Final Results
Vietnam Opportunity Fund Limited
23 November 2007
Vietnam Opportunity Fund Limited (the 'Company')
Results for the year ended 30th June 2007
We are pleased to present the annual report for the Vietnam Opportunity Fund
Limited (AIM: VOF) and its subsidiaries for the year ended 30 June 2007.
Chairman's Statement
Dear Shareholders
We are pleased to present the annual financial statements of the Vietnam
Opportunity Fund (AIM: VOF) for the year ended 30 June 2007.
The Vietnamese economy has been boosted by Vietnam's admission to the World
Trade Organisation and the hosting of the APEC heads meeting in late 2006. Real
gross domestic product has maintained its growth rate above 8% for the last ten
years with 2006 closing at an 8.2% increase. Industrial production, exports and
retail sales are all increasing as the domestic sector flourishes in the new
open commercial environment and the country continues to attract ever increasing
levels of foreign investment in healthy competition with China, India and other
South East Asian countries.
Economic growth and growing investor confidence in Vietnam energized share
prices and propelled the Vietnamese Stock Index to the number one position (146%
increase in 2006) in terms of global stock market returns. Significant growth
has been experienced in several sectors of the economy with land prices, in
particular, doubling and even tripling in many areas.
We are very pleased to report that VOF has been in a prime position to exploit
these opportunities. The Company raised an additional USD304 million in January
2007 through the issuance of 128 million new shares. Once again the offer was
over-subscribed and scaling was applied. Most of the funds raised had already
been fully invested before the end of the financial year, necessitating the
launch of VOF Round 7 fund raising in October 2007.
Since 30 June 2006 the net asset value per share has increased from USD2.00 to
USD3.28 (an increase of 64%) and earnings per share has risen from USD0.76 to
USD1.34 (an increase of 76%).
The accelerated equitisation of State owned enterprises and listing of private
enterprises were catalysts for the diversification of the Company's investment
portfolio during the year. The Company acquired significant stakes in a number
of very attractive businesses which are expected to provide solid investment
returns over the next few years. At 30 June 2007 the investment portfolio
comprised of over 80 listed and over-the-counter trade securities spread across
most major industrial sectors. The Company also held stakes in over 10 real
estate projects and 6 private companies.
Whilst there will always be challenges, we remain extremely confident that the
reforms being undertaken in Vietnam will continue and Vietnam will grow in
stature and importance in the global arena. We believe that VOF will continue
to be well positioned to take advantage of these changes and that the Company
will continue to perform well.
Thank you for your continued support.
Dr Jonathan Choi
Chairman
Vietnam Opportunity Fund
19 November 2007
Consolidated balance sheet Notes 30 June 2007 30 June 2006
USD USD
Assets
Non-current
Investment property 8 15,124,235 -
Property, plant and equipment 9 3,026,951 4,274,135
Investment properties under development 10 3,967,424 2,271,821
Investments in associates 11 69,176,640 23,844,581
Other long term investments 12 1,954,485 9,183,209
Loan receivables 13 41,459,674 19,659,480
Prepayment for operating lease 14 1,971,024 2,109,491
Other non-current assets 129,210 1,375,513
Goodwill 15 1,752,688 1,719,231
138,562,331 64,437,461
Current
Inventories 16 4,755,153 4,319,823
Receivables from related parties 33 1,019,604 -
Trade and other receivables 17 26,113,564 8,445,696
Financial assets at fair value through profit and loss 18 624,575,488 168,032,453
Held to maturity investments 19 47,940,593 -
Deposits for acquisitions of investments 20 10,442,162 -
Cash and cash equivalents 21 71,376,594 32,706,460
786,223,158 213,504,432
Total assets 924,785,489 277,941,893
Notes 30 June 2007 30 June 2006
USD USD
Equity
Equity attributable to shareholders
Share capital 22 2,506,483 1,226,572
Additional paid-in capital 23 459,150,780 164,950,181
Revaluation reserve 24 17,716,945 -
Translation reserve (663,801) (34,084)
Retained earnings 342,954,144 78,787,207
821,664,551 244,929,876
Minority interests 22,137,688 14,084,467
Total equity 843,802,239 259,014,343
Liabilities
Current liabilities
Payables to related parties 33 4,790,326 -
Trade and other payables 25 75,016,283 17,476,172
Borrowings - 118,772
Other liabilities 1,176,641 1,332,606
Total liabilities 80,983,250 18,927,550
Total equity and liabilities 924,785,489 277,941,893
Net asset per share ($ per share) 3.278 1.997
Consolidated statement of changes in shareholders' equity
Equity attributable to equity holders of the Group Minority Total
interests equity
Share Additional Translation Revaluation Retained
capital paid-in reserve reserve earnings
capital
USD USD USD USD USD USD USD
1 July 2005 751,547 91,634,442 - - 3,854,607 - 96,240,596
Currency translation - - (34,084) - - - (34,084)
Profit for the year - - - - 74,932,600 522,792 75,455,392
ended 30 June 2006
Total gains/(losses) - - (34,084) - 74,932,600 522,792 75,421,308
for the year
Issue of new shares 475,025 73,315,739 - - - - 73,790,764
Acquisition of - - - - - 13,561,675 13,561,675
subsidiaries
30 June 2006/1 July 1,226,572 164,950,181 (34,084) 78,787,207 14,084,467 259,014,343
2006
Currency translation - - (629,717) - - - (629,717)
Profit for the year - - - - 264,166,937 1,195,667 265,362,604
ended 30 June 2007
Total gains/(losses) - - (629,717) - 264,166,937 1,195,667 264,732,887
for the year
Issue of new shares 1,279,911 294,200,599 - - - - 295,480,510
Acquisition of - - - - - 6,857,554 6,857,554
subsidiaries
Revaluation reserves - - - 17,716,945 - - 17,716,945
30 June 2007 2,506,483 459,150,780 (663,801) 17,716,945 342,954,144 22,137,688 843,802,239
Consolidated statement of Income
Note Year ended 30 June 2007 Year ended 30 June
2006
USD USD
Revenue 9,451,988 14,218,400
Cost of sale (8,118,799) (9,614,287)
Gross profit 1,333,189 4,604,113
Other income 26 3,581,928 14,167,754
Administration expenses 27 (86,353,598) (26,343,605)
Other operating expenses (691,983) (116,191)
Other net changes in fair value on financial assets 28 315,206,185 78,236,372
at fair value through profit or loss
Gain on fair value adjustment of investment 1,124,235 -
properties
Profit from operations 234,199,956 70,548,443
Financial income 29 13,266,332 4,893,303
Finance costs (3,142,073) (371,372)
Share of profit gain (losses) of associates, net 21,038,389 385,018
31,162,648 4,906,949
Profit before tax 265,362,604 75,455,392
Income tax 30 - -
Net profit 265,362,604 75,455,392
Attributable to shareholders 264,166,937 74,932,600
Attributable to minority interests 1,195,667 522,792
Earnings per share - basic and diluted 1.34 0.76
($ per share) 31
Consolidated statement of cash flows
Year ended 30 Year ended 30
June 2007 June 2006
USD USD
Operating activities
Net profit before tax 265,362,604 75,455,392
Adjustment for:
Depreciation and amortisation 635,302 492,004
Reversal of impairment loss (232,360) -
Impairment loss 593,728 -
Gain on revaluation of financial assets (255,441,202) (62,112,662)
Gain on disposal of financial assets (59,764,983) (16,123,710)
Gain on revaluation of investment properties (1,124,235) -
Share of associates' profits (21,038,389) (385,018)
Negative goodwill (2,984,094) (13,685,855)
Unrealised foreign exchange losses 2,276,911 201,202
Interest and dividend income (13,007,466) (4,664,935)
Net loss before changes in working capital (84,724,184) (20,823,582)
Change in trade and other receivables (3,351,412) (3,433,015)
Change in inventory (435,330) -
Change in trade and other payables (2,772,556) 18,014,659
(91,283,482) (6,241,938)
Investing activities
Interest received 7,376,864 1,579,775
Dividends received 5,687,464 2,477,631
Purchases of property, plant and equipment and other non-current assets (1,650,986) (2,667,274)
Acquisition of a subsidiary, net of cash (2,716,323) (1,666,751)
Purchases of financial assets (319,786,440) (116,109,932)
Proceeds from disposals of financial assets 179,896,126 48,786,145
Proceeds from disposals of investments and fixed assets 2,770 -
Proceeds from loans repaid 177,033 -
Loans provided (34,513,402) (19,659,480)
(165,526,894) (87,259,886)
Financing activities
Proceeds from shares issued 295,480,510 73,790,764
295,480,510 73,790,764
Net increase in cash and cash equivalents for the year 38,670,134 (19,711,060)
Cash and cash equivalents at the beginning of the year 32,706,460 52,417,520
Cash and cash equivalents at end of the year 71,376,594 32,706,460
Notes to the consolidated financial statements
1 General information
Vietnam Opportunity Fund Limited is a limited liability company incorporated in
the Cayman Islands. The registered office of the Company is PO Box 309GT, Ugland
House, South Church Street, George Town, Grand Cayman, Cayman Islands. The
Company's primary objective is to undertake various forms of investment in
Vietnam, Cambodia, Laos and Southern China. The Company is listed on the London
Stock Exchange's Alternative Investment Market under the ticker symbol VOF. The
principle activities of its subsidiaries are set out in note 7 to the financial
statements.
