BRIGHTEN
LIVES
ANNUAL REPORT 2017
ABBREVIATION AGM
Annual General Meeting of Shareholders
KPI
Key performance indicator
ASEAN
Association of Southeast Asian Nations
M&A
Mergers and Acquisitions
BOD
Board of Directors
N.A
No applicable
BOM
Board of Management
NPL
Non-performing loan
CAGR
Compound annual growth rate
NVL
Stock ticker of Novaland Group
CEO
Chief Executive Officer
PB
Price-to-Book
CMIR
Capital markets and Investor relations
PE
Price-to-Earnings
CSR
Corporate social responsibility
PMS
Performance management system
EBIT
Earnings before interest and tax
PwC
PricewaterhouseCoopers Vietnam
EBITDA
Earnings before interest, taxes, depreciation and amortization
Q
Quarter
EDGE
Excellence In Design For Greater Efficiencies
QA
Quality assurance
EGM
Extraordinary general meeting
ROA
Return on assets
ERP
Enterprise resource planning
ROE
Return on equity
ESOP
Employee Stock Ownership Plan
ROS
Return on sales
FDI
Foreign direct investment
SAP
System application programing
GDP
Gross domestic product
SB
Supervisory Board
Ha
Hectare
SBV
State Bank of Vietnam
HCMC
Ho Chi Minh City
SME
Small and medium enterprise
HR
Human resource
SPA
Sales and purchase agreement
HSX
Ho Chi Minh City Stock Exchange
Sqm
Square meter
IA
Internal audit
SSC
State Securities Commission of Vietnam
IFC
International Finance Corporation
USD
US Dollar
IT
Information technology
VND
Vietnam Dong
JSC
Joint stock company
VSD
Vietnam Securities Depository
Contents
Effectiveness
ANNUAL REPORT 2017
BUSINESS OPERATIONS IN 2017
NOVALAND GROUP’S OVERVIEW
Commitment to accuracy and truthfulness of 2017 Annual Report United Nations 17 Sustainable Development Goals For a bright tomorrow Corporate profile History of establishment and development Key figures in 2017 Financial highlights in 2017 Overview of the Financials 2014 - 2017 Reconciliation profit and loss between VAS and IFRS Year in brief 2017 Awards and Accolades Projects Portfolio Projects handed over in 2017
04 06 10 14 16 18 20 21 22 26 28 32
MESSAGES FROM THE BOARD OF MANAGEMENT
44 46 48 50
Professionalism CORPORATE GOVERNANCE ACTIVITIES
Code of Corporate Governance Introduction of the Board of Directors Corporate governance activities 2017 Board of Directors’ Report Independent Member Of The Board Of Directors Report Audit Committee Report Internal Audit Department under The Board Audit Committee Reports by Committees under the Board of Directors Asean Corporate Scorecard Risk Management Law Compliance Investor relations and capital market activities
Sharing from customers Sharing from partners Sharing from staffs Business model Novaland Group – SWOT analysis Strategic plan and future orientations Introduction of the Board of Management The BOM’s report M&A activities - Continue with the land acquisition strategy Subsidiaries and associates activities Quality assurance - For a solid belief Human Resources and Training The foundation for success Invest in technology The leverage for business
122 126 127 128 133 134 136 137 142 144 148 150 154
Humanities SUSTAINABLE DEVELOPMENT RESPONSIBLE INVESTMENT
Integrity Message from the Chairman of the Board Interview with the CEO Message toward Community & Society Message toward Technology & Environment
54 60 62 72 74 76 80 84 86 102 106 108
Summary of Sustainability report
158
Strength FINANCIAL STATEMENTS
Consolidated financial statements 2017 (VAS) 180 Summary of the audited separate financial statements 2017 (VAS) 265 Summary of the audited consolidated financial statements under IFRS 272 Contact information and Operation network
278
COMMITMENT On the journey of 25 years, with passion, focus and consistency to reach the target, Novaland has become a reputable real estate developer with various products including: apartments, villas, townhouses, commercial buildings, office buildings, hospitality, etc. in strategic locations of Ho Chi Minh City and other provinces.
TO ACCURACY AND TRUTHFULNESS OF 2017 ANNUAL REPORT
INTEGRITY
EFFECTIVENESS
PROFESSIONALISM
4
BRIGHTEN LIVES
“Integrity - Effectiveness - Professionalism” are core values that Novaland Group follows with determination, which are the guideline for all activities of all Group’s members. In line with the achievements of 2016 Annual Report, the Integrated Report format is kept for 2017 Annual Report, with Sustainable Development Report being included in the Annual Report and also published as a separate report. Besides meeting the requirements of Circular 155/2015 / TT-BTC guideline for information disclosure on Securities Market, the 2017 Annual Report has additional contents in line with IIRC international reporting Standards. Comparative and analytical methods in accordance with the Corporate Governance Principles of OECD. The Transparency Scorecard on the ASEAN Corporate Governance Scorecard. Especially, for Sustainable Development Report, Novaland applied the latest GRI Reporting Guide - the latest version of G4 Standards as a performance benchmark.
Aiming to provide Shareholders, Investors and other Stakeholders with honestly, timely, completely and transparently information, We commit: 1
2
3
The contents in 2017 Annual Report meet the requirements of local information disclosure Regulations, with a reference to higher standards of international practices;
All information and data published in 2017 Annual Report, including the integrated Sustainable Development Report short version, are strictly reviewed to ensure the accuracy and truthfulness;
All information and data in the 2017 Annual Report are consistent with the 2017 audited Financial Statements by the independent auditing firm PricewaterhouseCoopers Vietnam.
Leaders of Novaland Group strive to improve 2017 Annual Report to reflect accurately and transparently the information on development strategies, corporate governance, operation performance, financial health including issues that were not implemented in the year, etc. in order to ensure the best benefits of Shareholders, Investors and Stakeholders. Novaland Group
Novaland Group’s Overview
5
17
United Nations Sustainable Development Goals
FOR A BRIGHT TOMORROW
At Novaland, we strive to work and serve, together we keep moving forward with 17 Sustainable Development Goals of the United Nations.
6
1
NO POVERTY Supporting the funds of the poor, performing typical poverty reduction activities as: “For the poor” Fund by Vietnamese Fatherland Front Committee of District 2 and HCMC; Accompanying the “ Gratitude and Love” Program of District 3; Organizing Tet Programme for the poor in HCMC and Dong Thap Province.
2
ZERO HUNGER Fundraising to support fellows-citizen in need: “Giving cattle” Programme to the poor farmers in Long An Province; Carrying out relief activities in Quang Nam Province for the people who were affected by Storm No. 12.
3
GOOD HEALTH AND WELL-BEING Supporting the improvement of community health, contributing to the happiness of every member of the community through activities: Holding the program “Connection with love” which fundraising for the free surgeries on 500 poor children with congenital heart disease; Sponsoring heart and eye surgeries for the South West Poverty Relief Association; Organizing a free heart surgery program for poor patients; Sponsoring in building the Rural Cultural Center in Dong Thap Province. All employees and their relatives received health care in line with: Policy of regular health care for all employees; 24/24 insurance for staffs with high standard medical services; Novacare Health Insurance for management’s families; Travel support program from the supervisors level.
BRIGHTEN LIVES
4
QUALITY EDUCATION Implementing educational support programmes: Annually awarding the “Teacher Nhe” scholarship in Dong Thap Province; Accompanying the Nguyen Huu Tho scholarship program of the Vietnam Fatherland Front Committee of HCMC; Accompanying the STF - Pham Phu Thu scholarship fund; Sponsoring in building Sao Bien Kindergarten School in Quang Nam Province; Giving scholarships to students in difficult circumstances; Supporting in training the staffs, improving the quality of the management and individual development programmes at Novagroup Leadership Center.
5
GENDER EQUALITY, EMPOWERMENT OF WOMEN AND GIRLS Implementing gender equality practices, in particular: Almost 37% of the Group’s employees are women; Women account for 34% of senior Managers and strategic Leaders positions; Highlighting respect, gender equality and women rights through welfare policies for female employees.
6
CLEAN WATER AND SANITATION Effectively use of water resource in residential areas: Using automatic tree watering system; Monitoring monthly water consumption (swimming pool, watering plants, etc.) to adjust if necessary; Regularly checking to ensure water supplied to the residential area is clean water; Applying water recycling system along with the operating large wastewater treatment system and using recycled water where possible in some projects.
7
AFFORDABLE AND CLEAN ENERGY Using and supporting the use of energy with reasonable price and reliable on the energy resource: Electricity: Using LED for projects, facilitating residents to make direct payment, making sure the prices are in accordance with state Regulations, without additional service charge; Water: Ensuring residents pay lower water tariff than directly purchased from suppliers as there is a discount for wholesales buying; Reminding residents to register for water quota to be entitled to the lowest unit price level within the quota; Gas: Signing contracts with suppliers who can trace the origin, ensuring a unit price equal or lower than the market.
8
DECENT WORK AND ECONOMIC GROWTH Contributing to the economic development: Creating more than 1,500 direct jobs and thousands of indirect employment opportunities; Supporting for the infrastructure construction: Building welfare bridges in poor communes and Districts in Dong Thap and Long An Provinces; Accompanying the program “CEO’s key to success”, making consultation on business persistent problems.
Novaland Group’s Overview
7
17
United Nations Sustainable Development Goals
FOR A BRIGHT TOMORROW
8
9
BUILDING STRONG INFRASTRUCTURE, SUSTAINABLE INDUSTRIALIZATION, ENCOURAGING INNOVATION AND CREATIVITY Contributing to the improvement of clean and friendly environmental technology: Applying scientific research results, improving clean and friendly environmental technology integrated into design and construction; Carrying out trial use of Eurowall non-baked panels which will be rolled out for a number of future projects; Developing plans to apply clean technologies as renewable energy (photovoltaic solar cells).
10
REDUCED INEQUALITY Supporting and caring for people with disabilities, contributing to social equality: Supporting people with disabilities: Joining as the Gold Sponsor of the 26th Charity fund of Operation Smile, supporting the operation of 400 children with cleft lip or cleft palate; Providing physical and mental support for the disabled people in Social Protection Center of Can Tho and Lam Dong Provinces, Da Lat Blind Association, shelters for children with disabilities, orphans in District 3, District 10, District 12, Binh Thanh District and Tan Phu District of HCMC; Giving Mid-autumn presents to Children’s Shelters in HCMC.
11
SUSTAINABLE CITIES AND COMMUNITIES Contributing to creating a safe, flexible and sustainable living environment: Disaster relief for the Central fellow-citizen in Quang Nam Province and Phu Yen Province; Donation for disaster prevention fund in Central Vietnam; Accompanying the “Peace Story” program of Tuoi Tre Newspaper and the Vietnam Student Association; Having been constructing the residential areas with modern and full facilities.
12
RESPONSIBLE CONSUMPTION AND PRODUCTION Contributing to enhancement of social, environmental and community responsibility: Conducting supplier survey with labor safety, environmental impact, responsible production criteria when their products reach Novaland; Implementing environmental impact assessment in all projects; Supervising quality inspection during construction to ensure safety for workers; Providing clear regulations for every contractor on environmental safety measures during the construction; Garbage from residential areas is classified, ensuring safety and environmental protection; Signing contract with providers of waste and hazardous waste treatment services.
BRIGHTEN LIVES
13
CLIMATE ACTION Ensuring Environmental Protection by: Using high quality of glass with careful calculation for buildings to limit the greenhouse effect, contributing to reducing emission; There are plans to use solar panels for public lighting in projects to help reduce the greenhouse effect; Designing and developing processes that meet Green Building Certification - IFC EDGE Green Building Certification system for Orchard Garden Project.
14 15
OCEANIC RESOURCES AND ECOSYSTEMS ON EARTH Protecting natural resources of Vietnam through: Accompanying with the “For our seas and islands - For the front line of our motherland” Fund by Vietnam Fatherland Front Committee of HCMC; Sponsoring the facilities for My Hung Border Guard Post, Cao Bang Province; Garbage collection programs at Ho Tram beach and Can Tho City.
16
PEACE AND JUSTICE STRONG INSTITUTIONS Establishing an effective, responsible and comprehensive Corporate Governance mechanism, which brought us recognition in the following awards: Top 6 Annual Reports, Top 10 best content on Corporate Governance, Top 10 Sustainable Development Reports; Top 50 best listed Companies in Vietnam; Enterprises with excellent human resource development strategies; Business with influence on the community; Special Certificate of Corporate Social Responsibility.
17
PARTNERSHIPS TO ACHIEVE THE GOAL Strengthening the implementation and revitalizing global partners for a sustainable development: Actively joining in the Green Building Forum: Vietnam Green Building Council (VGBC); Winner of the prestigious Asia Responsible Entrepreneurship Awards 2017 (AREA) with the companionship of relevant Related Parties.
Novaland Group’s Overview
9
Corporate profile
NO VA LAND INVESTMENT GROUP CORPORATION (NOVALAND GROUP) Head office: Novaland Office Building, 65 Nguyen Du, Ben Nghe Ward, Dist. 1, HCMC Telephone: (84) 906 353 838 Hotline: 1900 636 666 Website: www.novaland.com.vn Charter capital
VND 6,496,587,880,000
Owner’s equity
VND 13,256,390,503,420
Ticker
NVL
Independent auditor
PricewaterhouseCoopers Vietnam Co., Ltd
Business registration certificate No.
0301444753 Trading in real properties, land use rights under owner’s possession, user’s title or lease’s right with industry code 6810 under VSIC (governed by Article 10.1 of the Law on Property Trading).
Business lines
40
+
PROJECTS
10
BRIGHTEN LIVES
13,256
BILLION VND
OWNER’S EQUITY
Novaland is now a reputable property developer brand favored by customers with the diversify products HCMC’s in key locations. Novaland Group is the second largest property company listed on the Vietnam Stock Exchange with a market capitalization about USD 2 billion. According to a survey and publication from Euromoney, Novaland brand is among Vietnam’s top 5 property investors and developers and top 2 residential property developers.
A view from Lakeview City (Dist. 2, HCMC) - Photo by Tran Thi Ngoc Dung Novaland Group’s Overview
11
Corporate profile
VISION To be a highly regarded world-class real estate group, with strong and sustainable growth, contributing to a happy and prosperous society.
12
BRIGHTEN LIVES
MISSION
CORE VALUES
Our projects not only focus on square meters of construction, but we design and create advanced communities with modern lifestyle and facilities, thereby delivering a consistently higher standard of living for us and for society.
INTEGRITY
NVL EFFECTIVENESS
PROFESSIONALISM
CULTURE AT NOVALAND GROUP
CODE OF CONDUCT
We always aim for resonance development where we operate and share the success with millions of customers, shareholders, investors, suppliers, partners, employees and the social community. Novaland is committed to continued innovating, investing in people, protecting the environment, and pursuing sustainable development goals based on strong governance standards.
Each corporation has a unique culture. At Novaland, the Management Board has responsibility for taking care of the employees and each employee has responsibility for taking care of our customers. In order to build Novaland as a professional and highly consistent team, all behaviors must comply with this Code of Conduct. Everybody has the right to their own freedom but such a right must not adversely affect to the others. Proper conducts will help preserve the core values of Integrity - Effectiveness Professionalism as the guideline for all activities and the foundation of sustainable development. Novaland, Customers, shareholders, investor and partners can refer to the Code of Conduct at: https://www.novaland.com.vn/en-US/introduction
Novaland Group’s Overview
13
History of establishment and development
The group was restructured into two core businesses:
Establishment of Thanh Nhon Trading Co., Ltd.
Completion of 9 rental villas in District 2, HCMC & established a Joint venture with a Philippines partner to launch the BioPharmachemie Veterinary Medicine business, expanded domestic distribution and exported veterinary medicine to many countries around the world.
1992
1995
2007
2014
2015
2016
Announcement of 9 new projects in HCMC:
Progressive handed over of 6 projects: Galaxy 9 Residence, Icon 56, Lexington Residence, Tropic Garden Residence, Sunrise City, The Prince Residence;
Announcement of 5 new projects in HCMC: Central area: Saigon Royal Residence; Eastern area: Lakeview City; Western area: Newton Residence, Botanica Premier, Madison*.
Announcement of 11 new projects in HCMC: Eastern Area: The Sun Avenue Residence, Golf Park Residence, Wilton Tower; Southern area: Sunrise Cityview, Sunrise Riverside; Western area: Golden Mansion, Kingston Residence, Orchard Parkview, The Botanica, RichStar, The Park Avenue*.
Official listing on HSX.
Central area: Galaxy 9 Residence, Icon 56, Rivergate Residence, The Tresor Residence; Eastern area: Lexington Residence, Lucky Dragon Residence; Southern area: Lucky Palace; and Western area: GardenGate Residence, Orchard Garden.
◆◆ Novaland Group: Operating in Real Estate field. ◆◆ ANOVA Group: Operating in the field of cattle farming, cattle feed, veterinary medicine, vaccines and developing a value chain for safe, traceable food.
(*): Collaborative project
14
BRIGHTEN LIVES
1992 - 2017 Announcement of Sunrise City, District 7, HCMC.
Announcement of Tropic Garden Residence project, District 2, HCMC.
Announcement of The Prince Residence project, Phu Nhuan District, HCMC.
2009
2012
2013
2017 Handed over of 7 new projects: Rivergate Residence, The Tresor Residence, Lakeview City, Lucky Palace, GardenGate Residence, Kingston Residence, Orchard Garden. Development of recreational properties: Nova Phu Sa Azerai project in Can Tho - Phase 1 is put into operation. Total assets: VND 49,467 billion. Capitalization value: Near USD 2 billion.
Novaland Group’s Overview
15
Key figures in 2017
24% 14
40
+
2
THE REAL ESTATE COMPANY WITH LARGEST MARKET CAPITALIZATION LISTED ON HSX IN 2017
10,000
~
94%
~
28% BRIGHTEN LIVES
HANDED OVER PROJECTS
TOP
PROJECTS (including land bank)
16
OF HCMC’S MID&HIGH END APARTMENTS MARKET SHARE IN 2017 (according to Savills)
PRODUCTS IN COMPLETED
PRODUCTS ARE SELECTED BY CUSTOMERS
GROSS PROFIT MARGIN (up 27% yoy)
100 75
~
TOP
BILLION VND
6
BEST 2017 ANNUAL REPORTS
PROGRAMS CORPORATE SOCIAL RESPONSIBILITY
SOCIAL WELFARE COMMUNITY ACTIVITIES
TOP SHARES ◆◆ ◆◆ ◆◆ ◆◆
VN30 250,000
10
FTSE Vietnam Index MVIS Vietnam Index MSCI Vietnam Index MSCI Vietnam Investable Market Index
ADDED TO VN30
CUSTOMERS
NOVA PHU SA AZERAI CAN THO RESORT OPENING THE PIONEERING PROJECT IN HOSPITALITY
Novaland Group’s Overview
17
Financial highlights in 2017
OWNERS’ EQUITY (VND BILLION) CAGR 58%
15,000
13,256
An increase of
15,000
YOY 2016
10,000
32%
10,047
10,000
5,000
NET REVENUE (VND BILLION) CAGR 61% 11,632 6,673
6,095
2015
2016
2017
2014
CAGR 45%
49,467
20,000
An increase of YOY 2016
26,570
BILLION USD
An increase of 35% YOY 2016 2014
2015
2016
2017
CASH AND CASH EQUIVALENTS (VND BILLION) CAGR 34%
10,000 8,000
6,650
6,000 3,859 2,779
3,337
Hit the record growth of
99%
YOY 2016
10,000 8,000
CAGR 37% 8,147
8,848
2015
2016
2017
49%
3,441
2014
2015
2016
An increase of YOY 2016
5,955
6,000
2,000
2014
BRIGHTEN LIVES
SHORT-TERM ADVANCES FROM CUSTOMERS (VND BILLION)
4,000
2,000
18
2017
TOTAL ASSETS
16,094
10,000
4,000
2016
~
35%
36,527
40,000
2015
2.2
TOTAL ASSETS (VND BILLION)
30,000
YOY 2016
2,802
2014
50,000
58%
5,000
3,362
60,000
7,359
An increase of
2017
PROFIT AFTER TAX (VND BILLION)
GROSS PROFIT MARGIN (%)
CAGR 178%
2,500 2,000
2,062 1,659
1,500
An increase of
30
YOY 2016
20
24%
CAGR 18%
25
28
27%
22
20
YOY 2016
17
15
1,000
An increase of
10 442
500
5
96 2014
2
~
2015
2016
2017
BILLION USD
MARKET CAPITALIZATION
2014
2015
11,632
2016
2017
BILLION VND
NET REVENUE
An increase of 18% YOY 2016
An increase of 58% YOY 2016
As of December 31st, 2017
EBITDA (VND BILLION) 3,000 2,500
EBIT (VND BILLION)
CAGR 121%
2,807
180%
2,000
YOY 2016
1,500 830
1,000 500
Hit the record growth of
1,002
2,000
2015
2016
2017
CAGR 112%
2,322
Hit the record growth of
199%
1,500 1,000 500
259 2014
2,500
741
YOY 2016
776
243 2014
2015
2016
2017
Novaland Group’s Overview
19
Overview of the Financials 2014 - 2017
Unit: VND Billion
2014
2015
2016
2017
Increase (Decrease) 2017/2016 (%)
14,353
18,133
30,289
41,166
36
2,779
3,859
3,337
6,650
99
34
207
819
965
513
(47)
35
Short-term receivables
3,135
6,059
9,636
5,998
(38)
24
Inventories
8,151
7,159
15,790
27,129
72
49
81
237
561
876
56
121
1,741
8,437
6,238
8,301
33
68
965
3,306
912
654
(28)
(12)
BALANCE SHEET Short-term assets Cash and cash equivalents Short-term investments
Other current assets Long-term assets Long-term receivables Fixed assets Investment properties
CAGR 2014-2017 (%) 42
69
88
149
327
119
68
395
1,083
1,945
2,945
51
95
Long-term assets in-process
86
1,069
285
361
27
61
Long-term investments
21
1,585
375
1,043
178
268
205
1,306
2,572
2,971
16
144
TOTAL ASSETS
Other long-term assets
16,094
26,570
36,527
49,467
35
45
Liabilities
12,732
20,475
26,480
36,211
37
42
Short-term liabilities
9,907
13,354
15,011
22,659
51
32
Long-term liabilities
2,825
7,121
11,469
13,552
18
69
Owners’ Equity TOTAL RESOURCES
3,362
6,095
10,047
13,256
32
58
16,094
26,570
36,527
49,467
35
45 Unit: VND Billion
INCOME STATEMENT
2014
2015
2016
2017
Increase (Decrease) 2017/2016 (%)
Net revenue from sales of goods and rendering of services
2,802
6,673
7,359
11,632
58
61
Costs of sales
(2,327)
(5,333)
(5,776)
(8,376)
45
53
475
1,340
1,583
3,256
106
90
Net financial income
(127)
(105)
1,408
246
(83)
(224)
Selling and General and Administrative expenses
(231)
(599)
(807)
(934)
16
59
117
636
2,184
2,568
18
180
13
(28)
6
21
250
15
130
608
2,190
2,589
18
171
96
442
1,659
2,062
24
178
Gross profit from sales of goods and rendering of services
Net operating profit Net other income/expenses Net accounting profit before tax Net profit after tax
20
BRIGHTEN LIVES
CAGR 2014-2017 (%)
UNIT
2014
2015
2016
2017
Increase (Decrease) 2017/2016 (%)
Cash ratio
Times
0.28
0.29
0.22
0.29
32
Current ratio
Times
1.45
1.36
2.02
1.82
(10)
Quick ratio
Times
0.63
0.82
0.97
0.62
(36)
Borrowing and finance lease liabilities to Owners’ Equity ratio
Times
1.09
1.31
1.34
1.35
1
Borrowing and finance lease liabilities to Total assets ratio
Times
0.23
0.30
0.37
0.36
(3)
Account receivable turnover
Turnover
1.04
0.99
0.74
1.35
82
Asset turnover
Turnover
0.22
0.31
0.23
0.27
17
Inventory turnover
Turnover
0.33
0.70
0.50
0.39
(22)
9
11
11
20
82
FINANCIAL PERFORMANCE INDICATORS LIQUIDITY RATIOS
CAPITAL STRUCTURE RATIOS
CAPACITY RATIOS
PROFITABILITY RATIOS Earnings before taxes and interest
%
Profit before tax, interest and depreciation
%
9
12
14
24
71
Gross profit margin
%
17
20
22
28
27
Return on Assets ratio (ROA)
%
1
2
5
5
0
Return on Equity ratio (ROE)
%
4
9
21
18
(14)
Net profit margin
%
3
7
23
18
(22)
Net operating profit/ Net revenue
%
4
10
30
22
(27)
RECONCILIATION PROFIT AND LOSS BETWEEN VAS AND IFRS No.
Description
Unit: VND
I
Profit after tax under VAS
II
IFRS adjustments
1
Reversal of allocated goodwill
2
Recognition of goodwill impairment
(240,188,843,231)
3
Difference in recognition of expenses when issued shares under ESOP
(619,526,656,517)
4
Difference in recognition of debt conversion option
216,650,611,900
5
Difference in gain on disposal of subsidiaries
102,000,000,000
6
Difference in fair value revaluation of first investment when acquired subsidiaries
7
Finance income/finance expense arising from recognition lendings/borrowings according to amortised cost
26,284,590,217
8
Difference in income of apartments leasing for 50 years when recognised in whole
(6,734,032,951)
9
Difference in deferred income tax
9.1
Deferred tax expense in previous year regarding the adjustment of debt conversion option
9.2
Deferred tax income arising in the year
9.3
Other deferred tax expense adjustments
III
Profit after tax under IFRS
2,061,643,232,256 459,728,354,051
(494,845,389,983)
(129,521,933,534) 95,058,966,544 (13,089,989) 1,470,535,808,763
Novaland Group’s Overview
21
Year in brief
JANUARY ◆◆ After two weeks of listing on HSX, NVL was officially enlisted in Top 10 shares representing for MSCI Vietnam Index and Investable Market Index with a weighting of 2.97% and 2.49%, respectively, as of December 2017. ◆◆ Continuing to hand over Lucky Dragon Residence project District 9 and start handing over Orchard Garden project - Phu Nhuan District with the absorption rate of 99% and 100%, respectively, as of December 2017. ◆◆ On the new year occasion, many supporting community development and meaningful education activities were implemented: Giving Tet gifts to disadvantaged people in Dong Thap Province, Hoc Mon District, Cu Chi District, etc.; Awarding STF - Pham Phu Thu scholarship for students in Quang Nam Province.
FEBRUARY ◆◆ Successfully issuing the corporate bonds package with a par value of VND 500 billion, term of 2 years with the purpose of executing investment projects, increasing working capital and restructuring debts; and its bond was listed on HSX on June 26th, 2017.
MARCH ◆◆ After 3 months since official listing, NVL continued to be an exceptional share to listed in MVIS Vietnam Index ranked no. 4th with a weight of 6.40% as of December 2017. NVL was the only Vietnamese share currently added to the portfolio of the MVIS Vietnam Index. ◆◆ Commencing the handover of Lakeview City project, District 2 with the absorption rate of 95% as of December 2017.
22
BRIGHTEN LIVES
◆◆ Successfully issuing the corporate bonds package with a par value of VND 1,800 billion, term of 2 years with the purpose of executing investment projects, increasing working capital and debts restructuring; the bond was listed on HSX on October 27th, 2017.
APRIL ◆◆ Successfully organized the first Annual General Shareholders’ Meeting after listing, approved many important issues such as changing the structure of Corporate Governance according to international practices and the plan for raising capital to support M&A activities as well as continuing to implement projects.
◆◆ Disbursement of USD 30 million, a syndicated loan from foreign banks - Malayan Banking Berhad (Maybank) HCMC Branch, Maybank International Labuan Branch, Vietnam Joint Stock Commercial Bank for Industry and Trade Filiale Deutschland, The Shanghai & Saving Bank, Ltd. - Offshore Banking Branch and Chailease International Financial Services Co., Ltd - with a term of 30 months and competitive interest rates: Novaland step by step diversified its capital sources, especially from the international capital markets; and evidencing that the international financial institutions are showing interest in Novaland. ◆◆ Listing 4 bonds packages on HSX successfully, which were issued in 2016, with a total value of VND 1,650 billion. ◆◆ Commencing the handover of the Gardengate Residence project, Phu Nhuan District with the absorption rate of 99%, as of December 2017. ◆◆ In 2017, three-day-concert “Novaland concert - Brighten lives” was a prominent gratitude activity programme, attracting over 6,000 audiences who were Novaland’s customers and residents.
MAY ◆◆ Official topping up for 2 projects of The Tresor Residence, District 4 and Kingston Residence, Phu Nhuan District with the absorption rates of 97% and 95%, respectively at the end of December. ◆◆ Continuing to implement community support and health activities: giving cattle to the poor households in Long An Province; accompanying Operation Smile Vietnam and raising funds for surgery for children with cleft lip and cleft palate; sponsoring for heart, eye surgery, and disaster relief fund in the Central of Vietnam.
JUNE ◆◆ Successfully issuing the corporate bond package with the total value of VND 1,500 billion for Military Bank and Tien Phong Bank to execute investment projects and restructure the Company’s debts. ◆◆ NVL share continued to be presented in FTSE Vietnam Index for the second time in 2017 with a weight of 5.08% as of December 2017. This is one of the indicators that have biggest influence to Vietnam Stock Market. ◆◆ Successfully issuance private placement of 33.46 million shares to swap for USD 60 million loan at Credit Suisse AG, Singapore Branch: Novaland initiated the conversion of debt into capital to increase its ability to raise capital, ensure its liquidity ratios within limits and increase its profitability targets. ◆◆ Commencing the handover of Lucky Palace Project, District 6, Ho Chi Minh City and the topping up of The Botanica Project, Tan Binh District, which is expected to be handed over in 2018 with the absorption rate of about 98% and 99%, respectively, as of December 2017. ◆◆ Continuing to implement community development and health activities: supporting the construction of cultural centers in Dong Thap Province; accompanying with Vina Capital Securities in carrying out the “Connection with Love” program which calls for contributions to the heart surgeries for poor children patients.
AUGUST ◆◆ The contest “Novaland Business Ambassador 2017”, in the series of events celebrating company’s 25th Anniversary, was organized to strengthen and advocate the spirit of “Customer First” as well as simultaneously spread humanity to the community among sales persons of Novaland. ◆◆ Continuing to participate in community support, education and development activities: community activities cooperated with Novaland Team Building in Can Tho, Vung Tau, Dong Nai, Da Lat; granting Nguyen Huu Tho scholarship in Can Gio District; accompanying SGGA - Swing for Life, a Golf charity championship to build a kindergarten in Quang Nam Province. ◆◆ Successfully issuing the corporate bond package with the par value of VND 1,000 billion, term of 2 years, for investment projects, increasing the size of working capital and restructuring debts, the bond was listed on HSX on October 31st, 2017.
SEPTEMBER ◆◆ Closing the first Mini MBA course, continuing to deploy the second Mini MBA course and opening the third stage of the Mini MBA course for senior Executives and Managers of the Group: the Mini MBA course 3, expected to be finished in Q2/2018 with nearly 100 senior Leaders were trained in business administration at the postgraduate level. ◆◆ Credit Suisse AG Bank disbursed USD 40 million, phase 1 to Novaland in a USD 100 million credit package: the unsecured loan showed that Credit Suisse valued Novaland’s credibility and development prospects. ◆◆ Handing over 2 projects in District 4: Rivergate Residence and The Tresor Residence; topping up The Sun Avenue Project SAV 1 and SAV 6 Towers with the absorption rate at the end of December 2017 being 96%. ◆◆ Continuing to implement many community development and support activities: donating for heart surgery of Ho Chi Minh City Patient Association, “For our seas and islands - For the front line of the Fatherland” Fund; Giving Mid-Autumn gift for children in the children’s Shelters in HCMC.
JULY ◆◆ Organizing the “Novaland – Brighten Lives” Photography Contest for Novaland residents and the photography community: the contest was appreciated highly by professionals, and attracted the participation of 248 photographers with 674 photos. The prizes of the contest were awarded to the right winner on the 25th Anniversary of the Group. ◆◆ After more than 6 months of listing with stable performance, NVL shares officially entered VN30 Index, period 2/2017 and NVL was one of the two Real Estate Companies in the list. ◆◆ Novaland engaged in the community development and supported activities such as peace Story No.5 Program named Peace Wishes and Youth Inspiration - Time of the red flowers; accompanying the “Dong Loc - Sacred Divine Immortality” program; giving gifts to families with children affected by Agent Orange in Binh Thuan.
Rivergate Residence (Dist. 4, HCMC) Novaland Group’s Overview
23
Year in brief
OCTOBER
DECEMBER
◆◆ Community development with the Ground Breaking of 7 well-fares bridges construction in Dong Thap Province with a total budget of VND 15 billion, completely replacing many temporary wooden bridges that were degraded, providing convenient and safer transportation for local people in flood season, creating the premise for local economic development.
◆◆ Grand opening of Novaland Group Real Estate Trading Floor at 125 CMT8 Street, District 1, HCMC.
◆◆ Organizing the topping up the Ceremony for The Sun Avenue project (District 2) - Tower SAV 8.
◆◆ Credit Suisse AG, Singapore raised its credit limit from USD 100 million to USD 125 million to support Novaland Group operations.
◆◆ Topping up The Botanica Premier Project, Tan Binh District with the absorption rate of 97% at the end of December 2017 and expected to be delivered in 2018.
◆◆ Novaland ended its 2017 with many meaningful community support and development activities such as construction of rural bridges in Long An Province; supporting Phu Yen Fellowship to take care Tet for disavandtage people; accompanying with the “11th Youth’s Inspiration” programme.
NOVEMBER ◆◆ Topping up for the projects The Sun Avenue - SAV 2 and SAV 7 towers, District 2; Wilton Tower, Binh Thanh District, Newton Residence, Golden Mansion and Orchard Parkview, Phu Nhuan District, expected to be handed over to the residents in 2018 as commitment. ◆◆ Handing over Kingston Residence project - Phu Nhuan District. ◆◆ More students and the poor found their support in Novaland’s education programs and community support such as “Co giao Nhe” Scholarship in Dong Thap Province; accompanying the “For the Poor” Fund; giving presents to Quang Nam Province people after the Storm No. 12. ◆◆ Credit Suisse AG continued to disburse USD 35 million for Novaland in a USD 100 million credit package for new M&A activities aiming at increasing its land bank and value.
24
BRIGHTEN LIVES
Novaland representatives received Asia Pacific Property Awards
In 2017, Novaland Group was honored to receive one of the prestigious awards given by Asia Pacific Property Awards. This award honored two projects: The Sun Avenue Residence as “Best Architecture Multiple Residence Vietnam, Mixed-use Architecture Vietnam, Residential High-rise Architecture Vietnam” and Lakeview City as “Best Residential Project and Architecture Multiple Residence Vietnam”. Award-winning projects are evaluated on service delivery, creativity in design and spatial planning, potential of increasing value as well as the effectiveness of synergy of materials and resources in contributing to environmental protection.
Novaland Group’s Overview
25
2017 Awards and Recognition
Novaland Group has been recognized with numerous prestigious national and international awards, demonstrating the Group’s continuing efforts in creating the highest quality products at strategic locations, creating enhanced living communities in modern environments and contributing to the sustainable development of the society.
50 TOP
BEST LISTED COMPANIES IN VIETNAM
ASIA PACIFIC PROPERTY AWARDS 2017
FORBES
INTERNATIONAL PROPERTY AWARDS
Novaland is proud to be in the list right after its official listing and disclosure of information on Stock Market. The companies in this list accounted for over 60% of the market capitalization of HSX and HNX. Forbes’s ranking criteria are based on CAGR of revenue, profit, profitability index, EPS and sustainable development.
26
BRIGHTEN LIVES
Honoring two projects: The Sun Avenue Residence as “Best Architecture Multiple Residence Vietnam, Mixed-use Architecture Vietnam, Residential High-rise Architecture Vietnam” and Lakeview City as “Best Residential Project and Architecture Multiple Residence Vietnam”. Award-winning projects are evaluated on service delivery, creativity in design and spatial planning, potential of increasing value as well as the effectiveness of synergy of materials and resources in contributing to environmental protection.
TOP
06
ANNUAL REPORT HSX, HNX, DRAGON CAPITAL AND INVESTMENT NEWS
Novaland Group, on its first time participating in the contest, was honored in Top 6 Annual Report, Top 10 Annual Report with Best Corporate Governance and Top 10 Sustainable Development Report. Annual Report represents Novaland’s effort and commitment to providing information in the most transparent manner, not only in line with Vietnamese Regulations but also adopting higher international governance practices and GRI - Global Sustainability Report Standards.
TOP
BCI ASIA
10
DEVELOPERS AWARDS BCI ASIA AWARDS
This is the fifth consecutive year that Novaland has been honored at BCI Asia Awards - one of the most prestigious awards in Asia’s construction industry. The award represents the objective and professional assessments by experts who recognized Novaland’s unwavering commitment to providing value products to the society.
50
40
MOST VALUABLE BRANDS IN VIETNAM
VIETNAM PROPERTY AWARD, ASIA PROPERTY AWARD
FORBES
PROPERTY GURU
Novaland, after being officially listed in 2016, was ranked in the Top 40 for the first time. The ranking is based on calculation of the Brand’s contribution to its Company’s business performance, revenue contribution to the industry, EBIT, intangible asset value, and the industry average P/E.
Novaland was honored as Vietnam Real Estate Personality of the Year, Special Certificate of Corporate Social Responsibility, Best high-end Condo for The Sun Avenue Residence project In addition, Nova Phu Sa Azerai is the representative of Vietnam competing for the best hospitality architecture award - Asia Property Award.
BEST VIETNAMESE BRANDS 2017
ASIA’S BEST EMPLOYER BRAND AWARDS 2017
EUROMONEY REAL ESTATE AWARD
BRAND FINANCE
EMPLOYER BRANDING INSTITUTE, WORLD HRD
Brand Finance is a leading Brand valuation company, annually valuing 7,000 brands worldwide. This is the only chart that has a Brand valuation which meet the criteria of the ISO 10668 on valuation standards. Value of a Brand “certified” by Brand Finance is allowed to be used with tax and audit authorities, and in M&A transactions. Novaland is very proud to be in the list.
Thanks to the effective and sustainable human resource management strategies, Novaland Group has been continuously honored by the prestigious HR Awards and the only Vietnamese company to receive the Award. The Award aims to honor Asian Enterprise with excellent HR strategies.
ENTERPRISES WITH STRONG INFLUENCE TO THE COMMUNITY, ENTERPRISES WITH EXCELLENT HUMAN RESOURCES DEVELOPMENT STRATEGIES ASIA RESPONSIBLE ENTREPRENEURSHIP AWARDS 2017 (AREA)
GLOBAL FINANCE JOURNAL EUROMONEY
Euromoney’s Real Estate Awards, with its one most prestigious rating system, carried out a 13-year global property awards program to honor the leading real estate developers in each country. Ranking Standards base on the portfolio, quality service, investment strategy, reputation and scale of development. Novaland honored to be in the Top 5 Real Estate Investors and Top 2 Best Residential Developers in Vietnam.
This is the prestigious award by a Non-Government Organization Enterprise Asia honored Novaland in two categories: Community, and Human Resource Development. Especially, Novaland is the first Vietnamese Brand was chosen to receive this award.
Novaland Group’s Overview
27
Projects Portfolio
No. Project name
Developer
Type of business entity
NVL’s ownership (%)
COMPLETED, HANDED OVER AND BEING HANDED OVER PROJECTS: 15 1
Sunrise City
No Va Land Investment JSC
Subsidiary
91.76
2
Lucky Palace
Nova Lucky Palace Co., Ltd.
Subsidiary
100
3
Lakeview City
The 21st Century International Development Co., Ltd.
Subsidiary
98.96
4
Lexington Residence
Nova Lexington Real Estate JSC
5
Tropic Garden Residence
Novaland Group
100
6
Lucky Dragon Residence
Novaland Group
100
7
Galaxy 9 Residence
Nova Galaxy Real Estate JSC
8
Icon 56
Novaland Group
9
Rivergate Residence
Nova Rivergate Co., Ltd.
Subsidiary
99.77
10
The Tresor Residence
Nova Phuc Nguyen Real Estate Co., Ltd.
Subsidiary
99.89
11
GardenGate Residence
No Va Festival Corporation
Subsidiary
94.02
12
Kingston Residence
Nova Princess Residence JSC
Subsidiary
99.9
13
Orchard Garden
Novaland Group
14
The Prince Residence
The Prince Residence JSC
15
Nova Phu Sa Arezai Can Tho Resort
Novaland Group
Total of completed, handed over and being handed over projects
28
BRIGHTEN LIVES
Sold in Q3 2017
Sold in Q3 2017 100
100 Subsidiary
99.81
100
Product type
Area Location
Land area (m2)
Products chosen as of December Units 31, 2017 Quantity
Apartment, Office-tel, Commercial, Parking
Launching
Expected delivery
%
South: Q2/2009 99% Central: Q2/2011 North:Q1/2013
South: From Q3/2012 Central: From Q4/2014 North: From Q4/2015
552
98% Q3/2014
From Q2/2017
911
95% Q2/2016
Phase 1: From Q1/2017 Phase 2: From Q2/2017 Phase 3: From Q2/ 2018
South- Dist.7 ern
51,261
2,711
2,679
Dist.6
3,876
564
301,060
960
19,928
1,493
25,028
814
814 100%
9,024
149
147
99% Q2/2014
From Q4 2016
6,228
523
523 100% Q1/2014
From Q4/2015
2,904
313
311
99% Q1/2014
From Q4/2015
7,069
1,351
1,117
83% Q4/2014
From Q3/2017
Apartment, Office-tel, Office, Commercial
5,780
718
697
97% Q4/2014
From Q3/2017
Apartment, Office-tel Commercial
4,887
420
417
99% Q4/2014
From Q2/2017
4,604
405
383
95% Q2/2015
From Q4/2017
4,303
428
427 100% Q4/2014
From Q1/2017
4,644
506
502
From Q4/2015
194,342
Bungalow: 30 Villas: 47
Apartment, Commercial Township Apartment, Office-tel, Office, Commercial
Eastern
Dist.2
Apartment, Commercial Apartment, Townhouse
Dist.9
Apartment, Office, Commercial Apartment, Commercial Apartment, Office-tel, Office, Commercial
Apartment, Office-tel, Office, Kindergarten Apartment, Office-tel
Central
Dist.4
Phu WestNhuan ern Dist.
Apartment, Office-tel Commercial Hospitality
WestCan Tho ern City Region
644,938
1,490 100% Q1/2014
11,355 10,970
Phase 1: Q3/2012 Phase 2: Q3/ 2014
99% Q1/2013 Phase 1 for operation: Q4/2017
From Q4/2015 Phase 1: From Q2/2014 Phase 2: From Q2/2016
Phase 2 for operation: Q4/2019
97%
Novaland Group’s Overview
29
Projects Portfolio
No. Project name
Developer
Type of business entity
NVL’s ownership (%)
PROJECTS UNDER DEVELOPMENT: 13 16
Sunrise Cityview
Nhat Hoa Real Estate JSC
Subsidiary
99.81
17
Sunrise Riverside
Nova Riverside Real Estate Co., Ltd.
Subsidiary
99.97
18
The Sun Avenue Residence Gia Phu Real Estate Co., Ltd.
Subsidiary
99.98
19
Victoria Village
Thai Binh Real Estate JSC
20
Golf Park Residence
No Va Land Investment JSC
Subsidiary
91.76
21
Wilton Tower
Phuong Dong Building JSC
Subsidiary
99.89
22
Saigon Royal Residence
Nha Rong Investment and Commercial JSC
Subsidiary
99.96
23
Golden Mansion
Nova Sagel Co., Ltd.
Subsidiary
73.99
24
Orchard Parkview
Nova Nam A Co., Ltd.
Subsidiary
83.17
25
Newton Residence
Merufa-Nova Co., Ltd.
Subsidiary
99.89
26
Botanica Premier
Nova Sasco Co., Ltd.
Subsidiary
99.99
27
The Botanica (3)
Novaland Group
28
RichStar
Nova Richstar JSC
Total of projects under development Total completed, handed over and being handed over and under development projects COLLABORATION PROJECTS: 2 29
Madison
No Va 79 Madison Co., Ltd.
30
The Park Avenue
Chan Phong Investment and Development JSC (4)
Total of collaboration projects
30
BRIGHTEN LIVES
(1)
100 Subsidiary
99.98
Product type
Area Location
Land area (m2)
Products chosen as of December Units 31, 2017 Quantity
Apartment, Office-tel, Commercial Apartment, Office-tel, Commercial
Dist.7 Southern Nha Be Dist.
Apartment, Office-tel, Commercial Apartment, Villa, Shop-house Townhouse, Villa
Eastern
Central
1,378
1,332
97% Q2/2015
Q4/2018
39,305
3,227
2,993
93% Q3/2015
Q2/2018
38,073
2,892
2,767
96% Q1/2015
Q3/2018
42,777
1,208
413
34% Q2/2017 (2)
Q3/2019
Dist.9
25,398
95
Binh Thanh Dist.
7,169
555
549
99% Q3/2015
Q2/2018
Dist.4
6,669
767
736
96% Q2/2016
Q1/2019
15,129
727
721
99% Q3/2015
Q2/2018
9,184
520
518 100% Q3/2015
Q3/2018
2,807
253
235
93% Q2/2016
Q4/2018
16,330
1,039
1,017
98% Q1/2016
Q4/2018
9,028
611
603
99% Q1/2015
Q2/2018
27,802
2,021
1,983
98% Q4/2015
Q2/2018
Phu Nhuan Dist.
Apartment, Office-tel, Commercial, Kindergarten
Apartment, Office-tel, Commercial
%
15,720
Complex, Commercial
Apartment, Office-tel, Office
Expected delivery
Dist.2
Apartment, Office-tel, Commercial Apartment, Office-tel, Commercial
Launching
Western Tan Binh Dist.
Apartment, Shop-house Apartment, Shop-house, Commercial
Tan Phu Dist.
95 100% Q3/2015
255,391
15,293 13,962
91%
900,329
26,648 24,932
94%
Q4/2018
Apartment, Office-tel, Commercial, Hotel
Central
Dist. 1
2,337
188
155
82% Q1/2016
Q1/2019
Apartment, Office-tel, Shop-house
WestDist. 11 ern
8,937
869
604
70% Q3/2015
TBD
11,274
1,057
759
72%
: Novaland’s ownership at this project was 23,64% at time of publication AR 2017. : Time of developing the project. (3) : The ownership in The Botanica was executed by Cooperation Agreement with Saigon General Service Corporation (Savico). (4) : The company was authorized investment cooperation by the owner. (1) (2)
Novaland Group’s Overview
31
Projects handed over in 2017 In 2017, the green rubiks - symbol of Novaland’s Brand name - were lightened up in a series of completed projects on many key routes in Ho Chi Minh City from the Central (District 4), the Eastern (District 2, District 9), the Southern (District 6) to the Western (Phu Nhuan District). Gardengate Residence view shot from Orchard Garden swimming pool (Phu Nhuan District, HCMC) - Photo by: Nguyen Dinh Ri
32
BRIGHTEN LIVES
RIVERGATE RESIDENCE THE CENTRAL - DISTRICT 4
RiverGate Residence project possesses a gold location at the city centre, on the frontage of Ben Van Don street - a key route parallel to Vo Van Kiet Avenue, running along the poetic and beautiful Saigon river, forming one of the key transport axis of the city. Staying at Rivergate Residence, residents will be provided with the best conditions for a comfortable and perfect living.
1,351
Products
(including 1 commercial floor) st
Location:
151 - 155 Ben Van Don Street, Ward 6, District 4, HCMC
Development type:
Apartment, Office-tel, Office, Commercial
Land area:
7,069 m2
Number of products:
1,351
Average selling price:
VND 53 million/m2
Absorption rate at the end of December 2017:
83%
Delivery date:
From Q3/2017
Novaland Group’s Overview
33
Projects handed over in 2017
THE TRESOR RESIDENCE THE CENTRAL - DISTRICT 4
Located on the key route - Ben Van Don Street, a strategic location opposite the State Bank of Vietnam Office and Financial Center in District 1. This is a modern complex with a wide range of remarkable products of Apartments - Office-tel - Commercial, The Tresor Residence meets the need of a modern living and working style in the heart of the City of majority of customers, especially foreign professionals and successful businessmen.
718
34
BRIGHTEN LIVES
Products
Location:
39 Ben Van Don Street, Ward 12, District 4, HCMC
Development type:
Apartments, Office-tel, Commercial
Land area:
5,780 m2
Number of products:
718
Average selling price:
VND 52 million/m2
Absorption rate at the end of December 2017:
97%
Delivery date:
From Q3/2017
Photo by: Huynh Pham Ngoc Dung
LAKEVIEW CITY THE EASTERN - DISTRICT 2
Lakeview City located in An Phu Ward, District 2, a project of the paralleled front line with Long Thanh - Dau Giay Highway with the total land area of 30 hectare. The project was built consistently and completely including Villas, Townhouses, and Shophouses. Residents can enjoy the luxury indoor utilities including shopping mall, children playground, swimming pool, sport station, community relationship and last but not least the 3.6 hectare man-made eco-lake with a park which plays the role of natural air-conditional and shape the landscape.
960
Products
Location:
The Paralleled front line with Long Thanh - Dau Giay Highway, An Phu Ward, District 2, HCMC
Development type:
Urban area (Townhouses, Shophouses, Villas)
Land area:
301,060 m2
Number of products:
960
Average selling price:
VND 72 million/m2
Absorption rate at the end of December 2017:
95%
Delivery date:
From Q1/2017
Novaland Group’s Overview
35
Projects handed over in 2017
LUCKY PALACE THE SOUTHERN - DISTRICT 6
Lucky Palace is a complex of Commercial and high-class Apartments in District 6, the most famous commercial area and long-history in Saigon. It is full of “golden factors” from a strategic location with modern and diverse utilities and convenient transportation.
564
36
BRIGHTEN LIVES
Products
Location:
50 Phan Van Khoe Street, Ward 2, District 6, HCMC
Development type:
Apartments, Commercial
Land area:
3,876 m2
Number of products:
564
Average selling price:
VND 33 million/m2
Absorption rate at the end of December 2017:
98%
Delivery date:
From Q2/2017
GARDENGATE RESIDENCE THE WESTERN - PHU NHUAN DISTRICT
GardenGate Residence located next to Gia Dinh Park - the largest Greenery Park in HCMC, brings a quiet and private living space but also fully equipped to satisfy every need for the daily life convenience. Only a few minutes from Tan Son Nhat Airport, the project is an ideal choice for businessmen who travel regularly.
420
Products
Location:
8 Hoang Minh Giam Street, Ward 9, Phu Nhuan Dist., HCMC
Development type:
Apartments, Office-tel, Commercial
Land area:
4,887 m2
Number of products:
420
Average selling price:
VND 36 million/m2
Absorption rate at the end of December 2017:
99%
Delivery date:
From Q2/2017
Novaland Group’s Overview
37
Projects handed over in 2017
ORCHARD GARDEN
WESTERN AREA - PHU NHUAN DISTRICT Orchard Garden has the advantage of convenient transportation from its location, which is adjacent to Tan Son Nhat Airport and Pham Van Dong Boulevard - the main route of Tan Binh, Phu Nhuan, Binh Thanh and Thu Duc Districts. The highlight of the project is that it is located next to Gia Dinh Park - the “green lung” of the City, promising a hard to find living space - quiet but adjacent to the center.
428
38
BRIGHTEN LIVES
Products
Location:
128 Hong Ha Street, Ward 9, Phu Nhuan District, HCMC
Development type:
Apartments, Office-tel
Land area:
4,303 m2
Number of products:
428
Average selling price:
VND 33 million/m2
Absorption rate at the end of December 2017:
100%
Delivery date:
From Q1/2017
KINGSTON RESIDENCE THE WESTERN - PHU NHUAN DISTRICT
Kingston Residence own a prime location with 2 facades on Nguyen Van Troi and Hoang Van Thu Street. The project has a modern and luxurious design and a variety of luxury indoor and outdoor utilities.
405
Products
Location:
146 Nguyen Van Troi Street and 223 - 223B Hoang Van Thu Street, Ward 8, Phu Nhuan District, HCMC
Development type:
Apartments, Office-tel, Offices
Land area:
4,604 m2
Number of products:
405
Average selling price:
VND 52 million/m2
Absorption rate at the end of December 2017:
95%
Delivery date:
From Q4/2017
Novaland Group’s Overview
39
Projects handed over in 2017
40
BRIGHTEN LIVES
NOVA PHU SA AZERAI CAN THO RESORT
Nova Phu Sa Azerai is the first luxury eco-resort in the Mekong Delta and also the first hospitality project of Novaland Group. Adopting all the conveniences of Can Tho City and just a few minutes by boat from Ninh Kieu Wharf. Nova Phu Sa Azerai Resort brings visitors an unforgettable experience in the land of rivers of Vietnam’s South-western.
MEKONG DELTA - CAN THO CITY
30 47 Bungalows
Villas
Location:
Con Au, Hung Phu Ward, Cai Rang District, Can Tho City
Development type:
Hospitality
Total land area:
194,342 m2
Number of products:
30 Bungalows, 47 Villas
Average room rate:
From VND 5.7 million/day
Operation time:
Phase 1 from Q4/2017
Novaland Group’s Overview
41
11,632 BILLION VND NET REVENUE IN 2017
INTEGRITY
TO BUILD STRONG BELIEF INTEGRITY is the righteousness - one of the cores value contribute in the integrity of human resources, transparently business activities compliance with law and keep the Customers’ belief.
MESSAGES FROM THE BOARD OF MANAGEMENT
Message from the Chairman of the Board Interview with the CEO Message toward Community & Society Message toward Technology & Environment
44 46 48 50
Message from the Chairman of the Board
With a focus strategy and persistence with established goals, the building of a strong team and system, a clear business strategy, stable land bank, strong cash flows, stringent risk management, and compliance with law, Novaland will operate effectively and sustainably to realize the vision of “becoming a world-class real estate corporation with high position, strong development, contributing to happiness and prosperity for community. Mr. Bui Thanh Nhon - Chairman of the Board
Dear Valued Shareholders, Partners and Investors, In 2017, Novaland Group celebrated its 25th anniversary, marking a quarter of a century of continuous growth and persistence with the Sustainable Development strategy. The business performance of 2017 was positive with Net revenue of VND 11,632 billion and Net profit after tax of VND 2,062 billion, up by 58% and 24%, respectively, against 2016. The total number of products selected by customers was 5,802, accounting for 24% of HCMC’s mid&high end apartments market share in 2017 (according to savills). In 2017, Novaland Group delivered nearly 3,600 units, increasing the cumulative number of projects handed over to 14 with more than 10,000 units put into operation; Novaland continued to emerge as one of the prestigious property developers trusted by customers and one that is currently developing various types of projects that bring benefits to Customers and Society. In addition to business results, remarkable achievements were also made in regards to non-financial goals. Novaland’s core values of “Integrity - Effectiveness Professionalism” have been clearly demonstrated. In 2017, Novaland Group was honored with several awards by both local and international organizations such as PropertyGurus, Forbes, Enterprise Asia, Dot Property etc. not only in real estate but also in many other areas such as CSR, branding, finance, business, human resources, and sustainable development. In the human resources development strategy, the NovaGroup Leadership Center conducted more than 100 soft skill and professional skill training courses for Managers, Supervisors and Staff. In 2017, 57 managerial leaders completed the mini
44
BRIGHTEN LIVES
MBA program and this number will increase to over 100 by 2018 and subsequent years. These are good human resources and will be the Group’s talented successors. We pride ourselves on a team of Novalanders who always strive their best for the organization. The ESOP program will help Novaland cherry-pick talents with a long-term commitment to the Group. The persistence, solidarity and sincerity of all Novalanders have helped consolidate trust and engagement from our customers, thus helping us to grow steadfastly. For Shareholders, Novaland always pays attention to ensuring efficient and secured investments. We have always taken the best interests of shareholders, customers and the Community into consideration in relation to the various aspects of business development, so that Novaland’s market capitalization increases over time. Novaland constantly strives to make its business operations more and more transparent, aiming to be the most transparent listed company. Novaland has secured long-term partnership with strategic shareholders including internationally renowned organizations such as the Singapore Government’s GIC, Credit Suisse, and JP Morgan Asset Management. In 2017, NVL stock has performed encouragingly. With strong performance in market capitalization, Novaland has been included, as an exception, by MVIS Vietnam Index (V.N.M ETF) and FTSE ETF in their portfolios. At the same time, NVL has also been included in the list of VN30, Top 10 listed companies in terms of market capitalization on the stock exchange and honored by Forbes magazine in the list of Vietnam’s 40 most valuable brands as well as the group of 50 best listed companies in Vietnam. This is a proud result of a newly listed company.
