TIDMVOF
RNS Number : 8655I
VinaCapital Vietnam Opp. Fund Ld
30 March 2015
30 March 2015
VinaCapital Vietnam Opportunity Fund Limited
Interim results for the six months ended 31 December 2014
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 2014 ("the
Period").
Financial highlights:
-- Net Asset Value ("NAV") of USD742.3 million (30 June 2014, restated: USD771.4 million)
-- NAV per share of USD3.27 (30 June 2014, restated: USD3.24).
Operational highlights:
-- As at 31 December 2014, the Company has spent a total of
USD197.1 million overall repurchasing 97.9 million shares,
representing 30.2% of total shares in issue.
-- Shareholders supported the recommendations by members of the
Board regarding all six resolutions which were put to a vote at the
Company's Annual General Meeting (AGM) held on 26 November 2014 in
Singapore.
Notes to Editors:
VinaCapital is the leading investment management and real estate
development firm in Vietnam, with a diversified portfolio of USD1.5
billion in assets under management. VinaCapital was founded in 2003
and boasts a team of managing directors who bring extensive
international finance and investment experience to the firm. Our
mission is to produce superior returns for investors by using our
experience and knowledge to identify the key trends and
opportunities that emerge as Vietnam continues to develop its
economy. To achieve this, VinaCapital has industry-leading asset
class teams covering capital markets, private equity, fixed income,
venture capital, real estate and infrastructure.
VinaCapital manages three closed-end funds trading on the AIM
Market of the London Stock Exchange. These funds are: VinaCapital
Vietnam Opportunity Fund Limited (VOF), VinaLand Limited (VNL), and
Vietnam Infrastructure Limited (VNI). VinaCapital also co-manages
the USD32 million DFJ VinaCapital L.P. technology venture capital
fund with Draper Fisher Jurvetson.
VinaCapital has offices in Ho Chi Minh City, Hanoi, Danang, Nha
Trang, Singapore and Yangon. More information about VinaCapital is
available at www.vinacapital.com.
More information on the Company is available at
www.vinacapital.com/vof.
Enquiries:
David Dropsey
VinaCapital Investment Management Limited
Investor Relations/Communications
+84 8 3821 9930
david.dropsey@vinacapital.com
Philip Secrett
Grant Thornton UK LLP, Nominated Adviser
+44 (0)20 7383 5100
philip.j.secrett@uk.gt.com
Hiroshi Funaki / Andrew Davies
Edmond de Rothschild Securities, Broker
+44 (0)20 7845 5960
funds@lcfr.co.uk
David Benda / Hugh Jonathan
Numis Securities Limited, Broker
+44 (0)20 7260 1000
funds@numis.com
Andrew Walton
FTI Consulting, Public Relations (London)
+44 (0)20 7269 7204
andrew.walton@fticonsulting.com
VOF Chairman's Statement - interim FY 2015
Investment Performance
During the first six months of the 2015 Fiscal Year, which
covers the period from 1 July 2014 to 31 December 2014, the net
asset value (NAV) per share of Vinacapital Vietnam Opportunity Fund
("VOF" or the "Company") rose by 0.9%, which compares with a
decline of 6.0% in the Vietnamese Index in US Dollar terms. This
return combines contributions from the components which make up
VOF's portfolio, and the most important of these are set out
below:
Listed Stocks: +1.1% (58% of assets, including our holdings in
VinaLand Ltd, Vietnam Infrastructure Ltd and OTC stocks)
Real Estate: -1.5% (16% of assets)
Private Equity: +2.7% (8% of assets)
Hospitality: +0.4% (9% of assets)
Balance of assets: 9%, held in cash or equivalent
There was also an accretion to NAV of 0.9% from the effect of
the share buybacks conducted during the period, which amounted to a
value of $30.6 million.
The results achieved in the listed part of the portfolio are
very good compared to the equity benchmark and reflect an
underweight position in the Oil & Gas sector, which fell
sharply during the fourth calendar quarter of 2014. Within the peer
group, the performance was in the middle of the pack, with the
biggest determinant of the pecking order being the sector
weighting. It is worth noting that for large funds, it is in effect
impossible to achieve an index weight in this industry because the
largest stock, PetroVietnam Gas, represents nearly 14% of the index
but has a free float of only 3% of its equity, the balance being
owned by the State.
The returns in other parts of the portfolio reflect small
changes in directors' valuation of the assets. Two real estate
projects were written down modestly, while a provision against one
of the private equity holdings was written back after it was
recovered.
There were two transactions of note during the period. The first
was the sale of our 23.6% holding of An Giang Plant Protection
(AGPP) to Standard Chartered Private Equity in Singapore for $63.1
million. This investment was originally purchased five years ago
and the sale represents an IRR of 23.7% per annum over the holding
period. It is encouraging that foreign investors continue to see
attractive opportunities in the country and that the original
investment rationale of taking a large stake in an illiquid asset
has borne fruit for shareholders.
The second was a new $34.5 million private equity investment for
56% of one of Vietnam's largest dairy businesses, International
Dairy Products (IDP) in conjunction with Japanese private equity
investor Daiwa. IDP is a significant business, generating around
$80 million of sales annually from the yoghurt, milk and
nutritional products markets. New management has been brought in
and the objective is to inject fresh impetus into the marketing
strategy.
The Manager also reduced the holding in Vinamilk, which has for
a long time been VOF's largest position, in order to realise some
profits. Shares to the value of $21 million were sold at a premium
to the market price, reflecting the scarcity of stock available to
overseas portfolio investors because of the limits on foreign
ownership. The position in Vinamilk is still the largest in our
listed portfolio, representing 10% of VOF's assets. The holding in
Kinh Do Corporation, a bakery and confectionery business, was
realized for proceeds of $32 million on the basis that the Manager
believed that the company was fully valued.
VOF's strategy has been to reduce its holdings in direct real
estate while increasing holdings in so called equitisation
opportunities, which come about as a result of the privatization
process. As far as real estate goes, the market remains quite
subdued and it is disappointing that there have been no significant
disposals during the period. Negotiations are ongoing for the sale
of a number of projects, but progress is slow and intermittent. The
Board remains hopeful that significant disposals will be made over
the course of 2015.
