes up just over 1% of net assets. The pace of
equitisation continues to be slow, but several large transactions are expected
during 2016. Whether or not the Manager participates in any of these will
depend largely on valuation.
Private Equity - 11.2% of assets, compared with 11.3% at 30th June 2015
The largest position in this part of the portfolio is International Dairy
Products (IDP), a dairy business which is growing sales rapidly. The company is
in the second year of implementing a new marketing and product strategy, and
the Manager is optimistic that the current modest profits will follow sales
upwards.
During the half year, the Manager made a new investment in a convertible
preferred security in Novaland, one of the country's leading residential real
estate developers, which intends to list within the next couple of years. Since
the end of December, we have made progress with two new investments, one in a
large hospital south of Ho Chi Minh City, and the other in a leading
manufacturer and distributor of wood-based decorative panels. The hospital
investment was completed in March and we expect to complete the other by the
end of April.
The Manager has a pipeline of interesting new possibilities and hopes to invest
more capital in this part of the portfolio.
Direct Real Estate - 14.2% of assets, compared with 13.8% at 30th June 2015
As has been the case for the last three years, our strategy has been to reduce
the weighting of the portfolio in this area by selling assets. In this
endeavour, we have not been particularly successful. The reason for wishing to
reduce these direct property holdings is that we do not consider ourselves to
be property developers, but rather investors. It would be quite natural for a
fund such as VOF to have significant exposure to the real estate market in
Vietnam, but our approach is to reorient the portfolio away from direct
holdings towards listed equities and specific opportunities such as the
investment in Novaland.
Most of VOF's direct real estate assets are held in joint ventures with
VinaLand, another company managed by the Manager, and this company is in the
throes of a realisation process which should help us to achieve a significant
reduction in our property exposure by the end of 2016. Progress is slow,
however. Some assets are not in a shape or format to allow a quick sale and
where sales have been agreed, completing transactions in the Vietnamese real
estate market is bureaucratic and long-winded. At the time of writing, your
Board has been informed that it is likely that certain significant sales are
imminent, but no assurances can be given, despite a clear recovery in prices in
the property market. VOF will benefit from sales of any assets held through
joint ventures as well as through its holding in VinaLand. There were no
significant valuation changes in this part of the portfolio during the period
under review.
Operating Assets - 10.3% of assets, compared with 11.4% at 30th June 2015
The bulk of this part of the portfolio is represented by the 50% stake in the
Sofitel Metropole Hotel in Hanoi. This asset is operating slightly behind
budget, but more or less in line with last year. Increasing competition from 5
star hotels in the Hanoi market has had a marginally negative effect on
occupancy and room rates, but the asset remains solidly profitable. The Manager
expects a dividend of USD7.3 million during the current year which is in line
with prior year dividends received. As has been the case for a long time, the
Manager is happy to entertain offers for the hotel but, despite having received
several such expressions of interest, a sale on acceptable terms remains
elusive.
Migration & Listing
As you will no doubt be aware, VOF has shareholder approval to redomicile from
the Cayman Islands to Guernsey and more or less simultaneously shift its stock
market listing from AIM to the Premium section of the London Stock Exchange. We
had hoped to have this complete by the end of 2015, but ran into some problems
sourcing some of the information required by the Guernsey regulator. These
issues are now resolved and the process was completed on 30th March, just
before this report was issued. I would like to apologise to shareholders on
behalf of the Board for the delays, which were unforeseen. I remain optimistic
that the completion of this process will improve the breadth and depth of our
shareholder register, which, when combined with an active investor
communication plan to be implemented by the Manager, will help to reduce the
discount to NAV which remains stubbornly and annoyingly wide.
Governance
As I mentioned in the annual report, there was a difference of opinion between
the Manager and the Board on the methodology for the calculation of the
performance fee. The immediate issue was settled ahead of the release of the
2015 annual results, but in order to ensure that there is no recurrence, a
redraft of certain sections the Investment Management Agreement (IMA) is
needed. As yet, this is work in progress and we are taking advantage of the
process to review the IMA to align it with the standards expected of a premium
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listed Company. These will be very much in shareholders' interests. We are
advised that no vote is required on the matter, but I will write a letter to
you to explain the changes which we are implementing as and when agreed.
As mentioned earlier, the discount remains a bone of contention both for the
Board and for shareholders. Share buybacks alone appear not to be able to fix
the problem. Our approach instead now combines several elements:
· Migration and relisting, which we expect to lead to inclusion in the
FTSE All Share Index and perhaps further improve liquidity
· A more extensive investor relations programme
· A reduction in the Direct Real Estate holdings
· A larger weighting to OTC and private equity opportunities
· Continuing share buybacks
The next six months will be important in determining whether this strategy can
deliver a narrower discount to NAV but, if it cannot, further measures will
have to be considered.
Outlook
The first couple of months of 2016 have laid bare investor nervousness about
the outlook for markets globally. Concern over commodity prices, the pace of
economic growth in China, and a potential slowdown in the developed world have
weighed heavily and volatility has spiked. In reality, nothing much has
changed: the developed world remains mired in sluggish growth with very low or
negative interest rates likely to persist, while China makes faltering steps to
reorient its huge economy to consumption activity. In this environment,
economic growth is scarce, and those investment opportunities which do not have
to stretch to achieve such growth should hold attractions for investors. In
Vietnam, that growth is visible. The country is not without its problems, most
obviously in the banking sector where non-performing loan issues are only
partly resolved and in the inherent uncertainty which surrounds the change of
political leadership. Nevertheless, with the passage of the Trans-Pacific
Partnership and other free trade agreements likely to facilitate trade, falling
inflation and attractive labour market dynamics, all of which should support
the continuing relocation of supply chains within Asia, Vietnam looks set to
grow faster than many of its neighbours and emerging markets in general.
