Interim Results

RNS Number : 7453D

VinaCapital Vietnam Opp. Fund Ld

28 March 2011

 



28 March 2011

VinaCapital Vietnam Opportunity Fund Limited

Interim results for the six months ended 31 December 2010

VinaCapital Vietnam Opportunity Fund Limited (the "Company" or "VOF") (VOF.L), an AIM-quoted investment vehicle focused on Vietnam, today announces its interim results for the six months ended 31 December 2010 ("the Period").

Financial highlights

·      Net loss for the Period of USD18.7 million (HY09: USD99.86 million net profit).

·      Net loss per share of USD0.06 for the Period (HY09: USD0.31 net profit).

·      Cash and cash equivalents as at 31 December 2010 of USD47.9million.

·      Net asset value at 31 December 2010 of USD772.8 million representing USD2.38 per share.

Operational highlights

·      Listing of top ten holding Quoc Cuong Gia Lai on the Ho Chi Minh City Stock Exchange.

·      Acquiring additional USD9.8 million stake in An Giang Plant Protection JSC.

·      Acquiring stakes in Binh Dien Fertiliser and Thai Hoa Group (Arabica coffee producer).

·      Continued income received from residential sales at township and resort projects in Danang and Ho Chi Minh City.

Commenting, Andy Ho, Managing Director of VOF's Investment Manager, said:

"The second half of 2010 was a difficult time for Vietnam, as domestic investors rushed to gold as a hedge against inflation and their concern over depreciation pressures on the Vietnam dong. The Vietnam Index by the end of 2010 was pushed into value territory of under 10x P/E, a 15-20 percent discount to the region and emerging market peers. As the government's stabilisation measures begin to take effect, we expect Vietnam to offer an excellent investment environment for both acquisitions and listing or trade sale exits."

Notes to Editors:

VinaCapital is the leading investment management and real estate development firm in Vietnam, with a diversified portfolio of almost USD2 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 manages three closed-end funds trading on the AIM Market of the London Stock Exchange. These funds, at a combined net asset value (NAV) of USD1.7 billion as of December 2010, make VinaCapital the largest asset manager focused on Vietnam and its neighbouring countries.

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 VinaCapital Vietnam Opportunity Fund Limited is available at www.vinacapital.com/vof 

Enquiries:

Michael L. Gray
VinaCapital Investment Management Limited
Investor Relations/Communications
[phone]
[e-mail] 

Hiroshi Funaki
LCF Edmond de Rothschild Securities, Broker
[phone]
[e-mail]

David Benda / Hugh Jonathan
Numis Securities Limited
[phone]

Alastair Hetherington
Financial Dynamics, Public Relations (Hong Kong)
[phone]
[e-mail]

Andrew Walton
Financial Dynamics, Public Relations (London)
[phone]
[e-mail]

Philip Secrett
Grant Thornton Corporate Finance, Nominated Adviser
[phone]
[e-mail]

Chairman's Statement

Dear Shareholders,

We are pleased to present the interim financial statements of VinaCapital Vietnam Opportunity Fund Limited (AIM: VOF) for the six month period ended 31 December 2010.

The second half of 2010 was a difficult time for Vietnam, as inflation rose in response to premature loosening of liquidity restraints and the currency came under renewed pressure due to balance of payments concerns. Although top-line GDP growth of 6.8 percent was positive, investor sentiment remained weak, as evidenced by a surge in the price of gold.

VOF's NAV at the end of December 2010 was USD773 million, or USD2.38 per share. This was a decline of 1.3 percent from the end of June 2010, when VOF had an NAV of USD783 million, or USD2.41 per share. The performance was due primarily to losses in the capital markets portfolio, following the Vietnam Index decline of 6.7 percent (in USD terms) over the period.

VOF's share price at the end of December 2010 was USD1.88, up 34.3 percent from USD1.40 at the end of June 2010. (VOF's share price has fallen in March 2011, a decline we believe is related to the impact of the Japan tsunami on capital markets, and the general pull back from emerging markets in Q1 2011.)  

Over the period, VOF saw top ten holding Quoc Cuong Gia Lai (QCG) list on the Ho Chi Minh Stock Exchange. The fund invested a further USD9.4 million in An Giang Plant Protection to raise its stake in this sector-leading company to 17.4 percent, and acquired stakes in Binh Dien Fertiliser and Thai Hoa Group, Vietnam's leading coffee producer and top exporter of Arabica beans.

VOF continues to focus on private placements into unlisted companies. The agreement to sell the fund's stake in Halico to Diageo is evidence of the growing market for trade sales, and several other private equity disposals are under negotiation.

