VinaLand Limited Annual Report 2016

Transcription

1 VinaLand Limited

2 CONTENTS Section 1 Introduction Financial Highlights Chairman s Statement 1 2 Section 2 Investment Manager s Report Investment Environment Portfolio Performance Top Holdings VinaCapital Management Team Section 3 Reports and Financial Statements Board of Directors Report of the Directors Corporate Governance Statement Directors Remuneration Report Statement of Directors Responsibilities Independent Auditor s Report Consolidated Financial Statements and Notes Section 4 Annual General Meeting Notice of Annual General Meeting 135 Section 5 Additional Information Investing policy 137 Historical Financial Information 141 Overview and advisers 143 Front Cover Duplex Azura Project.

3 Financial Highlights - Updated 1 Vietnam s residential property market continued to improve in 2016 as available credit and economic conditions contributed to increased developments in step with consumer demand for residential properties. As such VinaLand Limited s ( VNL or the Company ) project divestments and residential sales improved from the previous year. The Company recorded a net asset value ( NAV ) of USD336.8 million, or USD0.86 per share as at 30 June 2016, a decline of 5.5 percent from a net asset value per share of USD0.91 a year before (however when taking into account the adjustment for the distribution of capital from the share premium account, an increase of 4.1 percent). VNL s share price at the end of the fiscal year was USD0.58, an increase of 12.4 percent (however when taking into account the adjustment for the distribution of capital from the share premium account, an increase of 29.0 percent) from a share price of USD0.52 at the end of June The Fund s share price to NAV discount narrowed to 32.2 percent as at 30 June Performancesummary FY2016 % Change FY2015 % Change FY2014 Number of assets NAV per share (USD) Share price (USD) Discount (%) Cash used for share buybacks (USD million) VNL has completed seventeen full divestments and two partial divestments since the November 2012 Extraordinary General Meeting, with a gross total sales value of USD312 million and net proceeds of approximately USD231 million, which were a combined 6.2 percent above NAV at the time each of the exits were completed. During the year ended 30 June 2016, VNL repurchased and cancelled 36.3 million ordinary shares. Since the onset of the share buyback program, which commenced in October 2011, to 30 June 2016, the Company has cancelled a total of million ordinary shares, representing 21.2 percent of the total shares in issue prior to the commencement of the share buyback program. FINANCIAL HIGHLIGHTS Net asset value at 30 June 2016 $336.8m NAV per share at 30 June 2016 $0.86 Increase 4.1%* *The figure is after the adjustment for the distribution of capital in June 2016.

4 Chairman s Statement - Updated 2 Dear Shareholders, After several years of a challenging business environment, Vietnam s GDP growth surpassed 6.0 percent in 2014, further increasing to 6.7 percent in 2015 and stabilising at around 6.0 percent by the end of the third quarter of Meanwhile inflation has remained below 4.0 percent, particularly low for such a high growth environment. The continuation of these stable macroeconomic conditions in Vietnam coupled with a real estate market that continued to recover during H and into 2016 has supported the positive direction of VinaLand (VNL). The country s banking sector continued to provide liquidity into the real estate market, which has fueled both new developments and enabled more buyers to purchase real estate properties. The growing confidence within the real estate market has enabled VinaLand (VNL) to continue its realisation program which commenced nearly four years ago, following approval by shareholders at the EGM held in November 2012 and extended by one year in November The current strategy consists of VNL not making any new investments and distributing surplus cash to shareholders. Since the 2012 EGM and up to 30 June 2016, VNL has completed seventeen full divestments and two partial divestments, with gross total sales value of USD312 million and net proceeds of approximately USD231 million, which, when combined, were 6.2 percent above NAV at the time of the closures. With these divestments completed and further disposals underway, the collection of exit proceeds will continue enabling further distributions to shareholders. Over this period the Company also reduced its debt from USD88 million (as at 31 December 2012) to USD73 million and returned USD86 million to shareholders. These distributions were executed through share buybacks (59%) and a capital reduction (41%). A key factor that has helped to create a stronger real estate market in Vietnam has been the significant improvement in liquidity across the property sector. This has provided developers with the opportunity to borrow from banks to acquire new development sites and commence new development projects, while home buyers have also been able to access mortgage lending during 2015 and Furthermore, FDI has increased as more foreign real estate companies have entered the Vietnam market over the past eighteen months, and this has resulted in an increase in demand for real estate land and properties. Should these conditions continue across the remainder of 2016 and 2017, VNL should be able to continue to realise projects within the portfolio in a timely manner and make further distributions to shareholders. Financial results summary CHAIRMAN S STATEMENT Michel Casselman Chairman The growing confidence in the real estate market has enabled VinaLand (VNL) to continue its realisation program which commenced nearly four years ago, following approval by shareholders at the EGM held in November 2012 and extended by one year in November The financial results of VNL for the fiscal year ended 30 June 2016 show VNL s audited NAV per share declined 5.5 percent, from USD0.91 as at 30 June 2015 to USD0.86 as at 30 June However when taking into account the adjustment for the 8.76 cent distribution of capital from the share premium account, the NAV per share increased by 4.1% year-on-year. The Company s share price closed FY 2016 at USD0.58 per share, an increase of 12.4% and again, when taking into account the adjustment for the distribution of capital increased by 29% from USD0.52 per share in FY As a result, VNL s share price to NAV discount narrowed to 32.2 percent from 43.2 percent atthe end offy During the financial year, VNL repurchased and cancelled 36.3 million ordinary shares, a 26.9% increase from the 28.6 million shares repurchased and cancelled in the previous fiscal year. As at 30 June 2016 the Company has cancelled million ordinary shares, representing 21.23% of the total shares in issue prior to the commencement of the share buyback program.