Steven Bates
Chairman
VinaCapital Vietnam Opportunity Fund
31 March 2016
CONDENSED INTERIM BALANCE SHEET
31 December 2015 30 June 2015
Notes USD'000 USD'000
Unaudited Audited
ASSETS
Cash and cash equivalents 6 349 906
Short-term receivables from related 22 196 382
parties
Trade and other receivables 7 11,081 4,697
Financial assets at fair value through 9 699,016 712,567
profit or loss
Prepayments for acquisitions of investment 10 5,115 5,192
properties
------ ------
Total assets 715,757 723,744
------ ------
EQUITY AND LIABILITIES
EQUITY
Share capital 11 2,145 3,246
Additional paid-in capital 12 496,511 722,064
Treasury shares 13 - (213,283)
Retained earnings 211,869 206,637
------ ------
Total equity 710,525 718,664
------ ------
LIABILITIES
Payables to related parties 14 4,555 5,036
Accruals and other payables 677 44
------ ------
Total liabilities 5,232 5,080
------ ------
Total equity and liabilities 715,757 723,744
------ ------
Net asset value, USD per share 19(c) 3.31 3.27
----- -----
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
Treasury Retained Total
Share Additional shares earnings equity
capital paid-in
capital
USD'000 USD'000 USD'000 USD'000 USD'000
3,246 722,064 212,009
Balance at 1 July 2014 (165,939) 771,380
Profit for the six-month - - 1,462 1,462
period to -
31 December 2014
----- ------- ------- ------ ------
Total comprehensive - - - 1,462 1,462
income
Transactions with owners
Ordinary shares - - (30,592) - (30,592)
repurchased
----- ------- ------- ------- -------
3,246 722,064 (196,531) 213,471 742,250
Balance at 31 December ----- ------- ------- ------- -------
2014
Balance at 1 July 2015 3,246 722,064 (213,283) 206,637 718,664
Profit for the six-month - - 5,232 5,232
period to -
31 December 2015
Total comprehensive ----- ------- ------- ------ ------
income - - - 5,232 5,232
Transactions with owners
Ordinary shares - - (13,371) - (13,371)
repurchased
Ordinary shares cancelled (1,101) (225,553) 226,654 - -
----- ------- ------- ------- ------
Balance at 31 December 2,145 496,511 - 211,869 710,525
2015 ----- ------- ------- ------- ------
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME
Six months ended
31 December 31
2015 December
2014
Notes USD'000 USD'000
Unaudited Unaudited
Dividend income (*) 15 25,733 46,242
Net losses on financial assets at fair value 16 (13,551) (29,146)
through profit or loss (**)
General and administration expenses 17 (7,069) (15,634)
Other income 196 -
Impairment losses (77) -
----- -----
Operating profit 5,232 1,462
----- -----
Profit before tax 18 5,232 1,462
Corporate income tax 18 - -
----- -----
Profit for the period 5,232 1,462
---- ----
Earnings per share 19(a),(b) 0.01
- basic and diluted (USD per share) 0.02 ----
----
----- -----
Total comprehensive income for the period 5,232 1,462
---- ----
Six months ended
31 December 31 December
2015 2014
USD'000 USD'000
(*) Dividend income includes:
- Dividend income from a subsidiary used to pay 13,371 30,592
for the Company's ordinary share repurchases
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(Note 15)
- Dividend income from a subsidiary used to pay 12,362 15,650
for the Company's operating expenses (Note 15)
----- -----
25,733 46,242
----- -----
Six months ended
31 December 31 December
2015 2014
USD'000 USD'000
(**) Net losses on financial assets at fair
value through profit or loss include:
- Reduction in fair value of a subsidiary due to (13,371) (30,592)
payments for ordinary share repurchases on the
Company's behalf (Note 15)
- Reduction in fair value of a subsidiary due to (12,362) (15,650)
payment for the Company's operating expenses
(Note 15)
----- -----
(25,733) (46,242)
----- -----
CONDENSED INTERIM STATEMENT OF CASH FLOWS
Six months ended
31 31 December
December 2014
2015
USD'000 USD'000
Unaudited Unaudited
Notes
Operating activities
Profit before tax 5,232 1,462
Adjustments for:
Dividend income (25,733) (46,242)
Impairment losses 77 -
----- -----
(20,424) (44,780)
Change in financial assets at fair value through 13,551 29,146
profit or loss
Change in trade receivables and other assets (6,198) 234
Change in trade payables and other liabilities 152 (621)
Dividends received 12,362 15,650
Net cash inflows from operating activities ----- -----
19,867 44,409
----- -----
Net change in cash and cash equivalents for the (557) (371)
period
Cash and cash equivalents at the beginning of the 6 906 1,311
period
Cash and cash equivalents at the end of the ----- -----
period 6 349 940
----- -----
The condensed interim statement of cash flows does not include payments made
for ordinary share repurchases of USD13.4 million (period ended 31 December
2014: USD30.6 million) because these payments were made by a subsidiary of the
Company.
1 GENERAL INFORMATION
VinaCapital Vietnam Opportunity Fund Limited (the "Company") is a non-cellular
company with limited liability incorporated in Guernsey. The registered office
of the Company is PO Box 255, Trafalgar Court, Les Banques, St Peter Port,
Guernsey, GY1 3QL. The Company's principal activity is to achieve medium to
long-term returns through investment in assets either in Vietnam or in
companies with a substantial majority of their assets, operations, revenues or
income in, or derived from, Vietnam. The Company is quoted on the London Stock
Exchange's Main Market 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 special resolutions in 2008 and 2013, each of which was not passed.
This has allowed the Company to continue. The next special resolution on the
continuation of the Company will be held no later than 2018.
The condensed interim financial statements for the six-month period ended 31
December 2015 were approved for issue by the Board on 31 March 2016.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
These condensed interim financial statements for the six-month period ended 31
December 2015 have been prepared in accordance with International Accounting
Standard 34, "Interim Financial Reporting" as issued by the International
Accounting Standards Board ("IASB"). They do not include all of the information
required in the annual financial statements which are prepared in accordance
with International Financial Reporting Standards ("IFRS"). Accordingly, these
financial statements are to be read in conjunction with the annual financial
statements of the Company for the year ended 30 June 2015.
