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 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
parties |
22 |
196 |
382 |
|
Trade and other receivables |
7 |
11,081 |
4,697 |
|
Financial assets at fair value
through profit or loss |
9 |
699,016 |
712,567 |
|
Prepayments for
acquisitions of investment properties |
10 |
5,115 |
5,192 |
|
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
|
Share
capital |
Additional
paid-in capital |
Treasury
shares |
Retained
earnings |
Total
equity |
|
USD’000 |
USD’000 |
USD’000 |
USD’000 |
USD’000 |
|
|
|
|
|
|
Balance at 1 July 2014 |
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 |
|
|
|
|
|
Ordinary shares
repurchased |
- |
- |
(30,592) |
- |
(30,592) |
Balance at 31 December 2014 |
-----
3,246
----- |
-------
722,064
------- |
-------
(196,531)
------- |
-------
213,471
------- |
-------
742,250
------- |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 July
2015 |
3,246 |
722,064 |
(213,283) |
206,637 |
718,664 |
Profit for
the six-month period to
31 December 2015 |
- |
- |
- |
5,232 |
5,232 |
Total
comprehensive income |
-----
- |
-------
- |
-------
- |
------
5,232 |
------
5,232 |
|
|
|
|
|
|
Transactions with
owners |
|
|
|
|
|
Ordinary shares
repurchased |
- |
- |
(13,371) |
- |
(13,371) |
Ordinary shares
cancelled |
(1,101) |
(225,553) |
226,654 |
- |
- |
Balance at 31 December 2015 |
-----
2,145
----- |
-------
496,511
------- |
-------
-
------- |
-------
211,869
------- |
------
710,525
------ |
CONDENSED INTERIM STATEMENT OF
COMPREHENSIVE INCOME
|
|
Six months ended |
|
|
31 December
2015 |
31
December
2014 |
|
Notes |
USD’000 |
USD’000 |
|
|
Unaudited |
Unaudited |
|
|
|
|
Dividend
income (*) |
15 |
25,733 |
46,242 |
Net losses
on financial assets at fair value through profit or loss
(**) |
16 |
(13,551) |
(29,146) |
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
- basic and diluted (USD per share) |
19(a),(b) |
0.02
---- |
0.01
---- |
|
|
|
|
|
|
----- |
----- |
Total comprehensive income for
the period |
|
5,232
---- |
1,462
---- |
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
|
31 December
2015 |
31 December
2014 |
|
|
|
USD’000 |
USD’000 |
|
|
(*)
Dividend income includes: |
|
|
|
|
- Dividend
income from a subsidiary used to pay for the Company's ordinary
share repurchases (Note 15) |
13,371 |
30,592 |
|
|
- Dividend
income from a subsidiary used to pay for the Company's operating
expenses (Note 15) |
12,362 |
15,650 |
|
|
|
----- |
----- |
|
|
|
25,733 |
46,242 |
|
|
|
----- |
----- |
|
|
|
|
|
|
|
|
Six months ended |
|
|
|
31 December
2015 |
31 December
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 payments for ordinary share
repurchases on the Company’s behalf (Note 15) |
(13,371) |
(30,592) |
|
|
- Reduction
in fair value of a subsidiary due to payment for the Company’s
operating expenses (Note 15) |
(12,362) |
(15,650) |
|
|
|
----- |
----- |
|
|
|
(25,733) |
(46,242) |
|
|
|
----- |
----- |
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED INTERIM STATEMENT OF CASH
FLOWS
|
|
Six months ended |
|
|
31
December
2015 |
31 December 2014 |
|
|
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 profit or loss |
|
13,551 |
29,146 |
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 period |
|
(557) |
(371) |
Cash and
cash equivalents at the beginning of the period |
6 |
906 |
1,311 |
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
· 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 markets |
Real
estate and hospitality |
Private equity |
Total |
|
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 financial assets at fair value through profit or
loss |
(17,518) |
4,144 |
(177) |
(13,551) |
General and
administration expenses |
(4,974) |
(1,658) |
(437) |
(7,069) |
Other income |
196 |
- |
- |
196 |
Impairment loss |
- |
(77) |
- |
(77) |
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 assets at fair value through profit or loss |
(34,839) |
(289) |
5,982 |
(29,146) |
General and
administration expenses |
(13,629) |
(1,580) |
(425) |
(15,634) |
Profit before tax |
-----
(2,226) |
-----
(1,869) |
-----
5,557 |
-----
1,462 |
|
