REG - VietNam Holding Ltd - Interim Report
22/03/2023 07:15
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RNS Number : 7815T VietNam Holding Limited 22 March 2023
VietNam Holding Limited
(a non-cellular company limited by shares registered in Guernsey under the
Companies (Guernsey) Law, 2008, on 25 February 2019 with registered number
66090)
VietNam Holding Limited ("VNH" or the "Company") is pleased to announce its
unaudited results for the six-month period from 1 July 2022 to 31 December
2022
More information on the Company is available at
www.vietnamholding.com (http://www.vietnamholding.com)
Dynam Capital, Ltd
Tel: +84 28 3554 2561
Craig Martin, Chairman
The information contained within the announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via
Regulatory Information Service ("RIS"), this inside information is now
considered to be in the public domain.
Condensed Interim Unaudited Financial Statements
for the six-month period from 1 July 2022 to 31 December 2022
Contents
Chairman's Statement
Investment Manager's Report
Market Report
Interim Report of the Directors
Statement of Directors' Responsibilities
Condensed Interim Unaudited Statement of Financial Position
Condensed Interim Unaudited Statement of Comprehensive Income
Condensed Interim Unaudited Statement of Changes in Equity
Condensed Interim Unaudited Statement of Cash Flows
Notes to the Condensed Interim Unaudited Financial Statements
Director Profiles
Key Parties
Chairman's Statement
Dear Shareholder,
VietNam Holding Limited (the "Company" or the "Fund") outperformed a falling
equities market during the first six months of the financial year. The net
asset value ("NAV") per share declined by 16.8 % in US dollar ("USD") terms
during the period versus a decline of 20.5% in the Vietnam All Share Index
("VNAS"). For the calendar year that ended on 31 December, the Fund's NAV per
share declined by 30.1% against a 39.8% decline in the VNAS. During that
period the Fund maintained its outperformance on a one, three, five and
ten-year basis.
As a result of the decline in market value of the Fund's listed holdings,
Total Assets decreased to USD 105,983,143 as at 31 December 2022, from USD
129,177,449 at 30 June 2022. Total Comprehensive Loss was USD 21,831,338 in
the six-month period, a significant decrease on the Total Comprehensive Income
of USD 17,235,713 generated in the corresponding period in 2021.
In addition to the Investment Manager's continuing communications initiatives,
the Board made appropriate decisions for implementing share buybacks as a
means of addressing the discount between the share price and the NAV. During
the period in review, the Company bought back 505,037 shares at an average
price of USD 3.248, adding an estimated 0.26 % in NAV per share accretion. The
Share buyback authority was renewed by the Shareholders at the AGM in October
2022, allowing up to 14.99% of the Company's issued shares to be bought back.
Current practice is that shares bought back are cancelled.
The Board has kept a very close eye on developments in Vietnam during the last
six months having travelled to the country both in June 2022 and March 2023 to
meet with the Manager's research team and portfolio companies. We were
particularly pleased to witness first-hand the progress the Manager is making
with regards to its Environmental, Social and Governance ("ESG") goals. This
helps explain why the Fund received two five stars in the UN PRI transparency
report and delivered outperformance in the estimated level of Carbon Footprint
against the VNAS. The Manager is also continuing its proactive engagement with
the Fund's portfolio companies and participation in an ESG conference in
Vietnam in May.
2022 marked an important milestone in modern history when as many parts of the
world, including Vietnam, were going "back to normal" after two years Covid-19
restrictions, Russia's invasion of Ukraine threw the world into further
uncertainty. Although 2022 was a record year for Vietnam's economy, - with its
decade high levels of GDP growth (8%), record levels of Foreign Direct
Investment, and unmatched trade surplus - it was not a great year for equity
investors.
Despite continuing uncertainties globally, 2023 could prove finer for Vietnam.
Investors are starting to return to the country's stock markets, with net
inflows recorded for the first time since 2019. Additionally, as detailed in
the Manager's Report, the market appears to be at historically cheap levels of
valuations accompanied with good growth prospects. The Manager also explains
how Vietnam can achieve growth despite weakness in the global economy. For
example, how reform of the nascent bond market could provide some respite for
the real-estate sector in Vietnam, or how the recent government resignations
related to corruption scandals can instil some added trust in the country's
leadership.
The Manager will continue to seek both sustainable outperformance and strong
risk adjusted returns through its active management of our concentrated
portfolio of well-researched researched companies.
I would like to thank all our shareholders, old and new, for their continued
support of the Company. 2022 has been a very challenging year for investors
globally, and we look forward to better results in 2023. Later in 2023 there
will be a five-yearly continuation vote for the Company, and we will be in
touch with investors during the year with information about the procedures for
the vote.
Hiroshi Funaki
Chairman
VietNam Holding Limited
21 March 2023
Investment Manager's Report
The last six months of 2022 saw a period of significant volatility in the
Vietnamese stock market, resulting in the Vietnam All Share index ("VNAS")
falling by 20.5%. Its performance diverged significantly from the underlying
economy and reflected twin fears among domestic investors about the weak
global outlook and the increased scrutiny of some domestic tycoons and
government officials in the crack-down on corruption.
Vietnam's macro-economic performance for the full year was remarkably robust
with record levels of disbursed Foreign Direct Investment ("FDI"), (USD
22.4bn), the second highest trade surplus of all time (USD 11.2bn), high
levels of GDP growth (8%), low levels of inflation (3.15%) and modest currency
devaluation (3.4%), despite the stock market playing victim of its own
success. In the previous 18 months, record numbers of new investors flocked to
the stock market, taking advantage of unrivalled access to mobile trading
apps, and streamlined 'KYC' on-boarding processes. These domestic retail
investor flows had driven the market to record levels of liquidity and
performance in 2021, but in the face of weak global outlook and domestic
scandals in 2022, the profit-taking, coupled with margin calls in a soft and
volatile market, created fearful market conditions. Much of the selling was
indiscriminate, bringing overall market pricing down to levels not seen for
several years. Some of the nervousness was focused on the real-estate market
on the back of scandals relating to misuse of the proceeds from corporate
bonds issuances that culminated in the arrest of a significant property
tycoon. The arrest coincided with a restriction on bank credit and the
inability to access either bank loans or bonds, pushing one or two large
property developers into default on some of their financing obligations.
Markets were also rattled by the purges and resignations of political
appointees, which were mostly related to inappropriate procurement practices
of Covid-19 test-kits and Covid-related repatriation flights. It appears the
chain of command is also the chain of responsibility, and at the end of the
year two deputy-prime ministers were removed from power. Then, in early
January, just before the Lunar New Year 'Tet' holiday, President Nguyen Xuan
Phuc announced his retirement.
Despite all this noise Vietnam continued to cement its position as a key
manufacturing hub, with 'made in Vietnam' appearing on an increasing amount of
the world's inventory of running shoes, garments, and IT accessories.
