VNL.L Regulatory News (VNL)

VinaLand Limited

Audited financial results for the twelve months ended 30 June 2015

VinaLand Limited ("the Company" or "VNL"), the AIM-quoted investment vehicle established to target strategic segments within Vietnam's emerging real estate market, today announces its full year results for the twelve months ended 30 June 2015 ("the Period").

Financial highlights:

· Net asset value per share at 30 June 2015 of USD0.91 (30 June 2014: USD0.92).

· 28.6 million shares outstanding were repurchased and cancelled during the period ended 30 June 2015.

Operational highlights:

· Since EGM 2012, the Company completed ten full divestments and one partial for combined net proceeds of USD71 million.  

· In aggregate VNL has cancelled 69.8 million ordinary shares, representing 13.97 percent of the total shares in issue prior to the commencement of the share buyback program.

· Appointment of Tran Trong Kien as an Independent Non-Executive Director (effective 25 September 2015), replacing Daniel McDonald.

Notes to Editors:

VinaCapital is a leading investment management and real estate development firm headquartered in Vietnam, with a diversified portfolio of USD1.3 billion in assets under management. Founded in 2003, VinaCapital boasts an unrivalled local network, providing the company with access to unique investment opportunities.

VinaCapital's mission is to continue to offer institutional solutions for a variety of clients that can best extract the dynamic development taking place in Vietnam and the ASEAN region as a whole. This mission is instilled in each of VinaCapital's industry-leading asset class teams covering capital markets, private equity, fixed income, venture capital, real estate and infrastructure. These teams are supported by one of Vietnam's leading in-house research units.

VinaCapital manages three closed-end funds trading on the AIM Market of the London Stock Exchange, VinaCapital Vietnam Opportunity Fund Limited, VinaLand Limited and Vietnam Infrastructure Limited. In addition, VinaCapital co-manages the DFJ VinaCapital L.P. technology venture capital fund with Draper Fisher Jurvetson and VinaWealth, a locally incorporated fund management company. VinaCapital recently established the open ended UCITS fund, the Forum One - VCG Partners Vietnam Fund, Vietnam's largest open-ended UCITS-compliant fund, focused on selecting Vietnam based stocks.

With offices in Ho Chi Minh City, Hanoi, Danang and Singapore, VinaCapital offers insight, expertise and an on the ground presence unrivaled in the ASEAN region. For more information about VinaCapital, please visit www.vinacapital.com or reach out directly to info@vinacapital.com.

The financial statements will be posted to shareholders and are available on the Company's website at www.vinacapital.com/vnl 

More information on the Company is available at www.vnl-fund.com.

 Enquiries:

Jonathon Trewavas

VinaCapital Investment Management Limited

Investor Relations/Communications

+84 8 3821 9930

jonathon.trewavas@vinacapital.com

Philip Secrett

Grant Thornton UK LLP, Nominated Adviser

+44 (0)20 7383 5100

philip.j.secrett@uk.gt.com

Hiroshi Funaki / William Marle

Edmond de Rothschild Securities, Broker

+44 (0)20 7845 5960

funds@lcfr.co.uk

David Benda / Hugh Jonathan

Numis Securities Limited, Broker

+44 (0)20 7260 1000

funds@numis.com

Andrew Walton

FTI Consulting, Public Relations (London)

+44 (0)20 7269 7204

andrew.walton@fticonsulting.com

Dear Shareholders,

Throughout this financial year and particularly since the beginning of 2015, the ongoing stability of Vietnam's macroeconomic environment, coupled with a significant improvement in liquidity within the banking system as well as growing confidence in the property sector, have enabled the Vietnamese real estate market to commence a meaningful recovery. We expect this trend to continue throughout the year. This positive recovery should provide a stable platform for VinaLand Limited (VNL) to expedite the implementation of the divestment strategy started nearly three years ago, following its approval by shareholders at the EGM held in November 2012.

