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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Vietnam Inf. | LSE:VNI | London | Ordinary Share | KYG936121022 | PRIVATE EQTY SHS USD0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.0015 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMVNI
RNS Number : 2657S
Vietnam Infrastructure Limited
19 December 2016
Vietnam Infrastructure Limited
Audited financial results for the twelve months ended 30 June 2016
Vietnam Infrastructure Limited ("VNI" or "the Company"), the first publicly traded fund to focus on investment into infrastructure assets in Vietnam, today announces its full year results for the twelve months ended 30 June 2016 ('the period').
Financial highlights:
Hot Features
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-- Listed Portfolio Share Net Asset Value ("LPS NAV") of USD38.3 million
-- Private Equity Share Net Asset Value ("PES NAV") of USD77.2 million (30 June 2015: USD202.5 million)
-- LPS NAV per share of USD0.357 -- PES NAV per share of USD0.220 (30 June 2015: USD0.578)
Operational highlights:
-- The Company undertook and completed the restructuring of the fund, with the segregation of the Listed and PE portfolios.
Ø In July 2015, the Listed Portfolio was admitted to the London Stock Exchange AIM, trading under the ticker "VNIL", while the PE Portfolio continued to trade under the ticker "VNI". Also in July 2015, the Forum One - VCG Partners Vietnam Fund (VVF) was successfully launched.
Ø Two Listed Portfolio Share repurchase events occurred during the financial year: a tender offer in August 2015, followed by a tender offer in February 2016 and culminating in a compulsory repurchase in August 2016, after the close of the financial year.
Ø The Listed Portfolio Shares were then cancelled and delisted on 17 August 2016.
Ø In June 2016, USD11 million was distributed to PES holders.
-- The investment manager made substantial progress in divesting assets, including:
Ø Vietnam Aircraft Leasing Corporation (VALC): VNI sold its 11.65% stake in the aircraft lessor for USD8.4 million in February 2016.
Ø Vina-CPK: Located in Vinh Phuc, Vietnam, Vina-CPK operates industrial park and infrastructure projects with an investment license of up to 49 years. VNI sold its stake in June 2016 for USD22.1 million.
-- After the close of the financial year, the Company reported two other important developments:
Ø SEATH: In August 2016, VNI reached an agreement to sell the BTS portion of the portfolio to OCK Vietnam Towers Ltd. for USD50 million. This transaction is expected to close by the end of December 2016.
Ø Long An: On 2 November 2016, the Company received an out-of-court cash settlement of USD2.37 million, and the asset was transferred to the buyer.
About VinaCapital
Founded in 2003, VinaCapital is a leading investment and asset management firm headquartered in Vietnam, with a diversified portfolio of USD1.4 billion in assets under management. The firm has three closed-ended funds that trade on the London Stock Exchange: VinaCapital Vietnam Opportunity Fund Limited, which trades on the Main Market, as well as VinaLand Limited and Vietnam Infrastructure Limited, which trade on the AIM. VinaCapital also manages the Forum One - VCG Partners Vietnam Fund, Vietnam's largest open-ended UCITS-compliant fund. VinaCapital's expertise spans a full range of asset classes including capital markets, private equity, real estate, venture capital, and fixed income.
More information on Vietnam Infrastructure Limited is available at www.vni-fund.com
Contacts:
Jonathan Viet Luu
VinaCapital Investment Management Limited
Investor Relations
+84 8 3821 9930
jonathan.luu@vinacapital.com
Joel Weiden
VinaCapital Investment Management Limited
Communications
+84 8 3821 9930
joel.weiden@vinacapital.com
Philip Secrett
Grant Thornton UK LLP, Nominated Adviser
+44 (0)20 7383 5100
philip.j.secrett@uk.gt.com
David Benda / Hugh Jonathan
Numis Securities Limited, Broker
+44 (0)20 7260 1000
funds@numis.com
Dear Shareholders,
During the financial year ended 30 June 2016, the Management and the Board of the Company
have been working to execute the restructuring of the Company and meet the plans that were
approved by shareholders in late 2014. I am pleased to report that we have made significant
headway during the year, and are well on track to meet the 2017 target deadline.
Fund Restructuring Completed
During the financial year, we undertook and completed the restructuring of the Company, with the
segregation of the Listed and Private Equity ("PE") portfolios. In July 2015, the Listed Portfolio was admitted to the London Stock Exchange AIM, trading under the ticker "VNIL", while the PE Portfolio continuing to trade under the ticker "VNI". Also in July 2015, the Forum One - VCG Partners Vietnam Fund (VVF) was successfully launched.
Two Listed Portfolio Share repurchase events occurred during the financial year: a tender offer in
August 2015, followed by a tender offer in February 2016 and culminating in a compulsory
repurchase in August 2016, after the close of the financial year. The Listed Portfolio Shares were
then cancelled and delisted on 17 August 2016.
Fund Performance
For the financial year ended 30 June 2016, the audited Net Asset Value (NAV) of the PE portfolio decreased from USD202.5 million, or USD0.58 per share, to USD77.2 million or
USD0.22 per share. The decline was primarily due to the segregation of the Listed and PE
portfolios, and a distribution to PE shareholders, as well as a downward valuation of the in-building
systems (IBS) assets of SEATH.
The audited NAV per share of the Listed Portfolio on 30 June 2016 increased USD0.29 per share, to USD0.36 per share. The rise was primarily due to the strong performance of VVF.
Performance Against Objectives
Our key objective is to realise the value of the Company's assets, and the investment manager
made substantial progress to that end during the financial year, including:
-- Vietnam Aircraft Leasing Corporation (VALC): VNI sold its 11.65% stake in the aircraft lessor for USD8.4 million in February 2016.
-- Vina-CPK: Located in Vinh Phuc, Vietnam, Vina-CPK operates industrial park and infrastructure projects with an investment license of up to 49 years. VNI sold its stake in June 2016 for USD22.1 million.
Subsequent to the close of the financial year, the Company reported two other important
developments:
-- SEATH: In August 2016, VNI reached an agreement to sell the BTS portion of the portfolio to OCK Vietnam Towers Ltd. for USD50 million. This transaction is expected to close by the end of December 2016.
-- Long An: On 2 November 2016, the Company received an out-of-court cash settlement of USD2.37 million, and the asset has been transferred to the buyer.
The IBS portion of the SEATH portfolio is the final asset to be divested, and the Board continues to
explore options to do so by June 2017.
Looking Ahead
Our top priority is to maximise shareholder value. In June 2016, we distributed USD11 million to
holders of the PE shares. We currently anticipate making another distribution during the first quarter of 2017 following the receipt of proceeds from the SEATH BTS sale. Subject to the sale of IBS, we would then anticipate making a further distribution either before, or in conjunction with, the commencement of the voluntary liquidation process towards the end of the 2017 financial year.
Furthermore, investors still holding VVF shares have benefitted from the fund's strong
performance. VVF continues to be Vietnam's largest open-ended UCITS-compliant fund, and it
continues to outperform the VN Index.
Vietnam's buoyant economy has received a great deal of international media attention this past
year, and with it, a growing flow of foreign investors interested in participating in this resilient
market. These and other factors have contributed to the solid progress we have made toward
completing the realisation process in an orderly and timely manner.
Given these positive developments, as well as consideration toward minimising administrative
expenses, the Board has decided to not hold an Annual General Meeting this year. Of course, I
invite shareholders with any issues or concerns to directly contact me or any of the other Directors.
On behalf of the entire Board, I thank you for your continued support.
Rupert Carington
Chairman
Vietnam Infrastructure Limited
19 December 2016
CONSOLIDATED BALANCE SHEET
As at
--------------------------------------------------
30 June 2016 30 June 2015
Note USD'000 USD'000
ASSETS
Non-current assets
Investment properties 6 - 73,435
Prepayment for acquisition of Long
An Industrial Service project 7 - 2,188
Property, plant and equipment 8 - 26,471
Financial assets at fair value through
profit or loss 11 - 8,902
Long-term deferred expenses - 1,110
Other long-term receivables - 333
--------------
- --------------
Total non-current assets -------------- 112,439 --------------
Current assets
Prepayment for acquisition of Long
An Industrial Service project 7 2,371 -
Inventories - 1,784
Trade and other receivables 10 4,455 11,730
Financial assets at fair value through
profit or loss 11 38,245 68,133
Prepayments to suppliers - 550
Short-term investments 12 - 4,608
Cash and cash equivalents 13 20,408 46,106
-------------- --------------
65,479 132,911
Assets classified as held for sale 14(c) 70,252 -
-------------- --------------
Total current assets 135,731 -------------- 132,911 --------------
Total assets 135,731 245,350
As at
----------------------------------
30 June 2016 30 June 2015
Note/
page USD'000 USD'000
EQUITY AND LIABILITIES
EQUITY
Equity attributable to shareholders of the Company
Share capital Note 15 - 3,502
Additional paid-in capital - 328,437
Foreign currency translation reserve (6,566) (6,359)
Equity reserve - 3,764
Other reserves - 306
Accumulated gains/(losses) 6,566 (127,135)
-------------- --------------
- 202,515
-------------- --------------
Non-controlling interests - 10,763
-------------- --------------
Total equity - 213,278
LIABILITIES
Non-current liabilities
Long-term borrowings Note 16 - 9,455
Long-term unearned revenue - 10,778
Deferred tax liabilities Note 17 - 1,113
-------------- --------------
- 21,346
Total non-current liabilities -------------- --------------
Current liabilities
Short-term borrowings Note 16 9,042 3,833
Corporate income tax payable - 262
Trade and other payables Note 18 1,868 6,209
Payable to related parties Note 19 531 422
-------------- --------------
11,441 10,726
Liabilities directly associated with assets classified as held
for sale Note 14(c) 2,727 -
-------------- --------------
Total current liabilities (excluding net assets attributable to holders of
redeemable shares
of the group and holders of non-controlling interests) 14,168 10,726
Net assets attributable to holders of the Company Page 9 115,480 -
Net assets attributable to holders of non-controlling interests
in subsidiaries Page 9 6,083 -
-------------- --------------
135,731 32,072
Total liabilities -------------- --------------
Total equity and liabilities 135,731 245,350
Net asset value per Listed Portfolio Share attributable to
holders of the Company (USD per
share) Note 24(b) 0.357 -
Net asset value per Private Equity Share attributable to
holders of the Company (USD per share) Note 24(b) 0.220 -
Net asset value per ordinary share attributable to shareholders
of the Company (USD per share) Note 24(b) - 0.578
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to shareholders of the Company
------------------------------------------------------------------------------------------
Foreign
Additional currency
Share paid-in Treasury translation Equity Other Accumulated Non-controlling Total
Capital capital shares reserve reserve reserves gain/(losses) Total interests equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Balance at 1 July 2014 4,021 346,157 (17,568) (5,536) 3,651 270 (117,584) 213,411 563 213,974
Loss for the year - - - - - - (9,488) (9,488) 118 (9,370)
Transfers to other
reserves - - - - - 36 (63) (27) - (27)
Other comprehensive
income - - - (823) - - - (823) (85) (908)
Total comprehensive -------- ------------ ---------- ---------- -------- -------- ------------ ------------ ---------- ------------
(loss)/income - - - (823) - 36 (9,551) (10,338) 33 (10,305)
for the year -------- ------------ ---------- ---------- -------- -------- ------------ ------------ ---------- ------------
Shares bought-back - - (671) - - - - (671) - (671)
Dilution of
non-controlling
interests - - - - 113 - - 113 (113) -
Capital deduction - - - - - - - - (500) (500)
Cancellation of treasury
shares (519) (17,720) 18,239 - - - - - - -
Acquisitions of
non-controlling
interests - - - - - - - - 10,780 10,780
-------- ------------ ---------- ---------- -------- -------- ------------ ------------ ---------- ------------
Total transactions with
shareholders
of the Company,
recognised
directly in equity (519) (17,720) 17,568 - 113 - - (558) 10,167 9,609
Balance at 30 June -------- ------------ ---------- ---------- -------- -------- ------------ ------------ ---------- ------------