We remain conscious, however, that in the short run much will depend on how the government manages the economy. The State Bank in 2011 needs to control inflation, which reached 11.8 percent year-on-year in 2010, and restore faith in the VND. To achieve these goals, the government has taken several proactive steps, which include establishing a stabilisation fund for consumer staples, announcing USD3 billion in spending cuts, placing a 10 percent tax on gold exports, and using a 'crawling peg' approach to better manage the currency following the February devaluation.

A tight monetary and fiscal policy is now in place, with the credit growth target now under 20 percent, down from an earlier target of 23 percent. The balance of payments situation looks manageable, as development assistance, FDI and remittance flows in 2010 more than made up for the trade deficit, which was USD12 billion in 2010 and will reach an estimated USD14 billion in 2011.

The proactive policy decisions by the government appear to bode well for Vietnam's economic prospects this year, although the international environment and the full impact of the tragic events in Japan are unclear. The open market VND rate peaked shortly after the February devaluation, but has since come down to rest about 1.5-2 percent below the official rate. This indicates relative stability. If further signs of stability appear, the low valuations on Vietnam's equity markets will stand out as an investment opportunity.

The Board remains committed to distributing four percent of NAV yearly, and is currently considering the precise form and timing of such a distribution. We will update shareholders as soon as possible. As always, the Board welcomes shareholder feedback, and we hope to be in touch with many of you over the coming year.

Thank you for your continued support.

William Vanderfelt

Chairman

VinaCapital Vietnam Opportunity Fund Ltd

28 March 2011

Condensed Interim Consolidated Statement of Financial Position

	Note	31 December 2010	30 June 2010
		USD'000	USD'000
ASSETS
Non-current
Investment properties		6,587	6,700
Investments in associates	7	211,022	194,688
Long-term loan receivables from related parties		48,047	47,718
Other long-term investments		6,916	6,916
Other long-term financial assets		10,156	11,661
Other non-current assets		100	104
Non-current assets		282,828	267,787
Current
Inventories		2,192	2,437
Trade and other receivables		6,690	6,045
Receivables from related parties		11,387	11,564
Financial assets at fair value through Statement of Income	8	432,489	455,526
Short-term investments		256	428
Cash and cash equivalents		47,955	50,033
Current assets		500,969	526,033
Total assets		783,797	793,820

	Note	31 December 2010	30 June  2010
		USD'000	USD'000
EQUITY AND LIABILITIES
EQUITY
Equity attributable to shareholders of the parent:
Share capital	10	3,246	3,246
Additional paid-in capital	11	722,064	722,064
Revaluation reserve	12	30,073	21,193
Translation reserve		(4,002)	(3,762)
Retained earnings		21,440	39,760
		772,821	782,501
Non-controlling interests		447	1,427
Total equity		773,268	783,928
LIABILITIES
Non-current
Other long-term liabilities		155	101
Non-current liabilities		155	101
Current
Trade and other payables		4,668	4,089
Payables to related parties		5,706	5,702
Current liabilities		10,374	9,791
Total liabilities		10,529	9,892
Total equity and liabilities		783,797	793,820
Net assets per share attributable to equity shareholders of the parent (USD per share)	17	2.38	2.41

Condensed Interim Consolidated Statement of Changes in Equity

		Equity attributable to shareholders of the parent
	Share capital	Additional paid-in capital	Revaluation reserve	Translation reserve	Retained earnings	Non-controlling interests	Total equity
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000
Balance at 1 July 2009	3,246	722,064	25,958	(2,088)	(67,268)	13,676	695,588
Disposal of associate	-	-	(2,403)	-	2,403	-	-
Disposal of assets and liabilities held for sale	-	-	-	-	-	(7,978)	(7,978)
Profit for the period from 1 July 2009 to 31 December 2009	-	-	-	-	99,253	602	99,855
Other comprehensive income
- Exchange differences on translation of foreign operations	-	-	-	(1,019)	-	(28)	(1,047)
- Share of revaluation gains on associates' properties for the period	-	-	169	-	-	-	169
Total other comprehensive income	-	-	169	(1,019)	-	(28)	(878)
Total comprehensive income	-	-	169	(1,019)	99,253	574	98,977
Balance at 31 December 2009	3,246	722,064	23,724	(3,107)	34,388	6,272	786,587
Balance at 1 July 2010	3,246	722,064	21,193	(3,762)	39,760	1,427	783,928
Acquisition/(disposal) of non-controlling interests	-	-	-	-	441	(1,056)	(615)
(Loss)/profit for the period from 1 July 2010 to 31 December 2010	-	-	-	-	(18,762)	106	(18,656)
Other comprehensive income
- Exchange differences on  translation of foreign operations	-	-	-	(240)	-	(30)	(270)
- Share of revaluation gains on associates' properties for the period (Note 12)	-	-	8,880	-	-	-	8,880
Total other comprehensive income	-	-	8,880	(240)	-	(30)	8,610
Total comprehensive income	-	-	8,880	(240)	(18,762)	76	(10,046)
Balance at 31 December 2010	3,246	722,064	30,073	(4,002)	21,439	447	773,267