Bilateral trade reached USD 733bn in 2022, another record year. In fact, over
the last five years trade has increased by more than 52%. China is the largest
trading partner (USD 178bn) followed by the United States (USD 124bn), Korea
(USD 87bn), Japan (USD 48bn) and Taiwan (USD 28bn). Trade with the US has
doubled over the last five years, which is indicative of the changing global
patterns of trade. When President Trump tweeted against China in 2018, many
manufacturers accelerated plans to produce more in Vietnam. The deepening
trade war and deterioration in trust between US and China has brought many
investors to the friendly shores of Vietnam. Four percent of US imports are
now from Vietnam, a level that was quite unimaginable just a few decades ago.
Trade can be fickle, and some of the gains came at China's expense because of
dislocations brought about by Covid-19 and China's zero-Covid policy response.
China has now abandoned this policy, and notwithstanding a soft global
economy, may regain some of this market share. However, Vietnam's role in a
China-plus-one world supply chain is unlikely to be challenged anytime soon.
FDI and global trade have driven growth In Vietnam's economy, broadly measured
by GDP, at an average level of 6.5% per annum for the past three decades. In
December, Vietnam posted an 8% growth number, its highest in a decade, and
2023 looks likely to remain on the multi-decade track. The domestic consumer
in Vietnam has benefitted by economic growth, and per capita GDP is now
equivalent to approximately USD 4,000, which is four times where it was when
the stock market first opened in the country 20 years ago.
The consumer is becoming better informed and more digital, while e-commerce is
growing at 37% per annum, the highest rate in Southeast Asia. Overall retail
sales grew rapidly in 2022 and at double digits (20% year-on-year in December
2022), showing strong underlying consumer demand. Some of our portfolio's
retail companies saw growth at levels more than the pre-Covid levels, not just
'pent-up' demand replacing sales lost to the pandemic. Phu Nhuan Jewellery
("PNJ") is a case in point. PNJ, the second largest company in the portfolio
(10.9% of Net Asset Value, NAV), has around half of all the branded retail
jewellery business in Vietnam and opened 38 new stores in 2022 (taking the
store count to 364) with plans to open 40 stores throughout 2023. Over the
last five years PNJ has maintained its Return on Equity at around 20% (versus
the Index level of 15%) and has very little debt. We view this company as an
'earnings compounder' and a core holding. Over the last decade it has
increased its market value from USD 100m to USD 1bn.
Despite the large growth in domestic wealth, the World Bank estimated in 2018
that less than 40% of the adult population have bank accounts. Credit card
penetration is only 4%, versus 21% In China and 54% In Taiwan. As such, the
scope for the growth in the banking sector, and financial services in general,
remains significant. Opportunities are also backed by the fact that banking
stocks are at historically low levels of 0.8 to 1.0 Price to Book. The banking
sector accounts for 38.6% of the VNAS, and the Fund's six bank holdings
account for 30.8% of the Fund's NAV.
Portfolio Performance
In the period of 1 July to 31 December 2022, the Fund's NAV per share declined
by 16.8% versus a decline In the VNAS of 20.5%. This brings the Fund's overall
return for 2022 to -30.1% versus a -39.8% decline In the VNAS Index.
The second half of calendar 2022, the period under review, required nimble
stock and sector selection. In the face of a domestic liquidity crunch for the
real-estate sector, we reduced the Fund's exposure to the sector, which
declined by 38% (our sector picks by 29%), and we were underweight at 11.7%
for real-estate versus the index level of 18.5%. We have maintained strong
conviction on FPT, a leading technology and telecommunication champion,
resulting in an 11.8% allocation to the sector versus the index's 4.5%. The
Fund is also overweight in the retail sector (16.7% versus 5.7%) and our
holdings overall performed better than the benchmark with a decline of 24.2%
versus 31.2% for the index, apart from MWG which fell by 40% during the
period. Two of our bank holdings - Sacombank and Vietin Bank managed to make
positive returns during the period, and the sector buffeted the overall
declines in the real-estate, transportation, and retail sectors.
Economic Outlook
Vietnam's trade levels are close to 200% of GDP - making it one of the most
open economies in the world. Although the country has a diversified mix of
trading partners, it will not be able to escape global headwinds resulting
from economic recession in those export markets. Trade levels in December
showed slowing demand for many goods, and it could take several months for
inventory levels and demand levels to normalise. In Vietnam's favour is the
fact that it produces a wide range of goods, and in many instances is a
low-cost producer. Although demand may fall for some categories and therefore
impact employment at the factories and industrial parks, the country will
still be expected to earn foreign exchange from the many basic commodities it
produces in quantity, including coffee, rice, rubber, pork, fruit and
vegetables. The latter categories may also see firmer demand from China as the
country opens-up from strict Covid restrictions.
Domestic spending on public infrastructure is expected to be a strong catalyst
for economic growth in 2023. The Government was running behind its plans in
2022 but has earmarked a total of USD 30 billion for 2023. This may provide a
buffer against headwinds from the global trading partners, many of whom may be
close to or entering, recession in 2023. The domestic infrastructure
expenditure is expected to cover core sections, including road and rail
infrastructure. Improvements in these areas will support greater productivity
for Vietnam's manufacturing centres and have a knock on or multiplier effect
for the economy as a whole. Vietnam is still a rural-based country with
urbanisation at less than 40%. While the country has made good strides in
digital Infrastructure - mobile phone penetration is high and internet
connectivity is affordable for much of the population - the arterial road
network requires further development and the railway connections between the
major cities need significant upgrades. A long-term project to connect Hanoi
and Ho Chi Minh City in six hours with a high speed 'bullet-train' was
reignited in 2022 and has been cited as one of the ways to help Vietnam
deliver on the promises of Net-Zero by 2050. The single-track rail line today
is old (completed in 1936) and slow, as the 1,726-kilometre journey between
the cities takes more than 30 hours. Air-travel is the main commercial
alternative, and the two-hour flight is the fourth busiest domestic air route
in the world, according to the Director of the Civil Aviation Authority.
Vietnam was quick to open to foreign visitors in 2022 and, as the Chairman
notes, the Board of the Fund has visited the country twice over the last
twelve months. The rebounding effect of tourism should continue in 2023 and
may be accelerated by the return of Chinese tourists in the second quarter,
perhaps when the peak of recent Covid infections in China has passed.
Although domestic investors have been nursing their wounds, as mentioned
before, foreign investors have started returning to Vietnam's stock market,
attracted in part by historically low valuations with the overall market on a
Price to Earnings ratio of 10x. As a result, 2022 saw the first net foreign
inflows since 2019. Vietnam is still a frontier market, and 'emerging' status
is elusive for now. 2023 should see the implementation of a new stock exchange
infrastructure, but until foreign investors are convinced that there is a
level playing field in terms of market access, Vietnam will remain the most
developed of the Frontier Markets and the largest for some time to come.
Force for Good
At the 2021 United Nations Climate Change Conference in Glasgow (COP26)
Vietnam bravely set out its Net-Zero ambitions, ahead of many other countries.
