Vietnam Infrastructure Regulatory News (VNI)

Vietnam Infrastructure Limited

Audited financial results for the twelve months ended 30 June 2013

Vietnam Infrastructure Limited ("VNI" or "the Company"), the first publicly traded fund to focus on investment into infrastructure assets in Vietnam, today announces its full year results for the twelve months ended 30 June 2013 ('the period').

Financial highlights:

· Net Asset Value ("NAV") of USD196.9 million (2012: USD201.8 million), and NAV per share of USD0.53 (2012: USD0.50).

· Cash and equivalents at 30 June 2013 of USD26.5 million.

· No debt at the fund level.

Operational highlights:

· Secured two additional tenants at Ba Thien II Industrial Park, outside Hanoi.

· Acquired the remaining stakes in both Mobile Information Service JSC (MIS) and Global Infrastructure Investment JSC (GII). As a result, SEATH now controls 100 percent of its portfolio of base transceiver station subsidiary companies.

· At July EGM, shareholders voted to approve the implementation of a share buyback authority to facilitate a return of capital and income to shareholders.

· As at 30 June 2013, the Company has spent USD9.0 million repurchasing 27.6 million shares, representing 6.9 percent of total shares in issue. 

· Appointment of Rupert Carrington and Robert Binyon as two new Independent Non-Executive Directors, bringing the total number of Board members to five.

Commenting, Paul Cheng, Chairman of Vietnam Infrastructure Limited, said:

"Throughout the twelve months to 30 June 2013 the economic environment in Vietnam remained persistently stable with falling interest rates and lower inflation. Looking towards the year ahead, the Board has an active agenda to prepare the Company for the lead up to its continuation vote in 2017. With just under half of the initial ten-year life of the fund to run the Board believes that it is important to monitor the Company's investment policy to ensure that it responds to changing circumstances."

Notes to Editors:

VinaCapital is the leading investment management and real estate development firm in Vietnam, with a diversified portfolio of USD1.6 billion in assets under management. VinaCapital was founded in 2003 and boasts a team of managing directors who bring extensive international finance and investment experience to the firm. Our mission is to produce superior returns for investors by using our experience and knowledge to identify the key trends and opportunities that emerge as Vietnam continues to develop its economy. To achieve this, VinaCapital has industry-leading asset class teams covering capital markets, private equity, fixed income, venture capital, real estate and infrastructure.

VinaCapital manages three closed-end funds trading on the AIM Market of the London Stock Exchange. These funds are: VinaCapital Vietnam Opportunity Fund Limited (VOF), VinaLand Limited (VNL), and Vietnam Infrastructure Limited (VNI). VinaCapital also co-manages the USD32 million DFJ VinaCapital L.P. technology venture capital fund with Draper Fisher Jurvetson.

VinaCapital has offices in Ho Chi Minh City, Hanoi, Danang, Nha Trang and Singapore. More information about VinaCapital is available at www.vinacapital.com.

More information on Vietnam Infrastructure Limited is available at www.vinacapital.com/vni

Enquiries:

David Dropsey

VinaCapital Investment Management Limited

Investor Relations/Communications

+84 8 821 9930

david.dropsey@vinacapital.com

Philip Secrett

Grant Thornton UK LLP, Nominated Adviser

+44 (0)20 7383 5100

philip.j.secrett@uk.gt.com

Hiroshi Funaki

Edmond de Rothschild Securities, Broker

+44 (0)20 7845 5960

funds@lcfr.co.uk

David Benda / Hugh Jonathan

Numis Securities Limited

+44 (0)20 7260 1000

funds@numis.com

Andrew Walton

FTI Consulting, Public Relations (London)

+44 20 7269 7204

andrew.walton@fticonsulting.com

Chairman's statement

Dear Shareholders,

Throughout the twelve months to 30 June 2013 the economic environment in Vietnam remained persistently stable with falling interest rates and lower inflation. The Vietnam Dong completed the year with a measure of stability against the United States Dollar. The country's previously crippling inflation rate appears to have hit a manageable 6.0 to 7.0 per cent year-on-year range, which is contributing to a renewed confidence that the economic problems recently suffered by the country are behind us for the present. The country's capital markets have proven to be resilient over the past year with the VN Index closing at 481.1 as at 30 June 2013, a 14.0 percent year-on-year increase from the close of 422.0 as at 30 June 2012.