---- |
---- |
---- |
----- |
Balance Sheet
Assets
|
Capital
markets |
Real
estate and hospitality |
Private
equity |
Cash |
Total |
|
USD’000 |
USD’000 |
USD’000 |
USD’000 |
USD’000 |
As at 31 December
2015 |
|
|
|
|
|
Cash and cash
equivalents |
- |
- |
- |
349 |
349 |
Short-term receivables
from related parties |
196 |
- |
- |
- |
196 |
Trade and other receivables |
4,697 |
6,384 |
- |
- |
11,081 |
Financial assets at fair value
through profit or loss |
465,914 |
182,023 |
51,079 |
- |
699,016 |
Prepayments for acquisitions of
investment properties |
- |
5,115 |
- |
- |
5,115 |
|
------ |
------ |
----- |
----- |
------ |
Total assets |
470,807 |
193,522 |
51,079 |
349 |
715,757 |
|
------ |
------ |
----- |
----- |
------ |
|
|
|
|
|
|
Payables to related parties |
4,254 |
238 |
63 |
- |
4,555 |
Accruals and other payables |
472 |
162 |
43 |
- |
677 |
|
------ |
------ |
----- |
----- |
------ |
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 equivalents |
- |
- |
- |
906 |
906 |
Short-term receivables from related
parties |
382 |
- |
- |
- |
382 |
Trade and other receivables |
4,697 |
- |
- |
- |
4,697 |
Financial assets at
fair value through profit or loss |
476,054 |
185,257 |
51,256 |
- |
712,567 |
Prepayments for acquisitions of
investment properties |
- |
5,192 |
- |
- |
5,192 |
|
------ |
------ |
----- |
----- |
------ |
Total assets |
481,133 |
190,449 |
51,256 |
906 |
723,744 |
|
------ |
------ |
----- |
----- |
------ |
|
|
|
|
|
|
Payables to related parties |
4,580 |
456 |
- |
- |
5,036 |
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 |
|
Name |
Country of incorporation |
% of
Company interest |
% of Company
interest |
Nature of the
business |
Vietnam Investment Property Holding
Limited |
BVI |
100 |
100 |
Holding company for listed,
unlisted securities and real estate |
Vietnam Investment Property
Limited |
BVI |
100 |
100 |
Holding company for
listed,
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 Limited |
BVI |
100 |
100 |
Holding company for
listed,
and unlisted securities |
Vietnam Master Holding 2
Limited |
BVI |
100 |
100 |
Holding company for
listed
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. Limited |
Singapore |
100 |
100 |
Holding company for
listed
securities |
SE Asia Master Holding 7 Pte
Limited |
Singapore |
100 |
100 |
Holding company for private
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 Pte
Limited |
Singapore |
100 |
100 |
Holding company for private
equity |
American Home Vietnam Co.,
Limited |
Vietnam |
100 |
100 |
Ceramic tiles |
Yen Viet Joint Stock Company |
Vietnam |
65 |
65 |
Birdnest products |
International Dairy Products Joint
Stock Company (“IDP”) |
Vietnam |
56 |
56 |
Dairy products |
|
|
---- |
---- |
|
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 incorporation |
% of
Company interest |
% of Company
interest |
Nature of the
business |
Pacific Alliance Land Limited |
BVI |
25 |
25 |
Holding company for |
|
|
|
|
VinaSquare project |
Sunbird Group Limited |
BVI |
25 |
25 |
Holding company for |
|
|
|
|
Pham Hung project |
VinaCapital Danang Resorts
Limited |
BVI |
25 |
25 |
Holding company for |
|
|
|
|
Danang Resorts
project |
Vietnam Property Holdings
Limited |
BVI |
25 |
25 |
Holding company for |
|
|
|
|
Danang Golf project |
Prosper Big Investment Limited |
BVI |
25 |
25 |
Holding company for |
|
|
|
|
Century 21 project |
VinaCapital Commercial Center |
Singapore |
12.75 |
12.75 |
Holding company for |
Private Limited |
|
|
|
Capital Square phase
1 |
Mega Assets Pte. Limited |
Singapore |
25 |
25 |
Holding company for |
|
|
|
|
Capital Square phase
2 |
SIH Real Estate Pte. Limited |
Singapore |
25 |
25 |
Holding company for |
|
|
|
|
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 2015 |
30 June
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 2015 |
30 June 2015 |
|
USD’000 |
USD’000 |
|
|
|
Receivables from
disposal of investments |
11,081 |
4,697 |
|
----- |
----- |
8
FINANCIAL INSTRUMENTS BY CATEGORY
|
Loans and receivables |
Financial
assets at fair value through 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 related parties |
196 |
- |
