REG - VinaCapital Vietnam - Annual Financial Report
24/10/2023 07:00
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RNS Number : 0271R VinaCapital Vietnam Opportunity Fd. 24 October 2023
VINACAPITAL VIETNAM OPPORTUNITY FUND LIMITED
(a non-cellular company incorporated in the Bailiwick of Guernsey under The
Companies (Guernsey) Law, 2008, on 22 March 2016 with registered number
61765.)
VinaCapital Vietnam Opportunity Fund Limited ("VOF" or the "Company") is
pleased to announce its audited results for the year ended 30 June 2023.
More information on the Company is available at: https://vinacapital.com/investment-solutions/offshore-funds/vof/overview/
(https://vinacapital.com/investment-solutions/offshore-funds/vof/overview/)
The information contained within the announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
("MAR"). Upon the publication of this announcement via Regulatory Information
Service ("RIS"), this inside information is now considered to be in the public
domain.
Annual Report and Financial Statements for the year ended 30 June 2023
COMPANY STRUCTURE AND LIFE
The Company is a Guernsey domiciled closed-ended investment company. The
Company is classified as a registered closed-ended Collective Investment
Scheme under the Protection of Investors (Bailiwick of Guernsey) Law, 2020 and
is subject to the Companies (Guernsey) Law, 2008, as amended (the "Guernsey
Law"). Prior to March 2016 the Company was a limited liability company
incorporated in the Cayman Islands.
The Company is quoted on the Main Market of the LSE with a Premium Listing
(ticker: VOF).
The Company does not have a fixed life, but the Board considers it desirable
that shareholders should have the opportunity to review the future of the
Company every fifth year, by way of voting on a special resolution proposing
that the Company ceases to continue. The next such resolution will be put to
the Company's annual general meeting in December 2023. For further
information, please refer to the section headed "Life of the Company".
INVESTMENT POLICY
Investment Objective
The Company's objective is to achieve medium to long-term returns through
investment in assets either in Vietnam or in companies with a substantial
majority of their assets, operations, revenues or income in, or derived from,
Vietnam.
Investment Policy
All of the Company's investments will be in Vietnam or in companies with at
least 75% of their assets, operations, revenues or income in, or derived from,
Vietnam at the time of investment.
· No single investment may exceed 20% of the NAV of the Company at the time of
investment.
· The Company may from time to time invest in other funds focused on Vietnam.
This includes investments in other funds managed by VinaCapital Investment
Management Limited (the "Investment Manager" or "VinaCapital"). Any investment
or divestment of funds managed by the Investment Manager will be subject to
prior approval by the Board.
· The Company may from time to time make co-investments alongside other
investors in private equity, real estate or similar assets. This includes, but
is not restricted to, co-investments alongside other funds managed by the
Investment Manager.
· The Company will not invest in other listed closed-ended funds.
The Company may gear its assets through borrowings which may vary
substantially over time according to market conditions and any or all of the
assets of the Company may be pledged as security for such borrowings.
Borrowings will not exceed 10% of the Company's total assets at the time that
any debt is drawn down.
From time to time the Company may hold cash or low risk instruments such as
government bonds or cash funds denominated in either VND or USD, either in
Vietnam or outside Vietnam.
HISTORICAL FINANCIAL INFORMATION
Years ended 30 June 2019 2020 2021 2022 2023
Statement of Comprehensive Income (USD'000)
Total (loss)/income from ordinary activities^ (9,334) (35,204) 633,220 (100,831) 5,080
Total expenses from ordinary activities (18,763) (15,254) (92,436) (20,612) (20,099)
Operating (loss)/profit before income tax (28,097) (50,458) 540,784 (121,443) (15,019)
Income tax expense - - - - -
(Loss)/profit for the year (28,097) (50,458) 540,784 (121,443) (15,019)
(Loss)/profit attributable to ordinary equity holders (28,097) (50,458) 540,784 (121,443) (15,019)
Statement of Financial Position (USD'000)
Total assets^ 974,633 877,968 1,429,421 1,222,513 1,157,219
Total liabilities (19,384) (1,863) (69,648) (42,413) (33,352)
Net assets 955,249 876,105 1,359,773 1,180,100 1,123,867
2019 2020 2021 2022 2023
Share information
Basic (loss)/earnings per share (cents per share)^ (15) (28) 315 (73) (9)
Basic (loss)/earnings per share (pence per share)*^ (12) (22) 228 (60) (7)
Share price at 30 June (USD) 4.34 4.07 6.64 5.79 5.46
Share price at 30 June (GBP)* 3.41 3.29 4.82 4.76 4.29
Ordinary share capital (thousand shares) 184,809 176,128 168,418 163,480 160,048
Market capitalisation at 30 June (USD'000) 802,069 716,843 1,119,089 946,576 873,862
Market capitalisation at 30 June (GBP'000)* 630,197 579,462 810,934 777,347 686,605
Net asset value per ordinary share (USD)^ 5.17 4.97 8.07 7.22 7.02
Net asset value per ordinary share (GBP)*^ 4.06 4.01 5.85 5.93 5.52
Ratio
Ongoing charges excluding incentive (income)/fee(‡) 1.7% 1.7% 1.6% 1.5% 1.7%
Incentive (income)/fee(₸) (0.3%) (0.3%) 6.1% (0.6%) (0.1%)
Ongoing charges plus incentive fee(₹) 1.4% 1.4% 7.7% 0.9% 1.6%
^ The figures for 2019 above include adjustments to the share prices of some
investments at 30 June 2019 in order to adjust for pricing anomalies
identified by the Board. Please refer to the Annual Report and Financial
Statements for the year ended 30 June 2019 for a complete explanation.
* Following the change of domicile to Guernsey in 2016, the Company's shares
have been quoted in Pounds Sterling ("GBP"). USD NAV per share is translated
to GBP using the rate of exchange at 30 June each year.
(‡) Calculated as general and administration expenses divided by average NAV
for the year. Ongoing charges have been prepared in accordance with the
Association of Investment Companies ("AIC") recommended methodology.
(₸) Calculated as total incentive fee/(income) divided by average NAV for
the year. The calculation can be found in the glossary.
(₹) Calculated as the sum of general and administration expenses and total
incentive fee/(income) divided by average NAV for the year. The calculation
can be found in the glossary.
FINANCIAL HIGHLIGHTS
In the year to 30 June 2023, the Company's NAV per share decreased in US
Dollar terms by 2.8% to USD7.02, while the Company's share price decreased by
5.7% to USD5.46. Taking account of dividends paid in the year to 30 June 2023,
the NAV Total Return in USD terms was -0.4% and the Share Price total return
was -3.1%*.
As at/years ended 30 June 2021 2022 2023
NAV total return* (%) 65.6 (8.8) (0.4)
Share price (USD) 6.64 5.79 5.46
Increase/(decrease) in Share Price total return** (%) 63.1 (12.8) (3.1)
Discount to NAV per share*** (%) (17.7) (19.8) (22.2)
Dividend per share (US cents) 11.5 16.0 14.25
* Expressed in percentage terms, is a measure of the investment return earned
by the Company, calculated by taking the change in the NAV over the period in
question and dividing by the starting NAV. This assumes that any dividends
paid in the period are reinvested at the prevailing NAV per share on the
ex-dividend date and that the dividend would grow at the same rate of return
as the NAV per share after re-investment. A numerical reconciliation of the
NAV total return can be found in the glossary. This footnote applies to all
disclosures of NAV Total Return throughout this Annual Report and Financial
Statements.
** Expressed in percentage terms, is a measure of the return to shareholders,
calculated by taking the change in the share price over the period in question
and dividing by the starting share price. This assumes that any dividends paid
in the period are reinvested at the prevailing share price on the ex-dividend
date and that the dividend would grow at the same rate of return as the share
price after re-investment. The Share Price total return is provided by an
independent third-party provider of investment statistics - see glossary. This
footnote applies to all disclosures of Share Price total return throughout
this Annual Report and Financial Statements.
*** Calculated as NAV per share less share price divided by NAV per share. The
calculation can be found in the glossary.
CHAIRMAN'S STATEMENT
Dear Shareholder,
Since it touched a high point at the end of February 2022, the Vietnamese
equity market has been adversely affected by conditions in the global economy
and international capital markets. In the second half of 2022, the negative
sentiment was exacerbated by a crackdown by the Vietnamese government on
corruption and poor business practices, particularly in the real estate
sector.
A number of the investments in the private equity component of the portfolio
are investments described as "public equities with private terms" or "PEPT"
where the Company has invested in instruments issued by public companies but
where the Investment Manager has negotiated downside protection. A number of
these were issued by companies in the real estate sector. At the time the
Board approved the interim accounts, with one event of default having taken
place and with the prospect of further such events, it was not clear how the
specific protections the Investment Manager had put in place would work. As a
result, the Board reduced the overall fair values of these investments by
USD52.9 million as at 31 December 2022 and I reported at the half year that
the Company's NAV per share declined by 14.5% in the six months to 31 December
2022.
Since the beginning of 2023, some confidence has returned to the equity market
and the real estate market has shown signs of a return to stability, although
recovery is likely to take some time . Against that background, the Investment
Manager has made good progress in renegotiating terms and improving the
security of the PEPT investments. In each case, the Investment Manager
continues to work towards a full recovery over time of the original investment
and contractual returns and, reflecting this, the Board has approved an
increase in the fair values of these investments of USD26.8 million as at 30
June. Separately, our independent valuers recommended increases in the
carried values of five "traditional" private equity investments as at 30 June
2023 compared with their values as at 31 December 2022 and, as a whole, the
increase in the PEPT and Private Equity investments in the second half of the
year totalled USD54.3 million. These uplifts, alongside an overall improvement
in listed equity valuations, contributed materially to a recovery in NAV in
the second half of our accounting year- an overall rise of 14.9%.
The NAV total return(1) for the whole year under review was -0.4%. We
regularly remind shareholders that they should view their holding in the
Company as a long term investment and, over a five-year period, the NAV total
return(2) was 45.0%. The Board believes that this is a strong outcome,
especially considering the challenges posed by COVID-19 and the more recent
resurgence of global inflation and reduced economic growth. Our Investment
Manager does not follow any benchmark in managing the portfolio but the Board
is aware that investors will always compare the Company's performance with the
VN Index. The NAV outperformed the index over the year under review and the
five-year period by 5.7 % points and 21.9% points respectively.
(1)The NAV declined by 2.8% over the year under review and, accounting for
dividends paid, the NAV Total Return (which is an Alternative Performance
Measure: see Glossary) was -0.4%
2The NAV increased by 30.5% over the five years from 30 June 2018 to 30 June
2023 and, accounting for dividends paid, the NAV Total Return (which is an
Alternative Performance Measure: see Glossary) was 45.0%
Dividends
Our policy is to pay out dividends of approximately 1% of NAV per share, twice
each year and normally declared in March and October. In October 2022 we
declared a dividend of 8.0 cents per share and in March 2023 we declared a
dividend of 6.25 cents per share. The reduction in the half yearly dividend
reflected the decline in NAV per share over that period.
The Directors recognise the importance of regular dividends for some
shareholders and, in October 2023, declared a dividend of 7.0 cents per share,
the increase broadly reflecting the increase in NAV in the second half of the
financial year. This will be payable to shareholders on or around 4 December
2023.
Borrowings
In March 2023, the Company extended its USD40 million secured revolving credit
facility with Standard Chartered Bank for a further year. This facility
provides an additional source of short-term liquidity for the Investment
Manager, particularly as it manages the Company's cash flows in some illiquid
investments.
Marketing and the Discount
We continue actively to promote the Company. Our Investment Manager makes
great efforts to encourage investment and is assisted by our brokers, Numis
Securities Limited, distribution partner, Cadarn Capital and Barclays Bank
Limited PLC which provides investor engagement services. A wide variety of
information is available to existing and potential investors with the aim of
stimulating demand for the shares: a detailed fact sheet is issued each month
and regular updates on the Vietnamese market and economy in both written and
video form are posted to our website. You can sign up to be notified of new
publications at https://vof.vinacapital.com and I particularly recommend the
video updates, which really help bring the case for investment to life.
The discount was under pressure for a large proportion of the year under
review, in common with much of the closed-end fund sector, and the Company has
renewed its efforts to manage the discount through share buybacks. During the
year, 3.4 million shares were bought back, which was 2.1% of shares in issue
at the start of the period. The discounts at which these shares were bought
resulted in an increase in the NAV of some 2.7 US cents per share to the
benefit of continuing shareholders and, the Directors believe, helped to
control the volatility of the discount.
We will continue to publicise the long-term potential of investment in Vietnam
and the benefits of the Company's unique approach to investing and will
continue to use share buybacks where we believe that these are in the best
interests of the shareholders.
Investment Management Fees
As a result of the exceptional performance in the year ended 30 June 2021, a
balance of USD22.8 million (discounted for the time value of money to USD20.4
million) was brought forward in the Company's accounts as an accrual for
potential payment of incentive fees in this and future years. As a result of
the decline in NAV this year no further incentive fees were accrued and, of
the amount carried forward, USD1.2 million has been clawed back. USD15.8
million will be paid out on publication of this annual report and USD5.8
million will be carried forward and may be paid out in future years, depending
on the investment performance. Note that the amount to be paid out does not
affect this year's ongoing charges ratio as it was accounted for in the
2020/21 accounting year - and also the amount clawed back has reduced the
ratio for this year.
The Board recognises that there is downward pressure on investment management
fees in many parts of the world. However, we also recognise that Vietnam is a
developing market and the types of investment which the Company typically
makes require a high level of resources, both in negotiating investments and
in managing existing holdings. Against this background, we announced in March
2023 that we had agreed with VinaCapital that the management fees with effect
from 1 July 2023 are as follows:
(a) Base Fees
• 1.30% of net assets up to the first US$1,000 million of net assets.(3)
• 1.00% of net assets between US$1,000 million and US$1,500 million.
• 0.75% of net assets between US$1,500 million and US$2,000 million.
• 0.50% of net assets above US$2,000 million.
3To 30 June 2023: 1.50% of net assets, levied on the first USD500 million of
net assets and 1.25% of net assets, levied on net assets between USD500
million and USD1,000 million. Base fee levels for net assets of over $1,000
million unchanged.
(b) Incentive Fees
· To the extent that the NAV as at any year end commencing 30 June 2024 is above
the higher of a 10%(4) compound annual return and the high water mark having
accounted for any share buy backs, share issues and/or dividends, the
incentive fee payable on any increase in the NAV with effect from 30 June 2023
above the higher of the high water mark and the 10% annual return target is
calculated at a rate of 10%(5);
· The maximum amount of incentive fees that can be paid in any one year is, as
previously, capped at 1.5% of the weighted average month-end NAV during that
year.
· Any incentive fees earned in excess of this 1.5% cap will be accrued if they
are expected to be paid out in subsequent years.
25% of any incentive fees paid will be invested in shares in the Company.
These may not be sold until they have been owned for at least five years.
4To 30 June 2023: 8% compound annual return
5To 30 June 2023: calculated at a rate of 12.5%
The Board
Thuy Dam retired from her position as Director of the Company on 18 April
2023. Thuy had been a Director for nine years and her retirement was in
compliance with best corporate governance practice. She made an important
contribution to the Company, providing the Board with insight and
representation in all matters Vietnamese. The Board has valued her
contribution greatly and she will be missed at both a business and a personal
level. The Board would like to wish her all the best in her future endeavours.
Thuy played an important role in the identification of a replacement
Vietnamese director, and this work culminated in the appointment of Hai Thanh
Trinh as a Director of the Company on 30 June 2022. Thuy acted as a mentor to
Hai from his appointment and the Board is pleased that he is now well settled
into his role.
Annual General Meeting
This year's AGM will take place in Guernsey on 6 December 2023 at Aztec Group,
Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 3PP. Notice of the
AGM is sent to registered shareholders with the Annual Report and Financial
Statements.
Most of the resolutions are routine matters which appear at each AGM, but I
would like to draw shareholders' attention in particular to Resolution 14.
This concerns the "discontinuation" of the Company. Every fifth year,
shareholders are asked to vote on whether the Company should continue as
currently constituted. This vote will be structured as a special resolution
for "discontinuation", whereby the Company will continue in operation unless
more than 75% of those voting elect to "discontinue". This unusual structure
means that shareholders who wish the Company to continue should vote against
the resolution. The Directors have considered the opportunities available to
the Company and the resources and investment track record of the Investment
Manager and are unanimously of the view that the Company should continue in
operation. We therefore recommend that shareholders vote against Resolution 14
at the AGM as those Directors who hold shares intend to do themselves.
Outlook
The world is going through a difficult period as governments and central banks
strive to control inflation. In setting interest rates, central banks continue
to wrestle with the dilemma that higher rates may help to control inflation
but at the same time reduce growth. Having increased interest rates
significantly to protect the currency, the Vietnamese central bank has now
reduced rates decisively to reduce the pressures in the real estate sector and
help stimulate growth in domestic consumption.
The real estate sector in Vietnam has liquidity problems and, as one of the
largest sectors in the Company's portfolio, these continue to be of concern.
However, we do expect the situation to improve over time as there is a
shortage of supply and pent-up demand, particularly for apartments in the
major cities. Elsewhere, there is evidence that manufacturers are beginning to
receive increased orders and Foreign Direct Investment remains strong. After
slower growth in 2023, there are reasons to be optimistic that GDP growth in
Vietnam will return to historic levels next year.
While during 2023 the equity market has recovered some of the ground lost in
2022, listed Vietnamese equities are still trading at a low valuation compared
with regional peers and their own past levels. With the usual caveat that
returns are likely to be volatile and buffeted by extraneous events, combining
the low valuation with continued economic growth gives cause for optimism for
Vietnamese equities. It is hoped that the recent elevation of the relationship
between Vietnam and the United States to a Comprehensive Strategic Partnership
will yield significant economic benefits over time.
As the Company looks to the future, the Board believes that Vietnam will
continue to offer interesting and rewarding investment opportunities for
patient, long-term investors and, particularly in light of this year's
discontinuation vote, we thank you for your continued support.
Huw Evans
Chairman
VinaCapital Vietnam Opportunity Fund Limited
23 October 2023
INVESTMENT MANAGER'S REPORT - 30 JUNE 2023
Macroeconomic Highlights
Vietnam's economy grew by 8% in its 2022 post-COVID-19 re-opening boom, being
one of the fastest-growing economies in Asia in 2022. However, from a
financial year perspective, for the twelve-month period ending 30 June 2023,
economic growth and market performance should be viewed in two separate and
distinct periods reflecting differing economic and market conditions.
The first half of the financial year, from 30 June 2022 to 31 December 2022
saw a significant decline in corporate debt issuance and public equity trading
liquidity which negatively affected the stock market and company performance.
While there were several arrests of business leaders during 2022, it was the
surprising arrest of Madame Truong My Lan, the owner and controller of many
real estate holdings and the largest private bank in Vietnam, that exacerbated
the market decline, particularly in the real estate sector.
The second half of the financial year, from 1 January 2023 to 30 June 2023 saw
market liquidity and stock market performance recover, with government support
across various parts of the economy, including the reduction of policy
interest rates, the revision of corporate bond regulations, and other measures
to help the real estate sector. While certainly more can be done with regards
to improving capital market regulations and real estate policies, the
improvements to the sector coupled with the Government support during the
second half of the financial year were meaningful and diverted significant
capital out of idle bank deposits and into the capital markets.
Vietnam's GDP grew by 9.5% year-on-year from 30 June to 31 December 2022, in
contrast to the stock market which declined by 16.3%, in USD total return
terms. In the second half of the Company's financial year from 1 January to 30
June 2023, the stock market staged a partial recovery, rising by 12.2% during
the six-month period. However, Vietnam's GDP growth slowed to 3.7%
year-on-year, reflecting a drop in manufacturing output and exports, a slow
recovery in international tourist arrivals, and ongoing issues with real
estate project approvals that are dampening sentiment and spending by local
consumers.
Despite Vietnam's disappointing GDP growth in the first half of calendar year
2023, we believe that the worst of the country's economic downturn has passed
given that exports and manufacturing appear to have now bottomed, while the
government's twin policy drives of boosting infrastructure spending and
lowering interest rates should support the country's economic growth.
Vietnam's economy has been impacted by the slow-down in the US and European
economies which collectively account for nearly half of Vietnam's total
exports. The weak demand for "Made in Vietnam" products in 2023 was not
unexpected, given the surge of inventories at US retailers last year, leading
them to reduce and/or cancel orders. The growth of manufacturing output in
Vietnam fell from 9.7% y-o-y in the first half of calendar year 2022 to 0.4%
in the first half of calendar year 2023, knocking more than 2% points off
Vietnam's GDP growth rate. However, it appears that consumer electronics
inventories may have already passed the bottom, as evidenced by two months
(June and July 2023) of month-on-month growth in Vietnam's exports of laptops
and other consumer electronics. We expect orders for factories producing
high-tech products in Vietnam to recover further in the remainder of calendar
year 2023.
Another significant driver of GDP is foreign tourist arrivals, which have now
recovered to about 70% of pre-COVID-19 levels. However, Chinese tourists, who
previously accounted for 30% of foreign tourist arrivals in Vietnam
pre-COVID-19, have not returned in a meaningful way despite China's reopening
earlier this year. Historically, tourism has contributed about 8% of
Vietnamese GDP and any further recovery in tourism will be a strong positive
for Vietnam's growth looking ahead.
Crackdown on corporate bond issuances have impacted the Real Estate sector and
impacted stock markets
Towards the end of calendar year 2022, we saw some major political changes
with the replacement of two Deputy Prime Ministers and in January 2023 the
resignation of Vietnam's President. While there may yet be further changes and
investigations, we do not expect these to have a significant negative
long-term impact on the economy and stock market. Rather, these changes should
be positive for the investment environment and economy over time.
The headline arrests of some business leaders for the misuse of funds raised
through the issuance of corporate bonds caused a decline in markets in the
second half of calendar year 2022. The cost of debt increased substantially
causing significant difficulties for corporate issuers to access new funding
or roll-over expiring debt. In addition, the government issued a revised
decree around the issuance of corporate bonds making it more difficult for
private individuals to invest. At one stage during November 2022 the yields
for some corporate bonds in the real estate sector were driven up to 30-40%.
Most issuers had to step in either to purchase their outstanding bonds and/or
renegotiate existing terms and tenors. This liquidity crunch particularly
impacted real estate developers as well as hitting overall market confidence.
As concerns grew over several large real estate developers' ability to access
credit, in particular Novaland (HOSE: NVL, NAV: 3.3%) and Phat Dat Real Estate
(HOSE: PHR, not held), the stock market began to fall in October and the
resulting pressure from margin calls led to large falls in share prices.
Investors, especially retail investors, were unnerved and the public equity
markets recorded a significant decline during the final quarter of 2022.
The arrests led to concerns over the security of deposits at Saigon Commercial
Bank (SCB). Faced with the potential for a run on the banks, the government
sought the help of Vietinbank (CTG), the third largest State-Owned Commercial
Bank, to oversee SCB and instil confidence by increasing its deposit rates.
Consequently, other banks increased their deposit rates in order to retain
customer deposits.
In 2022, the US Fed hiked rates by 425 basis points (bps), prompting the State
Bank of Vietnam ("SBV") to hike policy interest rates twice last year. Unlike
the rate increases in other economies, the increases in policy rates in
Vietnam were not in response to hot inflation numbers, given Vietnam's
inflation in 2022 and into 2023 was low, hovering between 2.0% and 4%, but
were to defend and stabilise the USD-VND exchange rate.
The tightening of liquidity, particularly during the last quarter of 2022 and
which persisted into early 2023 kept local deposit rates at around 9-10%.
This, coupled with a stable currency against a strengthening USD resulted in
Vietnamese depositors and businesses leaving money in the bank rather than
investing into shares or real estate.
The net result was that the corporate bond market has effectively been closed
for most of 2023. Lending conditions remain tight for real estate developers
as banks are reluctant to extend more credit to developers during this period
of uncertainty. It seems that this "liquidity crunch" is isolated to real
estate developers, rather than being a system-wide issue as lending to
manufacturers and other corporates continues. However, while interest rates
were high there was little motivation to invest in capital equipment to expand
businesses when orders for "Made in Vietnam" goods were weak.
Falling interest rates and improving credit liquidity should act as a positive
signal for the real estate and banking sectors, and for the equity market in
general.
Real Estate sector recovery will be slow and gradual
Although liquidity has improved and interest rates have declined, pain is
still being felt by many real estate businesses, particularly those that
borrowed aggressively in the bond market. Cash flows of these companies are
weak, needing debt agreements to be restructured.
The relationships between banks and real estate developers issuing bonds are
very close. Most of the corporate bonds are distributed through commercial
banks with some bonds being backed by banks, whether directly with collateral,
or indirectly through a promise to be market makers of these instruments.
Inevitably, banks involved in corporate bonds have been negatively impacted.
One of the Company's largest holdings, Asia Commercial Bank (HOSE: ACB, NAV:
12.7%) does not have significant exposure to real estate corporate bond
activities and continues to see steady earnings growth through its focus on
small and medium enterprise businesses, and retail customers.
The real estate sector contributes about 10% of GDP and made up approximately
19% of the stock market weight average. The sector fell by 33.1% during the
financial year, compared with the VN Index which declined by 6.1% in USD total
return terms ($TR)(6). The challenges discussed above have meant that there
has been very little construction and few project sales during the first six
months of the calendar year 2023. We see signs that the situation will
improve in 2024 and into 2025.
A recovery in the real estate sector would make a significant contribution to
Vietnam's GDP growth next year, especially since the demand for new housing
units far outstrips the supply of newly constructed apartments and homes.
VOF has provided funding to three real estate developers which defaulted or
are at risk of default in their repayment obligations. Restructuring efforts
for these investments are discussed in more detail below.