Condensed Interim Consolidated Statement of Income
	Note	Six month period ended
		31 December 2010	31 December 2009
		USD'000	USD'000
Revenue		4,963	6,281
Cost of sales		(3,830)	(4,518)
Gross profit		1,133	1,763
Selling, general and administration expenses	13	(11,017)	(10,978)
Net changes in fair value of financial assets at fair value through Statement of Income	14	(22,402)	97,612
Other income		984	64
Other expenses		(158)	(1,800)
Operating (loss)/profit		(31,460)	86,661
Finance income		8,742	7,236
Finance costs		(1,558)	(1,149)
Finance income - net	15	7,184	6,087
Share of profits of associates	7	5,714	7,209
		12,898	13,296
(Loss)/profit before tax for the period from continuing and total operations		(18,562)	99,957
Withholding taxes imposed on investment income	16	(94)	(102)
Net (loss)/profit for the period from continuing and total operations		(18,656)	99,855
Attributable to equity shareholders of the parent		(18,762)	99,253
Attributable to non-controlling interests		106	602
		(18,656)	99,855
(Loss)/earnings per share- basic and diluted (USD per share)	17	(0.06)	0.31

Condensed Interim Consolidated Statement of Comprehensive Income
	Note	31 December 2010	31 December 2009
		USD'000	USD'000
(Loss)/profit for the period		(18,656)	99,855
Other comprehensive income
- Share of other comprehensive income of associates	12	8,880	169
- Exchange differences on translating foreign operations		(270)	(1,047)
Other comprehensive income for the period		8,610	(878)
Total comprehensive income for the period		(10,046)	98,977
Attributable to equity shareholders of the parent		(10,122)	98,403
Attributable to non-controlling interests		76	574
		(10,046)	98,977

Condensed Interim Consolidated Statement of Cash Flows
	Six month period ended
	31 December 2010	31 December 2009
	USD'000	USD'000
Operating activities
Net (loss)/profit before tax	(18,562)	99,957
Adjustments for:
Depreciation and amortisation	-	242
Unrealised net loss/(gain) from revaluations of financial assets at fair value through Statement of Income	19,972	(71,540)
Net losses/(gains) from realisation of financial assets at fair value through Statement of Income	2,430	(26,072)
Impairment and write-off of assets	17	1,794
Gain on disposal of investments	(428)	-
Share of profits of associates	(5,714)	(7,209)
Unrealised foreign exchange losses	324	178
Dividend income	(6,772)	(5,757)
Interest income	(1,403)	(1,121)
Net loss before changes in working capital	(10,136)	(9,528)
Change in trade and other receivables	3,147	1,102
Change in inventories	245	(177)
Change in trade and other payables	637	2,087
Withholding taxes imposed on investment income paid	(94)	(102)
	(6,201)	(6,681)
Investing activities
Interest received	845	1,282
Dividends received	8,272	6,313
Purchases of property, plant, equipment and investment properties	-	(144)
Acquisition of non-controlling interests	(615)	-
Purchases of financial assets	(47,346)	(72,947)
Acquisitions of long-term investments	-	(1,910)
Investments in associates	(3,417)	(14,319)
Proceeds from disposals of financial assets	46,694	75,512
Proceeds/(deposits) from short-term investments	172	(5,460)
Proceeds from shareholder loans refunded	609	4,579
Proceeds from disposals of investments	-	12,751
Shareholder loans provided	(1,063)	(5,458)
	4,154	199
Net decrease in cash and cash equivalents for the period	(2,050)	(6,419)
Cash and cash equivalents at the beginning of the period	50,033	69,691
Exchange differences on cash and cash equivalents	(28)	(53)
Cash and cash equivalents at the end of the period	47,955	63,219

Notes to the Condensed Interim Consolidated Financial Statements

1.  General information

VinaCapital Vietnam Opportunity Fund 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's primary objective is to undertake various forms of investment primarily in Vietnam, but also in Cambodia, Laos and Southern China. The Company is listed on the AIM market of the London Stock Exchange under the ticker symbol VOF.

The condensed interim consolidated financial statements for the period from 1 July 2010 to 31 December 2010 were approved for issue by the Board of Directors on 28 March 2011.

2.  Basis of preparation of condensed interim consolidated financial statements

These condensed interim consolidated financial statements for the period from 1 July 2010 to 31 December 2010 (the "period") 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 annual financial statements in accordance with International Financial Reporting Standards (IFRS). Accordingly, these reports are to be read in conjunction with the annual consolidated financial statements of the Group for the year ended 30 June 2010.