5 Chairman s Statement - Updated 3 Corporate actions On 25 September 2015, the Board of Directors appointed Mr. Tran Trong Kien as a new Independent Non-executive Director, replacing Mr. Daniel McDonald, who 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 is assisting VNL as it seeks to develop and realise its property portfolio. On 24 November 2015, the Company conducted its third Annual General Meeting. At the meeting two of the five standing Directors, Mr. Tran Trong Kien and Mr. Nicholas Brooke, were voted by shareholders for reappointment. During the current one year extension of the realisation strategy, both the Board and the Manager remain focused on the objectives set forth at the 2015 EGM, and with a number of divestments completed and further disposals underway, the collection of exit proceeds will continue enabling further distributions to shareholders. Another EGM and AGM will be held in Zurich on 18 November 2016 where shareholders will review the performance over the past year and vote upon a revised new strategy that will focus on further realisations and distribution of proceeds to shareholders. This new strategy will be similar in some respects to the current strategy in that the primary focus will be to realise projects and make distributions to shareholders and will require a special resolution for how the Company is to continue to be voted upon at this EGM. All shareholders are encouraged to participate in the vote on this important issue. Michel Casselman Chairman VinaLand Limited 6 October 2016

6 Investment Environment 4 The financial year in review Vietnam s macroeconomic stability over 2015 and into 2016 provided a solid foundation for good market performance, in stark contrast to the lacklustre and volatile performance in recent years. Domestic and regional events, volatility in global markets, and a weak currency were among the issues that dominated 2014 and early GDP growth remains strong although deceleration in 2016 expected These themes did not recur in the financial year ending 30 June In contrast, Vietnam was a standout performer in terms of economic growth, posting 6.7 percent GDP growth for 2015, among the highest in the region and in emerging markets more generally. Foreign direct investments ( FDI ) remained a structural driver of this growth as industrial production reached multi-year highs (9 percent year-on-year growth for 2015), with manufacturing and services sectors contributing the most to output. FDI commitments and disbursements topped USD23 billion and USD14 billion respectively for 2015 (up 13 percent and 17 percent year-on-year respectively). FDI industries remain an important source of employment, wealth creation and the rise of the middle-class in Vietnam, as the economy shifts from its traditional reliance on the agricultural sector towards manufacturing and exports of consumer goods. INVESTMENT MANAGER S REPORT INVESTMENT ENVIRONMENT Foreign Direct Investment (USDm) Admittedly, growth in the first half of 2016 slipped with GDP increasing only 5.5 percent, leaving the prospect of achieving the targeted growth of 6.7 percent set by the Vietnamese government for 2016 at risk. Several reasons explain this deceleration including continued weakness in demand from China and developed markets, and the lingering effects of El Niño that resulted in severe drought conditions affecting agricultural output. Consequently, we have lowered our in-house GDP forecast to approximately 6.0 percent for Registered Capital (LHS) Realized Capital (LHS) 3,000 2,500 2,000 Currency stability in 2016 a stark contrast to previous year 15 1,500 During the 2015 calendar year Vietnam experienced a sharp 5.0 percent currency devaluation, a result of the devaluation if the Chinese Yuan (RMB) during the second half of the year, which forced the State Bank of Vietnam (SBV) to devalue the Vietnam Dong (VND) in order to maintain export competitiveness , For the first 6 months of the 2016 calendar year, the VND devaluation reversed course and in fact the currency appreciated by 0.8 percent against the US Dollar. This was partly due to the government introducing at the start of the year a flexible exchange rate regime against a basket of eight global currencies that make up Vietnam s key trading partners, as well as maintaining a wide trading band that the free-market rate can trade against the official rate. These measures, along with improvement of FDI inflows and overseas remittances have provided a level of confidence in the local currency and contributed to a healthy FX reserve that some analysts estimate to be close to USD40 billion (or over three months of import coverage) F Source: General Statistics Office of Vietnam 0

7 F VinaLand Limited Investment Environment 5 Structural reforms in the banking sector support credit growth According to SBV estimates, the remaining non-performing loans (NPLs) on banks balance sheets by the end of 2015 had fallen to 3 percent, or USD6 billion of system-wide loans. It is important to put Vietnam s banking crisis into context: NPL ratios peaked at 17 percent or USD20 billion in 2013, compared to percent NPL ratios in countries impacted by the Asian financial crisis. Several Asian countries undertook strong measures to recapitalise, consolidate bad banks, and regulate their banking sector after the crisis. Real GDP 8.0% 7.0% Growth was supported by excessive credit Growth is now supported by stable credit growth and strong economic fundamentals Credit growth 50% 40% We have yet to see similar strong-willed action directed towards Vietnam s banking system. Instead, the kicking the can down the road approach to addressing the sector s structural problems has allowed banks here to progressively reduce their NPL s through a process of: 6.0% 30% 20% + Transferring the bad loans to the Vietnam Asset Management Company (VAMC) which operates as a mechanism to allow banks to buy time to write-off these bad loans over a fiveyear period. Towards the end of 2015, approximately USD10 billion of the estimated USD20 billion in bad loans have been sold to the VAMC; + Write-offs through loan loss provisions which has an immediate impact on bank s balance sheets; or + By simply reducing the NPL ratio through increasing the loan books. Credit growth reached 11 percent in 2013, 13 percent in 2014, and approximately 18 percent in % 4.0% Real GDP Growth Credit growth (%) 10% 0% There are early signs of progress, with the SBV attempting to implement structural reforms in 2015 and 2016 that aim to improve the capitalisation, risk management and liquidity of Vietnam s banks. Long-awaited regulations that compel banks to report more accurate NPL figures are now in place (Circular 09). A comprehensive set of regulations (Circular 36) set industry-standards on capital adequacy ratios and minimum absolute amounts of equity capital required by banks, as well as a more uniform way of measuring loan-deposit-ratios, and limits on bank cross-ownership stakes. The SBV hopes that consolidation will follow with the number of local banks reducing from 36 at present to 15, although no such timetable has been committed to. With efforts to clean up balance sheets underway, banks have focused their efforts over the past year on increasing loan growth as a way to improve their operating income. Encouragingly, credit growth has been directed towards capital-intensive businesses instead of towards nonproductive or non-core businesses at state enterprises, which tend to exacerbate the NPL issue. System-wide loan growth is being driven by demand for retail loans (for example, mortgages and consumer credit), the financing for construction of real estate projects, and the financing of infrastructure projects, all of which will be positive for the growth of the economy. VND ' Official Rate VCB Sell Free market Sell 1% upper band 1% lower band 21.0 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Source: State Bank of Vietnam