2.2 Accounting policies
These condensed interim financial statements (the "interim financial
statements") have been prepared in accordance with the accounting policies,
methods of computation and presentation adopted in the latest financial
statements for the year ended 30 June 2015.
2.3 Subsidiaries and associates
As a result of the adoption, in the year ended 30 June 2015, of the amendments
to IFRS 10, "Consolidated financial statements" ("IFRS 10") and the fair value
option under IAS 28, "Investments in associates and joint ventures" ("IAS 28"),
the Company accounts for its investments in subsidiaries and associates as
financial assets at fair value through profit and loss.
The fair values of a selection of investments in subsidiaries and associates
are assessed such that the fair values of all investments in subsidiaries and
associates are assessed at least once each financial year. The fair values of
the majority of these investments are estimated by a qualified independent
professional services firm, KPMG Limited ("KPMG"). The valuations are prepared
by KPMG using a number of approaches such as adjusted net asset valuations,
discounted cash flows, income-related multiples and price-to-book ratios. These
estimated fair values are used by the Company's Audit and Valuation Committee
("AVC") as the primary basis for estimating each subsidiary's or associate's
fair value.
For interim reporting purposes, the
Board, having taken independent advice, estimated the fair value of the
majority of the Company's subsidiaries and associates which invest in real
estate and private equity by considering the impact of any significant changes
in property valuations, investees' performance and the major assumptions used
in the most recent adopted valuations. The Board, again having taken
independent advice, also determined the valuations of those subsidiaries which
hold investments in listed and unlisted securities based on published closing
prices and broker quotes.
Any gains or losses arising from a change in the fair value of investments in
subsidiaries and associates are recognised in the condensed interim statement
of comprehensive income.
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
When preparing the condensed interim financial statements, the Company relies
on a number of judgements, estimates and assumptions about recognition and
measurement of assets, liabilities, income and expenses. Actual results may
differ from the judgements, estimates and assumptions.
Information about significant judgements, estimates and assumptions which have
the greatest effect on the recognition and measurement of assets, liabilities,
income and expenses were the same as those that applied to the last annual
financial statements for the year ended 30 June 2015.
3.1 Eligibility to qualify as an investment entity
The Board has determined that it continues to be an investment entity under the
definition in IFRS 10 as it meets the following criteria:
(a) the Company has obtained funds from investors for the purpose of providing
those investors with investment management services;
(b) the Company's business purpose is to invest funds solely for returns from
capital appreciation, investment income or both; and
(c) the performance of investments made by the Company are substantially
measured and evaluated on a fair value basis.
The Company also meets the typical characteristics of an investment entity:
· it holds more than one investment;
· it has more than one investor;
· it has investors that are not its related parties; and
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· it has ownership interests in the form of equity or similar interests.
As a consequence, the Company does not consolidate its subsidiaries and
accounts for them at fair value through profit or loss.
3.2 Fair value of subsidiaries and associates and their underlying
investments
As at 31 December 2015, 100% (30 June 2015: 100%) of the financial assets at
fair value through profit and loss relate to the Company's investments in
subsidiaries and associates that have been fair valued in accordance with the
policies set out above. The Company has investments in a number of subsidiaries
and associates which were established to hold underlying investments. The
shares of the subsidiaries and associates are not publicly traded; return of
capital to the Company can only be made by divesting the subsidiaries and
associates or the underlying investments held by the subsidiaries and
associates. As a result, the carrying values of subsidiaries and associates may
not be indicative of the value ultimately realised on divestment.
The underlying investments include listed and unlisted securities, private
equity and real estate assets. Where an active market exists (for example, for
listed securities), the fair value of the subsidiary or associate reflects the
asset value of the underlying holdings. Where no active market exists,
valuation techniques are used.
As at 31 December 2015 and 30 June 2015, the Company classifies its investments
in subsidiaries and associates as Level 3 within the fair value hierarchy,
because they are held by subsidiaries and associates which are not publicly
traded, even when the underlying assets are readily realisable.
The fair value of the investments in subsidiaries and associates is primarily
based on their net asset values. The estimated fair values provided by KPMG and
/or the Investment Manager are used by the AVC as the primary basis for
estimating each investment's fair value for recommendation to the Board.
Information about the significant judgements, estimates and assumptions that
are used in the valuation of these investments is discussed below.
(a) Valuation of assets that are traded in an active market
The fair values of listed securities are based on quoted market prices at the
close of trading on the reporting date. For unlisted securities which are
traded in an active market, fair value is the average of the quoted prices at
the close of trading obtained from a minimum sample of three reputable
securities companies at the reporting date. Other relevant measurement bases
are used if broker quotes are not available or if better and more reliable
information is available.
(b) Valuation of assets that are not traded in an active market
The fair values of assets that are not traded in an active market (for example,
private equity and real estate where market prices are not readily available)
are determined by using valuation techniques. KPMG and/or the Investment
Manager uses its judgement to select a variety of methods and makes assumptions
that are mainly based on market conditions existing at each reporting date.
Independent valuations are also obtained from appropriately qualified
independent valuation firms. The valuations may vary from the actual prices
that would be achieved in an arm's length transaction at the reporting date.
Valuation of investments in private equity
The Company's private equity holdings are fair valued using the discounted cash
flow and market comparison methods. The projected future cash flows are driven
by management's business strategies and goals and its assumptions of growth in
gross domestic product ("GDP"), market demand, inflation, etc. KPMG and/or the
Investment Manager uses discount rates that reflect the uncertainty of the
amount and timing of the cash flows.
Depending on the development stage of a business and its associated risks, KPMG
uses discount rates ranging from 18% to 30% and terminal growth rates of 3% to
6% (30 June 2015: 25% to 30% and 5% to 6%, respectively). As at 31 December
2015 and 30 June 2015, if the discount rates had been higher/lower, the fair
value of the Company's private equity investments would have declined/risen. If
the terminal growth rates had been higher/lower, these investments' fair value
would have increased/decreased.
