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2009-11-03 13:01
VinaCapital Vietnam - Final Results |
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RNS Number : 8693B VinaCapital Vietnam Opp. Fund Ld 03 November 2009 03 November 2009 VinaCapital Vietnam Opportunity Fund Limited Audited financial results for the twelve months ended 30 June 2009 VinaCapital Vietnam Opportunity Fund Limited ("VOF" or "the Company") (VOF.L), an AIM-traded investment company established to target key growth segments within Vietnam's emerging market, today announces its audited financial results for the twelve month period ended 30 June 2009. Financial highlights
Operational highlights
Commenting, Andy Ho, VinaCapital Managing Director & Head of Investment said: "We are beginning to see a renewed confidence in the Vietnamese economy, particularly in the second half of the financial year - aided by the government's stimulus package and more positive sentiment internationally. We believe that our portfolio is well positioned to further capitalise on this return to economic growth, and have already begun to deliver strong returns on investments which is a trend that we are confident will continue over the course of the next year." For more information please contact:
VinaCapital Investment Management Limited chi.nguyen@vinacapital.com Investor Relations
Nominated Adviser
Notes to Editors: VinaCapital Group is a leading asset management, investment banking and real estate consulting firm with unrivalled experience in the Vietnamese market. VinaCapital Group was founded in 2003 and has grown from a single USD10 million fund to a diversified investment firm with over USD1.7 billion in assets under management as of August 2009. VinaCapital Investment Management Ltd manages three closed-end funds trading on the AIM Market of the London Stock Exchange. These are:
VinaCapital also co-manages the USD32 million DFJ VinaCapital technology venture capital fund with Draper Fisher Jurvetson, and owns a dominant stake in VinaSecurities JSC, a brokerage. More information is available at www.vinacapital.com. More information on VOF is available at www.vinacapital.com/vof.
Dear Shareholders, We herein present the annual report of the VinaCapital Vietnam Opportunity Fund Limited (AIM: VOF.L) for the year ended 30 June 2009. In the first half of 2009 Vietnam began to recover from a tumultuous 2008 that saw its capital markets shaken and GDP growth drop to 6.2 percent for the year, down from 8.5 percent in 2007. Under the impact of the global financial crisis, Vietnam saw its exports and foreign direct investment commitments decline sharply toward the end of 2008 and in the first quarter of 2009. However, the government's stimulus package, focused on interest rate subsidies for state and private enterprises, succeeded in stimulating domestic demand. GDP growth over the first half of 2009 reached 3.9 percent annualised, and the capital markets saw a healthy recovery from the early 2009 market lows. The benchmark Vietnam Index rose 42 percent in the first six months of 2009, mainly due to the active buying of domestic investors. With confidence returning to the economy, Vietnam's GDP growth for 2009 is now forecast by leading analysts at 4.5-5.0 percent (third quarter growth was 5.8 percent annualised), For VOF, the second half of the 2009 financial year saw the beginnings of a recovery in terms of net asset value, share price, and deal activity. VOF's net asset value ("NAV") rose 1.9 percent to USD682 million (2.10 per share) at 30 June 2009, from USD669 million (USD2.06 per share) at 30 June 2008. This followed the difficult 2008 financial year that saw VOF's NAV decline 37.2 percent. As an indication of the pace of recovery, in the third quarter of 2009 (June to September 2009), the unaudited NAV rose 20.7 percent on-quarter. VOF's share price at 30 June 2009 was USD1.43 per share, or a discount to NAV of 31.9 percent. While this is a far cry from the 4.9 percent premium that VOF traded at on 30 June 2008, it is nonetheless a marked improvement from the peak discount of 61.1 percent seen during early March 2009. Investor confidence, at an all-time low point in the midst of the global financial crisis, has now started to recover. Furthermore, for VOF, this renewed confidence is based on real investment results, not just improved sentiment. Although deal activity was lower than in past years, realised exits during the second half of the 2009 financial year included some at values significantly above the carrying value of the holdings. In particular, VOF's stake in Masan Group was sold at a price 81 percent above the carrying value of the position at the time of sale, generating over