VinaCapital_Annual2008_VNL

VinaLand LimitedAnnual Report 2008

2 VNL 2008 Annual Report

Contents VinaLand Limited (‘VNL’)Annual Report 2008

Section 1 Introduction Overview 3 Chairman’s Statement 5

Section 2 Manager’s Report State of the Economy 8 Investment Environment 10 Portfolio Performance 12 Featured Investments 18

Section 3 Financial Statements and Reports Report of the Board of Directors 24 Independent Auditors’ Report 26 Consolidated Financial Statements 27 Notes to the Consolidated Financial Statements 32

VNL 2008 Annual Report 1

Vietnam’s overcrowded, low-rise inner cities offer VinaLand the opportunity to benefit from urban regeneration and development stretching many years into the future.



VNL OverviewVinaLand Limited (‘VNL’) is a closed-end fund trading on the London Stock Exchange (AIM). Launched in 2006, VNL is the largest listed fund for investment in Vietnam’s emerging real estate sector. The fund focuses on key growth sectors including residential, office, retail, hospitality and leisure, and township/industrial properties. The manager’s objective is to provide shareholders with an attractive level of income as well as creating a potential for capital growth.

VINALAND DETAILS

Size of fund: USD804 million (NAV as of 30 June 2008)

Term of fund: Vote every seven years to wind up fund

Maximum investment: 20% of NAV in any one project

Geographic focus: Vietnam, Cambodia, Laos and southern China _ at least 70% invested in Vietnam

Fund structure: Cayman company traded on London Stock Exchange (AIM)

Auditor: Grant Thornton (Vietnam)

Nominated Advisor: Grant Thornton UK LLP

Custodian: HSBC Trustee

Lawyers: Lawrence Graham (UK)

Maples & Calder (Cayman Islands)

Broker: LCF Rothschild

Manager: VinaCapital Investment Management Limited

Management and performance fee: Management fee of 2 percent of NAV. Performance fee of 20 percent of total NAV increase over the higher of an 8 percent compound annual return and the high watermark



Chairman’s StatementWith this 27.8 percent increase in its NAV, VNL was the best performing Vietnam-dedicated fund for the year, and became the largest listed fund for investment in Vietnam.

VNL’s performance, in terms of NAV increase, came not only during the heady days at the end of 2007, but also into 2008, when the fund booked moderate valuation increases and divested a minority stake in a large project to an international co-investor.

As the 2008 financial year ended, VNL was in an excellent position to continue its strong performance, with a diverse portfolio of projects at various stages of development, including Vietnam’s top portfolio of operating assets in the hospitality sector.

In the third quarter of 2008, however, the global financial crisis affected us all, Vietnam included, and had an immediate impact on VNL’s share price, which dropped to a substantial discount to net asset value. As a result of these events the Board determined it was prudent to review the carrying values of all properties in the portfolio, the results of which are presented in the subsequent events note of the Financial Statements for the year ended 30 June 2008.

The Board of Directors is concerned about this discount and is exploring all options to protect shareholder value. We recognise, however, that VNL’s best means to preserving shareholder equity is the portfolio itself, which through its strength and diversity allows the investment manager to select and prioritise projects and only advance those that have the best potential returns on investment at a given point in time.

VNL is in the enviable position of having no debt at the fund level. This important fact does not appear to be recognised by the wider market and investors’ sudden pull-back from investing in close-ended emerging market funds (generally perceived as highly leveraged).

The strategy for the foreseeable future will be to partially or fully divest from select projects in the portfolio, while increasing focus on projects that have entered the construction phase. A number of exit strategies such as private equity co-investment, trusts and other forms of sale are being explored.

While recognising the challenges posed by the current global and domestic environment, the Board remains confident in VNL’s prospects for the future. The Board believes that VNL’s real estate team is the strongest in Vietnam, featuring a new managing director with a proven track record of development success. Against the turmoil and volatility of the global capital markets, investment in real estate offers the certainty of developing and managing tangible assets in the residential, retail, office and hospitality sectors, which are clearly so sorely lacking in Vietnam. VNL will continue to break new ground as the country continues its inevitable path of growth.

Thank you for your ongoing support.

Horst F. Geicke, Chairman

VinaLand Limited

15 November 2008

Dear Shareholders,

We are pleased to present the annual financial statements of VinaLand Limited (AIM: VNL.L) for the year ended 30 June 2008.

Vietnam’s real estate market was the centre of attention in late 2007 and early 2008 as the economy went through a period of exuberant growth followed rapidly by sharp adjustments to combat high inflation and a rising trade deficit.

During 2007 Vietnam’s real estate sector saw prices double or triple as an environment of strong economic growth and easy credit led to rampant speculation. This run came to an end when inflation worsened in early 2008 and the government put the brakes on the economy by raising interest rates and sharply restricting credit. As a result the real estate sector entered a down cycle for the remainder of the financial year.

In this difficult environment for domestic developers, VNL had a very good year that saw the fund increase its net asset value at 30 June 2008 to USD804 million, or USD1.61 per share, from USD628 million, or USD1.26 per share, at the end of 30 June 2007.


The Novotel Hanoi On The Park will be marketed as a ‘resort within the city’ due to its unique location.



State of the Economy

Vietnam’s economy over the first half of 2008 endured painful adjustments following the exuberance of 2007. Vietnam in 2007 saw strong GDP growth of 8.5 percent – reaching a ten-year average of 7.5 percent – and foreign direct investment (FDI) at a record USD20.3 billion. Industry, manufacturing and services all grew rapidly, with the construction sector leading the way due to a booming real estate market.

Vietnam in 2007 continued the trend of becoming an increasingly open economy, with the ratio of total trade (exports plus imports) to GDP at 153 percent, second only to Malaysia in the region.

The surge in foreign investment in 2007 led to increased imports, in particular machinery and equipment, and a worsening trade deficit at over USD12 billion. This put strong pressure on the country’s foreign exchange reserves. There was concurrently a rise in inflation due to commodity costs and an expansionary monetary and fiscal policy to facilitate economic growth. Broad money supply and domestic credit grew a staggering 46 and 54 percent, respectively, when the State Bank of Vietnam (SBV) opened its coffers to domestic lenders to fund real estate deals and imports.

By the end of 2007, inflation as measured by the consumer price index reached 12.6 percent. In early 2008 inflation continued to rise, reaching 19.4 percent year-on-year at the end of the first quarter. The trade deficit also continued to climb, to USD7.4 billion at the end of the first quarter.

A time to act Faced with an overheating economy, the government chose to act. In early April 2008, the government made the difficult but necessary decision to slow growth by fighting inflation and the deficit through sharp cutbacks to credit and spending.

A comprehensive policy package was announced that included

Vietnam needs to focus on its ability to absorb foreign direct investment, in terms of infrastructure, expertise and labour.

limiting lending for securities purchases to 20 percent of charter capital for all banks, limiting domestic credit growth to 30 percent for 2008, introducing obligatory one-year 7.8 percent SBV bond purchases for all banks, and increasing interest rates from 8.75 percent at the beginning of the year to 14 percent by the end of June. In addition, controls on foreign exchange conversion were tightened and public expenditure was scaled down, including a 10 percent spending cut across all government ministries.

As part of the policy package, the government reduced the official GDP growth target for 2008 from 9 percent to 7 percent.

What followed was a period of great turbulence, as a market “priced for perfection” at high valuations adjusted to the new, more restrictive environment. The first and most obvious casualty was the capital markets as represented by the Vietnam Index, which fell a precipitous 60 percent over the first half of 2008.

The tightening policies put strong pressure on bank liquidity and placed smaller banks at extreme risk. Meanwhile, the currency came under pressure due to the rising deficit, with the spread between the official and open market rates peaking at over 15 percent in the second quarter of 2008. Both foreign and domestic economic analysts, previously highly bullish on the Vietnamese economy, suddenly began to sound dire and pessimistic, including comment that Vietnam may be heading toward a financial crisis similar to Thailand in 1997.

As the second half of 2008 began, however, it was clear that the government policy package was beginning to have its intended effect. Month-on-month inflation, averaging 3 percent monthly over the first half of 2008, slowed notably in June and has fallen further since, to a rate of under one percent month-on-month during the third quarter of 2008.



There was also a marked improvement in the trade deficit, which reached USD14.9 billion at the end of the first half of 2008 but began to slow its growth by June. The threat to the Vietnam dong eased as a result, and by the end of the first half the official and open market exchange rates were nearly even.

Outlook Overshadowed by the market turmoil was the continued surge in FDI, with USD30.6 billion in new commitments registered in 2008 to June, 50 percent higher than the full-year record set in 2007. Several multi-billion dollar projects were recorded in steel production and real estate development.

Growth slowed to 6.5 percent over the first half of 2008 (versus 7.4 percent in the first half of 2007). However, as expectations moderated around the lower growth rate the outlook for the remainder of the year looked positive. Unfortunately, the global economy took a sudden turn for the worse at the end of the third quarter of 2008. This has clouded the short to medium-term outlook for Vietnam, even as the country’s fundamentals continue to be strong.

Near the end of the year, the government wavered only slightly in loosening its fiscal and monetary stance to allow faster GDP growth. Controlling inflation and maintaining financial stability remain the top economic priorities. In the context of the dire global economic situation, the government will likely use a flexible interest rate policy as a primary tool to contain inflation while minimising potential liquidity risks in the banking system, to help weak banks survive and to avert any potential rise in real estate loan defaults.

Vietnam needs to focus on its ability to absorb the FDI influx, in terms of infrastructure, expertise and labour. The global financial crisis will have an impact on Vietnam chiefly in the potential slowing of FDI disbursement. In other areas, the country’s diverse export base and numerous low-cost exports

Breakdown of FDI in to Vietnam H1 2008 vs 2007

18

15

12

9

6

3

0

Industry & construction

9.4

17.3

7.0

13.2

1.20.3 0.3 0.2

Real estate Others Agriculture, forestry & aquaculture

2007 H1 2008

USDbnUSDbn

Vietnam: Some Economic Factors H1 2008 vs 2007

70

60

50

40

30

20

10

0

60.8

44.648.4

29.7

12.414.9

20.3

31.6

5 4.9

Import Export Trade deficit FDI Disbursed FDI

2007 H1 2008

(items that may not see a sharp drop in demand) will protect it somewhat from the global slowdown.

In the medium term, Vietnam’s young, educated population and emerging middle class will continue to drive economic growth and development. The rise in consumer spending and services, and growing demand for modern urban spaces, will continue. The industrial base will be strengthened as oil refineries come online in 2009 and transport infrastructure improves. The global economic situation will slow, not stop, Vietnam’s inevitable growth.

Some 478 new FDI projects were registered with a total capital of USD30.9bn. Together with USD661m supplementary capital in 158 projects, total FDI over H1 2008 reached USD31.6bn, a 3.7 fold increase year-on-year over 2007. Disbursed FDI over H1 2008 was USD4.9bn, on track to reach the annual target of USD10bn.

Exports reached USD29.7bn in the first half of 2008, up 31.8 percent year-on-year. Imports rose to USD44.5bn, up 60.3 percent against 2007. Over the first half this resulted in a deficit of USD14.9bn, higher than the trade deficit for the whole of 2007. The largest component of imports was machinery and equipment, accounting for 15.7 percent of the total.