8 Portfolio Performance 6 Real estate Sector overview The major news item in the first half of 2016 was the British withdrawal from the European Union ( Brexit ). While many markets experienced a shock immediately following the UK s decision to leave the European Union, Vietnam has so far seen little impact. In terms of the currency, as of the end of June, USD/VND exchange rates remained stable at about 22,300 per dollar. Investment in real estate has remained steady post-brexit, and the expansion of real estate demand seen through the first half of this year is expected to continue in H Also of note in the first half of 2016 was the approval of revisions to Circular 36. This regulation, issued by the State Bank of Vietnam (SBV), will restrict lending over the medium-to-long-term to not exceed 50 percent of short term funding by 1 January 2017 and not exceed 40 percent by 1 January 2018, from the current limit of 60 percent. At the beginning of the new regulations, there were some concerns that the revised circular would reduce lending to the real estate market. However, as the revised circular is not expected to be implemented until January 2017, the market should have ample time to adjust. In addition, according to the SBV, non-performing loans have declined since 2012, while credit growth has been managed closely and loans to the real estate sector remain under control. The new circular is expected to prevent the property market from becoming another bubble in the coming years. INVESTMENT MANAGER S REPORT PORTFOLIO PERFORMANCE For much of the past two years, Vietnam s real estate market has been among the most visible signs of the economy s expansion. Residential property sales have been robust, construction of condominiums and office towers are underway in the major cities, and industrial parks are rising on their outskirts. It does indeed appear that real estate has recovered from the bubble that burst in The sector is fundamentally stronger thanks to the numerous reforms enacted over the past few years, an increase in bank liquidity and lending, all of which resulted in a remarkable level of activity in 2015, particularly in the residential sector. While 2016 has seen solid growth, the year is shaping up somewhat differently than Nevertheless, we believe the property market continues to hold value, though it may be more difficult to uncover, and certain segments bear monitoring. 25,000 20,000 15,000 Annual high-end residential property transactions 20,600 18,000 Residential property beginning to show signs of cooling The residential property market and the high-end condominium sector in particular has captured most of the attention when it comes to real estate in Vietnam, as massive projects rise across Hanoi and Ho Chi Minh City. In 2014, 7,530 condos were sold in Ho Chi Minh City, according to CBRE Vietnam. At the start of 2015, roughly 21,000 unsold units were on the market, while a number of new projects launched, putting even more inventory up for sale. But by mid-2015, the appetite for condos seemed insatiable, and buyers eagerly snapped up 20,600 available properties. In 2016 to date, absorption rates have continued to be improved, although CBRE expects that the third quarter will see a decline from the second quarter. 10,000 5, ,800 6,300 5,500 4,100 3,300 3,500 2, F Source: CBRE, VietCapital Securities

9 Portfolio Performance 7 It comes as no surprise, as higher levels of credit growth has fuelled growth in the sector, that competition has intensified in 2016, with more players in the market and a higher supply of high-end units. This year, an enormous amount of inventory is expected to come onto the market, with 45,000 units in Ho Chi Minh City more than the total sold in the city over the past three years and 12,000 units in Hanoi set to launch. At the end of the second quarter, unsold property in Hanoi and Ho Chi Minh City totalled nearly USD556 million. According to CBRE Vietnam, the majority of high-end condo buyers tend to be investors looking to rent out their units or speculators. Many of the more recent high-end launches have been in mega projects, ranging from 3,000 to 11,000 units. While these offer prime locations and a full range of amenities, these come at a cost, and there are signs that projects of this scale are losing their allure among buyers. The question is how many such buyers exist, given their strong purchasing over the past year, with most of the developments yet to be delivered. This high-end of the market may well have reached its capacity. Jones Lang LaSalle expects overall apartment prices to rise 5-7 percent per year over the next three years, a slight slowdown from the 9 percent they have seen in the past 18 months, and a far cry from the 106 percent in The Manager is of the view that there is excessive supply under construction that will outstrip demand for high rise residential units in With increasing prices, it is understandable that buyers at this level are looking for properties that feel more exclusive. Novaland, one of Vietnam s largest developers has made a name for itself for building more manageably-sized projects throughout Ho Chi Minh City at rates that are more affordable compared to other projects, and sales have continued to grow. While not as alluring as luxury, the sheer demand for affordable properties makes this the next growth segment of the market, particularly as incomes rise and urbanisation accelerates. Landed properties increasingly popular If mega projects are losing favor, landed properties such as villas and townhouses, are seeing steadily rising numbers of buyers. Offering larger homes and international designs, landed properties have seen increasing absorption rates. Developments from local developers such as Khang Dien House, have seen good sales within a short time after launch, given their affordable prices. While these developments tend to be a little further from the CBD, many of which are located in District 9, they offer attractive landscaping, amenities such as pools and clubhouses as well as a greater sense of privacy. We expect to see a number of new such projects in the mid-term, although the availability of prime land, such as clean riverfront sites or close to good infrastructure development, is becoming increasingly scarce. Retail growth still strong and gives rise to Vietnam s middle class As incomes have risen, so too have retail sales, which rose 9.5% in nominal terms during the first six months of The retail sector has seen a significant amount of M&A over the past 12 months, with Thai companies purchasing the Vietnam operations of Metro and Big C. Korea s Lotte and Japan s Aeon also continue to expand their retail networks in the country. Singapore s Keppeland recently opened the doors of its expanded Saigon Centre in the heart of District 1, with famed Japanese department store Takashimaya its anchor (a source of local pride as the store opened a branch in Vietnam before Thailand), and a full range of food and beverage options. Given its international design and construction standards and prime location, it is little surprise that the shopping centre was fully committed six months before opening.

