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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 May 2019 to May 2024
TIDMVNI
RNS Number : 7453R
Vietnam Infrastructure Limited
25 September 2017
Vietnam Infrastructure Limited
Audited financial results for the twelve months ended 30 June 2017
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 2017 ('the year').
Financial highlights:
Hot Features
Premium
-- Private Equity Share Net Asset Value ("PES NAV") of USD12.6 million (30 June 2016: USD77.2 million)
-- PES NAV per share of USD0.036 (30 June 2016: USD0.220)
Operational highlights:
During the year, the Company divested most of its remaining assets, and sold its final asset shortly after the close of the financial year:
-- IBS: On 31 July 2017, the Company announced the sale of the in-building cellular enhancement systems ("IBS"), to VIBS Pte. Ltd. (a consortium formed by JTOWER Inc. and the South East Asia Growth Fund) and a local investor, for total cash proceeds of approximately USD10.2 million. The sale proceeds were at a slight premium to the unaudited net asset value (NAV) of USD9.9 million as at 30 June 2017.
-- Southeast Asia Telecommunications Holdings Pte. Ltd. (SEATH): In August 2016, the Company reached agreement to sell the BTS portion of the portfolio to OCK Vietnam Towers Ltd for USD50 million. This transaction closed in December 2016, and the Company fully received the proceeds in January 2017. An additional working capital adjustment of approximately USD1.6 million was received in May 2017.
-- Long An SEA: In early November 2016, the Company received an out-of-court cash settlement of USD2.4 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 USD1.8 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, one of Vietnam's largest open-ended UCITS-compliant funds, numerous segregated accounts, and two domestic funds. VinaCapital also has joint ventures with Draper Fisher Jurvetson in venture capital, and Warburg Pincus in hospitality and lodging. 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 / Joel Weiden
VinaCapital Investment Management Limited
Investor Relations / Communications
+84 28 3821 9930
jonathan.luu@vinacapital.com / 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,
There was a great deal of activity during the 2017 financial year as the Management and the Board worked to realise the Company's remaining assets and adhere to the timeline outlined in the divestment strategy.
Asset Sales
During the year, the Company divested most of its remaining assets, with the sale of its final asset occurring just after the close of the financial year ended 30 June 2017.
-- IBS: On 31 July 2017, the Company announced the sale of the in-building cellular enhancement systems ("IBS"), to VIBS Pte. Ltd. (a consortium formed by JTOWER Inc. and the South East Asia Growth Fund) and a local investor, for total cash proceeds of approximately USD10.2 million. The sale proceeds were at a slight premium to the unaudited net asset value (NAV) of USD9.9 million as at 30 June 2017.
-- Southeast Asia Telecommunications Holdings Pte. Ltd. (SEATH): In August 2016, the Company reached agreement to sell the BTS portion of the portfolio to OCK Vietnam Towers Ltd for USD50 million. This transaction closed in December 2016, and the Company fully received the proceeds in January 2017. An additional working capital adjustment of approximately USD1.6 million was received in May 2017.
-- Long An SEA: In early November 2016, the Company received an out-of-court cash settlement of USD2.4 million and the asset was transferred to the buyer.
-- The aggregate net proceeds from the sales of the private equity assets exceeded the hurdle amount approved by shareholders, enabling the Company to pay the Manager the agreed incentive fee.
Shareholder Distributions
On 31 January 2017, the Company announced an aggregate distribution to Private Equity Shareholders of USD65.0 million, representing USD0.1856 for each Private Equity Share in issue, in either cash or, if eligible, in VVF shares. As announced on 1 March 2017, 81% of the distribution was paid in cash, and the remaining 19% (equal to USD12.3 million) was applied by the Company for VVF shares.
VNI announced a third and final distribution of USD12.6 million on 25 August 2017. On 21 September 2017, we revised the distribution to USD12.57 million, representing USD0.0359 for each Private Equity Share currently in issue. The Record Date for the distribution is 29 September 2017.
Corporate Matters and Fund Wind-Up
The end of the financial year saw the retirement of Mr Luong Van Ly from his position as Independent Director. Having served on the Board since the Company's inception, Mr Ly worked to help ensure that VNI fulfilled its shareholder mandate.
On 25 August 2017, the Company published a notice of Extraordinary General Meeting (the "EGM") setting out details of the recommended proposals for the voluntary winding up of the Company under the laws of the Cayman Islands, the appointment of joint liquidators and the cancellation of admission of the Private Equity Shares to trading on AIM. The EGM will take place on 9 October 2017 at 2.30 p.m. UK time at Grant Thornton UK LLP, 30 Finsbury Square, London EC2P 2YU, at which time shareholders will be asked to approve the Resolutions relating to the Fund's winding up. Subject to the passing of the Resolutions by the requisite majority, admission of the Private Equity Shares to trading on AIM will be cancelled with effect from the morning of 10 October 2017, and the Company's orderly liquidation will proceed as planned. Funds turned over to the liquidator are expected to cover the expenses of the liquidation process, and no further distributions to shareholders are expected.
The Board has endeavoured to ensure that the Company maximised the value of its assets and the return to shareholders, and I am pleased to report that we have been successful in doing so in a timely manner. On behalf of the Board, I want to thank you for your support throughout this process.