Real Estate Investment Environment

The cycle of economic growth has created a new consumer group of middle class professionals who need mid-tier residential and office space, and modern leisure and retail environments.

The tight credit environment in 2008 hit property developers particularly hard as project financing was difficult to obtain. As a result, residential retail sale prices for land, villas and apartments dropped significantly during the first six months of 2008. However other real estate sectors such as office and retail rentals have remained strong.

Residential The residential retail market in Vietnam experienced rapid growth in late 2006 and 2007 and in some instances residential retail sales prices increased by 100 percent or more. This was driven by high liquidity and significant speculation among local buyers, and was not sustainable in the longer term. During 2008 the economic slowdown and reduction in prices has ‘normalised’ the previously overheated residential market and returned it to a sustainable pace for the medium to long term. Despite the 2008 residential slowdown, with a large young population the fundamental demand for low to mid-tier residences is expected to remain strong. The wholesale real estate market has not seen the drop in prices evident in the retail market. However, margins for developers have been squeezed by rising construction costs and the cost of debt.

Office In office rentals the momentum has not slowed, with Grade A and B office rentals in Hanoi and Ho Chi Minh City remaining high. There is an extreme supply shortage in the central business districts, with 100 percent occupancy in the Grade A office market. Average rental rates for Grade A space are

about USD45/sq.m, with new buildings in prime locations asking USD80-100/sq.m. Grade B and C occupancy rates are above 80 percent. There will be some softening of demand due to the global economic slowdown, but the related slowdown in the supply of facilities coming online due to high construction and debt costs may balance this out.

Retail shopping Vietnam topped the A.T. Kearney 2008 annual list of emerging opportunities for global retailers. This reflects the high demand and underdeveloped supply of modern retail space, and that under WTO regulations, 100 percent foreign ownership of retail chains will be possible in 2009. The supply base in Ho Chi Minh City is only 500,000sq.m in 15 retail centres and department stores (and even less in Hanoi). Retail centres have very high levels of occupancy and there are few ‘purpose-built’ facilities. Meanwhile, increasing average incomes have led to new consumption patterns and a pent-up demand for facilities that rival those in other regional cities. With large foreign conglomerates circling for opportunities, Vietnam’s retail market is one of great potential.

Hospitality The hospitality sector remains strong as the demand continues for both city hotels and seaside resorts. There is in particular a shortage of luxury rooms, with a supply of 7,600 rooms at the 3-5 star level in Ho Chi Minh City. International visitors are on the rise, increasing at a consistent 15-20 percent yearly rate. The top countries in terms of visitors to Vietnam are


China, South Korea, USA, Japan and Thailand. Room rates are increasing, particularly for 5-star hotels, but expected to soften in 2009 due to impact of global slowdown.

Outlook The cycle of economic growth has created a new consumer group of middle class professionals who need mid-tier residential and office space, and modern leisure and retail environments. This will be boosted further in the next 2-3 years by the surge in FDI commitments and disbursements in 2008. The tight credit environment alongside continued high FDI growth points to a serious supply squeeze, both presently and in the next few years, this will create an excellent opportunity for cash-rich investors to acquire properties which are distressed or now available at more realistic prices. Restricted credit will likely limit supply further and lengthen the period of excess demand by at least another two years.



Portfolio Performance

Vietnam, particularly as part of WTO accession, is putting renewed emphasis on the quality of its built environment, including environmental, economic and social concerns.

The year ending 30 June 2008 saw great turbulence for the Vietnamese market. Real estate developers were challenged by rising costs for materials and, at the beginning of 2008, a restricted credit environment.

VNL nonetheless had a stellar year, with net asset value at 30 June 2008 rising to USD804 million, or USD1.61 per share, from USD628 million, or USD1.26 per share at 30 June 2007. This 27.8 percent increase reflects the fact that numerous projects in the portfolio increased in valuation due to reaching development milestones – such as receiving an investment licence, contruction permit, or groundbreaking – in addition to fundamental increases in the value of land.

VNL’s share price at 30 June 2008 was USD1.22, down slightly from the previous year’s close of USD1.26. For most of the year, VNI traded at a premium to its NAV, as it has done since inception in March 2006. However, changing global and domestic credit conditions and the perception generated by declines in Vietnam’s residential retail prices caused the share price to fall at the end of the financial year. The onset of global financial crisis in September and October 2008 resulted in a further pullback from emerging market funds, and the share price fell sharply.

VNL acquired 15 new assets during the year, moving from 26 to 41 projects in the portfolio. At the end of June 2008, the portfolio had a geographic breakdown (by NAV) of 46.6 percent in Ho Chi Minh City, 36.5 percent in the central region (namely Danang, Hoi An and Nha Trang), and 16.9 percent in Hanoi. The Ho Chi Minh City projects include several outside city limits, in the fast-growing neighbouring province of Dong Nai, for example.

The VNL portfolio is divided by sector into hospitality, township/large scale, landmark mixed-use, residential, and office developments. In addition, VNL has several projects considered land banking. The 2008 financial year saw the hospitality and township sectors grow at the fastest rate, due in the former case to new acquisitions and in the latter mainly

to intrinsic growth in the value of holdings.

During the year, construction commenced on several projects in Hanoi, Danang and Nha Trang, principally involving leading international hotel brands such as Sheraton and Accor’s Novotel and Mecure. Construction also began on the World Trade Center Danang and on the first of two golf courses at the Danang Beach Resort.

The hospitality portfolio benefited from a very strong year in international travel, as well as improvements to the asset base including the rebranding of two hotels, with the Movenpick Hotel Saigon complete during the financial year, and the Movenpick Hotel Hanoi set to open under its new flag in the fourth quarter of 2008.

VNL’s development and advisory service, VinaCapital Real Estate Ltd, remains the most experienced team of real estate experts in Vietnam. Near the end of the financial year, David Henry joined as managing director, at the helm of a group of almost 80 investment and development professionals.

Outlook With the fund now invested in 36 projects and 5 operating hospitality assets across Vietnam, VNL is in an excellent position to focus on the development of the highest potential projects during the upcoming year. Vietnam, particularly as part of WTO accession, is putting renewed emphasis on the quality of its built environment, including environmental, economic and social concerns. With the greater stress on responsible development, VNL considers its projects to be at the forefront of sustainable planning and design.

The coming year sees the challenge of a global economic slowdown and restricted access to credit. Given the high demand for real estate across all sectors, however, the greatest profit in coming years will be recognised by those companies able to press forward with development plans and quickly bring quality projects to market. In this regard, VNL has excellent prospects despite the difficult market conditions.


16.7% Hospitality

44.8% Township/large-scale

15.0% Mixed-use

20.2% Residential

3.3% Office/retail

32.6% Hospitality

28.7% Township/large-scale

18.1% Mixed-use

16.1% Residential

4.6% Office/retail

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

2008 2007

2008 2007

16.9% Hanoi

36.5% Central provinces

46.6% Ho Chi Minh City region

25% Hanoi

21% Central provinces

54% Ho Chi Minh City region

Portfolio by sector 2008 vs 2007

Portfolio by location 2008 vs 2007

Number of invested projects

NAV and Share Price Performance (to 30 June 2008)

30 Jun 2007 31 Dec 2007 30 Jun 2008

NAV per share 1.26 1.31 1.61

No. of invested projects 26 38 41

USD804m

USD804m

USD628m

USD628m

VNL’s NAV per share VNL’s Share Price

$1.80

$1.60

$1.40

$1.20

$1.00

$0.80

$0.60

$0.40

$0.20

$0.00

Mar-06 Jun-06 Aug-06 Oct-06 Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08

1.61

1.22


Top holdings by region

Hanoi

Danang

Nha Trang

HCM City

• Hanoi investments focus on two premier hotels alongside residential and retail projects.

• Danang is a rapidly growing coastal city. VNL has invested heavily in hospitality, office and conference facilities.

• Nha Trang is another centre of tourism in Vietnam.

• HCM City and region as the nation’s economic hub is home to many projects across all sectors.

Hanoi

Type Status

Hilton Hanoi Opera Hotel Hospitality Operating asset

Movenpick Hotel Hanoi Hospitality Operating asset

Golden Westlake apartments Residential Marketing underway

Times Square Hanoi Mixed-use Investment licence

Danang

Type Status

Danang Beach Resort Mixed-use Under construction

World Trade Center Danang Mixed-use Under construction

Sheraton Hoi An Resort and Spa Hospitality Under construction

Nha Trang

Type Status

Sheraton Nha Trang Hotel and Spa Hospitality Under construction

Vinh Thai Nha Trang Township Township Investment licence

Ho Chi Minh City and region

Type Status

Movenpick Hotel Saigon Hospitality Operating asset

Central Garden apartments Residential Marketing underway

Dai Phuoc Lotus Township (Dong Nai) Township Investment licence

Fideco Township (Binh Duong) Township Investment licence

Aqua City (Dong Nai) Residential Under construction

Sunrise City apartments Residential Investment licence

VinaSquare Tower Office/retail Investment licence


The Movenpick Hotel Hanoi is the second Movenpick-flagged hotel in Vietnam. The hotel will be positioned at the upper end of the four-star business hotels in central Hanoi.

Hanoi

Type Status

Hilton Hanoi Opera Hotel Hospitality Operating asset

Movenpick Hotel Hanoi Hospitality Operating asset

Golden Westlake apartments Residential Marketing underway

Times Square Hanoi Mixed-use Investment licence

Danang

Type Status

Danang Beach Resort Mixed-use Under construction

World Trade Center Danang Mixed-use Under construction

Sheraton Hoi An Resort and Spa Hospitality Under construction

Nha Trang

Type Status

Sheraton Nha Trang Hotel and Spa Hospitality Under construction

Vinh Thai Nha Trang Township Township Investment licence

Ho Chi Minh City and region

Type Status

Movenpick Hotel Saigon Hospitality Operating asset

Central Garden apartments Residential Marketing underway

Dai Phuoc Lotus Township (Dong Nai) Township Investment licence

Fideco Township (Binh Duong) Township Investment licence

Aqua City (Dong Nai) Residential Under construction

Sunrise City apartments Residential Investment licence

VinaSquare Tower Office/retail Investment licence


Construction of the Golden Westlake apartments in Hanoi is nearing completion.


The 260ha Danang Beach Resort will feature a five-star J.W. Marriott hotel and two golf courses, the first designed by Greg Norman and now under construction.


Feature Investments

Times Square HanoiTimes Square Hanoi is a landmark upscale mixed-use development on a 40,000sq.m site in My Dinh District, Hanoi. The site is surrounded by high profile buildings including the National Convention Centre, a Big C supermarket, the Viglacera building and the future Hanoi residence for visiting provincial delegates and officials. Times Square Hanoi is a perfect combination of form and function, as the 63,000sq.m retail, 17,000sq.m office, and 300-room hotel space will merge beautifully with the surrounding streetscape and amenities.