196 |
Trade and other
receivables |
11,081 |
- |
11,081 |
Financial assets at
fair value through profit or loss |
- |
699,016 |
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 related party |
382 |
- |
382 |
Trade and other
receivables |
4,697 |
- |
4,697 |
Financial assets at
fair value through profit or loss |
- |
712,567 |
712,567 |
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 2015 |
30
June 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 over-the- counter
(“OTC”) |
70,215 |
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 2015 |
30
June
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 loss |
(3,871) |
(3,794) |
|
---- |
---- |
|
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
|
31 December 2015 |
|
30 June 2015 |
|
Number
of ordinary shares |
USD’000 |
|
Number of ordinary shares |
USD’000 |
|
|
|
|
|
|
|
|
|
|
|
|
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 ordinary shares |
USD’000 |
|
Number
of ordinary shares |
USD’000 |
|
|
|
|
|
|
Opening balance (1 July
2015/ |
|
|
|
|
|
1 July
2014) |
104,652,647 |
213,283 |
|
86,355,265 |
165,939 |
Ordinary shares
repurchased during the period/year |
5,436,000 |
13,371 |
|
18,297,382 |
47,344 |
Cancellation of
treasury shares |
(110,088,647) |
(226,654) |
|
- |
- |
|
-------- |
------ |
|
-------- |
------ |
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
2015 |
30
June
2015 |
|
USD’000 |
USD’000 |
|
|
|
Management fees payable
to the Investment Manager (Note 22) |
883 |
938 |
Incentive
fees payable to the Investment
Manager (Note 22) |
3,672 |
3,672 |
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
2015 |
31
December
2014 |
|
USD’000 |
USD’000 |
|
|
|
|
|
|
Dividend income from a
subsidiary used to pay for the Company's ordinary share repurchases
(*) |
13,371 |
30,592 |
Dividend income from a
subsidiary used to pay for the Company's operating expenses |
12,362 |
15,650 |
|
------
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 2015 |
31
December
2014 |
|
USD’000 |
USD’000 |
|
|
|
|
|
|
Financial assets at
fair value through profit or loss: |
|
|
- Gains from the
realisation of financial assets, net |
2,053 |
114 |
- 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
2015 |
31
December
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 fees |
721 |
769 |
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 2015 |
31
December 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 |
|
31 December
2015 |
31 December
2014 |
|
USD’000 |
USD’000 |
|
|
|
|
|
|
Profit for the period (USD’000) |
5,232 |
1,462 |
Weighted average number of ordinary
shares in issue |
217,387,194 |
233,572,409 |
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
2015 |
As at 30
June
2015 |
|
|
|
Net asset value (USD’000) |
710,525
|
718,664 |
Number of outstanding ordinary
shares on issue |
214,521,612 |
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 2015 |
31
December
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
2015 |
30 June
2015 |
|
USD’000 |
USD’000 |
|
|
|
Receivable from the
Investment Manager for investment management fees rebated back to
the Company (*) |
196 |
382 |
|
--- |
--- |
Payable to the
Investment Manager for expenses paid on behalf of the Company |
- |
426 |
|
--- |
--- |
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 |
|
USD’000 |
USD’000 |
|
|
|
As at 31 December
2015 |
|
|
Financial assets at
fair value through profit or loss |
699,016 |
699,016 |
|
----- |
----- |
As at 30 June
2015 |
|
|
Financial assets at
fair value through profit or loss |
712,567 |
712,567 |
|
------ |
------ |
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 – unlisted
and OTC |
- |
41,684 |
28,531 |
70,215 |
Private equity |
- |
- |
51,079 |
51,079 |
Real estate and
hospitality companies |
- |
- |
170,335 |
170,335 |
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 – unlisted and OTC |
- |
30,438 |
33,372 |
63,810 |
Private equity |
- |
- |
51,256 |
51,256 |
Real estate companies
and hospitality |
- |
- |
168,776 |
168,776 |
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 2015 |
30
June
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.