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) (including International Accounting
Standards (IAS)) as developed and published by the International Accounting
Standards Board (IASB).
The financial statements for the year ended 30 June 2007 were approved for issue
by the Board of Directors on 19 November 2007.
2 Adoption of new and amended standards and interpretations
The IASB and the International Financial reporting Interpretations Committee
have issued various standards and interpretations with an effective date after
the date of this financial information. The Group has not elected for early
adoption of the standards and interpretations that have been issued as they are
not yet effective. The most relevant for the Group are amended IAS 1 '
Presentation of the Financial Statements' (effective for annual periods
beginning on or after 1 January 2007), IFRS 7 'Financial Instruments:
Disclosures' (effective for annual periods beginning on or after 1 January 2007)
and IFRS 8 'Operating Segments' (effective for annual periods beginning on or
after 1 January 2009).
Upon adoption of amended IAS 1, the Group will disclose its capital management
objectives, policies and procedures in each annual financial report and will
have its capital movements and other gains and losses presented separately in
the statement of changes in equity and statement of recognised income and
expenses. Upon adoption of IFRS 7, the Group will disclose additional
information about its financial instruments, their significance and the nature
and extent of risks to which they give rise. More specifically, the Group will
be required to disclose the fair value of its financial instruments and its risk
exposure in greater detail. There will be no impact on reported income or net
assets. Upon adoption of IFRS 8, the Group will disclose segmental information
when evaluating performance and deciding how to allocate resources to
operations.
The Directors do not anticipate that the adoption of these standards and
interpretations will have a material impact on the financial statements in the
period of initial application.
3 Summary of significant accounting policies
3.1 Basis of presentation
The significant accounting policies that have been used in the preparation of
these consolidated financial statements are summarised below. These policies
have been consistently applied to all the years presented unless otherwise
stated.
The financial statements have been prepared using the historical cost
convention, as modified by the revaluation of investment property, leasehold
land and certain financial assets and financial liabilities, the measurement
bases of which are described in the accounting policies below.
The preparation of financial statements in accordance with IFRS requires the use
of certain accounting estimates and assumptions. Although these estimates are
based on management's best knowledge of current events and actions, actual
results may ultimately differ from those estimates. The areas involving a higher
degree of judgment or complexity, or areas where assumptions and estimates are
significant to the financial statements, are disclosed in Note 4 to the
consolidated financial statements.
3.2 Basis of consolidation
The consolidated financial statements of the Company for the year ended 30 June
2007 comprise the Company and its subsidiaries (together referred to as the '
Group') and the Group's interests in associates and jointly controlled entities.
3.3 Subsidiaries
Subsidiaries are all entities over which the Group has the power to control the
financial and operating policies so as to obtain benefits from their activities.
In assessing control, potential voting rights that presently are exercisable or
convertible, along with contractual arrangements, are taken into account.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are excluded from consolidation from the date
that the control ceases.
In addition, acquired subsidiaries are subject to application of the purchase
method. This involves the revaluation at fair value of all identifiable assets
and liabilities, including contingent liabilities of the subsidiary, at the
acquisition date, regardless of whether or not they were recorded in the
financial statements of the subsidiary prior to acquisition. On initial
recognition, the assets and liabilities of the subsidiary are included in the
consolidated balance sheet at their revalued amounts, which are also used as the
basis for subsequent measurement in accordance with the Group's accounting
policies. Goodwill represents the excess of acquisition cost over the fair value
of the Group's share of the identifiable net assets of the acquired subsidiary
at the date of acquisition. Negative goodwill is immediately allocated to the
statement of income as at the acquisition date.
All inter-company balances and significant inter-company transactions and
resulting unrealised profits or losses (unless losses provide evidence of
impairment) are eliminated on consolidation.
A minority interest represents the portion of the profit or loss and net assets
of a subsidiary attributable to an equity interest that is not owned by the
Group. It is based upon the minority's share of post-acquisition fair values of
the subsidiary's identifiable assets and liabilities, except where the losses
applicable to the minority in the subsidiary exceed the minority interest in the
equity of that subsidiary. In such cases, the excess and further losses
applicable to the minority are taken to the consolidated statement of income,
unless the minority has a binding obligation to, and is able to, make good the
losses. When the subsidiary subsequently reports profits, the profits applicable
to the minority are taken to the consolidated statement of income until the
minority's share of losses previously taken to the consolidated statement of
income is fully recovered.
Changes in ownership interests in a subsidiary that do not result in gaining or
losing control of the subsidiary are accounted for using the parent entity
method of accounting whereby the difference between the consideration paid and
the proportionate change in the parent entity's interest in the carrying value
of the subsidiary's net assets is recorded as additional goodwill. No adjustment
is made to the carrying value of the subsidiary's net assets as reported in the
consolidated financial statements.
3.4 Associates and jointly controlled entities
Associates are those entities over which the Group is able to exert significant
influence, generally accompanying a shareholding of between 20% to 50% of voting
rights, but which are neither subsidiaries nor investments in joint ventures. In
the consolidated financial statements, investments in associates are initially
recorded at cost and subsequently accounted for using the equity method.
A jointly controlled entity is a contractual arrangement whereby two or more
parties undertake an economic activity where the strategic, financial and
operating decisions relating to the activity require the unanimous consent of
the venturers.
Under the equity method, the Group's interest in an associate or jointly
controlled entity is carried at cost and adjusted for the post-acquisition
changes in the Group's share of the associate's or jointly controlled entity's
net assets less any identified impairment loss, unless it is classified as held
for sale or included in a disposal group that is classified as held for sale.