6 An alternative performance measure: see Glossary.
Public spending will be a key driver of growth
Public spending will be a key driver for Vietnam's economy in 2024 and we
expect that the government will continue to boost investment to help to offset
the negative impact of the slowdown in exports and production. Infrastructure
spending has grown by 40% over the first six months of 2023 compared with the
same period last year and could reach over USD20 billion this year. In
addition, a USD5 billion subsidy programme for affordable housing purchases
has been introduced. Together these government initiatives could help boost
2023 GDP growth by about 1% point.
FDI continues to be resilient
Finally, Vietnam will continue to be a prime destination for FDI(7),
particularly for multinationals looking to produce for export and seeking an
alternative manufacturing base to China. Vietnam has been the biggest
beneficiary of the US-China trade war because of its low wages, proximity to
Asian supply chains, and its geo-politically aligned "friend-shoring" appeal,
which means that it has minimal risk of facing high tariffs from the US. These
factors have drawn multinationals to invest in Vietnam and increased its
exports in recent years, especially of high-tech products.
7See Glossary
Improving economic outlook as policy measures take effect
While many of the challenges that we have discussed above still remain, it now
appears that more fundamental drivers introduced in recent months are finally
having a positive effect. Globally, inflation appears to be moderating in
developed markets, and the US Fed appears to be taking a less aggressive
stance on monetary policy. Domestically, a sense of calm is settling in as the
real estate sector improves and there are signs of a return to stability,
although any robust recovery is likely to take some time. Interest rates were
reduced earlier than anticipated, while supportive measures for the corporate
bond and real estate market were introduced to help further strengthen the
recovery in the real estate sector.
We believe that all of these factors will contribute to confidence returning
to the economy and market.
Market Highlights
Vietnam's stock market experienced one of the most volatile years in its
history during 2022 and ended the calendar year down by 34.1% in USD, total
return terms ($TR). However, we are reporting over the financial year period
ending 30 June 2023 and, as such, it is useful to look at the performance of
the market over two distinct periods, with the first between July and December
2022, and then the second half of the financial year, from January to June
2023.
With the cost of debt rising significantly on the back of rising global
interest rates and with other domestic challenges, investor confidence has
remained weak, and this is clearly reflected in market liquidity which has
declined from its peak levels. That said, the market liquidity remains robust
and has improved in recent months.
Market liquidity and participation improves
During 2023, with green shoots across the field, domestic retail investors
found some confidence to return to the market. In June 2023, the market saw
the highest level of market turnover in a year, with average daily turnover up
+36% month-on-month, to USD723.0 million (for the VN Index). Overall, the
average daily trading volume in Vietnam's three exchanges has increased from
USD400 - USD500 million during late 2022 to over USD1 billion on several
occasions during the summer of 2023.
Calendar year-to-date, foreign investors are still net buyers in the market to
the tune of some USD83 million, as flows increase from ETF mandates that
originate from regional markets. Foreign buying activity has been concentrated
in brokers (i.e., non-bank financial sector), with USD118.0 million net buying
during the first half of the calendar year, reflecting the view that brokers
will be a natural proxy to capture the stock market momentum for the remainder
of the year.
The lowering of deposit rates has encouraged retail investors to return to the
stock market, with new account openings reaching 146,000 in June 2023, after
an impressive 105,000 new accounts opened in May, 4.6 times higher than April
levels. As retail investor participation continues to grow, we have seen total
stock margin lending balances of brokers increase 22% quarter-on-quarter as of
30 June 2023, estimated to be USD6.3 billion - albeit around 25% lower than
the peak levels.
Valuations remain appealing
Vietnam remains attractively valued. On prospective financial year ("FY") 2023
earnings, PER(8) and EV/EBITDA multiples are all well below their 5-year
averages.
Our research team believes that the macroeconomic picture for Vietnam remains
remarkably strong and resilient long-term. While earnings growth for 2023 has
been trending lower, with consensus estimates currently at 7.8% growth for
2023, looking ahead the outlook for 2024 is robust, with the market expecting
to deliver 32.1% earnings growth, one of the fastest growth rates in ASEAN,
while still attractively priced at an estimated 12.3x forward
price-to-earnings ratio for 2023.
While it is now encouraging to see improvements in both the policy cycle
(lower rates, low inflation, stable currency, increased public spending), and
the sentiment cycle (higher trading volumes, improved liquidity, rising
valuations), we will nevertheless continue to monitor the recovery in the
business cycle and the impact on earnings and economic growth as it relates to
the investment opportunities that we seek for the Company.
8 See Glossary
Fund Performance Highlights
Over the long term, we expect the economic performance of Vietnam to drive
investment returns and our approach to managing the Company's portfolio seeks
to take advantage of this economic growth. However, over the year under
review, Vietnam's economy has been affected by volatility in global markets,
exacerbated by domestic issues in the real estate market.
For the year ended 30 June 2023, the NAV per share of the fund declined by
-0.4% in USD, total return terms ($TR).
Historical long-term performance remains positive despite short-term
challenges over the past financial year
While the VN Index is not a benchmark for the Company, it serves as a useful
comparison for some investors.. Over the same 12-month period, the VN Index
declined by 6.1% ($TR). Over the first half of the financial year, the VN
Index declined by 16.3%, while over the second half of the financial year from
January to June 2023, the VN Index increased by 12.2%. Importantly, over a
3-year and 5-year period, the fund has delivered +50.1% and +45.0% total
returns respectively, versus +40.1% and 23.1% for the VN Index. The Company's
share price total return over the same periods are -3.1% (12-months), +44.2%
(3-year) and +44.1% (5-year).
Total Return in USD terms 6 months July to Dec 2022 6 months Jan to June 2023 Financial 3 years 5 years
Year 2023
VOF NAV -13.4% +14.9% -0.4% +50.1% +45.0%
VN Index -16.3% +12.2% -6.1% +40.1% +23.1%
Table: VOF and VN Index performance, up to 30 June 2023.
Source: Bloomberg, VinaCapital.
Dividends and Share Buyback
During the financial year, the Company received USD13.7 million in dividends
from its portfolio companies and, in return, the Company continues to maintain
its dividend policy and reward its shareholders with regular dividend pay-outs
equivalent to approximately 1% of NAV every half year. Dividends paid totalled
USD23.0 million for the financial year. The Company continues to be the only
Vietnam dedicated listed closed-ended fund to pay a regular dividend.
In addition to dividends, the Company's share buyback programme remains active
and during the financial year, the Company bought back USD18.2 million worth
of shares and, since the commencement of the buyback program in 2011, the
Company has bought (and cancelled) a cumulative total of 163 million shares,
equivalent to approximately USD458 million that has been spent on the share
buyback programme since its introduction.
Financial sector was the leading contributor to market performance, followed
by Healthcare
The best performing sectors over the financial year were Healthcare (+21.9%),
followed by Financial Services (+13.5%), and Energy (+5.1%). The Financial
Services sector has the largest sector weight in the index - 38.1% - and, on a
weighted contribution basis, was the leading contributor to market
performance, contributing 5.8% to index performance.
The outlook for the Financial Services sector and, within it, the commercial
banks, is enhanced by the SBV's recent accommodative monetary policy and
borrowing rates at commercial banks have reduced by 250 bps in 2023 to date.
Furthermore, the SBV have reaffirmed their desire to see higher credit growth
for the year as part of their economic support measures, raising the credit
growth limits for commercial banks by 14% year-on-year. This means that if
credit is fully extended out into the economy, there may be a total of
approximately USD70 billion of new credit disbursed in calendar year 2023.
Note that by 30 June 2023, banks reported just 4.7% year-to-date credit
growth, which points to a robust rate of credit disbursement for the remainder
of the year even if commercial banks choose not to fully utilise their
allotments.
The largest holding in the portfolio, ACB (NAV 12.7%), one of Vietnam's
leading commercial banks, was the second largest contributor to the Company's
annual performance, with ACB delivering a +8.5% return during the period and
contributing almost +1.0% to total NAV performance.
The best performing sector for the VN Index over the financial year was the
Healthcare sector (+21.9%), led mostly by several domestic pharmaceutical
companies. However, given the sector's index weight of just 0.7%, on a
weighted contribution basis, it delivered 0.2% contribution to the overall
index performance. The Company's portfolio, through our Private Equity
investments, has 8.4% NAV weight to the Healthcare sector, demonstrating that
the portfolio gives investors an off-index allocation to some of the most
exciting and growth-oriented segments of the domestic economy.
The only other sector in the VN Index that contributed a positive performance
during the financial year was the Energy sector, up 5.1%, but owing to the
sector's modest index weight, on a weighted contribution basis, added just
0.1% to the index performance. The Energy sector within the portfolio
performed well during the period, with PVS (+37%) showing strong positive
returns and helping to narrow the portfolio's losses during the market
volatility.
On a weighted contribution basis, Financial Services delivered +1.3% to total
return, while the Energy sector added +0.5% to the Company portfolio return
over the financial year.
Real Estate was one of the worst performing sectors and largest detractor to
market performance
As discussed above, the Real Estate sector was one of the worst performing
sectors in the market, down 27.5% over the financial year period, and only
second to the Consumer Discretionary sector, which was the worst performing,
down by 28.4% over the same period. However, as the Real Estate sector is the
second largest constituent of the VN Index, at 19.2% weight on average, it
contributed the most in holding back market performance, and on a weighted
contribution basis, took away 6.8% from the overall market performance during
the financial year, offsetting any of the gains made by the top three sectors.
The Real Estate sector had the biggest negative impact on the portfolio, with
a decline of 10% during the financial year, due to the valuation adjustments
made to the several unquoted investments held in the sector, and the
performance of some of the publicly listed Real Estate investments in the
portfolio. On a weighted contribution basis, the Real Estate sector detracted
-2.9% from the overall fund performance. Within the sector, KDH (-11%), VHM
(-12%), NVL (-10%), DXS (-14%) were the biggest underperformers during the
financial year.
Closely aligned to the fortunes of the Real Estate sector is the Construction
Materials sector which over the financial year, declined by 6.5%. With the
sector's 7.4% index weight, on a weighted contribution basis, this detracted
0.6% from the overall index return. However, within the individual companies
within the Materials sector, performance was led by Hoa Phat Group (HOSE: HPG,
NAV: 11.3%), the largest steel producer in Vietnam, which saw its share price
increase by 17.3% over the financial year, with much of the gain over the
January to June 2023 period, during which the price increased by 45.3%. HPG
saw its strongest year-to-date monthly sales volume increase in June, up by
2.7% month-on-month to 640,000 tonnes, thanks to a combination of strong
recovery in domestic demand and improved export volume growth.
Quarter-on-quarter sales volume growth reached 11.4% to 1.8 million tonnes
sold, delivering a net profit of USD43.0 million (+152% quarter-on-quarter).
Consensus estimates for the full calendar year 2023 indicate that HPG should
be able to deliver approximately USD315.0 million in net profit as a result of
a strong improvement in sales volume, margin expansion thanks to cheaper input
costs, and higher utilisation rates from their factories as all blast furnaces
(several of which had been shut due to weak demand over the past year) should
now all be back online.
Given the Materials sector performance, led by HPG, the fund's position in HPG
delivered a +15.9% return during the period and contributed almost +1.5% to
total NAV performance.
Illiquidity in the corporate bond market, a sizable wall of maturing bonds
facing many developers and the inability to secure loans all lead to concerns.
While mortgage rates have reduced in recent months, demand and buyer
sentiment remain weak which will limit the recovery of the sector in the short
term.
However, a recent report from CBRE research indicates that transaction volumes
in Ho Chi Minh City and Hanoi condominiums have seen a pick-up in demand with
46% and 12% quarter-on-quarter growth in the second quarter of 2023,
respectively, equivalent to 2,200 units in HCMC and 1,400 units in Hanoi sold
during the quarter. The easing of interest rates and a clearer impact from the
government's directives to support the sector (e.g., attempts to untie the
legal knots that entangle project approvals, as well as easing restrictions on
credit flow), all point to a gradual recovery for the real estate sector that
may commence in the second half of the year, and then continue in 2024 and
2025.
Policy measures to stimulate and support the real estate market appear to be
taking effect. This follows an aggressive deleveraging within the sector in
late 2022, as described above. We are certainly not out of the woods yet, and
it remains a tough year for pre-sales for real estate developers, which is a
leading indicator of subsequent profitability performance. Delays in the legal
approvals for projects and weak market sentiment have also deterred developers
from new project launches, limiting the prospects for future growth.
Valuation adjustments to privately negotiated investments
In addition to the quoted investments in the portfolio, the Company had made a
number of investments in private instruments issued by public companies
("PEPT") in the Real estate sector.
This year, the valuations of these investments have received particular
scrutiny following defaults or potential for default by the counterparties.
When the investments were originally made, the Investment Manager negotiated
"downside protections" in the form of put options to the sponsor, as well as
other rights, supplemented by collateral in the form of shares. With the
turmoil in the real estate market at the end of 2022, however, it was not
clear how these protections would take effect in the event of a default.
The Company has the following PEPT investments with NovaGroup:
· Two relate to Novaland which defaulted at the end of 2022. The Investment
Manager has taken additional measures to protect the Company's position as
both a creditor and shareholder including rescheduling the payments and taking
security in the form of real assets. The Investment Manager continues to work
with the NovaGroup to recover the full value of the investment cost and
returns that are owed to the Company.
· Nova Consumer Group (NCG), a subsidiary of NovaGroup, failed to list on a
stock exchange by 1 January 2023. VOF has a minority shareholding in NCG and
under the terms of the investment agreement, we have put back the shares to
NovaGroup. However, NovaGroup failed to honour its commitment to buy. We are
seeking to enforce the contract and to protect our investment returns through
a negotiation of payment terms and an asset swap, under which a portfolio of
food & beverage outlets, restaurants and cafes that were owned by
NovaGroup was transferred to IN Holdings, another investment in our Private
Equity portfolio in June 2023. We discuss this further below under Investment
Activities.
Other PEPT investments include Dat Xanh Services (DXS) and Hung Thinh Land
(HTL), with which renegotiations to extend payment terms have also now been
concluded.
In November 2022, the carrying values of all of these investments were reduced
by USD26.2 million. When the Board prepared the 31 December 2022 interim
accounts in March 2023, with the prospect of further events of default, the
valuations of these investments were reviewed again and a further reduction of
USD26.7 million was made.
Over the past six months, progress has been made in renegotiating terms and
the Board has approved a revaluation of these unquoted investments totaling
USD26.8 million as at 30 June 2023. The carrying values of these investments
are still below their original cost and expected returns and we continue to
work with the counterparties with a view to obtaining a full recovery of the
original investment and contractual returns. Without downside protections in
the above investments, we would have experienced much larger losses.
"Traditional" private equity investments
As part of the year-end processes, the Board engages KPMG, an independent
firm, to value the traditional private equity investments. A number of these
have done well, particularly those in the Healthcare sector as it recovers
from COVID-19. Over a total of five investments, Thu Cuc International
Hospital, Tam Tri Medical, In Holdings, Chicilon Media and Hung Vuong
Corporation, an uplift on value of USD27.5 million as at 30 June 2023 has been
approved.
Investment Activities
While the investment team has spent a considerable amount of time resolving
the existing investments that have been impacted by the downturn in the real
estate market, activity continues with investments and the pipeline remains
robust and interesting.
During the last financial year, USD179 million worth of transactions were
executed in aggregate across the Public Equity and Private Equity portfolios,
with USD65 million in investments and USD114 million in divestments. We
highlight some of these below.
Chicilon Media: Investment into Vietnam's leading digital advertising
infrastructure platform
We have long sought to increase our exposure to the digital communications and
consumer sector, and specifically companies that benefit from the rising
awareness and increasing sophistication in consumer behaviour, thanks to a
wider recognition of international and domestic brands. In early February we
announced that we had made a private equity investment into Chicilon Media,
Vietnam's leading digital advertising platform. VinaCapital led a consortium
to invest USD38 million, of which the Company invested USD31 million. As is
typical in our private equity investments, we will receive one board seat and
have privately negotiated terms of investment.
Founded in 2006, Chicilon Media's LCD screens are located in the lifts and
lobbies of residential and commercial buildings across Vietnam, reaching the
growing urban middle class, the most-prized target audience for both local and
global consumer brands. The company has consistently delivered double-digit
revenue growth on average and has remained profitable, even during the
pandemic. Following the post-COVID-19 reopening of the economy, Chicilon Media
has seen a strong recovery of its business, as evidenced by its net profit
quadrupling in 2022 year-on-year. When Chicilon Media launched, there were
nine building lift advertising companies in the market; today, there are only
two, with Chicilon Media being four times the size of its closest competitor
in terms of market share.
Chicilon Media is an ideal example of the type of market-leading company which
we like to invest in. It is well-established and linked to sectors that are
benefitting from Vietnam's growing middle class and strong domestic
consumption story. Its management team have a clear vision and strategy, are
experienced, and recognise the need to innovate in their business. In addition
to currently leading the market, they also evolve with it by investing in
advanced equipment and have a strong commitment to research and development.
IN Holdings / IN Dining: additional investment
The GEM Centre recently won Vietnam's best convention centre award conferred
by the World MICE Awards(9). The GEM Centre is one of the most prominent event
and conference centres in HCMC and has held events for companies such as
Amazon, Samsung, IBM, and Lexus. It is the flagship asset in a portfolio of
centres that forms part of our investment in IN Holdings, one of the leading
convention, banquet, and hospitality groups in Vietnam. We invested into IN
Holdings in 2020 and, while the period during the pandemic was difficult, the
team was able to keep all locations operating and now, post-pandemic, business
performance is improving.
In June 2023, VOF increased its investment in IN Holdings, helping them to
acquire a significant portfolio of restaurants from NovaGroup as part of the
negotiations discussed above. These restaurants included regional restaurant
brands Crystal Jade, JUMBO Seafood, Sushi Tei, and Gloria Jeans Coffee, as
well as several home-grown brands. This expansion into food and beverages
has seen the creation of IN Dining and we have appointed senior members to the
management and operations team, including a new CEO and financial controller
to help turn-around and grow this platform.
9 Part of the World Travel Awards (MICE is an acronym for Meetings,
Incentives, Conferences and Exhibitions)
Tam Tri Medical platform expansion through a roll-up strategy
In December 2022, we completed the roll-up of two of the hospital platforms in
the private equity portfolio, with Thai Hoa International Hospital now
integrated into the larger platform of Tam Tri Medical. This merger has
created a platform for 970 in-patient beds, spread across Vietnam including in
HCMC, Danang, Nha Trang, and Dong Thap. The healthcare sector has experienced
a compound annual growth rate of 10% since 2017 which is expected to continue
in the future, and our platform specifically targets the rising middle-income
class in Vietnam where demand for private healthcare is rapidly growing.
Subsequent to the financial year end, Tam Tri Medical has further expanded
with the acquisition of two additional hospitals, one in Quang Nam in the
central region of the country, and a significant hospital located near the
international airport in Ho Chi Minh City, approximately 8-10km from the city
centre. This expansion will bring on additional capacity to the Tam Tri
Medical system over the coming years.
Investment Strategy and Liquidity
The Company's private approach to investing, whether it be public or private
market opportunities, is what sets the Company apart from other funds that
focus on Vietnam. When we invest, we always try to protect the investment on
the downside. As we have seen over the past financial year, in times of
market turmoil or in instances where the counterparty is unable to honour
their commitments to us, we are able to use the downside protections and
legally enforceable terms to seek the best possible returns.
Today, the size of the Company is an important factor which allows us to
deploy large, meaningful amounts into investment opportunities. This is
important as it demonstrates: (1) our conviction in the company we are
investing in; (2) the size and scale of the company is large enough that it
will attract interest from other investors; (3) the size of the investment,
and the investment returns need to "move the dial" in terms of investment
returns; and (4) the effort to negotiate, carry out due diligence, monitor and
exit investments consumes roughly the same amount of time and effort whether
large or small.
Rather than having to seek liquidity directly on the stock market, VOF seeks
to negotiate positions of entry, whether they be into private companies where
we take significant minority stakes, or into publicly listed companies, where
the investment manager can participate in private placement opportunities or
negotiate large blocks of shares in off-market transactions or have terms of
investment not generally available to investors in the stock market.
ESG Reporting and Voting
VinaCapital published its first Annual ESG Report 2022 which can be found on
VinaCapital's website vinacapital.com/esg/.
As with last year's Annual Report, this year we have included a discussion of
our Responsible Investment approach and principles in the Corporate Governance
Statement of the Annual Report where a more complete picture of both the Board
and Investment Manager's commitments to ESG is discussed.
It is helpful to reiterate VinaCapital's commitment to adopting and
implementing the United Nations-supported PRI, which VinaCapital believes is
in the best long-term interests of its investors and portfolio companies, and
which contributes to a more long-term oriented, transparent, sustainable, and
well-governed investment market. We take a pragmatic approach to adopting ESG
in our investment activities, while realising the limitations of investing in
a developing market. We therefore focus less on screening companies solely on
ESG issues, and more on stewardship activities where we believe a patient
timeframe and active engagement can improve outcomes. This is further
reflected in our approach to voting and ensuring that we actively participate
in voting across our portfolio companies.
For publicly listed companies, VinaCapital has implemented a rigorous
framework to assess ESG risks and encourage companies to improve their
practices when warranted. Our portfolio managers, and in-house ESG and
research teams regularly engage with management on ESG policies and practices.
The discussions around ESG revolve around our proprietary framework of over
200 questions, that cover 17 areas of focus, including management and
corporate structure; business ethics; energy, water, pollution, waste
management, and greenhouse gas emissions; biodiversity; employee related
issues such as wages, health, employment conditions; and community impacts.
Currently our research team has made over 100 assessments of publicly listed
companies, including the majority of those held in the VOF public equity
portfolio.
Voting Activities
As stewards of our investors' capital, we systematically engage with our
investee companies on ESG matters. Our engagement takes various forms
including voting, direct discussions with management, and educational
initiatives.
As part of VinaCapital's Voting Policy that applies to the funds that
VinaCapital manages, a core principle is that we seek to actively participate
and vote, directly or through voting, on all resolutions. We will generally
exercise the voting rights for resolutions associated with the following
matters:
· Corporate governance issues, including changes in the statutes of
incorporation (such as amendments to the memorandum and/or articles of
association), takeover, merger or disposal, acquisition and other corporate
restructuring, and anti-takeover provisions;
· Changes to capital structure, including increases and decreases of capital and
preferred stock issuances, approval of rights, bonus issue and warrants, and
special dividend distributions (dividends in specie);
· Amendments to stock option schemes and other management compensation issues;
· Environmental, Social and Corporate responsibility issues; and
· Any other issue that may significantly affect the Company's interests.
During the year up to June 2023, all 26 investments held in the VOF portfolio
held their AGM. This included public and private companies, where we are
pleased to report that 100% of resolutions raised by companies held in our
portfolio were voted on. Of the 216 resolutions that we voted on, we abstained
or voted against 12 of these resolutions, while we supported the remaining 204
resolutions.
The largest category of resolutions that we voted on concerned ESG. This
category predominately captures resolutions that relate to the "Governance"
element of ESG, including for example: the appointment and removal of board
members, and members of the supervisory committee; appointment of external
auditors; or amendments to the company charter and internal policies. There
were very few resolutions tabled by the portfolio companies that relate to
Environmental or Social matters, perhaps a reflection of the stage of
immaturity of this developing market in addressing these concerns.
Conclusion
For investors who have confidence in the long-term growth potential for the
market, valuations are attractively priced and are below historical averages.
The investment team at VinaCapital looks forward to the future with optimism.
I would like to express my sincere thanks to our diligent and dedicated
investment team who have worked tirelessly through this past period of
volatility and challenges, as well as the unwavering support and guidance of
our independent board of directors. Most importantly, I thank our shareholders
who remain invested and have entrusted us to carry out the execution of our
strategy to deliver long-term performance in this exciting, yet challenging
emerging market we invest in.
Andy Ho
Managing Director and Chief Investment Officer
23 October 2023
VINACAPITAL MANAGEMENT TEAM
Don Lam
Group Chief Executive Officer
Don Lam is a founding partner of the Investment Manager and has more than 20
years' experience in Vietnam. He has overseen the Investment Manager's growth
from the manager of a single USD10 million fund in 2003 into a leading
investment management and real estate development firm in Southeast Asia, with
a diversified portfolio of more than USD3 billion in assets under management.
Before founding the Investment Manager, Mr Lam was a partner at
PricewaterhouseCoopers (Vietnam), where he led the corporate finance and
management consulting practices throughout the Indochina region. Additionally,
Mr Lam set up the VinaCapital Foundation whose mission is to empower the
children and youth of Vietnam by providing opportunities for growth through
health and education projects. He is active in the World Economic Forum and is
a member of several business task forces and committees in Vietnam. He has a
degree in Commerce and Political Science from the University of Toronto and
received an honorary doctorate from the Royal Melbourne Institute of
Technology Vietnam. He is a Chartered Accountant and is a member of the
Institute of Chartered Accountants of Canada. He also holds a Securities
Licence in Vietnam.
Brook Taylor
Chief Executive Officer, VinaCapital Asset Management
Brook Taylor is the Chief Executive Officer of the Investment Manager. Mr
Taylor has more than 20 years of management experience, including more than
eight years as a senior partner with major accounting firms. Previously, he
was deputy managing partner of Deloitte in Vietnam and head of the firm's
audit practice. He was also managing partner of Arthur Andersen Vietnam and a
senior audit partner at KPMG. Mr Taylor has lived and worked in Vietnam since
1997. Mr Taylor's expertise spans a broad range of management and finance
areas including accounting, business planning, audit, corporate finance,
taxation, and risk management. He holds an Executive MBA from INSEAD and a
Bachelor of Commerce and Administration from Victoria University of
Wellington.
Andy Ho
Managing Director and Group Chief Investment Officer
Andy Ho is Managing Director and Group Chief Investment Officer of the
Investment Manager, where he oversees the capital markets, fixed income and
private equity investment teams. Previously, Mr Ho was Director of Investment
at Prudential Vietnam's fund management company, where he managed the capital
markets portfolio and Prudential's investment strategy. He has also held
management positions at Dell Ventures (the investment Company of Dell Computer
Corporation) and Ernst & Young. Mr Ho is a leading authority on capital
markets investment, privatisations, and private equity deals and structures in
Vietnam, where he has led private placement deals totalling almost USD1
billion. He holds an MBA from the Massachusetts Institute of Technology and is
a Certified Public Accountant in the United States.