The proportion of assets invested in OTC stocks has fallen (from
9% to 3%) because of the sale of AGPP but the Manager's intention
is to add new positions as and when attractive opportunities become
available. The Vietnamese government has ambitions to privatize a
huge slate of companies, but these are often small, low quality
businesses which do not fit with VOF's investment strategy. A
handful of interesting opportunities are expected to become
available over the next few months but, as with everything which
involves bureaucracy, the timing is very uncertain.
In private equity, the pipeline has a number of interesting
opportunities in media, agriculture and education; and the Manager
is optimistic that another significant investment can be made this
year. In the meantime, exit opportunities for existing positions
are being actively sought.
Share Price
The discount to net asset value remains a persistent problem and
currently sits at around 22%. We have continued to buy back shares,
notching up close to $200 million since we began the programme. In
previous statements we have speculated as to the cause of the
problem, but the evidence is that it cannot be solved by simply
buying stock back. A more complete approach is needed. In practice,
there are four levers the Board can pull:
1. We can define the Company's strategy clearly so that any
unwarranted discount from investor uncertainty disappears. One of
the proximate causes of the discount is almost certainly the
holding in direct real estate. Property assets in Vietnam typically
trade at significant discounts to their net asset values, no doubt
because investors question those values in the absence of an active
and transparent market. We have been very clear that it is our
intention to reduce our exposure to this area and I reiterate that
commitment here. It is worth noting that the limited number of
transactions which have taken place are clearing at prices close to
the directors' valuation levels;
2. We can attempt to influence the demand for shares. This
involves communicating the 'story' to as wide an audience as
possible, ensuring that the listing of the Company is in the best
possible market, its governance is good and that information is
clear, transparent and easily available. The manager is spending
more time and effort on seeking new shareholders and increasing the
demand for the shares. As mentioned in the annual report, the Board
is still considering the benefits of applying for a premium listing
on the Main Market of the London Stock Exchange and it will alter
its corporate structure and governance to comply with best
practice. This is a project for the second half of the year.
3. We can influence the supply of stock. The primary vector
through which we attempt this is by buying stock back, but it is
also possible to achieve the same goal through other means. For the
time being we are persisting with the buyback programme, but other
mechanisms are under constant review.
4. We can offer shareholders some form of restructuring of the
Company. This is a potentially radical solution and is likely to be
both expensive and divisive of the shareholder base. Nevertheless,
if the Board felt that it was in the Company's best interests to
consider such an option, it would do so.
For now, we are using the first three levers and expect these
initiatives to increase demand for the shares and to yield results
over time. In particular, we had hoped to be moving more quickly on
proposals to list the shares on the Main Market in London but we
have been delayed by the regulatory requirement to issue full year
accounts to a new accounting standard as described below.
Changes to Accounting Standards
As noted in the last Annual Report and Accounts, the recent
amendments to International Financial Reporting Standards
introduced in IFRS10A the concept of investment entities. By
adopting IFRS10A from the date of this Interim Report, the Company
is now exempt from the requirement to consolidate investments where
it has a controlling stake and all of our investments are recorded
at fair value through profit or loss. This change requires the
restatement of the accounts as at 30 June 2014. The NAV per share
reported in this Interim Statement of $3.27 compares with a
restated NAV of $3.24 as at 30 June 2014. The latter figure
represents a $0.03 reduction compared with the number stated in our
last annual report, reflecting the consequences of the application
of the new standard. In the notes to this Interim Report we set out
some quite complex reconciliations of the accounts to 30 June 2014
as previously published and the same accounts under the new IFRS
requirements. The restatement in itself is complex, but the
resulting accounts are more appropriate to the nature of VOF as a
fund. However, there are some aspects of IFRS10A which are
potentially confusing. In particular:
- All assets, including cash, are classified as Level 3, a
classification normally reserved for private equity investments,
because they are held via subsidiaries. In note 22b we have
recategorised these assets on a look-through basis;
- Cash, as it appears on the balance sheet, is not
representative of the total cash held by the Company because of the
Level 3 classification described above. As at 31 December 2014, net
cash held was approximately 9% of assets; and
- The classification of assets as either current or non-current
would have been confusing under IFRS10A, so we have opted to
present the balance sheet in order of liquidity as opposed to using
the current and non-current classifications.
Aside from these points, the accounts should be more easy to
read than hitherto.
Outlook
Since the end of the year, the Vietnamese market has risen and
is ahead of the general emerging market benchmarks which continue
to struggle in this era of US Dollar strength. Vietnam itself has
seen inflation fall substantially while GDP growth marginally
exceeded expectations in the last year. The effect of the dramatic
swing in oil prices is minimal, as Vietnam is both a producer and
an importer of oil. The country continues to attract increasing
levels of foreign direct investment; this was estimated at $12.4
billion in 2014, a 7% increase over the previous year. Much of this
investment is in manufacturing and a $2 billion trade surplus was
achieved in 2014. It is well known that economic growth does not
necessarily correlate with stock market returns but given a market
which does not look as overvalued as some, and some foreign
investor interest, the prospects for the year ahead are reasonably
positive.