Rupert Carington
Chairman
Vietnam Infrastructure Limited
25 September 2017
CONSOLIDATED BALANCE SHEET
As at 30 June
--------------------------------
2017 2016
Note USD'000 USD'000
ASSETS
Non-current assets
Investment properties 13 - -
Property, plant and equipment 14 - -
---------- ------------
Total non-current assets - -
---------- ------------
Current assets
Prepayment for acquisition
of Long An Industrial
Service project 6 - 2,371
Trade and other receivables 8 119 4,455
Financial assets at fair
value through profit or
loss 9 - 38,245
Cash and cash equivalents 10 4,277 20,408
------------ --------------
4,396 65,479
Assets classified as held
for sale 11(c) 13,946 70,252
------------ --------------
18,342 135,731
Total current assets ------------ --------------
Total assets 18,342 135,731
As at 30 June
----------------------------------------
2017 2016
Note/page USD'000 USD'000
EQUITY AND LIABILITIES
EQUITY
Equity attributable to shareholders of
the Company
Note -
Share capital 15 3,502
Page -
Additional paid-in capital 10 150,012
Foreign currency translation Page
reserve 10 (566) (6,566)
Page
Accumulated (losses)/gains 10 (140,330) 6,566
------------ ----------
12,618 -
------------ ----------
Non-controlling interests 2,999 -
---------- ------------
Total equity 15,617 -
LIABILITIES
Current liabilities
Note
Short-term borrowings 16 - 9,042
Note
Trade and other payables 18 1,773 1,868
Note
Payable to related parties 19 203 531
---------- ------------
1,976 11,441
Liabilities directly associated
with assets classified as Note
held for sale 11(c) 749 2,727
---------- ------------
Total current liabilities
(excluding net assets attributable
to holders of the Company
and holders of non-controlling
interests) 2,725 14,168
Net assets attributable to Page
holders of the Company 11 - 115,480
Net assets attributable to
holders of non-controlling Page
interests in subsidiaries 11 - 6,083
------------ --------------
Total liabilities 2,725 135,731
------------ --------------
Total equity and liabilities 18,342 135,731
Net asset value per LP Share
attributable to holders of Note
the Company (USD per share) 25(b) - 0.357
Net asset value per PE Share
attributable to holders of Note
the Company (USD per share) 25(b) 0.036 0.220
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to shareholders of
the Company
---------------------------------------------------------------------------------
Foreign
Additional currency
Share paid-in translation Equity Other Accumulated Non-controlling Total
capital capital reserve reserve reserves gains/(losses) Total interests equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
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 PE Shares (3,502) (226,013) - (3,764) (306) 133,844 (99,741) - (99,741)
Transfers to net
assets
attributable to
holders
of LP 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 - - -
Loss for the
year - - - - - (6,534) (6,534) (1,523) (8,057)
Other
comprehensive
income - - 6,000 - - - 6,000 - 6,000
-------- -------- -------- -------- -------- ---------- -------- -------- --------
Total
comprehensive
(loss)/income
for the year - - 6,000 - - (6,534) (534) (1,523) (2,057)
-------- -------- -------- -------- -------- ---------- -------- -------- --------
Transfers from
net assets
attributable to
holders
of PE Shares 3,502 215,013 - - - (140,362) 78,153 - 78,153
Transfers from
net assets
attributable to
holders
of
non-controlling
interests
in subsidiaries - - - - - - - 6,133 6,133
Distributions to
shareholders - (65,001) - - - - (65,001) - (65,001)
Derecognition of
non-controlling
interests on
disposal
of subsidiaries - - - - - - - (1,611) (1,611)
-------- -------- -------- -------- -------- -------------- -------- -------- --------
Total
transactions
with
shareholders of
the Company,
recognised
directly in
equity 3,502 150,012 - - - (140,362) 13,152 4,522 17,674
Balance at 30 -------- ------------ ---------- -------- -------- -------------- ---------- ---------- ------------
June 2017 3,502 150,012 (566) - - (140,330) 12,618 2,999 15,617
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE SHARES
PE Non-controlling
Note LP Shares Shares Subtotal interests Total
USD'000 USD'000 USD'000 USD'000 USD'000
Balance at 1 July - - - - -
2015
Transferred from
equity 102,774 99,741 202,515 10,763 213,278
Repurchase of
LP Shares (67,983) - (67,983) - (67,983)
------------ ---------- ------------ ------------ ----------
Net decrease 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 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 38,311 77,169 115,480 6,083 121,563
Balance at 1 July
2016 38,311 77,169 115,480 6,083 121,563
Repurchase of
LP Shares 15 (40,842) - (40,842) - (40,842)
Transferred to
equity - (78,153) (78,153) (6,133) (84,286)
---------- ---------- ---------- ---------- ----------
Net decrease from
share transactions (40,842) (78,153) (118,995) (6,133) (125,128)
Increase in net
assets attributable
to holders of
the Company and
holders of non-controlling
interests 15 2,531 984 3,515 50 3,565
---------- ---------- ---------- ---------- ----------
Net assets attributable
to holders of
the Company and
holders of non-controlling
interests as at
30 June 2017 15 - - - - -
CONSOLIDATED INCOME STATEMENT
Year ended 30 June
------------------------
Note 2017 2016
USD'000 USD'000
Continuing operation
Revenue 20 - -
Cost of sales 20 - -
---------- ----------
Gross profit - -
---------- ----------
Dividend income - 7
Interest income 21 36 12
Administrative expenses 22 (3,844) (4,701)
Fair value gain of financial
assets at fair value through
profit or loss 23 2,597 5,544
Gain on remeasurement of prepayment
on acquisition of Long An
Industrial Service project - 183
Gain on fair value non-controlling
interests in subsidiaries 931 -
Other income - 6
Other expenses (90) -
---------- ----------
Operating (loss)/profit (370) 1,051
---------- ----------
Finance income 1 1
Finance costs (1) (304)
---------- ----------
Finance costs - net - (303)
---------- ----------
(Loss)/profit before tax (370) 748
Income tax expense 24 - -
17,
Deferred income tax 24 - -
---------- ----------
(Loss)/profit from continuing
operations (370) 748
Loss from discontinued operations 11(a) (4,120) (12,948)
---------- ----------
Loss for the year (4,490) (12,200)
Distributions to shareholders - (11,000)
(Increase)/decrease in net
assets attributable to
Shareholders of the Company (3,515) 18,687
Non-controlling interests (50) 4,680
---------- ----------
(Loss)/gain for the year (8,055) 167
(Loss)/gain for the year attributable
to:
Shareholders of PE Share (5,547) (11,040)
Shareholders of LP Share 2,531 3,520
Non-controlling interests (1,474) (4,680)
---------- ----------
(4,490) (12,200)
---------- ----------
Earnings per LP Share (USD
per share) 25(a) 0.024 0.023
Loss per PE Share (USD per
share) 25(a) (0.016) (0.032)
CONSOLIDATED Statement of COMPREHENSIVE INCOME
Year ended 30 June
----------------------
Note 2017 2016
USD'000 USD'000
(Loss)/gain for the year (8,055) 167
Other comprehensive gain/(loss)
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on translation
of foreign operations from
discontinued operations:
Other comprehensive income
arising from disposal of subsidiaries 11(a) 7,032 1,518
Other comprehensive loss arising
from exchange differences
on translation of foreign
operations (1,032) (1,725)
---------- --------
6,000 (207)
---------- --------
Items that will not be reclassified
subsequently to profit or loss:
Others (**) - 40
Other comprehensive gain/(loss)
for the year, net of tax 6,000 (167)
---------- --------
Total comprehensive loss for
the year (2,055) -
(**) These represent reserves provided on after tax profits of the Group's subsidiaries which are required by local regulations.