Dear Shareholders, Partners, and Investors, In 2017, Novaland encountered many difficulties and objective adverse impacts, leading to delays in the processing of legal documents and construction. High turnover in HR was recorded. Despite the mentioned problems, thanks to its respect for the rule of law and the maintenance of product and service quality, the Group has gradually resolved problems and moved forward. In terms of governance, in 2017, Novaland implemented the SAP-ERP system that efficiently supports operation management and ensures information and data control and safety standards, fine-tuned the development of a scientific, efficient and professional corporate governance according to international standards. At the same time, a standardized internal control system is in place to ensure that Novaland Group’s operations are transparent and compliant with regulatory standards. In terms of finance, multiple defenses have been implemented to solidify strong cash flows. The issuance of international bonds is planned to bring in additional funds to develop more projects and acquire more land bank. Risk management has been consistently well regarded. All business operations and compliance are closely monitored. The Sustainable Development Committee of the Novaland Group pro-actively provides appropriate advice. With a view to better serve customers, in 2018, the Group will continue to implement the motto of “Customer First”, ensuring that all employees and the Management team will implement comprehensively in order to deliver good quality products as well as professional customer service for better customer satisfaction. 2018 marks the beginning of the phase 2 of business strategy, i.e. one with development of hospitality. Novaland will concentrate 80% of its resources on the housing market in HCMC and will spend 20% of its investment capital to develop hospitality in cities with high tourism potentials such as Da Nang – Hoi An, Nha Trang - Cam Ranh, Da Lat, Binh Thuan - Phan Thiet, Ba Ria - Vung Tau - Con Dao, Phu Quoc and Can Tho. In March 2018, the launched Nova Phu Sa project for development of Mekong Delta for climate change adaptation is a large-scale and long-term project. This is a green, carbon-free sustainable development project that is in line with the sustainability trend and is qualified for green bond issuance. The project, which has great social significance, will create many new jobs and has won special encouragement from the Prime Minister. The project will soon be known as an important turning point as well as a highlight of Novaland when entering into hospitality. It is expected to turn the Mekong Delta into the destination for entire country, the region and the world. The project will be implemented in several stages and will be very effective to
attract target customers, especially those in Ho Chi Minh City once the HCM - Trung Luong - Can Tho Highway has been completed. Travel time will only be 1 hour and 20 minutes. Dear valued Shareholders, Partners, and Investors, Along with Vietnam’s growing economy, increasingly standardized investment environment, the contribution of private enterprises has been highly appreciated. Novaland Group is very confident of its business performance and sustainable development and will seize the opportunity for a big leap ahead. Regarding business philosophy, Novaland Group is always persistent with its goals and sustainable development. Emerging out of the 2009 -2013 crisis as well as the difficulties in 2017, Novaland further understands the value of sustainable development. This is what differentiates us. The Board of Directors as well as the Shareholders want to invest effectively and safely. Aware of this, Novaland does not want to and will not be drawn into short-term interests. Instead, we make long-term plans for better brand building and customer service. Novaland takes customer and community interests into account when considering various aspects of business development. Novaland always recognizes its social responsibility through good business performance, stable jobs for employees, provision of good products and services to society and proactive participation in voluntary and community activities. The Board believes that, with a focus strategy, the persistence with the established goals, the building of a strong system and team, a clear business strategy, stable land resources, strong cash flows, stringent risk management, respect for law, Novaland will operate effectively and sustainably to realize the vision of “To be a highly regarded world-class real estate group, with strong and sustainable growth, contributing to a happy and prosperous society”. On behalf of the Board of Directors of Novaland Group, I would like to thank our valued Shareholders, Partners, and Investors for the trust, support and cooperation in the past year and in the time to come. I would like to wish you happiness and success. Best regards,
Mr. Bui Thanh Nhon Chairman of the Board. Messages from the Board of Management
45
Interview with the CEO
We are leveraging available internal resources to implement the 2018 plan, and we are confident of the success of the plan to realize this aspiration soon. Novaland prides itself on having built a strong and professional team. What is the secret? How to increase the value of Novaland’s human resources? Novaland now has more than 1,500 talented employees well-versed in project development and management, and financial management; the Group has set up internationalstandard processes and systems; we operate based on the core values of “Integrity - Effectiveness - Professional”.
Mr. Bui Xuan Huy - Chief Executive Officer
Can you share some information about Novaland Group’s 2018 plan to “becoming a world-class real estate corporation with high position, strong development, contributing to happiness and prosperity for community”? In order to become a world-class real estate group with strong and sustainable growth, Novaland’s business activities must be effective and towards international standards, especially in the context of integration. With better quality and reasonably priced, Novaland will offer customers more chances to have their own homes, contributing to happier and more prosperous life. The vision is long-term goal, and we need to fulfill shortterm plans before we can reach that long-term target. In order to realize this vision, for Novaland, this mission must be continuously implemented and innovated. The 2018 business plan is the beginning of 2nd phase of business strategy with development of hospitality. The Group will focus on finding more land bank, especially for hospitality products. For this year, the issuance of international bonds worth USD 300,000,000 to develop projects and secure more land resources will be one of the financial targets. The operation of the SAP-ERP system will allow fast and transparent intra-Group governance. Concurrently, we also concentrate on building a strong and professional team, increasing human resources, improving system building process and applying new technologies to cut down cost and generate smart property products with increasingly competitive advantages.
46
BRIGHTEN LIVES
For us, the secret to build the team is the acquisition and training of people who possess the core values of “Integrity - Effectiveness - Professional”. In its development strategy, Novaland has always given top priority to the Learning & Development policy. The NovaGroup Leadership Center, officially launched in November 2016, partners with several renowned education institutions and has held training and development courses for mid and high-level leaders and managers as part of the Group’s Succession Planning program. This is a form of benefit appreciated by Novalanders. In 2017, more than 100 soft skills and professional skill training courses and 40 external training courses for managers, supervisors and staff were completed. To date, 57 managers have completed the Mini MBA program and this number will increase to over 100 by 2018 and subsequent years. The Mentoring/Coaching program (Experience sharing), launched in early 2017 for Senior Directors and Managers, has yielded positive results with 37 mentor-mentee pairs. This has contributed to the increased sharing of experience and cohesion within the organization. This is a very significant achievement in the Successor planning program to improve the quality of corporate governance and is a foundation for Novaland’s success in the future. What helps differentiate Novaland? How can Novaland distinguish itself to gain competitive advantages in the real estate market? The property market is diverse and open where each player has its own direction and strength. Novaland Group adopts a clearly defined direction and strategy. Upholding the customer-centric philosophy in all operations,
Novaland places itself in customers’ position to provide good products and services with dedication and sincerity. On that foundation, the Company’s companionship with Customers’ and Shareholders’ interests is indicated throughout all activities. Novaland’s business strategy is divided into 3 phases: Phase 1: completion of 5,000 housing products; Phase 2: in addition to housing, expand its development into hospitality; Phase 3: Focus on developing urban areas with modern infrastructure connections. Novaland has always been aware that success cannot come from a magic stick. Rather, it only comes from persistence and determination. Over the course of development, Novaland has successfully built a sizable team well-versed in project development and management, and financial management; the Group has set up international-standard processes and systems and is now striving to become one of Vietnam’s best workplaces. Novaland does not want to and will not be drawn into shortterm interests. Instead, we make long-term plans for better brand building and customer service. With a sustainable development strategy, Novaland takes customer and community interests into account when considering various aspects of business development. Novaland always recognizes its social responsibility through good business performance, stable job for employees, provision of good products and services to society and pro-active participation in voluntary activities. Focus on the ultimate destination - Focus on sustainable development. This differentiates Novaland. In the context of the 4.0 technology revolution that is exerting strong impacts on many fields in Vietnam, what are the preparations that Novaland has made to increase value for customers? The 4.0 technology revolution, characterized by digitalization, is taking place sweepingly and diversely. In the near future, in the property industry, the 4.0 technology will provide great support ranging from the application of technology in smart home products, building management to cost cutting, shortening construction time, performing transaction on virtual floor, and corporate governance. Like the other local businesses, we need to quickly change our thinking if we do not want
to be left behind. The enhancement of management capability, starting from the building of infrastructure and IT applications, the digitalization of business activities, etc. needs to be executed promptly. As part of Novaland’s sustainable development strategy, special attention is paid to investment in technology, especially IT. The SAP ERP - Enterprise Resource Planning System is an important step in the application of IT to the building of an efficient Corporate Governance integration system as well as to the automation of business processes and close control of intra-Group activities. Novaland has invested almost VND 90 billion in the ERP project with the consultancy and implementation services provided by SAP. Such a project not only requires intensive funding but also involves collective efforts. This project is among those involving the largest number of departments so far. We expect SAP’s Real estate solution will enable Novaland to achieve our objectives both in the short and long term. The Certificate of Security - ISO 27001 Certification granted by the TUV Rheinland accreditation organization - for Novaland’s Information Security Management System issued on July 13, 2017 demonstrates the Group’s commitment to Information Risk Management and is an example of its ongoing efforts to improve information security amid a sweeping technological revolution. 2017 is the year when the infrastructure platform was upgraded and investments were made for applications to be deployed and applied in a comprehensive and professional scope. This will be the basis for the development of a series of new technological applications in the time to come. This will bring added values to customers as well as corporate governance. Aiming to become one of the leading property developers both in terms of product quality and customer service, Novaland is intensifying the exploitation and application of technology to efficiently implement its business strategy and sustainable development strategies. Thank you very much!
Messages from the Board of Management
47
Message toward Community and Society
We are always committed to and consistent with our goals. Sustainable Development with the community and enhancing corporate social responsibility are the development orientation of Novaland. This is also Novaland’s commitment to Customers, Society and the Community. Message from Chairman of Novaland
Novaland always focuses on the Community and Social activities in its Sustainable Development strategy. We consider it is the Group’s responsibility to carry out these activities and contribute to the long-term development of the community. Together, we can build a better life. For Novaland, sharing values with the society is a responsibility, the joy, and a goal to look forward to, ensuring Sustainable Development in the long run. We determine that successes and brand values can last with time, not only thanks to business performance but also to the level of responsibility and contribution to the community and society. Novaland’s community activities focus on four main areas: social security, public health, education and community development. We also encourage and motivate all staff to participate actively in volunteer activities, and to have the chance to show their responsibility to the community. Simultaneously, in order to build a strong community, Novaland continues to cooperate actively with the
48
BRIGHTEN LIVES
Novaland Group ‘s employees positively join CSR activities.
government agencies, NGOs, partners and local people to raise awareness and jointly development of the community capacity. Novaland’s social responsibility is also reflected in its focus on the working environment and the welfare system for its employees, in order to create sustainable employment, sustainable business development, and a happy life with support for the staff. People are not only the asset to every company, but also to the whole society. Therefore, maintaining and developing an elite, professional staff remain to be the priority responsibility of the Group.
In the next phase, the Group shall devote more attention to education and health care. Study encouragement activities have been maintained, as the scholarship of “Co Giao Nhe”, funding for school construction, health care for students and teachers in disadvantaged rural areas through the program “Clean drinking water for schools”. Social security and community development continue to be promoted such as supporting poor patients have free heart surgeries; supporting campaigns raising funds on the occasion of Tet for the poor; supporting young start-up entrepreneurs; contributing to the construction of road infrastructure, public parks in some key areas in Ho Chi Minh City.
By the end of 2017, Novaland had spent nearly VND 75 billion on social welfare, implementing nearly 100 community-based programs and activities across the country, with hundreds of thousands of beneficiaries as well as thousands of staff members actively engaging in the volunteer work, sharing their social responsibility together with the Group.
Messages from the Board of Management
49
Message toward Technology and Environment
Sustainable development is the principle of our business operations. Regulation compliance, environmental protection, not acting against to the benefit of Community, etc. All activities must be based on honesty, to bring Customers good services and products, adding value over time. Message from Chairman of Novaland
In 2017, the Government issued a national agenda with 17 general goals and 115 specific targets to sustain the sustainable economic growth in parallel with progress of social equality, environment and ecology protection, effectively management and use of resources, active response to climate change. Upon adopting Environmental, Social and Governance (ESG) – Risk management relating to environment, Society, and Governance. Novaland understands that initially, there would be challenges and increased expenses for applying advanced technology which is meant to do less harm to the environment. However, in the long run, this will ensure sustainability with new business opportunities for Shareholders, Customers and the Society.
50
BRIGHTEN LIVES
SUSTAINA BILITY
REPO RT
Materials
Energy
Environment protection
Occupational health and safety
The Group has been gradually reducing environmental impact and ensuring co-existence in a fresh environment, by developing and applying products and technologies such as suitable water recycling system for some projects; energy-saving infrastructure products and services; energy-saving lighting equipment; the digital technology-supported solutions and new materials to help reduce greenhouse effects and climate change in the future. Creating a clean living environment in the projects with green space, waste collection system, nationalstandards of fire-fighting. We ensure that residents of our projects are always able to access economical energy sources, contributing to improved environmental impact.
adaptation programs in the Mekong Delta, lending a hand in the Government’s environmental protection program. Long-term planning shall also be carried out and improved at every stage of governance, to arrive to the best solution. As a business Group with Sustainable Development goals in mind, we commit to bring a sustainable society, and fulfilling our responsibility as a member of the community, in order to create public trust. We highly appreciate the support of our Stakeholders, in order to maximize all benefits to the environment and the society.
In 2018, we are to pursue Sustainable Development. In line with the environment, we shall work with Stakeholders to develop solutions and implement climate change
Messages from the Board of Management
51
1,500
+
PROFESSIONAL EMPLOYEES
PROFESSIONAL
MAKING THE DIFFERENCE Difference is the element, deciding the successful in the market, we always innovate in all activities to become a more PROFESSIONAL, effective Group and unstoppable stepping forward.
CORPORATE GOVERNANCE ACTIVITIES
Code of Corporate Governance Introduction of the Board of Directors Corporate governance activities in 2017 Board of Directors’ Report Independent Member of The Board of Directors Report Audit Committee report Internal Audit Department under The Board Audit Committee Reports by Committees under the Board of Directors Asean Corporate Scorecard Risk Management Law Compliance Investor relations and capital market activities
54 60 62 72 74 76 80 84 86 102 106 108
Code of Corporate Governance
THE MAJOR PRINCIPLES IN NOVALAND’S CODE OF CORPORATE GOVERNANCE In order to provide the Investors with long-term perspective as well as potentials of the Group to make right investment decisions, Novaland management is implementing the sustainable business model ESG - Environmental, Social, and Governance factors in relation to Risk management. Efficient Corporate Governance is regarded by Novaland’s BOD as the stepping stone to increase corporate value and to support Sustainable Development. This enables the Group’s capacity to access the capital market, slash funding costs and increase asset value, minimize investment-related risks, promote operations and improve business performance as well as develop brand reputation and build trust among Shareholders, Investors and other Related Parties. Besides, for foreign Investors, the building and establishment of a standardized governance mechanism serves as a factor to evaluate the conservation and profitability of their investments.
In order to improve Corporate Governance, the BOD issued the amended Code of Corporate Governance in June 2017 and the amended Company’s Charter in August 2017. These documents covered legal updates including Decree No. 71/2017/NĐ-CP of June 6th, 2017, effective from August 1st, 2017 by the Government guiding Corporate Governance applicable to public companies. Novaland’s new Regulations cover such major aspects as (1) the establishment of standardized Corporate Governance principles; (2) the assurance of Shareholders’ rights and the proceedings of the GMS; (3) responsibilities and authorities of the Board and each Board Member; the structure and modus operandi of the Board and Committees thereof; (4) the continuous delivery of training programs and Corporate Governance trending updates for the management; (5) the prevention of conflicts of interest so as to ensure internal person and related persons compliance with standards of professional conduct and ethics in governance activities for the purpose of Shareholders’ rights and interests protection; (6) the building of reporting principles, the outperforming of a number of information disclosure indicators; (7) the proper and transparent monitoring and handling of violations. Besides, the Board has conducted supervision and coordinated with internal auditors and the risk management function to effectively perform Corporate Governance activities. In order to provide Investors with an insight of Novaland’s long-term advantages and potentials, the Board is implementing a sustainable business model known as ESG (Environmental, Social and Governance) - i.e. Risk management relating to environmental, social and governance factors. This conveys a strong message of measurable long-term benefits in reality as the Group attaches importance to ESG factors in business activities and a methodology in Investors’
54
BRIGHTEN LIVES
investment analysis. The BOD is aware that contributions from relevant stakeholders constitute valuable resources to enhance corporate competitiveness and generate profits. The organizational structure of Corporate Governance ensures the Company’s interests are realized via the recognition of Managers’ benefits and their contributions to the Company’s long-term interests. The Board currently encourages beneficial cooperation among relevant stakeholders, continues to improve Code of Corporate Governance taking into account such benefits as well as recognizes the importance of those benefits to the Group’s long-term success. In addition, the Board awards the efforts of staff
The Board encourages beneficial cooperation among relevant stakeholders, continues to improve Code of Corporate Governance taking into account such benefits as well as recognizes the importance of those benefits to the Group’s long-term success.
who contribute to the Company with worthy compensation. Such pragmatic Corporate Governance measures are more appealing to Investors who are willing to provide more affordable funding to the Group. Novaland’s Board has gradually and effectively improved Corporate Governance activities across various levels such as the compliance with laws and by-laws in order to enhance the Company’s reputation; the Board has taken initial steps in Corporate Governance and introduced advance Corporate Governance system to promote access to the capital market at competitive costs; analysis has been done of Corporate Governance rankings to improve business performance. Novaland’s Corporate Governance over the past year has not only complied with legal provisions, the Company’s Charter and the issued Code of Corporate Governance but also managed to apply more stringent international standards including: (1) The Corporate Governance framework of the Organization for Economic Co-operation and Development (OECD) is based on 4 core values including accountability, fairness, transparency and responsibility and is harmoniously associated with (2) Corporate Governance principles on the ASEAN Corporate Governance Scorecard.
Corporate Governance Activities
55
Code of Corporate Governance
No.
1
Type of principle
Description
Highlights at Novaland in addition to statutory requirements The Company clearly provides for the fair execution of the redemption of shares at Shareholders’ request.
Shareholders’ rights
Shareholders’ fundamental rights The right to attend GMS, documents that are served with; the right to have decisions in changing the Company’s fundamental decisions. Notice of annual GMS
2
3
4
Equal treatment toward Shareholders
Roles of parties with related interests
Insider trading and the manipulation of business activities for personal gains Protection of minority Shareholders from acts motivated by personal gains Related Parties benefits are governed by law or respected agreements Benefits of Related Parties are protected by law, and Related Parties have a chance to demonstrate their opinions should their benefits are infringed upon.
Information The quality of annual disclosure and reports transparency
Responsibility of the Board of Directors
5
Responsibility The BOD’s structure of the Board of Directors
The BOD’s operating performance
56
BRIGHTEN LIVES
The Company encourages and facilitates Shareholders’ exchange of information or consultations with other Shareholders. Additions information are always updated to the agenda of annual and extraordinary GMS. Chairman of the Board, Head of the Audit Committee (previously Head of the Supervisory Board) and CEO attend all the GMS. The Company performs better than legally required by giving a 28 days notice of the GMS. Having strictly implemented the Code of Conduct, over the past several years, the Group has not violated regulations on insider trading by the Board of Directors, the Board of Management and staff. The Company has over the past 3 years recorded no violations of applicable laws, rules and regulations relating to material Related Parties transactions and has had no Related Parties transactions that have the nature of financial support for non-subsidiary entities. The Company adopts international standards to execute Annual Reports and Sustainable Development Report including IIRC and GRI standards.
The Company has not been subject to any sanctions by the regulator in relation to the untimely disclosure of information for essential.
The audited 2016 Financial Statements were disclosed 69 days after the fiscal year end, outperforming the 100-day cap under Circular 155. With regards to audited Financial Statements, the Group has not received any “qualified opinions”, “adverse opinions”, “disclaimer of opinions” or amendments to the Financial Statements for other reasons than changes in the accounting policy. In addition, the Company has disclosed the income of the CEO and other Related Parties. Transparency is considered the top priority as the Group has over the years always adhered to regulations on listing as well as those on information disclosure. Among non-executive Board Members who have resigned, none has expressed any concern over the Group’s governance. The Company has properly structured the BOD with regards to specialization and gender equality by specifying independent Members and appointing a female as a non-executive BOD Member from 2016. The Group has introduced a dedicated policy on BOD membership diversity, disclosed measurement requirements as well as followed up implementation progress and achievements. Female Non - Executive BOD Member currently serve a 5-year term in accordance with the Company’s Charter and does not serves in over 5 BOD of listed companies. In particular, the Group does not appoint BOD Members who worked for the current Independent Auditor Company. The Group appoints the Human Resources Committee under the BOD. As part of such appointment, priority is given to the implementation of BOD membership quality determination process in conformity with the Group’s strategic orientations. The BOD performs governance function relating to IT issues, ensuring all major risks are identified, managed and reported to the BOD. Besides, the supportive is provided by the Audit Committee with respect to the Group’s risk management activities. In order to ensure independence and efficiency, Nonexecutive BOD Members are not authorized to accept warrants and bonus shares from the Group.
OPERATING STRUCTURE AND MECHANISM The AGM is the Group’s top authority. The AGM makes decisions on matters authorized by applicable laws, the Company’s Charter and the Code of Corporate Governance. All Shareholders are entitled to attend the AGM and owns a number of votes in proportion to their shares. The BOD, which plays a central role within the Corporate Governance framework, is responsible for directing and building the Group’s strategies together with business priorities including annual business and financial plans as well as managing and controlling the BOM’s activities. The current BOD, which comprises of 5 Members who serve a 5-year term, has one female independent Member who possesses expertise and experience in strategic governance and property trading. In 2017, the Group launched 4 Committees under the BOD in order to support the BOD of various activities including Audit Committee, Development Policy Committee, HR Committee and Remuneration Committee. Each of these Committees has its own operation regulations to carry out and fulfill assigned duties. The annual AGM of 2017 approved the change of the Group’s management and operation
Representative of Novaland received award of Top 10 Annual Report 2017 by Vietnam Annual Report Awards (ARA)
organization model under Article 134 Part 1 Point b of the 2014 Enterprise Law. Under this article, the Group ensures at least 20% of BOD Members are independent and the BOD has its own Audit Committee. The female Non-Executive BOD Member is currently responsible for performing supervisory functions and organizing the control of Corporate Governance and management. After the official introduction of the structure from June 2017, the Audit Committee, comprising of members diversely experienced in strategy, financial management and internal audit and headed by an Independent BOD member with expertise and experience in strategic governance and property trading, has enabled the Group to restructure the entire governance system to become more streamlined and leaner. The Audit Committee advises and assists the BOD in overseeing the integrity of the Group’s Financial Statements, ensuring the Group’s legal compliance, the competency and independence of the independent auditor, the competency and efficiency of Internal Audit, the efficiency of the risk management function and the internal control system. At present, Novaland is one of the few listed companies that pioneer in the transformation of the modus operandi by removing the Supervisory Board. This is considered both an international Corporate Governance Standards and a best market practice that is encouraged to improve the Corporate Governance efficiency of listed companies. A report released in September 2017 by the Boston Consulting Group (BCG) showed that Vietnam has a ratio of women serving in BOD and as CEO (25%) that is higher than that of several ASEAN countries e.g. Malaysia (14%), Singapore (10%) and Indonesia (6%). Southeast Asia, however, still ranks below Europe and North America in this regard. According to Adecco Group (a Swiss agency specialized in recruitment), the world in general has yet to reach the optimal point in terms of gender diversity in businesses. This means that all Managers will have to try even more as reality has shown that women involved in Corporate Governance have over the past years achieved a lot of success thanks
Corporate Governance Activities
57
Code of Corporate Governance
formation of the Vietnam Institute of independent BOD Members is being planned in order to support the governance of listed companies. The BOD believes it will have many chances to engage professional BOD Members who possess proper qualifications, professional ethics and experience to fuel the Group’s long-term growth.
to their unique qualities. For Novaland, the BOD has attached importance to the diversification of membership, expertise and experience of the BOD. BOD Members include individuals who have many years of experience in strategic governance and come from various industries such as finance, accounting, auditing, construction, property and corporate governance. Notably, 2 out of 5 BOD members are women and one of them serves as an independent BOD Member. This demonstrates the gender diversity and equality in the BOD structure and represents the contributions of women to the improvement of the BOD’s operating performance. In addition, the female independent BOD member, who is also head of the Audit Committee and the Development Policy Committee, serves as an advisor to the BOD in making economic, environmental and social decisions in an efficient, timely and appropriate manner. This ensures the BOD makes objective and fair decisions, thus avoiding conflicts of interest among the BOD. It also ensures the efficient monitoring of the BOD’s activities, guarantees Shareholders’ benefits and promotes Investor’s confidence in the BOD’s operations. Regarding the successor policy, the BOD has envisaged plans to improve the BOD structure such as increasing the number of independent and non-executive member in order to ensure the objectivity and independence of the BOD, mitigate conflicts of interest, thereby facilitating profit growth and corporate value. Besides, the
58
BRIGHTEN LIVES
The CEO, appointed by the BOD, is accountable to the BOD for the execution of assigned responsibilities and authorities. The CEO has to report to these authorities when required. The BOM, which comprises of two members, is responsible for the Group’s daily business and implementing the BOD’s decisions. While performing their job, the BOM is supported by the Chief Financial Officer and the Chief Accountant. The Company’s current BOM Members have many years of managerial experience in property, accounting and financial management. In addition, in order to efficiently support Corporate Governance activities, the BOD has appointed a Corporate Governance executive who at the same time serves as Corporate Secretariat. The executive, who has relevant legal knowledge, advises and assists the BOD in handling the latter’s daily activities as well as monitors and reports the Group’s legal compliance to the BOD. Novaland’ BOD understands that a company that properly performs the Corporate Governance function will be able to contribute more to the national economy as well as society as a whole. Corporate Governance is a continuous process rather than a short-term task. Therefore, the Group has to frequently update and review applicable Corporate Governance structures and processes. After being adopted by the 2017 AGM, the Company will continue to update, amend and supplement the Code of Corporate Governance and the Company’s Charter in order to ensure compliance with new regulations under Circular 95/2017/TT-BTC, published on September 22nd, 2017 by the Ministry of Finance guiding a number of Articles of Decree 71/2017/ ND-CP, effective from November 2017. This is the cornerstone of governance and management principles for the Group to apply to reality so as to improve operating performance and the optimal utilization of resources in Corporate Governance and management.
GENERAL MEETING OF SHAREHOLDERS
BOARD OF DIRECTORS
Branding & communications
Sustainable development council
Development policy committee
Audit Committee
BOD OFFICE
Human resources committee
Remuneration committee
CHIEF EXECUTIVE OFFICER
LEGAL & COMPLIANCE
Investment division
Project development division
Commercial division
Operations division
Finance & Accounting division
Human resources division
Corporate Governance Activities
59
Introduction of the Board of Directors
Mr. BUI THANH NHON
Mr. BUI XUAN HUY
Date of appointment as Chairman of the Board: Oct 10th, 2007
Date of appointment as Deputy CEO: Dec 1st, 2015
Duration of service as Chairman of the Board: 10 years and 2 months
Duration of service as Deputy CEO: 1 years and 9 months
Chairman of the Board
Qualifications: ◆◆ Bachelor in Agronomy. ◆◆ Executive MBA, HSB-TUCK, Dartmouth University, United States. Professional experience: ◆◆ 1992 - 2007: Chairman of the Board of Members - Thanh Nhon Trading Co., Ltd. ◆◆ 2007 to date: Chairman of the Board of Directors - No Va Land Investment Group Corporation.
Date of appointment as Board member: May 11th, 2017 Duration of service as Board member: 7 months Date of appointment as CEO: Sep 8th, 2017 Duration of service as CEO: 3 months Qualifications: ◆◆ Construction and industrial management engineer, HCMC University of Technology ◆◆ International MBA (DAS/EMBA), Arts Northwestern Switzerland School of Business in collaboration with FSB
Major duties at Novaland Group:
Professional experience:
◆◆ Strategic governance.
◆◆ 2007 - 2012: Project manager - Meinhardt Viet Nam
◆◆ Organization and supervision of the execution and implementation of resolutions of the Shareholders’ General Meeting and the Board of Directors.
◆◆ 2012 - 2015: Director of Project Development Division - No Va Land Investment Group Corporation
◆◆ Head of the Human Resources Committee and the Remuneration Committee. Chairman of the Board at 5 other companies (excluding subsidiaries and parent companies): Diamond Properties Joint stock Company, Novagroup Joint stock Company, Nova Mclub Joint stock Company, NSQ Investment and Development Joint stock Company, and Anova Joint stock Company. Ratio of voting rights at Novaland Group: 145,715,656 shares, accounting for 22.43%.
60
Member of the Board of Directors cum CEO
BRIGHTEN LIVES
◆◆ 2015 - Sep 2017: Deputy CEO and Board member - No Va Land Investment Group Corporation ◆◆ Sep 2017 to date: CEO and Board member - No Va Land Investment Group Corporation Major duties at Novaland Group: ◆◆ Strategic governance and leading of all the Group’s operations ◆◆ Member of the Development Policy Committee. BOD member at other companies (excluding subsidiaries and parent companies): Not applicable. Ratio of voting rights at Novaland Group: 67,834 shares, accounting for 0.01%.
Mr. PHAN THANH HUY
Ms. HOANG THU CHAU
Ms. NGUYEN THANH BICH THUY
Member of the Board of Directors
Member of the Board of Directors cum Deputy CEO
Independent member of the Board of Directors
Date of appointment as BOD member: July 21th, 2016
Date of appointment as Deputy CEO: Dec 3rd, 2012
Date of appointment as independent BOD member: Apr 27th, 2017
Duration of service as BOD member: 1 year and 5 months
Duration of service as Deputy CEO: 5 years
Duration of service as independent BOD member: 8 months
Date of appointment as CEO: Jul 9th, 2015
Date of appointment as BOD member: Nov 11th, 2016
Duration of service as CEO: 2 years and 2 months
Duration of service as BOD member: 1 year and 2 months
Qualifications: Doctor of Business Administration (DBA), Apollos University, United States
Qualifications:
Professional experience: ◆◆ 2006 - 2008: CFO - Duy Tan Plastic Joint Stock Company ◆◆ 2008 - 2010: Deputy CEO for Finance An Phu Long Corporation ◆◆ 2010 - 2015: CFO and CEO - No Va Land Investment Group Corporation ◆◆ 2015 – Jul 2016: CEO - No Va Land Investment Group Corporation ◆◆ Jul 2016 – Sep 2017: Board member and CEO - No Va Land Investment Group Corporation ◆◆ Sep 2017 to date: Board member - No Va Land Investment Group Corporation Major duties at Novaland Group: ◆◆ Strategic governance in relation to Novaland Group’s development orientations and model ◆◆ Member of the Development Policy Committee BOD member at other companies (excluding subsidiaries and parent companies): Not applicable. Ratio of voting rights at Novaland Group: 68,682 shares, accounting for 0.011%.
◆◆ Bachelor in Accounting ◆◆ International MBA (DAS/EMBA), Arts Northwestern Switzerland School of Business in collaboration with FSB Professional experience: ◆◆ 2003 - 2010: Chief Accountant - No Va Land Investment Group Corporation ◆◆ 2010 - 2012: Chief Accountant – No Va Land Investment JSC ◆◆ 2012 – Oct 2016: Deputy CEO - No Va Land Investment Group Corporation ◆◆ Nov 2016 to date: Deputy CEO and Board member - No Va Land Investment Group Corporation
Qualifications: Bachelor degree Professional experience: ◆◆ Over 25 years of Strategic Planner and Senior Executive at international groups ◆◆ Apr 2017 to date: Independent Board member - No Va Land Investment Group Corporation Major duties at Novaland Group: ◆◆ Strategic governance ◆◆ Supervision and execution of control over the Group’s management and governance ◆◆ Head of the Audit Committee, the Development Policy Committee, member of the HR Committee BOD member at other companies (excluding subsidiaries and parent companies): Not applicable. Ratio of voting rights at Novaland Group: 0%
Major duties at Novaland Group: ◆◆ Strategic governance ◆◆ Lead the execution of the Shareholders’ General Meeting and Board of Directors’ strategy ◆◆ Member of the Development Policy Committee. BOD member at other companies (excluding subsidiaries and parent companies): Not applicable. Ratio of voting rights at Novaland Group: 51,310 shares, accounting for 0.008%.
Corporate Governance Activities
61
Corporate governance activities in 2017
BOARD OF DIRECTORS’ MEETINGS In 2017, the BOD conducted 82 meetings, promulgated 97 Resolutions to adopting important guidelines and decisions for the strategic directions of development and business activities of the Group with the main contents as follows: (1) Corporate Governance activities, appointment and dismissal of the BOM; (2) Fundraising, increasing Charter Capital and (3) Investment activities and establishment of Company: No.
Resolution/ Decision No.
Date
Contents
I. Corporate Governance activities, appointment and dismissal of the BOM: 28 1
05/2017-QĐ-NVLG
25/1/2017
The record date for Shareholder’s written opinions
2
12B/2017-QĐ.HĐQT-NVLG
30/3/2017
Cancellation of Shareholders’ written opinion
3
08/2017-QĐ-NVLG
6/3/2017
The record date for Shareholders’ list of the AGM 2017
4
13/2017-QĐ.HĐQT-NVLG
31/3/2017
Agenda of the 2017 AGM
5
15/2017-QĐ.HĐQT-NVLG
17/4/2017
Decision on the Letter of resignation of independent BOD’s Member, and supplement of 2017 AGM agenda
6
18/2017-QĐ.HĐQT-NVLG
24/4/2017
List of nominated candidates for BOD’s independent Members
7
19/2017-QĐ.HĐQT-NVLG
11/5/2017
Resignation, dismissal of Deputy Chairman – Deputy CEO and temporary appointed new BOD’s Member
8
22/2017-QĐ.HĐQT-NVLG
25/5/2017
Dismissal of Deputy CEO
9
21/2017-QĐ.HĐQT-NVLG
29/5/2017
Promulgating the Company’s Charter with amendment and supplementation
10
24/2017-QĐ.HĐQT-NVLG
1/6/2017
Appointment of Finance and Accounting Division Director
24A, 24B/2017-QĐ.HĐQT-NVLG
9/6/2017
Dismissal of Manager; Deputy Manager of Novaland Phu Nhuan Real Estate Exchange
26/2017-QĐ.HĐQT-NVLG
19/6/2017
Issued Code of Corporate Governance
28, 29, 30, 31, 32/2017-QĐ. HĐQT-NVLG
26/6/2017
Established Audit Committee, Human Resources Committee, Remuneration Committee, Development policy Committee; Appointment of Corporate Governance and Company Secretariat person
19
34/2017-QĐ.HĐQT-NVLG
3/7/2017
The record date for Shareholder’s written opinions
20
38/2017-QĐ.HĐQT-NVLG
26/7/2017
The content changes for Shareholders’ written opinions
21
43/2017-QĐ.HĐQT-NVLG
15/8/2017
Dismissal of Deputy CEO
22
44/2017-QĐ.HĐQT-NVLG
22/8/2017
Issued updated Company’s Charter
54, 55, 56, 57/2017-QĐ.HĐQTNVLG
8/9/2017
Dismissal of CEO, Deputy CEO; Appointment of CEO; Changes in human structure of Committees
20/12/2017
Dismissal, appointment Corporate Governance person; the record date for Shareholders’ written opinions
11-12 13 14-18
23 - 26
27 - 28 73, 74/2017-QĐ.HĐQT-NVLG
II. Fundraising, increasing Charter Capital: 18
62
1
05A/2017-QĐ-NVLG
22/2/2017
Issuance of Corporate bonds
2
12A/2017-QĐ.HĐQT-NVLG
27/3/2017
Issuance of Corporate bonds
3
20/2017-QĐ.HĐQT-NVLG
19/5/2017
Issuance of Corporate bonds
BRIGHTEN LIVES
No.
Resolution/ Decision No.
Date
Contents
4
25/2017-QĐ.HĐQT-NVLG
15/6/2017
Implementation of private placement for loan conversion
5
36/2017-QĐ.HĐQT-NVLG
3/7/2017
Increasing Charter capital and amendment of the Company Charter
39, 40/2017-QĐ.HĐQT-NVLG
3/8/2017
Issuance Company’s bond; Receiving credit from Credit Suisse AG Singapore Branch
8
57A/2017-QĐ.HĐQT-NVLG
11/9/2017
Authorized BOD Chairman/ CEO to execute the issuance of Corporate bonds
9 - 13
58, 59, 60, 61, 62/2017-QĐ. HĐQT-NVLG
25/9/2017
Capital using plan for Credit Suisse AG’s loan; Established ESOP executive team; Established additional voting checking board; implementation plan and code of ESOP; ESOP issuance list
7/11/2017
Adjustment of plan and code of ESOP 1; Revising ESOP issuance list
6-7
14 - 15 67, 68/2017-QĐ.HĐQT-NVLG 16
71B/2017-QĐ.HĐQT-NVLG
28/11/2017
Novaland’s loan at Vietinbank – HCMC Branch
17
72/2017-QĐ.HĐQT-NVLG
20/12/2017
Issuance of Company’s bond
18
76/2017-QĐ.HĐQT-NVLG
27/12/2017
Increase credit limit at Credit Suisse AG
III. Investment activities and established Company: 51 1
06/2017-QĐ-NVLG
23/2/2017
Receiving the capital transferred and appointing the Representative for the capital contributed at Bach Hop Real Estate Co., Ltd
2
07/2017-QĐ-NVLG
28/2/2017
Increasing capital and appointing the Representative for the capital contributed at No Va An Phu Company Limited
3
09/2017-QĐ.HĐQT-NVLG
9/3/2017
Divestment of Vuong Cung Real Estate Investment Company Limited
4
10/2017-QĐ.HĐQT-NVLG
14/3/2017
Open account at Malayan Banking Berhad HCMC Branch
5
10A/2017-QĐ.HĐQT-NVLG
24/3/2017
Transfer land use right at Vung Tau City
11, 12/2017-QĐ.HĐQT-NVLG
27/3/2017
Receiving the capital transfer of Phu Dinh Port Joint Stock Company; and implemented receiving capital transfer and appointing the representative of capital at Phu Dinh Port JSC
14/2017-QĐ.HĐQT-NVLG
13/4/2017
Increasing capital and appointing authorization representative at Thanh Nhon Real Estate JSC
16, 17/2017-QĐ.HĐQT-NVLG
20/4/2017
Receiving the capital transfer at Gia Duc Real Estate Company Limited; implementation receiving capital transfer and appointing the representative of capital at Gia Duc Real Estate Limited Company
11
19A/2017-QĐ.HĐQT-NVLG
16/5/2017
Amendment of employee information
12
23/2017-QĐ.HĐQT-NVLG
31/5/2017
Increasing capital and appointing the representative of capital at Nova Galaxy Real Estate JSC
13
27/2017-QĐ.HĐQT-NVLG
20/6/2017
Receiving capital transfer and appointing the representative of capital at Nova Sasco Limited Company
14
33/2017-QĐ.HĐQT-NVLG
30/6/2017
Increasing capital, appointing the representative of capital at Vung Tau Youth Hotel and Travel Joint Stock Company
15
35/2017-QĐ.HĐQT-NVLG
3/7/2017
Increasing capital and appointing the representative of capital at No Va Galaxy Real Estate JSC
16
37/2017-QĐ.HĐQT-NVLG
21/7/2017
Increasing capital and appointing the representative of capital at No Va Galaxy Real Estate JSC
2/8/2017
Transferring capital at Nova Galaxy Real Estate JSC, Cooperating with Dat Viet Development JSC implemented and developed project in District 1, HCMC
6-7
8
9 - 10
17 -18 38A, 38B/2017-QĐ.HĐQT-NVLG
Corporate Governance Activities
63
Corporate governance activities in 2017
No.
Resolution/ Decision No.
19
41/2017-QĐ.HĐQT-NVLG
3/8/2017
Implementation of capital transfer at Nova Galaxy Real Estate JSC
20
41A/2017-QĐ.HĐQT-NVLG
4/8/2017
Capital using plan for Credit Suisse AG’s credit
21
42/2017-QĐ.HĐQT-NVLG
7/8/2017
Investment capital in Thanh Nhon Real Estate Limited Company
22
42A/2017-QĐ.HĐQT-NVLG
11/8/2017
Implement capital investment, appointing capital representative at Thanh Nhon Real Estate Limited Company
23
45/2017-QĐ.HĐQT-NVLG
22/8/2017
Increasing capital, appointing capital representative at Thanh Nhon Real Estate Limited Company
24
46/2017-QĐ.HĐQT-NVLG
24/8/2017
Transferring capital at Nova Phu Sa Investment and Development JSC and Nova Phu Sa Ecotourism JSC
25 - 27
47, 48, 49/2017-QĐ.HĐQTNVLG
25/8/2017
Implementing shares transfer at Nova Phu Sa Ecotourism JSC; Nova Phu Sa Investment and Development JSC; Signed sales agreement of real estate in District 1, HCMC
50, 51, 52, 53/2017-QĐ.HĐQT28 - 31 NVLG
6/9/2017
Setting up Subsidiary Company - Ngoc Linh Hoa Investment JSC; contributing capital in setting up Ngoc Linh Hoa Investment JSC; appointing capital representative at Nova Properties Management Limited Company
32 - 33 63, 64/2017-QĐ.HĐQT-NVLG
26/9/2017
Increasing capital contribution at Sun City Investment and Development Limited Company; appointing capital representative at Sun City Investment and Development Limited Company
9/10/2017
Receiving land use right in District 2, HCMC
11/10/2017
Documents attached to BOD’s meeting invitation of Phu Dinh Port JSC; Increasing capital contribution and appointing capital representative at Ngoc Linh Hoa Investment JSC
34
64A/2017-QĐ.HĐQT-NVLG
35 - 36 65, 66/2017-QĐ.HĐQT-NVLG
Contents
37
66A/2017-QĐ.HĐQT-NVLG
29/10/2017
Transferring and receiving capital transfer at Nova Nam A Limited Company
38
69/2017-QĐ.HĐQT-NVLG
10/11/2017
Transferring all shares at Huy Minh Real Estate JSC
39
70/2017-QĐ.HĐQT-NVLG
14/11/2017
Transferring all shares at Huy Minh Real Estate JSC
40
71/2017-QĐ.HĐQT-NVLG
8/12/2017
Increasing capital, appointing authorized capital representative at Thanh Nhon Real Estate JSC
41
71A/2017-QĐ.HĐQT-NVLG
12/12/2017
Appointing authorized capital representative at Nova An Phu Limited Company
42
73A/2017-QĐ.HĐQT-NVLG
20/12/2017
Remuneration of the BOD in 2017
22/12/2017
Increasing capital contribution in Mega Housing JSC; appointing authorized capital representative at Mega Housing JSC; Increasing capital, appointing authorized capital representative at Phuoc Long Investment and Development Limited Company
27/12/2017
Increasing capital contribution in Nova An Phu Limited Company; Appointing authorized capital representative at Nova An Phu Limited Company; Increasing capital contribution, appointing authorized capital representative at Nova Thao Dien Limited Company
28/12/2017
Increasing capital contribution at Nova Property Management Limited Company; Appointing capital representative at Nova Property Management Limited Company; signing principle contract to S.C.I Investment, Import and Export JSC
74A, 75, 75A/2017-QĐ.HĐQT43 - 45 NVLG
77, 78, 79/2017-QĐ.HĐQT46 - 48 NVLG
80, 81, 82/2017-QĐ.HĐQT49 - 51 NVLG
64
Date
BRIGHTEN LIVES
BOARD OF DIRECTORS’ MEETINGS In addition to the BOD meetings to issue Resolutions, Decisions on implementation of the plan approved by the AGM as well as to implement the strategy during 2017, the Board Members also participated in meetings with Audit Committee, Development Policy Committee, Human Resources Committee and Remuneration Committee to best support the BOD’s Corporate Governance.
No. Name
Title
Total No. of meetings
BOD
IAC
PDC
HRC
RC
82
2
1
2
2
2
2
Absence reason
BOD’s Chairman
1
Mr. Bui Thanh Nhon
Head of Human Resources Committee (HRC)
82
Head of Remuneration Committee (RC) BOD’s Member 2
Mr. Phan Thanh Huy
Member of Development Policy Committee (DPC)
36
Business trip and personal reason
63
1
Appointing as a BOD’s Member from May 11th, 2017
82
1
BOD’s Member 3
Mr. Bui Xuan Huy
Member of DPC CEO BOD’s Member
4
Ms. Hoang Thu Chau
Member of DPC Deputy CEO Independent BOD’s Member
5
Ms. Nguyen Thanh Bich Thuy
Head of IAC
64
Head of DPC Member of HRC
2
1
2
Appointing as an independent BOD’s Member from April 27th, 2017
6
Mr. Bui Cao Nhat Quan
BOD’s Member
19
Resignation from May 11th, 2017
7
Ms. Cong Huyen Ton Nu My Lien
Independent BOD’s Member
15
Resignation from April 17th, 2017
Corporate Governance Activities
65
Corporate governance activities in 2017 BOARD OF DIRECTORS’ DETAIL STRUCTURE INCOME Pursuant to the 2017 AGM’s Resolution, the remuneration of the BOD shall not exceed VND 2 billion and the Supervisory Board shall get paid according to the 2016 plan, but not in excess of VND 48 million, as the Supervisory Board only operated during the first 4 months of 2017. The actual remuneration for the BOD and Supervisory Board in 2017 totaled VND 1,046 billion, with the BOD’s remuneration of VND 1.03 billion and the Supervisory Board remuneration of VND 16 million, in line with their actual operating time in 2017. No.
Position
Salary
Bonus
98.8% 78.7% 66.9%
1.2% 21.3% 33.1%
93.4%
6.6%
0%
0%
99.6%
0.4%
0%
0%
Head Member Member
59.3% 51.3% 50.9%
40.7% 48.7% 49.1%
Head Member Member Member
0% 0% 0% 0%
0% 0% 0% 0%
Remuneration 2017 (Million VND) 1,030 600 70 80
Time in the position
I 1 2 3
BOARD OF DIRECTORS Mr. Bui Thanh Nhon Mr. Phan Thanh Huy Mr. Bui Xuan Huy
4
Ms. Hoang Thu Chau
5
Ms. Nguyen Thanh Bich Thuy
6
Mr. Bui Cao Nhat Quan
Deputy BOD’s Member
7
Ms. Cong Huyen Ton Nu My Lien
Independent BOD’s Member
II 1 2 3 III 1 2 3 4 IV 1 2
SUPERVISORY BOARD Ms. Nguyen Thi Minh Thanh Mr. Nguyen Vu Duy Ms. Nguyen Anh Thi AUDIT COMMITTEE Ms. Nguyen Thanh Bich Thuy Mr. David Proctor Ms. Vo Thi Thu Van Ms. Nguyen Thi Minh Thanh BOARD OF MANAGEMENT Mr. Bui Xuan Huy Ms. Hoang Thu Chau
CEO Deputy CEO
Reference I.3 BOD Reference I.4 BOD
3
Mr. Phan Thanh Huy
CEO
Reference I.2 BOD
4
Mr. Bui Cao Nhat Quan
Deputy CEO
Reference I.6 BOD
5
Mr. Chan Hong Wai
Deputy CEO
61.5%
38.5%
6
Mr. Le Hong Phuc
Deputy CEO
99.9%
0.1%
7
Ms. Vo Thi Thu Van
Deputy CEO
47%
53%
V
OTHER MANAGEMENT POSITION Acting Finance – Mr. Phan Le Hoa Accounting Division Director Ms. Tran Thi Thanh Van Chief Accounting Officer Total
60.6%
39.4%
0 1/6/2017 - 31/12/2017
94.9%
5.1%
0 1/1/2017 - 31/12/2017 1,046
1 2
66
Details
BRIGHTEN LIVES
Chairman BOD’s Member BOD’s Member - CEO BOD’s Member – Deputy CEO Independent BOD’s Member
1/1/2017 - 31/12/2017 1/1/2017 - 31/12/2017 11/5/2017 - 31/12/2017
120 1/1/2017 - 31/12/2017 80 27/4/2017 - 31/12/2017 1/1/2017 - 11/5/2017 40 Resignation from May 11th, 2017 1/1/2017 - 27/4/2017 40 Resignation from April 17th, 2017 16 8 1/1/2017 - 27/4/2017 4 1/1/2017 - 27/4/2017 4 1/1/2017 - 27/4/2017 0 0 26/6/2017 - 31/12/2017 0 8/9/2017 - 31/12/2017 0 8/9/2017 - 31/12/2017 0 26/6/2017 - 31/12/2017 0 8/9/2017 - 31/12/2017 1/1/2017 - 31/12/2017 1/1/2017 - 8/9/2017 Resignation from September 8th, 2017 1/1/2017 - 11/5/2017 Resignation from May 11th, 2017 1/1/2017 - 25/5/2017 0 Resignation from May 25th, 2017 1/1/2017 - 15/8/2017 0 Resignation from August 15th, 2017 1/1/2017 - 8/9/2017 0 Resignation from September 8th, 2017 0
IMPROVING AND ENHANCING CORPORATE GOVERNANCE EFFECTIVENESS Training courses attended by the BOD In addition to meet the Corporate Governance requirements against the BOD, the Audit Committee and the BOM, in accordance with the law, members of senior management at Novaland actively participated in training courses in the fields of strategic management, executing, controlling and risk management through the programs from national and international trainers, organized
No. Course
by Novagroup Leadership Center and also through outsourced courses. These activities aimed to assist the Senior Management to update advanced Corporate Governance model in line with good practices in the global market, then for appropriate application to Novaland from time to time. Outstanding training activities of the year could be listed as follows:
Bui Phan Bui Hoang Thanh Thanh Xuan Thu Nhon Huy Huy Chau
1
Q1/2017 - Information Security Management System ISMS ISO27001: Internal Information Security, Information Security Guidelines at Novaland and Information Security Implementation and Compliance Guideline - Novagroup Leadership Center.
2
Q1/2017 - Customer Mindset Workshop: Raising awareness about customer service mindset under the motto “ Customer First” - Novagroup Leadership Center.
3
Q1/2017 - Tax training 2017: Updating knowledge and skills on tax in accordance with regulations The State and Tax Department of Ho Chi Minh City.
4
Q2/2017 - Customer Service Workshop: Supporting the management team, increasing attention and improving customer care - customer service; Building the Customer First mindset - Dr. Vicki Halsey.
5
Q2/2017 - Corporate Governance: Providing knowledge and skills on Corporate Governance in accordance with the Corporate Governance Regulation for public companies - Securities Research and Training Center.
6
Q3/2017 - Personal Coaching: Leadership Capacity Enhancement and Personal Development Dale Carnegie.
7
Q3/2017 - “Economic trends and real estate situation in Vietnam and in the world” Workshop”: World economic trends, potential risks and recovery, macroeconomic policies, microeconomic movements and Vietnam’s current real estate market and future prospects - Novagroup Leadership Center, Mr. Vo Tri Thanh - Deputy Director of Central Institute for Economic Management and Research.
8
Q4/2017 - Preparation and presentation of financial statements on IFRS Standards: Applying international accounting standards and increasing the transparency of financial statements PwC Vietnam.
Nguyen Thanh Bich Thuy
Vo Thi Thu Van
Nguyen Bui Thi Cao Minh Nhat Thanh Quan
Corporate Governance Activities
67
Corporate governance activities in 2017
Corporate activities associated with Internal Audit Starting from June 26th, 2017, Novaland Group adopted a governance structure without the Supervisory Board, and set up the Audit Committee, and reorganized the entire management system in the way of lean and logical management. Independent BOD Members with prestige, high professional capacity and impartiality has been supervising and ensuring the company’s management and operation in good control. Also in 2017, the independent BOD Member was appointed as Head of Audit Committee. The BOD supervised the performance of the internal control and risk management system through the Audit Committee, the BOD also managed the Group’s Internal Audit. The Audit Committee was only officially put into operation in the second half of 2017; therefore, the BOD implemented the following steps (1) Reviewing the regulation on the Audit Committee operation; (2) Reviewing the Internal Audit reports; (3) Reviewing, discussing and approving the performance of the Audit Committee and its Members annually. In order to improve Corporate Governance practices, the Group invested in both audit and non-audit services. Non-audit services include consultancy on sustainable development, consultancy on corporate finance, domestic and foreign fundraising, Due diligence assessment, etc. with the cost of about VND 4.3 billion; It exceeded audit services cost by about VND 3 billion, the later services included auditing and reviewing financial statements in accordance with Vietnamese Accounting Standards (VAS), International Financial Reporting Standards (IFRS), capital auditing, etc. In order to ensure the transparency and efficiency of services, Novaland ‘s Internal Audit step by step reviewed these activities as well as have had plans for comprehensive implementation in the coming years.
The participation of the Non-Executive Director in committees to ensure independent and fair decision-making, assisting the BOD in overseeing the development and personnel activities of the Company.
68
BRIGHTEN LIVES
Management activities associated with development policy, human resource and remuneration In parallel with the establishment of Audit Committee and implementation of the compliance roadmap for ASEAN Corporate Governance scorecard with the target set by the BOD in 2016; in June 2017, the BOD set up Development Policy Committee, Human Resource Committee and Remuneration Committee to improve corporate governance practices in line with good practice from around the world. Improvements of the corporate governance structure gradually demonstrated the importance of independent BOD Member. As a result, the independent BOD member was also appointed as head of the Development Policy Committee and Member of Human Resource Committee. The participation of the BOD Executive member in operation of committee to ensure independent and decision-making, assisting the BOD in overseeing development and personnel orientation activities of Company.
the fair the the
In 2017, the BOD structure retained at least two nonexecutive Members, including the independent member, accounting for 40% of the number of BOD members. However, in order to improve independence and equality in corporate governance, the BOD continued to seek more independent members and non-executive members in the coming years to support the improvement of management effectiveness through the expertise and strategic direction in which these members have expertise. These members will ensure independence in decision making, impartiality in monitoring and control because they are not influenced by Related Parties, as they do not directly control the activities of the Company. In addition, in order to meet the latest regulations on corporate governance, the BOD also appointed a Corporate Governance person who has knowledge in law and related fields to make consultation to the BOD, to minimize legal risks in governance activities.
Management activities associated with Risk Management. Proper development and application of risk management procedures is a solid foundation for sustainable development of enterprises. In 2017, while facing a series of difficulties and challenges, the BOD became more determined in the application and improvement of the current risk management structure. The BOD, through the Audit Committee, completed the following:
◆◆ Approval of risk management policies; ◆◆ Reviewing and approving the audited reports relating
to risk management of the Group by the Internal Audit Department;
◆◆ Reviewing and adopting reports on key risks, risk
assessment results and action plans of the BOM.
◆◆ Discussing with the BOM on policies related to risk
assessment and management, including the risk appetite, key risks and the BOM’s action plan regarding these risks.
Corporate governance rule on ASEAN Corporate Governance Scorecard, ensuring the following principles:
The BOD and Committees, including the Audit Committee, had easy access to information on the Company’s operations, directly met all staff in person, proactively get access to information sources to monitor the effectiveness of risk management, in particular:
◆◆ Assurance of the Rights of Shareholders;
◆◆ Considering the effectiveness of the internal control
◆◆ Information disclosure and transparency;
and risk management system, including ICT control and security;
◆◆ Equal treatment to all Shareholders; ◆◆ Roles of Related Parties;
◆◆ Responsibilities of the BOD.
Management activities associated with information disclosure
Corporate activity associated with media crisis
The timely and sufficient information disclosure has considerable effect on the behavior of Shareholders and Investors, increasing the Company’s transparency in the market. Novaland’s BOD does not consider that the information disclosure is an obligation by the law, but it is an interest of the Company in enhancing its reputation and image, the most effective way to convince Investors, to show professionalism, to respect the Shareholders and to serve as a basis for sustainable development and increase the value of the Company. In addition to implementing the ESG - Risk Management with respect to Environmental, Social and Governance factors, the BOD instructed the BOM to continue to enhance information disclosure practices in accordance with international standards:
In media crisis, not only the business is harmed but the Company’s image and brand are also damaged. Risk prevention planning was established and updated quarterly, together with the media crisis Management Process, are the basis for prevention and resolution for communication incidents throughout 2017. To overcome these risks, the Group had identified risks that may lead to a media crisis to have timely plan and corrective solutions in place.
The OECD Principles of Corporate Governance, based on four core values
EQUALITY
RESPONSIBILITY
TRANSPARENCY
ACCOUNTABILITY
From 2016, the Company set up the Committee for crisis management consisting of the highest senior managers and in 2017, the Group promulgated regulations on communication to the public to ensure consistent and professional delivery of important information about the Company; thereby minimizing risks that could lead to media crisis. The BOD also conducted training courses on “Spokeperson Skills in Media Crisis” for Senior management, under the guidance of leading media experts in Vietnam. In fact, experiencing some media incidents in 2017, the Committee of crisis management put in place an appropriate strategy, acted quickly, and therefore minimized the possible negative impact. The progress of the incidents continued to be monitored and updated; experience from the incidents was documented, thoroughly analyzed and supplemented, then finalized and included in the crisis communication plan for the next phase.
Corporate Governance Activities
69
Corporate governance activities in 2017
Management activities linked to the Sustainable Development strategy Novaland’s Sustainable Development Strategy is consistent with its vision, mission and business strategy and based on engagement with Stakeholders in three key areas: ◆◆ Creating
long-term value through investment in sustainable development dynamics (Economy);
◆◆ Creating and sharing common values (Society); ◆◆ Managing impacts (Environment).
The Sustainable Development Council of Novaland Group was established in 2016 with independent external members, who had expertise and strategic experience in economy, society and the environment. In 2017, facing the incidents, the BOD was advised by Sustainable Development Council on the right and appropriate steps to solve difficulties thoroughly in the short term, to use the incidents as case studies, to analyze and create strategic solutions for the company’s management; which, then, was transferred as information to stakeholders in a transparent and objective way, in reply to concerns about the Group’s business activities. The BOD understands that achievement of sustainable development goals should be a long-term, even costintensive strategy. However, for a stable future and sustainable development, in 2017, under the advice of the Sustainable Development Council, the BOD continued to invest strongly in non-financial activities: ◆◆ Improving the operation of corporate governance as
implementing healthy living and improving the welfare
70
BRIGHTEN LIVES
Success shall not be achieved in a day or two, instead it will be the long-term yield; from an impressive business result in a period, to Novaland’s contributions which are recognized by the Society and the Community. for employees, ensuring gender equality in staff and leadership structure, contributing to economic growth and sustainable employment, and promoting global partnerships; ◆◆ Continuing
community and social activities as contributing to no poverty, no poor, improving the quality of education, reducing social inequality;
◆◆ Protecting living environment as assisting residents
to access clean water and sanitation, access energy at reasonable and reliable prices, building sustainable urban and safe communities, carrying out responsible production and consumption, responding to climate change activities, etc.
All of these goals are directed by the BOD for the BOM for implementation, step by step developing the sustainable development strategy, in which the BOD and the Sustainable Development Council have set consistent goals. Sweet fruit shall not be harvested in one or two days, instead it will be the long-term yield; from an impressive business result in a period, to Novaland’s contributions which are recognized by the Society and the Community.