Dieu Phuong Nguyen
Deputy Managing Director
Dieu Phuong joined VinaCapital in 2005 and is responsible for the Company's
private equity investments and deal sourcing. Ms Phuong has led several
private equity and private placement investments for the Company and holds
board positions at several of the Company's investee companies including Khang
Dien House (HOSE: KDH). Ms Phuong has previous experience at KPMG Vietnam
where she covered international and local banks and holds a BA from the
Banking University of Vietnam and is a fellow member of the ACCA (UK).
Khanh Vu
Deputy Managing Director
With over eleven years at VinaCapital, Khanh Vu is responsible for the
Investment Manager's capital markets, portfolio management, investor relations
and communication activities for the Company. He is also an active member of
the fund's Investment Committee, involved in deal sourcing, investment
execution and monitoring. Mr Vu has over 15 years of investment experience and
has been based in Vietnam for the last nine years. Mr Vu has held managerial
positions in corporate finance, asset management, investment banking, and
professional services. Prior to VinaCapital, he was at Macquarie Bank based in
New York and Sydney, with his last posting on the buy-side infrastructure
asset management team. Prior to that, he held various positions with Deloitte
& Touché and Arthur Andersen, based in Sydney. Mr Vu holds both master's
and bachelor's degrees from the University of New South Wales, Sydney, and a
Graduate Diploma of Applied Finance granted by the Financial Services
Institute of Australia where he is a Fellow.
Michael Kokalari
Chief Economist
Michael Kokalari, CFA serves as VinaCapital's Chief Economist, and is
responsible for providing thought leadership and technical acumen on a wide
range of global and local macroeconomic issues with a view to maximising the
firm's investment performance. Mr Kokalari has worked in Vietnam for nine
years, and was previously the Head of Research at CIMB Securities Vietnam, and
the CIO of Saigon Asset Management. Earlier in his career, Mr Kokalari was a
derivatives trader in Tokyo & London where he ran multi-billion dollar
trading books for Lehman Brothers, JP Morgan Chase, Credit Suisse First
Boston, BNP Paribas and West LB. Mr Kokalari co-authored the CFA guide to
Credit Derivatives, and was a contributor to "Risk Management: Foundations for
a Changing Financial World" (published in 2010), along with Nobel Prize
winners Myron Scholes and William Sharpe of Stanford University. Mr Kokalari
holds an MS Engineering in Computational Mathematics from Stanford University,
an MS Mathematics from Stanford, an MS Management from the Graduate School of
Business at Stanford, and a BA Mathematics from Clark University, where he was
a Gryphon and Pleiades Scholar.
BOARD OF DIRECTORS
Huw Evans
Non-executive Chairman (Independent)
(Appointed 27 May 2016)
Huw Evans qualified in London as a Chartered Accountant with KPMG (then Peat
Marwick Mitchell) in 1983. He subsequently worked for three years in the
Corporate Finance Department of Schroders before joining Phoenix Securities
Limited in 1986. Over the next twelve years he advised a wide range of
companies in financial services and other sectors in the UK and overseas on
mergers and acquisitions and more general corporate strategy. Since moving to
Guernsey in 2005 he has acted as a Director of a number of Guernsey based
companies and funds. He returned to the UK in 2023 and is now UK resident. He
holds an MA in Biochemistry from Cambridge University.
Peter Hames
Non-executive Director (Independent)
(Appointed 24 June 2021)
Peter Hames spent 18 years of his investment career in Singapore, where in
1992 he co-founded Aberdeen Asset Management's Asian operation and, as
director of Asian Equities, he oversaw regional fund management teams
responsible for running a number of top-rated and award-winning funds. Peter
is a former director of Polar Capital Technology Trust plc. and Syncona Ltd
(formerly BACIT Ltd). Peter is also an independent member of the operating
board of Genesis Investment Management, LLP and is a director of The Genesis
Emerging Markets Investment Company.
Julian Healy
Non-executive Director (Independent)
(Appointed 23 July 2018)
Julian Healy has over thirty years' experience of banking, private equity and
investment management in emerging and frontier markets. He holds an MA in
Modern Languages from Cambridge University and is a member of the Institute of
Chartered Accountants in England and Wales. He has been a non-executive
director of a number of companies and financial institutions in emerging
markets.
Kathryn Matthews
Non-executive Director (Independent)
(Appointed 10 May 2019)
Kathryn Matthews has been involved in financial services for the last 40
years. Her last executive role was as Chief Investment Officer, Asia Pacific
(ex-Japan), for Fidelity International. Prior to that, Kathryn held senior
appointments with William M Mercer, AXA Investment Managers, Santander Global
Advisers and Baring Asset Management. She has previously been on the Board of
Directors of a number of investment companies including Fidelity Asian Values
and JPMorgan Chinese Investment Trust. She is currently on the Board of
JPMorgan Asia Growth and Income Fund, British International Investment Ltd and
is Chairman of Barclays Investment Solutions Ltd.
Hai Thanh Trinh
Non-executive Director (Independent)
(Appointed 30 June 2022)
Hai Thanh Trinh has over 35 years' business experience, having held various
managerial and senior executive positions at financial services institutions
in Vietnam and in the United States including Indochina Capital, New York Life
and BAOVIET Insurance Group. Prior to joining the Company, he used to serve as
an Independent Director at Saigon Hanoi Commercial Bank, and An Binh
Commercial Bank. He currently also serves as Independent Director and Chairman
of the Audit Committee of Van Phu Invest, a listed real estate developer in
Vietnam. He holds an MBA in Finance and Investment from The George Washington
University, a FFSI (Fellow of LOMA Financial Services Institute) and a LLIF
granted by LIMRA Leadership Institute and The Wharton School (University of
Pennsylvania).
Thuy Bich Dam retired from the Board with effect from 18 April 2023.
DISCLOSURE OF DIRECTORSHIPS IN OTHER PUBLIC COMPANIES LISTED ON RECOGNISED
STOCK EXCHANGES
Directorships Stock Exchange
Company Name
Huw Evans
Third Point Investors Limited London
Peter Hames
None -
Julian Healy
Fidelity Emerging Markets Limited London
Kathryn Matthews
Perpetual Limited Australia
JPMorgan Asia Growth & Income Plc London
Hai Thanh Trinh
Van Phu Investment Joint Stock Company Vietnam
The Board is required to declare any potential conflicts at each meeting.
During the year, no Director reported any potential conflicts that may affect
their independence.
CORPORATE GOVERNANCE STATEMENT
The Board is responsible for strategy and has established an annual programme
of agenda items under which it reviews the objectives and strategy for the
Company.
To comply with the UK Listing Regime, the Company must comply with the
requirements of the UK Code. The Company is also required to comply with the
Guernsey Code. The Company is a member of the AIC and by complying with the
AIC Code, the Company is deemed to comply with both the UK Code and the
Guernsey Code. The Board has considered the Principles and Provisions of the
AIC Code. The AIC Code addresses the Principles and Provisions set out in the
UK Code, as well as setting out additional Provisions on issues that are of
specific relevance to the Company as an investment company. The Board
considers that reporting against the Principles and Provisions of the AIC
Code, which has been endorsed by the Financial Reporting Council and the
Guernsey Financial Services Commission provides relevant information to
shareholders. The AIC Code is available on the AIC website (www.theaic
(http://www.theaic) .co.uk). It includes an explanation of how the AIC Code
adopts the Principles and Provisions set out in the UK Code to make them
relevant for investment companies.
The UK Code includes provisions relating to the role of the chief executive,
executive directors' remuneration and the need for an internal audit function.
For the reasons set out in the AIC Code, and as explained in the UK Corporate
Governance Code, the Board considers that these provisions are not relevant to
the Company, being an externally managed investment company. The Company has
therefore not reported further in respect of these provisions.
The Board is of the view that throughout the year ended 30 June 2023 the
Company complied with the recommendations of the AIC Code. Key issues
affecting the Company's corporate governance responsibilities, how they are
addressed by the Board and application of the AIC Code are presented below.
Provision 1 of the AIC Code requires the annual report to set out the
following information:
How opportunities and risks to the future success of the business have been An overview of the Company's performance is set out in the Chairman's
considered and addressed Statement, and a more detailed review is set out in the Investment Manager's
Report. A detailed review of risk management is set out below.
The sustainability of the company's business model The sustainability of the business model is set out in the Viability Statement
below.
How its governance contributes to the delivery of its strategy The approach to governance is set out in this section of the Annual Report, in
particular the section 172 statement below and the description of the board
structure.
There is no information that is required to be disclosed under Listing Rule
9.8.4.
Section 172 Statement
Section 172 of the UK Companies Act applies directly to UK domiciled
companies. Nonetheless, the intention of the AIC Code is that the matters set
out in section 172 are reported on by all London listed investment companies,
irrespective of domicile, provided that this does not conflict with local
company law.
Section 172 states that: A director of a company must act in the way he or she
considers, in good faith, would be most likely to promote the success of the
company for the benefit of its members as a whole, and in doing so have regard
(amongst other matters) to the six items (a) to (f) in the table below. A
summary of relevant activities is also included in the table:
Section 172(1) statement area Reference
(a) the likely consequences of any decision in the long term, In managing the Company, the aim of the Board and the Investment Manager is
always to ensure the long-term sustainable success of the Company and,
therefore, the likely long-term consequences of any decision are a key
consideration. In managing the Company during the year under review, the Board
acted in the way which it considered, in good faith, would be most likely to
promote the Company's long-term sustainable success and to achieve its wider
objectives for the benefit of shareholders as a whole, having had regard to
the Company's wider stakeholders and the other matters set out in section 172
of the UK Companies Act.
(b) the interests of the Company's employees, The Company does not have any employees.
(c) the need to foster the Company's business relationships with suppliers, The Board's approach is described under "Stakeholders" below.
customers and others,
(d) the impact of the Company's operations on the community and the The Board's approach is described under ESG below.
environment,
(e) the desirability of the Company maintaining a reputation for high The Board's approach is described under "Culture and Values" below.
standards of business conduct, and
(f) the need to act fairly as between members of the company. The Board's approach is described under "Stakeholders" below.
Actions taken by the Board which fall under the scope of Section 172
During the year, the Board received regular quarterly reports from the · The Board and the Investment Manager agreed a reduction in
Investment Manager, the Corporate Broker, and its marketing and distribution management fees with effect from 1 July 2023, as described in the Chairman's
advisors on market conditions and the views of shareholders. Huw Evans met a Statement.
number of the Company's major shareholders in order to understand their views
on the Company. Based on market intelligence received, the Board undertook a · Throughout the year, the Board regularly reviewed with the
number of activities and made a number of decisions which fall under the scope Corporate Broker the discount to net asset value at which the Company's shares
of Section 172. trade and supervised the share buyback programme.
· In October 2022, the Company appointed Barclays Bank Plc to
provide investor engagement services which should help further develop the
Company's shareholder base.
· The Board decided to reduce the half yearly dividend in March
2023 to 6.5 cents per share in line with the reduction in the NAV. In October
2023, in recognition that the NAV had increased as at 30 June 2023, the
dividend was increased to 7.0 cents per share.
Purpose
The Company is an investment company and its purpose is to provide
non-Vietnamese investors with the opportunity to achieve medium to long-term
returns through investment in Vietnam.
Culture and Values
The Directors' overarching duty is to promote the success of the Company for
the benefit of investors, with due consideration of other stakeholders'
interests. The Company's approach to investment is explained in the Investment
Manager's Report. The Board applies various policies and practices to ensure
that the Board's culture is in line with the Company's purpose, values and
strategy. The Directors aim to achieve a supportive business culture combined
with constructive challenge.
The Company has a number of policies and procedures in place to assist with
maintaining a culture of good governance including those relating to
diversity, conflicts of interest, and dealings in the Company's shares. The
Company's policy is to have zero tolerance of corruption, bribery and tax
evasion either by the Company and its officers or by its suppliers.
The Board assesses and monitors compliance with these policies regularly
through Board meetings and the annual evaluation process. The Board seeks to
appoint the most appropriate service providers for the Company's needs and
evaluates the services on a regular basis. The Board considers the culture of
the Investment Manager and other service providers through regular reporting
and by receiving regular presentations as well as through ad hoc interaction.
The Board also seeks to control the Company's costs, thereby enhancing
performance and returns for the Company's shareholders. The Directors consider
the impact on the community and environment.
ESG
The Board takes a close interest in ESG issues. It receives regular reports
from the Investment Manager on the development of best practice in Vietnam and
on the Investment Manager's approach to ESG. It also receives reports on
engagement with individual investee companies. As management of the portfolio
is delegated to the Investment Manager, the practical implementation of policy
rests with the Investment Manager. A description of the Investment Manager's
approach to ESG issues is set out below and examples of how the Investment
Manager carries out their ESG due diligence are included in the Investment
Manager's Report.
Investment Manager's Approach to Responsible Investing
Responsible investing has been and continues to be a core tenet of
VinaCapital's investment philosophy and process. VinaCapital, as a firm, has
long recognised that ESG issues can have a significant impact on value
creation across the investment cycle. The Investment Manager has adopted a
Responsible Investment policy to formalise its approach to incorporating
environmental, social, and corporate governance considerations across its
investment activities. In developing this policy, VinaCapital has considered a
range of codes and standards, including the United Nations-supported PRI, the
IFC's Performance Standards on Environmental and Social Sustainability, and
its internal policies.
As more institutional investors invest into Vietnam and Vietnamese businesses
expand, ESG related matters have taken on greater importance. In recent years,
the Investment Manager has witnessed situations in which shareholder value
declined significantly when businesses polluted the environment, ignored
global standards, relocated families from land without paying adequate
compensation, or did not adhere to international best practices with respect
to corporate governance.
VinaCapital has developed a framework to identify ESG risks at potential
investee companies, and helps businesses improve their practices, where
appropriate, by incorporating ESG terms as part of its overall terms of
investment in private opportunities. VinaCapital engages expert advisors and
consultants to evaluate ESG risks as part of its due diligence activities
prior to investing, as well as monitoring any applicable remediation actions
post-investment.
VinaCapital has committed to adopting and implementing the PRI, which
VinaCapital believes is in the best long-term interests of its investors, and
which contributes to a more long-term oriented, transparent, sustainable, and
well-governed investment market. While VinaCapital aims to adopt best
practices of ESG in its investment activities and at its portfolio companies,
VinaCapital also takes a pragmatic approach, recognising the limitations of
investing in developing markets. VinaCapital therefore focuses less on
screening companies solely on ESG issues, and more on stewardship activities
where VinaCapital believes a patient timeframe and active engagement can
improve outcomes.
VinaCapital believes ESG considerations materially impact long term value
creation and has therefore integrated ESG considerations into the investment
decision making process. This is typically done through a combination of
screening and active stewardship, where possible. As stewards of its
investors' capital, VinaCapital systematically engages with its investee
companies on ESG matters. VinaCapital's engagement
takes various forms including voting, direct discussions with management, and
educational initiatives, among others.
Specifically, ESG forms a core part of the due diligence and investment
activities that the Company carries out, particularly when it comes to making
private equity investments, as this is an area in which VinaCapital can exert
influence within its portfolio companies. Through its private equity
investment approach, VinaCapital has an opportunity to carry out ESG due
diligence using external consultants, or through its in-house ESG expertise.
The due diligence review typically identifies weaknesses relative to local and
international standards. Such weaknesses do not necessarily deter the Company
from making an investment but rather provide a clear roadmap for improvement.
Importantly, with the recommendations for change, VinaCapital can gauge
whether a sponsor is motivated to make these improvements to their business.
VinaCapital feels that the greatest value added to the business and in society
comes from the motivation for change and the actions that a company takes to
improve ESG weaknesses and, thus, VinaCapital gravitates more towards these
types of opportunities and sponsors.
For publicly listed companies, VinaCapital has implemented a rigorous
framework to assess ESG risks and encourage companies to improve their
practices when warranted.
Currently VinaCapital's research team has made over 100 assessments of
publicly listed companies, including those held in the Company's public equity
portfolio. VinaCapital applies this evaluation to the listed part of the
Company's portfolio to determine the weighted average results of the portfolio
at the current point in time. With this understanding, VinaCapital can set a
benchmark as to where it will like Company's portfolio to be in the next
twelve to twenty-four months. Actions such as encouraging management teams to
make impactful improvements or divesting holdings that rank poorly by ESG
standards will be taken to achieve VinaCapital's objectives.
Investment Manager's Approach to Voting
As stewards of its investors' capital, VinaCapital systematically engages with
its investee companies on governance and voting matters. VinaCapital's
engagement takes various forms including voting, direct discussions with
management, and education initiatives, among others.
As part of VinaCapital's Voting Policy that applies to all funds that
VinaCapital manages, a core principle is that VinaCapital seeks to actively
participate and vote, directly or through proxy voting, on all resolutions.
VinaCapital has published its ESG Policy on VinaCapital's website and
encourages investors to review the policies and principles that guide
VinaCapital's approach to responsible investing and stewardship.
Stakeholders
The Company is an externally managed investment company whose activities are
all outsourced. It does not have any employees. The Board has identified its
key stakeholders, and how the Company engages with them, in the table below:
Stakeholder Key Considerations Engagement
Shareholders As an investment company, the shareholders are, in effect, both its owners and A detailed explanation of the Company's approach is set out under Relations
its customers, obtaining investment returns from the Company. A well-informed With Shareholders below.
and supportive shareholder base is crucial to the long-term sustainability of
the Company. Understanding the views and priorities of shareholders is,
therefore, fundamental to retaining their continued support.
The Board receives regular reports from the Investment Manager as well as
independent reports from the Corporate Broker and the other organisations
engaged in promoting the Company on relations with, any views expressed by,
In considering shareholders, the Board's key considerations are: shareholders.
- Overall investment returns;
- The ability to maintain, and potentially grow, the dividend; The Board provides shareholders with the opportunity to review the future of
the Company every five years.
- Controlling the discount (and potentially the premium) at which shares trade
to net asset value; and
- Control of costs.
Investment Manager Management of the investment portfolio is delegated to the Investment Manager. The Board engages in regular, open and detailed communication with the
Investment performance is crucial to the long-term success of the Company. Investment Manager. It reviews in detail the overall performance of the
Company and of individual investments. The relationship with and performance
of the Investment Manager is monitored and reviewed by the Management
Engagement Committee.
In setting investment management fees, the Board seeks to achieve an
appropriate balance between value for money and an incentive to retain a
strong and capable portfolio management team along with supporting staff and
infrastructure.
Stakeholder Key Considerations Engagement
Administrator & Company Secretary and other key service providers. The Administrator and Company Secretary are key to the effective running of The Administrator and Company Secretary attend all Board meetings.
the Company.
The Management Engagement Committee undertakes an annual review of the key
The Company has a number of other key service providers, each of which service providers, encompassing performance, level of service and cost. Each
provides an important service to the Company and ultimately to its provider is an established business, and each is required to have in place
shareholders. suitable policies to ensure that they maintain high standards of business
conduct, treat customers fairly, and employ corporate governance best
practice.
All bills and expense claims from suppliers are paid in full, on time and in
compliance with the relevant contracts.
While portfolio investments are not stakeholders in the conventional sense,
the Board acknowledges its responsibility to ensure where possible that
investee companies adhere to good standards of conduct with regard to their
own stakeholders. In some cases, the Investment Manager may have the capacity
to affect these matters directly; in others, the scale of the Company's
investment gives it the ability to influence the management of its investee
holdings.
Relations with Shareholders
The Company aims to provide shareholders with a full understanding of the
Company's investment objective, policy and activities, its performance and the
principal investment risks by means of informative annual and half year
reports. This is supplemented by the publication by the Investment Manager of
a monthly fact sheet, both daily and weekly estimates of the NAV per share and
a regular series of video presentations, all of which are available on the
Company's website (https://
(https://aztecfseu-my.sharepoint.com/personal/tinashe_gondora_aztecgroup_co_uk/Documents/Microsoft%20Teams%20Chat%20Files/e%20(https:/)
vof.vinacapital.com).
A detailed analysis of the substantial shareholders of the Company and a
report from the Corporate Broker on investor sentiment and industry issues is
provided to the Directors at each Board meeting. The Chairman and
representatives of the Investment Manager are available to meet shareholders
to discuss strategy and to understand any issues and concerns which they may
have. The results of such meetings are reported at the following Board
meeting.
Shareholders wishing to communicate with the Chairman, the SID or any other
member of the Board, may do so by writing to the Company, for the attention of
the Company Secretary, at the Registered Office. The Directors welcome the
views of all shareholders and place considerable importance on communications
with them.
The Annual General Meeting of the Company provides a forum for shareholders to
meet and discuss issues with the Directors of the Company.
Re-election and Tenure of Directors
As set out in the AIC Code, Directors submit themselves for annual re-election
and in any event as soon as it is practical after their initial appointment to
the Board. The Board has adopted a formal policy requiring that Directors
should stand down at the AGM following the ninth anniversary of their initial
appointment.
The individual performance of each Director standing for re-election has been
evaluated by the other members of the Board and a recommendation will be made
to shareholders to vote in favour of their re-election at the AGM.
Board Proceedings and Relationship with the Investment Manager
The Chairman encourages open debate to foster a supportive and co-operative
approach for all participants.
The Board meets formally six times each year and representatives of the
Investment Manager are in attendance, when appropriate, at each meeting.
During the year under review, the Board held two meetings in person with the
Investment Manager in Vietnam and two in Europe. In addition two formal Board
meetings were held during the year under review by video conference during
which the portfolio and its performance was reviewed. Going forward, the Board
will continue to arrange a combination of video conferences and meetings in
person, while recognising the cost and the environmental impact of
international travel.
The Board, at its regular meetings, undertakes reviews of key investment and
financial data, revenue projections and expenses, analyses of asset
allocation, transactions, share price and NAV performance, marketing and
shareholder communication strategies, the risks associated with pursuing the
investment strategy, peer company information and industry issues. In addition
to the scheduled meetings, ad hoc meetings of the Board are held during the
year to deal with any significant matters which arise which are attended by
those directors who are available at the time.
The Board has agreed a schedule of matters specifically reserved for decision
by the Board. This includes establishing the investment objectives, strategy
and benchmarks, the permitted types or categories of investments, the markets
in which transactions may be undertaken, the level of permitted borrowings,
the amount or proportion of the assets that may be invested in any category of
investment or in any one investment, and the Company's treasury share and
share buyback policies. Representatives of the Investment Manager attend each
meeting of the Board to address questions on specific matters and to seek
approval for specific transactions which the Investment Manager is required to
refer to the Board. The Board has delegated discretion to the Investment
Manager to exercise voting powers in investee companies on the Company's
behalf.
The Investment Manager is generally responsible for routine announcements of
information but the Board is responsible for communications regarding major
corporate issues.
The Directors have access to the advice and services of the Company Secretary,
who is responsible to the Board for ensuring that the Directors are aware of
the procedures to be followed. The Company Secretary is also responsible for
ensuring good information flows between all parties.
At Board meetings the Company Secretary provides a report in which the
Directors are given key information on the Company's regulatory and statutory
requirements as they arise, including information on the role of the Board,
matters reserved for its decision, the terms of reference for the Board
Committees, the Company's corporate governance practices and procedures and
the latest financial information. It is the Chairman's responsibility to
ensure that the Directors have sufficient knowledge to fulfil their roles and
Directors are encouraged to undertake training courses where appropriate.
Continued appointment of the Investment Manager
Following an annual appraisal carried out by the Management Engagement
Committee, the Board considers that it is in the best interests of
shareholders to continue with the appointment of VinaCapital Investment
Management Ltd as the Investment Manager.
Board Committees
There are four Board committees in operation: the Audit Committee, Management
Engagement Committee, Remuneration Committee and Nomination Committee. The
chairmanship and membership of each Committee throughout the year, and the
number of meetings held during the year, are shown in the table below. A
summary of the duties of each of the Committees is provided below. The
chairman of each Committee presents their findings to the Board at the next
Board meeting following each Committee meeting.
The terms of reference of each committee can be obtained from the Company
Secretary.
Audit Committee
The Audit Committee, which meets at least three times a year, comprises all of
the Directors and is chaired by Julian Healy.
The Audit Committee is responsible for monitoring the process of production
and ensuring the integrity of the Company's Financial Statements and advises
the Board whether the Annual Report and Financial Statements are fair,
balanced and understandable. The Audit Committee is also responsible for
overseeing the relationship with the External Auditor and the Company's
process for assessing and managing risk. The responsibilities and activities
of the Audit Committee are set out in detail in the Report of the Audit
Committee below.
Management Engagement Committee
The Management Engagement Committee comprises all of the Directors and is
chaired by Kathryn Matthews. The Committee's responsibilities include
reviewing the performance of the Investment Manager under the Investment
Management Agreement and considering any variation to the terms of the
agreement. The Management Engagement Committee also reviews the performance of
the Company Secretary, Corporate Brokers, Custodian, Administrator, Registrar,
other key service providers and any matters concerning their respective
agreements with the Company.
Remuneration Committee
The Remuneration Committee comprises all of the Directors and is chaired by
Peter Hames. The Committee's responsibilities include reviewing the ongoing
appropriateness and relevance of the remuneration policy; determining the
individual remuneration of the chairman and each non-executive director; and
the selection and appointment of any remuneration consultants who advise the
Committee.
The Directors' Remuneration Report is set out below.
Nomination Committee
The Nomination Committee comprises all of the Directors and is chaired by Huw
Evans. The Committee's responsibilities include reviewing the structure, size
and composition of the Board and making recommendations to the Board in
respect of any changes; succession planning for the Chairman and the remaining
non-executive directors; making recommendations to the Board concerning the
membership and chairmanship of the Board committees; identifying and
nominating for the approval of the Board candidates to fill Board vacancies;
and, before any new appointment is recommended, evaluating the balance of
skills, knowledge, experience and diversity within the Board and preparing an
appropriate role description. The Committee will seek to ensure that for any
recruitment process a suitably diverse list of candidates is considered. The
Company's policy is that in making appointments it will seek to avoid any
discrimination based on age, gender, ethnicity, sexual orientation, disability
or educational, professional and socio-economic backgrounds. The Chairman
absents himself from discussions on succession to his own role.
Board Composition
As at the date of this report the Board consists of five non-executive
directors, each of whom is independent of the Investment Manager. No member of
the Board is a Director of another investment company managed by the
Investment Manager, nor has any Board member been an employee of the Company,
its Investment Manager or any of its service providers.
