Final Results

RNS Number : 0924J

Vietnam Opportunity Fund Limited

27 November 2008

Vietnam Opportunity Fund Limited

Audited financial results for the twelve months ended 30 June 2008

Vietnam Opportunity Fund Limited (the 'Company' or 'VOF'), the AIM-quoted investment vehicle focused on Vietnam, today announces its audited financial results for the twelve month period ended 30 June 2008.

Financial highlights

Net loss for the Period USD 416 million
Basic loss per share of USD 1.41 for the Period
Cash and cash equivalents as at 30 June 2008 of USD 24.3 million

Operational highlights

NAV decline of 37.2 percent in a difficult investment climate; benchmark Vietnam Index declined 61.1 percent in the same period.
Real estate sector return on investment of 37.5 percent, including a partial exit from a major real estate project via co-investment from a large European investor.
Hospitality (hotel) sector return on investment of 22.8 percent.
Martin Glynn joined the Board as an independent director and Bill Vanderfelt assumed the chairmanship of the Board.

Commenting, Don Lam, Director of VOF, said:

'This was a very difficult year for equity investments in Vietnam due to both domestic and international conditions. Nonetheless, the diversified VOF portfolio held up well against the market declines, and we believe the portfolio is very well positioned for a market rebound. The onset of the global financial crisis has made if difficult to ascertain when this rebound will occur but we continue to believe that our funds are excellent value, particularly at their current trading levels, and are well-placed to benefit from Vietnam's excellent growth prospects'.

For more information please contact:

Ms Chi Nguyen

VinaCapital Investment Management Limited

Investor Relations

+84 8 821 9930

chi.nguyen@vinacapital.com

Philip Secrett

Grant Thornton UK LLP

Nominated Adviser

+44 20 7383 5100

philip.j.secrett@gtuk.com

Hiroshi Funaki

LCF Edmond de Rothschild Securities

+44 20 7845 5960

funds@lcfr.co.uk

David Cranmer

Financial Dynamics

+44 20 7831 3113

david.cranmer@fd.com

Chairman's Statement

Dear Shareholders,

We herein present the annual financial statements of the Vietnam Opportunity Fund (AIM: VOF.L) for the year ended 30 June 2008.

Vietnam's economy during the first half of 2008 came back to earth after two years of stellar growth. Vietnam's admission to the World Trade Organisation in January 2007 and a subsequent rise in foreign direct investment contributed to an atmosphere of easy credit that led to over-enthusiasm and outright speculation, particularly in the real estate sector. The economy began to overheat, with inflation rising to 12.6 percent by the end of 2007.

In early 2008, the situation worsened. Inflation continued to rise, and the currency was put under pressure by a rising trade deficit. At the end of the first quarter of 2008, the government put the brakes on the economy by sharply restricting credit and cutting spending. Unprepared for such restrictions, the markets reacted strongly and reversed course, with the benchmark Vietnam Index shedding 60 percent of its market capitalisation over the first six months of 2008.

On the surface, this appeared to be a dire situation, with some commentators raising the spectre of the 1997 Asian Financial Crisis that started with a destabilising rush on the Thai baht. Was the Vietnam dong next?

Thankfully, by the end of June 2008 it was clear that financial disaster was not around the corner. As the second half of 2008 began, the markets started to recover.

When the dust cleared, however, investment funds such as VOF had seen their stellar 2007 returns sharply reduced. VOF at the end of June 2008 had an NAV of USD 669 million, or USD 2.06 per share. This was a per-share decline of 37.2 percent from the end of June 2007 when VOF had an NAV of USD 822 million, or USD 3.28 per share, and was net of a capital fundraising of USD 272 million in November 2007 at USD 3.68 per share.

Despite the NAV decline, it was nonetheless an important year in many respects. The new capital that VOF raised in November 2007 was quickly invested into several of Vietnam's top emerging private and OTC companies. The fund's real estate portfolio saw an increase in investment over 2008, and despite the slowdown in Vietnam's real estate market in 2008, the value of these investments has, to date, remained strong, with several assets increasing in value, such as the renowned Sofitel Metropole Hotel in Hanoi. Generally speaking, the broad diversification of the VOF portfolio helped to protect shareholder equity. The NAV decline, while disappointing, was moderate compared to the broader market, and VOF also outperformed its comparable Vietnam funds.

As the second half of 2008 began, the improved macroeconomic situation, strong portfolio and respectable cash position had VOF in place to begin recovering its net asset value. Unfortunately, as all investors will know, a truly global financial crisis took hold that resulted in an unexpected impact on VOF - a drastic fall in share price to a discount of as much as 50 percent of NAV. This is a major concern of the Board and it is something that we are seeking to address. In October 2008, the Board convened an extraordinary general meeting of shareholders to request adding a buyback facility to the fund's articles of association. Although this request was rejected, the Board will in the future revisit this issue as well as explore other avenues to build shareholder value.

The global financial crisis and economic slowdown will likely hinder VOF's immediate prospects. However, we believe this challenge is also an opportunity.

VOF has no debt at the fund level. It does not trade in complicated derivatives or credit swaps, preferring to invest capital in solid companies and real estate projects, in areas of expertise, that deliver demand-driven products and services, while seeking to enhance shareholder value through the use of debt, share buybacks and other simple tools after prudent consideration and analysis. In these times, this approach should be comforting to our shareholders.

Vietnam over the past ten years was the second fastest growing economy in the world. Even with the recent global events, we are confident that Vietnam will continue to be one of the world's top performing economies for the next ten years. VOF, as always, will be well placed to capitalise from Vietnam's inevitable path of growth.

Thank you for your continued support.

William Vanderfelt

Chairman

Vietnam Opportunity Fund

26 November 2008

Consolidated Balance Sheet

	Notes	30 June 2008	30 June 2007
	Notes	30 June 2008	30 June 2007
		USD'000	USD'000
ASSETS
Non-current
Investment property	7	30,212	16,852
Property, plant and equipment	8	2,885	3,027
Investment properties under development	9	7,980	2,239
Investments in associates	10	175,885	69,177
Long-term investments	11	11,926	1,954
Other long-term financial assets		1,170	1,721
Prepayments for operating leases	12	1,777	1,971
Goodwill	13	33	1,752
Deferred tax assets		90	-
Other non-current assets		46	129
Total non-current assets		232,004	98,822

Current
Inventories	14	5,326	4,755
Trade and other receivables	15	7,437	6,389
Receivables from related parties	33	65,697	60,484
Financial assets at fair value through profit or loss	16	372,187	624,575
Short-term investments	17	1,806	47,941
Deposits for acquisitions of investments	18	14,871	10,442
Cash and cash equivalents	19	24,286	71,377
Total current assets		491,610	825,963
Total assets		723,614	924,785

	Notes	30 June 2008	30 June 2007
		USD'000	USD'000
EQUITY
Equity attributable to shareholders of the parent:
Share capital	20	3,246	2,506
Additional paid-in capital	21	722,064	459,151
Revaluation reserve	22	18,463	17,717
Translation reserve		(846)	(664)
Retained earnings		(74,050)	342,954
		668,877	821,664

Minority interest		34,117	22,138
Total equity		702,994	843,802

LIABILITIES
Non-current
Long-term borrowings and debts		3,764	-
Other long-term liabilities		199	-
Non-current liabilities		3,963	-

Current
Short-term borrowings and debts		1,069	-
Trade and other payables	23	6,021	4,821
Payables to related parties	33	9,502	74,985
Other liabilities		65	1,177
Current liabilities		16,657	80,983
Total liabilities		20,620	80,983
Total equity and liabilities		723,614	924,785
Net assets per share attributable to equity shareholders of the parent (USD per share)		2.06	3.28

Consolidated Statement of Changes in Equity

	Equity attributable to shareholders of the parent					Minority interest	Total equity
	Share capital	Additional paid-in capital	Translation reserve	Revaluation reserve	Retained earnings	Minority interest	Total equity
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000
1 July 2006	1,227	164,950	(34)	-	78,787	14,084	259,014
Currency translation	-	-	(630)	-	-	-	(630)
Share of associate income and expense recognised directly in equity	-	-	-	17,717	-	-	17,717
Profit for the year ended 30 June 2007	-	-	-	-	264,167	1,196	265,363
Total recognised income and expense for the year	-	-	(630)	17,717	264,167	1,196	282,450
Issue of new shares	1,279	303,340	-	-	-	-	304,619
Placement fee		(9,139)	-	-	-	-	(9,139)
Acquisition of subsidiaries	-	-	-	-	-	6,858	6,858
30 June 2007	2,506	459,151	(664)	17,717	342,954	22,138	843,802

1 July 2007	2,506	459,151	(664)	17,717	342,954	22,138	843,802
Currency translation	-	-	(182)	-	-	-	(182)
Share of associate income and expense recognised directly in equity	-	-	-	9,382	-	-	9,382
Profit (loss) for the year ended 30 June 2008	-	-	-	-	(417,004)	1,347	(415,657)
Total recognised income and expense for the year	-	-	(182)	9,382	(417,004)	1,347	(406,457)
Issue of new shares	740	271,078	-	-	-	-	271,818
Placement fee	-	(8,165)	-	-	-	-	(8,165)
Allocated share of associate gain to minority interest	-	-	-	(8,636)	-	8,636	-
Acquisition of minority interest share in subsidiaries	-	-	-	-	-	(5,758)	(5,758)
Capital contribution from minority shareholder	-	-	-	-	-	7,754	7,754
30 June 2008	3,246	722,064	(846)	18,463	(74,050)	34,117	702,994