Board of Directors’ Report
ON DEVELOPMENT STRATEGY
11,632
BILLION VND NET REVENUE 58% YOY INCREASE
2,062
BILLION VND PROFIT AFTER TAX 24% YOY INCREASE
In line with the Phase 3 development strategy of Novaland Group. In 2017, the BOD continued to implement the Phase 2’s strategies based on core apartment products, expanding to commercials and hospitality, keeping in mind the goal of building stable long-term income, serving sustainable development strategy of the Group. The BOD reviewed and approved decisions on products development in relation with the market demand, carried out M&A deals and increased ownership in affiliated companies, subsidiaries, re-structured the Corporate Governance.
Regarding business Sales revenue: Net revenue reached VND 11,632 billion, an increase of 58% YOY. Profit after tax: Reaching VND 2,062 billion, an increase of 24% YOY. Market share: Taking approximately 24% market share of HCMC’s mid&high end apartments market share in 2017 (according to Savills).
Regarding dividend In 2017, the BOD submitted the proposal to pay dividend at 2017 AGM. However, dividends were not paid because the BOD set out priorities in using profit for re-investment into new projects, accumulating land bank for long-term development strategy, implementing the business plan and maximum the opportunities in the real estate market. The BOD distributed dividends to preferred conversion shares in accordance with the AGM’s Resolution with the total amount of VND 20,490,000,000. Based on 2017 business performance, the expected dividend in 2018 will be up to 20% of Charter Capital by cash or share. Stunning view at night at Lakeview City - Photo by Le Huu Dung
Corporate Governance Activities
71
Board of Directors’ Report
Sustainable Development and Social Responsibility In 2017, the BOD implemented the orientation programs, policies on sustainable development and social responsibility as announced. Specific contents have been integrated into operational processes (reference detail information in the Sustainable Development Report).
ASSESSMENT OF THE BOD‘S PERFORMANCE Upon implementation of the plans approved by the GMS, the BOD carried out crucial management activities regarding the structure of the Group, compliance with provisions of the Company’s Charter, Code of Corporate Governance and current regulations. The BOD issued Resolutions and Decisions related to the Group’s activities within the scope of its responsibilities and authority. BOD’s Resolutions and Decisions was issued in accordance with the authority, order and procedures as in the Law on Enterprises and the Company’s Charter, in line with business reality, that met the management requirements and business development demand as well as the Group’s strategies. In 2017, the BOD held regular and periodic meetings. The BOD members made the decision with orientation and direction on business activities, in light of the AGM Resolutions. The BOD conducted 82 meetings, issued 97 Resolutions adopting important guidelines and decisions for the strategic directions of the Group’s development and business activities as follows: (1) Corporate Governance Management, appointment and dismissal of Management Personnel; (2) Fundraising, increasing Charter Capital and (3) Capital investment activities. Corporate Governance activities / Appointment, dismissal of Management Personnel Year 2017 can be considered as a year of comprehensive restructure of the Group, with remarkable Corporate Governance activities as changing the organizational structure to a structure without the Supervisory Board, and setting up Committee under the BOD; appointing nonexecutive BOD Members to be Heads of the Committees. This change enhanced and facilitated Governance activity. BOD set up Committees under the BOD in June 2017 to assist the activities related to Human Resources, Remuneration and Development Policy regarding the
72
BRIGHTEN LIVES
change in structure. Novaland is one of the pioneering enterprises in applying new Corporate Governance structure in accordance with the Law on Enterprises. The governance operation under this new structure has not been popular in Vietnam, currently implementation is encouraged by the Government. In order to meet new requirements, the BOD defined the Group’s governance contents as follows: ◆◆ Increasing the number of BOD non-executive Member and independent Members to improve the independence of the BOD; ◆◆ Enhancing the participation of independent Members in the Committees under the BOD, to improve the performance of the Committees, to consult for the BOD; strengthening the independence of Committees under the BOD. Fundraising, increasing Charter Capital / Capital investment activities The BOD directed the successful implementation of the Charter Capital increasing from VND 5,962 billion to VND 6,297 billion under private placement of shares. The BOD also directed the BOM to complete the 2017 ESOP issuance, thereby recording the increased Charter Capital from VND 6,297 billion to VND 6,497 billion. As part of the sustainable development strategy, the implementation of the programs not only served the Investors, Shareholders but also the employees of the Group through the ESOP in December 2017 and early 2018, contributing to the engagement of the employee’s in the Group. In 2017, the BOD submitted to the AGM for adopting the fundraising plan through the issuance of convertible dividend preferred shares. However, this plan was not implemented in 2017 due to the fact that the capital investment project was changed, and the BOD had the alternative fundraising plan. For the protection of the interests of investors, the BOD in some way expressed the commitment to ensure the interests of the investors, by directing the preparation of Annual Reports in accordance with the standards of The International Integrated Reporting Council (IIRC), enhancing the transparency and reliability of information provided to domestic and foreign investors. The BOD also agreed on the preparation of financial statements in accordance with International Financial Reporting Standards, which help foreign investors to access and understand the Group’s Financial Statements.
Remuneration for BOD and members of the BOD Pursuant to the AGM’s Resolution on 2017 remuneration of BOD, Supervisory Board, the Group adopted the remuneration for the BOD and BOS with the total of VND 1,046 million as follows: ◆◆ BOD’s remuneration (from Jan 1st, 2017 to Dec 31st, 2017): VND 1,030 million. ◆◆ Supervisory Board’s Remuneration (from Jan 1st, 2017 to Apr 27th, 2017): VND 16 million.
Activities of Committees under the BOD Audit Committee Reviewing 2017 Financial Statements, taking into account the adequacy and appropriateness of accounting system. Reviewing the effectiveness of the internal control system. Development Policy Committee Reviewing, evaluating and advising for the BOD on the Group’s development strategy, objectives and plans as adopted by the AGM and the BOD during the year. Proposing priorities contents for the Group’s activities: sustainable development, sustainable business model in the context of environment, society, governance of ESG. Human Resources Committee Developing a process for evaluating the performance of the BOD through the BOD’s meetings, engaging in the evaluation of the PMS to propose proper criteria for each BOD’s Member activities. Setting up the order and procedures for nomination, appointment and dismissal of the BOD Members, the BOM to fulfill the Corporate Governance in accordance with the Law on Enterprises and Securities. Remuneration Committee Reviewing remuneration and other material benefits for the BOD’s Members and BOM. Regular evaluation the scale and structure of the remuneration as well as other benefits of the BOD and BOM Members.
Supervision and assessment of the Board of Management The BOD supervised of the BOM activities through the Committees together with maintaining the periodical reporting system to the BOM, to ensure the development
strategies and business plan adopted by the AGM and the BOD could be rolled out as planned. In addition to business activities, the governance activities of risk management, IT and human resources were always monitored and evaluated on a periodical or ad-hoc basis by the BOD to ensure that the development plan fit in with the development requirements of the Group. Result According to the BOD’s assessment, by 2017, the Group only fulfilled 70% of the revenue and profit target which was approved in 2017 AGM in the context of difficulties and challenges. Real estate was adversely impacted by macro factors while legal documents, the construction of the projects were delayed, making it not feasible to roll out new projects. The BOM (CEO and the Executive Management) should continue to complete restructure, make efforts to fulfill the tasks assigned in 2018, in compliance with current laws and the Group’s regulations.
BOD’S PLAN AND ORIENTATION IN 2018 Customer first In order to ensure the interests of Investors, Customers, in 2018, the BOD will continue the philosophy “Customer first” for the purpose of serving Customers better day by day. It should go on to confirm that the value of Novaland Group’s services comes not only from the quality and progress of the delivery of property, but also from the whole-heartedness mindset of the customer service. The BOD directed the implementation of the whole program for employees and the BOM through training programs as well as internal communication channels. The success of the 2018 Development Strategy shall be dependent upon the realization of the motto “Customer first”. All Novaland Group employees will stand together for a common goal, for the Novaland brand name’s value, and for a Sustainable Development goal.
Orientation for activities in 2018 Upon implementing the development strategy phase 2 (2015-2025), in 2018, the Group continues to implement the development strategy phase 2, with a focus key apartments products, expanding to commercials and hospitality in cities with large potential in tourism. The year 2018 is identified as a following year of Sustainable Development. Corporate Governance Activities
73
Independent member of the Board of Directors report
At the 27th April 2017 AGM, it was approved that the Supervisory Board would be cancelled and an Audit Committee would be established reporting to the Board of Directors. The Audit Committee is chaired by an Independent Director and the criteria for qualification as a Non-Executive Director were reviewed and approved by the BOD in accordance with Clause 2, Article 151 Enterprise Law – Standards and conditions for members of the Board of Directors.
Non-Executive Director’s roles A Non-Executive Director has all the rights stipulated in the Enterprise Law, related legal documents and Company Charter, especially the right to be provided with information and documents on the financial, operational performance of the Group. A Non-Executive Director oversees and supervises the management in order to improve the quality, objectivity, transparency and effectiveness of the management.
Activities of Non-Executive Director in 2017 In addition to fulfilling the responsibilities and obligations as a BOD member in accordance with the Enterprise Law and related legal documents, the Non-Executive Director also performed the following activities: 1. Monitored the information disclosure in accordance with laws and regulations to ensure the availability and accuracy of disclosed information; 2. Chaired the Audit Committee to assist the Board of Directors to oversee the truth and fairness of financial statements, the compliance with laws and regulations, performance and independence of external auditors, performance and effectiveness of internal auditors and the effectiveness of internal controls and risk management; 3. Chaired the Policy Development Committee to determine the Group’s development strategy, business objectives and plans, as well as its Key Performance Indicators and identify the Group’s business priorities and evaluated its long-term effectiveness; 4. Was a member of the Human Resources Committee as a member to advise the Board on the Group’s human resources development strategy and recommended on the senior management’s recruitment, appointment, dismissal and training.
Non-Executive Director’s Assessment on the Board of Directors’ activities In 2017, the BOD held regular meetings and made strategic decisions and oversaw the business operations in accordance with the Resolutions of 2017 Annual General Meeting. The BOD issued a number of resolutions and decisions related to the Group’s activities in accordance with its responsibilities and authorities. Resolutions and decisions of the BOD were issued in line with the authority and procedures under Enterprise Law, Company Charter, business practices, the requirement of corporate governance and business development of the Group. Lakeview City urban area (District 2, HCMC) - Photo by: Tran Ngoc Tuan
74
BRIGHTEN LIVES
Lakeview City urban area (District 2, HCMC) - Photo by: Huynh Pham Anh Dung Corporate Governance Activities
75
Audit Committee report
Ms. NGUYEN THANH BICH THUY
Mr. DAVID PROCTOR
Independent BOD member and Head of Audit Committee
Member
Please refer to page 61 “Introduction of the Board of Directors”
Date of appointment as Audit Committee member: September 8th, 2017 Duration of service as Audit Committee member: 3 months Qualifications Bachelor degree at Cambridge University Professional experience ◆◆ 35 years working as senior manager at international financial institutions ◆◆ From 2010 to present: Chairman - BAS Consulting Pte. Ltd, Singapore ◆◆ Sep 2017 to present: Audit Committee member - No Va Land Investment Group Corporation Member of BOD at other companies (excluding subsidiaries and parent companies) Chairman at BAS Consulting Pte. Ltd, Singapore Ratio of voting rights at Novaland Group: 0%
76
BRIGHTEN LIVES
Ms. VO THI THU VAN
Ms. NGUYEN THI MINH THANH
Date of appointment as Audit Committee member: September 8th, 2017
Date of appointment as Audit Committee member: June 26th, 2017
Duration of service as Audit Committee member: 3 months
Duration of service as Audit Committee member: 6 months
Qualifications
Qualifications
Commercial Master, Accounting Bachelor degree
Audit – Accounting Bachelor, Member of the Association of Chartered Certified Accountants, Vietnam Association of Certified Public Accountants
Member
Professional experience ◆◆ 1999 - 2004: Financial Analyst – Pepsico Vietnam ◆◆ 2004 - 2007: Financial Planning Manager, Deputy Financial Controlling Manager – Pepsico Vietnam ◆◆ 2011 - 2012: Senior Financial Planning Director – Pepsico Vietnam ◆◆ 2012 - 2013: Financial Controlling Director – Pepsico Vietnam ◆◆ 2013 - 2016: Financial Controlling Manager – Suntory Pepsico Vietnam
Member
Professional experience ◆◆ 2010 - 2012: Auditors team leader – KPMG LLP, USA; Senior Manager – KPMG Vietnam ◆◆ 2013 - 2015: Compliance and Operation Manager – Representative Office of Pfizer Thailand in Vietnam ◆◆ 2015 – June 2017: Internal Audit Director and Head of Supervisory Board – No Va Land Investment Group Corporation
◆◆ 2016 - Sep 2017: Deputy CEO – No Va Land Investment Group Corporation
◆◆ June 2017 to present: Internal Audit Director and Audit Committee Member – No Va Land Investment Group Corporation
◆◆ Sep 2017 to present: Audit Committee member – No Va Land Investment Group Corporation
Member of BOD at other companies (excluding subsidiaries and parent companies): Not applicable
Member of BOD at other companies (excluding subsidiaries and parent companies): Not applicable
Ratio of voting rights at Novaland Group 9,290 shares, accounting for 0.001%
Ratio of voting rights at Novaland Group 25,000 shares, accounting for 0.004%
Corporate Governance Activities
77
Audit Committee report
AUDIT COMMITTEE REPORT In accordance with 2017 AGM, effected from April 27th, 2017, the Group changed its corporate governance structure. In place of the Supervisory Board, an Audit Committee has been established, chaired by an Independent BOD member. The Internal Audit Department reports to Head of the Audit Committee, and the Audit Committee reports to the BOD. The Independent BOD Member chairing the Audit Committee was appointed by the BOD. No. Name
Position
Period of holding position
Share
Head of IAC
26/6/2017 - 31/12/2017
0%
1
Ms. Nguyen Thanh Bich Thuy
2
Mr. David Proctor
Member
8/9/2017 - 31/12/2017
0%
3
Ms. Vo Thi Thu Van
Member
8/9/2017 - 31/12/2017
0.004%
4
Ms. Nguyen Thi Minh Thanh
Member
26/6/2017 - 31/12/2017
0.001%
5
Ms. Vo Thi Thanh Tham
Member
26/6/2017 - 8/9/2017
0.0001%
ROLES AND RESPONSIBILITIES OF AUDIT COMMITTEE Audit Committee assists the BOD to oversee the truth and fairness of financial statements, compliance with laws and regulations, the performance and independence of independent auditors, the performance and effectiveness of internal auditors and the effectiveness of internal controls and risk management.
ACTIVITIES OF THE AUDIT COMMITTEE IN 2017 The Supervisory Board had implemented the supervision of the BOD and BOM’s activities in accordance with the Company’s Charter and Code of Corporate Governance. The Audit Committee was established in June 2017 and conducted the following activities:
Important reports before release Reviewed 2017 Financial Statements to verify they are true and fair, consistent with information known by Audit Committee, and comply with the accounting standards. The Company’s independent auditors in the last 5 years were KPMG for the year ended 2013, Deloitte for the year ended 2014 and PwC for the year ended 2015, 2016 and 2017. All the independent auditors expressed unqualified opinions on those reports.
78
BRIGHTEN LIVES
Internal Audit Discussed with Internal Audit Department about auditing plan in 2017 and major changes to the plan; Reviewed Internal Audit activities compare to the approval plan;
performance
Discussed with Internal Audit department about the budget, human resources plan, and organizational structure of the internal audit function; Reviewed all internal audit reports; Reviewed and monitored BOM’s feedback to internal audit findings and recommendations; Reviewed the performance of the Internal Audit department and approved the compensations, including salary and bonus.
Internal controls and risk management Discussed with the BOM and Internal Audit Director the policies related to the Group’s risk assessment and management, including risk appetite, top key risks and relative action plans; Assessed the effectiveness of the Group’s internal control system and risk management.
Meetings of Audit Committee In the second half of 2017, the Audit Committee held 2 meetings to discuss the important matters relating to its activities:
No.
Date
1
26/6/2017
Discussed the Audit Committee Charter
3/3
8/9/2017
Replaced a committee member Discussed ◆◆ The review of the truth and fairness of the financial statements; ◆◆ The review of all related party transactions; ◆◆ The review of Internal Audit department and risk management
4/4
2
Meeting
Participation
2018 Audit Committee plan The Audit Committee will continue its improvement process as follows:
Continue monitoring risk management in order to detect emerging risks and control key risks.
Review the truth and fairness of financial statements, the completeness and consistency of information.
Continue supervising the effectiveness of internal audit and monitoring the management’s responses to internal audit findings and recommendations.
Corporate Governance Activities
79
Internal audit department under the Audit Committee
Internal audit - An important part of the Audit Committee Internal audit is a “third line of defense” in a business model that provides independent, objective assurance and consultation to evaluate and improve the effectiveness of risk management, control, and governance processes. Internal Audit Department reports directly to the Audit Committee.
BOARD OF DIRECTORS AUDIT COMMITTEE
First line of defense
Second line of defense
Third line of defense
Departments
Legal and Compliance and Project Quality and Monitoring Department
Internal Audit Department
Risk management and implementation of appropriate internal controls
Develop policies and processes for risk management, quality assurance and compliance of first line of defense
Cooperate
Independent and objective evaluation of risk management, internal controls and corporate governance
External Auditors
EXECUTIVE BOARD
Audit Function report
General report
Internal Audit Process Internal Audit planning General understanding ◆◆ Internal factors ◆◆ External factors
80
BRIGHTEN LIVES
Risk assessment ◆◆ Understand the group’s risk management process ◆◆ Risk assessment
Audit implementation Internal audit planning ◆◆ Determine the focus of the internal audit plan ◆◆ Define the scope and level of defense ◆◆ Internal audit planning
Conducting the internal audit engagement and reporting ◆◆ Plan for each internal audit engagement ◆◆ Process analysis ◆◆ Develop and execute the audit program ◆◆ Audit report
Internal Auditors - Code of Conduct Each member of Internal Audit Department is responsible for ensuring the independence, objectivity, integrity, confidentiality and competency. These standards are developed based on the Code of Conduct for internal auditors, according to The Institute of Internal Auditors.
INDEPENDENCE
◆◆ No authoriy, roles or responsibilities of running business. ◆◆ No involvement to the day to day operation or inspection of other departments.
◆◆ Be objective, fair, not prejudiced when performing tasks. ◆◆ Be objective when collecting, evaluating and discussion on audited activities or processes.
OBJECTIVITY
◆◆ Perform the work with honesty, diligence, and responsibility. ◆◆ Carry out work in accordance with the laws and ethical standards.
INTEGRITY
CONFIDENTIALITY
◆◆ Do not disclose information without permission unless the disclosure of information complies with the Company’s regulations and the law.
COMPETENCY
◆◆ Engage only in those services for which they have the necessary knowledge, skills, and experience. ◆◆ Continually improve their proficiency and the effectiveness and quality of the audit services.
Responsibilities and authorities of Internal Auditors Authorities
Responsibilities
◆◆ Be equipped with the resources needed to accomplish the audit objectives. ◆◆ Be provided with fully and timely information, records, documents necessary for audit. ◆◆ Have access to all personnels to inquire on the auditing matters.
◆◆ Information protection. ◆◆ Responsible for the result of internal audit. ◆◆ Follow up and check the implementation of internal audit’s recommendations.
Corporate Governance Activities
81
Internal audit department under the Audit Committee
2017 Internal Audit activities With the goal of assisting the Audit Committee in assessing and monitoring the internal control system, Internal Audit Department performed project health checks and audit operational processes with the following objectives:
Audit the effectiveness and efficiency of internal controls related to audited activities.
Review the compliance of relevant internal controls.
Recommend the process improvements and efficiency.
Scope of project health check starts from the project planning stage to the project completion and handing over products to customers. Monthly report of project health check partly represents a regular and periodic supervision and inspection of projects as well as includes recommendations for timely process improvements. In addition, Internal Audit Department also performed the audit for the Group’s risk management, including:
Review the management of key risks.
Review the key risk reports.
Review risk management processes.
Check the compliance of risk management processes.
Evaluate the result of the following activities: (i) identifying risk; (ii) analyzing/ assessing risk ratings; (iii) risk action plan; (iv) monitoring risks.
2018 Internal Audit Plan Internal Audit Department will continuously focus on the project health check. We will audit projects that will be handed over in 2018. In addition, Internal Audit Department also extends the scope of audit to information technology areas, including:
Review the implementation of Enterprise Resource Planning application (ERP).
82
BRIGHTEN LIVES
Review Cyber Maturity Assessment.
Audit the operating effectiveness of risk management and compliance application.
Novaland Group Office Building - 65 Nguyen Du, Ben Nghe Ward, Dist. 1, HCMC
Corporate Governance Activities
83
Reports by Committees under the Board of Directors
STRUCTURE OF THE DEVELOPMENT POLICY, HUMAN RESOURCES, AND REMUNERATION COMMITTEES No.
Full name
BOD/BOM
Position
Executive BOD Member
Head of the DPC
Ratio of voting rights
I
Development Policy Committee
1
Ms. Nguyen Thanh Bich Thuy
2
Mr. Bui Xuan Huy
Executive BOD Member - CEO
Member
0.010%
3
Mr. Phan Thanh Huy
Non-executive BOD Member
Member
0.011%
4
Ms. Hoang Thu Chau
Executive BOD member Deputy CEO
Member
0.008%
II
Human Resources Committee
1
Mr. Bui Thanh Nhon
BOD Chairman
Head of the HRC
22.43%
2
Ms. Nguyen Thanh Bich Thuy
Independent BOD Member
Member
0%
3
Ms. Tran Ngoc Tran
x
Member
0.00004%
III
Remuneration Committee
1
Mr. Bui Thanh Nhon
BOD Chairman
Head of the RC
2
Ms. Tran Ngoc Tran
x
Member
0.00004%
3
Ms. Dinh Thi Van Anh
x
Member
0.001%
0%
22.43%
ACTIVITIES OF THE COMMITTEES UNDER THE BOD Development Policy Functions and duties ◆◆ Build development strategies, objectives, plans as well as the key performance indicators of the Group; ◆◆ Identify the Company’s operation priorities; ◆◆ Evaluate the longterm efficiency of the Company’s operations.
84
BRIGHTEN LIVES
Activities in 2017 ◆◆ Reviewed, evaluated and advised the BOD on the Company’s development strategies, objectives, plans that have been adopted by the GMS and the BOD during the year; ◆◆ Proposed priority topics relating the Company’s operations: Sustainable development, sustainable business model relating to Environmental, Social and Governance factors of ESG; ◆◆ Provided long-term efficiency evaluation of the Group’s business activities and development strategies.
Meetings in 2017 Conducted 1 meeting: ◆◆ The Members conducted the major tasks assigned in a manner that is independent of all information sources within the Group; ◆◆ In order to review operating performance, the Committee held 1 meeting covering topics implemented during the year regarding the review, assessment of development strategies, objectives, plans and proposals relating to the Group’s operation objectives.
Plan for 2018 ◆◆ Propose and change strategies appropriately from time to time; ◆◆ Continue to implement the sustainable development strategy and the ESG model in conformity with the Groups’ vision.
Human Resources Functions and duties
Activities in 2017
Meetings in 2017
Plan for 2018
◆◆ Build processes to evaluate the operations of the BOD;
◆◆ Built processes to evaluate the BOD’s operations via the number of Member meetings, combined with PMS evaluation to propose evaluation criteria which are suitable for the BOD’s operations for each Member thereof;
Conducted 2 meetings:
◆◆ Continue to implement plans to review and finetune processes for evaluating the BOD’s operations;
◆◆ Propose criteria for evaluation of the BOD’s operations; ◆◆ Build the independence of non-executive/executive BOD Members; ◆◆ Develop criteria of qualities and competencies for the BOD and BOM Members as well as managerial titles appointed by the BOD (Members of the management team); ◆◆ Build sequence and procedures for nomination, election, appointment and removal of BOD Members and Members of the management team; ◆◆ Implement other HR works as directed by the BOD.
◆◆ Built sequence and procedures for nomination, election, appointment and dismissal of the BOD Members and Members of the management team in conformity with Corporate Governance needs and governance requirements under the laws on enterprise and securities.
◆◆ Built a process to evaluate the operations of the BOD; ◆◆ Built sequence and procedures for nomination, election of BOD Members and Members of the management team.
◆◆ Continue to finetune process for nomination, election, appointment and dismissal of the BOD Members and Members of the management team.
Remuneration Functions and duties
Activities in 2017
Meetings in 2017
Plan for 2018
◆◆ Propose remuneration policies as well as other material benefits for the BOD Members and Members of the management team and submit to the BOD for approval;
◆◆ Reviewed remuneration policies as well as other material benefits for the BOD Members and Members of the management team;
Conducted 2 meetings:
◆◆ Continued to review and finetune remuneration policies;
◆◆ Perform periodical assessment of the scale and structure of remuneration and other benefits for the BOD Members and Members of the management team as well as other necessary proposals and submit to the BOD for approval.
◆◆ Reviewed and evaluated the remuneration policy;
◆◆ Performed assessment of the scale and structure of remuneration and proposed ESOP implementation schemes as per the ◆◆ Proposed schemes of building directions approved remuneration structure as well for BOD members as the Company’s restructuring and members of the throughout the year. managerial structure. ◆◆ Performed periodical assessment of the scale and structure of remuneration and other benefits for the BOD Members and Members of the management team;
◆◆ Update new remuneration policies in line with local and international trends, ensuring the benefits of BOD members and members of the managerial structure and conformity with the Group’s vision.
Corporate Governance Activities
85
Asean Corporate Scorecard
No. A
THE RIGHTS OF SHAREHOLDERS
A.1
Basic rights of Shareholders
A.1.1
Does the Company pay (interim and final/annual) dividends in an equitable and timely manner; that is, all Shareholders are treated equally and paid within 30 days after being (i) declared for interim dividends and (ii) approved by Shareholders at general meetings for final dividends? In case the Company has offered Scrip dividend, did the Company paid the dividend within 60 days?
A.1.1 (P)
Does the Company treat its Shareholders equally in regards to share acquisition for all Shareholders?
A.2
Right to participate in decisions concerning fundamental corporate changes
A.2.1
Do Shareholders have the right to participate in Amendments to the Company’s constitution?
A.2.1 (P)
Is there evidence of barriers that prevent Shareholders from communicating or consulting with other Shareholders?
A.2.2
Do Shareholders have the right to authorization of additional shares?
A.2.3
Do Shareholders have the right to transfer of all or substantially all assets, which in effect results in the sale of the Company?
A.3
Right to participate effectively in and vote in general Shareholder meetings and should be informed of the rules, including voting procedures, that govern general Shareholder meetings.
A.3.1
Do Shareholders have the opportunity, evidenced by an agenda item, to approve remuneration (fees, allowances, benefitin-kind and other emoluments) or any increases in remuneration for the non-executive Directors/BOD?
A.3.1 (P) A.3.2 A.3.2 (P)
Did the Company include any additional and unannounced agenda item into the notice of GMS/EGM? Does the Company provide non-controlling Shareholders a right to nominate candidates for Board of Directors/BOD? Did the Chairman of the Board, Audit Committee Chairman and CEO attend the most recent AGM?
A.3.3
Does the Company allow Shareholders to elect Directors/BOD individually?
A.3.4
Does the Company disclose the voting procedures used before the start of meeting?
A.3.4 (B)
86
Requirements
Does the company practice secure electronic voting in absentia at the GMS?
A.3.5
Do the minutes of the most recent AGM record that the Shareholders were given the opportunity to ask questions and the questions raised by Shareholders and answers given recorded?
A.3.6
Does the Company disclose the voting results including approving, dissenting, and abstaining votes for all resolutions/each agenda item for the most recent GMS?
A.3.7
Does the Company disclose the list of board Members who attended the most recent GMS?
A.3.8
Does the Company disclose that all board Members and the CEO (if he is not a board Member) attended the most recent GMS?
A.3.9
Does the Company allow voting in absentia?
A.3.10
Did the Company vote by poll (as opposed to by show of hands) for all resolutions at the most recent GMS?
A.3.11
Does the Company disclose that it has appointed an independent party (scrutineers/inspectors) to count and/or validate the votes at the AGM?
A.3.12
Does the Company make publicly available by the next working day the result of the votes taken during the most recent AGM/ EGM for all resolutions?
BRIGHTEN LIVES
2017 Practice <=30%
>31-69%
>=70%
2016 Practice
Reference
The Company has not paid dividend for ordinary shares because it’s time for continuously building projects as well as land bank for long term development.
30%
100%
Company’s Charter, Code of Corporate Governance: equally practice buying back Company’s shares as Shareholders’ requirement.
100%
100%
Documents prepare for GMS/ Shareholders’ written opinions.
70%
100%
Company’s Charter, Code of Corporate Governance: Shareholders’ rights is detail clarified.
80%
100%
Company’s Charter, Regulation on Organization, Voting and Election at the 2018 Annual General Meeting.
80%
100%
Company’s Charter, Code of Corporate Governance: Contracts, transactions is approved by GMS; the terminate of Company’s operation, restructure and liquidate.
80%
100%
GMS document 2017.
60%
100%
Any additional information about GMS will be announced to Shareholders in advanced.
80%
100%
Company’s Charter, Code of Corporate Governance, Regulation on Organization, Voting and Election at the 2017 AGM: Shareholders hold shares at least 6 months have the right to combine their shares together.
30%
100%
Yes.
100%
100%
Company’s Charter, Code of Corporate Governance, Regulation on Organization, Voting and Election at the 2017 AGM: Shareholder or group of Shareholders hold from 10% voting shares will have the right to nominate BOD Members; cumulative voting.
90%
100%
GMS documents 2017.
80%
In the research process and apply soon; allow authorization and applied information technology in voting at GMS 2017.
0%
100%
AGM 2017’s Meeting minutes.
70%
100%
GMS 2017’s Meeting minutes.
80%
100%
GMS 2017’s Meeting minutes.
80%
100%
GMS 2017’s Meeting minutes.
80%
100%
Company’s Charter.
30%
100%
Regulation on Organization, Voting and Election at the GMS 2017.
80%
100%
Regulation on Organization, Voting and Election at the: any minority. Shareholders attend AGM.
30%
100%
GMS 2017’s Meeting minutes.
30%
30%
0%
Corporate Governance Activities
87
Asean Corporate Scorecard
No. A.3.13
Does the Company provide at least 21 days notice for all AGMs and EGMs?
A.3.14
Does the Company provide the rationale and explanation for each agenda item which require Shareholders’ approval in the notice of AGM/circulars and/or the Companying statement?
A.3.15
Does the Company give the opportunity for Shareholder to place item/s on the agenda of AGM?
A.4
Markets for corporate control should be allowed to function in an efficient and transparent manner
A.4.1
In cases of mergers, acquisitions and/or takeovers requiring Shareholders’ approval, does the Board of Directors/BOD of the Company appoint an independent party to evaluate the fairness of the transaction price?
A.4.1 (P)
Do the Company disclose the Shareholders Agreement?
A.4.1 (P)
Do the Company disclose the existing of Voting cap?
A.4.1 (P)
Do the Company disclose the existing of Multiple Voting Rights?
A.5
The exercise of ownership rights by all Shareholders, including institutional investors, should be facilitated
A.5.1
Does the Company disclose its practices to encourage Shareholders to engage the Company beyond AGM?
A.5.1 (P) B
Is a pyramid ownership structure and/ or cross holding structure apparent? EQUITABLE TREATMENT OF SHAREHOLDERS
B.1
Shares and Voting Rights
B.1.1
Does the Company’s ordinary or common shares have one vote for one share?
B.1.2
Where the Company has more than one class of shares, does the Company publicize the voting rights attached to each class of shares (e.g. through the Company website / reports/ the stock exchange/ the regulator’s website)?
B.2
Notice of AGM
B.2.1
Does each resolution in the most recent GMS deal with only one item, i.e., there is no bundling of several items into the same resolution?
B.2.1 (B)
Does the Company release its notice of GMS (with detailed agendas and explanatory circulars), as announced to the Exchange, at least 28 days before the date of the meeting?
B.2.2
Are the Company’s notice of the most recent GMS/circulars fully translated into English and published on the same date as the local language version?
B.2.3
Are the profiles of Directors/BOD (at least age, academic qualification, date of appointment, experience, and Directorships in other listed companies) in seeking election/re-election included?
B.2.4
Are the auditors seeking appointment/re-appointment clearly identified?
B.2.5
Were the proxy documents made easily available?
B.3
Insider trading and abusive self-dealing should be prohibited.
B.3.1
Does the Company have policies and/or rules prohibiting Directors/BOD and employees to benefit from knowledge which is not generally available to the market?
B.3.2
Are the Directors / BOD required to report their dealings in Company shares within 3 business days?
B.3.2 (P)
88
Requirements
Has there been any conviction of insider trading involving Directors/BOD , management and employees in the past three years?
BRIGHTEN LIVES
2017 Practice <=30%
>31-69%
>=70%
2016 Practice
Reference
100%
21 days notice in advance the AGM.
30%
90%
2017 AGM documents.
60%
100%
21 days notice in advance the AGM.
80%
100%
Company’s Charter.
80%
100%
Company’s Charter, Code of Corporate Governance.
30%
100%
Company’s Charter, Code of Corporate Governance, Regulation on Organization, Voting and Election at the AGM 2017.
30%
100%
There is no Multiple Voting Rights share.
80%
80%
21 days notice in advance the AGM.
60%
Related person of the Chairman.
30%
100%
Company’s Charter, Code of Corporate Governance, Regulation on Organization, Voting and Election at the AGM 2017.
80%
100%
Company’s Charter, Code of Corporate Governance, Regulation on Organization, Voting and Election at the AGM 2017.
80%
90%
2017 AGM documents.
60%
100%
28 days in advance before 2017 AGM.
30%
98%
2017 AGM documents.
30%
100%
2017 AGM documents.
70%
100%
2017 AGM documents.
100%
100%
2017 AGM documents.
70%
100%
Code of Conduct.
100%
100%
Internal regulation about information disclosure.
100%
100%
Insider transaction and business abuse behavior to get personal benefit is totally prohibition.
100%
30%
Corporate Governance Activities
89
Asean Corporate Scorecard
No.
Requirements
B.4
Related party transactions by Directors and key executives
B.4.1
Does the Company have a policy requiring Directors /BOD to disclose their interest in transactions and any other conflicts of interest?
B.4.2
Does the Company have a policy requiring a committee of independent Directors/BOD to review material RPTs to determine whether they are in the best interests of the Company and Shareholders?
B.4.3
Does the Company have a policy requiring board Members (Directors/BOD) to abstain from participating in the board discussion on a particular agenda when they are conflicted?
B.4.4
Does the Company have policies on loans to Directors and BOD either forbidding this practice or ensuring that they are being conducted at arm’s length basis and at market rates?
B.5
Protecting minority Shareholders from abusive actions
B.5.1
Does the Company disclose that RPTs are conducted in such a way to ensure that they are fair and at arms’ length?
B.5.1 (P) B.5.2 B.5.2 (P) C
In case of related party transactions requiring Shareholders’ approval, is the decision made by disinterested Shareholders? Has there been any related party transaction that funding to a subsidiaries which do not related to the Company? ROLE OF STAKEHOLDERS
C.1
The rights of stakeholders that are established by law or through mutual agreements are to be respected
C.1.1
The existence and scope of the Company’s efforts to address customers’ welfare?
C.1.1 (B)
Does the Company adopt an internationally recognized reporting framework for sustainability (i.e. GRI, Integrated Reporting, SASB)?
C.1.1 (P)
Have there been any violations of any laws pertaining to labour/employment/consumer/insolvency/commercial/ competition or environmental issues?
C.1.2 C.1.3
90
Has there been any cases of non-compliance with the laws, rules and regulations pertaining to material related party transactions in the past three years?
Supplier/contractor selection procedures? The Company’s efforts to ensure that its value chain is environmentally friendly or is consistent with promoting sustainable development?
C.1.4
The Company’s efforts to interact with the communities in which they operate?
C.1.5
The Company’s anti-corruption programs and procedures?
C.1.6
How creditors’ rights are safeguarded?
C.1.7
Does the Company have a separate report/section that discusses its efforts on environment/economy and social issues?
C.2
Where stakeholder interests are protected by law, stakeholders should have the opportunity to obtain effective redress for violation of their rights
C.2.1
Does the Company provide contact details via the Company’s website or Annual Report which stakeholders (e.g. customers, suppliers, general public etc.) can use to voice their concerns and/or complaints for possible violation of their rights?
C.2.1 (P)
Has the Company faced any sanctions by regulators for failure to make announcements within the requisite time period for material events?
C.3
Mechanisms for employee participation should be permitted to develop
C.3.1
Does the Company explicitly disclose the policies and practices on health, safety and welfare for its employees?
C.3.2
Does the Company explicitly disclose the policies and practices on training and development programs for its employees?
C.3.3
Does the Company have a reward/compensation policy that accounts for the performance of the Company beyond shortterm financial measures?
BRIGHTEN LIVES
2017 Practice <=30%
>31-69%
>=70% 100%
0%
2016 Practice
Reference
Company’s Charter, Code of Corporate Governance.
100%
There will be a policy which require Audit Committee to review material RPTs.
0%
100%
Company’s Charter, Code of Corporate Governance.
30%
100%
Company’s Charter, Code of Corporate Governance.
60%
100%
Company’s Charter, Code of Corporate Governance, 2017 Annual Report.
80%
100%
No.
100%
100%
Company’s Charter.
100%
100%
Company’s Charter, Code of Corporate Governance: business abuse behavior to get personal benefits is totally prohibited.
100%
100%
Sales Contract, Sustainable development report, Annual report.
80%
100%
IIRC, GRI.
70%
100%
No.
100%
100%
Internal Process, Code of Conduct.
90%
100%
Sustainable development report, Annual Report.
80%
100%
Corporate Social responsibility, Sustainable development report, Annual report.
80%
100%
Code of Conduct.
100%
60%
Loan Agreement.
60%
100%
Sustainable development report.
80%
100%
Annual report 2017.
60%
100%
Abide.
100%
100%
Sustainable development report, Annual report.
80%
100%
Sustainable development report, Annual report.
80%
100%
ESOP Policy.
70%
Corporate Governance Activities
91
Asean Corporate Scorecard
No.
Requirements
C.4
Stakeholders including individual employee and their representative bodies, should be able to freely communicate their concerns about illegal or unethical practices to the board and their rights should not be compromised for doing this.
C.4.1
Does the Company have a whistle blowing policy which includes procedures for complaints by employees and other stakeholders concerning alleged illegal and unethical behaviour and provide contact details via the Company’s website or annual report?
C.4.2
Does the Company have a policy or procedures to protect an employee/person who reveals alleged illegal/unethical behavior from retaliation?
D
DISCLOSURE AND TRANSPARENCY
D.1
Transparent Ownership Structure
D.1.1
Does the information on shareholdings reveal the identity of beneficial owners, holding 5% shareholding or more?
D.1.2
Does the Company disclose the direct and indirect (deemed) shareholdings of major and/or substantial Shareholders?
D.1.3
Does the Company disclose the direct and indirect (deemed) shareholdings of Directors (BOD )?
D.1.4
Does the Company disclose the direct and indirect (deemed) shareholdings of senior management?
D.1.5
Does the Company disclose details of the parent/holding Company, subsidiaries, associates, joint ventures and special purpose enterprises/ vehicles (SPEs)/ (SPVs)?
D.2
Quality of Annual Report
D.2.1
Corporate Objectives
D.2.2
Financial Performance indicators
D.2.2 (B)
Are the audited annual financial report /statement released within 60 days from the financial year end?
D.2.2 (P)
Did the Company receive a "qualified opinion" in its external audit report?
D.2.2 (P)
Did the Company receive an "adverse opinion" in its external audit report?
D.2.2 (P)
Did the Company receive a "disclaimer opinion" in its external audit report?
D.2.2 (P)
Has the Company in the past year revised its financial statements for reasons other than changes in accounting policies?
D.2.3
Non-Financial Performance indicators
D.2.4
Dividend Policy
D.2.5
Biographical details (at least age, academic qualifications, date of first appointment, relevant experience, and any other
D.2.6
Directorships of listed companies) of all Directors/BOD
D.2.7
Attendance details of each director/BOD in all Directors/commissioners meetings held during the year
D.2.7 (B)
92
Total remuneration of each Member of the Board of Directors/BOD
D.2.8
Does the Annual Report contain a statement confirming the Company’s full compliance with the code of corporate governance?
D.3
Disclosure of Related Party Transactions (RPTs)
D.3.1
Does the Company disclose its policy covering the review and approval of material RPTs?
D.3.2
Does the Company disclose the name, relationship, nature and value for each material RPTs?
D.44
Directors and BOD dealings in the shares of the Company
D.4.1
Does the Company disclose trading in the Company’s shares by insiders?
BRIGHTEN LIVES
2017 Practice <=30%
>31-69%
>=70%
2016 Practice
Reference
100%
Code of Conduct, Annual report 2017.
100%
100%
Code of Conduct, Annual report 2017.
100%
100%
Annual Report, Website.
100%
100%
Annual Report, Website.
100%
100%
Annual Report, Website.
100%
100%
Annual Report, Website.
100%
100%
Annual Report, Website.
100%
100%
Vision, Mission, Strategy plan.
90%
100%
Financial highlight, BOMâ&#x20AC;&#x2122;s report.
90%
70%
2016 Audited Financial Statements was announced within 69 days. 2017 Audited Financial Statements was announced within 100 days.
30%
100%
Unqualified audit opinion.
100%
100%
Unqualified audit opinion.
100%
100%
Unqualified audit opinion.
100%
100%
No.
100%
90%
Sustainable development report, Annual report.
80%
Provisional for Convertible preference shares.
30%
30% 100%
90%
100%
Annual report, Website.
90%
90%
Governance operation activities, BOD report.
80%
90%
Governance operation activities, Financial Statements.
70%
100%
Annual Report: Code of Corporate Governance.
70%
100%
Companyâ&#x20AC;&#x2122;s Charter, Code of Corporate Governance.
60%
100%
Annual report 2017 (if any), Financial Statements.
100%
100%
Annual report , Website.
100%
Corporate Governance Activities
93
Asean Corporate Scorecard
No.
Requirements
D.5
External Auditor and Auditor Report
D.5.1
Are the audit and non-audit fees disclosed?
D.5.2
Does the non-audit fee exceed the audit fees?
D.6
Medium of Communications
D.6.1
Quarterly Reporting
D.6.2
Company Website
D.6.3
Analystâ&#x20AC;&#x2122;s briefing
D.6.4
Media briefings/press conferences
D.7
Timely filing/release of annual/financial reports
D.7.1
Are the audited annual financial report / statement released within 120 days from the financial year end?
D.7.2
Is the annual report released within 120 days from the financial year end?
D.7.3
Is the true and fairness/fair representation of the annual financial statement/reports affirmed by the Board of Directors/ BOD and/or the relevant officers of the Company?
D.8
Company Website
D.8.1
Financial statements/reports (latest quarterly)
D.8.2
Materials provided in briefings to analysts and media
D.8.3
Downloadable Annual Report
D.8.4
Notice of AGM and/or EGM
D.8.5
Minutes of AGM and/or EGM
D.8.6
Company's constitution (Company's by-laws, memorandum and articles of association)
D.9
Investor Relations
D.9.1
Does the Company disclose the contact details (e.g. telephone, fax, and email) of the officer / office responsible for investor relations?
E
RESPONSIBILITIES OF THE BOARD
E.1
Board Duties and Responsibilities
E.1.1
Does the Company disclose its corporate governance policy / board charter?
E.1.1 (P) E.1.2 E.1.2 (P)
94
Is there any evidence that the Company has not complied with any listing rules and regulations over the past year apart from disclosure rules? Are the types of decisions requiring Board of Directors/BOD ' approval disclosed ? Have there been any instances where non-executive Directors/BOD have resigned and raised any issues of governancerelated concerns?
E.1.3
Are the roles and responsibilities of the Board of Directors/BOD clearly stated ?
E.1.4
Does the Company have an updated vision and mission statement?
BRIGHTEN LIVES
2017 Practice <=30%
>31-69%
>=70% 100%
2016 Practice
Reference
Annual report 2017.
30%
Annual report 2017.
40%
100%
GMS, IR Bulletin, Investor meeting, updated presentation, Financial statement and Financial explanation, etc.
70%
100%
Bilingual and updated.
70%
100%
Analyst meeting, Research reports, Q&A, etc.
70%
100%
Periodical meeting, events, public information, etc.
70%
100%
Within 100 days from the financial year end.
100%
100%
120 days in advance.
100%
100%
Yes.
80%
100%
Investor relations – Investor activities – Financial calendar; Investor relation – Information disclosure – Financial Statements.
80%
100%
Investor relations – Corporate information – Company profile; Investor relations – Information disclosure; Investor relations – GMS; Investor relations – Investors activities – Analyst coverage.
50%
100%
Investor relations – Information disclosure – Annual report.
100%
100%
Investor relations – GMS - 2017.
70%
100%
Investor relations – GMS - 2017.
70%
40%
Investor relations – Corporate information – Company’s Charter; 100%
Investor relations – Corporate Governance;
70%
Investor relations – Investor activities – Investor relations policy.
90%
Website, Annual report.
70%
100%
Website, Annual report 2017.
30%
100%
Completely complied.
100%
100%
Website, Annual report 2016, Annual report 2017.
80%
100%
No issue informed.
100%
100%
Company’s Charter, Code of Corporate Governance, Annual report 2017.
30%
100%
Website, Annual report 2017.
100%
Corporate Governance Activities
95
Asean Corporate Scorecard
No.
Requirements
E.1.5
Does the Board of Directors play a leading role in the process of developing and reviewing the Companyâ&#x20AC;&#x2122;s strategy at least annually?
E.1.6
Does the Board of Directors have a process to review, monitor and oversee the implementation of the corporate strategy?
E.2
Board Structure
E.2.1
Are the details of the Code of Conduct or conduct disclosed?
E.2.2
Are all Directors/BOD , senior management and employees required to comply with the code/s?
E.2.3
Does the Company have a process to implement and monitor compliance with the code/s of ethics or conduct?
E.2.4
Do independent Directors/BOD make up at least 50% of the Board of Directors/BOD ?
E.2.4 (B)
Does the Company have at least one female independent director/BOD?
E.2.4 (B)
Does the Company have a policy and disclose measurable objectives for implementing its board diversity and report on progress in achieving its objectives?
E.2.4 (P)
Did the Company fail to identify who are the independent director(s)/ BOD(s)?
E.2.4 (P)
Does the Company have any independent Directors/non-executive/BOD who serve on a total of more than five boards of publicly-listed companies?
E.2.5
Does the Company have a term limit of nine years or less or 2 terms of five years each for its independent Directors/ BOD ?
E.2.5 (P)
Does the Company have any independent Directors/BOD who have served for more than nine years or two terms of five years each (whichever is higher) in the same capacity?
E.2.5 (P)
Is any of the Directors or senior management a former employee or partner of the current external auditor (in the past 2 years)?
E.2.6
Has the Company set a limit of five board seats that an individual independent/non-executive director/BOD may hold simultaneously?
E.2.7
Does the Company have any executive Directors who serve on more than two boards of listed companies outside of the group?
E.2.8
Does the Company have a Nominating Committee?
E.2.9
Is the Nominating Committee comprised of a majority of independent Directors/BOD?
E.2.9 (B)
96
Is the Nominating Committee comprise entirely of independent Directors/BOD?
E.2.10
Is the Chairman of the Nominating Committee an independent director/BOD?
E.2.11
Does the Company disclose the terms of reference/ governance structure/charter of the Nominating Committee?
E.2.11 (B)
Does the Nominating Committee undertake the process of identifying the quality of Directors aligned with the Company's strategic directions?
E.2.12
Is the meeting attendance of the Nominating Committee disclosed and if so, did the Nominating Committee meet at least twice during the year?
E.2.13
Does the Company have a Remuneration Committee?
E.2.14
Is the Remuneration Committee comprised of a majority of independent Directors/BOD ?
E.2.15
Is the Chairman of the Remuneration Committee an independent director/BOD ?
E.2.16
Does the Company disclose the terms of reference/ governance structure/ charter of the Remuneration Committee?
E.2.17
Is the meeting attendance of the Remuneration Committee disclosed and, if so, did the Remuneration Committee meet at least twice during the year?
E.2.18
Does the Company have an Audit Committee?
BRIGHTEN LIVES
2017 Practice <=30%
>31-69%
>=70%
2016 Practice
Reference
100%
Company’s Charter, Code of Corporate Governance, Annual report 2017.
100%
100%
Company’s Charter, Code of Corporate Governance, Annual report 2017.
80%
100%
Website, Annual report.
90%
100%
Code of Conduct, Annual report, Website.
100%
100%
Code of Conduct, Annual report, Website.
80%
Accounted for 20%.
30%
100%
1 female independent BOD Member.
80%
80%
Annual report 2017, Code of Corporate Governance.
20%
100%
No.
90%
100%
No.
100%
100%
Company’s Charter, Code of Corporate Governance: 5 years period limitation.
100%
100%
Only working at NVL.
100%
100%
Not related to external auditor.
100%
Will be revised in Code of Corporate Governance.
30%
100%
Only working at NVL.
100%
100%
Established in 2017.
20%
50%
1 independent BOD Member.
0%
33%
Member: 1 independent BOD Member; Chairman: Company’s Chairman.
0%
Member: 1 independent BOD Member; Chairman: Company’s Chairman.
0%
Annual report 2017.
0%
40%
30%
30% 40% 0%
0% 80%
Annual report 2017.
20%
100%
Established in 2017.
20%
0%
No.
0%
0%
No.
0%
Annual report 2017.
0%
80%
Annual report 2017.
20%
100%
Established in 2017.
20%
40%
Corporate Governance Activities
97
Asean Corporate Scorecard
No. E.2.19
Is the Audit Committee comprised entirely of non-executive Directors/BOD with a majority of independent Directors/BOD?
E.2.20
Is the Chairman of the Audit Committee an independent director/BOD ?
E.2.21
Does the Company disclose the terms of reference/governance structure/charter of the Audit Committee?
E.2.22
Does at least one of the independent Directors/BOD of the committee have accounting expertise (accounting qualification or experience)?
E.2.23
Is the meeting attendance of the Audit Committee disclosed and, if so, did the Audit Committee meet at least four times during the year?
E.2.24
Does the Audit Committee have primary responsibility for recommendation on the appointment, and removal of the external auditor?
E.3
Board Processes
E.3.1
Are the Board of Directors meeting scheduled before the start of financial year?
E.3.1 (B)
98
Requirements
Does the Company use professional search firms or other external sources of candidates (such as director databases set up by director or Shareholder bodies) when searching for candidates to the Board of Directors/BOD ?
E.3.2
Does the Board of Directors/BOD meet at least six times during the year?
E.3.3
Has each of the Directors/BOD attended at least 75% of all the board meetings held during the year?
E.3.4
Does the Company require a minimum quorum of at least 2/3 for board decisions?
E.3.5
Did the non-executive Directors/BOD of the Company meet separately at least once during the year without any executives present?
E.3.6
Are meeting documents for Board of Directors meetings provided to the board at least five business days in advance of the board meeting?
E.3.7
Does the Company secretary play a significant role in supporting the board in discharging its responsibilities?
E.3.8
Is the Company secretary trained in legal, accountancy or Company secretarial practices and has kept abreast on relevant developments?
E.3.9
Does the Company disclose the criteria used in selecting new Directors/BOD ?
E.3.10
Did the Company describe the process followed in appointing new Directors/BOD?
E.3.11
Are all Directors/BOD subject to re-election every 3 years; or 5 years for listed companies in countries whose legislation prescribes a term of 5 years each?
E.3.12
Does the Company disclose its remuneration (fees, allowances, benefit-in-kind and other emoluments) policy/practices (i.e. the use of short term and long term incentives and performance measures) for its Executive Directors and CEO?
E.3.13
Is there disclosure of the fee structure for non-executive Directors/BOD?
E.3.14
Do the Shareholders or the Board of Directors approve the remuneration of the executive Directors and/or the senior executives?
E.3.15
Does the Company have measurable standards to align the performance-based remuneration of the executive Directors and senior executive with long-term interests of the Company, such as claw back provision and deferred bonuses?
E.3.16
Does the Company have a separate internal audit function?
E.3.17
Is the head of internal audit identified or, if outsourced, is the name of the external firm disclosed?
BRIGHTEN LIVES
2017 Practice <=30%
>31-69%
>=70%
33%
2016 Practice
Reference Audit Committee’s Chairman is the female independent BOD Member.
0%
100%
Audit Committee’s Chairman is the female independent BOD Member.
0%
90%
Annual report 2017.
0%
100%
Chairman of the Committee: accounting experience.
20%
50%
Annual report 2017.
20%
0%
Will be submitted to GMS for approval on authorization Audit Committee for appointment and dismissal of Independent Audit Member.
0%
Company’s Charter, Code of Corporate Governance: Chairman can organize a meeting whenever necessary at least 1 meeting/ quarter.
30%
External human resources.
10%
100%
Company’s Charter, Code of Corporate Governance: Chairman can organize a meeting whenever necessary at least 1 meeting/ quarter.
100%
90%
Company’s Charter, Code of Corporate Governance: Members lose the rights of BOD Member when not attending BOD’s meeting in 6 month continuously.
100%
75%
Company’s Charter, Code of Corporate Governance: BOD Member must present over 50%.
70%
100% 30%
0%
0% Company’s Charter, Code of Corporate Governance: at least 3 days prior to the BOD meeting.
50%
70%
Annual report 2017, Code of Corporate Governance.
0%
70%
Company’s Charter, Code of Corporate Governance.
0%
50%
Annual report 2017, Code of Corporate Governance.
0%
50%
Company’s Charter , Code of Corporate Governance.
30%
100%
BOD’s term is 5 year period with at least 2/3 Member of previous term.
30%
80%
Annual report 2017.
70%
80%
Annual report 2017.
70%
100%
Depend on each case to get approval from the GMS and BOD.
100%
100%
GMS approved ESOP policy.
50%
100%
Internal Audit Department.
100%
100%
Internal Audit Manager is a full-time employee.
30%
60%
Corporate Governance Activities
99
Asean Corporate Scorecard
No.
Requirements
E.3.18
Does the appointment and removal of the internal auditor require the approval of the Audit Committee?
E.3.19
Does the Company establish a sound internal control procedures/risk management framework and periodically review the effectiveness of that framework?
E.3.20
Does the Annual Report/Annual CG Report disclose that the Board of Directors/BOD has conducted a review of the Companyâ&#x20AC;&#x2122;s material controls (including operational, financial and compliance controls) and risk management systems?
E.3.21
Does the Company disclose the key risks to which the Company is materially exposed to (i.e. financial, operational including IT, environmental, social, economic)?
E.3.22
Does the Annual Report/Annual CG Report contain a statement from the Board of Directors/BOD or Audit Committee commenting on the adequacy of the Companyâ&#x20AC;&#x2122;s internal controls/risk management systems?
E.4 E.4.1
PEOPLE ON THE BOARD Do different persons assume the roles of Chairman and CEO?
E.4.1 (B)
Do independent non-executive Directors/BOD make up more than 50% of the Board of Directors/BOD for a Company with independent Chairman?
E.4.1 (P)
Has the Chairman been the Company CEO in the last three years?
E.4.2
Is the Chairman an independent director/BOD ?
E.4.3
Is any of the Directors a former CEO of the Company in the past 2 years?
E.4.4
Are the roles and responsibilities of the Chairman disclosed?
E.4.5
If the Chairman is not independent, has the Board appointed a Lead/Senior Independent Director and has his/her role been defined?
E.4.6
Does at least one non-executive director/BOD have prior working experience in the major sector that the Company is operating in?
E.5
BOARD PERFORMANCE
E.5.1
Does the Company have orientation programs for new Directors/BOD?
E.5.1 (B)
Does the Company have a separate board level Risk Committee?
E.5.1 (B)
Does the board describe its governance process around IT issues including disruption, cyber security, disaster recovery, to ensure that all key risks are identified, managed and reported to the board?
E.5.2
Does the Company have a policy that encourages Directors/BOD to attend on-going or continuous professional education programs?
E.5.3
Does the Company disclose the process on how the Board of Directors/BOD plans for the succession of the CEO/Managing Director/President and key management?
E.5.4
Does the Board of Directors/BOD conduct an annual performance assessment of the CEO/Managing Director/President?
E.5.5
Did the Company conduct an annual performance assessment of the Board of Directors and disclose the criteria and process followed for the assessment?
E.5.6
Did the Company conduct an annual performance assessment of the individual Directors/BOD and disclose the criteria and process followed for the assessment?
E.5.7
Did the Company conduct an annual performance assessment of the board committees and disclose the criteria and process followed for the assessment?
E.5.7 (P)
Do independent non-executive Directors/BOD receive options, performance shares or bonuses?
(B): Bonus items (P): Penalty items
100
BRIGHTEN LIVES
2017 Practice <=30%
>31-69%
>=70%
2016 Practice
Reference
100%
Annual report 2017.
0%
100%
Internal Audit policy and Risk management policy.
70%
100%
Corporate Governance activities, BOD report, Internal Audit report, Risk management report, Financial Statements.
70%
100%
Annual report: Risk management activities.
100%
100%
Annual report: Audit Committee’s report.
70%
100%
Different persons.
100%
Independence BOD Member accounts for 20%.
30%
30%
Chairman is the non-executive BOD Member. 70%
0% 0%
Chairman cum CEO prior to 2015.
70%
Chairman is a non-executive BOD Member.
0%
1 BOD Member used to be a CEO.
0%
100%
Annual report 2017, Code of Corporate Governance, Company’s Charter.
100%
100%
Appoint 1 independent BOD Member with many experience.
50%
100%
1 independent non-executive BOD Member have experience in Real estate area.
30%
By attending BOD and BOM’s meetings.
30%
100%
Audit Committee is responsible for Risk management.
0%
100%
Annual report 2017: BOD report, Corporate Governance activities, Information Technology, Risk management.
50%
100%
Leadership Center, Annual report 2017.
70%
60%
Successor policy.