Prime Minister Pham Minh Chinh pledged alongside more than 40 other countries
around the world to phase out coal and commit to achieving Net-Zero carbon
emissions by 2050. The Prime Minister called for fairness and justice in
dealing with global climate urgencies and discussed the Government's plans for
trying to align its policies both with international investors' corporate
governance expectations and Vietnamese citizens' own health and prosperity in
mind. At last year's COP27 in Egypt, Vietnam reaffirmed its commitment and the
Group of Seven ("G7") industrialised nations have offered USD 15bn in funding
to assist with the country's transition away from coal.
As detailed in last year's Annual Report, the Fund received two five stars in
the United Nations Principles for Responsible Investing ("UNPRI") transparency
report. The Fund has always believed its stewardship role as a responsible
investor is a very important one when it comes to environmental and social
matters in Vietnam, and as Investment Manager we have been enhancing our
active engagement with boards and senior management of our portfolio companies
regarding climate and other environmental, social and governance ("ESG")
risks. Over the last six months we have been pleased by the progress made at
some of our core holdings and have been able to provide some advice and
assistance to these companies in their own ESG journey. We intend to build on
this work in 2023 and are planning to sponsor and support one of the first ESG
conferences in the country scheduled for the end of May 2023.
Dynam Capital, Ltd
21 March 2023
Market Report
The following is an article written by Craig Martin, Chairman of Dynam
Capital, Ltd which was published in the UK in Investor Magazine on 6 February
2023.
A new frontier in Vietnam
Vietnam currently accounts for 30% of the MSCI Frontier Market Index, making
it the largest and most developed constituent of it, so when can we expect the
country to step up to the Emerging Market Index?
The rapid rise of the retail investor in Vietnam has transformed the country's
capital markets. Two and a half million new trading accounts were opened in
the past year alone, with the overall market value surpassing US$ 300 billion
since the stock market opened two decades ago. Daily liquidity now averages
close to US$1 billion, and more than 80% of this activity comes from domestic
investors, whose investment into the stock market replaced US $2 billion or so
of foreign capital that was pulled out of Vietnam during the pandemic years.
Yet despite greater local interest and this increasing size and liquidity of
the stock market, Vietnam is still classified as a 'Frontier' country by
leading global equity index providers. It is the largest and arguably most
developed constituent of the MSCI Frontier Markets Index (MSCI FM), with
Vietnamese companies accounting for 30% of the US$88 billion represented in
the index, but the curveball of a year that was 2022 has inevitably delayed
its inclusion in the much larger - US$6 Trillion - MSCI Emerging Market (MSCI
EM).
Indices, such as the MSCI FM and the much larger MSCI EM, are widely used as a
benchmark for active and passive global institutional investors and fund
managers. The MSCI FM comprises 99 companies from 29 countries and six
Vietnamese listed companies are already in the top ten stocks. When a
country's stocks are included in the index, there is typically an increased
allocation from investors who use that benchmark.
The high stakes and potential growing aches
To be eligible for inclusion in the MSCI EM, a company must have a market
capitalisation of at least US$ 1 billion, as well as a minimum level of
trading activity and liquidity. The country must also have regulations in
place that allow foreign investors access to its stock market, along with a
sufficiently developed infrastructure for trading and settlement.
Interestingly, other Asian countries, including China, India, Indonesia,
Korea, Malaysia, Philippines, Thailand, and Taiwan already represent a third
of the 24 constituents of the MSCI EM.
It goes without saying that when and if Vietnam was to be included, the
country would attract significantly more foreign capital and potentially see a
re-rating in the valuation of several of the companies listed on its stock
markets. Some studies have also suggested that such an upgrade would also
reduce market risk, lower the cost of capital, and make the equity market more
suitable as a source of domestic financing.
Today Vietnam does not fully meet the 18 criteria for inclusion set by MSCI
and falls short on the key aspects of openness and equal treatment for foreign
investors. As MSCI's evaluation is based on feedback from institutional
investors, brokers, and custodians, there would need to be a visible and
demonstrable improvement in areas such as the amount of 'free float' available
to foreigners after taking into consideration foreign ownership restrictions.
Currently more than 10% of Vietnam's market is impacted by such ownership
restrictions, and more than 1% of the Vietnam Index suffers from lack of room
for investors as a result.
Although progress has been made, there are short-term and mid-term impediments
to improving the perception in investors' minds. Exchange infrastructure needs
to be enhanced with a facilitating central counterparty clearing system that
reduces trade settlement periods and removes the current requirement to
'pre-fund' investor accounts. Theoretically, much of this can be addressed
when the stock market system is upgraded. The good news is that the Vietnam
Securities Depository and Clearing Corporation (VSDC) was established in
December 2022, and this should allow the new 'KRX' trading platform to go live
midway this year. However, we still have mid-term issues, which are primarily
about easing capital flows and opening more of the addressable market to
foreign investors.MSCI conducts its reviews of countries annually and usually
announces its findings every June. The review process for Vietnam as with all
countries would be done in stages, not overnight. First, if enough progress is
identified, Vietnam would be added to the watchlist 'for potential upgrade'.
One year later, if all went to plan, there would be an announcement made
stating that the country would be included. Then, assuming all is well another
year on, it would receive actual inclusion. It had been hoped that the first
phase could be completed by June 2023, leading to inclusion by June 2025, but
given the roller-coaster ride of 2022, this timeframe has probably slipped by
at least one year.
Moving forward
The most important point is that these incremental steps needed for eventual
inclusion would benefit everyone investing in Vietnam in the long-term.
Although the actual amount of inflow to the market might be modest, maybe US$5
to US $10 billion initially, the prestige would also be welcomed by the
government. Indeed, over the last twelve months or so, the focus of the
general secretary of the Communist Party, Nguyen Phu Trong, has been on
cleaning up misconduct in the system by pursuing private and public corruption
and refining some of the rules related to bond issuance. Last year, the heads
of the stock market and the regulator were removed, and there have been some
short-term delays in implementing upgraded market infrastructure. A new
chairwoman has been appointed to the State Securities Commission and she has
just reaffirmed the launch of the new exchange trading platform and additional
capital market developments.
Sadly, as we saw, sentiment among the six million or so domestic investors
weakened for much of 2022 as global markets declined and local anti-corruption
cases rattled local real estate stocks. Vietnam's market fell by more than 35%
and became one of the world's laggards despite it being its champion only one
year before. Thus, the market certainly could do with some positive news, as
the eyes of investors likely stay on global events, such as the war and fear
of recession and trajectory of US interest rates and inflation. Closer to
home, investors will be watching signs of greater stability in the bond and
real-estate markets.
Nevertheless, there is no urgency for Emerging Market inclusion amongst
domestic investors and for foreign investors who wish to invest in Vietnam
they can already do so through specialised funds, such as Vietnam Holding.
Eventual inclusion would be a significant step for Vietnam, putting it more
firmly on investors' radars, but looking down the road there will be many
opportunities to reap even before that happens.