Consolidated Statement of Income

	Notes	Year ended
		30 June 2008	30 June 2007
		USD'000	USD'000
Revenue		11,796	9,452
Cost of sales		(9,965)	(8,118)
Gross profit		1,831	1,334

Net changes in fair value of financial assets at fair value through profit or loss	24	(481,192)	315,206
Gain on fair value adjustment of investment properties		12,573	1,124
Selling, general and administration expenses	25	(24,625)	(86,353)
Other operating income	26	6,620	598
Goodwill written-off/ negative goodwill	13	(1,719)	2,984
Other operating expenses	27	(1,305)	(692)
Operating (loss)/ profit		(487,817)	234,201

Financial income	28	12,604	13,266
Finance costs	29	(2,736)	(3,142)
Share profit of associates, net		62,292	21,038
		72,160	31,162
(Loss)/ profit before tax from continuing operations		(415,657)	265,363
Income tax	30	-	-
Net (loss)/ profit for the year		(415,657)	265,363

Attributable to equity shareholders of the parent:		(417,004)	264,167
Attributable to minority interest		1,347	1,196
(Loss)/ earnings per share (continuing operations and total EPS) - basic and diluted (USD per share)	31	(1.41)	1.34

Consolidated Statement of Cash Flows

	Year ended
	30 June 2008	30 June 2007
	USD'000	USD'000
Operating activities
Net (loss)/ profit before tax	(415,657)	265,363
Adjustments:
Depreciation and amortisation	515	635
Unrealised net loss (gain) on revaluation of financial assets	477,376	(255,441)
Net loss (gain) on disposal of financial assets	3,816	(59,765)
Gain on revaluation of investment properties	(12,573)	(1,124)
Gain on disposal of investments	(5,622)	-
Gain on written-off account balances	(423)	-
Provision for loan write-downs and doubtful debts	1,287	-
Share of associates' profits	(62,292)	(21,038)
Write-off goodwill	1,719	-
Negative goodwill	-	(2,984)
Impairment loss	-	362
Unrealised foreign exchange loss	848	2,277
Interest and dividend income	(12,557)	(13,009)
Net loss before changes in working capital	(23,563)	(84,724)
Change in trade and other receivables	(1,621)	(3,351)
Change in inventories	(571)	(435)
Change in trade and other payables	(65,207)	(2,773)
	(90,962)	(91,283)

	Year ended
	30 June 2008	30 June 2007
	USD'000	USD'000
Investing activities
Interest received	6,104	7,377
Dividends received	8,641	5,687
Purchases of investment property, plant, equipment and other non-current assets	(7,159)	(1,651)
Acquisition of subsidiaries, net of cash	(7,105)	(2,716)
Purchases of financial assets	(443,433)	(319,787)
Deposits for acquisitions of investments	(4,429)	-
Acquisitions of long-term investment	(11,400)	-
Proceeds from disposals of financial assets	215,305	179,896
Investment in associates	(32,585)	-
Proceeds from disposals of investments and fixed assets	7,541	3
Proceeds from loans prepaid and short-term investments	46,568	177
Loans provided	(2,662)	(34,514)
	(224,614)	(165,528)
Financing activities
Net proceeds from shares issued	263,652	295,481
Proceeds from bank loans	4,833	-
	268,485	295,481
Net (decrease) increase in cash and cash equivalents for the year	(47,091)	38,670
Cash and cash equivalents at the beginning of the year	71,377	32,707
Cash and cash equivalents at end of the year	24,286	71,377

Notes to the Consolidated Financial Statements

1 General information

Vietnam Opportunity Fund Limited 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, Cambodia, Laos and Southern China. The Company is listed on the AIM market of the London Stock Exchange under the ticker symbol VOF.

The consolidated financial statements for the year ended 30 June 2008 were authorised for issue by the Board of Directors on 26 November 2008.

2 Statement of compliance with IFRS and adoption of new and amended standards and interpretations

2.1 Statement of compliance with IFRS

The consolidated financial statements (the 'financial statements') have been prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board (IASB).

2.2 Changes in accounting policies

2.2.1 Overall considerations

The IASB and the International Financial Reporting Interpretations Committee have issued various standards and interpretations with an effective date after the date of this financial information. The Group has not early adopted the standards and interpretations that have been issued as they are not yet effective. The most relevant for the Group are IAS 1 (Revised 2007) 'Presentation of the Financial Statements' (effective for annual periods beginning on or after 1 January 2009), and IFRS 8 'Operating Segments' (effective for annual periods beginning on or after 1 January 2009).

Upon adoption of IAS 1 (Revised 2007), the Group will disclose its capital management objectives, policies and procedures in each annual financial report and will have its capital movements and other gains and losses presented separately in the statement of changes in equity and statement of recognised income and expenses. Upon adoption of IFRS 8, the Group will disclose segmental information when evaluating performance and deciding how to allocate resources to operations.

The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the financial statements in the period of initial application.

2.2.2 Adoption of IFRS 7, Financial Instruments: Disclosures

IFRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. The Group has applied IFRS 7 from the annual period beginning 1 July 2007.

2.2.3 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group

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

IAS 23 Borrowing Costs (Revised) (effective from 1 January 2009)

The revised standard requires the capitalisation of borrowing costs, to the extent they are directly attributable to the acquisition, production or construction of qualifying assets that need a substantial period of time to get ready for their intended use or sale. In accordance with the transitional provisions of the revised standard the Group capitalises borrowing costs relating to qualifying assets for which the commencement date is on or after the effective date. No retrospective restatement will be made for borrowing costs that have been expensed for qualifying assets with a commencement date before the effective date. The revised standard will decrease the Group's reported interest expense and increase the capitalised cost of qualifying assets under construction in future periods. The capitalisation is primarily related to some of the Group's development projects.

IFRS 3 Business Combinations (Revised 2008) (effective from 1 July 2009)

The standard is applicable for business combinations occurring in reporting periods beginning on or after 1 July 2009 and will be applied prospectively. The new standard introduces changes to the accounting requirements for business combinations, but still requires use of the purchase method, and will have a significant effect on business combinations occurring in reporting periods beginning on or after 1 July 2009. The Group is required to adopt Revised IFRS 3 for business combinations when the acquisition date is on or after 1 July 2009, with prospective application required.

IAS 27 Consolidated and Separate Financial Statements (Revised 2008)

(effective from 1 July 2009)

The revised standard introduces changes to the accounting requirements for the loss of control of a subsidiary and for changes in the Group's interest in subsidiaries. Management does not expect the standard to have a material effect on the Group's financial statements.

Annual Improvements 2008

The IASB has issued Improvements for International Financial Reporting Standards 2008. Most of these amendments become effective in annual periods beginning on or after 1 January 2009. The Group expects the amendment to IAS 23 Borrowing Costs to be relevant to the Group's accounting policies. The amendment clarifies the definition of borrowing costs by reference to the effective interest method. This definition will be applied for reporting periods beginning on or after 1 January 2009, however forecasts indicate the effect to be insignificant. Smaller amendments are made to several other standards, however, these amendments are not expected to have a material impact on the
Group's financial statements.

3 Summary of significant accounting policies

3.1 Presentation of consolidated financial statements

The financial statements are presented in United States dollars (USD) and all values are rounded to the nearest thousand ('000) unless otherwise indicated.

The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarised below. These policies have been consistently applied to all the years presented unless otherwise stated.

The preparation of consolidated financial statements in accordance with IFRS requires the use of certain accounting estimates and assumptions. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 4 to the consolidated financial statements.

3.2 Basis of consolidation

The consolidated financial statements of the Group for the year ended 30 June 2008 comprise the Company and its subsidiaries (together referred to as the 'Group') and the Group's interests in associates and jointly controlled entities.

3.3 Subsidiaries

Subsidiaries are all entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from their activities. In assessing control, potential voting rights that presently are exercisable or convertible, along with contractual arrangements, are taken into account. 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. Majority subsidiaries of the Group have a reporting date of 30 June.

In addition, acquired subsidiaries are subject to application of the purchase method. This involves the revaluation at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their revalued amounts, which are also used as the basis for subsequent measurement in accordance with the Group's accounting policies. Goodwill represents the excess of acquisition cost over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Negative goodwill is immediately allocated to the statement of income as at the acquisition date.

All inter-company balances and significant inter-company transactions and resulting unrealised profits or losses (unless losses provide evidence of impairment) are eliminated on consolidation.