2015 3,502 328,437 - (6,359) 3,764 306 (127,135) 202,515 10,763 213,278
Balance at 1 July 2015 3,502 328,437 - (6,359) 3,764 306 (127,135) 202,515 10,763 213,278
Transfers to net assets
attributable
to holders of Private
Equity
Shares (3,502) (226,013) - - (3,764) (306) 133,844 (99,741) - (99,741)
Transfers to net assets
attributable
to holders of Listed
Portfolio
Shares - (102,424) - - - - (350) (102,774) - (102,774)
Transfers to net assets
attributable
to holders of
non-controlling
interests in
subsidiaries - - - - - - - - (10,763) (10,763)
Other comprehensive
income
arising from disposal
of
a subsidiary - - - 1,518 - - (1,518) - - -
Other comprehensive loss
arising from exchange
differences
on translation of
foreign
operations - - - (1,725) - - 1,725 - - -
-------- ------------ ---------- ---------- -------- -------- ------------ ------------ ---------- ------------
Total transactions with
shareholders
of the Company,
recognised
directly in equity (3,502) (328,437) - (207) (3,764) (306) 133,701 (202,515) (10,763) (213,278)
Balance at 30 June -------- ------------ ---------- ---------- -------- -------- ------------ ------------ ---------- ------------
2016 - - - (6,566) - - 6,566 - - -
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE SHARES
Listed Private
Portfolio Equity Non-controlling
Note Shares Shares Sub total interests Total
USD'000 USD'000 USD'000 USD'000 USD'000
Balance at 1 July 2015 - - - - -
Transfers from equity 102,774 99,741 202,515 10,763 213,278
Repurchase of Listed Portfolio
Shares 15 (67,983) - (67,983) - (67,983)
---------- ---------- ---------- ---------- ----------
Net increase from share
transactions 34,791 99,741 134,532 10,763 145,295
---------- ---------- ---------- ---------- ----------
Increase/(decrease) in
net assets attributable
to holders of the Company
and holders of non-controlling
interests 15 3,520 (22,572) (19,052) (4,680) (23,732)
---------- ---------- ---------- ---------- ----------
Net assets attributable
to holders of the Company
and holders of non-controlling
interests as at 30 June
2016 15 38,311 77,169 115,480 6,083 121,563
CONSOLIDATED INCOME STATEMENT
Year ended 30 June
2016 2015
Note USD'000 USD'000
Restated (*)
Continuing operation
Revenue 20 - -
Cost of sales 20 - -
---------- ----------
Gross profit - -
---------- ----------
Dividend income 7 7,137
Interest income 12 264
Administrative expenses 21 (4,701) (7,344)
Fair value gain/(loss) of financial
assets at fair value through profit
or loss 22 5,544 (6,542)
Net loss from fair value adjustment 6
on investment properties - -
Revaluation loss on property, plant 8
and equipment - -
Impairment loss on prepayment on acquisition
of Long An Industrial Service project 7 - (2,966)
Gain on remeasurement of prepayment
on acquisition of Long An Industrial
Service project 7 183 -
Other income 6 886
Other expenses - (465)
---------- ----------
1,051 (9,030)
Operating profit/(loss) ---------- ----------
Finance income 1 54
(304) (190)
Finance costs ---------- ----------
Finance costs - net (303) (136)
---------- ----------
Profit/(loss) before tax 748 (9,166)
Income tax expense 23 - -
Deferred income tax 17,
23 - -
---------- ----------
Profit/(loss) from continuing operations 748 (9,166)
Loss from discontinued operations 14(a) (12,948) (204)
---------- ----------
Loss for the year (12,200) (9,370)
Distribution to shareholders (11,000) -
Decrease in net assets attributable
to
Shareholders of the Company 18,687 10,456
Non-controlling interests 4,680 (151)
---------- ----------
Gain for the year 167 935
Earning per Listed Portfolio Share (USD
per share) 24(a) 0.023 -
Loss per Private Equity Share (USD per
share) 24(a) (0.032) -
Loss per ordinary share (USD per share) 24(a) - (0.026)
(*) See Note 14 for details regarding the restatement as a result of operation being classified as discontinued.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 30 June
2016 2015
Note USD'000 USD'000
Restated (*)
Gain for the year 167 935
Other comprehensive loss
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation
of foreign operations from discontinued
operation:
Other comprehensive income arising
from disposal of a subsidiary 14(b) 1,518 -
Other comprehensive loss arising from
exchange differences on translation
of foreign operations 14(a) (1,725) (908)
-------- --------
(207) (908)
Items that will not be reclassified
subsequently to profit or loss:
Others (**) 14(a) 40 (27)
---------- ----------
Other comprehensive loss for the year, (167) (935)
net of tax ---------- ----------
Total comprehensive income for the
year - -
(*) See Note 14 for details regarding the restatement as a result of operation being classified as discontinued.
(**) These represent reserves provided on profit after tax of the Group's subsidiaries as required by local regulations.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 30 June
2016 2015
Note USD'000 USD'000
Operating activities
Profit/(loss) from continuing operation
before tax 748 (9,166)
Loss from discontinued operation before
tax (12,090) (1,518)
---------- ----------
Loss before tax (11,342) (10,684)
Adjustments for:
Depreciation and amortisation 8 5,184 549
Fair value (gain)/loss of financial
assets at fair value through profit
or loss 22 (5,544) 6,542
Fair value loss of investment properties 6 5,836 6,610
Fair value (gain)/loss on prepayment
for acquisition of Long An Industrial
Service project 7 (183) 2,966
Revaluation loss on property, plant
and equipment 8 9,072 1,257
Gain from sale of subsidiary 14(a) (1,719) -
Written-off property, plant and equipment - 293
Unrealised foreign exchange (gains)/losses (119) 107
Interest expense 623 293
Interest income (12) (808)
Dividend income (7) (7,137)
Profit/(loss) before changes in working ---------- ----------
capital 1,789 (12)
Changes in prepayments (203) (495)
Changes in trade receivables and other
assets 5 1,060
Change in assets classified as held
for sales (2,018) -
Changes in inventories 836 (241)
Changes in trade payables and other
liabilities (402) 5,703
Change in liabilities classified as
held for sales 1,192 -
Taxes paid (887) (744)
---------- ----------
312 5,271
Net cash inflow from operating activities ---------- ----------
Investing activities
Interest received 12 903
Dividends received 1,802 5,373
Purchase of short-term investment (2,149) 4,158
Proceeds from disposal of short-term
investment 5,975 -
Purchases of financial assets - (26,434)
Acquisitions of subsidiaries - (16,800)
Purchases of investment properties 6 (2,323) (5,332)
Cash transferred to VVF 11 (35,036) -
Purchases of property, plant and equipment 8 (1,186) (1,034)
Proceeds from disposals of financial
assets at fair value through profit
and loss 11 11,387 59,055
Net proceeds from disposals of a subsidiary
held for sale 14(b) 15,310 -
---------- ----------
Net cash (outflow)/inflow from investing (6,208) 19,889
activities ---------- ----------
Year ended 30 June
2016 2015
Note USD'000 USD'000
Financing activities
Interest paid (623) (241)
Return of capital to non-controlling
interest - (500)
Proceeds from borrowings 419 14,184
Repayments of borrowings (4,191) (1,520)
Distributions paid to holders of Private
Equity Shares (8,200) -
Purchase VVF shares to distribute to
holders of Private Equity Shares (2,800) -
Treasury shares bought-back - (671)
---------- ----------
Net cash (outflow)/inflow from financing
activities (15,395) 11,252
---------- ----------
Net (decrease)/increase in cash and
cash equivalents for the year (21,291) 36,412
Cash and cash equivalents at beginning
of the year 13 46,106 9,761
Exchange differences on cash and cash
equivalents (27) (67)
Cash and cash equivalents at end of ---------- ----------
the year 24,788 46,106
Made up of:
Cash and equivalents per the consolidated
balance sheet 13 20,408 46,106
Included in the assets of the disposal
groups 14(c) 4,380 -
Major non-cash transactions
Year ended 30 June
2016 2015
Note USD'000 USD'000
Contribution of investment in listed
shares to VVF units 11 67,388 -
Repurchase of Listed Portfolio Shares
in exchange for VVF units 11 67,983 -
Distribution to holders of Private Equity
Shares in exchange for VVF units 11 2,800 -
1. GENERAL INFORMATION
Vietnam Infrastructure 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 original principal activity of the Group was to invest in a diversified portfolio of entities owning infrastructure projects and assets primarily in Vietnam. The Group could invest and hold equity and debt instruments in unquoted companies that themselves held, developed or operated infrastructure assets. The Group could also invest in entities whose shares or other instruments were listed on a stock exchange, or traded on over-the-counter ("OTC") markets and in other funds that invested in infrastructure projects or assets.
On 22 July 2015, following shareholder approval of a proposal to restructure the Company, the listed and private equity components of VNI's portfolio were separated into two distinct pools, the Listed Portfolio and the Private Equity Portfolio, through a bonus issue of new Listed Portfolio Shares on a one-for-one basis to existing ordinary shareholders. As a result the Listed Portfolio and the Private Equity Portfolio were represented by separate classes of shares which were listed on the London Stock Exchange's Alternative Investment Market ("AIM") under the tickers VNIL and VNI, respectively. The Listed Portfolio assets and any surplus cash in the Company were contributed to Forum One-VCG Partners Vietnam Fund ("VVF"), a newly established sub-fund of Forum One, a Luxembourg open-ended investment company or SICAV ("Forum One") for consideration of 10,242,351 Class A VVF shares at the subscription price of USD10 per Class A VVF share. VVF's particular focus is to invest in listed equities on the Ho Chi Minh Stock Exchange and the Hanoi Stock Exchange; or other issuers that carry out a substantial part of their economic activity in Vietnam and are listed, traded or dealt on stock exchanges worldwide.
(i) Listed Portfolio Shares ("LPS")
LPS shareholders were given an opportunity to tender their shares in return for VVF units in August 2015 and February 2016. In August 2016 all the remaining outstanding LPS were compulsorily repurchased by the Company in return for VVF units. All shares repurchased by the Company were cancelled on the respective repurchase date so that after the date of the final repurchase no LPS remain in issue. The admission of the shares for trading on AIM was also cancelled that day.
(ii) Private Equity Shares ("PES")
The disposal proceeds from the sale of investments in the Private Equity Portfolio and surplus net cash-flows are distributed to the holders of the PES on a periodic basis. At such times holders of PES are given the option to either receive distributions in cash or have the funds invested by the Company in VVF Units (at the then current net asset value of a VVF Unit) and then to have the VVF Units distributed to them. Holders of PES who do not make an election are deemed to have elected to receive VVF Units.
The Company is seeking to fully realise the Private Equity Portfolio before 30 June 2017.
The consolidated financial statements for the financial year ended 30 June 2016 were approved for issue by the Board of Directors on 19 December 2016.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the financial years presented.
2.1 Basis of preparation
(a) Compliance with International Financial Reporting Standards ("IFRS")
The consolidated financial statements of Vietnam Infrastructure Limited have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").
Going concern
The Company is progressively realising its Private Equity Portfolio which it expected to complete by 30 June 2017. Following the realisation of the portfolio and return of proceeds to shareholders the Company will be wound up in accordance with the Amended and Restated Memorandum of Association dated 15 December 2014. As a consequence, these financial statements have been prepared using the liquidation basis, as the going concern basis is no longer considered appropriate. The Company continues to apply the same IFRS accounting policies as has been used in prior years as management do not believe there is a difference in the accounting measurement basis that would be applied using a going concern basis of accounting versus what would apply under a liquidation basis of accounting.
(b) Historical cost convention
The consolidated financial statements have been prepared using the historical cost convention, as modified by the revaluation of investment properties, and in-building cellular enhancement systems ("IBS") under property, plant and equipment, and financial assets at fair value through profit or loss and financial liabilities, the measurement bases of which are described in the accounting policies below.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3(i).
(c) New standards and interpretation effective 1 July 2015 adopted by the Group
There are no standards, interpretations and amendments to existing standards that are effective for the financial year beginning 1 July 2015 that have had a material impact on the Group.