Interim Report of the Directors
The Board of Directors (the "Directors") submits its report together with the
Condensed Interim Unaudited Financial Statements of VietNam Holding Limited
(the "Company") for the six-month period from 1 July 2022 to 31 December 2022
(the "six-month period").
The Company is registered in Guernsey as a non-cellular company with limited
liability. The registered office of the Company is 1 Royal Plaza, Royal
Avenue, St Peter Port, Guernsey, GY1 2HL.
Investment Objective
The Company's investment objective is to achieve long-term capital
appreciation by investing in a diversified portfolio of companies that have
high growth potential at an attractive valuation.
Investment Policy
The Company attempts to achieve its investment objective by investing in the
securities of publicly traded companies in Vietnam, and in the securities of
foreign companies if a majority of their assets and/or operations are based in
Vietnam. The Company may invest in equity securities or securities that have
equity features, such as bonds that are convertible into equity.
The Company may invest in listed or unlisted securities, either on the
Vietnamese stock exchanges, through purchases on the OTC Market, or through
privately negotiated deals.
The Company may invest its available cash in the Vietnamese domestic bond
market as well as in international bonds issued by Vietnamese entities.
The Company may utilise derivatives contracts for hedging purposes and for
efficient portfolio management but will not utilise derivatives for investment
purposes.
The Company does not intend to take control of any company or entity in which
it has directly or indirectly invested (the "Investee Company") or to take an
active management role in any such company. However, Dynam Capital, Ltd.
("Dynam Capital"), (the "Investment Manager") may appoint one of its
directors, employees or other appointees to join the board of an Investee
Company and/or may provide certain forms of assistance to such company,
subject to prior approval by the Company's Board.
The Company integrates environmental, social and corporate governance ("ESG")
factors into its investment analysis and decision-making process. Through its
Investment Manager, the Company actively incorporates ESG considerations into
its ownership policies and practices and engages Investee Companies in pursuit
of appropriate disclosure and the improvement of material issues.
The Company may invest:
● up to 25% of its Net Asset Value ("NAV") (at the time of
investment) in companies with shares traded outside of Vietnam if a majority
of their assets and/or operations are based in Vietnam;
● up to 20% of its NAV (at the time of investment) in direct
private equity investments; and
● up to 20% of its NAV (at the time of investment) in other listed
investment funds and holding companies which have the majority of their assets
in Vietnam.
Borrowing Policy
The Company is permitted to borrow money and to grant security over its assets
provided that such borrowings do not exceed 25% of the latest available NAV of
the Company at the time of the borrowing unless the Shareholders in general
meeting otherwise determine by ordinary resolution.
Investment Restrictions and Diversification
The Company will adhere to the general principle of risk diversification in
respect of its investments and will observe the following investment
restrictions:
● the Company will not invest more than 10% of its NAV (at the
time of investment) in the shares of a single investee company;
● the Company will not invest more than 30% of its NAV (at the
time of investment) in any one sector;
● the Company will not invest directly in real estate or real
estate development projects, but may invest in companies which have a large
real estate component, if their shares are listed or are traded on the OTC
Market; and
● the Company will not invest in any closed-ended investment fund
unless the price of such investment fund is at a discount of at least 10% to
such investment fund's NAV (at the time of investment).
Furthermore, based on the guidelines established by the United Nations
Principles for Responsible Investment, of which the Company is a signatory:
● the Company will not invest in companies known to be significantly
involved in the manufacturing or trading of distilled alcoholic beverages,
tobacco, armaments or in casino operations or other gambling businesses;
● the Company will not invest in companies known to be subject to
material violations of Vietnamese laws on labour and employment, including
child labour regulations or racial or gender discriminations; and
● the Company will not invest in companies that do not commit to
reducing in a measurable way pollution and environmental problems caused by
their business activities.
Principal Risks
Market Risk
Vietnam is an increasingly open trading nation, and the changes in terms of
international trade, disruption to supply chains and impositions of tariffs
could impact directly and indirectly the Vietnamese Economy and the companies
in which the Company is invested. The Vietnamese economy can also be impacted
by the global-macro economic conditions, and also geopolitical tensions such
as the conflict between Russia and Ukraine. The Vietnamese capital markets are
relatively young, and liquidity levels can change abruptly responding to
changes in behaviour of domestic and international investors.
Parts of the portfolio may be prone to enhanced liquidity and price risk.
Investor Sentiment
Vietnam is currently classified as a Frontier Market by MSCI, and the
timetable for any inclusion as an Emerging Market is unsure. Investor
attitudes to Frontier and Emerging Markets can change, leading to reduced
demand for the Company's shares, and an increase in the discount to NAV per
share.
Investment Performance
The performance of the Company's investment portfolio could be poor, either
absolutely or in relation to the Company's peers, or to the market as a whole.
Fair Valuation
The risks associated with the fair valuation of the portfolio could result in
the NAV of the Company being misstated. The quoted companies in the portfolio
are valued at market price, but it may be difficult to liquidate, where large
positions are held, at these prices in an orderly fashion in the ordinary
course of market activity. The values of the Company's underlying investments
are denominated in Vietnamese Dong, whereas the Company's accounts are
prepared in US Dollars. The Company does not hedge its Vietnamese Dong
exposures so exchange rate fluctuations could have a material effect on the
NAV.
Investment Management Agreement
The fund management activities are outsourced to the Investment Manager. If
the Investment Manager became unable to carry out these activities or if the
Investment Management Agreement was terminated, there could be disruptions to
the management of the portfolio until a suitable replacement is found.
Principal Risks (continued)
Operational
The Company has no employees and is dependent on a number of third parties for
the provision of services (including Investment Management, Fund
Administration and Custody). Any control failures or gaps in the services
provided could result in damage or loss to the Company.
Legal and Regulatory
Failure to comply with relevant regulation and legislation in relevant
jurisdictions may have an impact on the Company. Although there are compliance
policies (including anti-bribery policies) in place at the Company, the
Investment Manager and all service providers, the Company could be damaged or
suffer losses if any of these policies were breached.
Covid-19
Further widespread outbreaks of contagious diseases, such as novel coronavirus
(Covid-19) could pose a health concern through fast person-to-person spread,
resulting in an illness that can lead to death. Lockdowns, quarantine measures
and restrictions on travel can cause sustained economic disruption and
slowdown in growth and can cause some industries and companies to face severe
financial pressures that can lead to job losses and in extreme cases
bankruptcies, impacting the value of the investments held by the Company, and
weakening investor confidence. Key service providers to the Company could face
loss of personnel, diminution in service capability and could impact the
ongoing operations of the Company.
Climate Risk
Climate change is happening faster than models earlier predicted, threatening
the safety of billions of people on the planet. Vietnam is one of the five
countries most vulnerable to climate change. The country's diverse geography
means it is hit by sea level rise, typhoons, landslides, flooding and
droughts, and weather events are expected to worsen in coming years. Two types
of climate-related risks have been identified.