A minority interest represents the portion of the profit or loss and net assets of a subsidiary attributable to an equity interest that is not owned by the Group. It is based upon the minority's share of post-acquisition fair values of the subsidiary's identifiable assets and liabilities, except where the losses applicable to the minority in the subsidiary exceed the minority interest in the equity of that subsidiary. In such cases, the excess and further losses applicable to the minority are taken to the consolidated statement of income, unless the minority has a binding obligation to, and is able to, make good the losses. When the subsidiary subsequently reports profits, the profits applicable to the minority are taken to the consolidated statement of income until the minority's share of losses previously taken to the consolidated statement of income is fully recovered.

Changes in ownership interests in a subsidiary that do not result in gaining or losing control of the subsidiary are accounted for using the parent entity method of accounting whereby the difference between the consideration paid and the proportionate change in the parent entity's interest in the carrying value of the subsidiary's net assets is recorded as additional goodwill. No adjustment is made to the carrying value of the subsidiary's net assets as reported in the consolidated financial statements.

3.4 Associates and jointly controlled entities

Associates are those entities over which the Group is able to exert significant influence, generally accompanying a shareholding of between 20% to 50% of voting rights, but which are neither subsidiaries nor investments in joint ventures. In the consolidated financial statements, investments in associates are initially recorded at cost and subsequently accounted for using the equity method.

A jointly controlled entity is a contractual arrangement whereby two or more parties undertake an economic activity where the strategic, financial and operating decisions relating to the activity require the unanimous consent of the venturers.

Under the equity method, the Group's interest in an associate or jointly controlled entity is carried at cost and adjusted for the post-acquisition changes in the Group's share of the associate's or jointly controlled entity's net assets less any identified impairment loss, unless it is classified as held for sale or included in a disposal group that is classified as held for sale. The consolidated statement of income includes the Group's share of the post-acquisition, post-tax results of the associate or jointly controlled entity for the year, including any impairment loss on goodwill relating to the investment in associate or jointly controlled entity recognised for the year.

All subsequent changes to the Group's share of interest in the equity of the associate are recognised in the carrying amount of the investment. Changes resulting from the profit or loss generated by the associate are reported within 'Share profit of associates, net' in profit or loss. These changes include subsequent depreciation, amortisation or impairment of the fair value adjustments of assets and liabilities.

When the Group's share of losses in an associate or jointly controlled entity equals or exceeds its interest in the associate or jointly controlled entity, the Group does not recognise further losses, unless it has legal or constructive obligations, or made payments, on behalf of the associate or jointly controlled entity.

Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities of an associate or jointly controlled entity recognised at the date of acquisition is recognised as goodwill. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group, plus any costs directly attributable to the investment.

Goodwill is included within the carrying amount of an investment and is assessed for impairment as part of the investment. After the application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group's investments in its associates and jointly controlled entities. At each balance sheet date, the Group determines whether there is any objective evidence that an investment in an associate or jointly controlled entity is impaired. If such indications are identified, the Group calculates the amount of impairment as being the difference between the recoverable amount of the associate or jointly controlled entity and its respective carrying amount.

Unrealised gains on transactions between the Group and its associates and jointly controlled entities are eliminated to the extent of the Group's interest in an associate or jointly controlled entity. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

3.5 Functional and presentation currency

The consolidated financial statements are presented in United States Dollars (USD) ('the presentation currency'). The financial statements of each consolidated entity are prepared in either USD or the currency of the primary economic environment in which the entity operates ('the functional currency'), which for most investments is Vietnamese Dong. USD is used as the presentation currency because it is the primary basis for the measurement of the performance of the Group (specifically changes in the Net Asset Value of the Group) and a large proportion of significant transactions of the Group are denominated in USD.

3.6 Foreign currency translation

In the individual financial statements of the consolidated entities, transactions arising in currencies other than the functional currency of the individual entity are translated at exchange rates in effect on the transaction dates. Monetary assets and liabilities denominated in currencies other than the functional currency of the individual entity are translated at the exchange rates in effect at the balance sheet date. Translation gains and losses and expenses relating to foreign exchange transactions are recorded in the consolidated statement of income.

In the consolidated financial statements all separate financial statements of subsidiaries, if originally presented in a currency different from the Group's presentation currency, are converted into USD. Assets and liabilities are translated into USD at the closing rate of the balance sheet date. Income and expenses are converted into the Group's presentation currency at the average rates over the reporting period. Any differences arising from this translation are charged to the currency translation reserve in equity.

3.7 Revenue recognition

Goods and services rendered

Revenue from sale of goods is recognised in the consolidated statement of income when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognised in the statement of income in proportion to the stage of completion of the transaction at the balance sheet date. No revenue is recognised if there are significant uncertainties regarding the ultimate receipt of the proceeds or the reasonable estimation of the associated costs of the sale, or the possibility of the return of the goods.

Rental income

Rental income from investment property is recognised in the consolidated statement of income on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income.

Interest income

Interest income is recognised on an accrual and, if applicable, effective yield basis.

Dividend income

Dividend income is recorded when the Group's right to receive the dividend is established.

3.8 Expense recognition

Borrowing costs

Borrowing costs, comprising interest and related costs, are recognised as an expense in the period in which they are incurred, except for borrowing costs relating to the construction of property, plant and equipment and investment property under development, which are capitalised as a cost of the related assets.

Operating lease payments

Payments made under operating leases are recognised in the consolidated statement of income on a straight-line basis over the term of the lease. Lease incentives received are recognised in the statement of income as an integral part of the total lease expense.

Finance lease payments

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

3.9 Intangible assets

Intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses. Expenditure on internally generated goodwill and brands is recognised in the statement of income as an expense when incurred.

Amortisation

Amortisation is charged to the statement of income on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

Software 3 to 5 years

3.10 Goodwill

Goodwill represents the excess of the cost of acquisition of subsidiary companies and associated companies over the Group's share of the fair value of their identifiable net assets at the date of acquisition.

Goodwill is recognised at cost less any accumulated impairment losses. The carrying value of goodwill is subject to an annual impairment review and whenever events or changes in circumstances indicate that it may not be recoverable. An impairment charge will be recognised in the statement of income when the results of such a review indicate that the carrying value of goodwill is impaired (see accounting policy 3.17).

Negative goodwill represents the excess of the Group's interest in the fair value of identifiable net assets and liabilities over cost of acquisition. It is recognised directly in the statement of income at the date of acquisition.

Gains and losses on disposal of an entity include the carrying amount of goodwill relating to the entity disposed of.

3.11 Investment properties

Investment properties are properties owned or held under finance lease to earn rentals or capital appreciation, or both, or 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.

Investment properties are stated at fair value. Two independent valuation companies, with appropriately recognised professional qualifications and recent experience in the location and category being valued, value each property each year. On the valuation date, the fair value is estimated assuming that there is an agreement between a willing buyer and a willing seller in an arm's length transaction after proper marketing; wherein the parties had each acted knowledgeably, prudently and without compulsion. The valuations are prepared based upon direct comparison with sales of other similar properties in the area and the expected future discounted cash flows of a property using a yield that reflects the risks inherent in those cash flows. Valuations are reviewed and approved by the Valuation Committee of the Board of Directors. The Valuation Committee may adjust valuations if there are factors that the external independent valuers have not considered in their determination of a property's fair value.

Any gain or loss arising from a change in fair value is recognised in the income statement. Rental income from investment property is accounted for as described in the accounting policy 3.7.

When an item of property, plant and equipment is transferred to investment property following a change in its use, any differences arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly in equity if it is a gain. Upon disposal of the item the gain is transferred to retained earnings. Any loss arising in this manner is recognised in the statement of income immediately.

Property where more than 10% of the property is occupied by the Group for the production or supply of goods and services, or for administration purposes, is accounted for as property, plant and equipment (see accounting policy 3.13).

3.12 Investment property under development

Property that is being constructed or developed for future use as investment property is classified as investment property under development (development projects) and stated at cost until construction or development is complete, at which time it is reclassified and subsequently accounted for as investment property. At the date of transfer, the difference between fair value and cost is recorded as income in the consolidated statement of income.

All costs directly associated with the purchase and construction of a property, and all subsequent capital expenditures for the development qualifying as acquisition costs are capitalised.

Borrowing costs are capitalised if they are directly attributable to the acquisition, construction or production of a qualifying asset. Capitalisation of borrowing costs commences when the activities to prepare the asset are in progress and expenditures and borrowing costs are being incurred. Capitalisation of borrowing costs continues until the assets are substantially ready for their intended use. If the resulting carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognised. The capitalisation rate is arrived at by reference to the actual rate payable on borrowings for development purposes or, with regard to that part of the development cost financed out of general funds, to the average rate.

3.13 Property, plant and equipment

Owned assets

All property, plant and equipment, except buildings, are stated at cost less accumulated depreciation and impairment losses (see accounting policy 3.17). 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.

Buildings are revalued to fair value in accordance with the methods set out in accounting policy 3.11. Any surplus arising on the revaluation is recognised in a revaluation reserve within equity, except to the extent that the surplus reverses a previous revaluation deficit on the building charged to the consolidated statement of income, in which case a credit to that extent is recognised in the consolidated statement of income. Any deficit on revaluation is charged in the consolidated statement of income except to the extent that it reverses a previous revaluation surplus on a building, in which case it is taken directly to the revaluation reserve. Any revaluation surplus remaining in equity on disposal of the asset is transferred to retained earnings.