USD20 million for a return of over 2.5x. The sale of VOF's stake in the Hilton Hanoi Opera Hotel (which closed just after the financial year ended) also came at a premium to carrying value. VOF's ability to protect shareholder value during the 2009 financial year was due in large measure to a diversified investment policy that saw liquid assets turned to cash in greater volume as the year progressed, such as VOF's bond holdings that were sold for a 40 percent return toward the end of the 2008 calendar year. More recently, VOF has begun to restructure its real estate holdings to favour more liquid equities over direct investments - including purchase of shares in VinaLand Limited to take advantage of that fund's discount to NAV. The year also saw the fund adopt a new name to recognise the investment manager's brand, and we welcomed a new member to the Board of Directors, with Michael G. Gray joining VOF as the fourth independent director. Vietnam's 2009 economic performance has surprised both domestic and international analysts. On the back of this performance, Vietnam is once again garnering headlines for its medium to long-term growth potential, based on the strength of its domestic economy and rising middle class. We remain confident that VOF's investing policy and strategy, geared strongly to those sectors that will benefit from domestic economic growth, will prove highly rewarding for our shareholders in the years to come. Thank you for your continued support. William Vanderfelt Chairman Vietnam Opportunity Fund 3 November 2009
Consolidated Balance Sheet
ASSETS
Non-current
parties
Current
income statement
EQUITY AND LIABILITIES
EQUITY
Equity attributable to shareholders of the
parent:
LIABILITIES
Non-current
Current
equity shareholders of the parent (USD per share) Consolidated Statement of Changes in Equity
revaluation gains recognised
directly in equity (Note 20)
ended 30 June 2008
expense for the year
gain to minority interest
(Note 20)
interest share in subsidiaries
minority shareholders
revaluation gains recognised
ended 30 June 2009
interest in a subsidiary (Note 6)
minority shareholder
minority shareholder
Consolidated Statement of Income
statement
of investment properties
before tax
income
continuing and total operations
parent
per share)
Operating activities
Adjustments:
financial assets at fair value through income
statement
assets at fair value through income statement
interest/goodwill written-off
assets
Investing activities
and other non-current assets
assets
Financing activities
year
Notes to the Consolidated Financial Statements
VinaCapital Vietnam Opportunity Fund Limited (previously known as Vietnam Opportunity Fund Limited) ("the Company") is a limited liability company incorporated in the Cayman Islands. The registered office of the Company is PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands. The Company's primary objective is to undertake various forms of investment primarily in Vietnam, also in Cambodia, Laos and Southern China. The Company is listed on the AIM market of the London Stock Exchange under the ticker symbol VOF. The consolidated financial statements for the year ended 30 June 2009 were authorised for issue by the Board of Directors on 3 November 2009. 2 Statement of compliance with IFRS and adoption of new and amended standards and interpretations
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (IASB).
2.2.1 Overall considerations 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 early adopted the standards and interpretations that have been issued as they are not yet effective. The most relevant for the Group are amendment to IAS 1 (Revised 2007) "Presentation of the Financial Statements" (effective for annual periods beginning on or after 1 January 2009) and IFRS 8 "Operating Segments" (effective for annual periods beginning on or after 1 January 2009). The adoption of IAS 1 (Revised 2007) makes certain changes to the format and titles of the primary financial statements and to the presentation of some items within these statements. 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 consolidated financial statements in the period of initial application. Annual Improvements 2008 The IASB has issued Improvements for International Financial Reporting Standards 2008. Most of these amendments become effective in annual periods beginning on or after 1 January 2009. The Group has opted for early adoption of IAS 23 Borrowing Costs (Revised) and IAS 40 Investment Property (Amended) to the consolidated financial statements. Smaller amendments are made to several other standards, however, these amendments are not expected to have a material impact on the Group's consolidated financial statements.