2.2 New significant accounting policies
LPS and PES are classified as financial liabilities
Under IAS 32, both the LPS and PES are classified as financial liabilities as they both meet the definition of puttable instruments. That is, they are financial instruments that give the holders the right to put the instruments back to the issuer for cash or another financial asset or are automatically put back to the issuer on the occurrence of an uncertain future event.
2.3 Principles of consolidation and equity accounting (a) Subsidiaries
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidences of an impairment of the transferred asset. All of the Group's subsidiaries have a reporting date of 31 December. For subsidiaries with a different reporting date, the management information up to 30 June are used for consolidation purposes and are adjusted for consistency with the Group's accounting policies.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated financial statements of profit or loss, statement of comprehensive income, statement of changes in equity, statement of changes in net assets attributable to holder of redeemable shares and balance sheet respectively.
Business combination
The Group applies the acquisition method to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred for the acquisition of a subsidiary comprises the:
-- fair value of the assets transferred -- liabilities incurred to the former owners of the acquired business -- equity interests issued by the group -- fair value of any asset or liability resulting from a contingent arrangement, and -- fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the acquired entity's identifiable net assets.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred, amount of any non-controlling interest in the acquired entity, and acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss.
(b) Change in ownership interests
When the group ceases to consolidate for an investment because of a loss of control, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
2.4 Segment reporting
Operating segments are reported in a manner consistent with the internal management reporting information for the Investment Manager's management, monitoring of investments, and decision making. The Investment Manager assesses the financial performance and position of the Group, and makes strategic decisions.
The operating segments by investment portfolio include energy, property and infrastructure development, telecommunications, transportation and logistics, general infrastructure, other capital markets and cash.
2.5 Foreign currency translation (a) Functional and presentation currency
The Group's consolidated financial statements are presented in United States Dollars ("USD") ("the presentation currency"). The financial statements of each consolidated entity are initially prepared in the currency of the primary economic environment in which the entity operates ("the functional currency"), which for most investments is Vietnamese Dong ("VND"). The financial statements prepared using VND are then translated into the presentation currency. USD is used as the presentation currency because it is the primary basis for the measurement of the performance of the Group and a large proportion of significant transactions of the Group are denominated in USD.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated income statement. They are deferred in equity if they are attributable to part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the consolidated income statement, within finance costs. All other foreign exchange gains and losses are presented in the consolidated income statement on a net basis within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss.
(c) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
ii) income and expenses for each consolidated income statement and consolidated statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
iii) all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
2.6 Investment properties
Investment properties are properties owned or held to earn rentals or capital appreciation, or both, or land held for a currently undetermined use.
Investment property is measured initially at its cost, including related transaction costs. After initial recognition, investment property is carried at fair value.
Investment property under construction is measured at fair value if the fair value is considered to be reliably determinable. Investment property under construction for which the fair value cannot be determined reliably, but for which the company expects that the fair value of the property will be reliably determinable when construction is completed, are measured at cost less impairment until the fair value becomes reliably determinable or construction is completed - whichever is earlier. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, the Group uses alternative valuation methods, such as recent prices on less active markets or discounted cash flow projections. Valuations are performed as of the financial position date by the Company's independent professional valuer and/or internal investment officers who have relevant professional experience, and professional valuers who hold recognised relevant professional qualifications and have recent experience in the location and category of the investment property being valued. These valuations form the basis for the carrying amounts in the financial statements. Investment property that is being redeveloped for continuing use as investment property or for which the market has become less active continues to be measured at fair value.
2.7 Leases (a) A group company is the lessee in an operating lease
Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases, unless they are treated as investment properties (Note 2.6). Where the Group has the use of an asset held under an operating lease, payments made under the lease are charged to the consolidated income statement on a straight line basis over the term of the lease. Prepayments for operating leases represent property held under operating leases where a portion, or all, of the lease payments have been paid in advance, and the properties cannot be classified as an investment property.
(b) A group company is the lessor in an operating lease
Properties leased out under operating leases are included in investment property in the consolidated balance sheet.
2.8 Financial assets 2.8.1 Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. The Group does not have any financial assets classified as available for sale or held to maturity.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets that are designated by the management to be carried at fair value through profit or loss at inception. They are not classified as held for trading but are managed, and their performance is evaluated on a fair value basis in accordance with the Company's documented investment strategy. Financial assets at fair value through profit or loss held by the Group include listed and unlisted securities. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group's loans and receivables comprise "Trade and other receivables" and "Cash and cash equivalents" in the consolidated balance sheet.
Trade and other receivables are amounts due from customers for services performed in the ordinary course of business.
2.8.2 Recognition and derecognition
Purchases or sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.
2.8.3 Measurement
Investments are initially recognised at fair value plus transaction costs for all financial assets which are not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the consolidated income statement. Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.
If the investments do not have a quoted market price in an active market and whose fair value cannot be reliably measured, such investments shall be measured at cost, less provision for impairment.
Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are presented in the consolidated income statement within "fair value gain/(loss) of financial assets at fair value through profit or loss" in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the consolidated income statement when the Group's right to receive payments is established.
2.9 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
2.10 Prepayments for acquisitions of Long An Industrial Service project
Prepayments are made by the Group to vendors for land compensation and other related costs, and professional fees directly attributed to the projects, where the final transfer of the investment/property is pending the approval of the relevant authorities and/or is subject to either the Group or the vendor completing certain performance conditions set out in agreements. Such prepayments are measured initially at cost until such time as the approval is obtained or conditions are met, at which point they are transferred to appropriate investment accounts.
Pre-payments are carried at cost less any accumulated impairment losses.
2.11 Property, plant and equipment
SEATH In-Building Cellular Enhancement Systems ("IBS") under machinery are shown at fair value, based on valuation by independent professional valuer and/or the Company's internal investment officers, less subsequent depreciation. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. A revaluation surplus is credited to other comprehensive income and accumulated in shareholders' equity under the heading of revaluation surplus and is transferred to retained earning when the asset is sold. A revaluation decrease is charged against any related revaluation surplus to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of that same asset. Any remaining balance of the decrease then be recognised as an expense in profit and loss. All other property, plant and equipment are stated at cost less depreciation. The cost of self-constructed assets includes the cost of materials, direct labour, overheads and the initial estimate of the costs of dismantling and removing the items and restoring the site on which they are located.
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. The carrying values of any parts replaced as a result of such replacements are expensed at the time of replacement. All other costs associated with the maintenance of property, plant and equipment are recognised in the consolidated income statement as incurred.
Depreciation is charged to the consolidated income statement on a straight-line basis over the estimated useful lives of property, plant and equipment, and major components that are accounted for separately. The estimated useful lives are as follows:
Buildings 6 to 10 years Plant and machinery 3 to 7 years Office equipment 2 to 5 years Motor vehicles 6 to 10 years
Material residual value estimates and estimates of useful lives are reviewed at least annually, irrespective of whether assets are revalued.
2.12 Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the consolidated balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the consolidated balance sheet.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the consolidated income statement.
2.13 Impairment of assets (a) Impairment of non-financial assets
Assets that have an indefinite useful life, for example, prepayments for acquisitions of investment properties, are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or group of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting period.
(b) Impairment of financial assets
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Assets carried at amortised cost
(i) For loans and receivables, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument's fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.
(ii) For trade receivables, individual receivables which are known to be uncollectible are written off by reducing the carrying amount directly. The other receivables are assessed collectively to determine whether there is objective evidence that an impairment has been incurred but not yet been identified. For these receivables the estimated impairment losses are recognised in a separate provision for impairment. The group considers that there is evidence of impairment if any of the following indicators are present:
-- significant financial difficulties of the debtor, -- probability that the debtor will enter bankruptcy or financial reorganisation, and -- default or delinquency in payments.
Receivables for which an impairment provision was recognised are written off against the provision when there is no expectation of recovering additional cash.
Impairment losses are recognised in profit or loss within other expenses. Subsequent recoveries of amounts previously written off are credited against other expenses.
The Group's trade and other receivables, prepayments for acquisitions of investment property and interests in associates are subject to impairment testing.
2.14 Cash and cash equivalents
Cash and cash equivalents includes cash in bank and on hand, as well as short term highly liquid investments such as money market instruments and bank deposits with original terms of not more than three months.
2.15 Share capital
Ordinary shares were classified as equity. Share capital is determined using the nominal value of shares that have been issued. Additional paid-in capital includes any premiums received on the initial issuance of the share capital. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax from the proceeds. Any transaction costs associated with the issuing of shares are deducted from additional paid-in capital, net of any related income tax benefits.
On 22 July 2015, the ordinary shares were redesignated as PES and subsequently classified as financial liabilities. Refer to Note 15 for details.
2.16 Trade and other payables
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
2.17 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the consolidated income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
2.18 Borrowing costs
All borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.19 Current and deferred income tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in the consolidated income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, tax authorities relating to the current or prior reporting periods that are unpaid at the reporting date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate based on the taxable profit for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the consolidated income statement.
Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.
Deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and associates is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future.
Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income.
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the reporting date. Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the consolidated income statement. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to other comprehensive income are charged or credited directly to other comprehensive income.
2.20 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation and there is uncertainty about the timing or amount of the future expenditure require in settlement. Where there are a num-ber of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Long-term pro-vi-sions are discounted to their present values, where the time value of money is material.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate of the Group's management.
2.21 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for services rendered, stated net of discounts, returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured, when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group's activities, as described below:
(a) Sale of services
The Group's revenue represents the rental income from Southeast Asia Telecomunication Holdings ("SEATH") Base Transceiver Station ("BTS") tower network and SEATH In-Building Cellular Enhancement Systems ("IBS") leasing services, information rescue services and from lease of infrastructure in Ba Thien industrial park.
Revenue from SEATH BTS tower network and SEATH IBS services is recognised in the accounting period in which the services are rendered and the rental income is due to be received.
Revenue from lease of infrastructure is recognised on the straight line basis over the entire lease term. Rental income received in advance over one year is recognised under long-term unearned revenue.
(b) Interest income
Interest income is recognised on the effective interest rate basis.
(c) Dividend income
Dividend income is recognised when the right to receive the dividend is established.
2.22 Related parties
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. Enterprises and individuals that directly, or indirectly through one or more immediately, control or are controlled by, or under common control with, the Company including holding company, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning directly, or indirectly, an interest in the voting power of the Company that give them significant influence over the entity, key management personnel, including directors and officers of the Company and close members of their families. When considering possible related party relationships, attention is directed to the substances of the relationship, and not merely the legal form.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
When preparing the consolidated financial statements, the Group undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and may not equal the estimated results. Information about significant judgements, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below.
3.1 Critical accounting estimates and assumptions (a) Fair value of investment properties
The investment properties of the Group are stated at fair value in accordance with Note 2.6. The fair values of investment properties of Ba Thien Industrial Park and SEATH Base Transceiver Station ("BTS") tower network have been determined by independent professional valuers and the Company's internal investment officers respectively. These valuations are based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results. The estimated fair values provided by the independent professional valuers and/or the Company's internal investment officers are used by the Audit and Valuation Committee as the primary basis for estimating each property's fair value. In making its judgement, the committee considers information from a variety of sources, including:
i. current prices in an active market for properties of different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect those differences;
ii. recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices;
iii. any other adjustments relevant to the property held by the Group but which were not factored into the valuation by the independent professional valuers, such as land compensation, costs and any other discount factors; and
iv. discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of external evidence such as current market rents and sales prices for similar properties in the same location and condition and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of cash flows.
Refer to sensitive analysis for key valuation inputs in Note 28(b)(v).
(b) Fair value of SEATH IBS under property, plant and equipment
The IBS of the Group are stated at fair value in accordance with Note 2.11. The fair values of IBS have been determined by independent professional valuers and/or the Company's internal investment officers. These valuations are based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results. The estimated fair values provided by the independent professional valuers and/or the Company's internal investment officers are used by the Audit and Valuation Committee as the primary basis for estimating IBS's fair value. In making its judgement, the committee considers information from a variety of sources, including discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of external evidence such as current market rents, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of cash flows. Refer to sensitive analysis for key valuation inputs in Note 28(b)(v).