If an investment property is reclassified as property, plant and equipment its fair value at the date of reclassification becomes its deemed cost for subsequent accounting.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Leased assets

Leases under the terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Property, plant and equipment and investment property acquired by way of a finance lease is stated at an amount equal to the lower of its fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses.

Subsequent expenditure

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 statement of income as incurred.

Depreciation

Depreciation is charged to the statement of income 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 and leasehold land improvement 5 to 20 years

Plant and machinery 5 to 10 years

Office equipment, furniture and fixtures 4 to 9 years

Motor vehicles 5 to 10 years

Material residual value estimates and estimates of useful lives are updated as required , but reviewed at least annually, irrespective of whether or not the assets are revalued.

Assets held under finance leases which do not transfer title to the assets to the Group at the end of the lease are depreciated over the shorter of the estimated useful lives shown above and the term of the lease.

3.14 Leases

Leases under the terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases (see accounting policy 3.13).

Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases. Where the Group has the use of an asset held under an operating lease, payments made under the lease are charged to the statement of income 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.

3.15 Financial assets

Financial assets are divided into the following categories: loans and receivables; and financial assets at fair value through profit or loss, available for sale financial assets; and financial assets held to maturity.

Management determines the classification of its financial assets at initial recognition depending on the purpose for which the financial assets were acquired. Where allowed and appropriate management re-evaluates this designation at each reporting date. The designation of financial assets is based on the investment strategy set out in the Group's Admission Document to the London Stock Exchange's Alternative Investment Market, dated 24 September 2003.

All financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at a fair value through profit or loss, directly attributable transaction costs.

Derecognition of financial assets occurs when the rights to receive cash flows from the investments expires or are transferred and substantially all of the risks and rewards of ownership have been transferred. At each balance sheet date, financial assets are reviewed to assess whether there is objective evidence of impairment. If any such evidence exists, any impairment loss is determined and recognised based on the classification of the financial assets.

The Group's financial assets consist primarily of listed, unlisted equities, bonds, loans and receivables.

Loans and receivables

All loans and receivables, except trustee loans, are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value is recognised in profit or loss. The Group's trade and most other receivables fall into this category of financial instruments. Discounting, however, is omitted where the effect of discounting is immaterial.

Significant receivables are considered for impairment on a case-by-case basis when they are overdue at the balance sheet date or when objective evidence is received that a specific counterparty will default.

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 are designated by the entity to be carried at fair value through profit or loss upon initial recognition. By definition, all derivative financial instruments that do not qualify for hedge accounting fall into this category. Other financial assets at fair value through profit or loss held by the Company include listed and unlisted securities and trustee loans.

Any gain or loss arising from derivative financial instruments is based on changes in fair value, which is determined by direct reference to active market transactions or using industry standard valuation techniques where no active market exists.

Financial assets at fair value through profit and loss include trustee loans to banks and other parties where the Group receives interest and other income on the loans calculated based on the proceeds from the sales of specific assets held by the counterparties. Fair value is determined based on the expected future discounted cash flows from each loan.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that do not qualify for inclusion in any of the other categories of financial assets. All financial assets within this category are subsequently measured at fair value. Gains and losses arising from changes in their fair values are recognised directly in equity, except for impairment losses, until the financial asset is derecognised, at which time the cumulative gain or loss previously recognised in equity would be recognised in the statement of income.

For available for sale investment in equity securities that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, they are measured at cost less any identified impairment losses at each balance sheet date subsequent to initial recognition.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities. Investments are classified as held-to-maturity if it is the intention of the Group to hold them until maturity. The Group currently holds bonds which fall within this category of financial assets.

Held-to-maturity investments are subsequently measured at amortised cost using the effective interest rate method. In addition, if there is objective evidence that the investment has been impaired, the financial asset is measured at the present value of estimated cash flows. Any changes to the carrying amount of the investment are recognised in the statement of income.

3.16 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Financing costs are not taken into consideration. Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses.

3.17 Impairment of assets

The Group's goodwill; intangible assets; operating lease prepayments; property, plant and equipment; property held for development; and interests in associates and jointly controlled entities are subject to impairment testing.

For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill in particular is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management controls the related cash flows.

All individual assets or cash generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised as an expense immediately for the amount by which the asset's carrying amount exceeds its recoverable amount unless the relevant asset is carried at a revalued amount under the Group's accounting policy, in which case the impairment loss is treated as a revaluation decrease according to that policy. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the assets.

3.18 Income taxes

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods that are unpaid at the balance sheet 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 statement of income.

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

Deferred tax 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. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

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 substantially enacted at the balance sheet date. Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statement of income. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity are charged or credited directly to equity.

3.19 Cash and cash equivalents

Cash and cash equivalents include cash at bank and in hand as well as short term highly liquid investments such as money market instruments and bank deposits with an original maturity term of not more than three months.

3.20 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. Any transaction costs associated with the issuing of shares are deducted from additional paid-in capital, net of any related income tax benefits.

Revaluation reserve represents the surplus arising on the revaluation of the Group's owned buildings which are classified under property, plant and equipment.

Currency translation differences on net investment in foreign operations are included in the translation reserve.

Retained earnings include all current and prior period results as disclosed in the consolidated statement of changes in equity.

3.21 Financial liabilities

The Group's financial liabilities include trade and other payables and other liabilities.

Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All interest related charges are recognised as an expense in finance costs in the statement of income.

Trade payables are recognised initially at their fair value and subsequently measured at amortised cost, using the effective interest rate method.

Borrowings are raised for support of long term funding of the Group's investments. They are recognised at fair value.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

3.22 Provisions, contingent liabilities and contingent assets

Provisions are recognised when present obligations will probably lead to an outflow of economic resources from the Group that can be reliably estimated. A present obligation arises from the presence of a legal or constructive obligation that has resulted from past events. 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 balance sheet date, including the risks and uncertainties associated with the present obligation. Where there are a number 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 provisions are discounted to their present values, where the time value of money is material.

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

The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably.

A contingent asset is a possible asset that arises from past events that's existence will be confirmed by uncertain future events beyond the control of the Group. The Group does not recognise contingent assets but discloses their existence when inflows of economic benefits are probable, but not virtually certain.

3.23 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. Parties are considered to be related to the Group if:

1. directly or indirectly, a party controls, is controlled by, or is under common control with the Group; has an

interest in the Group that gives it significant influence over the Group; or has joint control over the Group;

2. a party is a jointly-controlled entity;

3. a party is an associate;

4. a party is a member of the key management personnel of the Group; or

5. a party is a close family member of the above categories.

3.24 Segment reporting

An investment segment is a group of assets that are subject to risks and returns that are different from those of other business segments.

A geographical segment is a particular economic environment that is subject to risks and return that are different from those of segments operating in other economic environments.

3.25 Earnings per share and net asset value per share

The Group presents basic earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

Net asset value (NAV) per share is calculated by dividing the net asset value attributable to ordinary shareholders of the Company by the number of outstanding ordinary shares as at the balance sheet date. Net asset value is determined as total assets less total liabilities and minority interest.

4 Critical accounting estimates and judgements

When preparing the financial statements management 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 will seldom 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 buildings

The investment properties and buildings of the Group are stated at fair value in accordance with the accounting policies 3.11. The fair values of investment properties and buildings have been determined by independent professional valuers including: CB Richard Ellis; Savills; Colliers and Sallmans. These valuations are based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results.

Fair value of financial instruments

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 balance sheet date.

The fair value of financial instruments 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 balance sheet date. The outcome may vary from the actual prices that would be achieved in an arm's length transactions at the reporting date.

Impairment

Trade and other receivables

The Group's management considers the need to provide for the 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.

Other assets

In the process of reviewing for impairment, the Group's management makes assumptions about future cash flows and discount rates associated with market risk and asset specific risk factors. The impairment assessment is an estimate and consequently the actual results achieved if the assets were disposed at the balance sheet date may differ to the current book value recorded by the Group.

Business combinations

On initial recognition, the assets and liabilities of the acquired business are included in the consolidated statement of financial position at their fair values. In measuring fair value management uses estimates about future cash flows and discount rates or independence valuation reports for investment properties and buildings, however, the actual results may vary. Any measurement changes upon initial recognition would affect the measurement of goodwill. Details of acquired assets and liabilities are given in note 6.

5 Segment reporting

	As at 30 June 2008			As at 30 June 2007
	Vietnam	Outside Vietnam	Total	Vietnam	Outside Vietnam	Total
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000
Total assets
Capital markets	360,516	12,078	372,594	582,939	31,444	614,383
Private equity	24,205	-	24,205	26,015	-	26,015
Real estate	302,438	-	302,438	161,213	-	161,213
Cash	22,085	2,202	24,287	121,626	1,548	123,174
	709,244	14,280	723,524	891,793	32,992	924,785

	As at 30 June 2008			As at 30 June 2007
	Vietnam	Outside Vietnam	Total	Vietnam	Outside Vietnam	Total
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000
Net Profit (loss)
Capital markets	(500,948)	-	(500,948)	228,442	9,196	237,638
Private equity	2,916	-	2,916	(9,537)	-	(9,537)
Real estate	76,386	-	76,386	30,960	-	30,960
Cash	5,976	13	5,989	2,994	3,308	6,302
	(415,670)	13	(415,657)	252,859	12,504	265,363

Segment information is presented in respect to the Group's investment and geographical segments. The primary reporting format, investment segments, is based on the investment manager's management and monitoring of investments. Investments are allocated into four main segments: capital markets, private equity, real estate (including real estate related loans) and cash (including term deposits and bonds). The Group's secondary reporting format, geographical segments, includes Vietnam and the regions outside Vietnam.