10 Portfolio Performance 8 The same cannot necessarily be said for other western-style shopping centres. Earlier this year, Parkson, a Malaysian retailer which has operated in Vietnam for several years, closed its store in Ho Chi Minh City s District 7, following the closure of its store in Hanoi last year, leaving just a handful of locations. During the first quarter of this year, the company said its retail sales had plummeted more than 14% on a year-to-year basis. A few factors are at play in this sector. First, western-style malls and modern trade outlets are perceived as expensive. Second, the traditional habit of shopping at wet markets and local family owned shops has been hard to break. Third, some of the new shopping centres have been poorly designed and lack an alluring retail mix. The most successful tenants today are food & beverage operators whose margins tend to be slim and rely on foot traffic and centres currently being designed designate up to 65 percent of net leasing area to food and beverage ( F&B ) and entertainment Residential sales and project development During the fiscal year ending 30 June 2016, VNL recorded 149 sales and purchase agreements against 279 agreements signed last year. Although market conditions have improved over the past 12 months, this number was affected by full or partial divestments of project sites recorded in the period. VNL has minimal exposure to the condominium market with only two projects under development, the Ocean Suites (formally the Ocean Apartments) and the Azura Apartment Tower, both in Danang. The Ocean Apartments includes 46 modern-designed condominiums of 1-2 bedrooms ranging from 71 to 133 square meters in size. The development allows owner s access to all facilities within the Danang Beach Resort and an adjoining golf course. This building was fully sold out in Q and has been successfully handed over to buyers. In Q3 2015, the Ocean Apartments secured the Best Condo development in Vietnam award at the inaugural Vietnam Property Awards The Azura Apartment Tower project has continued to see sales activity over the past 12 months and to date, VNL has signed sales and purchase agreements for more than 96 percent of available units. In Q4 2015, Azura was awarded the Highly Commended Residential High Rise Development category at the 2015/16 Asia Pacific Property Awards. Future projects on the Capital Square site are now being reviewed given that the local real estate market has strengthened. The residential sales program also witnessed a sell-out of the all remaining K-series units at Ocean Villas with the final two sale and purchase contracts being secured in the second quarter of 2016.

11 Portfolio Performance 9 The Point is a small cluster of 40 villas on the Danang Golf Course site and was awarded the Best Residential Development in Vietnam award at the 2015/16 Asia Pacific International Property Awards and a Highly Commended award at the inaugural Vietnam Property Awards in Q At the end of Q2 2016, 90% of the project was sold out. The Golf project was divested during the year. Dai Phuoc Lotus produced 30 sales and purchase agreements that were secured during FY As at 30 June 2016, in total, 191 homes had been handed over to buyers. Additional facilities and amenities were completed to improve appearance and increase villa sales during the year with the target to achieve a complete sell-out of all units in Zone 5 within the next 12 to 18 months. VNL also continued to work with its JV partner to revise the overall 1:500 master plan for the site. This will result in value enhancement of the land without having to complete large scale infrastructure. At the My Gia Township project in Nha Trang city, some 28 land plot sale and purchase agreements were recorded in the relevant period. Infrastructure is being progressively completed, and interest in the project itself has increased. All available land lots located within Parcel 2 have now been allocated to buyers and only the completion of infrastructure is needed to collect payables. The key focus is now on negotiating to dispose of further sub-parcels within the project to local developers. The first transaction to be completed was sub-parcel 5, a wholesale land parcel without land improvements was divested during the year. The Fund will continue to promote and leverage the VinaLiving brand to assist in selling its residential projects comprising land, condominiums, and landed houses. For projects under development and planning stages, VNL continued to make progress on completing statutory requirements and obtaining necessary licenses to enhance the projects value for future divestment or development.