Valuation of real estate and hospitality investments
A number of the Company's real estate investments are co-invested with VinaLand
Limited ("VNL"), another fund managed by the Investment Manager. In most cases,
VNL holds a controlling stake in the joint venture companies and therefore
exerts control over the investments. There are no shareholder agreements in
place for these investments but as both funds are managed by the same
Investment Manager, the funds' investment objectives for each property are
similar. However, given that VNL has an investment objective of disposing of a
significant portion of its portfolio, the Company could potentially be put in a
position where sales may be triggered earlier than ideally desired. The Board
would expect the Company to fully participate in any sales of jointly held
investments and under normal circumstances is not prepared to assume the
development risk that would result from continuing to hold an investment which
VNL is selling.
The estimated values of underlying real estate properties are based
on valuations by qualified independent professional valuers including Coldwell
Banker Richard Ellis, Savills, Jones Lang LaSalle, Cushman & Wakefield and HVS.
These valuations are based on certain assumptions which are subject to
uncertainty and might materially differ from the actual results of a sale. The
estimated fair values provided by the independent professional real estate
appraisers are used by KPMG and/or the Investment Manager as the primary basis
for estimating fair value of the Company's subsidiaries and associates that
hold these properties in accordance with accounting policies set out in section
2.3 above.
In conjunction with making its judgement for the fair value of the Company's
underlying real estate and hospitality investments, KPMG and/or the Investment
Manager considers information from a variety of sources including:
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 Company's ability to exercise its rights in respect to
properties and therefore fully realise the estimated values of such properties;
d. discounted cash flow projections based on estimates of future cash flows,
derived from the terms of external evidence such as current market rents,
occupancy and room rate, and sales prices for similar properties in the same
location and condition, and using discount rates that reflect current market
assessments of the uncertainty in the amount and timing of the cash flows; and
e. recent compensation prices made public by the local authority at the
province where the property is located.
As at 31 December 2015, the discount rates used ranged from 15% to 21.5% (30
June 2015: 15% to 21.5%). At the year end, if the discount rates had been
higher/lower, the fair value of the Company's underlying real estate and
hospitality investment would have been decreased/increased.
The average occupancy and room rate used in the discounted cash flow projection
for the Company's hospitality investment are 69% and USD235 (30 June 2015: 69%
and USD235, respectively). At 31 December 2015, if the average occupancy and
room rate had been higher/lower, the fair value of the Company's underlying
hospitality investment would have risen/declined.
4 SEGMENT ANALYSIS
In identifying its operating segments, the Investment Manager follows the
subsidiaries' sectors of investment which are based on internal management
reporting information. The operating segments by investment portfolio include
capital markets, real estate and hospitality, private equity and cash
(including cash and cash equivalents, bonds, and short-term deposits) sectors.
Each of the operating segments are 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 underlying investment assets of the subsidiaries.
Expenses and liabilities which are common to all segments are allocated based
on each segment's share of total assets. 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:
Statement of Comprehensive Income
Capital Real Private
markets estate and equity Total
hospitality
USD'000 USD'000 USD'000 USD'000
Six months ended 31 December 2015
Dividend income 25,733 - - 25,733
Net (losses)/gains on fair value of (17,518) 4,144 (177) (13,551)
financial assets at fair value
through profit or loss
General and administration expenses (4,974) (1,658) (437) (7,069)
Other income 196 - - 196
Impairment loss - (77) - (77)
----- ----- ---- -----
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Profit before tax 3,437 2,409 (614) 5,232
----- ----- ---- -----
Six months ended 31 December 2014
Dividend income 46,242 - - 46,242
Net (losses)/gains on financial (34,839) (289) 5,982 (29,146)
assets at fair value through
profit or loss
General and administration (13,629) (1,580) (425) (15,634)
expenses
----- ----- ----- -----
Profit before tax (2,226) (1,869) 5,557 1,462
---- ---- ---- -----
Balance Sheet
Assets
Capital Real
markets estate and Private Cash Total
hospitality equity
USD'000 USD'000 USD'000 USD'000 USD'000
As at 31 December 2015
Cash and cash - - - 349 349
equivalents
Short-term receivables 196 - - - 196
from related parties
Trade and other 4,697 6,384 - - 11,081
receivables
Financial assets at 465,914 182,023 51,079 - 699,016
fair value through
profit or loss
Prepayments for 5,115 - 5,115
acquisitions of - -
investment properties
------ ------ ----- ----- ------
Total assets 470,807 193,522 51,079 349 715,757
------ ------ ----- ----- ------
Payables to related 4,254 238 63 - 4,555
parties
Accruals and other 472 162 43 - 677
payables
------ ------ ----- ----- ------
Total liabilities 4,726 400 106 - 5,232
------ ------ ----- ----- ------
Net asset value 466,081 193,122 50,973 349 710,525
------ ------ ----- ----- ------
As at 30 June 2015
Cash and cash - - - 906 906
equivalents
Short-term receivables 382 - - - 382
from related parties
Trade and other 4,697 - - - 4,697
receivables
Financial assets at 476,054 185,257 51,256 - 712,567
fair value through
profit or loss
Prepayments for - 5,192 - 5,192
acquisitions of -
investment properties