To determine the geographical segments for financial instruments the following rules have been applied:

Listed shares − place of primary listing;
Unlisted shares − place of incorporation of the issuer;
Private equity − place of incorporation of the issuer;
Real estate − location of property; and
Cash − place of deposit.

6 Acquisition of subsidiaries and associate

Additional acquisition of Vietnam Hospitality Ltd.

As of 30 June 2007, the Group held a beneficial interest of 80% in Vietnam Hospitality Ltd, a company incorporated in the British Virgin Islands. The principal activity of this company is to jointly invest and manage S.E.M Thong Nhat Hotel Metropole project which is a five-star hotel located in Vietnam. On 5 March 2008, the Group acquired additional 20% interest in Vietnam Hospitality Ltd. and this acquisition increased the Group's beneficial ownership in Vietnam Hospitality to 100%. The total cost of the additional acquisition was USD7.1 million which was settled in cash.

The fair value amounts recognised for each class of the acquiree's assets, liabilities and contingent liabilities at the acquisition date were as follows:

Assets	USD'000	Liabilities	USD'000
Current assets		Current liabilities
Cash and cash equivalents	5,522	Payable to related party	1,104
Investment in subsidiary	31,311
Total current assets	36,833	Total current liabilities	1,104
Non-current asset		Equity
		Share capital	12,629
		Retained earnings	23,100
Total	36,833		36,833

Acquisition VinaCapital Dai Phuoc Corporation (Dai Phuoc Lotus Project)

On 1 April 2008, the Group acquired 100% interest in Allright Assets Limited, a company incorporated in the British Virgin Islands by VinaLand Ltd, a related party, which owned 18% interest in VinaCapital Dai Phuoc Corporation (Dai Phuoc Lotus Project). The principal activity of this project is to invest and build up an urban residential and resort area of about 200ha located in Vietnam. The total cost of the acquisition was USD21,017,235, which was settled in cash.

The fair value amounts recognised for each class of the acquiree's assets, liabilities and contingent liabilities at the acquisition date were as follows:

Assets	USD'000	Liabilities	USD'000
Current assets		Current liabilities
Cash and cash equivalents	2	Payable to related party	21,019
Investment in associate	21,017
Total current assets	21,019	Total current liabilities	21,019
Non-current asset	-	Equity	-
Total	21,019		21,019

Allright Assets Limited and VinaCapital Dai Phuoc Corporation contributed a profit of USD4.55 million to the consolidated profit for the period from 1 April 2008 to the balance sheet date.

Particulars of significant subsidiaries

Name	Place of incorporation/operations	Nominal value of issued share capital/registered capital USD	Percentage interest held by the Group	Principal activities

Asia Value Investment Ltd	BVI	50,000	100%	Investment
Vietnam Enterprise Ltd	BVI	50,000	100%	Investment
Vietnam Investment Property Ltd	BVI	50,000	100%	Investment
Vietnam Investment Property Holdings Ltd	BVI	50,000	100%	Investment
Vietnam Investment Ltd	BVI	50,000	100%	Investment
Vietnam Ventures Ltd	BVI	50,000	100%	Investment
VOF Investment Ltd	BVI	50,000	100%	Investment
Vina QSR Limited	BVI	50,000	100%	Investment
Indochina Building Supplies Pte Ltd.	Singapore	3,384,000	100%	Building materials
American Home Limited	Vietnam	23,400,000	75%	Building materials
Indotel Limited	Singapore	3,480,000	57.7%	Hospitality
Bivi Investment JS Co. Ltd.	Vietnam	2,009,024	100%	Investment
Pegasus Leisure Limited	BVI	2,475,000	100%	Property
Saigon Water Park	Vietnam	3,536,000	100%	Property
A&B JSC	Vietnam	1,476,254	50.1%	Property
Allright Assets Limited	BVI	100	100%	Investment
Vietnam Hospitality Ltd.	BVI	50,000	100%	Investment
PA Investment Opportunity II Limited	BVI	23,104,000	66.4%	Investment
VinaSugar Holding Limited	BVI	nil	100%	Investment

7 Investment properties

	30 June 2008	30 June 2007
	USD'000	USD'000
Opening balance	16,852	-
Acquisition of a subsidiary	-	14,000
Additions	931	1,728
Net gain on fair value adjustments	12,429	1,124
Closing balance	30,212	16,852

In which:

	30 June 2008	30 June 2007
	USD'000	USD'000
A&B Tower project	25,339	14,000
Binh Trieu Apartment project	2,818	1,728
Vista Villas project	1,124	1,124
Marie Curie Suites project	931	-
	30,212	16,852

The net gain on fair value adjustments of investment properties relates to the revaluation of the leasehold land for A&B Tower project and Binh Trieu Apartment project during the year by independent professional qualified valuers mentioned in Note 4.

8 Property, plant and equipment

For the year ended 30 June 2008:

	Buildings and leasehold land improvements	Plant and machinery	Office equipment	Furniture and fixtures	Motor vehicles	Construction in progress (CIP)	Total
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000
Gross carrying amount
1 July 2007	6,203	15,158	5,447	544	396	-	27,748
Transfer from CIP	13	-	-	7		(20)	-
New purchases	-	92	3	9	-	264	368
Disposals	(1)	-	-	(14)	-	-	(15)
Write-off	(38)	-	(173)	(9)	-	-	(220)
Translation differences	(259)	(637)	(130)	(22)	(17)	-	(1,065)
30 June 2008	5,918	14,613	5,147	515	379	244	26,816

Depreciation and impairment
1 July 2007	(3,490)	(14,968)	(5,443)	(461)	(359)	-	(24,721)
Charge for the year	(273)	(80)	(2)	(35)	(9)	-	(399)
Disposals	1	-	-	15	-	-	16
Write-off	38	-	173	9	-	-	220
Translation differences	156	632	130	20	15	-	953
30 June 2008	(3,568)	(14,416)	(5,142)	(452)	(353)	-	(23,931)

Carrying amount
1 July 2007	2,713	190	4	83	37	-	3,027
30 June 2008	2,350	197	5	63	26	244	2,885

For the year ended 30 June 2007:

	Buildings and leasehold improvements	Plant and machinery	Office equipment	Furniture and fixtures	Motor vehicles	Total
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000
Gross carrying amount
1 July 2006	6,495	15,759	5,602	556	407	28,819
New purchases	18	-	1	2	-	21
Acquisition of subsidiary	7	-	-	3	-	10
Disposals	(7)	-	(12)	(4)	(14)	(37)
Write offs	(99)	-	(96)	-	-	(195)
Translation differences	(211)	(600)	(48)	(13)	4	(868)
30 June 2007	6,203	15,159	5,447	544	397	27,750

Depreciation and impairment
1 July 2006	(3,452)	(15,514)	(4,729)	(465)	(383)	(24,543)
Charge for the year	(241)	(45)	(267)	(17)	(4)	(574)
Disposals	5	-	11	4	14	34
Impairment loss	-	-	(594)	-	-	(594)
Write offs	99	-	96	-	-	195
Translation differences	99	590	40	17	13	759
30 June 2007	(3,490)	(14,969)	(5,443)	(461)	(360)	(24,723)

Carrying amount
1 July 2006	3,043	245	873	91	24	4,276
30 June 2007	2,713	190	4	83	37	3,027

9 Investment properties under development

	30 June 2008	30 June 2007
	USD'000	USD'000
Opening balance	2,239	2,272
Additional costs incurred	5,801	-
Translation difference	(60)	(33)
Closing balance	7,980	2,239
Including:
A&B Tower project	5,193	923
Marie Curie Suites project	1,453	645
Vista Villas project	1,135	633
Binh Trieu Apartment project	199	33
Other	-	5
	7,980	2,239

10 Investments in associates

	30 June 2008	30 June 2007
	USD'000	USD'000
Opening balance	69,177	23,845
Additions from acquisition of associates, net - Note 33	36,733	9,869
Share of associates' profits, net - Note 33	62,292	21,038
Share of associates' change in revaluation reserves - Note 22	9,382	17,717
Reversal of impairment losses	-	232
Transferred to financial assets at fair value through profit or loss	-	(1,544)
Translation differences	(29)	-
Dividends received	(1,670)	(1,980)
Closing balance	175,885	69,177

The closing balance consists of:

	30 June 2008	30 June 2007
	USD'000	USD'000
Hung Vuong Corporation	11,974	9,703
International School of Ho Chi Minh City	2,406	1,842
Kinh Do Property Limited	9,371	5,197
Phong Phu Investment Development Ltd.	1,873	768
T.D Corporation	1,052	1,114
Saigon Golf	10,581	1,250
S.E.M Thong Nhat Hotel Metropole	47,189	32,320
Pho Viet JV	3,839	2,349
VinaCapital Dai Phuoc Corporation	25,650	-
House and Urban Development Financial Investment Co.	3,224	-
Subsidiaries of VinaLand Limited	58,726	14,634
Total	175,885	69,177

Particulars of operating associates and their summarised financial information, extracted from their audited/unaudited and/or management accounts as at 30 June 2008 are as follows:

	Incorporation/ operation	Equity interest held	Principle activity	Account status	Assets	Liabilities	Revenue	Profit/ (loss)
		%			USD'000	USD'000	USD'000	USD'000
Hung Vuong Corporation	Vietnam	36.6	Property	Reviewed	58,343	45,294	6,423	1,780
International School of Ho Chi Minh City	Vietnam	35	Education	Mana-gement account	12,132	8,857	11,758	1,692
Kinh Do Property Limited	Vietnam	23.3	Property	Reviewed	38,798	2,414	-	(899)
Phong Phu Investment Development Ltd.	Vietnam	30	Investment	Reviewed	30,613	25,644	58	(50)
T.D Corporation	Vietnam	30	Property	Mana-gement account	3,425	97	-	(209)
Saigon Golf	Vietnam	20	Property	Reviewed	7,734	-	-	(386)
S.E.M Thong Nhat Hotel Metropole	Vietnam	36.06	Hospitality	Reviewed	47,452	6,467	26,458	5,641
Vietnam Property Holding Ltd.	BVI	25	Property	Audited	131,900	79,826	-	43,337
Prosper Big Ltd	BVI	25	Property	Audited	70,432	134	-	(321)
VinaCapital Danang Resorts Ltd	BVI	25	Property	Audited	71,289	27,660	-	37,104
Perimeter Investment Ltd	BVI	25	Property	Audited	1,089	1,092	-	(3)
Merrytime International Ltd	BVI	20	Property	Audited	3,086	3,092	-	(6)
VinaCapital Commercial Center Ltd (*)	BVI	21.55	Property	Audited	84,479	3,404	-	71,513
VinaCapital Development Ltd	BVI	25	Property	Audited	540	540	-	-
Bantam Investment Ltd	BVI	25	Property	Audited	5,417	5,417	-	-
Avante Global Ltd	BVI	25	Property	Audited	1,810	1,810	-	-
Pacific Alliance Land Ltd	BVI	25	Property	Audited	47,950	47,629	-	319
Hoi An Development	BVI	25	Property	Audited	142	142	-	-
Daybreak Overseas Ltd	BVI	25	Property	Audited	1,810	1,810	-	-
House & Urban Development Financial Investment Co.	Vietnam	30	Property	Reviewed	5,990	3	-	(18)
VinaCapital Dai Phuoc Corporation	BVI	18	Property	Audited	104,029	52,771	-	25,947
Maplecity Investment Limited	BVI	25	Hospitality	Audited	128,328	71,540	30,957	7,850
Sunbird Group Ltd	BVI	25	Property	Audited	7,439	7,632	-	(5,231)
VinaLand Espero Limited	BVI	25	Property	Audited	150,197	95,065	-	27,161
Cypress Assets Ltd	BVI	25	Hospitality	Audited	30,203	26,797	-	(2,149)
Roxy Assets Ltd	BVI	25	Hospitality	Audited	24,750	19,297	-	256
Standbrook Global Ltd	BVI	25	Property	Audited	26,145	31,083	-	(4,863)

(*) During the year, the Group sold 1,225 Class A shares of its interest in VinaCapital Commercial Center Limited. Under the Share Sale and Purchase Agreement, the Buyer has been granted a right to acquire an additional 1,225 Class B shares in this company from the Group.

11 Long-term investments

	30 June 2008	30 June 2007
	USD'000	USD'000
Indochina Industries Food Pte Ltd. (*)	11,400	-
AA Land Corporation Limited	526	526
Non-listed equity shares	-	1,201
Other	-	227
	11,926	1,954

(*) The investment in shares of Indochina Industries Food Pte Ltd. is classified as a financial asset available for sale and is stated at cost as the shares are not traded in an active quoted market and there is a lack of available market information to determine fair value of the shares.

12 Prepayments for operating leases

	30 June 2008	30 June 2007
	USD'000	USD'000
Opening balance	1,971	2,109
Charge for the year	(116)	(58)
Translation difference	(78)	(80)
Closing balance	1,777	1,971

Prepayments for operating leases relates to the land occupied by American Home Limited, a subsidiary of the Group, until 2024. The prepayment is allocated to the statement of income over the life of the lease.

13 Goodwill

	30 June 2008	30 June 2007
	USD'000	USD'000
Opening balance	1,752	1,719
Increase	-	33
Goodwill written-off (*)	(1,719)	-
Closing balance	33	1,752

(*) The amount relates to goodwill written-off recognised for Saigon Water Park, a subsidiary of the Group.

14 Inventories

	30 June 2008	30 June 2007
	USD'000	USD'000
Raw materials and consumables	3,123	3,000
Merchandise	2,486	2,038
	5,609	5,038
Provision for stock write-down	(283)	(283)
Closing balance	5,326	4,755

The inventory at the balance sheet date represents stock on hand held at American Home Limited, a subsidiary of the Group.

15 Trade and other receivables

	30 June 2008	30 June 2007
	USD'000	USD'000
Trade receivables	2,048	1,577
Prepayments to customers	804	34
Receivable for liquidated trustee loan	2,478	-
Interest receivable	1,319	353
Dividends receivable	171	658
Other receivables	734	3,541
Other current assets	-	226
	7,554	6,389
Provision for doubtful debts	(117)	-
	7,437	6,389

As all trade and other receivables are short term in nature their carrying value is considered a reasonable approximation of their fair value as at balance sheet date.

16 Financial assets held at fair value through profit or loss

	30 June 2008	30 June 2007
	USD'000	USD'000
Designated at fair value through profit or loss:
Financial assets in Vietnam
Ordinary shares - listed	204,624	310,146
Ordinary shares - unlisted	150,367	269,584
Corporate bonds	5,118	3,858
Loan contracts at fair value through profit or loss	-	9,543

Financial assets in countries other than Vietnam
Ordinary shares - listed	12,078	31,444
Total designated at fair value through profit or loss at inception	372,187	624,575
Total financial assets at fair value through profit or loss	372,187	624,575

These financial assets are denominated in the following currencies:

	30 June 2008	30 June 2007
Currency	USD'000	USD'000
United States Dollars	12,078	31,444
Vietnamese Dong	360,109	593,131
	372,187	624,575

The carrying amounts disclosed above are the Group's maximum possible credit risk exposure in relation to these instruments. See Note 36 for further information on the Group's exposure to credit risk.

Categories of financial assets and liabilities

The carrying amounts presented in the statement of financial position relate to the following categories of assets and liabilities:

	Notes	30 June 2008	30 June 2007
		USD'000	USD'000
Financial assets
Financial assets held for trading (carried at fair value through profit or loss)
Ordinary shares - listed and unlisted		367,069	611,174
Other short-term financial assets		-	9,543
Bonds		5,118	3,858
Short-term investment	17	1,806	47,941
		373,993	672,516
Loans and receivables
Trade and other receivables	15, 33	73,134	66,873
Cash and cash equivalents	19	24,286	71,377
		97,420	138,250
Financial liabilities
Financial liabilities measured at amortised cost:
Non-current:
Borrowings		3,963	-
Current:
Borrowings		1,069	-
Trade and other payables	23	15,588	80,983
		20,620	80,983

See Note 3.16 for a description of the accounting policies for each category of financial instruments. The fair values are presented in the related notes. A description of the Group's risk management objectives and policies for financial instruments is given in Note 36.

17 Short-term investments

Short-term investments represent term deposits at local banks with term to maturity of more than three months to one year. Their carrying value is considered a reasonable approximation of their fair value as at balance sheet date.

18 Deposits for acquisitions of investments

	30 June 2008	30 June 2007
	USD'000	USD'000
Deposits for investment projects	14,871	7,234
Deposits for bid participation	-	3,208
	14,871	10,442

These deposits pertain to payments made by the Group to property vendors where the final transfer of the 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.

19 Cash and cash equivalents

	30 June 2008	30 June 2007
	USD'000	USD'000
Cash on hand	99	69
Cash at banks	9,004	71,308
Cash equivalents	15,183	-
	24,286	71,377

20 Share capital

	30 June 2008		30 June 2007
	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	250,648,414	2,506	122,657,202	1,226
New shares issued	73,961,845	740	127,991,212	1,280
Closing balance	324,610,259	3,246	250,648,414	2,506

21 Additional paid-in capital

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

	30 June 2008	30 June 2007
	USD'000	USD'000
Opening balance	459,151	164,950
Additional paid-in capital during the year	271,078	303,340
Placement fee	(8,165)	(9,139)
Closing balance	722,064	459,151

22 Revaluation reserve

	30 June 2008	30 June 2007
	USD'000	USD'000
Opening balance	17,717	-
Additions
Addition: share gain on revaluation of associates properties (*)	9,382	17,717
Less: Share of gain attributable to minority interest of the Group	(8,636)	-
Closing balance	18,463	17,717

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

(*) This amount represents the share of gains from the revaluation of property in S.E.M Thong Nhat Hotel Metropole during the year.