Movenpick Hotel HanoiThe Movenpick Hotel Hanoi is a four-star business hotel in central Hanoi. It is the second Movenpick-flagged hotel in Vietnam, alongside the Movenpick Hotel Saigon. The former Guoman Hotel was renovated and rebranded in 2008. Some 360sq.m of back-of-house area was transformed into additional meeting and conference facilities, and an additional 300sq.m was leased to an international gaming operator.

Type Mixed-use urban development.

Location My Dinh, Hanoi.

Size/area Total GFA 230,000sq.m.

Status Invest licence received; groundbreaking Q4 2008.

Ownership VNL and VOF 65%.

Highlights Expected completion of office tower in 2010.

Type Hospitality.

Location Hanoi CBD.

Size/area 154 rooms, 2,950sq.m.

Status Operating asset.

Ownership VNL 55.6%.

Highlights Renovated and rebranded in 2008.


Danang Beach ResortLocated less than 20 minutes from Danang International airport and the UNESCO World Heritage site of Hoi An, the Danang Beach Resort is destined to be the ultimate resort destination in Vietnam. This 260ha resort development features two spectacular 18-hole championship golf courses, the first designed by internationally renowned course designer Greg Norman. The integrated resort will include the 5-star J.W. Marriott Danang hotel with 270 rooms and 196 villas offering a panoramic view of the mountains, beach and serene golf courses. Also featured will be a convention and exhibition centre, and a recreational marina alongside a second hotel.

World Trade Center DanangFacing the beautiful Han River and only a short walk from the city centre, the World Trade Center Danang will be the most spectacular mixed-use development in Danang, a coastal city and one of Vietnam’s top tourism destinations. The World Trade Center covers 333,178sq.m of built-up area, to be constructed in three phases that will see completion in 2017. The 9ha site will be transformed into a complete urban complex comprised of a commercial centre, international-standard hotel, office, convention centre, high-end apartments, an international school and townhouses. Phase 1, to be completed in 2011, will feature a five-star hotel, 246 upscale apartments and 36,960sq.m of retail shopping centre. Ground work is now in progress.

Novotel Hanoi On The Park HotelThe Novotel Hanoi On The Park Hotel will be a 389-room four-star hotel on a pristine site overlooking Hanoi’s Reunification Park. The hotel will feature one of the biggest conference facilities and ballrooms in central Hanoi. The location and amenities will allow the hotel to position itself as a ‘resort within the city’ in addition to serving the business market. This hotel, slated to open in 2010, will be managed by Accor.

Type Hospitality.

Location Hanoi CBD.


Status Under construction.

Ownership VNL 39%.

Highlights Expected to open in 2010. Designed as ‘resort within the city’ given secluded location within Reunification Park.

Type Mixed-use hospitality.

Location Danang City in central Vietnam; 10km from an international airport.

Size/area 260ha.

Status Investment licence received, construction of first golf course underway.

Ownership VNL 75%.

Highlights J.W. Marriott beachfront hotel to open in 2011. Features two 18-hole championship golf courses with the first designed by golf legend Greg Norman.


Location Danang City, central Vietnam.

Size/area 9ha.

Status Ground work underway.

Ownership VNL/VOF and a European partner hold 100% in an FIE licence.

Highlights Riverfront landmark project in downtown Danang featuring five-star hotel, luxury apartments, retail, office, school, and convention centre.


VinaSquare TowerVinaSquare is a landmark development on 31,829sq.m in the bustling centre of District 5 in Ho Chi Minh City. Surrounded by hospitals, universities, and the densely populated Cho Lon commercial area (Chinatown), the mixed-use VinaSquare project combines over 254,557sq.m of B-Grade retail and office space with 1,286 mid-and high-end spacious apartments.

Saigon Design CenterLocated in the commercial business area of Phu My Hung in District 7, Ho Chi Minh City, the Saigon Design Center will provide 13,937sq.m of B-Grade office and retail space, on a land area of 2,475sq.m. The unique spiral design will make the Saigon Design Center a landmark building in District 7. The structure will also provide parking for 126 cars and 161 motorbikes. The site is cleared with ground work underway. Expected completion date is Q4 2010.


Location China town, District 5, HCM City.

Size/area 31,829sq.m, GFA 254,557sq.m.

Status Investment licence received.

Ownership VNL and VOF hold 49%.

Highlights Prime location in the heart of HCM City’s Chinatown.

Type Office and retail.

Location Phu My Hung, District 7, HCM City.

Size/area 2,475sq.m, GFA 13,937sq.m.

Status Investment licence received, ground work underway.

Ownership VNL 80%.

Highlights Located in Phu My Hung, the top suburb of HCM City.


Sheraton Nha Trang Hotel and SpaThe Sheraton Nha Trang Hotel and Spa is the first internationally recognised hotel brand on the coastline of Vietnam. Nha Trang continues to prosper from increasing investment in the leisure and tourism sector, and its popularity with both domestic and international tourists. The hotel will open in 2009 and will include 1,183sq.m of conference facilities, expected to attract a large proportion of conference and event-related business to the coast via cross selling with the Sheraton hotels located in Ho Chi Minh City and Hanoi.

Dai Phuoc Lotus TownshipDai Phuoc Lotus is a landmark resort-style urban development project in Nhon Trach district, Dong Nai province, one of southern Vietnam’s key regions of economic development. The island development, in the shape of a boat, will create a distinctive living environment. The 200-hectare project will transform the area with office buildings, shopping centre, residences, marina, recreational facilities, hotels, andpublic facilities in the midst of parks and lakes.

Movenpick Hotel SaigonThe Movenpick Hotel Saigon is a 249-room, five-star hotel located in fast-growing Phu Nhuan district, minutes away from Tan Son Nhat International Airport. This was the first Movenpick _ branded hotel in Vietnam, after the former Omni Saigon Hotel was re-branded under the management of the Swiss group, which now also manages the Movenpick Hotel Hanoi. From March 2007 to March 2008 the average room rate at this hotel rose from USD68 to USD123 per night.

Type Hospitality.

Location Nha Trang, central Vietnam.


Status Under construction.


Highlights Expected to open in Q2 2009 as the first major international hotel brand on the coast of Vietnam.

Type Township.

Location Nhon Trach, Dong Nai Province (HCM City region).

Size/area 200ha.

Status Investment licence received; infrastructure construction underway.

Ownership VNL 54%.

Highlights Unique island development with access to HCM City by road and riverway.

Type Hospitality.

Location Phu Nhuan (near airport), HCM City.

Size/area 249 room, 8,657sq.m.

Status Operating asset.


Highlights First Movenpick branded hotel in Vietnam and the only five star hotel near HCM City’s international airport.


Board of Directors


HORST F. GEICKE, ChairmanHorst F. Geicke is Chairman and Co-founder of VinaCapital Group Limited. He has resided in Asia for almost 30 years and has over 25 years of operating and investing experience in the region, having made several financial and strategic investments in Vietnam, including the establishment of a manufacturing plant for his family business. Mr. Geicke also co-founded the Pacific Alliance fund management group, which has more than USD2 billion in assets under management. Mr. Geicke was the President of the German Chamber of Commerce in Hong Kong for four years and in 2005, became the president of the European Chamber of Commerce in Hong Kong. Mr. Geicke has a Masters degree in Economics and Business Law from the University of Hamburg, Germany.

DON LAM, DirectorDon Lam is Co-founder and Chief Executive Officer of VinaCapital Group Limited. He has overseen the Group’s growth from manager of a single USD10 million fund in 2003 into a full-featured investment house managing four funds worth almost USD2 billion and offering a complete range of corporate finance and real estate advisory services. Before founding VinaCapital, Mr. Lam was a partner at PricewaterhouseCoopers (Vietnam) Limited, where he led the Corporate Finance and Management Consulting practices throughout the Indochina region. Mr. Lam has also held management positions at Deutsche Bank and Coopers & Lybrand in Vietnam and Canada.

NICHOLAS BROOKE, DirectorMr. Brooke is the Chairman of Professional Property Services Limited, a Hong Kong-based real estate consultancy that provides a select range of advisory services across the Asia Pacific Region. Mr. Brooke is a former President of the Royal Institution of Chartered Surveyors and was the first overseas surveyor to be accorded that honour. Mr. Brooke is

a recognised authority on land administration and planning matters and has provided advice in these areas to several Asian governments as well as the US State Department. He is also a Justice of the Peace, and a former Deputy Chairman of the Hong Kong Town Planning Board and a former member of the Hong Kong Housing Authority. Mr. Brooke also sits as a Non-executive Director on the Boards of a number of public companies including Shanghai Forte Land Company Limited, one of China’s largest residential developers and Majid Al Futtaim Investments, one of Middle East’s leading shopping centre developers. Mr. Brooke has a degree in Estate Management and a Post Graduate Diploma in Business Administration from the University of London.

NGUEN KHOONG TONG, Director Mr. Tong is the co-founder and Group Managing Director of Bukit Kiara Properties (BKP), a premier real estate developer of lifestyle homes in Kuala Lumpur, Malaysia. He was also formerly an Executive Director of Sunrise Berhad, a publicly listed real estate developer in Malaysia. In BKP and formerly Sunrise, Mr. Tong spearheaded the conceptualisation and development of over 3,000 high-end residential homes, and the initial master planning of Mont’ Kiara, the most sought after expatriate suburb in Kuala Lumpur. He was strategic in creating the exit from Sunrise for his family shareholding at the end of 1996, just prior to the Asian financial crisis in 1997. Mr. Tong is also a member of the investment committee and an independent director of both KSC Capital, a dynamic unit trust management company in Malaysia, and Accelera Ventures, a boutique Pacific Rim growth fund in Hong Kong. Mr. Tong has a Bachelor of Arts degree in Architecture from the University of Manchester, United Kingdom, and a Masters of Business Administration degree, majoring in Real Estate, from the Wharton School, University of Pennsylvania, USA.

BRUNO SCHÖPFER, DirectorMr. Schöpfer has a distinguished 25-year career in hotel, real estate and consumer goods management, including 15 years in operational positions with leading Asian luxury hotel companies. From 1992 to 1997, he oversaw Mandarin Oriental’s worldwide operations with over USD 1 billion in hotel assets. In 1997, Mr. Schöpfer was Managing Director of Mövenpick’s Asian operations and from 1998 to 2003 Managing Director and CEO of Mövenpick Holding, the well-known Swiss premium hospitality company, with interests in consumer goods, restaurants, and hotels. Until 2005, Mr. Schöpfer was Chairman of Mövenpick Hotels and Resorts Ltd. He is currently a consultant to several hospitality developers and runs two companies in these fields.

1. Horst F. Geicke, Chairman2. Don Lam, Director3. Nicholas Brooke, Director4. Nguen Khoong Tong, Director5. Bruno Schöpfer, Director

12

34

5


Report of the Board of Directors

The Board of Directors submits its report together with the consolidated financial statements of VinaLand Limited (“the Company”) and its subsidiaries (together “the Group”) for the year ended 30 June 2008 (“the year”).

The Group VinaLand Limited is incorporated in the Cayman Islands as a company with limited liability. The registered office of the Company is PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands.

Particulars of the Group’s principal subsidiaries and associates are set out in notes 6 and 11.