60%
50%
Annually evaluate CEO’s performance.
40%
40%
To evaluate the Group’s KPI.
40%
40%
Annually evaluate PMS.
40%
30%
0%
0% 100%
Do not apply to non-executive independent BOD Member.
30%
Corporate Governance Activities
101
Risk management
OBJECTIVES OF RISK MANAGEMENT Risk management is now regarded as one of the critical tools for efficient Corporate Governance and Sustainable development. The management team of the Group have always considered risk management as the top priority in Corporate Governance. Established in 2015 under the advice of KPMG - one of the top consultant Company, the risk management system at Novaland meets the requirements of ISO 31000:2009 and COSO 2004 Standards. The risk management function has constantly been maintained and improved toward a risk management framework and culture of “no accident” - dynamic risk management. Specifically, after having identified material risks, a good risk monitoring mechanism will follow up warning signs and perform early analysis of potential risks as well as ensure an efficient risk management process in order to bring the risk to the expected level. This efficiently assists the management team in minimizing losses while optimally utilizing opportunities to attain business goals, protect the interests of the Group and Related Parties.
FUNCTIONS, DUTIES OF THE RISK MANAGEMENT DEPARTMENT The Group’s risk management function is advised and monitored by the risk management unit that reports directly to the CEO: Advise and provide independent opinions to the management while monitoring, analyzing and evaluating the efficiency of the risk management work, ensure risks are pro-actively managed; Build a risk management culture; hold awareness and knowledge building training for executives and staff; Research, design and apply risk forecasting tools/ models of risk management framework as well as policies, regulations, processes and guidelines relating to risk management, ensure the risk management policy that fit the Group and Vietnam’s landscape; Build risk database for the Group; build and improve the risk management framework, policies, regulations, processes and instructions relating to risk management; ensure the risk management policy is adhered to; Coordinate with and support departments and process owners in regards to risk-related matters in order to have an overview at Group level of the risk management function; Continuously improve the risk management system in order to improve the Group’s Governance and operation efficiency.
RISK MANAGEMENT POLICY Risks arising out of the development of Real Estate projects are all the material ones. These risks are managed using detailed processes that emphasize the importance of the transparency, product quality, human resources ethics and social responsibility. By issuing the risk management policy, the Group demonstrates its acceptance of risks in establishing business objectives and implementing orientations, which includes the determination of the strategies, investment, and planning of risk management for potentially risky activities.
102
BRIGHTEN LIVES
THE GROUPâ&#x20AC;&#x2122;S RISK MANAGEMENT STRUCTURE Aware of the fact that risk management is only efficient if implemented by all the staff and in a continuous manner rather than as a seasonal activity, the Group has built a
risk management structure that operate throughout subsidiaries in the same system in order to ensure uniformity for optimal risk management efficiency. This structure comprises of 3 defenses lines integrated into the organization with the highest responsibility for risk management being vested in the BOD and the CEO as follows:
BOD Audit Committee
CEO
Internal Audit Department
Division Project Investment Commercial Development Division Division Division (IND) (COD) (PDD)
Operations Division (OPD)
Finance & Accounting Division (FAD)
Human Resources Division (HRD)
Risk, Process and Compliance (RPC)
Legal
Project Quality Planning and Control (PQM)
Project risk management in regions
Description:
Risk owner (1st defense layer) Most risks are proactively managed on daily basis at Divisions/Departments/Projects. Risk management units (2nd defense layer) Monitoring entities, where the Project Quality Planning and Control (PQM) and the Legal & Compliance departments are responsible for collecting and analyzing risk information from multiple different sources.
An independent evaluation and inspection unit (3rd defense layer) The IAC gives its independent opinions to verify risks as well as the efficiency of control activities Function reporting Administrative reporting 2-way exchange of information on risk
Corporate Governance Activities
103
Risk management
RISK MANAGEMENT IN 2017 The dynamic risk management culture extended to each staff Member, Division/Department and to all daily activities at Novaland with specific activities: The risk management process was frequently implemented covering risk Identification, Assessment, Handling and Reporting. Risk appetite and risk measurement parameters were updated close to reality in order to ensure high practicality; Continuously reviewed and assessed of risks as well as improved current processes;
With a view to automating the risk management function, the Group is implementing a dedicated risk management software with the advisory of KPMG; Frequently followed up and updated market and economy situation, changes in the regulatory system, SWOT analysis, etc. in order to timely identify risks, challenges as well as seize business opportunities. Novaland has also won the ISO/IEC 27001:2013 certificate for information security.
MANAGEMENT OF MAJOR RISKS DURING THE YEAR As a property developer holds a big market share in the HCMC with a series of projects being delivered and under construction at the same time, Novaland is faced with many risks arising from changes in macro policies, project life cycles as well as changes in daily business activities. The following risk groups, which are classified and considered to be likely to significantly affect the Groups’ sustainable development and long-term business strategy, are monitored and overseen:
Legal risks Legal risks are those arising from compliance and changes in regulatory policies. Concretely, policies and regulations on tax, banking, real estate trading, Housing Law, Investment Law, etc. all exert very big impacts on real estate businesses’ activities. In order to ensure compliance when there are changes in regulatory policies that affect business activities, the Legal Department constantly follows up and updates changes and communicate such changes to the entire staff in the weekly basis as well as provides advisory and support in respect to legal compliance. The Legal Department, at the same time, also coordinates with other Departments in analyzing specific impacts, thereby assisting the management team in developing or modifying business strategy accordingly.
Financial risks The financial risks that Real Estate Companies usually face are credit, interest rate and liquidity risks. Concretely, risk of fundraising, capital structure, liquidity and interest rate changes are very likely to happen if Real Estate Companies fail to properly manage their financial capabilities. Under Circular 06/2016/TT-NHNN issued by the State Bank of Vietnam on May 27th, 2016, from January 1st, 2017, 104
BRIGHTEN LIVES
the maximum ratio of short-term liabilities that commercial banks can use for medium and long-term loans will decrease from 60% to 50%. Besides, the risk factor for real estate trading loan also increases from 150% to 200%. This has limited the supply of medium and long-term credits, thus leading to difficulties for real estate businesses in accessing funds from local banks. Faced with this situation, Novaland has taken proactive steps to raise funds from foreign Partners/credit Institutions such as Credit Suisse AG, Singapore Branch (Switzerland), GW Supernova Pte. Ltd. (Singapore), Maybank (Malaysia), VietinBank Filiale Deutschland (Vietinbank - Frankrurt Branch, Germany). This has helped stabilize the cash flow and ensure funds for continuous business activities. Besides, in order to ensure Novaland’s financial strength, the Finance & Accounting Division has always tightly controlled the cash flow. The Company’s financial status is evaluated on a monthly basis and the capital structure and liquidity balancing is pro-actively performed. The maintenance of reputation when dealing with local and foreign credit Institutions has been consider a top priority in the Group’s financial management.
Information security risks Information security risks are hazards that could impact and affect the confidentiality, integrity and readiness of information. With the advance of IT, information security risk should be special paid attention. Novaland staff are required to adhere to security protocols when accessing the Company’s information and communication channels. Besides, in order to meet high requirements of information security, integrity and readiness and to ensure information security for Customers, Investors and Shareholders, Novaland has implemented the building of an information security management system that has been granted the ISO/IEC 27001:2013 certificate.
Environmental risks Environmental risks are threats that could lead to adverse impacts on the environment. In order to manage environmental risks, Novaland has always headed for the objectives of Sustainable Development and environmentallyfriendliness via the improvement, innovation and application of advanced technologies that generate positive values and minimize environmental pollution. At Lakeview City project, sewage from the residential section - after having been treated - meets the highest standard required for sewage that can be discharged directly to the environment (Column A, QCVN 14-2008/ BTNMT) and is even treated once more to be recycled for tree watering. The Group has also installed a drinking tap
system that produces water meeting the Health Ministry’s bottled water standard QCVN 6-1:2010/BYT for residents. In addition, Novaland has planned to assemble and commission solar energy that will be used for lighting public areas including the swimming pool. This plan is expected to be applied to other projects within the framework of registration for and implementation of the Green Buildings certificate. Besides, Novaland is one of the developers who pioneer in cooperating with suppliers to study the application of environmentally-friendly unfired materials (EURO WALL unfired wall pieces) to cut down waste during construction, thereby ensuring the goal of safety and beauty at project sites.
Labor safety and health risks Labor safety and health risks are hazards that may cause damages to human health or life at the workplace. A safe working environment is a top concern at Novaland. Training courses are frequently held to ensure the staff are provided with knowledge of workplace safety, thus being able to keep themselves safe while preserving Novaland’s reputation and prestige. The Group has also maintained annual insurance and health checkup policies as well as established working hour frames which are suitable for each type of position so as to ensure the staff’s well-being. The efficient policy of safety and health for employees is an important part of risk management and plays a critical role in increasing working performance as well as improving employees’ moral and happiness index.
RISK MANAGEMENT IN 2018 Annually, the Risk Management Department and the management will review the risk management system and build a development plan and status of risk management in the following year. The management will determine the mode of implementing risk management, the desired level of risk management maturity, and consequently make decisions on the modus operandi of risk management. Set to build a professional risk management system, in 2018, the Group will continue to work toward the automation of risk management with a plan to apply a dedicated risk management software for many projects. Besides, the Group will continue to enhance the staff’s awareness of risk management via both offline and online training courses and on-the-job advisory at different departments and projects. This aims to a culture of voluntary and proactive risk management from each employee so as to yield the highest efficiency.
Corporate Governance Activities
105
Legal compliance
The Company’s Management Board understands that in order to maintain and develop the corporate value as expected, in addition to the core requirements of Integrity - Efficiency - Professionalism, all of the Group’s operations must comply with and stay within Regulatory frameworks.
LEGAL REQUIREMENTS FOR THE COMPANY’S OPERATIONS As a HSX-listed real estate company that ranks among the top players in terms of market capitalization, Novaland is required to strictly comply with applicable laws on real estate, land, housing, investment, construction as well as regulations on Corporate Governance and information disclosure issued by the Ministry of Finance, the State Securities Commission, HSX and Vietnam Securities Depository. Many new legal documents have been issued relating to real estate trading and Corporate Governance. In particular, Decree 01/2017/NĐ-CP on land has addressed gaps regarding the issue of land use right, assets on land ownership certificate; the transfer of land together with all or part of an investment project; the use of land in case of purchase, sales, transfer of capital contribution/shares in a business. At the same time, the Government also issued Decree 139/2017/NĐ-CP providing for sanctions against administrative violations in real estate construction and trading investment. This by-law, which governs various forms of violation and sanctions therefor, covers acts of various actors in order to provide better robustness to the building, trading and operation of apartments in particular and the property market in general. In parallel, the SBV also issued new regulations under Circular No. 13/2017/TTNHNN which was designed to facilitate the implementation of by credit institutions and foreign bank branches’ guarantee activities in selling and buying future houses and to ensure consistency with new legal regulations relating to guarantee activities. Although these legal documents have more or less created barriers for real estate companies and banks, they are generally regarded as positive measures to strengthen buyers’ confidence in prestigious and capable of real estate developers.
106
BRIGHTEN LIVES
With regards to Corporate Governance, the Securities Law and Decree 71/2017/NĐ-CP issued by the Government provides stricter rules governing reporting and information disclosure by public companies. In addition to the provision of fully, accurately and timely disclosure of information on the regular/irregular basis regarding the business, financial and Corporate Governance situation to Shareholders and the public, (1) any new internal Code of Corporate Governance must be approved by the GMS; (2) the CEO and other management team’s income must be disclosed and presented as a separate item in the annual Financial Statements as well as the report to the AGM. In order to have an efficient governance and build Shareholders’ confidence; (3) the structure of the BOD, in addition to balance of the member in terms of knowledge and experience in law, finance and Group’s business, must take into account the gender factor; (4) in particular, the responsibilities of independent BOD Members are emphasized when these persons must have a report on the performance of the Board and such a report may be reported at the AGM; (5) in addition, the Board must appoint at least one person, who may at the same time be the Corporate Secretary, to perform the duties of a Corporate Governance Executive. Such an Executive must have legal knowledge and must not at the same time work for an independent auditor who is auditing the Company’s Financial Statements. At the same time, the Ministry of Finance also issued Circular No. 95/2017/TT-BTC which is enclosed with template of Company’s Charter as well as the Code of Corporate Governance so that public companies to refer to draft Company’s Charter and Internal Code of Corporate Governance, ensuring compliance with the new rules.
NOVALAND’S LEGAL COMPLIANCE IN 2017
The Company’s legal compliance protocols also require all employees to ensure that their behaviors cannot afford to violate the law or the Code of Conduct issued by the Company. The Company facilitates all employees’ access to all necessary sources of information in a timely manner as well as to the sufficient consultants to prevent any violations of the law or the Company’s internal rules.
In order to comply with the new legal requirements, the Group has gradually developed internal regulations related to the BOD Members, prevention of conflicts of interest, transactions with Shareholders, other Managers and their Related Persons, implementation of reporting and disclosure information. The amendment of the Company’s Charter and the Code of Corporate Governance to ensure compliance with the new regulations are also implemented on schedule through the AGM and the collection of written opinions from Shareholders. Decree No.71/2017/ND-CP, effective from August 1st, 2017 and Circular 95/2017/TT-BTC, effective from November 6th, 2017, are also being implemented by amending respective internal regulations. The Group will continue to implement these regulations at the next GMS to ensure the Group’s compliance with the requirements of the Government. Internal regulations have been uniformly developed by the Group on the principles of: (1) Assurance of Shareholder benefits; (2) Equal treatment among Shareholders; (3) Ensured roles and benefits of Related Parties; (4) Information disclosure and transparency and (5) The BOD’s responsibilities in efficient and rational governance. The Company’s legal compliance protocols also require all employees to ensure that their behaviors cannot afford to violate the law or the Code of Conduct issued by the
Company. The Company facilitates all employees’ access to all necessary sources of information in a timely manner as well as to the sufficient consultants to prevent any violations of the law or the Company’s internal rules. The Corporate Legal Department is responsible for updating legal provisions governing the Company’s business areas to ensure everyone understands and abides by the law in their day-to-day operations. Each employee, regardless of his position and level, must practice self-monitoring to ensure compliance with the Company’s regulations and applicable laws. The Company assigns legal staff to advise and provide training on compliance issues to a number of related departments. These staff also investigate every alleged violation, ensuring all activities of the staff must be consistent with the Company’s brand and reputation. The Company also communicates to business Partners, Investors and the public. Those Related Parties are requested to compliance with the principles that have been upheld by the Company as prerequisites in its business. At the same time, so as to render Partners and Customers the best support, the Company provides them with guidance on how to receive assistance from the Company when they have questions about legal compliance. Last but not least, with pride in the proper conduct and responsibility toward government Authorities, Partners, Customers and Investors, etc., all members of Novaland Group will work together to make the Novaland brand name more and more appreciated.
Corporate Governance Activities
107
Investor relations and capital market activities
SHAREHOLDER’S INFORMATION As of January 25th, 2018, Novaland Group has 3 major Shareholders who hold over 5%, making up 58.17% of the Charter’s Capital. Mr. Bui Cao Nhat Quan’s shares decreased from 5.26% as at December 30th, 2016 to 4.82%, which means he is no longer a major shareholder after the Company completes the private placement of share for conversion as well as the first ESOP. In addition, the Group has 9 Shareholders who own between 1% and 5% of Charter’s Capital, accounting for 26.52% of the Charter’s Capital, and 1,959 Shareholders holding less than 1% of Charter’s Capital, making up 15.31%.
Regarding to the Shareholder structure, Novaland had 55 institutional Shareholders who hold 46.88% of the Charter’s Capital and 1,916 individual Shareholders who owned 53.12% of the Charter capital. Currently, the majority of Shareholders’ structure come from local investors, accounted for 94.14% and 5.86% remaining was foreign shareholders, in which institutional contributed 5.85% of Charter Capital. As the cap of ownership for foreign shareholders applicable to the property sector is 49%, foreign investors still have a lot of room to invest in Novaland in the future.
Novaland’s shareholder structure as at January 25, 2018
No.
Type of Shareholder
Individual Institutional
Number of shares
Ratio (%)
I
Major Shareholder (owning from 5% of Charter capital)
1
2
377,872,997
58.17%
1
Local
1
2
377,872,997
58.17%
2
Foreign
-
-
-
-
II
Shareholders holding between 1%-5% of Charter capital
6
3
172,341,554
26.52%
1
Local
6
1
150,622,984
23.18%
2
Foreign
-
2
21,718,570
3.34%
III
Shareholders holding less than 1% of Charter capital
1,909
50
99,444,237
15.31%
1
Local
1,847
17
83,068,537
12.79%
2
Foreign
62
33
16,375,700
2.52%
TOTAL
1,916
55
649,658,788
100%
Local
1,854
20
611,564,518
94.14%
62
35
38,094,270
5.86%
Foreign
108
Number of Shareholders
BRIGHTEN LIVES
5.86% 22.43%
41.03% 41.83%
53.12% 12.45%
5.85%
23.29%
Shareholder structure by ratio of ownership
94.14%
Shareholder structure by type of ownership
Mr. Bui Thanh Nhon
22.43%
Diamond Properties JSC
12.45%
Novagroup JSC
23.29%
Other Shareholders
41.83%
Local Institutional Foreign Institutional Individual
Shareholder structure by geographic distribution 41.03%
94.14%
Local
5.85%
5.86%
Foreign
53.12%
Source: Novaland Group
Changes in major shareholders in 2017
No. Shareholder
1
Novagroup JSC
2
Mr. Bui Thanh Nhon
3
Diamond Properties JSC
4
Mr. Bui Cao Nhat Quan Total
Address 315 Nam Ky Khoi Nghia, Ward 7, Dist. 3, HCMC, Vietnam 313B Nam Ky Khoi Nghia, Ward 7, Dist. 3, HCMC, Vietnam 36-38 Nguyen Van Troi, Ward 15, Phu Nhuan Dist., HCMC, Vietnam 315 Nam Ky Khoi Nghia, Ward 7, Dist. 3, HCMC, Vietnam
2017 (As at Jan 15, 2018)
2016 (As at Dec 30, 2016)
Status
Number of shares
Ratio Number of (%) shares
Ratio (%)
151,287,055
23.29 151,287,055
25.37
Major shareholder
145,715,656
22.43 126,197,583
21.17
Major shareholder
80,870,286
12.45
80,870,286
13.56
Major shareholder
31,335,524
4.82
31,335,524
5.26
No longer a major shareholder
409,208,521
62.99
389,690,448
65.36 Source: Novaland Group
In 2017, Mr. Bui Thanh Nhon, an Internal Person and Chairman of the Board, subscribed for additional shares and completed the transaction on April 24th, 2017, thus increasing his ratio of ownership in Novaland from 21.17% to 22.43% of the Charterâ&#x20AC;&#x2122;s Capital. Other Internal Persons including BOD, IAC and BOM Members, Chief Financial Officer and Chief Accountant completed the purchases of NVL shares on December 29th, 2017 following the ESOP.
Corporate Governance Activities
109
Investor relations and capital market activities
Internal Persons and major Shareholders and Related Persons as holders of the Companyâ&#x20AC;&#x2122;s shares as at January 25th, 2018 No. Full name
110
Shareholding as at December 30th, 2016
Ratio (%)
126,289,159
21.186
126,197,583
21.17
BOD Member â&#x20AC;&#x201C; CEO
22,894
0.004
68,682
0.012
Title
I
BOD/BOM
1
Mr. Bui Thanh Nhon
2
Mr. Bui Xuan Huy
3
Mr. Phan Thanh Huy
BOD Member
4
Ms. Hoang Thu Chau
BOD Member - Deputy CEO
-
-
5
Ms. Nguyen Thanh Bich Thuy
Independent BOD Member
-
-
II
Audit Committee
-
-
1
Ms. Nguyen Thanh Bich Thuy
Head
-
-
2
Mr. David Proctor
Member
-
-
3
Ms. Vo Thi Thu Van
Member
-
-
4
Ms. Nguyen Thi Minh Thanh
Member
-
-
III
Finance & Accounting Division
-
-
1
Mr. Phan Le Hoa
Division Head
-
-
2
Ms. Tran Thi Thanh Van
Chief Accountant
-
-
IV
Major Shareholders are Related Person of Internal Persons
232,157,341
38.93
1
Novagroup JSC
Major Shareholders related to BOD Members
151,287,055
25.37
2
Diamond Properties JSC
Major Shareholders related to BOD Members
80,870,286
13.56
V
Major shareholders being persons related to internal person
-
-
1
Mr. Bui Dat Chuong
-
-
BRIGHTEN LIVES
BOD Chairman
Shareholder related to BOD Members
Shareholding as at January 25th, 2018
Ratio (%)
145,903,482
22.459
145,715,656
22.43
67,834
0.01
68,682
Number of shares with restrictions on transfer
Ratio (%)
96,250
0.015
Increase of ownership ratio
-
-
Purchase of ESOP shares
44,940
0.007
-
-
51,310
0.008
Reason of change
0.011
1 year from 29/12/2017
1 year from 29/12/2017
51,310
0.008
-
-
-
-
34,290
0.005
9,290
0.001
-
-
-
-
-
-
-
-
25,000
0.004
Purchase of ESOP shares
-
-
9,290
0.001
Purchase of ESOP shares
9,290
0.001
22,470
0.003
22,470
0.003
8,600
0.001
Purchase of ESOP shares
8,600
0.001
1 year from 29/12/2017
13,870
0.002
Purchase of ESOP shares
13,870
0.002
1 year from 29/12/2017
232,157,341
35.74
-
-
151,287,055
Decrease of ownership ratio due to the Company’s capital 23.29 increase via debt conversion and ESOP issuance
-
-
80,870,286
Decrease of ownership ratio due to the Company’s capital 12.45 increase via debt swap and ESOP issuance
-
-
9,180
0.0014
9,180
0.0014
9,180
0.0014
9,180
0.0014
Purchase of ESOP shares
Period of transfer restrictions
Purchase of ESOP shares
1 year from 29/12/2017
1 year from 29/12/2017 Source: Novaland Group
Corporate Governance Activities
111
Investor relations and capital market activities
The Company has completed the issuance of 20 million the first ESOP, including 3 million 1-year lock-up shares under the ESOP Issuance Regulations. Of the 1,242 Shareholders receiving distributions, 6 Internal Persons are subject to transfer restrictions with a total number of lock-up shares being 137,190 representing 4.57% of the total number lock-up shares from the 1st ESOP issuance. In addition, according to Resolution No. 07/2017-NQ-NVLG approved at the AGM on April 27th, 2017 regarding to the private placement for debt conversion, Credit Suisse has appointed issuing to two persons and those shares will be locked up for 1 year after issuance.
No.
Number of shares
Full name
Ratio (%)
Number of lock-up shares
1
Mr. Nguyen Nhu Pho
24,939,970
3.84
24,205,054
2
Mr. Le Thanh Liem
24,206,500
3.73
9,254,500
Ratio Reason (%)
Lock-up period
According to credit document with 3.73 Credit Suisse AG - Singapore Branch According to credit document with 1.42 Credit Suisse AG - Singapore Branch
1 year from 28/6/2017
1 year from 28/6/2017
Source: Novaland Group Million shares 6.0
VND 1,000
81 76
4.0 71 66
2.0
61 56 Jan-17
Feb-17
Mar-17
Trading volume
T4/17
May-17
Jun-17
Trading price
Jul-17
Aug-17
Sep-17
Nov-17
Dec-17
Source: Novaland Group
The prices of NVL stock in 2017 fluctuated within a range of about 31% with the lowest being VND 57,800 on Jan 23rd, 2017 and the highest being VND 75,500 on March 14th, 2017. As at the end of the trading session on December 29th, 2017, the NVL stock closed at VND 65,100, representing a 30% increase against the VND 50,000 on December 28th, 2016, i.e. the date of official listing on HSX. Transactions are quite robust with a trading volume and trading value reaching approximately USD1.2 million shares and VND 78 billion, respectively, per session. In terms of capitalization, NVL currently ranks the 17th on the HSX, staying at about 2 billion USD, accounting for 1.6% of the entire market capitalization. Considering the real estate sector alone, NVL has the second largest market capitalization which is 4.5 times larger than the next-ranked company. 112
BRIGHTEN LIVES
Stock price as at December 29th, 2017 (VND) 52-Week highest/lowest prices (VND) 52-Week average trading volume (million shares) Total outstanding shares (million shares) Market capitalization (VND billion)
65,100 75,500/57,800
65,100
VND STOCK PRICE AS AT DECEMBER 29TH, 2017
1.2 649.7 42,295
EPS (VND)
3,210
P/E (times)
20
P/B (times)
3
42,295 BILLION VND MARKET CAPITALIZATION
With its stable performance, Novaland stock has been consistently named in the structuring of the portfolio of highprofile Indexes on the Stock Market with a proportion among the top group. In particular, it has been included in such Indexes as V.N.M ETF and FTSE Vietnam Index.
Indexes for which NVL was included in the portfolio in 2017 No.
Index
1
MSCI Vietnam Index
2
MSCI Vietnam Investable
3
MVIS Vietnam Index (V.N.M ETF)
4
MSCI Frontier Markets 100 Index
5
FTSE Vietnam Index
6
VN30
7
VN100
Description This index comprises of component stocks that represent about 85% of the total market capitalization. Developed by MSCI, it measures the behavior of medium and large market capitalization stocks on Vietnam’s Stock market. This index comprises of component stocks that represent about 99% of the total market capitalization. Developed by MSCI, it measures the behavior of small, medium and large market capitalization stocks on Vietnam’s Stock market. An index that combines stocks of the largest and most liquid companies on Vietnam’s stock market as well as stocks of foreign companies that have at least 50% of their revenues earned from within Vietnam. An index comprising of 100 largest and most liquid component stocks for the frontier market. An index combining stocks of companies included in the FTSE Vietnam All-Share Index with sufficient foreign room and satisfying the requirements of the index. An index constituted from VN- AllShare basket of component stocks including 30 top companies in terms of market capitalization and liquidity that meet specified requirements. An index that comprises of components of VN30 and VNMidcap.
Ratio (%) (31/12/2017)
Ranking
Date of inclusion
2.97
8
12/1/2017
2.49
8
12/1/2017
6.40
4
17/3/2017
0.63
48
30/5/2017
5.08
7
16/6/2017
Included in VN30
x
24/7/2017
Included in VN100
x
18/7/2017
Source: Novaland Group Corporate Governance Activities
113
Investor relations and capital market activities
INDUSTRY COMPARISON Ticker
ROE T12M (%)
ROA T12M (%)
P/E T12M (x)
P/B T12M (x)
NVL
18
5
20
3
Average (*)
12
6
18
2
Mean (*)
11
4
37
4
(*) Calculations are done based on 7 prominent Companies in the Real Estate field.
REGULAR AND TRANSPARENT DISCLOSURE OF INFORMATION WELL ABOVE THE COMPLIANCE THRESHOLDS - ENSURE BENEFITS AND EQUAL TREATMENT FOR SHAREHOLDERS
Novaland Group continues to strive for higher international standards such as the OECD’s Corporate Governance framework and the ASEAN Corporate Governance Scorecard in regards to a number of indicators. The operations of Novaland’s investor relations are based on the principles of Honesty - Timeliness - Transparency, which are connected with the Company’s Core Values, etc.Integrity - Effectiveness - Professionalism. Novaland develops a strategy under which information disclosure becomes an effective tool in enhancing corporate value, reflecting the management’s serious care for the needs of information, ensuring the best interests and fair treatment for all Shareholders and Investors under all circumstances. With information disclosure and transparency above the minimum standards of Vietnam regulations, Novaland Group continues to strive for higher international standards
114
BRIGHTEN LIVES
Source: Bloomberg
such as the OECD’s Corporate Governance framework and the ASEAN Corporate Governance Scorecard in regards to a number of indicators. In 2017, Novaland held a Shareholders’ General Meeting in April and two shareholders’ written opinions in August and December to get approval within the authority of the GMS. To encourage Shareholders to attend the GMS where they have the opportunity to propose issues for the agenda and contribute to the Company’ operations, the Company distributed all documents 21 days ahead of the meeting. Changes in agenda were communicated in advance and meeting documents were fully translated into English and published on the same day with documents in the local language so as not to affect foreign Shareholders’ decisionmaking; information transparency is implemented above the current standard level.
No.
1
2
3
4
5
Type of information
Disclosed content
Details of implementation
Company’s Charter https://www.novaland.com.vn/en-US/companyscharter
The most updated Company’s Charter dated August 22nd, 2017.
Yes
Corporate profile https://www.novaland.com.vn/quan-he-dau-tu/ thong-tin-ve-tap-doan-novaland/thong-tin-cong-ty
Frequently update prominent activities and provide transparent clarification of negative information relating to the Company.
Yes
Corporate Governance
Code of Corporate Governance https://www.novaland.com.vn/en-US/investmentrelation/corporate-governance
The most updated Code of Corporate Governance dated June 19th, 2017.
Yes
Information disclosure
Ownership summary https://www.novaland.com.vn/en-US/investorrelations/information-disclosure/ownershipsummary
December 2016, May 2017, January 2018.
Yes
Financial Statements https://www.novaland.com.vn/en-US/investorrelations/information-disclosure/financialstatements
Audited semi-annual Financial Statements 2017, unaudited quarterly Financial Statements, reviewed semi-annual and audited Financial Statements for the 2014-2017 period; explanatory notes for +/-10% change in profit after tax.
Yes
Announcements https://www.novaland.com.vn/en-US/investorrelations/information-disclosure/announcements
Periodical, extraordinary, requested disclosure of information, major shareholders, insiders and related persons.
Yes
Annual report https://www.novaland.com.vn/en-US/investorrelations/information-disclosure/annual-report-2
Annual report 2016.
Yes
Listed bond https://www.novaland.com.vn/en-US/investorrelations/information-disclosure/listed-bond
Information relating to 7 packages of listed bonds at HSX.
Yes
General Meeting Shareholders 2018 https://www.novaland.com.vn/en-US/investmentrelation/agm/2018-2
Information and documents relating to the collection of Shareholders’ written opinions.
Yes
General Meeting Shareholders 2017 https://www.novaland.com.vn/en-US/investmentrelation/agm/2017-28
Information and documents relating to the annual GMS 2017 and the collection of Shareholders’ written opinions.
Yes
Genneral Meeting Shareholders 2016 https://www.novaland.com.vn/en-US/investmentrelation/agm/2016-43
Resolution of listing at HSX.
Yes
Investor relations policy https://www.novaland.com.vn/en-US/investmentrelation/investor-activities/investor-relations-policy
Regulations on communication with Authorities, Shareholders, and Investors.
Yes
Stock price and market information https://www.novaland.com.vn/en-US/investmentrelation/investor-activities/investor-relations-policy
Stock information by trading day
Yes
Analyst coverage https://www.novaland.com.vn/en-US/investmentrelation/investor-activities/analyst-coverage
Notes and analysis of quarterly business and financial activities.
Yes
Financial calendar https://www.novaland.com.vn/en-US/investmentrelation/investor-activities/financial-calendar
Consolidated financial events in the year and plan.
Yes
IR Contact https://www.novaland.com.vn/en-US/investmentrelation/investor-activities/ir-contact
Contact information for Shareholders and Investors.
Yes
Corporate information
As required by Circular 155 and other relevant legal documents. In addition, the Company is implementing the information disclosure road map according to ASEAN Scorecard standards to meet Shareholders and Investors’ needs for accurate, transparent and timely information
General Meeting Shareholders
Investor activities
English
Source: Novaland Group
Corporate Governance Activities
115
Investor relations and capital market activities
STRENGTHEN INVESTORS AND SHAREHOLDERS RELATIONS Building the relationships established in previous years, the Capital Markets and Investor Relations Department has continually held meetings with Shareholders, Investors, Securities Companies, Credit Institutions, etc. to report on business results, update new business strategies and implement fund raising plans to ensure the Companyâ&#x20AC;&#x2122;s secured and sustainable development under market circumstance from time to time.
Institutional Investors structure visited Novaland in 2017 1% 2%
23%
16%
58%
America
23%
Asia
58%
Europe
16%
Africa
1%
Australia
2% Source: Novaland Group
116
BRIGHTEN LIVES
Nearly 70 Investors visited Novaland to seek investment opportunities and understand the Companyâ&#x20AC;&#x2122;s business performance. Almost 58% of these Investors came from Japan, Korea, Singapore, Taiwan, Hong Kong and China. The other 42% came from Americas (the US and Canada), Europe (Switzerland, England, Cayman Islands), Australia and even Africa (Egypt). A number of world-renown credit Institutions have established relationships with Novaland including Credit Suisse AG (Switzerland), GW Super Nova (Singapore), Maybank (Malaysia) and VietinBank Filiale Deutchland (Vietinbank - Germany Branch).
Compared with industry peers listed on the HSX, NVL is considered one of a few reputable Companies with an efficient business model, a relatively fast growth rate and an attractive profitability. As a result, NVL stock is frequently named among positive recommended choices of the major Securities Companies in the market. No.
Securities Company
Recommendation Outperform
1
HSC Hold
2
SSI
Hold
3
VCSC
Market perform
4
VND
Hold
Target price for 1 year (VND) 63,866 67,388 64,832 64,779 61,028 61,800 69,500 73,200 72,200 67,600 66,100 69,500
Date of report 3/1/2017 28/3/2017 27/4/2017 31/7/2017 14/12/2017 30/12/2016 10/7/2017 7/4/2017 7/6/2017 10/8/2017 20/12/2017 17/4/2017 28/8/2017 Source: Consolidated by Novaland
In order to promote Novaland’s brand to Investors, the management team actively attended conferences and forums held by local and foreign prestigious institutions. Many opportunities have thus been opened up for cooperation as well as fund raising for subsequent years of Sustainable Development. Time
Quarter 1
Quarter 2
Quarter 3 Quarter 4
Workshop/Event
Held by
Country
JP Morgan Investor Day
JP Morgan
Vietnam
VCSC’s Vietnam Access Day
VCSC
Asian Frontier Markets Conference
Credit Suisse
Asian Frontier Markets Conference
Credit Suisse
Standard Chartered Bank’s Global Research Briefing
Standard Chartered
Vietnam
Market Outlook 2017: Opportunities in the new normal 2016 review and 2017 market outlook for Vietnam: Vietnam - Shining bright like a diamond Accompanying businesses
CBRE
Vietnam
JLL
Vietnam
Government Office
Vietnam
Viet Access Conference
Dragon Capital
Vietnam
Gateway Parners Investor Conference
Gateway Partners
KIS Conference Corporate governance and corporate risk management - Global trends HOSE - Daiwa Vietnam Corporate Day Tokyo 2017
KIS
Vietnam London (England) New York (US)
Singapore South Korea
Deloitte Vietnam IFC
Vietnam
Asia Real Estate Summit
HOSE and Daiwa Securities HSC, Dragon Capital and CLSA Singapore PropertyGuru
Gateway to Vietnam 2017
SSI
Vietnam Conference 2017
Japan Vietnam Singapore Vietnam
Source: Novaland Group Corporate Governance Activities
117
Investor relations and capital market activities
PROCESS OF INCREASING CHARTER CAPITAL In 2017, Novaland completed two times of increasing Charter capital via a private placement for debt conversion and ESOP issuance. As a result, Charter capital increased from VND 5,962 billion to VND 6,297 billion and from VND 6,297 billion to VND 6,497 billion, equivalent to 5.6% and 3.1%, respectively.
649,658,788
SHARES
OUTSTANDING SHARES INCREASED BY 53,459,554 SHARES
Unit: VND billion
5,742 4,700 3,505
3,615
3,672
3,683
Jun 2015
Jul 2015
Oct 2015
Dec 2015
5,962
6,297
6,497
5,220
2,300
95 2007
600
Oct 2007
900
May 2009
1,200
Jul 2009
Oct 2014
Feb 2016
Aug 2016
Nov 2016
Nov 2016
Jun 2017
Dec 2017
Source: Novaland Group
In 2017, Novaland Group implemented some shares issuances to increase Charter capital, including:
118
Private placement for debt conversion
ESOP issuance
Under the State Securities Commission’s approval, on June 28th, 2017, Novaland Group successfully issued 33.46 million shares to convert USD 60 million loan at Credit Suisse AG, Singapore Branch to fulfill the Novaland’s commitment in 2016 to Credit Suisse AG. The value of Novaland’s shares has been growing positively over time and is well appreciated by the market. The total amount of funds converted was VND 1,367.4 billion. Following this private placement, Novaland demonstrated its ability to diversify capital mobilization channels. Instead of merely focusing on loans, the Company managed to reduce the debt with Credit Suisse AG and increase Charter capital from VND 5,962 billion to VND 6,297 billion, equivalent to 5.6%.
On December 4th, 2017, the State Securities Commission approved Novaland’s 1st ESOP issuance of 20,000,000 ESOP shares, of which 17,000,000 shares could be traded immediately after the issuance while the remaining 3,000,000 shares are locked up for one year. In the Capital audit report issued by PwC on December 29th, 2017, the Charter capital of Novaland Group was raised to VND 6,497 billion, an increase of about 3.1%. According to the 2017 GMS’s Resolution, a total of 29.8 million ESOP shares will be issued in two issuances. The second issuance for 9.8 million shares is scheduled to be carried out and completed in the Q1/2018.
BRIGHTEN LIVES
In addition, in 2017, through TCBS consultant, Novaland successfully issued three bond packages and listed a total of 7 bond packages on the HSX for the purpose of implementing investment projects, increasing the scale of working capital, and restructuring debts. By the end of 2017, 2 bond packages NVLG092017, NVLG09201702 reached maturity and the Company fulfilled its obligations to repay full amount to the investors.
Total issuance value (VND)
Date of issue
Maturity date
Tenor
Date of listing approval
NVL21602
550
24/8/2016
5/9/2017
377 days
12/4/2017
NVLG09201702
NVL21603
150
9/9/2016
11/9/2017
367 days
12/4/2017
3
NVLG042018
NVL21604
450
3/10/2016
3/4/2018
18 months
12/4/2017
4
NVLG122018
NVL21605
500
19/12/2016
19/12/2018
2 years
12/4/2017
5
NVLG022019
NVL11708
500
28/2/2017
28/2/2019
2 years
26/6/2017
6
NVLG032019
NVL11714
1,800
31/3/2017
31/3/2019
2 years
27/10/2017
7
NVLG082019
NVL11715
1,000
8/8/2017
8/8/2019
2 years
31/10/2017
No.
Name of Bond
Ticker
1
NVLG092017
2
Total
4,950 Source: Novaland Group
DIVIDEND POLICY In order to take the most advantage of the opportunities in the real estate market, Company prioritizes the use of business profits to finance the development of new projects, and accumulate land banks for long-term development strategies. In addition to the payment of dividends to Shareholders of convertible preference shares, the Groupâ&#x20AC;&#x2122;s dividend policy places more attention on the issuance of bonus shares or stock dividends. Under a plan approved by the AGM 2017, NVL will set aside over VND 2,000 billion from share premium and retained earnings to distribute bonus shares to Shareholders.
COMMITMENTS TO BE EXECUTED: CONVERTIBLE PREFERENCE SHARES As of December 31st, 2017, Novaland Group had 6,830,000 convertible preference shares that have not been converted into ordinary shares. The conversion plan for convertible preferred shares to ordinary shares was approved in Resolution No.120/2016-NQ-NVLG on July 21st, 2012 with the following particulars: Form of Conversion
Preference shares will be converted into ordinary shares by the request of the preferred shareholders with the ratio of 1 preferred share to 3 ordinary shares
Sources of issuance
Share premium
Eligible subscriber
The owner of preference shares at the time of conversion
Timing
Expected from Q4/2016 to Q1/2019 as scheduled commitment to shareholders holding preference shares
Corporate Governance Activities
119
2,062 BILLION VND PROFIT AFTER TAX
EFFECTIVENESS
INCREASING VALUE
Value added capabilities versions have been improved through accumulated experience, investment, research and response to the market. With a large land bank and an EFFECTIVE investment strategy, we are confident to deliver outstanding value in the next 7 to 10 years.
BUSINESS OPERATIONS IN 2017
Sharing from customers Sharing from partners Sharing from staff s Business model Novaland Group - SWOT analysis Strategic plan and future orientations Introduction of the Board of Management The BOMâ&#x20AC;&#x2122;s report M&A activities - Continue with the land acquisition strategy Activities of Subsidiaries - Associates Quality assurance - For a solid belief Human Resources and Training - The foundation for success Invest in technology - The leverage for business
122 126 127 128 133 134 136 137 142 144 148 150 154
Sharing from customers A steadfast journey of value creation
For many customers, Novaland’s products are more than attractive profitable assets and quality residences. They imply a sustainable chain of “added value”. Their belief was further consolidated in 2017, when thousands of new homes were delivered just as committed.
DELIVERY OF THOUSANDS OF PRODUCTS THE VALUE OF SCHEDULE AND QUALITY COMMITMENTS In 2017, the green Rubik’s cube – Novaland’s brand icon - were lit up in a series of completed projects along many key routes of HCMC such as: Rivergate Residence, The Tresor Residence (Dist. 4); Lakeview City (Dist.2), Lucky Dragon Residence (Dist.9); Lucky Palace (Dist.6); and Kingston Residence (Phu Nhuan Dist.), etc.
Nguyen Minh Hoang recalls when he chose an apartment at GardenGate Residence project, located close to Gia Dinh Park, Phu Nhuan District: “I visited several European countries like Luxembourg, the Netherlands, Germany, Italy, and I can say Novaland’s apartments are no different from those I saw there”. Upon becoming a resident of Novaland, Hoang said: “Novaland is a reputable developer, and I was not worried about the schedule and quality. During reception, all of my requirements were met before the actual hand-over. I found it a very serious, responsible move that ensured customer satisfaction”. Mr. Nguyen Minh Hoang Gardengate‘s resident
Golf Park (Dist.9, HCMC) - Photo by: Tran Ngoc Tuan
Nguyen Ngoc Bich, who has just received an Office-tel at Rivergate Residence project, said: “As many of my friends are residents of Tropic Garden Residence, Sunrise City… I was totally worry-free when investing in an Office-tel at Rivergate Residence. Now, I am even more pleased as an owner of an office-tel located in a central district with so much convenience and many beyond-expectation services. In particular, my trust is even greater given what the developer has managed to do by delivering the apartment on time and offering very good care of residents”. Ms. Nguyen Ngoc Bich Rivergate‘s resident
The values created from adhering to commitments are first and foremost the maintenance of investor confidence, followed by customers’ support for the developer brand, and then the spread of positive reputation to the entire market. 122
BRIGHTEN LIVES
A DECENT INCREASE OF INVESTMENT VALUE
I bought 5 villas at Lakeview City and have so far sold 3 of them at a rate of return that makes me so satisfied. We have received the others and are doing some interior works. So proud to show my friends that in the middle of this noisy and dusty city, my sweet home offers an entire cool, healthy and comfortable space that is possible thanks to a nearly 3.6-hectare lake.
Lakeview City (Dist.2, HCMC) - Photo by: Ngo Quang Phuc
Ms. Ngoc Anh - Director of Sang Ban Mai Company Joyfully talks about how her investments have performed over the past year.
To start with, I bought a one-bedroom apartment. Even when I was hardly done with interior works, some people already came asking for a sale. I experienced similar ease with the sale and lease of next apartments around the airport area. I am also very lucky to have won a lucky draw for another 2 apartments at Botanica Premier project. Novaland is a developer of very good reputation, a very good investment channel. Mr. Bui Quang Lai Evaluates the liquidity of Novaland apartments.
I chose to invest in Office-tel as Vietnam is a developing country where business is springing up, followed by an increasing need for offices. It has been very easy for me to find tenants for all the 3 office-tel at Orchard Garden that I received in June. Ms. Nguyen Phuong Thu Cheerfully recalls her successful investments in office-tel.
Office-tel are very popular in other countries. When Novaland launched this kind of product, I decided to be one of the first investors. The location of Lexington Residence is very convenient for business and I decided to buy 8 apartments. I use 7 of these as offices and the other for lease. Mr. Andrew Li A Singapore businessman, disclosed the reason why he bought so many office-tel.
Stories from Novalandâ&#x20AC;&#x2122;s customers about their investments in villas, town houses, apartments, commercial or Office-tel diversely vary in terms of purpose or manner but have one thing in common which is their satisfaction with the rate of return and their willingness to make further investments in new projects and to refer friends and relatives, etc. Business Operations in 2017
123
Sharing from customers A steadfast journey of value creation NOVALAND AGENT TRANSFER AND LEASE SERVICE A LEVER FOR INVESTMENT VALUE
Novaland Agent performs transfer and lease support services for Novalandâ&#x20AC;&#x2122;s products. It also offers consultancy for financial solutions, legal issues, apartment management, etc. The service was officially launched in September 2016. After over 1 year, this service has received many positive feedbacks regarding the efficiency in increasing property value as well as quality service.
The Novaland Agent service is very helpful for foreigners who buy or sell properties in Vietnam. We do not need a lot of market knowledge to persuade buyers because Novaland Agent will provide all the needed support. Mr. Richard Rayce A British filmmaker.
Novaland Agent specialist are very helpful and attentive. They do not waste my time. They usually prepare all the necessary papers and I just need to sign at the notary public office. Each transaction only takes from 1 week to 10 days to complete. So far, I have conducted over 10 transactions via Novaland Agent. said Ms. Quan Anh Thoa
124
BRIGHTEN LIVES
NOT JUST A HOME, BUT ALSO WHERE LIFE IS ENJOYED
Lakeview City (Dist.2, HCMC).
My family was the first to start living in this project, really impressed with the projectâ&#x20AC;&#x2122;s 3.6-hectares ecological lake, Novaland actually do what they say! The air is fresh and cool, and we almost do not need air-conditioning. My brotherin-lawâ&#x20AC;&#x2122;s family also moved in and are now living nearby. The kids can comfortably cycle around the campus while adults can do exercise by the lake every afternoon.
1
Ms. Le Thi Nga A resident at Lakeview City.
Persistent with the motto CUSTOMERS ARE NO.
Novaland Group continues to develop a wide variety of products which are both resident and investor-friendly. In particular, the Company will intensify the improvement of service quality and customer care in the time to come. The trust and companionship of tens thousands of customers has undoubtedly strengthened the journey of value increment and created an advanced humanistic community of the Novaland brand. Business Operations in 2017
125
Sharing from partners Developing Together
For a quarter of a century, Novaland Group has grown steadily thanks to the enthusiastic support and sincere cooperation of business partners, the support and recognition from local authorities at all levels as well as community organizations.
BUILDING CONTRACTORS
SUPPLIERS OF BUILDING MATERIALS
Hoa Binh Construction JSC
HALO GROUP Limited Company
The similarities in corporate culture such as fairness, transparency and goodwill with partners have been the key elements that cement the partnership between Novaland and Hoa Binh over the past 10 years.
Over the course of more than 8 years of cooperation in over 20 projects, we appreciate the Novaland team’s professionalism, integrity, transparency, affability and maximum support for partners. This is also the reason why Halo would like continue a long-term and sustainable partnership with Novaland.
In particular, in addition to the importance it attaches credibility in business, Novaland is also one of the few developers who uphold the quality of works at all stages, from design to construction, management, operation and services. As a result, Novaland has brought to customer high quality products; contributing to the creation of a modern urban landscape, a civilized environment and many outstanding values for the community.
Mr. Le Viet Hai Chairman of the Board and CEO Hoa Binh Construction JSC.
Mr. Luu Thai Dung Chairman and CEO of HALO GROUP Co., Ltd.
Viet An Technology JSC Viet An - Povina Company proudly accompanies Novaland Group. We bring quality steel products and optimal steel structure solutions to over 17 key projects of Novaland in Ho Chi Minh City. With its contribution to the real estate market, Novaland Group deserves to be the pioneer in reviving stagnant projects, a positive contributor to a warming property market, a builder of customer confidence and a strong influencer on the urban development in HCMC. Ms. Dang Nam Lien Board Chairman of Viet An Technology JSC.
CSR PARTNERS In 2017, Novaland Group donated heart surgery funds to save 25 children with congenital heart diseases. This is a very meaningful, practical and timely deed of the Company’s management. Novaland’s companionship has lent a helping hand to the Association in helping ease the pain of poor and disadvantaged patients. It is also a great source of encouragement for volunteers like our Association.
Dr. Tran Thanh Long President of Ho Chi Minh City Association for Poor Patients.
126
BRIGHTEN LIVES
I appreciate and am thankful for the benevolence and wholeheartedness of Novaland Group’s management and staff for helping people in Quang Nam province overcome the consequences of Typhoon No. 12. Over 6 tons of rice and hundreds of blankets have been handed to 647 households. It is worth mentioning that the roads to the relief sites are very difficult and dangerous with steep slopes and landslide. Though they had to walk on foot for kilometers, the Group’s staff would not bother. These are truly noble and responsible deeds for the community. They should be encouraged and promoted amount successful entrepreneurs. Ms. Ho Thi Thanh Lam President of Quang Nam Province Association for the Protection of Disabled People, Children’s Rights and Poor Patients.
Sharing from staffs Corporate culture, the foundation of sustainable success
With a 25-year journey, Novaland Group is proud to have built a very distinctive corporate culture of “Integrity - Effectiveness - Professionalism”. This has become the guideline for all of the Company’s activities as well as the identity of each and every Novalander.
Nguyen Bao Loc
Cao Tran Duy Nam
To Huynh Phuong Tram
Construction, Safety and Environment Management Director (7 years with Novaland)
Procurement Director (7 years with Novaland)
Team Lead of Property Consultancy (4 years with Novaland, Best seller of 2016)
Having been with Novaland since the first project which was Sunrise City in District 7, my jobs have ranged from building of processes, recruitment of people to execution of projects. Together we overcame difficult times of the real estate market at that time. Till now, I am really satisfied with and proud of the Company’s recognition. At Novaland, I’ve explored my own capacity through challenges and have found the common point in awareness, or, in other words, the similarities in my own cultural goals with Novaland’s core values of Integrity, Effectiveness and Professionalism”. I believe that professional skills can be trained but working attitude and the sense of responsibility are the most difficult factors that can be shaped. Therefore, on my career path, it’s only intangible values such as experience and skills to improve myself are the very springboard for success.
What it comes to procurement, the boundary between integrity and deflection is very fragile.
That I am favored by customers is thanks to the Company’s good projects with nice locations, quality products, and timely delivery. I always try to provide customers with helpful and honest advice, which in turn motivate customers refer their relatives and friends to Novaland.
Xa Nhon Phong
Nguyen Thanh Tam
Dinh Thi Van Anh
Head of Apartment Handover Department (5 years with Novaland)
Senior Sales Manager (5 years with Novaland)
Acting Head of Remuneration Department (5 years with Novaland)
Delivery was a new division when I joined Novaland. Thanks to the facilitation of the management team, after 3 years, I was appointed Head of Apartment Handover Department. The best thing that I have here at Novaland is the team of helpful colleagues and good relationships with the first Novaland residents.
Leadership, empowerment and motivation is what I and my colleagues have received from the Group’s Management team over the years. The job of the sales staff requires us to maintain our vitality, love and strength to overcome the targets. Most importantly, the core values of the Group must be the guiding principles for all of our actions.
Joining Novaland when the property market was almost frozen, I was lucky to see how quickly Novaland transformed and developed and how a dynamic working environment was created where I could find challenges to satisfy my passion.
The root of all sustainable relationships is sincerity, conscious listening, understanding and sharing of goodwill through an enthusiastic heart. This is also the working motto of our home delivery team.
What makes us even more proud is that everyday we are bringing practical values to our customers. We are clear and transparent in every transaction and we always pioneer to discover new challenges... Everything aims to associate the growth of the organization with the development of each individual and, at the same time, to successfully convey the Group’s commitment to each customer.
Therefore, I am lucky and proud to be a Novalander for whom the spirit of “Integrity - Effectiveness - Professionalism” is instilled in every thought and action. This enables me to further improve both professional skills and ethical virtues. Besides, I know that contractors and suppliers are also very proud of being Novaland’s strategic partners. Of course, in order to create sustainability for the cultural foundation, the orientation, guidance, inspiration and timely support from the management team is very important. It fosters enthusiasm and promotes the cohesion among the entire Novaland Group’s staff.
In fact, I have worked for 3 developers and this is where I can feel the most motivation in my job. Not only does Novaland have a good remuneration policy, the Company also helps me improve my professional skills significantly.
I am truly proud to be a member of Novaland, to absolutely adhere to and act in the spirit of the Company’s core values. I am willing to spread this good thing to my colleagues and relatives. What I feel most clearly is that I have become disciplined and professional in my professional job. This has enabled me achieve certain success on my career path. You should not spend time looking for perfection since it is not an absolute concept. While doing your job, only by your efforts, endeavors and accumulation of valuable experience for yourself, the opportunities will come to you to benefit from the development of the Group.
Business Operations in 2017
127
Business model
A dynamic and active business model is one of the contributors to the positive business performance in 2017. 4 basic elements of FOCUS STRATEGY, EFFECTIVE LAND BANK ACQUISITION, STRONG EXECUTION TEAM and PRUDENT CAPITAL MANAGEMENT are grouped into a mutually supportive solid block.
FOCUS STRATEGY
PRUDENT CAPITAL MANAGEMENT
BUSINESS MODEL
STRONG EXECUTION TEAM
128
BRIGHTEN LIVES
EFFECTIVE LAND BANK ACQUISITION
FOCUS STRATEGY
MID AND HIGH END SEGMENTS, STRATEGIC LOCATIONS Novaland Group executes a focus strategy in order to ensure its business operating swiftly and effective cost control, thereby providing customers with high-quality products at competitive prices. In 2017, the Company’s spearhead products continued to be residential product including apartments, Office-tels, town houses, villas and commercial of mid and high end segment in HCMC’s strategic locations. Lexington Residence (Dist.2, HCMC) - Photo by: Huynh Pham Anh Dung
The Central area
The Southern area
The Central area has always been regarded as HCMC’s strategic location where land bank is really scarce and profitability has always been among the top tier in the real estate market. In 2017, Novaland successfully delivered two new projects in District 4, namely Rivergate Residence and The Tresor Residence with over 2,000 products at an absorption rate of nearly 90%. The Group is expected to announce a new project in Dist. 1 with nearly 164,000 square meters of construction space, contributing to the increased coverage of the Novaland brand in Dist. 1 and Dist. 4.
Infrastructure is also a lever stimulating the continued development of the real property market. Metro line No.4, one of the key projects with a total investment of nearly USD 5 billion, is designed to connect Dist. 7 and Nha Be Dist. with Central ones. Leveraging the area’s potentials in transportation infrastructure and connectivity conveniences, Novaland is also investing to build over 4,600 products including apartments, office-tels and commercial, scheduled for delivery in 2018. as promised for Sunrise Cityview Project (Dist. 7) and Sunrise Riverside (Nha Be Dist.).
The Eastern area
The Western area
70% of HCMC’s infrastructure investment capital focuses on the Eastern area in the 2010-2020 period with such projects as Mai Chi Tho Avenue, Thu Thiem Tunnel, Cat Lai Bridge, Long Thanh Highway, Hanoi Highway. The next highlights including the Metro line 1 Ben Thanh - Suoi Tien, underground tunnel on Hanoi Highway, the bridge through Diamond island connecting to Mai Chi Tho Avenue, etc. have changed the face of this area day after day and made it an attractive destination not only for domestic and foreign investors but also for customers seeking settlement. Novaland Group started accumulating land bank and developing projects in this area from early days. For projects that have been delivered, under ongoing delivery and those under development, the Eastern area occupies 52% of the total land area with an average absorption rate of 88%. This demonstrates the significance of this area in the Group’s long-term development strategy. In 2018, the Company plans to announce three new projects with a total of over 7,000 products.
The West is the gateway between Ho Chi Minh City and Southwestern provinces. In particular, Metro line No.2 (Ben Thanh - Tham Luong), Metro line No.4 (Nguyen Van Linh Boulevard - Ben Cat Bridge - Thanh Xuan) will facilitate seamless connectivity from the East to the West as well as from the Western area to the inner city area. 2017 can be considered as the year of the Western area when the Group delivered three projects, namely Gardengate Residence, Kingston Residence, and Orchard Garden (Phu Nhuan Dist.) with an average absorption rate of 98%. In addition to the four projects that have been delivered and under delivery, Novaland continues to implement the remaining 6 projects to provide about 5,000 products to customers in 2018. The average absorption rate of the Western as at the end of 2017, which was about 98%, has more or less demonstrated the significant attractiveness of this area.
Business Operations in 2017
129
Business model
EFFECTIVE LAND BANK ACQUISITION
PROACTIVELY SEARCH FOR POTENTIAL LAND BANK WITH QUICK ACQUISITION PROCEDURES Based on an efficient focus strategy, Novaland has been involved in many mergers and acquisitions (M&A) or development cooperation. Novaland follows a policy of acquiring projects that have prime locations with complete legal status, those for which can be commenced immediately to shorten project development process and reduce development cost, thereby lowering the COGS, enabling competition on the market.
Novalandâ&#x20AC;&#x2122;s land bank come mostly from
Buying back from private companies wishing to restructure their business system;
130
BRIGHTEN LIVES
Buying shares of state-owned enterprises which would like to divest from non-core business;
Acquiring from real estate developers in need of restructuring their project portfolio;
Projects which are bad debts to be cleared.
STRONG EXECUTION TEAM
EXPERIENCED PERSONNEL, SPECIALIZED SALES FORCE Brand reputation comes from actions. In addition to the “clement timing, favorable land” factors, the “united team” factor demonstrated through the ability to deploy projects, to efficiently utilize resources and experienced staff to provide quality products with high financial performance is what differentiates Novaland’s products. Up to now, all of Novaland’s projects have been delivered as per or ahead of schedule. The average project development turnover is 2.5 years for high-rise buildings and less than 2 years for low-rise ones, notably the Lakeview City project, this helps increase the efficiency of capital utilization and satisfy customers’ demands.
1
The “CUSTOMERS ARE NO. motto is instilled into the mindset of each Novalander.