Julian Healy was appointed as the SID on 2 December 2021. The SID provides
shareholders with someone whom they can contact if they have concerns which
cannot be addressed through the normal channels. The SID is also available to
act as an intermediary between the other Directors and the Chairman (if
required). The role serves as an important check and balance in the governance
process.
The Board reviews the independence of the Directors at least annually.
Board Diversity
The Board believes that each Director has appropriate qualifications, industry
experience and expertise to guide the Company and that the Board as a whole
has an appropriate balance of skills, experience, background and knowledge. As
at the date of this report, the Board comprises four men and one woman. One of
the directors is Vietnamese and resident in Vietnam. The Directors'
biographies can be found within the Board of Directors section. The gender
identity and ethnic background reporting as at 30 June 2023 is provided below.
Gender Identity Number of Board members Percentage of the Board
Male 4 80%
Female 1 20%
Ethnic Background Number of Board members Percentage of the Board
White British or other White (including minority white groups) 4 80%
Asian 1 20%
Note: Listing Rule 9.8.6R(11): 'As the Board consists of five individuals the
data in the above table was reviewed by each of the individual board members'
As an externally managed company, the Company does not have any employees. The
Board acknowledges the importance of diversity for the effective functioning
of the Board which helps create an environment for success and effective
decision making. The Board is aware of the recommendations of the Hampton
Alexander Review on gender diversity and the Parker Review on ethnic diversity
and inclusion on company boards. At present the board does not meet the target
on gender diversity but does meet the target on ethnic diversity. Prior to
the appointment of Mr Hai Trinh and the subsequent retirement of Ms Thuy Dam,
the board did meet the target on gender diversity. The board's decision to
appoint Mr Hai Trinh was on the basis that he was the strongest candidate
available to fill the vacancy. As the Board is made up wholly of non-executive
directors it only has two roles which are classed in the UK Listing Rules as
"senior", namely the Chairman and Senior Independent Director. At present
neither of these roles is filled by a female director. The Board is focused on
addressing all of the relevant targets and, through its Nomination Committee,
will keep these matters under regular review and will take account of the
targets when appointing further board members in the future.
Appointment of New Directors
The Board seeks to ensure that any vacancies arising are filled by the best
qualified candidates. The Board's policy is that the Company's Directors
should bring a wide range of skills, knowledge, experience, backgrounds and
perspectives to the Board. All appointments are made on merit, and in the
context of the skills, knowledge and experience that are needed for the Board
to be effective. Part of the remit of the Board's Nomination Committee is,
before any new appointment is recommended, evaluating the balance of skills,
knowledge, experience and diversity within the Board.
For new appointments to the Board, nominations are sought from the Directors
and from other relevant parties, and independent search consultants are
appointed when appropriate. Candidates are then interviewed by members of the
Nomination Committee. The Board has a breadth of experience relevant to the
Company, and the Directors believe that any changes to the Board's composition
can be managed without undue disruption. Any incoming Directors of the Company
participate in a full, formal and tailored induction programme.
Board and Committee Meetings
During the year ended 30 June 2023, the number of scheduled Board and
Committee meetings attended by each Director was as follows:
Board Meetings Audit Committee Meetings Management Engagement Committee Nomination Committee Remuneration Committee Meetings
Meetings Meetings
Number of meetings 7 6 N/A N/A 1
Attendance
Huw Evans 7 6 _ _ 1
Thuy Bich Dam (1) 5 5 _ _ _
Peter Hames 7 6 _ _ 1
Julian Healy 7 6 _ _ 1
Kathryn Matthews 7 6 _ _ 1
Hai Thanh Trinh 7 6 _ _ 1
(1) Thuy Bich Dam retired on 18 April 2023.
Meetings of the Management Engagement Committee, Remuneration Committee and
Nomination Committee were held on 6 October 2023. In addition to the scheduled
meetings noted above, a number of ad hoc Board and Committee meetings were
held during the year which were attended by those Directors available at the
time.
Board Performance
The Board has a formal process to evaluate its own performance and that of its
Chairman annually. The provisions of the AIC Code require a FTSE 350 company
to have its annual evaluation carried out in conjunction with an independent
agency every three years and a review was carried out in 2022 by an external
evaluator, Lintstock Ltd. During the year under review an internal assessment
was conducted by the Directors. This review raised no issues of significance,
and the Board was satisfied that the structure, mix of skills and operation of
the Board continue to be effective and relevant for the Company.
Internal Controls and Risk
(i) Risk Management System
Day to day management of risk is the responsibility of the Investment Manager,
whose ERM framework provides a structured approach to managing risk across all
of its managed funds by establishing a risk management culture through
education and training, formalised risk management procedures, defining roles
and responsibilities with respect to managing risk, and establishing reporting
mechanisms to monitor the effectiveness of the framework. The Audit Committee
works closely with the Investment Manager on the application, consideration
and review of the ERM framework to the Company's risk environment.
Regular risk assessments and reviews of internal controls are undertaken by
the Audit Committee. At each meeting, the Board considers both previously
identified and emerging risks. The Administrator and Company Secretary and
other service providers are also encouraged to provide their views on emerging
risks. The reviews cover the strategic, investment, operational and
financial risks facing the Company. In arriving at its judgement of the risks
which the Company faces, the Board has considered the Company's operations in
light of the following factors:
· the nature and extent of risks which it regards as acceptable for the Company
to bear within its overall business objective;
· the threat of such risks becoming reality;
· the Company's ability to reduce the incidence and impact of risk on its
performance; and
· the cost to the Company and benefits related to the Company of third parties
operating the relevant controls.
(ii) Internal Control Assessment Process
Responsibility for the establishment and maintenance of an appropriate system
of internal control rests ultimately with the Board. However, the Board is
dependent on the Investment Manager and other service providers to achieve
this and a process has been established which seeks to:
· review the risks faced by the Company and the controls
in place to address those risks;
· identify and report changes in the risk environment;
· identify and report changes in the operational
controls;
· identify and report on the effectiveness of controls
and errors arising; and
· ensure no override of controls by the Investment
Manager or Administrator or any other service providers.
The key procedures which have been established to provide effective internal
financial controls are as follows:
· investment management is provided by the Investment Manager. The Board is
responsible for the overall investment policy and monitors the investment
performance, actions and regulatory compliance of the Investment Manager at
regular meetings;
· accounting for the Company and subsidiaries is provided by Aztec Group;
· fund administration is provided by Aztec Group;
· custody of those assets which can be held by a third-party custodian is
undertaken by Standard Chartered Bank;
· the Management Engagement Committee monitors the contractual arrangements with
each of the key service providers and their performance under these contracts;
· mandates for authorisation of investment transactions and expense payments are
set by the Board and documented in the Investment Management Agreement;
· the Board receives financial information produced by the Investment Manager
and by Aztec Group on a regular basis. Board meetings are held regularly
throughout the year to review such information; and
· actions are taken to remedy any significant failings or weaknesses, if
identified.
(iii) Risk Management
For the purposes of making the Viability Statement, the Board has undertaken a
robust review of the principal risks and uncertainties facing the Company
including those that would threaten its business model, future performance,
solvency or liquidity. A risk matrix and heat map prepared by the Investment
Manager and subject to detailed scrutiny by the Audit Committee are the key
tools in this review, along with a mechanism at each quarterly Audit Committee
meeting to consider and monitor any emerging risks. The principal risks are
described in the following table together with a description of the mitigating
actions taken by the Board.
Geopolitical
Description Mitigating Action
Risks to global growth emerged in February 2022 as a result of the conflict The Investment Manager takes full account of economic risks in managing the
between Russia and Ukraine and continued throughout the year under review. Company's investments. While there has been little direct effect from the war
in Ukraine, the Investment Manager has reviewed existing and potential
There is also a risk of an increase in the geopolitical tensions in the Asia investments with particular attention to the economic effects of increased
region. global inflation, particularly in energy and food prices.
Macroeconomic and Market
Description Mitigating Action
Opportunities for the Company to invest in Vietnam have come about through the The Board is regularly briefed on political and economic developments by the
liberalisation of the Vietnamese economy. Were the pace or direction of change Investment Manager. The Investment Manager publishes a monthly report on the
to the economy to alter in the future, the interests of the Company could be Company which includes information and comment on macroeconomic and, where
damaged. relevant, political developments relating to Vietnam.
Changes in the equilibrium of international trade caused, for example, by the
imposition of tariffs could affect the Vietnamese economy and the companies in
which the Company is invested.
As Vietnam becomes increasingly connected with the rest of the world,
significant world events will have a greater impact on the country. The
consequences of these events are not always known and, in the past, have led
to increased uncertainty and volatility in the pricing of investments. The
continuing effects of the Russian invasion of Ukraine, in particular on global
commodity prices, remain a cause for concern. The effects continue to be felt
in heightened inflation and higher interest rates intended to combat this.
Investment Performance
Description Mitigating Action
The Investment Management Agreement requires the Investment Manager to provide The Board maintains close contact with the Investment Manager and key
competent, attentive, and efficient services to the Company. If the Investment personnel of the Investment Manager attend each Board meeting.
Manager was not able to do this or if the Investment Management Agreement were
terminated, there could be no assurance that a suitable replacement could be
found and, under those circumstances, the Company could suffer a loss of
value. The Board reviews the performance of the Investment Manager annually and
provides feedback to the Investment Manager on matters that could be improved.
The performance of the Company's investment portfolio could be poor, either
absolutely or in relation to the Company's peers. Within the portfolio, The Board monitors the Company's portfolio of underlying investments and
individual investments could suffer a partial or total loss of value. For some receives regular reports on the performance of the portfolio and on the
structured investments, downside protections are subject to risk that the underlying investments. The Investment Manager seeks to limit risks by
counterparty is unable to meet their obligations. investing in a portfolio with limits on exposure to market sectors and to
individual investments. Privately negotiated investments are closely
scrutinised at all stages from initial investment, through ongoing regular
monitoring and at the exit stage. During the year under review, particular
There is a risk that privately negotiated deals are not executed at the best attention was paid to the risks and thence the valuations of PEPT investments,
possible price or that timing of deals is not optimal due to the presence of as described in the Chairman's Statement. The Investment Manager is based in
co-investors who may have different liquidity or timing requirements. Vietnam and closely monitors all developments which may affect investee
companies. The Investment Manager attends all Board meetings.
There is also a risk that the Investment Manager is not able to access
suitable private equity investments. Private equity investments are subject to
higher execution risk than the risks associated with trading in public
markets. Satisfactory performance of private equity investments relies on
detailed and continuing management oversight.
Operational
Description Mitigating Action
The Company is dependent on third parties for the provision of all systems and The Board receives regular reports from the Investment Manager on its internal
services (in particular, those of the Investment Manager and the policies, controls and risk management. It also receives formal assurance each
Administrator) and any control failures or gaps in these systems and services year from the Investment Manager on the adequacy and effectiveness of its
could result in a loss or damage to the Company. internal controls, including those concerning cyber risk.
The Board has taken measures to ensure segregation of functions by appointing
Aztec Group as the Company's independent administrator and Standard Chartered
Bank as custodian for those assets which can be held by a third-party
custodian.
Fair Valuation
Description Mitigating Action
The risks associated with the fair valuation of the portfolio could result in The Board reviews the fair valuation of the listed and unlisted investment
the NAV of the Company being misstated. portfolio with the Investment Manager at the end of each quarter and focuses
in particular on any unexpected or sharp movements in market prices.
The quoted companies in the portfolio are valued at market price but many of
the holdings are of a size which would make them difficult to liquidate at The weekly, monthly and year-end NAV calculations are prepared by the
these prices in the ordinary course of market activity. Company's Administrator and reviewed by the Investment Manager.
The unlisted securities are valued at their quoted prices on UPCoM or using The Board has appointed independent external valuers to assist in determining
quotations from brokers, but many of the holdings are of a size which may make fair values of certain private equity investments at the year end in
them difficult to liquidate at these prices in the ordinary course of market accordance with International Financial Reporting Standards.
activity.
The remaining valuations are estimated by the Investment Manager using pricing
The fair valuation of operating assets and private equity investments is analysis and discounted cash flows and, in all cases, valuations are reviewed
carried out according to international valuation standards. The investments by the Audit Committee and approved by the Board.
are not readily liquid and may not be immediately realisable at the stated
carrying values.
The values of the Company's underlying investments are, on a 'look-through'
basis, mainly denominated in VND whereas the Company's Financial Statements
are prepared in USD. The Company makes investments and receives income and
proceeds from sales of investments in USD. The Company does not hedge its VND
exposure, so exchange rate fluctuations could have a material effect on the
NAV. The sensitivity of the NAV to exchange rates is set out in Note 20(a) of
the Financial Statements.
Legal and Regulatory
Description Mitigating Action
Failure to comply with relevant regulation and legislation in Vietnam, The laws and regulations in Vietnam continue to develop. The Investment
Guernsey, Singapore, the British Virgin Islands or the UK may have an impact Manager maintains a risk and compliance department which monitors compliance
on the Company. with local laws and regulations as necessary. Locally based external lawyers
(typically members of major international law firms) are engaged to advise on
portfolio transactions where necessary.
Although there are anti-bribery and corruption policies in place at the
Company, the Investment Manager and all other service providers, the Company
could be damaged and suffer losses if any of these policies were breached. As to its non-Vietnamese regulatory and legal responsibilities: (i) the
Company is administered in Guernsey by Aztec Group which reports to the Board
at each Board meeting on Guernsey compliance matters and more general issues
applicable to Guernsey companies listed on the LSE, and (ii) the Investment
Manager monitors legal, regulatory and tax issues in Singapore and the BVI,
where the Company owns subsidiaries.
The Investment Manager and other service providers confirm to the Board at
least annually that they maintain anti-bribery and corruption policies and are
required to disclose any breaches of these policies.
Changing investor sentiment
Description Mitigating Action
As a Company investing mainly in Vietnam, changes in investor sentiment The Investment Manager has an active Investor Relations programme, keeping
towards Vietnam and/or emerging and frontier markets in general may lead to shareholders and other potential investors regularly informed on Vietnam in
the Company becoming unattractive to investors. general and on the Company's portfolio in particular. At each Board meeting
the Board receives reports from the Investment Manager, from the corporate
The clamp down in recent years by the Vietnamese government highlights the Broker and from the UK Marketing and Distribution partner and is updated on
risks associated with corruption in Vietnam and may lead to international the composition of, and any movements in, the shareholder register. The
investors adopting a more cautious approach to investment in the country. Chairman also communicates regularly with major shareholders directly,
Changes in international investor sentiment could lead to reduced demand for independent of the Investment Manager.
its shares and a widening discount.
In seeking to make the Company attractive to investors seeking an income the
Company pays regular dividends.
In seeking to close the discount, the Board has also approved and implemented
an extensive share buy-back programme, which is discussed under Discount
Management on page 49.
ESG Risk
Description Mitigating Action
As responsible investors, the Board and Investment Manager are aware of the As set out in the Corporate Governance Statement under "ESG" and in the
growing focus on ESG matters. There is a risk that the value of an investment Investment Manager's Report under "ESG and Voting Principles", the Board takes
could be damaged for example by a failure of governance and/or a failure to a close interest in ESG issues and receives regular reports on progress in
protect the environment, employees or the wider community in which a company this increasingly important area. The Investment Manager integrates ESG
operates. As evidence of the effects of climate change grows, there is analysis into its portfolio management process. VinaCapital has increased its
increasing focus by shareholders on investment companies' role in influencing resources focused on ESG matters and its engagement with investee companies.
investee companies' approach to environmental risks. Climate change and other ESG risks are also considered when valuing
investments both before investment and when held in VOF's portfolio.
China changed its policy on lock downs to control COVID-19 in October 2022,
becoming the last major economy to do so. The Board and the Investment Manager
remain aware of the risk of further pandemic outbreaks but the immediate risk
to economic performance has reduced and the risk from COVID-19 is no longer
considered to be a principal risk.
(iv) Internal Audit Function
The Audit Committee has reviewed the need for an internal audit function for
the Company itself. The Committee has concluded that the systems and
procedures employed by the Investment Manager and the Administrator, including
their own internal audit functions, currently provide sufficient assurance
that a sound system of internal control, which safeguards the Company's
assets, is maintained. As all operations of the Company are outsourced to
third parties, an internal audit function specific to the Company is therefore
considered unnecessary. The Investment Manager has appointed KPMG Vietnam as
its internal auditor and the Administrator has appointed KPMG Channel Islands
Limited as its internal auditor.
Directors' Dealings
The Company has adopted a Code of Directors' Dealings in Securities.
International Tax Reporting
For purposes of the US Foreign Account Tax Compliance Act, the Company
registered with the IRS as a Guernsey reporting FFI, received a Global
Intermediary Identification Number (GUHZUZ.99999.SL.831), and can be found on
the IRS FFI list.
The CRS is a global standard developed for the automatic exchange of financial
account information developed by the OECD, which was adopted in Guernsey and
which came into effect on 1 January 2016.
The Company made its latest report for CRS and FATCA to the Guernsey Director
of Income Tax in June 2023. The Board ensures that the Company is compliant
with Guernsey regulations and guidance in this regard.
Share Capital and Treasury Shares
The number of shares in issue at the year-end is disclosed in note 11 to the
Financial Statements.
Directors' Interests in the Company
As at 30 June 2023 and 30 June 2022, the interests of the Directors in shares
of the Company are as follows:
Shares held Percentage Shares held Percentage
as at 30 June 2023 of total shares at 30 June 2023 as at 30 of total shares at 30 June
June 2022 2022
Huw Evans 35,000 0.022% 35,000 0.021%
Peter Hames 8,000 0.005% 8,000 0.005%
Julian Healy 15,000 0.009% 15,000 0.009%
Kathryn Matthews 9,464 0.006% 9,464 0.006%
Hai Thanh Trinh - - - -
Thuy Bich Dam (Retired 18 April 2023) - - - -
There have been no changes to any holdings between 30 June 2023 and the date
of this report.
Substantial Shareholdings
As at 30 June 2023 and 30 September 2023, the Directors are aware of the
following shareholders with holdings of more than 3% of the ordinary shares of
the Company:
30 June 2023 30 September 2023
Number of Percentage Number of Percentage
ordinary of issued ordinary of issued
shares share capital shares share capital
Shareholder
Lazard Asset Management 22,096,493 13.80% 19,831,742 12.49%
City of London Investment Management 17,183,753 10.73% 17,097,049 10.77%
Hargreaves Lansdown 10,531,517 6.58% 10,732,980 6.76%
Allspring Global Investments 9,182,624 5.74% 8,921,195 5.62%
Interactive Investor 7,279,641 4.55% 7,398,947 4.66%
Janus Henderson 5,883,262 3.67% 5,800,229 3.65%
Going Concern and Viability Statement
Under the AIC Code and applicable regulations, the Directors are required to
satisfy themselves that it is reasonable to assume that the Company is a going
concern. The Directors have considered carefully the liquidity of the
Company's investments and the level of cash balances as at the reporting date
as well as reviewing forecast cash flows up to 31 December 2024. The Company
has substantial assets and the Board monitors the liquidity of the portfolio
to ensure that more than enough cash could be realised from asset sales to
meet any unexpected liability over the period. The Company does have a
modest credit facility which could easily be repaid were the need to arise.
An additional factor which the Directors have considered is the
discontinuation vote which will be put to shareholders at the AGM in December
2023. If the resolution were to be passed, the Directors will be required to
formulate proposals to be put to shareholders to reorganise, unitise or
reconstruct the Company or for the Company to be wound up. The Board tabled
such resolutions in 2008, 2013 and 2018 and on each occasion the resolution
was not passed.
In seeking to ensure that shareholders retain confidence in the Company, the
Investment Manager meets regularly with shareholders and has an active
investor relations programme. In addition, the Chairman communicates
independently with significant shareholders. The Directors cannot predict the
outcome of the discontinuation vote in December and, therefore, recognise that
a material uncertainty exists which may cast doubt on the ability of the
Company to continue as a going concern. That having been said, the Directors
currently have no indication that the resolution will be passed and,
therefore, continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
The Company is exposed to many risks and uncertainties, the principal of which
are listed in the Report of the Board of Directors. As noted, the Directors
monitor and assess these risks on a regular basis as well as considering any
other risks which emerge from time to time. The Directors confirm that they
believe that their assessment of the principal risks facing the Company is
robust and, for the purposes of complying with the AIC Code, that they have
assessed the viability of the Company over the three years to 30 June 2026.
The Directors consider this period sufficient given the inherent uncertainty
of the investment world and the specific issues which the Company faces in
investing in Vietnam.
As referred to above, a discontinuation vote will be put to shareholders at
the AGM in December 2023. The directors have no reason to believe that the
resolution will be passed and, in assessing the viability of the Company, have
assumed that it will continue in its present form throughout the period of
assessment.
The Directors, having considered the above risks and other factors, have a
reasonable expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the three-year period of their
assessment.
REPORT OF THE BOARD OF DIRECTORS
The Board submits its Annual Report together with the Financial Statements of
the Company for the year ended 30 June 2023.
The Company is a Guernsey domiciled closed-ended investment company. The
Company is classified as a registered closed-ended Collective Investment
Scheme under the Protection of Investors (Bailiwick of Guernsey) Law, 2020 and
is subject to the Companies (Guernsey) Law, as amended (the "Guernsey Law").
Prior to March 2016 the Company was a limited liability company incorporated
in the Cayman Islands.
The Company is quoted on the Main Market of the LSE with a Premium Listing
(ticker: VOF).
The Company's investments continue to be managed by the Investment Manager.
Principal Activities
Through its investments in subsidiaries and associates, the Company's
objective is to achieve medium to long-term returns through investment in
assets either in Vietnam or in companies with a substantial majority of their
assets, operations, revenues, or income in, or derived from, Vietnam.
Life of the Company
The Company does not have a fixed life but the Board considers it desirable
that shareholders should have the opportunity to review the future of the
Company at appropriate intervals. Accordingly, the Board intends that every
fifth year a special resolution will be proposed that the Company ceases to
continue. If the resolution is not passed, the Company will continue to
operate as currently constituted. If the resolution is passed, the Directors
will be required to formulate proposals to be put to shareholders to
reorganise, unitise, or reconstruct the Company or for the Company to be wound
up. The Board tabled such resolutions in 2008, 2013 and 2018 and on each
occasion the resolution was not passed, allowing the Company to continue as
currently constituted. The next such resolution will be put to shareholders in
December 2023.
Investment Objective
The Company's objective is to achieve medium to long-term returns through
investment in assets either in Vietnam or in companies with a substantial
majority of their assets, operations, revenues, or income in, or derived from,
Vietnam.
Investment Policy
All of the Company's investments will be in Vietnam or in companies with at
least 75% of their assets, operations, revenues or income in, or derived from,
Vietnam at the time of investment.
· No single investment may exceed 20% of the NAV of the Company at the time of
investment.
· The Company may from time to time invest in other funds focused on Vietnam.
This includes investments in other funds managed by the Investment Manager.
Any investment or divestment of funds managed by the Investment Manager will
be subject to prior approval by the Board.
· The Company may from time to time make co-investments alongside other
investors in private equity, real estate, or similar assets. This includes,
but is not restricted to, co-investments alongside other funds managed by the
Investment Manager.
· The Company will not invest in other listed closed-ended funds.
The Company may gear its assets through borrowings which may vary over time
according to market conditions and any or all of the assets of the Company may
be pledged as security for such borrowings. Borrowings will not exceed 10% of
the Company's total assets at the time that any debt is drawn down.
From time to time the Company may hold cash or low risk instruments such as
government bonds or cash funds denominated in either VND or USD, either in
Vietnam or outside Vietnam.
Gearing
The Board sets the Company's policy on the use of gearing. The Company
negotiated a USD40 million secured revolving credit facility with Standard
Chartered Bank in March 2022 which was renewed for a further 12 month period
in March 2023. The Investment Manager draws funds under the facility from
time to time to manage the Company's cash balances and liquidity.
Valuation Policy
The accounting policy for valuations can be found in note 2.7 to the Financial
Statements.
Key Performance Indicators
The Chairman's Statement and the Investment Manager's Report provide details
of the Company's activities and performance during the year.
In light of the Company's Investment Objective, the KPIs used to measure the
progress of the Company are:
● the movement in the Company's NAV total return;
● the movement in the Company's share price; and
● discount of the share price in relation to the NAV.
Information relating to the KPIs can be found in the Financial Highlights
section.
A discussion of progress against the KPIs is included in the Chairman's
Statement.
Distribution Policy
Dividend Policy
The Company intends to pay a dividend representing approximately 1% of NAV
twice each year, normally declared in March and October.
The policy will be subject to shareholder approval at each annual general
meeting.
Share Buybacks
The Company may also distribute capital by means of share buybacks when the
Board believes that it is in the best interests of shareholders to do so. The
share buyback programme will be subject to Shareholder approval at each annual
general meeting.
Discount Management
The Board operates the share buyback programme in line with the objective of
ensuring that the share price more closely reflects the underlying NAV per
share.
The Board retains responsibility for setting the parameters for the discount
management policy, for overseeing the management of the buyback programme and
for ensuring that its policy is implemented. The Board intends to continue to
seek to manage the discount through the continued use of share buybacks and
active marketing of the Company. The Board's objective is to achieve a
narrowing of the discount in a manner that is sustainable over the longer
term. The Board and the Investment Manager consult regularly with shareholders
and with the corporate broker with a view to assessing and improving the
effectiveness of the buyback programme. Further comments on the buyback
programme are set out in the Chairman's Statement.
Refer to note 11 of the Financial Statements for details of share buybacks
during the year under review.
Subsequent Events after the Reporting Date
On 23 October 2023, the Board declared a dividend of 7.0 US cents per share.
The dividend is payable on or around 4 December 2023 to shareholders on record
at 3 November 2023.