The consolidated statement of income includes the Group's share of the
post-acquisition, post-tax results of the associate or jointly controlled entity
for the year, including any impairment loss on goodwill relating to the
investment in associate or jointly controlled entity recognised for the year.
When the Group's share of losses in an associate or jointly controlled entity
equals or exceeds its interest in the associate or jointly controlled entity,
the Group does not recognise further losses, unless it has legal or constructive
obligations, or made payments, on behalf of the associate or jointly controlled
entity.
Any excess of the cost of acquisition over the Group's share of the net fair
value of the identifiable assets, liabilities and contingent liabilities of an
associate or jointly controlled entity recognised at the date of acquisition is
recognised as goodwill. The cost of acquisition is measured at the aggregate of
the fair values, at the date of exchange, of assets given, liabilities incurred
or assumed, and equity instruments issued by the Group, plus any costs directly
attributable to the investment.
Goodwill is included within the carrying amount of an investment and is assessed
for impairment as part of the investment. After the application of the equity
method, the Group determines whether it is necessary to recognise an additional
impairment loss on the Group's investments in its associates and jointly
controlled entities. At each balance sheet date, the Group determines whether
there is any objective evidence that an investment in an associate or jointly
controlled entity is impaired. If such indications are identified, the Group
calculates the amount of impairment as being the difference between the
recoverable amount of the associate or jointly control entity and its respective
carrying amount.
Unrealised gains on transactions between the Group and its associates and
jointly controlled entities are eliminated to the extent of the Group's interest
in an associate or jointly controlled entity. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the
asset transferred.
3.5 Functional and presentation currency
The consolidated financial statements are presented in United States Dollars
(USD) ('the presentation currency'). The financial statements of each
consolidated entity are prepared in either USD or the currency of the primary
economic environment in which the entity operates ('the functional currency'),
which for most investments is Vietnamese Dong. USD is used as the presentation
currency because it is the primary basis for the measurement of the performance
of the Group (specifically changes in the Net Asset Value of the Group) and a
large proportion of significant transactions of the Group are denominated in
USD.
3.6 Foreign currency translation
In the individual financial statements of the consolidated entities,
transactions arising in currencies other than the reporting currency of the
individual entity are translated at exchange rates in effect on the transaction
dates. Monetary assets and liabilities denominated in currencies other than the
reporting currency of the individual entity are translated at the exchange rates
in effect at the balance sheet date. Translation gains and losses and expenses
relating to foreign exchange transactions are recorded in the statement of
income.
In the consolidated financial statements all separate financial statements of
subsidiaries, if originally presented in a currency different from the Group's
presentation currency, are converted into USD. Assets and liabilities are
translated into USD at the closing rate of the balance sheet date. Income and
expenses are converted into the Group's presentation currency at the average
rates over the reporting period. Any differences arising from this translation
are charged to the currency translation reserve in equity.
3.7 Revenue recognition
Goods and services rendered
Revenue from sale of goods and provision of services is recognised in the
combined statement of income when the significant risks and rewards of ownership
have been transferred to the buyer or the services have been provided. No
revenue is recognised if there are significant uncertainties regarding the
ultimate receipt of the proceeds or the reasonable estimation of the associated
costs of the sale, or the possibility of the return of the goods.
Rental income
Rental income from investment property is recognised in the statement of income
on a straight-line basis over the term of the lease. Lease incentives granted
are recognised as an integral part of the total rental income.
Interest income
Interest income is recognised on an accrual and, if applicable, effective yield
basis.
Dividend income
Dividend income is recorded when the Group's right to receive the dividend is
established.
3.8 Expense recognition
Borrowing costs
Borrowing costs, comprising interest and related costs, are recognised as an
expense in the period in which they are incurred, except for borrowing costs
relating to the construction of property, plant and equipment and investment
property under development, which are capitalised as a cost of the related
assets.
Operating lease payments
Payments made under operating leases are recognised in the statement of income
on a straight-line basis over the term of the lease. Lease incentives received
are recognised in the statement of income as an integral part of the total lease
expense.
Finance lease payments
Minimum lease payments are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is allocated to each
period during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability.
3.9 Intangible assets
Intangible assets that are acquired by the Group are stated at cost less
accumulated amortisation and impairment losses. Expenditure on internally
generated goodwill and brands is recognised in the statement of income as an
expense when incurred.
Amortisation
Amortisation is charged to the statement of income on a straight-line basis over
the estimated useful lives of intangible assets unless such lives are
indefinite. Intangible assets with an indefinite useful life are systematically
tested for impairment at each balance sheet date. Other intangible assets are
amortised from the date they are available for use. The estimated useful lives
are as follows:
Software 3 to 5 years
3.10 Goodwill
Goodwill represents the excess of the cost of acquisition of subsidiary
companies and associated companies over the Group's share of the fair value of
their identifiable net assets at the date of acquisition.
Goodwill is recognised at cost less any accumulated impairment losses. The
carrying value of goodwill is subject to an annual impairment review and
whenever events or changes in circumstances indicate that it may not be
recoverable. An impairment charge will be recognised in the statement of income
when the results of such a review indicate that the carrying value of goodwill
is impaired (see accounting policy 3.18).
Negative goodwill represents the excess of the Group's interest in the fair
value of identifiable net assets and liabilities over cost of acquisition. It is
recognised directly in the statement of income at the date of acquisition.
Gains and losses on disposal of an entity include the carrying amount of
goodwill relating to the entity disposed of.
3.11 Investment property
Investment properties are properties owned or held under finance lease to earn
rentals or capital appreciation, or both, or held for a currently undetermined
use. Property held under operating leases (including leasehold land) that would
otherwise meet the definition of investment property is classified as investment
property on a property by property basis. If a leased property does not meet
this definition it is recorded as an operating lease.
Investment properties are stated at fair value. Two independent valuation
companies, with appropriately recognised professional qualifications and recent
experience in the location and category being valued, value each property each
year. On the valuation date, the fair value is estimated assuming that there is
an agreement between a willing buyer and a willing seller in an arm's length
transaction after proper marketing; wherein the parties had each acted
knowledgeably, prudently and without compulsion. The valuations are prepared
based upon direct comparison with sales of other similar properties in the area
and the expected future discounted cash flows of a property using a yield that
reflects the risks inherent in those cash flows. Valuations are reviewed and
approved by the Valuation Committee of the Board of Directors. The Valuation
Committee may adjust valuations if there are factors that the external
independent valuers have not considered in their determination of a property's
fair value.
Any gain or loss arising from a change in fair value is recognised in the income
statement. Rental income from investment property is accounted for as described
in the accounting policy 3.7.
When an item of property, plant and equipment is transferred to investment
property following a change in its use, any differences arising at the date of
transfer between the carrying amount of the item immediately prior to transfer
and its fair value is recognised directly in equity if it is a gain. Upon
disposal of the item the gain is transferred to retained earnings. Any loss
arising in this manner is recognised in the statement of income immediately.
Properties where more than 10% of the property is occupied by the Group for the
production or supply of goods and services, or for administration purposes, is
accounted for as property, plant and equipment (see accounting policy 3.13).
3.12 Investment property under development
Property that is being constructed or developed for future use as investment
property is classified as investment property under development (development
projects) and stated at cost until construction or development is complete, at
which time it is reclassified and subsequently accounted for as investment
property. At the date of transfer, the difference between fair value and cost is
recorded as income in the consolidated statement of income.