12 Portfolio Performance 10 Net asset value and share price The Company recorded a net asset value ( NAV ) of USD336.8 million, or USD0.86 per share as at 30 June 2016, a decline of 5.5 percent from a net asset value per share of USD0.91 a year before (however when taking into account the adjustment for the distribution of capital from the share premium account, an increase of 4.1 percent). VNL s share price at the end of the fiscal year was USD0.58, an increase of 12.4 percent (however when taking into account the adjustment for the distribution of capital from the share premium account, an increase of 29.0 percent) from a share price of USD0.52 at the end of June The Fund s share price to NAV discount narrowed to 32.2 percent as at 30 June 2016 compared to 43.2 percent a year ago. During the year ended 30 June 2016, VNL repurchased and cancelled 36.3 million ordinary shares. Since the onset of the share buyback program, which commenced in October 2011, to 30 June 2016, the Company has cancelled a total of million ordinary shares, representing 21.2 percent of the total shares in issue prior to the commencement of the share buyback program. Project divestments Since the Company s extraordinary general meeting (EGM) in 2012 and up to 30 June 2016, VNL has completed seventeen full divestments and two partial divestments. Seven full divestments completed during this financial year including; Project HAS, NPV Project, Marina Project, Century 21 Project, Project Golf, Project Pham Hung and Project HBT. plus the partial divestment of Parcel 5 My Gia. These seventeen full divestments and two partial divestments totaled a gross sale value of USD312 million and brought in net proceeds of approximately USD231 million which was 6.2 percent above NAV at exit. In addition, these disposals substantially reduced debt in the consolidated balance sheet of VNL as well as removing some future funding commitments. Debt financing On 17 December 2013, VNL issued, through its wholly owned subsidiary VinaLand ZDP Limited, 15 million zero dividend preference shares with a gross redemption yield of 8 percent. The ZDP shares have an issue price of 100 pence and a final capital entitle of 126 pence per ZDP share. The shares are listed on the London Stock Exchange plc ( LSE ) and are admitted to a standard listing on the Official List and trading on the LSE s main market for listed securities. The proceeds have been utilised to assist in refinancing the Company s project level debt facilities as they mature across its development portfolio, to fund potential capital investments in its project companies (as necessary) and for general working capital purposes. This issue has increased flexibility in financing and completion of some projects contributed additional working capital and diversified funding sources. The full redemption of these ZDP shares will be completed in December 2016.

13 Portfolio Performance 11 VNL s debt at the project level (bank debt) as at 30 June 2016 is 11.7 percent of NAV and debt at the fund level (ZDPs) was 9.2 percent of NAV. Throughout the financial year, VNL s debt at the project level (bank debt) decreased as a result of the project divestment. The Manager is continuing to monitor the debt market to secure more favourable terms and ensure sufficient funding for VNL s projects (at the project level, not the Fund level) over the next twelve months and beyond. Strategy Since the EGM on 21 November 2012, VNL has continued with the strategy of focusing on realisation of assets and no new investments have been made. Resources and efforts have been concentrated on proceeding with development of selected residential projects to enable divestment through the sale of residential products (land plots, villas, and apartments) and full or partial project divestments. For larger land projects, VNL will proceed with initial infrastructure where necessary and expedite completion of statutory requirements to facilitate the splitting of land into wholesale parcels for divestment to secondary developers.

14 Top Holdings at 30 June Investment Location Sector VNL ownership VOF Site area ownership (ha) NAV (USD mil) % of NAV 1 VinaSquare South Mixed Use 46.5% 15.5% % 2 Dai Phuoc Lotus South Township 54.0% 18.0% % Bank debt (VNL portion, USD mil) 1 - Projected future investments through 2016 (VNL portion, USD mil) Current status 0.8 Planning Development 3 Pavilion Square South Mixed Use 90.0% 0.0% % Planning 4 Times Square Hanoi North Mixed Use 65.0% 0.0% % 5 Aqua City South Township 40.0% 0.0% % 6 Trinity Garden South Residential 75.0% 25.0% % 7 Capital Square 3 Central Mixed Use 70.0% 23.3% % 8 Green Park Estate South Mixed Use 62.9% 33.9% % 9 Phu Hoi City South Residential 52.5% 17.5% % Total of Top Investments (USD mil) % Planning - Planning - Planning Development Planning - Land Banking INVESTMENT MANAGER S REPORT TOP HOLDINGS Remaining Investments (USD mil) % Total Portfolio (USD mil) % Bank debt: VNL s portion of current outstanding bank finance at the local investment (project) vehicle. 2 Projected future investments through to 2016: Projected remaining equity payments from VNL. These projections are subject to change should local authorities amend policies relating to licencing approvals and capital contributions or should debt be utilized instead of capital or should an investment partner not participate. Some of the projected future investments may not apply should VNL sell or choose not to proceed to develop the property. 3 Capital Square is broken down into three separate phases. The ownership percentages of this project reflect the total NAV of three phases, which are owned by VinaLand Limited and VinaCapital Vietnam Opportunity Fund Limited.

15 Top Holdings 13 VinaSquare VinaSquare was acquired in Q due to its prime location in District 5 of Ho Chi Minh City. The project is a mixed-use residential, retail, office, hotel and serviced apartment development. The investment license was obtained in Q and the 1:500 master plan was approved in Q The demolition of old factory buildings on the site was completed in 2011 and the site is now fully cleared. The amended investment license was issued in Q and the revised Land Use Right Certificate was obtained in Q The Manager is in discussions with a potential co-investor on this project. Project summary Sector Area Location Mixed-use (residential, retail, office, serviced apartment and hotel) 3.1ha District 5, Ho Chi Minh City History Acquired in Q Investment licence received in Q Investmentrationale 1:500 master plan approved in Q Revised investment license received in Q and LURC obtained in Q The project is well located in the high profile and high density District 5, also known as HCMC s Chinatown, excellent site for residential and commercial use buildings.