On behalf of the Board
Huw Evans
Chairman
VinaCapital Vietnam Opportunity Fund Limited
23 October 2023
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Financial Statements for each
financial year which give a true and fair view of the state of affairs of the
Company and of its profit or loss for that year in accordance with IFRS and
the Guernsey Law. International Accounting Standard 1 - Presentation of
Financial Statements requires that financial statements present fairly for
each financial period the Company's financial position, financial performance
and cash flows. This requires the faithful representation of the effects of
transactions, other events and conditions in accordance with the definitions
and recognition criteria for assets, liabilities, income and expenses set out
in the IASB's "Framework for the preparation and presentation of financial
statements". In virtually all circumstances a fair presentation will be
achieved by compliance with all applicable IFRS.
The Directors are also responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and to ensure that the Financial Statements have been prepared in
accordance with the Guernsey Law and IFRS. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the oversight of the maintenance and
integrity of the corporate and financial information in relation to the
Company's website; the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website. Legislation in
Guernsey governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
In preparing the Financial Statements the Directors are required to:
· ensure that the Financial Statements comply with the Company's Memorandum
& Articles of Incorporation and IFRS;
· select suitable accounting policies and apply them consistently;
· present information including accounting policies, in a manner that provides
relevant, reliable, comparable and understandable information;
· make judgements and estimates that are reasonable and prudent;
· prepare the Financial Statements on the going concern basis, unless it is
inappropriate to presume that the Company will continue in business; and
· provide additional disclosures when compliance with the specific requirements
of IFRS is insufficient to enable users to understand the impact of particular
transactions, other events and conditions on the Company's financial position
and financial performance.
The Directors confirm that they have complied with these requirements in
preparing the Financial Statements.
Responsibility Statement of the Directors in Respect of the Financial
Statements
The Directors consider that the Annual Report and Financial Statements, taken
as a whole, are fair, balanced and understandable and provide information
necessary for shareholders to assess the Company's position, performance,
business model and strategy. Each of the Directors confirms to the best of
each person's knowledge and belief that:
a) the Financial Statements have been prepared in accordance with IFRS and
give a true and fair view of the assets, liabilities, financial position and
profit or loss of the Company as at and for the year ended 30 June 2023; and
b) the Annual Report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that the Company faces.
Directors' Statement
So far as each of the Directors is aware, there is no relevant audit
information of which the Company's External Auditor is unaware, and each
Director has taken all of the steps that they ought to have taken as a
Director to make themselves aware of any relevant audit information and to
establish that the Company's External Auditor is aware of that information. In
the opinion of the Board, the Annual Report and Financial Statements taken as
a whole, are fair, balanced and understandable and provide the information
necessary to assess the Company's position, performance, business model and
strategy.
On behalf of the Board
Huw Evans
Chairman
VinaCapital Vietnam Opportunity Fund Limited
23 October 2023
REPORT OF THE AUDIT COMMITTEE
On the following pages, we present the Report of the Audit Committee for the
year ended 30 June 2023, setting out the Audit Committee's structure and
composition, principal duties and key activities during the year. As in
previous years, the Audit Committee has reviewed the Company's financial
reporting, the independence and effectiveness of the External Auditor and the
internal control and risk management systems of the service providers.
Structure and Composition
The Audit Committee is chaired by Julian Healy. All other Directors of the
Company are members of the Audit Committee. Huw Evans, who is the Chairman of
the Company, is a member of the Audit Committee but does not chair it. His
membership of the Audit Committee is considered appropriate given his
extensive knowledge of the Company and its investments. Julian Healy and Huw
Evans are both Chartered Accountants.
Appointment to the Audit Committee is for an indefinite period provided that
members remain independent of the Investment Manager and meet the criteria
for membership of the Audit Committee.
The Committee conducts formal meetings at least three times a year. The table
in the Corporate Governance Statement sets out the number of Audit Committee
meetings held during the year ended 30 June 2023 and the number of such
meetings attended by each Committee member. The External Auditor is invited to
attend those meetings at which the audit plan for the year is reviewed and at
which the annual and interim reports are considered. The External Auditor and
the Audit Committee Chairman meet every year without the presence of either
the Administrator or the Investment Manager and at other times if the Audit
Committee deems this to be necessary.
Principal Duties
The role of the Audit Committee includes:
· monitoring the integrity of the published Financial Statements of the Company
and advising the Board on whether, taken as a whole, the Annual Report and
Financial Statements are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Company's performance,
business model and strategy;
· recommending to the Board the valuation of investments;
· reviewing and reporting to the Board on the significant issues and judgements
made in the preparation of the Company's Annual Report and Financial
Statements, having regard to matters communicated by the External Auditor,
significant financial returns to regulators and other financial information;
· monitoring and reviewing the quality and effectiveness of the External Auditor
and their independence and making recommendations to the Board on their
appointment, reappointment, replacement and remuneration; and
· carrying out a robust assessment of the principal risks facing the Company and
including in the Annual Report and Financial Statements a description of those
risks and explaining how they are being managed or mitigated.
External Auditor
PwC CI was appointed as the External Auditor with effect from 24 May 2016
following the change of domicile of the Company from the Cayman Islands to
Guernsey. The accounting year ended 30 June 2023 is therefore the eighth
accounting year for which PwC CI has been the External Auditor.
The independence and objectivity of the External Auditor is reviewed by the
Audit Committee, which also reviews the terms under which the External Auditor
is appointed to perform any non-audit services. The Audit Committee has
established policies and procedures governing the engagement of the External
Auditor to provide non-audit services. These are that the External Auditor may
not provide a service which:
● places them in a position to audit their own work;
● creates a mutuality of interest;
● results in the External Auditor functioning as a manager or employee
of the Company; and
● puts the External Auditor in the role of advocate of the Company.
The audit and any non-audit fees proposed by the External Auditor each year
are reviewed by the Audit Committee taking into account the Company's
structure, operations and other requirements during the period and the
Committee makes recommendations to the Board.
The Audit Committee has examined the scope and results of the external audit,
its cost effectiveness and the independence and objectivity of the External
Auditor, with particular regard to non-audit fees, and considers PwC CI as
External Auditor, to be independent of the Company. The only non-audit
activity carried out by PwC CI was the review of the Half Yearly Report. This
activity is assurance related and the Committee believes that PwC CI is best
placed to provide this service for the shareholders and that this does not
compromise its independence.
The External Auditor is required to rotate the Audit Engagement Partner
responsible for the Company's audit every five years. The accounting year to
30 June 2023 was the third year for which Evelyn Brady has been the Audit
Engagement Partner.
Key Activities
The following sections discuss the principal assessments made by the Audit
Committee during the year:
Risk Management
The Audit Committee received and reviewed detailed reports on the principal
risks facing the Company from the Investment Manager. The Audit Committee's
reviews focused on changes to the risks and also considered whether the
Company was subject to any new or emerging risks, taking account of the views
of the Investment Manager, of other service providers and of Committee
members' own awareness of issues which may affect the Company. In the year
under review, particular attention was paid to the key risks as described in
the Corporate Governance Statement, namely risks under the headings: (i)
geopolitical (ii) macroeconomic and market (iii) investment performance, (iv)
operational, (v) fair valuation, (vi) legal and regulatory, (vii) changing
investor sentiment and (viii) ESG.
Significant Financial Statement Issues
(a) Valuation of Investments
The Chairman of the Audit Committee and the Chairman of the Board committed a
considerable amount of time to initial review and oversight of the valuations
of investments throughout the year and particularly when considering
valuations at the financial year-end. Their observations formed a key part of
the Audit Committee's review of valuations.
In relation to the listed investments and unlisted investments where an active
market exists, the Audit Committee confirmed that the Investment Manager has
used the market values published by the relevant stock exchanges as at the
Statement of Financial Position date.
In relation to the operating asset and private equity investments, the Audit
Committee ensured that the Investment Manager and, where relevant, the
Independent Valuer have applied appropriate valuation methodologies.
Members of the Audit Committee meet the Independent Valuer and the Investment
Manager at least annually to discuss the valuation process. In seeking to
determine the fair value of the Company's operating asset and private equity
investments, the Committee reviews the reports from the organisations
providing valuations along with the Investment Manager's valuation and
recommendations. Each individual valuation is reviewed in detail and, where an
Independent valuer has been retained, their recommendation may be accepted or
modified. Refer to note 3 of the Financial Statements for further information
on the valuation of investments held by the Company.
On two occasions during the year under review the Committee considered and
recommended adjustments to the values of some of the Company's valuations
which were additional to the normal half yearly reviews. These adjustments
were agreed by the Board and communicated to shareholders via Stock Exchange
announcements which were issued on 29 November 2022 and 10 March 2023.
The methodologies and valuations as at 30 June 2023 were discussed and
subsequently approved by the Audit Committee in meetings with the Independent
Valuer and the Investment Manager in September and October 2023. In these
meetings, the Audit Committee challenged the unobservable inputs applied to
projected future returns and in particular as to whether these take due
account of the effects of heightened global inflation, macroeconomic and
specific company and industry risks, as well as any possible effects of
climate change.
The Independent Valuer and the Investment Manager were invited to justify the
approach to these issues and confirmed that due account had been taken of the
relevant risks.
The Audit Committee regularly reviews the movement in valuations year on year
including sensitivity factors affecting the valuations.
(b) Calculation of the incentive fee and determination of fair value of the
liability
The incentive fee is calculated by the Administrator, which is independent of
the Investment Manager.
The Audit Committee sought assurance both that the incentive fee and
associated accruals were correctly calculated in compliance with the
investment management agreement and that an appropriate discount rate was used
and correctly applied in arriving at the present value of incentive fees which
may potentially be paid in future years, on the basis that the NAV remains
constant. As in previous years, the Audit Committee instructed CES Investments
Ltd to perform an independent, full review of the relevant calculations.
Following this exercise, the Audit Committee was satisfied that the
assumptions used were appropriate and the calculations were accurate.
Effectiveness of the Audit
The Audit Committee held formal meetings with PwC CI before the start of the
audit to discuss formal planning, to discuss any potential issues, to agree
the scope that would be covered and, after the audit work was concluded, to
discuss the significant issues which arose.
Following evaluation, the Audit Committee was satisfied that there had been
appropriate focus and challenge on the significant and other key areas of
audit risk and assessed the quality of the audit to be good. The Audit
Committee undertakes an evaluation of the performance of the External Auditor
annually.
Audit fees and Safeguards on Non-Audit Services
The table below summarises the remuneration paid by the Company to PwC CI and
to other PwC member firms for audit and non-audit services during the years
ended 30 June 2023 and 30 June 2022.
Year ended Year ended
30 June 2023 30 June 2022
USD'000 USD'000
Audit and assurance services
- Annual audit 543 413
- Interim review 91 91
Total 634 504
The Audit Committee considers PwC CI to be independent of the Company.
Further, the Audit Committee has obtained PwC CI's confirmation that the
services provided by other PwC member firms to the wider VinaCapital
organisation do not prejudice its independence with respect to its role as
auditor of the Company.
Conclusion and Recommendation
On the basis of its work carried out over the year, and assurances given by
the Investment Manager and the Administrator, the Audit Committee is satisfied
that the Financial Statements appropriately address the critical judgements
and key estimates (both in respect of the amounts reported and the
disclosures). The Audit Committee is also satisfied that the significant
assumptions used to determine the values of assets and liabilities have been
appropriately scrutinised and challenged and are sufficiently robust. At the
request of the Board, the Audit Committee considered and was satisfied that
the 30 June 2023 Annual Report and Financial Statements, taken as a whole,
were fair, balanced and understandable and that they provided the necessary
information for shareholders to assess the Company's position, performance,
business model and strategy.
The Investment Manager and the Administrator confirm to the Committee that
they were not aware of any material misstatements including matters relating
to the presentation of the Financial Statements. The Audit Committee confirms
that it is satisfied that PwC CI has fulfilled its responsibilities with
diligence and professional scepticism.
Following the review process on the effectiveness of the independent audit and
the review of audit and non-audit services, the Audit Committee has
recommended that PwC CI be reappointed for the coming financial year.
Julian Healy
Audit Committee Chairman
23 October 2023
DIRECTORS' REMUNERATION REPORT
Directors' Remuneration Policy
The Board's policy is that the remuneration of the independent non-executive
Directors should reflect the experience and time commitment of the Board as a
whole and is determined with reference to comparable organisations and
available market information each year.
The non-executive Directors of the Company are entitled to such rates of
annual fees as the Board at its discretion shall from time to time determine.
In addition to the annual fee, under the Company's Articles of Association, if
any Director is requested to perform extra or special services they will be
entitled to receive such additional remuneration as the Board may think fit.
No component of any Director's remuneration is subject to performance factors.
The rates of fees per Director are reviewed annually, although these reviews
will not necessarily result in any changes in remuneration. Annual fees are
pro-rated where a change takes place during a financial year.
Limit on Aggregate Total Directors' Fees
At the AGM on 10 December 2018, a resolution was approved by shareholders to
increase the maximum aggregate total remuneration to USD650,000.
Recruitment Remuneration Principles
1. The remuneration package for any new Chairman or non-executive Director
will be the same as the prevailing rates determined on the basis set out
above. The fees and entitlement to reclaim reasonable expenses will be set out
in Directors' Letters of Appointment.
2. The Board will not pay any introductory fee or incentive to any person
to encourage them to become a Director but may pay the fees of search and
selection specialists in connection with the appointment of any new
non-executive Director.
3. The Company intends to appoint only non-executive Directors for the
foreseeable future.
Service Contracts
None of the Directors has a service contract with the Company. Non-executive
Directors are engaged under Letters of Appointment and are subject to annual
re-election by shareholders.
Loss of Office
Directors' Letters of Appointment expressly prohibit any entitlement to
payment on loss of office.
Scenarios
The Chairman's and non-executive Directors' remuneration is fixed at annual
rates, and there are no other scenarios where remuneration will vary unless
there are payments for extra or special services in their role as Directors.
It is accordingly not considered appropriate to provide different remuneration
scenarios for each Director.
Statement of Consideration of Conditions Elsewhere in the Company
As the Company has no employees, a process of consulting with employees on the
setting of the Remuneration Policy is not relevant.
Other Items of Remuneration
None of the Directors has any entitlement to pensions or pension-related
benefits, medical or life insurance schemes, share options, long-term
incentive plans, or performance-related payments. No Director is entitled to
any other monetary payment or any assets of the Company except in their
capacity (where applicable) as shareholders of the Company.
Directors' and Officers' liability insurance is maintained and paid for by the
Company on behalf of the Directors. The Company has also provided indemnities
to the Directors in respect of costs or other liabilities which they may incur
in connection with any claims relating to their performance or the performance
of the Company whilst they are Directors.
No Director was interested in any contracts with the Company during the year
or subsequently other than in their role as a Director.
Review of the Remuneration Policy
The Board has agreed that there would be a formal review before any change to
the Remuneration Policy is made; and, at least once a year, the Remuneration
Policy will be reviewed to ensure that it remains appropriate.
Shareholder approval of the Directors' Remuneration Policy
An ordinary resolution for the approval of the Directors' Remuneration Policy
was put to the shareholders at the AGM which was held on 5 December 2022. The
results of this resolution were:-
Vote cast Shares voted Percentage
In favour 69,932,273 99.93%
Against 38,367 0.05%
Withheld 10,955
0.02%
The directors intend to put forward a further resolution for approval of the
Directors' Remuneration Policy not later than the Company's AGM in 2025.
Directors' Remuneration Implementation Report
For the year ended 30 June 2023, Directors' individual annual remuneration
was:
Fees
Position (USD)
Chair of the Company 105,000
Chair of the Audit Committee 90,000
Chairs of the Remuneration and Management Engagement Committees 85,000
Other directors 80,000
There are no long-term incentive schemes provided by the Company and no
performance fees are paid to Directors.
Directors' Emoluments for the Year
The Directors over the past two years have received the following emoluments
in the form of fees:
Year ended
Annual fee 30 June 2023 30 June 2022
USD USD USD
Steve Bates(1) 105,000 - 44,226
Huw Evans(2) 105,000 105,000 98,723
Thuy Bich Dam(3) 85,000 67,942 80,000
Peter Hames(4) 85,000 80,548 80,000
Julian Healy 90,000 90,000 90,000
Kathryn Matthews(5) 85,000 85,000 80,000
Hai Thanh Trinh(6) 80,000 80,000 219
508,490 473,168
(1) Steve Bates retired from his position as chairman of the Board on 2
December 2021.
(2) Huw Evans was appointed chairman of the Board on 2 December 2021.
(3) Thuy Bich Dam was appointed chairman of the Remuneration Committee and
retired from the board on 18 April 2023.
(4) Peter Hames was appointed chair of the Remuneration Committee on 10 May
2023.
(5) Kathryn Matthews is the chair of the Management Engagement Committee.
(6)Hai Trinh was appointed as a member of the Board on 30 June 2022.
In addition, Directors were reimbursed for their expenses incurred in
performance of their duties, including attendance at Board and Annual General
Meetings.
Shareholder Approval of the Directors' Remuneration Implementation Report
An ordinary resolution for the approval of the Directors' Remuneration
Implementation Report will be put to the shareholders at the AGM to be held on
6 December 2023. A similar resolution was put to the previous AGM in December
2022 and votes cast were as follows: -
Vote cast Shares voted Percentage
In favour 69,935,359 99.93%
Against 34,245 0.05%
Withheld 11,991 0.02%
Directors' Fees with effect from 1 October 2023
Vietnam is an emerging market where regulation of investment activities is at
an early stage and the Investment Manager is inexperienced in the investment
disciplines practiced in more developed markets. Each Director has
experience in developed markets and the Board constantly seeks to use this
experience to improve the processes operating within the Investment Manager.
For its part, the Investment Manager recognises that this external influence
will improve the professionalism of the investment process over time to the
benefit of its broader business. The Directors have worked with the Investment
Manager to improve the investment process in both listed and unlisted
equities. Further, the Chairman of the Audit Committee and the company
Chairman spend a considerable amount of time at each half-yearly report
reviewing valuations of unlisted investments.
Each October, the directors attend the VinaCapital conference in Vietnam
followed by meetings with the senior management of VinaCapital. The Board
meets formally and holds an away day at which broader strategy matters are
discussed. This series of meetings typically takes a week. In addition to
this, the Chairman travels to Vietnam in March again to meet the VinaCapital
team and to maintain the relationship with Hai Trinh. Individual members of
the Board have also travelled to Vietnam in between Board meetings to address
specific issues with the Investment Manager.
This degree of oversight means that the work load of individual directors is
considerably higher than that for a typical investment company. With this in
mind, the Remuneration Committee engaged an independent consultant, Stephenson
Executive Search Limited, to review the directors' work load and remuneration.
Taking account of the consultant's recommendations, the Board agreed the
following levels of directors' remuneration with effect from 1 October 2023:-
Director Description Total annual remuneration
with effect from 1 October 2023
Huw Evans $115,000 as Chair $115,000
Julian Healy $80,000 directors' fee $100,000
$10,000 as Chair of the Audit Committee
$10,000 for work on valuations
Kathryn Matthews $80,000 directors' fee $85,000
$5,000 as Chair of the Management Engagement Committee
Peter Hames $80,000 directors' fee $95,000
$5,000 as Chair of the Remuneration Committee
$10,000 for work on listed investments
Hai Trinh $80,000 directors' fee $85,000
$5,000 for additional work carried out in Vietnam
On behalf of the Board
Peter Hames
Chair
Remuneration Committee
23 October 2023
Independent auditor's report to the members of VinaCapital Vietnam Opportunity
Fund Limited
Report on the audit of the financial statements
Our opinion
In our opinion, the financial statements give a true and fair view of the
financial position of VinaCapital Vietnam Opportunity Fund Limited (the
"company") as at 30 June 2023, and of its financial performance and its cash
flows for the year then ended in accordance with International Financial
Reporting Standards and have been properly prepared in accordance with the
requirements of The Companies (Guernsey) Law, 2008.
What we have audited
The company's financial statements comprise:
· the statement of financial position as at 30 June 2023;
· the statement of comprehensive income for the year then ended;
· the statement of changes in equity for the year then ended;
· the statement of cash flows for the year then ended; and
· the notes to the financial statements, which include significant
accounting policies and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
("ISAs"). Our responsibilities under those standards are further described in
the Auditor's responsibilities for the audit of the financial statements
section of our report.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We are independent of the company in accordance with the ethical requirements
that are relevant to our audit of the financial statements of the company, as
required by the Crown Dependencies' Audit Rules and Guidance. We have
fulfilled our other ethical responsibilities in accordance with these
requirements.
Material uncertainty related to going concern
We draw attention to note 2.2 to the financial statements which indicates that
the company is due to hold a discontinuation vote at its Annual General
Meeting in December 2023.This event or condition indicates that a material
uncertainty exists that may cast significant doubt on the company's ability to
continue as a going concern. Our opinion is not modified in respect of this
matter.
Our audit approach
Overview
Audit scope
· The principal activity of the company comprises investing in a portfolio of
investments in Vietnam (referred to as "financial assets at fair value through
profit or loss") through a structure of unconsolidated holding companies.
· In establishing the overall approach to the company's audit, we determined the
type of work that needed to be performed by us or by our assisting teams from
other PwC network firms.
· We tailored the audit scope taking into account the type of financial assets
at fair value through profit or loss held, the accounting processes and
controls operated by the company and the overall market to which the company
is exposed through its financial assets at fair value through profit or loss.
· We conducted our audit of the financial information and records provided by
Aztec Financial Services (Guernsey) Limited (the "Administrator") to whom the
Board of Directors has delegated the provision of administrative functions.
The company and the unconsolidated holding companies are administered by the
Administrator and all financial information and records are available in
Guernsey. We, together with our assisting teams from other PwC network firms,
also had significant interaction with the Investment Manager in completing
aspects of our audit work.
Key audit matters
· Material uncertainty related to going concern
· Valuation of the underlying level 3 investments, recognised as part of
financial assets at fair value through profit or loss
Materiality
● Overall materiality: USD 16.9 million (2022: USD 17.7 million)
based on 1.5% of net assets.
● Performance materiality: USD 12.6 million (2022: USD 13.3
million).
Key audit matters
· Material uncertainty related to going concern
· Valuation of the underlying level 3 investments, recognised as part of
financial assets at fair value through profit or loss
Materiality
● Overall materiality: USD 16.9 million (2022: USD 17.7 million)
based on 1.5% of net assets.
● Performance materiality: USD 12.6 million (2022: USD 13.3
million).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the
risks of material misstatement in the financial statements. In particular, we
considered where the directors made subjective judgements; for example, in
respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. As in all of our
audits, we also addressed the risk of management override of internal
controls, including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to
fraud.
Key audit matters
Key audit matters are those matters that, in the auditor's professional
judgement, were of most significance in the audit of the financial statements
of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by the auditor,
including those which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the results of our
procedures thereon, were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. In addition to the matter
described in the Material uncertainty related to going concern section, we
have determined the matters described below to be the key audit matters to be
communicated in our report.
This is not a complete list of all risks identified by our audit.
Key audit matter How our audit addressed the key audit matter
Valuation of the underlying level 3 investments, recognised as part of
financial assets at fair value through profit or loss
As detailed in notes 3.1(a) and 8 to the financial statements, the company's 1. We understood and evaluated the controls over the valuation process and
financial assets at fair value through profit or loss include the underlying the areas where significant judgements and estimates are made;
level 3 investments (i.e. investments in private equities, operating asset and
loans and receivables designated at fair value through profit or loss) 2. We obtained and evaluated the final reports issued by the Investment
totalling USD 332.7 million (2022: USD 308.6million). Manager and by the valuation experts to the Board so as to understand the
critical accounting estimates, judgements and valuation methodologies adopted
to determine the fair value of the underlying level 3 investments;
The underlying level 3 investments as detailed in notes 3.1(a.2), 3.1(a.3) and 3. Confirmed and assessed the independence, objectivity and competence of
3.1(a.4), are valued on methodologies considered most appropriate by the the valuation experts engaged by the Board;
Directors, including fair values derived from internal valuations prepared by
the Investment Manager and fair values determined by valuation experts engaged 4. We engaged our valuation experts to provide audit support in
by the Board, using industry standard private equity valuation techniques evaluating, challenging and concluding on the fair valuations of certain
which are then adjusted for the relevant unconsolidated holding companies' underlying level 3 investments. With the assistance of our experts, we have
residual net assets. (a) assessed and challenged the appropriateness of valuation methodologies and
approaches and (b) challenged and commented on models which were adopted by
the company, including significant estimates such as cash flow projections,
discount rates and terminal growth rates;
5. In evaluating the critical estimates and judgements underpinning the
fair value of the underlying level 3 investments, we challenged the
assumptions used, we corroborated the information received against third party
sources where applicable and our view and understanding of various economic
indicators; and
There is a risk that the fair valuation of the underlying level 3 investments
may be materially misstated as these fair values rely on the use of 6. We tested the mathematical accuracy of the valuation models and
appropriate methodologies and judgemental inputs as well as the skill and verified the significant inputs into the models by agreement to third party
knowledge of the Investment Manager and valuation experts engaged by the Board sources where applicable.
to develop and report on these valuations.
Based on the audit work detailed above we have nothing to report to those
charged with corporate governance.
There is also the inherent risk that the Investment Manager or the Board may
unduly influence the independent experts in their determination of the fair
valuations for these investments.
This is a main area of focus and a significant risk and we have deemed this
area to be a key audit matter.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to
be able to give an opinion on the financial statements as a whole, taking into
account the structure of the company, the accounting processes and controls,
the industry in which the company operates, and we considered the risk of
climate change and the potential impact thereof on our audit approach.
Materiality
The scope of our audit was influenced by our application of materiality. We
set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and
the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements
as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole as follows:
Overall materiality USD 16.9 million (2022: USD 17.7 million).
How we determined it 1.5% of net assets
Rationale for benchmark applied We believe that net asset is the most appropriate benchmark because this is
the key metric of interest to the members of the company. It is also the
generally accepted measure used for companies in this industry.
We use performance materiality to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements
exceeds overall materiality. Specifically, we use performance materiality in
determining the scope of our audit and the nature and extent of our testing of
account balances, classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was 75% (2022: 75%) of
overall materiality, amounting to USD 12.6 million (2022: USD 13.3 million)
for the company financial statements.