This strategy consists of VNL not making any new investments and distributing all surplus cash to shareholders over a three-year "cash return period". Since that EGM and up to 30 June 2015, VNL has completed ten full divestments and one partial divestment, with a gross total sales value of USD110 million and net proceeds of approximately USD71 million, which were a combined 8.5 percent above NAV at the times of the exits concerned. However, these achievements to date are still below the targets we set out to accomplish during that EGM, primarily as a result of a much slower than expected recovery of Vietnam's economy, especially with regard to its real estate market. A combination of factors including the high cost of borrowing, low liquidity due to the country's large number of nonperforming loans (NPL's) within the banking system and delays in project licensing, coupled with an overall lack of confidence in the property sector, significantly reduced VNL's ability to dispose of its projects, in particular the larger projects. Additionally, delays in divesting of these projects have resulted in a higher proportion of net proceeds being diverted toward payments of capital commitments and operating expenses. This has resulted in less funds being available for distribution to shareholders as at 30 June 2015. The positive evolution in the real estate market witnessed in the second half of the last financial year which ended on that date should allow VNL to speed up the closure of the sales of a number of its projects during VNL's current financial year.

Financial results summary

The financial results of VNL for the fiscal year ended 30 June 2015 show VNL's audited NAV per share declined 0.7 percent, year-on-year, from USD0.91 as at 30 June 2014 to USD0.90 as at 30 June 2015. The Company's share price closed FY 2015 at USD0.516 per share, a decline of 6.9 percent from USD0.554 per share in FY 2014. As a result, VNL's share price to NAV discount widened slightly to 43.7 percent from 39.5 percent at the end of FY 2014.

During the financial year, VNL repurchased and cancelled 28.6 million ordinary shares, a 26.5% increase from the 22.6 million shares repurchased and cancelled in the previous fiscal year. As at 30 June 2015 the Company has cancelled 69.8 million ordinary shares, representing 13.97% of the total shares in issue prior to the commencement of the share buyback program.

Corporate actions

In November 2014, the Company conducted its second Annual General Meeting. At the meeting three of the five standing Directors stood and were voted by shareholders for reappointment. Additionally, the Board of Directors appointed Mr. Tran Trong Kien as a new Independent Non-executive Director, effective 25 September 2015. Mr. Tran has replaced Mr. Daniel McDonald, who has resigned from the VNL Board with effect from the same date. Mr. Tran's experience in owning, developing and guiding both property investments and commercial enterprises in Vietnam and the region over the last 20 years will greatly assist VNL as it seeks to develop and realise its property portfolio. 

Both the Board and the Manager have remained focused on the objectives set forth during this three-year cash return period however the targets set in 2012 will not be achieved by November 2015. As promised at the last EGM in 2012, another EGM and AGM will be convened in London later this year where shareholders can review the performance over the past three years and vote upon a revised realization and distribution policy that will come into effect at the end of the current cash return period. This revised realization and distribution policy will require a special resolution for how the Company is to continue to be voted upon at this EGM and all shareholders are encouraged to participate in the vote on this important issue.  

Michel Casselman

Chairman

VinaLand Limited

19 October 2015

CONSOLIDATED BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF CASH FLOWS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 GENERAL INFORMATION

VinaLand 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 focus on key growth segments within Vietnam's emerging real estate market, namely residential, office, retail, industrial and leisure projects in Vietnam and the surrounding countries in Asia. The Company is quoted on the AIM Market of the London Stock Exchange under the ticker symbol VNL.

At the Extraordinary General Meeting ("EGM") held on 21 November 2012, the shareholders supported both recommendations put forth by the Board regarding the continuation of the Company. As a result, the Special Resolution which called for the continuation of the Company as presently constituted was not passed and the Ordinary Resolution to restructure the Company was passed with over a two-thirds approval rate.

