Interim results for six months ended 31 Dec 2014

Vietnam Infrastructure Limited

Interim results for the six months ended 31 December 2014

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 2014 ("the Period").

Financial highlights

· Net Asset Value ("NAV") of USD211.7 million as at 31 December 2014, representing a NAV per share of USD0.60.

· Cash and equivalents at 31 December 2014 of USD45.7 million.

Operational highlights

· On 15 December 2014, at its Extraordinary General Meeting ("EGM") held that day, VNI shareholders voted to approve the proposals to restructure VNI, as set out in the circular to shareholders published on 21 November 2014 (the "Circular").

Notes to Editors:

VinaCapital is the leading investment management and real estate development firm in Vietnam, with a diversified portfolio of USD1.4 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. VinaCapital's mission is to produce superior returns for investors by using its 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, Singapore and Yangon. 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,

During the Period, VNI recorded an auditor reviewed NAV of USD211.7 million or USD0.60 per share, representing an 7.1% year-on-year increase from a NAV per share of USD0.56 as at 31 December 2013. The Company's share price rose to USD0.49 per share as at 31 December 2014, an increase of 28.9% above USD0.38 as at 31 December 2013.This is a reflection of both the increase in NAV driven by the performance of the Company's listed equity portfolio and the announcement of restructuring proposals on 21 November 2014. As a result the discount of the share price to the NAV of the Company's shares narrowed significantly to 18.9% from 30.0% a year earlier.

Update on the restructuring

On 15 December 2014, the Company announced that, at its EGM held that day, VNI shareholders voted to approve the proposals to restructure VNI, as set out in the Circular. As stated in the announcement of the Company dated 15 December 2014, the application for the authorisation of VVF (the formal name of which is expected to be Forum One - VCG Partners Vietnam Fund, a sub-fund of Forum One, which is an existing Luxembourg open-ended investment company) has been submitted to the Commission de Surveillance du Secteur Financier ("CSSF") and was expected to be approved in the first quarter of 2015. However, due to the length of the regulatory process, this approval is expected to be received early in the second quarter. Consequently, the Company now anticipates that admission of the new class of Listed Portfolio Shares and implementation of the proposals will take place in the second quarter of 2015. I am pleased to note that, despite this unexpected delay, the Company's other restructuring activities are progressing positively and that VNI will provide further updates when appropriate.

Corporate governance

As stated in last year's annual report, the Board has decided to bring forward proposals to ensure that the corporate governance practices of the Company are brought into line with good practices for AIM quoted investment companies. As such, the Company held its first Annual General Meeting on Monday 24 November 2014. The resolutions which were all voted in favour, included proposals relating to approving the financial statements, the re-election of directors, and reducing the required number of votes to requisition an EGM.

The Board

During the Period, the composition of the Board changed as the Board invited Mr Paul Garnett to become a non-executive director. Mr Garnett is a partner and fund manager of Ironsides Partners UK LLP, an affiliate of Ironsides Partners LLC, which is currently our largest investor. He also has considerable experience with closed ended funds.

Rupert Carington

Chairman

Vietnam Infrastructure Limited

27 March 2015 

CONDENSED INTERIM CONSOLIDATED BALANCE SHEET

CONDENSED INTERIM CONSOLIDATED INCOME STATEMENT

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONDENSED Interim CONSOLIDATED Statement of COMPREHENSIVE INCOME

CONDENSEDInterim 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 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. 

At the Extraordinary General Meeting ("EGM") held on 15 December 2014, the shareholders voted to approve the proposals to restructure the Company, as set out in the circular to shareholders published on 21 November 2014. The changes of the Company's strategy were summarised in Note 31 to the annual financial statements of the Group for the year ended 30 June 2014.

The condensed interim consolidated financial statements for the six-month period ended 31 December 2014 were approved for issue by the Board of Directors on 27 March 2015.

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 2014 have been prepared in accordance with International Financial Reporting 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 2014.

3 ACCOUNTING POLICIES

The accounting policies adopted are consistent with those of the previous financial year ended 30 June 2014, except additional accounting policies as described below:

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.

New significant accounting policies

a) Property, plant and equipment

All property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The cost of self-constructed assets includes the cost of materials, direct labour, overheads and the initial estimate of the costs of dismantling and removing the items and restoring the site on which they are located.

The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. The carrying values of any parts replaced as a result of such replacements are expensed at the time of replacement. All other costs associated with the maintenance of property, plant and equipment are recognised in the interim consolidated income statement as incurred.

Depreciation is charged to the interim consolidated income statement on a straight-line basis over the estimated useful lives of property, plant and equipment, and major components that are accounted for separately. The estimated useful lives are as follows:

Buildings 6 to 10 years

Machinery, plant and equipment 3 to 5 years

Furniture, fixtures and office equipment 1 to 3 years

Motor vehicles 5 to 6 years

Material residual value estimates and estimates of useful lives are reviewed at least annually, irrespective of whether assets are revalued.

a) 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 lending, 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.

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 2014 except that:

Investment in Southern Star Telecommunication Equipment Joint Stock Company ("SST")

Management assessed that its acquisition of SST during the period (Note 5) is an acquisition of business and not an acquisition of assets. 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 required. In the context of SST, management determined that at the date of acquisition, the business of SST consist of its in-building cellular enhancement system, that have the ability to create economic benefits to provide a return to its owners. Consequently, the acquisition of SST is an acquisition of business.

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 development, telecommunications, transportation and logistics, general infrastructure, 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 financial asset at fair value through profit or loss includes the long-term and short term.

5 SUBSIDIARIES

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

(*) During the period, Vina-CPK Limited decreased its chartered capital by returning capital contribution to its local partner, hence, the Group became the sole member.

(**) During the period, the Group acquired a 70% equity interest in SST for cash consideration of USD11.1 million, of which USD10.6 million has been paid as at 31 December 2014. Fair value of the acquiree's net assets was equal to the consideration at the acquisition date which resulted no goodwill from this acquisition.

This acquisition of SST was determined by management to be an acquisition of business (Note 3).

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 2014 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) SEATH BTS tower network

- 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) Ba Thien industrial park

- 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:

SEATH BTS tower network with a total carrying value of USD52 million as at 31 December 2014 are pledged as security for bank borrowings disclosed in Note 17.

7 PREPAYMENT FOR ACQUISITION OF INVESTMENT PROPERTY

8 PROPERTY, PLANT AND EQUIPMENT

Movement during the six-month period ended 31 December 2014:

Movement during the year ended 30 June 2014:

9 FINANCIAL INSTRUMENTS BY CATEGORY