In determining the performance materiality, we considered a number of factors
- the history of misstatements, risk assessment and aggregation risk and the
effectiveness of controls - and concluded that an amount at the upper end of
our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements
identified during our audit above USD 0.84 million (2022: USD 0.89 million) as
well as misstatements below that amount that, in our view, warranted reporting
for qualitative reasons.
Reporting on other information
The other information comprises all the information included in the Annual
Report and Financial Statements (the "Annual Report") but does not include the
financial statements and our auditor's report thereon. The directors are
responsible for the other information.
Our opinion on the financial statements does not cover the other information
and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to report
that fact. We have nothing to report based on these responsibilities.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors' Responsibilities, the
directors are responsible for the preparation of the financial statements that
give a true and fair view in accordance with International Financial Reporting
Standards, the requirements of Guernsey law and for such internal control as
the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are responsible for
assessing the company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the company or
to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Our audit testing might include testing complete populations of certain
transactions and balances, possibly using data auditing techniques. However,
it typically involves selecting a limited number of items for testing, rather
than testing complete populations. We will often seek to target particular
items for testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion about the
population from which the sample is selected.
As part of an audit in accordance with ISAs, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit 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 company's
internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
directors.
· Conclude on the appropriateness of the directors' use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast
significant doubt on the company's ability to continue as a going concern over
a period of at least twelve months from the date of approval of the financial
statements. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor's report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor's report. However, future events or conditions may cause
the company to cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves
fair presentation.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial
statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Use of this report
This report, including the opinions, has been prepared for and only for the
members as a body in accordance with Section 262 of The Companies (Guernsey)
Law, 2008 and for no other purpose. We do not, in giving these opinions,
accept or assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Report on other legal and regulatory requirements
Company Law exception reporting
Under The Companies (Guernsey) Law, 2008 we are required to report to you if,
in our opinion:
● we have not received all the information and explanations we
require for our audit;
● proper accounting records have not been kept; or
● the financial statements are not in agreement with the
accounting records.
We have no exceptions to report arising from this responsibility.
Corporate governance statement
The Listing Rules require us to review the directors' statements in relation
to going concern, longer-term viability and that part of the corporate
governance statement relating to the company's compliance with the provisions
of the UK Corporate Governance Code specified for our review. Our additional
responsibilities with respect to the corporate governance statement as other
information are described in the Reporting on other information section of
this report.
The company has reported compliance against the 2019 AIC Code of Corporate
Governance (the "Code") which has been endorsed by the UK Financial Reporting
Council as being consistent with the UK Corporate Governance Code for the
purposes of meeting the company's obligations, as an investment company, under
the Listing Rules of the FCA.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of the corporate governance statement is materially
consistent with the financial statements and our knowledge obtained during the
audit, and we have nothing material to add or draw attention to in relation
to:
· The directors' confirmation that they have carried out a robust
assessment of the emerging and principal risks;
· The disclosures in the Annual Report that describe those principal
risks, what procedures are in place to identify emerging risks and an
explanation of how these are being managed or mitigated;
· The directors' statement in the financial statements about whether
they considered it appropriate to adopt the going concern basis of accounting
in preparing them, and their identification of any material uncertainties to
the company's ability to continue to do so over a period of at least twelve
months from the date of approval of the financial statements;
· The directors' explanation as to their assessment of the company's
prospects, the period this assessment covers and why the period is
appropriate; and
· The directors' statement as to whether they have a reasonable
expectation that the company will be able to continue in operation and meet
its liabilities as they fall due over the period of its assessment, including
any related disclosures drawing attention to any necessary qualifications or
assumptions.
Our review of the directors' statement regarding the longer-term viability of
the company was substantially less in scope than an audit and only consisted
of making inquiries and considering the directors' process supporting their
statements; checking that the statements are in alignment with the relevant
provisions of the Code; and considering whether the statement is consistent
with the financial statements and our knowledge and understanding of the
company and its environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our
knowledge obtained during the audit:
· The directors' statement that they consider the Annual Report, taken
as a whole, is fair, balanced and understandable, and provides the information
necessary for the members to assess the company's position, performance,
business model and strategy;
· The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems; and
· The section of the Annual Report describing the work of the Audit
Committee.
We have nothing to report in respect of our responsibility to report when the
directors' statement relating to the company's compliance with the Code does
not properly disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
Evelyn Brady
For and on behalf of PricewaterhouseCoopers CI LLP
Chartered Accountants and Recognised Auditor
Guernsey, Channel Islands
23 October 2023
STATEMENT OF FINANCIAL POSITION
30 June 2023 30 June 2022
Note USD'000 USD'000
TOTAL ASSETS
Financial assets at FVTPL 8 1,137,428 1,205,940
Prepayments and other assets 10 658 943
Cash and cash equivalents 6 19,133 15,630
Total assets 1,157,219 1,222,513
TOTAL LIABILITIES
Accrued expenses and other payables 12 18,125 22,060
Loans and other borrowings 13 10,000 -
Deferred incentive fees 16(b) 5,227 20,353
Total liabilities 33,352 42,413
SHAREHOLDERS' EQUITY
Share capital 11 267,087 285,314
Retained earnings 856,780 894,786
Total shareholders' equity 1,123,867 1,180,100
Total liabilities and shareholders' equity 1,157,219 1,222,513
Net asset value, USD per share 18 7.02 7.22
Net asset value, GBP per share 5.52 5.93
The Financial Statements were approved by the Board of Directors on 23 October
2023 and signed on its behalf by:
Huw Evans
Julian Healy
Chairman
Director
The accompanying notes are an integral part of these Financial Statements.
STATEMENT OF CHANGES IN EQUITY
Share capital Retained earnings Total
equity
For the year ended 30 June 2022 Note USD'000 USD'000 USD'000
Balance at 1 July 2021 317,112 1,042,661 1,359,773
Loss for the year - (121,443) (121,443)
Total comprehensive loss - (121,443) (121,443)
Transactions with shareholders
Shares repurchased 11 (31,798) - (31,798)
Dividends paid 9 - (26,432) (26,432)
Balance at 30 June 2022 285,314 894,786 1,180,100
Note Share Capital USD'000 Retained earnings USD'000 Total equity USD'000
For the year ended 30 June 2023
Balance at 1 July 2022 285,314 894,786 1,180,100
Loss for the year - (15,019) (15,019)
Total comprehensive loss - (15,019) (15,019)
Transactions with shareholders
Shares repurchased 11 (18,227) - (18,227)
Dividends paid 9 - (22,987) (22,987)
Balance at 30 June 2023 267,087 856,780 1,123,867
The accompanying notes are an integral part of these Financial Statements.
STATEMENT OF COMPREHENSIVE INCOME
Year ended
30 June 2023 30 June 2022
Note(s) USD'000 USD'000
Dividend income 14 53,126 58,250
Net losses on financial assets at FVTPL 8, 15 (48,046) (167,289)
General and administration expenses 16(a) (17,710) (20,248)
Finance cost (577) -
Facility set-up costs 10 (1,134) (364)
Finance expense 16(b), 19 (1,847) (6,977)
Incentive fee clawback 3, 16(b), 19 1,169 15,185
Operating loss (15,019) (121,443)
Loss before tax (15,019) (121,443)
Corporate income tax 17 - -
Loss for the year (15,019) (121,443)
Total comprehensive loss for the year (15,019) (121,443)
Earnings per share
- basic and diluted (USD per share) 18 (0.09) (0.73)
- basic and diluted (GBP per share) 18 (0.07) (0.60)
All items were derived from continuing activities.
The accompanying notes are an integral part of these Financial Statements.
STATEMENT OF CASH FLOWS
Year ended
30 June 2023 30 June 2022
Note USD'000 USD'000
Operating activities
Loss before tax (15,019) (121,443)
Adjustments for:
Net losses on financial assets at FVTPL 15 48,046 167,289
Dividend income 14 (53,126) (58,250)
Facility set-up costs 10 1,134 364
Loan interest expense 577 -
Incentive fee clawback 16(b), 19 (b) (1,169) (15,185)
Finance expense 16(b) 1,847 6,977
(17,710) (20,248)
Decrease/(Increase) in prepayments and other assets 10 285 (855)
Decrease in liabilities 12,16(b) (20,173) (16,671)
(37,598) (37,774)
Purchases of financial assets at FVTPL 8 (68,110) (226,944)
Return of capital from financial assets at FVTPL 8 88,576 206,823
Dividends received 14 53,126 58,250
Net cash generated from operating activities 35,994 355
Financing activities
Purchase of shares into treasury 11 (17,955) (34,154)
Proceeds from short term loans and borrowings 13 60,000 -
Repayment of short term loans and borrowings 13 (50,000) -
Loan interest paid (506) -
Facility set-up costs 10 (1,043) (364)
Dividends paid 9 (22,987) (26,432)
Net cash used in financing activities (32,491) (60,950)
Net change in cash and cash equivalents for the year 3,503 (60,595)
Cash and cash equivalents at the beginning of the year 6 15,630 76,225
Cash and cash equivalents at the end of the year 6 19,133 15,630
The accompanying notes are an integral part of these Financial Statements.
1. GENERAL INFORMATION
The Company registered on 22 March 2016 as a closed-ended investment scheme
with limited liability under the Guernsey Law. The Company is registered in
Guernsey with registration number 61765. Prior to that date the Company was
incorporated in the Cayman Islands as an exempted company with limited
liability.
The Company is classified as a registered closed-ended Collective Investment
Scheme under the Protection of Investors (Bailiwick of Guernsey) Law 2020 and
is subject to the Guernsey Law.
The Company's objective is to achieve medium to long-term returns through
investment either in Vietnam or in companies with a majority of their assets,
operations, revenues or income in, or derived from, Vietnam.
On 30 March 2016, the Company's shares were admitted to the Main Market of the
LSE with a Premium Listing under the ticker symbol VOF. Prior to that date,
the Company's shares were traded on the AIM market of the LSE.
The Company does not have a fixed life, but the Board considers it desirable
that shareholders should have the opportunity to review the future of the
Company at appropriate intervals. Accordingly, the Board intends that every
fifth year a special resolution will be proposed that the Company ceases to
continue. If the resolution is not passed, the Company will continue to
operate as currently constituted. If the resolution is passed, the Directors
will be required to formulate proposals to be put to shareholders to
reorganise, unitise or reconstruct the Company or for the Company to be wound
up. The Board tabled such resolutions in 2008, 2013 and 2018 and on each
occasion the resolution was not passed, allowing the Company to continue as
currently constituted.
The Financial Statements for the year ended 30 June 2023 were approved for
issue by the Board on 23 October 2023.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
Financial Statements are set out below. These policies have been consistently
applied to all years presented, unless otherwise stated.
Statement of Compliance
The Financial Statements have been prepared in accordance with IFRS, which
comprise standards and interpretations approved by the IASB together with
applicable legal and regulatory requirements of the Guernsey Law.
2.1 Basis of preparation
The Financial Statements have been prepared using the historical cost
convention, as modified by the revaluation of financial assets at fair value
through profit or loss, and financial liabilities at fair value through profit
or loss. The Financial Statements have been prepared on a going concern basis.
The preparation of Financial Statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires judgement to be
exercised in the process of applying the Company's accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Financial Statements, are
disclosed in note 3.
2.2 Going concern
Under the AIC Code and applicable regulations, the Directors are required to
satisfy themselves that it is reasonable to assume that the Company is a going
concern. The Directors have considered carefully the liquidity of the
Company's investments and the level of cash balances as at the reporting date
as well as reviewing forecast cash flows up to 31 December 2024.
An additional factor which the Directors have considered is the
discontinuation vote which will be put to shareholders at the AGM
in December 2023. If the resolution were to be passed, the Directors will be
required to formulate proposals to be put to shareholders to reorganise,
unitise or reconstruct the Company or for the Company to be wound up. The
Board tabled such resolutions in 2008, 2013 and 2018 and on each occasion the
resolution was not passed,
In seeking to ensure that shareholders retain confidence in the Company, the
Investment Manager meets regularly with shareholders and has an active
investor relations programme. In addition, the Chairman communicates
independently with significant shareholders. The Directors cannot predict
the outcome of the discontinuation vote in December and, therefore, recognise
that a material uncertainty exists which may cast doubt on the ability of the
Company to continue as a going concern. That having been said, the Directors
currently have no indication that the resolution will be passed and,
therefore, continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
2.3 Changes in accounting policy and disclosures
The Board has considered the new standards and amendments that are mandatorily
effective from 1 January 2022 and determined that these do not have a material
impact on the Company and are not expected significantly to affect the current
or future periods.
2.4 Subsidiaries and associates
The Company meets the definition of an Investment Entity within IFRS 10 and
therefore does not consolidate its subsidiaries but measures them instead at
fair value through profit or loss. The Company has also applied the exemption
from accounting for its associates using the equity method as permitted by IAS
28.
Any gain or loss arising from a change in the fair value of investments in
subsidiaries and associates is recognised in the Statement of Comprehensive
Income.
Refer to note 3 for further disclosure on accounting for subsidiaries and
associates.
2.5 Segment reporting
In identifying its operating segments, management follows the subsidiaries'
sectors of investment which are based on internal management reporting
information. The operating segments by investment portfolio include: capital
markets, operating asset, private equity investments and other net assets
(including cash and cash equivalents, bonds, and short-term deposits).
Each of the operating segments is managed and monitored individually by the
Investment Manager as each requires appropriate resources and approaches. The
Investment Manager assesses segment profit or loss using a measure of
operating profit or loss from the underlying investment assets of the
subsidiaries. Refer to note 4 for further disclosure regarding allocation to
segments.
2.6 Foreign currency translation
(a) Functional and presentation currency
The functional currency of the Company is the USD. The Company's Financial
Statements are presented in USD.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation where items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the Statement of Comprehensive Income.
Non-monetary items measured at historical cost are translated using the
exchange rates at the date of the transaction. Non-monetary items measured at
fair value are translated using the exchange rates at the date when the fair
value was determined.
2.7 Financial instruments
(a) Recognition and derecognition
Financial assets and financial liabilities are recognised when the Company
becomes a party to the contractual provisions of the financial instrument.
Purchases and sales of financial assets are recognised on the trade date,
being the date on which the Company commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred and the Company has
transferred substantially all of the risks and rewards of ownership. A
financial liability is derecognised when it is extinguished, discharged,
cancelled or expires.
(b) Classification of financial assets
The Company classifies its financial assets based on the Company's business
model for managing those financial assets and the contractual cashflow
characteristics of the financial assets.
The Company has classified all investments in equity securities as financial
assets at FVTPL as they are managed, and performance is evaluated on a fair
value basis. The Company is primarily focused on fair value information and
uses that information to assess the assets' performance and to make decisions.
The Company has not taken the option to designate irrevocably any investment
in equity as fair value through other comprehensive income.
The Company's receivables and cash and cash equivalents are classified as
financial assets at amortised cost as these are held to collect contractual
cash flows which represent solely payments of principal and interest.
(c) Initial and subsequent measurement of financial assets
Except for those trade receivables that do not contain a significant financing
component and are measured at the transaction price in accordance with IFRS
15, financial assets are initially measured at fair value plus, in the case of
a financial asset not at FVTPL, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of
financial assets at FVTPL are expensed in the Statement of Comprehensive
Income.
Subsequent to initial recognition, investments at FVTPL are measured at fair
value with gains and losses arising from changes in the fair value recognised
in the Statement of Comprehensive Income.
All other financial assets are subsequently measured at amortised cost using
the effective interest rate method, less any impairment.
(d) Impairment of financial assets
At each reporting date, the Company measures the loss allowance on debt assets
carried at amortised cost at an amount equal to the lifetime expected credit
losses if the credit risk has increased significantly since initial
recognition.
If, at the reporting date, the credit risk has not increased significantly
since initial recognition, the Company measures the loss allowance at an
amount equal to 12-month expected credit losses. The expected credit losses
are estimated using a provision matrix based on the Company's historical
credit loss experience, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current as well as
the forecast direction of conditions at the reporting date, including time
value of money where appropriate. The measurement of expected credit losses is
a function of the probability of default, loss given default (i.e., the
magnitude of the loss if there is a default) and the exposure at default.
The assessment of the probability of default and loss given default is based
on historical data adjusted by forward-looking information.
(e) Classification and measurement of financial liabilities
Financial liabilities are initially measured at fair value plus transaction
costs that are directly attributable to their acquisition or issue, other than
those classified as at fair value through profit or loss in which case
transaction costs are recognised directly in profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the
effective interest method except for financial liabilities designated at fair
value through profit or loss and held for trading, which are carried
subsequently at fair value with gains or losses recognised in the Statement of
Comprehensive Income.
The Company's financial liabilities include trade and other payables and loans
and other borrowings which are measured at amortised cost using the effective
interest method.
2.8 Cash and cash equivalents
In the Statement of Cash Flows, cash and cash equivalents includes deposits
held at call with banks, other short-term highly liquid investments with
original maturities of three months or less and bank overdrafts.
2.9 Share capital
Ordinary shares are classified as equity. Share capital includes the nominal
value of ordinary shares that have been issued and any premiums received on
the initial issuance of shares. Incremental costs directly attributable to the
issue of new ordinary shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
When the Company purchases its equity share capital (treasury shares), the
consideration paid, including any directly attributable incremental costs (net
of income taxes) is deducted from equity attributable to the Company's equity
holders.
When such treasury shares are subsequently reissued, any consideration
received, net of any directly attributable incremental transaction costs and
the related income tax effects, is included in equity attributable to the
Company's equity holders.
2.10 Dividend Income
Dividend income is recognised when the right to receive payment is
established, it is probable that the economic benefits associated with the
dividend will flow to the Company, and the amount of the dividend can be
measured reliably.
2.11 Operating expenses
Operating expenses are accounted for on an accrual basis.
2.12 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. Enterprises and individuals that
directly, or indirectly through one or more intermediary, control, or are
controlled by, or under common control with, the Company, including
subsidiaries and fellow subsidiaries are related parties of the Company.
Associates are individuals owning directly, or indirectly, an interest in the
voting power of the Company that gives them significant influence over the
entity, key management personnel, including directors and officers of the
Company, the Investment Manager and their close family members. In considering
related party relationships, attention is directed to the substance of the
relationship and not merely the legal form.
2.13 Offsetting financial instruments
Financial assets and liabilities are offset, and the net amount is reported in
the Statement of Financial Position, when there is a legally enforceable right
to offset the recognised amounts and there is an intention to settle on a net
basis or realise the asset and settle the liability simultaneously. The
legally enforceable right must not be contingent on future events, and it must
be enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the company or the counterparty.
2.14 Dividend distribution
Dividend distributions to the Company's shareholders are recognised as a
liability in the Company's Financial Statements and disclosed in the Statement
of Changes in Equity in the period in which the dividends are approved by the
Board.
2.15 Loans and borrowings
All loans and borrowings are initially recognised at fair value less directly
attributable transaction costs, such as set up costs. After initial
recognition interest bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest rate method. Facility set up costs
are charged to the Statement of Comprehensive Income over the period of the
facility.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
When preparing the Financial Statements, the Company relies on a number of
judgements, estimates and assumptions about recognition and measurement of
assets, liabilities, income and expenses. Actual results may differ from the
judgements, estimates and assumptions.
3.1 Critical accounting estimates and assumptions
(a) Fair value of subsidiaries and associates and their underlying investments
The Company holds its investments through a number of subsidiaries and
associates which were established for this purpose. At the end of each half of
the financial year, the fair values of investments in subsidiaries and
associates are reviewed and the fair values of all material investments held
by these subsidiaries and associates are assessed. As at 30 June 2023, 100%
(30 June 2022: 100%) of the financial assets at fair value through profit and
loss relate to the Company's investments in subsidiaries and associates that
have been fair valued in accordance with the policies set out above.
The shares of the subsidiaries and associates are not publicly traded; return
of capital to the Company can only be made by divesting the underlying
investments of the subsidiaries and associates. As a result, the carrying
value of the subsidiaries and associates may not be indicative of the value
ultimately realised on divestment.
The underlying investments include listed and unlisted securities, one
operating asset and private equity investments (including investments
classified as "public equity with private terms"). Where an active market
exists (for example, for listed securities), the fair value of the subsidiary
or associate reflects the valuation of the underlying holdings, as disclosed
below. Where no active market exists, valuation techniques are used.
Information about the significant judgements, estimates and assumptions which
are used in the valuation of the investments is discussed below.
(a.1) Valuation of assets that are traded in an active market
The fair values of listed securities are based on quoted market prices at the
close of trading on the reporting date. The fair values of unlisted securities
which are traded on Vietnam's Unlisted Public Company Market ("UPCoM") are
based on published prices at the close of business on the reporting date. For
other unlisted securities which are traded in an active market, fair value is
the average quoted price at the close of trading obtained from a minimum
sample of five reputable securities companies at the reporting date. Other
relevant measurement bases are used if broker quotes are not available or if
better and more reliable information is available.
(a.2) Valuation of investments in private equities
As at the financial year-end, the Company's underlying investments in private
equities are fair valued by an Independent Valuer or by the Investment Manager
using a number of methodologies such as adjusted net asset valuations,
discounted cash flows, income related multiples, price-to-book ratios,
structured financial arrangements and blended models. The projected future
cash flows are driven by management's business strategies and goals and its
assumptions of growth in GDP, market demand, inflation, ESG risk, etc. For the
principal investments, the Independent Valuer and, where relevant, the
Investment Manager selects appropriate discount rates that reflect the level
of certainty of the quantum and timing of the projected cash flows.
For the year ended 30 June 2023, methods, assumptions and data were
consistently applied when compared to last year, except for certain underlying
private equity investments where a change in methodology was deemed
appropriate to reflect the change in the market conditions or
investment-specific factors. As at the reporting date, some private equity
investments have changed the valuation methodology from market price model to
scenario-based discounted cash flow model as a result of exercising
put-options and restructuring of the counterparty obligations due to default.
The Investment Manager then made recommendations to the Audit Committee of the
fair values as at 30 June 2023 and the Audit Committee, having considered
these, then made recommendations for approval by the Board. Refer to note
20(c) which sets out a sensitivity analysis of the significant unobservable
inputs used in the valuations of the private equity investments.
(a.3) Loans and receivables at FVTPL
For the year ended 30 June 2023, two underlying investments that were
previously classified as private equity have been restructured and classified
as loans and receivables at FVTPL due to defaults.
In the prior year, these underlying investments are fair valued by the
Investment Manager using the discounted cash flows model.
For the current year, these underlying loans and receivables designated at
FVTPL are fair valued by an Independent Valuer or by the Investment Manager
using methodologies such as a scenario-based model using probability-weighted
average of discounted cash flows and investment cost plus expected return.
Refer to note 20(c) which sets out a sensitivity analysis of the significant
unobservable inputs used in the valuations.
(a.4) Valuation of the operating asset
At each year-end, the fair value of the principal underlying operating asset
is based on valuations by independent specialist appraisers, Jones Lang
LaSalle. These valuations are based on certain assumptions which are subject
to uncertainty and might result in valuations which differ materially from the
actual results of a sale. The estimated fair values provided by the
independent specialist appraisers are then used by the Independent Valuer as
the primary basis for estimating fair value of the Company's subsidiaries and
associates that hold these properties in accordance with accounting policies
set out in note 2.7. Refer to note 20(c) which sets out a sensitivity analysis
of the significant unobservable inputs used in the valuation of the operating
asset. At year end, the valuation was reviewed and recommended to the Board by
the Audit Committee.
In conjunction with making its judgement for the fair value of the Company's
principal operating asset, the Independent Valuer also considers information
from a variety of other sources including:
i. current prices in an active market for properties of similar nature,
condition or location;
ii. current prices in an active market for properties of different
nature, condition or location (or subject to different lease or other
contracts), adjusted to reflect those differences;
iii. recent prices of similar properties in less active markets, with
adjustments to reflect any changes in economic conditions since the date of
the transactions that occurred at those prices;
iv. recent developments and changes in laws and regulations that might
affect zoning and/or the Company's ability to exercise its rights in respect
to properties and therefore fully realise the estimated values of such
properties;
v. discounted cash flow projections based on estimates of future cash
flows, derived from the terms of external evidence such as current market
rents, occupancy and room rates, and sales prices for similar properties in
the same location and condition, and using discount rates that reflect current
market assessments of the uncertainty in the amount and timing of the cash
flows; and
vi. recent compensation prices made public by the local authority in the
province where the property is located.
(b) Incentive Fee
For the accounting years ended 30 June 2022 and 30 June 2023, the incentive
fee was calculated as follows:
· To the extent that the NAV as at any year end commencing 30 June 2019 was
above the higher of an 8% compound annual return and the high water mark
initially set in 2019, having accounted for any share buy backs, share issues
and/or dividends, the incentive fee payable on any increase in the NAV with
effect from 30 June 2019 above the higher of the high water mark and the 8%
annual return target was calculated at a rate of 12.5%;
· The maximum amount of incentive fees that can be paid out in any one year was
capped at 1.5% of the average month-end NAV during that year; and
· Any incentive fees earned in excess of this 1.5% cap were accrued if they were
expected to be paid out in subsequent years.
Any incentive fees payable within 12 months are classified under accrued
expenses and other payables in the Statement of Financial Position. The fair
values of any additional incentive fees potentially payable beyond 12 months
after the end of the reporting period are classified as deferred incentive
fees in the Statement of Financial Position.
At the end of each financial period, the Board makes a judgement in
considering the total amount of any accrued incentive fees which are likely to
be settled beyond 12 months after the end of the reporting period. In
determining the fair value of the non-current liability at a Statement of
Financial Position date the Board may
apply a discount to reflect the time value of money and the probability and
phasing of payment. An annualised discount rate of 8% was applied to the
deferred incentive fees carried forward as at the accounting years ended 30
June 2022 and 30 June 2023. Any unwinding of the discount recorded in the
previous financial period is recorded in finance expense in the Statement of
Comprehensive Income.
For further details of the incentive fees earned and accrued at the yearend
please refer to note 16(b).
Revisions to the fee arrangements for accounting years commencing 1 July 2023
are set out in note 21.
(a) Eligibility to qualify as an investment entity
The Company has determined that it is an investment entity under the
definition of IFRS 10 as it meets the following criteria:
i. The Company has obtained funds from investors for the purpose of
providing those investors with investment management services;
ii. The Company's business purpose is to invest funds solely for returns
from capital appreciation, investment income or both; and
iii. The performance of investments made by the Company are substantially
measured and evaluated on a fair value basis.