16 Top Holdings 14 Dai Phuoc Lotus Dai Phuoc Lotus Township was acquired due to its unique location on an island in a suburban region adjacent to Ho Chi Minh City. The residential resort-style environment, with transport by road and high speed boat accessing Ho Chi Minh City, will attract second homebuyers as well as young families. The development strategy is to develop the first of six zones of the ha site in conjunction with partial wholesale disposal to co-investors. The first phase of development commenced with Zone 5, comprising 332 villas. All infrastructure work to Zone 5 has been completed including Prosperity Lake adjacent to the display villas. Approval to sell land plots for Zone 5 was received from the Dong Nai People s Committee in 2015 with sales previously secured under Deposit Agreements immediately converted to Sale Purchase Agreements. The revision of the 1:500 Master Plan of Zone 4 was submitted and received the Dong Nai People s Committee approval in Q The revised investment license was issued in Q with the development schedule extended from 2016 to The revised Master Plan of the remaining zones will be processed on a staged basis with Zone 7 selected as the next area for updating. During Q2 2016, the project continued to see increased activity with new sale transactions and construction progress. The second quarter of 2016 has shown some improvements in the speed of lot and villa sales. As at 30 June 2016, 254 sales and purchase agreements have been signed out of 332 villas launched, with 191 villas handed over to buyers. Furthermore, 161 ownership titles have been issued to owners with a further 16 targeted to be completed by Q Given the extensive infrastructure in the area including key projects such as the completed Ho Chi Minh -Long Thanh-Dau Giay Highway, the upcoming construction of No.3 Ring Road (from 25B Province Road to Ho Chi Minh-Long Thanh-Dau Giay Highway) and the proposed construction of a series of highways for Q1 2017, the site s locality will attract more investor interest across a range of industries including real estate development. Project summary Sector Area Location Township (integrated residential) 198.5ha, Nhon Trach District, Dong Nai Province History Acquired in Q Investment license received in Q Sports and recreation centre, CBD link road, all Zone 5 infrastructure completed Construction and sales of Zone 5 villas underway Approval to sell land plots for Zone 5 approved Q Revised Master Plan of Zone 4 approved Q Working to revise 1:500 master plan for remaining zones Investmentrationale The site lies in the fast-growing eastern corridor adjacent to HCMC and will benefit from the completed transport infrastructure roll-out in Districts 2 and 9 and new airport

17 Top Holdings 15 Pavilion Square Pavilion Square is a freehold residential project located in District 1 of Ho Chi Minh City. The project was acquired in Q with the investment license obtained in the same year. The revised planning parameters, with a smaller retail area, were approved by the authorities in Q and the revised 1:500 master plan approval, which included additional resettlement apartments, was received in Q Site compensation is underway and approximately 84% completed at 30 June In conjunction with the expected completion of land compensation, the Manager is working with a potential co-investor on this project. Project summary Sector Area Location Mixed-use (residential and retail) 1.4ha District 1, Ho Chi Minh City History Acquired in Q Investment licence received in Q Revised 1:500 master plan approval received in Q Compensation 84% completed. Expected completion of compensation in Q Investmentrationale The site is well-located for mid to high end residential towers with modern facilities offering freehold residential units in the central District 1 of Ho Chi Minh City

18 Top Holdings 16 Times Square Hanoi Times Square is positioned in a strategic location opposite the National Convention and Exhibition Centre, which has hosted many national and regional events since opening in Additionally, the location is within a new urban development in western Hanoi, often considered as the city s future CBD. The project, acquired in 2007, is a mixed-use office, retail, hotel and serviced apartment development. Given its high-profile location, the project has considerable potential as a future landmark development. Project summary Sector Area Location History Investmentrationale Mixed-use (office, retail, hotel and serviced apartment) 4.0ha Cau Giay District, Hanoi Acquired in Q12007 Investment licence received Q and final revised Q :500 master plan approved Q :500 revised master plan underway A high profile site located in a strategic location in the heart of the city s future second CBD, opposite National Convention and Exhibition Centre.

19 Top Holdings 17 Aqua City AquaCity was purchased in 2006 as a strategic acquisition along the North East corridor leading to the new Long Thanh International Airport in Dong Nai. The site is located on the Dong Nai River, approximately 45 minutes from the centre of Ho Chi Minh City. In 2012, the project received its 1:500 master plan approval. The development master plan includes both residential (apartment, townhouse and villa) and commercial use. Due to the limited availability of land in the CBD, potential buyers are continuing to buy properties in non-cbd locations, particularly in locations with improving infrastructure and public facilities. Since acquisition, the infrastructure systems and social facilities within the site s locality have improved significantly. In addition, surrounding infrastructure developments such as the completed HCMC Long Thanh Dau Giay highway, the proposed construction of the metro line and Long Thanh International Airport, will provide convenient access between the CBD, surrounding districts, and suburban areas, and will attract investor interest in the site s location. Project summary Sector Area Location Township (commercial and residential use) ha Bien Hoa City, Dong Nai Province History Acquired in :2000 master plan approved Q :500 master plan approved Q Investmentrationale A riverfront township bordering on District 9 of HCMC. The project will provide affordable mass housing units in a modern living township to serve the extended catchment of HCMC s north east area.

20 Top Holdings 18 Trinity Garden Trinity Garden was acquired in The 1:500 master plan for the project was approved in 2007, while infrastructure on site is partially completed. Following the recovery of the real estate market in , there is now a shortage of land available for residential low-rise development in the city s suburban districts, recent developments have tended to concentrate in areas such as District 2 and 9, and the site s location has seen a marked increase in development activity. VNL completed all documentation with the local partner relating to the development of remaining infrastructure in H The construction of further infrastructure is now underway and will create further options for VNL. Project summary Sector Area Location Residential (including school) 33.7ha, estimated GFA 343,058 sqm District 9, Ho Chi Minh City History Acquired in Q :500 master plan approved Q Site cleared and fully compensated Investmentrationale Sound long-term demand for mid-range, landed residential housing in District 9.