All costs directly associated with the purchase and construction of a property,
and all subsequent capital expenditures for the development qualifying as
acquisition costs are capitalised.
Borrowing costs are capitalised if they are directly attributable to the
acquisition, construction or production of a qualifying asset. Capitalisation of
borrowing costs commences when the activities to prepare the asset are in
progress and expenditures and borrowing costs are being incurred. Capitalisation
of borrowing costs continues until the assets are substantially ready for their
intended use. If the resulting carrying amount of the asset exceeds its
recoverable amount, an impairment loss is recognised. The capitalisation rate is
arrived at by reference to the actual rate payable on borrowings for development
purposes or, with regard to that part of the development cost financed out of
general funds, to the average rate.
3.13 Property, plant and equipment
Owned assets
All property, plant and equipment, except buildings, are stated at cost less
accumulated depreciation and impairment losses (see accounting policy 3.18). 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.
Buildings are revalued to fair value in accordance with the methods set out in
accounting policy 3.11. Any surplus arising on the revaluation is recognised in
a revaluation reserve within equity, except to the extent that the surplus
reverses a previous revaluation deficit on the building charged to the statement
of income, in which case a credit to that extent is recognised in the statement
of income. Any deficit on revaluation is charged in the statement of income
except to the extent that it reverses a previous revaluation surplus on a
building, in which case it is taken directly to the revaluation reserve.
If an investment property is reclassified as property, plant and equipment its
fair value at the date of reclassification becomes its deemed cost for
subsequent accounting.
Where parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and
equipment.
Leased assets
Leases under the terms of which the Group assumes substantially all the risks
and rewards of ownership are classified as finance leases. Property, plant and
equipment and investment property acquired by way of a finance lease is stated
at an amount equal to the lower of its fair value and the present value of the
minimum lease payments at inception of the lease, less accumulated depreciation
and impairment losses.
Subsequent expenditure
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 statement of
income as incurred.
Depreciation
Depreciation is charged to the statement of income 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:
Leasehold improvements 5 to 20 years
Plant, machinery and equipment 5 to 10 years
Office furniture and fittings 4 to 9 years
Motor vehicles 5 to 10 years
Assets held under finance leases which do not transfer title to the assets to
the Group at the end of the lease are depreciated over the shorter of the
estimated useful lives shown above and the term of the lease.
3.14 Property held for sale
Property intended for sale in the ordinary business or property developed for
sale is classified as trading property and is accounted for as inventory.
Leasehold land upon which trading properties are constructed, or are in the
process of construction, is classified as investment property.
Property held for sale is stated at the lower of cost and net realisable value.
Cost includes development costs and other direct costs attributable to the
properties concerned until they reach a saleable state. Net realisable value
represents the estimated selling price in the ordinary course of business less
all estimated costs of completion and the estimated costs necessary to make the
sale.
3.15 Leases
Leases under the terms of which the Group assumes substantially all the risks
and rewards of ownership are classified as finance leases (see accounting policy
3.13).
Leases which do not transfer substantially all the risks and rewards of
ownership to the Group are classified as operating leases. Where the Group has
the use of an asset held under an operating lease, payments made under the lease
are charged to the statement of income 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.
3.16 Financial assets
Financial assets, other than hedging instruments, are divided into the following
categories: loans and receivables; financial assets at fair value through profit
or loss; available-for-sale financial assets; and held-to-maturity investments.
Management determines the classification of its financial assets at initial
recognition depending on the purpose for which the financial assets were
acquired. Where allowed and appropriate management re-evaluates this
designation at each reporting date. The designation of financial assets is
based on the investment strategy set out in the Group's Admission Document to
the London Stock Exchange's Alternative Investment Market, dated 24 September
2003.
All financial assets are recognised when, and only when, the Group becomes a
party to the contractual provisions of the instrument. When financial assets are
recognised initially, they are measured at fair value, plus, in the case of
investments not at a fair value through profit or loss, directly attributable
transaction costs.
Derecognition of financial assets occurs when the rights to receive cash flows
from the investments expires or are transferred and substantially all of the
risks and rewards of ownership have been transferred. At each balance sheet
date, financial assets are reviewed to assess whether there is objective
evidence of impairment. If any such evidence exits, any impairment loss is
determined and recognised based on the classification of the financial assets.
The Group's financial assets consist primarily of listed and unlisted equities,
bonds, loans and receivables.
Loans and receivables
All loans and receivables, except trustee loans, are non-derivative financial
assets with fixed or determinable pay-ments that are not quoted in an active
market. After initial recognition these are measured at amortised cost using
the effective interest method, less provision for impairment. Any change in
their value is recognised in profit or loss. The Group's trade and most other
receivables fall into this category of financial instruments. Discounting,
however, is omitted where the effect of discounting is immaterial.
Significant receivables are considered for impairment on a case-by-case basis
when they are overdue at the balance sheet date or when objective evidence is
received that a specific counterparty will default
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets
that are either classified as held for trading or are designated by the entity
to be carried at fair value through profit or loss upon initial recognition. By
definition, all derivative financial instruments that do not qualify for hedge
accounting fall into this category. Other financial assets at fair value
through profit or loss held by the Company include listed and unlisted
securities and trustee loans.
Any gain or loss arising from derivative financial instruments is based on
changes in fair value, which is determined by direct reference to active market
transactions or using industry standard valuation techniques where no active
market exists.
Financial assets at fair value through profit and loss includes trustee loans to
banks and other parties where the Group receives interest and other income on
the loans calculated based on the proceeds from the sales of specific assets
held by the counterparties. Fair value is determined based on the expected
future discounted cash flows from each loan.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that do
not qualify for inclusion in any of the other categories of financial assets.
All financial assets within this category are subsequently measured at fair
value. Gains and losses arising from changes in their fair values are recognised
directly in equity, except for impairment losses, until the financial asset is
derecognised, at which time the cumulative gain or loss previously recognised in
equity would be recognised in the statement of income.
For available for sale investment in equity securities that do not have a quoted
market price in an active market and whose fair value cannot be reliably
measured, they are measured at cost less any identified impairment losses at
each balance sheet date subsequent to initial recognition.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or
determinable payments and fixed maturities. Investments are classified as
held-to-maturity if it is the intention of the Group to hold them until
maturity. The Group currently holds bonds which fall within this category of
financial assets.
Held-to-maturity investments are subsequently measured at amortised cost using
the effective interest rate method. In addi-tion, if there is objective
evidence that the investment has been impaired, the financial asset is measured
at the present value of estimated cash flows. Any changes to the carrying
amount of the investment are recognised in the statement of income.
3.17 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
includes all expenses directly attributable to the manufacturing process as well
as suitable portions of related pro-duction overheads, based on normal operating
capacity. Financing costs are not taken into consideration. Costs of
ordinarily interchangeable items are assigned using the first in, first out cost
formula. Net realisable value is the estimated selling price in the or-di-nary
course of business less any applicable selling expenses.
3.18 Impairment of assets
The Group's goodwill; intangible assets; operating lease prepayments; property,
plant and equipment; property held for development; and interests in associates
and jointly controlled entities are subject to impairment testing.
For the purpose of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows (cash-generating units).
As a result, some assets are tested individually for impairment and some are
tested at cash-generating unit level. Goodwill in particular is allocated to
those cash-generating units that are expected to benefit from synergies of the
related business combination and represent the lowest level within the Group at
which management controls the related cash flows.
All individual assets or cash generating units are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable.