Principal activities The Company’s primary objective is to focus on key growth segments within Vietnam’s emerging real estate market, namely residential, office, retail, industrial and leisure projects in Vietnam and the surrounding countries in Asia to provide shareholders with an attractive level of income and capital growth, from investing in a diversified portfolio of mainly property investments.

The principal activities of the subsidiaries are property investment and hospitality management.

Results and dividend The results of the Group for the year ended 30 June 2008 and the state of its affairs as at that date are set out in the consolidated financial statements on pages 27 to 60.

The Board of Directors do not recommend a payment of dividend for the year ended 30 June 2008 (30 June 2007: USDnil).

Board of Directors The members of the Board of Directors of the Company during the year and to the date of this report are as follows:



Auditors The Group’s auditors, Grant Thornton (Vietnam) Ltd., have expressed their willingness to accept reappointment.

Subsequent events after the balance sheet date Details of significant subsequent events which impact on the financial position of the Group are set out in Note 39 to the accompanying consolidated financial statements.

Directors’ interest in the Company As at 30 June 2008, the interests of the directors in the shares, underlying shares and debentures of the Company are as follows:

Board of Directors’ responsibility in respect of the consolidated financial statements The Board of Directors is responsible for ensuring that the consolidated financial statements are properly drawn up so as to give a true and fair view of the financial position of the Group as at 30 June 2008 and of the results of its operations and its cash flows for the year ended on that date. When preparing the consolidated financial statements, the Board of Directors is required to:1. adopt appropriate accounting policies which are supported

by reasonable and prudent judgements and estimates and then apply them consistently;

2. comply with the disclosure requirements of International Financial Reporting Standards or, if there have been any departures in the interest of true and fair presentation, ensure that these have been appropriately disclosed, explained and quantified in the consolidated financial statements;

3. maintain adequate accounting records and an effective system of internal control;

4. prepare the consolidated financial statements on a going concern basis unless it is inappropriate to assume that the Group will continue its operations in the foreseeable future; and

5. control and direct effectively the Group in all material decisions affecting its operations and performance and ascertain that such decisions and/or instructions have been properly reflected in the consolidated financial statements.

The Board of Directors is also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Board of Directors confirms that the Group has complied with the above requirements in preparing the consolidated financial statements.

Statement by the Board of Directors In the opinion of the Board of Directors, the accompanying

At the date of this report there had been no further changes in the above holdings.

Name Position Appointed/Resigned on

Horst Geicke Chairman 31 August 2005

Don Lam Director 13 November 2006

Nicholas Brooke Director 13 November 2006

Nguen Khoong Tong Director 13 November 2006

Bruno Schöpfer Director 13 November 2006/28 November 2008

No. of shares Approximate % of holding

Direct Indirect

Horst Geicke 2,750,000 412,583 0.63%

Don Lam 1,755,250 412,583 0.43%

Nicholas Brooke 150,000 - 0.03%

Nguen Khoong Tong 798,500 - 0.16%

Bruno Schöpfer 300,000 - 0.06%

consolidated balance sheet, consolidated statement of income, changes in equity and cash flows, together with the notes thereto, have been properly drawn up and give a true and fair view of the financial position of the Group as at 30 June 2008 and the results of its operations and cash flows for the year ended 30 June 2008 in accordance with International Financial Reporting Standards.

On behalf of the Board of Directors,

Horst F. GeickeChairman Ho Chi Minh City, Vietnam28 November 2008


An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend upon the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independent Auditors’ Report

Management’s responsibility for the consolidated financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the consolidated financial statements are free from material misstatement.

To the Shareholders of VinaLand LimitedWe have audited the accompanying consolidated financial statements of VinaLand Limited and its subsidiaries (“the Group”) which comprise the Consolidated Balance Sheet as of 30 June 2008, and the Consolidated Statement of Income, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows for the year then ended, and a Summary of significant accounting policies and other explanatory notes.

Opinion In our opinion, the consolidated financial statements give a true and fair view of the financial position of VinaLand Limited and its subsidiaries as of 30 June 2008, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

GRANT THORNTON (VIETNAM) LTD.Ho Chi Minh City, Vietnam28 November 2008


Consolidated balance sheet

Notes 30 June 2008 30 June 2007

USD’000 USD’000

ASSETS

Non-current

Investment properties 8 559,966 97,185

Property, plant and equipment 9 135,106 114,047

Intangible assets 10 6,421 -

Investments in associates 11 26,270 -

Goodwill 12 2,939 -

Prepayments for operating leases 13 19,635 13,297

Loan receivables - 6,819

Other long-term financial assets 1,077 -

Deferred tax assets 310 355

Non-current assets 751,724 231,703

Current

Inventories 310 276

Receivables from related parties 14 21,930 22,825

Trade and other receivables 15 146,750 33,198

Short-term deposits 16 57,027 -

Financial assets at fair value through income statement 17 61,924 29,461

Deposits for acquisitions of investments 18 77,943 72,729

Cash and cash equivalents 19 80,806 350,898

Current assets 446,690 509,387

Total assets 1,198,414 741,090

The accompanying notes are an integral part of these financial statements.



USD’000 USD’000

EQUITY

Equity attributable to shareholders of the parent

Share capital 20 4,999 4,999

Additional paid-in capital 21 588,870 588,870

Revaluation reserve 22 13,844 777

Translation reserve (4,623) (530)

Retained earnings 201,437 34,756

804,527 628,872

Minority interests 219,868 54,011

Total equity 1,024,395 682,883

LIABILITIES

Non-current

Long-term borrowings 23 21,673 4,705

Other liabilities 1,044 577

Non-current liabilities 22,717 5,282

Current

Payables to related parties 24 116,536 40,583

Trade and other payables 25 34,491 11,062

Current portion of long-term borrowings 23 275 1,280

Current liabilities 151,302 52,925

Total liabilities 174,019 58,207

Total equity and liabilities 1,198,414 741,090

Net assets per share attributable to equity shareholders of the parent (USD per share) 1.61 1.26



Consolidated Statement of Changes in Equity

Equity attributable to shareholders of the parent

Share capitalAdditional

paid-in capitalTranslation

reserveRevaluation

reserveRetained earnings Minority interest

Total equity

USD‘000 USD‘000 USD‘000 USD’000 USD’000 USD‘000 USD‘000

1 July 2006 2,048 196,414 - - 121 - 198,583

Currency translation - - (530) - - (177) (707)

Revaluation reserves - - - 777 - 703 1,480

Net income recognised directly in equity - - (530) 777 - 526 773

Profit for the year ended 30 June 2007 - - - - 34,635 15,341 49,976

Total recognised income and expense for the year - - (530) 777 34,635 15,867 50,749

Issue of new shares 2,951 392,456 - - - - 395,407

Acquisition of subsidiaries - - - - - 38,144 38,144

30 June 2007 4,999 588,870 (530) 777 34,756 54,011 682,883

1 July 2007 4,999 588,870 (530) 777 34,756 54,011 682,883

Currency translation - - (4,093) - - (1,957) (6,050)

Revaluation reserves - - - 13,067 - 11,633 24,700

Net income recognised directly in equity - - (4,093) 13,067 - 9,676 18,650

Profit for the year ended 30 June 2008 - - - - 167,698 80,485 248,183

Total recognised income and expense for the year - - (4,093) 13,067 167,698 90,161 266,833

Acquisition of subsidiaries - - - - - 34,768 34,768

Capital contributions in subsidiaries - - - - - 41,981 41,981

Reduction in retained earnings on liquidation of Guoman (Hanoi) Limited - - - - (1,017) (340) (1,357)

Dividend distributions - - - - - (713) (713)

30 June 2008 4,999 588,870 (4,623) 13,844 201,437 219,868 1,024,395



Consolidated Statement of Income

Notes Year ended Year ended

30 June 2008 30 June 2007

USD’000 USD’000

Revenue 35,968 17,459

Cost of sales 26 (17,916) (7,048)

Gross profit 18,052 10,411

Other income 27 44,605 7,702

Management fee and administration expenses 26 (76,508) (17,292)

Other operating expenses 26 (11,594) (1,457)

Other net changes in fair value of financial assets at fair value through income statement 28 16,869 3,085

Gain on fair value adjustments of investment properties 8 247,068 38,530

Profit from continuing operations 238,492 40,979

Financial income 29 18,751 11,836

Finance costs 30 (6,991) (2,594)

Share of profits from associates 53 -

11,813 9,242

Profit before tax from continuing operations 250,305 50,221

Income tax 31 (2,122) (245)

Net profit for the year 248,183 49,976

+ Attributable to equity shareholders of the parent: 167,698 34,635

+ Attributable to minority interest 80,485 15,341

+ Earnings per share – basic and diluted (USD per share) 32 0.34 0.12



ConsolidatedStatement of Cash Flows


USD’000 USD’000

Operating activities

Profit for the year before tax 250,304 50,221

Adjustments 33 (300,505) (47,923)

Change in trade and other receivables (167,585) (25,689)

Change in inventory (34) (18)

Change in trade and other payables 142,066 (14,514)

Corporate income tax paid (1,854) -

(77,608) (37,923)

Investing activities

Interest received 16,546 10,834

Purchases of property, plant, and equipment (15,682) (27,902)

Acquisition of a subsidiaries, net of cash 7 (59,707) (62,828)

Proceeds from disposal of fixed assets 108 -

Proceeds from disposal of investments 10,188 -

Deposits for acquisitions of investments (5,214) (72,729)

Purchase of financial assets (22,220) (21,993)

Acquisitions of investment properties (61,220) -

Investment in associates (26,218) -

Proceeds from loans repaid 43,432 54,550

Loans provided (87,412) (57,825)

(207,399) (177,893)

Financing activities

Proceeds from shares issued - 395,406

Loan proceeds from banks 22,197 113

Loan repayments to banks (6,343) (1,000)

Dividend paid to minority interest (450) -

Interest paid (489) (2,593)

14,915 391,926

Net change in cash and cash equivalents for the year (270,092) 176,110

Cash and cash equivalents at the beginning of the year 350,898 174,788

Cash and cash equivalents at end of the year 19 80,806 350,898



Notes to the Consolidated Financial Statements

1. General information VinaLand 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 focus on key growth segments within Vietnam’s emerging real estate market, namely residential, office, retail, industrial and leisure projects in Vietnam and the surrounding countries in Asia. The Company is listed on the AIM market of the London Stock Exchange under the ticker symbol VNL.

The consolidated financial statements for the year ended 30 June 2008 were authorised for issue by the Board of Directors on 28 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 of the Group 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 amendment to IAS 1 “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 amendment to IAS 1, 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 January 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. The option currently used by the Group of immediately expensing those borrowing costs will be removed. 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 statement 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 consolidated financial statements have been prepared using the historical cost convention, as modified by the revaluation of investment property, leasehold land and certain financial assets and financial liabilities, the measurement bases of which are described in the accounting policies below.

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.

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.

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 are recorded as changes in 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 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.

Under the equity method, the Group’s interest in an associate is carried at cost and adjusted for the post-acquisition changes in the Group’s share of the associate’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 entity for the year, including any impairment loss on goodwill relating to the investment in associate recognised for the year.

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

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.

Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction (not retranslated). Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined.