(c) Fair value of financial assets at fair value through profit or loss
Listed securities are quoted at the bid price at each reporting date. For unlisted securities which are traded over-the-counter, the fair value is the average brokers' price obtained from a minimum sample of three reputable securities companies at the reporting date, or the published daily net asset value.
The fair value of financial assets that are not traded in an active market (for example, unlisted securities where market prices are not readily available) is determined by using valuation techniques. The Group uses judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at each reporting date. The valuations are also obtained from the Company's internal investment officers to evaluate and adjust valuations. The outcomes may vary from the actual prices that would be achieved in an orderly transaction between market participants at the reporting date. Refer to sensitive analysis for key valuation inputs in Note 28(a)(iv).
(d) Fair value of prepayment for acquisition of Long An Industrial Service project
The prepayment for acquisition reflects the Group's investment in the Long An Industrial Service project. The value of this asset was originally based on the sale and purchase agreement signed between the Group and the purchaser in June 2012; however, the buyer has defaulted on its obligations to settle the outstanding balance receivable, citing market conditions. The Investment Manager commenced legal procedures on 15 April 2015 to recover the outstanding balance. On 16 June 2016, the court ruling result is favourable to the Group which was appealed by the buyer to a higher court. A final settlement was agreed with the purchaser on 4 October 2016 and the defendant paid the finally agreed amount in October 2016. In light of these developments, the Group has estimated the recoverable amount at 30 June 2016 based on the amount actually received.
3.2 Critical judgements in applying the Group's accounting policies (a) Classification of SEATH BTS tower network as investment properties
Management has classified the BTS tower network as investment properties measured at fair value. Management determined that BTS tower network can be considered as similar to buildings and thus can be classified as investment properties. The tower network also displays similar characteristics to investment properties, in that space on the tower network is let to telecommunication tenants to earn rentals.
(b) Investments in Southern Star Telecommunication Equipment Joint Stock Company ("SST") and Vien Tin Joint Stock Company ("Vien Tin")
Management assessed that its acquisitions of Southern Star Telecommunication Equipment Joint Stock Company ("SST") and Vien Tin Joint Stock Company ("Vien Tin") in pervious year were acquisitions of businesses and not acquisitions of assets. The assessment was based on the criteria of whether at the date of acquisition, a business existed. The assessment criteria is whether there were inputs, significant processes and outputs on the date the subsidiary was required. In the context of SST and Vien Tin, management determined that at the date of acquisitions, the businesses of SST and Vien Tin consist of their in-building cellular enhancement systems, and that they have the ability to create economic benefits to provide a return to their owners. Consequently, the acquisitions of SST and Vien Tin have been accounted for as business combinations.
4 SEGMENT INFORMATION
In identifying its operating segments, management generally follows the Group's sectors of investments which are based on internal management reporting information for the Investment Manager's management, monitoring of investments, and decision making. The operating segments by investment portfolio include energy, property and infrastructure development, telecommunications, transportation and logistics, general infrastructure, other capital markets and cash.
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, as reported to the Board, segment profit or loss using a measure which is consistent with that in profit or loss. 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:
Property
and Other
infrastructure Transportation General capital
Assets Energy development Telecom-munications and logistics infrastructure markets Cash Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
As at 30 June
2016
Prepayment
for
acquisition
of Long
An
Industrial
Service
project - 2,371 - - - - - 2,371
Trade and
other
receivables - 4,455 - - - - - 4,455
Financial
assets at
fair value
through
profit or
loss - - - - - 38,245 - 38,245
Cash and cash
equivalents - - - - - - 20,408 20,408
Assets
classified
as held for
sale - - 70,252 - - - - 70,252
Total ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------
assets - 6,826 70,252 - - 38,245 20,408 135,731
Total
assets
include:
Additions
to
non-current
assets - - 3,509 - - - - 3,509
As at 30 June
2015
Investment
properties - 24,637 48,798 - - - - 73,435
Prepayment
for
acquisition
of Long
An
Industrial
Service
project - 2,188 - - - - - 2,188
Property,
plant and
equipment - 140 26,331 - - - - 26,471
Long-term
deferred
expenses - - 1,110 - - - - 1,110
Other
long-term
receivables - - 333 - - - - 333
Inventories - - 1,784 - - - - 1,784
Trade and
other
receivables - 975 6,878 - - 3,877 - 11,730
Financial
assets at
fair value
through
profit or
loss 14,367 4,838 - 14,605 3,833 39,392 - 77,035
Prepayments
to suppliers - 70 480 - - - - 550
Short-term
investments - - - - - - 4,608 4,608
Cash and cash
equivalents - - - - - - 46,106 46,106
Total ---------- ---------- ---------- ---------- ---------- ---------- -------- ------------
assets 14,367 32,848 85,714 14,605 3,833 43,269 50,714 245,350
Total
assets
include:
Additions
to
non-current
assets - 5,497 27,682 - - - - 33,179
Revenue and
segment
profit and
loss
Property
and Other
infrastructure Transportation General capital
Energy development Telecom-munications and logistics infrastructure markets Cash Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Year ended 30
June 2016
Dividend
income - - - - - 7 - 7
Interest
income - - - - - 12 - 12
Fair value
gain of
financial
assets
at fair
value
through
profit or
loss - - - - - 5,544 - 5,544
Fair value
gain on
prepayment
for
acquisition
of Long An
Industrial
Service
project - 183 - - - - - 183
---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------
Total - 183 - - - 5,563 - 5,746
Unallocated (4,998)
expenses ------------
Profit before
tax from
continuing
operations 748
Year ended
30 June 2015
Dividend
income 1,949 113 - 3,306 536 1,233 - 7,137
Interest
income - - - - - - 264 264
Fair value
(loss)/gain
of
financial
assets at
fair value
through
profit
or loss (6,146) (135) - (1,115) 2,104 (1,250) - (6,542)
Impairment
loss on
prepayment
for
acquisition
of Long An
Industrial
Service
project - (2,966) - - - - - (2,966)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------
Total (4,197) (2,988) - 2,191 2,640 (17) 264 (2,107)
Unallocated (7,059)
expenses ------------
Loss before
tax from
continuing
operations (9,166)
5 SUBSIDIARIES
The operating subsidiaries of the Group are incorporated in Vietnam which are held through special purpose vehicles established outside of Vietnam and the details are as follows:
Equity interest
held by the
Group (%)
------------------
30 June 30 June
Name of entity 2016 2015 Principal activity
Ba Thien Industrial park
Vina-CPK Limited (*) 0.0 100.0 Industrial park
SEATH Base Transceiver Station
("BTS") tower network (**)
VNC-55 Infrastructure Investment
Joint Stock Company 100.0 100.0 Telecommunications
Mobile Information Service Joint
Stock Company 100.0 100.0 Telecommunications
Zone II Mobile Information Service
Joint Stock Company 99.9 99.9 Telecommunications
Global Infrastructure Investment
Joint Stock Company 100.0 100.0 Telecommunications
Truong Loc Telecom Trading and
Service Joint Stock Company 98.0 98.0 Telecommunications
Tan Phat Telecom Joint Stock Company 99.9 99.9 Telecommunications
T&A Company Limited 100.0 100.0 Telecommunications
SEATH In-Building Cellular Enhancement
Systems ("IBS")
Southern Star Telecommunication
Equipment Joint Stock Company ("SST") 70.0 70.0 Telecommunications
Vien Tin Joint Stock Company ("Vien
Tin") 75.0 75.0 Telecommunications
(*) Disposal of Vina-CPK Limited
On 1 February 2016, the Group entered into a capital assignment agreement with a Vietnamese buyer to dispose of its 100% equity interest in Vina-CPK Limited for total consideration of USD22.1 million. The Group subsequently lost control of Vina-CPK Limited on 31 March 2016 and so the subsidiary's financial performance and cash flow information are reported as discontinued operations in these consolidated financial statements. The book value of the net assets at the disposal date was USD20.4 million, resulting a gain of USD1.5 million (net of tax) for the Group which was recognised in the consolidated income statement (Note 14).
(**) Agreement to sell equity interest in SEATH
On 27 April 2016, the Company signed a term sheet, which was later replaced by a share sale and purchase agreement dated 4 August 2016 to transfer 100% of its holding of BTS tower network in SEATH to OCK Vietnam Towers Pte. Ltd. The transaction will result in a net cash proceeds of USD50.0 million to the Company. The completion of the transaction is subject to the receipt of sale proceeds and other conditions precedent. The sale proceeds are expected to be fully received in January 2017 (Note 30(a)).
6 INVESTMENT PROPERTIES
30 June 2016 30 June 2015
USD'000 USD'000
Opening balance 73,435 75,002
Additional investments made during
the year 2,323 5,332
Transfer to property, plant and equipment
(Note 8) (684) -
Net loss from fair value adjustment
(Note 14(a)) (5,836) (6,610)
Currency translation difference in
other comprehensive income (1,003) (289)
Transfer to disposal groups classified
as held for sale
(Note 14(e)) (68,235) -
------------ ------------
Closing balance - 73,435
As at 30 June 2016 and 30 June 2015, the BTS tower network was pledged with banks as security for long-term borrowings granted to a subsidiary (Note 16).
Measuring investment property at fair value
Investment properties, principally lands and BTS tower network, which were held for long-term rental yields in 2015, are now held for sale. They are not occupied by the Group and are carried at fair value. Changes in fair values are presented in profit or loss as part of loss from discontinued operations.
Significant estimate - fair value of investment property
Information about the valuation of investment properties is provided in Note 28(b).
Amounts recognised in profit or loss for investment properties
30 June 2016 30 June 2015
USD'000 USD'000
Rental income 12,197 12,029
Direct operating expenses from property
that generated rental income (5,427) (4,716)
Direct operating expenses from property
that did not generate rental income (233) (1,061)
Fair value losses recognised (*)
(Note 14(a)) (5,836) (6,610)
(*) Fair value losses recognised in the profit or loss from discontinued operations during the year included the fair value loss of the BTS tower network which was presented as assets classified as held for sale as at reporting date amounting to USD5.5 million.
Contractual obligations and leasing arrangements
As at 30 June 2016, there were no significant contractual obligations to purchase, construct or develop investment properties or conduct repairs, maintenance or other enhancements.
Information about leasing arrangements of investment properties is provided in Note 27.
7 PREPAYMENT FOR ACQUISITION OF LONG AN INDUSTRIAL SERVICE PROJECT
30 June 2016 30 June 2015
USD'000 USD'000
Opening balance 2,188 5,154
Impairment loss of prepayment for
acquisition of Long An Industrial
Service project - (2,966)
Gain on remeasurement of prepayment
for acquisition of Long An Industrial
Service project 183 -
-------- --------
Closing balance 2,371 2,188
On 4 October 2016, the purchaser of Long An Industrial Service project agreed to pay the Company VND53.3 billion, equivalent to USD2.4 million, as a final settlement of this outstanding balance. A gain of USD0.2 million was recorded to reflect the final amount recovered by the Company in October 2016. Refer to Note 3.1(d) for further information. As at 30 June 2015,an impairment loss of USD3.0 million was recognised based on expected recoverable amount at the reporting date.