The revenue, cost of sales and a large proportion of expenses in the condensed interim consolidated statement of income results from the Group's operating subsidiaries. 

The condensed interim consolidated financial statements are presented in United States Dollars (USD), which is also the functional currency of the parent company, and all values are rounded to the nearest thousand ('000) unless otherwise indicated

3.  Significant accounting policies

These condensed interim consolidated financial statements (the interim financial statements) have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 30 June 2010.

The accounting policies have been applied consistently throughout the Group for the purposes of the preparation of these condensed interim consolidated financial statements.

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.

4.  Critical accounting estimates and judgements

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 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:

Fair value of investment properties and hotels

The investment properties and hotels of the Group are stated at fair value in accordance with accounting policies 3.11 of the annual consolidated financial statements. The fair values of investment properties and hotels have been determined by independent professional valuers including: CB Richard Ellis, Savills, Jones Lang LaSalle, Colliers, Sallmanns and HVS. These valuations are based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results.

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 change in

economic conditions since the date of the transactions that occurred at those prices;

(iii) recent developments and changes in laws and regulations that might affect zoning and/or the

Group's ability to exercise its rights in respect to properties and therefore fully realise the estimated

values of such properties; 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 the cash flows.

Fair value of financial assets

Listed securities are quoted at the bid price at each reporting date. For unlisted securities which are traded in an active market, the fair value is the average quoted bid 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 its 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 appropriately qualified independent valuation firms 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.

Impairment

Other assets

The Group's goodwill, intangible assets, operating lease prepayments, other assets and interests in associates are subject to impairment testing in accordance with accounting policy 3.14 of the annual consolidated financial statements.

Trade and other receivables

The Group's Management determines the provision for impairment of trade and other receivables on a regular basis. This estimate is based on the credit history of its customers and prevailing market conditions.

Impairment of investment properties and hotels

Whenever there is an indication of impairment of an investment property and/ or a hotel, the Valuation Committee and Group's management will assess the need for an impairment adjustment. The estimation of impairment adjustments is based on the same principles used to adjust the periodic independent valuations as mentioned above.

5.  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 capital markets, real estate (real estate and hospitality), private equity and cash (including cash and cash equivalents, bonds, and term deposits) sectors.

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 for the reporting periods under review:

Condensed Interim Consolidated Statement of Income

		Six month period ended 31 December 2010
	Capital markets	Real estate	Private equity	Cash	Total
	USD'000	USD'000	USD'000	USD'000	USD'000
Revenue	-	-	4,963	-	4,963
Finance income	8,290	166	-	286	8,742
Share of profits of associates	-	3,619	2,095	-	5,714
Other income	8	905	71	-	984
Net changes in fair value of financial assets at fair value through Statement of Income
- Listed and unlisted securities	(22,766)	-	-	-	(22,766)
- Corporate bonds	364	-	-	-	364
	(14,104)	4,690	7,129	286	(1,999)
Cost of sales					(3,830)
Selling, general and administration expenses					(11,017)
Other expenses					(158)
Finance costs					(1,558)
Loss before tax					(18,562)
Withholding taxes imposed on investment income					(94)
Net loss for the period					(18,656)

In comparison with the comparative period last year:

	Six month period ended 31 December 2009
	Capital markets	Real estate	Private equity	Cash	Total
	USD'000	USD'000	USD'000	USD'000	USD'000
Revenue	-	-	6,281	-	6,281
Finance income	6,914	-	66	256	7,236
Share of profits of associates	-	5,847	1,362	-	7,209
Other income	60	-	4	-	64
Net changes in fair value of financial assets at fair value through Statement of Income
- Listed and unlisted securities	97,015	-	-	-	97,015
- Corporate bonds	597	-	-	-	597
	104,586	5,847	7,713	256	118,402
Cost of sales					(4,518)
Selling, general and administration expenses					(10,978)
Other expenses					(1,800)
Finance costs					(1,149)
Profit before tax					99,957
Withholding taxes imposed on investment income					(102)
Net profit for the period					99,855

