Vietnam Infrastructure Regulatory News (VNI)

Vietnam Infrastructure Limited

Audited financial results for the twelve months ended 30 June 2012

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 2012 ('the period').

Financial highlights:

·; Net profit attributable to shareholders for the period of USD12.7 million (2011: net loss of USD54.7 million).

·; Profit per share of USD0.01 (2011: losses per share of USD0.14).

·; Net Asset Value ("NAV") of USD201.8 million (2011: USD199.6 million), and NAV per share of USD0.503 (2011: USD0.497).

·; Cash and equivalents at 30 June 2010 of USD42.3 million.

·; No debt at the fund level.

Operational highlights:

·; Secured first tenant at Ba Thien II Industrial Park, outside Hanoi

·; Initial stages of cooperation with Japanese partner and provincial authorities to establish full service industrial park aimed at small and medium sized foreign enterprises

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

·; Appointment of Rupert Carrington as a new Independent Non-Executive Director bringing total number of Board members to four

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

"Vietnam's growth has continued to slow as an after effect of the tight monetary policy. Inflation has fallen rapidly and the 'crawling peg' currency policy has significantly aided the stabilization of the Vietnam Dong. The Board has reviewed the fund's strategy with the investment manager and believes that a balanced portfolio of diversified listed infrastructure assets and private equity investments in telecommunications, industrial zones and hydropower is most appropriate for the fund going forward. Closing the discount to NAV remains a top priority for the Board and Investment Manager and the recently approved share buyback should assist us in this goal."

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, Phnom Penh (Cambodia) 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 Corporate Finance, Nominated Adviser

+44 (0)20 7383 5100

philip.j.secrett@uk.gt.com

Hiroshi Funaki

LCF 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

James Jarmen

FTI Consulting, Public Relations (Hong Kong)

+852 3768 3535

james.jarman@fticonsulting.com 

Andrew Walton

FTI Consulting, Public Relations (London)

+44 20 7269 7204

andrew.walton@fticonsulting.com

Chairman's statement

Dear shareholders,

Throughout the past twelve months, Vietnam's economic growth continued to slow, finishing at 4.4 percent during the first half of 2012. A cooling economy has been the after effect of tight monetary policy aimed at easing the high inflation and interest rates of the last several years. After reaching a peak of 23 percent in August 2011, Vietnam's CPI fell rapidly in the following months. Additionally, the implementation of a 'crawling peg' currency policy has significantly aided in the stabilization of the Vietnam Dong (VND) against the USD. The VN Index started the year well, rising to 422 at June 2012's end, an increase of approximately 21 percent from the beginning of the year. However, after the fallout of a banking sector scandal involving two high profile Vietnamese businessmen, the VN Index has fallen and remained below 400.

For the 2012 financial year VNI saw its audited net asset value increase slightly by 1.1 percent to USD201.8 million or USD0.503 per share at 30 June 2012, from USD199.6 million or USD0.497 per share at 30 June 2011.

During the twelve months ended 30 June 2012, operational highlights included VNI securing its first tenant at the Ba Thien II Industrial Park, just outside Hanoi. Additionally, VNI is in the initial stages of cooperating with a Japanese partner and provincial authorities to establish a full service industrial park which should assist in signing up small to medium sized foreign enterprises.

In July, VNI held an EGM in which shareholders voted to approve the implementation of a share buyback authority. The share buyback authority will facilitate the return of capital to shareholders and assist the Company in seeking to reduce any discounts which may arise between the quoted price of the ordinary shares and the applicable net asset value per ordinary share.

Recently, VNI appointed Mr. Rupert Carington as a new Independent Non-executive Director, with effect from 1 October 2012, bringing the total number of Board members to four. Our decision to review the composition of the Board was made with the goal to reinforce independence from the Investment Manager, while adding someone with vast experience and a deep understanding in emerging market funds.

As of 30 June 2012, VNI's shares traded at USD0.209, representing a 58.2 percent discount to NAV. However, over the last two months, the share price for VNI has increased to approximately USD0.29, reducing the discount to 42.0 percent, as a result of renewed interest from investors and the impact of the share buyback programme. Closing the discount remains a top priority for the Board and Investment Manager and the ongoing repurchasing of shares in the open market should assist us in achieving this goal.

The Board has reviewed the fund's strategy with the investment manager and believes that a balanced portfolio containing a mix of diversified listed infrastructure holdings and private equity investments into telecommunications, industrial zones and hydropower is the most appropriate strategy for the fund going forward.

Thank you for your continued support.