21 Top Holdings 19 Capital Square Capital Square Danang was acquired in 2006 given its central, riverfront location in the fast growing city of Danang. In 2009, the project broke ground on the first residential tower, Azura, which was completed in The restructuring process to split the 9ha site into three separate investment licenses was successfully completed in 2012, allowing greater flexibility in development or divestment. In 2015 VNL divested the remaining Phase 1 land to a retail mall developer, and the construction of a new shopping mall was completed and opened officially in Q Azura Tower was 98% sold out as at 30 June 2016 (222 sold out of 225 units), with 94% handed over to buyers. The Manager expects to sell down all remaining unsold stock by Q Phases 2 and 3 of the project consist of an approved master plan permitting residential apartment towers and connecting public spaces. The Land Use Right Certificates (LURCs) were issued for Phase 2 in Q Having been selected to host the 25th Asia-Pacific Economic Cooperation (APEC) Summit November 2017, a series of major infrastructure projects in Danang have begun including upgrades to Danang International Airport. Given Danang s rapidly developing infrastructure and the increased deal activity in surrounding areas, the Capital Square Project will likely continue to attract attention from local and foreign developers and investors. Project summary Sector Area Location History Investmentrationale Mixed-use (commercial and residential) 6.6 ha Son Tra District, Danang City Acquired in Q32006 Investment licence received in Q The restructuring process to split the site into three separate investment licenses was successfully completed Q Azura residential apartment tower (a part of Phase 1) completed in 2012, and currently 98% apartments sold In 2015, VNL divested the rest of Phase 1 to a retail mall developer Phase 2 received the Land Use Right Certificates Q A prime site located in the city centre of Danang City, with direct frontage to the Han River, 5 minutes drive to East Sea beach.

22 Top Holdings 20 Green Park Estate The Green Park Estate project site was acquired in 2006 given its strategic location in a densely populated suburb adjacent to Ho Chi Minh City s Tan Son Nhat International Airport and only 10km from the city s CBD. This 15.7ha site has excellent exposure with over 300 metres of frontage onto Truong Chinh Street, a major arterial road with a future Metro Rail Transit (MRT) route running alongside. The 19km Metro Line No. 2 (An Suong Thu Thiem), which is approximately 1km east of the site, broke ground and is expected to be operating by Site clearance and relocation work are in progress. Vacant possession is expected byq Project summary Sector Area Location Residential & commercial (proposed) 15.7 ha Tan Phu District, Ho Chi Minh City History Acquired in 2006 Currently used as textile factories and warehouses Site clearance and relocation work in progress Investmentrationale Strategically located in a densely populated suburb near HCMC s Tan Son Nhat InternationalAirport

23 Top Holdings 21 Phu Hoi Project The Phu Hoi Project is located at the centre of Nhon Trach City, Dong Nai Province, approximately 27km east of Ho Chi Minh City s CBD and 15km from the proposed Long Thanh International Airport. A development site with total land area of approximately 83.94ha, the project is set to become a new residential urban area with supporting commercial and public amenities. The revised 1:500 master plan was received in early 2012 and the latest Investment License was amended in Q Currently, the site is accessible via an internal road from Nguyen Huu Canh Street, one of the main roads in the city of Nhon Trach. According to Nhon Trach s master plan, by 2020, the site will be well located along the Provincial Road 25C (Nguyen Ai Quoc Street) and opposite the city s new administrative centre. Provincial Road 25C is planned to extend 120m and connect the site s locality to the proposed Long Thanh International Airport. The completion of Provincial Road 25C will significantly improve access to the site. Project summary Sector Area Location Residential use 83.9ha Nhon Trach District, Dong Nai Province History Original master plan 1:500 approved 2004 Joint Venture contract signed in 2008 Investment license first issuance in Q LURs were received in 2009 and 2010 Approval of amended master plan 1:500 in Q Site cleared and fully compensated. Investmentrationale A new urban zone in the southern key economic area located between three major cities including Ho Chi Minh City, Bien Hoa and Vung Tau.

24 Management Team 22 Don Lam Chief Executive Officer, VinaCapital Don Lam, a founding partner of VinaCapital, has more than 20 years ofexperience in Vietnam. He has overseen VinaCapital s growth from manager of a single USD10 million fund in 2003 into a leading investment management and real estate development firm in Southeast Asia, with a diversified portfolio of USD1.5 billion in assets under management. Before founding VinaCapital, Mr. Lam was a partner at PricewaterhouseCoopers (Vietnam), where he led the corporate finance and management consulting practices throughout the Indochina region. Additionally, Mr. Lam set up the VinaCapital Foundation whose mission is to empower the children and youth of Vietnam by providing opportunities for growth through health and education projects. He also is the Vice-Chairman, Global Agenda Council on ASEAN for the World Economic Forum. He has a degree in Commerce and Political Science from the University of Toronto, and is a member of the Institute of Chartered Accountants of Canada. He is a Certified Public Accountant and holds a Securities License in Vietnam. Brook Taylor Chief Operating Officer, VinaCapital Brook Taylor has more than 20 years of management experience, including eight years as a senior partner with major accounting firms. Previously, Brook was deputy managing partner of Deloitte in Vietnam and head of the firm s audit practice. He was also managing partner of Arthur Andersen Vietnam and a senior audit partner at KPMG. Brook has lived and worked in Vietnam since Brook s expertise spans a broad range of management and finance areas including accounting, business planning, audit, corporate finance, taxation, and IT systems risk management. He holds an MBA from INSEAD, a B.A. in Commerce and Administration from Victoria University of Wellington, New Zealand, and is a member of the New Zealand Institute of Chartered Accountants. VINACAPITAL MANAGEMENT TEAM