At the same time, the Group can still ensure project quality thanks to the supervision of the quality assurance team from design to delivery stage. Unlike most of industry peers who outsource their saleforces, Novaland maintains an in-house saleforce of over 300 salespeople who are selected after strict tests and special training courses. A dedicated research team helps with following up market movements, providing timely and high-accuracy information for investment decision-making and diversifying launching time so as to avoid internal cannibalization.
The Group has worked with Proman Building Management Company, which boasts a professional staff with many years of experience accumulated from industry leaders to provide professional operation management services throughout the life cycle of products for residents and the surrounding community.
Business Operations in 2017
131
Business model
PRUDENT CAPITAL MANAGEMENT
DIVERSIFYING OF CAPITAL AND APPROPRIATE FINANCIAL STRUCTURE
Novaland Group has built its own financial structure based on the independent cash flow of each project via Subsidiaries and Associates. The Company chooses the appropriate time to increase shares in these entities and consolidates them into the Group via merger transactions.
Distinct financial structure
132
BRIGHTEN LIVES
Local & foreign credit institutions
Liquidity for raised funds
Novaland always adheres to financial control through a prudent financial policy. In particular, it always ensures satisfactory liquidity and leverage ratios in business operations. The Group has approached domestic and international capital markets through competitive interest-rate loans from reputable partners such as VietinBank, VPBank, Credit Suisse (Switzerland) and Maybank (Malaysia). The Groupâ&#x20AC;&#x2122;s objective is to build a secure financial structure that ensures diversified funding sources for its business operations through loans, bond and share issue. In addition, thanks to Novalandâ&#x20AC;&#x2122;s brand reputation, payments from customers are made on time after launching projects, thus ensuring sufficient funds for each stage of project development.
Novaland Group SWOT analysis
STRENGTHS Reputable real estate company: Novaland’s capacity has been affirmed through 14 completed projects: 1. Accurate commitment-based progress. 2. Qualified products. Obvious competitive advantage over competitors in the market:
WEAKNESSES Products focus only on middle and high-end segments. Lack of product variety: Developing only on real estate for sale which is easily affected by unfavorable housing market conditions. Lack of products ensuring stable cash flow: As of 2017, Novaland has just entered Phase 2 of its development strategy where the product range is extended to hospitality and commercials.
1. Being affordable and high quality. 2. Ability to finish projects on committed schedule.
OPPORTUNITIES
Large and diverse land banks through effective M&A activities: Land banks are accumulated at reasonable prices in prime locations, ensuring stable cash flow in the next 7 to 10 years.
Promising macro economy and political stability: Real estate market is expected to enter its stable growth period from 2017.
Experienced Management Board: The Group’s senior Management Team has a number of years of universal experience in both local and international real estate business and construction management. Project development on the basis of timing optimization and effective cost control: 1. Development process is standardized and functional departments demonstrate reliable expertise as well. 2. State-of-the-art technology is applied for execution, construction management, design and operation of the building. Outstanding sales team of well-trained and professional people, attractive selling policy together with smooth coordination with local banks for financial support to customers. Prudent capital management: Novaland was formally listed on December 2016 to diversify methods of raising capital and look for more resources both in domestic and international to ensure stable funding for timely project development. The Group is diversifying forms of development in coastal areas and special economic zones to optimize revenues and profits and generate stable cash flows.
The Group’s land bank is concentrated mainly in HCMC to take advantage of economic growth and golden population structure at the commercial hub of Vietnam. Housing demand always exists in the mid-tier housing segment. In HCMC, GDP per capita has been increasing: According to the City’s socio-economic development targets, per capita income in HCMC will reach USD 9,800 per year in 2020. In Vietnam, demand for housing ownership, especially for apartment ownership from foreigners is augmenting the domestic demand: As soon as the guideline of Real Estate Law number 66/2014/QH13 is issued, it will positively support the demand.
THREATS Progress of real estate projects: It will always be affected by legal procedures, market and economic situation. Increasing competitive pressure: High supply of mid and high end products from well-known developers and even newcomers. Limited land bank within the city center. Fund raising can hit difficulties if the market undergoes downturn.
Business Operations in 2017
133
Strategic plan and future orientations
Embarking on property development in 2007 and having experienced a downturn of the real estate market from 2009 to 2012, Novaland has gained powerful internal strengths and emerged as one of the leading developers of high-rise apartment buildings in HCMC. Since the official launch of the first project, i.e. Sunrise City project in Dist. 7, in 2009,
To follow the success of Phase 1, Novaland Group has been focusing on all resources for
so far over 40 projects (including land bank) have been developed by Novaland across most of the City’s central districts. This has increased the Group’s total assets and equity by 52 times and 17 times, respectively, after 10 years of development in the local real estate market.
PHASE 2
of development journey from 2015 to 2025
Share holder value
NOVALAND GROUP’S DEVELOPMENT STRATEGY IS DIVIDED INTO THREE PHASES, WITH EACH PHASE CHARACTERIZED BY DEVELOPMENT OF A SPECIFIC RANGE OF PRODUCT.
Stage 3 Starting township projects
Stage 2 Continuing to focus on HCMC while selectively reviewing opportunities elsewhere Entering commercial real estate to provide stable recurring revenues
3 2
Stage 1 Focusing on residential to become the number one brand in HCMC
1
134
BRIGHTEN LIVES
Novaland has how successfully accomplished the first phase, concentrating on medium and high end apartment
In phase 2, the Company continues to focus on key apartment products, expanding to commercials, mini townships including various indoor and outdoor utilities as well as hospitality in big cities with high tourism potential
Novaland Group will expand its development areas to focus on smart townships with various utilities and modern infrastructure connection
2007 - 2015
2015 - 2025
2025 onwards
Lexington Residence (Dist.2, HCMC).
In Phase 1, the Group will focus on developing middle and high end apartment market and becoming the leading real estate developer in HCMC. In Phase 2, in addition to building on strengths in key housing products, especially low-rise types such as townhouse, villas, and shop-houses, the Group will expand to complete urban areas including many internal and external facilities, and reach out to hospitality projects in big cities with high potentials and commercial properties. In Phase 3 (after 2025), Novaland Group will expand its operating boundary and focus on developing smart township areas with multiple facilities and modern infrastructure connectivity. Thanks to the right orientations and the persistence to pursue its goals, the Group has recorded success in the development strategy for phase 1 from 2007 to 2015. Typical projects such as Sunrise City, Tropic Garden, Galaxy 9 Residence, Icon 56, Lexington Residence, The Prince Residence, The Tresor Residence, Gardengate Residence, and Orchard Garden have been delivered on time with satisfactory quality. This has helped consolidate the Companyâ&#x20AC;&#x2122;s reputation and brand, thus contributing to the attractiveness of other products and enhancing its sales effectiveness and competitive advantages. As part of the strategy for the next phase of development, Novaland will concentrate most of its resources on the
housing market in HCMC to maintain its leading position. In addition, the Group will gradually diversify its product mix, reaching toward a greater balance between high-rise and low-rise commercial for sale and those for lease, as well as between residential and hospitality. Given the limited supply of the low-rise houses and the sizable needs from a section of customers who hold a traditional view of house ownership, the low-rise segment still has a lot of room for growth. The success of the first low-rise project, i.e. Lakeview City, is the foundation for the Group to continue investing in other street house and villa projects in the future. In addition to its core products, Novaland Group also develops commercial and residential properties to create stable cash flows in the coming years. For hospitality properties, the Group has also begun to expand its scope by seeking development opportunities in coastal cities and provinces, those with potentials in tourism and special economic zones. Novaland plans to stabilize the new business segments after 2025 and that will serve as the premise for the next stage of development, i.e. the construction and development of urban areas not only in HCMC but also in other provinces.
Business Operations in 2017
135
Introduction of the Board of Management
Mr. BUI XUAN HUY
Ms. HOANG THU CHAU
BOD member cum CEO
BOD member and Deputy CEO
Please refer to page 60 “Introduction of the Board of Directors”
Please refer to page 61 “Introduction of the Board of Directors”
Changes in the BOM structure in 2017 No. Full name
136
Title
Changes in 2017
1
Mr. Bui Cao Nhat Quan
BOD Deputy Chairman/Deputy CEO
Dismissed from BOD on May 11th, 2017 Dismissed from BOM on May 11th, 2017
2
Mr. Phan Thanh Huy
BOD member/CEO
Dismissed from BOM on September 8th, 2017
3
Mr. Eric Chan Hong Wai
Deputy CEO
Dismissed from BOM on May 25th, 2017
4
Mr. Le Hong Phuc
Deputy CEO
Dismissed from BOM on August 15th, 2017
5
Ms. Vo Thi Thu Van
Deputy CEO
Dismissed from BOM on September 8th, 2017
BRIGHTEN LIVES
The BOM’s report A REVIEW OF BUSINESS PERFORMANCE
Revenue structure by product type
Business results in 2017 still recorded positive growth. Net revenue and Net profit after tax increased year-on-year by 58% and 24% to VND 11,632 billion and VND 2,062 billion, respectively. In addition, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and EBIT (Earnings Before Interest and Taxes) recorded a year-on-year growth rate of 180% and 199%, respectively, due to the impacts of interest expense and depreciation and amortization, of which the year-on-year increase was 40% and 114%, respectively. In 2017, the Group’s revenue structure has a dramatic change when 94% of the earnings came from sale of real estate, which highlights for Novaland’s sustainable development by focusing on the core business.
6%
4%
16%
10% 40%
11% 2%
76% 34%
2016: Inside
As the Group’s operations are mainly domestic, the impact of forex on foreign loans is negligible, accounting for only 0.04% of net revenues.
2017: Outside
Apartment Town house, villa Office-tel Commercial Other income
11,632
Billion VND Net revenue increased year-on-year by 58%
Business performane in 2014 - 2017 (Unit: billion VND) 11,632
2,062
Net income EBITDA
EBIT Net profit after tax
Billion VND Net profit after tax increased year-on-year by 24%
7,359 6,673
94%
Revenue came from sale of real estate
2,802 830
By the end of 2017, Net revenue and Net profit after tax recorded by Novaland reached only nearly 70% of the target adopted by the AGM in the context of economic difficulties and challenges together with the restructuring of the Group. In 2017, the Government Inspectorate’s inspections of the use of land by equitized enterprises, which led to the Group’s delays in paying land charges for its projects. This has also affected some other players in the real estate sector. In November 2017, the Group proposed to the HCMC
259 244 96 2014
741
2015
442
1,002 776 2016
1,659
2,807 2,322 2,062
2017
Source: Audited consolidated financial statements 2017
People’s Committee for approval of early payments of use right fees, additional use right fees and even payments of deposits for additional use right fees (if any) for 14 projects. This demonstrated the Group’s efforts in fulfilling its commitments of timely delivery.
Business Operations in 2017
137
The BOM’s report
FINANCIAL STATUS In 2017, the net profit margin decreased due to the impacts of interest expenses, but asset utilization efficiency improved from 23% to 27%. Besides, the Group’s ROE for 2017 reached 18%, higher than the industry average of 12%.
The Group’s total assets as at the end of 2017 reached VND 49,467 billion (almost USD 2.2 billion), up 35% over the same period of 2016. This increase was mainly from cash and cash equivalents (Cash), inventories, investment properties and long-
Total assets and equity in 2014 - 2017 (Unit:Billion VND) Total asset
Owners’ equity
Owner equity/total asset ratio 28%
23%
21%
27% 49,467
36,527 26,570 16,094 10,047
6,095
3,362 2014
2015
13,256
2016
2017
Source: Audited consolidated financial statements 2017
Liabilities structure 2014 - 2017 (Unit: %) Short-term liabilities
20
Long-term liabilities
23
28
Owners’ equity
27
18 27
62
2014
60
2015
31
41
2016
27
46
2017
Source: Audited consolidated financial statements 2017
138
BRIGHTEN LIVES
term investments. Current assets accounted for 83% of the total assets with cash doubling from VND 3,337 billion to VND 6,650 billion. Inventories by the end of 2017 stood at VND 27,129 billion, a year-on-year increase of 72%. Most of these, VND 24,477 billion, were Construction in progress properties, including land cost consulting and designing fees paid to constructors and others costs relating to the projects. In 2018, the Group is expected to hand over 11 out of a total of 13 projects under construction. This will contribute to an increase in sales revenue and a corresponding decrease in inventories. Regarding Resources structure, Liabilities accounted for 73% of Total resources, equivalent to the 2016 number. Short-term liabilities stood at VND 22,659 billion, accounting for 63% of Total liabilities. Out of liabilities, Short-term advances from customers accounted for the largest portion with 34%, up by 49% against the beginning of the year. These are advances or deposits or deposits from customers under property transfer contracts. This amounts will be recognized as Revenues when the Group completes and hands over apartments to customers. With 13 under development projects along with M&A activities to expand the land bank, Novaland needs a sufficient capital to fund for project to meet delivery commitment. The total borrowings and finance lease liabilities in 2017 was VND 17,950 billion, accounting for 50% of Total liabilities, slightly down from 2016. The debt to equity and debt to total assets ratios were 1.35 and 0.36 times, respectively.
13,256
Financial leverage ratios in 2014 - 2017 (Unit: Time) Debt/ total asset ratio
Debt/owners’ equity ratio
1.31
BILLION VND
1.34
1.35
0.37
0.36
1.09
0.23
2014
0.30
2015
2016
2017
Solvency ratios (Unit: Time) Current ratio
Quick ratio
Cash ratio
2.02 1.45
0.63
1.82
1.36 0.97
0.82
0.28
0.29
2014
2015
0.62 0.22
2016
0.29
2017
Source: Audited consolidated financial statements 2017
Novaland Group has been pro-actively establishing good relationships with reputable domestic and international financial institutions to arrange appropriate capital through loans or bond issuance for project development and M&A activities. In order to diversify its financial
structure, the Group has approached international and domestic capital through the issuance of Convertible preferred shares, Common shares and Convertible loans. Owners’ Equity as at December 31st, 2017 increased by 32% y.o.y from VND 10,047 billion to VND 13,256 billion, out of which
Owners’ Equity as at December 31st, 2017 increased by 32% y.o.y
Chartered capital increased from VND 5,962 billion to VND 6,497 billion, equivalent to 9% via (1) the successful private placement of ordinary shares for Credit Suisse AG Bank, Singapore Branch’s loan conversion of USD 60 million and (2) 20 million shares of ESOP issued. Novaland’s brand name and development prospects have been highly recognized and appreciated by Credit Suisse who approved to raise its credit limit from USD 100 million to USD 125 million. By the end of January 2018, the disbursement of the USD 125 million credit package was completed. In addition, the Group has also concentrated resources to ensure liquidity for the funds raised. This is demonstrated by the liquidity ratios of each year. The Company’s highest liquidity ratio, i.e. the cash solvency ratio, was up by 32% y.oy. The current and quick ratios decreased slightly over the same period of 2016 but remained within safety thresholds (over 1 and 0.5 times). These ratios, however, will be improved in 2018 when the Company will have delivered 11 projects and recognized revenues therefrom. Maintaining liquidity ratios is proof that the Company always maintains a stable liquidity structure and upholds its commitments to shareholders and investors.
Business Operations in 2017
139
The BOM’s report
IMPROVEMENTS IN ORGANIZATIONAL STRUCTURE, POLICY AND MANAGEMENT In 2017, the BOM implemented corporate restructuring activities following the direction of streamlining and rationalization in order to meet the requirements of sustainable development. Besides, in order to foster longterm cohesion between employees and the Group, the Board and the BOM completed a policy on remuneration for employees, especially the ESOP program.
Novaland has consistently upgraded the IT system and applied advanced platforms to business activities so as to optimize the governance system as well as save time and resources. (kindly refer to the “Invest in technology, the lever for business” section).
PLANS FOR FUTURE DEVELOPMENT
In 2018, in addition to the core product that is residential houses in HCMC, Novaland will gradually diversify the product mix by striving for a greater balance between high-rise and low-rise, commercial for sale and those for lease, as well as between residential and hospitality.
CORPORATE ENVIRONMENTAL AND SOCIAL RESPONSIBILITY The BOM spent almost VND 75 billion on community support and social welfare programs, and implemented almost 100 community programs and activities throughout the country. Regarding environmental responsibility, Novaland has taken steps to reduce environmental impacts and ensure environmental co140
BRIGHTEN LIVES
existence through the application of environmentally friendly technologies to project implementation. These actions demonstrate the Group’s efforts in fulfilling its obligations towards the environment and society (kindly refer to activity details in the “Summary of Sustainable Development Report”).
Tropic Garden, Dist.2, HCMC - Photo by: Nguyen Manh Tai. Business Operations in 2017
141
M&A activities Continue with the land acquisition strategy
Nova Phu Sa - Azerai Can Tho Resort, Mekong Delta, Can Tho City
As Nova Phu Sa Azerai Can Tho Resort, the 1st luxury eco-resort in the Mekong Delta was put into the operation, Novaland has set its first step into hospitality industry as the turning point toward building a long-term recurring income for the Group’s sustainable development strategy.
In the 2014 - 2016 period, Novaland successfully implemented a series of M&A deals in the central of districts 2, 4, 7, Phu Nhuan and Tan Binh. The Group has succeeded in finding and acquiring projects of tens of hectares to start the development of small and mediumscale township. The 30-hectare Lakeview City project, for example, represents the Group’s first low-rise project that has recorded success both in terms of business and financial efficiency. This is a positive starting point for the Group to prepare for expansion into new larger township in the Eastern and Southern areas. The scale of these new projects could reach hundreds of hectares in the coming years.
142
BRIGHTEN LIVES
Building on the successful land acquisition strategy of the previous years, in 2017, Novaland acquired projects at prime location with clear legal status so that it could carry out development in a short period, thus reducing the cost of capital and lowering COGS for better competitiveness. In particular, Novaland successfully acquired large-scale projects in key locations in HCMC and will selectively expand its land bank in other cities with high tourism potential in Vietnam to serve Phase 2 of its development road map. As Nova Phu Sa Azerai Can Tho Resort, the 1st luxury eco-resort in the Mekong Delta was put into the operation, Novaland has set its first step into hospitality industry as the turning point toward building a long-term recurring income for the Group’s sustainable development strategy.
West
In 2017, the Group completed the acquisition of new subsidiaries and investment in existing subsidiaries and affiliates with the total consideration of VND 9,536 billion, related to Sunrise Riverside, Sunrise Cityview, The Sun Avenue Residence, Botanica Premier, Newton Residence, Orchard Parkview and some projects in Southern area, Eastern area and Western area.
5%
East 39%
56%
South
No.
Area
District
2017 (billion VND)
Ratio (%)
1
East
2, 9
3,710
39
2
South
7, 8, Nha Be
5,372
56
3
West
10, Tan Binh, Phu Nhuan
454
5
9,536
100
Total
Source: Novaland Group South West
By the end of 2017, Novaland owned more than 7.1 million m land area including nearly 6.2 million m2 of land bank (87%), concentrated in most of HCMCâ&#x20AC;&#x2122;s key areas that has been sufficient to develop for the next 7-10 years. The Eastern area, the strategic destination of most local and foreign property developers where the Government is focusing on infrastructure development, accounts for the largest proportion in the land bank structure with 89%. 2
2%
1%
Center
8%
89% East
No.
Area
District
Total number of projects
Land area (m2)
Ratio (%)
1
Center
1, 4
3
59,343
1
2
East
2, 9
7
5,574,364
89
3
West
10, 12
2
96,843
2
4
South
8
1
500,475
8
13
6,231,025
100
Total
Source: Novaland Group
In 2018, building on its strengths in residential, Novaland will focus on developing sizable urban area projects in HCMC and will selectively expand to hospitality in coastal cities and special economic zones on certain M&A principles: locations and legal qualification.
Business Operations in 2017
143
Subsidiaries and associates activities LIST OF 40 SUBSIDIARIES
Continuing with the M&A strategy to acquire land bank, in 2017, Novaland included 40 subsidiaries and 3 affiliates. With a portfolio of 40+ projects, Novalandâ&#x20AC;&#x2122;s business will remain stable within 7 to 10 years as profit plans for the coming years will take into account from those projects launched in 2015, 2016 and 2017.
Nha Rong Investment and Commercial Joint Stock Company Charter capital: VND 327.4 billion Saigon Royal Residence
99.96%
Nova Phuc Nguyen Real Estate Development and Investment Company Limited Charter capital: VND 190.2 billion The Tresor Residence 99.89%
Nova Rivergate Company Limited Charter capital: VND 801.1 billion Rivergate Residence 99.77%
No Va Land Company Limited Charter capital: VND 81.6 billion 100%
Novaland Agent Company Limited Charter capital: VND 20.0 billion 100%
Nova Saigon Royal Real Estate Investment Company Limited Charter capital: VND 327.4 billion 99.99%
Nova Property Management Company Limited Charter capital: VND 139.0 billion
99.99%
Nova Nippon Joint Stock Company Charter capital: VND 20.0 billion 99.98%
Nova My Dinh Land Joint Stock Company Charter capital: VND 20.0 billion
99.98%
Saigon Housing and Infrastructure Development Joint Stock Company Charter capital: VND 6.0 billion 98.00%
Vung Tau Youth Hotel and Travel Joint Stock Company Charter capital: VND 70.0 billion
65.00%
144
BRIGHTEN LIVES
NO VA LAND INVESTMENT GROUP CORPORATION
Nova An Phu Company Limited Charter capital: VND 254.1 billion 100%
Nova Lucky Palace Company Limited Charter capital: VND 200.0 billion Lucky Palace 100%
Gia Phu Real Estate Company Limited Charter capital: VND 1,065.0 billion The Sun Avenue Residence
Nova Riverside Real Estate Company Limited Charter capital: VND 1,115.1 billion Sunrise Riverside 99.97%
Phuong Dong Building Joint Stock Company Charter capital: VND 182,0 billion Wilton Tower 99.89%
Nhat Hoa Real Estate Joint Stock Company Charter capital: VND 510.0 billion Sunrise Cityview 99.81%
Saigon Golf Company Limited Charter capital: VND 490,0 billion
No Va Land Investment JSC Charter capital: VND 1,295.0 billion Sunrise City, Golf Park Residence 91.76%
99.98%
99.12%
Nova Sasco Company Limited Charter capital: VND 430.0 billion Botanica Premier 99.99%
Nova Richstar Joint Stock Company Charter capital: VND 724.0 billion RĂchtar 99.98%
Nova Princess Residence Joint Stock Company Charter capital: VND 300.0 billion Kingston Residence 99.90% Merufa-Nova Company Limited Charter capital: VND 125.0 billion Newton Residence
99.89%
The 21 Century International Development Company Limited Charter capital: VND 2,534.5 billion Lakeview City st
98.96%
Khai Hung Real Estate Company Limited Charter capital: VND 3,932.4 billion
99.99%
Thanh Nhon Real Estate Company Limited Charter capital: VND 1,320.0 billion 99.99%
Tuong Minh Investment and Real Estate Company Limited Charter capital: VND 299.7 billion
99.99%
Thanh Nhon Real Estate Joint Stock Company Charter capital: VND 551.6 billion
99.11%
Phu Dinh Port Joint Stock Company Charter capital: VND 1,000.0 billion 83.45%
The Prince Residence Joint Stock Company Charter capital: VND 189.0 billion The Prince Residence 99.81%
Bach Hop Real Estate Company Limited Charter capital: VND 213.0 billion
No Va Festival Corporation Charter capital: VND 184.0 billion Gardengate Residence
Gia Duc Real Estate Company Limited Charter capital: VND 1,939.0 billion
Nova Nam A Company Limited Charter capital: VND 292.0 billion Orchard Parkview
99.99%
99.99%
Phuoc Long Investment and Development Company Limited Charter capital: VND 470.0 billion 99.99%
Ngoc Linh Hoa Investment Joint Stock Company Charter capital: VND 580.0 billion
99.83%
94.02%
83.17%
Nova Sagel Company Limited Charter capital: VND 367.0 billion Golden Mansion
73.99%
No Va Thao Dien Company Limited Charter capital: VND 1,103.1 billion 99.99%
Mega Housing Joint Stock Company Charter capital: VND 215.0 billion 98.60%
Mega Tie Company Limited Charter capital: VND 191.4 billion 98.59%
Source: Novaland Group
Business Operations in 2017
145
Subsidiaries and associates activities
THE LIST OF 3 ASSOCIATES COMPANIES
NO VA LAND INVESTMENT GROUP CORPORATION
49.00%
25.00%
33.31%
Sun City Real Estate Development and Investment Company Limited Charter capital: VND 1,950 billion
Ben Thanh Housing Servie and Development Company Joint Stock Company Charter capital: VND 80 billion
Saigon Electronics and Industrial Service Joint Stock Company Charter capital: VND 15 billion Source: Novaland Group
In 2017, as the Company did not pursue a multi-industry model, Novaland Groupâ&#x20AC;&#x2122;s subsidiaries and affiliates focus on real estate industry. In 2017, these companies mainly focused on the development of projects, trading, brokerage and investment in properties. Besides, 7 projects have been completed and delivered to customers in accordance with the specified schedule. This helped the recognition of revenues and further consolidated Novalandâ&#x20AC;&#x2122;s profit growth in the year.
146
BRIGHTEN LIVES
In addition to the holding company’s Orchard Garden project, new projects which were delivered in 2017, and developers being Novaland Group’s subsidiaries include: No.
Company
Project
Unit (Billion VND)
Address
Central area 1 2
3 4
Nova Rivergate Company Limited Nova Phuc Nguyen Real Estate Development and Investment Company Limited Eastern Area The 21st Century International Development Company Limited Southern Area Nova Lucky Palace Company Limited
Rivergate Residence The Tresor Residence
1,777 Dist. 4, HCMC
1,639
Lakeview City
Dist. 2, HCMC
3,899
Lucky Palace
Dist. 6, HCMC
915
Western Area 5 6
Nova Festival Corporation Nova Princess Residence Joint Stock Company Total
Gardengate Residence Kingston Residence
961
Phu Nhuan Dist., HCMC
619 9,810 Source: Novaland Group
In 2017, subsidiaries contributed VND 10,207 billion, accounting for about 88% of the Group’s net revenues. Affiliates contributed VND 12 billion to Novaland’s profit. A series of projects of which developers are subsidiaries are under development for completion and delivery in 2018. In 2018 the Groups’ revenues are expected to grow against 2017 thanks to the planned delivery of 10 projects developed by subsidiaries and 1 project developed by the Group itself.
No. Company
Project
Address
Eastern Area 1
Gia Phu Real Estate Company Limited
The Sun Avenue Residence
Dist. 2, HCMC
2
No Va Land Investment Joint Stock Company
Golf Park Residence
Dist. 9, HCMC
3
Phuong Dong Building Joint Stock Company
Wilton Tower
Binh Thanh Dist., HCMC
Nhat Hoa Real Estate Joint Stock Company
Sunrise Cityview
Dist. 7, HCMC
Nova Riverside Real Estate Company Limited
Sunrise Riverside
Nha Be Dist., HCMC
Southern Area 4 5
Western Area 6
Nova Sagel Company Limited
Golden Mansion
7
Merufa-Nova Company Limited
Newton Residence
8
Nova Nam A Company Limited
Orchard Parkview
Phu Nhuan Dist., HCMC
9
Nova Sasco Company Limited
Botanica Premier
Tan Binh Dist., HCMC
10
Nova RichStar Joint Stock Company
RichStar
Tan Phu Dist., HCMC Source: Novaland Group
In addition, Novaland will expand into hospitality and commercial in order to generate stable cash flows and ensure Phase 2 objectives of the sustainable development strategy.
Business Operations in 2017
147
Quality assurance For a solid belief
14
projects handed over
With 14 projects delivered and approximately 10,000 products being put into operation, Novaland is proud of the quality-assured products delivered to customers. These products will make small contributions to the change of the appearance of HCMC. Visibly and securely placed on the tower crane is one of the icons of a building project - the strong and solid Novaland logo that promises a modern and humane living environment.
All the achieved accomplishments are contributed to the cohesion of the Novaland teams who share the same objective. Customer satisfaction is the measure for the success and development goals of the Company. Commitment to the quality of the products, building and maintaining customerâ&#x20AC;&#x2122;s trusts are the priority goals that the Company has adopted throughout the product implementation and delivery. 148
BRIGHTEN LIVES
10,000
~
products being put into operation
The control of the product manufacturing process that meets or exceeds the commitment with customers is implemented by the Quality Assurance (QA) Department through a disciplined and systematic approach in order to evaluate and improve the efficiency of risk management, and to examine management processes at departments. Such controls mainly focus on factors such as quality, safety and filing. This is considered to be the second defense layer to identify and eliminate quality risks throughout the product manufacturing process from (1) design, (2) contractor selection, (3) construction, and (4) product delivery and commissioning. In each phase, the QA Department focuses on developing guiding processes and allocating verification resources. The entire QA process is developed by QA professionals and is closely monitored by the Companyâ&#x20AC;&#x2122;s top management. This is to optimize the quality control and ensure delivery schedule.
QUALITY CONTROL AND ENSURE DELIVERY SCHEDULE 1
2
3
4
During the design phase
During the bidding period
During the process of project construction
During the delivery preparation phase
The QA Department ensures detailed testing procedures for mechanical and electrical (M&E) concept design, structural design, M&E design, fire protection system design and infrastructure. This review ensures that the smallest details are synchronized across disciplines and are in accordance with current regulations and, above all, meet the functionality committed to customers.
The prestige and image of Novaland with contractors and suppliers is ensured through the detailed examination of the pre-qualification of contractors, suppliers, bills of quantities (BOQ), orders, etc. This examination ensures compliance with bidding laws and accurate values are not only to select the best bidder in terms of price and construction capacity but also to ensure fairness, competition and satisfaction of these stakeholders.
Beside experienced supervising consultants and project management unit, the QA team is carefully selected from qualified and disciplined candidates to carry out independent and objective tests to increase product value and improve project design activities. The Company has procedures for inspecting the quality of construction and M&E works as well as the process of testing 100% of the main electrical equipment of the project with the quality policy and a set of uniform guidelines for inspection standards among relevant departments to ensure uniformity as well as product quality. In addition, with a system of strict guiding processes, policies and standard on safety, health and environmental (HSE), the QA teamâ&#x20AC;&#x2122;s safety assurance engineers help ensure safety in all projects. This differentiates Novaland from other investors in terms of discipline in construction, thus providing peace of mind to workers at the work site as well as to future residents.
The QA team has processes for construction and M&E inspection in all areas of the apartments, offices, office-tels, public areas, utility areas, swimming pools, childrenâ&#x20AC;&#x2122;s playgrounds, basements, technical area and landscape infrastructure. The testing of operational functions and trial run is recommended by the QA leadership on 100% of the executed workload to ensure all the key equipment is interconnected and synchronized in serving residents. All these activities are the last step to ensure each and every smallest detail is taken care of before delivering to the customer.
3,600 11
~
PRODUCTS being handed over to customers in 2017
PROJECTS Expected to be handed over in 2018
The year 2017 ended with nearly 3,600 quality products being delivered to customers upon or before the committed deadline. Feedbacks from customers will be valuable inputs for the QA team to further improve the quality of products delivered to new home-owners.
Business Operations in 2017
149
Human Resources and Training The foundation for success
MOVING FORWARD At Novaland, we believe that success in business is the result of a devoted human resources investment strategy. During the Companyâ&#x20AC;&#x2122;s course of development, we have been proud of having a passionate team of 1,581 employees, who constantly desire to fulfill the Groupâ&#x20AC;&#x2122;s mission and to make Novaland a world-class property developer.
150
BRIGHTEN LIVES
PERSONNEL STRUCTURE Currently, 63% of the Company’s employees are male, and the remaining 37% are female. At Novaland, the management respects and upholds gender equality and promotes women’s rights through welfare policies dedicated to women.
Number of employees in the 2014-2017 period
Emloyees ratio by gender in 2017
3,000 1,991
2,000 1,000
Female 37%
2,210
1,581
Male 63%
1,028
2014
2015
2016
2017
One challenge for Novaland Group is to ensure a stable workforce and their quality. In 2017, despite the implementation of personnel restructuring to meet the requirements of the Group’s Phase 2 business development strategy, the HR structure remained stable in many aspects:
Source: Novaland Group
Employees aged between 30 and 50 75%
72%
70% 65%
1
Experienced personnel is on the rise with people aged between 30 and 50 rising steadily over the years, accounting for 72% of the total workforce in 2017 compared to the 45% in 2014;
2
HR quality is ensured, which is indicated by the proportion of postgraduate, university, and college graduates continuing to increase from 77% in 2014 to 94% in 2017.
65%
60% 55% 50%
56% 52% 2014
2015
2016
2017
Employees with qualifications of postgraduate and higher 100% 95%
Year
Employees aged between 30 and 50
Employees with qualifications of postgraduate and higher
90%
2014
52%
70%
80%
2015
56%
80%
2016
65%
77%
2017
72%
94% Source: Novaland Group
94%
85%
80% 77%
75% 70% 65%
70%
2014
2015
2016
2017
The management also requested the HR Department to pay adequate attention and frequently update job quitters’ feedback in order to continuously improve the talent acquisition strategy and sustainably nurture human resources. In 2017, the turnover rate of the Group was about 12.8% (exclusive of the salesforce), which is of average level in the local labor market).
Business Operations in 2017
151
Human Resources and Training The foundation for success
REMUNERATION AND WELFARE POLICIES In 2017, policies on salary, bonus and welfare continued to be completed, diversified and improved in terms of competitiveness compared to the market benchmarks. Typically, the bonus policy under the ESOP program demonstrated the management’s care for employees and served to create their long-term relationship to the development of the company. In 2017, for a healthy life and in order to enhance benefits for mid-level managers, Novaland expanded its scope of health insurance grants to relatives (spouses and children). In particular, the life insurance scheme for supervisory level and above is
being finalized for official launch in early 2018. It is for the first time that such a long-term benefit policy has been introduced at the Group. Rather than being limited to the senior management, the new policy ensures equality in the recognition of contributions and loyalty of the employees to the Company. In parallel, current programs and policies such as holiday bonuses, illness visits, social insurance, health check-up, etc. have also been upgraded to higher standards and extended to all working level including those under probation.
OCCUPATIONAL SAFETY AND HEALTH The Group has completed training courses on occupational safety and hygiene as required by Decree 44/2016/ND-CP and regularly held fire prevention and fighting drills. With the strict application of the Occupational Safety and Occupational Standards to each contractor, Novaland has significantly reduced accidents
on site and ensured a low level of injury. At the same time, the Company strictly adheres to an internationally recognized safety and health management system that ensures the type of injury, the ratio of injury, occupational diseases as well as the number of work-related deaths are minimal.
BUILDING CORPORATE CULTURE All employees’ daily activities at Novaland are based on the Novaland Code of Conduct to ensure transparency and integrity in operations in order to deliver quality products and professional services to customers. Everyone including the Board of Directors, the Board of Management, managers and staff are required to properly comply with the Code and their compliance is subject to frequent supervision. Any act that is detrimental to the Code of Conduct or negatively affects
152
BRIGHTEN LIVES
the Group’s core values is properly sanctioned. On the other hand, the management team always rewards and protects individuals who report wrongful behaviors and contribute to building a healthy and honest working environment. Novaland’s management appreciates the contributions of employees. The Company has a policy in place to support those who have to find a new job due to changes in the HR plan. This represents the humanistic character of Novaland culture.
70,494
EDUCATION AND TRAINING In 2017, the Group gained plenty of fruitful results from the training programs implemented by the NLC Leader Training Center. There were over 57 new graduates from the Mini MBA jointly held with the FPT School of Business, bringing the total number of training hours to 400 hours dedicated to nearly 100 executives and managers. 229 Mentoring - Coaching sessions were held for 39 Mentor - Mentee pairs who were senior directors. These helped bringing managers and staff closer and facilitated the share of work experience for better internal and inter-department coordination. Building on the success in 2016, the Training Center partnered with Dale Carnegie to continue the “Leadercreating breakthroughs” topic to improve leadership competencies and personal development for mid-level and higher managers. In addition, training courses on corporate governance, tax, financial reporting as per international standard also applied to related managers and staff. With the motto “Customer First ”, Novaland prioritizes
TOTAL NUMBER OF TRAINING HOURS the delivery of training courses on awareness building for customer service. In addition, the staff has also taken part in soft skills training courses, behavior and customer service skills training programs, etc. Owning a team of talented and capable staff, the Company has also pioneered in the development of dedicated training programs to further enhance the confidence and toughness for the team. Especially, the Novaland Sales Ambassadors Competition gave the sales team the opportunity to rival with colleagues through practical situations through which they obtained knowledge and learnings from the top management. The total number of training hours in 2017 was 70,494, out of which the duration was 6,653 hours for senior management, 8,606 hours for middle managers and 55,335 hours for staff and supervisors. 2018 is an important year in the implementation of Phase 2 of the development strategy. The NLC will continue to improve HR quality through the main programs:
◆◆ Development of internal trainers including the TOT (Train the Trainer) program; ◆◆ Continue mini MBA courses for potential leaders; ◆◆ Delivery of soft skills and supplementary skills training programs for middle managers including department heads/ deputy heads, supervisors and team leaders with outstanding performance; ◆◆ Implementation of knowledgeimprovement courses to all the staff to accommodate the business strategy of expansion into commercial and hospitality; ◆◆ Continue soft skills training courses for employees; ◆◆ Supporting departments in improving their professional knowledge such as courses on the new BIM design technology, those on financial knowledge updates, accounting, securities, etc.
Closing Ceremony of Mini MBA Course of NovaGroup Leadership Center. Business Operations in 2017
153
Invest in technology the leverage for business
THE IMPORTANCE OF IT AND NOVALAND’S ABILITY TO RAPIDLY APPLY MODERN IT Information technology plays an important role and is a catalyst for changes in all fields and industries. The real estate industry is no exception. Currently, all of Novaland’s employees use mobile devices and are almost always connected, which is synonymous with the continuous operations and the prompt and timely handling of the business. The ability to apply modern and appropriate IT to meet governance and business requirements is one of the crucial criteria of a company’s success.
Novaland Group’s targeted population for IT application does not only cover the management in corporate governance operations, staff in their daily work and business activities but also extends to customers and residents living within projects Novaland has delivered. To accomplish this, suitable IT infrastructure with strong application platforms is a prerequisite.
IMPROVE TECHNOLOGY FOR CORPORATE GOVERNANCE ACTIVITIES Comprehensive governance of corporate operations is one of the top priorities of the Group’s IT strategic investment road map. In 2017, the Company officially started the building and deployment of SAP resource planning system on a modern database system called HANA with solutions specific for the property sector. In addition to the deployment of standard accounting, financial and supply management modules, the SAP specially develops modules from project management to sales according to Novaland’s specific requirements. When put into operation, SAP not only helps to operate the entire system efficiently and smoothly, provides timely and accurate information to
all levels of management, but also meets the requirements on information security management standards. With millions of dollar invested in the Enterprise resource planning system, Novaland Group is committed to build an application platform and system in line with international practices, thereby contributing to the Company’s sustainable development goals. In addition to the deployment and application of such a big and complex system as SAP, Novaland also pays special attention to the development of professional specialists and managers for long-term efficient implementation and operation.
TECHNOLOGICAL IMPROVEMENTS IN DAILY BUSINESS OPERATIONS Throughout 2017, Novaland constantly upgraded its infrastructure system to provide a mobile work environment via modern wireless system, secure remote connectivity and transition to cloud services for the entire company including accountants, sales people and field engineers. For application platforms, Novaland has invested in deploying and developing applications on advanced application platforms of SAP, Microsoft, and has used Google services.
154
BRIGHTEN LIVES
By deploying and applying cloud computing applications on the Microsoft and Google cloud platforms, the communication, exchange and archiving via emails and work tools have become convenient, fast, stable and secure, leading to increased productivity and efficiency. A modern wireless system with broadband Internet connection provides a dynamic and convenient working environment; Employees are provided laptops and use mobile devices which are compliant with information safety standards in order to meet their job deadline.
IT has been gradually applied to internal and interdepartmental business processes to save time and resources. This also helps control processes efficiently and professionally. Thanks to this, all departments can perform self-control and easily audit extracted information and data as well as efficiently support risk management. In particular, the application of IT to process operations also helps cut costs of paper and documentation which are otherwise incurred in case of manual approval. This represents a further step toward the goal of Paperless Office. In addition, the system also helps find and retrieve records quickly. The authorization of relevant personnel to access records is easily archived.
Apart from these, Novaland has made big leaps in strengthening its project management activities through the establishment of a centralized Project Monitoring Center (PMC), an independent entity that provides support for the management team in the planning and real-time reporting of both on-going projects and imminent ones. The centralized PMC plays an important role in ensuring centralized and integrated planning for projects, monitoring of site performance and reporting across various MIS management reporting layers. At the same time, this enables the remote monitoring of projects as well as the follow-up and reporting of performance by project stakeholders. Besides, the PMC helps identify key issues on a regular basis and help solve problems quickly in order to achieve the project objectives.
TECHNOLOGICAL IMPROVEMENTS FOR PROJECT RESIDENTS Seeing residents of Novaland projects are also the important targets of the IT strategy, the Novaland Care application software using web responsive technology is developed to help residents interact with the Building Management Committee via comment letters, notifications, and online gadgets on mobile devices. As a result, residents can easily receive information quickly and in a timely manner, with no space or time gaps.
The software also enables residents to access facilities in their neighborhood and allows the Building Management Committee to ensure resident security using booking and absence registration utilities, etc. Novaland Care speaks volumes for Novalandâ&#x20AC;&#x2122;s wishes to bring a technological, modern and convenient life to each resident.
MEASURES TO MANAGE IT-RELATED RISKS In 2017, Novaland Group developed an Information Security Management System for business operations and obtained the ISO/IEC 27001:2013 Certificate with full system coverage. The achievement of this security certificate demonstrates the managementâ&#x20AC;&#x2122;s commitment to information risk management as well as measures to mitigate IT system risks in a timely manner.
Besides, Novaland also attaches importance to safety in the operation of its IT system. The Company has proactively conducted vulnerability screening and intrusion testing - such tasks were performed by a trusted and reputable partner - in order to provide a comprehensive assessment of the overall performance of the IT system.
Business Operations in 2017
155
75
~
BILLION VND FOR SOCIAL WELFARE ACTIVITIES
HUMANITY
STRENTHENING CONNECTIONS
We always strive to fulfill the mission of project development: not only in every square meter of construction but also in the contribution to a civilized, HUMANE and connected community with modern lifestyle thanks to various practical utilities.
SUSTAINABLE DEVELOPMENT
RESPONSIBLE INVESTMENT Summary of sustainability report
158
Summary of Sustainability report
Novaland Group sets its development direction by keeping persistent and consistent to the goals set, embeds and integrates sustainable development into the overall operation and ensures enhancement of corporate social responsibility. This is also Novalandâ&#x20AC;&#x2122;s commitment to the stakeholders based on Core Values: Integrity - Effectiveness - Professionalism, partnership and understanding in the engagement with stakeholders.
158
BRIGHTEN LIVES
Novaland Group is progressing strategically and integrating Sustainable Development in all activities, contributing to the creation of shared values while realizing the goals in the new stage of development. We have explicitly determined our investment in the drivers for sustainable development, step-by-step integrating sustainable development into the core business tasks as well as in the short, medium and long-term strategies of the business. Sustainability material topics on a range of economic, social and environmental dimensions with specific characteristics have been identified on the basis of engagement and interaction with stakeholders, in line with the development
strategy of Novaland as well as ensure updating the international sustainability practices and trends. Novaland reaffirms its commitment to investing in green and sustainable development resources, simultaneously promotes and creates a strong community and fair society. As a leading listed company pioneering the construction of important infrastructure for economic development, Novaland is committed to its resources, innovative investment and continuous efforts to contributing to successful implementation of Vietnam green growth strategy as well as 17 Sustainable Development Goals (SDGs) of the United Nations.
17 Sustainable Development Goals of the United Nations. This chapter of the Sustainability Report summarises the main contents of the Standalone Sustainability Report 2017 of Novaland prepared in accordance with the GRI Standard. The report is intended to provide key information on the sustainability performance of 2017. Please refer to the Sustainability Report 2017 to gain insights into Novalandâ&#x20AC;&#x2122;s sustainability performance and commitment to stakeholders.
Sustainable development - Responsible investment
159
Summary of Sustainability report APPROACH TO SUSTAINABILITY AND SUSTAINABILITY MANAGEMENT FRAMEWORK Strategic direction for sustainable development and creation of shared values.
Strategy
Management procedures and process
Management processes for department measurement.
Operating standards and initiatives
Operation standards, initiatives and objectives of performance.
Monitoring and Reporting
A consistent approach towards sustainable development will harmonize economic development benefits with corporate social responsibility in all business operations, Novaland has developed its sustainability governance in line with international best practices. Its management frameowrk, policy and procedures for material aspects of sustainable development are gradually developed and implemented to enable the management to assess performance for continual improvement. To ensure full implementation of the commitments to achieving sustainable development goals, the Sustainable Development Council is responsible for facilitating interconnection support between the Group and the Board, reviewing and guiding the implementation of programs, policies, interrelationships, activities of sustainable
Assessment, monitoring and reporting.
development objectives associated with the Groupâ&#x20AC;&#x2122;s business strategy to ensure the unity of the whole system.
The overall interests balanced between economy, society and the environment are a priority in business development. Novaland is a Vietnamese brand with the desire to reach out and wish to be associated with the development of the community. We have created a wide variety of useful products for society. With these achievements, Novaland is developing in a professional, sustainable way, ready for the integration phase. Mr Pham Phu Ngoc Trai GIBC Chairman, Novaland Group Sustainability Council Chairman
Stakeholder engagement Customer
Shareholder/ Investor
Bank / Financial institution
STAKEHOLDERS ENGAGEMENT & TRANSPARENCY IN COMMUNICATION Local Community
Contractor/ Supplier
Government
160
BRIGHTEN LIVES
Employee
The sustainability strategy of Novaland ensures that stakeholders are important elements in the development of the Group. We also ensure the development and maintenance of sustainable relationships on the basis of respect and cooperation with stakeholders including government agencies, partners, shareholders, investors, employees and local communities. We always place on top the accountability for transparent and timely communication on the basis of stakeholder interests as a guiding principle to develop cooperative and trustworthy relationships with stakeholders. With the sincerity and aspirations of creating superior value, Novaland always satisfies the increasing demands of customers and stakeholders with dedicated services and passion in addition to the specialized management and operation processes in compliance with international practices.
Materiality assessment As part of our 2017 plan, we have reviewed and updated materiality assessment with priority areas that reflect the changing trends throughout the Groupâ&#x20AC;&#x2122;s value chain. The material issues were assessed based on the extent of the impact on Novaland and importance of topics to various stakeholders.
Identify
Materiality assessment was also conducted through workshops with senior executives to agree on material aspects and updated results on materiality matrix. The material topics and aspects on economic, environmental and social dimensions reflect the level of concern of the stakeholders in the real estate industry, with additional topics on indirect economic impact assessment, supplier social and environmental assessement.
Prioritize
A preliminary elvauation is carried out to identify key issues that arise that are associated with business operation and stakeholdersâ&#x20AC;&#x2122; concerns.
Each aspect is scored accordingly based on stakeholders interest and our business.
Validate
Review
The material aspects chosen are validated by middle management.
The management reviews materiality assessment with adjustment for appropriateness to align with business strategy.
Materiality matrix We have conducted review and assessment of material sustainability aspects based on interaction with stakeholders, in accordance with operation strategy as well as updated sustainability trends and practices associated with UNâ&#x20AC;&#x2122;s 17 Sustainable Development Goals. Material topics under economics, environment and society pillars are presented in materiality matrix as diagram below: High
4 1. Supplier social assessment
Impact on Stakeholders
3.5
1
2. Environment compliance
3
2 3
3. Supplier environmental assessment
2.5
Medium
4. Effluent and waste 5. Procurement practice
2
4
5
6. Customer health and safety
11. Economic performance 11
6
7. Martketing and labelling 12. Anti-corruption 8. Training and education 9 9. Materials 8
12
7
13. Energy 14. Water 16. Employment 17 15 17. Local community 15. Occupational 10 health and safety 10. Indirect economic impact 13 14
16
1.5 1 0.5
Low
0 0.0
1.0
2.0
Low
3.0
4.0
Medium
5.0
High
Impact on Novaland
Economics
Environment
Economic performance (11) Indirect economic impact (10) Procurement practice (5)
Materials (9) Energy (13) Water (14) Effluent and waste (4) Environment compliance (2) Supplier environmental assessment (3)
Society
Employment (16) Occupational health and safety (15) Training and education (8) Local community (17) Anti-corruption (12) Customer health and safety (6) Martketing and labelling (7) Supplier social assessment (1) Sustainable development - Responsible investment
161
Summary of Sustainability report
SUSTAINABILITY PERFORMANCE IN EACH AREA Summary of sustainability performance in 2017 Area
Programs/initiatives
Implementation results
HUMAN RESOURCE MANAGEMENT
◆◆ Implement Leadership Training
◆◆ MiniMBA programs for leadership. ◆◆ Employee Performance and
Program.
◆◆ Strengthen effective
management system by developing key performance indicators
◆◆ Human resource development
to meet future growth needs and ambitions.
Effectiveness level
Capabibilty Appraisal Program (PMS).
◆◆ Total training hours over 400 hours dedicated to nearly 100 leaders, managers.
◆◆ Over 229 Mentoring - Coaching for 37 Mentors – Mentees.
Completed in line with the management’s requirements
◆◆ The mechanism of compensation ◆◆ Implemented ESOP for all and welfare is further improved and diversified with increased competitiveness in the market.
COMMUNITY DEVELOPMENT INVESTMENT
◆◆ Sustainable development with
ENVIRONMENTAL IMPACT MANAGEMENT
◆◆ Benchmarking on materials,
the community, enhancing corporate social responsibility. Spread a sense of social responsibility and encourage volunteer activities among agencies, partners, shareholders, customers and employees. energy and water use in projects.
Corporate social responsibility, nearly 100 community programs/ activities, with hundreds of thousands of beneficiaries.
energy savings practices.
◆◆ Establish a health, safety and
◆◆ Safety, health and environmental
environmental committee
management and safety monitoring at each stage of project implementation.
◆◆ Supervision of safety with Contractors
◆◆ Monitoring and assessing employees’ health
◆◆ Upgrading IT system for corporate governance. center.
customer support programs.
committee conducts periodic assessments and reviews of projects implementation.
◆◆ Periodic safety training has been implemented for all employees.
BRIGHTEN LIVES
Completed
◆◆ Conduct personnel and equipment safety supervision during construction.
◆◆ Implement health programs. ◆◆ Implement SAP-ERP across the Group.
deploy and operate synchronously Basically and monitor the progress of completed projects.
◆◆ Maximize customer support through Novalandcare application.
162
Basically completed
assessment in all projects.
◆◆ Building a centralized monitoring ◆◆ Remote Project Monitoring Center ◆◆ Applying IT applications to
Completed the management’s requirements
◆◆ Develop energy use norms and ◆◆ Implement environmental impact
◆◆ Training on safety, risk
TECHNOLOGY INNOVATION
◆◆ Spending nearly VND 75 billion on
◆◆ Quality assurance and
environmental quality control.
HEALTH AND SAFETY
employees.
CREATION OF SHARED VALUE THROUGH PARTNERSHIP WITH STAKEHOLDERS HUMAN RESOURCE MANAGEMENT Novaland believes that human resources are the property and critical success factor in business and for successful implementation of the Strategy for Sustainable Development. Therefore, the Group has established a strategy for investment in human resource development to meet the requirements of the new development stage.
It is encouraging that females make up a higher proportion of middle management, senior management positions and strategic leadership, reflecting women’s greater contribution to the Group’s performance. In Novaland, the Board of Directors always respects, promotes gender equality and enhances women’s rights through welfare policies for women.
Sustainable development - Responsible investment
163
Summary of Sustainability report
LABOUR AND EMPLOYMENT
Employees by gender 2017
Indicators:
GRI 102-8:
Female 37%
Information on employees and other workers.
Male 63%
GRI 401-1: New employee hires and employee turnover. Employee qualifications 2017
GRI 401-2: Benefits provided to full-time employees that are not provided to temporary or part-time employees.
Intermediate level
99
Higher education
57
1,425 College / univerrsity
Proportion of 30-50 year old employees (out of Group employees)
Proportion of employees with college/university & higher education 100% 95%
75%
72%
70%
60% 55% 50%
85%
65%
65%
94%
90% 80%
80% 75%
56%
70%
52%
77% 70%
65% 2014
2015
2016
2017
2014
2015
2016
2017
Source: Novaland Group
The Group always strives to provide good welfare policies for employees, create a good working environment, ensuring the long-term dedication of experienced management team to the Group and makes frequent updates of information on employee leave through surveys and interviews with employees to continuously improve the strategy to attract talent and develop human resources.
Compensation and welfare policies Novaland compensation and benefits policy meets the diversity of beneficiaries, is competitive in the market and
164
BRIGHTEN LIVES
continuously updated annually. In particular, Novaland has implemented the incentive program under the ESOP program to increase employee engagement and dedication to the development of the Group. Paralleling the promotion of associated benefits increasing employee benefits, typically employeesâ&#x20AC;&#x2122; personal and family care services, in 2017, Novaland extended the coverage limit for health insurance for relatives of middle managers. In addition to common practices such as social insurance, holiday bonuses, periodic health checks, Novacare insurance, Novaland has set up life insurance programs for supervisors and higher levels, which are currently in the process of finalizing, and will be officially launched in 2018.
EDUCATION AND TRAINING Indicators:
GRI 404-1: Average hours of training per year per employee.
GRI 404-2: Programs for upgrading employee skills and transition assistance programs.
GRI 404-3: Percentage of employees receiving regular performance and career development reviews.
Number of training hours by level Total number of training hours Everage number of training hours 100,000 90,000
148.92
55,335
50,000
80,000
40,000
70,000
Novaland determines that the development of the Group is accompanied by the development of each employee, and we strive to provide our employees with opportunities for growth that are commensurate with their potential. In addition, education and training plays an important role in meeting the requirements of development stage. Training programs are designed to meet the practical operating needs of all levels, providing new knowledge, leadership and management experience to enable staff to be ready for the development of the Group. The training will focus on middle managers and staffs, the total number of training hours in 2017 is shown in the diagram. In 2017, the Mini MBA courses have trained 57 new masters for the Group. Besides, in pursuit of the goal of constantly improving the efficiency of our employees, Novaland continues to update the regulations and methods of annual review, taking the appropriate allocation rates into account to ensure fairness in evaluation and development of assessment system to reduce time and ensure systematic and accurate features. The performance management system (PMS) conducts assessment publicly and transparently, allowing managers and staff to monitor individual development in the overall development of the Group.
60,000 50,000
30,000
10,000
30,000
48.90
40,000
20,000
60,000
40.66
8,606
6,553
20,000 10,000 0
Middle management
Senior management
Employee and supervisor
Performance management system (PMS) 2017 41 new employees of the total number of 1,581 employees (accounting for 2.59%) that joined the Group in December 2017 were not included in PMS at the end of 2017. 80%
60%
40%
20%
Đồng
Bạc
Vàng
Kim Cương
Bạch Kim
Sustainable development - Responsible investment
165
Summary of Sustainability report
COMMUNITY DEVELOPMENT INVESTMENT Performance results
Indicators:
GRI 413-1:
Novalandâ&#x20AC;&#x2122;s community activities focus on four main areas: social security, community health, education and community development. In 2017, Novaland spent nearly VND 75 billion on social welfare activities, implementing nearly 100 community programs/activities nationwide, with hundreds of thousands of beneficiaries as well as thousands of active employees taking part in charity and volunteer programs for sharing the Groupâ&#x20AC;&#x2122;s responsibility to the society.
Operations with local community engagement, impact assessments, and development programs.
GRI 413-2: Operations with significant actual and potential negative impacts on local communities.
100
75
~
~
BILLION VND ON SOCIAL WELFARE ACTIVITIES
COMMUNITY PROGRAMS/ ACTIVITIES NATIONWIDE
Community activities of the Novaland Group in 2017 50,000 45,000 40,000 35,000
5% 14% 63% 18%
Community development Education Social security Community health
30,000 25,000 20,000 15,000 10,000 5,000 Community development
166
BRIGHTEN LIVES
Education
Social security
Community health
Sponsoring the the program “Lighting the Dreams” of the Vietnam Association for Protection of Child Rights
Program “For a living-worth city” broadcast on HTV9.
Building 07 bridges in Hong Ngu District, Dong Thap Province.
Amount of funding (VND)
Percentage
Community development
Built the local brigdes and culture house, accompanied the prestigious cultural and artistic programs, responded to activities related to border, sea and island, rehabilated sewerage system, dredged cannals and constructed local roads, etc.
46,917,114,104
63
Education
Accompanied the business experience shared program, awarded scholarships, buildt kindergarten etc.
13,776,921,721
18
3
Social security
Provided material and spiritual support to the families of the poor, families with meritorious services, families with special needs, helping the people in flood-affected areas to overcome the consequences of natural disasters.
10,375,725,333
14
4
Community health
Supported for cleft lip, cleft palate surgery for children; sponsored heart surgery programs for poor patients etc.
3,673,323,536
5
74,743,084,694
100
No.
Area
Main activities
1
2
Total
Source: Media & Community Support Department of Novaland Group Sustainable development - Responsible investment
167
Summary of Sustainability report INVESTMENT IN COMMUNITY DEVELOPMENT
COMMUNITY DEVELOPMENT BUILDING BRIDGES, ECONOMIC DEVELOPMENT AND CULTURAL DEVELOPMENT With the mission of a leading real estate development company in Ho Chi Minh City, the goal of community development activities is to make long-term and sustainable contributions to national construction and development. This is highlighted in the joint work with the local authorities to build rural bridges to completely replace many degraded temporary wooden bridges to create good traffic conditions and ensure transportation
safety; concurrently creating the premise for the local economic development. The Group cooperated actively with many agencies, NGOs and local people to carry out many programs to develop community capacity. We join prestigious cultural and artistic programs to uphold and promote cultural identity among our youth; actively respond to programs to support the border, sea and island areas. This helps raise awareness in the community of the sovereignty over the islands, protection of national security and work towards a stronger future for the Vietnamese people.