An impairment loss is recognised as an expense immediately for the amount by
which the asset's carrying amount exceeds its recoverable amount unless the
relevant asset is carried at a revalued amount under the Group's accounting
policy, in which case the impairment loss is treated as a revaluation decrease
according to that policy. The recoverable amount is the higher of fair value,
reflecting market conditions less costs to sell, and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the assets.
3.19 Income taxes
Current income tax assets and/or liabilities comprise those obligations to, or
claims from, fiscal authorities relating to the current or prior reporting
periods that are unpaid at the balance sheet 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
statement of income.
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 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. However, the deferred income tax is not
accounted for if it arises from initial recognition of an asset or liability in
a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss.
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 substantially enacted at the balance sheet date.
Most changes in deferred tax assets or liabilities are recognised as a component
of tax expense in the statement of income. Only changes in deferred tax assets
or liabilities that relate to a change in value of assets or liabilities that is
charged directly to equity are charged or credited directly to equity.
3.20 Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand as well as short term
highly liquid investments such as money market instruments and bank deposits
with an original maturity term of not more than three months.
3.21 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. Any transaction costs associated with the issuing
of shares are deducted from additional paid-in capital, net of any related
income tax benefits.
Currency translation differences on net investment in foreign operations are
included in the translation reserve.
Retained earnings include all current and prior period results as disclosed in
the consolidated statement of change in equity.
3.22 Financial liabilities
The Group's financial liabilities include trade and other payables and other
liabilities.
Financial liabilities are recognised when the Group becomes a party to the
contractual agreements of the instrument. All interest related charges are
recognised as an expense in finance costs in the statement of income.
Trade payables are recognised initially at their fair value and subsequently
measured at amortised cost, using the effective interest rate method.
Borrowings are raised for support of long term funding of the Group's
investments. They are recognised at fair value.
A financial liability is derecognised when the obligation under the liability is
discharged or cancelled or expires.
3.23 Provisions, contingent liabilities and contingent assets
Provisions are recognised when present obligations will probably lead to an
outflow of economic resources from the Group that can be reliably estimated. A
present obligation arises from the presence of a legal or constructive
obligation that has resulted from past events. Provisions are not re-cognised
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 balance
sheet date, including the risks and uncertainties associated with the present
obligation. 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 balance sheet date and adjusted to reflect
the current best estimate of Group's management.
The Group does not recognise a contingent liability but discloses its existence
in the financial statements. A contingent liability is a possible obligation
that arises from past events whose existence will be confirmed by uncertain
future events beyond the control of the Group or a present obligation that is
not recognised because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises in the
rare circumstance where there is a liability that cannot be recognised because
it cannot be measured reliably.
A contingent asset is a possible asset that arises from past events that's
existence will be confirmed by uncertain future events beyond the control of the
Group. The Group does not recognise contingent assets but discloses their
existence when inflows of economic benefits are probable, but not virtually
certain.
3.24 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. Parties are considered to be related to the
Group if:
1. directly or indirectly, a party controls, is controlled by, or is under
common control with the Group; has an interest in the Group that gives it
significant influence over the Group; or has joint control over the Group;
2. a party is a jointly-control entity;
3. a party is an associate; or
4. a party is a member of the key management personnel of the Group.
3.25 Segment reporting
An investment segment is a group of assets that are subject to risks and returns
that are different from those of other business segments.
A geographical segment is a particular economic environment that is subject to
risks and return that are different from those of segments operating in other
economic environments.
4 Critical accounting estimates and judgements
When preparing the financial statements the Group makes estimates and
assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are
discussed below:
Fair value of investment properties and buildings
The investment properties and buildings of the Group are stated at fair value in
accordance with the accounting policies. The fair values of investment
properties and buildings have been determined by independent professional
valuers including: CB Richard Ellis; Chesterton Petty; Jones Lang LaSalle; and
Sallmanns. These valuations are based on certain assumptions, which are subject
to uncertainty and might materially differ from the actual results.
Impairment of trade and other receivables
The Group's management determines the provision for impairment of trade and
other receivables on a regular basis. This estimate is based on the credit
history of its customers and prevailing market conditions.
Fair value of financial instruments
The fair value of financial instruments that are not traded in an active market
(for example, unlisted securities) is determined by using industry standard
valuation techniques. The Group uses its judgement to select a variety of
methods and make assumptions that are mainly based on market conditions existing
at each balance sheet date.
Impairment of assets
The Group's goodwill; intangible assets; operating lease prepayments; property,
plant and equipment; property held for development; and interests in associates
and jointly controlled entities are subject to impairment testing in accordance
with the accounting policy stated in note 3.18.
5 Comparative figures
Certain figures for the year ended 30 June 2006, which are included in this
year's financial statements for comparative purposes, have been reclassified to
conform to current year's presentation. The only reclassification is detailed
under Note 18.
6 Segment reporting
Segment information is presented in respect to the Group's investment and
geographical segments. The primary format, investment segment, is based on the
investment manager's management and monitoring of investments. Investments are
allocated into four main segments: capital markets, private equity, real estate
(including real estate related loans) and cash (including term deposits and
bonds). The Group's secondary reporting format, geographical segments, includes
Vietnam and the Asia Pacific region.
2007 2006
Vietnam Asia Pacific Total Vietnam Asia Pacific Total
USD USD USD USD USD USD
Income
Capital markets 314,861,357 9,195,521 324,056,878 79,467,427 - 79,467,427
Private equity 633,498 - 633,498 28,215,962 - 28,215,962
Real estate 32,677,849 - 32,677,849 3,410,148 - 3,410,148
Cash 2,993,678 3,307,154 6,300,832 390,615 416,695 807,310
351,166,382 12,502,675 363,669,057 111,484,152 416,695 111,900,847
Total assets
Capital markets 582,938,856 31,444,000 614,382,856 158,266,146 - 158,266,146
Private equity 26,015,369 - 26,015,369 24,258,637 - 24,258,637
Real estate 161,212,244 - 161,212,244 58,209,806 - 58,209,806
Cash 121,626,453 1,548,567 123,175,020 36,352,550 854,754 37,207,304
891,792,922 32,992,567 924,785,489 277,087,139 854,754 277,941,893
To determine the geographical segments for financial instruments the following
rules have been applied:
• Listed shares - place of primary listing;
• Unlisted shares - place of incorporation of the issuer;
• Private equity - place of incorporation of the issuer;
• Real estate - location of property; and
• Cash - place of deposit.
7 Subsidiaries
8
Acquisition of subsidiary
On 1 September 2006, the Group acquired a further 15.1% interest in A&B
Development Joint Stock Company ('A&B JSC'), which is incorporated in Vietnam.
This acquisition increased the Group's beneficial ownership in A&B JSC to 50.1%,
thus making A&B JSC a subsidiary of the Group. The total cost of the first and
second acquisitions were USD1,250,147 and USD2,718,457, respectively, which were
settled in cash. The fair values of the A&B JSC's assets and liabilities
acquired on 1 September 2006 were:
Current assets USD Current liabilities USD
Cash and cash equivalents 2,134
Trade and other receivables 132,740 Trade and other payables 375,726
134,874 375,726
Non-current assets Non-current liabilities
Plant, property and equipment 118,492 Long term loans -
Investment property 14,000,000 Other non-current liabilities -
14,118,492 -
14,253,366 375,726
A&B JSC's net income since acquisition date is nil due to the fact that it has
not yet started commercial activities.
Negative goodwill amounting to USD2,984,094 has been recognised in the statement
of income for the year ended at 30 June 2007.