The Ordinary Resolution established the framework to restructure the Company including changes to the Company's investing policy, distribution strategy, the Investment Management Agreement and the remuneration of the Investment Manager and its corporate governance framework. These changes are summarised as follows:

· During the three-year period until 21 November 2015 ("the Cash Return Period") the Company will make no new investments, save that it can invest in existing projects within its existing portfolio of assets. The Company will instead implement a realisation strategy whereby the Company's existing assets will be developed (if necessary) and/or divested in a controlled, orderly and timely manner.

· Net proceeds of these realisations will be returned to shareholders, subject to the Board's discretion and consideration in respect of the Company's working capital requirements, the need to invest in existing projects, and the cost/tax efficiency of such transactions/distributions.

· Once the Cash Return Period has ended, shareholders will be given the opportunity to reassess the strategy of the Company through another continuation resolution.

· The fees payable to the Investment Manager have been amended as discussed in Note 36 to these consolidated financial statements. 

The Company will organise no later than November 2015 a general meeting of shareholders to vote on the Company's strategy after that date. The Board of Directors and the Investment Manager are currently considering several continuation proposals, one of which will be presented to shareholders for approval at the meeting.

The consolidated financial statements for the year ended 30 June 2015 were approved for issue by the Company's Board of Directors on 19 October 2015.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

The consolidated financial statements of the Group for the year ended 30 June 2015 comprise the Company and its subsidiaries (together, the "Group") and the Group's interests in associates.

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The consolidated financial statements have been prepared using the

historical cost convention, as modified by the revaluation of investment properties, property, plant and equipment, financial assets and financial liabilities at fair value through profit or loss, the measurement bases of which are described in the accounting policies below.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.

2.2 Changes in accounting policy and disclosures

(a) New and amended standards adopted by the Group

Amendments to IAS 36, "Impairment of assets"

Amendments to IAS 36, "Impairment of assets", require additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair value less costs of disposal.

Moreover, the amendments require an entity to disclose the discount rates that have been used in the current and previous measurements if the recoverable amount of impaired assets based on fair value less costs of disposal was measured using a present value technique.

Other new and/or amended standards including amendments to IAS 39 "Novation of derivatives and continuation of hedge accounting" and IAS 19 (revised), "Employee Benefits" that become effective for financial periods starting on or after January 2014, are determined to be irrelevant to the Group.

(b) New standards, amendments and interpretations issued but not yet effective and not early adopted

At the date of authorisation of these consolidated financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been early adopted by the Group.

The Board anticipates that all such pronouncements will be adopted in the Group's accounting policies for the first period beginning after the effective dates of these pronouncements. Information on new standards, amendments and interpretations that are expected to be relevant to the Group's consolidated financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group's consolidated financial statements.

 (b) New standards, amendments and interpretations issued but not yet effective and not early adopted

IFRS 9, "Financial instruments", addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was completed in July 2014 and its effective for annual periods beginning on or after 1 January 2018. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be

classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The Group is yet to assess IFRS 9's full impact and intends to adopt IFRS 9 no later than the accounting year ending 30 June 2019.

IFRS 15, "Revenue from contracts with customers", was issued on 28 May 2015. It establishes a comprehensive framework for determining when to recognise revenue and how much revenue to recognise. The core principle in that framework is that an entity should recognise revenue upon the transfer of promised goods and services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The Group is yet to assess IFRS 15's full impact and intends to adopt the standard no later than the accounting year ending 30 June 2018.

There are no IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

2.3 Consolidation

(a) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The majority of the Group's subsidiaries have a reporting date of 30 June. For those subsidiaries with a different reporting date, the Group consolidates management information prepared for the year to 30 June.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

Gain on bargain purchase is immediately allocated to the consolidated income statement as at the acquisition date.

Inter-company transactions, balances, income and expenses on transactions between the Group's companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(b) Changes in ownership interests in subsidiaries without change of control

Changes in ownership of interests in a subsidiary that do not result in loss of control of the subsidiary are accounted for as equity transactions 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 in equity and attributable to the owners. No adjustment is made to the carrying value of the subsidiary's net assets as reported in the consolidated financial statements.