------ ------ ----- ----- ------
Total assets 481,133 190,449 51,256 906 723,744
------ ------ ----- ----- ------
Payables to related 4,580 456 - - 5,036
parties
Other payables 44 - - - 44
------ ------ ----- ----- ------
Total liabilities 4,624 456 - - 5,080
------ ------ ----- ----- ------
Net asset value 476,509 189,993 51,256 906 718,664
------ ------ ----- ----- ------
5 INTERESTS IN SUBSIDIARIES AND ASSOCIATES
5.1 Subsidiaries
The Company had the following significant subsidiaries as at 31 December 2015
and 30 June 2015:
As at
31.12.2015 30.6.2015
Country of % of % of Nature of the business
incorporation Company Company
Name interest interest
Vietnam Investment Property BVI 100 100
Holding Limited Holding company for listed,
unlisted securities and real
estate
Vietnam Investment Property BVI 100 100 Holding company for listed,
Limited and unlisted securities
Vietnam Ventures Limited BVI 100 100 Holding company for listed,
unlisted securities and real
estate
Vietnam Investments Limited BVI 100 100 Holding company for listed,
unlisted securities and real
estate
Asia Value Investment BVI 100 100 Holding company for listed,
Limited and unlisted securities
Vietnam Master Holding 2 BVI 100 100 Holding company for listed
Limited securities
VOF Investment Limited BVI 100 100 Holding company for listed,
unlisted securities and real
estate
VOF PE Holding 5 Limited BVI 100 100 Holding company for listed
securities
Visaka Holding Limited BVI 100 100 Holding company for treasury
shares
Portal Global Limited BVI 100 100 Holding company for listed
securities
Winstar Resources Limited BVI 100 100 Holding company for listed
securities
Indotel Limited Singapore 100 100 Holding company for hospitality
AllwealthWorldwide Limited Singapore 100 100 Holding company for private
equity
Fraser Investment Pte. Singapore 100 100 Holding company for listed
Limited securities
SE Asia Master Holding 7 Pte Singapore 100 100 Holding company for private
Limited equity
Alright Assets Limited Singapore 100 100 Holding company for real estate
VTC Espero Limited Singapore 100 100 Holding company for real estate
Howard Holdings Pte Limited Singapore 80.6 80.6 Holding company for private
equity
Indochina Ceramic Singapore Singapore 100 100 Holding company for private
Pte Limited equity
American Home Vietnam Co., Vietnam 100 100 Ceramic tiles
Limited
Yen Viet Joint Stock Company Vietnam 65 65 Birdnest products
International Dairy Products Vietnam 56 56 Dairy products
Joint Stock Company ("IDP")
---- ----
There is no legal restriction on the transfer of funds from the BVI or
Singapore subsidiaries to the Company. Cash held in Vietnamese subsidiaries is
subject to restrictions imposed by co-investors and the Vietnamese government
and therefore cannot be transferred out of Vietnam unless such restrictions are
satisfied.
5.2 Associates
As at
31.12.2015 30.6.2015
Name Country of % of % of Nature of the
incorporation Company Company business
interest interest
Pacific Alliance Land BVI 25 25 Holding company for
Limited
VinaSquare project
Sunbird Group Limited BVI 25 25 Holding company for
Pham Hung project
VinaCapital Danang Resorts BVI 25 25 Holding company for
Limited
Danang Resorts project
Vietnam Property Holdings BVI 25 25 Holding company for
Limited
Danang Golf project
Prosper Big Investment BVI 25 25 Holding company for
Limited
Century 21 project
VinaCapital Commercial Singapore 12.75 12.75 Holding company for
Center
Private Limited Capital Square phase 1
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Mega Assets Pte. Limited Singapore 25 25 Holding company for
Capital Square phase 2
SIH Real Estate Pte. Singapore 25 25 Holding company for
Limited
Capital Square phase 3
VinaLand Eastern Limited Singapore 25 25 Holding company for
Phu Hoi City project
---- ----
The Company's real estate associates have commitments under investment
certificates which they have received for real estate projects jointly invested
with VNL (refer to Note 23).
5.3 Financial risks
The Company owns a number of subsidiaries for the purpose of holding
investments in listed and unlisted securities, debt instruments, private equity
and real estate. The Company, via these underlying investments, is subject to
financial risks which are further disclosed in Note 24. The Investment Manager
makes investment decisions after performing extensive due diligence on the
underlying investments, their strategies, financial structure and the overall
quality of management.
6 CASH AND CASH EQUIVALENTS
31 December 30 June
2015 2015
USD'000 USD'000
Cash in banks 349 906
----- -----
As at the balance sheet date, cash and cash equivalents are denominated in US
dollars ("USD"). Please refer to Note 9 for the balance of cash and cash
equivalents held at the Company's subsidiaries.
7 TRADE AND OTHER RECEIVABLES
31 December 30
2015 June 2015
USD'000 USD'000
Receivables from disposal of investments 11,081 4,697
----- -----
8 FINANCIAL INSTRUMENTS BY CATEGORY
Financial
assets at fair
Loans and value through
receivables profit or loss Total
USD'000 USD'000 USD'000
As at 31 December 2015
Cash and cash equivalents 349 - 349
Short-term receivables from 196 - 196
related parties
Trade and other receivables 11,081 - 11,081
Financial assets at fair value 699,016
through profit or loss - 699,016
------ ------- -------
Total 11,626 699,016 710,642
----- ------ ------
Financial assets denominated in:
- USD 11,626 699,016 710,642
----- ------ ------
As at 30 June 2015
Cash and cash equivalents 906 - 906
Short-term receivables from a 382 - 382
related party
Trade and other receivables 4,697 - 4,697
Financial assets at fair value - 712,567 712,567
through profit or loss
------ ------ -------
Total 5,985 712,567 718,552
------ ------ ------
Financial assets denominated in:
- USD 5,985 712,567 718,552
------ ------- -------
All financial liabilities are short term in nature and their carrying values
approximate their fair values. There are no financial liabilities that must be
accounted for at fair value through profit or loss (30 June 2015: nil).
