Half Yearly Report

Vietnam Infrastructure Limited

Interim results for the six months ended 31 December 2013

Vietnam Infrastructure Limited (the "Company" or "VNI") (VNI.L), the first publicly traded fund to focus on investment into infrastructure assets in Vietnam, today announces its interim results for the six months ended 31 December 2013 ("the Period").

 Financial highlights

·  Net Asset Value ("NAV") of USD202.9 million as at 31 December 2013, representing a NAV per share of USD0.56.

· Cash and equivalents at 31 December 2013 of USD33.9 million.

· No debt at the fund level.

 Operational highlights

· As a result of investments into listed equity, VNI's capital markets portfolio represents 34.6 percent of total NAV as at 31 December 2013, from 27.5 percent as at 30 June 2013.

· Robert Binyon was appointed to the Board of Directors as an independent Non-Executive Director in September 2013.

· During the Period, VNI repurchased 15.0 million shares for a total of 42.6 million shares since the commencement of the share buyback programme, representing 10.6 percent of the total shares in issue.

Notes to Editors:

VinaCapital is the leading investment management and real estate development firm in Vietnam, with a diversified portfolio of USD1.5 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

[email protected]

Philip Secrett

Grant Thornton UK LLP, Nominated Adviser

+44 (0)20 7383 5100

[email protected]

Hiroshi Funaki / Andrew Davies

Edmond de Rothschild Securities, Broker

+44 (0)20 7845 5960

[email protected]

David Benda / Hugh Jonathan

Numis Securities Limited

+44 (0)20 7260 1000

[email protected]

Andrew Walton

FTI Consulting, Public Relations (London)

+44 20 7269 7204

[email protected]

Chairman's statement

Dear Shareholders,

The economic environment in Vietnam has continued to show signs of improvement with stable interest rates and flat-lined inflation, currently sitting at approximately 6.0 percent year-on-year. The country's exchange rate finished the year at just over 21,000 VND per USD, essentially unchanged from the exchange rate as at 30 June 2013. The improvement in these key metrics is prompting foreign investors to look at Vietnam again as a favourable jurisdiction for investment.

Throughout the first six months of the 2014 fiscal year (1 July 2013 to 31 December 2013), the net asset value per share of Vietnam Infrastructure Limited ("VNI", the "Company") increased 7.4 percent to USD0.565 from a net asset value per share of USD0.526 as at 30 June 2013. The Company's performance was underpinned by the capital markets portion of the portfolio, which rose by 28.9 percent during the same period; outperforming the VN Index which was up 4.9 percent.

During this same period, the Company's share price increased 5.3 percent to close at USD0.379 per share as at 31 December 2013 (closing 6 March 2014 at USD0.4188), from USD0.360 as at 30 June 2013. The Board believes the ongoing improvement in the Company's share price is the result of many factors, including the continuing share buyback programme and a renewed interest by foreign investors looking to capitalise on an opportunity to invest in Vietnamese listed and private equity assets at attractive valuations. The continued success of VNI's listed portfolio and an improved outlook for the Company's private equity assets, such as Southeast Asia Telecommunications Holdings Pte Ltd. (SEATH) and the industrial parks, have drawn investors' attention.

The composition of the Board has been further enhanced with the addition of Mr. Robert Binyon in September 2013. Robert brings considerable experience in emerging market funds and his addition as an independent director further cements the Board's independence from the investment manager.

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

Paul Cheng

Chairman

Vietnam Infrastructure Limited

10 March 2014

INTERIM CONSOLIDATED BALANCE SHEET

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(*) This represents the translation differences from the functional currency of the Group's Vietnamese subsidiaries (Vietnam Dong) to the Group's presentation currency (United States Dollars).

INTERIM CONSOLIDATED INCOME STATEMENT

Interim CONSOLIDATED Statement of COMPREHENSIVE INCOME

Interim CONSOLIDATED Statement oF CASH FLOWS

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 Company and its subsidiaries herein are referred to as the Group.