(c) Disposal of subsidiaries

When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(d) Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. Under the equity method, the carrying amount of the investment is increased or decreased to recognise the Group's share of the profit or loss of the investee after the date of acquisition. The Group's investments in associates include goodwill identified on acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

The Group's share of post-acquisition profit or loss of an associate is recognised in the consolidated income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associates is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount as 'share of profit/(loss) of associates' in the consolidated income statement.

Profits and losses resulting from upstream and downstream transactions between the Group and its associates are recognised in the Group's consolidated financial statements only to the extent of unrelated investors' interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

Dilution gains and losses arising in investments in associates are recognised in the consolidated income statement.

2.4 Foreign currency translation

(a) Functional and presentation currency

The Group's consolidated financial statements are presented in United States Dollars ("USD") ("the presentation currency"). The financial statements of each consolidated entity are initially prepared in the currency of the primary economic environment in which the entity operates ("the functional currency"), which for most of the Group's investments is Vietnam Dong ("VND"). The financial statements prepared using VND are then translated into the presentation currency of USD. 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.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated income statement.

Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction. Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined.

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available for sale, are included in other comprehensive income.

(c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

(ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

(iii) all resulting exchange differences are recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.

2.5 Investment property

Investment properties are properties owned or held under finance leases to earn rentals or capital appreciation, or both, or land 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.

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 can be reliably determined.

Investment properties are stated at fair value. At the end of each quarter of the financial year, the fair values of a selection of investment properties are assessed by the Board such that the fair values of all investment properties are assessed at least once each financial year. At the date of assessment, two independent valuation companies with appropriately recognised professional qualifications and relevant experience in the location and category being valued undertake a valuation of each property selected. The fair value is estimated by the independent valuation companies assuming there is an agreement between a willing buyer and a willing seller in an arm's length transaction after proper marketing; wherein the parties have each acted knowledgeably, prudently and without compulsion. The valuations by the independent valuation companies 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. The estimated fair values provided by the independent valuation companies are used by the Valuation Committee as the primary basis for estimating each property's fair value. In addition to the reports of the independent valuation companies the valuation committee considers information from other sources, including those sources referred

to in Note 3, before recommending each property's estimated fair value to the Board for approval. Discount rates from 14.5% to 22% are considered appropriate for properties in different locations.

In addition to the annual revaluation cycle, at the end of each quarter the Investment Manager reviews the entire portfolio to determine if there are any material changes to investment properties or other indicators that might mean that the value of an investment property has materially changed. Subject to the results of this review a more detailed assessment of those properties may be performed. If there is an indication that an investment property's value has increased then the investment property will be included in the independent valuation program. If there is an indication that an investment property's value has declined then an assessment will be made in respect to quantifying the fall in value. This involves either obtaining an independent valuation of the investment property or determining the change in value of each property based on internal assessment. Based upon the analysis performed by the Investment Manager or the independent valuation report, the Valuation Committee determines whether any valuation adjustments should be recommended to the Board for approval.

Any gain or loss arising from a change in fair value of investment properties is recognised in the consolidated income statement. Rental income from investment property is accounted for as described in the Note 2.26.

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 treated in the same way as a revaluation under IAS 16. Any resulting increase in the carrying amount of the property is recognised in profit or loss to the extent that it reverses a previous impairment loss, with remaining increase recognised in other comprehensive income and increase directly to equity in revaluation surplus. Any resulting decrease in the carrying amount of the property is initially charged in other comprehensive income against any previous recognised revaluation surplus, with any remaining decrease charged to profit or loss.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting purposes. Where an investment property undergoes a change in use, evidenced by commencement of development with a view to sale, the property is transferred to inventories. A property's deemed cost for subsequent accounting as inventories is its fair value at the date of change in use.

All costs directly associated with the purchase and construction of an investment property, and all subsequent capital expenditures for the development, which qualify 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.