(1) Physical risks: sea level rise, floods and typhoons that put
infrastructure or real estate companies with projects in coastal areas or
low-lying levels at higher risk from physical impacts of climate change.
(2) Transition risks: climate policy and rising carbon prices may cause higher
prices and impact the viability of companies that rely on fossil fuels or
those in high carbon intensity activities and may necessitate a significant,
and costly, technology shift.
Emerging Risks
New risks beyond those identified as Principal Risks can develop. These
Emerging Risks may have a detrimental or existential impact on the Company.
Life of the Company
The Company does not have a fixed life, but the Directors consider it
desirable that shareholders should have the opportunity to review the future
of the Company at appropriate intervals. Accordingly, the Directors intend
that every fifth year a special resolution will be proposed that the Company
shall continue in existence. If the resolution is not passed the Directors
will be required to formulate proposals to be put to shareholders to either
wind up the Company or implement a reconstruction, amalgamation or other
material alteration to the Company or its activities. The Directors last
tabled such a resolution at the Extraordinary General Meeting of the Company
on 31 October 2018 and it was passed, allowing the Company to continue as
currently constituted. The Fund has a formal continuation vote in 2023 and it
is the current intention of the Board to table a continuation resolution at
the 2023 Annual General meeting.
Results
The results of the Company for the six-month period and the state of its
financial affairs as at the reporting date are set out in the Condensed
Interim Unaudited Financial Statements on pages 13 to 21.
Performance
To ensure the Company meets its objectives the Directors evaluate the
performance of the Investment Manager at least at each quarterly Board meeting
and take into account the following performance indicators:
· NAV - reviews the performance of the portfolio
· Discount to NAV - and reviews the average discount for the
Company's shares against its peer group.
Related Parties
Details of related party transactions that have taken place during the period
and any material changes, if any, are set out in note 6 of the Condensed
Interim Unaudited Financial Statements.
Share Repurchase Programme
Details of the Company's share repurchase programme are set out in note 4 of
the Condensed Interim Unaudited Financial Statements.
Board of Directors
The members of the Board during the six-month period and up to the date of
this report were:
Name Position
Hiroshi Funaki Non-executive Chairman
Sean Hurst Senior Independent Director; Environmental, Social and Governance Committee
Chairman
Philip Scales Non-Executive Director; Audit and Risk Committee Chairman
Damien Pierron Non-Executive Director; Management Engagement Committee Chairman
Saiko Tajima Non-Executive Director; Remuneration and Nomination Committee Chairman
Directors' Interest in the Company
As at 31 December 2022 and 30 June 2022, the interests of the Directors in
shares of the Company were as follows:
Shares held Shares held
as at 31 December 2022 as at 30 June 2022
Hiroshi Funaki 19,887 19,887
Sean Hurst 5,312 5,312
Philip Scales 10,077 10,077
Damien Pierron 4,644 4,644
Saiko Tajima 5,000 5,000
Going Concern
The Board considered it appropriate to prepare the Condensed Interim Unaudited
Financial Statements on the going concern basis, as explained in the basis of
preparation paragraph in note 2 to the Condensed Interim Unaudited Financial
Statements. In making this statement, the Board has made enquiries of the
Investment Manager and reviewed the principal risks. The Board also considered
the levels of working capital available to the Company, the closed-ended
nature of the Company, the liquidity of the investment portfolio, forecasts of
future cash flows, the impact of the Covid-19 pandemic and other geopolitical
factors such as the conflict between Russia and Ukraine. There were no
identified material uncertainties to the Company's ability to continue.
On behalf of the Board:
Hiroshi Funaki
Philip Scales
Chairman
Director
VietNam Holding Limited
VietNam Holding Limited
21 March 2023
21 March 2023
Statement of Directors' Responsibilities
The Directors are responsible for preparing this interim financial report in
accordance with applicable law and regulations. The Directors confirm that to
the best of their knowledge:
n the Condensed Interim Unaudited Financial Statements have been prepared in
accordance with IAS 34 Interim Financial Reporting; and
n the Chairman's Statement, the Investment Manager's Report and the Interim
Report of the Directors include a fair review of information required by:
(i) DTR 4.2.7R of the UK Disclosure and Transparency Rules, being an
indication of important events, which have occurred during the first six
months and their impact on the Condensed Unaudited Interim Financial
Statements, and a description of the principal risks and uncertainties for the
remaining six months of the year; and
(ii) DTR 4.2.8R of the UK Disclosure and Transparency Rules, being related
party transactions, which have taken place in the first six months, and which
have materially affected the financial position or performance of the Company
during that period, and any material changes in the related party transactions
disclosed in the last Annual Report.
On behalf of the Board
Hiroshi Funaki
Philip Scales
Chairman
Director
21 March 2023
21 March 2023
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website, and for
the preparation and dissemination of financial statements. Legislation in
Guernsey governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Condensed Interim Unaudited Statement of Financial Position as at 31 December
2022
Unaudited Audited
As at 31.12.22 As at 30.06.22
Notes USD USD
Assets
Non-current assets
Investments at fair value through profit or loss 7 99,515,762 120,957,996
Total non-current assets 99,515,762 120,957,996
Current assets
Cash and cash equivalents 6,467,381 8,160,681
Accrued dividends - 58,772
Total current assets 6,467,381 8,219,453
Total assets 105,983,143 129,177,449
Equity
Share capital 4 166,645,041 166,645,041
Reserve for own shares (167,337,268) (165,709,783)
Retained earnings 106,055,571 127,886,909
Total equity 105,363,344 128,822,167
Liabilities
Payables on purchase of investments 253,699 -
Accrued expenses 285,122 355,282
Payables on repurchase of shares 80,978 -
Total liabilities 619,799 355,282
Total equity and liabilities 105,983,143 129,177,449
The Condensed Interim Unaudited Financial Statements on pages 13 to 21 were
approved by the Board of Directors on 21 March 2023 and were signed on its
behalf by
Hiroshi Funaki
Philip Scales
Chairman of the Board of Directors
Chairman of the Audit and Risk Committee
The accompanying notes on pages 17 to 21 form an integral part of these
financial statements.
Note Unaudited Unaudited
01.07.22- 01.07.21-
31.12.22 31.12.21
USD USD
Dividend income from investments at fair value through profit or loss 809,155 1,055,492
Net (loss)/gain from investments at fair value through profit or loss 5 (20,501,018) 18,357,368
Net foreign exchange (loss)/gain (408,115) 89,163
Net investment (loss)/income (20,099,978) 19,502,023
Investment management fees 6 965,443 1,447,677
Directors' fees and expenses 6 190,646 191,688
Administrative and accounting fees 99,863 114,965
Custodian fees 79,417 84,690
Audit fees 37,762 37,006
Other expenses 358,229 390,284
Total operating expenses 1,731,360 2,266,310
Other comprehensive income - -
Total comprehensive (loss)/income for the period (21,831,338) 17,235,713
Basic and diluted (loss)/earnings per share (USD 0.75) USD 0.50
Condensed Interim Unaudited Statement of Comprehensive Income
The accompanying notes on pages 17 to 21 form an integral part of these financial statements.