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 invests and holds equity and debt instruments in unquoted companies that themselves hold, develop or operate infrastructure assets. The Group also invests 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 condensed interim consolidated financial statements for the six months ended 31 December 2013 were approved for issue by the Board of Directors on 10 March 2014.

The condensed interim consolidated financial statements have been reviewed, not audited.

2 BASIS OF PREPARATION

These condensed interim consolidated financial statements for the six month period ended 31 December 2013 have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" as issued by the International Accounting Standards Board ("IASB"). They do not include all of the information required in the annual financial statements which are prepared in accordance with International Financial Reporting Standards ("IFRS"). Accordingly, these financial statements are to be read in conjunction with the annual financial statements of the Group for the year ended 30 June 2013.

3 ACCOUNTING POLICIES

The accounting policies adopted, methods of computation and presentation are consistent with those of the previous financial year except for the additional disclosures as required by IAS 34 p16A(j). The new disclosures are in Note 6 and Note 27.

The AIM Rules for Companies require comparative figures for the balance sheet for the corresponding period end in the preceding financial year which differs to IAS 34 which requires comparative figures for the balance sheet for the immediately preceding financial year end. The Group continues to elect to report in accordance with IAS 34 and as such has agreed with the London Stock Exchange a derogation from the above requirement of the AIM Rules for Companies in order to comply with IAS 34.

Estimates and judgements in applying the Group's accounting policies

When preparing the condensed interim consolidated financial statements, the Group undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from these judgements.

In preparing these condensed interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 30 June 2013 except for the following:

a) Acquisition of a new subsidiary

During the period, the Group acquired control of a new subsidiary, T&A Company Limited ("T&A") (refer to Note 5). The acquisition is assessed by management as an acquisition of the assets and not an acquisition of a business. Management determined that at the date of acquisition, the processes of T&A were mainly ancillary services to maintain the telecommunication towers it owns. Consequently, the acquisition of T&A is deemed an acquisition of assets.

b) Write down of an equity investment

During the period, management determined that an equity instrument of USD5.9 million should be fully provided for. In making this judgement, management evaluates the financial performance, business outlook of the investee and its exit options. As the decline in fair value below cost is considered significant, the equity investment was written down and a fair value loss of USD5.9 million was charged to the income statement. The investment which was previously classified in Level 2 in the fair value hierarchy was reclassified to Level 3 during the period, refer to Note 27. 

c) Change in deferred tax liabilities

With effect from 1 January 2014, the corporate income tax rate applicable to the operating subsidiaries in Vietnam reduces from 25% to 22%. The lower corporate income tax rate has an impact on the estimation of deferred tax assets and liabilities at the balance sheet date. Further details are contained in Note 23.

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, environmental, other capital markets and cash.

Each of the operating segments is 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:

\* The environmental business segment has no balances as at 30 June 2013 and 31 December 2013 as the investment within the segment has been fully impaired.

5 SUBSIDIARIES

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

Balance of non-controlling interest in Vina-CPK Limited as at 31 December 2013 of USD0.6 million (30 June 2013: USD0.6 million) belongs to a minority shareholder.

During the period, the Group acquired a 100% equity interest in T&A for cash consideration of USD4.6 million, of which USD3.3 million has been paid by 31 December 2013. The remaining cash consideration of USD1.3 million is pending the completion of certain conditions precedent to the sale and purchase agreement. The balance is included in payables (Note 16).

This acquisition of T&A was determined by the investment manager to be an acquisition of assets, refer to Note 3(a).

6 INVESTMENT PROPERTIES

Fair value hierarchy of investment properties

There were no transfers between levels during the period.

Valuation process

The Group's investment properties were valued at 30 June 2013 by independent professional qualified valuers who hold recognised relevant professional qualifications and have recent experience in the locations and segments of the investment properties being valued. Management reviews the valuations performed by the independent valuers for financial reporting purposes, and the valuations, as adjusted if appropriate, are approved by the Board for adoption after deliberation in the audit committee.

For interim reporting purposes, management assessed the fair value of investment properties by considering the investees' performances and the changes of significant assumptions used for determining the fair value as per the last adopted valuation.