25 Management Team 23 David Blackhall Managing Director, VinaCapital David Blackhall has more than 30 years experience in real estate, development, design and construction, with the last 20 years in real estate fund and asset management. David has worked in the Vietnam property sector for the past ten years, the majority of this time with VinaCapital. He holds the positions of Managing Director VinaCapital Real Estate, and Fund Manager for VinaLand (VNL). Prior to relocating to Southeast Asia in 2006, David worked in Sydney for 12 years with Deutsche Bank RREEF Funds Management Ltd, one of Australia s largest property fund managers. Earlier in his career, experience included engineering design and project management for large-scale power generation projects in Australia. He holds a Master s Degree in Design Science from the University of Sydney, Australia, as well as qualifications in Business Real Estate Management, Applied Science (Building) and Civil Engineering, and is a Member of the Royal Institution of Chartered Surveyors (MRICS). Anthony House Deputy Managing Director of VinaCapital Real Estate Anthony House has over 26 years experience in both the real estate development and construction management sectors, of which the past nine years have been spent working in Vietnam. Prior to joining VinaCapital, he worked for Watpac Limited, a leading publicly listed Australian company, specializing in property development and construction. Anthony s development experience encompasses a range of retail, commercial office, low and high-rise residential projects. Anthony holds a Post Graduate Diploma in Project Management and a Bachelor of Applied Science degree in Construction Management, both from the Queensland University of Technology, Australia. Oai Nguyen Deputy Managing Director of VinaCapital Real Estate Oai Nguyen has 19 years experience in real estate investment funds and asset management. Oai had been with Indochina Land, the second largest real estate investment manager in Vietnam for nine years prior to joining VinaCapital in July At IndoChina Land, he was Chief Investment Officer and subsequently Managing Director. Prior to that, he spent ten years with Lend Lease Real Estate Investment in the US where he was a fund controller for the Value Enhancement Funds. Oai holds a Bachelor Degree in Accounting from Georgia State University and he is a Certified Public Accountant in the United States.

26 Board ofdirectors 24 Michel Casselman Non-executive Chairman (Independent) Michel Joris Carline Casselman, who isresident in Belgium, is the CEO of PMV, the investment company of the Flemish region, which has invested 880 million in early stage companies, infrastructure and real estate across Flanders. Before joining PMV he was a founding partner of AeroManS, managing private equity investments in aviation assets, and served as Partner and CFO at Leeward, a private equity asset manager investing in SMEs in the Benelux and northern France. Prior to that, he worked for 13 years for Petercam SA, where he started in 1998 as a financial analyst and had several roles with the company. His last position was as Director of Petercam Services responsible for private equity investments. In this role he managed or directed investments in aviation and renewable energy, as well as investments in listed private equity funds in Asia (China, India and Vietnam). Mr. Casselman has over 20 years of experience, including five years at a technology firm, now part of Oracle, where he started as a consultant and left as Director of Consulting Services. He holds two Masters degrees, in Mechanical Engineering and Financial Economics, from the University of Leuven in Belgium. Nicholas Allen Non-executive Director (Independent) Nicholas Charles Allen, who is resident in Hong Kong, is an independent non-executive director of CLP Holdings Ltd, Lenovo Group Ltd, and Hysan Development Company Ltd. He is a chairman or member of the audit committee for all three companies. Mr. Allen joined Coopers & Lybrand in 1977, coming to Hong Kong with that firm in In 1998 Coopers & Lybrand merged to form PricewaterhouseCoopers, and Mr. Allen worked at PwC until his retirement in During his 24 years with PwC in Hong Kong, Mr. Allen was the partner-in-charge of the Consumer and Industrial Products Group, the Corporate Finance and Recovery Practice division, and the Hong Kong and China Assurance Practice. He is a fellow of the Chartered Accountants in England and Wales and a member of the Hong Kong Institute of Certified Public Accountants. Mr. Allen has a B.A. from Manchester University in the United Kingdom. Nicholas Brooke Non-executive Director (Independent) Mr. Brooke, who is resident in Hong Kong, is the Chairman of Professional Property Services Limited, a Hong Kong based real estate consultancy that provides a select range of advisory services across the Asia Pacific Region. He is also the Chairman of the Hong Kong Harbourfront Commission and was, until 2014, the Chairman of the Hong Kong Science and Technology Parks Corporation. Mr. Brooke is a former President of the Royal Institution of Chartered Surveyors and a recognised authority on land administration and planning matters. He also sits as a non-executive director on the boards of a number of public companies including Top Spring International, one of China s leading residential developers. Mr. Brooke was awarded the Silver Bauhinia Star in 2012 in recognition of his services to the Hong Kong community. He holds a degree in Estate Management and a Post Graduate Diploma in Business Administration from the London. University of BOARD OF DIRECTORS

27 Board ofdirectors 25 Charles Isaac Non-executive Director (Independent) Charles John Walter Isaac, who is resident in Switzerland, is Managing Partner and Fund Manager at B&I Capital AG which he co-founded in B&I Capital AG manages funds that invest in listed Asian real estate securities. Previously, he was Senior Fund Manager and member of Senior Management at Swisscanto Asset Management, and at Paribas Asia Equity (UK) Ltd. He has over 20 years experience in fund management and real estate investment, and started his career at the private client division at Merrill Lynch in London. Mr. Isaac is a CFA charter holder, holds an MSc in Investment Management from City University Business School, and an undergraduate degree in psychology from the University of Newcastle upon Tyne. Tran Trong Kien Non-executive Director (Independent) Tran Trong Kien, who is resident in Vietnam, became a Director on 25 September Mr. Tran currently serves as the Chairman of Thien Minh Group (TMG), which he founded in 1994 as Buffalo Tours. With assets across its three divisions of travel, hospitality and online, TMG is one of the region s top integrated tourism operators. Mr. Tran brings 20 years of local and regional experience in both property investments and commercial enterprises to VinaLand. He has also applied his entrepreneurial mind to financial services as an independent board member of the Asia Commercial Bank, and has been involved in charitable work with the Pearl S. Buck Foundation. Mr. Tran is a qualified Medical Doctor, has a Bachelor of Arts from Hanoi Foreign Language University, and holds an MBA from Hawaii University in America.