Paul Cheng

Chairman

Vietnam Infrastructure Limited

30 October 2012

Consolidated Balance Sheet

Consolidated Balance Sheet (Continued)

Consolidated Statement of Changes in Equity

Consolidated Statement of Income

Consolidated Statement of Comprehensive Income

Consolidated Statement of Cash Flows

Notes to the Consolidated 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 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. The Group may also invest 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 2012 were approved for issue by the Board of Directors on 30 October 2012.

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 property and financial assets at fair value through profit or loss and financial liabilities, the measurement bases on 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 disclosure

(a) New and amended standards adopted by the Group

There are no IFRS or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 January 2011 that would be expected to have a material impact on the Group.

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

adopted

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

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

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 period ending 30 June 2014. The Group will also consider the impact of the remaining phases of IFRS 9 when completed by the IASB.

IFRS 10, "Consolidated financial statements", builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent Company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. The Group is yet to assess IFRS 10's full impact and intends to adopt IFRS 10 no later than the accounting period ending 30 June 2014.

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 period 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 period ending 30 June 2014.

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 IFRS: (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. The Board expects adoption will change the current presentation of items in other comprehensive income; however, it will not affect the measurement or recognition of such items.

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 Group consolidates management information up to 30 June.

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

Acquisition-related costs are expensed as incurred.

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

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

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

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 in Vietnam Dong. The financial statements prepared using Vietnam Dong are then translated into the presentation currency of USD. USD is used as the presentation currency because it is the primary basis for the measurement of the performance of the Group and a large proportion of significant transactions of the Group are denominated in USD (especially changes in the net asset values of the Group)

(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 fair value determined.

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

(c) Group companies

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

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

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

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

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

2.5 Investment properties

Investment properties are properties owned or held under finance leases to earn rentals or capital appreciation, or both, or land held for a currently undetermined use. Property held under operating leases (including leasehold land) that would otherwise meet the definition of investment property is classified as investment property on a property by property basis. If a leased property does not meet this definition it is recorded as an operating lease.

Property under construction or development for future use as investment property is treated as investment property and is measured at fair value where the fair value of the investment property under construction or development for future use can be reliably determined.

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, 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 equivalents" in the consolidated balance sheet (Notes 2.14 and 2.15)

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.

Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income.

When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as 'gains and losses from investment securities'.

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

Prepayment 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 available-for-sale financial assets, trade and other receivables, prepayments for acquisitions of investments, investment properties, and interests in associates are subject to impairment testing.

2.12 Trade receivables

Trade receivables are amounts due from customers for merchandise sold or 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 cost is 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 such 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 retained earnings.

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 Borrowings

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

2.18 Borrowing costs

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

All other borrowing costs are recognised in profit or loss in the period in which they are incurred on effective interest rate basis.

2.19 Current and deferred income tax

(i) Corporate income tax

The tax expense for the period 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.

Gains and losses from changes in fair value of properties of the associates are accounted for using the equity method of accounting.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, 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.

However, deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is 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.

(ii) Withholding taxes imposed on investment income

The Group currently incurs withholding taxes imposed by local jurisdictions on investment income. Such income is recorded gross of withholding taxes in the consolidated income statement.

2.20 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.

2.21 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured, when it is probable that future economic benefits will flow to the entity; and when specific criteria have been 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, other than those from investments in associates, is recorded when the Group's right to receive the dividend is established.

2.22 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 the close members of the family. 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

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 valuation companies 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; and

(iii) 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.

3.2 Critical judgement in applying the Group's accounting policies

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. There are situations, however, where it can be clearly demonstrated that an interest held by the Group is less than 20%, but significant influence exists; and an interest held of more than 20% but there is no significant influence. In exercising its judgement, management considers one or more of the following as to whether the Group has significant influence over the investee. The criteria are whether the Group:

a) has representation on the board of directors of the investee;

b) participates in policy-making processes, including decisions about dividends or other distributions;

c) has interchange of managerial personnel; or

d) provides essential technical information.

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).

Investment in VNC-55 Infrastructure Investment Joint Stock Company ('VNC-55')

Management has assessed its acquisition of the remaining 60% share in VNC-55 during the year (Note 5(b)) and determined that the acquisition 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 exists. The criteria to consider include whether there is input, significant processes and output on the date the subsidiary was acquired. In the context of VNC-55 which mainly consists of the base transceiver stations towers, management assessed that at the date of acquisition, the processes in place were mainly ancillary services to maintain the towers. Consequently, the investment is not an acquisition of business.

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

Management has classified the Base Transceiver Station ('BTS') towers as investment properties and the towers are measured at fair value. The management assessed that the BTS towers can be viewed as buildings and thus can be classified within investment properties. The towers also display some characteristics of investment properties, in that spaces in the towers are let to tenants to earn rentals and services in respect of the towers rented are ancillary by nature.