CONDENSED INTERIM BALANCE SHEET
31 December
2014 30 June 2014
Note USD'000 USD'000
Unaudited Restated
ASSETS
Cash and cash equivalents 7 940 1,311
Short-term receivables from a related
party 20 197 331
Trade and other receivables - 100
Financial assets at fair value through
profit or loss 9 744,508 773,653
Prepayments for acquisitions of
investment properties 10 6,250 6,250
------------ ------------
Total assets 751,895 781,645
EQUITY AND LIABILITIES
EQUITY
Share capital 11 3,246 3,246
Additional paid-in capital 722,064 722,064
Treasury shares 12 (196,531) (165,939)
Retained earnings 213,471 212,009
------------ ------------
742,250 771,380
Total equity ------------ ------------
LIABILITIES
Other payables 22 19
Payables to related parties 13 9,623 10,246
------------ ------------
9,645 10,265
Total liabilities ------------ ------------
Total equity and liabilities 751,895 781,645
Net asset value, USD per share 17(c) 3.27 3.24
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY
Share Additional Treasury Retained Total
capital paid-in capital shares earnings equity
USD'000 USD'000 USD'000 USD'000 USD'000
Balance at 1 July 2013
(restated) 3,246 722,064 (113,639) 123,026 734,697
Profit for the six-month
period to
31 December 2013 (restated) - - - 34,357 34,357
---------- -------------- -------------- ------------ ------------
Total comprehensive
income (restated) - - - 34,357 34,357
Transactions with owners
Shares repurchased - - (28,560) - (28,560)
---------- -------------- -------------- -------------- --------------
Balance at 31 December
2013 (restated) 3,246 722,064 (142,199) 157,383 740,494
Balance at 1 July 2014
(restated) 3,246 722,064 (165,939) 212,009 771,380
Profit for the six-month
period to
31 December 2014 - - - 1,462 1,462
Total comprehensive ---------- -------------- -------------- ------------ ------------
income - - - 1,462 1,462
Transactions with owners
Shares repurchased - - (30,592) - (30,592)
Balance at 31 December ---------- -------------- -------------- -------------- --------------
2014 3,246 722,064 (196,531) 213,471 742,250
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME
Six months ended
--------------------------
31 December 31 December
2014 2013
Note USD'000 USD'000
Unaudited Restated
Net gain on financial assets at fair
value through profit or loss 14 17,096 40,706
General and administration expenses 15 (15,634) (6,499)
Other income - 150
---------- ----------
1,462 34,357
Operating profit ---------- ----------
Profit before tax 1,462 34,357
Corporate income tax 16 - -
---------- ----------
Profit for the period 1,462 34,357
Earnings per share
* basic and diluted (USD per share) 17(a),(b) 0.01 0.14
---------- ----------
Total comprehensive income for the period 1,462 34,357
CONDENSED INTERIM STATEMENT OF CASH FLOWS
Six months ended
--------------------------
31 December 31 December
2014 2013
USD'000 USD'000
Unaudited Restated
Operating activities
Profit before tax 1,462 34,357
Adjustment for:
Unrealised gain on financial assets at
fair value through profit or loss (16,982) (40,706)
---------- ----------
(15,520) (6,349)
Change in financial assets at fair value
through profit or loss 15,535 14,808
Change in trade receivables and other
assets 234 2,428
Change in trade payables and other liabilities (620) (8,099)
---------- --------
Net cash (outflow)/inflow from operating (371) 2,788
activities ---------- --------
Net change in cash and cash equivalents
for the period (371) 2,788
Cash and cash equivalents at the beginning
of the period 1,311 4,502
Cash and cash equivalents at the end ---------- ----------
of the period 940 7,290
The condensed interim statement of cash flow does not include
payments made for share repurchases of USD30.6 million (period
ended 31 December 2013: USD28.6 million) because these payments
were made by a subsidiary.
NOTES TO THE CONDENSED 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 it may also invest in
Cambodia, Laos and Southern China. The Company is quoted on the AIM
market of the London Stock Exchange under the ticker symbol
VOF.
The Company does not have a fixed life but the Company's
Admission Document to the AIM market of the London Stock Exchange
states that the Board considers it desirable that shareholders
should have the opportunity to review the future of the Company at
appropriate intervals. Accordingly, the Board intends that a
special resolution will be proposed every fifth year that the
Company ceases to continue as presently constituted. If the
resolution is not passed, the Company will continue to operate. If
the resolution is passed, the Directors will be required to
formulate proposals to be put to shareholders to reorganise,
unitise or reconstruct the Company or for the Company to be wound
up. The Board tabled such a special resolution on 22 July 2013 and
it was not passed, allowing the Company to continue as presently
constituted for another five years.
The condensed interim financial statements for the six-month
period ended 31 December 2014 were approved for issue by the Board
on 30 March 2015.
2 BASIS OF PREPARATION
These condensed interim financial statements for the six-month
period ended 31 December 2014 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 consolidated financial statements of the Company and its
subsidiaries for the year ended 30 June 2014.
3 ACCOUNTING POLICIES
The accounting policies adopted are consistent with those of the
previous financial year except as described below:
-- The Company has adopted the "Investment Entities" amendments
to IFRS 10, "Consolidated financial statements". The amendments
define an investment entity and introduce an exception from the
consolidation requirements for investment entities. On adoption,
the Company has determined that it meets the definition of an
investment entity (see Note 4.1 below). As a result, it has changed
its accounting policy with respect to its investments in
subsidiaries. The Company's subsidiaries, which were previously
consolidated, are now accounted for at fair value through profit or
loss. This change in accounting policy has been applied
retrospectively in accordance with the transition provision of IFRS
10 and the amendments to IFRS 10. The impact of the change has been
disclosed in Note 3.2 below.
-- The Company has adopted amendments to IFRS 12, "Disclosure of
interests in other entities", which introduce new disclosure
requirements related to investment entities. Required disclosures
are presented in Note 6.
-- IAS 27 (revised 2011), "Separate financial statements" and
amendments to IAS 27 have been adopted by the Company. The standard
prescribes the accounting and disclosure requirements when an
entity prepares separate financial statements. The amendments
require an investment entity as defined in IFRS 10 to present
separate financial statements as its only financial statements in
the case where it measures all of its subsidiaries at fair value
through profit or loss and to disclose that fact.
-- The Company has opted to value all of its investments at fair
value in accordance with IAS 28 (revised 2011), "Investments in
associates and joint ventures". As a result, the Company has ceased
the application of equity accounting to its investments in
associates. It now classifies its investments in associates as
financial assets at fair value through profit or loss. The Company
has applied this change in accounting policy retrospectively in
accordance with IAS 8, "Accounting policies, changes in accounting
estimates and errors".
3.1 Subsidiaries and associates
As a result of the adoption the amendments to IFRS 10 and the
fair value option under IAS 28, the Company has changed its
accounting policy with respect to its investments in subsidiaries
and associates. Its subsidiaries and associates which were
previously consolidated or equity accounted, are now accounted for
at fair value through profit and loss. At the date of initial
application of IFRS 10, the Company measured these investments at
fair value through profit or loss as if it had done so since
inception. As part of the required retrospective application of
those changes, the Company adjusted retained earnings at the
beginning of the immediately preceding period for any difference
between:
(a) the previous carrying amount of the investments; and
(b) the fair value of the Company's investments in subsidiaries and associates.