IAS 23 Borrowing Costs (Revised 2007) IAS 23 Borrowing Costs (Revised 2007) requires the capitalisation of borrowing costs to the extent they are directly attributable to the acquisition, production or construction of qualifying assets that need a substantial period of time to get ready for their intended use or sale. In accordance with the transitional provisions, no retrospective restatement of borrowing costs has been made. Borrowing costs have been capitalised only for qualifying assets that primarily related to some of the Group's development projects. Adoption of IAS 40 Investment Property (Amended) The amended standard introduces changes to classify the property that is being constructed or developed for future use as an investment property to investment property. Where the fair value model is applied, such property under construction is measured at fair value if reliably measurable. The Group applies IAS 40 Investment Property (Amended) to investment properties under construction provided that the fair values of these investment properties under construction can be determined.
At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group. IFRS 3 Business Combinations (Revised 2008) (effective from 1 July 2009) The standard is applicable for business combinations occurring in reporting periods beginning on or after 1 July 2009 and will be applied prospectively. The new standard introduces changes to the accounting requirements for business combinations, but still requires use of the purchase method, and will have a significant effect on business combinations occurring in reporting periods beginning on or after 1 July 2009. The Group is required to adopt Revised IFRS 3 for business combinations when the acquisition date is on or after 1 July 2009, with prospective application required. IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (effective from 1 July 2009) The revised standard introduces changes to the accounting requirements for the loss of control of a subsidiary and for changes in the Group's interest in subsidiaries. The Group's directors do not expect the standard to have a material effect on the Group's consolidated financial statements. IAS 1 Presentation of the Financial Statements (Revised 2007) (effective for annual periods beginning on or after 1 January 2009) The revised standard introduces changes to the format and titles of the primary financial statements and to the presentation of some items within these statements. Disclosures are made for capital management objectives, policies and procedures in each annual financial report, capital movements and other gains and losses, which presented separately in the statement of changes in equity and statement of recognised income and expenses. The Group selects to adopt IAS 1 (Revised 2007) from the effective date of the standard. IFRS 8 Operating Segments (effective for annual periods beginning on or after 1 January 2009) The new standard, which replaces IAS 14 Segment Reporting, requires more comprehensive segmental information to be disclosed in evaluating performance and deciding how to allocate resources to operations. The Group selects to adopt the IFRS 8 from the effective date of the standard. Amendment to IFRS 7 Financial Instruments: Disclosures: Improving disclosures about financial instruments (effective for annual periods beginning on or after 1 January 2009) The amendment requires enhanced disclosures regarding fair value measurements and liquidity risk. It will not affect the financial position of the Group but will give rise to additional disclosures. 3 Summary of significant accounting policies 3.1 Presentation of consolidated financial statements The consolidated financial statements are presented in United States dollars (USD) and all values are rounded to the nearest thousand ('000) unless otherwise indicated. 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 preparation of consolidated 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 judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 4 to the consolidated financial statements.
The consolidated financial statements of the Group for the year ended 30 June 2009 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in associates and jointly controlled entities.
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, 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. Majority subsidiaries of the Group have a reporting date of 30 June. 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. All subsequent changes to the Group's share of interest in the equity of the associate are recognised in the carrying amount of the investment. Changes resulting from the profit or loss generated by the associate are reported within "Share of (loss)/profit of associates" in the statement of income. These changes include subsequent depreciation, amortisation or impairment of the fair value adjustments of assets and liabilities. Adjustments to the carrying value of the associate are necessary for changes in the associate's equity that have not been recognised in their statement of income, primarily those arising on the revaluation of plant, property and equipment. The Group's share of this change is recognised directly in the statement of changes in equity. 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 controlled 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 Vietnam 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 functional 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 functional 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 consolidated 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.
Goods and services rendered Revenue from sale of goods is recognised in the consolidated statement of income when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognised in the statement of income in proportion to the stage of completion of the transaction at the balance sheet date. 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 consolidated 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 the effective interest rate basis. Dividend income Dividend income is recorded when the Group's right to receive the dividend is established.