Condensed Interim Consolidated Statement of Financial Position

	As at 31 December 2010
	Capital markets	Real estate	Private equity	Cash, corporate bonds and short-term investments	Total
	USD'000	USD'000	USD'000	USD'000	USD'000
Total assets
Financial assets at fair value through Statement of Income
- Consumer staples	89,354	-	-	-	89,354
- Construction	69,377	-	-	-	69,377
- Financial services	68,471	-	-	-	68,471
- Rubber and fertiliser	29,211	-	-	-	29,211
- Energy, minerals and petroleum	31,327	-	-	-	31,327
- Pharmaceuticals	8,392	-	-	-	8,392
- Real estate	26,051	-	-	-	26,051
- Other securities	98,351	-	-	-	98,351
- Corporate bonds	-	-	-	11,955	11,955
Investment properties	-	6,587	-	-	6,587
Investments in associates	-	184,729	26,293	-	211,022
Long-term loan receivables from related parties	-	48,047	-	-	48,047
Other long-term financial assets	-	8,986	1,170	-	10,156
Other long-term investments	-	-	6,916	-	6,916
Other long-term assets	-	-	100	-	100
Cash and cash equivalents	-	-	-	47,955	47,955
Short-term investments	-	-	-	256	256
Inventories	-	-	2,192	-	2,192
Other current assets	4,817	11,785	1,475	-	18,077
Total	425,351	260,134	38,146	60,166	783,797

In comparison with the last period end:

	As at 30 June 2010
	Capital markets	Real estate	Private equity	Cash, corporate bonds and short-term investments	Total
	USD'000	USD'000	USD'000	USD'000	USD'000
Total assets
Financial assets at fair value through Statement of Income
- Consumer staples	101,608	-	-	-	101,608
- Construction	70,471	-	-	-	70,471
- Financial services	68,626	-	-	-	68,626
- Rubber and fertiliser	27,655	-	-	-	27,655
- Energy, minerals and petroleum	34,853	-	-	-	34,853
- Pharmaceuticals	9,454	-	-	-	9,454
- Real estate	100,199	-	-	-	100,199
- Other securities	36,784	-	-	-	36,784
- Corporate bonds	-	-	-	5,876	5,876
Investment properties	-	6,700	-	-	6,700
Investments in associates	-	170,415	24,273	-	194,688
Long-term loan receivables from related parties	-	47,718	-	-	47,718
Other long-term financial assets	-	11,661	-	-	11,661
Other long-term investments	-	3,216	3,700	-	6,916
Other long-term assets	-	2	102	-	104
Cash and cash equivalents	-	-	-	50,033	50,033
Short-term investments	-	-	-	428	428
Inventories	-	-	2,437	-	2,437
Other current assets	2,342	11,968	3,299	-	17,609
Total	451,992	251,680	33,811	56,337	793,820

The Group's revenues, investment income and non-current assets (other than financial instruments, investments accounted for using the equity method, deferred tax assets and post-employment benefit assets) are divided into the following geographical areas:

	Six month period ended 31 December 2010		Six month period ended 31 December 2009
	Revenue and income	Non-current assets	Revenue and income	Non-current assets
	USD'000	USD'000	USD'000	USD'000
Vietnam	(16,568)	13,603	107,703	18,623
Other countries	7,871	-	3,426	-
Total	(8,697)	13,603	111,129	18,623

Revenues and investment income includes revenue, financial income, net gain or loss on fair value adjustments of investment properties and financial assets at fair value through Statement of Income, have been identified on the basis of the operation and investment location. Non-current assets are allocated based on their physical location.

6.  Acquisition of subsidiary

Additional acquisition of American Home Limited

At 30 June 2010 the Group held 75% equity interest of American Home Limited, a subsidiary incorporated in Vietnam. The principal activity of this company is to manufacture and sell building materials. In December 2010, the Group acquired a further 25% equity interest for USD0.6 million which was settled in cash and brings the Group's total interest in the project to 100% at the reporting date. The difference of USD0.4 million between the percentage change in non-controlling interests and the consideration paid has been recognised directly in equity and attributed to the owners of the Group.

Particulars of principal subsidiaries of the Group as of 31 December 2010:

Name	Place of incorporation/operations	Contributed share capital (USD)	Percentage interest held by the Group	Principal activities
Asia Value Investment Ltd.	BVI	4,730,000	100%	Investment
Vietnam Enterprise Ltd.	BVI	61,460,000	100%	Investment
Vietnam Investment Property Ltd.	BVI	8,750,000	100%	Investment
Vietnam Investment Property Holdings Ltd.	BVI	12,600,000	100%	Investment
Vietnam Investment Ltd.	BVI	19,320,000	100%	Investment
Vietnam Ventures Ltd.	BVI	7,100,000	100%	Investment
VOF Investment Ltd.	BVI	643,700,000	100%	Investment
Vina QSR Limited	BVI	1,610,000	100%	Investment
Indochina Building Supplies  Pte Ltd.	Singapore	3,384,000	100%	Building materials
American Home Limited	Vietnam	23,400,000	100%	Building materials
Indotel Limited	Singapore	17,734,008	100%	Hospitality
BI VI Investments Corporation	Vietnam	2,549,646	100%	Investment
Pegasus Leisure Limited	BVI	2,475,000	100%	Property
Saigon Water Park Co. Ltd.	Vietnam	3,536,000	100%	Property
PA Investment Opportunity II Limited	BVI	17,721,862	100%	Investment
VOF PE Holding 1 Limited	BVI	360,075	50%	Investment
VOF PE Holding 2 Limited	BVI	10,100,000	100%	Investment
VOF PE Holding 5 Limited	BVI	6,500,000	100%	Investment
DTL Education Holding Ltd.	BVI	15,000,000	100%	Investment
Vinasugar Holding Ltd.	BVI	-	100%	Investment
Vietnam Master Holding 2 Ltd .	BVI	-	100%	Investment
Allright Assets Ltd.	BVI	-	100%	Investment
VinaLand Heritage Ltd.	BVI	-	100%	Investment