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 developers, telecommunication, transportation and logistics, general infrastructure environment and others.

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 segment profit or loss using a measure of operating profit or loss from the investment assets. Although IFRS 8 requires measurement of segmental profit or loss the majority of expenses are common to all segments therefore cannot be individually allocated. There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss.

Segment information can be analysed as follows:

4. SEGMENT ANALYSIS (CONTINUED)

5. SUBSIDIARIES

The details of significant operating subsidiaries of the Group are as follows:

These subsidiaries of the Group are incorporated in Vietnam and have a 31 December year end. For consolidation purposes, the management accounts of the subsidiaries for the period to 30 June are adjusted for compliance with the Group's accounting policies.

As at 30 June 2011, despite having effective interests of less than 50% in both Long An Port Joint Stock Company and Long An Industrial Park Joint Stock Company, the Group assessed that it has control over the two entities as the Group has the power to govern the financial and operating policies of the subsidiaries by virtue of the fact that it has more than 50% of voting rights on the boards of the two entities and the proportionate capital contribution to these subsidiaries by the Group is more than 50%.

(a) Additional investment into Vina-CPK Limited

During the year, the Group invested USD3.1 million of cash into Vina-CPK Limited to increase its stake in the subsidiary's chartered capital to 96.1%. As a result, the local partner's stake in Vina-CPK Limited has been diluted to 3.9%.

(b) Acquisition of controlling interest in VNC-55 Infrastructure Investment Joint Stock Company ('VNC-55')

At 30 June 2011, the Group held a 40% equity interest in VNC-55 which was previously carried as an associate. The principal activity of this company is to build and lease base transceiver station towers to local mobile telephone operators. During the year, the Group acquired the remaining 60% equity interest in VNC-55 for USD12.7 million in cash. This acquisition is deemed an acquisition of assets and not that of a business acquisition (Note 3.2).

(c) Subsidiaries classified as disposal group held for sale

The Group's investments in the Long An projects have been classified as held for sale following management's decision to divest these stakes and the subsequent signing of sale and purchase agreements for their disposal. The sale of these investments is conditional upon the approval of the local authorities. The full disposal of these assets should be completed by December 2012 (Note 13).

Upon classification of these investments to assets held for sale, the Group has recognised a loss of USD0.33 million and is included within other expenses.

6. INVESTMENT PROPERTIES

7. PREPAYMENT FOR ACQUISITION OF INVESTMENT PROPERTY

8. INVESTMENTS IN ASSOCIATES

The movements in the cumulative allowance for impairment were as follows:

The additional provision for impairment of associates during the year was in respect to investments which are performing below expectations.

The results of the Group's significant associates, their aggregated assets (including goodwill) and liabilities at 30 June 2012, and their performance during the year were as follows:

The results of the Group's significant associates, their aggregated assets (including goodwill) and liabilities at 30 June 2012, and their performance during the year were as follows:

(*) During the year the Group acquired a controlling interest in VNC-55 (Note 5(b)).

9. FINANCIAL INSTRUMENTS BY CATEGORY

10. TRADE AND OTHER RECEIVABLES

Movements in the cumulative allowance for impairment of receivables during the year are as follows:

Impaired assets are written off when there is no expectation of future recoveries.

The allowance for impairment of receivables of USD9.4 million (30 June 2011: USD10.0 million) relates mainly to interest receivable of USD8.6 million (30 June 2011: USD8.6 million) for a loan advance to a third party in the prior years. The principal of the loan advance has been fully recovered in the prior years. However, the recoverability of the cumulative interest attributable to the loan is pending the result of a litigation case. Due to the uncertainty of the recoverability of the interest receivable, the management has assessed the amount as fully impaired at the balance sheet date.

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

As at 30 June 2012 there is a significant concentration of credit risk relating to one customer that represents 78% (30 June 2011: 68%) of trade receivables.

As trade and other receivables are short-term in nature, 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

Corporate bonds carry a fixed interest rate of 9.6% (30 June 2011: 9.6%) and will mature on 21 December 2012.

As at the reporting date, the Group holds more than 20% equity interest in the following entities but in respect of which the Group determines that it has no significant influence over:

12. CASH AND CASH EQUIVALENTS

 Cash and cash equivalents denominated in:

Cash equivalents represent short-term deposits with annual interest rates of 0.5% and 9.0% for USD and VND accounts (30 June 2011: 0.5% and 14.0% for USD and VND accounts), respectively.

13. ASSETS CLASSIFIED AS HELD FOR SALE

Assets classified as held for sale are the Group's investments in the Long An projects (Note 5(c)). The value of these assets is based on the sale and purchase agreement signed between the Group and the purchaser.

14. SHARE CAPITAL

15. TREASURY SHARES