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 qualifying assets that need a substantial period of time to get ready for their intended use or sale to the extent that they are directly attributable to the acquisition, production or construction of such assets. These costs are capitalised as a cost of the related assets from 1 January 2009. No retrospective restatement is made for borrowing costs that have been expensed for qualifying assets before 1 January 2009. Operating lease payments Payments made under operating leases are recognised in the consolidated 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.
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:
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 3.16). Negative goodwill represents the excess of the Group's interest in the fair value of identifiable net assets and liabilities, and contingent liabilities over costs 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 properties Investment properties are properties owned or held under finance leases 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. The property under construction or development for future use as investment property is treated as investment property and is measured at fair value where the fair value of the investment property under construction or development for future use is reliably determined. Two independent valuation companies, with appropriately recognised professional qualifications and recent experience in the location and category undertake a valuation of every property. On the valuation date, the fair value is estimated assuming there is an agreement between a willing buyer and a willing seller on an arm's length basis after proper marketing; wherein the parties have 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 therein. Valuations are reviewed by the Valuation Committee and approved the Group's Board of Directors. Discount rates in the range from 13% to 16% are considered appropriate for properties in different locations. Where the Valuation Committee considers the discount rate applied by the independent valuers to be too low or if there are factors that the external independent valuers have not considered in their determination of a property's fair value, they will adjust the discount rate and other assumptions in the discounted cash flow projections, whereby decreasing the property's valuation. Any gain or loss arising from a change in fair value is recognised in the statement of income. 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. Property 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 3.12). All costs directly associated with the purchase and construction of an investment property, and all subsequent capital expenditures for the development qualifying as acquisition costs are capitalised. Borrowing costs for property under construction or development are capitalised if they are directly attributable to the acquisition, construction or production of that 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.
Owned assets All property, plant and equipment, except buildings and leasehold land improvements, are stated at cost less accumulated depreciation and impairment losses (see accounting policy 3.16). 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 and leasehold land improvements 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 consolidated statement of income, in which case a credit to that extent is recognised in the consolidated statement of income. Any deficit on revaluation is charged in the consolidated 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. Any revaluation surplus remaining in equity on disposal of the asset is transferred to retained earnings. 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 finance leases are 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 of the Group's property, plant and equipment are as follows:
Material residual value estimates and estimates of useful lives are reviewed at least annually, irrespective of whether assets are revalued. 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.
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 3.12). 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 (see accounting policy 3.11). 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.
Financial assets are divided into the following categories: loans and receivables, financial assets at fair value through income statement, and held-to-maturity financial assets. 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 income statement, 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 exists, any impairment loss is determined and recognised based on the classification of the financial assets. The Group's financial assets consist primarily of listed, 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 payments 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 statement of income. Discounting, however, is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. Significant receivables are considered for impairment when they are overdue or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and other available features of shared credit risk characteristics. The percentage of the write-down is then based on recent historical counterparty default rates for each identified group. Impairment of trade and other receivables are presented within "other expenses". Financial assets at fair value through income statement Financial assets at fair value through income statement include financial assets that are either classified as held for trading or are designated by the entity to be carried at fair value through income statement 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 income statement held by the Group 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 income statement include 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. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities other than loans and receivables. Investments are classified as held-to-maturity if the Group has the intention and ability 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 addition, if there is objective evidence that the investment is impaired, determined by reference to external credit ratings, the financial asset is measured at the present value of estimated cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognised in the statement of income.
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 production 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 ordinary course of business less any applicable selling expenses.
The Group's goodwill, intangible assets, other long-term investments, 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. Goodwill and intangible assets with an indefinite life are tested for impairment annually, while other assets are tested when there is an indicator of impairment. 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. 3.17 Prepayments for acquisitions of investments Those payments made by the Group to property vendors for land clearance and other related costs, and professional fees directly attributed to the projects, where the final transfer of the 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, are treated as prepayments. 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 investment properties and accounted for accordingly.
Income tax 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 substantively 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. Withholding taxes imposed on investment income The Group currently incurs withholding taxes imposed by local jurisdictions on investment income. Such income is recorded gross of withholding taxes in the consolidated statement of income.