7.  Investments in associates

	31 December 2010	30 June 2010
	USD'000	USD'000
Opening balance (1 July 2010/1 July 2009)	194,688	148,435
Additions (*)	3,417	17,650
Share of profits of associates	5,714	15,267
Share of associates' changes in revaluation reserves (Note 12)	8,880	(2,362)
Transferred from other long-term financial assets	-	3,000
Transferred from long-term loan receivables from related parties	-	16,330
Transferred from receivables from related parties	-	975
Dividends received	(1,500)	(1,534)
Disposals	(35)	(2,543)
Written-off	-	(312)
Translation differences	(143)	(218)
Closing balance	211,022	194,688

^(*) This amount includes USD2.9 million paid for Prosper Big Ltd. (Century 21^st Project) and USD0.5 million for Saigon Golf JSC. There was no change in the Group's controlling interest in respect to these investments.

Particulars of significant operating associates and their summarised financial information, extracted from their statutory audited/reviewed and/or management accounts as at 31 December 2010 are as follows:

	Incorpor- ation/ operation	Direct & indirect equity interest held	Principal activities	Assets	Liabilities	Income	Net profit/ (loss)
		%		USD'000	USD'000	USD'000	USD'000
SEM Thong Nhat Hotel Metropole	Vietnam	50	Hospitality	48,074	14,832	16,342	2,652
Thang Loi Textile & Garment JSC	Vietnam	49	Textile & Garment	10,711	7,585	1,285	1,003
Hung Vuong Corporation	Vietnam	40.91	Property	40,719	24,453	8,241	1,513
Pho Viet Joint Stock Co	Vietnam	32.5	Food & Beverage	3,462	2,241	2,985	(223)
Phong Phu Investment Development Ltd	Vietnam	30	Investment	34,705	24,695	131	47
Hoan My Medical Corporation JSC	Vietnam	28.8	Medical	43,437	17,642	15,336	3,838

8.  Financial assets at fair value through Statement of Income

	31 December 2010	30 June 2010
	USD'000	USD'000
Designated at fair value through Statement of Income:
Financial assets in Vietnam
Ordinary shares - listed	286,898	298,675
Ordinary shares - unlisted	85,240	115,422
Corporate bonds (*)	11,955	5,876
Financial assets in countries other than Vietnam:
Ordinary shares - listed	48,396	35,553
Total financial assets at fair value through Statement of Income	432,489	455,526

^(*) Corporate bonds include USD2 million of bonds with a fixed interest rate of 9.6% and maturing in 2012 and USD8.8 million of convertible bonds.

During the period, the Group purchased 6,218,269 ordinary shares of VinaLand Limited for USD4,974,451 bringing the Group's total shareholding to 36,216,326 shares. As a result, the Group had a 7.24% interest in VinaLand Limited as at 31 December 2010.

The financial assets are denominated in the following currencies:

	31 December 2010	30 June 2010
	USD'000	USD'000
Vietnamese Dong	384,093	419,973
Other currencies	48,396	35,553
	432,489	455,526

9.  Categories of financial assets and financial liabilities

	Note	31 December 2010	30 June 2010
		USD'000	USD'000
Financial assets
Financial assets held for trading (carried at fair value through Statement of Income)
- Ordinary shares - listed and unlisted	8	420,534	449,650
- Corporate bonds	8	11,955	5,876
		432,489	455,526
Loans and receivables
- Trade and other receivables		6,690	6,045
- Receivable from related parties		59,434	59,282
- Other long-term receivables		10,156	11,661
- Short-term investments		256	428
-  Cash and cash equivalents		47,955	50,033
		124,491	127,449
		556,980	582,975
Financial liabilities
Financial liabilities measured at amortised cost:
Non-current:
- Other payables		-	-
Current:
- Trade and other payables		10,374	9,791
		10,374	9,791

10.  Share capital

	31 December 2010		30 June 2010
	Number of shares	USD'000	Number of shares	USD'000
Authorised: Ordinary shares of USD0.01 each	500,000,000	5,000	500,000,000	5,000
Issued and fully paid:
Opening balance	324,610,259	3,246	324,610,259	3,246
Closing balance	324,610,259	3,246	324,610,259	3,246

11.  Additional paid-in capital

Additional paid-in capital represents the excess of consideration received over the par value of shares issued.