8 PROPERTY, PLANT AND EQUIPMENT
Movement during the financial year ended 30 June 2016:
Other Assets
Plant Motor Office assets under
Buildings and machinery vehicles equipment construction Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Historical
cost
At 1 July 2015 222 26,368 302 6 37 452 27,387
New purchases - 130 67 27 2 960 1,186
Transfer from
assets under
construction - 764 - - - (764) -
Transfers from
investment
properties
(Note 6) 684 - - - - - 684
Revaluation
loss
(Note 14(a)) - (9,072) - - - - (9,072)
Written-off - (92) - - - - (92)
Transfers to
assets classified
as held for
sale (Note
14(e)) (902) (17,508) (362) (33) (39) (648) (19,492)
Translation
differences (4) (590) (7) - - - (601)
-------- ---------- -------- -------- -------- -------- ----------
At 30 June
2016 - - - - - - -
-------- ---------- -------- -------- -------- -------- ----------
Accumulated
depreciation
At 1 July 2015 58 692 137 4 25 - 916
Charged for
the year 25 5,101 43 9 6 - 5,184
Written-off - (92) - - - - (92)
Transfers to
assets classified
as held for
sale (Note
14(e)) (81) (5,691) (176) (11) (28) - (5,987)
Translation
differences (2) (10) (4) (2) (3) - (21)
-------- ---------- -------- -------- -------- -------- ----------
At 30 June
2016 - - - - - - -
-------- ---------- -------- -------- -------- -------- ----------
Net book value
At 1 July 2015 164 25,676 165 2 12 452 26,471
At 30 June
2016 - - - - - - -
Movement during the financial year ended 30 June 2015:
Assets
Plant Motor Office Other under
Buildings and machinery vehicles equipment assets construction Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Historical cost
At 1 July 2014 120 822 543 8 31 - 1,524
New purchases - 313 102 2 7 610 1,034
Transfer from
assets under
construction - 158 - - - (158) -
Acquisitions
of subsidiaries 105 26,706 - 2 - - 26,813
Revaluation
loss
(Note 14(a)) - (1,257) - - - - (1,257)
Written-off - (76) (335) (6) - - (417)
Translation
differences (3) (298) (8) - (1) - (310)
-------- ---------- -------- -------- -------- -------- ----------
At 30 June 2015 222 26,368 302 6 37 452 27,387
-------- ---------- -------- -------- -------- -------- ----------
Accumulated
depreciation
At 1 July 2014 33 269 183 8 18 - 511
Charged for
the year 26 479 36 1 7 - 549
Written-off - (40) (79) (5) - - (124)
Translation
differences (1) (16) (3) - - - (20)
-------- ---------- -------- -------- -------- -------- --------
At 30 June 2015 58 692 137 4 25 - 916
-------- ---------- -------- -------- -------- -------- --------
Net book value
At 1 July 2014 87 553 360 - 13 - 1,013
At 30 June 2015 164 25,676 165 2 12 452 26,471
Plant and machinery primarily comprises of SEATH IBS which are measured at fair value less accumulated depreciation.
As at 30 June 2016, the net book value of the plant and machinery of IBS is USD11.4 million (2015: USD25.09 million) which has been classified as assets held for sale together with other property, plant and equipment disclosed in Note 14. All other property, plant and equipment are stated at cost less depreciation.
Significant estimates - valuations of plant and machinery of IBS
Information about the valuation of plant and machinery of IBS is provided in Note 28(b).
9 FINANCIAL INSTRUMENTS BY CATEGORY
Financial
assets at
Loans and fair value
receivables through profit Total
or loss
USD'000 USD'000 USD'000
Financial assets
As at 30 June 2016
Trade and other receivables
(Note 10) 4,455 - 4,455
Financial assets at fair value
through profit or loss (Note
11) - 38,245 38,245
Cash and cash equivalents (Note
13) 20,408 - 20,408
Assets classified as held for
sale (Note 14(c)), include:
* Trade and other receivables 5,347 - 5,347
* Short-term investments (Note 12) 781 - 781
* Cash and cash equivalents 4,380 - 4,380
---------- ---------- ----------
Total financial assets 35,371 38,245 73,616
Financial assets denominated
in:
* USD 2,405 - 2,405
* VND 32,966 38,245 71,211
---------- ---------- ----------
35,371 38,245 73,616
As at 30 June 2015
Trade and other receivables
(Note 10) 11,730 - 11,730
Financial assets at fair value
through profit or loss (Note
11) - 77,035 77,035
Short-term investments (Note
12) 4,608 - 4,608
Cash and cash equivalents (Note
13) 46,106 - 46,106
---------- ---------- ----------
Total financial assets 62,444 77,035 139,479
Financial assets denominated
in:
* USD 33,075 - 33,075
* VND 29,369 77,035 106,404
---------- ---------- ----------
62,444 77,035 139,479
Liabilities
at amortised
cost
USD'000
Financial liabilities
As at 30 June 2016
Trade and other payables (Note 18, Note
19) 2,399
Borrowings (Note 16) 9,042
Liabilities directly associated with assets
classified as held for sale (Note 14(c)),
include:
* Borrowings 71
* Trade and other payables 1,670
----------
Total financial liabilities 13,182
Financial liabilities denominated in:
* USD 11,440
* VND 1,742
----------
13,182
As at 30 June 2015
Trade and other payables (Note 18, Note
19) 6,631
Borrowings (Note 16) 13,288
----------
Total financial liabilities 19,919
Financial liabilities denominated in:
* USD 12,542
* VND 7,377
----------
19,919
10 TRADE AND OTHER RECEIVABLES
30 June 2016 30 June 2015
USD'000 USD'000
Trade receivables 4,455 1,731
Due to brokers - 1,872
Dividends receivable - 1,919
Accrued trade receivables - 2,416
Due to former owner of a subsidiary - 900
Other receivables - 3,177
---------- ----------
4,455 12,015
Less: allowance for impairment of receivables - (285)
---------- ----------
Total 4,455 11,730
The credit quality of the trade and other receivables as at the reporting date is as follows:
30 June 2016 30 June 2015
USD'000 USD'000
Trade receivables:
* Not past due and not impaired 4,455 1,446
- Past due and impaired - 285
Other receivables:
* Current and not impaired - 10,284
---------- ----------
4,455 12,015
As at 30 June 2016, there is a significant concentration of credit risk relating to a buyer who acquired Vina-CPK Limited (Note 5), that represents 96.8% of trade receivables. As at 30 June 2015, there was a significant concentration of credit risk relating to a BTS customer that represents 40% of trade receivables, which is secured by a bank guarantee.
Trade and other receivables are short-term in nature and their carrying values, after allowances for impairment approximate their fair values at the reporting date.
11 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June
2016 30 June 2015
USD'000 USD'000
Designated at fair value through profit
or loss:
Non-current:
Unlisted shares, fair value based on
internal/ independent valuer's report - 8,902
---------- ----------
Current:
Listed shares - 66,543
Unlisted shares, fair value based on
net asset value 38,245 -
Unlisted shares, fair value based on
sales agreements - 1,590
---------- ----------
38,245 68,133
---------- ----------
38,245 77,035
Risk exposure and fair value measurements
Information about the Group's exposure to price risk is provided in Note 29. Refer to Note 28(a) for information about the methods and assumptions used in determining fair value.
Movement of financial assets at fair value through profit or loss:
Current unlisted
shares
-------------------------------
Fair value Fair value
based based on
Current on net sales agreements Non-current
listed asset unlisted
shares value shares Total
USD'000 USD'000 USD'000 USD'000 USD'000
As at 30 June 2015 66,543 - 1,590 8,902 77,035
Proceeds from disposals
of financial assets
at fair value through
profit and loss (1,411) - (1,566) (8,410) (11,387)
Contribution to VVF
units (67,388) 102,424 - - 35,036
Repurchase of LPS
in exchange for VVF
units - (67,983) - - (67,983)
Purchase VVF unit
to distribute to
holders of PES - 2,800 - - 2,800
Distribute VVF unit
to holders of PES - (2,800) - - (2,800)
Change in fair value
of financial assets
at fair value through
profit or loss 2,256 3,804 (24) (492) 5,544
---------- ---------- ---------- ---------- ----------
As at 30 June 2016 - 38,245 - - 38,245
12 SHORT-TERM INVESTMENTS
Short-term investments of USD0.8 million (2015: USD4.6 million) which were classified to assets held for sale as at 30 June 2016 (Note 14(e)) are term deposits with original maturity longer than three months but less than one year, which have a range of annual interest rates from 6.0% to 6.8% (2015: 4.5% to 5.6%) for VND accounts at local banks.
13 CASH AND CASH EQUIVALENTS
30 June 2016 30 June 2015
USD'000 USD'000
Cash and cash equivalents 20,408 46,106
Cash and cash equivalents denominated in:
USD 2,381 32,966
VND 18,027 13,140
---------- ----------
20,408 46,106
Included in cash and cash equivalents are short-term deposits of USD nil (2015: USD5.1 million which have an annual interest rates approximately 6.5%) for VND accounts.
14 DISCONTINUED OPERATION AND ASSETS AND LIABILITIES OF DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
Disposal of Vina-CPK Limited
On 31 December 2015 the Group announced its intention to exit the industrial park business and initiated an active program to locate buyer for Vina-CPK Limited. Consequently, the assets and liabilities of Vina-CPK Limited were classified as held for sale.
Vina-CPK Limited was sold on 1 February 2016 (Note 5) and is reported in the current year as a discontinued operation.
Classify SEATH BTS tower network and SEATH IBS as asset held for sales
The associated assets and liabilities of the BTS tower network and IBS systems have been presented as held for sale in these consolidated financial statements on the basis that Company is actively seeking buyers for both assets and expects to dispose of them within 12 months. The disposal groups are reported in the current year as discontinued operations.
Financial information relating to the above discontinued operations is set out below.
(a) Financial performance and cash flow information
The financial performance and cash flow information presented include the nine-month period ended 31 March 2016 of Vina-CPK Limited and for the financial year ended 30 June 2016 of BTS and of IBS. The comparative figures presented for these disposal groups are for the financial year ended 30 June 2015.
30 June 30 June
2016 2015
USD'000 USD'000
Revenue 19,646 14,243
Cost of sales (14,699) (5,929)
Net loss from fair value adjustment on
investment properties (Note 6) (*) (5,836) (6,610)
Revaluation loss on fixed assets (Note
8) (**) (9,072) (1,257)
Administration expenses (2,315) (2,002)
Other income 498 860
Other expenses (2,031) (823)
---------- ----------
Loss before income tax (13,809) (1,518)
Income tax expense (702) (477)
Deferred income tax income 34 1,791
---------- ----------
Loss after income tax of discontinued
operation (14,477) (204)
Gain on sale of a subsidiary before capital
gain tax 1,719 -
Capital gain tax on disposal of a subsidiary (190) -
---------- ----------
Loss from discontinued operation (12,948) (204)
Exchange differences on translation of
discontinued operations (207) (908)
In which:
* Reclassification of foreign currency translation
reserve 1,518 -
* Exchange differences on translation of foreign
operations (1,725) (908)
Other comprehensive income/(loss) 40 (27)
---------- ----------
Other comprehensive income from discontinued
operations (167) (935)
Net cash outflow from operating activities 2,005 27,905
Net cash inflow/(outflow) from investing
activities (includes an inflow of USD
17,712,614 from the sale of Vina-CPK Limited) 15,674 (23,166)
Net cash inflow/(outflow) from financing
activities 15 (500)
---------- ----------
Net increase in cash generated by the
disposal groups 17,694 4,239
(*) Investment properties comprise of SEATH BTS tower network
(**) Fixed assets comprise of SEATH IBS
(b) Details of the disposal of Vina-CPK Limited
30 June 2016
USD'000
Consideration received or receivable:
Cash (*) 17,713
Receivable (Note 30) 4,431
----------
Total disposal consideration 22,144
Carrying amount of net assets sold (18,907)
----------
Gain on sale before income tax and reclassification
of foreign currency translation reserve 3,237
Reclassification of foreign currency
translation reserve (1,518)
Capital gain tax on disposal (190)
----------
Gain on sale of the subsidiary after
income tax 1,529
The carrying amounts of assets and liabilities as at the date of sale were:
31 March 2016
USD'000
Investment properties 26,048
Property, plant and equipment 784
Trade and other receivables 881
Prepayment for suppliers 68
Short-term investments 4,567
Cash and cash equivalents (*) 2,403
----------
Total assets 34,751
----------
Long-term and short-term unearned revenue 13,346
Long-term and short-term borrowings
and debts 388
Deferred tax liabilities 1,110
Advance from customers 516
Trade and other payables 371
Other reserves 113
----------
Total liabilities 15,844
----------
Net assets 18,907
(*) For the purpose of presentation in the consolidated statement of cash flows, net proceeds from disposal of Vina-CPK Limited was USD15.3 million.