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. 3.20 Non-current assets and liabilities classified as held for sale When the Group intends to sell a non-current asset or a group of assets (a disposal group), and if the carrying amount will principally be recovered through sale, they are available for immediate sale in their present condition subject only to terms that are usual and customary for sale of such assets and sale is highly probable at the balance sheet date, the assets are classified as "held for sale" and presented separately in the consolidated balance sheet in accordance to IFRS 5 "Non-current assets held for sale and discontinued operations". Liabilities are classified as "held for sale" and presented as such in the consolidated balance sheet if they are directly associated with a disposal group. Assets classified as "held for sale" are measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair values less costs to sell. However, some "held for sale" assets such as financial assets or deferred tax assets, continue to be measured in accordance with the Group's accounting policy for those assets. No assets classified as "held for sale" are subject to depreciation or amortisation, subsequent to their classification as "held for sale".
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. Revaluation reserve represents the surplus arising on the revaluation of the Group's owned buildings which are classified under property, plant and equipment. Currency translation differences on net investments 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 changes in equity. 3.22 Financial liabilities The Group's financial liabilities include trade and other payables, borrowings 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 and are recognised at fair value plus direct transaction costs on initial recognition and thereafter at amortised cost under the effective interest rate method. 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 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 balance sheet date, including the risks and uncertainties associated with the present obligation. Where there are a number 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 provisions 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.
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:
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.
The Group presents basic earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Net asset value (NAV) per share is calculated by dividing the net asset value attributable to ordinary shareholders of the Company by the number of outstanding ordinary shares as at the balance sheet date. Net asset value is determined as total assets less total liabilities and minority interests. 4 Critical accounting estimates and judgements When preparing the financial statements, management 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 the Company's 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: Fair value of investment properties, leasehold land and buildings The investment properties, leasehold land and buildings of the Group are stated at fair value in accordance with accounting policy 3.11. The fair values of investment properties, leasehold land and buildings have been determined by independent professional valuers including: CB Richard Ellis, Savills, Jones Lang LaSalle, Colliers, Sallmanns and HVS. These valuations are based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results. Valuations are reviewed by the Valuation Committee and approved by the Board of Directors. Discount rates in the range from 13% to 16% are considered appropriate for properties in different locations. Where the Valuation Committee considers the discount rate applied by the independent valuers to be too low or if there are factors that the external independent valuers have not considered in their determination of a property's fair value, they will adjust the discount rate and other assumptions in the discounted cash flow projections, whereby decreasing the property's valuation. In making its judgement, the Valuation 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) recent developments and changes in laws and regulations that might affect zoning and/or the Group's ability to exercise its rights in respect to properties and therefore fully realise the estimated values of such properties; 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 the cash flows. Fair value of financial assets For unlisted securities which are traded in an active market, the fair value is the average quoted bid price obtained from a minimum sample of three reputable securities companies at the balance sheet 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 its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at each balance sheet date. Independent valuations are also obtained from appropriately qualified independent valuation firms to evaluate and adjust valuations. The outcomes may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date. Impairment Trade and other receivables The Group's management considers the need to provide for the impairment of trade and other receivables on a regular basis. This estimate is based on the credit history of its customers, recoverability of receivables and prevailing market conditions. Other 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 3.16. Impairment of investment properties, leasehold land and buildings Whenever there is an indication of impairment of an investment property, leasehold land and buildings, the Valuation Committee and Group's management will assess the need for an impairment adjustment. The estimation of impairment adjustments is based on the same principles used to adjust the periodic independent valuations as mentioned above. In the process of reviewing for impairment the Group's management makes assumptions about future cash flows and discount rates associated with market risk and asset specific risk factors. The impairment assessment is an estimate and consequently the actual results achieved if the assets were disposed at the balance sheet date may differ to the current carrying value recorded by the Group. Inventories Inventories are measured at lower of cost and net realised value. In estimating net realised values, management takes into account the most reliable evidence available at the times the estimates are made.