Share Reserve for Retained
capital own shares earnings Total
USD USD USD USD
Balance at 1 July 2021 166,645,041 (106,170,790) 135,606,219 196,080,470
Total comprehensive income for the period
Change in net assets attributable to shareholders - - 17,235,713 17,235,713
166,645,041 (106,170,790) 152,841,932 213,316,183
Contributions and distributions
Repurchase of own shares (note 4) - (58,121,370) - (58,121,370)
- (58,121,370) - (58,121,370)
Balance at 31 December 2021 166,645,041 (164,292,160) 152,841,932 155,194,813
Balance at 1 July 2022 166,645,041 (165,709,783) 127,886,909 128,822,167
Total comprehensive loss for the period
Change in net assets attributable to shareholders - - (21,831,338) (21,831,338)
166,645,041 (165,709,783) 106,055,571 106,990,829
Contributions and distributions
Repurchase of own shares (note 4) - (1,627,485) - (1,627,485)
- (1,627,485) - (1,627,485)
Balance at 31 December 2022 166,645,041 (167,337,268) 106,055,571 105,363,344
Condensed Interim Unaudited Statement of Changes in
Equity
The accompanying notes on pages 17 to 21 form an
integral part of these financial statements.
Condensed Interim Unaudited Statement of Cash Flows
Unaudited Unaudited
01.07.22 - 01.07.21 -
31.12.22 31.12.21
USD USD
Cash flows from operating activities
Total comprehensive (loss)/income for the period (21,831,338) 17,235,713
Adjustments to reconcile total comprehensive (loss)/income to net cash from
operating activities:
Dividend income (809,155) (1,055,492)
Net loss/(gain) from investments at fair value through profit or loss 20,501,018 (18,357,368)
Purchase of investments (25,555,631) (50,275,477)
Proceeds from sale of investments 26,750,546 107,717,621
Net foreign exchange loss/(gain) 408,115 (89,163)
Decrease in receivables on sale of investments - 1,239,041
Decrease in other receivables - 9,290
Decrease in accrued expenses (70,160) (47,489)
Increase in repurchases of shares payable 80,978 470,149
Dividends received 867,927 828,704
Net cash from operating activities 342,300 57,675,529
Cash flows used in financing activities
Repurchase of own shares (1,627,485) (58,121,370)
Net cash used in financing activities (1,627,485) (58,121,370)
Net decrease in cash and cash equivalents (1,285,185) (445,841)
Cash and cash equivalents at beginning of the period 8,160,681 6,031,337
Effect of exchange rate fluctuations on cash held (408,115) 89,163
Cash and cash equivalents at end of the period 6,467,381 5,674,659
The accompanying notes on pages 17 to 21 form an integral part of these
financial statements.
Notes to the Condensed Interim Unaudited Financial Statements
For the six-month period from 1 July 2022 to 31 December 2022
1 The Company
VietNam Holding Limited (the "Company") is a closed-end investment company
that was incorporated in the Cayman Islands on 20 April 2006 as an exempted
company with limited liability under registration number 166182. On 25
February 2019, the Company, via a process of cross-border continuance,
transferred its legal domicile from the Cayman Island to Guernsey and was
registered as a closed-ended company limited by shares incorporated in
Guernsey with registered number 66090.
On 8 March 2019, the Company's ordinary shares were cancelled from trading on
AIM and admitted to the Premium segment of the official list of the UK Listing
Authority ("Official List") and trading on the main market of the London Stock
Exchange ("Main Market"). On the same date the Company's shares were admitted
to listing and trading on the Official List of The International Stock
Exchange ("TISE").
The investment objective of the Company is to achieve long-term capital
appreciation by investing in a diversified portfolio of companies that have
high growth potential at an attractive valuation.
At the Extraordinary General Meeting held on 31 October 2018 the Shareholders
voted in favour of the continuance resolution, authorising the Company to
operate in its current form through to the 2023 Annual General Meeting when a
similar resolution will be put forward for Shareholders' approval.
Dynam Capital, Ltd has been appointed as the Company's Investment Manager and
is responsible for the day-to-day management of the Company's investment
portfolio in accordance with the Company's investment policies, objectives and
restrictions.
Sanne Group (Guernsey) Limited is the Company's administrator.
Standard Chartered Bank (Singapore) Limited and Standard Chartered Bank
(Vietnam) Limited are the custodian and the sub-custodian respectively.
Standard Chartered Bank (Singapore) Limited is also the sub-administrator.
The registered office of the Company is 1 Royal Plaza, Royal Avenue, St Peter
Port, Guernsey, GY1 2HL.
2 Principal Accounting Policies
(a) Statement of compliance
The Condensed Interim Unaudited Financial Statements (the "financial
statements") have been prepared in accordance with IAS 34 Interim Financial
Reporting, the Disclosure Guidance Transparency Rules of the UK's Financial
Conduct Authority and the Listing Rules.
The financial statements do not include all of the information required for
full financial statements and should be read in conjunction with the Company's
audited financial statements for the year ended 30 June 2022, which were
prepared in accordance with International Financial Reporting Standards as
adopted by the EU ("IFRS"). The accounting policies used by the Company are
the same as those applied by the Company in its annual financial statements as
at and for the year ended 30 June 2022.
The Directors have assessed the impact, or potential impact, of all New
Accounting Requirements. In the opinion of the Directors, there are no
mandatory New Accounting Requirements applicable in the current period that
had any material effect on the reported performance, financial position, or
disclosures of the Company. Consequently, no mandatory New Accounting
Requirements are listed. The Company has not early adopted any New Accounting
Requirements that are not mandatory.
All non-mandatory New Accounting Requirements in issue are either not yet
permitted to be adopted or, in the Directors' opinion, would have no material
effect on the reported performance, financial position, or disclosures of the
Company and consequently have neither been adopted, nor listed.
(b) Basis of preparation
The financial statements are presented in United States Dollars ("USD"), which
is the Company's functional currency. The financial statements have been
prepared on a going concern basis, applying the historical cost convention,
except for the measurement of investments at fair value through profit or
loss.
2 Principal Accounting Policies (continued)
Going concern
The Directors have reasonable expectations and are satisfied that the Company
has adequate resources to continue its operations and meet its commitments for
the foreseeable future and they continue to adopt the going concern basis for
the preparation of the financial statements. In making this statement, the
Directors confirm the Company's forecasts and projections have been stress
tested taking into account the potential for (i) asset value declines and (ii)
declines in cash dividends from equities held in the portfolio and (iii) share
buybacks and tender offers. The Directors note that the underlying liquidity
of the Vietnamese stocks has increased significantly over the last twelve
months with average daily traded volumes increasing by as much as five times
the level of the prior period. The Company's liquidity position, taking into
account cash held and with the ability to sell underlying assets to meet share
buybacks, tender offers and to meet the operating costs of the Company, shows
that the Company is able to operate with appropriate liquidity and be able to
meet its liabilities as they fall due. The Directors therefore have a
reasonable expectation that the Company will have adequate resources to
continue its operations for the foreseeable future and continue to adopt the
going concern basis of accounting in preparing the financial statements.