CONSOLIDATED Statement oF CASH FLOWS
Year ended 30
June
----------------------------
Note 2017 2016
USD'000 USD'000
Operating activities
(Loss)/profit from continuing
operation before tax (370) 748
Loss from discontinued operation
before tax (3,616) (12,090)
---------- ------------
Loss before tax (3,986) (11,342)
Adjustments for:
Depreciation and amortisation 14 2,480 5,184
Fair value gain of financial
assets at fair value through 9,
profit or loss 23 (2,597) (5,544)
Fair value (gain)/loss of investment
properties 13 (2,678) 5,836
Fair value gain on prepayment
for acquisition of Long An
Industrial Service project - (183)
Revaluation loss on property,
plant and equipment 14 865 9,072
Gain on fair value non-controlling
interests in subsidiaries (931) -
Loss/(gain) from sale of subsidiaries 6,454 (1,719)
Unrealised foreign exchange
losses/(gains) 356 (119)
Interest expense 265 623
Interest income (36) (12)
Dividend income - (7)
------------ ----------
Profit before changes in working
capital 192 1,789
Change in prepayments - (203)
Change in trade receivables
and other assets 1,690 5
Change in assets classified
as held for sale (1,562) (2,018)
Change in inventories 725 836
Change in trade payables and
other liabilities (526) (402)
Change in liabilities classified
as held for sale (265) 1,192
Taxes paid (477) (887)
---------- ----------
Net cash (outflow)/inflow from
operating activities (223) 312
---------- ----------
Investing activities
Interest received 36 12
Dividends received - 1,802
Purchases of short-term investment (111) (2,149)
Proceeds from disposal of short-term
investments 517 5,975
Cash transferred to VVF - (35,036)
Purchases of investment properties - (2,323)
Purchases of property, plant
and equipment (1,261) (1,186)
Proceeds from disposal of a
prepayment for acquisition
of investment property 6 2,371 -
Proceeds from disposals of
financial assets at fair value
through profit or loss - 11,387
Net proceeds from disposals
of subsidiaries held for sale 11 56,110 15,310
---------- ----------
Net cash inflow/(outflow) from
investing activities 57,662 (6,208)
---------- ----------
Year ended 30 June
--------------------------
Note 2017 2016
USD'000 USD'000
Financing activities
Interest paid (265) (623)
Proceeds from borrowings - 419
Repayments of borrowings (9,042) (4,191)
Distributions paid to holders
of PE Shares (52,669) (8,200)
Purchase VVF shares to distribute
to holders of PE Shares (12,332) (2,800)
---------- ----------
Net cash outflow from financing
activities (74,308) (15,395)
---------- ----------
Net decrease in cash and cash
equivalents for the year (16,869) (21,291)
Cash and cash equivalents
at beginning of the year 24,788 46,106
Exchange differences on cash
and cash equivalents 303 (27)
---------- ------------
Cash and cash equivalents
at end of the year 8,222 24,788
Made up of:
Cash and equivalents per the
consolidated balance sheet 10 4,277 20,408
Included in the assets of
the disposal groups 11(c) 3,945 4,380
Major non-cash transactions
Year ended 30 June
--------------------------
Note 2017 2016
USD'000 USD'000
Contribution of listed investments
into VVF 9 - 67,388
Repurchase of LP Shares in
exchanging for VVF units 9 40,842 67,983
Distribution to holders of
Private Equity Shares in exchange
for VVF units 9 12,332 2,800
Derecognition of non-controlling
interests on disposal of subsidiaries 1,611 -
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. Each pool of assets was represented by a separate share class, Listed Portfolio Shares ("LP Shares") and Private Equity Shares ("PE Shares"), which were listed on the London Stock Exchange's Alternative Investment Market ("AIM") under the tickers VNIL and VNI, respectively. For the financial year ended 30 June 2016, both classes of shares met the definition for financial liabilities under International Accounting Standard 32 ("IAS 32") and were classified as liabilities. For the financial year ended 30 June 2017, as a result of fully redemption of LP Shares, PE Shares met the specific conditions under IAS 32 to be reclassified as equity (refer Note 15).
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 investment strategy is to invest in equities listed on the Ho Chi Minh Stock Exchange and the Hanoi Stock Exchange; and other issuers that carry out a substantial part of their economic activity in Vietnam and are listed, traded or dealt on other stock exchanges. The VVF shares were distributed to LP Share shareholders between August 2015 and August 2016 in return for redeeming their LP Shares. Following the final distribution of VVF shares and receipt of all outstanding LP Shares from shareholders the AIM listing for VNIL was withdrawn and all outstanding LP Shares were cancelled.
The Company has ceased making new private equity investments and sought to fully realise the Private Equity Portfolio by 30 June 2017. With this objective met shortly after the balance sheet date, the Company expects to be wound up within twelve months. The proceeds from the sale of the private equity assets and any surplus net cash-flows have, subject to each shareholders' election, previously been distributed to the PE Share shareholders in cash, else to them in the form of VVF units distributed in specie.
On 25 August 2017, the Company published the circular including a Notice of Extraordinary General Meeting setting out details of the recommended proposals for the voluntary winding up of the Company under the laws of the Cayman Islands, the appointment of joint liquidators and the cancellation of admission of the PE Shares to trade on the AIM. The Extraordinary General Meeting of the Company will take place on 9 October 2017 at 2.30 p.m. UK time at Grant Thornton UK LLP, 30 Finsbury Square, London EC2P 2YU, at which Shareholders will be asked to approve the necessary resolutions. Subject to the passing of the resolutions, admission of the PE Shares to trading on the AIM will be cancelled with effect on 10 October 2017.
The consolidated financial statements for the year ended 30 June 2017 was approved for issue by the Board of Directors on 25 September 2017.
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 has progressively realised its Private Equity Portfolio which it expected to complete by 9 October 2017. As a consequence, these consolidated 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 material 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 3.1.
(c) New standards and interpretation effective 1 July 2017 adopted by the Group
There are no standards, interpretations and amendments to existing standards that are effective for the financial year beginning 1 July 2017 that have had a material impact on the Group.
2.2 Significant accounting policies
LP Shares and PE Shares are classified as financial liabilities
Under IAS 32, both the LP Shares and PE Shares were classified as financial liabilities in the financial year ended 30 June 2016 as they both meet the definition of puttable instruments. That is, they were financial instruments that gave the holders the right to put the instruments back to the issuer for cash or another financial asset or were automatically put back to the issuer on the occurrence of an uncertain future event.
As a result of fully redemption of LP Shares, PE Shares met the specific conditions under IAS 32 to be reclassified as equity. That is, the shareholders entitle to share a pro rata of the Company's net assets in the event of liquidation and are subordinate to all other classes of instruments.
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 consolidated 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
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
In-Building 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 Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
2.16 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 PE Shares and subsequently classified as financial liabilities. For the financial year ended 30 June 2017, as a result of fully redemption of LP Shares, PE Shares met the specific conditions under IAS 32 to be reclassified as equity. Refer to Note 15 for details.
2.17 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.
2.18 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.
2.19 Borrowing costs
All borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.20 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.
2.21 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.
2.22 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 Telecommunication Holdings ("SEATH") Base Transceiver Station ("BTS") tower network and Vietnam Infrastructure Holding Ltd. ("VIHL") In-Building Systems ("IBS") leasing services, information rescue services and from lease of infrastructure in Ba Thien industrial park.
Revenue from SEATH BTS tower network and VIHL 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.
2.23 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.
2.24 Rounding of amounts
All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units unless otherwise stated.
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 SEATH Base Transceiver Station ("BTS") tower network have been determined by 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 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 29(b)(iv).
(b) Fair value of VIHL 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 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 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 29(b)(iv).
(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.