TYPICAL ACTIVITIES Program “For a livable city” broadcast on HTV9; Sponsored the program “Peace story” No 5 launched by the Tuoi Tre Newspaper and the Central Association of Students; Joined the program “Young aspirations” No. 11 of Thanh Nien newspaper; Supported the fund for “For the island of homeland For the first line of the motherland” and “Fund for the poor “ of Ho Chi Minh City Vietnam Fatherland Front Committee; Built a cultural centre at Hoa Hung Hamlet, Hoa An Commune, Cao Lanh City, Dong Thap Province; Built 07 bridges in Hong Ngu District, Dong Thap Province; Built a rural bridge in Vinh Tri Commune, Vinh Hung District, Long An Province.
168
BRIGHTEN LIVES
Building bridges in Hong Ngu District, Dong Thap Province
EDUCATIONAL SUPPORT TAKING CHILDREN TO SCHOOL In line with the motto “Children are the hope of the country”, in 2017, through many organizations the Group donated thousands of scholarships to pupils and students on the occasion of the new school year.
Particularly, the scholarship program named after Teacher Nhe was implemented in the past 13 years. It is one of the wishes of the management of Novaland Group from the first years of operation of the company and it made the dream of going to school for more than 1,000 poor children in Dong Thap Province. Besides, the Group also coordinates with the television station to run the program of sharing business experiences of Vietnamese enterprises in the integration context to improve the competency and communication of Vietnamese businesses and entrepreneurs.
Maintaining the journey of 13 consecutive years to launch Nhe teacher scholarship program
TYPITAL ACTIVITIES Program “CEO – the key to success” broadcast on VTV1; Sponsoring Pham Phu Thu Scholarship of Saigontimes Foundation; Sponsoring Nguyen Huu Tho scholarship of the Ho Chi Minh City Fatherland Front Committee; Teacher Nhe Scholarship in 13 consecutive years;
Sponsoring the the program “Lighting the Dreams” of the Vietnam Association for Protection of Child Rights; Participated in the construction of Sao Bien Kindergarten in Tam Hai Island Commune, Nui Thanh District, Quang Nam Province through the “Swing for Life” Golf Award Fund.
Sustainable development - Responsible investment
169
Summary of Sustainability report INVESTMENT IN COMMUNITY DEVELOPMENT
COMMUNITY SUPPORT ON-SITE AND DEDICATED Social security is also a major priority in Novaland’s community support strategy. Priorities are given to disadvantaged families, families of war invalids, mothers and wives of martyrs, retired revolutionary officers and victims of Agent Orange - and families having made great contributions to the nation. This support is in the form of visits and giving gifts on Tet holidays and other holidays in many provinces.
We also create favourable conditions for people in disadvantaged areas to improve their material and spiritual life by donating cows, houses, etc. Notably, with the spirit of caring for others as the beauty of culture that was enlightened from the early days of foundation of Novaland Corporation, the staff of the company are always proactive and responsive and prompt in volunteer activities by making donations to people in areas affected by natural disasters to overcome consequences of floods. In addition, we also visited disadvantaged children in social protection centers, trying to bring joy in life for children.
TYPITAL ACTIVITIES Tet program for the poor in Ho Chi Minh City and Dong Thap province; Donation of 20 breeding cows to poor farmers An Ninh Dong and An Ninh Tay Commune, Duc Hoa District, Long An Province; Give gifts to children affected by Agent Orange in Binh Thuan Province; Join the program “Sacred Immortality” of Nhan Dan newspaper; Charity and donation activities by staff of Novaland Group to help people in Quang Nam to overcome aftermath of typhoon No. 12, visit and give gifts at social protection centers in Can Tho, Lam Dong, Ho Chi Minh City...
170
BRIGHTEN LIVES
Charity and donation activities by staff of Novaland Group to help people in Quang Nam to overcome aftermath of typhoon No. 12
COMMUNITY HEALTH HELPING PEOPLE RECOVER FROM ILLNESS OR INJURY AND ENJOY LIFE AGAIN In public health care aspects, Novaland has been co-operating with numerous NGOs to appeal and engage the community in bringing together healthy lives for many children and families in difficult circumstances throughout the country.
Remarkably, the Novaland Group joined hands with Vina Capital Foundation in communicating and radically spreading the message “Connecting love” to the entire community with the goal of 500 children entitled to free heart surgery in 2017. Through approximately 100 programs and community activities nationwide, Novaland Group engaged the fervour of all employees, customers and partners, sharing our social responsibility with the community for a brighter Vietnam.
TYPICAL ACTIVITIES “Connecting love” Program on HTV9 to call support for 500 children with congenital heart disease in Vietnam;
of fundraising activities, offered free surgery to 400 children with cleft lips and cleft palates in Vietnam;
Co-operated with Operation Smile Vietnam to organize the 26th Annual Charity Auction which is part of a series
Donated to Ho Chi Minh City Sponsoring Association for poor patients for free heart surgery.
Donated to Ho Chi Minh City Sponsoring Association to support cases of heart disease for the poor
“Connecting love” Program on HTV9 appeals surgery support to 500 children with congenital heart disease in Vietnam
LOCAL COMMUNITY During the project development, Novaland always conducts consultations on potential environmental and social impacts not only in 2017 but with every project deployed through years.
Sustainable development - Responsible investment
171
Summary of Sustainability report
COMMITMENT TO THE QUALITY AND RESPONSIBILITY OF PRODUCTS AND SERVICES Indicators:
GRI 417-1: Requirements for product and service information and labeling.
CRE8: Sustainable and Green Labeling, Assessment and Labeling for new buildings, management and restoration.
Commitment on project quality to form good products, build and maintain customer trust is a prerequisite goal which has been the company’s orientation throughout the project deployment and delivery.
The Group applies strict control measures in the product creation process by means of a disciplined and systematic approach to evaluate and improve the effectiveness of risk management control, examine the management procedures in Group’s departments; notably focus on quality, safety and data and documents filling. This is considered as the second defense layer to identify and eliminate poor quality risks across the project development from designing, selecting contractors, constructing and hand over.
management, which aims to optimize the quality control and ensure the delivery schedule, affirm the Novaland prestige and brand.
Quality Assurance Department (QA) focused on developing guidelines and allocating resources for examination in each phase. The entire QA process is developed by QA experts and closely supervised by the highest levels of
We focused on every details in documents on products and services to customers, including brochure, leaflet, product information, product hand-over handbook.
Quality assurance activities are continually updated and improved to enhance product quality and intergrate the latest technological advances into product quality. Staff capacity is constantly sharpened through training with the aim of knowledge-updating and practical experience sharing.
INVESTMENT IN GREEN AND SUSTAINABLE DEVELOPMENT PROJECTS With the goal of saving resources and protecting the environment, Novaland’s sustainability strategy focuses on materials, water, energy and waste. The strategy is realized through the application of numerous initiatives, including the use of alternative materials, recycled materials, the application of energy saving technologies, smart energy management systems, advanced water and waste management systems. In fact, Novaland is one of the few real estate companies taking the lead in adopting the EDGE green building system of the International Finance Corporation (IFC) of the World Bank (WB) in design and construction for the purpose of reducing at least 20% of the amount of materials, energy consumption and water consumption. In 2016, Orchard Garden (Phu Nhuan District, HCMC) – the project certified as EDGE construction – saved energy at 21%, water 23% and materials 33%. 172
BRIGHTEN LIVES
Lakeview City (Dist.2, HCMC) - Photo by: Nguyen Dinh Ri
MATERIALS Indicators:
Our dedicated R&D team specialize in research and application of new environmental and human friendly materials, bringing about sustainable values and health for not only residents in Novalandâ&#x20AC;&#x2122;s buildings but also the neighboring communities.
GRI 301-1: Materials used by weight or volume.
GRI 301-2: Recycled input materials used.
Novaland embeds corporate social responsibility into the procurement model, in order to link the procurement activities to the social, environmental and economic responsibility of the Group with a view to enhancing customersâ&#x20AC;&#x2122; quality of life in particular, the surrounding community and society in general. We prioritize environmentally friendly materials and construction materials available in Vietnam for our construction works (eg. stone brick, technological equipment, technological pipelines ...), gradually superseding imported materials. Novaland Group has also shifted to lightweight brick, non-fired brick, lightweight construction panel instead of traditional bricks, contributing to reduction of energy consumption in brick baking. The Group increasingly used, engineered wood, laminate wood, MDF, plywood using recycled wood, husk, sawdust etc. These materials not only meet the requirements of aesthetics and features but also physically exceed common natural types (less warping, better water resistance and abrasion resistance). Reducing use of natural wood contributed to natural resouces and environment protection. Waste from a large number of industries can be reused to create high quality materials, save resources and settle problems related to the environment.
Alternative material ratio (%) 2016
100
100
2017
100
80
66.28
60 44.00
40 20
Artificial wood ratio
LED bull ratio
Materials used 2016 700,000 600,000
611,031
572,694
500,000
2017 611,674
393,132
400,000 300,000 200,000 100,000
97,964 Steel (ton)
217,680
167,693 32,110 Concrete (m3)
Sand (m3)
Brick (ton)
Sustainable development - Responsible investment
173
Summary of Sustainability report
ENERGY Indicators:
GRI 302-1: Energy consumption within the organization.
GRI 302-3: Energy intensity.
It is the nature of the construction industry for most energy consumed in our operation to be for equipment operation, transportation, and system operation. We controlled the operating time, transportation distance of materials, use new equipment with high efficiency so as to restrict material loss and save energy.
In addition, we applied new technologies into project construction process and system operation. Furthermore, we monitored electrical equipment operating over time during the system operation to reduce power consumption. With the aim of energy saving for lighting, we have used LEDs as a replacement for fluorescent and compact bulbs at projects Rivergate Residence, The Tresor Residence (District 4), Lucky Palace (District 6), GardenGate Residence, Kingston Residence (Phu Nhuan District). With regard to energy saving for ventilation and water supply, the Group used high efficiency engines for water pumps and fans in most of on-going projects.
Energy consumption (KwH) On-going projects Finished projects
60 43,368,323
45 30 15 5,599,245
8,545,299
11,999,089
2016
2017
Diesel oil consumption (litre) On-going projects
1,500
Finished projects
1,000
1,206,487
500 25,805 2016
137,399
16,309
2017
Energy intensity (Kwh/m2) 160
160.61
800 400 5.83 2016
174
BRIGHTEN LIVES
2017
WATER, EFFLUENTS AND WASTE Indicators:
Lakeview City (District 2) takes its pride to be one of the first projects designed and implemented in compliance with the smart and environmentally sustainable urban criteria and the premise for the next projects. Novaland Group owns a team of specilized staff for these tasks. We train our specilized team, execution team, supervisors, and compliance control team with specialized and continuous up-to-date knowledge on a regular basis to sharpen professional competence and effective performance.
GRI 303-1: Water withdrawal by source.
GRI 306-1: Water discharge by quality and destination.
GRI 306-2: Waste by type and disposal method.
Total water withdrawal (m3)
Water is also effectively utilized while water saving practices are implemented throughout the construction process via checking water supply points during construction as well as water management in building operation (monitoring tree watering consumption and using water saving sensors and water meters in public areas, etc.).
On-going projects Finished projects
1,000
887,134
800 600
518,032
601,345
400
301,223
200
2016
2017
Total of household waste (ton) On-going projects Finished projects
15,000
13,980
12,500
13,091
11,267
10,000 7,500 5,000 2,503
2,5000 2016
Total treated water discharge (m3) On-going projects
600
Finished projects
400
Total hazardous waste (ton) 563,603
500
300 200
2017
On-going projects Finished projects
393,281
1,500 1,250
1,267
1,000 750
215,785
500
100
50,359 2016
2017
250
225 2.55 2016
1.09
2017
Sustainable development - Responsible investment
175
Summary of Sustainability report
ENVIRONMENT PROTECTION Indicators:
GRI 307-1: Non-compliance with environmental laws and regulations.
We always adhere to environmental safety regulations pursuant to the requirements from the authorities in all our projects, such as
1
Classification of hazardous waste, household waste, waste collection contracts with functioning units;
2
Sewage has been treated to meet environmental standards during building operation. Status is periodically reported to relevant functioning authorities every six months, ensuring that treated sewage meets standards.
Besides, noise control during construction is managed to acceptable limits in accordance with regulations. We use new technology in construction and in concrete casting for walls, columns and floors so as to reduce noise and dust released in wall construction and painting, while reducing waste from debris at some projects such as The Sun Avenue Residence (District 2), Lucky Palace (District 6), GardenGate Residence (District Phu Nhuan), The Botanica (District Tan Binh. Before operation, buildings are equipped with noise-isolating solutions and the devices with acceptable noise level to meet standards and improve the quality of life for residents.
We always comply with environmental impact assessments for all projects that we develop, ensuring control and prevention of impacts on the quality of residential living environment as well as as well as geography in the project area we developed. 176
BRIGHTEN LIVES
OCCUPATIONAL HEALTH AND SAFETY Indicators:
GRI 403-1: Workers representation in formal joint management–worker health and safety committees.
GRI 403-2: Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities.
GRI 403-3: Workers with high incidence or high risk of diseases related to their occupation.
GRI 403-4: Health and safety topics covered in formal agreements with trade unions.
With the specific nature of the construction industry, the issue of Health Safety and Environment has always been attached to great importance and first priority for all projects and operation areas. The Group has completed training courses on occupational health and safety as stipulated in Decree 44/2016/ND-CP and regularly conducted fire drills. Occupational health and safety risks during project development in annual plans were consulted with trade union before implementation.
With the strict application of Occupational Safety and Health regulations and standards to individual contractors, Novaland has made a significant reduction in incidents on site. In addition, the Company stringently adheres to the health and safety management system to ensure that injury type and rate, occupational diseases and number of dealths are at the lowest. Safety training was conducted before operation. The contractors’equipment with stringent labour safety requirements was controlled and managed with more than 70 forms of human and equipment management audit and check. Safety – specialised staff conducted the audit and check on a regular and continuous basis. We integrated costs and investments for safety assurance into project investment cost via construction contracts with reputable contractors in the market. Moreover, QA Department and Occupational Health and Safety Board conducted periodic check at all on-going projects to raise safety awareness and safe construction measures. Internal safety procedures are implemented to cross-check daily, weekly and monthly at projects. The effectiveness of Safety Management is evaluated periodically with contractors, as well as project management team. In addition, we have proactively applied remote project monitoring centre via the installation of cameras monitoring projects’ activities in order to support site operations and timely intervention. Occupational Health and Safety Board also conducted periodic inspections of working conditions and environment to ensure the labour safety at or beyond current standards for office area.
Occupational health and safety related rates 2016
2017
0.18
0.16
0.15 0.108
0.12 0.09 0.06
0.07
0.07
0.05
0.03 0.0039 Injury rate (IR)
0.0007
0.00 Occupational disease rate (ODR)
Loss days rate (LDR)
Absenteeism rate (AR)
In pursuit of its goals, Novaland aims to further strengthen safety management that promotes occupational health and safety information dissemination to all employees as well as stakeholders. Sustainable development - Responsible investment
177
49,467 BILLION VND
TOTAL ASSETS
AS AT DECEMBER 31, 2017
ACHIEVING STABILITY REACHING HIGH With the advantage of being financially STRONG and always pioneering in M&A activities, Novaland continues to expand its influence in the market and is ready to move further on the new path.
FINANCIAL STATEMENTS Consolidated financial statements 2017 (VAS) Summary of the audited separate financial statements 2017 (VAS) Summary of the audited consolidated financial statements under IFRS
180 265 272
CONSOLIDATED FINANCIAL STATEMENTS 2017 (VAS) For the year ended 31 December 2017
180
BRIGHTEN LIVES
CORPORATE INFORMATION
` Business Registration Certificate
No. 054350 dated 18 September 1992 was initially issued by the Department of Planning and Investment of Ho Chi Minh City and the 42nd amended Business registration certificate No. 0301444753 dated 2 March 2018.
Board of Directors
Mr. Bui Thanh Nhon
Chairman
Mr. Bui Xuan Huy
Member from 11 May 2017)
Ms. Hoang Thu Chau
Member
Ms. Nguyen Thanh Bich Thuy
Member (from 27 April 2017)
Mr. Phan Thanh Huy
Member (to 30 January 2018)
Mr. Bui Cao Nhat Quan
Member (to 11 May 2017)
Ms. Cong Huyen Ton Nu My Lien
Member (to 17 April 2017)
Ms. Nguyen Thi Minh Thanh
Head of Board of Supervisor (to 27 April 2017)
Mr. Nguyen Vu Duy
Member (to 27 April 2017)
Ms. Nguyen Anh Thi
Member (to 27 April 2017)
Ms. Nguyen Thanh Bich Thuy
Chairman (from 26 June 2017)
Ms. Nguyen Thi Minh Thanh
Member (from 26 June 2017)
Ms. Vo Thi Thanh Tham
Member (from 26 June 2017 to 8 September 2017)
Ms. Vo Thi Thu Van
Member (from 8 September 2017)
Mr. David Proctor
Member (from 8 September 2017)
Mr. Bui Xuan Huy
General Director (from 8 September 2017)
Mr. Phan Thanh Huy
General Director (to 8 September 2017)
Ms. Hoang Thu Chau
Deputy General Director
Mr. Le Hong Phuc
Deputy General Director (to 15 August 2017)
Board of Supervision (Replace Board of Supervision to Audit committee from 27 April 2017)
Audit committee
Board of Management
Financial Statements 2017
181
CORPORATE INFORMATION
Board of Management (continued)
182
Ms. Vo Thi Thu Van
Deputy General Director (to 8 September 2017)
Mr. Bui Cao Nhat Quan
Deputy General Director (to 11 May 2017)
Mr. Eric Chan Hong Wai
Deputy General Director (to 25 May 2017)
Legal representative
Mr. Bui Thanh Nhon
Chairman
Registered office
313B - 315 Nam Ky Khoi Nghia Street, Ward 7, District 3, Ho Chi Minh City, Vietnam
Operation office
65 Nguyen Du Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam
Auditor
PwC (Vietnam) Limited
BRIGHTEN LIVES
CORPORATE INFORMATION
STATEMENT OF THE RESPONSIBILITY OF THE BOARD OF MANAGEMENT OF THE COMPANY IN RESPECT OF THE CONSOLIDATED FINANCIAL STATEMENTS The Board of Management of No Va Land Investment Group Corporation (“the Company”) is responsible for preparing the consolidated financial statements which give a true and fair view of the financial position of the Company and its subsidiaries (together, “the Group”) as at 31 December 2017 and of the results of its operations and cash flows for the year then ended. In preparing these consolidated financial statements, the Board of Management is required to: »» select suitable accounting policies and then apply them consistently; »» make judgments and estimates that are reasonable and prudent; and »» prepare the consolidated financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business. The Board of Management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the financial position of the Group and which enable consolidated financial statements to be prepared which comply with the basis of accounting set out in Note 2 to the consolidated financial statements. The Board of Management is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS I hereby approve the accompanying consolidated financial statements as set out on pages 6 to 80 which give a true and fair view of the financial position of the Group as at 31 December 2017 and of the results of its operations and cash flows for the year then ended, in accordance with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on preparation and presentation of consolidated financial statements.
Bui Thanh Nhon Chairman Ho Chi Minh City, SR Vietnam 10 March 2018
Financial Statements 2017
183
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF NO VA LAND INVESTMENT GROUP CORPORATION
We have audited the accompanying consolidated financial statements of No Va Land Investment Group Corporation and its subsidiaries (together “the Group”) which were prepared on 31 December 2017 and approved by the Chairman on 10 March 2018. The consolidated financial statements comprise the consolidated balance sheet as at 31 December 2017, the consolidated income statement and the consolidated cash flow statement for the year then ended, and explanatory notes to the consolidated financial statements including significant accounting policies, as set out on pages 6 to 80. The Board of Management’s Responsibility The Board of Management of the Company is responsible for the preparation and the true and fair presentation of these consolidated financial statements in accordance with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on the preparation and presentation of consolidated financial statements and for such internal control which the Board of Management determines necessary to enable the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We conducted our audit in accordance with Vietnamese Standards on Auditing. Those standards require that we comply with ethical standards and requirements, plan and perform the audit in order to obtain reasonable assurance as to whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including an assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group’s preparation and true and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Management as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
184
BRIGHTEN LIVES
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF NO VA LAND INVESTMENT GROUP CORPORATION
Auditor’s Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2017, its financial performance and cash flows for the year then ended in accordance with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on the preparation and presentation of consolidated financial statements. For and on behalf of PwC (Vietnam) Limited
Nguyen Hoang Nam Audit Practising Licence No. 0849-2018-006-1 Authorised signatory
Cao Thi Ngoc Loan Audit Practising Licence No. 3030-2017-006-1
Report reference number: HCM6585 Ho Chi Minh City, 10 March 2018
As indicated in Note 2.1 to the consolidated financial statements, the accompanying consolidated financial statements are not intended to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than SR Vietnam, and furthermore their utilisation is not designed for those who are not informed about SR Vietnam’s accounting principles, procedures and practices.
Financial Statements 2017
185
CONSOLIDATED BALANCE SHEET
Form B 01 - DN/HN
As at 31 December
186
2017 VND
2016 VND
41,165,965,853,502
30,288,729,450,391
6,650,160,994,741
3,336,969,432,791
Cash
1,198,110,884,846
808,215,895,293
112
Cash equivalents
5,452,050,109,895
2,528,753,537,498
120
Short-term investments
512,509,850,676
964,822,616,829
123
Investments held-to-maturity
512,509,850,676
964,822,616,829
130
Short-term receivables
5,998,164,901,016
9,635,748,057,226
131
Short-term trade accounts receivable
6
390,715,866,371
333,223,529,420
132
Short-term prepayments to suppliers
7
1,771,344,474,280
936,793,642,253
135
Short-term lending
8(a)
625,605,206,171
3,313,658,593,511
136
Other short-term receivables
9(a)
3,210,499,354,194
5,065,734,101,184
137
Provision for doubtful debts â&#x20AC;&#x201C; short term
10
-
(13,661,809,142)
140
Inventories
27,128,796,867,411
15,789,641,948,072
141
Inventories
27,136,318,547,663
15,795,037,614,256
149
Provision for decline in value of inventories
(7,521,680,252)
(5,395,666,184)
150
Other current assets
876,333,239,658
561,547,395,473
151
Short-term prepaid expenses
12(a)
104,024,633,186
51,738,280,747
152
Value Added Tax to be reclaimed
20(a)
649,739,747,874
381,804,313,170
153
Other taxes receivable
20(a)
122,568,858,598
128,004,801,556
Code
ASSETS
100
CURRENT ASSETS
110
Cash and cash equivalents
111
BRIGHTEN LIVES
Note
4
5(a)
11(a)
CONSOLIDATED BALANCE SHEET
Form B 01 - DN/HN
As at 31 December
2017 VND
2016 VND
8,300,996,138,739
6,238,346,263,606
654,401,516,832
911,972,303,351
953,750,090
953,750,090
8(b)
449,644,400,000
-
9(b)
203,803,366,742
911,018,553,261
326,609,439,362
148,823,215,155
281,845,599,120
120,180,246,302
411,168,923,089
162,134,437,319
(129,323,323,969)
(41,954,191,017)
44,763,840,242
28,642,968,853
Historical cost
50,544,832,543
30,025,329,118
229
Accumulated amortisation
(5,780,992,301)
(1,382,360,265)
230
Investment properties
2,944,616,534,199
1,945,013,110,252
231
Historical cost
3,055,632,258,276
2,022,070,991,658
232
Accumulated depreciation
(111,015,724,077)
(77,057,881,406)
240
Long-term assets in progress
361,032,817,716
285,199,310,593
241
Long-term work in progress
224,136,375,352
233,819,522,165
242
Construction in progress
136,896,442,364
51,379,788,428
250
Long-term investments
1,042,972,935,246
374,785,832,914
252
Investments in associates, joint ventures
1,042,972,935,246
371,670,632,914
253
Investments in other entities
-
3,115,200,000
260
Other long-term assets
2,971,362,895,384
2,572,552,491,341
261
Long-term prepaid expenses
12(b)
449,352,171,677
288,077,446,389
262
Deferred income tax assets
38(a)
115,783,534,333
66,869,015,901
269
Goodwill
2,406,227,189,374
2,217,606,029,051
270
TOTAL ASSETS
49,466,961,992,241
36,527,075,713,997
Code
ASSETS (continued)
200
LONG-TERM ASSETS
210
Long-term receivables
212
Long-term advances to suppliers
215
Long-term lending
216
Other long-term receivables
220
Fixed assets
221
Tangible fixed assets
222
Historical cost
223
Accumulated depreciation
227
Intangible fixed assets
228
Note
13
14
15
11(b)
5(b)
17
Financial Statements 2017
187
CONSOLIDATED BALANCE SHEET
Form B 01 - DN/HN
As at 31 December
188
2017 VND
2016 VND
LIABILITIES
36,210,571,488,821
26,480,185,576,926
310
Short-term liabilities
22,658,196,187,952
15,011,223,881,816
311
Short-term trade accounts payable
18
2,648,333,517,795
1,505,728,428,659
312
Short-term advances from customers
19
8,848,256,383,261
5,954,806,119,381
313
Tax and other payables to the State Budget
20(b)
588,662,021,432
122,954,010,058
314
Payable to employees
21
114,949,661,694
172,542,007,199
315
Short-term accrued expenses
22
1,382,586,375,115
666,762,531,707
318
Short-term unearned revenue
1,974,280,808
2,201,411,807
319
Other short-term payables
23(a)
1,318,999,855,808
983,763,264,057
320
Short-term borrowings and finance lease liabilities
24(a)
7,748,878,980,646
5,595,769,743,653
322
Bonus and welfare funds
5,555,111,393
6,696,365,295
330
Long-term liabilities
13,552,375,300,869
11,468,961,695,110
27,481,411,249
35,480,545,489
Code
RESOURCES
300
Note
336
Long-term unearned revenue
337
Other long-term payables
23(b)
1,664,029,225,075
2,048,219,507,098
338
Long-term borrowings and finance lease liabilities
24(b)
10,200,873,745,673
7,907,493,558,081
341
Deferred income tax liabilities
38(a)
1,659,990,918,872
1,477,768,084,442
BRIGHTEN LIVES
CONSOLIDATED BALANCE SHEET
Form B 01 - DN/HN
As at 31 December
2017 VND
2016 VND
OWNERS’ EQUITY
13,256,390,503,420
10,046,890,137,071
Capital and reserves
13,256,390,503,420
10,046,890,137,071
25, 26
6,496,587,880,000 6,428,287,880,000 68,300,000,000
5,961,992,340,000 5,893,692,340,000 68,300,000,000
Code
RESOURCES
400 410
Note
411 411a 411b
Owners’ capital »» Ordinary shares with voting rights »» Preference shares
412
Share premium
26
3,206,830,905,400
2,174,026,445,400
421
Undistributed earnings
26
2,907,218,106,652
952,449,830,514
421a
»» Undistributed post-tax profits of previous years
927,684,830,514
496,880,777,697
421b
»» Post-tax profit of current year
1,979,533,276,138
455,569,052,817
429
Non-controlling interests
645,753,611,368
958,421,521,157
49,466,961,992,241
36,527,075,713,997
440
TOTAL RESOURCES
Nguyen Ngoc Bang Preparer
Tran Thi Thanh Van Chief Accountant
27
Bui Thanh Nhon Chairman 10 March 2018
Financial Statements 2017
189
CONSOLIDATED INCOME STATEMENT
Form B 02 - DN/HN
Year ended 31 December Code 01
Note Sales of goods and rendering of services
02
Less deductions
2017 VND
2016 VND
11,759,393,956,148
7,369,463,145,396
(127,057,926,975)
(10,282,224,581)
10
Net revenue from sales of goods and rendering of services
30
11,632,336,029,173
7,359,180,920,815
11
Cost of sales
31
(8,375,505,074,901)
(5,776,101,411,561)
20
Gross profit from sales of goods and rendering of services
3,256,830,954,272
1,583,079,509,254
21
Financial income
32
1,696,524,125,589
2,523,042,548,253
22
Financial expenses
33
(1,463,309,502,095)
(1,115,230,030,171)
23
»» Including: Interest expenses
33
(1,205,387,997,120)
(863,073,263,518)
24
Profit sharing from investments in associates
12,079,426,593
498,537,487
25
Selling expenses
34
(258,292,397,030)
(165,484,975,281)
26
General and administration expenses
35
(676,193,753,758)
(641,600,989,722)
2,567,638,853,571
2,184,304,599,820
30
Net operating profit
31
Other income
36
62,422,616,018
44,524,814,573
32
Other expenses
37
(41,562,445,470)
(39,125,801,538)
40
Net other income
20,860,170,548
5,399,013,035
50
Net accounting profit before tax
2,588,499,024,119
2,189,703,612,855
51
Business income tax – current
38(b)
(810,647,531,519)
(327,371,479,437)
52
Business income tax – deferred
38(a)
283,791,739,656
(202,982,820,440)
60
Net profit after tax
2,061,643,232,256
1,659,349,312,978
2,033,481,810,322
1,665,077,557,360
28,161,421,934
(5,728,244,382)
Attributable to: 61
Owners of the parent company
62
Non-controlling interests
70
Earnings per share
28(a)
3,210
3,073
71
Diluted earnings per share
28(b)
3,210
2,862
Nguyen Ngoc Bang Preparer
190
BRIGHTEN LIVES
Tran Thi Thanh Van Chief Accountant
Bui Thanh Nhon Chairman 10 March 2018
Form B 03 - DN/HN
CONSOLIDATED CASH FLOW STATEMENT (Indirect method)
Year ended 31 December Code
Note
2017 VND
2016 VND
2,588,499,024,119
2,189,703,612,855
484,833,728,737
226,331,076,287
CASH FLOWS FROM OPERATING ACTIVITIES 01
Net profit before tax Adjustments for:
02
Depreciation, amortisation and goodwill allocation
03
Reversal provisions
(5,689,095,922)
(41,356,813,092)
04
Unrealised foreign exchange (gains)/losses
(5,083,914,401)
34,551,090,149
05
Profits from investing activities
(1,464,413,967,698)
(2,228,127,795,722)
06
Interest expense, bonds issuance costs
1,251,160,373,101
910,387,721,293
2,849,306,147,936
1,091,488,891,770
1,919,050,031,993
3,960,297,279,419
(1,963,235,562,101)
93,805,533,648
619,226,427,403
(3,561,263,899,138)
(118,688,935,374)
(99,019,085,556)
(1,104,335,516,660)
(849,017,262,276)
(652,457,047,620)
(431,733,905,624)
1,548,865,545,577
204,557,552,243
(1,129,651,141,626)
(215,251,612,635)
8,353,511,141
15,646,566,319
(1,466,446,465,713)
(7,672,922,664,879)
4,918,484,078,283
6,258,296,050,163
(6,367,994,960,329)
(7,218,477,119,177)
1,793,455,062,483
2,048,210,045,846
486,615,118,973
180,791,013,185
(1,757,184,796,788)
(6,603,707,721,178)
08
Operating profit before changes in working capital
09
Decrease in receivables
10
(Increase)/decrease in inventories
11
Increase/(decrease) in payables
12
Increase in prepaid expenses
14
Interest paid
15
Business income tax paid
20
Net cash inflows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES
21
Purchases of fixed assets and other long-term assets
22
Proceeds from disposals of fixed assets and long-term assets
23
Loans granted, purchases of debt instruments of other entities
24
Collection of loans, proceeds from sales of debt instruments of other entities
25
Investments in other entities
26
Proceeds from divestment in other entities
27
Dividends and interest received
30
Net cash outflows from investing activities
Financial Statements 2017
191
CONSOLIDATED CASH FLOW STATEMENT
Form B 03 - DN/HN
(Indirect method)
Year ended 31 December Code
Note
2017 VND
2016 VND
286,871,900,000
3,985,340,870,000
(405,000,000,000)
-
CASH FLOWS FROM FINANCING ACTIVITIES 31
Proceeds from issue of shares and capital contribution
32
Payments for share returns and repurchases
33
Proceeds from borrowings
17,207,325,658,255
12,884,785,455,043
34
Repayments of borrowings
(13,499,500,855,745)
(10,939,826,576,518)
36
Dividends paid
(68,165,097,000)
(54,639,219,932)
40
Net cash inflows from financing activities
3,521,531,605,510
5,875,660,528,593
50
Net increase/(decrease) in cash and cash equivalents
3,313,212,354,299
(523,489,640,342)
60
Cash and cash equivalents at beginning of year
3,336,969,432,791
3,859,710,163,282
(20,792,349)
748,909,851
6,650,160,994,741
3,336,969,432,791
61
Effect of foreign exchange differences
70
Cash and cash equivalents at end of year
Nguyen Ngoc Bang Preparer
192
BRIGHTEN LIVES
Tran Thi Thanh Van Chief Accountant
4 4
Bui Thanh Nhon Chairman 10 March 2018
Form B 09 - DN/HN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 december 2017
1
GENERAL INFORMATION No Va Land Investment Group Corporation (“the Company”) is a joint stock company which was established in SR Vietnam pursuant to Business Registration Certificate No. 054350 which was issued by the Department of Planning and Investment of Ho Chi Minh City on 18 September 1992 and the 42nd amended Business Registration Certificate No. 0301444753 dated 2 March 2018. The Company is formerly known as Thanh Nhon Trading Limited, which was established and operated under the Business registration certificate as above. The Company’s stock was officially listed on Ho Chi Minh City Stock Exchange (“HOSE”) on 28 December 2016 with stock symbol “NVL” pursuant to Decision No. 500/QD-SGDHCM issued by General Director of HOSE on 19 December 2016. The principal activities of the Group are residence project development; real estate trading; civil and industrial construction; providing design and management consultancy services; providing real estate brokerage services. The representative offices and branches of the Group include: »» Representative office
23 Nguyen Huu Tho, Tan Hung Ward, District 7, Ho Chi Minh City, Vietnam
»» Branch of No Va Land Investment Group Corporation – Novaland Group Real Estate Exchange
23 Nguyen Huu Tho, Tan Hung Ward, District 7, Ho Chi Minh City, Vietnam
»» Branch of No Va Land Investment Group Corporation – Novaland District 1 Real Estate Exchange
65 Nguyen Du Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam
»» Branch of No Va Land Investment Group Corporation – Novaland Phu Nhuan Real Estate Exchange
36 – 38 Nguyen Van Troi, Ward 15, Phu Nhuan District, Ho Chi Minh City, Vietnam
The normal business cycle of the Group’s projects is within 36 months. As at 31 December 2017, the Group had 1,581 employees (2016: 2,210 employees). As at 31 December 2017, the Group had 40 subsidiaries and 3 associates (as at 31 December 2016: 38 subsidiaries and 5 associates) as follows:
Financial Statements 2017
193
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
1
No.
GENERAL INFORMATION (continued)
Name
Place of incorporation and operation
I â&#x20AC;&#x201C; Subsidiaries
194
1
No Va Land Investment Joint Stock Company
Ho Chi Minh City
2
No Va Thao Dien Company Limited
Ho Chi Minh City
3
No Va Festival Corporation
Ho Chi Minh City
4
No Va Land Company Limited
Ho Chi Minh City
5
Nova Saigon Royal Real Estate Investment Company Limited
Ho Chi Minh City
6
Sai Gon Housing And Infrastructure Development Joint Stock Company
Ho Chi Minh City
7
Nova Lucky Palace Company Limited
Ho Chi Minh City
8
The Prince Residence Joint Stock Company
Ho Chi Minh City
9
Thanh Nhon Real Estate Joint Stock Company
Ho Chi Minh City
10
Nova Sagel Company Limited
Ho Chi Minh City
11
Novaland Agent Company Limited
Ho Chi Minh City
12
Phuoc Long Investment and Development Company Limited
Ho Chi Minh City
13
Vung Tau Youth Hotel and Travel Joint Stock Company
Ho Chi Minh City
14
Nova Richstar Joint Stock Company
Ho Chi Minh City
15
Nova Nippon Joint Stock Company
Ho Chi Minh City
16
Khai Hung Real Estate Company Limited
Ho Chi Minh City
17
Nova Nam A Company Limited
Ho Chi Minh City
18
Nova Sasco Company Limited
Ho Chi Minh City
19
No Va My Dinh Land Joint Stock Company
Ho Chi Minh City
20
Thanh Nhon Investment Real Estate Company Limited
Ho Chi Minh City
21
Nova An Phu Company Limited
Ho Chi Minh City
22
Nova Phuc Nguyen Real Estate Development and Investment Company Limited
Ho Chi Minh City
23
Tuong Minh Investment and Real Estate Company Limited
Ho Chi Minh City
24
The 21st Century International Development Joint Stock Company
Ho Chi Minh City
BRIGHTEN LIVES
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
2017
2016
% of ownership
% of voting rights
% of ownership
% of voting rights
Real estate trading
91.76
91.76
69.90
69.90
Real estate trading
99.99
99.99
100.00
100.00
Real estate trading
94.02
94.02
94.02
94.02
Real estate trading
100.00
100.00
100.00
100.00
Real estate trading
99.99
99.99
99.99
99.99
Real estate trading
98.00
98.00
98.00
98.00
Real estate trading
100.00
100.00
100.00
100.00
Real estate trading
99.81
99.81
99.81
99.81
Real estate trading
99.11
99.12
98.00
98.00
Real estate trading
73.99
74.00
73.98
74.00
Real estate trading
100.00
100.00
100.00
100.00
Real estate trading
99.99
99.99
99.99
99.99
Real estate trading
65.00
65.00
65.00
65.00
Real estate trading, factory and warehouse lease
99.98
99.99
99.99
99.99
Real estate trading
99.98
99.98
99.98
99.98
Real estate trading
99.99
99.99
99.99
99.99
Real estate trading
83.17
83.17
74.00
74.00
Real estate trading
99.99
99.99
74.00
74.00
Real estate trading
99.98
99.98
99.98
99.98
Real estate trading
99.99
100.00
98.00
100.00
Real estate trading
100.00
100.00
90.00
90.00
Real estate trading
99.89
99.89
99.99
99.99
Real estate trading
99.99
99.99
99.99
99.99
Real estate trading
98.96
98.97
98.96
98.97
Principal activity
Financial Statements 2017
195
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
1
GENERAL INFORMATION (continued)
No.
Name
Place of incorporation and operation
I - Subsidiaries (continued)
196
25
Phuong Dong Building Joint Stock Company
Ho Chi Minh City
26
Nova Rivergate Company Limited
Ho Chi Minh City
27
Nova Princess Residence Joint Stock Company
Ho Chi Minh City
28
Nha Rong Investment and Commercial Joint Stock Company
Ho Chi Minh City
29
Mega Housing Joint Stock Company
Ho Chi Minh City
30
Mega Tie Company Limited
Ho Chi Minh City
31
Bach Hop Real Estate Company Limited
Ho Chi Minh City
32
Phu Dinh Port Joint Stock Company
Ho Chi Minh City
33
Gia Duc Real Estate Company Limited
Ho Chi Minh City
34
Sai Gon Golf Company Limited
Ho Chi Minh City
35
Gia Phu Real Estate Company Limited
Ho Chi Minh City
36
Nova Riverside Real Estate Company Limited
Ho Chi Minh City
37
Ngoc Linh Hoa Investment Joint Stock Company
Ho Chi Minh City
38
Nova Property Management Company Limited
Ho Chi Minh City
39
Merufa-Nova Company Limited
Ho Chi Minh City
40
Nhat Hoa Real Estate Joint Stock Company
Ho Chi Minh City
41
Nova Phu Sa Ecotourism Joint Stock Company
Ho Chi Minh City
42
Nova Galaxy Real Estate Joint Stock Company
Ho Chi Minh City
43
Nova Lexington Real Estate Joint Stock Company
Ho Chi Minh City
44
Nova Phu Sa Investment and Development Joint Stock Company
Ho Chi Minh City
45
Hung Duc Real Estate Company Limited
Ho Chi Minh City
46
Thanh Nien Real Estate Joint Stock Company
Ho Chi Minh City
47
Phu Viet Tin Limited Company
Ho Chi Minh City
48
Vuong Cung Real Estate Investment Company Limited
Ho Chi Minh City
BRIGHTEN LIVES
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
2017
2016
% of ownership
% of voting rights
% of ownership
% of voting rights
Real estate trading
99.89
99.90
99.89
99.90
Real estate trading
99.77
99.77
99.90
99.90
Real estate trading
99.90
99.90
99.90
99.90
Real estate trading
99.96
99.97
99.96
99.97
Real estate trading
98.60
98.60
84.99
84.99
Real estate trading
98.59
99.99
62.89
74.00
Real estate trading
99.99
99.99
-
-
Support activities related to transportation, real estate trading
83.45
83.45
-
-
Real estate trading
99.99
99.99
-
-
Real estate trading
99.12
100.00
-
-
Real estate trading
99.98
99.99
-
-
Real estate trading
99.97
99.98
-
-
Real estate trading
99.83
99.83
-
-
Real estate trading
99.99
99.99
-
-
Real estate trading
99.89
99.90
-
-
Real estate trading
99.81
99.98
-
-
Real estate trading
-
-
99.00
99.00
Real estate trading
-
-
99.98
99.98
Real estate trading
-
-
99.90
99.90
Real estate trading
-
-
99.98
99.98
Real estate trading
-
-
70.00
70.00
Real estate trading
-
-
99.70
99.80
Real estate trading
-
-
99.89
99.90
Real estate trading
-
-
99.99
99.99
Principal activity
Financial Statements 2017
197
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
1
GENERAL INFORMATION (continued)
No.
Name
Place of incorporation and operation
II - Associates 1
Sun City Real Estate Development and Investment Company Limited
Ho Chi Minh City
2
Sai Gon Electronics and Industrial Service Joint Stock Company
Ho Chi Minh City
3
Ben Thanh Housing Service and Development Joint Stock Company
Ho Chi Minh City
4
Sai Gon Golf Company Limited
Ho Chi Minh City
5
Phu Dinh Port Joint Stock Company
6
Huy Minh Real Estate Joint Stock Company (formerly known as Nova Dong Hai Joint Stock Company)
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1
Basis of preparation of consolidated financial statements
Ho Chi Minh City
Ho Chi Minh City
The consolidated financial statements have been prepared in accordance with Vietnamese Accounting Standards, the Vietnamese Corporate Accounting System and applicable regulations on preparation and presentation of consolidated financial statements. The consolidated financial statements have been prepared under the historical cost convention. The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Vietnam. The accounting principles and practices utilised in Vietnam may differ from those generally accepted in countries and jurisdictions other than Vietnam. 2.2
Fiscal year The Group’s fiscal year is from 1 January to 31 December.
2.3 Currency The consolidated financial statements are measured and presented in Vietnamese Dong (“VND”). Transactions arising in foreign currencies are translated at exchange rates ruling at the transaction dates. Foreign exchange differences arising from these transactions are recognised in the consolidated income statement.
198
BRIGHTEN LIVES
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
2017
2016
% of ownership
% of voting rights
% of ownership
% of voting rights
Real estate trading
49.00
49.00
-
-
Electronic components and telecommunication trading
33.31
33.31
33.31
33.31
Real estate trading
25.00
25.00
25.00
25.00
Real estate trading
-
-
49.00
50.00
Support activities related to transportation, real estate trading
-
-
27.64
27.64
-
-
49.99
49.99
Principal activity
Real estate trading
Monetary assets and liabilities denominated in foreign currencies at the consolidated balance sheet date are respectively translated at the buying and selling exchange rates at the consolidated balance sheet date of the commercial bank where the Group regularly trades. Foreign currencies deposited in bank at the balance sheet date are translated at the buying exchange rate of the commercial bank where the Group opens the foreign currency accounts. Foreign exchange differences arising from these translations are recognised in the consolidated income statement. 2.4
Basis of consolidation The Group prepared its consolidated interim financial statements in accordance with Circular 202/2014/TT-BTC - Guidance on the preparation and presentation of consolidated financial statements issued by the Ministry of Finance on 22 December 2014. Subsidiaries Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
Financial Statements 2017
199
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.4
Basis of consolidation (continued Subsidiaries (continued) The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. Inter-company transactions, balances and unrealised gains and losses on transactions between group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling transactions and interests The Group applies a policy for transactions with non-controlling interests as transactions with external parties to the Group. Non-controlling interests (“NCI”) are measured at their proportionate share of the acquiree’s identifiable net assets at date of acquisition. The divestment of the Group’s interest in a subsidiary that does not result in a loss of control is accounted for as transactions with owners. The difference between the change in the Group’s share of net assets of the subsidiary and any consideration paid or received of divestment of the Group’s interest in a subsidiary is recorded directly in the undistributed earnings under equity. Joint ventures and associates Joint ventures are contractual arrangements whereby two or more parties undertake an economic activity which is subject to joint control. 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 joint ventures and associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s investment in joint ventures and associates includes goodwill identified on acquisition, net of any accumulated impairment loss. The Group’s share of its joint ventures’ and associates’ post-acquisition profits or losses is recognised in the consolidated income statement, and its share of post-acquisition movements in reserves is recognised in consolidated reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in a joint venture or associate equals or exceeds its interest in the joint venture or associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture or associate.
200
BRIGHTEN LIVES
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.4
Basis of consolidation (continued) Joint ventures and associates (continued) Accounting policies of joint ventures and associates have been changed where necessary to ensure consistency with the policies adopted by the Group. Unrealised gains and losses on transactions between the Group and its joint ventures and associates are eliminated to the extent of the Groupâ&#x20AC;&#x2122;s interest in the joint ventures and associates. Accounting policies of joint ventures and associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
2.5 Goodwill Goodwill represented on the consolidated financial statements is initially measured at cost being the excess of the cost of an acquisition over the fair value of the Groupâ&#x20AC;&#x2122;s share of the net identifiable assets of the acquired subsidiary/ associate at the date of acquisition. If the cost of a business combination is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated income statement. After initial recognition, goodwill is measured at cost less any accumulated armotisation. Goodwill on acquisitions of subsidiaries is recognised as an asset and is amortised on the straight-line basis over its estimated period of benefit but not exceed 10 years. Goodwill on acquisitions of investments in joint ventures and associates is included in the carrying amount of the investments at the date of acquisition. The Group does not amortise this goodwill. On disposal of the investments in subsidiaries or associates, the attributable amount of unamortised goodwill is included in the determination of the profit or loss on the disposal. Goodwill is tested annually for impairment and carried at cost less accumulated amortisation less accumulated impairment losses. If there is evidence that the impairment during the year is higher than the annual goodwill charge, the Group records the impairment immediately in the accounting period. 2.6
Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash at bank, cash in transit, demand deposits and other short-term investments with an original maturity of three months or less.
2.7
Trade receivables Trade receivables are carried at the original invoice amount less an estimate made for doubtful receivables based on a review by the Board of Management of all outstanding amounts at the year end. Bad debts are written off when identified.
Financial Statements 2017
201
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.8 Inventories Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation are recognised as inventories. Inventories are stated at the lower of cost and net realisable value. The cost of inventories includes cost of land and construction costs of infrastructure and apartments, direct expenditures and other overhead expenses incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution. Provision is made, where necessary, for obsolete, slow-moving, defective inventory items and where cost is higher than net realisable values. 2.9 Investments (a)
Investments held-to-maturity Investments held-to-maturity are investments which the Groupâ&#x20AC;&#x2122;s Board of Management has positive intention and ability to hold until maturity. Investments held-to-maturity include term deposits, loans held-to-maturity for interest earning and other heldto-maturity investments. These investments are accounted for at cost less provision. Provision for diminution in value of investments held-to-maturity is made when there is evidence that part or the whole of the investment is uncollectible.
(b) Lendings Lendings are contractual liabilities between the parties. Lendings are carried at cost less an estimate made for doubtful lendings based on a review by the Board of Management of all outstanding amounts at the year end. (c)
Investments in joint ventures and associates Investments in joint ventures and associates are accounted using the equity method when preparing the consolidated financial statements (Note 2.4).
(d)
Investments in equity of other entities Investments in equity of other entities are investments in equity instruments of other entities without controlling rights or co-controlling rights, or without significant influence over the investee. These investments are initially recorded at cost. Provision for diminution in value of these investments is made when the entities make losses, except when the loss was anticipated in their business plan before the date of investment.
2.10
Fixed assets Tangible and intangible fixed assets Fixed assets are stated at historical cost less accumulated depreciation/ amortisation. Historical cost includes expenditure that is directly attributable to the acquisition of the fixed assets.
202
BRIGHTEN LIVES
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.10
Fixed assets (continued) Depreciation and amortisation Fixed assets are depreciated and amortised using the straight-line method so as to write off the cost of the assets over their estimated useful lives. The estimated useful lives of the assets are as follows: Buildings Machinery Motor vehicles Office equipment Software Brandname and trade mark Others
5 - 52 3 - 10 2 - 10 2-8 2 - 10 3 3-4
years years years years years years years
Land use rights with indefinite useful life are recorded at historical cost and are not depreciated. Disposals Gains and losses on disposals are determined by comparing net disposal proceeds with the carrying amount and are recognised as income or expense in the income statement. Construction in progress Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined, are carried at cost. Cost mainly includes software development, designing fees and construction costs of show house and office. Depreciation of these assets, on the same basis as other fixed assets, commences when the assets are ready for their intended use. 2.11
Leased assets Leases of property, plant and equipment where the lessor has transferred the ownership at the end of the lease period, and transferred substantially the risks and rewards, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charge, are included in long-term borrowings. The interest element of the finance cost is charged to the income statement over the lease period. The property, plant and equipment acquired under finance leasing contracts are depreciated over the shorter of the estimated useful life of the assets or the lease term. However, if there is reasonable certainty that the lessee will obtain ownership by the end of the lease term, depreciation is calculated over the estimated useful life of the assets. Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straightline basis over the period of the lease.
Financial Statements 2017
203
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.12
Investment properties Cost of an investment property means the amount of cash or cash equivalents paid or the fair value of other consideration given to acquire the investment property at the time of its acquisition or completion of construction. Depreciation Investment properties are depreciated on the straight-line method to write off the cost of the assets over their estimated useful lives. The estimated useful lives of the investment properties are as follows: Buildings 6 â&#x20AC;&#x201C; 50 years Land use rights with indefinite useful life are recorded at historical cost and are not amortised. The Group does not depreciate the investment properties held for price appreciation. Impairment of investment properties held for price appreciation is recognised when there are objective evidences of the impairment in the value of investment properties compared to the market price and the impairment allowance can be estimated reliably. Impairment allowance is recorded to cost of sales. Disposals Gains or losses on disposals are determined by comparing net disposal proceeds with the net book value and are recognised as income or expense in the income statement.
2.13
Prepaid expenses Prepaid expenses include short-term and long-term prepayments on the balance sheet and are mainly sales commissions, interest expense from issuing bonds, and tools and equipment already put to use. Prepaid expenses are recorded at historical cost and allocated to expenses using the straight line method over the allocation period, except for sales commissions which are allocated to expenses on the basis of matching with revenue recorded when the Group has handed over significant risks and rewards of ownership to the buyers.
2.14 Payables Classifications of payables are based on the nature of economic transactions occurred. Payables are classified into long-term and short-term payables on the balance sheet based on remaining period from the balance sheet date to the maturity date. 2.15
Accrued expenses Accrued expenses include liabilities for goods and services received in the period but not yet paid for due to pending invoice or insufficient records and documents. Accrued expenses are recorded as expenses in the reporting period.
204
BRIGHTEN LIVES
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.16
Borrowing costs Borrowing costs that are directly attributable to the construction or production of any qualifying assets are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are recognised in the income statement when incurred.
2.17
Borrowings Borrowings and finance lease liabilities with payment period of more than 12 months from the date of the financial statements are presented as long-term loans and finance lease liabilities. Borrowings and finance lease liabilities fall due for settlement within the next 12 months from the date of the financial statements are presented as short-term loans and finance lease liabilities. Borrowing expenses directly relates to the borrowings (other than payable interest), such as expenses for verification, audit, application... are recognised in the income statement when incurred. Where these expenses arise from borrowings for purposes of investment, construction or production of assets in progress, they shall be capitalized in accordance with the accounting policy stated in Note 2.16.
2.18 Provisions Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provision is not recognised for future operating losses. Provisions are measured at the expenditures expected to be required to settle the obligation. If the time value of money is material, provision will be measured at the present value using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as an interest expense. 2.19
Provision for severance allowances In accordance with Vietnamese labour laws, employees of the Group who have worked regularly for full 12 months or longer, are entitled to a severance allowance. The working period used for the calculation of severance allowance is the period during which the employee actually works for the Group less the period during which the employee participates the unemployment insurance scheme in accordance with the labour regulations and the working period for which the employee has received severance allowance from the Group. The severance allowance is accrued at the end of the reporting period, on the basis that a half of an average monthly salary per each working year. The average monthly salary used for calculating the severance allowance is the employeeâ&#x20AC;&#x2122;s average salary for the six-month period prior to the balance sheet date. This allowance will be paid as a lump sum when the employees terminate their labour contracts in according with current regulations.
2.20
Unearned revenue Unearned revenue mainly comprises the amounts that customers paid in advance for one or many accounting periods for asset leases. The Group records unearned revenue for the future obligations that the Group has to conduct.
Financial Statements 2017
205
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.21
Convertible bonds Convertible bonds are bonds that may be converted into ordinary shares of the same issuer under the conditions identified in the bond issuance plan. At initial recognition, the Group calculates and determines separately the value of the debt component and equity component of convertible bonds using the effective interest rate method. The debt component of convertible bonds is recorded as a liability; equity component (share options) of convertible bonds is recorded as an owners’ equity item. Subsequently, the Group regularly records bond interest using the effective interest rate. The costs of issuing convertible bonds are deducted to the bond’s liability component and allocated to financial expenses/capitalised on straight line basis. At maturity, the equity component which is a share option is transferred to the share premium account regardless whether the bond holder exercised the option or not.
2.22
Owners’ capital Contributed capital of the shareholders is recorded according to actual amount contributed. Contributions from owners are recorded according to par value of the share. Share premium is the difference between the par value and the issue price of shares and the difference between the repurchase price and re-issuing price of treasury shares. Share conversion options on bonds is the value of the equity component of the convertible bonds at the reporting date. The value is defined as the difference between the total sums received from the issuance of convertible bonds and the value of the debt component of convertible bonds. At initial recognition, the value of share conversion options on bonds is recorded separately in owners’ capital. At the bond maturity, this option is transferred to share premium. Undistributed earnings record the Group’s results (profit, loss) after business income tax at the reporting date.
2.23
Appropriation of net profit Net profit after income tax could be distributed to owners/ shareholders after approval at General Meeting, and after appropriation to other funds in accordance with the Group’s charter and Vietnamese regulations. The bonus and welfare fund is appropriated from the Group’s net profit as proposed by the Board of Directors and subject to the shareholders’ approval at the Annual General Meeting. This fund is set aside for rewarding, increasing general benefits and improving the welfare for officers and employees.
206
BRIGHTEN LIVES
Form B 09 – DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.24
Revenue recognition
(a)
Revenue from sale of real estate Revenue from sale of real estate is recognised in the income statement when the real estate sale has been completed and the Group has handed over significant risks and rewards of ownership to the buyer. Revenue from the sale of real estate is recognised in the income statement when all five (5) following conditions are satisfied: •• The real estate has been completed, and the Group has transferred to the buyer the significant risks and rewards of ownership of the real estate; •• The Group no longer holds the right to manage the real estate as real estate‘s owners or the right to control the real estate; •• The amount of revenue can be measured reliably; •• The Group has received or enables to receive economic benefits from the sales of the real estate; and •• The costs incurred or to be incurred in respect of the real estate can be measured reliably.
(b)
Sale of services Revenue from the sale of services is recognised in the income statement when the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. Revenue from the sale of services is only recognised when all four (4) following conditions are satisfied: •• The amount of revenue can be measured reliably; •• It is probable that the economic benefits associated with the transaction will flow to the Group; •• The percentage of completion of the transaction at the balance sheet date can be measured reliably; and •• The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
(c)
Interest income Interest income is recognised on an earned basis.
(d)
Dividend income Income from dividend is recognised when the Group has established the receiving right from investees.
2.25
Sales deductions Sales deductions include trade discounts, sales returns and allowances. Sales deductions incurred in the same period of the related sales of products, goods and services are recorded as deduction of revenue of that period. Sales deductions for products, goods or services which are sold in the period but are incurred after the balance sheet date but before the issuance of the consolidated financial statements are recorded as deduction of revenue of the period.
2.26
Cost of sales Cost of goods sold or cost of services are cost of finished goods, merchandises, materials sold or services provided during the period, and recorded on the basis of matching with revenue and on prudent concept. Financial Statements 2017
207
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.27
Financial expenses Finance expenses are expenses incurred in the period for financial activities including interest expenses, expenses of borrowing and issuing bonds, losses incurred when selling foreign currencies, losses from foreign exchange differences and payment discounts.
2.28
Selling expenses Selling expenses represent expenses that are incurred in the process of selling products, goods, and providing services, which mainly include publicity, display, promotions, advertising expenses and sale commissions.
2.29
General and administration expenses General and administration expenses represent expenses for administrative purposes which mainly include salary expenses of administrative staffs (salaries, wages, allowances,...); social insurance; medical insurance; labour union fees; unemployment insurance of administrative staff; expenses of office materials; tools and supplies; depreciation of fixed assets used for administration; provision for bad debts; outside services and other expenses.
2.30
Dividend distribution Dividend of the Group is recognised as a liability in the Groupâ&#x20AC;&#x2122;s consolidated financial statements in the period in which the dividends are approved by the Groupâ&#x20AC;&#x2122;s General Meeting of shareholders.
2.31
Current and deferred income tax Income taxes include all income taxes which are based on taxable profits including profits generated from production and trading activities in other countries with which the Socialist Republic of Vietnam has not signed any double taxation agreement. Income tax expense comprises current tax expense and deferred tax expense. Current income tax is the amount of income taxes payable or recoverable in respect of the current year taxable profits at the current year tax rates. Current and deferred tax should be recognised as an income or an expense and included in the profit or loss of the period, except to the extent that the tax arises from a transaction or event which is recognised, in the same or a different period, directly in equity. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of occurrence affects neither the accounting nor the taxable profit or loss. Deferred income tax is determined at the tax rates that are expected to apply to the financial year when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
208
BRIGHTEN LIVES
Form B 09 – DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.32
Related parties Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Group, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Group. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Group that gives them significant influence over the enterprise, key management personnel, including directors of the Group and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering the related party relationship, the Group considers the substance of the relationship not merely the legal form.