The cumulative amount of any fair value adjustments previously
recognised in other comprehensive income was transferred to
retained earnings at the beginning of the
period immediately preceding the date of initial
application.
At the end of each half of the financial year, 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. The valuations by this professional
services firm are prepared using a number of approaches such as
adjusted net asset valuations, discounted cash flows,
income-related multiples and price-to-book ratio. These estimated
fair values are used by the Audit and Valuation Committee ("AVC")
as the primary basis for estimating each subsidiary's or
associate's fair value.
Any gain or loss arising from a change in the fair value of
investments in subsidiaries and associates is recognised in the
statement of comprehensive income.
3.2 Impacts of changes in accounting policies
As a result of the changes in the Company's accounting policies,
financial statements for prior periods were restated. The Company
changed from preparing consolidated financial statements to issuing
separate financial statements with its investments in subsidiaries
and associates classified as financial assets at fair value through
profit or loss. The Company has opted to present the balance sheet
in order of liquidity as opposed to using the current and
non-current classifications. The following tables show the
adjustments recognised for each individual line item.
Balance sheet as at 30 June 2014
30 June 2014 30 June 2014
(Consolidated) Adjustments (Restated)
USD'000 USD'000 USD'000
Assets
Non-current
Plant and equipment 3,114 (3,114) -
Investment properties 4,175 (4,175) -
Investments in associates 169,505 (169,505) -
Prepayments for acquisition of
investment properties 7,895 (1,645) 6,250
Financial assets at fair value
through profit or loss 4,697 604,787 609,484
Available-for-sale financial assets 6,033 (6,033) -
Other non-current assets 792 (792) -
------------ ------------ ------------
196,211 419,523 615,734
Total non-current assets ------------ ------------ ------------
Current
Inventories 7,216 (7,216) -
Trade and other receivables 14,515 (14,415) 100
Short-term loans to related parties 5,235 (5,235) -
Short-term receivables from related
parties - 331 331
Financial assets at fair value
through profit or loss 552,339 (388,170) 164,169
Other financial assets 4,695 (4,695) -
Cash and cash equivalents 21,551 (20,240) 1,311
------------ ------------ ------------
605,551 (439,640) 165,911
Total current assets ------------ ------------ ------------
Assets classified as held for
sale 3,726 (3,726) -
------------ ------------ ------------
Total assets 805,488 (23,843) 781,645
30 June 2014 30 June 2014
(Consolidated) Adjustments (Restated)
USD'000 USD'000 USD'000
Equity and liabilities
Equity
Equity attributable to shareholders of the Company
Share capital 3,246 - 3,246
Additional paid-in capital 722,064 - 722,064
Treasury shares (165,939) - (165,939)
Revaluation reserve 33,281 (33,281) -
Translation reserve (19,186) 19,186 -
Retained earnings 205,489 6,520 212,009
---------- ---------- ----------
Total equity attributable to shareholders of the 778,955 (7,575) 771,380
Company ---------- ---------- ----------
Non-controlling interests 849 (849) -
----------
---------- ---------- 771,380
779,804 (8,424) ----------
Total equity ---------- ---------- --
Liabilities
Non-current
Other long-term liabilities 189 (189) -
---------- ---------- --------
189 (189) -
Total non-current liabilities ---------- ---------- --------
Current
Short-term borrowings 7,839 (7,839) -
Trade and other payables 4,566 (4,547) 19
Payables to related parties 13,090 (2,844) 10,246
---------- ---------- ----------
Total current liabilities 25,495 (15,230) 10,265
25,684 (15,419) 10,265
Total liabilities ---------- ---------- ----------
805,488 (23,843) 781,645
Total equity and liabilities ---------- ---------- ----------
Net asset value, USD per share attributable to
shareholders of the Company 3.27 (0.03) 3.24
Statement of income for the six months ended 31 December
2013
Six months ended
---------------------------------------------
31 December 31 December
2013 Adjustments 2013
USD'000 USD'000 USD'000
(Consolidated) (Restated)
Revenue 4,856 (4,856) -
(3,289) 3,289 -
Cost of sales ---------- ---------- ----------
Gross profit 1,567 (1,567) -
Dividend income 10,169 (10,169) -
Interest income 831 (831) -
Net gains from financial assets
at fair value through profit
or loss, net 32,655 8,051 40,706
Selling, general and administration
expenses (8,405) 1,906 (6,499)
Other income 880 (730) 150
Other expenses (653) 653 -
---------- ---------- ----------
37,044 (2,687) 34,357
Operating profit ---------- ---------- ----------
Finance income 44 (44) -
(370) 370 -
Finance costs ---------- ---------- ----------
Finance costs - net (326) 326 -
Share of losses of associates,
net of tax (12,996) 12,996 -
---------- ---------- ----------
(13,322) 13,322 -
---------- ---------- ----------
Profit before tax 23,722 10,635 34,357
Corporate income tax (18) 18 -
Withholding taxes imposed on
investment income (321) 321 -
---------- ---------- ----------
Profit for the period 23,383 10,974 34,357
Profit attributable to:
Owners of the Company 23,536 (23,536) -
Non-controlling interests (153) 153 -
---------- ---------- ----------
23,383 (23,383) -
---------- ---------- ----------
Earnings per share
- basic and diluted (USD per
share) 0.09 0.05 0.14
Statement of comprehensive income for the six months ended 31
December 2013
Six months ended
--------------------------------------------------
31 December 31 December
2013 Adjustments 2013
USD'000 USD'000 USD'000
(Consolidated) (Restated)
Profit for the period 23,383 10,974 34,357
Other comprehensive income
Items that will be reclassified
subsequently to profit or loss
- Currency translation differences 847 (847) -
---------- ------------ ------------
847 (847) -
Items that will not be reclassified
subsequently to profit or loss
* Share of revaluation reserves of associates 780 (780) -
------------ ------------ ------------
Other comprehensive income for 1,627 (1,627) -
the period ------------ ------------ ------------
Total comprehensive income for
the period 25,010 9,347 34,357
Statement of cash flow for the six months ended 31 December
2013
Six months ended
-------------------------------------------------
31 December 31 December
2013 Adjustments 2013
USD'000 USD'000 USD'000
(Consolidated) (Restated)
Operating activities
Profit before tax 23,722 10,635 34,357
Adjustments for:
Depreciation and amortisation 279 (279) -
Unrealised gains on financial assets
at fair value through profit or
loss (28,316) (12,390) (40,706)
Impairment of assets 159 (159) -