Significant subsidiaries
Name Place of Nominal value of Percentage Principal activities
incorporation/ issued share interest held by
operations capital/registered the Group
capital
USD
Asia Value Investment Ltd BVI 50,000 100% Investment
Vietnam Enterprise Ltd BVI 50,000 100% Investment
Vietnam Investment Property BVI 50,000 100% Investment
Ltd
Vietnam Investment Property 50,000 100% Investment
Holdings Ltd
BVI
Vietnam Investment Ltd BVI 50,000 100% Investment
Vietnam Ventures Ltd BVI 50,000 100% Investment
VOF Investment Ltd BVI 50,000 100% Investment
Vina QSR Limited BVI 50,000 100% Investment
Indochina Building Supplies Singapore 3,384,000 100% Building materials
Pte Ltd
American Home Limited Vietnam 23,400,000 75% Building materials
Indotel Limited Singapore 3,480,000 57.7% Hospitality
SDM Nederland 22,000 57.7% Investment
Pegasus Leisure Limited BVI 2,475,000 100% Property
Saigon Water Park Vietnam 3,536,000 70% Property
A&B JSC Vietnam 1,476,254 50.1% Property
9 Investment properties
2007 2006
USD USD
1 July - -
Acquisition of subsidiary 14,000,000 -
Net gain on fair value adjustments 1,124,235 -
30 June 15,124,235 -
Investment property acquired during the year reflects the fair value of
leasehold land held by A&B JSC, a subsidiary acquired during the year (Note 7).
The net gain on fair value adjustments of investment properties relates to the
revaluation of the leasehold land for Vista Villas, which was revalued on 30
June 2007 by an independent professional qualified valuer: CB Richard Ellis Ltd.
10 Property, plant and equipment
Leasehold Plant and Equipment Furniture Vehicles Total
improvements machinery and fixtures
USD USD USD USD USD USD
Historical cost
1 July 2006 6,494,670 15,758,629 5,601,730 555,829 406,660 28,817,518
New purchases 17,906 - 814 1,909 - 20,629
Acquisition of 7,019 - - 2,964 - 9,983
subsidiary
Disposals (6,676) - (12,115) (4,495) (13,872) (37,158)
Write offs (98,866) - (95,674) - - (194,540)
Translation differences (211,437) (600,363) (48,255) (12,567) 3,529 (869,093)
30 June 2007 6,202,616 15,158,266 5,446,500 543,640 396,317 27,747,339
Accumulated depreciation
1 July 2006 (3,451,677) (15,513,900) (4,729,282) (465,327) (383,197) (24,543,383)
Charge for the year (240,599) (44,920) (267,394) (16,646) (3,929) (573,488)
Disposals 5,177 - 10,844 4,126 13,872 34,019
Impairment loss - - (593,728) - - (593,728)
Write offs 98,866 - 95,674 - - 194,540
Translation differences 98,033 591,301 40,739 17,038 14,541 761,652
30 June 2007 (3,490,200) (14,967,519) (5,443,147) (460,809) (358,713) (24,720,388)
Net book value
1 July 2006 3,042,993 244,729 872,448 90,502 23,463 4,274,135
30 June 2007 2,712,416 190,747 3,353 82,831 37,604 3,026,951
11 Investment properties under development
2007 2006
USD USD
1 July 2,271,821 -
Additional costs incurred 1,691,974 2,271,821
Translation differences 3,629 -
30 June 3,967,424 2,271,821
Including:
Vista Villas project 632,933 2,271,821
A&B Tower project 922,563 -
Binh Trieu apartment project 1,761,209 -
Marie Curie Suites project 645,517 -
Others 5,202 -
3,967,424 2,271,821
12 Investments in associates
2007 2006
USD USD
1 July 23,844,581 9,854,600
Addition from acquisition of associates 9,869,179 13,437,970
Share of associates' profits (losses), net 21,038,389 552,011
Reversal of impairment losses (*) 232,360 -
Share of associates' change in revaluation reserves 17,716,945 -
Transferred to financial assets at fair value through profit or loss (1,544,411) -
Dividends received (1,980,403) -
30 June 69,176,640 23,844,581
(*): Reversal of impairment losses represents the reversal of a previously
recorded impairment loss in S.E.M Thong Nhat Hotel Metropole.
During the year, following an issue of shares by an associate, the Group's
share in this associate reduced and the Group lost its influence over the
entity. As the entity ceased to be an associate of the Group, shares in this
entity have been classified as a financial asset as at fair value through profit
or loss in the consolidated balance sheet.
The closing balance as at 30 June 2007 consists of:
USD
Hung Vuong Corporation 9,702,863
International School of Ho Chi Minh City 1,842,126
Kinh Do Property Limited 5,196,765
Phong Phu Investment Development Ltd 767,675
T.D Corporation 1,114,464
Saigon Golf 1,250,234
S.E.M Thong Nhat Hotel Metropole 32,319,651
Pho Viet 2,348,946
Subsidiaries of Vinaland Ltd 14,633,916
Total 69,176,640
Particulars of operating associates and their summarised financial information,
extracted from their audited/unaudited and/or management accounts as at 30 June
2007 are as follows:
Country of Equity Principle Assets Liabilities Revenue Profit/
incorporation/ interest activity (loss)
operation held
% USD USD USD USD
Hung Vuong Vietnam 33.30 Property 52,191,109 28,349,384 - 13,480,247
Corporation
International School Vietnam 35.00 Education 10,717,385 7,712,093 10,660,266 1,716,751
of Ho Chi Minh City
Kinh Do Property Vietnam 23.33 Property 28,649,159 7,246,902 - (253,900)
Limited
Phong Phu Investment Vietnam 30.00 Investment 4,258,533 2,855,795 5,863 35,472
Development Ltd
T.D Corporation Vietnam 30.00 Hospitality 3,866,677 568,168 - -
Saigon Golf Vietnam 20.00 Hospitality 8,142,163 - 18,836 18,836
S.E.M Thong Nhat Vietnam 28.83 Hospitality 49,703,194 23,025,165 7,245,852 3,876,640
Hotel Metropole
Pho Viet JV Vietnam 30.00 Food & 80,081 217 - (16,289)
beverages
Vietnam Property BVI 25.00 Property 121,837,673 93,930,554 43,768 27,971,132
Holding Ltd
Prosper Big Ltd BVI 25.00 Property 59,012,584 37,092,620 3,079 21,889,428
VinaCapital Danang BVI 25.00 Property 12,898,847 4,351,997 - 7,096,375
Resorts Ltd
Cypress Assets Ltd BVI 25.00 Property 8,575,030 486,681 545 (45,334)
Roxy Assets Ltd BVI 25.00 Property 39,435,308 34,649,896 - -
VinaCapital Long An BVI 25.00 Property 1,542,373 1,555,843 - (13,570)
Industry Ltd
Greenstar Global Ltd BVI 25.00 Property 15,561,249 15,574,348 - (13,198)
Standbrook Global BVI 25.00 Property 26,441,111 26,515,946 - (74,839)
Ltd
13 Other long term investments
2007 2006
USD USD
Non-listed equity shares 1,201,446 6,407,928
Convertible notes - 2,022,242
Other 753,039 753,039
1,954,485 9,183,209
Investments in non-listed equity shares that do not have a quoted market price
in an active market and whose fair value cannot be reliably measured, are
measured at cost less any identified impairment losses at each balance sheet
date subsequent to initial recognition.