2.33
Segment reporting A segment is a component which can be separated by the Group engaged in providing products or services (business segment), or providing products or services within a particular economic environment (geographical segment). Each segment is subject to risks and returns that are different from those of other segments. A reportable segment is the Group’s business segment or the Group’s geographical segment. Segment reporting is prepared and presented in accordance with accounting policies applied to the preparation and presentation of the Group’s consolidated financial statements in order to help users of consolidated financial statements understand and evaluate the Group’s operations in a comprehensive way.
2.34
Accounting estimate The consolidated financial statements have been prepared in accordance with Vietnamese Accounting Standards requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of assets and contingent liabilities at the date of the financial statements as well as the amounts of revenues and expenses for the reporting period. Although the accounting estimate is made all the knowledge of the Board of Management, the actual results may differ from those estimates.
Financial Statements 2017
209
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
3 3.1 (a)
BUSINESS COMBINATION Acquisition during the year Acquisition of Bach Hop Real Estate Company Limited (“Bach Hop”) On 24 February 2017, the Group completed the acquisition of 99.99% of voting shares of Bach Hop with a consideration of VND212,978,700,000. This business combination impacts to the net assets of the Group at the acquisition date as follows:
Fair values recognised at acquisition date VND Assets Cash and cash equivalents Investment in associates Other assets
328,941,925 212,699,604,660 20,603,998 213,049,150,583
Liabilities Total identifiable net assets
213,032,650,583
Gain on bargain purchase
(32,647,318)
Non-controlling interests
(21,303,265)
Purchase consideration transferred Cash acquired Net cash outflow on acquisition
210
16,500,000
BRIGHTEN LIVES
212,978,700,000 (328,941,925) 212,649,758,075
Form B 09 – DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
3
BUSINESS COMBINATION (continued)
3.1
Acquisition during the year (continued)
(b) Acquisition of Phu Dinh Port Joint Stock Company (“Phu Dinh Port”) On 23 March 2017, the Group completed the acquisition of 83.45% of voting shares of Phu Dinh Port with a consideration of VND1,520,038,533,551. This business combination impacts to the net assets of the Group at the acquisition date as follows:
Fair values recognised at acquisition date VND Assets Cash and cash equivalents
113,568,838,315
Short-term receivables
504,045,727,244
Inventories
939,186,906,421
Fixed assets
125,876,084,670
Deferred income tax assets Other assets
4,911,136,870 47,116,040,560 1,734,704,734,080
Liabilities Liabilities Deferred income tax liabilities
38,081,690,305 141,948,247,357 180,029,937,662
Total identifiable net assets
1,554,674,796,418
Goodwill
222,650,683,358
Non-controlling interests
(257,286,946,225)
Purchase consideration transferred First consideration which measured at equity method at the date had control
492,995,002,699
Revaluation of the investments in associate at the acquisition date
340,244,330,852
Second consideration at the acquisition date
686,799,200,000
Cash acquired Accumulated profit after tax shared from associates Net cash outflow on acquisition
(257,954,039) 1,065,967,410,345
The goodwill of VND222,650,683,358 arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Group and Phu Dinh Port.
Financial Statements 2017
211
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
3
BUSINESS COMBINATION (continued)
3.1
Acquisition during the year (continued)
(c)
Acquisition of Sai Gon Golf Company Limited (“Sai Gon Golf”) On 14 April 2017, the Group completed the acquisition of 98.02% of voting shares of Saigon Golf with a consideration of VND1,422,789,842,584. This business combination impacts to the net assets of the Group at the acquisition date as follows:
Fair values recognised at acquisition date VND Assets Cash and cash equivalents Short-term receivables Inventories Other assets
265,163,256 8,466,564,233 1,622,366,571,571 284,310,775,116 1,915,409,074,176
Liabilities Liabilities
360,717,653,159
Deferred income tax liabilities
271,176,993,311 631,894,646,470
Total identifiable net assets Goodwill Non-controlling interests Purchase consideration transferred
1,283,514,427,706 149,037,021,109 (9,761,606,231) 1,422,789,842,584
First consideration which measured at equity method at the date had control
150,459,350,619
Revaluation of the investments in associate at the acquisition date
626,886,359,890
Second consideration at the acquisition date
645,444,132,075
Cash acquired
(265,163,256)
Accumulated profit after tax shared from associate
(459,350,619)
Net cash outflow on acquisition
795,178,968,819
The goodwill of VND149,037,021,109 arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Group and Sai Gon Golf.
212
BRIGHTEN LIVES
Form B 09 – DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
3
BUSINESS COMBINATION (continued)
3.1
Acquisition during the year (continued)
(d)
Acquisition of Gia Duc Real Estate Company Limited (“Gia Duc”) On 26 April 2017, the Group completed the acquisition of 99.99% of voting shares of Gia Duc with the consideration of VND1,938,950,000,000. This business combination impacts to the net assets of the Group at the acquisition date as follows:
Fair values recognised at acquisition date VND Assets Cash and cash equivalents (*) Investment in associates (*) Other assets
1,380,971,033,059 558,220,040,000 20,189,712,949 1,959,380,786,008
Liabilities Total identifiable net assets Goodwill Non-controlling interests Purchase consideration transferred Cash acquired Net cash outflow on acquisition
20,758,271,728 1,938,622,514,280 521,347,971 (193,862,251) 1,938,950,000,000 (1,380,971,033,059) 557,978,966,941
The goodwill of VND521,347,971 arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Group and Gia Duc. (*) On 24 March 2017, Gia Duc’s investment in other entities was VND1,938,776,000,000. During the year, this investment was reduced to VND558,220,040,000 as the investee reduced its capital, the difference of VND1,380,555,960,000 was paid back to Gia Duc in cash.
Financial Statements 2017
213
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
3
BUSINESS COMBINATION (continued)
3.1
Acquisition during the year (continued)
(e)
Acquisition of Gia Phu Real Estate Company Limited (“Gia Phu”) On 23 August 2017, the Group completed the acquisition of 99.96% of voting shares of Gia Phu with the consideration of VND1,312,493,000,000. This business combination impacts to the net assets of the Group at the acquisition date as follows:
Fair values recognised at acquisition date VND Assets Cash and cash equivalents
189,901,177,618
Short-term prepayments to suppliers
550,904,928,761
Short-term lending
490,000,000,000
Long-term lending
449,644,400,000
Other long-term receivables Inventories Deferred income tax assets Other assets
55,526,940,835 3,235,747,113,467 9,858,618,092 71,450,897,999 5,053,034,076,772
Liabilities Liabilities Deferred income tax liabilities
3,676,970,084,384 70,001,266,549 3,746,971,350,933
Total identifiable net assets
1,306,062,725,839
Goodwill
6,558,892,248
Non-controlling interests
(128,618,087)
Purchase consideration transferred Cash acquired Net cash outflow on acquisition
1,312,493,000,000 (189,901,177,618) 1,122,591,822,382
The goodwill of VND6,558,892,248 arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Group and Gia Phu.
214
BRIGHTEN LIVES
Form B 09 – DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
3
BUSINESS COMBINATION (continued)
3.1
Acquisition during the year (continued)
(f)
Acquisition of a group of companies: Nova Riverside Real Estate Company Limited (“Nova Riverside”) and Anh Sao Real Estate Company Limited (“Anh Sao”) On 18 August 2017, the Group completed the acquisition of 99.98% of voting shares of Nova Riverside with the consideration of VND1,114,948,187,500. Through this acquisition, the Group also controlled Anh Sao because Nova Riverside held 99.99% interest in Anh Sao. This business combination impacts to the net assets of the Group at the acquisition date as follows:
Fair values recognised at acquisition date VND Assets Cash and cash equivalents
663,771,535
Short-term prepayments to suppliers
307,013,687,488
Short-term lending
538,570,412,672
Other short-term receivables
620,230,320,931
Inventories
2,447,029,855,498
Deferred income tax assets
64,630,576,814
Other assets
99,710,811,432 4,077,849,436,370
Liabilities Total identifiable net assets Goodwill Non-controlling interests Purchase consideration transferred Cash acquired Net cash outflow on acquisition
3,219,059,789,520 858,789,646,850 256,555,800,905 (397,260,255) 1,114,948,187,500 (663,771,535) 1,114,284,415,965
The goodwill of VND256,555,800,905 arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Group and the group of companies Nova Riverside and Anh Sao.
Financial Statements 2017
215
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
3
BUSINESS COMBINATION (continued)
3.1
Acquisition during the year (continued)
(g)
Acquisition of Merufa-Nova Company Limited (“Merufa-Nova”) On 12 October 2017, the Group completed the acquisition of 99.89% of voting shares of Merufa-Nova with the consideration of VND130,240,000,000. This business combination impacts to the net assets of the Group at the acquisition date as follows:
Fair values recognised at acquisition date VND Assets Cash and cash equivalents Short-term receivables Inventories Deferred income tax assets Other assets
1,485,578,315 82,454,032,441 161,432,230,694 264,052,907 23,144,921,639 268,780,815,996
Liabilities Liabilities Deferred income tax liabilities
133,768,370,522 2,213,731,421 135,982,101,943
Total identifiable net assets Gain on bargain purchase Non-controlling interests Purchase consideration transferred Cash acquired Net cash outflow on acquisition
216
BRIGHTEN LIVES
132,798,714,053 (2,425,745,009) (132,969,044) 130,240,000,000 (1,485,578,315) 128,754,421,685
Form B 09 – DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
3
BUSINESS COMBINATION (continued)
3.1
Acquisition during the year (continued)
(h)
Acquisition of Nhat Hoa Real Estate Joint Stock Company (“Nhat Hoa”) On 12 October 2017, the Group completed the acquisition in order to obtain 99.81% interest in Nhat Hoa with the total consideration of VND585,010,759,109. This business combination impacts to the net assets of the Group at the acquisition date as follows:
Fair values recognised at acquisition date VND Assets Cash and cash equivalents Short-term prepayments to suppliers Short-term lending Other short-term receivables Inventories Deferred income tax assets Other assets
155,252,799 411,919,121,770 48,809,459,077 234,729,198,447 1,165,677,786,315 2,668,187,281 28,757,775,372 1,892,716,781,061
Liabilities Liabilities Deferred income tax liabilities
1,303,697,953,178 17,936,638,115 1,321,634,591,293
Total identifiable net assets Goodwill Non-controlling interests Purchase consideration transferred Cash acquired Net cash outflow on acquisition
571,082,189,768 14,031,988,140 (103,418,799) 585,010,759,109 (155,252,799) 584,855,506,310
The goodwill of VND14,031,988,140 arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Group and Nhat Hoa.
Financial Statements 2017
217
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
3
BUSINESS COMBINATION (continued)
3.2
Disposals and merging during the year
(a)
Disposal of Vuong Cung Real Estate Investment Company Limited (“Vuong Cung”) On 9 March 2017, the Group disposed the entire 99.99% equity interest in Vuong Cung with a total consideration of VND19,998,000,000. The loss of VND392,941,245 which is the difference between the consideration and the carrying value of net assets transferred, was recognised in the consolidated income statement of profit or loss (Note 33).
(b)
Disposal of Hung Duc Real Estate Company Limited (“Hung Duc”) On 30 April 2017, the Group disposed the entire 70.00% equity interest in Hung Duc with a total consideration of VND174,825,000,000. The loss of VND315,199,608 which is the difference between the consideration and the carrying value of net assets transferred, was recognised in the consolidated income statement (Note 33).
(c)
Disposal of Nova Galaxy Real Estate Joint Stock Company (“Galaxy”) On 3 August 2017, the Group disposed the entire 99.98% equity interest in Galaxy with a total consideration of VND624,059,698,895. The gain of VND63,404,939,309 which is the difference between the consideration and the carrying value of net assets transferred, was recognised in the consolidated income statement (Note 32).
(d)
Disposal of Nova Lexington Real Estate Joint Stock Company (“Lexington”) On 24 August 2017, the Group disposed the entire 99.90% equity interest in Lexington with a total consideration of VND647,212,700,000. The gain of VND29,079,181,869 which is the difference between the consideration and the carrying value of net assets transferred, was recognised in the consolidated income statement (Note 32).
(e)
Disposal of Nova Phu Sa Ecotourism Joint Stock Company (“Nova Phu Sa Ecotourism”) On 30 August 2017, the Group disposed the entire 99.00% equity interest in Nova Phu Sa Ecotourism with a total consideration of VND5,940,000,000. The loss of VND31,644,250 which is the difference between the consideration and the carrying value of net assets transferred, was recognised in the consolidated income statement (Note 33).
(f)
Disposal of Nova Phu Sa Investment and Development Joint Stock Company (“Nova Phu Sa Investment”) On 30 August 2017, the Group disposed the entire 99.98% equity interest in Nova Phu Sa Investment with a total consideration of VND5,998,800,000. The loss of VND49,985,790 which is the difference between the consideration and the carrying value of net assets transferred, was recognised in the consolidated income statement (Note 33).
(g)
Merged Phu Viet Tin Company Limited into Nova Phuc Nguyen Real Estate Development and Investment Company Limited On 13 April 2017, the Group completely merged Phu Viet Tin Company Limited into Nova Phuc Nguyen Real Estate Development and Investment Company Limited. Accordingly, all assets, liabilities and owner’s equity of Phu Viet Tin Company Limited were transferred to Nova Phuc Nguyen Real Estate Development and Investment Company Limited.
218
BRIGHTEN LIVES
Form B 09 – DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
3
BUSINESS COMBINATION (continued)
3.2
Disposals and merging during the period (continued) Merged Thanh Nien Real Estate Joint Stock Company into Nova Rivergate Company Limited
(h)
On 17 August 2017, the Group completely merged Thanh Nien Real Estate Joint Stock Company into Nova Rivergate Company Limited. Accordingly, all assets, liabilities and owner’s equity of Thanh Nien Real Estate Joint Stock Company were transferred to Nova Rivergate Company Limited. (i)
Merged Anh Sao Real Estate Company Limited into Nova Riverside Real Estate Company Limited On 14 September 2017, the Group completely merged Anh Sao Real Estate Company Limited into Nova Riverside Real Estate Company Limited. Accordingly, all assets, liabilities and owner’s equity of Anh Sao Real Estate Company Limited were transferred to Nova Riverside Real Estate Company Limited.
4
CASH AND CASH EQUIVALENTS
2017
2016
VND
VND
1,720,245,875
679,014,510
Cash at bank
1,196,390,638,971
807,536,880,783
Cash equivalents (*)
5,452,050,109,895
2,528,753,537,498
6,650,160,994,741
3,336,969,432,791
Cash on hand
(*) Cash equivalents are term deposits in Vietnamese Dong at commercial banks with an original maturity of 3 months or less and earn an interest rate from 2.3% to 6.0% per annum (as at 31 December 2016: from 4.5% to 5.5% per annum). As at 31 December 2017, cash and cash equivalents of VND496,752 million (as at 31 December 2016: VND1,137,281 million) were pledged as collateral assets for the bank loans and VND1,350,972 million (as at 31 December 2016: VND943,271 million) were managed by bank under purpose of borrowings for each project.
Financial Statements 2017
219
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
5 INVESTMENTS (a)
Investments held to maturity
2017 Cost Carrying value VND VND Term deposits
512,509,850,676
512,509,850,676
2016 Cost Carrying value VND
VND
964,822,616,829
964,822,616,829
The term deposits represent bank deposits in VND with an original maturity of more than three months and the remaining term not exceed twelve months at the commercial banks with interest from 5.0% to 9.0% per annum (as at 31 December 2016: from 5.7% to 6.8% per annum).
(b)
As at 31 December 2017, the term deposits of VND11,671 million (as at 31 December 2016: VND1,537 million) were pledged as collateral assets for the bank loans and no term deposits were managed by bank under purpose of borrowings for each project (as at 31 December 2016: VND960,536 million). Long-term investments
2017
Investments in associates (i) Other long term investments (ii)
Cost Fair value Provision
Cost Fair value Provision
VND
VND
VND
VND
VND
VND
1,042,972,935,246
(*)
-
371,670,632,914
(*)
-
-
(*)
-
3,115,200,000
(*)
-
-
374,785,832,914
1,042,972,935,246
220
BRIGHTEN LIVES
2016
-
Real estate trading
Real estate trading
Sun City Real Estate Development and Investment Company Limited (**)
Ben Thanh Housing Service and Development Company Joint Stock Company
Real estate trading
Nova Dong Hai Joint Stock Company
-
-
-
-
-
-
-
VND
371,670,632,914
10,037,064,563
150,598,742,092
133,176,686,804
14,297,950,313
63,560,189,142
-
VND
Cost
(*)
(*)
(*)
(*)
(*)
-
VND
Fair value
-
-
-
-
-
-
-
VND
Provision
On 6 September 2017, the Group held 49% controlling interests of Sun City Real Estate Development and Investment Company Limited by the total contribution of VND955.5 billion.
Phu Dinh Port Joint Stock Company and Sai Gon Golf Company Limited became subsidiaries of the Group during the year 2017 through business combination achieved in stepsâ&#x20AC;&#x2122; acquisition (Note 3.1).
(***)
As at 31 December 2017 and 31 December 2016, the Group was not able to disclose the fair value of these investments as they were not listed in the stock market. As a result, their fair values information was not available.
1,042,972,935,246
-
-
-
(*)
(*)
(*)
VND
Fair Provivalue sion
2016
(**)
((*)
-
Real estate trading
Sai Gon Golf Company Limited (***) -
-
4,566,153,588
65,803,452,997
972,603,328,661
VND
Cost
2017
Service supporting in relation Phu Dinh Port Joint Stock Company (***) to transportation, real estate trading
Sai Gon Electronics and Industrial Service Electronics and Joint Stock Company telecommunication trading
The principal activity
Investments in associates
(i)
Name
Investments in other entities (continued)
(b)
5 INVESTMENTS (continued) Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
Financial Statements 2017
221
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
5
INVESTMENTS (continued)
(b)
Investments in other entities (continued)
(i)
Investments in associates (continued) Movements in the investments in associates during the year were as follows:
2017
2016
VND
VND
371,670,632,914
1,526,233,919,261
1,315,207,564,660
40,000,000,000
12,079,426,593
498,537,487
Transfers from subsidiaries to associates
-
150,598,742,092
Transfers from associates to subsidiaries
(643,454,353,318)
(1,342,290,520,919)
(2,400,000,000)
(1,200,000,000)
(10,130,335,603)
(1,968,405,512)
-
(201,639,495)
1,042,972,935,246
371,670,632,914
Beginning of year Increase in additional investments Profit sharing from investments in associates
Dividend received Disposals Others End of year
222
BRIGHTEN LIVES
(*)
-
%
-
VND
-
VND
Cost Fair value
2017
-
VND VND
Cost
11.80 3,115,200,000
%
Ownership and voting Provision rights
2016
(*)
VND
-
VND
Fair value Provision
As at 31 December 2016, the Group did not disclose the fair value of this investment as it was not listed in the stock market. There was no fair value information available of this investment.
Retailing food, fabric, Nam A Footwear thread and textile; Import Export Joint producing and trading Stock Company footwear and handbags
Principal activity
Other long-term investments
(ii)
Name
Investments in other entities (continued)
(b)
Ownership and voting rights
INVESTMENTS (continued)
5 Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
Financial Statements 2017
223
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
6
SHORT-TERM TRADE ACCOUNTS RECEIVABLE
2017
2016
VND
VND
308,351,265,168
276,792,721,491
40,183,233,814
42,324,948,220
42,181,367,389
14,105,859,709
390,715,866,371
333,223,529,420
Trade receivables from sale of real estate Third parties (*) Related parties (Note 41(b)) Trade receivables from rendering services Third parties (*)
(*) As at 31 December 2017 and 31 December 2016, there was no third party trade accounts receivables accounting for 10% or more of the total the short-term trade accounts receivable balance. Provisions for short-term trade accounts receivable were presented at Note 10. As at 31 December 2017, there was no balance of short-term trade accounts receivables which was past due or not past due but doubtful. 7
SHORT-TERM PREPAYMENTS TO SUPPLIERS
2017
2016
VND
VND
-
52,000,000,000
Silver Field International Trading Company Limited (formerly known as MIK International Business Corporation)
500,000,000,000
-
Sai Gon General Service Corporation
320,189,629,546
46,070,042,873
Kien A Investment And Services Company Limited
200,000,000,000
-
62,005,207,646
93,757,653,303
Tan Ky Construction Real Estate Trading Corporation
-
143,924,098,922
An Phu An Real Estate Company Limited
-
111,343,000,000
689,149,637,088
489,698,847,155
1,771,344,474,280
936,793,642,253
Related parties (Note 41(b)) Third parties (*)
Florida Yachts International Company
Others
Provisions for short-term prepayments to suppliers were presented at Note 10. As at 31 December 2017, there was no balance of short-term prepayments to suppliers which was past due or not past due but doubtful.
224
BRIGHTEN LIVES
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
8
SHORT-TERM LENDING
(a)
Short-term lending
2017
2016
VND
VND
43,420,000,000
43,420,000,000
350,000,000,000
-
CQ89 Real Estate Investment and Development Company Limited (*)
-
2,106,700,000,000
Gia Phu Real Estate Company Limited (*)
-
311,580,408,814
Song Giang Investment and Development Company Limited (*)
-
255,380,000,000
232,185,206,171
596,578,184,697
625,605,206,171
3,313,658,593,511
Related parties (Note 41(b)) Third parties Thinh Vuong Real Estate Company Limited (Note 8(b))
Others (*)
(*) These are the short-term loans to third parties which are unsecured and earn interest at rate from 5.0% to 10.9% per annum (as at 31 December 2016: from 5.0% to 12.2% per annum). The maturity of these loans are from 5 to 12 months (b)
Long-term lending This is a long-term loan to Thinh Vuong Real Estate Company Limited which is unsecured and earns interest at a rate of 10.6% per annum. The maturity of this loan is 36 months. As at 31 December 2017 and 31 December 2016, there was no balance of lending which was past due or not past due but doubtful.
Financial Statements 2017
225
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
9
OTHER RECEIVABLES
(a)
Other short-term receivables
2017
2016
Cost Provision
Cost Provision
VND
VND
VND
VND
1,831,712,600,000
-
248,061,940,913
-
Deposits for the contract related to investment consultancy services (**)
406,589,287,268
-
2,600,713,192,246
-
Interest receivables from term deposits and lending
360,154,008,671
-
182,157,995,996
-
Advances for projects
351,489,334,396
-
366,734,361,189
-
Deposits
107,146,699,034
-
125,996,829,272
-
49,000,000,000
-
912,750,000,000
-
-
-
233,420,000,000
-
104,407,424,825
-
395,899,781,568
-
Project development and investment co-operation (*)
Deposits for shares acquisition (***) Deposits for project transfers Others
3,210,499,354,194
5,065,734,101,184
In which, the balances with related parties and third parties were as follows: Third parties Related parties (Note 41(b))
3,146,763,909,150
-
4,705,049,035,768
-
63,735,445,044
-
360,685,065,416
-
3,210,499,354,194 (*)
(**)
5,065,734,101,184
This balance represents project development and investment co-operation with CQ89 Real Estate Investment and Development Company Limited. These amounts will be repaid in full to the Group at the end of the projects. The Group will be entitled to a fixed interest amount annually; in addition, the Group will receive profits at the end of the projects in accordance with agreed sharing ratio in the agreement. This balance represents deposits as an amount guaranteed for the investment consultancy agreements with partners that are mainly in relation to SSR Real Estate Investment and Development Limited Company. According to the agreements, the partners will consult, identify and select appropriate projects, consulting fee will be paid based on the percentage of successful transactions.
(***) These deposits for share acquisition of companies which the Group is investing, these deposits will be recognised as investments in subsidiaries or associates when the Group completes share transfers.
226
BRIGHTEN LIVES
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
9
OTHER RECEIVABLES (continued)
(b)
Other long-term receivables
2017
Deposits for projects (*) Project development and investment co-operation (Note 9(a)) Others
2016
Cost
Provision
Cost
Provision
VND
VND
VND
VND
186,484,661,758
-
114,284,000,000
-
-
-
782,536,582,050
-
17,318,704,984
14,197,971,211
-
203,803,366,742
911,018,553,261
In which, the balances with related parties and third parties were as follows: Third parties Related parties (Note 41(b))
202,404,590,742
-
504,619,777,261
1,398,776,000
-
406,398,776,000
203,803,366,742
-
911,018,553,261
(*) This balance represents long-term deposit at the Department of Planning and Investment as an amount guaranteed for performing the projects. As at 31 December 2017 and 31 December 2016, there was no balance of other long-term receivables which was past due or not past due but doubtful.
Financial Statements 2017
227
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
10
DOUBTFUL DEBTS
2017 Cost
Recoverable amount
VND
VND
-
-
-
-
-
-
Short-term trade account receivables that are past due Vietnam Joint Stock Commercial Bank for Industry and Trade (*) Short-term prepayments to suppliers that are past due North Phi Kha Commerce Service Manufacturing Company Limited
(*) As of the date of these consolidated financial statements, the amount receivable from Vietnam Joint Stock Commercial Bank for Industry and Trade was fully collected.
11 INVENTORIES (a) Inventories
2017 Cost VND
Provision VND
Cost
Provision
VND
VND
Properties in construction progress (i)
24,446,674,606,321
-
15,127,829,614,894
-
Properties in construction completion (ii)
2,449,747,339,621
(3,276,069,352)
487,034,387,442
(5,395,666,184)
226,949,654,864
(4,245,610,900)
176,783,952,157
-
12,946,946,857
-
3,389,659,763
-
27,136,318,547,663
(7,521,680,252) 15,795,037,614,256
(5,395,666,184)
(7,521,680,252)
(5,395,666,184)
27,128,796,867,411
15,789,641,948,072
Property merchandises Tools and equipment Provision for decline in value of inventories
228
2016
BRIGHTEN LIVES
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
2016
Provision
Number of overdue days
Cost
Recoverable amount
Provision
Number of overdue days
VND
Days
VND
VND
VND
Days
-
26,004,993,270
18,203,495,289
7,801,497,981
Dưới 1 năm
-
5,860,311,161
-
5,860,311,161
Trên 3 năm
-
5,860,311,161
-
5,860,311,161
Movements in the provision for decline in value of inventories during the year were as follows:
2017
2016
VND
VND
Opening balance
(5,395,666,184)
(42,889,553,945)
Increase
(4,846,915,964)
(1,728,453,945)
Reversal
2,720,901,896
39,222,341,706
(7,521,680,252)
(5,395,666,184)
Closing balance
(i) As at 31 December 2017, the properties in construction progress mainly include land costs, construction costs, consulting and designing fees and other costs relating to the projects. (ii) As at 31 December 2017, the balance presents the properties in construction completion for sale. As at 31 December 2017, the Group’s inventories of VND7,406,736 million (as at 31 December 2016: VND2,314,035 million) were pledged as collateral assets for loans. Total amount of interest expenses capitalised into value of inventories during the year was VND131,293 million (2016: VND111,971 million).
Financial Statements 2017
229
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
11 (b)
INVENTORIES (continued) Long-term work in progress
12
The balance represents the value of properties in construction progress of projects located in Ho Chi Minh City. These projects are in progress of completing the paper works due to changes in usage purpose. PREPAID EXPENSES
(a)
Short-term prepaid expenses
Tools and equipment Deferred expenses
(b)
2017
2016
VND
VND
1,072,191,258
2,482,258,721
102,952,441,928
49,256,022,026
104,024,633,186
51,738,280,747
Long-term prepaid expenses
2017
2016
VND
VND
Deferred expenses
274,296,639,404
174,383,199,394
Prepayment expenses for parking lot
116,901,818,182
-
Compensation cost for land clearance
41,932,114,168
-
Interest expenses from issuing bonds
8,296,729,396
92,425,330,834
Tools and equipment
7,924,870,527
21,268,916,161
449,352,171,677
288,077,446,389
Movements in long-term prepaid expenses during the year were as follows:
2017
2016
VND
VND
Opening balance
288,077,446,389
160,651,074,570
Additions
308,946,758,502
242,660,269,430
27,130,420,628
15,667,954,697
117,203,900,546
3,550,973,399
(235,203,626,186)
(134,391,192,497)
Decrease from disposal of subsidiaries
(56,802,728,202)
(61,633,210)
Closing balance
449,352,171,677
288,077,446,389
Transfers from construction in progress (Note 16) Increase from acquisition of subsidiaries Allocation
230
BRIGHTEN LIVES
13
163,256,895,658
As at 31 December 2017
8,522,283,030
6,948,410,031
(9,724,288,173)
2,365,339,789
1,012,112,453
(413,005,914)
(2,377,953,658)
-
(10,310,780,843)
18,246,571,203
(3,414,089,100)
(1,974,086,773)
-
976,893,101
5,398,663,101
-
93,290,206,940
57,512,704,818
(20,731,612,447)
1,005,159,086
4,056,793,215
(720,383,511)
(11,573,285,020)
-
(13,499,896,217)
114,021,819,387
(3,606,693,819)
(12,919,497,732)
38,303,709,498
1,693,777,859
19,537,922,546
-
71,012,601,035
VND
Motor Vehicles
16,715,106,908
14,388,631,824
(11,453,533,054)
4,186,400,641
164,641,650
(536,725,487)
(5,395,142,719)
(875,936,298)
(8,996,770,841)
28,168,639,962
(8,709,415,193)
(210,259,316)
-
1,178,465,361
7,360,203,713
5,164,242,732
23,385,402,665
VND
Office equipment
There were no tangible fixed assets pledged as collateral assets for the bank loans.
7,907,797,105
6,290,442,639
(74,172,577,487)
(27,394,795,209)
-
(41,954,191,017)
411,168,923,089
(16,303,662,018)
(16,432,961,364)
38,303,709,498
207,448,385,012
37,239,056,644
(1,220,042,002)
162,134,437,319
VND
Total
61,106,584
514,554,458
281,845,599,120
120,180,246,302
(280,502,507) (129,323,323,969)
350,897,589
-
-
(230,881,557)
-
(400,518,539)
341,609,091
(573,463,906)
-
-
-
-
-
915,072,997
VND
Others
Cost of fully depreciated tangible fixed assets but still in use was VND17,343 million (as at 31 December 2016: VND24,543 million).
40,815,945,171
(87,133,387,788)
-
As at 1 January 2017
Net book value
As at 31 December 2017
Decrease from disposal of subsidiaries
1,056,895,321
(72,502,462,575)
Increase from acquisition of subsidiaries
Disposals
(7,817,532,255)
875,936,298
(8,746,224,577)
250,390,283,446
-
(1,329,117,543)
-
203,599,248,691
4,942,267,284
Charge for the year
Reclassification
As at 1 January 2017
Accumulated depreciation
As at 31 December 2017
Decrease from disposal of subsidiaries
Disposals
Transfers from construction in progress (Note 16)
Increase from acquisition subsidiaries
Additions
(6,384,284,734)
Reclassification
17,259,190,874
VND
VND 49,562,169,748
Machinery
Buildings
As at 1 January 2017
Historical cost
TANGIBLE FIXED ASSETS Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
Financial Statements 2017
231
14
232
BRIGHTEN LIVES
34,880,498,260
As at 31 December 2017
-
Increase from acquisition of subsidiaries
Disposals
As at 31 December 2017
34,880,498,260
-
42,408,350
(30,000,000)
112,225,000
-
(42,408,350)
(99,816,650)
30,000,000
(112,225,000)
-
-
-
-
9,883,341,982
3,199,669,435
(5,750,992,301)
-
(142,250,000)
(4,326,198,686)
(1,282,543,615)
15,634,334,283
-
150,000,000
3,057,100,000
7,945,021,233
-
4,482,213,050
VND
Software
44,763,840,242
28,642,968,853
(5,780,992,301)
112,225,000
(142,250,000)
(4,368,607,036)
(1,382,360,265)
50,544,832,543
(2,975,162,000)
150,000,000
3,057,100,000
19,067,523,423
1,220,042,002
30,025,329,118
VND
Total
There were no intangible fixed assets pledged as collateral assets for bank loans granted to the Group.
As at 31 December 2017, cost of fully depreciated intangible fixed assets but still in use was VND351 million (as at 31 December 2016: VND167 million).
As at 31 December 2017
As at 1 January 2017
25,400,891,068
-
Charge for the year
Net book value
-
As at 1 January 2017
Accumulated amortisation
(2,862,937,000)
-
Increase from acquisition of subsidiaries
Disposals
-
11,122,502,190
Additions
Transfers from construction in progress (Note 16)
1,220,042,002
Reclassification
142,225,000
VND
VND 25,400,891,068
Brandname and trade mark
Land use rights
As at 1 January 2017
Historical cost
INTANGIBLE FIXED ASSETS
Notes to the consolidated financial statements Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
15
INVESTMENT PROPERTIES
Land use rights
Buildings
Total
VND
VND
VND
As at 1 January 2017
157,058,664,724
1,865,012,326,934
2,022,070,991,658
Additions
930,957,140,000
2,400,000,000
933,357,140,000
Transfers from inventories
-
390,346,006,607
390,346,006,607
Disposal
-
(4,028,035,204)
(4,028,035,204)
Transfers to inventories
-
(102,697,411,793)
(102,697,411,793)
Decrease from disposal of subsidiaries
-
(183,416,432,992)
(183,416,432,992)
1,088,015,804,724
1,967,616,453,552
3,055,632,258,276
As at 1 January 2017
-
(77,057,881,406)
(77,057,881,406)
Charge for the year
-
(49,797,055,229)
(49,797,055,229)
Transfers to inventories
-
2,793,412,320
2,793,412,320
Disposal
-
895,118,928
895,118,928
Decrease from disposal of subsidiaries
-
12,150,681,310
12,150,681,310
As at 31 December 2017
-
(111,015,724,077)
(111,015,724,077)
157,058,664,724
1,787,954,445,528
1,945,013,110,252
1,088,015,804,724
1,856,600,729,475
2,944,616,534,199
Historical cost
As at 31 December 2017 Accumulated amortisation
Net book value As at 1 January 2017 As at 31 December 2017
As at 31 December 2017, investment properties pledged as security for bank borrowings granted to the Group was VND1,271,830 million (as at 31 December 2016: nil). 16
CONSTRUCTION IN PROGRESS
2017
2016
VND
VND
Purchase of assets
89,582,304,871
8,624,757,938
Office renovation
20,731,302,400
23,467,075,191
Showhouses
20,211,429,150
13,870,661,095
6,371,405,943
5,417,294,204
136,896,442,364
51,379,788,428
Others
Financial Statements 2017
233
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
16
CONSTRUCTION IN PROGRESS (continued) Movements in the construction in progress during the year were as follows:
2017
2016
VND
VND
51,379,788,428
1,069,151,366,643
Increase
176,621,475,784
461,819,737,956
Transfers to tangible fixed assets (Note 13)
(38,303,709,498)
(9,351,349,491)
(3,057,100,000)
-
-
(10,819,815,083)
(1,380,309,663)
(1,434,713,119,624)
Transfers to long-term prepaid expenses (Note 12(b))
(27,130,420,628)
(15,667,954,697)
Transfers to short-term prepaid expenses
(3,835,466,021)
-
-
(7,861,433,012)
Other decreases
(17,397,816,038)
(1,177,644,264)
End of year
136,896,442,364
51,379,788,428
2017
2016
VND
VND
2,217,606,029,051
1,119,884,733,917
Increase (*)
649,355,733,731
1,917,657,294,239
Decrease from disposal of subsidiaries (**)
(54,862,071,860)
(597,391,461,867)
Decrease from merging of subsidiaries (**)
(146,640,884,246)
-
Allocation
(259,231,617,302)
(222,544,537,238)
End of year
2,406,227,189,374
2,217,606,029,051
Beginning of year
Transfers to intangible fixed assets (Note 14) Transfers to investment properties Transfers to inventories
Decrease from disposal of subsidiaries
17 GOODWILL
Beginning of year
234
BRIGHTEN LIVES
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
17
GOODWILL (continued) (*) Details of goodwill arising from business combinations during the year and estimated allocation period are as below:
Phu Dinh Port Joint Stock Company Gia Duc Real Estate Company Limited Sai Gon Golf Company Limited Gia Phu Real Estate Company Limited Nova Riverside Real Estate Company Limited Nhat Hoa Real Estate Joint Stock Company
Goodwill
Allocation period
VND
Year
222,650,683,358
10
521,347,971
10
149,037,021,109
10
6,558,892,248
10
256,555,800,905
10
14,031,988,140
10
649,355,733,731 Details of goodwill arising from business combinations were presented in Note 3. (**) Decrease in goodwill is mainly relating to divestment of subsidiaries including: Vuong Cung Real Estate Investment Company Limited, Nova Galaxy Real Estate Joint Stock Company and Nova Lexington Real Estate Joint Stock Company and merging of Phu Viet Tin Company Limited with Nova Phuc Nguyen Real Estate Development and Investment Company Limited, a subsidiary. 18
SHORT-TERM TRADE ACCOUNTS PAYABLE
2017
2016
VND
VND
619,680,395,588
679,680,395,588
Third parties Henry Enterprise Group Company Limited Hoa Binh Construction and Real Estate Trading Joint Stock Company Nova Homes Trading Joint Stock Company Others (*)
84,896,786,277 336,914,898,682
41,374,058,935
1,198,175,647,275
699,777,187,859
2,648,333,517,795
1,505,728,428,659
As at 31 December 2017 and 31 December 2016, the Company had no short-term trade accounts payable overdue. (*) As at 31 December 2017 and 31 December 2016, there were no suppliers accounting from 10% or more of the total balance.
Financial Statements 2017
235
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
19
SHORT-TERM ADVANCES FROM CUSTOMERS The short-term advances from customers mainly include advances from third parties according to the property transfer agreements of the Groupâ&#x20AC;&#x2122;s projects. The amount is recognised as revenue when the Group completes and hands over apartments to customers. As at 31 December 2017 and 31 December 2016, there were no customers accounting from 10% or more of the total balance.
20
TAXES AND OTHER RECEIVABLES FROM AND PAYABLES TO THE STATE BUDGET
(a)
Tax and other receivables from the State Budget
2017
2016
VND
VND
649,739,747,874
381,804,313,170
Business income tax temporarily paid 1%
62,481,003,869
83,142,669,324
Overpaid business income tax
60,027,108,901
24,830,306,933
-
20,031,825,299
60,745,828
-
772,308,606,472
509,809,114,726
2017
2016
VND
VND
Business income tax
207,324,266,996
36,614,066,025
Value added tax on domestic sales
120,814,880,491
82,859,123,162
12,962,075,302
3,413,359,127
242,500,000,000
-
5,060,798,643
67,461,744
588,662,021,432
122,954,010,058
VAT to be reclaimed
Overpaid value added tax Others
(b)
Tax and other payables to the State Budget
Personal income tax Land use tax Others
236
BRIGHTEN LIVES
20
(20,031,825,299) (24,830,306,933)
Overpaid value added tax
Overpaid business income tax
3,413,359,127
Personal income tax
Others
122,954,010,058
67,461,744
-
82,859,123,162
Value added tax on domestic sales
Land use tax
36,614,066,025
Business income tax
(b) Tax payables
-
-
(4,731,737)
(872,495,114,463)
(51,282,950,280)
(94,767,124)
(346,174,006)
-
(59,075,691,583)
72,878,171
VND
(59,648,116,899)
(255,405,956,000)
(100,036,618,585)
(391,979,759,272)
(580,255,308,446)
(667,051,414)
-
-
80,612,692
-
(747,664,106)
(72,263,231,998) (59,443,754,542)
(61,492,824)
(1,226,928,488)
-
-
(70,974,810,686)
VND
Impact of busiSettled during ness combinathe year tion
2,777,483,618,470 (923,782,796,480) (1,387,325,759,202)
64,641,453,798
497,905,956,000
109,509,453,805
1,302,430,631,064
802,996,123,803
923,782,796,480
(509,809,114,726) (1,054,575,301,686)
(34,027,261,862)
20,031,825,299
852,463,289,164
85,310,212,142
4,731,737
403,562,388
-
(1,061,323,032,285)
6,253,385,828
VND
Netted off
90,782,383
-
(381,804,313,170)
VAT to be reclaimed
Others
(83,142,669,324)
VND
VND
Business income tax temporary paid 1%
(a) Tax receivables
Arose during the year
As at 1.1.2017
The movements of tax and other receivables from/payables to the State Budget during the year were as below:
TAXES AND OTHER RECEIVABLES FROM AND PAYABLES TO THE STATE BUDGET (CONTINUED)
588,662,021,432
5,060,798,643
242,500,000,000
12,962,075,302
120,814,880,491
207,324,266,996
(772,308,606,472)
(60,745,828)
(60,027,108,901)
-
(649,739,747,874)
(62,481,003,869)
VND
As at 31.12.2017
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
Financial Statements 2017
237
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
21
PAYABLES TO EMPLOYEES
2017
2016
VND
VND
1,449,930,286
161,463,623
113,499,731,408
172,380,543,576
114,949,661,694
172,542,007,199
2017
2016
VND
VND
Constructions costs
552,464,269,227
401,605,406,335
Interest expenses
522,156,467,006
201,705,978,172
Others
307,965,638,882
63,451,147,200
1,382,586,375,115
666,762,531,707
Salary 13th month salary, bonus
22
SHORT-TERM ACCRUED EXPENSES
In which, the balances with related parties and third parties were as follows: Third parties Related parties (Note 41(b))
238
BRIGHTEN LIVES
1,382,461,474,765
666,184,072,854
124,900,350
578,458,853
1,382,586,375,115
666,762,531,707
Form B 09 – DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
23
OTHER PAYABLES
(a)
Other short-term payables
2017
2016
VND
VND
11,200,981,253
26,679,764,500
Maintenance fund payables (i)
358,058,792,927
253,397,315,185
Project development and investment co-operation (Note 23(b)(*))
735,820,000,000
270,000,000,000
-
311,488,843,401
213,920,081,628
122,197,340,971
1,318,999,855,808
983,763,264,057
Deposits for purchases of apartments and commercial units
Advances received (ii) Others
(i) The maintenance fund payables represent 2% of the total net value of the contract which the Group collected from the residents for the maintenance of apartments. This amount will be transferred to the Residence Committee when the Residence Committee is established.
(b)
(ii) As at 31 December 2016, this was advances from Nova Homes Trading Joint Stock Company with no interest and collateral assets. Other long-term payables
2017
2016
VND
VND
Project development and investment (*)
1,660,275,400,000
2,044,034,432,000
»» Third parties »» Related parties (Note 41(b))
1,660,275,400,000
1,764,824,432,000
-
279,210,000,000
3,753,825,075
4,185,075,098
1,664,029,225,075
2,048,219,507,098
Others
(*) The balance represents the capital contribution for project development and investment cooperation from third parties. The Group is obliged to refund this amount in full to counter parties at the end of the projects. The Group shall pay fixed interest to partners annually. In addition, the Group shall share profits arising from the projects in accordance with agreed sharing ratio in agreements at the end of the projects.
Financial Statements 2017
239
240
BRIGHTEN LIVES
»» Costs of issuing bonds
parties (***)
7,907,493,558,081
(33,385,570,424)
2,506,900,000,000
3,482,000,000,000
»» Bonds issuance (**)
»» Borrowings from third
1,951,979,128,505
Long-term borrowings
-
-
9,356,654,787,735
2,011,046,222,222
1,632,342,207,620
VND
3,999,999,996
(9,465,000,000)
(388,336,875,165) (1,335,230,000,000)
-
40,522,375,985
-
-
(48,760,194,439)
2,841,875,000,000
5,566,000,000,000
1,841,758,940,112
7,748,878,980,646
-
-
3,448,306,773,026
1,900,000,000,000
2,400,572,207,620
VND
As at 31.12.2017
8,264,789,686,772 (4,965,000,000) (2,731,214,499,180) (3,235,230,000,000) 10,200,873,745,673
(55,897,000,000)
3,235,230,000,000
-
-
-
1,900,000,000,000
1,335,230,000,000
VND
- (1,016,000,000,000) (1,900,000,000,000)
(290,000,000)
- (14,082,163,980,584)
-
-
- (9,002,118,380,396)
- (3,311,046,222,222)
1,707,050,000,000 (4,675,000,000) (1,367,400,000,000)
5,000,000,000,000
1,613,636,686,772
VND
Current portion of long-term Decrease borrowings
- (1,763,534,377,962)
VND
Foreign exchange Increase differences
5,595,769,743,653 13,000,043,217,577
(3,999,999,996)
9,465,000,000
»» Bank loans (*)
(b)
»» Costs of issuing bonds
parties (Note 41(b))
»» Borrowings from related
parties (***)
3,093,770,365,687
1,300,000,000,000
»» Bonds issuance (**)
»» Borrowings from third
1,196,534,377,962
Short-term borrowings
VND
As at 01.01.2017
»» Bank loans (*)
(a)
24 BORROWINGS
Notes to the consolidated financial statements Form B 09 – DN/HN
For the year ended 31 december 2017
Form B 09 – DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
24 BORROWINGS (continued) (*) Details of closing balance of short-term bank loans are as follows:
2017
2016
VND
VND
Vietnam Prosperity Joint Stock Commercial Bank (i)
897,000,000,000
-
Vietnam Prosperity Joint Stock Commercial Bank (ii)
451,800,000,000
-
Vietnam Joint Stock Commercial Bank for Industry and Trade – Ho Chi Minh City Branch (vii)
360,000,000,000
-
Saigon Thuong Tin Commercial Joint Stock Bank – Transaction Center (iii)
250,000,000,000
250,000,000,000
Tien Phong Commercial Joint Stock Company – Sai Gon Branch (iv)
200,000,000,000
150,000,000,000
Vietnam Prosperity Joint Stock Commercial Bank – Ho Chi Minh City Branch (v)
100,002,000,000
-
Joint Stock Commercial Bank for Foreign Trade of Vietnam – Nam Sai Gon Branch (vi)
73,542,207,620
150,153,000,000
Vietnam Joint Stock Commercial Bank for Industry and Trade Filiale Deutschland (viii)
34,140,000,000
-
Maybank International Labuan Branch (viii)
20,484,000,000
-
The Shanghai & Savings Bank, Ltd. –Offshore Banking Branch (viii)
6,828,000,000
-
Chailease International Financial Services co., Ltd (viii)
4,552,000,000
-
Malayan Banking Berhad (Maybank) – Ho Chi Minh Branch (viii)
2,224,000,000
-
Southeast Asia Commercial Joint Stock Bank – Ho Chi Minh City Branch
-
181,200,000,000
Saigon Thuong Tin Commercial Joint Stock Bank
-
160,000,000,000
Tien Phong Commercial Joint Stock Company – Sai Gon Branch
-
140,500,000,000
Viet Capital Commercial Joint Stock Bank – Gia Dinh Branch
-
98,828,896,087
Southeast Asia Commercial Joint Stock Bank
-
65,852,481,875
(a) Short-term borrowings
2,400,572,207,620 1,196,534,377,962
Financial Statements 2017
241
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
24
BORROWINGS (continued)
2017
2016
VND
VND
846,433,940,112
1,206,433,940,112
(b) Long-term borrowings Vietnam Joint Stock Commercial Bank for Industry and Trade – Ho Chi Minh City Branch (vii)
242
Vietnam Joint Stock Commercial Bank for Industry and Trade Filiale Deutschland (viii)
306,885,000,000
Maybank International Labuan Branch (viii)
184,131,000,000
-
The Shanghai & Savings Bank, Ltd. – Offshore Banking Branch
61,377,000,000
-
Chailease International Financial Services co., Ltd (viii)
40,918,000,000
-
Malayan Banking Berhad (Maybank) – Ho Chi Minh Branch (viii)
20,016,000,000
-
Saigon Thuong Tin Commercial Joint Stock Bank – Transaction Center (ix)
232,000,000,000
-
Vietnam Prosperity Joint Stock Commercial Bank – Ho Chi Minh City Branch (v)
99,998,000,000
200,000,000,000
Tien Phong Commercial Joint Stock Bank – Sai Gon Branch (iv)
50,000,000,000
250,000,000,000
Sai Gon Thuong Tin Commercial Joint Stock Bank – Transaction Center (iii)
-
250,000,000,000
Joint Stock Commercial Bank for Foreign Trade of Vietnam – Soc Trang Branch
-
45,545,188,393
1,841,758,940,112
1,951,979,128,505
-
(i)
These are borrowings under 2 credit contracts with total credit facility of VND1,437,000,000,000, for a term of 40 months and the grace period is 18 months from the drawdown date. The interest rate is 11% per annum and adjusted every 3 months at the lowest rate of 12 months saving deposit (paid in arrears) plus a margin of 3.5% per annum. These borrowings are secured by Sunrise Riverside project.
(ii)
These are borrowings in Vietnamese Dong under a credit facility of VND451,800,000,000, maturing in 12 months. These borrowings bear an interest rate of 11% per annum and adjusted for every 3 months. The adjusted interest rate will be defined as the lowest interest rate of the 12 months saving deposits (paid in arrears) plus a margin of 3.5% per annum. These borrowings are secured by the capital contributed in Sai Gon Golf Company Limited and development right of a project in District 9, Ho Chi Minh City.
(iii)
These are borrowings in Vietnamese Dong under a credit facility of VND500,000,000,000, maturing in twenty-four (24) months from the date of drawndown. The principal is repaid on three-months (3) basis since the thirteenth (13th) month. These borrowings bear an interest rate of 10% per annum for the first six-month period and at a rate of the thirteen-month saving deposits from individuals in Vietnamese Dong (paid in arrears) plus a margin of 3% per annum from the seventh (7th) month onwards. These borrowings are secured by shares of the Company owned by shareholders.
BRIGHTEN LIVES
Form B 09 – DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
24
BORROWINGS (continued) (iv)
These are borrowings in Vietnamese Dong with a credit limit of VND400,000,000,000, which are due for repayment within thirty-six (36) months since the drawndown date. The principal and interest are paid on a three-month basis since the thirteenth (13th) month. Interest rate is fixed at 9.5% per annum and adjusted for every three months equivalent the corporate lending rate for twelve (12) months plus a margin of 1.7% per annum. The collateral assets include: capital contributed of the Company into Nova Nam A Company Limited; asset rights relating to Orchard Parkview project.
(v)
These are borrowings in Vietnamese Dong with a credit limit VND200,000,000,000 for a period of thirty-six (36) months duration since the first drawndown on 22 August 2016. The interest rate of these borrowings is 11% per annum and adjusted every three (3) months. These borrowings were secured by shares of the Company owned by shareholders.
(vi)
These are borrowings in Vietnamese Dong under a credit facility of VND250,000,000,000 for a term of 12 months to finance working capital of the Company. Interest rates are being specified in each drawndown. As at 31 December 2017, the Group had the outstanding balance of VND73,542,207,620 which bears an interest rate of 7% per annum. These borrowings are secured by deposit contracts at the lender ensuring the total value of collateral assets over the outstanding balance, at all time, is 10%.
(vii)
These are borrowings in Vietnamese Dong with a credit limit of VND3,400,000,000,000, which are due for repayment within fourty-eight (48) months duration since the first drawndown on 3 August 2016. The interest rates of these borrowings are equal to basic interest rate plus a margin of 4% per annum. These borrowings are secured by the total value of assets formed in the future of Binh Khanh Project.
(viii) This is syndicated loan between Malayan Banking Berhad (Maybank) – Ho Chi Minh Branch, Maybank International Labuan Branch, Vietinbank Filiale Deutschland, The Shanghai & Savings Bank and Chailease International Financial Service. Maybank – Ho Chi Minh Branch is the agent and representative to receive and deal with collaterals. Loan amount is US$30 million, in which with respective parties as Maybank – Ho Chi Minh Branch (US$1 million, equivalent to VND22.24 billion), Maybank Labuan (US$9 million), Vietinbank Filiale Deutschland (US$15 million), The Shanghai & Savings Bank (US$3 million) and Chailease International Financial Service (US$2 million) for a term of 30 months. The borrowing in USD is bearing an interest of 3-month LIBOR plus a margin of 5.5% per annum and borrowing in Vietnamese Dong is bearing an interest of basic lending interest of Maybank – Ho Chi Minh Branch plus a margin of 3.04% per annum. These borrowings are secured by parking areas of three Sunrise City projects and two commercial blocks of Sunrise City South project. (ix)
These are borrowings in Vietnamese Dong with a credit limit of VND232,000,000,000 for a term of 60 months and the grace period is 12 months since the drawndown date. The principal are paid on a three-month basis. Interest rate is 10.5% per annum for the first three-month period, and at a rate of the thirteen-month saving deposits from individuals in Vietnamese Dong (paid in arrears) plus a margin of 3.5% per annum from the fourth (4th) month onwards. These borrowings are secured by parking areas of Tropic 1 and Lexington project and a part of commercial blocks of three Sunrise City projects (South, Central, North).
Financial Statements 2017
243
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
24
BORROWINGS (continued) (**) Details for the balances of issued bonds are as follows:
2017
2016
VND
VND
(a) Short-term borrowings Bonds issued at discount Techcom Securities Limited Company (i)
450,000,000,000
700,000,000,000
Techcom Securities Limited Company (ii)
500,000,000,000
-
Bao Viet Commercial Joint Stock Bank (iii)
300,000,000,000
-
Military Commercial Joint Stock Bank – North Sai Gon Branch (iv)
250,000,000,000
-
Tien Phong Commercial Joint Stock Bank (iv)
125,000,000,000
-
Vietnam Joint Stock Commercial Bank for Industry and Trade – Ho Chi Minh City Branch (v)
275,000,000,000
-
-
600,000,000,000
1,900,000,000,000
1,300,000,000,000
-
450,000,000,000
Techcom Securities Limited Company (ii)
-
500,000,000,000
Military Commercial Joint Stock Bank (iv)
750,000,000,000
-
Tien Phong Commercial Joint Stock Bank (iv)
375,000,000,000
-
Vietnam Joint Stock Commercial Bank for Industry and Trade – Ho Chi Minh City Branch (v)
441,000,000,000
1,732,000,000,000
Vietnam Technological and Commercial Joint Stock Bank (vi)
1,500,000,000,000
-
Indovina Bank Limited (vi)
1,050,000,000,000
-
Techcom Securities Limited Company (vi)
750,000,000,000
-
Bao Viet Group (vii)
200,000,000,000
-
Military Commercial Joint Stock Bank (viii)
500,000,000,000
400,000,000,000
Tien Phong Commercial Joint Stock Bank (viii)
-
100,000,000,000
Bao Viet Commercial Joint Stock Bank (iii)
-
300,000,000,000
5,566,000,000,000
3,482,000,000,000
Bonds issued at par
Military Commercial Joint Stock Bank
(b) Long-term borrowings Bonds issued at discount Techcom Securities Limited Company (i) Bonds issued at par
244
BRIGHTEN LIVES
Form B 09 – DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
24
BORROWINGS (continued)
(i)
Bonds issued at discount to Techcom Securities Company Limited as the initial bonds buyer, including: •• Package of bonds with a par value of VND700,000,000,000 at the price of VND634,173,582,430, bearing interest at a rate of 0% per annum and maturing in September 2017. These issued bonds were pledged by shares of the Company owned by shareholders. As at 31 December 2017, these bonds have been paid. •• Package of bonds with a par value of VND450,000,000,000 at the price of VND389,419,211,877, bearing interest at a rate of 0% per annum and maturing in April 2018. These issued bonds were pledged by shares of the Company owned by shareholders.
(ii)
Bonds issued at par value in Vietnamese Dong with a par value of VND500,000,000,000 to Techcom Securities Company Limited as the initial bonds buyer, maturing in December 2018, bearing an interest rate of 10.9% per annum for the two (2) first interest periods. The interest rate applied for the remaining period will be defined as a reference rate plus 4.5% per annum. The interest will be adjusted for every six (6) months from the issuance date to the maturity date. The reference rate is calculated by average of the interest rates offered for the twelvemonth deposits from individuals in Vietnamese Dong (paid in arrears) for the same period declared on 7th working day before the first day of the period by four (4) banks including: Bank for Investment and Development of Vietnam – Transaction Center 1, Joint Stock Commercial Bank for Foreign Trade of Vietnam – Transaction Center, Vietnam Joint Stock Commercial Bank for Industry and Trade - Ha Noi City Branch and Vietnam Bank for Agriculture and Rural Development – Transaction Center. These bonds are secured by shares of the Company owned by shareholders.
(iii)
Bonds issued at par value in Vietnamese Dong to Bao Viet Joint Stock Commercial Bank – Head Office, maturing on 28 January 2018, bearing an interest rate of 10.25% per annum for the first two interest periods since January 2016. The interest rate applied for the remaining period will be defined as a reference rate plus a margin of 3.6% per annum. The reference rate is calculated by average of the interest rate offered for twelve-month deposits from individuals in Vietnamese Dong (paid in arrears) by Ho Chi Minh City branches of four (4) banks including: Bank for Investment and Development of Viet Nam, Joint Stock Commercial Bank for Foreign Trade of Vietnam, Vietnam Joint Stock Commercial Bank for Industry and Vietnam Bank for Agriculture and Rural Development. These bonds are secured by collateral assets including shares of the Company owned by shareholders.
(iv)
Bonds issued at par value in Vietnamese Dong to Military Joint Stock Commercial Bank – North Sai Gon Branch (MB) and Tien Phong Commercial Joint Stock Bank (TPB). Package of bonds with a par value of VND1,500,000,000,000 (MB: VND1,000,000,000,000 and TPB: VND500,000,000,000), maturing in 2021 and bearing an interest rate of 10.0% per annum for the first year. The interest rate applied for remaining period will be defined as a reference rate of plus a margin of 3.5% per annum. The reference rate is calculated by average of the interest rate offered for twelve-month deposits from individuals in Vietnamese Dong (paid in arrears) by four (4) banks including: Bank for Investment and Development of Viet Nam, Joint Stock Commercial Bank for Foreign Trade of Vietnam, Vietnam Joint Stock Commercial Bank for Industry and Trade and Military Joint Stock Commercial Bank. These bonds are secured by the collateral assets including assets of Lakeview City project, part of shares owned by the Company in subsidiary.