9 FINANCIAL ASSETS AT FAIR VALUE
THROUGH PROFIT OR LOSS
Financial assets at fair value through profit and loss comprise the Company's
investments in subsidiaries and associates. The underlying assets and
liabilities of the subsidiaries and associates carried at fair value are
disclosed in the following table:
31 December 30 June
2015 2015
USD'000 USD'000
In Vietnam
Cash and cash equivalents 30,200 22,752
Ordinary shares - listed 349,926
376,453
Ordinary and preference shares - unlisted and 70,215
over-the- counter ("OTC") 63,810
Private equity 51,079 51,256
Real estate and hospitality companies 170,335 168,776
Other assets, net of liabilities 920 4,755
------- -------
672,675 687,802
In countries other than Vietnam
Ordinary shares - listed 26,341 24,765
------- -------
699,016 712,567
------ ------
The sectors of the major underlying investments held by the Company's
subsidiaries are as follows:
31 December 30 June
2015 2015
USD'000 USD'000
Consumer goods 193,524 175,391
Construction 75,921 94,341
Financial services 42,120 52,991
Agriculture 21,411 22,056
Energy, minerals and petroleum 32,804 58,153
Pharmaceuticals 18,745 21,356
Real estate and hospitality companies 266,743 257,491
Infrastructure 10,546 5,860
As at 31 December 2015, an underlying holding, Vietnam Dairy Products Joint
Stock Company, usually referred to as Vinamilk, within financial assets at fair
value through profit or loss amounted to 15% of the net asset value of the
Company (30 June 2015: 11%). There were no other holdings that had a value
exceeding 10% of the net asset value of Company as at
31 December 2015 or 30 June 2015.
10 PREPAYMENTS FOR
ACQUISITION OF INVESTMENT PROPERTIES
31 December 2015 30 June 2015
USD'000 USD'000
Historical cost 8,986 8,986
Less: cumulative allowance for impairment (3,871) (3,794)
loss
---- ----
5,115 5,192
---- ----
Movements in the allowance for impairment during the period/year are as below:
31 December 2015 30 June 2015
USD'000 USD'000
Opening balance (1 July 2015/1 July 2014) 3,794 2,736
Charge for the period/year 77 1,058
---- ----
Closing balance 3,871 3,794
---- ----
A prepayment was made by the Company to a property vendor in 2007 and 2008. The
final transfer of the property is pending the approval of the relevant
authorities and subject to the completion of certain performance conditions set
out in the relevant agreement. As at 31 December 2015, due to market
conditions, an impairment charge of USD0.1 million (year ended 30
June 2015: USD1.1 million) has been taken against this prepayment. The
recoverable amount is the fair value less costs to sell estimated by the Board
based on a 31 December 2015 valuation performed by a qualified independent
professional property valuer (refer to Note 3.2 (b)).
The valuation is prepared based on the expected future discounted cash flows of
the property using a yield that reflects the risks inherent therein. The
discount rate applied is 20% (30 June 2015: 20%). If a higher or lower discount
rate had been used the estimated recoverable amount would have decreased/
increased as a result. It is the Board's view that this prepayment should be
classified as Level 3 in the fair value hierarchy.
11 SHARE CAPITAL
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31 December 2015 30 June 2015
Number of USD'000 Number of USD'000
ordinary ordinary
shares shares
Ordinary shares of
USD0.01 each:
Authorised 500,000,000 5,000 500,000,000 5,000
-------- ---- -------- ----
Issued and fully paid 214,521,612 2,145 324,610,259 3,246
-------- ---- -------- ----
12 ADDITIONAL PAID-IN CAPITAL
Additional paid-in capital represents the excess of consideration received over
the par value of ordinary shares issued.
31 December 2015 30 June 2015
USD'000 USD'000
Opening balance (1 July 2015/1 July 2014) 722,064 722,064
Ordinary shares cancelled (Note 13) (225,553) -
------- -------
Closing balance 496,511 722,064
------ ------
13 TREASURY SHARES
31 December 2015 30 June 2015
Number of USD'000 Number of USD'000
ordinary ordinary
shares shares
Opening balance (1 July
2015/
1 July 2014) 104,652,647 213,283 86,355,265 165,939
Ordinary shares 5,436,000 13,371 18,297,382 47,344
repurchased during the
period/year
Cancellation of treasury (110,088,647) (226,654) - -
shares
-------- ------ -------- ------
Closing balance - - 104,652,647 213,283
-------- ------ -------- ------
During the period, the Company purchased 5,436,000 of its ordinary shares (year
ended 30 June 2015: 18,297,382 ordinary shares) for total cash consideration of
USD13.4 million (year ended 30 June 2015: USD47.3 million). The consideration
was paid with cash from one of the Company's subsidiaries. All purchases had
been fully settled by the balance sheet dates.
In anticipation of the plan to move the Company's trading platform from the AIM
market to a premium listing on the Main Market of the London Stock Exchange,
all of the ordinary shares held in treasury were cancelled. Following the
cancellation, the total number of ordinary shares in issue and total voting
rights is 214,521,612.
The Company will continue with the ordinary share repurchase programme approved
by the Board on 25 October 2011. Any ordinary shares purchased as part of the
ordinary share repurchase activities may be held in treasury up to a limit of
10% of ordinary shares in issue.
14 PAYABLES TO RELATED PARTIES
31 December 30 June
2015 2015
USD'000 USD'000
Management fees payable to the Investment 883 938
Manager (Note 22)
Incentive fees payable to the Investment 3,672 3,672
Manager (Note 22)
Other payables to related parties - 426
----- -----
4,555 5,036
---- ----
All payables to related parties are short-term in nature. Therefore, their
carrying values are considered a reasonable approximation of their fair values.
15 DIVIDEND INCOME
31 December 31 December
2015 2014
USD'000 USD'000
Dividend income from a subsidiary used 13,371 30,592
to pay for the Company's ordinary
share repurchases (*)
Dividend income from a subsidiary used 12,362 15,650
to pay for the Company's operating
expenses
------ ------
25,733 46,242
----- -----
(*) This dividend income was settled by the subsidiary's payments on the
Company's behalf for its ordinary share repurchases.
As cash was transferred out of the subsidiary as settlement for the dividend
income, the subsidiary's fair value decreased, resulting in losses on financial
assets at fair value through profit or loss as described in Note 16.