In July 2012 VNI held an EGM in which shareholders voted to approve the implementation of a share buyback authority. This share buyback programme has been integral in narrowing the discount in the share price to the Company's net asset value ("NAV") per share.

At the end of the financial year VNI recorded an audited NAV of USD196.9 million or USD0.53 per share, representing a 6.0 percent year-on-year increase from a NAV per share of USD0.50 as at 30 June 2012. Notably however, VNI's share price increased considerably to close the year at USD0.36 per share, an increase of 72.2 percent above USD0.21 as at 30 June 2012. The Board believes this considerable improvement in the Company's share price is the result of many factors, including the onset of the share buyback programme and an improvement in the value of the company's listed equity portfolio. As a result, VNI's share price to NAV discount narrowed to 32.1 percent from 58.2 percent a year earlier. A further closing of this discount remains a top priority for the Board and the investment manager.

Looking towards the year ahead, the Board has an active agenda to prepare the Company for the lead up to its continuation vote in 2017. With just under half of the initial ten-year life of the fund to run the Board believes that it is important to monitor the Company's investment policy to ensure that it responds to changing circumstances. Accordingly there will be:

· a renewed focus on developing the existing private equity investments, over which the Company has control, to their full potential.

· a rebalancing of the Company's portfolio towards listed infrastructure investments which are expected to provide greater liquidity and stronger returns than new opportunities in the private equity sector.

The composition of the Board has been enhanced during the year and the Directors continue to review the Company's corporate governance with the view to ensuring that they are in line with current market practice. In the past year VNI has appointed two new independent non-executive directors, Mr Rupert Carington and Mr Robert Binyon. Both directors bring considerable experience in emerging market funds and as a result of their appointments; the Board is now entirely independent from the investment manager.

We highly appreciate the feedback that shareholders have provided over the last year and look forward to your continuing support.

Paul Cheng

Chairman

Vietnam Infrastructure Limited

14 October 2013

CONSOLIDATED BALANCE SHEET

CONSOLIDATED BALANCE SHEET (CONTINUED)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF CASH FLOWS

The principal non-cash transaction is the transfer of investment properties to the Group as disclosed in Note 8(a).

Notes to the Consolidated Financial Statements

1 GENERAL INFORMATION

Vietnam Infrastructure Limited ("the Company") is a limited liability company incorporated in the Cayman Islands. The registered office of the Company is PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands.

The Group's and the Company's principal activity is to invest in a diversified portfolio of entities owning infrastructure projects and assets primarily in Vietnam. The Group mainly invests and holds equity and debt instruments in unquoted companies that themselves hold, develop or operate infrastructure assets. The Group may also invest in entities whose shares or other instruments are listed on a stock exchange, or traded on over-the-counter ("OTC") markets and in other funds that invest in infrastructure projects or assets. The Company is listed on the AIM Market of the London Stock Exchange under the ticker symbol VNI.

The consolidated financial statements for the year ended 30 June 2013 were approved for issue by the Board of Directors on 14 October 2013.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

2.1 Basis of preparation

The consolidated financial statements of Vietnam Infrastructure Limited have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The consolidated financial statements have been prepared using the historical cost convention, as modified by the revaluation of the investment properties and financial assets at fair value through profit or loss and financial liabilities, the measurement bases of which are described in the accounting policies below.

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

2.2 Changes in accounting policy and disclosures

(a) New and amended standards adopted by the Group

Amendments to IAS 1, "Presentation of Financial Statements", require an entity to group items presented in other comprehensive income into those that, in accordance with other IFRSs: (a) will not be reclassified subsequently to profit or loss and (b) will be reclassified subsequently to profit or loss when specific conditions are met. The amendments are effective for annual periods beginning on or after 1 July 2012 and have been adopted by the Group.

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

adopted by the Group

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

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

IFRS 9, "Financial instruments", addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October 2010. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity's business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity's own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. The Group is yet to assess IFRS 9's full impact and intends to adopt IFRS 9 no later than the accounting year ending 30 June 2016. The Group will also consider the impact of the remaining phases of IFRS 9 when completed by the IASB.

IFRS 10, "Consolidated financial statements" and Amendments to IFRS 10: The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial statements. It sets out how to apply the principle of control to identify whether an investor controls an investee and therefore must consolidate the investee. It also sets out the accounting requirements for the preparation of consolidated financial statements. The amendments to IFRS 10 define an investment entity and introduce an exception from the consolidation requirements for investment entities. The Group is yet to assess IFRS 10's full impact and if applicable, it intends to adopt IFRS 10 and the Amendments to IFRS 10 no later than the accounting year ending 30 June 2014 and 30 June 2015, respectively.