2.6 Goodwill

Goodwill arises on the acquisition of subsidiaries, associates, and joint ventures and represents the excess of the cost of acquisition of subsidiary companies and associates 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 consolidated income statement when the results of such a review indicate that the carrying value of goodwill is impaired.

Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity disposed of.

2.7 Leases

Leases under the terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the leases' commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.

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 as described in Note 2.5. Where the Group has the use of an asset held under an operating lease, payments made under the lease are charged to the consolidated income statement on a straight line basis over the term of the lease. Prepayments for operating leases represent properties 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 investment properties.

2.8 Property, plant and equipment

All property, plant and equipment, except buildings and leasehold land improvements, are stated at cost less accumulated depreciation and impairment losses as set out in Note 2.14. 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 including golf course are revalued to fair value in accordance with the methods and processes as set out in Note 2.5. 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 income statement, in which case a credit to that extent is recognised in the consolidated income statement. Any deficit on revaluation is charged in the consolidated income statement 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.

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.

The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. The carrying values of any parts replaced as a result of such replacements are expensed at the time of replacement. All other costs associated with the maintenance of property, plant and equipment are recognised in the consolidated income statement as incurred.

Depreciation is charged to the consolidated income statement on a straight-line basis over the estimated useful lives of property, plant and equipment, and major components that are accounted for separately. The estimated useful lives are as follows:

Buildings and golf course 33 to 50 years

Machinery, plant and equipment 4 to 20 years

Furniture, fixtures and office equipment 3 to 5 years

Motor vehicles 5 to 10 years

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 leases are depreciated over the shorter of the estimated useful lives shown above and the terms of the leases.

2.9 Intangible assets

Intangible assets represent software. Intangible assets acquired separately are measured initially at cost. The cost of an intangible asset acquired in a business combination is the asset's fair value at the date of acquisition. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses. The carrying values of the assets are reviewed annually for impairment.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that they may be impaired. The amortisation period and method are reviewed at least at each financial year end. The estimated useful lives are as follows:

Software 5 years

2.10 Non-current assets (or disposal groups) and liabilities held for sale

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable at the reporting date. They are presented separately in the consolidated balance sheet. They 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. Assets held for sale are not subject to depreciation or amortisation subsequent to their classification as held for sale.

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.

2.11 Financial assets

(a) Classification

The Group classifies its financial assets in the following categories: at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

 (i) 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 designated by management to be carried at fair value through profit or loss at inception. Financial assets at fair value through profit or loss held by the Group include unlisted equity securities. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise they are classified as non-current.

Embedded within the ZDP Shares, as disclosed in Note 2.22, are call options which give VinaLand ZDP Limited early redemption rights. The Company does not consider the ZDP Shares and call options to be closely related. Therefore, the call options have been separated from the preference shares and are accounted for as derivatives.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period, which are classified as non-current assets. The Group's loans and receivables comprise 'trade and other receivables' and 'cash and cash equivalents' in the consolidated balance sheet.

(b) Recognition and measurement

Purchases or sales of financial assets are recognised on the trade-date, being the date on which the Group commits to purchase or sell the asset.

Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the consolidated income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Net changes in fair value of financial assets at fair value through profit or loss includes net unrealised gains in fair value of financial assets and net gains from realisation of financial assets during the year.

Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are presented in the consolidated income statement within 'net changes in fair value of financial assets at fair value through profit or loss' in the period in which they arise.

2.12 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

2.13 Prepayments for acquisitions of investments

These represent prepayments made by the Group to vendors for land compensation and other related costs including professional fees directly attributed to an investment property, 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 vendors completing certain performance conditions. 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 the appropriate investment accounts.

2.14 Impairment of assets

The Group's goodwill, operating lease prepayments, property, plant and equipment (except for buildings and leasehold land improvements), intangible assets, trade and other receivables, prepayments for acquisitions of investments, and interests in associates 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 a 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 indefinite lives 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 an 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, but only to the extent of the revaluation surplus for that same asset according to that policy. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use.