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 29(b)(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. The Group 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:
Assets
Property Other
and infrastructure capital
development Telecomm-unications markets Cash Total
USD'000 USD'000 USD'000 USD'000 USD'000
As at 30 June
2017
Trade and other
receivables - 119 - - 119
Cash and cash
equivalents - - - 4,277 4,277
Assets classified
as held for sale - 13,946 - - 13,946
---------- ------------ ---------- ---------- ------------
Total assets - 14,065 - 4,277 18,342
Total assets include:
Additions to non-current
assets - 1,755 - - 1,755
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
Revenue and segment profit and loss
Property
and infrastructure Other capital
development markets Cash Total
USD'000 USD'000 USD'000 USD'000
Year ended 30
June 2017
Interest income - 36 - 36
Fair value loss
of financial assets
at fair value
through profit
or loss - 2,597 - 2,597
---------- ---------- -------- ----------
Total - 2,633 - 2,633
(3,003)
Unallocated expenses ----------
Loss before tax (370)
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
(4,998)
Unallocated expenses ----------
Gain before tax 748
5 SUBSIDIARIES
The operating subsidiaries of the Group are incorporated in Vietnam, which are held through special purpose vehicles outside of Vietnam, details are as follows:
Equity interest
held by the
Group (%)
as at 30 June
------------------
Principal
Name of entity 2017 2016 activity
Southeast Asia Telecommunication
Holdings ("SEATH") Base
Transceiver Station ("BTS")
tower network (i)
VNC-55 Infrastructure
Investment Joint Stock
Company 0.0 100.0 Telecommunications
Mobile Information Service
Joint Stock Company 0.0 100.0 Telecommunications
Zone II Mobile Information
Service Joint Stock Company 0.0 99.9 Telecommunications
Global Infrastructure
Investment Joint Stock
Company 0.0 100.0 Telecommunications
Truong Loc Telecom Trading
and Service Joint Stock
Company 0.0 98.0 Telecommunications
Tan Phat Telecom Joint
Stock Company 0.0 99.9 Telecommunications
T&A Company Limited 0.0 100.0 Telecommunications
Vietnam Infrastructure
Holding Ltd. ("VIHL") In-Building
Cellular Enhancement Systems
("IBS") (ii), (v)
Vietnam Data and Aerial
System Company Limited
("VinaDAS") 100.0 100.0 Telecommunications
Southern Star Telecommunication
Equipment Joint Stock Company
("SST") (iv) 70.0 70.0 Telecommunications
Vien Tin Joint Stock Company
("Vien Tin") (iii) 0.0 75.0 Telecommunications
(i) Agreement to sell equity interest in SEATH
On 4 August 2016, the Company signed a share sale and purchase agreement to transfer 100% of its holding of SEATH. The transaction resulted in a net cash proceeds of USD51.9 million to the Company. Sale proceeds of USD51.8 million were received on 17 January 2017 and the remaining balance of approximately USD0.1 million was fully received in August 2017.
(ii) In December 2016, as a pre-condition of the share sale and purchase agreement with the buyer, VinaDAS, SST and Vien Tin were transferred from SEATH to VIHL. All of the restructuring transactions were recorded at book value and no gains or losses were recognised as a result of this restructuring.
(iii) Agreement to sell equity interest in Vien Tin
On 8 May 2017, the Group signed a share sale and purchase agreement to dispose its interest in Vien Tin for a cash consideration of USD3.1 million which was fully received. From 1 June 2017, the Group no longer held any interest in Vien Tin.
(iv) Agreement to acquire the remaining interest in SST (Note 31(b))
On 8 June 2017, the Group signed a share sale and purchase agreements to acquire 30% of interest in SST from other minority interest parties for a cash consideration of USD3.0 million which was fully paid. From 27 July 2017, the Group holds 100% of interest in SST.
(v) Agreement to sell equity interest in Vietnam Infrastructure Holding Ltd. (Note 31(c))
On 26 May 2017, the Company signed a share sale and purchase agreement to transfer 100% of its holding of Vietnam Infrastructure Holding Ltd to the buyer for a cash consideration of approximately USD10.2 million which was fully received in August 2017.
6 PREPAYMENT FOR ACQUISITION OF LONG AN INDUSTRIAL SERVICE PROJECT
30 June
30 June 2017 2016
USD'000 USD'000
Opening balance 2,371 2,188
Gain on remeasurement
of prepayment for acquisition
of Long An Industrial
Service project - 183
Receipt of final settlement
(*) (2,371) -
---------- ----------
Closing balance - 2,371
(*) On 2 November 2016, USD2.4 million was received as a final settlement of this outstanding balance.
7 FINANCIAL INSTRUMENTS BY CATEGORY
Financial
assets
Loans at fair
and receivables value Total
through
profit
or loss
USD'000 USD'000 USD'000
Financial assets
As at 30 June 2017
Trade and other receivables
(Note 8) 119 - 119
Cash and cash equivalents
(Note 10) 4,277 - 4,277
Assets classified as
held for sale (Note 11(c)),
include:
* Trade and other receivables 1,443 - 1,443
* Short-term investments (Note 12) 925 - 925
* Cash and cash equivalents 3,945 - 3,945
------------ ---------- ------------
Total 10,709 - 10,709
Financial assets denominated
in:
* USD 4,396 4,396
* VND 6,313 6,313
------------ ---------- ------------
10,709 - 10,709
As at 30 June 2016
Trade and other receivables
(Note 8) 4,455 - 4,455
Financial assets at fair
value through profit
or loss (Note 9) - 38,245 38,245
Cash and cash equivalents
(Note 10) 20,408 - 20,408
Assets classified as
held for sale (Note 11(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 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
Liabilities
at amortised
cost
USD'000
Financial liabilities
As at 30 June 2017
Trade and other payables (Notes
18, 19) 1,976
Liabilities directly associated
with assets classified as held
for sale (Note 11(c)), include:
* Trade and other payables 586
----------
Total financial liabilities 2,562
Financial liabilities denominated
in:
* USD 1,976
* VND 586
----------
2,562
As at 30 June 2016
Trade and other payables (Notes
18, 19) 2,399
Borrowings (Note 16) 9,042
Liabilities directly associated
with assets classified as held
for sale (Note 11(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
8 TRADE AND OTHER RECEIVABLES
30 June
30 June 2017 2016
USD'000 USD'000
Trade receivables 119 4,455
-------- ----------
119 4,455
Less: allowance for impairment
of receivables - -
-------- ----------
Total 119 4,455
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. As at 30 June 2017 and 30 June 2016, there were no trade and other receivable past due and impaired or not past due but doubtful.
As at 30 June 2017, there is a significant concentration of credit risk (representing 100% of trade receivables) relating to a buyer who acquired SEATH (Note 5). As at 30 June 2016, there was a significant concentration of credit risk (representing 100% of trade receivables at that date) relating to a buyer who acquired Vina-CPK Limited.
9 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 30 June
2017 2016
USD'000 USD'000
Designated at fair value
through profit or loss:
Current:
Unlisted shares, fair value
based on net asset value - 38,245
------------ ------------
- 38,245
------------ ------------
- 38,245
The financial assets at fair value through profit or loss as at 30 June 2016 comprised of Class A VVF shares which were subsequently transferred to the LP Shares shareholders' accounts on 25 August 2016 following the compulsory repurchase of the remaining 107,281,741 LP Shares by the Company in exchange for 3,288,435,511 Class A VVF shares on 17 August 2016 (Note 15).