23 Trade and other payables

	30 June 2008	30 June 2007
	USD'000	USD'000
Trade payables	1,824	3,163
Other accrued liabilities	1,801	241
Tax payable	646	888
Other payables	1,750	529
	6,021	4,821

As all trade and other payables are short term in nature, their carrying values are considered a reasonable approximation of their fair values as at balance sheet date.

24 Net changes in fair value of financial assets at fair value through profit or loss

	30 June 2008	30 June 2007
	USD'000	USD'000
Unrealised	(477,376)	255,441
Realised	(3,816)	59,765
	(481,192)	315,206

25 Selling, general and administration expenses

	30 June 2008	30 June 2007
	USD'000	USD'000
Management fee	18,064	12,012
Performance fee	-	68,851
Professional fee	1,352	407
Selling, general administration expenses	4,559	4,179
Other expenses	650	904
	24,625	86,353

26 Other operating income

	30 June 2008	30 June 2007
	USD'000	USD'000
Disposal of investments	5,622	-
Other income	998	598
	6,620	598

27 Other operating expenses

	30 June 2008	30 June 2007
	USD'000	USD'000
Provision for uncollectible loan - Note 33	1,210	-
Other expenses	95	692
	1,305	692

28 Financial income

	30 June 2008	30 June 2007
	USD'000	USD'000
Interest and dividend income	12,557	13,007
Other income	-	259
Realised gain from foreign exchange	47	-
	12,604	13,266

29 Financial costs

	30 June 2008	30 June 2007
	USD'000	USD'000
Loan interest	1,611	866
Unrealised loss from foreign exchange	849	2,276
Realised loss on foreign exchange	270	-
Other expenses	6	-
	2,736	3,142

30 Corporate income tax

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 associates 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.

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 for these Vietnamese subsidiaries of the Group for the year ended 30 June 2008 (30 June 2007: nil). All of the 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.

Under the laws of Vietnam, tax losses can be carried forward to offset against future taxable income for five years from the year the loss was incurred. The amount of unrecognised deferred tax assets of USD662,561 (30 June 2007: USD307,390) relates to losses which can be carried forward but has not been recorded due to uncertainty as to their recoverability.

31 Earnings per share

(a) Basic

Basic loss/earnings per share is calculated by dividing the loss/profit attributable to shareholders of the Group by the weighted average number of ordinary shares on issue during the year.

	30 June 2008	30 June 2007

(Loss) profit attributable to equity holders of the Group (USD)	(417,003,649)	264,166,937
Weighted average number of ordinary shares on issue	295,633,427	197,318,742
Basic (loss) earnings per share (USD per share)	(1.41)	1.34

(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.

32 Directors' remuneration

The emoluments paid or payable to the directors during the year were as follows:

	30 June 2008	30 June 2007
	USD'000	USD'000
Horst Geicke	-	20
William Vanderfelt	20	20
Martin Glynn	5	-
Jonathan Choi	-	20
Bernard Grigsby	20	14
Don Lam	-	-
Philip Skevington	15	14
	60	88

33 Related party transactions

Management fees

The Group is managed by VinaCapital Investment Management Limited (the 'Investment Manager'), an investment management company incorporated in the British Virgin Islands ('BVI'), under a management agreement dated 24 September 2003 (the 'Management Agreement'). The Investment Manager receives a fee based on the net asset value of the Group, payable monthly in arrears, at an annual rate of 2% (30 June 2007: 2%).

Total management fees for the year amounted to USD18,064,000 (30 June 2007: USD12,012,000), with USD1,170,000 (30 June 2007: USD1,417,000) in outstanding accrued fees due to the Investment Manager at the end of the year.

Performance fees

In accordance with the Management Agreement, the Investment Manager is also entitled to a performance fee equal to 20% of the realised returns over an annualised compounding hurdle rate of 8% (30 June 2007: hurdle rate of 8%).

There was no performance fee charge for the year (30 June 2007: USD68,851,000), with no (30 June 2007: USD68,778,000) outstanding accrued fee due to the Investment Manager at the end of the year.

Placement fees

When raising capital through the issuance of new Ordinary Share a commission equal to 3% of the subscription price multiplied by the total number of the shares allotted by the Group on admission is payable by the Group to the Investment Manager. The Investment Manager is responsible for paying placing agents that are engaged in respect to such subscriptions. The net proceeds of share subscriptions is recorded after netting off placement fees.

Total placement fees for the year amounted to USD8,165,000 (30 June 2007: USD9,139,000), with no (30 June 2007: nil) outstanding accrued fees due to the Investment Manager at the end of the year.

Other related party transactions and balances

During the year, the following significant transactions with related parties were recorded:

Related party	Relation	Transactions (USD'000)
		Additional acquisitions /investment	Share profit/ (loss)
SEM Thong Nhat Hotel Metropole	Associate	4,336	2,820
House and Urban Development Financial Investment Co.	Associate	3,206	17
Hung Vuong Corporation	Associate	6	2,294
Kinh Do Property Limited	Associate	4,355	(180)
Pho Viet JV	Associate	1,253	237
T.D Corporation	Associate	-	(63)
International School of Ho Chi Minh City	Associate	-	564
Phong Phu Investment Development Ltd.	Associate	1,121	(15)
Saigon Golf	Associate	-	9,331
VinaCapital Dai Phuoc Corporation	Associate	21,017	4,633
Subsidiaries of VinaLand Limited	Associate	1,439	42,654
		36,733	62,292

At 30 June 2008, the following balances were outstanding with related parties:

			Receivables
Related party	Relation	Transaction	30 June 2008	30 June 2007
			USD'000	USD'000
VinaLand Ltd	Common management	Loans receivable (*)	48,260	49,318
		Interest receivable	234	-
		Dividend receivable	263	-
		Others	2,327	659
Hung Vuong Corporation	Associate	Loan and interest receivable	9,211	7,496
NORDICA Capital Square ApS	Minority shareholder	Disposal of investment	3,085	-
Phong Phu Investment Development Ltd.	Associate	Loan and interest receivable	2,317	2,651
International School of Ho Chi Minh City	Associate	Others	-	360
			65,697	60,484

			Payables
Related party	Relation	Transaction	30 June 2008	30 June 2007
			USD'000	USD'000
VinaLand Ltd	Common management	Advances for real estate projects	8,332	4,790
VinaCapital Investment Management Limited	Common management	Management fee	1,170	70,195
			9,502	74,985

(*) Loan receivables from VinaLand Ltd. subsidiaries are unsecured, bear interest at the SIBOR 6 month interest rate and are repayable by end of 2012. The loans are carried at amortised cost at the balance sheet date. Details of loan receivables as at 30 June 2008 are as follows:

	30 June 2008	30 June 2007
	USD'000	USD'000
VinaCapital Danang Resorts Ltd.	2,501	1,450
Cypress Assets Limited	3,747	2,134
Prosper Big Investment Limited	8,202	8,190
VinaCapital Long An Industry Ltd	2,771	317
VinaLand Espero Ltd	9,182	-
Maplecity Investments Ltd.	14,193	-
Greenstar Global Limited	-	3,890
Sunbird Group Limited	1,706	-
Vietnam Property Holding Ltd	763	21,091
VinaCapital Commercial Center Ltd	202	-
Standbrook Limited	1,210	7,460
VinaCapital Development Ltd	125	-
Roxy Assets Limited	4,868	4,786
	49,470	49,318
Provision for uncollectible loan (*)	(1,210)	-
	48,260	49,318

(*) The amount represents provision for a prepayment on jointly acquisition of investment with VinaLand Ltd.

34 Commitments

As at 30 June 2008, the Group is committed under lease agreements and capital expenditure programs to pay the following future amounts:

	30 June 2008	30 June 2007
	USD'000	USD'000
Within one year	28	131
From two to five years	112	236
Over five years	1,205	1,287
	1,345	1,654

35 Contingent liabilities

Taxation

Although the Company and some of its subsidiaries are incorporated in the Cayman Islands and the British Virgin Islands where they are exempt from tax, the Group's activities are primarily focused on Vietnam. In accordance with the prevailing tax regulations in Vietnam, if an entity was treated as having a permanent establishment, or as otherwise being engaged in a trade or business in Vietnam, the income attributable to or effectively connected with such permanent establishment or trade or business may be subject to tax in Vietnam. As at the date of this report the following information is uncertain:

Whether the Company and/or its subsidiaries are considered as having permanent establishments in Vietnam; and
The amount of tax that may be payable, if the income is subject to tax.

The implementation and enforcement of tax regulations in Vietnam can vary depending on numerous factors, such as the interpretation of the tax rules by the specific tax authority involved. The administration of laws and regulations by the local or provincial tax departments may be subject to considerable discretion, and in many areas, the legal framework is vague, contradictory and subject to conflicting interpretation. The Directors believe that it is unlikely that the Company and/or the subsidiaries incorporated in the Cayman Islands and the British Virgin Islands will be exposed to tax liabilities in Vietnam, and in the worse case, if tax is imposed on income arising in Vietnam it will not be applied retrospectively.