2.15 Inventories

The Group's inventories arise where there is a change in use of investment properties evidenced by the commencement of development with a view to sale, and the properties are reclassified as inventories at their deemed cost, which is the fair value at the date of reclassification. They are subsequently carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less costs to complete redevelopment and selling expenses.

2.16 Trade receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

2.17 Cash and cash equivalents

Cash and cash equivalents include cash in banks and on hand as well as short term highly liquid investments such as money market instruments and bank deposits with original maturity terms of not more than three months.

2.18 Share capital

Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares that have been issued. Additional paid-in capital includes any premiums received on the initial issuance of the share capital. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2.19 Ordinary shares acquired by the Company

Shares which are repurchased by the Company are cancelled and whilst the amount of the authorised share capital is not affected, the issued share capital is reduced accordingly.

If the cost of purchasing ordinary shares is less than the net asset value attributable to the shares acquired, the difference is transferred to the Company's equity reserve. If the cost of purchasing ordinary shares is greater than the net asset value of the shares, i) the amount of any equity reserve, additional paid-in capital account or fully paid share capital of the Company, and ii) any amount representing unrealised profits of the Company for the time being standing to the credit of any revaluation reserve maintained by the Company may be reduced by a sum not exceeding the amount by which the repurchase payment exceeds the net asset value of the shares.

2.20 Revaluation reserve

The revaluation reserve arises from the revaluation of buildings and leasehold land improvements including hotels and golf courses. The revaluation policy is consistent with the fair value policy as described in Note 3. Any increase in the carrying amount arising on revaluation is recognised in profit or loss to the extent that it reverses a provision for impairment loss, with any remaining increase recognised in other comprehensive income and shown as revaluation reserve in shareholders' equity. Decreases that offset previous increases of the same asset are

charged to other comprehensive income and debited against revaluation reserve directly in equity; all remaining decreases are charged to the profit or loss.

2.21 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.22 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the profit or loss over the period of the borrowings using the effective interest method.

On 17 December 2013, VinaLand ZDP Ltd., a wholly owned subsidiary of the Company, issued 15 million Zero Dividend Preference Shares ("the ZDP Shares"), with a gross redemption yield of 8% after three years. The shares were admitted to the standard listing segment of the Official List of the UK Listing Authority and trading on the London Stock Exchange's main market on 20 December 2013.

Each preference share has an issue price of £1 and a final capital entitlement of £1.26 at the end of its term. These shares are classified as liabilities and measured at amortised cost using the effective interest method.

2.23 Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.24 Current and deferred income tax

The tax expense for the year comprises current and deferred tax. Tax is recognised in the consolidated income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Current income tax assets and/or liabilities comprise claims from or obligations to fiscal authorities relating to the current or prior reporting periods that are not yet settled at the reporting date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate based on the taxable profit for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the consolidated income statement.

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. In addition, tax losses available to be carried

forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

However, deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and associates is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the reporting date. Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the consolidated income statement. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to other comprehensive income are charged or credited directly to other comprehensive income.

2.25 Provisions, contingent liabilities and contingent assets

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation and there is uncertainty about the timing or amount of the future expenditure require in settlement. Where there are a num-ber of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Long-term pro-vi-sions are discounted to their present values, where the time value of money is material.

All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate of the Group's management.

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, whose 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.

2.26 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and

represents amounts receivable for goods supplied, stated net of discounts, returns and value

added taxes. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group's activities, as described below.

(a) Sale of goods and revenues from hotel operations and other related services

Revenue from sale of goods is recognised in the consolidated income statement when the significant risks and rewards of ownership of goods have passed to the buyer. Revenue from hotel operations and other related services is recognised as and when the services are provided.

(b) Sales of real estate

Deposits received from buyers to reserve rights to buy houses are recognised as a liability on the consolidated balance sheet. These amounts are recorded as unearned revenue when the house's foundation is completed and a sales and purchase agreement is signed with the buyer. Unearned revenue is recorded as revenue when the construction is completed and the house is handed over to the buyer.