Risk exposure and fair value measurements
Information about the Group's exposure to price risk is provided in Note 30. Refer to Note 29(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 Fair
value value
based based
Current on net on sales Non-current
listed asset agreements unlisted
shares value shares Total
USD'000 USD'000 USD'000 USD'000 USD'000
As at 30 June
2016 - 38,245 - - 38,245
Distribute VVF
unit in exchange
for LP Shares - (40,842) - - (40,842)
Purchase VVF
unit to distribute
to holders of
PE Shares - 12,332 - - 12,332
Distribute VVF
unit to holders
of PE Shares - (12,332) - - (12,332)
Change in fair
value of financial
assets at fair
value through
profit or loss - 2,597 - - 2,597
---------- ---------- ---------- ---------- ----------
As at 30 June
2017 - - - - -
- Current unlisted
shares
-------------------------
Fair Fair
value value
based based
Current on net on sales Non-current
listed asset agreements 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
Distribute VVF
unit in exchange
for LP Shares - (67,983) - - (67,983)
Purchase VVF
unit to distribute
to holders of
PE Shares - 2,800 - - 2,800
Distribute VVF
unit to holders
of PE Shares - (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
10 CASH AND CASH EQUIVALENTS
30 June
30 June 2017 2016
USD'000 USD'000
Cash and cash equivalents 4,277 20,408
Cash and cash equivalents denominated in:
USD 4,277 2,381
VND - 18,027
---------- ------------
4,277 20,408
11 DISCONTINUED OPERATION AND ASSETS AND LIABILITIES OF DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
Classification of SEATH BTS tower network and VIHL IBS network as assets held for sale
As discussed in Note 5, the Company has signed share sale and purchase agreements to transfer 100% of its holding of SEATH and of VIHL to the buyers. As a result, the associated assets and liabilities of the BTS tower network and IBS systems have been reported as discontinued operations and presented as held for sale in these consolidated financial statements. The financial information relating to these discontinued operations is set out below:
(a) Financial performance and cash flow information
The financial performance and cash flow information presented below include the six-month period ended 13 January 2017 of SEATH, the eleven-month period ended 31 May 2017 of Vien Tin and the financial year ended 30 June 2017 of the remaining of VIHL IBS system. The comparative figures presented for these disposal groups and the nine-month period ended 31 March 2016 of Vina-CPK Limited are for the year ended 30 June 2016.
30 June 30 June
2017 2016
USD'000 USD'000
Revenue 12,704 19,646
Cost of sales (9,438) (14,699)
Net gain/(loss) from fair value
adjustment on investment properties
(Note 13) (*) 2,678 (5,836)
Revaluation loss on fixed assets
(Note 14) (**) (865) (9,072)
Administrative expenses (1,509) (2,315)
Other income 753 498
Other expenses (1,485) (2,031)
---------- ----------
Profit/(loss) before income
tax 2,838 (13,809)
Income tax expense (Note 24) (503) (702)
Deferred income tax (charge)/income (1) 34
---------- ----------
Profit/(loss) after income tax
of discontinued operation 2,334 (14,477)
(Loss)/gain on disposal of subsidiaries
before capital gains tax (6,454) 1,719
Capital gains tax on disposal
of subsidiaries - (190)
---------- ----------
Loss from discontinued operation (4,120) (12,948)
Exchange differences on translation
of discontinued operations 6,000 (207)
In which:
* Reclassification of foreign currency translation
reserve 7,032 1,518
* Exchange differences on translation of foreign
operations (1,032) (1,725)
Others (***) - 40
---------- ----------
Other comprehensive gain/(loss)
from discontinued operations 6,000 (167)
(*) Investment properties includes SEATH's BTS tower network and Vina-CPK Limited's land and buildings.
(**) Fixed assets includes VIHL's IBS system.
(***) These represent reserves provided on after tax profits of the Group's subsidiaries which are required by local regulations.
30 June 30 June
2017 2016
USD'000 USD'000
Net cash inflow from operating
activities 902 2,005
Net cash inflow from investing
activities (includes an inflow
of USD51.8 million, USD3.1 million
and USD4.4 million from sales
of SEATH, Vien Tin and Vina-CPK
Limited, respectively) 57,958 15,674
Net cash (outflow)/inflow from
financing activities (38) 15
------------ ------------
Net increase in cash generated
by the disposal groups 58,822 17,694
(b) Details of the sale of SEATH and Vien Tin
SEATH Vien Tin Total
USD'000 USD'000 USD'000
Consideration received
or receivable:
Cash 51,818 3,159 54,977
Receivable 119 - 119
---------- ---------- ----------
Total disposal consideration 51,937 3,159 55,096
Carrying value of non-controlling
interest 17 1,594 1,611
Carrying value of net
assets sold (51,954) (4,175) (56,129)
---------- ---------- ----------
Gain on sale before
income tax and reclassification
of foreign currency
translation reserve - 578 578
Reclassification of
foreign currency translation
reserve and other reserves (6,784) (248) (7,032)
Capital gains tax on
disposal of subsidiaries - - -
---------- ---------- ----------
(Loss)/gain on disposal
of the subsidiaries
after income tax (6,784) 330 (6,454)
The carrying amounts of assets and liabilities as at the date of sale were:
SEATH Vien Tin
13 January
2017 31 May 2017 Total
USD'000 USD'000 USD'000
Investment properties 45,837 - 45,837
Property, plant
and equipment 602 2,230 2,832
Long-term deferred
expenses 1,226 2 1,228
Other long term
receivables 245 37 282
Deferred tax asset 8 - 8
Inventories 13 490 503
Trade and other
receivables 2,085 986 3,071
Prepayment for suppliers 12 845 857
Shor-term deposit - - -
Cash and cash equivalents 3,121 129 3,250
---------- ---------- ----------
Total assets 53,149 4,719 57,868
---------- ---------- ----------
Long-term and short-term
borrowings and debts - 18 18
Corporate tax payable 179 49 228
Trade and other
payables 493 411 904
Long-term and short-term
unearned revenue 408 65 473
Other reserves 115 1 116
---------- ---------- ----------
Total liabilities 1,195 544 1,739
---------- ---------- ----------
Net assets 51,954 4,175 56,129
(c) Movement of assets and liabilities of disposal groups classified as held for sale:
As
at Change Fair As at
Note 1 July in carrying value Sale 30 June
2016 amount gain/(loss) of subsidiaries 2017
USD'000 USD'000 USD'000 USD'000 USD'000
Assets of disposal
groups classified
as held for
sale
Investment properties 13 42,798 361 2,678 (45,837) -
Property, plant
and equipment 14 12,705 (1,873) (865) (2,832) 7,135
Long-term deferred
expenses 1,313 57 - (1,229) 141
Other long term
receivables 406 (14) - (281) 111
Deferred tax
assets 9 (1) - (8) -
Inventories 948 (222) - (503) 223
Trade and other
receivables 5,347 (833) - (3,071) 1,443
Prepayment for
suppliers 1,565 (685) - (857) 23
Short-term investments 12 781 144 - - 925
Cash and cash
equivalents 4,380 2,815 - (3,250) 3,945
---------- -------- ---------- ---------- ----------
70,252 (251) 1,813 (57,868) 13,946
---------- -------- ---------- ---------- ----------
Liabilities
directly associated
with assets
classified as
held for sale
Long-term and
short-term borrowings
and debts 71 (53) - (18) -
Corporate income
tax payable 209 101 - (228) 82
Advance from
customers 62 (57) - - 5
Trade and other
payables 1,670 (178) - (906) 586
Long-term and
short-term unearned
revenue 463 40 - (472) 31
Other reserves 252 (92) - (115) 45
---------- -------- ---------- ---------- ----------
2,727 (239) - (1,739) 749
---------- -------- ---------- ---------- ----------
Net assets and
liabilities
of disposal
groups classified
as held for
sale 67,525 (12) 1,813 (56,129) 13,197
12 SHORT-TERM INVESTMENTS
As at 30 June 2017 and 30 June 2016, the Company did not hold any short-term investments. Short-term investments of USD0.9 million (2016: USD0.8 million), which were classified to assets held for sale (Note 11(c)) comprises of VND term deposits at local banks with maturities of three months to one year, which earned interest at rates ranging from 6.0% to 6.8% per annum.