(v)
Bonds issued at par value in Vietnamese Dong to Vietnam Joint Stock Commercial Bank for Industry and Trade - Ho Chi Minh City Branch. Package of bonds with a par value of VND736,000,000,000, maturing in August 2020, bearing an interest rate of 10% per annum for the first three months. During 2017, the Company partly paid VND20,000,000,000 of par value. The interest rate will be adjusted for every three months at the interest rate of the twelve-month deposit from individuals (paid in arrears) in Vietnamese Dong plus a margin of 4.0% per annum. These bonds are secured by shares of the Company owned by shareholders, receivables relating to a Company’s project, part of shares owned by the Company in subsidiary.
Financial Statements 2017
245
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
24
BORROWINGS (continued)
(vi)
Bonds issued at par value in Vietnamese Dong, include: »» Package of bonds with a par value of VND500,000,000,000, maturing in February 2019, bearing an interest rate of 10.9% per annum for the two (2) first interest periods. The interest rate applied for the remaining period will be defined as a reference rate plus 4.5% per annum. These bonds are secured by shares of the Company owned by shareholders. The initial buyer was Indovina Limited Bank. »» Package of bonds with a par value of VND1,800,000,000,000, maturing in March 2019, bearing an interest rate of 10.9% per annum for the first two (2) interest periods. The interest rate applied for the remaining period will be defined as a reference rate plus a margin of 4.5% per annum. These bonds are secured by shares of the Company owned by shareholders. The initial buyers were Indovina Limited Bank, Vietnam Technology and Commercial Joint Stock Bank and Techcom Securities Company Limited with respective value of VND550,000,000,000, VND1,000,000,000,000 and VND250,000,000,000. »» Bonds issued at par value in Vietnamese Dong with total par value of VND1,000,000,000,000, maturing in August 2019 and bearing an interest of 10.9% per annum for the first two (02) interest periods. The interest rate applied for the remaining period will be defined as a reference rate plus 4.5% per annum. These bonds are secured by shares of the Company owned by shareholders. The initial bond buyers were Vietnam Technological and Commercial Joint Stock Bank and Techcom Securities Limited Company with respective value of VND500,000,000,000 and VND500,000,000,000.
246
(vii)
Bonds issued at par value in Vietnamese Dong to Bao Viet Group, maturing on 20 January 2020, bearing an interest rate of 10.4% per annum for the first interest period. The interest rate applied for the remaining period will be adjusted every twelve (12) months and defined as a reference rate plus 2.5% per annum. The reference rate is calculated by average of the interest rate offered for twelve-month deposits from individuals in Vietnamese Dong (paid in arrears) by Ho Chi Minh City branches of four (4) banks including: Bank for Investment and Development of Viet Nam, Joint Stock Commercial Bank for Foreign Trade of Vietnam, Vietnam Joint Stock Commercial Bank for Industry and Vietnam Bank for Agriculture and Rural Development. These bonds are secured by shares of the Company owned by shareholders.
(viii)
Bonds issued at par value in Vietnamese Dong to Military Joint Stock Commercial Bank – North Sai Gon Branch include package of bonds with a par value of VND500,000,000,000, maturing in 2019, bearing an interest rate of 10.0% per annum for the first year period. The interest rate applied for the remaining period will be defined as a reference rate plus 3.5% per annum. The reference rate is calculated by average of the interest rate offered for twelve-month deposits from individuals in Vietnamese Dong (paid in arrears) by four (4) banks including: Bank for Investment and Development of Viet Nam, Joint Stock Commercial Bank for Foreign Trade of Vietnam, Vietnam Joint Stock Commercial Bank for Industry and Trade and Military Joint Stock Commercial Bank. These bonds are secured by the collateral assets including: development rights of Golden Mansion Project and shares of the Company owned by shareholders. On 29 November 2016, Military Joint Stock Commercial Bank – North Sai Gon Branch transferred bonds of VND100,000,000,000 to Tien Phong Commercial Joint Stock Bank, then repurchased these bonds in 2017. As at 31 December 2017, the creditor of VND500,000,000,000 package of bonds is Military Joint Stock Commercial Bank – North Sai Gon Branch.
BRIGHTEN LIVES
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
24
BORROWINGS (continued) (***)
Details for the balances of third parties and related parties were as follows:
2017
2016
VND
VND
3,340,306,773,026
3,093,770,365,687
108,000,000,000
-
3,448,306,773,026
3,093,770,365,687
(a) Short-term borrowings Nova Homes Trading Joint Stock Company (i) Binh An Investment and Development Real Estate Joint Stock Company (ii)
(i)
These are borrowings in Vietnamese Dong, maturing in 5 months, bear interest at the rate from 4.4% to 5.4% per annum and are unsecured.
(ii)
This is borrowing in Vietnamese Dong, maturing in 6 months, bear interest at the rate 11.0% per annum and is unsecured.
2017
2016
VND
VND
1,136,750,000,000
1,139,500,000,000
Credit Suisse AG- Singapore Branch (iv)
750,255,000,000
1,367,400,000,000
Crane Investment Ltd. (iv)
954,870,000,000
-
2,841,875,000,000
2,506,900,000,000
(b) Long-term borrowings GW Supernova Pte,Ltd. (iii)
(iii)
This borrowing is denominated in USD from GW Supernova Pte. Ltd., with a credit facility of US$50,000,000, maturing in thirty-six (36) months since the first drawndown in December 2016, including a portion of nonconvertible borrowing amounting to US$20,000,000 and the other portion of convertible borrowing amounting to US$30,000,000. The principal is repaid at the maturity date. The borrowing bears an interest rate of 6% per annum and is repayable every six (6) months. At maturity or early repayment or conversion, the Company would pay an additional amount to ensure that lender receives a target IRR of 15%. The borrowing is unsecured. The lender may elect to convert the convertible borrowing component into shares of the Company at any time after ten (10) months since the first drawndown date or six (6) months since the conversion date of the borrowing from Credit Suisse AG, Singapore Branch (has already been converted on 28 June 2017), depending on which date comes first. As at 31 December 2017, the Board of Management of the Company estimated that the value of the convertible debt component was the same as the principal of the borrowing. Accordingly, there was no equity component recognised. As at 31 December 2017, this borrowing was fully disbursed. In case the debt conversion option is exercised, the maximum shares to be converted will be 15,723,325 shares of the Company. As at the date of these consolidated financial statements, the loan was not converted.
Financial Statements 2017
247
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
24
BORROWINGS (continued)
(iv)
These are borrowings according to the loan agreement and appendices with the adjusted credit facility of US$125,000,000, which Credit Suisse AG, Singapore Branch is the facility agent and the guarantee agent. The loan duration is fourty-two (42) months from the first date of drawndown, the principal is repayable every six (6) months from the eighteenth (18th) month since the first date of drawndown to maturity. Interest rate is defined as LIBOR rate plus a margin of 5.5% per annum and repayable every three (3) months. At maturity or early repayment, the Company would pay an additional amount to ensure that lender receives a target IRR of 13%. The borrowing is unsecured. As at 31 December 2017, these borrowings were disbursed by US$75 million.
25
OWNERSâ&#x20AC;&#x2122; CAPITAL
(a)
Number of shares
2017
(b)
Ordinary shares
Preference shares
Ordinary shares
Preference shares
Number of shares registered
642,828,788
6,830,000
589,369,234
6,830,000
Number of shares issued
642,828,788
6,830,000
589,369,234
6,830,000
Number of existing shares in circulation
642,828,788
6,830,000
589,369,234
6,830,000
Movement of share capital
Ordinary shares
Preference shares
Total
350,465,761
17,830,000
368,295,761
33,000,000
(11,000,000)
22,000,000
New shares issued
205,903,473
-
205,903,473
As at 31 December 2016
589,369,234
6,830,000
596,199,234
New shares issued for converting debts
33,459,554
-
33,459,554
New shares issued for ESOP plan
20,000,000
-
20,000,000
642,828,788
6,830,000
649,658,788
As at 1 January 2016 Preference shares conversion
As at 31 December 2017 Par value per share: VND10,000.
248
2016
BRIGHTEN LIVES
26
-
Transferring the loss previously recognised in undistributed earnings (iii)
Change in ownership of subsidiaries (iv) 6,428,287,880,000
-
Dividends paid
As at 31 December 2017
-
200,000,000,000
Issuance of ordinary shares for ESOP (ii)
Profit for the year
334,595,540,000
Issuance of ordinary shares for converting debts (i)
5,893,692,340,000
-
Change in ownership of subsidiaries
As at 31 December 2016
-
Dividends paid
330,000,000,000
Converting preference shares to ordinary shares -
522,000,000,000
Issuance of ordinary shares
Profit for the year
519,995,160,000
Bonus shares from share premium
1,017,039,570,000
Issuance of ordinary shares
68,300,000,000
-
-
-
-
-
-
68,300,000,000
-
-
-
(110,000,000,000)
-
-
-
178,300,000,000
VND
VND 3,504,657,610,000
Preference shares
Ordinary shares
As at 1 January 2016
MOVEMENTS IN OWNERSâ&#x20AC;&#x2122; EQUITY
3,206,830,905,400
-
-
-
-
-
1,032,804,460,000
2,174,026,445,400
-
-
-
(220,000,000,000)
2,031,423,000,000
(519,995,160,000)
-
882,598,605,400
VND
Share premium
2,907,218,106,652
(155,948,534,184)
102,000,000,000
(24,765,000,000)
2,033,481,810,322
-
-
952,449,830,514
(1,209,508,504,543)
(53,490,000,000)
1,665,077,557,360
-
-
-
-
550,370,777,697
VND
Post-tax undistributed earnings
12,610,636,892,052
(155,948,534,184)
102,000,000,000
(24,765,000,000)
2,033,481,810,322
200,000,000,000
1,367,400,000,000
9,088,468,615,914
(1,209,508,504,543)
(53,490,000,000)
1,665,077,557,360
-
2,553,423,000,000
-
1,017,039,570,000
5,115,926,993,097
VND
Total
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
Financial Statements 2017
249
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
26
MOVEMENTS IN OWNERS’ EQUITY (continued)
(i)
According to the Resolution of Annual General Meeting of Shareholders on 27 April 2017, the Company issued 33,459,554 ordinary shares to convert the borrowing of US$60,000,000 from Credit Suisse AG - Singapore Branch, with convertible rate of 40,867 debt unit will be converted to one share. The equivalent share value is 344,595,540,000, at par value of VND10,000 per share, which was recorded as the share capital. The variance between the par value of VND10,000 per share and the issuing price of VND40,867 per share was recorded as the share premium.
(ii)
According to the Resolution of Annual General Meeting of Shareholders on 27 April 2017 and Resolution of Annual General Meeting of Shareholders passed by way of consultation of Shareholders in writing dated 10 August 2017, the Company issued 20,000,000 ordinary shares to employees at par value. Accordingly, the total value of issued share was recorded as the share capital.
(iii)
The losses which previously recognised in undistributed earnings were transferred to the income statement in this year due to the entire divestment in Nova Galaxy Real Estate Joint Stock Company and Nova Lexington Real Estate Joint Stock Company.
(iv)
These adjustments are in owners’ equity (particularly, undistributed earnings) due to change in the Company’s ownership portion in subsidiaries after the Company had control on these subsidiaries. Details of adjustments related to change in ownership of subsidiaries were as follows:
Subsidiaries
Post-tax undistributed earnings increase/(decrease) VND
Nova Sasco Company Limited Nova Nam A Company Limited Nova Richstar Joint Stock Company No Va Land Investment Joint Stock Company Mega Tie Company Limited Sai Gon Golf Company Limited Mega Housing Joint Stock Company Others
(104,330,509,489) (51,492,388,743) (48,312,967,373) 28,633,330,084 14,126,362,599 5,458,948,502 (3,079,791,335) 3,048,481,571 (155,948,534,184)
27
NON - CONTROLLING INTERESTS The non-controlling interests represent the holdings of the other shareholders for the value of the net assets and results of operations of the subsidiaries at year end. Details were as follows:
2017 VND
2016
500,423,132,544
871,671,325,519
19,705,357
406,052
38,495
-
Post tax undistributed earnings
145,310,734,972
86,749,789,586
Non-controlling interests
645,753,611,368
958,421,521,157
Charter capital Other funds Share premium
250
BRIGHTEN LIVES
VND
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
Movements in non-controlling interests are as below:
2017
2016
VND
VND
958,421,521,157
979,282,422,321
28,161,421,934
(5,728,244,382)
269,039,884,157
940,280,003,133
(489,372,722,733)
(456,762,798,943)
Decrease due to divestment of subsidiaries
(77,096,396,147)
(498,392,904,795)
Decrease due to dividends received
(43,400,097,000)
(1,149,219,932)
-
892,263,755
645,753,611,368
958,421,521,157
Beginning of year Net profit/(loss) allocated to non-controlling interest for the year Increase due to acquisition of new subsidiaries Decrease due to change ownership percentage during the year
Others End of year 28
EARNINGS PER SHARE
(a)
Basic earnings per share Basic earnings per share is calculated by dividing the net profit attributable to shareholders after deducting the bonus and welfare funds by the weighted average number of ordinary shares outstanding during the year, excluding ordinary shares repurchased by the Group and held as treasury shares:
2017
2016
The Groupâ&#x20AC;&#x2122;s net profit after tax (VND)
2,033,481,810,322
1,665,077,557,360
Dividend on preference shares (VND)
(20,490,000,000)
(53,490,000,000)
2,012,991,810,322
1,611,587,557,360
606,675,910
503,975,447
20,490,000
20,490,000
627,165,910
524,465,447
3,210
3,073
Net profit attributable to shareholders (VND) Weighted average number of ordinary shares in issue (shares) Mandatorily convertible shares (shares) Weighted average number of ordinary shares including mandatorily convertible shares (shares) Basic earnings per share (VND)
Financial Statements 2017
251
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
28
EARNINGS PER SHARE (continued)
(b)
Diluted earnings per share Diluted earnings per share is calculated by dividing the net profit attributable to shareholders, which already subtracted the bonus and welfare fund, by the weighted average number of ordinary shares outstanding during the year and the ordinary shares expected to be issued.
2017
2016
The Groupâ&#x20AC;&#x2122;s net profit after tax (VND)
2,033,481,810,322
1,665,077,557,360
Dividend on preference shares (VND)
(20,490,000,000)
(53,490,000,000)
-
30,299,647,770
2,012,991,810,322
1,641,887,205,130
606,675,910
503,975,447
-
49,182,879
20,490,000
20,490,000
627,165,910
573,648,326
3,210
2,862
Adjustment (VND) (*) Net profit attributable to shareholders (VND) Weighted average number of ordinary shares (shares) Potential shares (shares) (*) Mandatorily convertible shares (shares) Weighted average number of ordinary shares including potential shares (shares) Diluted earnings per share (VND)
(*) The Company considered each issue or series of potential ordinary shares in determining whether potential ordinary shares are dilutive. Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to ordinary shares would decrease earnings per share or increase loss per share. In year 2016, these are the adjustment for the interest expenses after tax relating to the convertible borrowing corresponding with potential shares with assumption they will be converted in the future from convertible loans. In the year 2017, there is no potential ordinary shares. 29
OFF BALANCE SHEET ITEMS
Gold (tael of gold) Foreign currencies US$
252
BRIGHTEN LIVES
2017
2016
2.4
4.4
2,053,377
13,854,560
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
30 REVENUE
2017
2016
VND
VND
11,052,768,852,428
6,641,625,495,259
573,152,244,351
633,507,895,302
Sales from leasing properties
88,333,076,089
82,387,768,792
Others
45,139,783,280
11,941,986,043
11,759,393,956,148
7,369,463,145,396
(115,752,929,282)
(887,416,113)
(11,304,997,693)
(9,394,808,468)
(127,057,926,975)
(10,282,224,581)
10,925,710,925,453
6,631,343,270,678
573,152,244,351
633,507,895,302
Net sales from leasing properties
88,333,076,089
82,387,768,792
Others
45,139,783,280
11,941,986,043
11,632,336,029,173
7,359,180,920,815
2017
2016
VND
VND
7,742,490,495,967
5,096,423,899,209
524,448,993,318
603,834,889,042
Cost of leasing properties
76,829,508,148
66,989,670,540
Others
31,736,077,468
8,852,952,770
8,375,505,074,901
5,776,101,411,561
Sales of goods and rendering of services Sale of real estate Rendering of services for corporate management, project development and sales consultancy
Sales deductions Trade discounts Sales returns Net revenue from sale of goods and rendering of services Net sales of real estate Net sales of rendering of services for corporate management, project development and sales consultancy
31
COST OF SALES
Cost of real estate sold Cost of rendering of services for corporate management, project development and sales consultancy
Financial Statements 2017
253
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
32
FINANCIAL INCOME
2017
2016
VND
VND
Revaluation of investments at each business combination stage (*)
967,130,690,742
1,597,491,943,722
Interest income from deposits at banks
206,823,488,341
184,209,664,925
Interest income from lending
191,749,654,634
173,413,124,016
Interest income from late payment
128,106,141,828
4,741,380
Interest income from co-operation contracts
100,834,558,219
82,177,110,463
92,484,121,178
457,368,734,563
Gain on bargain purchase
2,458,392,327
3,593,546,233
Unrealised foreign exchange gains
5,881,810,757
1,614,928,657
212,400,000
269,040,000
76,031,931
22,567,818,224
766,835,632
331,896,070
Gain from divestment of subsidiaries (**)
Dividend income Realised foreign exchange gains Others
1,696,524,125,589 2,523,042,548,253 (*) This is the revaluation of the initial investment of the Group in Phu Dinh Port Joint Stock Company and Sai Gon Golf Company Limited at the acquisition date (Note 3). (**) This gain is mainly relating to divestment of Nova Galaxy Real Estate Joint Stock Company and Nova Lexington Real Estate Joint Stock Company (Note 3). 33
FINANCIAL EXPENSES
2017
2016
VND
VND
1,205,387,997,120
863,073,263,518
Borrowings related costs
96,991,551,724
73,783,490,758
Interest expenses from investment cooperation
95,185,121,202
55,285,496,805
Cost of issuing bonds
45,772,375,981
47,314,457,775
797,896,356
34,551,090,149
12,516,681,896
17,124,316,699
4,574,531,071
14,501,149,994
789,770,893
4,660,910,103
1,293,575,852
4,935,854,370
Interest expenses
Loss from foreign currency translation at year-end Payment discounts Realised foreign exchange losses Loss from divestment of subsidiaries (*) Other financial expenses
1,463,309,502,095 1,115,230,030,171 (*) This loss is mainly relating to divestment of subsidiaries including Vuong Cung Real Estate Investment Company Limited, Hung Duc Real Estate Investment Company Limited, Nova Phu Sa Ecotourism Joint Stock Company and Nova Phu Sa Investment and Development Joint Stock Company (Note 3). 254
BRIGHTEN LIVES
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
34
SELLING EXPENSES
2017
2016
VND
VND
Outside services expenses
96,745,923,391
87,710,106,551
Staff costs
36,034,631,422
53,200,987,158
Tools and supplies
902,913,104
1,971,773,920
Depreciation expenses
685,652,426
2,270,015,328
Material, package costs
118,847,858
370,452,973
123,804,428,829
19,961,639,351
258,292,397,030
165,484,975,281
Other expenses (*)
(*) Other expenses mainly included the interest aid expenses which is 54,748,464,317 VND (2016: 900,250,586 VND).
35
GENERAL AND ADMINISTRATION EXPENSES
2017
2016
VND
VND
Goodwill allocation (Note 17)
259,231,617,302
222,544,537,238
Write-off goodwill due to merger of subsidiaries (Note 17)
146,640,884,246
-
Outside services expenses
103,610,834,995
111,745,823,728
62,917,354,083
197,367,837,877
Depreciation expenses
5,777,153,496
5,110,069,954
Tax and other fees
4,239,846,620
4,622,911,716
Stationary expenses
3,561,124,297
3,807,245,822
Tools and supplies
700,745,057
710,598,349
Reversal provisions
(7,545,666,905)
(962,925,331)
Other expenses
97,059,860,567
96,654,890,369
676,193,753,758
641,600,989,722
2017
2016
VND
VND
51,705,401,436
23,579,521,375
529,135,163
3,706,526,952
Income from sales of tools and scrap
4,127,751,204
2,909,410,023
Others
6,060,328,215
14,329,356,223
62,422,616,018
44,524,814,573
Staff costs
36
OTHER INCOME
Collection of penalties on contract violation Gains on disposal of fixed assets
Financial Statements 2017
255
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
37
OTHER EXPENSES
Penalty expenses on contract violation Losses on disposal of fixed assets Others
38
BUSINESS INCOME TAX
(a)
Deferred income tax
2017
2016
VND
VND
20,560,400,132
18,752,961,278
4,895,131,202
7,068,050,084
16,106,914,136
13,304,790,176
41,562,445,470
39,125,801,538
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority. Movements in deferred income tax were as follows:
2017
2016
VND
VND
66,869,015,901
25,612,519,257
Deferred income tax liabilities
(1,477,768,084,442)
(91,879,543,160)
Beginning of year
(1,410,899,068,541)
(66,267,023,903)
283,791,739,656
(202,982,820,440)
(421,674,326,488)
(1,151,100,042,904)
4,574,270,834
9,445,191,457
-
5,627,249
(1,544,207,384,539)
(1,410,899,068,541)
115,783,534,333
66,869,015,901
(1,659,990,918,872)
(1,477,768,084,442)
Deferred income tax assets
Income statement (credited)/charge Impact of business combination during the year (*) Impact of divestments in subsidiaries Others End of year In which: Deferred income tax assets Deferred income tax liabilities
The deferred income tax assets and liabilities mainly arise from the temporary differences relating to unrealised profits from business combination. The Group uses tax rate of 20% in year 2017 (2016: 20%) for determining deferred tax assets and deferred tax liabilities. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. (*) This is deferred tax liabilities arising from the business combination during the year (Note 3).
256
BRIGHTEN LIVES
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
38
BUSINESS INCOME TAX (continued)
(b)
Business income tax - current The tax on the Groupâ&#x20AC;&#x2122;s profit before tax differs from the theoretical amount that would arise applicable tax rate of 20% as follows:
using
the
2017
2016
VND
VND
2,588,499,024,119
2,189,703,612,855
517,699,804,824
437,940,722,571
(425,597,168)
(53,808,000)
51,846,323,460
33,513,574,009
8,783,268,783
13,942,509,249
(12,774,267,142)
(8,632,161,914)
(35,167,794)
190,977,184
Tax losses for which no deferred income tax asset was recognised
219,585,217,475
73,024,221,592
Gain from transfers of subsidiaries
(18,338,870,057)
(12,770,051,538)
Sharing profits from associates
(2,415,885,319)
(99,707,497)
(491,678,465)
(718,709,247)
29,323,733
637,775,831
(236,606,680,467)
-
-
(6,621,042,363)
526,855,791,863
530,354,299,877
810,647,531,519
327,371,479,437
(283,791,739,656)
202,982,820,440
526,855,791,863
530,354,299,877
Net accounting profit before tax Tax calculated at a rate of 20% Effect of: Income not subject to tax Goodwill allocation Expenses not deductible for tax purposes Tax losses utilisation Temporary difference from previous years for which deferred tax liabilities was not recognised
Gain from subsidiaries acquisitions Adjustment business income tax expense from previous years Adjustment for merger of subsidiaries (*) Effect of change in tax rate Business income tax charge (**) Charged/(credited) to income statement: Business income tax - current Business income tax - deferred (Note 38(a))
(*) This includes deferred tax liabilities arising from the difference between the fair value and the book value at the acquisition date when the Group acquired Phu Viet Tin Limited Company and Thanh Nien Real Estate Joint Stock Company. During the period, Phu Viet Tin Limited Company was merged into Nova Phuc Nguyen Real Estate Development and Investment Limited Company, Thanh Nien Real Estate Joint Stock Company was merged into Nova Rivergate Company Limited, therefore deferred tax liabilities were reverted in the year (Note 3). This also includes goodwill decrease and loss due to merger of subsidiaries. (**) The business income tax charge for the year is based on estimated taxable income and is subject to review and possible adjustments by the tax authorities.
Financial Statements 2017
257
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
39
COST OF OPERATION BY FACTOR
2017
2016
VND
VND
19,070,955,366,285
13,923,563,008,197
Labour costs
537,184,574,721
736,353,993,269
Outside services expenses
323,314,850,787
336,076,173,698
Depreciation expenses and goodwill allocation
340,651,236,818
287,196,723,219
146,640,884,246
-
230,387,766,332
128,099,512,500
Real estate development costs for selling
Write-off goodwill due to merger of subsidiaries (Note 17) Other expenses
20,649,134,679,189 15,411,289,410,883 40
ADDITIONAL INFORMATION FOR THE ITEMS OF THE CASH FLOW STATEMENT
(a)
Non-cash transactions affect the cash flow statement
2017
2016
VND
VND
1,367,400,000,000
-
Bonus shares from share premium
-
519,995,160,000
Conversion of preference shares into ordinary shares
-
330,000,000,000
2017
2016
VND
VND
12,263,222,658,255
8,839,287,576,255
4,944,103,000,000
4,045,497,878,788
2017
2016
VND
VND
Repayments for borrowings following normal borrowing contracts (11,183,500,855,745)
(7,155,826,576,518)
Repayments for bonds
(3,784,000,000,000)
Conversion of debts into equity
(b)
Amount of borrowings actually withdrawn during the year
Proceeds from borrowings following normal borrowing contracts Issuing bonds (c) Amount of borrowings actually repaid during the year
258
BRIGHTEN LIVES
(2,316,000,000,000)
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
41
RELATED PARTY DISCLOSURES During the year, the Company has transactions and balances with following related parties:
(a)
Relationship
Name
Associate
Sai Gon Electronics and Industrial Service Joint Stock Company
Associate
Huy Minh Real Estate Joint Stock Company (formerly known as Nova Dong Hai Joint Stock Company)
Associate
Ben Thanh Housing Service and Development Company Joint Stock Company
Shareholder
Bui Thanh Nhon
Shareholder
Bui Cao Nhat Quan
Related Individual
Cao Thi Ngoc Suong
Related Individual
Bui Phan Phu Loc
Company owned by the shareholder
Diamond Properties Joint Stock Company
Related party transactions During the year, the following transactions were carried out with related parties:
2017
2016
VND
VND
110,000,003
357,045,455
18,939,165,316
25,873,944,785
Sai Gon Electronics and Industrial Service Joint Stock Company
-
2,249,984,346
Phu Dinh Port Joint Stock Company (*)
-
9,880,143,090
18,939,165,316
38,004,072,221
-
43,420,000,000
415,276,875
444,974,375
Bui Thanh Nhon
-
1,098,287,323
Bui Cao Nhat Quan
-
1,473,383,453
Bui Phan Phu Loc
-
893,135,751
Cao Thi Ngoc Suong
-
732,370,395
415,276,875
4,642,151,297
i) Sales of goods and services Huy Minh Real Estate Joint Stock Company (**) ii) Purchase of services Ben Thanh Housing Service and Development Company Joint Stock Company
iii) Lending Sai Gon Electronics and Industrial Service Joint Stock Company iv) Interest from borrowings Huy Minh Real Estate Joint Stock Company (**)
Financial Statements 2017
259
Notes to the consolidated financial statements
Form B 09 – DN/HN
For the year ended 31 december 2017
41
RELATED PARTY DISCLOSURES (continued)
(a)
Giao dịch với các bên liên quan (continued)
2017
2016
VND
VND
4,553,310,664
3,859,743,333
Sai Gon Electronics and Industrial Service Joint Stock Company
-
5,000,000,000
Bui Cao Nhat Quan
-
57,436,400,000
-
62,436,400,000
-
10,144,530
-
10,144,530
35,024,121,743
25,579,078,297
v) Interest on lending Sai Gon Electronics and Industrial Service Joint Stock Company vi) Deposits
vii) Advance Bui Cao Nhat Quan viii) Collection of advance Bui Cao Nhat Quan ix) Compensation of key management Gross salaries and other benefits
260
BRIGHTEN LIVES
Form B 09 â&#x20AC;&#x201C; DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
41
RELATED PARTY DISCLOSURES (continued)
(b)
Year end balances with related parties
2017
2016
VND
VND
40,024,130,644
42,324,948,220
159,103,170
-
40,183,233,814
42,324,948,220
-
52,000,000,000
43,420,000,000
43,420,000,000
Ben Thanh Housing Service and Development Company Joint Stock Company
39,827,672,410
41,330,603,446
Sai Gon Electronics and Industrial Service Joint Stock Company
23,907,772,634
19,354,461,970
-
300,000,000,000
63,735,445,044
360,685,065,416
1,398,776,000
1,398,776,000
-
405,000,000,000
1,398,776,000
406,398,776,000
i) Short-term trade accounts receivable (Note 6) Diamond Properties Joint Stock Company Ben Thanh Housing Service and Development Company Joint Stock Company ii) Short-term prepayments to suppliers (Note 7) Sai Gon Electronics and Industrial Service Joint Stock Company iii) Short-term lendings (Note 8(a)) Sai Gon Electronics and Industrial Service Joint Stock Company iv) Other short-term receivables (Note 9(a))
Sai Gon Golf Joint Stock Company (*) v) Other long-term receivables (Note 9(b)) Ben Thanh Housing Service and Development Company Joint Stock Company Him Lam Joint Stock Company (**)
Financial Statements 2017
261
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
41
RELATED PARTY DISCLOSURES (continued)
(b)
Year end balances with related parties (continued)
2017
2016
VND
VND
124,900,350
101,556,700
-
476,902,153
124,900,350
578,458,853
-
279,210,000,000
-
9,465,000,000
vi) Short-term accrued expenses (Note 22) Ben Thanh Housing Service and Development Company Joint Stock Company Huy Minh Real Estate Joint Stock Company (**) vii) Other long-term payables (Note 23(b)) Sai Gon Golf Joint Stock Company (*) viii) Short- term borrowings (Note 24(a)) Huy Minh Real Estate Joint Stock Company (**)
(*) During the year and until 31 December 2017, these companies became subsidiaries and were consolidated in the consolidated financial statements of the Group. (**) During the year and until 31 December 2017, these companies were no longer related parties of the Group. 42
COMMITMENTS UNDER OPERATING LEASES The future minimum lease payments under non-cancellable operating leases were as follows:
Office rental
2017
2016
VND
VND
Within one year
51,798,974,424
53,136,534,887
From one to five years
25,319,743,416
94,247,338,548
-
335,786,527,210
77,118,717,840
483,170,400,645
Over five years Total minimum payments 43
CAPITAL COMMITMENTS Capital expenditure contracted for at the balance sheet date but not recognised in the consolidated financial statements was as follows:
Construction costs of projects
262
BRIGHTEN LIVES
2017
2016
VND
VND
6,081,197,094,885
6,207,364,208,252
Form B 09 – DN/HN
Notes to the consolidated financial statements For the year ended 31 december 2017
44
SEGMENT REPORTING Business activity segment As the Group’s revenue and profit are mainly derived from the business activities of the real estate while other sources of revenue are not material as a whole, the Board of Management accordingly believes that the Group’s real estate and supporting activities for real estate are in a sole business segment only. Geographical segments: The Group’s activities are mainly segmented by domestic activities. The Group does not monitor its operation results, fixed assets, other non-current assets or non-cash major expenses by the geographical areas of customers.
45
COMPARATIVE FIGURES Certain immaterial comparative figures have been reclassified to conform to the current year’s presentation.
46
EVENTS AFTER THE BALANCE SHEET DATE
(a)
Issuance of Shares
Issuance of Shares under the Employee Stock Ownership Plan (“ESOP”) According to Annual Resolution No. 09/2017-NQ-NVLG on 27 April 2017, the General Meeting of Shareholders approved the issuance of Shares under the Employee Stock Ownership Plan (“ESOP”) with the maximum number of 29,809,962 shares. In 2017, the Company completed the issue of 20,000,000 ordinary shares to employees with the details presented in Note 25 and Note 26. According to Decision No. 004/2018-QD.HDQT-NVLG dated 12 January 2018, the Board of Directors approved the issuance of the remaining shares of 9,809,962 under the Resolution of the Annual General Meeting of Shareholders. These shares are all unrestricted to transfer. On 22 February 2018, these shares were issued to employees.
Issuance of ordinary shares According to Resolution No. 08/2017-NQ-NVLG dated 27 April 2017, the General Meeting of Shareholders approved the plan to issue the maximum number of ordinary shares of 216,297,895 at par value of VND 10,000 per share to existing shareholders of the Company to increase the owners’ equity from share premium of 2016. The issuance was scheduled in the 4th Quarter of 2017 with a maximum exercise ratio of 1:0.367, which means that the shareholder owning 1,000 shares will receive a maximum of 367 shares. However, according to Resolution No. 01/2018-NQ-NVLG dated 24 January 2018, the General Meeting of Shareholders rescheduled the expected time of issuing the shares to the year 2018. According to Decision No. 18/2018-QD.HDQT-NVLG dated 1 March 2018, the Board of Directors approved the Company to issue 202,318,012 ordinary shares with exercise ratio of 100:31, which means that the shareholder owning 100 shares will receive a maximum of 31 shares. As at the date of approval of these consolidated financial statements, the shares have not been issued.
Financial Statements 2017
263
Notes to the consolidated financial statements
Form B 09 â&#x20AC;&#x201C; DN/HN
For the year ended 31 december 2017
46
ACQUISITION OF SABETRAN TRUNG THUY REAL ESTATE INVESTMENT CORPORATION (continued)
(b)
Acquisition of Sabetran Trung Thuy Real Estate Investment Corporation According to General Meeting of Shareholders meeting minutes No. 01A/2018-BB-TNH dated 5 February 2018, the General Meeting of Shareholders of a Groupâ&#x20AC;&#x2122;s subsidiary approved to acquire 9,999,000 ordinary shares at cost of VND759,924,000,000, and accounting for 99.99% of the charter capital of Sabetran Trung Thuy Real Estate Investment Corporation. As at the date of approval of these consolidated financial statements, the shares have been acquired.
(c)
Acquisition of ASEAN Urban Development Joint Stock Company According to Decision No. 11/2018-QD.HDQT-NVLG dated 6 February 2018, the Board of Directors approved the Company to acquire 5.100.000 ordinary shares, equivalent to the total par value of VND51,000,000,000, and accounting for 51% of the charter capital of ASEAN Urban Development Joint Stock Company. As at the date of approval of these consolidated financial statements, the shares have been acquired.
(d)
Capital contribution to establish 234 Thanh My Loi Joint Stock Company According to Decision No. 15/2018-QD.HDQT-NVLG dated 8 February 2018, the Board of Directors approved the Company to contribute capital to establish 234 Thanh My Loi Joint Stock Company. The Company contributes VND99,800,000,000, accounting for 49.9% of the total chartered capital of VND200,000,000,000. 234 Thanh My Loi Joint Stock Company was established on 9 February 2018 and the capital will be contributed within 90 days from the establishment date. The consolidated financial statements were approved by the Chairman on 10 March 2018.
Nguyen Ngoc Bang Preparer
264
BRIGHTEN LIVES
Tran Thi Thanh Van Chief Accountant
Bui Thanh Nhon Chairman
SUMMARY OF THE AUDITED SEPERATE FINANCIAL STATEMENTS 2017 (VAS) For the year ended 31 December 2017
SEPARATE BALANCE SHEET
Form B 01 - DN
As at 31 December Code ASSETS
266
Note
2017 VND
2016 VND
7,336,717,166,620
11,309,645,554,183
1,455,689,692,352
2,153,027,696,086
290,577,542,976
472,905,282,697
100
CURRENT ASSETS
110
Cash and cash equivalents
111
Cash
112
Cash equivalents
1,165,112,149,376
1,680,122,413,389
120
Short-term investments
430,671,476,752
763,286,000,000
123
Investments held-to-maturity
430,671,476,752
763,286,000,000
130
Short-term receivables
2,341,407,152,135
5,560,440,373,728
131
Short-term trade accounts receivable
5
109,056,528,946
84,012,548,202
132
Short-term prepayments to suppliers
6
385,683,515,155
168,329,639,170
135
Short-term lending
7
232,671,600,222
979,893,920,814
136
Other short-term receivables
8(a)
1,613,995,507,812
4,328,204,265,542
140
Inventories
10
2,835,253,744,542
2,610,152,630,939
141
Inventories
2,835,253,744,542
2,610,152,630,939
150
Other current assets
273,695,100,839
222,738,853,430
151
Short-term prepaid expenses
11(a)
33,811,409,608
34,273,189,647
152
Value Added Tax to be reclaimed
18(a)
176,502,020,418
127,296,421,310
153
Other taxes receivable
18(a)
63,381,670,813
61,169,242,473
BRIGHTEN LIVES
3
4(a)
SEPARATE BALANCE SHEET
Form B 01 - DN
As at 31 December Code ASSETS (continued) 200
LONG-TERM ASSETS
210
Long-term receivables
216
Other long-term receivables
Note
8(b)
2017 VND
2016 VND
19,658,383,070,708
12,518,233,917,576
193,670,726,330
907,906,778,261
193,670,726,330
907,906,778,261
134,599,843,385
119,757,184,853
89,870,796,906
91,174,216,022
220
Fixed assets
221
Tangible fixed assets
222
Historical cost
124,401,270,278
116,042,582,070
223
Accumulated depreciation
(34,530,473,372)
(24,868,366,048)
44,729,046,479
28,582,968,831
12(a)
227
Intangible fixed assets
228
Historical cost
50,149,950,044
29,773,073,718
229
Accumulated amortisation
(5,420,903,565)
(1,190,104,887)
1,314,479,799,383
308,170,066,254
1,331,862,308,547
316,018,036,048
(17,382,509,164)
(7,847,969,794)
292,558,067,073
280,223,268,503
230
Investment properties
231
Historical cost
232
Accumulated depreciation
12(b)
13
240
Long-term assets in progress
241
Long-term work in progress
14
224,136,375,352
233,819,522,165
242
Construction in progress
15
68,421,691,721
46,403,746,338
250
Long-term investments
17,648,684,947,467
10,742,536,587,895
251
Investments in subsidiaries
4(b)
16,617,792,887,467
10,529,415,042,895
252
Investments in associates
4(b)
1,030,892,060,000
210,006,345,000
253
Investments in other entities
4(b)
-
3,115,200,000
260
Other long-term assets
74,389,687,070
159,640,031,810
261
Long-term prepaid expenses
73,413,813,498
158,664,158,238
262
Deferred income tax assets
975,873,572
975,873,572
270
TOTAL ASSETS
26,995,100,237,328
23,827,879,471,759
11(b) 23
Financial Statements 2017
267
SEPARATE BALANCE SHEET
Form B 01 - DN
As at 31 December Code RESOURCES
2017 VND
2016 VND
15,815,002,083,930
14,612,306,536,789
6,482,181,340,468
7,870,294,471,354
300
LIABILITIES
310
Short-term liabilities
311
Short-term trade accounts payable
16
109,079,438,699
279,143,774,099
312
Short-term advances from customers
17
541,931,205,610
2,237,975,628,156
313
Tax and other payables to the State Budget
18
15,397,184,292
2,693,533,635
314
Payable to employees
114,616,082,625
167,232,393,967
315
Short-term accrued expenses
19
570,338,370,866
368,158,915,150
318
Short-term unearned revenue
20
1,505,790,703
143,941,448
319
Other short-term payables
21(a)
822,614,019,388
754,774,450,500
320
Short-term borrowings
22(a)
4,301,150,382,990
4,053,475,469,104
322
Bonus and welfare funds
5,548,865,295
6,696,365,295
330
Long-term liabilities
9,332,820,743,462
6,742,012,065,435
336
Long-term unearned revenue
20
65,749,720,031
-
337
Other long-term payables
21(b)
244,556,717,870
240,952,447,466
338
Long-term borrowings
22(b)
9,022,514,305,561
6,501,059,617,969
400
OWNERS’ EQUITY
11,180,098,153,398
9,215,572,934,970
410
Capital and reserves
11,180,098,153,398
9,215,572,934,970
6,496,587,880,000
5,961,992,340,000
6,428,287,880,000
5,893,692,340,000
68,300,000,000
68,300,000,000
411
Owners’ capital
24, 25
411a
»» Ordinary shares with voting rights
411b
»» Preference shares
412
Share premium
24
3,206,830,905,400
2,174,026,445,400
421
Undistributed earnings
24
1,476,679,367,998
1,079,554,149,570
421a
»» Undistributed post-tax profits of
previous years
1,054,789,149,570
222,549,105,278
421b
»» Post-tax profit of current year
421,890,218,428
857,005,044,292
440
TOTAL RESOURCES
26,995,100,237,328
23,827,879,471,759
Do Phuong Thuy Preparer 268
Note
BRIGHTEN LIVES
Tran Thi Thanh Van Chief Accountant
Bui Thanh Nhon Chairman 10 March 2018
SEPARATE INCOME STATEMENT
Form B 02 - DN
Year ended 31 December Note
Code
2017 VND
2016 VND
2,997,814,436,871
3,739,648,758,345
(4,395,144,584)
(6,776,714,246)
01
Sales of goods and rendering of services
02
Less deductions
10
Net revenue from goods and rendering of services
27
2,993,419,292,287
3,732,872,044,099
11
Cost of goods sold and services
28
(2,736,582,160,890)
(3,368,590,289,217)
20
Gross profit from sales of goods and rendering of services
256,837,131,397
364,281,754,882
21
Financial income
29
1,676,500,005,991
1,446,337,089,286
22
Financial expenses
30
(1,311,898,120,465)
(812,634,467,272)
23
- Including: Interest expenses
(1,166,913,635,086)
(677,897,599,474)
25
Selling expenses
31
(70,744,142,906)
(17,966,476,584)
26
General and administration expenses
32
(115,451,349,858)
(129,282,004,958)
30
Net operating profit
435,243,524,159
850,735,895,354
31
Other income
10,657,894,231
24,313,394,126
32
Other expenses
(24,011,199,962)
(18,044,245,188)
40
Net other (expenses)/income
(13,353,305,731)
6,269,148,938
50
Net accounting profit before tax
421,890,218,428
857,005,044,282
51
Business income tax â&#x20AC;&#x201C; current
34
-
-
52
Business income tax - deferred
23, 34
-
-
60
Net profit after tax
421,890,218,428
857,005,044,292
Do Phuong Thuy Preparer
33
Tran Thi Thanh Van Chief Accountant
Bui Thanh Nhon Chairman 10 March 2018
Financial Statements 2017
269
SEPARATE CASH FLOW STATEMENT
Form B 03 - DN
(Indirect method)
Year ended 31 December Code
Note
2017 VND
2016 VND
421,890,218,428
857,005,044,292
CASH FLOWS FROM OPERATING ACTIVITIES 01
Net profit before tax Adjustments for:
02
Depreciation and amortisation
28,497,320,448
16,679,619,532
04
Unrealised foreign exchange (gain)/losses
(5,156,804,641)
33,704,935,561
05
Profits from investing activities
(1,664,913,840,881)
(1,332,454,210,667)
06
Interest expense and bond issuance fee
1,207,436,011,071
677,897,599,474
08
Operating (loss)/profit before changes in working capital
(12,247,095,575)
252,832,988,192
09
Decrease/(increase) in receivables
3,388,267,647,438
(1,891,404,222,956)
10
Increase in inventories
(272,243,758,657)
(1,388,040,945,405)
11
Decrease in payables
(2,013,503,312,520)
(2,424,522,605,043)
12
Decrease/(increase) in prepaid expenses
121,842,254,160
(60,965,550,427)
14
Interest paid
(798,960,863,057)
(579,758,818,599)
15
Business income tax paid
(1,167,942,963)
(67,153,094,070)
20
Net cash inflows/(outflows) from operating activities
411,986,928,826
(6,159,012,248,308)
(1,042,079,304,474)
(160,785,964,624)
3,782,828,295
10,245,671,963
CASH FLOWS FROM INVESTING ACTIVITIES
270
21
Purchases of fixed assets and other longterm assets
22
Proceeds from disposals of fixed assets and other long-term assets
23
Loans granted, purchases of debt instruments of other entities
(898,268,929,392)
(2,912,909,048,050)
24
Collection of loans, proceeds from sales of debt instruments of other entities
1,978,105,773,232
2,348,466,894,228
25
Investments in other entities
(7,497,424,490,000)
(5,187,538,384,000)
26
Proceeds from divestment in other entities
669,138,898,895
2,053,093,700,000
27
Dividends and interest received
1,337,650,118,231
1,362,270,232,641
30
Net cash outflows from investing activities
(5,449,095,105,213)
(2,487,156,897,842)
BRIGHTEN LIVES
SEPARATE CASH FLOW STATEMENT
Form B 03 - DN
(Indirect method)
Year ended 31 December Code
Note
2017 VND
2016 VND
200,000,000,000
3,570,462,570,000
CASH FLOWS FROM FINANCING ACTIVITIES 31
Proceeds from issue of shares
33
Proceeds from borrowings
12,515,475,954,629
12,547,797,361,811
34
Repayments of borrowings
(8,358,606,729,136)
(7,078,344,802,819)
36
Dividends paid
(17,100,000,000)
(53,490,000,000)
40
Net cash inflows from financing activities
4,339,769,225,493
8,986,425,128,992
50
Net (decrease)/increase in cash and cash equivalents
(697,338,950,894)
340,255,982,842
60
Cash and cash equivalents at beginning of year
2,153,027,696,086
1,811,176,648,805
61
Effect of foreign exchange differences
947,160
1,595,064,439
70
Cash and cash equivalents at end of year
3
3
1,455,689,692,352
2,153,027,696,086
Major non-cash transactions in the year were presented in Note 37.
Do Phuong Thuy Preparer
Tran Thi Thanh Van Chief Accountant
Bui Thanh Nhon Chairman 10 March 2018
Financial Statements 2017
271
SUMMARY OF THE AUDITED CONSOLIDATED FINANCIAL STATEMENT UNDER IFRS for the year ended 31 December 2017 and 31 December 2016
272
BRIGHTEN LIVES
Consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2017 and 31 December 2016
2017
2016
VND
VND
11,557,731,039,124
7,302,135,763,580
Cost of sales
(8,878,471,479,175)
(5,728,720,729,212)
Gross profit
2,679,259,559,949
1,573,415,034,368
Selling and distribution costs
(245,102,115,457)
(164,994,890,032)
Administrative expenses
(590,617,373,096)
(630,805,224,676)
Other operating income
793,119,030,981
2,394,262,292,505
Other operating expenses
(42,439,591,417)
(35,419,274,586)
2,594,219,510,960
3,136,457,937,579
913,490,998,339
623,632,877,732
(1,487,922,278,287)
(1,758,015,173,697)
(574,431,279,948)
(1,134,382,295,965)
12,079,426,593
498,537,487
2,031,867,657,605
2,002,574,179,101
Income tax expense
(561,331,848,842)
(529,331,062,103)
Profit for the year
1,470,535,808,763
1,473,243,116,998
1,444,741,958,933
1,466,137,989,063
25,793,849,830
7,105,127,935
Items that may be reclassified to profit or loss
-
-
Items that will not be reclassified to profit or loss
-
-
Other comprehensive income for the year, net of tax
-
-
1,470,535,808,763
1,473,243,116,998
1,444,741,958,933
1,466,137,989,063
25,793,849,830
7,105,127,935
Basic earnings per share
2,271
2,551
Diluted earnings per share
2,264
2,396
Revenue
Operating profit Finance income Finance costs Finance costs - net Share of profit of associates Profit before tax
Profit is attributable to: Equity holders of the parent Non-controlling interests Other comprehensive income
Total comprehensive income for the year Total comprehensive income is attributable to: Equity holders of the parent Non-controlling interests Earning per share for profit attributable to the ordinary equity holders of the Company:
Financial Statements 2017
273
Consolidated statement of financial position As at 31 December 2017 and 31 December 2016
2017
2016
VND
VND
418,742,041,484
171,560,034,730
Intangible assets
2,543,454,547,999
2,119,173,005,467
Investment properties
2,917,914,582,418
1,946,696,285,032
Investments in associates
1,042,972,935,246
866,516,022,897
118,475,260,607
224,787,397,109
-
3,115,200,000
Long-term prepaid expenses
270,088,505,750
152,534,656,577
Long-term lending
496,155,947,900
578,557,095,252
Other long-term receivables
204,757,116,832
821,972,303,351
8,012,560,938,236
6,884,912,000,415
27,579,164,400,707
15,992,635,884,927
390,715,866,371
319,561,720,278
1,771,344,474,280
936,793,642,253
308,451,669,695
94,855,739,725
2,733,754,024,831
3,561,720,534,424
Short-term deposits at banks
526,238,868,213
964,822,616,829
Tax receivables
772,308,606,472
509,809,114,725
1,019,281,690,586
4,266,144,176,938
508,835,577,318
1,137,281,000,000
6,163,551,980,186
2,199,688,432,791
Total current assets
41,773,647,158,659
29,983,312,862,890
TOTAL ASSETS
49,786,208,096,895
36,868,224,863,305
NON-CURRENT ASSETS Property, plant and equipment
Deferred income tax assets Available-for-sales financial assets
Total non-current asset CURRENT ASSETS Inventories Trade receivables Short-term prepayments to suppliers Short-term prepaid expenses Short-term lending
Other short-term receivables Restricted cash Cash and cash equivalents
274
BRIGHTEN LIVES
Consolidated statement of financial position As at 31 December 2017 and 31 December 2016
2017
2016
VND
VND
12,141,945,599,771
9,908,313,780,055
Long-term unearned revenue
2,163,153,496
455,122,518
Deferred income tax liabilities
1,684,771,452,626
1,524,330,138,154
3,753,825,075
4,185,075,098
13,832,634,030,968
11,437,284,115,825
Short-term borrowings
8,667,364,730,239
5,865,769,743,653
Trade payable
3,508,763,425,904
1,970,784,982,194
Deposits and down payment from customers
8,888,651,329,594
6,391,341,991,541
-
647,609,667,670
Other short-term payables
664,731,289,851
524,679,918,525
Current income tax liabilities
207,324,266,996
135,583,144,022
Other tax payables
381,337,754,436
86,339,944,033
Total current liabilities
22,318,172,797,020
15,622,109,391,638
Total liabilities
36,150,806,827,988
27,059,393,507,463
Net assets
13,635,401,268,907
9,808,831,355,842
Share capital
6,466,587,880,000
5,961,992,340,000
Share premium
4,513,289,961,170
2,174,026,445,400
33,717,914,439
-
1,980,826,428,701
688,963,308,401
12,994,422,184,310
8,824,982,093,801
640,979,084,597
983,849,262,041
13,635,401,268,907
9,808,831,355,842
LIABILITIES Non-current liabilities Long-term borrowings
Other long-term payables Total non-current liabilities Current liabilities
Derivative financial liabilities
EQUITY
Other capital Retained earnings Equity attributable to equity holders of the parent Non-controlling interests Total equity
Financial Statements 2017
275
Consolidated statement of cash flows for the year ended 31 December 2017 and 31 December 2016
2017
2016
VND
VND
2,031,867,657,605
2,002,574,179,101
79,537,111,659
50,572,421,562
240,188,843,231
134,765,248,830
2,126,014,068
(37,493,887,761)
(5,083,914,401)
34,551,090,149
4,365,996,039
3,361,523,132
Changes in fair value of derivative financial instrument
(216,650,611,900)
647,609,667,670
Gain on disposal of subsidiaries
(247,550,202,788)
(754,744,204,514)
Interest income
(561,776,872,528)
(502,352,513,916)
Interest expenses
1,460,894,694,917
1,052,342,214,255
Dividend income
(212,400,000)
(269,040,000)
(12,079,426,593)
(498,537,487)
20,293,763
(1,031,594,488)
-
(94,442,887,350)
(472,285,300,759)
(1,597,491,943,722)
2,303,361,882,313
937,451,735,461
2,349,245,262,263
1,133,902,844,848
(2,189,466,720,045)
948,845,397,591
Increase/(decrease) in trade and other payables
2,692,655,891,124
(1,838,575,598,741)
Increase in prepaid expenses
(236,277,636,790)
(22,261,709,419)
528,290,594,005
321,440,362,620
(1,427,991,005,225)
(871,558,747,191)
(652,457,047,620)
(431,733,905,624)
3,367,361,220,025
177,510,379,545
CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments for: Depreciation and amortisation Impairment of goodwill Provisions for decline in value of inventories Unrealised foreign exchange differences Loss on disposal of properties, plants and equipment
Share of profit of associates Loss/(gain) from disposal of associates Gain on initial recognition at fair value of financial instruments Revaluation of investments at each business combination stage Operating profit before changes in working capital Decrease in trade and other receivables (Increase)/decrease in inventories
Interest receipt Interest paid Business income tax paid Net cash inflows from operating activities
276
BRIGHTEN LIVES
Consolidated statement of cash flows for the year ended 31 December 2017 and 31 December 2016
2017
2016
VND
VND
(1,129,651,141,626)
(155,884,091,352)
8,353,511,141
14,048,083,213
Payment for short-term deposits at banks
(522,607,303,316)
(185,355,435,472)
Receipt from short-term deposits at banks
974,920,069,469
-
(4,775,551,762,397)
(6,936,829,597,603)
4,821,131,231,088
5,858,273,043,162
(1,160,044,273,138)
(2,329,261,542,457)
3,755,842,309,649
981,011,925,228
(5,086,532,181,862)
(5,564,131,753,174)
Proceeds on disposal of subsidiaries, net of cash disposal
1,222,009,780,643
1,614,403,748,265
Payment for acquisition of associates
(955,500,000,000)
(40,000,000,000)
10,110,000,000
3,000,000,000
561,335,281,840
10,060,000,000
2,400,000,000
1,401,639,495
212,400,000
269,040,000
(2,273,572,078,509)
(6,728,994,940,695)
200,000,000,000
3,570,462,570,000
(405,000,000,000)
-
Proceeds from borrowings
17,617,361,038,758
15,156,995,455,043
Repayment of borrowings
(14,863,455,287,745)
(11,037,992,455,817)
Restricted bank deposits
628,445,422,682
(349,521,125,000)
Dividend paid
(24,765,000,000)
(53,490,000,000)
Dividend paid to non-controlling interests
(43,400,097,000)
(1,149,219,932)
(325,962,778,467)
(2,071,215,603,486)
86,871,900,000
406,963,300,000
Net cash inflows from financing activities
2,870,095,198,228
5,621,052,920,808
Net increase/(decrease) in cash and cash equivalents
3,963,884,339,744
(930,431,640,342)
(20,792,349)
748,909,851
Cash and cash equivalents at beginning of year
2,199,688,432,791
3,129,371,163,282
Cash and cash equivalents at end of year
6,163,551,980,186
2,199,688,432,791
CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment and investment properties Proceeds from sale of property, plant and equipment
Loan granted to other parties Collection of loans from other parties Cash advances to other parties Collection of cash advances from other parties Payment for acquisition of subsidiaries, net of cash acquired
Proceed from disposal of associates Received from collection of available-for-sale financial assets Dividends receipt from associates Dividends receipt from investments in other equity instrument Net cash outflows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issues of shares Capital withdrawal of non-controlling interests
Payment for further acquisition non-controlling interest Capital contribution from non-controlling interests
Effects of translation differences
Financial Statements 2017
277
Contact information and Operation network
Integrity hotline Email Telephone
: nvl@novaland.com.vn : (84) 903 999 119
Investor Relations Department Address Contact Email Telephone
: Floor 7, Novaland Office Building, 65 Nguyen Du, Ben Nghe Ward, Dist. 1, HCMC : Mr. Phan Le Hoa - Chief Financial Officer : ir@novaland.com.vn : (84) 906 35 38 38
Communications & Press Relations Department Address Contact Email Telephone
: Floor 3, Novaland Office Building, 65 Nguyen Du, Ben Nghe Ward, Dist. 1, HCMC : Ms. Vu Thanh Ha - Head of Communications Department : info@novaland.com.vn : (84) 906 35 38 38
Customer Care Department Address Contact Email Telephone
: Floor 3, Novaland Office Building, 65 Nguyen Du, Ben Nghe Ward, Dist. 1, HCMC : Ms. Tran Thi Loan - Head of Customer Care Department : chamsockhachhang@novaland.com.vn : 1900 636 666
Corporate Social Responsibility - CSR Address Contact Email Telephone
: Floor 3, Novaland Office Building, 65 Nguyen Du, Ben Nghe Ward, Dist. 1, HCMC : Ms. Pham Thi Phuong Nhi - Head of CSR Department : info@novaland.com.vn : (84) 906 35 38 38
Procurement Department Address Contact Email Telephone
278
BRIGHTEN LIVES
: Floor 5, Novaland Office Building, 65 Nguyen Du, Ben Nghe Ward, Dist. 1, HCMC : Ms. Le Thi Thanh Huyen - Head of Procurement Department : procurement@novaland.com.vn : (84) 906 35 38 38
Main office Address Telephone
: Novaland Office Building, 65 Nguyen Du, Ben Nghe Ward, Dist. 1, HCMC : (84) 906 35 38 38
Novaland Real Estate Sale Office Dist. 1
Novaland Real Estate Sale Office Dist. 2
Novaland Real Estate Sale Office 125 Cach Mang Thang 8
Address: Novaland Office Building, 65 Nguyen Du, Ben Nghe Ward, Dist. 1, HCMC
Address: Novaland Sample Apartment Quarter, 67 Mai Chi Tho, An Phu Ward, Dist.2, HCMC
Address: 125 Cach Mang Thang 8, Ben Thanh Ward, Dist. 1, HCMC
Telephone: (84) 906 35 38 38
Telephone: (84) 906 35 38 38
Telephone: (84) 906 35 38 38
NOVALAND GROUP Novaland Group Office Building 65 Nguyen Du, Ben Nghe Ward, District 1, Ho Chi Minh City (+84) 906 35 38 38 info@novaland.com.vn www.novaland.com.vn