The Company has the typical characteristics of an investment entity:
● It holds more than one investment;
● It has more than one investor;
● It has investors that are not its related parties; and
● It has ownership interests in the form of equity or similar
interests.
As a consequence, the Company does not consolidate its subsidiaries and
accounts for them at fair value through profit or loss. The Company has
applied the exemption from accounting for its subsidiaries using the equity
method as permitted by IAS 28.
(b) Judgements about active and inactive markets
The Board considers that the Ho Chi Minh Stock Exchange, the Hanoi Stock
Exchange and UPCoM are active markets for the purposes of IFRS 13.
Consequently, the prices quoted by those markets for individual shares as at
the balance sheet date can be used to estimate the fair value of the Company's
underlying investments.
Notwithstanding the fact that these stock exchanges can be regarded as active
markets, the size of the Company's holdings in particular stocks in relation
to daily market turnover in those stocks would make it difficult to conduct an
orderly transaction in a large number of shares on a single day. However, the
Board considers that, if the Company were to offer a block of shares for sale,
the price which could be achieved in an orderly transaction is as likely to be
at a premium to the quoted market price as at a discount.
Consequently, when taken across the whole portfolio of the Company's
underlying quoted investments, the Board considers that using the quoted
prices of the shares on the various active markets is generally a reasonable
determination of the fair value of the securities.
In the absence of an active market for quoted or unquoted investments which
may include positions that are not traded in active markets, valuations may be
adjusted to reflect illiquidity and/or non-transferability, which are
generally based on available market information, and in determining the fair
value one or more valuation techniques may be utilised.
4. SEGMENT ANALYSIS
Dividend income is allocated based on the underlying investments of
subsidiaries which declared dividends. Net gains/losses on financial assets
at fair value through profit or loss are allocated to each segment with
reference to the assets held by each respective subsidiary. General and
administration expenses, finance costs and loan facility set-up costs are
allocated based on the investment sector. Finance expenses, accrued expenses
and other payables are allocated to each segment with reference to the
percentage allocation on the investments holding.
The financial assets at fair value through profit or loss are measured based
on the investment sector. Other assets and liabilities are classified as other
net assets.
Segment information can be analysed as follows:
Statement of Comprehensive Income
Capital Operating Private Other Net
Markets* Asset Equity Assets** Total
USD'000 USD'000 USD'000 USD'000 USD'000
Year ended 30 June 2023
Dividend income 21,819 - 31,307 - 53,126
Net gains/(losses) on financial assets at FVTPL
13,017 10,075 (81,319) 10,181 (48,046)
General and administration expenses (note 16 (a)) (12,111) (209) (3,903) (1,487) (17,710)
Finance cost (399) - (130) (48) (577)
Facility set-up costs (note 10) (785) - (253) (96) (1,134)
Finance expense (1,278) - (412) (157) (1,847)
Incentive clawed back income 809 - 261 99 1,169
Profit/(loss) before tax 21,072 9,866 (54,449) 8,492 (15,019)
Capital Operating Private Other Net
Markets* Asset Equity Assets** Total
USD'000 USD'000 USD'000 USD'000 USD'000
Year ended 30 June 2022
Dividend income 30,705 - 27,545 - 58,250
Net (losses)/gains on financial assets at FVTPL (217,275) 155 49,831 - (167,289)
General and administration expenses (note 16) (14,522) (206) (4,905) (615) (20,248)
Facility set-up costs (note 10) (262) (4) (88) (10) (364)
Finance expense (5,004) (71) (1,690) (212) (6,977)
Incentive clawed back income 10,890 154 3,679 462 15,185
(Loss)/profit before tax (195,468) 28 74,372 (375) (121,443)
* Capital markets include listed securities and unlisted securities, valued at
their prices on UPCoM or using quotations from brokers.
** Other Net Assets include cash and cash equivalents, loans and receivables
at FVTPL, interest and other net assets of the subsidiaries and associates at
fair value.
Statement of Financial Position
Capital Operating Private Other Net
Markets* Asset Equity Assets** Total
USD'000 USD'000 USD'000 USD'000 USD'000
As at 30 June 2023
Financial assets at FVTPL 791,376 13,661 254,974 77,417 1,137,428
Prepayments and other assets - - - 658 658
Cash and cash equivalents - - - 19,133 19,133
Total assets 791,376 13,661 254,974 97,208 1,157,219
Total liabilities
Accrued expenses and other payables 12,610 218 4,065 1,232 18,125
Deferred incentive fees 3,637 63 1,172 355 5,227
Loans and borrowings 7,042 - 2,270 688 10,000
Total liabilities 23,289 281 7,507 2,275 33,352
Net asset value 768,087 13,380 247,467 94,933 1,123,867
Capital Operating Private Other Net
Markets* Asset Equity Assets** Total
USD'000 USD'000 USD'000 USD'000 USD'000
As at 30 June 2022
Financial assets at FVTPL 876,743 12,413 296,156 20,628 1,205,940
Prepayments and other assets - - - 943 943
Cash and cash equivalents - - - 15,630 15,630
Total assets 876,743 12,413 296,156 37,201 1,222,513
Total liabilities
Accrued expenses and other payables 15,821 224 5,344 671 22,060
Deferred incentive fees 14,596 207 4,931 619 20,353
Total liabilities 30,417 431 10,275 1,290 42,413
Net asset value 846,326 11,982 285,881 35,911 1,180,100
* Capital markets include listed securities and unlisted securities. The
unlisted securities are comprised of securities valued at their prices on
UPCoM or using quotations from brokers.
** Other net assets of USD77.4 million (30 June 2022: USD20.6 million) include
cash and cash equivalents, prepayments, loans and receivables at FVTPL and
other net assets of the subsidiaries and associates at fair value.
5. INTERESTS IN SUBSIDIARIES AND ASSOCIATES
There is no legal restriction to the transfer of funds from the BVI or
Singapore subsidiaries to the Company. Cash held in directly owned as well as
indirectly owned Vietnamese subsidiaries and associates is subject to
restrictions imposed by co-investors and the Vietnamese government and
therefore it cannot be transferred out of Vietnam unless such restrictions are
satisfied. As at 30 June 2023, the restricted cash held in these Vietnamese
subsidiaries and associates amounted to USD nil (30 June 2022: USD nil).
The Company has not entered into a contractual obligation to, nor has it
committed to provide, current financial or other support to an unconsolidated
subsidiary during the year.
5.1 Directly-owned subsidiaries
The Company had the following directly-owned subsidiaries as at 30 June 2023
and 30 June 2022:
As at
30 June 2023 30 June 2022
Subsidiary Country of incorporation % of Company interest % of Company interest Nature of the business
Allwealth Worldwide Limited British Virgin Islands ("BVI") 100.00 100.00 Holding company for investments
Asia Value Investment Limited BVI 100.00 100.00 Holding company for listed and unlisted securities
Belfort Worldwide Limited BVI 100.00 100.00 Holding company for private equity
Boardwalk South Limited BVI 100.00 100.00 Holding company for listed securities
Clearfield Pacific Limited BVI 100.00 100.00 Holding company for investments
Clipper Ventures Limited BVI 100.00 100.00 Holding company for listed securities and private equity
Darasol Investments Limited BVI 100.00 100.00 Holding company for investments
Foremost Worldwide Limited BVI 100.00 100.00 Holding company for unlisted securities and private equity
Fraser Investment Holdings Pte. Limited Singapore 100.00 100.00 Holding company for listed securities
Goldcity Worldwide Limited * BVI - 100.00 Holding company for investments
Hospira Holdings Limited BVI 100.00 100.00 Holding company for private equity
Longwoods Worldwide Limited BVI 100.00 100.00 Holding company for listed securities
Navia Holdings Limited BVI 100.00 100.00 Holding company for listed securities
Portal Global Limited BVI 100.00 100.00 Holding company for listed securities
Preston Pacific Limited BVI 100.00 100.00 Holding company for listed securities
Rewas Holdings Limited BVI 100.00 100.00 Holding company for unlisted securities
Turnbull Holding Pte. Ltd. Singapore 100.00 100.00 Holding company for investments
Vietnam Enterprise Limited BVI 100.00 100.00 Holding company for listed and unlisted securities
Vietnam Investment Limited BVI 100.00 100.00 Holding company for listed and unlisted securities
Vietnam Investment Property Holdings Limited BVI 100.00 100.00 Holding company for listed and unlisted securities
Vietnam Investment Property Limited BVI 100.00 100.00 Holding company for listed securities
Vietnam Master Holding 2 Limited BVI 100.00 100.00 Holding company for private equity
Vietnam Ventures Limited BVI 100.00 100.00 Holding company for listed and unlisted securities
VinaSugar Holdings Limited BVI 100.00 100.00 Holding company for investments
VOF Investment Limited BVI 100.00 100.00 Holding company for listed and unlisted securities, operating assets and
private equity.
VOF PE Holding 5 Limited BVI 100.00 100.00 Holding company for listed securities
Windstar Resources Limited BVI 100.00 100.00 Holding company for listed securities
* Goldcity Worldwide Limited has been restructured during the year to be held
100% under Clipper Ventures Limited.
5.2 Indirect interests in subsidiaries
The Company had the following indirect interests in subsidiaries at 30 June
2023 and 30 June 2022:
As at
30 June 2023 30 June 2022
% of % of
Company's Company's
Country of Immediate indirect indirect
Indirect subsidiary incorporation Nature of the business Parent interest interest
Abbott Holding Pte. Limited* Singapore Holding company for private equity Hospira Holdings Limited 100.00 100.00
Aldrin One Pte. Ltd. Singapore Holding company for private equity Halley One Limited 81.31 81.31
Aldrin Three Pte. Ltd. Singapore Holding company for private equity Halley Three Limited 80.07 80.07
Aldrin Two Pte. Ltd. Singapore Holding company for investments Clipper Ventures Limited 100.00 100.00
Allright Assets Ltd BVI Holding company for private equity Clipper Ventures Limited 100.00 100.00
Chifley Investments Pte. Ltd Singapore Holding company for investments Belfort Worldwide Limited 85.91 100.00
Clipper One Limited BVI Holding company for investments Clipper Ventures Limited 100.00 100.00
Goldcity Worldwide Limited * BVI Holding company for investments Clipper Ventures Limited 100.00 -
Gorton Investments Pte Ltd Singapore Holding company for investments Belfort Worldwide Limited 100.00 100.00
Halley Five Limited BVI Holding company for investments Clipper Ventures Limited 80.90 80.90
Halley Four Limited BVI Holding company for investments Clipper Ventures Limited 79.40 79.40
Halley One Limited BVI Holding company for investments Clipper Ventures Limited 81.31 81.31
Halley Three Limited BVI Holding company for investments Clipper Ventures Limited 80.07 80.07
Halley Two Limited BVI Holding company for investments Clipper Ventures Limited 85.91 83.46
Howard Holdings Pte. Limited** Singapore Holding company for investments Allwealth Worldwide Limited - 100.00
Liva Holding Limited BVI Holding company for private equity Halley Five Limited 80.90 80.90
Menzies Holding Pte. Ltd. Singapore Holding company for investments Belfort Worldwide Limited 100.00 100.00
PA Investment Opportunity II Limited BVI Holding company for investments Vietnam Enterprise Limited 100.00 100.00
Sharda Holdings Limited BVI Holding company for private equity Clipper Ventures Limited 89.64 89.64
Tempel Four Limited BVI Holding company for investments Halley Four Limited 79.40 79.40
Thai Hoa International Hospital JSC Vietnam Medical and healthcare services Abbott Holding Pte. Limited - 81.07
Victory Holding Investment Limited BVI Holding company for listed securities and private equity Clipper Ventures Limited 87.58 87.58
Vietnam Opportunity Fund II Pte. Ltd. Singapore Holding company for private equity Belfort Worldwide Limited 68.00 68.00
Whitlam Holding Pte. Limited Singapore Holding company for listed securities Navia Holdings Limited 61.26 61.26
*Thai Hoa International Hospital JSC was sold to Tam Tri Medical by Abbott
Holdings Pte. Ltd during the year.
** Howard Holdings Pte Ltd was struck off from the register on 8 May 2023.
5.3 Direct interests in associates
The company did not have any directly-owned associates as at 30 June 2023 or
30 June 2022.
5.4 Indirect interests in associates
The Company had the following indirect interests in associates at 30 June 2023
and 30 June 2022:
As at
30 June 2023 30 June 2022
% of % of
Company's Company's
Country of Company's subsidiary holding indirect indirect
Indirect associate incorporation Nature of the business direct interest in the associate interest interest
Hung Vuong Corporation Vietnam Operating assets investment VOF Investment Limited 31.04 31.04
Tam Tri Medical * Vietnam Private equity investment Vietnam Opportunity Fund II Pte. Ltd. and Clearfield Pacific Limited 37.80 23.80
Thu Cuc Medical & Beauty Care Joint Stock Company BVI Private equity investment Aldrin One Pte. Ltd 24.39 24.39
Chicilon Media** Vietnam Private equity investment Chifley Investment Pte. Ltd 14.84 -
* Clearfield Pacific Limited acquired an additional equity holding in Tam Tri
Medical during the year, increasing the Company's aggregate shareholding in
the portfolio company.
**In February 2023, Chifley Investments Pte Ltd invested USD30 million to
acquire a 14.84% interest in Chicilon Media.
5.5 Financial risks
At 30 June 2023, the Company owned a number of subsidiaries and associates for
the purpose of holding investments in listed and unlisted securities,
operating asset and private equity investments. The Company, via these
underlying investments, is subject to financial risks which are further
disclosed in note 20. The Investment Manager makes investment decisions after
performing extensive due diligence on the underlying investments, their
strategies, financial structure and the overall quality of management.
6. CASH AND CASH EQUIVALENTS
30 June 2023 30 June 2022
USD'000 USD'000
Cash at banks 19,133 15,630
As at 30 June 2023, cash and cash equivalents were denominated in USD and GBP.
The Company's overall cash position including cash held in directly held
subsidiaries as at 30 June 2023 was USD22.8 million (30 June 2022: USD30.1
million). Please refer to note 8 for details of the cash held by the Company's
subsidiaries. As mentioned in note 5, the restricted cash held in the
Vietnamese subsidiaries and associates amounted to USD nil (30 June 2022: USD
nil).
7. FINANCIAL INSTRUMENTS BY CATEGORY
Financial assets at amortised cost Financial assets at fair value through profit or loss Financial liabilities at amortised cost Total
USD'000 USD'000 USD'000 USD'000
As at 30 June 2023
Financial assets at FVTPL - 1,137,428 - 1,137,428
Financial liabilities - - (33,352) (33,352)
Cash and cash equivalents 19,133 - - 19,133
Total 19,133 1,137,428 (33,352) 1,123,209
Financial assets/(liabilities) denominated in:
- GBP 92 - - 92
- USD 19,041 1,137,428 (33,352) 1,123,117
As at 30 June 2022
Financial assets at FVTPL - 1,205,940 - 1,205,940
Financial liabilities - - (42,413) (42,413)
Cash and cash equivalents 15,630 - - 15,630
Total 15,630 1,205,940 (42,413) 1,179,157
Financial assets/(liabilities) denominated in:
- GBP 162 - - 162
- USD 15,468 1,205,940 (42,413) 1,178,995
As at 30 June 2023 and 30 June 2022, the carrying amounts of all financial and
other assets approximate their fair values.
All financial liabilities are short term in nature and their carrying values
approximate their fair values. There are no financial liabilities that must be
accounted for at fair value through profit or loss (30 June 2022: nil).
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial assets at fair value through profit and loss comprise the Company's
investments in subsidiaries and associates. The underlying assets and
liabilities of the subsidiaries and associates at fair value are included in
the following table.
30 June 2023 30 June 2022
Within 12 Months Over 12 Months Within 12 Months Over 12 Months
USD'000 USD'000 USD'000 USD'000
Cash and cash equivalents 3,705 - 14,472 -
Ordinary shares - listed 687,039 - 704,878 -
Ordinary shares - unlisted * 104,337 - 171,865 -
Private equity** - 254,974 9,853 286,303
Operating asset - 13,661 12,413 -
Loans and Receivables at FVTPL*** 64,059 - - -
Other net assets 9,653 - 6,156 -
868,793 268,635 919,637 286,303
* Unlisted Securities include OTC traded securities and unlisted securities
publicly traded on UPCoM of the Hanoi Stock Exchange.
** Private equity includes underlying investments in PEPT.
*** On a look-through basis, following the change in the structure of the
underlying investments, these are now classified as loans and receivables at
FVTPL.
The major underlying investments held by the direct subsidiaries and indirect
subsidiaries and associates of the Company were in the following industry
sectors.
30 June 2023 30 June 2022
USD'000 USD'000
Real Estate 268,002 321,138
Financials 211,226 229,229
Materials 169,780 182,182
Consumer Discretionary 98,927 76,704
Consumer Staples 96,062 116,388
Health Care 94,181 65,976
Industrial 86,081 97,804
Information Technology 62,702 63,595
Energy 37,109 32,296
As at 30 June 2023, the largest underlying holding, Asia Commercial Bank,
within financial assets at fair value through profit or loss amounted to 12.7%
of the NAV of the Company. (As at 30 June 2022: the holding in Asia Commercial
Bank amounted to 11.6% of NAV)
There have been no changes in the classification of financial assets at fair
value through profit or loss shown as Level 3 during the year ended 30 June
2023.
Changes in Level 3 financial assets at fair value through profit or loss
The fair values of the Company's investments in subsidiaries and associates
are estimated using approaches as described in note 3.1. As observable prices
are not available for these investments, the Company classifies them as Level
3 fair values.
For the year ended
30 June 2023 30 June 2022
USD'000 USD'000
Opening balance 1,205,940 1,353,108
Purchases 68,110 226,944
Return of capital (88,576) (206,823)
Net losses for the period (48,046) (167,289)
1,137,428 1,205,940
9. DIVIDENDS
The dividends paid in the reporting period were as follows;
Year ended 30 June Dividend rate Net dividend
2023 per share payable
(cents) (USD'000) Record date Ex-dividend date Pay date
Dividend 8.0 12,940 4 November 2022 3 November 2022 5 December 2022
Dividend 6.25 10,047 11 April 2023 6 April 2023 11 May 2023
22,987
Year ended 30 June Dividend rate Net dividend
2022 per share payable
(cents) (USD'000) Record rate Ex-dividend date Pay date
Dividend 8.0 13,288 5 November 2021 4 November 2021 6 December 2021
Dividend 8.0 13,144 8 April 2022 7 April 2022 10 May 2022
26,432
Under the Guernsey Law, the Company can distribute dividends from capital and
revenue reserves, subject to the net asset and solvency test. The net asset
and solvency test considers whether a company is able to pay its debts when
they fall due, and whether the value of a company's assets is greater than its
liabilities. The Board confirms that the Company passed the net asset and
solvency test for each dividend paid.
10. PREPAYMENTS AND OTHER ASSETS
30 June 2023 30 June 2022
USD'000 USD'000
Deferred expenses 517 900
Prepayments 141 43
658 943
Due to the short-term nature of the prepayments and other assets, their
carrying amount is considered to be the same as their fair value.
The Company exited Indochina Food Industries Pte. Ltd through the sale of 100%
of VinaSugar Holding Limited in 2012 for a total consideration of USD28.45
million. As at 30 June 2023 and 30 June 2022, the Buyer had paid USD19.75
million with USD8.7 million remaining outstanding. In June 2014, the Company
approved a loan of USD2.9 million to Indochina Food Industries Pte. Ltd to
provide immediate relief for the business. Together with the existing
receivable of USD8.7 million, the total USD11.6 million is receivable but has
been fully provided for.
On 18 March 2022, the Company entered into a revolving credit facility with
Standard Chartered Bank (Singapore) Limited. Interest charged on the facility
is the aggregate of Margin plus the Compounded Reference Rate. Costs totalling
USD1.26 million were incurred in relation to this arrangement, which have been
capitalised as a prepayment and is amortised over the period of the facility.
The outstanding amount of USD0.9 million (30 June 2022: USD0.36 million) has
been expensed to the Statement of Comprehensive Income upon expiry of the
facility on the 18 of March 2023.
On 18 March 2023, the expired revolving credit facility was renewed by a
further 1 year through exercise of an extension option in the original
agreement. Costs totalling USD0.7 million were incurred in relation to this
new arrangement, which have been capitalised as a prepayment and are being
amortised over the period of the new facility. In these financial statements,
an amount of USD0.2 million (30 June 2022: USD0.36 million) has been expensed
to the Statement of Comprehensive Income and deferred expenses of USD0.5
million (30 June 2022; USD0.9 million) is recorded on the Statement of
Financial Position as at 30 June 2023.
11. SHARE CAPITAL
The Company may issue an unlimited number of shares, including shares of no
par value or shares with a par value. Shares may be issued as (a) shares in
such currencies as the Directors may determine; and/or (b) such other classes
of shares in such currencies as the Directors may determine in accordance with
the Articles and the Guernsey Law and the price per Share at which shares of
each class shall first be offered to subscribers shall be fixed by the Board.
The minimum price which may be paid for a share is USD0.01. The Directors will
act in the best interest of the Company and the shareholders when authorising
the issue of any shares and shares will only be issued at a price of at least
the prevailing Net Asset Value at the time of issue, so that the NAV per share
is not diluted.
Issued capital
30 June 2023 30 June 2022
Number of Number of
shares USD'000 shares USD'000
Issued and fully paid at 1 July 179,662,704 491,301 184,600,992 491,301
Cancellation of treasury shares (13,432,142) - (4,938,288) -
Issued and fully paid at year end 166,230,562 491,301 179,662,704 491,301
Shares held in treasury (6,182,716) (224,214) (16,182,716) (205,987)
Outstanding shares at year end 160,047,846 267,087 163,479,988 285,314
Treasury shares
30 June 2023 30 June 2022
Number of Number of
shares shares
Opening balance at 1 July 16,182,716 16,182,716
Shares repurchased during the year 3,432,142 4,938,288
Shares cancelled during the year (13,432,142) (4,938,288)
Closing balance at year end 6,182,716 16,182,716
In October 2011, the Board first sought and obtained shareholder approval to
implement a share buyback programme. The share buyback programme has been
approved again at subsequent general meetings of the Company.
During the year ended 30 June 2023, 3.4 million shares (30 June 2022: 4.9
million) were repurchased at a cost of USD18.2 million (30 June 2022: USD31.8
million) of which USD0.3 million (30 June 2022: USD nil) was payable at the
year-end (see note 12) and 13.4 million shares (30 June 2022: 4.9 million)
were cancelled.
12. ACCRUED EXPENSES AND OTHER PAYABLES
30 June 2023 30 June 2022
USD'000 USD'000
Incentive fees payable to the Investment Manager (note 19(b)) 15,803 20,284
Management fees payable to the Investment Manager (note 19(a)) 1,233 1,272
Expenses recharged payable to the Investment Manager (note 19(a)) 73 98
Revolving credit facility costs payable (note 10) 91 25
Shares repurchase payable (note 11) 272 -
Other payables 653 381
18,125 22,060
All accrued expenses and other payables are short-term in nature. Therefore,
their carrying values are considered a reasonable approximation of their fair
values. Further details on the payables to other related parties are disclosed
in note 19.
13. LOANS AND OTHER BORROWINGS
30 June 2023 30 June 2022
USD'000 USD'000
Net loan liability at beginning of the year - -
Revolving credit facility drawdowns 60,000 -
Revolving credit facility repayments (50,000) -
Net loan liability due 10,000 -
On 18 March 2022, the Company entered into a USD40.0 million revolving credit
facility ("the Facility") with Standard Chartered Bank (Singapore) Limited,
known as the Agent. The Company drew USD40.0 million and repaid the same by
the maturity date of 18 March 2023.
On 18 March 2023, the Company exercised an extension option on the Facility.
USD20.0 million was drawn down under the facility and USD10.0 million has been
repaid. Interest charged on the facility is the aggregate of margin plus the
compounded reference rate.
Security for the Facility has been provided by way of a charge over the
Group's assets under the Facility.
In accordance with the loan Facility Agreement the Group has various
non-financial and financial covenants that are required to be met. The two
financial covenants are detailed below. Throughout the year, these financial
covenants have been met.
Covenants Requirement
Loan to Value Ratio Must not exceed 10%
Asset Cover Ratio Must not be less than 3.25:1
14. DIVIDEND INCOME
Year ended
30 June 2023 30 June 2022
USD'000 USD'000
Dividend income 53,126 58,250
The above table sets out dividends received by the Company from its
subsidiaries. These represent distributions of income received as well as the
proceeds from disposals of assets at subsidiaries, and do not reflect the
dividends earned by the underlying investee companies. During the year, the
subsidiaries received a total amount of USD13.7 million in dividends from
their investee companies (30 June 2022: USD15.9 million).
15. NET LOSSES ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Year ended
30 June 2023 30 June 2022
USD'000 USD'000
Financial assets at fair value through profit or loss:
- Unrealised losses, net (48,046) (167,289)
(48,046) (167,289)
16(a). GENERAL AND ADMINISTRATION EXPENSES
Year ended
30 June 2023 30 June 2022
USD'000 USD'000
Management fees (note 19(a)) 14,252 17,256
Custodian, secretarial and other professional fees 1,066 1,139
Audit fees 611 512
Directors' fees and expenses (note 19(c)) 525 480
Expenses recharged by the Investment Manager (note 19(a)) 156 132
Other expenses 1,100 729
17,710 20,248
16(b). DEFERRED INCENTIVE FEE
As a result of exceptional performance in 2021, a deferred liability in
respect of incentive fees of USD 22.8 million was carried forward as at 30
June 2022. In the Statement of Financial Position as at 30 June 2022, this
amount was discounted to USD20.4 million as described in note 3.1(b) and was
recorded as a deferred liability. For the year ended 30 June 2023, USD1.2
million of the liability was clawed back as a result of the decline in the
Company's NAV over the year, reducing the liability as at 30 June 2023 to
USD21.6 million. Of this amount, USD15.8 million (see note 12) is accrued and
will be paid out immediately following the publication of this annual report.