3.7. Revenue recognition Sale of goods and rendering of services Revenue from sale of goods is recognised in the consolidated statement of income when the significant risks and rewards of ownership of goods have passed 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.

In relation of the hotel and related hotel services, revenue is recognised as and when the services are rendered.

Rental income Rental income from investment property is recognised in the

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 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. At each balance sheet date, the Group determines whether there is any objective evidence that an investment in an associate 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 and its respective carrying amount.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in an associate. 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 United States Dollars. 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 entities, transactions


consolidated statement of income on a straight-line basis over the term of the operating 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 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.

3.9. 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.

3.10. Investment property 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 by the Valuation Committee and approved by 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 3.12).

3.11. 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.


3.12. 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 3.10. 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.

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 33 to 50 years Plant and machinery 4 to 20 years Office equipment 2 to 20 years Furniture and fixtures 3 to 25 years Motor vehicles 5 to 10 years

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.

3.13. Intangible assets Intangible assets comprise software and licences. Intangible assets acquired separately are measured initially at cost. Intangible asset acquired in a business combination is measured at fair value and amortised evenly over the useful economic life. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses. The carrying value of the assets are reviewed annually for impairment

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may

be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. The estimated useful lives are as follows:

Licence 16 to 30 years Software 5 years

3.14. Property held for sale Property intended for sale in the ordinary course of business or property developed for sale is classified as trading property and is accounted for as inventory. Leasehold land upon which trading properties are constructed, or are in the process of construction, is classified as investment property.

Property held for sale is stated at the lower of cost and net realisable value. Cost includes development costs and other direct costs attributable to the properties concerned until they reach a saleable state. Net realisable value represents the estimated selling price in the ordinary course of business less all estimated costs of completion and the estimated costs necessary to make the sale.

3.15. 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 3.12).

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.

3.16. Financial assets Financial assets are divided into the following categories: loans and receivables; and financial assets at fair value through income statement.

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 AIM market of the London Stock Exchange, dated 16 March 2006.

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.

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 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 income statement Financial assets at fair value through income statement include financial assets that are either classified as held for trading or are designated by the entity to be carried at fair value through income statement upon initial recognition. Other financial assets at fair value through income statement held by the Company include listed and unlisted securities and trustee loans.

Financial assets at fair value through income statement 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.

3.17. Impairment of assets The Group’s goodwill, operating lease prepayments, property, plant and equipment, property held for development, and interests in associates 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. However, deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and associates is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future.

Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. 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 less direct transaction costs and carried subsequently at amortised cost.

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; or5. a party is a close family member of the above categories.

3.24. 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.

3.25. 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.


4. Critical accounting estimates and judgements When preparing the financial statements the Group makes estimates and assumptions concerning the future. The resulting accounting estimates will by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year 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 3.10. The fair values of investment properties and buildings have been determined by independent professional valuers including: CB Richard Ellis; Savills; Jones Lang LaSalle; Colliers Sallmanns and HVS. These valuations are based on certain assumptions, which are subject to uncertainty and might materially differ from the actual results. Valuations are reviewed by the Valuation Committee and approved by 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.

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

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.

Useful lives of depreciable assets Management reviews the useful lives of depreciable assets at each reporting date. At 30 June 2008 management assesses that the useful lives represent the expected utility of the assets to the

Group. The carrying amounts are analysed in notes 9 and 10.

Impairment of assets The Group’s goodwill in associates is subject to impairment testing in accordance with the accounting policy stated in note 3.17.

5. Segment reporting 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 five main segments: four real estate sectors: commercial; residential; hospitality; and mixed use, and cash (including term deposits and bonds). The Group’s secondary reporting format, geographical segments, includes north, central and south Vietnam, and the regions outside Vietnam.

As at 30 June 2008

Vietnam Outside Vietnam Total

North Central South

USD’000 USD’000 USD’000 USD’000 USD’000

Assets

Real estate

Commercial 12,799 - 51,513 - 64,312

Residential 15,731 149,108 171,718 - 336,557

Hospitality 108,038 58,069 44,642 - 210,749

Mixed use 55,015 221,596 229,073 - 505,684

Cash 8,802 4,443 56,605 10,952 80,802

200,385 433,216 553,551 10,952 1,198,104

For the year ended 30 June 2008

Net profit/(loss)

Real estate

Commercial (6,500) - 25,265 - 18,765

Residential 17,777 11,593 50,455 - 79,825

Hospitality (143) 1,273 (979) (269) (118)

Mixed use (3,176) 154,706 (20,571) - 130,959

Cash 149 883 12,908 4,812 18,752

Net profit 8,107 168,455 67,078 4,543 248,183


Assets As at 30 June 2007

Real estate

Commercial 10,029 - - - 10,029

Residential 7,500 - 8,476 - 15,976

Hospitality 78,966 21,949 36,386 - 137,301

Mixed use 45,083 51,093 130,354 - 226,530

Cash 4,047 663 84,676 261,513 350,899

145,625 73,705 259,892 261,513 740,735

For the year ended 30 June 2007

Net profit/(loss)

Real estate

Commercial 1,001 - (14) - 987

Residential (227) - 2,094 - 1,867

Hospitality (6,512) 2,024 11,060 (26) 6,546

Mixed use (1,363) 14,560 15,419 - 28,616

Cash - - 7,045 4,915 11,960

Net profit (7,101) 16,584 35,604 4,889 49,976

6. Subsidiaries Acquisition of Ha Trading Co. Ltd. (Danang 15ha Project) On 12 March 2008, the Group acquired 99.983% interest in Ha Trading Co., Ltd. (Danang 15ha Project), which is incorporated in Vietnam. The principal activity of the company is to construct and manage residential villas for sale and a four-star resort for lease in Danang City, Vietnam. The total cost of the acquisition was USD8.9 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:

Ha Trading Co. Ltd. contributed a loss of USD10,000 to the consolidated profit for the period from 12 March 2008 to the balance sheet date.

Assets USD’000 Liabilities USD’000

Current assets

Loan receivable 3,179

Other receivable 1

3,180

Non-current asset Non-current liabilities

Investment property 8,900 Long-term borrowing 3,179

Minority interest 1

12,080 3,180

To determine the geographical segments for investments and cash the following rules have been applied:

• Real estate − location of property; and • Cash − place of deposit.

The above segmental reporting information has not been presented in accordance with the requirements of IAS 14 – Segment reporting as the Board of Directors believes that the current way of presentation gives more appropriate and relevant information to the users of the financial statements and is in accordance with the way the Investment Manager manages and monitors the risks and returns of the Group’s investments.


Acquisition of Orchid House Co., Ltd. (HBT Court Project) On 13 December 2007, the Group acquired 30% of Orchid House Co., Ltd (HBT Court Project), which is incorporated in Vietnam. On 4 February 2008, the Group acquired a further 25.56% interest in the company. This company owns and manages an apartment complex with 21 luxury units in District 1, Ho Chi Minh City, Vietnam. The total costs of the acquisitions were USD1.5 million which was settled in cash.


Orchid House Co., Ltd. contributed USD6,000 to the consolidated profit for the period from 4 February 2008 to the balance sheet date.


Current assets Current liabilities

Cash and cash equivalent 29 Short-term loan 92

Receivable 170 Payable 2

Other current assets 5

Total current assets 204 Total current liabilities 94

Non-current asset Non-current liabilities

Investment property 2,766 Long-term borrowing 115

Other non-current liabilities 50

Minority interest 1,205

2,970 1,464

Acquisition of Pavia Properties Ltd., (Nguyen Du Building Project) On 28 March 2008, the Group acquired 100% interest in Pavia Properties Ltd., which is incorporated in British Virgin Islands, which owns 65% interest in Nguyen Du Joint Venture Company (Nguyen Du Building Project). The principal activity of the Nguyen Du Joint Venture Company is to operate an office building for lease located in Hanoi, Vietnam. The total cost of the acquisition was USD4.2 million which was settled in cash.


Nguyen Du Joint Venture Company and Pavia Properties Ltd. contributed USD1,000,000 to the consolidated profit for the period from 28 March 2008 to the balance sheet date.



Cash and cash equivalent 857 Payable 64

Receivable 12


Non-current asset

Investment property 5,454 Minority interest 2,060

6,323 2,124


Acquisition of Vinh Thai Urban Development Corporation (Vinh Thai Urban Residential Project) On 29 December 2007, the Group acquired 68% interest in the Vinh Thai Urban Development Corporation (Vinh Thai Urban Residential Project). The principal activity of the company is to construct and operate urban residential land and infrastructure located in Nha Trang City, Khanh Hoa Province, Vietnam. The total cost of the acquisition was USD36.7 million which was settled in cash.


Vinh Thai Urban Development Corporation contributed a loss of USD1,000 to the consolidated profit for the period from 29 December 2007 to the balance sheet date.



Cash and cash equivalent 621 Payable 30,434

Receivable 49,836

Total current assets 50,457 Total current liabilities 30,434

Non-current asset


Total 124,389 60,499

Acquisition of International Consultant Company Limited (Long Dien Project) On 25 October 2007, the Group acquired a 99% interest in International Consultant Company Limited which has a 16% interest in the VinaCapital Long Dien Limited (Long Dien Project). The principal activity of VinaCapital Long Dien Limited is to construct and develop an apartment building in District 9, Ho Chi Minh City. As at 30 June 2007, the Group owned 84% interest in VinaCapital Long Dien Limited. As a result of this acquisition, the Group increased its beneficial ownership in VinaCapital Long Dien Limited from 84% to 99.84% at the balance sheet date. The total cost of the acquisition was USD2.4 million, which was settled in cash.


International Consultant Company Limited contributed USD25,000 to the consolidated profit for the period from 25 October 2007 to the balance sheet date.


Current assets

Cash and cash equivalent 1,215

Receivable 37

Total current assets 1,252

Non-current assets

Investment property 641

Investment in associate 503

2,396 -


Acquisition of Dien Phuoc Long Real Estate Company Limited (Phuoc Dien Project) On 25 October 2007, the Group acquired a 99% interest in Dien Phuoc Long Real Estate Company Limited which has a 16% interest in the VinaCapital Phuoc Dien Limited (Phuoc Dien Project). The principal activity of VinaCapital Phuoc Dien Limited is to construct and develop an apartment building and villas in District 9, Ho Chi Minh City. As at 30 June 2007, the Group owns 84% interest in VinaCapital Phuoc Dien Limited. As a result of this acquisition, the Group increases beneficial ownership in VinaCapital Phuoc Dien Limited from 84% to 99.84% at the balance sheet date. The total cost of the acquisition was USD3.1 million, which was settled in cash.


Dien Phuoc Long Real Estate Company Limited contributed a loss of USD364,000 to the consolidated profit for the period from 25 October 2007 to the balance sheet date.



Cash and cash equivalent 2,654 Payable 9

Receivable 15

Total current assets 2,669 Total current liabilities 9

Non-current asset

Investment in associate 448

3,117 9

Acquisition of SIH Investment Limited (Novotel Hanoi Hotel Project) On 29 October 2007, the Group acquired 75% interest in SIH Investment Limited, a company incorporated in Singapore, which owns 70% interest in SAS Hanoi Royal Hotel Limited (Novotel Hanoi Hotel Project). As a result, the Group owns 52.5% interest in this Project. The principal activity of the SAS Hanoi Royal Limited is to construct and manage a four-star hotel in Hanoi. The total cost of the acquisition was USD4.5 million, which was settled in cash.