Share of losses of associates 12,996 (12,996) -
Unrealised foreign exchange gain
- net (18) 18 -
Interest expense 128 (128) -
---------- ------------ ----------
Profits/(loss) before changes in 8,950 (15,299) (6,349)
working capital ---------- ------------ ----------
Change in financial assets at fair
value through profit or loss - 14,808 14,808
Change in trade receivables and
other assets 1,917 511 2,428
Change in inventories 521 (521) -
Change in trade payables and other
liabilities (8,219) 120 (8,099)
Income taxes paid (339) 339 -
------------ ------------ ----------
2,830 (42) 2,788
Net cash inflow from operating activities ------------ ------------ ----------
Investing activities
Dividends received 1,355 (1,355) -
Purchases of plant and equipment (158) 158 -
Purchases of financial assets (18,246) 18,246 -
Investments in associates (982) 982 -
Proceeds from disposals of financial
assets 50,794 (50,794) -
Shareholder loans refunded 237 (237) -
Proceeds from disposals of investments 1,613 (1,613) -
---------- ------------ ----------
34,613 (34,613) -
Net cash inflow from investing activities ---------- ------------ ----------
Financing activities
Interest paid (128) 128 -
Payments for shares repurchased (28,560) 28,560 -
Loan proceeds from banks 3,187 (3,187) -
Loan repayment to banks (2,906) 2,906 -
---------- ---------- ----------
Net cash outflow from financing
activities (28,407) 28,407 -
---------- ---------- ----------
Net increase in cash and cash equivalents
for the period 9,036 (6,248) 2,788
Cash and cash equivalents at the
beginning of the period 53,392 (48,890) 4,502
Exchange differences on cash and
cash equivalents 18 (18) -
Cash and cash equivalents at the ---------- ---------- ----------
end of the period 62,446 (55,156) 7,290
4 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. The actual results may differ from the
judgements.
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 consolidated
financial statements for the year ended 30 June 2014.
4.1 Eligibility to qualify as an investment entity
The Company has determined that it is 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
-- 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. See Note 3.2 above for information regarding the impact of
the change in accounting policy.
4.2 Fair value of subsidiaries and associates
As at 31 December 2014, 100% (30 June 2014: 100%) of the
financial assets at fair value through profit and loss relate to
the Company's investments in the 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.
These 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 as set out in
Note 3.1 are used. The shares of the subsidiaries and associates
are not publicly traded; return of capital to the Company can only
be made by divesting the underlying investments of the subsidiaries
and associates. As a result, the carrying value of the subsidiaries
and associates may not be indicative of the value ultimately
realised on divestment.
The fair value of the investments in subsidiaries and associates
is primarily based on their net asset value. These subsidiaries and
associates hold investments in real estate, listed and unlisted
securities and private equities. Information about the significant
judgements, estimates and assumptions that are used in the
valuation of these investments is discussed below.
Valuation of listed and unlisted securities, private equities
and real estate
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, the fair value is
the average 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.
The fair value of financial assets that are not traded in an
active market (for example, unlisted securities, private equities
and real estate where market prices are not readily available) is
determined by using valuation techniques. The Company 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. The valuations may vary from
the actual prices that would be achieved in an arm's length
transaction at the reporting date.
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 company and therefore exerts control over the
investment. As both funds are managed by the same Investment
Manager, each fund's investment objectives for each property are
generally the same. However, given VNL's recently established
investment objective of disposing of a portion of its portfolio,
the Company would potentially be put in a position where sales may
be triggered earlier than ideally desired. The Board reviews all
such decisions 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 Company also holds a
stake in VNL itself and supports the board of that company in its
objective of disposing of a portion of its assets.
As at 31 December 2014 and 30 June 2014, 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.
5 SEGMENT ANALYSIS
In identifying its operating segments, management 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. Although IFRS 8
requires measurement of segmental profit or loss, the majority of
expenses are common to all segments and, therefore, cannot be
individually allocated. There have been no changes from prior
periods in the measurement methods used to determine reported
segment profit or loss.
The majority of the liabilities are payables for general
expenses; therefore, liabilities are not disclosed in the sector
analysis.
Segment information can be analysed as follows:
Statement of income
Capital markets Real Private equity
estate Hospitality Total
USD'000 USD'000 USD'000 USD'000 USD'000
Six months ended
31 December 2014 (unaudited)
Net gain/(loss) on financial
assets at fair value through
profit or loss 11,403 (5,035) 4,746 5,982 17,096
General and administration expenses
(Note 15) (13,737) (902) (409) (586) (15,634)
---------- ---------- ---------- ---------- ----------
Profit before tax (2,334) (5,937) 4,337 5,396 1,462
Six months ended
31 December 2013 (restated)
Net gain/(loss) on financial assets at fair
value through profit or loss 43,867 (3,423) 117 145 40,706
General and administration expenses (Note 15) (5,036) (860) (525) (78) (6,499)
Other income - 150 - - 150
---------- ---------- ---------- ---------- ----------
Profit before tax 38,831 (4,133) (408) 67 34,357
5
Balance sheet
Assets
Capital Real Private
markets estate Hospitality equity Cash Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
As at 31 December 2014
(unaudited)
Cash and cash equivalents - - - - 940 940
Short-term receivables from a
related party 197 - - - - 197
Financial assets at fair value
through profit or loss 513,292 106,683 73,372 51,161 - 744,508
Prepayments for acquisitions
of investment properties - 6,250 - - - 6,250
------------ ------------ ------------ ---------- ---------- ------------
Total assets 513,489 112,933 73,372 51,161 940 751,895