IFRS 12, "Disclosures of interests in other entities", includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The Group is yet to assess the full impact of IFRS 12 and intends to adopt IFRS 12 no later than the accounting year ending 30 June 2014.

IFRS 13, "Fair value measurement", aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. The requirements, which are largely aligned between IFRS and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS or US GAAP. The Group is yet to assess the full impact of IFRS 13 and intends to adopt IFRS 13 no later than the accounting year ending 30 June 2014.

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

2.3 Consolidation

(a) Subsidiaries

Subsidiaries are all entities 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, along with contractual arrangements, are taken into consolidation. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are excluded from consolidation from the date that the control ceases. The majority of the Group's subsidiaries have a reporting date of 31 December. For subsidiaries with a different reporting date, the management information up to 30 June are used for consolidation purposes and are adjusted for compliance with the Group's accounting policies.

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

Acquisition-related costs are expensed as incurred.

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

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

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

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

Disposal of subsidiaries

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

(b) Associates

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

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

The Group's share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment.

When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

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

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

2.4 Foreign currency translation

(a) Functional and presentation currency

The Group's consolidated financial statements are presented in United States Dollars ("USD") ("the presentation currency"). The financial statements of each consolidated entity are initially prepared in the currency of the primary economic environment in which the entity operates ("the functional currency"), which for most investments is Vietnam Dong ("VND"). The financial statements prepared using VND are then translated into the presentation currency. USD is used as the presentation currency because it is the primary basis for the measurement of the performance of the Group and a large proportion of significant transactions of the Group are denominated in USD.

(b) Transactions and balances

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

Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction. Non-monetary items at fair value are translated using the exchange rate at the date when the fair value are determined. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss.

(c) Group companies

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

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

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

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

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

2.5 Investment properties

Investment properties are properties owned or held to earn rentals or capital appreciation, or both, or land held for a currently undetermined use. Property held under operating leases (including leasehold land) that would otherwise meet the definition of investment property is classified as investment property on a property by property basis. Land held under operating leases is classified and accounted for by the Group as investment property when the rest of the definition of investment property is met.

Investment property is measured initially at its cost, including related transaction costs. After initial recognition, investment property is carried at fair value.

Investment property under construction is measured at fair value if the fair value is considered to be reliably determinable. Investment property under construction for which the fair value cannot be determined reliably, but for which the company expects that the fair value of the property will be reliably determinable when construction is completed, are measured at cost less impairment until the fair value becomes reliably determinable or construction is completed - whichever is earlier. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, the Group uses alternative valuation methods, such as recent prices on less active markets or discounted cash flow projections. Valuations are performed as of the financial position date by professional valuers who hold recognised and relevant professional qualifications and have recent experience in the location and category of the investment property being valued. These valuations form the basis for the carrying amounts in the financial statements. Investment property that is being redeveloped for continuing use as investment property or for which the market has become less active continues to be measured at fair value.

2.6 Operating leases

Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases, unless they are treated as investment properties (see accounting policy 2.5). Where the Group has the use of an asset held under an operating lease, payments made under the lease are charged to the consolidated income statement on a straight line basis over the term of the lease. Prepayments for operating leases represent property held under operating leases where a portion, or all, of the lease payments have been paid in advance, and the properties cannot be classified as an investment property.

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

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable at the reporting date. The assets are classified as "asset held for sale" and presented separately in the consolidated balance sheet. They are measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair values less costs to sell.

2.8 Financial assets

2.8.1 Classification

The Group classifies its financial assets in the following categories: at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. The Group does not have any financial assets classified as available for sale.

(a) Financial assets at fair value through profit or loss

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

(b) Loans and receivables

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

2.8.2 Recognition and measurement

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

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

If the investments do not have a quoted market price in an active market and whose fair value cannot be reliably measured, such investments shall be measured at cost, less provision for impairment.

Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are presented in the income statement within "fair value gain/(loss) of financial assets at fair value through profit or loss" in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the income statement when the Group's right to receive payments is established.

2.9 Offsetting financial instruments

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

2.10 Prepayments for acquisitions of investment property

Prepayments are made by the Group to vendors for land compensation and other related costs, and professional fees directly attributed to the projects, where the final transfer of the investment/property is pending the approval of the relevant authorities and/or is subject to either the Group or the vendor completing certain performance conditions set out in agreements. Such prepayments are measured initially at cost until such time as the approval is obtained or conditions are met, at which point they are transferred to appropriate investment accounts.