SIH Investment Limited and SAS Hanoi Royal Hotel Limited contributed a loss of USD5 million to the consolidated profit for the period from 25 October 2007 to the balance sheet date.



Cash and cash equivalents 280 Trade and other payables 56

Other receivables 6


Non-current asset


6,056 1,556


NamePlace of incorporation/

operations

Nominal value of issued share capital/registered

legal capital in USD and USD equivalent

Percentage interest held by the Group Principal activities

Onshine Investments Limited BVI 1 100% Property investment

Vietnam Property Holdings Limited BVI 100 75% Property investment

Prosper Big Investment Limited BVI 50,000 75% Property investment

VinaCapital Danang Resorts Limited BVI 4 75% Property investment

VinaCapital Commercial Center Limited (*) BVI 20,000 64.5% Property investment

Bates Assets Limited BVI 4 100% Property investment

Proforma Asia Limited BVI 4 100% Property investment

Cypress Assets Limited BVI 100 75% Property investment

Roxy Assets Limited BVI 4 75% Property investment

VinaCapital Hoi An Resort Vietnam 6,000,000 80% Property investment

VinaCapital Danang Golf Course Limited Vietnam 23,000,000 75% Property investment

Maplecity Investments Limited BVI 4 75% Property investment

Henry Enterprise Group Limited BVI 100 61.5% Property investment

VinaCapital Danang Resort Limited Vietnam 27,000,000 75% Property investment

VinaCapital Commercial Center Limited (Vietnam) Vietnam 65,000,000 64.5% Property investment

Tungshing International Investment Limited BVI 50,000 100% Property investment

International Consultant Company Limited Vietnam 1,237,240 99% Property investment

Dien Phuoc Long Real Estate Company Vietnam 2,474,482 99% Property investment

VinaCapital Phuoc Dien Limited Vietnam 2,927,500 100% Property investment

VinaCapital Long Dien Limited Vietnam 3,142,375 100% Property investment

Additional acquisition of East Ocean Real Estate & Tourism Joint Stock Company (Sheraton Nha Trang Hotel Project) As of 30 June 2007, VinaLand held a beneficial interest of 67.6% in East Ocean Real Estate & Tourism Joint Stock Company (Sheraton Nha Trang Hotel Project). The principal activity of this company is to construct and manage the five-star Sheraton Nha Trang Hotel. On 5 July 2007, the Group acquired a further 5.7% interest in this company for USD1.3 million and on 6 May 2008,

the Group acquired additional 7.9% interest in this company for USD2.7 million. These acquisitions increased the Group’s beneficial ownership in East Ocean Real Estate & Tourism Joint Stock Company to 81.2%. The total costs of the additional acquisitions were USD4 million, which was settled in cash.

Particulars of signification subsidiaries


(*) During the year, the Group sold 3,675 Class A shares in VinaCapital Commercial Center Limited. Under the Share Sale and Purchase Agreement, the Buyer has been granted a right to acquire an additional 3,675 Class B shares in the company from the Group.

East Ocean Real Estate & Tourism Joint Stock Company Vietnam 20,495,621 81.2% Hospitality

Vina Properties Pte. Limited Singapore 1 75% Property investment

21st Century International Development Company Inc. Vietnam 28,680,000 61.5% Property investment

Thang Long Tungshing JV Company Vietnam 6,071,088 70% Property investment

Roxy Vietnam Co., Ltd (formerly HLL – Guoco Vietnam Co. Ltd.) Vietnam 6,748,923 55.5% Hospitality

Top Star International Hong Kong 13 75% Hospitality

SRLHO Vietnam 24,711,683 52.5% Hospitality

A-1 International Corporation Limited Vietnam 16,700,000 52.5% Hospitality

Dong Binh Duong Urban Development Co., Ltd. Vietnam 19,218,507 70% Property investment

Ha Trading Co., Ltd. Vietnam 3,562,099 99.98% Property investment

Orchid House Co. Ltd Vietnam 562,022 55.56% Property investment

Vina Dai Phuoc Corporation Vietnam 100,000,000 100% Property investment

Prodigy Pacific Vietnam Co., Ltd. Vietnam 1,500,000 100% Property investment

Pavia Properties Ltd BVI 50,000 100% Property investment

Nguyen Du Joint Venture Company Vietnam 2,324,834 65% Property investment

SIH Investment Limited Singapore 8,379,168 75% Property investment

SAS Hanoi Royal Hotel Ltd. Vietnam 12,000,000 70% Hospitality

Viet Land Development Corporation Vietnam 2,500,000 60% Property investment

VinaLand Espero Ltd BVI 100 75% Property investment

Vinh Thai Urban Development Corporation Vietnam 37,348,756 68% Property investment


7. Net cash for acquisition of subsidiaries

30 June 2008 30 June 2007

USD’000 USD’000

Cost of investment in the subsidiaries:

Ha Trading Co., Ltd. (Danang 15ha Project) 8,901 -

Orchid House Co., Ltd (HBT Court Project) 1,506 -

Nguyen Du Joint Venture Company (Nguyen Du Building Project) 4,200 -

Vinh Thai Urban Development Corporation (Vinh Thai Urban Residential Project) 36,723 -

International Consultant Company Limited (Long Dien Project ) 2,395 -

Dien Phuoc Long Real Estate Company (Phuoc Dien Project) 3,107 -

SAS Hanoi Royal Hotel Ltd. (Novotel Hanoi Project) 4,518 -

21st Century International Development Company Inc. (21st Century Project) - 35,431

SRLHO (Hilton Hanoi Opera Hotel Project) - 20,423

Thang Long Tungshing JV Company (Hanoi Opera Office Project) - 6,700

East Ocean Real Estate & Tourism Joint Stock Company (Sheraton Nha Trang Hotel Project) 4,013 8,534

A-1 International Corporation Limited (Omni Saigon Hotel Project) - 23,075

Roxy Vietnam Co., Ltd (Hanoi Guoman Hotel Project) - 19,143

Nishimura Restaurant at the Omni Saigon Hotel - 547

65,363 113,853

Less:

Cash and cash equivalents at the date of acquisition (5,656) (24,219)

Cost of acquisition last year as an associate - (15,997)

Acquisition cost not yet settled - (10,809)

Cost of investments settled in cash 59,707 62,828


Buildings Equipment Furniture and fixtures Motor vehicles Construction in progress Total

USD’000 USD’000 USD’000 USD’000 USD’000 USD’000

Gross carrying amount

1 July 2007 119,495 20,264 1,584 664 10,333 152,340

Acquisitions of subsidiaries - 2 31 1 5,434 5,468

Reclassifications (6,802) (210) 210 - - (6,802)

Additions 415 546 150 1,154 6,126 8,391

Decrease - (2,744) (100) (434) (4,343) (7,621)

Revaluation gains 24,700 - - - - 24,700

30 June 2008 137,808 17,858 1,875 1,385 17,550 176,476

Depreciation and impairment

1 July 2007 (20,690) (15,648) (1,409) (546) - (38,293)

Charge for the year (4,106) (1,253) (276) (90) - (5,725)

Decrease - 2,175 62 411 - 2,648

30 June 2008 (24,796) (14,726) (1,623) (225) - (41,370)

Carrying amount 1 July 2007 98,805 4,616 175 118 10,333 114,047

Carrying amount 30 June 2008 113,012 3,132 252 1,160 17,550 135,106

8. Investment properties

30 June 2008 30 June 2007

USD’000 USD’000

Opening balance 97,185 -

Acquisition of subsidiaries 102,598 32,528

Additions during the year 113,919 26,127

Translation difference (804) -

Net gain from fair value adjustments 247,068 38,530

Closing balance 559,966 97,185

9. Property, plant and equipmentThe carrying amount can be analysed as follow:


Buildings and construction in progress belonging to East Ocean Real Estate & Tourism Joint Stock Company with a net book value of USD14,222,000 as at 30 June 2008 (30 June 2007: USD12,080,000) are pledged as security for the bank loan as disclosed in Note 23.

If cost model had been used, the carrying amount of the buildings would be as follows:

USD’000

Buildings at 30 June 2008

At cost 118,963

Accumulated depreciation (22,761)

Net carrying amount 96,202

Buildings at 30 June 2007

At cost 119,496

Accumulated depreciation (20,690)

Net carrying amount 98,806

10. Intangible assets

Licences Software Total

USD’000 USD’000 USD’000


1 July 2007 - - -

Reclassification 6,802 - 6,802

Additions - 8 8

30 June 2008 6,802 8 6,810

Amortisation and impairment

1 July 2007 - - -

Charge for the year (388) (1) (389)

30 June 2008 (388) (1) (389)

Carrying amount 1 July 2007 - - -

Carrying amount 30 June 2008 6,414 7 6,421

Buildings Equipment Furniture and fixtures Motor vehicles Construction in progress Total

USD’000 USD’000 USD’000 USD’000 USD’000 USD’000


1 July 2006 - - - - - -

Acquisitions of subsidiaries 117,697 20,025 1,575 584 9,368 149,249

New purchases 319 239 9 80 965 1,612

Valuation gain 1,479 - - - - 1,479

30 June 2007 119,495 20,264 1,584 664 10,333 152,340

Depreciation and impairment

1 July 2006 - - - - - -

Acquisitions of subsidiaries (18,510) (14,904) (1,397) (546) - (35,357)

Charge for the year (2,180) (744) (12) - - (2,936)

30 June 2007 (20,690) (15,648) (1,409) (546) - (38,293)

Carrying amount 1 July 2006 - - - - - -

Carrying amount 30 June 2007 98,805 4,616 175 118 10,333 114,047

For the comparative year, the carrying amount can be presented as follows:


2008 2007

USD’000 USD’000

1 July 13,297 -

Acquisition of subsidiaries - 13,584

Addition during the year 7,284 162

Charge for the year (938) (449)

Translation differences (8) -

30 June 19,635 13,297

11. Investments in associates

2008 2007

USD’000 USD’000

1 July - 15,997

Acquisition of associates 26,217 -

Share of associates’ profits, net 53 -

Transferred to subsidiary - (15,997)

30 June 26,270 -

The closing balance consists of:

30 June 2008 30 June 2007

USD’000 USD‘000

Long An S.E.A Industrial Park Development Co. Ltd.

1,089 -

Aqua City Joint Stock Company 3,086 -

Thang Loi Land Joint Stock Company 13,404 -

Romana Resort and Spa 8,691 -

26,270 -

12. Goodwill

13. Prepayments for operating leases

Prepayments for operating leases relates to leasehold land occupied by subsidiaries of the Group.

Leasehold property held by East Ocean Real Estate and Tourism Joint Stock Company with a net book value of USD1,819,000 as at 30 June 2008 (30 June 2007: USD162,000) are pledged as security for the bank loan is disclosed in Note 23.

Under the parent equity method goodwill has been recognised for additional acquisitions of East Ocean Real Estate & Tourism Joint Stock Company (Note 6).