Segment information is presented in respect to the Group's investment and geographical segments. The primary reporting format, investment segments, 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 shareholder loans) and cash (including deposits having maturity term below three months). The Group's secondary reporting format, geographical segments, includes Vietnam and the regions outside Vietnam.
Total assets
Net profit/(loss)
To determine the geographical segments for financial instruments the following rules have been applied:
The above segmental reporting information has not been presented in accordance with the requirements of IAS 14 "Segment reporting" as the Board of Directors believes that the current presentation gives more appropriate and relevant information to the users of the financial statements and is in accordance with the way the Investment Manager manages and monitors the risks and returns of the Group's investments.
Additional acquisition of minority interest in Indotel Limited As at 30 June 2008, the Group held a beneficial interest of 72.2% in Indotel Limited, a subsidiary incorporated in Singapore. The principal activity of this company is to invest and manage the five-star S.E.M Thong Nhat Hotel Metropole and holds 50% of the equity in this company. On 4 September 2008, the Group acquired a further 27.8% interest in Indotel Limited for USD13.4 million, which was settled in cash. Negative goodwill arising on this transaction amounted to USD2.8 million. As a result, the Group's beneficial ownership in Indotel Limited is 100% as at 30 June 2009.
Ltd.
Indochina Building Supplies
BI VI Investments Corporation
PA Investment Opportunity II
7. Investment properties
investment properties
The net (loss)/gain on fair value adjustments of investment properties relates to the revaluation of leasehold land of the Group's subsidiaries during the year as described in Note 4. The Group has opted to adopt IAS 40 (Revised) early, therefore for comparative purposes, investment properties under development at 30 June 2008 of USD7.98 million have been reclassified to investment properties.
For the year ended 30 June 2009:
Gross carrying amount
Depreciation and impairment
Carrying amount
(*) This amount represents impairment of property, plant and equipment held at American Home Limited, a subsidiary of the Group, at the balance sheet date.
Gross carrying amount
Depreciation and impairment
Carrying amount
(Note 20)
Particulars of significant operating associates and their summarised financial information, extracted from their statutory audited/reviewed and/or management accounts as at 30 June 2009 are as follows:
Development Ltd.
Metropole (1)
Ltd.
Limited. (Phase I: 12.75%,
Phase II: 25%) (3)
JSC (4)
Financial Investment Co. (1) At the balance sheet date, the Group effectively has a 50% equity interest in SEM Thong Nhat Hotel Metropole (via the 100% equity holding in Indotel Limited - Note 6) but does not have control or joint control due to its limited representation on its Board. Therefore, it is considered appropriate to treat the interest as an associate holding. (2) The Group has an 18% equity interest in Vina Dai Phuoc Corporation, a subsidiary of VinaLand Limited, and wields significant influence since it has the power to participate in the financial and operating policy decisions of the investee but it does not have control or joint control over those policies through its Board representation. Therefore, it is considered an associate holding rather than an investment. (3) During the prior year, the Group sold 1,125 Class A shares of its interest in VinaCapital Commercial Center Limited. Under the sale and purchase agreement, the buyer was granted a right to acquire an additional 1,125 shares in this company from the Group. (4) In the prior year, the Group did not have control or significant influence in Thang Loi Textile & Garment JSC despite its 30% equity interest. During this year, the Group assumed significant influence over the entity, at which point the carrying value of the asset was transferred from financial assets at fair value through income statement to an associate and thereafter accounted for as such.
(*) These prepayments pertain to payments made by the Group to property vendors where the final transfer of the 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. In the prior year, USD14.9 million of prepayments for acquisitions of investments were reclassified as current assets, however these are now considered to be long-term assets and have been reclassified.
(*) Indochina Industries Food Pte. Ltd. participates in the sugar processing industry which was significantly affected by economic factors in the latter half of 2008 such as price controls on sugar selling prices and increasing raw material costs. As a result, the management determined that these factors were indicators of impairment and a valuation of the equity holding was undertaken by an independent valuer which was subsequently approved by the Valuation Committee. A discounted cash flow model was used to determine that the carrying value of the investment should be impaired by USD9.4 million at the balance sheet date.