2.11 Impairment of assets

a) Impairment of non-financial assets

Assets that have an indefinite useful life, for example, prepayments for acquisitions of investment properties, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

b) Impairment of financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future

cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument's fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.

The Group's trade and other receivables, prepayments for acquisitions of investments and interests in associates are subject to impairment testing.

2.12 Trade receivables

Trade receivables are amounts due from customers for services performed in the ordinary course of business. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

2.13 Cash and cash equivalents

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

2.14 Share capital

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

2.15 Treasury shares

Where any Group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company's equity holders until the shares are cancelled or reissued.

Repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/from accumulated losses.

2.16 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.17 Current and deferred income tax

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

Current income tax assets and/or liabilities comprise those obligations to, or claims from, tax authorities relating to the current or prior reporting periods that are unpaid at the reporting date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate based on the taxable profit for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in the consolidated income statement.

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and associates is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future.

Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income.

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

2.18 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. Provisions are not recognised for future operating losses.

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

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

2.19 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for services rendered, stated net of discounts, returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured, when it is probable that future economic benefits will flow to the entity; and when specific criteria have been meet for each of the Group's activities, as described below:

(a) Sale of services

The Group's revenue represents the rental income from base transceiver station ("BTS") towers leasing services and information rescue services. Revenue from these services is recognised in the accounting period in which the services are rendered and the rental income is due to be received.

(b) Interest income

Interest income is recognised on the effective interest rate basis.

(c) Dividend income

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

2.20 Related parties

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. Enterprises and individuals that directly, or indirectly through one or more immediately, control or are controlled by, or under common control with, the Company including holding company, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning directly, or indirectly, an interest in the voting power of the Company that give them significant influence over the entity, key management personnel, including directors and officers of the Company and close members of their families. When considering possible related party relationships, attention is directed to the substances of the relationship, and not merely the legal form.

3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

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

3.1 Critical accounting estimates and assumptions

(a) Fair value of investment properties

The investment properties of the Group are stated at fair value in accordance with Note 2.5. The fair values of investment properties have been determined by independent professional valuers. These valuations are based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results. The estimated fair values provided by the independent professional valuers are used by the Valuation Committee as the primary basis for estimating each property's fair value. In making its judgement, the Valuation Committee considers information from a variety of sources, including:

(i) current prices in an active market for properties of different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect those differences;

(ii) recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices;

(iii) any other adjustments relevant to the property held by the Group but which were not factored into the valuation by the independent professional valuers, such as land compensation, costs and any other discount factors; and

(iv) discounted cash flow projections based on reliable estimates of future cash flows, derived from the terms of external evidence such as current market rents and sales prices for similar properties in the same location and condition and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of cash flows.

(b) Fair value of financial assets at fair value through profit or loss

Listed securities are quoted at the bid price at each reporting date. For unlisted securities which are traded over-the-counter, the fair value is the average brokers' price obtained from a minimum sample of three reputable securities companies at the reporting date.

The fair value of financial assets that are not traded in an active market (for example, unlisted securities where market prices are not readily available) is determined by using valuation techniques. The Group uses judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at each reporting date. Independent valuations are also obtained from professional valuers to evaluate and adjust valuations. The outcomes may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date.

3.2 Critical judgements in applying the Group's accounting policies

(a) Equity investments

When the Group has an interest in the voting power of an investee of between 20% and 50%, significant influence over the investee is presumed. At the reporting date, the Group has interests in certain investees with more than 20% voting power but which are not accounted for as associates (Note 11). These are accounted for as financial assets at fair value through profit or loss based on management's judgement after considering that:

i) The Group has no representation on the board of directors of the investee;

ii) The Group does not participate in policy-making processes, including decisions about dividends or other distributions;

iii) There were no interchanges of managerial personnel; and

iv) The Group does not provide essential technical information.

(b) Classification of Base Transceiver Stations (BTS) towers as investment properties

Management has classified the Base Transceiver Station ('BTS') towers as investment properties measured at fair value. Management determined that BTS towers can be considered as similar to buildings and thus can be classified as investment properties. The towers also display similar characteristics to investment properties, in that space in the towers is let to telecommunication tenants to earn rentals.