(c) The following assets and liabilities were reclassified as held for sale in relation to the discontinued operations:
As at 30 June
2016
USD'000
Assets classified as held for sale
Investment properties 42,798
Property, plant and equipment 12,705
Long-term deferred expenses 1,313
Other long term receivables 406
Deferred tax assets 9
Inventories 948
Trade and other receivables 5,347
Prepayments to suppliers 1,565
Short-term investments 781
Cash and cash equivalents 4,380
----------
Total assets of disposal group held for sale 70,252
----------
Liabilities directly associated with assets
classified as held for sale
Long-term and short-term borrowings and debts 71
Corporate income tax payable 209
Advance from customers 62
Trade and other payables 1,670
Short-term unearned revenue 463
Other reserves 252
----------
Total liabilities of disposal group held for
sale 2,727
----------
Net assets of disposal groups classified as
held for sale 67,525
(d) Restating prior periods
Under IFRS 5 - Non-current assets held for sale and discontinued operations, the Company must disclose prior period information for discontinued operations in the consolidated financial statements so that the disclosure cover all operations that have been discontinued at the end of the reporting period of the latest period presented. The discontinued operations presented in the consolidated statement of comprehensive income and the consolidated statement of cash flows in the comparative period therefore include all operations that have been discontinued by the current year end. This means that the consolidated statements of comprehensive income and cash flows for the comparative period show as discontinued operations both reported as discontinued in the previous year together with those classified as discontinued in the current year. As a consequence the restated prior year statements of comprehensive income and cash flows will not be entirely comparable to the current year's figures.
In contrast, the balance sheet information for the prior year is neither restated nor remeasured.
(e) Movement of assets and liabilities of disposal groups classified as held for sale:
Transferred
to assets
and liabilities Change
of disposal in carrying
groups amount
classified of a subsidiary
As at as held after classification As at
1 July for sale as held Sale 30 June
2015 (*) for sale of subsidiary 2016
USD'000 USD'000 USD'000 USD'000 USD'000
Assets of disposal
groups classified
as held for sale
Investment properties - 68,235 611 (26,048) 42,798
Property, plant and
equipment - 13,505 (16) (784) 12,705
Long-term deferred
expenses - 1,313 - - 1,313
Other long term receivables - 406 - - 406
Deferred tax assets - 9 - - 9
Inventories - 948 - - 948
Trade and other receivables - 6,655 (427) (881) 5,347
Prepayment for suppliers - 1,633 - (68) 1,565
Short-term investments - 3,498 1,850 (4,567) 781
Cash and cash equivalents - 7,880 (1,097) (2,403) 4,380
---------- ---------- -------- ---------- ----------
- 104,082 921 (34,751) 70,252
---------- ---------- -------- ---------- ----------
Liabilities directly
associated with assets
classified as held
for sale
Long-term and short-term
borrowings and debts - 473 (14) (388) 71
Deferred tax liabilities - 1,110 - (1,110) -
Corporate income
tax payable - 209 - - 209
Advance from customers - 778 (200) (516) 62
Trade and other payables - 2,150 (109) (371) 1,670
Long-term and short-term
unearned revenue - 12,407 1,402 (13,346) 463
Other reserves - 252 113 (113) 252
---------- ---------- -------- ---------- ----------
- 17,379 1,192 (15,844) 2,727
---------- ---------- -------- ---------- ----------
Net assets and liabilities
of disposal groups
classified as held
for sale - 86,703 (271) (18,907) 67,525
(*) As at 31 December 2015, the associated assets and liabilities of Vina-CPK Limited were classified as held for sale. And as at 30 June 2016, the associated assets and liabilities of SEATH IBS and BTS were classified as held for sale.
15 SHARE CAPITAL
At 1 July 2015 the Company had 10 billion authorised ordinary shares of USD 0.01 each and 350,221,094 outstanding ordinary shares (equating to share capital of USD3,502,211). Following the restructuring of the Company's share capital on 22 July 2015 the Company has had two classes of shares: PES and LPS. The PES give the holders the right to receive cash distributions from the realisation of the private equity investments. The LPS were subject to mandatory repurchase in August 2016 in return for VVF shares. Both classes of shares meet the definition for financial liabilities under International Accounting Standard 32 ("IAS 32") (refer Note 2.2).
Movements of LPS and PES during the year were as follows:
Listed Portfolio Shares
------------------------------
Number of shares USD'000
As at 1 July 2015 - -
Issued during the year 350,221,094 102,774
Repurchased during the year (242,939,353) (67,983)
Increase in net assets attributable
to holders of LPS - 3,520
---------------- ----------
As at 30 June 2016 107,281,741 38,311
Private Equity Shares
------------------------------
Number of shares USD'000
As at 1 July 2015 - -
Issued during the year - -
Re-designated from existing ordinary
shares 350,221,094 99,741
Decrease in net assets attributable
to holders of PES - (22,572)
---------------- ----------
As at 30 June 2016 350,221,094 77,169
16 BORROWINGS
30 June 2016 30 June 2015
USD'000 USD'000
Long-term borrowings:
Bank borrowings - 12,733
Others - 338
Less:
Current portion of long-term borrowings - (3,616)
---------- ----------
- 9,455
Total ---------- ----------
Short-term borrowings:
Bank borrowings - 217
Current portion of long-term borrowings 9,042 3,616
---------- ----------
9,042 3,833
---------- ----------
Total 9,042 13,288
Under the liquidation basis, all long-term borrowings which are expected to be realised or settled within the next twelve months from the reporting date are classified as short-term borrowings as at 30 June 2016 (Note 2.1).
According to the original contract terms, the Group's borrowings mature on a range of dates up to October 2019 and bear a range of annual interest rates from 3.9% to 4.1% for amounts denominated in USD (2015: 3.9% for amounts denominated in USD and from 3.6% to 11.5% for amounts denominated in VND).
As at 30 June 2016, the Group's borrowings amounting to USD9.0 million are subject to floating interest rates (2015: USD12.5 million bore floating interest rates and USD 0.8 million was subject to fixed interest rates). On 30 November 2016, the loan was fully repaid to lender.
The borrowings are secured by the SEATH BTS tower network disclosed in Note 6.
The maturities of the Group's borrowings at the end of the reporting year based on the original contract term are as follows:
30 June 2016 30 June 2015
USD'000 USD'000
6 months or less 1,750 2,024
6 - 12 months 1,750 1,809
1 - 5 years 5,542 9,359
Over 5 years - 96
---------- ----------
9,042 13,288
The fair value of short-term borrowings approximates their carrying amounts as the impact of discounting is not significant. The fair value of long-term borrowings as at 30 June 2016 is USD9.0 million (2015: USD8.6 million). They are level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk which are estimated using the discounted cash flow method. The Group's borrowings are denominated in the following currencies:
30 June 2016 30 June 2015
USD'000 USD'000
VND - 746
USD 9,042 12,542
---------- ----------
9,042 13,288
17 DEFERRED TAX LIABILITIES
The analysis of deferred tax liabilities is as follows:
30 June 2016 30 June 2015
USD'000 USD'000
Deferred tax liabilities:
Deferred tax liabilities to be recovered
after less than
12 months - -
Deferred tax liabilities to be recovered
after more than 12 months - 1,113
The gross movement in the deferred income tax liabilities is as follows:
30 June 2016 30 June 2015
USD'000 USD'000
Beginning of year 1,113 2,921
Income statement credited - (1,791)
Balance sold as part of disposal of
Vina-CPK Limited (Note 14(b)) (1,110) -
Effect of translation to presentation
currency (3) (17)
---------- ----------
End of year - 1,113
There are no other significant unrecognised deferred tax liabilities.
18 TRADE AND OTHER PAYABLES
30 June 2016 30 June 2015
USD'000 USD'000
Accrued realisation fees (Note 26(c)) 1,692 -
Trade payables 176 1,380
Payables for acquisitions of subsidiaries - 2,794
Unearned revenue - 882
Accrued liabilities - 568
Advance from customers - 221
Other payables - 364
-------- --------
Total 1,868 6,209
Trade and other payables as at 30 June 2016 primarily relate to the operations of the Company (2015: they primarily related to the SEATH BTS tower network and the SEATH IBS operations of the Group). The carrying amounts of trade and other payables approximate their fair values due to their short-term nature.
19 PAYABLE TO RELATED PARTIES
30 June 2016 30 June 2015
USD'000 USD'000
Payable to VinaCapital Investment Management
Ltd.:
* management fees (Note 26(a)) - 361
* realisation fees (Note 26(c)) 525 -
* other payables - 55
Payable to shareholders 6 6
------ ------
Total 531 422
Payables to related parties are short-term in nature; hence their carrying values are considered a reasonable approximations of their values at the balance sheet date.
20 REVENUE AND COST OF SALES
The Group's revenue represents rental income from the SEATH BTS tower network and the SEATH IBS and associated leasing and information rescue services which were classified as assets held for sale as at 30 June 2016 (Note 14). All revenue is derived from external customers, although 70% of total sales during the year amounting to USD13.6 million (2015: 77% amounting to USD10.8 million) was sourced from one customer.
The Group's cost of sales mainly relates to the operating costs of the BTS and IBS leasing business and provision of related services.
The analysis of cost of sales based on the nature of the more significant expenses is as follows:
Year ended
----------------------------
30 June 2016 30 June 2015
USD'000 USD'000
Land rentals 3,187 2,175
Tools and equipment expenses 2,330 1,431
Employee expenses 883 664
21 ADMINISTRATIVE EXPENSES
Year ended
----------------------------
30 June 2016 30 June 2015
USD'000 USD'000
Restated
Professional fees (*) 1,013 2,174
Realisation fees (Note 26(c)) 2,561 -
Management fees (Note 26(a)) 306 4,319
Directors' fees (Note 25) 209 225
Custodian fees 167 237
Other expenses 445 389
-------- --------
Total 4,701 7,344
(*) Professional fees for the financial year ended 30 June 2016 included restructuring fees of USD0.6 million (2015: USD1.3 million).
22 FAIR VALUE GAIN/(LOSS) OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Year ended
----------------------------
30 June 2016 30 June 2015
USD'000 USD'000
Restated
Unrealised gains/(losses) based on changes in fair values using:
- market and brokers' quoted prices - 46
- sales agreements - 1,590
- internal valuation 3,800 (1,582)
Gains/(losses) from realisations of financial assets 1,740 (5,047)
Unrealised gains/(losses) on foreign exchange translation 4 (1,549)
---------- ----------
Total 5,544 (6,542)
The gains/(losses) for the financial year 2016 relate to the Company's holding in VVF.
23 INCOME TAX EXPENSE
Vietnam Infrastructure Limited is domiciled in the Cayman Islands. Under the current laws of the Cayman Islands, there is no income, state, corporation, capital gains or other taxes payable by the Company.
The majority of the Group's subsidiaries are domiciled in the British Virgin Islands and so have tax exempt status.
The principal operating subsidiaries of the Group are established in Vietnam and are subject to corporate income tax in Vietnam. The income from these subsidiaries is taxable at the applicable tax rate in Vietnam. On 19 June 2013, the Vietnamese National Assembly approved a new corporate income tax law. Under the new law, the standard corporate income tax has been reduced from 22% to 20% effective 1 January 2016. A provision of USD0.7 million was provided for corporate income tax payable by the Vietnamese subsidiaries for the current year (2015: USD0.4 million).