16 NET LOSSES FROM FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
LOSS
Six months ended
31 December 31 December
2015 2014
USD'000 USD'000
Financial assets at fair value through profit or
loss:
- Gains from the realisation of financial 2,053 114
assets, net
- Unrealised losses (15,604) (29,260)
------ ------
(13,551) (29,146)
----- -----
The above net losses of USD13.6 million (period ended 31 December
2014: USD29.2 million) on financial assets at fair value through profit or loss
include dividend and interest income of
USD11.0 million earned by the Company's subsidiaries during the period (period
ended 31 December 2014: USD17.1 million). The net losses also include total
payments of USD13.4 million which a subsidiary paid for ordinary share
repurchases made during the period (period ended 31 December 2014: USD30.5
million) as explained in Note 15. Also included in these losses were this
subsidiary's dividend payments of USD12.3 million to the Company to cover its
operating expenses (period ended 31 December 2014: USD15.7 million).
17 GENERAL AND ADMINISTRATION EXPENSES
Six months ended
31 December 31 December
2015 2014
USD'000 USD'000
Management fees (Note 22(a)) 5,233 6,007
Incentive fees (Note 22(b)) - 8,360
Directors' fees 173 205
Custodian, secretarial and other professional 721 769
fees
Listing expenses 898 -
Others 44 293
---- -----
7,069 15,634
---- ----
18 INCOME TAX EXPENSE
The Company is incorporated in Guernsey. Prior to 23 March 2016, the Company
was a company with limited liability in the Cayman Islands. Under the current
laws of Guernsey or the Cayman Islands, there are no income, state,
corporation, capital gains or other taxes payable by the Company in Guernsey
and the Cayman Islands.
A number of subsidiaries are established in Vietnam and Singapore and are
subject to corporate income tax in those countries. The income tax payable by
these subsidiaries is included in their fair values as disclosed in the line
item "Financial assets at fair value through profit or loss" on the balance
sheet.
The relationship between the estimated income tax expense based on the
applicable income tax rate of 0% and the tax expense actually recognised in the
condensed interim statement of income can be reconciled as follows:
Six months ended
31 December 31 December
2015 2014
USD'000 USD'000
Profit before tax 5,232 1,462
----- -----
Applicable tax rate 0% 0%
----- -----
Income tax - -
----- -----
There is no deferred income tax.
19 EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE
(a) Basic
Basic earnings per share is calculated by dividing the profit from operations
of the Company by the weighted average number of ordinary shares in issue
during the six-month period excluding ordinary shares purchased by the Company
and held as treasury shares (Note 13).
Six months ended
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31 December 31 December
2015 2014
USD'000 USD'000
Profit for the period (USD'000) 5,232 1,462
Weighted average number of ordinary shares 217,387,194 233,572,409
in issue
Basic earnings per share (USD per share) 0.02 0.01
-------- --------
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The Company 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 NAV 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 13). NAV is determined as total assets less total
liabilities.
As at 31 December As at 30 June
2015 2015
Net asset value (USD'000) 710,525 718,664
Number of outstanding ordinary shares on 214,521,612
issue 219,957,612
Net asset value per share (USD/share) 3.31 3.27
--------- ---------
20 SEASONALITY
The Board believes that the impact of seasonality on the condensed interim
financial information is not material.
21 DIRECTORS' REMUNERATION
The aggregate directors' fees for the six-month period amounted to USD172,500
(six months ended 31 December 2014: USD204,944), of which there was no
outstanding amount payable at the reporting date (30 June 2015: nil).
The remuneration of each director is summarised below:
Six months ended
31 December 31 December
2015 2014
USD USD
Steven Bates 47,500 47,500
Martin Adams 40,000 40,000
Martin Glynn (*) - 32,444
Michael Gray 45,000 45,000
Bich Thuy Dam 40,000 40,000
------- -------
172,500 204,944
------- -------
(*) Martin Glynn retired on 27 November 2014.
22 RELATED PARTIES
(a) Management fees
Under an amended and restated investment management agreement dated 24 June
2013 which became effective as of 1 July 2013 (the "Amended Management
Agreement"), the Investment Manager receives a fee at an annual rate of 1.5% of
the NAV, payable monthly in arrears.
Total investment management fees for the six-month period amounted to USD5.2
million (31 December 2014: USD6 million), with USD0.8 million (31 December
2014: USD1 million) in outstanding accrued fees due to the Investment Manager
at the reporting date.
(b) Incentive fee
Under the Amended Management Agreement dated 24 June 2013 and the latest
amendment dated 15 October 2014, from 1 July 2013 the incentive fee was changed
to be 15% of the increase in NAV per share over a hurdle rate of 8% per annum.
A catch up is no longer applied. Furthermore, for the purposes of calculating
incentive fees, the Company's net assets are segregated into a Direct Real
Estate Portfolio and a Capital Markets Portfolio. Ordinary shares bought back
by the Company shall be treated as distributions, with the purchase amounts
allocated to each portfolio subtracted from the relevant portfolio as an
adjustment to the high water mark per share. A separate incentive fee is
calculated for each portfolio so that for any balance sheet date 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. However,
the maximum incentive fee that can be paid in any given year in respect to a
portfolio is 1.5% of the NAV of that portfolio at the balance sheet date. Any
incentive fees earned in excess of the cap may be paid out in subsequent years
providing that certain performance targets are met.
There is a difference of interpretation between the Company and the Investment
Manager about certain provisions of the investment management agreement
relating to the incentive fee. The Board has taken independent legal advice on
the matter. In order to avoid the costs and financial uncertainty of recourse
to a legal solution, the Board and the Investment Manager agreed that the
incentive fee payable for the year ended 30 June 2015 is USD3.7 million, which
has been fully settled. The Investment Manager and the Board have agreed in
principle that the investment management agreement will be amended before 30
June 2016 to reduce the possibility of differences of interpretation in the
future. No incentive fee has been accrued on the Company's performance for the
six month period ended 31 December 2015 as the Board and the Investment Manager
do not expect that any incentive fee will have become payable during the period
under the contemplated revised terms of the Amended Management Agreement.