30 June 2008 30 June 2007

USD’000 USD‘000

Opening balance - -

Increase 2,939 -

Closing balance 2,939 -

Incorporation Equity interest held Principle activity Status of financial statements Assets Liabilities Revenue Profit/(loss)

% USD’000 USD’000 USD’000 USD’000

Long An S.E.A Industrial Park Development Co. Ltd. Vietnam 20 Property Reviewed 4,349 12 - (16)

Aqua City Joint Stock Company Vietnam 50 Property Reviewed - 17,385 - (18)

Thang Loi Land Joint Stock Company Vietnam 49 Property Reviewed 32,796 2,084 - (8)

Romana Resort and Spa Vietnam 50 Hospitality Reviewed 4,976 1,930 591 130

Particulars of operating associates and their summarised financial information, extracted from their financial statements as at 30 June 2008 are as follows:


14. Receivable from related parties

30 June 2008 30 June 2007

Relation Transactions USD’000 USD’000

Vietnam Opportunity Fund Limited Common control Loan advance to projects 3,000 22,825

Expenses paid for projects 2,965 -

Cash advance for investments in projects 14,600 -

VinaCapital Real Estate Vietnam Co., Limited Common control Other 378 -

Vietnam Infrastructure Fund Limited Common control Other 217 -

Romana Resort and Spa Associate Shareholder loan 709 -

Lam Co Company Limited Related party Share premium receivable 61 -

21,930 22,825

15. Trade and other receivables

30 June 2008 30 June 2007

USD’000 USD’000

Loan receivable from third parties (*) 87,412 19,882

Prepayments to suppliers 19,710 4,324

Interest receivables 3,678 1,624

Trade receivables 916 417

Receivable from minority shareholders (**) 25,505 -

Other receivables 4,330 3,035

Other current assets 5,215 3,916

146,766 33,198

Provision for bad and doubtful debts (16) -

146,750 33,198

30 June 2008 30 June 2007

Name Descriptions USD’000 USD’000

ACM Company Loan receivables (***) 5,497 -

NORDICA Capital Square ApS Disposal of investment 9,259 -

Thai Thinh Capital Joint Stock Company Receivable 10,749 -

25,505 -

(*) This represents short-term loans to third parties, which are to be repaid during 2009. The loans are unsecured, interest free or bear interest rates ranging from 7.5% to 15% per annum. Their carrying value is considered a reasonable approximation of their expected recovery.

(***) This loan is unsecured, interest free, and is to be repaid by May 2009. It is carried at amortised cost at the balance sheet date.

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

(**) Details of receivable from minority shareholders are as follows:


16. Short-term deposits

Short-term deposits are term deposits with 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.

(*) The Group has deposited VND560.8 billion (equivalent to USD33 million) with a local bank. The deposit is repayable within one year and earns interest at the rate of 13% per annum. The deposit is exclusively for purpose of lending to Thai Thinh Capital Joint Stock Company. The bank has guaranteed to ensure the full repayment of the deposit and associated accrued interest thereon to the Group in VND upon the expiry of the deposit term.

17. Financial assets held at fair value through income statement

The carrying amounts disclosed above are the Group’s maximum possible credit risk exposure in relation to these instruments. See Note 38 for further information on the Group’s exposure to credit risk.

These financial assets are denominated in the following currencies:

30 June 2008 30 June 2007

USD’000 USD’000

Designated at fair value through income statement:

Financial assets in Vietnam

Ordinary shares – unlisted 5,257 157

Trustee loans 46,409 21,805

Corporate bonds 10,258 7,499

Total financial assets at fair value through income statement 61,924 29,461

18. Deposits for acquisitions of investments

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.

(*) The amount represents provision for a prepayment on acquisition of investment.

30 June 2008 30 June 2007

USD’000 USD’000

Deposits for acquisitions of investments 83,103 72,729

Provision for loss on deposit for acquisition of investment – Note 26 (*) (5,160) -

77,943 72,729

30 June 2008 30 June 2007

USD’000 USD’000

United States Dollars 46,409 21,805

Vietnam Dong 15,515 7,656

61,924 29,461

19. Cash and cash equivalents

30 June 2008 30 June 2007

USD’000 USD’000

Cash on hand and in banks 36,090 61,572

Cash equivalents 44,716 289,326

80,806 350,898

30 June 2008 30 June 2007

USD’000 USD’000

Short-term deposits 23,735 -

Bank secured deposit (*) 33,292 -

57,027 -


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 499,967,622 4,999 204,844,779 2,048

New shares issued in the year - - 295,122,843 2,951

Closing balance 499,967,622 4,999 499,967,622 4,999

21. Additional paid-in capital

22. Revaluation reserve

2008 2007

USD’000 USD’000

1 July 588,870 196,414

Additional paid-in capital during the year - 392,456

30 June 588,870 588,870

2008 2007

USD’000 USD’000

1 July 777 -

Revaluation gain on property, plant and equipment 24,700 1,480

Less: share of gain attributable to minority interest (11,633) (703)

30 June 13,844 777

The Group’s share of valuation gains resulting from the revaluation of subsidiaries’ hospitality properties has been recorded directly in the Group’s revaluation reserve under shareholders’ equity.

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

23. Long-term borrowings

30 June 2008 30 June 2007

USD’000 USD’000

Long-term loans of Maplecity Investments Ltd. 18,813 -

Long-term loans of East Ocean Real Estate & Tourism Joint Stock Company 2,982 4,872

Long-term loans of A-1 International (Vietnam) Corporation Limited - 1,113

Long-term loan of Orchid House Co., Ltd 153 -

21,948 5,985

Current portion of long-term loans of East Ocean Real Estate & Tourism Joint Stock Company (188) (252)

Current portion of long-term loan of Orchid House Co., Ltd (87) (1,028)

Total current portions of long-term loans (275) (1,280)

21,673 4,705


24. Payables to related parties30 June 2008 30 June 2007

Relation Transactions USD’000 USD’000

Vietnam Opportunity Fund Limited

Common management

Shareholder loans (*) 66,367 35,549

Dividend from a subsidiary

263 -

VinaCapital Investment Management Ltd

Common management

Management fees 1,409 1,012

Performance fees 48,218 3,340

Others 279 682

116,536 40,583

(*) This represents shareholder loans from Vietnam Opportunity Fund Limited (VOF), a minority shareholder in subsidiaries of the Group. These loans are unsecured, bear interest at SIBOR six-month interest rate and are repayable by the end of 2012. The loans are carried at amortised cost in the balance sheet.

25. Trade and other payablesThe long-term loan of Maplecity Investments Ltd, a subsidiary of the Group, represents a loan obtained from Taipei Fubon Commercial Bank Co., Ltd. The loan is payable in full on 11 July 2009 and bears interest based on LIBOR plus 1.18% per annum. The loan is carried at amortised cost at the balance sheet date.

The long-term loans of East Ocean Real Estate & Tourism Joint Stock Company, a subsidiary of the Group, represents loans obtained from Dong A Bank. These loans are for a period of 10 years and repayable by 2016 and bear an interest rate based on SIBOR plus 2.5% per annum. These loans are secured by leasehold property and the value of construction on such property. These loans are carried at amortised cost at the balance sheet date.

The long-term loan of Orchid House Co., Ltd, a subsidiary of the Group, represents loan obtained from Vietcombank – Ho Chi Minh City branch. The loan is for periods of 6 years since 9 February 2004 and bears interest at prime deposit rate for 12 month-period loan plus 0.18% per annum on reducing balance. The loan is carried at amortised cost at the balance sheet date.

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.

30 June 2008 30 June 2007

USD’000 USD’000

Trade payables 2,010 5,680

Tax payable 2,445 245

Payable for land acquisitions and compensations 18,813 -

Payable to minority shareholders 6,147 -

Other accrued liabilities 2,692 614

Other payables 2,384 4,523

34,491 11,062

26. Expenses by nature

30 June 2008 30 June 2007

USD’000 USD’000

Performance fees 48,218 3,340

Management fees 13,916 6,644

Professional fees 3,079 1,993

Staff costs 6,687 2,750

Depreciation and amortisation 7,052 3,386

Material costs 4,510 2,888

General, administration expenses and outside service costs 10,924 4,135

Provision for loss on deposit for acquisition of investment 5,160 -

Loss on disposal of investments and fixed assets 6,226 -

Other expenses 246 661

106,018 25,797


28. Other net changes in fair value on financial assets at fair value through income statement

29. Financial income

27. Other income

30 June 2008 30 June 2007

USD’000 USD’000

Unrealised gain from trustee loans 18,686 3,085

Unrealised gain from shares 1,051 -

Unrealised loss from bonds’ valuation (2,868) -

16,869 3,085

30 June 2008 30 June 2007

USD’000 USD’000

Disposals of investments 15,976 -

Negative goodwill (*) 27,166 -

Disposals of fixed assets 108 -

Gain on shareholder’s loan from Maplecity Investments Ltd. to SRLHO - 3,078

Gain on waiver of liabilities from ex-shareholder - 2,491

Others 1,355 2,133

44,605 7,702

(*) As stated in Note 6, the Group acquired a 68% interest in the Vinh Thai Urban Development Corporation when the fair value of the net assets was USD94 million. The difference between the Group’s share of the net assets of USD63.9 million and the cost of the acquisition of USD36.7 million represents negative goodwill which has been recognised in the Statement of Income at the acquisition date.

30 June 2008 30 June 2007

USD’000 USD’000

Interest income 18,599 11,836

Realised gain on foreign exchange difference 152 -

18,751 11,836

30. Financial costs

30 June 2008 30 June 2007

USD’000 USD’000

Interest expenses 1,485 2,594

Unrealised loss for borrowing at amortised cost 440 -

Realised loss on foreign exchange difference 174 -

Unrealised loss on foreign exchange difference 4,892 -

6,991 2,594

31. Corporate income tax VinaLand Limited is domiciled in the Cayman Islands. Under the current laws of the Cayman Islands, there is no income, state, corporation, capital gains or other taxes payable by the Company.

The majority of the Group’s subsidiaries are domiciled in the British Virgin Islands (BVI) and so have a tax exempt status. A number of subsidiaries are established in Vietnam and are subject to corporate income tax in Vietnam at the regular tax rate of 28%. A provision of USD2,122,000 has been made for these Vietnamese subsidiaries of the Group for the year ended 30 June 2008 (30 June 2007: USD245,000).

The relationship between the expected tax expense based on the applicable tax rate of 0% and the tax expense actually recognised in the statement of income can be reconciled as follows:

Under the law of Vietnam, tax losses can be carried forward to offset with future taxable income for five years from the year a loss is incurred. Unrecognised deferred tax assets for tax losses of USD7,329,000 (30 June 2007: USD5,614,000) relating to losses carried forward have not been recognised due to uncertainties as to their recoverability.

30 June 2008 30 June 2007

USD’000 USD’000

Group profit before tax 250,305 50,222

Group profit multiplied by applicable tax rate (0%) - -

Income tax on Vietnamese subsidiaries 2,122 245

Corporate income tax expense 2,122 245


32. Earnings per sharea. Basic Basic earnings per share is calculated by dividing the profit attributable to shareholders of the

Group by the weighted average number of ordinary shares on issue during the year.