The relationship between the expected income tax expense based on the applicable income tax rate and the tax expense actually recognised in the consolidated income statement can be reconciled as follows:
Year ended
----------------------------
30 June 2016 30 June 2015
USD'000 USD'000
Restated
Current tax
Current income tax on loss for the
year - -
Adjustments for:
Current income tax expense on Vietnamese
subsidiaries (Note 14(a)) 702 477
Capital gains tax on sale of a subsidiary
(Note 14(a)) 190 -
---------- ----------
Total current tax expense 892 477
---------- ----------
Deferred income tax
Decrease in deferred tax assets (31) -
Increase in deferred tax liabilities (3) (1,791)
---------- ----------
Deferred income tax benefit (Note 14(a)) (34) (1,791)
---------- ----------
Income tax expense/(income) 858 (1,314)
Income tax expense is attributable
to:
Charged to the consolidate income statement
from continuing operation - -
Charged/(credited) to the consolidate
income statement from discontinued
operation 858 (1,314)
Numerical reconciliation of income tax expense to prima facie tax payable:
Year ended
----------------------------
30 June 2016 30 June 2015
USD'000 USD'000
Restated
Profit/(loss) from continuing operations
before income tax expense 748 (9,166)
Loss from discontinuing operation before
income tax expense (12,090) (1,518)
---------- ----------
Group loss before tax (11,342) (10,684)
Group loss multiplied by applicable
tax rate 0% (2015: 0%) - -
Tax effect of amounts which are not
deductible (taxable) in calculating
taxable income:
Difference in overseas tax rates 702 477
Capital gains tax on sale of a subsidiary 190 -
Unearned revenue subjected to tax in
the year (34) (1,791)
---------- ----------
Total income tax expense/income 858 (1,314)
---------- ----------
Income tax expense is attributable
to:
Charged to the consolidate income statement
from continuing operation - -
Charged/(credited) to the consolidate
income statement from discontinued
operation 858 (1,314)
24 EARNINGS/(LOSS) PER SHARE AND NET ASSET VALUE PER SHARE
(a) Earnings/(loss) per share
Earnings/(loss) per share is calculated by dividing the profit/(loss) from operations attributable to the shareholders of the Company by the weighted average number of shares in issue during the year excluding shares purchased by the Group and held as treasury shares (Note 15).
Year ended 30 June 2016
Listed Portfolio Shares Private Portfolio Shares
Profit/(loss) for the year attributable to shareholders of
the Company (USD'000) 3,520 (11,040)
Weighted average number of shares in issue ('000) 152,501 350,221
Earnings/(loss) per share (USD/share) 0.023 (0.032)
Year ended 30 June 2015
Ordinary Shares
Loss for the year attributable to shareholders of the Company (USD'000) (9,488)
Weighted average number of ordinary shares in issue ('000) 370,885
Loss per share (USD/share) (0.026)
(b) Net asset value per share
Net asset value ("NAV") per share is calculated by dividing the net asset value attributable to shareholders of the Company by the number of outstanding shares in issue at the reporting date. Net asset value is determined as total assets less total liabilities.
As at 30 June 2016:
Listed Portfolio Private Portfolio
Shares Shares
Net asset value attributable to
shareholders of the Company (USD'000) 38,311 77,169
Number of outstanding shares in
issue ('000) 107,282 350,221
Net asset value per share (USD/share) 0.357 0.220
At 30 June 2015:
Ordinary Shares
Net asset value attributable to shareholders
of the Company (USD'000) 202,515
Number of outstanding ordinary shares in issue
('000) 350,221
Net asset value per share (USD/share) 0.578
25 DIRECTORS' FEES AND MANAGEMENT'S REMUNERATION
The aggregated directors' fees amounted to USD209,000 (2015: USD225,000) (Note 21), of which there was no outstanding amounts payable at the reporting date (2015: USD75,000). The directors are considered key management personnel of the Company for reporting purposes. The details of the remuneration for each director is summarised below:
Year ended
----------------------------
30 June 2016 30 June 2015
USD'000 USD'000
Rupert Carington (*) 60 74
Robert Binyon (*) 45 57
Luong Van Ly (*) 45 35
Paul Garnett 35 24
Ekkehard Goetting (*) 24 35
-------- --------
Total 209 225
(*) During the year additional fees of USD15,000 and USD10,000, respectively, were paid to Rupert Carington and each of Robert Binyon, Ekkehard Goetting and Luong Van Ly, in conjunction with the extra work undertaken to restructure the Company. In 2015, additional fees of USD29,000 and USD22,000, respectively, were paid to Rupert Carington and Robert Binyon for a similar purpose.
26 RELATED PARTIES (a) Management fees
The Group is managed by VinaCapital Investment Management Limited (the "Investment Manager"), incorporated and registered as a licensed fund manager in the Cayman Islands. From 1 July 2015 to 26 July 2015 the Investment Manager received a fee based on the gross asset value of the Group, payable monthly in arrears, at an annual rate of 2% (30 June 2015: 2%). On 20 November 2014, the Company signed a new investment management agreement with the Investment Manager, which became effective on 27 July 2015 (the "new Investment Management Agreement"). Under this agreement no management fee is charged by the Investment Manager to the Company on either the LPS or the PES.
Total management fees for the year amounted to USD0.3 million (30 June 2015: USD4.3 million) (Note 21), there was no outstanding accrued fees due to the Investment Manager at the reporting date (2015: USD0.4 million) (Note 19).
(b) Performance fees
The Investment Manager is also entitled to a performance fee equal to 20% of the realised returns over an annualised compounding hurdle rate of 8%. There was no performance fees payable for the financial years ended 30 June 2015 and 30 June 2016.
Under the new Investment Management Agreement, no management fee is charged by the Investment Manager to the Company. Instead, the Investment Manager will receive the incentive fees as indicated in Note 26(c).
(c) Realisation fees and incentive fees
Under the new Investment Management Agreement, the Investment Manager will receive a realisation fee and an incentive fee based on sales proceeds relating to the Private Equity Portfolio:
1) Upon realisation of the Company's private equity assets, the Company will pay a fee of 3% of the net sale proceeds of each asset realised once the net sale proceeds are received by the Company. Total realisation fees for the year amounted to USD2.6 million (2015: nil) (Note 21), with USD0.5 million (2015: nil) (Note 19) currently due to Investment Manager and USD1.7 million (Note 18) accrued as a future payable to the Investment Manager at the reporting date.
2) The Company will also pay an incentive fee of 10% of the amount by which the total return from the sale of private equity assets exceeds a hurdle amount of USD80.9 million. The total return equals the aggregate of all net sale proceeds and other distribution received by the Company from private equity investments. This incentive fee will be paid when the proceeds collected from private equity asset sales have exceeded the hurdle amount.
27 OPERATING LEASE COMMITMENTS
The Group leases various offices, land for SEATH BTS tower network and the SEATH IBS under non-cancellable operating leases expiring within two to eight years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are negotiated.
The Group has commitments under non-cancellable operating lease agreements as follows:
30 June 2016 30 June 2015
USD'000 USD'000
Within one year 6,755 4,829
Within two to five years 9,897 3,623
Over five years 435 20,085
------------ ------------
Total 17,087 28,537
Included in these future operating lease commitments are commitments of SEATH BTS tower network amounting to USD15.3 million which will be transferred to the buyer as a result of the divestment (Note 5).
28 RECOGNISED FAIR VALUE MEASUREMENTS a) Financial assets and financial liabilities i) Fair value hierarchy
The following table presents financial assets measured at fair value by valuation method. The different levels have been defined as below:
- Level 1: quoted prices (unadjusted) in active markets for identical assets;
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e as prices) or indirectly (i.e derived from prices); and
- Level 3: inputs for the assets that are not based on observable market data (unobservable inputs).
The level within which the financial assets are classified is determined based on the lowest level of significant input to the fair value measurement.
The financial assets measured at fair value in the balance sheet are grouped into the fair value hierarchy as follows:
Recurring fair value measurements Level Level Level 3 Total
1 2
USD'000 USD'000 USD'000 USD'000
30 June 2016
Financial assets
Ordinary shares - unlisted - 38,245 - 38,245
---------- ---------- ---------- ----------
Total financial assets - 38,245 - 38,245
30 June 2015
Ordinary shares - listed 66,543 - - 66,543
Ordinary shares - unlisted - 1,590 8,902 10,492
---------- -------- ---------- ----------
Total financial assets 66,543 1,590 8,902 77,035
ii) During the year, there were no transfers between the fair value hierarchy levels (2015: nil). There were also no other reclassifications of financial assets in the current year and prior year.Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments include:
- the use of quoted market prices for level 1 listed shares; - the use of dealer quotes or published daily net asset value for level 2 unlisted shares;
- the fair value of level 3 unlisted equity as at 30 June 2015 and of borrowing is determined using discounted cash flow analysis.
iii) Valuation process
The Company's internal investment officers perform the valuation of listed and unlisted securities for financial reporting purposes. The valuation results are reported directly to the Audit and Valuation Committee and approved by the Board for adoption.
The main level 3 inputs used by the Group are derived and evaluated as follows:
- Interest rate on borrowings - based on the terms of existing commercial loans and financial lease contracts with Export Credit Agency;
- Discount rates - reflecting current market assessment of the uncertainty in the amount and timing of cash flows; and
- Salvage value of aircraft - based on forecasted income from selling the aircraft at the end of the leasing period.
i) Valuation input and relationship to level 3 fair value
The following table analyses the significant unobservable inputs and the impact of possible changes to the fair value of the private equity instrument:
Sensitivity as at 30 June 2015:
Significant input Sensitivity on management's
estimates
-----------------------------------------
Changes of input Impact
Forecast of 3M and
Interest rate 6M LIBOR and 12M +/-1% (USD0.6m) - USD0.6m
deposit rate
Discount rate 22.8% +/-1% (USD0.1m) - USD0.2m
Salvage value 43.3% - 50% -/+10% (USD0.5m) - USD0.6m
b) Non-financial assets and financial liabilities
i) Fair value hierarchy
This note explains the judgements and estimates made in determining the fair values of the non-financial assets that are recognised and measured at fair value in the consolidated financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its non-financial assets and liabilities into the three levels prescribed under the accounting standards. An explanation of each level is provided in Note 28(a).
Recurring fair value measurements Level Level 2 Level Total
1 3
USD'000 USD'000 USD'000 USD'000
As at 30 June 2016
Assets classified as held
for sale
Investment properties -
SEATH BTS tower network - - 42,798 42,798
Plant and machinery - SEATH
IBS - - 11,362 11,362
---------- ---------- ---------- ----------
Total non-financial assets - - 54,160 54,160
As at 30 June 2015
Investment properties
SEATH BTS tower network - - 48,798 48,798
Vina-CPK Limited (*) - - 24,637 24,637
Property, plant and equipment
Plant and machinery - SEATH
IBS - - 25,088 25,088
---------- ---------- ---------- ----------
Total non-financial assets - - 98,523 98,523
The Group's policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer.
(*) During the year, the Group disposed of its 100% equity interest in Vina-CPK Limited for a total consideration of USD22.1 million. The book value of the net assets at the disposal date was USD20.4 million, resulting in a gain of USD1.5 million for the Group which was recognised in the consolidated income statement (Note 14).
There were no transfers between levels in prior year.
iv) Valuation technique used to determine level 3 fair values
Specific valuation techniques used to determine the level 3 fair value include:
- sale comparison approach for level 3 investment properties as at 30 June 2016;
- discounted cash flow ("DCF") method for level 3 investment properties as at 30 June 2015 and level 3 plant and machinery.
v) Significant unobservable inputs (level 3)
The significant unobservable inputs used in the DCF calculation for the respective investment properties and plant and machinery are as follows:
SEATH IBS
- Future IBS growth to generate incremental rental cash inflows - such growth is funded by recurring cash inflows from existing leases while rental for new IBS and tenants is based on the same terms as those of existing leases;
- Discount rates - reflecting current market assessment of the uncertainty in the amount and timing of cash flows; and
- Terminal value - reflecting management's view of long-term growth in the sector.
SEATH BTS tower network
- Future tower and tenancy growth to generate incremental rental cash inflows - such growth is funded by recurring cash inflows from existing leases while rental for new towers and tenants is based on the same terms as those of existing leases;
- Discount rates - reflecting current market assessment of the uncertainty in the amount and timing of cash flows; and
- Terminal value - reflecting management's view of long-term growth in the sector.