As at 30 June 2014 (restated)
Cash and cash equivalents - - - - 1,311 1,311
Short-term receivables from a
related party 331 - - - - 331
Trade and other receivables 100 - - - - 100
Financial assets at fair value
through profit or loss 583,985 111,718 68,626 9,324 - 773,653
Prepayments for acquisitions of
investment properties - 6,250 - - - 6,250
------------ ------------ ------------ ---------- ---------- ------------
Total assets 584,416 117,968 68,626 9,324 1,311 781,645
6 INTERESTS IN SUBSIDIARIES AND ASSOCIATES
6.1 Subsidiaries
The Company had the following principal subsidiaries as at 31
December 2014:
As at
----------------------- ------------------------------
31.12.2014 30.6.2014
% of % of
Country Company Company
Name of incorporation interest interest Nature of the business
Holding company for
listed,
Vietnam Investment Property unlisted securities
Holding Limited BVI 100 100 and real estate
Holding company for
Vietnam Investment Property listed,
Limited BVI 100 100 and unlisted securities
Holding company for
listed,
unlisted securities
Vietnam Ventures Limited BVI 100 100 and real estate
Holding company for
listed,
unlisted securities
Vietnam Investments Limited BVI 100 100 and real estate
Holding company for
Asia Value Investment listed,
Limited BVI 100 100 and unlisted securities
Holding company for
Vietnam Master Holding listed
2 Limited BVI 100 100 securities
Holding company for
VOF Investment Limited BVI 100 100 listed,
unlisted securities
and real estate
Holding company for
listed
VOF PE Holding 5 Limited BVI 100 100 securities
Holding company for
Visaka Holding Limited BVI 100 100 treasury
shares
Holding company for
listed
Portal Global Limited BVI 100 100 securities
Holding company for
listed
Winstar Resources Limited BVI 100 100 securities
Holding company for
Howard Holding Pte. Limited Singapore 100 100 private equity
Holding company for
Fraser Investment Pte. listed
Limited Singapore 100 100 securities
SE Asia Master Holding Holding company for
7 Pte Limited Singapore 100 100 private equity
Holding company for
Alright Assets Limited Singapore 100 100 real estate
Holding company for
VTC Espero Limited Singapore 100 100 real estate
American Home Vietnam
Co., Limited Vietnam 100 100 Ceramic tiles
Yen Viet Joint Stock
Company Vietnam 65 65 Birdnest products
International Dairy Products Vietnam 56 - Dairy products
Joint Stock Company ("IDP")
There is no legal restriction to 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 it cannot
be transferred out of Vietnam unless such restrictions are
satisfied.
The Company has commitments under investment certificates it has
received for 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 many of these arrangements are
at the Company's discretion.
6.2 Associates
As at
----------------------- ----------------------------
31.12.2014 30.6.2014
Name Country % of % of Nature of the business
of incorporation Company Company
interest interest
Pacific Alliance Land Holding company
Limited BVI 25 25 for
VinaSquare project
Holding company
Sunbird Group Limited BVI 25 25 for
Pham Hung project
VinaCapital Danang Resorts Holding company
Limited BVI 25 25 for
Danang Resorts project
Vietnam Property Holdings Holding company
Limited BVI 25 25 for
Danang Golf project
Prosper Big Investment Holding company
Limited BVI 25 25 for
Century 21 project
VinaCapital Commercial Holding company
Center Singapore 12.75 12.75 for
Capital Square phase
Private Limited 1
Holding company
Mega Assets Pte. Limited Singapore 25 25 for
Capital Square phase
2
SIH Real Estate Pte. Holding company
Limited Singapore 25 25 for
Capital Square phase
3
Holding company
VinaLand Eastern Limited Singapore 25 25 for
Phu Hoi City project
6.3 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 22. 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.
7 CASH AND CASH EQUIVALENTS
31 December 30 June
2014 2014
USD'000 USD'000
Restated
Cash in banks 940 1,311
As at the balance sheet date, cash and cash equivalents are
denominated in USD. Please refer to Note 9 for the balance of cash
and cash equivalents held at the Company's subsidiaries.
8 FINANCIAL INSTRUMENTS BY CATEGORY
Financial
assets at
Loans and receivables fair value
through profit Total
or loss
USD'000 USD'000 USD'000
As at 31 December 2014
(unaudited)
Cash and cash equivalents 940 - 940
Short-term receivables
from a related party 197 - 197
Financial assets at
fair value through profit
or loss - 744,508 744,508
---------- ------------ ------------
Total 1,137 744,508 745,645
Financial assets denominated
in:
* USD 1,137 744,508 745,645
As at 30 June 2014 (restated)
Cash and cash equivalents 1,311 - 1,311
Short-term receivables
from a related party 331 - 331
Trade and other receivables 100 - 100
Financial assets at
fair value through profit
or loss - 773,653 773,653
---------- ---------- --------------
Total 1,742 773,653 775,395
Financial assets denominated
in:
* USD 1,742 773,653 775,395
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 2014: 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
2014 2014
USD'000 USD'000
Restated
In Vietnam
Cash and cash equivalents 74,413 19,795
Government bonds - 19,241
Ordinary shares - listed 381,072 423,563
Ordinary shares - unlisted and over-the-counter
("OTC") 41,441 88,689
Private equity 51,161 9,324
Hospitality 63,143 67,148
Real estate projects 103,139 111,718
Other assets, net of liabilities 3,026 8,632
------------ ------------
717,395 748,110
In countries other than Vietnam
Ordinary shares - listed 27,113 25,543
------------ ------------
27,113 25,543
------------ ------------
744,508 773,653
The sectors of the major underlying investments held by in the
Company's subsidiaries are as follows:
31 December 30 June
2014 2014
USD'000 USD'000
Restated
Consumer goods 150,822 149,599
Construction 107,342 101,599
Financial services 51,329 54,542
Agriculture 28,586 94,251
Energy, minerals and petroleum 61,351 57,642
Pharmaceuticals 28,415 28,886
Real estate 169,058 166,236
Hospitality 63,143 67,148
Government bonds - 19,241
As at 31 December 2014, an underlying holding, Vietnam Dairy
Products Joint Stock Company, within financial assets at fair value
through profit or loss amounted to 10% of the net asset value of
the Company (30 June 2014: 12%). There were no other holdings that
had a value exceeding 10% of the net asset value of Company as at
31 December 2014 or 30 June 2014.
10 PREPAYMENTS FOR ACQUISITIONS OF INVESTMENT PROPERTIES
31 December
2014 30 June 2014
USD'000 USD'000
Restated
Historical costs 8,986 8,986
Less: cumulative allowance for impairment
losses (2,736) (2,736)
-------- --------
6,250 6,250
There were no movements in the prepayments and allowance for
impairment during the period (30 June 2014: none).