As at 30 June 2008, due to the uncertainties mentioned above, no liability in relation to taxation has been recognised in the consolidated financial statements.

36 Risk management objectives and policies

The Group invests in listed and unlisted equity instruments, debt instruments, assets and other opportunities in Vietnam, overseas and neighbouring countries with the objective of achieving medium to long-term capital appreciation and providing investment income.

The Group is exposed to a variety of financial risks: market risk (including currency risk, interest rate risk, and price risk); credit risk; and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. The Group's risk management is coordinated by its Investment Manager who manages the distribution of the assets to achieve the investment objectives. The most significant financial risks the Group is exposed to are described below:

Foreign currency risk sensitivity

The Group's exposure to risk resulting from changes in foreign currency exchange rates is moderate as although transactions in Vietnam are settled in Vietnam Dong, the value of the Vietnam Dong has historically been closely linked to that of USD, the reporting currency.

The Group's financial assets and liabilities exposure to risk of fluctuations in foreign currency exchange rates at the balance sheet date were as follows:

	Short-term exposure		Long-term exposure
	VND	Others	VND	Other
	USD'000	USD'000	USD'000	USD'000
30 June 2008
Financial assets	378,749	58	-	-
Financial liabilities	(6,636)	-	(1,886)	-
Total exposure	372,113	58	(1,886)	-

30 June 2007
Financial assets	656,932	30	1,719	-
Financial liabilities	(1,403)	-	-	-
Total exposure	655,529	30	1,719	-

Sensitivity analysis to a reasonably possible change in exchange rates

A 5% weakening of the VND against USD at the end of the year ended 30 June 2008 and 30 June 2007 would have impacted net income of the Group's equity by the amounts shown below. This percentage has been determined based on the average market volatility in exchange rates in the previous twelve months. This analysis assumes that all other variables, in particular interest rates, remain constant.

30 June 2008

Loss (net of taxation)

USD'000

30 June 2007

Loss (net of taxation)

USD'000

5% devaluation of the Vietnam Dong

18,511

32,862

A 5% strengthening of the VND against USD would have had the equal but opposite effect to the amount shown above, on the basis that all other variables remain constant.

Price risk sensitivity

Price risk is the risk that the value of the instrument will fluctuate as a result of changes in market prices, whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. As the majority of the Group's financial instruments are carried at fair value with fair value changes recognised in the income statement, all changes in market conditions will directly affect net investment income.

The Group's unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Investment Manager provides the Group with investment recommendations that are consistent with the Group's objectives. The Investment Manager's recommendations are approved by an Investment Committee of the Investment Manager and/or the Board of Directors before investment decisions are implemented.

All securities investments present a risk of loss of capital. The Investment Manager manages this risk through the careful selection of securities and other financial instruments within specified limits and by holding a diversified portfolio of listed and unlisted instruments. In addition, the performance of investments held by the Group is monitored by the Investment Manager on a monthly basis and reviewed by the Board of Directors on a quarterly basis.

The Group invests in listed and unlisted equity securities and is exposed to market price risk of these securities. If the prices of the securities were to fluctuate by 10%, the impact on profit or loss and equity would amount to approximately USD22.1 million (2007: USD117 million).

Cash flow and fair value interest rate risk sensitivity

The Group's exposure to interest rate risk is related to interest bearing financial assets and financial liabilities. Cash and cash equivalents, bank deposits and bonds are subject to interest at fixed rates. They are exposed to fair value changes due to interest rate changes. The Group currently has no financial liabilities with floating interest rates which are disclosed in the Notes to the consolidated financial statements. As a result, the Group has limited exposure to cash flow interest rate risk.

Credit risk analysis

Credit risk is the risk that a counterparty will be unable to pay amounts in full when due. Impairment provisions are provided for losses that have been incurred by the Group at the balance sheet date.

	30 June 2008	30 June 2007
	USD'000	USD'000
Classes of financial assets - carrying amounts
Short-term investments	1,806	47,941
Financial assets at fair value through profit or loss
Bonds	5,118	3,858
Ordinary shares - listed and unlisted	367,069	611,174
Other short-term financial assets	-	9,543
Cash and cash equivalents	24,286	71,377
Trade and other receivables	73,134	66,873

All transactions in listed securities are settled/paid for upon delivery using approved brokers. The risk of default is considered low, as delivery of securities sold is only made once the broker has received payment. Payment is made for purchases once the securities have been received by the broker. The trade will be unwound if either party fails to meet its obligations.

The carrying amount of trade and other receivables and loans represent the Group's maximum exposure to credit risk in relation to its financial assets. The Group has no other significant concentrations of credit risk.

In accordance with the Group's policy, the Investment Manager continuously monitors the Group's credit position on a monthly basis.

Liquidity risk analysis

The Group invests in both listed securities that are traded in active markets and unlisted securities that are not actively traded.

The Group's listed securities are considered to be readily realisable, as they are mainly listed on the Vietnam Stock Exchange.

Unlisted securities, which are not traded in an organised public market, may be illiquid. As a result, the Group may not be able to quickly liquidate its investments in these instruments at an amount close to fair value in order to respond to its liquidity requirements or to other specific events such as deterioration in the creditworthiness of a particular issuer. However, the Group has the ability to borrow in the short term to ensure sufficient cash is available for any settlements due.

At the balance sheet date, the Group's liabilities have contractual maturities which are summarised below:

30 June 2008	Within 1 year	From 2 to 5 years	Over 5 years
	USD'000	USD'000	USD'000
Trade and other payables	6,021	-	-
Payable to related parties	9,502	-	-
Short-term borrowings	1,069	-	-
Long-term borrowings	-	3,764	-
Other liabilities	65	199	-

30 June 2007	Within 1 year	From 2 to 5 years	Over 5 years
	USD'000	USD'000	USD'000
Trade and other payables	4,821	-	-
Payable to related parties	74,985	-	-
Other liabilities	1,177	-	-

The above contractual maturities reflect the gross cash flows, which may differ to the carrying value of the liabilities at the balance sheet date.

Capital management

The Group considers the capital to be managed as equal to the net assets attributable to the holders of ordinary shares. The Group has engaged the Investment Manager to allocate the net assets in such a way so as to generate investment returns that are commensurate with the investment objectives outlined in the Group's AIM Admission Documentation.

37 Subsequent events after the balance sheet date

Valuation of financial assets at fair value through profit and loss

Subsequent to the year ended 30 June 2008, global markets were sharply affected by the collapse of Lehman Brothers and other financial institutions. As the extent of the credit crisis became clear the market turmoil spread to Europe and emerging markets including the Vietnam stock market.

As of the date of issuance of the financial statements, the aggregate fair value of the Group's financial assets at fair value through profit or loss has fallen by USD62.8 million to USD309.4 million from the aggregate fair value as of 30 June 2008. The details are as follows:

	Fair value at 30 June 2008	Fair value at 13 November 2008	Movement
	USD'000	USD'000	USD'000
Financial assets at fair value through profit or loss:
Financial assets in Vietnam
Ordinary shares - listed	204,624	141,501	(63,123)
Ordinary shares - unlisted	150,367	159,750	9,383
Bonds	5,118	5,161	43

Financial assets in countries other than Vietnam
Ordinary shares - listed	12,078	2,994	(9,084)
	372,187	309,406	(62,781)

Valuation of investment properties

As of the date of issuance of the financial statements, the Board of the Company had determined, based on independent valuations and other available market information that the fair value of the Group's real estate investment properties has fallen by USD3 million to USD27.2 million. The details are as follows:

	USD'000
Real estate investment properties recorded at fair value through profit or loss:
Fair value at 30 June 2008	30,212
Revaluation of real estate investment properties recorded at fair value at 30 June 2008	(3,029)
	27,183

In addition, the value of leasehold lands held by associates of the Group has been reduced by a net amount of USD21.7 million based on independent valuations. On an equity accounting basis, this will result in a reduction in the Group's book value of investments in the associates of USD2.2 million.

Additional acquisition of subsidiary's interest

Subsequent to the year ended, the Group acquired a further 27.8% interest in Indotel Limited. This acquisition increased the Group's beneficial ownership in Indotel Limited from 72.2% to 100%. The total cost of the acquisition was USD12.8 million which was settled in cash.

38 Comparative figures

Certain figures for the year ended 30 June 2007, which are included in this year's financial statements for comparative purposes, have been reclassified to conform to current year's presentation and requirements following adoption of IFRS 7.

The financial information set out in this announcement does not constitute the Group's statutory accounts for the year ended 30 June 2008 but is derived from those accounts. The full audited accounts of Vietnam Opportunity Fund Limited for the year ended 30 June 2008 will be sent to registered shareholders shortly and will also be available, free of charge, from VinaCapital Investment Management, 17/F, Sun Wah Tower, Ho Chi Minh City, Vietnam. A copy of the report will be posted on the Company's website www.vietnam-opportunity-fund.com.

This information is provided by RNS

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