Valuation technique and significant unobservable inputs

The valuation technique primarily used to determine the fair value of investment properties is discounted cash flow ("DCF") methods. The significant unobservable inputs used in the DCF calculation for the respective investment properties are as follows:

(a) BTS towers

- Future tower and tenancy growth to generate incremental rental cash inflows - such growth is funded by recurring cash inflow from existing leases while rental for new towers and tenants is based on the same terms as those of existing ones;

- Discount rates - reflecting current market assessment of the uncertainty in the amount and timing of cash flows; and

- Terminal value - reflecting management's view of long-term growth in the infrastructure sector.

(b) Industrial park property

- Sale price per square metre - based on current market comparables;

- Costs to complete the development of the property - based on management's experience and knowledge of market conditions;

- Completion dates - this property is under development and requires the approval from oversight bodies at various points in the development process. The completion date of the development may vary depending on the timeliness of obtaining the approvals and any remedial actions; and

- Discount rates - reflecting the current market assessment of the uncertainty in the amount and timing of cash flows.

Sensitivity of significant unobservable inputs to fair value

The following table analyses the range of the significant unobservable inputs and the impact of changes of these to the fair value of investment properties:

7 PREPAYMENT FOR ACQUISITION OF INVESTMENT PROPERTY

(*) The balance of USD5.78 million relates to a sale under which the conditions precedent were not met by the buyer. The sale did not complete and accordingly the asset has been reclassified back to prepayment for acquisition of investment property, its original asset class.

8 INVESTMENTS IN ASSOCIATES

The unrecognised share of losses of the associate during the period was USD0.6 million. The cumulative share of losses of the associate at 31 December 2013 is USD1.1 million.

9 FINANCIAL INSTRUMENTS BY CATEGORY

10 TRADE AND OTHER RECEIVABLES

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

There is a significant concentration of credit risk relating to an ultimate leasee of the Group's BTS towers. The concentration of credit risk represents 79% (30 June 2013: 78%) of trade receivables as at 31 December 2013.

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 entity, which it does not have significant influence:

12 CASH AND CASH AT BANKS

Cash and cash at banks denominated in:

Included in cash and cash equivalents are short-term deposits of USD29.3 million (30 June 2013: USD15.5 million) with annual interest rates of 0.25% and 7.0% for USD and VND accounts (30 June 2013: 0.5% and 9.0% for USD and VND accounts), respectively.

\* The cash held in an escrow account relates to part of the consideration to T&A (Note 5).

13 ASSETS CLASSIFIED AS HELD FOR SALE

\* The balance of USD5.8 million relates to a sale under which the conditions precedent were not met by the buyer. The sale did not complete and accordingly the asset has been reclassified to being a prepayment for acquisition of investment property, its original asset class.

14 SHARE CAPITAL

The Company deems investors holding more than 10% beneficial interest in the ordinary shares of the Fund as major shareholders. As at 31 December 2013, three shareholders (30 June 2013: three shareholders) of the Company held more than 10% in the ordinary shares of the Company.

15 TREASURY SHARES

Pursuant to the share buyback authority granted to the Company's Board of Directors on 27 July 2012, the Group has purchased 42,612,496 ordinary shares of the Company for total cash consideration of USD14.3 million since the approval date.

During the period, the Group spent an aggregate of USD5.5 million repurchasing 15,035,762 shares (year ended 30 June 2013: USD8.8 million and 27,576,734 shares, respectively) which are now held as treasury shares. The total number of shares acquired to date represents 10.60 percent of the Company's 402,100,000 ordinary shares in issue. As a result, the total voting rights in the Company have been reduced to 359,487,504 shares (30 June 2013: 374,523,266 shares).

16 TRADE AND OTHER PAYABLES 

The trade and other payables primarily relate to the BTS tower operations of the Group. The payables are short-term in nature; hence their carrying values are considered reasonable approximations of their fair values at the balance sheet date.

17 PAYABLE TO RELATED PARTIES

Payable to related parties are short-term in nature, hence their carrying values are considered a reasonable approximation of their values at the balance sheet date.

18 REVENUE AND COST OF SALES