	31 December 2010	30 June 2010
	USD'000	USD'000
Opening balance	722,064	722,064
Closing balance	722,064	722,064

12.  Revaluation reserve

	31 December 2010	30 June 2010
	USD'000	USD'000
Opening balance (1 July 2010/1 July 2009)	21,193	25,958
Share of associates' changes in revaluation reserve for the period/ year	8,880	(2,362)
Disposal of investment	-	(2,403)
Closing balance	30,073	21,193

The Group's share of associates' changes in revaluation reserve resulting from the revaluation of associates' properties have been recorded directly in the Group's revaluation reserve under shareholders' equity.

13.  Selling, general and administration expenses

	Six month period ended
	31 December 2010	31 December 2009
	USD'000	USD'000
Management fees (Note 19)	7,409	7,938
Professional fees	1,591	1,507
Selling and general administration expenses (*)	2,017	1,533
	11,017	10,978

^(*) The majority of these expenses relate to operating expenses incurred by subsidiaries of the Group.

14.  Net changes in fair value of financial assets at fair value through Statement of Income

	Six month period ended
	31 December 2010	31 December 2009
	USD'000	USD'000
(Losses)/gains from realisation of financial assets, net	(2,430)	26,072
Unrealised (losses)/gains on market value differences	(11,240)	82,385
Unrealised losses from foreign exchange differences	(8,732)	(10,845)
	(22,402)	97,612

15.  Finance income and costs

	Six month period ended
	31 December 2010	31 December 2009
	USD'000	USD'000
Interest income	1,403	1,121
Dividend income	6,772	5,757
Realised gains from foreign exchange differences	567	358
Finance income	8,742	7,236
Realised losses from foreign exchange differences	(1,234)	(971)
Unrealised losses from foreign exchange differences	(324)	(178)
Finance costs	(1,558)	(1,149)
Net finance income	7,184	6,087

16.  Corporate income tax

VinaCapital Vietnam Opportunity Fund Limited is domiciled in the Cayman Islands. Under the current laws of the Cayman Islands, there is no income, state, corporation, capital gains or other taxes payable by the Company.

The majority of the Group's subsidiaries are domiciled in the British Virgin Islands (BVI) and so have a tax exempt status. Some of the subsidiaries are established in Singapore and have offshore operations in Vietnam. The income from these offshore operations is also tax exempt in Singapore.

A small number of subsidiaries are established in Vietnam and are subject to corporate income tax in Vietnam. However no provision for corporate income tax has been made (2009: nil) for these Vietnamese subsidiaries because all of these Vietnamese subsidiaries are in a position where there are no corporate income taxes payable because they either have incurred losses, or have unutilised tax holidays, or have sufficient carry-forward tax losses to offset any taxable income.

The relationship between the expected income tax expense based on the applicable income tax rate (stated below) and the tax expense actually recognised in the condensed interim consolidated statement of income can be reconciled as follows:

	Six month period ended
	31 December 2010	31 December 2010
	USD'000	USD'000
Group (loss)/profit before tax	(18,762)	99,957
Group (loss)/profit multiplied by applicable tax rate (0%)	-	-
Withholding taxes imposed on investment income	(94)	(102)
Income tax on Vietnamese subsidiaries	-	-
Tax expenses	(94)	(102)

17.  Earnings per share

(a) Basic

Basic earnings per share is calculated by dividing the profit/(loss) attributable to equity shareholders of the Company from continuing and total operations by the weighted average number of ordinary shares in issue during the period.

	Six month period ended
	31 December 2010	31 December 2009
(Loss)/profit attributable to equity shareholders of the Company from continuing and total operations (USD'000)	(18,762)	99,253
Weighted average number of ordinary shares in issue	324,610,259	324,610,259
Basic earnings/(loss) per share from continuing and total operations (USD per share)	(0.06)	0.31

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Group has no category of potentially dilutive ordinary shares.  Therefore, diluted earnings per share is equal to basic earnings per share.

(c) Net asset value per share

Net asset value (NAV) per share is calculated by dividing the net asset value attributable to ordinary shareholders of the Company by the weighted average number of outstanding ordinary shares in issue as at the reporting date. Net asset value is determined as total assets less total liabilities and non-controlling interests.