13 INVESTMENT PROPERTIES
As at 30 June 2017, all investment properties are classified and presented as assets held for sale (Note 11).
Movement of investment properties is as follows:
Year ended
30 June 30 June
2017 2016
USD'000 USD'000
Opening balance of:
Investment properties - 73,435
Investment properties classified
as assets held for sale 42,798 -
---------- ----------
42,798 73,435
Additional investments made
during the year 494 2,934
Transfer to property, plant
and equipment (Note 14) - (684)
Net gain/(loss) from fair
value adjustment (Note 11(a)) 2,678 (5,836)
Sale of subsidiaries (45,837) (26,048)
Currency translation difference
in other comprehensive income (133) (1,003)
---------- ----------
Closing balance of:
Investment properties - -
Investment properties classified
as assets held for sale - 42,798
As at 30 June 2016, the BTS tower network was pledged with banks as security for long-term borrowings granted to a subsidiary (Note 16).
Measuring the fair value of investment property
Investment properties, principally the BTS tower network, which were held as available for sale and carried at fair value. Changes in fair values were presented in the consolidated income statement as profit/(loss) from discontinued operations.
Significant estimate - fair value of investment property
Information about the valuation of investment properties is provided in Note 29(b).
Amounts recognised in profit or loss for investment properties
30 June 30 June
2017 2016
USD'000 USD'000
Rental income 6,133 12,197
Direct operating expenses
from property that generated
rental income (4,524) (5,427)
Direct operating expenses
from property that did not
generate rental income (749) (233)
Fair value gain/(loss) recognised
(*) (Note 11(a)) 2,678 (5,836)
(*) The fair value gain/(loss) recognised in the consolidated income statement as profit/(loss) from discontinued operations during the year included the fair value gain/(loss) on the BTS tower network which was presented as assets classified as held for sale as at reporting date.
Contractual obligations and leasing arrangements
As at 30 June 2017 and 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 28.
14 PROPERTY, PLANT AND EQUIPMENT
As at 30 June 2017 and 30 June 2016, all property, plant and equipment is classified and presented as assets held for sale (Note 11). The movements of property, plant and equipment which are classified as assets held for sale at 30 June 2017 were:
Plant Other Assets
and Motor Office assets under
Buildings machinery vehicles equipment construction Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Historical
cost
At 1 July
2016 100 17,507 229 33 33 648 18,550
New purchases - 27 - - - 1,234 1,261
Transfer
from assets
under construction - 683 - - - (683) -
Written-off - (25) - - - (43) (68)
Other decrease - (5) - - - - (5)
Revaluation
loss
(Note 11(a)) - (865) - - - - (865)
Sale of subsidiary (100) (3,413) (182) (6) (26) (872) (4,599)
Translation
differences - (520) (15) - (3) (90) (628)
-------- ---------- -------- -------- -------- -------- ----------
At 30 June
2017 - 13,389 32 27 4 194 13,646
-------- ---------- -------- -------- -------- -------- ----------
Accumulated
depreciation
At 1 July
2016 1 5,690 118 11 25 - 5,845
Charged for
the year - 2,449 18 10 3 - 2,480
Written-off - (25) - - - - (25)
Sale of subsidiaries - (1,620) (121) (4) (22) - (1,767)
Translation
differences (1) (16) (3) - (2) - (22)
-------- ---------- -------- -------- -------- -------- ----------
At 30 June
2017 - 6,478 12 17 4 - 6,511
-------- ---------- -------- -------- -------- -------- ----------
Net book
value
At 1 July
2016 99 11,817 111 22 8 648 12,705
At 30 June
2017 - 6,911 20 10 - 194 7,135
The movements of property, plant and equipment during the year ended 30 June 2016 were:
Plant Other Assets
and Motor Office assets under
Buildings 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 13) 684 - - - - - 684
Revaluation
loss
(Note 11(a)) - (9,072) - - - - (9,072)
Written-off - (92) - - - - (92)
Transfers
to assets
classified
as held for
sale (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 (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 - - - - - - -
In which the net book value of property, plant and equipment which are classified and presented as assets held for sale as at 30 June 2016 were:
Plant Other Assets
and Motor Office assets under
Buildings machinery vehicles equipment construction Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Net book
value
At 30 June
2016 99 11,817 111 22 8 648 12,705
Plant and machinery primarily comprises of VIHL's IBS network which is measured at fair value less accumulated depreciation. As at 30 June 2017 the net book value of the network was USD6.8 million (30 June 2016: USD11.4 million) which has been classified as assets held for sale together with other property, plant and equipment disclosed in Note 11(c). 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 29(b).
15 SHARE CAPITAL
On 21 July 2015, the Company's ordinary shares were re-designated as PE Shares and a bonus issue of a new class of LP Shares was undertaken. As a result each VNI shareholder held an equal number of PE Shares and LP Shares. The PE Shares give the holders the right to receive cash distributions and the LP Shares were subject to mandatory repurchase in August 2016, so both met the definition of financial liabilities under International Accounting Standard 32 ("IAS 32"). Accordingly, both share classes were classified as financial liabilities in the financial year ended 30 June 2016.
All of the remaining 107,281,741 LP Shares were repurchased by the Company on 17 August 2016 in exchange for 3,288,435,511 Class A VVF shares. Following the compulsory repurchase all of the LP Shares have been cancelled on 18 August 2016. As a result of fully redemption of LP Shares, PE Shares met the specific conditions under IAS 32 to be reclassified as equity as at 30 June 2017 (refer Note 2).