Vina-CPK Limited (Ba Thien Industrial Park)
- Sale price per square metre - based on current market comparable;
- Costs to complete the development of the property - based on management's experience and knowledge of market conditions;
- Completion dates - expected completion dates based on management's experience and knowledge taking into account the need for approvals from oversight bodies at various times in the development process; and
- Discount rates - reflecting the current market assessment of the uncertainty in the amount and timing of cash flows.
vi) Valuation process
The Group's plant and machinery (IBS) and investment properties (BTS and Vina-CPK Limited) are valued by the independent professional qualified valuers who hold recognised relevant professional qualifications and have recent experience in the locations and categories of the investment properties being valued (IBS and Vina-CPK) or the Company's internal investment officers (BTS). The estimated fair values provided by the independent professional valuers and the Company's internal investment officers are used by the Audit and Valuation Committee as the primary basis for estimating each property's fair value. Management reviews the valuations performed by the Company's internal investment officers and the independent professional valuers for financial reporting purposes, and the valuations, as adjusted if appropriate, are approved by the Board for adoption after deliberation in the Audit and Valuation Committee.
vii) Valuation inputs and relationship to fair value
The following table analyses the range of the significant unobservable inputs and the impact of changes of these to the fair value of investment properties and property, plant and equipment:
Sensitivity as at 30 June 2016:
Range of Sensitivity on management's
estimates
--------------------------------
(Loss)/gain
Unobservable Change of to fair value
inputs input due to change
Assets classified as
held for sale
Plant and machinery
- SEATH IBS
* IBS growth 5% -/+1% (USD0.4m) - USD0.4m
* Discount rate 16% +/-1% (USD1m) - USD1m
* Terminal growth 0% +1% USD2.1m
USD0.22 -
* Leasing price per square metre per month USD0.29 -/+10% (USD1.8m) - USD1.8m
Investment Properties - SEATH BTS
Before and after being classified as asset held for sale, the fair value of BTS was measured based on the price quoted on the sale and purchase agreement plus the additional cash generated from BTS business post year end which was confirmed by the buyer and utilised by the Company in November 2016.
Sensitivity as at 30 June 2015:
Range of Sensitivity on management's
estimates
--------------------------------
(Loss)/gain
unobservable Change of to fair value
inputs input due to change
Property, plant and
equipment
SEATH IBS
* IBS growth 6% -/+1% (USD0.7m) - USD0.6m
* Discount rate 16% +/-1% (USD0.7m) - USD0.8m
* Terminal growth 1% -/+1% (USD0.7m) - USD0.8m
USD0.22 -
* Leasing price per square metre per month USD0.29 -/+15% (USD7m) - USD7m
Range of Sensitivity on management's
estimates
------------------------------------------
(Loss)/gain
unobservable Change of to fair value
inputs input due to change
Investment properties
SEATH BTS tower network
7% and 2% -/+10% (USD 1.0m) -
* Tower and tenancy growth USD 1.0m
(USD 3.5m) -
* Discount rate 16% +/-1% USD 4.1m
(USD 1.6m) -
* Terminal growth 2% -/+1% USD 1.4m
Vina-CPK Limited
USD44 - USD52 -/+10% (USD4.1m) - USD4.1m
* Sale price per square metre
USD13 - USD15 +/-10% (USD2.7m) - USD2.7m
* Cost to complete
5 periods
* Expected completion date - 7 periods Delay 2 periods (USD2.8m) - USD2.4m
* Discount rate 18% - 20% +/-1% (USD1.0m) - USD1.0m
29 FINANCIAL RISK MANAGEMENT
The Group invests in listed and unlisted equity instruments, debt instruments, assets and other opportunities in Vietnam and other countries with the objective of achieving medium to long-term capital appreciation and providing investment income.
The Group is exposed to a variety of financial risks: market risk (including currency risk, interest rate risk, and price risk); credit risk; and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. The Group's risk management is coordinated by the Investment Manager who manages the distribution of the assets to achieve the investment objectives.
Since the restructuring of the Group on 15 December 2014 the Company has sought to progressively realise its Private Equity Portfolio with an objective of completing this exercise by 30 June 2017. Consequently, the Group's objective to maximise capital returns to its shareholders.
The most significant financial risks the Group is exposed to are described below:
(a) Market risk analysis
Foreign exchange and foreign currency sensitivity risks
The Group's exposure to risk resulting from changes in foreign currency exchange rates is moderate as although transactions in Vietnam are settled in the VND, the value of the VND has historically been closely linked to that of the USD, the reporting currency.
The Group has not entered into any hedging mechanisms as the estimated benefits of available instruments outweigh their costs. On an ongoing basis the Investment Manager analyses the current economic environment and expected future conditions and decides the optimal currency mix considering the risk of currency fluctuation, interest rate return differentials, and transaction costs. The Investment Manager updates the Board regularly and reports on any significant changes for further actions to be taken.
As at 30 June 2016, the Group has foreign currency exposure mainly arising from holding financial assets and financial liabilities which is not denominated in its functional currency. At the reporting date, had the VND weakened/strengthened by 5% in relation to USD, with all other variables held constant, there would be a net exchange loss/gain of USD1.1 million (2015: a net exchange gain/loss of USD0.3 million).
Price risk
Price risk is the risk that the value of the instrument will fluctuate as a result of changes in market prices, whether caused by factors specific to an individual investment, its issuer, or factors affecting all instruments traded in the market.
The Group invests directly and indirectly in listed and unlisted equity securities and is exposed to market price risk of these securities due to the uncertainties about future values of the investment securities.
As at 30 June 2016, all equity investments of the Group are the Group's interest in an open-ended fund which in turn invests in the listed securities that publicly traded on the Vietnam stock exchanges. For the financial year 2015, the majority of the Group's equity investments were publicly traded on the Vietnam stock exchanges. The Group has no concentration in individual equity positions exceeding 5% of the Group's net assets.
All securities investments present a risk of loss of capital. The investment manager manages this risk through the careful selection of securities and other financial instruments within specified limits and by holding a diversified portfolio of listed and unlisted instruments. In addition, the performance of investments held by the Group is monitored by the investment manager on a monthly basis and reviewed by the Board of Directors at each quarterly meeting.
If the prices of the securities increased or decreased by 10%, the impact on the net asset value of the Group would be a gain or loss of USD3.4 million (2015: gain or loss of USD6.3 million).
Cash flow and fair value interest rate risk
The Group's exposure to interest rate risk is related to interest bearing financial assets and financial liabilities. Cash and cash equivalents are subject to interest at fixed rates. They are exposed to fair value changes due to interest rate changes. The Group currently has financial liabilities arising from long-term borrowings in USD with floating interest rates. The Group's forecast of the interest rates is favourable for the borrowings and it has limited exposure to cash flow and interest rate risk.
(b) Credit risk analysis
Credit risk is the risk that a counterparty will be unable to pay amounts in full when due. Impairment provisions are provided for losses that have been incurred by the Group at the reporting date.
The Investment Manager maintains a list of approved banks for holding deposits and set aggregate limits for deposits or exposures to individual banks. While this list is formally reviewed each month, it is updated to reflect developments in the market on a timely basis as new information becomes available.
Of the USD25.6 million (30 June 2015: USD50.7 million) cash and cash equivalents and short-term investments as at 30 June 2016, USD20.8 million (30 June 2015: USD37.0 million) was deposited with a bank that has a Standard and Poors ('S&P') rating of AA- at the reporting date. Another USD3.9 million (30 June 2015: USD9.5 million) was deposited with banks that have S&P ratings of between B+ and BB- at the reporting date. The remaining USD0.9 million (30 June 2015: USD4.2 million) was held with banks that have no credit rating by any rating agencies.
All transactions in listed securities are settled upon delivery using approved brokers. The risk of default is considered low, as delivery of securities sold is only made once the broker has received payment. Payment is made for purchases once the securities have been received by the broker. The trade will be unwound if either party fails to meet its obligations.
The carrying amount of trade and other receivables represent the Group's maximum exposure to credit risk in relation to its financial assets.
As at 30 June 2016, the Group did not provide impairment for trade and receivables of assets of disposal groups classified as held for sale (30 June 2015: nil). The credit quality of financial assets that are neither past due nor impaired is assessed by management for each period end. This assessment takes into account the financial health of the customers, or history of payments and defaults of existing customers of the Group. Debtors and amounts due from a related party that are neither past due nor impaired are substantially companies with good collection records with the Group.
No credit limits were exceeded during the reporting period other than those impaired as disclosed in Notes 3.1(d) and Note 7 relating to the prepayment for acquisition of investment in the Long An Industrial Service project. Management does not expect any losses from non-performance by these counterparties.
In accordance with the Group's policy, the Investment Manager continuously monitors the Group's credit position, identified either individually or by group, and incorporates this information into its credit controls.
The Group's Investment Manager reconsiders the valuations of financial assets that are impaired or overdue at each reporting date based on the payment status of the counterparties, recoverability of receivables, and prevailing market conditions.
(c) Liquidity risk analysis
The Group invests in both listed securities that are traded in active markets and unlisted securities that are not actively traded.
The Group's listed securities are considered to be readily realisable, as they are mainly listed on the Vietnam Stock Exchanges. However, there have been times in the past when, due to restrictions imposed by the market daily trading bands, shares cannot be sold immediately. Under such circumstances it is likely that the Group's holdings in listed shares are not immediately realisable.
Unlisted securities, which are not traded in an organised public market, may be illiquid. As a result, the Group may not be able to quickly liquidate its investments in these instruments at an amount close to fair value in order to respond to its liquidity requirements or to other specific events such as deterioration in the creditworthiness of a particular issuer. However, the Group has the ability to borrow in the short-term to ensure sufficient cash is available for any settlements due.
At the reporting date, the Group's liabilities which have contractual maturities are summarised below:
Within 6 to 12 1 to Over
6 months months 5 years 5 years Total
USD'000 USD'000 USD'000 USD'000 USD'000
30 June 2016
Borrowings 1,913 1,897 5,750 - 9,560
Trade and other payables
(*) - 1,868 - - 1,868
Payable to related
parties 531 - - - 531
Liabilities directly
associated with assets
classified as held
for sale:
* Borrowing 34 19 18 - 71
* Trade and other payables (*) - 1,670 - - 1,670
Net assets attributable
to holders of the LPS 38,311 - - - 38,311
Net assets attributable
to holders of the Private
Equities Shares - 77,169 - - 77,169
---------- ---------- ---------- ------ ----------
40,789 82,623 5,768 - 129,180
30 June 2015
Borrowings 2,236 1,950 9,187 26 13,399
Trade and other payables
(*) - 5,106 - - 5,106
Payable to related
parties 422 - - - 422
-------- -------- -------- ------ ----------
2,658 7,056 9,187 26 18,927
(*) These balances exclude unearned revenue and advance from customers.
The above contractual maturities reflect the gross cash flows, which may differ to the carrying value of the liabilities at the reporting date. Balances due within 12 months equal their carrying value as the impact of discounting is not significant.
(d) Capital management
The Group's capital management objective is to maximise the return of capital to shareholders.
The Group considers the capital managed as equal to the net assets attributable to the holders of ordinary shares. The Group is not subject to any externally imposed capital requirements. The Group has engaged the Investment Manager to allocate the net assets in such a way so-as-to maximise the return of capital to shareholders.
30 SUBSEQUENT EVENTS (a) Agreement to sell equity interest in Southeast Asia Telecommunications Holdings
On 4 August 2016, the Company signed a share sale and purchase agreement to transfer 100% of its holding of BTS tower network in Southeast Asia Telecommunications Holdings Pte. Ltd. ("SEATH") to OCK Vietnam Towers Pte. Ltd. Details of SEATH disposal is provided in Note 5.
(b) Compulsory repurchase and cancellation of trading LPS on the AIM
All of the remaining 107,281,741 LPS were repurchased by the Company on 17 August 2016 in exchange for 3,288,435,511 Class A VVF Shares. The Class A VVF Shares were transferred to the shareholders' accounts on 25 August 2016.
Following the compulsory repurchase none of LPS remain in issue and the admission of the LPS to trading on AIM under the ticker VNIL was cancelled with effect on 18 August 2016. The PES are continuing to be traded as normal.
(c) Final payment on disposal of Vina-CPK Limited
On 22 November 2016, the Group received the final 20% of sale proceeds of USD4.4million from the buyer.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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