(c) Other balances with related parties
31 December 30 June
2015 2015
USD'000 USD'000
Receivable from the Investment Manager for investment 196 382
management fees rebated back to the Company (*)
--- ---
Payable to the Investment Manager for expenses paid on - 426
behalf of the Company
--- ---
Investments in other investment funds managed by the
Investment Manager, held by a subsidiary of the
Company:
- Vietnam Infrastructure Limited ("VNI") 3,969 5,860
- VNL 22,364 18,698
----- -----
26,333 24,558
----- -----
(*) This receivable pertains to investment management fees earned by the
Investment Manager on the Company's investments in VNL and VNI which are
rebated by the Investment Manager to the Company. These rebates are recognised
as other income in the statement of comprehensive income.
23 COMMITMENTS
The Company's real estate associates have a broad range of commitments under
investment certificates which have been received for real estate projects
jointly invested with VNL (Note 3.2 (b)). The Company's share of these
commitments is approximately USD8.5 million (30 June 2015: USD11.5 million).
Further investments in these arrangements are at the Company's discretion.
24 FINANCIAL RISK MANAGEMENT
(a) Financial risk factors
The Company's activities expose it to a variety of financial risks: market risk
(including currency risk, fair value interest rate risk, cash flow interest
rate risk and price risk), credit risk and liquidity risk.
The condensed interim financial statements do not include all financial risk
management information and disclosures required in the annual financial
statements; they should be read in conjunction with the Company's annual
financial statements as at 30 June 2015.
There have been no significant changes in the management of risk or in any risk
management policies since the last balance sheet date.
(b) Fair value estimation
The table below analyses financial instruments carried at fair value, by
valuation method. The different levels have been defined as follows:
· 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 Company which were measured using the
fair valuation method as at 30 June 2015 and 31 December 2015.
The level into which financial assets are classified is determined based on the
lowest level of significant input to the fair value measurement.
Financial assets measured at fair value in the balance sheet are grouped into
the following fair value hierarchy:
Level 3 Total
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USD'000 USD'000
As at 31 December 2015
Financial assets at fair value through 699,016 699,016
profit or loss
----- -----
As at 30 June 2015
Financial assets at fair value through 712,567 712,567
profit or loss
------ ------
All of the Company's financial assets at fair value through profit or loss are
classified as Level 3, because they represent the Company's interests in
private entities which hold the Company's underlying investments. If these
investments were held at the Company level, they would be presented as follows:
Level 1 Level 2 Level 3 Total
USD'000 USD'000 USD'000 USD'000
As at 31 December 2015
Cash and cash equivalents 30,200 - - 30,200
Ordinary shares - listed 376,267 - - 376,267
Ordinary and preference shares - - 41,684 28,531 70,215
unlisted
and OTC
Private equity - - 51,079 51,079
Real estate and hospitality - - 170,335 170,335
companies
Other assets, net of liabilities - - 920 920
------ ------ ------ ------
406,467 41,684 250,865
699,016
------ ------ ------ ------
Level 1 Level 2 Level 3 Total
USD'000 USD'000 USD'000 USD'000
As at 30 June 2015
Cash and cash equivalents 22,752 - - 22,752
Ordinary shares - listed 391,459 9,759 - 401,218
Ordinary and preference shares - - 30,438 33,372 63,810
unlisted and OTC
Private equity - - 51,256 51,256
Real estate companies and - - 168,776 168,776
hospitality
Other assets, net of liabilities - - 4,755 4,755
------ ------ ------- -------
414,211 40,197 258,159
712,567
------ ------ ------- -------
Investments whose values are based on quoted market prices in active markets,
and are therefore classified within Level 1, include actively traded equities,
government bonds and private equity investments which have committed prices at
the balance sheet date. The Company does not adjust the quoted price for these
instruments.
Financial instruments which trade in markets that are not considered to be
active but are valued based on quoted market prices and dealer quotations are
classified within Level 2. These include investments in unlisted equities and
over-the-counter ("OTC") equities. As Level 2 investments include positions
that are not traded in active markets, valuations may be adjusted to reflect
illiquidity and/or non-transferability, which are generally based on available
market information. There are no significant adjustments that may result in a
fair value measurement categorised within Level 3.
Private equity, real estate and hospitality investments, and other assets that
do not have an active market are classified within Level 3. The Company uses
valuation techniques to estimate the fair value of these assets based on
significant unobservable inputs such as discount rates, average occupancy and
room rates, etc., as described in Note 3.2.
There were no transfers between the Levels (year ended 30 June 2015: none).
Specific valuation techniques used to value financial instruments include:
* Quoted market prices or dealer quotes;
* Use of discounted cash flow technique to present value the estimated
future cash flows;
* Other techniques, such as latest market transaction price.
Changes in Level 3 financial assets at fair value through profit or loss
The fair value of the Company's investments and associates are estimated using
approaches as described in Note 3.2. As observable prices are not available for
these investments, the Company classifies them as Level 3 fair values.
31 December 30 June
2015 2015
USD'000 USD'000
Opening balance (1 July 2015/1 July 2014) 712,567 768,956
Realised gains 2,053 114
Unrealised losses (15,604) (56,503)
----- -----
Closing balance 699,016 712,567
----- -----
Total unrealised gains for the period/year
included in:
- Profit or loss (15,604) (56,503)
----- -----
(15,604) (56,503)
----- -----
25. SUBSEQUENT EVENTS
At the Extraordinary General Meeting on 27 October 2015 shareholders approved
proposals to migrate the Company from the Cayman Islands to Guernsey and to
move the trading venue for its ordinary shares from the Alternative Investment
Market to the Main Market of the London Stock Exchange. The Company's migration
to Guernsey occurred on 23 March 2016. The Company's ordinary shares were
admitted to trading on the Main Market of the London Stock Exchange on 30 March
2016.
END
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