Prepayments are made by the Company to property vendors where
the final transfer of the properties is pending the approval of the
relevant authorities and/or subject to either the Company or the
vendor completing certain performance conditions set out in
agreements.
As at 31 December 2014, due to market conditions, impairment
allowances of USD2.7 million (30 June 2014: USD2.7 million) have
been taken against the prepayments for acquisitions of investments.
The relevant recoverable amounts are fair values less costs to sell
estimated by an independent professional qualified valuer who holds
recognised relevant professional qualifications and has recent
experience in the locations and categories of the properties for
which the prepayments are made.
The valuations by independent valuation companies are prepared
based upon direct comparison with sales of other similar properties
in the area and the expected future discounted cash flows of each
property using a yield that reflects the risks inherent therein.
Discount rates applied vary from 15% to 22% (30 June 2014: 15% to
22%). If the sale prices of similar properties had
increased/decreased, it is expected that the recoverable amounts of
these prepayments would have moved up/down accordingly. On the
other hand, if discount rates had risen/dropped, their recoverable
amounts would have decreased/increased as a result.
It is the Company's view that all of its prepayments for
acquisitions of investments are in Level 3 of the fair value
hierarchy.
11 SHARE CAPITAL
31 December 2014 30 June 2014
---------------------- ----------------------
Number of Number of
shares USD'000 shares USD'000
Ordinary shares of USD0.01 each:
Authorised 500,000,000 5,000 500,000,000 5,000
Issued and fully paid 324,610,259 3,246 324,610,259 3,246
12 TREASURY SHARES
31 December 2014 30 June 2014
------------------------------ ------------------------------
Number Number
of shares USD'000 of shares USD'000
Opening balance (1
July 2014/
1 July 2013) 86,355,265 165,939 63,233,988 113,639
Shares repurchased
during the period/year 11,544,882 30,592 23,121,277 52,300
---------------- ---------- ---------------- ----------
Closing balance 97,900,147 196,531 86,355,265 165,939
During the period, the Company purchased 11,544,882 of its
ordinary shares (year ended 30 June 2014: 23,121,277 shares) for
total cash consideration of USD30.6 million (year ended 30 June
2014: USD52.3 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.
13 PAYABLES TO RELATED PARTIES
31 December 30 June
2014 2014
USD'000 USD'000
Restated
Management fees payable to the
Investment Manager (Note 20) 1,009 1,013
Incentive fees payable to the
Investment
Manager (Note 20) 8,360 9,013
Other payables to related parties 254 220
-------- ----------
9,623 10,246
All payables to related parties are short-term in nature.
Therefore, their carrying values are considered a reasonable
approximation of their fair values.
14 NET GAINS FROM FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Six months ended
------------------------------------
31 December 2014 31 December 2013
USD'000 USD'000
Restated
Financial assets at fair value through profit or loss:
* Gains from the realisation of financial assets, net 114 -
* Unrealised gains 16,982 40,706
---------- ----------
Total 17,096 40,706
The above net gains on financial assets at fair value through
profit or loss include dividend and interest income of USD8.4
million earned by the Company's subsidiaries during the period
(period ended 31 December 2013: USD11.0 million).
15 GENERAL AND ADMINISTRATION EXPENSES
Six months ended
-------------------------------
31 December
2014 31 December 2013
USD'000
Investment management fees (Note 20(a)) 6,007 5,722
Incentive fees (*) 8,360 -
Directors' fees 236 232
Custodian, secretarial & administration fees 175 153
Others 856 392
---------- ----------
15,634 6,499
(*) The structure of the incentive fee is set out in Note 20(b).
As at 31 December 2014, the Company accrued an incentive fee of
USD8.4 million based on the Company's performance up to that date.
Any incentive fee will not crystallise until the Company's
financial year end on 30 June 2015, therefore the accrued amount
will change depending on the performance of the Company during the
second half of the financial year.
16 INCOME TAX EXPENSE
The Company is incorporated in the Cayman Islands. Under the
current laws of the Cayman Islands, there are no income, state,
corporation, capital gains or other taxes payable by the
Company.
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
2014 2013
USD'000
USD'000 Restated
1,462 34,357
(Loss)/profit before tax ---------- ----------
Applicable tax rate 0% 0%
---------- ----------
Income tax - -
There is no deferred income tax.
17 EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE
(a) Basic
Basic earnings per share is calculated by dividing the
(loss)/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 12).
Six months ended
--------------------------
31 December 31 December
2014 2013
USD'000 USD'000
Restated
Profit for the period (USD'000) 1,462 34,357
Weighted average number of ordinary shares in issue 233,572,409 250,626,969
Basic earnings per share (USD per share) 0.01 0.14
(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
net asset value 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 12). NAV is determined as total assets less total
liabilities.
As at 31 December As at 30 June
2014 2014
(Restated)
Net asset value (USD'000) 742,250 771,380
Number of outstanding ordinary shares on issue 226,710,112 238,254,994
Net asset value per share (USD/share) 3.27 3.24
18 SEASONALITY
The Company's management believes that the impact of seasonality
on the condensed interim financial information is not material.
19 DIRECTORS REMUNERATION
The aggregate directors' fees for the six-month period amounted
to USD204,944 (six months ended 31 December 2013: USD172,500), of
which there was no outstanding amount payable at the reporting date
(30 June 2014: nil).
The details of remuneration for each director are summarised
below:
Six months ended
------------------------------------
31 December 2014 31 December 2013
USD USD
Steven Bates 47,500 47,500
Martin Adams 40,000 40,000
Martin Glynn (*) 32,444 40,000
Michael Gray 45,000 45,000
Bich Thuy Dam 40,000 -
------------ ------------
204,944 172,500
(*) resigned 27 November 2014
20 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 management fees for the six-month period amounted to
USD6.0 million (30 June 2014: USD5.7 million), with USD1 million
(30 June 2014: USD1 million) in outstanding accrued fees due to the
Investment Manager at the reporting date.
(b) Incentive fees
Prior to 1 July 2013 the Investment Manager was paid an
incentive fee equal to 20% of the increase in the NAV of the
Company over an 8% per annum hurdle rate, with a catch up.