14 Loan receivables
2007 2006
USD USD
Loans to associates 39,740,231 17,567,292
Loans to minority shareholders 1,719,443 1,915,154
Other - 177,034
41,459,674 19,659,480
Loans to associates are unsecured, interest free and are repayable by end of
2012. The loans are carried at amortised costs at the balance sheet date.
Details of loans to associates as at 30 June 2007 are as follows:
USD
VinaCapital Danang Resorts Ltd 1,450,500
Cypress Assets Limited 2,133,557
Prosper Big Investment Limited 8,189,923
VinaCapital Long An Industry Ltd 316,801
Greenstar Global Limited 3,890,178
Vietnam Property Holding Ltd
11,477,105
Roxy Assets Limited 4,785,758
Hung Vuong Corporation 7,496,409
39,740,231
15 Prepayments for operating leases
2007 2006
USD USD
1 July 2,109,491 2,226,682
Translation differences (80,025) (58,749)
Charge for the year (58,442) (58,442)
30 June 1,971,024 2,109,491
Prepayments for operating leases relates to the land occupied by American Home,
a subsidiary of the Group, until 2024. The prepayment is allocated to the
statement of income over the life of the lease.
16 Goodwill
2007 2006
USD USD
1 July 1,719,231 -
Additions 33,457 1,719,231
30 June 1,752,688 1,719,231
During the year the Group acquired a further 10,000 ordinary shares of Indotel
Limited. The parent entity method has been applied to account for this
transaction. The additional goodwill of USD33,457 arising from this transaction
has been recorded in the Group's balance sheet.
Annual impairment tests were performed for goodwill and no impairment loss is
considered necessary during the year.
17 Inventories
As at 30 June 2007, the USD4,755,153 of inventory on hand (30 June 2006:
USD4,319,823) included: finished goods of USD1,775, 000, raw materials of USD
1,736,000, and tools and supplies of USD808,823, held by American Home, a
subsidiary of the Group.
18 Trade and other receivables
2007 2006
USD USD
Trade receivables 1,576,967 1,234,156
Prepayments to customers 34,212 2,266
Short term loan receivables 19,725,450 2,312,174
Other receivables 4,551,615 4,897,100
Other current assets 225,320 -
26,113,564 8,445,696
Short term loan receivables comprise of the following short term loans to
associates that are interest free and have no fixed term of repayment:
USD
Vietnam Property Holding Limited 9,614,267
Standbrook Limited 7,460,000
Phong Phu Textile 2,651,183
Total 19,725,450
As all trade and other receivables are short term in nature their carrying value
is considered a reasonable approximation of their fair value as at balance sheet
date.
19 Financial assets held at fair value through profit and loss
2007 2006
USD USD
Designated at fair value through profit or loss:
Financial assets in Vietnam
Ordinary shares - listed 310,146,231 90,345,054
Ordinary shares - unlisted 269,583,793 69,943,334
Government bonds 759,172 4,500,844
Corporate bonds 3,098,661 -
Loan contracts at fair value through profit and loss (*) 9,543,326 3,243,221
Financial assets in countries other than Vietnam
Ordinary shares - listed 31,444,305 -
Total designated at fair value through profit or loss at inception 624,575,488 168,032,453
Total financial assets at fair value through profit or loss 624,575,488 168,032,453
(*) The Group provides loans to banks and other parties and receives interest on
the loans calculated based upon the proceeds from the sales of specific property
assets owned by the counterparties. Last year, these loans were presented under
investment property, but have been reclassified and presented as loan contracts
at fair value through profit and loss in the current year to more accurately
reflect the appropriate nature of these assets. The prior year comparative
financial information has been adjusted to reflect this change.
20 Held-to-maturity investments
Held-to-maturity investments represent term deposits at local banks and bonds.
The average deposit term is six months.
21 Deposits for acquisitions of investments
2007 2006
USD USD
Deposits for bid participation 3,208,527 -
Deposits for investment projects 7,233,635 -
10,442,162 -
22 Cash and cash equivalents
2007 2006
USD USD
Cash on hand 68,810 -
Cash at bank 71,307,784 32,706,460
71,376,594 32,706,460
23 Share capital
2007 2006
Number of USD Number of USD
shares shares
Authorised:
Ordinary shares of USD0.01 each 500,000,000 5,000,000 500,000,000 5,000,000
Issued and fully paid:
At 1 July 122,657,202 1,226,572 75,154,654 751,547
New shares issued 127,991,212 1,279,911 47,502,548 475,025
At 30 June 250,648,414 2,506,483 122,657,202 1,226,572
24 Additional paid-in capital
Additional paid in capital represents the excess of consideration received over
the par value of share issued.
2007 2006
USD USD
1 July 164,950,181 91,634,442
Additional paid-in capital during the year 294,200,599 73,315,739
30 June 459,150,780 164,950,181
25 Revaluation reserve
2007 2006
USD USD
1 July - -
Additions:
Sofitel Metropole Hanoi Hotel 17,347,158 -
Hilton Hanoi Opera Hotel 369,787 -
30 June 17,716,945 -
The Group's share of valuation gains resulting from the revaluation of
subsidiaries' and associates' properties have been recorded directly in the
Group's revaluation reserve under shareholders' equity.
26 Trade and other payables
2007 2,006
USD USD
Trade payables 3,162,553 1,243,358
Performance and management fees payable 70,195,399 15,933,024
Other accrued liabilities 103,252 109,631
Other payables 1,555,079 190,159
75,016,283 17,476,172
As all trade and other payables are short term in nature, their carrying values
are considered a reasonable approximation of their fair values as at balance
sheet date.
27 Other income
Included in other income of USD3,581,928 is negative goodwill of USD2,984,084
with respect to the acquisition of A&B JSC. The detailed disclosure is contained
within Note 7.
28 Administration expenses
2007 2006
USD USD
Performance fees 68,850,611 15,495,436
Management fees 12,012,053 4,348,661
Professional fees 407,477 440,418
General administration expenses 4,178,784 4,813,138
Other expenses 904,673 1,245,952
86,353,598 26,343,605
29 Other net changes in fair value on financial assets at fair value
through profit or loss
2007 2006
USD USD
Unrealised 255,441,202 62,112,662
Realised 59,764,983 16,123,710
315,206,185 78,236,372
30 Financial income
2007 2006
USD USD
Dividend and interest income 13,007,466 4,750,991
Other income 258,866 142,312
13,266,332 4,893,303
31 Corporate income tax
Vietnam Opportunity Fund 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 associates are domiciled in the British Virgin
Islands (BVI) and so have a tax exempt status. Some of the subsidiaries are
established in Singapore and have offshore operations in Vietnam. The income
from these offshore operations is also tax exempt. A small number of
subsidiaries are established in Vietnam and are subject to corporate income tax
in Vietnam, however no provision for corporate income tax has been made for
these Vietnamese subsidiaries of the Group for the year ended 30 June 2007 as
they either incurred losses, have unutilised tax holidays, or have sufficient
carry-forward tax losses to offset any taxable income.
Under the law of Vietnam, tax losses can be carried forward to offset with
future taxable income for five years from the year the loss incurred. The amount
of unrecognised deferred tax assets of USD307,390 relating to losses carried
forward has not been recorded due to uncertainties as to their recoverability.
32 Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to
shareholders of the Group by the weighted average number of ordinary shares on
issue during the year.
2007 2006
Profit attributable to equity holders of the company (USD) 264,166,937 74,932,600
Weighted average number of ordinary shares on issue 197,318,742 98,905,928
Basic earnings per share ($ per share) 1.34 0.76
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The Group has no category of dilutive potential
ordinary shares. Therefore, diluted earnings per share is equal to basic
earnings per share.