The movements LP Shares and PE Shares during the year were as follows:
For the year ended 30 June 2017:
LP Shares
--------------------------------
Number of USD'000
shares
Opening balance 107,281,741 38,311
Repurchased during the
year (107,281,741) (40,842)
Increase in net assets
attributable to holders
of LP Shares - 2,531
Closing balance ------------------ ----------
- -
PE Shares
--------------------------------
Number of USD'000
shares
Opening balance of:
Net assets attributable
to holders of PE Shares 350,221,094 77,169
Share capital - -
------------------ ----------
350,221,094 77,169
Increase in net assets
attributable to holders
of PE Shares - 984
Distributions to shareholders - (65,001)
Comprehensive loss for
the year - (534)
------------------ ----------
Closing balance 350,221,094 12,618
In which:
Net assets attributable -
to holders of PE Shares -
Share capital 350,221,094 3,502
Additional paid-in capital - 150,012
Accumulated losses - (140,330)
Foreign currency translation
reserve - (566)
For the year ended 30 June 2016:
LP Shares
------------------------------
Number of USD'000
shares
Opening balance - -
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 LP Shares - 3,520
---------------- ----------
Closing balance 107,281,741 38,311
PE Shares
------------------------------
Number of USD'000
shares
Opening balance - -
Re-designated from existing
ordinary shares 350,221,094 99,741
Decrease in net assets
attributable to holders
of PE Shares - (22,572)
---------------- ----------
Closing balance 350,221,094 77,169
16 BORROWINGS
30 June 30 June
2017 2016
USD'000 USD'000
Short-term borrowings:
Current portion of long-term
bank borrowings - 9,042
---------- ----------
- 9,042
---------- ----------
Total - 9,042
As at 30 June 2016, according to the original contract terms, the Group's borrowings, which are denominated in USD, mature on a range of dates up until October 2019 and bear a range of annual interest rates from 3.9% to 4.1%. The borrowings were secured by the BTS tower network as disclosed in Note 13. As at 30 June 2017, the outstanding loan was fully repaid to lender.
As at 30 June 2016, under the liquidation basis of accounting all long-term borrowings which were expected to be realised or settled within the next twelve months from the reporting date are classified as short-term borrowings as at reporting date.
The maturities of the Group's borrowings at the reporting date were:
30 June
30 June 2017 2016
USD'000 USD'000
6 months or less - 1,750
6 - 12 months - 1,750
1 - 5 years - 5,542
---------- ----------
- 9,042
As at 30 June 2016 the fair value of short-term borrowings amounting to USD9.0 million approximates their carrying amounts as the impact of discounting is not significant. They were classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs.
17 DEFERRED TAX LIABILITIES
30 June 30 June
2017 2016
USD'000 USD'000
Beginning of year - 1,113
Balance sold as part of
disposal of Vina-CPK Limited - (1,110)
Effect of translation to
presentation currency - (3)
---------- ----------
End of year - -
There are no other significant unrecognised deferred tax liabilities.
18 TRADE AND OTHER PAYABLES
30 June 30 June
2017 2016
USD'000 USD'000
Accrued realisation fees
(Note 27(b)) 313 1,692
Accrued incentive fees (Note
27(b)) 1,005 -
Trade payables 455 176
---------- ----------
Total 1,773 1,868
As at 30 June 2017 and 30 June 2016, trade and other payables primarily relate to the 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
30 June 2017 2016
USD'000 USD'000
Payable to VinaCapital Investment
Management Ltd.:
* realisation fees (Note 27(b)) 46 525
- incentive fees (Note 27(b)) 157 -
Payable to shareholders - 6
-------- --------
Total 203 531
Payables to related parties are short-term in nature, hence their carrying values are considered a reasonable approximation of their values at the balance sheet date.
20 REVENUE AND COST OF SALES
The Group's revenue represents rental income from the BTS tower network and the IBS system and associated leasing and information rescue services. All revenue is derived from external customers, although 60.6% of total sales during the year amounting to USD5.8 million (2016: 70% of total sales during the year amounting to USD13.6 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
----------------------------------
2017 2016
USD'000 USD'000
Land rentals 1,906 3,187
Tools and equipment expenses 1,045 2,330
Employee expenses 421 883
21 INTEREST INCOME
Year ended 30 June
---------------------
2017 2016
USD'000 USD'000
Interest income was derived from:
- Cash and term deposits 36 12
-------- --------
Total 36 12
22 ADMINISTRATIVE EXPENSES
Year ended 30 June
------------------------
2017 2016
USD'000 USD'000
Management fees (Note 27(a)) - 306
Professional fees 1,764 1,013
Custodian fees 111 167
Directors' fees (Note 26) 182 209
Realisation fees (Note 27(b)) 319 2,561
Incentive fees (Note 27(b)) 1,221 -
Other expenses 247 445
---------- ----------
Total 3,844 4,701
23 FAIR VALUE (LOSS)/GAIN OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Year ended 30 June
------------------------
2017 2016
USD'000 USD'000
Unrealised gains based on changes in fair
values using
- internal valuation - 3,800
Gains from realisation of financial assets 2,597 1,740
Unrealised gains on foreign exchange translation - 4
---------- ----------
Total 2,597 5,544
24 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 USD0.5 million was provided for corporate income tax payable by the Vietnamese subsidiaries for the current year (2016: USD0.7 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
------------------------
2017 2016
USD'000 USD'000
Current tax
Current income tax on loss
for the year - -
Adjustments for:
Current income tax expense
on Vietnamese subsidiaries
(Note 11(a)) 503 702
Capital gains tax on sale
of a subsidiary (Note 11(a)) - 190
---------- ----------
Total current tax expense 503 892
---------- ----------
Deferred income tax
Increase/(decrease) in deferred
tax assets 1 (31)
Increase in deferred tax liabilities
(Note 17) - (3)
---------- ----------
Deferred income tax benefit/(charge)
(Note 11(a)) 1 (34)
---------- ----------
Income tax expense 504 858
Income tax expense is attributable
to:
Charged to the consolidated
income statement from continuing
operation - -
Charged to the consolidated
income statement from discontinued
operation (Note 11(a)) 504 858
Numerical reconciliation of income tax expense to prima facie tax payable:
Year ended 30 June
--------------------------
2017 2016
USD'000 USD'000
(Loss)/profit from continuing
operations before income
tax expense (370) 748
Loss from discontinuing operation
before income tax expense (3,616) (12,090)
---------- ------------
Group loss before tax (3,986) (11,342)
Group loss multiplied by
applicable tax rate 0% (2016:
0%) - -
Tax effect of amounts which
are not deductible (taxable)
in calculating taxable income:
Difference in overseas tax
rates 504 702
Capital gains tax on disposal
of subsidiaries - 190
Unearned revenue subjected
to tax in the year - (34)
---------- ----------
Total income tax expense 504 858
---------- ----------
Income tax expense is attributable
to:
Charged to the consolidated
income statement from continuing
operation - -
Charged to the consolidated
income statement from discontinued
operation 504 858
25 LOSS PER SHARE AND NET ASSET VALUE PER SHARE
(a) Earnings/(losses) per share
Earnings/(losses) 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 2017:
LP Shares (*) PE Shares
Profit/(loss) for the year attributable to shareholders of the Company (USD'000) 2,531 (5,547)
Weighted average number of shares in issue ('000) 107,282 350,221
Earnings/(losses) per share (USD/share) 0.024 (0.016)
(*) The losses per share for the LP Shares is determined for the period from 1July 2016 to 17 August 2016 when it was existing, whereby all the remaining 107,281,741 repurchased and cancelled by the Company.