(c) Investment in Tan Phat Telecom Joint Stock Company ("Tan Phat")

Management assessed that its acquisition of Tan Phat during the year (Note 5(c)) is deemed an acquisition of assets and not that of a business acquisition. The assessment is based on the criteria of whether at the date of acquisition, a business existed. The assessment criteria is whether there were inputs, significant processes and outputs on the date the subsidiary was acquired. In the context of Tan Phat, management determined that at the date of acquisition, the processes in place by the company were mainly ancillary services to maintain the towers. Consequently, the acquisition is not an acquisition of business but an acquisition of assets which are the BTS towers within Tan Phat.

4 SEGMENT ANALYSIS

In identifying its operating segments, management generally follows the Group's sectors of investment which are based on internal management reporting information for the Investment Manager's management, monitoring of investments, and decision making. The operating segments by investment portfolio include energy, property and infrastructure developments, telecommunication, transportation and logistics, general infrastructure, environment, other capital markets and cash.

Each of the operating segments are managed and monitored individually by the Investment Manager as each requires different resources and approaches. The Investment Manager assesses, as reported to the Board, segment profit or loss using a measure which is consistent with that in profit or loss. There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss.

Segment information can be analysed as follows:

4. SEGMENT ANALYSIS (CONTINUED)

4. SEGMENT ANALYSIS (CONTINUED)

5 SUBSIDIARIES

The significant operating subsidiaries of the Group are incorporated in Vietnam and the details are as follows:

(a) Additional investment in Vina-CPK Limited

During the year, the Group contributed USD5 million into Vina-CPK Limited to increase the subsidiary's chartered capital. The local partner did not make an additional contribution for this capital call. As a result, the local partner's stake in Vina-CPK Limited was diluted to 2.8% (30 June 2012: 3.9%) and the Group's stake in Vina-CPK Limited was increased from 96.1% to 97.2%. The Group derecognised the non-controlling interest of USD62,000 and recorded an increase in equity attributable to owners of the parent of USD62,000.

(b) Acquisitions of additional interests in subsidiaries

On 19 November 2012, the Group acquired the remaining 25% of the issued shares of MIS for a consideration of USD2 million. The carrying amount of non-controlling interests in MIS on the date of acquisition was USD1.3 million. The Group derecognised the non-controlling interest of USD1.3 million and recorded a decrease in equity attributable to owners of the parent of USD0.7 million.

On 8 February 2013, the Group acquired the remaining 41% of the issued shares of GII for a purchase consideration of USD2.9 million. The carrying amount of non-controlling interests in GII on the date of acquisition was USD7.2 million. The Group derecognised the non-controlling interest of USD7.2 million and recorded an increase in equity attributable to owners of the parent of USD4.3 million.

The aggregated effect of changes in the ownership interests of MIS and GII is summarised as follows:

(c) Acquisition of 100% equity interest in Tan Phat

During the year, the Group acquired 100% equity interest in Tan Phat for cash consideration of USD1.8 million. This acquisition is deemed an acquisition of assets and not that of a business acquisition (Note 3.2(c)).

6 INVESTMENT PROPERTIES

7 PREPAYMENT FOR ACQUISITION OF INVESTMENT PROPERTY

8 INVESTMENTS IN ASSOCIATES

(a) The total consideration for the disposal of an associate was USD6 million, of which USD1 million was settled in cash and USD5 million was settled through the transfer of investment properties to the Group.

(b) The unrecognised share of loss of the associate is USD0.5 million, both in respect of the year ended 30 June 2013 and cumulatively.

(c) The movement in the allowance for impairment was as follows:

9 FINANCIAL INSTRUMENTS BY CATEGORY

10 TRADE AND OTHER RECEIVABLES

(*) During the year, based on a ruling of the High Court of Ho Chi Minh City, management has written off the interest receivable that was fully provided for at 30 June 2012.

The credit quality of the trade and other receivables as at the reporting date is as follows:

As at 30 June 2013 there is a significant concentration of credit risk relating to VMS Mobile Phone, a BTS customer, that represents 78% (30 June 2012: 68%) of trade receivables.

Trade and other receivables are short-term in nature, hence their carrying values are considered a reasonable approximation of their fair values at the reporting date.

11 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

The government bonds are three year bonds with fixed interest rates ranging from 8.6% to 10.4%. These bonds mature between September 2015 and January 2017.

The Group holds equity interests of more than 20% in the following unlisted entities but over which it does not have significant influence over:

12 CASH AND CASH AT BANKS