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 potential dilutive ordinary shares. Therefore, diluted earnings per share are equal to basic earnings per share.

30 June 2008 30 June 2007

Profit attributable to equity holders of the Company (USD) 167,697,519 34,635,037

Weighted average number of ordinary shares on issue 499,968,622 278,625,490

Basic earnings per share (USD per share) 0.34 0.12

33. Cash flow statementThe following non-cash flow adjustments have been made to the pre-tax result for the year to arrive at operating cash flow:

2008 2007

USD’000 USD’000

Depreciation and amortisation 7,052 3,386

Other net changes in fair value of financial assets at fair value through income statement (16,869) (3,085)

Gain on fair value adjustment of investment properties (247,068) (38,530)

Gain on liquidations of subsidiary (1,080) -

Provision for loss on deposit for acquisition of investment 5,160 -

Gain from disposal of investments, net (14,681) -

Negative goodwill (27,166)

Write-off expenses 168 -

Share of associate’s profit (53) -

Loss on disposal and write-off of fixed assets 5,814 -

Unrealised loss on foreign exchange difference 4,892 (452)

Amortised cost of loan receivable 440 -

Interest expense 1,485 2,594

Interest income (18,599) (11,836)

(300,505) (47,923)

34. Directors’ remunerationThe 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 20

Don Lam 20 20

Nguen Khoong Tong 20 20

Bruno Schoepfer 20 20

Nicholas Brooke 20 20

100 100


35. 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 16 March 2006 (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 USD13,916,000 (30 June 2007: USD6,644,000), with USD1,409,000 (30 June 2007: USD1,012,000) 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%).

Total performance fees, for the year amounted to USD48,218,000 (30 June 2007: USD3,340,000), in which included the balance of performance fee of USD4,304,000 for the year ended 30 June 2007. The performance fees for the year ended 30 June 2008 have not been paid and included in outstanding accrued fees 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 are recorded after netting off placement fees.

There was no placement fee for the year (30 June 2007: USD11,862,000).

During the year, the Group granted total loans of USD25 million to Lam Co Company Limited, a related party, to acquire shares in Vinh Thai Urban Development Corporation (Vinh Thai Urban Residential Project) and Ha Trading Co., Ltd. (Danang 15ha Project) on behalf of the Group. These loans are fully secured by the shares which Lam Co Company Limited owns in these projects.

Other related party transactions and balances Other related parties transactions and balances are disclosed in Notes 11, 14, and 24.

36. Contingent assets and liabilities Taxation Although the Company and its direct 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, 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 can not be determined:• 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, including the identity of the tax authority involved. The administration of laws and regulations by government agencies may be subject to considerable discretion, and in many areas, the legal framework is vague, contradictory and subject to interpretation. The Directors believe that it is unlikely that the Group 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 financial information.

Co-operation contract with Thai Thinh Capital In accordance with the co-operation contract dated 8 December 2007 between the Group and Thai Thinh Capital Joint Stock Company (“TTC”), a joint stock company, for which the Group has placed an amount of USD33 million (Note 16) with a bank for lending to TTC, the Group has an option (“the Option”) to buy shares of TTC when TTC offers its share to public at a favourable price which is 20% lower than the average initial public offer (“IPO”) price.

As at 30 June 2008 the following information is uncertain:

1. Whether TTC will offer its share to the public in the foreseeable future; and 2. The average IPO price, if TTC offers its shares to the public.

As at 30 June 2008, due to the uncertainties as mentioned above, the fair value of the Option, which was not able to be determined reliably, has not been recognised in the consolidated financial statements.


37. CommitmentsAs at 30 June 2008, the Group was committed under operating lease agreements to paying the following future amounts:

As at 30 June 2008, the Group was also committed under the construction agreements to paying USD31,878,000 (30 June 2007: USD4,555,000) for future construction works.

The Group has a broad range of commitments under investment licences it has received, and other agreements it has entered into, to acquire and develop, or make additional investments in investment properties and leasehold land in Vietnam. Further investment in any of these arrangements is at the Group’s discretion.

38. Risk management objectives and policies The Group invests in a diversified property portfolio in Vietnam and neighbouring countries with the objective of providing investors with an attractive level of investment income, together with the potential for capital growth.

The Group is exposed to a variety of financial risks: market risk (including currency risk and interest rate 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 to which the Group is exposed to are described below:

Foreign currency 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.

30 June 2008 30 June 2007

USD’000 USD’000

Within one year 1,422 700

From two to five years 3,505 2,800

Over five years 13,830 10,500

18,757 14,000

Short-term exposure Long-term exposure

VND Others VND Other

USD’000 USD’000 USD’000 USD’000

30 June 2008

Financial assets 237,157 4,021 28 -

Financial liabilities (28,619) - (3,045) -

Total exposure 208,538 4,021 (3,017) -

30 June 2007

Financial assets 327,516 1,235 4,383 -

Financial liabilities (12,342) - (5,985) -

Total exposure 315,174 1,235 (1,602)

Sensitivity analysis to a reasonably possible change in exchange ratesProperty valuations in Vietnam are based on a combination of factors linked to both the USD and VND. Assuming all properties are valued based on VND cash flow, 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 analysis assumes that all other variables, in particular interest rates, remain constant.

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.

30 June 2008 30 June 2007

Loss (net of taxation)USD’000

Loss (net of taxation)USD’000

5% devaluation of the Vietnam Dong 10,276 15,679

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:


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 invests in real estate projects and is exposed to market price risk. If the prices of the real estate were to fluctuate by 10%, the impact on profit or loss and equity would amount to approximately USD67.3 million (2007: USD19.6 million).

Cash flow and fair value interest rate 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 some financial liabilities with floating interest rates which are disclosed in the Notes to the Financial Statements. This is the maximum exposure of the Group 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.

The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the balance sheet date, as summarised on the right:

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.

30 June 2008 30 June 2007

USD’000 USD’000

Classes of financial assets – carrying amounts

Ordinary share – unlisted 5,257 157

Corporate bonds 10,258 7,499

Trustee loans 46,409 21,805

Other long-term financial assets 1,077 -

Deposits for acquisitions of investments 77,943 72,729

Short-term deposits 57,027 -

Cash and cash equivalents 80,806 350,898

Trade and other receivables 168,680 62,842


Liquidity risk analysisLiquidity risk is the risk that the Group will experience difficulty in either realising assets or otherwise raising sufficient funds to satisfy commitments associated with investments and financial instruments. There is an inherent liquidity risk associated with the Company’s primary business, being property investment. As a consequence, the value of the majority of the Company’s investments cannot be realised as quickly as other investments such as cash or listed equities. Furthermore, the development and realisation of the Company’s property investments will normally require access to debt financing at a reasonable cost or shareholder loans from the Company’s surplus funds and its co-investors.

The Company seeks to minimise liquidity risk through:

• Preparing and monitoring cash flow forecasts for each investment project and the Company on a consolidated basis,• Arranging financing to fund real estate developments as required, and• Providing amble lead times for the disposal of assets and realisation of cash.

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

(*) Payables to related parties are primarily shareholder loans from related parties to jointly owned subsidiaries. These loans are not repayable until the respective subsidiaries have sufficient cash to repay these obligations.

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 offering documents.

30 June 2008 Within 1 year From 2 to 5 years Over 5 years

USD’000 USD’000 USD’000

Trade and other payables 34,491 - -

Payable to related parties (*) 116,536 - -

Short-term borrowings 275 - -

Long-term borrowings - 21,673 -

Other liabilities - 1,044 -

30 June 2007 Within 1 year From 2 to 5 years Over 5 years

USD’000 USD’000 USD’000

Trade and other payables 11,061 - -

Payable to related parties (*) 40,583 - -

Short-term borrowings 1,280 - -

Long-term borrowings - 4,705 -

Other liabilities - 577 -


39. Subsequent events Hanoi Opera Plaza As at 30 June 2008, the Group owned 100% of Tung Shing International Limited which has a 70% interest in Thang Long Tung Shing Joint Venture Company. The joint venture company was entitled to develop the Hanoi Opera Plaza, an office and retail project on a site of 1,700sq.m in the centre of Hanoi. The land had been contributed by the local party to obtain a 30% interest in the Company and was valued at USD12.4 million as at 30 June 2008.

As the site has considerable heritage value to the country the Hanoi People’s Committee requested that the Company swap the land for another site. The Company has accepted this offer and received the new land near the Hanoi Convention Centre in My Dinh District. The new land is held under a new subsidiary Golden Gain Enterprises Vietnam Limited. The Investment Manager has determined the value and future potential of the new land is not less than the land site that was given up.

Global economic crisis 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 Vietnam.

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

USD’000

Real estate investment recorded at fair value through profit or loss

Book value of investment properties at 30 June 2008 559,966

Revaluation of investment properties recorded at fair value at 30 June 2008 (39,584)

Revaluation of investment properties not previously recorded at fair value 7,142

527,524

USD’000

Real estate investments recorded as investment in associates

Potential equity accounted loss for real estate held by associates 12,900

fair value of the Group’s real estate investments has fallen by USD32.4 million to USD527.5 million. The details are as follows:

DirectoryVinaLand Limited is listed on the AIM market of the London Stock Exchange plc., Share price information is available on Bloomberg and Reuters.

Administration

The CompanyVinaLand LimitedP.O. Box 309GTUgland HouseSouth Church Street, George TownGrand Cayman, Cayman Islands

Custodian, Administrator,and Registrar /Receiving AgentHSBC Trustee (Cayman) LimitedHSBC HouseMary Street, George TownGrand Cayman, Cayman Islands

BrokerLCF Edmond De Rothschild Securities Limited5 Upper St Martin’s Lane, London WC2H 9EA, United Kingdom

Legal Advisers(English Law)Lawrence Graham Solicitors4 More London Riverside, London, SE1 2AUUnited Kingdom

(Cayman Islands Law)Maples and CalderUgland HouseP.O. Box 309GTSouth Church Street, George TownGrand CaymanCayman Islands

Investment ManagerVinaCapital Investment Management LtdRepresentative Office17th Floor, Sun Wah Tower115 Nguyen Hue BoulevardDistrict 1, Ho Chi Minh City, Vietnam

Nominated AdviserGrant Thornton UK LLP30 Finsbury Square, London EC2P 2YU, United Kingdom

AuditorsGrant Thornton (Vietnam) Ltd.28th Floor, Saigon Trade Center37 Ton Duc Thang StreetDistrict 1, Ho Chi Minh City, Vietnam

Ho Chi Minh City17th Floor, Sun Wah Tower115 Nguyen Hue Bldv. Dist. 1, Ho Chi Minh CityTel. + 84-8 3821 9930Fax. + 84-8 3821 9931

Hanoi5th Floor13 Hai Ba Trung, Hai Ba Trung District, HanoiTel. + 84-4 3936 4630Fax. + 84-4 3936 4629

Hong Kong16/F., St. John’s Building, 33 Garden Road,Central, Hong Kong SARTel. + 852 2918 0088Fax. + 852 2918 0881

www.vinacapital.com

Documents

VinaCapital_Annual2008_VNL