Year ended 30 June 2016:
LP Shares PE 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/(losses) per share (USD/share) 0.023 (0.032)
(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 2017:
LP Shares PE Shares
Net asset value attributable
to shareholders of the Company
(USD'000) - 12,618
Number of outstanding shares
in issue ('000) - 350,221
Net asset value per share
(USD/share) - 0.036
As at 30 June 2016:
LP Shares PE 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
26 DIRECTORS' FEES AND MANAGEMENT'S REMUNERATION
The aggregated directors' fees during the year up to liquidation date amounted to USD181,625 (2016: USD209,000) (Note 22), of which there was USD31,625 outstanding amounts payable at the reporting date (2016: nil). 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 2017 30 June 2016
USD'000 USD'000
Rupert Carington 57.4 60.0
Robert Binyon 44.6 45.0
Luong Van Ly 35.0 45.0
Paul Garnett 44.6 35.0
Ekkehard Goetting - 24.0
---------- ----------
Total 181.6 209.0
27 RELATED PARTIES
(a) Management fees
The Group is managed by VinaCapital Investment Management Ltd. (the "Investment Manager"), incorporated and registered as a licensed fund manager in the Cayman Islands. 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 LP Shares or the PE Shares.
There is no management fee for the year ended 30 June 2017 (30 June 2016: USD0.3 million), there was no outstanding accrued fees due to the Investment Manager at the reporting date (30 June 2016: nil).
(b) 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 PE Portfolio:
i) 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 fee payable for the year ended 30 June 2017 amounted to USD0.3 million (30 June 2016: USD2.6 million) (Note 22), with USD0.05 million (30 June 2016: USD0.5 million) (Note 19) in outstanding balance due to investment manager and USD0.3 million (30 June 2016: USD1.7 million) (Note 18) in the outstanding accrued fees at the reporting date.
ii) 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. Total incentive fee payable for the year ended 30 June 2017 amounted to USD1.2 million (30 June 2016: nil) (Note 22), with USD0.2 million (30 June 2016: nil) (Note 19) in outstanding balance due to investment manager and USD1 million (30 June 2016: nil) (Note 18) in the outstanding accrued fees at the reporting date.
28 OPERATING LEASE COMMITMENTS
The Group leases various offices, land for BTS tower network and the 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.
At the reporting date the Group has the following commitments under non-cancellable operating lease agreements:
30 June 30 June
2017 2016
USD'000 USD'000
Within one year 256 6,755
Within two to five years 448 9,897
Over five years 85 435
---------- ------------
Total 789 17,087
29 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.
As at 30 June 2017, there were no financial asset measured at fair value by valuation method held by the Company.
As at 30 June 2016, the financial assets measures at fair value in the balance sheet were grouped into the fair value hierarchy as follows:
Recurring fair value Level Level Level Total
measurements 1 2 3
USD'000 USD'000 USD'000 USD'000
Ordinary shares - unlisted - 38,245 - 38,245
---------- ------------ ---------- ------------
- 38,245 - 38,245
During the year, there were no transfers between the fair value hierarchy levels (30 June 2016: nil). There were also no other reclassifications of financial assets in the current year and prior year.
ii) 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 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.
(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 29(a).
Recurring fair value Level Level Level Total
measurements 1 2 3
USD'000 USD'000 USD'000 USD'000
As at 30 June 2017
Assets classified
as held for sale
Plant and machinery
- VIHL IBS - - 7,135 7,135
---------- ---------- ---------- ----------
Total non-financial
assets - - 7,135 7,135
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
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.
There were no transfers between levels in prior year.
i) 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 and plant and machinery;
- discounted cash flow ("DCF") method for level 3 plant and machinery.
ii) 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:
VIHL IBS network
- 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. iii) Valuation process
After being classified as asset held for sale the fair value of BTS network and IBS system are based on the pricing terms set out in the sale and purchase agreements.
Sensitivity as at 30 June 2016:
Range of Sensitivity on management's
Unobservable estimates
inputs
---------------------------- ----------------
(Loss)/gain
Change to fair value
of input due to change
Assets classified
as held for sale
Plant and machinery
- IBS
(USD0.4m)
* IBS growth 5% -/+1% - USD0.4m
(USD1m) -
* Discount rate 16% +/-1% USD1m
* Terminal growth 0% +1% USD2.1m
USD0.22 (USD1.8m)
* Leasing price per square metre per month - USD0.29 -/+10% - USD1.8m
Investment Properties - BTS network
Before and after being classified as asset held for sale the fair value of BTS network was 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 applied by the Company in November 2016.
30 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 9 October 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 2017, 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 USD0.003 million (2016: a net exchange gain/loss of USD1.1 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 2017, following the final tender of listed portfolio shares, the Group has ceased its holding in VVF shares, therefor not exposed to any price risk.
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. The Group has no concentration in individual equity positions exceeding 5% of the Group's net assets. 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.
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. As at 30 June 2017, the Group currently has no financial liabilities exposed to fair value changes due to interest rate changes, therefor not exposed to any cash flow and interest rate risk. As at 30 June 2016, the Group had financial liabilities arising from long-term borrowings in USD with floating interest rates. The Group's forecast of the interest rates was favourable for the borrowings and it had 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.
All of the USD4.3 million (30 June 2016: USD25.6 million) cash and cash equivalents as at 30 June 2017 was deposited with a bank that has a Standard and Poors ('S&P') rating of AA- at the reporting date.
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 2017, the Group did not provide impairment for trade and receivables of assets of disposal groups classified as held for sale (30 June 2016: 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 6 relating to the prepayment for acquisition of investment in the Long An Industrial Service project. As at 30 June 2016, management did 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 1 to Over
6 months 12 months 5 years 5 years Total
USD'000 USD'000 USD'000 USD'000 USD'000
30 June 2017
Trade and other
payables (*) - 1,773 - - 1,773
Payable to related
parties - 203 - - 203
Liabilities directly
associated with
assets classified
as held for sale:
* Trade and other payables (*) - 586 - - 586
-------- ---------- ---------- ------ ------------
- 2,562 - - 2,562
Within 6 to 1 to Over
6 months 12 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
LP Shares 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
(*) 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.
31 SUBSEQUENT EVENTS (a) Distributions to the shareholders
The Company announced a third and final distribution of USD12.6 million on 25 August 2017. On 21 September 2017, the Company revised the distribution to USD12.57 million, representing USD0.0359 for each Private Equity Share currently in issue. The Record Date for the distribution is 29 September 2017.
(b) Additional acquisition of 30% interest in Southern Star Telecommunication Equipment Joint Stock Company ("SST")
On 8 June 2017, the Company signed a share sale and purchase agreement to acquire the remaining 30% interest in SST for a cash consideration of VND68,085 million (equivalent to approximately USD3.0 million). Following completion of the transaction on 27 July 2017, the Company held 100% interest in SST and subsequently sold to the buyer in August 2017 as disclosed in note (c) below.
(c) Agreement to sell equity interest in Vietnam Infrastructure Holding Ltd.
On 26 May 2017, the Company signed a share sale and purchase agreement to transfer 100% of its holding of Vietnam Infrastructure Holding Ltd, for a cash consideration of approximately USD10.2 million which was fully received in August 2017. The Group no longer exerted control over Vietnam Infrastructure Holding Ltd. upon the closing of this transaction.
These consolidated financial statements were approved by the Board of Directors on 25 September 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LAMITMBBTBMR
(END) Dow Jones Newswires
September 25, 2017 10:22 ET (14:22 GMT)
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