	As at 31 December 2010	As at 30 June 2010
Net asset value attributable to equity shareholders of the Company (USD'000)	772,820	782,501
Weighted average number of ordinary shares in issue	324,610,259	324,610,259
Net asset value per share (USD/share)	2.38	2.41

18.  Seasonality

The Group's Management believes that the impact of seasonality on the condensed interim consolidated financial information is not material.

19.  Significant related party transactions

Disposal of investment in VinaCapital Hoi An Resort Limited (Hoi An Resort Project)

In Oct 2010, the Group sold 25% interest in Hoi An Development Ltd. to VinaLand Limited, a related party under common management, for USD1.9 million resulting in a gain from disposal amounting to USD427,638 in the period. The cost of this investment was recorded under Other long-term financial assets.

Management fees

During the period, the Group was managed by VinaCapital Investment Management Limited (the "BVI Investment Manager"), an investment management company incorporated in the British Virgin Islands ("BVI"), under a management agreement dated 24 September 2003 (the "Management Agreement").  From 1 January 2011, the Group is managed by VinaCapital Investment Management Limited (the "CI Investment Manager"), a 100% owned subsidiary company of the BVI Investment Manager incorporated and registered as a licensed fund manager in the Cayman Islands ("CI"), under the novation agreement between the BVI Investment Manager and the CI Investment Manager. The Investment Managersreceive a fee based on the net asset value of the Group, payable monthly in arrears, at an annual rate of 2% (31 December 2009: 2%).

Total management fees for the period amounted to USD7,409,430 (31 December 2009: USD7,937,935), with USD2,652,866 (31 December 2009: USD1,335,576) in outstanding accrued fees due to the Investment Manager at the reporting date.

20.  Commitments

The Group has a broad range of commitments under investment licences it has received for the real estate projects jointly invested with VinaLand Limited, a related party under common management, and other agreements it has entered into, to acquire and develop, or make additional investments in investment properties and leasehold land in Vietnam. Further investments in any of these arrangements are at the Group's discretion.

21.  Fair value hierarchy

The following table presents financial assets and liabilities measured at fair value in the Condensed Interim Consolidated Statement of Financial Position in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:

- Level 1: quoted prices in active markets for identical assets or liabilities;

- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices); and

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows:

31 December 2010		Level 1	Level 2	Level 3	Total
		USD'000	USD'000	USD'000	USD'000
Assets
Financial assets at fair value through Statement of Income
Financial assets in Vietnam
- Ordinary share - listed		286,898	-	-	286,898
- Ordinary share - unlisted		-	85,240	-	85,240
- Corporate bonds		-	11,955	-	11,955
Financial assets in countries other than Vietnam		48,396	-	-	48,396
Investment in properties		-		6,587	6,587
Investments in associates		-		211,022	211,022
Other long-term investments		-	3,700	3,216	6,916
		335,294	100,895	220,825	657,507
Liabilities		-	-	-	-
Net fair value		335,294	100,895	220,825	657,507
In comparison with the last period end:
30 June 2010		Level 1	Level 2	Level 3	Total
		USD'000	USD'000	USD'000	USD'000
Assets
Financial assets at fair value through Statement of Income
Financial assets in Vietnam
- Ordinary share - listed		298,675	-	-	298,675
- Ordinary share - unlisted		1,559	113,863	-	115,422
- Corporate bonds		-	5,876	-	5,876
Financial assets in countries other than Vietnam		35,553	-	-	35,553
Investment in properties		-	-	6,700	6,700
Investments in associates		-	-	194,688	194,688
Other long-term investments		-	3,700	3,216	6,916
		335,787	123,439	204,604	663,830
Liabilities		-	-	-	-
Net fair value		335,787	123,439	204,604	663,830

22. Subsequent events after the reporting date

Impact of currency devaluation and decline in Vietnam stock market

As of the date of issuance of the interim financial information, the aggregate fair value of the Group's investments in financial assets at fair value through profit or loss has fallen by USD58.7 million to USD373.8 million from the aggregate fair value as of 31 December 2010 due to a general decline in listed and unlisted share prices in Vietnam and the weakening of the VND against the USD. The details are as follows:

	Fair value at					Movement
	31 December 2010		28 March 2011		Price			Foreign exchange loss			Total
	USD'000		USD'000		USD'000			USD'000			USD'000
Financial assets at fair value through profit or loss:
Ordinary shares - listed	335,294	286,158		(29,956)			(19,180)			(49,136)
Ordinary shares - unlisted	85,240	76,479		(5,662)			(3,099)			(8,761)
Corporate bonds	11,955	11,151		-			(804)			(804)
	432,489	373,788		(35,618)			(23,083)			(58,701)

 

END

 

 

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