The inventory at the balance sheet date represents stock on hand held at American Home Limited, a subsidiary of the Group. The inventory impairment provision has been determined through individual identification of those obsolete items where the net realisable value is impaired below the cost.
As all trade and other receivables are short-term in nature, their carrying values are considered a reasonable approximation of their fair values at the balance sheet date. (*) In November 2006, the Group entered into an agreement with Mai Linh Corporation to purchase convertible bonds equal to 15% of their share capital. An agreement was reached with Mai Linh Corporation in September 2009 whereby they will pay the Group USD4.2 million before April 2010 to terminate this agreement. Part of the USD4.2 million consideration may be paid in shares equivalent to USD0.9 million. However, at the date of approval of the consolidated financial statements, legal documentation for share transfer has not been completed, therefore it is considered to be a receivable at the balance sheet date. At 30 June 2008, the bonds were treated as a financial asset at fair value through income statement and their fair value was USD3 million.
Designated at fair value through income statement:
Financial assets in Vietnam:
Financial assets in countries other than Vietnam:
statement (*) Corporate bonds have fixed interest rates between 8% to 9.6% and mature in 2012. During the year, the Group purchased 14,749,044 ordinary shares of VinaLand Limited for USD9,917,281. As a result, the Group had a 2.95% interest in VinaLand Limited as at 30 June 2009. The financial assets are denominated in the following currencies:
The carrying amounts disclosed above are the Group's maximum possible credit risk exposure in relation to these instruments. See Note 34 for further information on the Group's exposure to financial risk.
The carrying amounts presented in the consolidated balance sheet relate to the following categories of assets and liabilities:
Financial assets
Financial assets held for trading
(carried at fair value through income
statement)
Loans and receivables
Financial liabilities
Financial liabilities measured at
amortised cost:
Non-current:
Current:
The fair values of financial assets and liabilities are presented in the related notes. The Group's risk management objectives and policies for financial instruments are set out in Note 34.
Summary of the assets/(liabilities) held for sale at the balance sheet date:
(*) In June 2009, the Group entered into an agreement to dispose of its 50.1% interest in A&B Development JSC, however, control of the entity will not pass to the Purchaser until after the date of approval of the consolidated financial statements when all of the terms in the agreement are met. Consequently, the assets and liabilities of A&B Development JSC are classified as held for sale assets/liabilities at the balance sheet date and are valued at the lower of carrying value and fair value. The net (loss)/gain for the year from A&B Development JSC which is included in the Group's consolidated statement of income can be summarised as follows:
investment property
136 (22)
(**) In May 2009, the Group entered into a principal agreement to dispose of its 17.5% interest in SRLHO (Hilton Project), however, the ownership of the interest will not pass to the Purchaser until after the date of approval of the consolidated financial statements when all of the terms in the agreement are met. Consequently, the investment in this associate and the loan receivable, which belong to SRLHO, are classified as held for sale assets/liabilities at the balance sheet date and are valued at the lower of carrying value and fair value. The carrying amounts of assets and liabilities in this asset category at the balance sheet date are summarised as follows:
SRLHO
Authorised:
each
Issued and fully paid:
19. Additional paid-in capital Additional paid-in capital represents the excess of consideration received over the par value of shares issued.
associates' properties (Note 9)
interests of the Group
date sales (*)
(*) This amount represents the first payments from the Purchasers of the 50.1% interest of the Group in A&B Corporation JSC amount USD3 million and of the 17.5% interest of the Group in SRLHO (Hilton Project) amount USD1.4 million as disclosed in Note 17. As all trade and other payables are short-term in nature, their carrying values are considered a reasonable approximation of their fair values at the balance sheet date.
assets, net
during the year, net
23. Selling, general and administration expenses
(*) The majority of these expenses relate to operating expenses incurred by subsidiaries of the Group. In the prior year, withholding taxes imposed on investment income of USD125,000 were classified within this cost category, however in the current year these have been reclassified within the consolidated statement of income and are now included in Note 28.
income statement
(*) Included in this amount is an allowance of USD9.4 million provided for the impairment of the long-term investment in Indochina Industries Food Pte. Ltd. at the balance sheet date (Note 11).