33 Directors' remuneration
The emoluments paid or payable to the directors during the year were as follows:
2007 2006 Remarks
USD USD
Jonathan Choi 20,000 20,000
Horst Geicke 20,000 20,000
William Vanderfelt 20,000 20,000
Robert Knapp - 20,000 Resigned 1 July 2007
Bernard Grigsby 14,167 - Appointed 16 October 2006
Philip Skevington 14,167 - Appointed 16 October 2006
88,334 80,000
34 Related party transactions
Management fees
The Group is managed by VinaCapital Investment Management Limited (the '
Investment Manager'), an investment management company incorporated in the
British Virgin Islands ('BVI'), under a management agreement dated 24 September
2003 (the 'Management Agreement'). The Investment Manager receives a fee based
on the net asset value of the Group, payable monthly in arrears, at an annual
rate of 2% (30 June 2006: 2.5%).
Total management fees for the year amounted to USD12,012,053 (2006:
USD4,348,221), with USD1,417,292 (2006: USD536,053) in outstanding accrued fees
due to the Investment Manager at the end of the year.
Performance fees
In accordance with the Management Agreement, the Investment Manager is also
entitled to a performance fee equal to 20% of the realised returns over an
annualised compounding hurdle rate of 8% (30 June 2006: hurdle rate of 10%).
Total performance fees, for the year amounted to USD68,850,611 (2006:
USD15,396,334), with USD68,778,107 (2006: USD15,396,334) in outstanding accrued
fees due to the Investment Manager at the end of the year.
Placement fees
When raising capital through the issuance of new Ordinary Share a commission
equal to 3% of the subscription price multiplied by the total number of the
shares allotted by the Group on admission is payable by the Group to the
Investment Manager. The Investment Manager is responsible for paying placing
agents that are engaged in respect to such subscriptions. The net proceeds of
share subscriptions is recorded after netting off placement fees.
Total placement fees for the year amounted to USD9,138,572 (2006: USD2,213,710),
with no (2006: Nil) outstanding accrued fees due to the Investment Manager at
the end of the year.
Other related party transactions and balances
During the year, the following transactions with related parties were recorded:
Related party Relation Transaction USD
Vietnam Property Holding Ltd Associate Share profit from associates 6,992,783
Prosper Big Ltd Associate Share profit from associates 5,484,681
VinaCapital Danang Resorts Ltd Associate Share profit from associates 1,774,094
Cypress Assets Ltd Associate Share loss from associates (25)
Roxy Assets Ltd Associate Share loss from associates (1)
VinaCapital LongAn Industry Ltd Associate Share loss from associates (25)
Standbrook Global Ltd Associate Share loss from associates (1)
VinaCapital Commercial Center Ltd Associate Share loss from associates (1)
VNL Development Ltd Associate Share loss from associates (1)
SEM Thong Nhat Hotel Metropole Associate Share profit from associates 1,738,133
Hung Vuong Corporation Associate Share profit from associates 4,479,486
Loan interest 1,069,782
International School Associate Share profit from associates 600,863
Phong Phu Investment Associate Share profit from associates 19,183
Kinh Do Property Ltd Associate Share loss from associates (50,780)
At 30 June 2007, in addition to the loans receivable from associates disclosed
in Notes 13 and 17, the following balances were outstanding with related
parties:
Related party Relation Receivable Payable
USD USD
Vinaland Ltd Common management 659,202 4,790,326
International School of Ho Chi Minh Associate 360,402 -
1,019,604 4,790,326
35 Commitments
As at 30 June 2007, the Group is committed under lease agreements to paying the
following future amounts:
USD
Within one year 131,373
From two to five years 235,744
Over five years 1,286,776
=SUM(ABOVE) 1,653,893
36 Subsequent events
On 9 October 2007, the Company announced its intention to raise USD200 million
by way of a placement of approximately 54 million new Ordinary Shares at a price
of USD3.68 per share ('the Placement'). The closing date for subscriptions for
the Placement was 14 November 2007. On 15 November 2007 the Company announced
that the capital raising had been significantly over-subscribed and that the
Placement would be increased to approximately 77 million new Ordinary Shares for
consideration of approximately USD285 million. At the date of this report the
allotment of shares is still pending.
37 Risk management objectives and policies
The Group invests in listed and unlisted equity instruments, debt instruments,
assets and other opportunities in Vietnam and Asia Pacific countries with the
objective of achieving medium to long-term capital appreciation and providing
investors with an attractive level of investment income from dividends.
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 its Investment Manager who manages the distribution of the assets
to achieve the investment objectives. The most significant financial risks to
which the Group is exposed to are described below:
Foreign currency risk
The Group's exposure to risk resulting from changes in foreign currency exchange
rates is low as although transactions in Vietnam are settled in Vietnamese Dong,
the value of the Vietnamese Dong is closely linked to that of USD, the reporting
currency.
The Group's exposure to fluctuations in foreign currency exchange rates at the
balance sheet date were as follows:
30 June 2007 30 June 2006
USD USD
Assets denominated in Vietnamese Dong 668,876,482 212,563,713
Liabilities denominated in Vietnamese Dong 11,759,464 13,332,952
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 all factors affecting all instruments
traded in the market. As the majority of the Group's financial instruments are
carried at fair value with fair value changes recognised in the income
statement, all changes in market conditions will directly affect net investment
income.
The Group's unlisted equity securities are susceptible to market price risk
arising from uncertainties about future values of the investment securities. The
Investment Manager provides the Group with investment recommendations that are
consistent with the Group's objectives. The Investment Manager's recommendations
are approved by an Advisory Committee and/or the Board of Directors before
investment decisions are implemented.
All securities investments present a risk of loss of capital. The Investment
Manager manages this risk through the careful selection of securities and other
financial instruments within specified limits and by holding a diversified
portfolio of listed and unlisted instruments. In addition, the performance of
investments held by the Group is monitored by the Investment Manager on a
monthly basis and reviewed by the Board of Directors on a quarterly basis.
Cash flow and fair value interest rate risks
The majority of the Group's financial assets are non-interest bearing. The Group
currently has no financial liabilities with floating interest rates. As a
result, the Group is not exposed to cash flow interest rate risk. Any excess
cash and cash equivalents are invested at short-term market based interest
rates.
Credit risk
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 balance sheet date.
All transactions in listed securities are settled/paid for upon delivery using
approved brokers. The risk of default is considered low, as delivery of
securities sold is only made once the broker has received payment. Payment is
made for purchases once the securities have been received by the broker. The
trade will be unwound if either party fails to meet its obligations.
The carrying amount of trade and other receivables and loans represent the
Group's maximum exposure to credit risk in relation to its financial assets. The
Group has no other significant concentrations of credit risk.
In accordance with the Group's policy, the Investment Manager monitors the
Group's credit position on a monthly basis.
Liquidity risk
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 Exchange.
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.
The financial information set out in this announcement does not constitute the
Group's statutory accounts for the period ended 30 June 2007 but is derived from
those accounts. The full audited accounts of Vietnam Opportunity Fund Limited
for the year ended 30 June 2007 will be posted to shareholders shortly and will
be available at the offices of VinaCapital Investment Management Ltd, 17/F,
Sun-Wah Tower, Ho Chi Minh City, Vietnam , for a period of 30 days from the date
of this announcement.
This information is provided by RNS
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