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. 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.
Total incentive fees for the six-month period amounted to USD8.4
million (31 Dec 2013 : nil), with USD8.4 million (30 June 2014:
USD9 million) in outstanding accrued fees due to the Investment
Manager at the reporting date.
(c) Other balances with related parties
31 December 2014 30 June 2014
USD'000 USD'000
Receivables from the Investment Manager on management fees rebate 197 331
Payables to the Investment Manager on expenses paid on behalf 254 220
21 COMMITMENTS
The Company's real estate associates has a broad range of
commitments under investment licences which it has received for
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 many of these arrangements are at the
Company's discretion.
22 FINANCIAL RISK MANAGEMENT
(a) Financial risk factors
The Company has set up a number of subsidiaries as well as
invested in some associates for the purpose of holding investments
in listed and unlisted securities, debt instruments, private equity
and real estate in Vietnam and overseas with the objective of
achieving medium to long-term capital appreciation and providing
investment income. The Company accounts for these subsidiaries and
associates as financial assets at fair value through profit or
loss. The fair values are therefore subject to a variety of
financial risks: market risk (including currency risk, interest
rate risk, and price risk), credit risk and liquidity risk. The
Company's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise
potentially adverse effects on the Company's financial performance.
The Company's risk management is coordinated by the Investment
Manager who manages the distribution of the assets to achieve the
investment objectives.
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 annual consolidated financial statements of the Company
and its subsidiaries as at 30 June 2014.
There have been no significant changes in the management of risk
or in any risk management policies since the last balance sheet
date.
Foreign exchange risk
The Company's subsidiaries' exposure to risk resulting from
changes in currency exchange rates is moderate as, although
transactions in Vietnam are settled in the VND, the value of the
VND has in recent times been closely tied to that of the USD, the
reporting currency.
Neither the Company nor any of its subsidiaries or associates
hedges currency exposure, but cash may be held in either VND or
USD. The Board and Investment Manager regularly review the costs
and potential benefits of currency hedging. The Company did not
enter into any currency hedges in the reporting period and it is
considered unlikely that it will do so in the foreseeable
future.
As at 31 December 2014 and 30 June 2014, the fair value of the
Company's investments in subsidiaries and associates is exposed to
foreign currency risk mainly because they hold financial assets and
liabilities denominated in VND. As at the reporting date, had the
VND weakened/strengthened by 5 per cent in relation to the USD,
with all other variables held constant, the balance of financial
assets held at fair value through profit or loss would have been
lower/higher by USD33.7 million (30 June 2014: USD37.1
million).
Price risk
Price risk is the risk that the value of an instrument will
fluctuate as a result of changes in market prices, whether caused
by factors specific to an individual investment, its issuer, or
factors affecting all instruments traded in the market.
The Company's subsidiaries invest in listed and unlisted equity
securities and are exposed to market price risk of these
securities.
The majority of the Company's subsidiaries' equity investments
are publicly traded on either of Vietnam's stock exchanges (HOSE or
HNX).
All securities investments present a risk of loss of capital.
This risk is managed through the careful selection of securities
and other financial instruments within specified limits and by
holding a diversified portfolio of listed and unlisted instruments.
In addition, the performance of investments held by the Company is
monitored by the Investment Manager on a monthly basis and reviewed
by the Board of Directors on a quarterly basis.
If the prices of the securities had increased/decreased by 10
per cent, the Company's financial assets held at fair value through
profit or loss would have been higher/lower by USD42.2 million (30
June 2014: USD51.2 million).
The Company's associates invest in a number of real estate
projects. The fair values of the underlying properties have a
direct impact on the fair values of these investment in associates.
The Investment Manager closely monitors indicators that may affect
property valuations. The Board of Directors is also highly involved
through its quarterly review of these valuations.
If the fair values of real estate properties had gone up/down by
10%, the Company's financial assets at fair value would have been
risen/dropped by USD10.6 million (30 June 2014: USD12.1
million).
Interest rate risk
The Company's subsidiaries' exposure to interest rate risk is
related to interest bearing financial assets and financial
liabilities. Cash and cash equivalents, and government bonds are
subject to interest at fixed rates. They are exposed to fair value
changes due to interest rate changes. The Company's subsidiaries
had no significant financial liabilities with floating interest
rates. As a result, the Company had limited exposure to cash flow
and interest rate risk.
(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
carried at fair value through profit or loss as at 30 June 2014 and
31 December 2014.
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
USD'000 USD'000
As at 31 December 2014 (unaudited)
Financial assets at fair value through
profit or loss 744,508 744,508
------------ --------------
744,508 744,508
As at 30 June 2014 (restated)
Financial assets at fair value through
profit or loss 773,653 773,653
------------ --------------
773,653 773,653
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, as at 31 December 2014, they would be presented
as follows:
Level Level Level
1 2 3 Total
USD'000 USD'000 USD'000 USD'000
Cash and cash equivalents 74,413 - - 74,413
Ordinary shares - listed 408,185 - - 408,185
Ordinary shares - unlisted
and OTC - 38,763 2,678 41,441
Private equity - - 51,161 51,161
Hospitality - - 63,143 63,143
Real estate projects - 7,401 95,738 103,139
Other assets, net of liabilities - - 3,026 3,026
---------- ---------- ---------- ----------
482,598 46,164 215,746 744,508
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 listed 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.
Specific valuation techniques used to value the Company's
underlying investments 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 the latest market transaction price.
The fair value of the Company's investments and associates are
estimated using approaches as described in Note 3.1. As observable
prices are not available for these investments, the Company
classifies these as Level 3 fair values.
Changes in Level 3 financial assets at fair value through profit
or loss
31 December 30 June
2014 2014
USD'000 USD'000
Opening balance (1 July 2014/1 July
2013) 773,653 730,538
Realised gains 114 -
Unrealised 16,982 119,070
Other reductions due to payments
on behalf of the Company and its
subsidiaries (46,241) (75,955)
------------ ------------
Closing balance 744,508 773,653
Total unrealised gains for the period/year
included in:
* Profit or loss 16,982 119,070
* Other comprehensive income - -
-------- ----------
16,982 119,070
This information is provided by RNS
The company news service from the London Stock Exchange
END
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