VinaCapital 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 subsidiaries 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 in Singapore. 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 2009 (30 June 2008: nil). All of the Vietnamese subsidiaries are in a position where there are no corporate income taxes payable because they either have incurred losses, or have unutilised tax holidays, or have sufficient carry-forward tax losses to offset any taxable income. Under the laws of Vietnam, tax losses can be carried forward to offset against future taxable income for five years from the year the loss was incurred. The unrecognised deferred tax assets for the year of USD493,045 (30 June 2008: USD662,561) relate to the current year losses of Vietnamese subsidiaries, which can be carried forward but no asset has been recorded for these tax losses due to uncertainty as to their recoverability. The relationship between the expected income tax expense based on the applicable income tax rate (state below) and the tax expenses actually recognised in the consolidated statement of income can be reconciled as follows:
rate (0%)
(a) Basic Basic earnings per share is calculated by dividing the profit/(loss) attributable to shareholders of the Group by the weighted average number of ordinary shares on issue during the year.
operations (USD)
issue
total operations (USD per share) (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 potentially dilutive ordinary shares. Therefore, diluted earnings per share is equal to basic earnings per share. (c) Net asset value per share Net asset value (NAV) per share is calculated by dividing the net asset value attributable to ordinary shareholders of the Company by the number of outstanding ordinary shares as at the balance sheet date. Net asset value is determined as total assets less total liabilities and minority interests.
30. Directors and management's remuneration The emoluments payable to the Group's Board of Director members at the balance sheet date are as follows:
229 61 At the EGM on 17 June 2009, the shareholders approved a resolution to increase Directors' remuneration to a maximum amount of USD300,000 per year, subject to the condition that any fees paid in excess of USD60,000 for services rendered from 1 July 2007 shall result in a corresponding reduction in the management fee paid to VinaCapital Investment Management Limited, the Investment Manager (Note 31). The fee payable to the Group's Directors as at 30 June 2009 includes a catch up amount for the year ended 30 June 2008. The Board of Management and certain other individuals who act on behalf of the Group are remunerated by the Investment Manager. However, it is not possible to specifically allocate their costs to the Group. Part of the management fees disclosed in Note 31 can be allocated to remuneration of these individuals. 31. Related party transactions and balances 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 2008: 2%). Total management fees for the year amounted to USD12,934,662 (30 June 2008: USD18,064,000), of which USD1,195,494 (30 June 2008: USD1,170,000) were payable to the Investment Manager at the balance sheet date. Performance fees In accordance with the Management Agreement, the Investment Manager is also entitled to a performance fee equal to 20% of the increase in the Group's NAV over an annualised compounding hurdle rate of 8% (30 June 2008: hurdle rate of 8%) and high watermark. There were no performance fees payable in the year (30 June 2008: nil) and no amounts were payable to the Investment Manager at the balance sheet date (30 June 2008: nil). 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 are recorded after netting off placement fees. There were no placement fees payable in the year (30 June 2008: USD8,165,000) and no amounts were payable to the Investment Manager at the balance sheet date (30 June 2008: nil).
During the year, the following significant transactions with related parties were recorded as follows:
Metropole
Financial Investment Co.
Development JSC
(Note 9)
At 30 June 2009, the following receivable and payable balances were outstanding with related parties:
Current assets
Development JSC
(*) Loan receivables represent the Group's share of loans provided to its associates on joint investments in real estate projects with VinaLand Limited. The loans are unsecured, bear interest at the 6-month SIBOR interest rate, and repayable on demand or on disposal of related investments. The loans are carried at amortised cost at the balance sheet date. In the prior year, these loan receivables were classified as current assets, however these are considered non-current assets and for comparative purposes, USD48.26 million has been reclassified to long-term loan receivables from related parties. Details of these loan receivables at the balance sheet date are as follows:
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