Improved liquidity in the market and the portfolio was in evidence in August
2021 when the Investment Manager was able to generate close to 30% cash in the
portfolio to fund the recent tender offer.
Critical accounting estimates and judgements
The preparation of financial statements in accordance with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and the reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.
The estimated and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised if the revision affects only that period or in the
period of the revision and future periods if the revision affects both current
and future periods.
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.
Functional currency
The Company's shares were issued in USD and the listing of the shares on the
Main Market and TISE is in USD. The performance of the Company is measured and
reported to the investors in USD, although the primary activity of the Company
is to invest in the Vietnamese market. The Directors consider the USD as the
currency that most faithfully represents the economic effects of the
underlying transactions, events and conditions.
Fair value of financial instruments
The fair value of financial instruments that are not traded in an active
market is determined by using valuation techniques. The Company uses its
judgement to select a variety of methods and make assumptions that are mainly
based on market conditions existing at each reporting date.
3 Operating Segments
An operating segment is a component of the Company that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Company's
other components. The Company is engaged in a single segment of business,
being investment in Vietnam. The Board, as a whole, has been determined as
constituting the chief operating decision maker of the Company. The key
measure of performance used by the Directors to assess the Company's
performance and to allocate resources is the total return on the Company's NAV
calculated as per the prospectus.
Information on gains and losses derived from investments are disclosed in the
statement of comprehensive income.
The Company is domiciled in Guernsey, Channel Islands. Entity wide disclosures
are provided as the Company is engaged in a single segment of business,
investing in Vietnam. In presenting information on the basis of geographical
segments, segment investments and the corresponding segment net investment
income arising thereon are determined based on the country of domicile of the
respective investment entities.
All of the Company's investments in securities at fair value are in Vietnam as
at 31 December 2022 and 30 June 2022. All of the Company's investment income
can be attributed to Vietnam for the periods ended 31 December 2022 and 31
December 2021.
4 Share Capital
Ordinary shares of USD 1.00 each
Pursuant to its redomiciliation to Guernsey, the Company re-registered with an
authorised share capital of USD 200,000,000 divided into 200,000,000 shares of
a nominal or par value of USD 1.00 each. In line with the Company's new
Articles of Incorporation, the Company may from time to time redeem all or any
portion of the shares held by the Shareholders upon giving notice of not less
than 30 calendar days.
On 8 March 2019 the Company's ordinary shares were cancelled from trading on
AIM and admitted to the Premium segment of the Official List and trading on
the Main Market. On the same date the Company's shares were admitted to
listing and trading on the TISE.
31.12.22 30.06.22
No. of shares No. of shares
Total shares issued and fully paid (after repurchases and cancellations) at 29,225,667 42,623,935
beginning of the period/year
Shares cancellation (505,037) (13,398,268)
28,720,630 29,225,667
Repurchased and reserved for own shares
At beginning of the period/year - -
During the period/year (505,037) (13,398,268)
Shares cancellation 505,037 13,398,268
- -
Total outstanding ordinary shares with voting rights 28,720,630 29,225,667
As a result, as at 31 December 2022 the Company has 28,720,630 (30 June 2022:
29,225,667) ordinary shares with voting rights in issue (excluding the reserve
for own shares), and nil (30 June 2022: nil) are held as reserve for own
shares.
The Company does not have any externally imposed capital requirements.
The Company's general intention is to reinvest the capital received on the
sale of investments. However, the Directors may from time to time and at their
discretion, either use the proceeds of sales of investments to meet the
Company's expenses or distribute them to shareholders. Alternatively, the
Company may repurchase its own ordinary shares with such proceeds from
shareholders pro rata to their shareholding upon giving notice of not less
than 30 calendar days to shareholders (subject always to applicable law) or
repurchase ordinary shares at a price not exceeding the last published net
asset value per share.
5 Net (Loss)/Gain from Investments at Fair Value through Profit or Loss
6 months to 6 months to
31.12.22 31.12.21
USD USD
Realised (loss)/gain on disposal of investments at fair value through profit (3,268,922) 46,797,281
or loss
Unrealised loss on investments at fair value through profit or loss (17,232,096) (28,439,913)
(20,501,018) 18,357,368
6 Related Party Transactions
Investment management fees
The Company entered into a new investment management agreement with Dynam
Capital, Ltd on 26 June 2018. The agreement was amended and restated on 8
October 2018 and further amended and restated on 1 October 2020. The Board and
the Investment Manager agreed to modify the management fee (previously on a
sliding scale of 1.5% per annum on NAV below USD 300 million, 1.25% per annum
on NAV between USD 300 - USD 600 million, and 1.0% per annum on NAV above USD
600 million) effectively from 1 November 2020.
Pursuant to the agreement the Investment Manager is entitled to receive a
monthly management fee, paid in the manner set out as below:
● On the amount of the Net Asset Value of the Company up to
but excluding USD 300 million, one-twelfth of 1.75%;
● On the amount of the Net Asset Value of the Company
between and including USD 300 million up to and including USD 600 million,
one-twelfth of 1.5%; and
● On the amount of the Net Asset Value of the Company that
exceeds USD 600 million, one-twelfth of 1%.
The management fee accruing to the Investment Manager for six-month period to
31 December 2022 was USD 965,443 (period ended 31 December 2021: USD
1,447,677). An amount of USD 147,141 (30 June 2022: USD 200,421) was
outstanding as at 31 December 2022.
Directors' fees and expenses
The Board of Directors determines the fees payable to each Director, subject
to a maximum aggregate amount of USD 350,000 (2021: USD 350,000) per annum
being paid to the Board of Directors as a whole. The Company also pays
reasonable expenses incurred by the Directors in the conduct of the Company's
business including travel and other expenses. The Company pays for directors
and officers liability insurance coverage. The charges for the six-month
period to 31 December 2022 for the Directors fees were USD 160,564 (period
ended 31 December 2021: USD 161,442) and expenses were USD 30,082 (2021: USD
30,246).
As at 31 December 2022, USD 7,012 (30 June 2022: USD 9,012) of Directors' fees
were outstanding.
Directors' ownership of shares
As at 31 December 2022, Directors held 44,920 ordinary shares in the Company
(30 June 2022: 44,920) as listed below.
Hiroshi Funaki
19,887 Shares
Sean
Hurst
5,312 Shares
Philip
Scales
10,077 Shares
Damien Pierron 4,644
Shares
Saiko Tajima
5,000 Shares
7 Fair Value Information
For certain of the Company's financial instruments not carried at fair value,
such as cash and cash equivalents, accrued dividends, other receivables,
receivables/payable upon sales/purchase of investments and accrued expenses,
the amounts approximate to fair value due to the immediate or short-term
nature of these financial instruments.