Revenue on sales of apartments is recognised when the Company has transferred to the buyer the usual risks and rewards of the ownership in a transaction that is in substance a sale and does not have a substantial continuing involvement with the property.

(c) Rental income

Rental income from investment property is recognised in the consolidated income statement on a straight-line basis over the term of the operating lease. Lease incentives granted are recognised as an integral part of the total rental income.

(d) Interest income

Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables is recognised using the original effective interest rate.

(e) Dividend income

Dividend income is recognised when the right to receive payment is established.

2.27 Related parties

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.

Enterprises and individuals that directly, or indirectly through one or more immediately, control, or are controlled by, or under common control with, the Company, including holding Company, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owing directly, or indirectly, an interest in the voting power of the Company that give them significant influence over the Company, key management personnel, including directors and officers of the Company and the close members of the family. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.

2.28 Realisation fee

In accordance with the Amended Management Agreement, the Investment Manager is entitled to receive a share of any realisations of the Group, up to a total amount equalling the previously accrued performance fee payable. The Investment Manager may receive its share of these realisations on a deal-by-deal basis throughout the Cash Return Period. In accordance with the Amended Management Agreement, the amount of performance fees due to the Investment Manager, is re-assessed at each reporting date, taking into account the future expected realisation strategy of the Company. The change in performance fees due to the Investment Manager during the period is included as "realisation fee (expense)/recovery" in the consolidated income statement and is further described in Note 35 to these consolidated financial statements. An expense results from an increase in the realisation fee liability to the Investment Manager, and a recovery of previously expensed realisation fees results from a decrease in the realisation fee liability to the Investment Manager at the reporting date.

The realisation fee liability is initially recognised at fair value, and subsequently measured based on the realisable value of the investments of the Group on which the realisation fee would be ultimately crystallised, which is estimated using the fair values of those investments at the reporting date. Realisation fees are paid when the relevant investments are sold and proceeds distributed to the Company's shareholders.

2.29 Earnings per share and net asset value per share

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.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding during the year to assume conversion of all dilutive potential ordinary shares.

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 reporting date. NAV is determined as total assets less total liabilities and non-controlling interests.

2.30 Derivative financial instruments and hedging activities

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either:

(a) Hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge);

(b) Hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge); or

(c) Hedges of a net investment in a foreign operation (net investment hedge).

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.

In the case of a derivative that qualifies for cash flow hedge, the effective portion of changes in its fair value is recognised in other comprehensive income. The gain or loss is removed from equity and included in profit or loss in the same period and periods during which the hedged items affects profit or loss. In the case of a derivatives that qualifies for fair value hedge, the effective portion of changes in its fair value is recognised in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedge risk.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity.

2.31 Segment reporting

An operating segment is a component of the Group:

· that engages in investment activities from which it may earn revenues and incur expenses;

· whose operating results are based on internal management reporting information that is regularly reviewed by the Investment Manager to make decisions about resources to be allocated to the segment and assess its performance; and

· for which discrete financial information is available.

3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

When preparing the consolidated financial statements, the Group undertakes a number of accounting judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and may not equal the estimated results. Information about significant judgements, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below.

3.1 Fair value of investment properties, buildings and leasehold land improvements

The investment properties, buildings and leasehold land improvements of the Group are stated at fair value in accordance with accounting policies 2.5 and 2.8. The fair values of investment properties, buildings and leasehold land improvements are based on valuations by independent professional valuers including CBRE, Savills, JLL, Colliers and HVS. These valuations are based on certain assumptions which are subject to uncertainty and might materially differ from the actual results. The estimated fair values provided by the independent professional valuers are used by the Valuation Committee as the primary basis for estimating each property's fair value for recommendation to the Board.

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 dates of those transactions;

(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;

(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; and

(v) recent compensation prices public by local authority at the province where the property is located.