Other financial instruments are measured at fair value through profit or loss.
Fair value estimates are made at a specific point in time, based on market
conditions and information about the financial instrument. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgement and therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
· Level 1: Inputs that are quoted market prices (unadjusted) in
active markets for identical instruments. This level includes listed equity
securities on exchanges (for example, Ho Chi Minh Stock Exchange).
· Level 2: Inputs other than quoted prices included within Level 1
that are observable either directly (i.e., as prices) or indirectly (i.e.,
derived from prices). This level includes instruments valued using: quoted
prices for identical or similar instruments in markets that are considered
less than active; quoted market prices in active markets for similar
instruments; or other valuation techniques in which all significant inputs are
directly or indirectly observable from market data.
· Level 3: Inputs that are not based on observable market data
(i.e., unobservable inputs). This level includes all instruments for which the
valuation technique includes inputs not based on observable data and the
unobservable inputs have a significant effect on the instrument's valuation.
The table below analyses financial instruments measured at fair value at the
reporting date by the level in the fair value hierarchy into which the fair
value measurement is categorised. The amounts are based on the values
recognised in the statement of financial position. All fair value measurements
below are recurring.
Level 1 Level 2 Level 3 Total
USD USD USD USD
As at 31.12.22
Financial assets classified at fair value upon initial recognition
Investments in securities 99,515,762 - 99,515,762
As at 30.06.22
Financial assets classified at fair value upon initial recognition
Investments in securities 120,957,996 - - 120,957,966
There were no transfers between levels during the period.
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined based on the lowest level input
that is significant to the fair value measurement in its entirety. Assessing
whether an input is significant requires judgement including consideration of
factors specific to the asset or liability. Moreover, if a fair value
measurement uses observable inputs that require significant adjustment based
on unobservable inputs, that fair value measurement is a Level 3 measurement.
8 Basic and Diluted Earnings per Share
The calculation of basic and diluted earnings per share at 31 December 2022
was based on the change in net assets attributable to ordinary shareholders of
USD (21,831,338) (period ended 31 December 2021: USD 17,235,713) and the
weighted average number of shares outstanding of 28,991,146 (period ended 31
December 2021: 34,563,847).
9 Subsequent Events
There were no other material events that require disclosure and/or adjustments
in these financial statements.
Director Profiles
Hiroshi Funaki (Chairman)
Mr Funaki has been actively involved in raising, researching and trading
Vietnam funds since 1995. He worked at Edmond de Rothschild Securities from
2000 to 2015 where he led the Investment Companies team, focusing on Emerging
Markets and Alternative Assets. Prior to that he was Head of Research at
Robert Fleming Securities, also specialising in closed-end funds. He currently
acts as an investment adviser to a Family Office. He has a MA in Mathematics
and Philosophy from Oxford University and is a UK resident.
Sean Hurst (Senior Independent Director and Environmental, Social and
Governance Committee Chairman)
Mr Hurst was co-founder, director and chief investment officer of Albion Asset
Management, a French regulated asset management company, from 2005 to 2009. He
is an experienced multi-jurisdictional director including roles at Main Market
and AIM traded funds and numerous offshore and UCITS funds. He is currently
non-executive Chairman of both JPEL Private Equity Ltd and Dolphin Capital
Investors Ltd and non-executive director at CIAM Opportunities Fund. Mr Hurst
was formerly a non-executive director of AIM listed ARC Capital Holdings Ltd.
He holds an MBA in Finance from CASS Business School in London and is a
resident of France.
Philip Scales (Audit and Risk Committee Chairman)
Mr Scales has over 40 years' experience working in offshore corporate, trust,
and third-party fund administration. For 18 years, he was managing director of
Barings Isle of Man (subsequently to become Northern Trust) where he
specialised in establishing offshore fund structures, mainly in the
closed-ended arena (both listed and unlisted entities). Mr Scales subsequently
co-founded FIM Capital Limited where he is Deputy Chairman. He is a Fellow of
the Institute of Chartered Secretaries and Administrators and holds a number
of directorships of listed companies and collective investment schemes. He is
an Isle of Man resident.
Damien Pierron (Management Engagement Committee Chairman)
Mr Pierron is currently Managing Partner at Ankaa Ventures, a Venture Capital
firm active in Seed stage in Europe. In his last position, he was a managing
director in Societe Generale. Mr Pierron has 20 years' experience in M&A
and Private equity gained at, among others, Lafarge Holcim, OC&C Strategy
Consultants, Natixis and Societe Generale. He is a CFA charterholder and
holds an Engineering Degree in Mathematics, Physics and Economy from Ecole
Polytechnique in Paris and a Master's Degree in Quantitative Innovation from
Ecole Nationale Superieure des Mines de Paris. He is a Dubai resident.
Saiko Tajima (Remuneration and Nomination Committee Chairman)
Ms Tajima has over 20 years' experience in finance, of which 8 years have been
spent in Asian real estate asset management and structured finance. Working
for Aozora Bank and group companies of Lehman Brothers and Capmark, she
focused on financial analysis, monitoring and reporting to lenders, borrowers,
auditors, regulators and rating agencies. Over the last 8 years, she has
invested in and helped develop tech start-ups in Tokyo, Seoul and Sydney. She
is a Certified Public Accountant in the US and is a UK resident.
Key Parties
Directors
Hiroshi Funaki
Sean Hurst
Philip Scales
Damien Pierron
Saiko Tajima
Investment Manager
Dynam Capital, Ltd
1 Royal Plaza
Royal Avenue
Guernsey
GY1 2HL
Registered Office, Company Secretary and Administrator
Sanne Group (Guernsey) Limited
1 Royal Plaza
Royal Avenue
Guernsey
GY1 2HL
Sub-Administrator, Custodian and Principal Bankers
Standard Chartered Bank (Singapore) Limited
7 Changi Business Park Crescent
Level 3, Securities Services
Singapore 486028
UK Legal Adviser
Stephenson Harwood LLP
1 Finsbury Circus
London
EC2M 7SH
Guernsey Legal Adviser
Carey Olsen (Guernsey) LLP
Carey House
Les Banques
Guernsey
GY1 4BZ
Auditor
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
Guernsey
GY1 1WR
Market Researcher
Dynam Consultancy and Services
Company Limited
Floor 12, Deutsches Haus,
33 Le Duan,
Ben Nghe Ward, District 1
Ho Chi Minh City, Vietnam
Corporate Broker and Financial Adviser
finnCap Ltd.
One Bartholomew Close
London
EC1A 7BL
(Nominated Adviser (AIM) until transference to LSE Main Market)
Registrar
Computershare Investor Services (Guernsey) Limited
1st Floor, Tudor House
Le Bordage
St Peter Port
GY1 1DB
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