As at 30 June 2015, if the discount rates used had been 1% higher/lower (30 June 2014: 1%), the total carrying values of the Group's investment properties and property, plant and equipment would have been USD15.8 million lower/USD17.4 million higher (30 June 2014: USD22.9 million lower/USD24.5 million higher).

3.2 Impairment

(a) 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.

(b) Prepayments for acquisitions of investments

The Group estimates the recoverable amounts of significant prepayments for acquisitions of investments either based on management's internal assessment or by engaging independent valuers in accordance with the valuation methods and processes as set out in Notes 2.5 and 3.1.

(c) Other assets

The Group's prepayments for acquisitions of investments, other assets and interests in associates are subject to impairment testing in accordance with Note 2.14.

3.3 Useful lives of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting date. Management assesses that the useful lives represent the expected utility of the assets to the Group. The carrying amounts are analysed in Notes 6 and 7.

3.4 Realisation fee

As of the date of the consolidated financial statements, management has assessed that the fair value of the realisation fee liability under the restructured terms is USD28.2 million (30 June 2014: USD27.3 million). Payment of any realisation fees is contingent on the Group realising their portfolio investments and making distributions to the shareholders of the Company. Given that the Group expects to substantially achieve the divestment objectives approved by shareholders it is reasonable to assume that the accrued realisation fees will be paid to the Investment Manager. 

4 SEGMENT ANALYSIS

In identifying its operating segments, management generally follows the Group's sectors of investment which are based on internal management reporting information for the Investment Manager's management, monitoring of investments and decision making. The operating segments by investment portfolio include commercial, residential and office buildings, hospitality, mixed-use segments and cash and deposits.

The activities undertaken by the commercial segment include the development and operation of investment properties. Apartments and villas properties which are developed for sale, land and office buildings are included in the residential and office buildings segment. The hospitality segment includes the development and operation of hotels and related services. The mixed-use segment includes multi-purpose projects. Strategic decisions are made on the basis of segment operating results.

Each of the operating segments are managed and monitored separately by the Investment Manager as each requires different resources and approaches. The Investment Manager assesses segment profit or loss using a measure of operating profit or loss from the investment assets. Although IFRS 8 requires measurement of segmental profit or loss, the majority of expenses are common to all segments and therefore cannot be individually allocated. There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss.

There is no measure of segment liabilities regularly reported to the Investment Manager; therefore, liabilities are not disclosed in the sector analyses.

Segment information can be analysed as follows for the reporting years:

(a) Consolidated income statement

(b) Consolidated balance sheet

(*) The amount presented in this table does not include the fair value of the call options which give the Group the rights to early redeem the ZDP shares. The Investment Manager does not manage the ZDP shares and call options under any particular segment.

(*) The amount presented in this table does not include the fair value of the call options which give the Group the rights to early redeem the ZDP shares. The Investment Manager does not manage the ZDP shares and call options under any particular segment.

5 INVESTMENT PROPERTIES

The Group's investment properties were revalued during the year by independent professionally qualified valuers who hold recognised relevant professional qualifications and have recent experience in the locations and categories of the investment properties valued.

Bank borrowings are secured by investment properties with a fair value of USD168.0 million

(30 June 2014: USD236.9 million). During the year, the Group capitalised borrowing costs amounting to USD4.9 million (year ended 30 June 2014: USD5.1 million) into investment properties.

At 30 June 2015, land use rights certificates have not been fully issued for certain portions of the Group's investment properties as final issuance is subject to the completion of a number of administrative steps required by local authorities and/or the settlement of any outstanding land taxes. In the Investment Manager's view, the lack of land use rights certificates does not have any material impact on the existence and valuation of the investment properties as land use rights over the land area for each project have been specifically granted under investment licences.

The Group's policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. All of the Group's investment properties are in Level 3 of the fair value hierarchy. There were no transfers between levels during the year (2014: none).

Information about fair value measurements using unobservable inputs (Level 3) is set out below:

As at 30 June 2015