The remaining incentive fee liability of USD5.8 million has been discounted
to USD5.2 million as described in note 3.1(b) and is recorded as a deferred
liability in the Statement of Financial Position.
17. INCOME TAX EXPENSE
The Company has been granted Guernsey tax exempt status in accordance with the
Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 (as amended).
The majority of the subsidiaries are domiciled in the BVI and so have a
tax-exempt status whilst the remaining subsidiaries are established in Vietnam
and Singapore and are subject to corporate income tax in those countries. The
income tax payable by these subsidiaries is taken into account in determining
their fair values in the Statement of Financial Position.
18. EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE
(a) Basic
Basic earnings per share is calculated by dividing the profit or loss from
operations of the Company by the weighted average number of ordinary shares in
issue during the year excluding ordinary shares purchased by the Company and
held as treasury shares (note 11).
Year ended
30 June 2023 30 June 2022
Loss for the year (USD'000) (15,019) (121,443)
Weighted average number of ordinary shares in issue 161,660,260 165,674,093
Basic earnings per share (USD per share) (0.09) (0.73)
The basic earnings per share in GBP is (0.07) at 30 June 2023 (30 June 2022:
earnings per share in GBP was 0.60).
(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 Company has no category of potentially dilutive
ordinary shares. Therefore, diluted earnings per share is equal to basic
earnings per share.
(c) NAV per share
NAV per share is calculated by dividing the net asset value of the Company by
the number of outstanding ordinary shares in issue as at the reporting date
excluding ordinary shares purchased by the Company and held as treasury shares
(note 11). NAV is determined as total assets less total liabilities. The basic
NAV per share is equal to the diluted NAV per share.
30 June 2023 30 June 2022
Net asset value (USD'000) 1,123,867 1,180,100
Number of outstanding ordinary shares in issue (note 11) 160,047,846 163,479,988
Net asset value per share (USD per share) 7.02 7.22
19. RELATED PARTIES
The Investment Management Agreement between the Company and the Investment
Manager can be terminated by either party giving six months' notice. In
certain circumstances the Company may be required to pay compensation to the
Investment Manager of an amount up to six months' fees in lieu of notice.
(a) Management fees
For accounting years ended 30 June 2022 and 2023, the Investment Manager
received a fee at the annual rates set out below, paid monthly in arrears.
● 1.50% of net assets, levied on the first USD500 million of net
assets;
● 1.25% of net assets, levied on net assets between USD500 million
and USD1,000 million;
● 1.00% of net assets, levied on net assets between USD1,000 million
and USD1,500 million;
● 0.75% of net assets, levied on net assets between USD1,500 million
and USD2,000 million; and
● 0.50% of net assets, levied on net assets above USD2,000 million.
Total management fees incurred for the year amounted to USD14.4 million (30
June 2022: USD17.4 million), of which USD0.1 million (30 June 2022: USD0.1
million) was in relation to recharge of expenses incurred. In total USD1.3
million (30 June 2022: USD1.4 million) was payable to the Investment Manager
at the reporting date.
(b) Incentive fees
As described in notes 12 and 16(b), as at 30 June 2023, an incentive fee of
USD 15.8 million will be paid out immediately on publication of these
accounts. A deferred incentive fee of USD5.8 million will be carried forward
for potential payment in future years and is discounted to USD5.2 million. A
total of USD 21.0 million is accounted for in the Statement of Financial
Position.
Further, as set out in note 16(b), USD1.2 million was clawed back from the
amount previously accrued and a discounted amount of USD5.2 million remains
accrued and is potentially payable in future years.
25% of any incentive fee paid to the Investment Manager is used by the
Investment Manager to purchase shares in the Company in the open market. In
practice such purchases are generally made alongside, and at the same price
as, share buybacks made by the Company.
As set out in note 21, the fee arrangements were modified with effect from 1
July 2023.
(c) Directors' Remuneration
The Directors who served during the past two years received the following
emoluments in the form of fees:
Year ended
Annual fee 30 June 2023 30 June 2022
USD USD USD
Steve Bates* 105,000 - 44,226
Huw Evans 105,000 105,000 98,723
Thuy Bich Dam 85,000 67,942 80,000
Peter Hames 85,000 80,548 80,000
Julian Healy 90,000 90,000 90,000
Kathryn Matthews 85,000 85,000 80,000
Hai Thanh Trinh 80,000 80,000 219
508,490 473,168
* Steve Bates retired as a director effective 2 December 2021.
In addition to annual fee, Directors' expenses of USD12,518 (30 June 2022:
USD6,843) were incurred during the year. In total the annual fees and expenses
of Directors for the year were USD521,008 (30 June 2022: USD480,011), of which
USD nil was outstanding at 30 June 2023 (30 June 2022: USD219).
(d) Shares held by related parties
Shares held Shares held
as at 30 June 2023 as at 30 June 2022
Thuy Bich Dam* - -
Huw Evans 35,000 35,000
Peter Hames 8,000 8,000
Julian Healy 15,000 15,000
Kathryn Matthews 9,464 9,464
Hai Thanh Trinh - -
Andy Ho 248,084 248,084
* Thuy Bich Dam retired as a director effective 18 April 2023.
As at 30 June 2023, Stephen Westwood, the co-owner of CES Investments Ltd
which provides consultancy services to the Company, owned 6,000 shares (30
June 2022: 6,000 shares) in the Company.
As at 30 June 2023, the Investment Manager owned 3,303,397 shares (30 June
2022: 2,354,275 shares) in the Company.
(e) Controlling party
In the opinion of the Directors on the basis of shareholdings advised to them,
the Company has no immediate nor ultimate controlling party.
20. FINANCIAL RISK MANAGEMENT
(a) Financial risk factors
The Company has set up a number of subsidiaries and associates for the purpose
of holding investments in listed and unlisted securities, operating asset and
private equity investments in Vietnam and overseas with the objective of
achieving medium to long-term capital appreciation and providing investment
income. The Company accounts for these subsidiaries and associates as
financial assets at fair value through profit or loss.
The Company's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise potentially
adverse effects on the Company's financial performance. The Company's risk
management is coordinated by the Investment Manager which manages the
distribution of the assets to achieve the investment objectives.
The changes in the management of risk or in any risk management policies
during the financial year ended 30 June 2023 is documented in the corporate
governance section of the annual report.
The Company is subject to a variety of financial risks: market risk, credit
risk and liquidity risk.
(i) Market risk
Market risk comprises price risk, foreign exchange risk and interest rate
risk. Market risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market prices,
interest rates and/or foreign exchange rates.
The investments are subject to market fluctuations and the risk inherent in
the purchase, holding or selling of investments and there can be no assurance
that appreciation or maintenance in the value of those investments will occur.
The Company's subsidiaries and associates invest in listed and unlisted equity
securities and are exposed to market price risk of these securities. The
majority of the underlying equity investments are traded on either of
Vietnam's stock exchanges, the Ho Chi Minh Stock Exchange or the Hanoi Stock
Exchange, as well as UPCoM.
All securities investments present a risk of loss of capital. This risk is
managed through the careful selection of securities and other financial
instruments within specified limits and by holding a diversified portfolio of
listed and unlisted instruments. In addition, the performance of investments
held by the Company's subsidiaries is monitored by the Investment Manager on a
regular basis and reviewed by the Board of Directors on a quarterly basis.
Market price sensitivity analysis
If the prices of the underlying listed and unlisted securities had
increased/decreased by 10%, the Company's financial assets held at fair value
through profit or loss would have been higher/lower by USD79.1 million (30
June 2022: USD87.7 million).
See note 20(c) for a sensitivity analysis of the fair values of , operating
assets, private equity and loans and receivables at FVTPL.
Depending on the development stage of a project and its associated risks, the
Independent Valuer uses discount rates in the range from 13 - 23% and terminal
growth rates of 5 - 13.5% (30 June 2022: 13 - 19% and 5%, respectively).
Foreign exchange risk
The Company makes investments in USD and receives income and proceeds from
sales in USD. Nevertheless, investments are made in entities which are often
exposed to the VND, and these entities are therefore sensitive to the foreign
exchange rate of the VND against USD. On a 'look-through' basis, therefore,
the Company is exposed to movements in the exchange rate of the VND against
the USD. In addition, the Company has exposure to GBP and Euro ("EUR") through
operational transactions in these currencies.
The Company's NAV would fluctuate by the following amounts were the foreign
exchange rate to increase by 1%.
30 June 2023 30 June 2022
USD'000 USD'000
VND (11) (12)
GBP (3) -
There would be the reverse impact should the foreign exchange rate decrease by
1%.
Interest rate risk
The Company's exposure to interest rate risk relates to the Company's cash and
cash equivalents and loans and other borrowings. The Company is subject to
risk due to fluctuations in the prevailing levels of market interest rates.
(ii) Credit risk
Credit risk is the risk that a counterparty to a financial instrument will
fail to discharge an obligation or commitment that it has entered into with
the Company.
The Company's maximum credit exposure consists of the carrying amount
financial assets of the Company and its subsidiaries and associates at the
year end.
30 June 2023 30 June 2022
USD'000 USD'000
Financial assets at FVTPL 77,614 20,300
Cash and cash equivalents 19,133 15,630
Other net assets 658 943
97,405 36,873
On a look-through basis, the Company is exposed to counterparty credit risk on
cash and cash equivalents, financial assets at FVTPL and other net assets.
All cash held by the Company and its subsidiaries and associates is placed
with a financial institution with a credit rating of A+. Other net assets
includes other receivables which are considered short-term and are held by
subsidiaries and associates from sister companies and from third parties and
considered unrated.
The Company's exposure in financial assets at FVTPL is a result of the
Company's exercise of the put options and restructure of counterparty's
obligation due to default. However, the credit risk associated with these
investments is reduced by collateral secured amounting to USD18.7 million.
For the year ended 30 June 2023, included in the fair value of the financial
asset at fair value through profit or loss is an amount of USD 63.4 million
which represents the changes in the credit risk as a result of exercising put
options and restructuring of obligations.
At 30 June 2023 and 30 June 2022, USD11.6 million of receivables of the
Company relating to the sale of a direct investment were fully impaired, as
described in note 10. In determining the impairment the Directors have made
judgements as to whether there is a probability of default or observable data
available indicating that there has been a significant change to the debtor's
ability to pay. The Investment Manager is also investigating the collateral
against which the receivables may be secured and whether mechanisms exist to
recover value from the collateral. The Investment Manager is examining the
possibility of recovering the receivables in question; however, it was
concluded that there is still a reasonable expectation of recovery thus no
write-off of the fully impaired receivables has been made.
(iii) Liquidity risk
Liquidity risk is the risk that the Company may not be able to generate
sufficient cash resources to settle its obligations in full as they fall due
or can only do so on terms that are materially disadvantageous.
Listed securities held by the Company's subsidiaries are considered readily
realisable, as the majority are listed on Vietnam's stock exchanges.
At the year end, the Company's non-derivative financial liabilities have
contractual maturities which are summarised in the table below. The amounts in
the table are the contractual undiscounted cash flows.
30 June 2023 30 June 2022
Within 12 Over 12 Within 12 Over 12
Months Months Months Months
USD'000 USD'000 USD'000 USD'000
Incentive fee payable/deferred 15,803 5,227 20,284 20,353
Payables to related parties (note 12) 1,306 - 1,370 -
Other payables (note 12) 1,016 - 406 -
The Company manages its liquidity risk by investing predominantly in
securities through its subsidiaries that it expects to be able to liquidate
within 12 months or less. The following table analyses the expected liquidity
of the assets held by the Company:
30 June 2023 30 June 2022
Within 12 Over 12 Within 12 Over 12
Months Months Months Months
USD'000 USD'000 USD'000 USD'000
Cash and cash equivalents 19,133 - 15,630 -
Prepayments and other assets 658 - 943 -
Financial assets at FVTPL on underlying investments (Note 8) 868,793 268,635 919,637 286,303
888,584 268,635 936,210 286,303
(b) Capital management
The Company's capital management objectives are:
● To ensure the Company's ability to continue as a going
concern.
● To provide investors with an attractive level of investment
income; and
● To preserve a potential capital growth level.
The Company is not subject to any externally imposed capital requirements
other than the covenants as disclosed in note 13. The Company has engaged the
Investment Manager to allocate the net assets in such a way so as to generate
a reasonable investment return for its shareholders and to ensure that there
is sufficient funding available for the Company to continue as a going
concern.
(c) Fair value estimation
Capital as at the year-end is summarised as follows:
30 June 2023 30 June 2022
USD'000 USD'000
Net assets attributable to equity shareholders 1,123,867 1,180,100
The table below analyses financial instruments carried at fair value, by
valuation method. The different levels have been defined as follows:
· Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities;
· Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices); and
· Level 3: Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs).
There are no financial liabilities of the Company which were carried at fair
value through profit or loss as at 30 June 2023 and 30 June 2022.
The level into which financial assets are classified is determined based on
the lowest level of significant input to the fair value measurement.
Financial assets measured at fair value in the Statement of Financial Position
are grouped into the following fair value hierarchy:
Level 3 Total
USD'000 USD'000
As at 30 June 2023
Financial assets at fair value through profit or loss 1,137,428 1,137,428
As at 30 June 2022
Financial assets at fair value through profit or loss 1,205,940 1,205,940
The Company classifies its investments in subsidiaries and associates as Level
3 because they are not publicly traded, even when the underlying assets may be
readily realisable. There were no transfers between the Levels during the year
ended 30 June 2023 and 30 June 2022.
If these investments were held at the Company level, they would be presented
as follows:
Level 1 Level 2 Level 3 Total
USD'000 USD'000 USD'000 USD'000
As at 30 June 2023
Cash and cash equivalents 3,705 - - 3,705
Ordinary shares - listed 687,039 - - 687,039
- unlisted * 98,099 6,238 - 104,337
Private equity investments - - 254,974 254,974
Loans and receivables at FVTPL - - 64,059 64,059
Operating asset - - 13,661 13,661
Other net assets - - 9,653 9,653
788,843 6,238 342,347 1,137,428
Level 1 Level 2 Level 3 Total
USD'000 USD'000 USD'000 USD'000
As at 30 June 2022
Cash and cash equivalents 14,472 - - 14,472
Ordinary shares - listed 704,878 - - 704,878
- unlisted* 166,003 5,862 - 171,865
Private equity investments - - 296,156 296,156
Operating asset - - 12,413 12,413
Other net assets - - 6,156 6,156
885,353 5,862 314,725 1,205,940
* Unlisted securities are valued at their prices on UPCoM or using quotations
from brokers.
Investments whose values are based on quoted market prices in active markets,
and are therefore classified within Level 1, include actively traded equities
on Ho Chi Minh City Stock Exchange, Hanoi Stock Exchange or UPCoM at the
Statement of Financial Position date. Financial instruments which trade in
markets that are not considered to be active but are valued based on prices
dealer quotations are classified within Level 2. These include investments in
OTC equities. As Level 2 investments include positions that are not traded in
active markets, valuations may be adjusted to reflect illiquidity and/or
non-transferability, which are generally based on available market
information.
Private equity investments, the operating asset, loans and receivables at
FVTPL and other asset that do not have an active market are classified within
Level 3. The Company uses valuation techniques to estimate the fair value of
these assets based on significant unobservable inputs as described in note
3.2. There were no movements into or out of the Level 3 category during the
year.
The Company considers the appropriateness of the valuation model inputs, as
well as the valuation results using various valuation methods and techniques
which are generally recognised as standard within the industry. The change in
the significant unobservable inputs shown in the table below shows the impact
which a reasonable potential shift in the input variables would have on the
valuation result.
Set out below is the sensitivity analysis which shows the changes in the
Company's net asset value, on a look through basis, based on the significant
unobservable input assumptions used in the valuation of Level 3 investments as
at 30 June 2023, keeping all other assumptions constant. The changes in
discount rates by +/- 1% is considered appropriate for the market in which the
Company is operating.
Segment Valuation Valuation Discount Cap Terminal Multiples Sensitivities in discount rates and cap rates/terminal
technique (USD'000) rate rate growth rate growth rate (USD'000)
Change
in discount rate
Operating assets Discounted cash flows 13,661 15% n/a 13.5% n/a -1% 0% 1%
Change in -1% 14,406 13,812 13,262
terminal growth 0% 14,241 13,661 13,123
1% 14,088 13,520 12,995
Private equity Discounted cash flows 210,540 13%-23% n/a 5% n/a
-1% 0% 1%
Change in -1% 213,655 200,433 189,488
terminal growth 0% 226,630 210,540 196,563
1% 241,417 222,074 206,725
Private equity Multiples 11,392 n/a n/a n/a 8.03
Change in -1% 0% 1%
EBITDA margin 11,270 11,392 11,483
Loans at FVTPL Scenario 37,212 21% n/a n/a n/a
-1% 0% 1%
based 37,755 37,212 36,681
Private equity
Discounted cash flows
210,540
13%-23%
n/a
5%
n/a
-1% 0% 1%
Change in -1% 213,655 200,433 189,488
terminal growth 0% 226,630 210,540 196,563
1% 241,417 222,074 206,725
Private equity
Multiples
11,392
n/a
n/a
n/a
8.03
Change in -1% 0% 1%
EBITDA margin 11,270 11,392 11,483
Loans at FVTPL
Scenario
based
37,212
21%
n/a
n/a
n/a
-1% 0% 1%
37,755 37,212 36,681
* The above sensitivity analysis includes those underlying Level 3 private
equity investments that have been valued using the valuation methodologies
noted above. The difference between the balance of USD319.0 million recorded
as Level 3 private equity investments and loans and receivables at FVTPL
earlier in note 20 and the three above balances of USD259.1 million relates to
four underlying investments, whose fair value measurement and inputs are not
subject to the same sensitivities.
Set out below is the sensitivity analysis which shows the changes in the
Company's net asset value, on a look through basis, based on the significant
unobservable input assumptions used in the valuation of Level 3 investments as
at 30 June 2022, keeping all other assumptions constant. The changes in
discount rates by +/- 1% is considered appropriate for the market in which the
Company is operating.
At 30 June 2022, the operating asset was valued at USD12.4 million by
reference to its expected sale price and any changes in unobservable input
assumptions such as discount rate and cap rate are not considered to be
relevant.
Segment Valuation Valuation Discount Cap Terminal Multiples Sensitivities in discount rates and cap rates/terminal
technique (USD'000) rate rate growth rate growth rate (USD'000)
Change in sales growth rate
Private equity Discounted cash flows 195,104 * 13%-19% n/a 5% n/a
-1% 0% 1%
Change in -1% 197,887 189,001 181,228
terminal 0% 205,558 195,104 185,615
growth 1% 214,041 202,004 192,055
Private Multiples 13,100 n/a n/a n/a 10.8x Change in sales growth rate
equity
-1% 0% 1%
Change in -1% 13,100 13,100 13,139
terminal 0% 13,100 13,100 13,139
growth rate 1% 13,123 13,123 13,161
Private
Multiples
13,100
n/a
n/a
n/a
10.8x
Change in sales growth rate
equity
-1% 0% 1%
Change in -1% 13,100 13,100 13,139
terminal 0% 13,100 13,100 13,139
growth rate 1% 13,123 13,123 13,161
* The above sensitivity analysis includes those underlying Level 3 private
equity investments that have been valued using the valuation methodologies
noted above. The difference between the balance of USD296.2 million recorded
as Level 3 private equity investments earlier in note 20 and the two above
balances of USD208.2 million relates to three underlying investments, two of
those were valued using the quoted market price at the year end and the other
was valued using the net selling price and are thus not subject to the same
sensitivities.
Specific valuation techniques used to value the Company's underlying
investments include:
● Quoted market prices or dealer quotes.
● Use of discounted cash flow techniques to calculate the present
value of estimated future cash flows; and
● Other techniques, such as the latest market transaction price.
(d) Incentive fee
Set out below is the sensitivity analysis which shows the changes in the
Company's deferred and accrued incentive fee payable based on the significant
unobservable input assumptions used in the calculation as at
30 June, keeping all other assumptions constant. The changes in discount rates
of +/- 1% and NAV of +/-10%
are considered appropriate for the market in which the Company is operating.
As at 30 June 2023
Discount rate
-1% 0% +1%
Change in NAV +10% 17,889 17,630 17,378
0% 5,297 5,227 5,159
-10% - - -
Note that if the NAV were to be 10% lower then the incentive fee payable in
2023 on publication of this Annual Report would have been reduced to USD 7.6
million.
As at 30 June 2022
Discount rate
-1% 0% +1%
Change in NAV +10% 53,485 52,943 52,414
0% 40,918 40,637 40,362
-10% 27,692 27,595 27,500
21. SUBSEQUENT EVENTS
This Annual Report and Financial Statements were approved by the Board on 23
October 2023.
On 23 October 2023, the Board declared a dividend of 7.0 US cents per share.
The dividend is payable on or around 4 December 2023 to shareholders on record
at 3 November 2023.
Investment Management Fees
Revisions to the fee arrangements for accounting years commencing 1 July 2023
are listed below:
(a) the Investment Manager will receive a fee at the annual rates set out
below, paid monthly in arrears.
● 1.30% of net assets, levied on net assets on the first USD1,000
million;
● 1.00% of net assets, levied on net assets between USD1,000 million
and USD1,500 million;
● 0.75% of net assets, levied on net assets between USD1,500 million
and USD2,000 million; and
● 0.50% of net assets, levied on net assets above USD2,000 million.
(b) The incentive fee is 10% of any increase in NAV above an 10% p.a. hurdle
rate, with the cap on incentive fees paid out in any year at 1.5% of weighted
average of month-end net assets.
MANAGEMENT AND ADMINISTRATION
Directors Registrar
Thuy Bich Dam (retired on 18 April 2023) Computershare Limited
Huw Evans 13 Castle Street
Peter Hames St Helier
Julian Healy Jersey, JE1 1ES
Kathryn Matthews Channel Islands
Hai Thanh Trinh
Registered Office Independent Auditor
PO Box 656 PricewaterhouseCoopers CI LLP
Trafalgar Court PO Box 321
Les Banques Royal Bank Place
St Peter Port 1 Glategny Esplanade
Guernsey, GY1 3PP St Peter Port
Channel Islands Guernsey, GY1 4ND
Channel Islands
Investment Manager Investment Advisor
VinaCapital Investment Management Ltd VinaCapital Fund Management JSC
1(st) and 2(nd) Floors, Elizabeth House 17th Floor, Sun Wah Tower
Les Ruettes Brayes 115 Nguyen Hue Blvd, District 1
St Peter Port Ho Chi Minh City
Guernsey, GY1 1EW Vietnam
Channel Islands
Administrator and Corporate Secretary UK Marketing and Distribution Partner
Aztec Financial Services (Guernsey) Limited Cadarn Capital Limited
PO Box 656 Moor Place
Trafalgar Court 1 Fore St Avenue
Les Banques London EC2Y 9DT
St Peter Port
Guernsey, GY1 3PP
Channel Islands
Corporate Broker Custodian
Numis Securities Limited Standard Chartered Bank (Vietnam) Limited
45 Gresham Street Unit 1810-1815, Keangnam
London EC2V 7BF Cau Giay New Urban Area
United Kingdom Me Tri Com Hanoi
Vietnam
Marketing and Investor Engagement (Global) Public Relations (London)
Barclays Bank PLC Camarco
1 Churchill Place, 40 Strand
London, E14 5HP London, WC2N 5RW
United Kingdom United Kingdom
Investment Manager's Offices:
Ho Chi Minh City
17th Floor, Sun Wah Tower
115 Nguyen Hue Blvd., District 1
Ho Chi Minh City
Vietnam
Phone: +84-28 3821 9930
Fax: +84-28 3821 9931
Hanoi
2(nd) Floor, International Centre Building
17 Ngo Quyen, Hoan Kiem District
Hanoi
Vietnam
Phone: +84-424 3936 4630
Fax: +84-424 3936 4629
Singapore
6 Temasek Boulevard
# 42-01 Suntec Tower 4
Singapore 038986
Phone: +65 6332 9081
Fax: +65 6333 9081
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES
Term Definition
2H23 The second half of 2023
2Q23 The second quarter of calendar year 2023
Agent Standard Chartered Bank (Singapore) Limited
ACB Asia Commercial Bank
ADTV Average daily trading value
AGM Annual General Meeting
AIC The Association of Investment Companies
AIC Code The AIC Code of Corporate Governance which was issued in February 2019
ASEAN The Association of Southeast Asian Nations
Board The Board of Directors
BVI British Virgin Islands
CBRE Coldwell Banker Richard Ellis
Company VinaCapital Vietnam Opportunity Fund Limited
COVID-19 The disease caused by SARS-CoV-2, the coronavirus that emerged in December
2019
CRS Common Reporting Standard
Discount to NAV per Share Discount to NAV per Share is calculated as follows (in USD):
(NAV at year end - Share Price at year end) ÷ NAV at year end
Being (7.02 - 5.46) ÷ 7.02
EBITDA Earnings before interest, tax, depreciation and amortisation. A measure of the
gross profit of a company.
ERM Enterprise Risk Management
ESG Environmental, Social, and Governance
ETF Exchange Traded Fund
External Auditor PricewaterhouseCoopers CI LLP
Facility The revolving credit facility as disclosed in note 13.
FATCA Foreign Account Tax Compliance Act
F&B Food and Beverage services
FDI Foreign direct investments.
FFI Foreign Financial Institution
Financial Statements The Audited Financial Statement
FVTPL Fair value through profit or loss
FY Financial year. The Company's financial year runs from 1 July to 30 June.
GBP British Pound Sterling.
GDP Gross Domestic Product. GDP is a monetary measure of the market value of all
the final goods and services produced in a specific time period in a country
or wider region.
GICS Global Industry Classification Standard
Guernsey Code The Guernsey Code of Corporate Governance
Guernsey Law The Companies (Guernsey) Law, 2008 as amended.
HCMC Ho Chi Minh City
HNX The Hanoi Stock Exchange
HOSE The Ho Chi Minh Stock Exchange.
IAS International Accounting Standard
IASB International Accounting Standards Board
IFC International Finance Corporation
IFRS International Financial Reporting Standards
Incentive (Income)/Fee Ratio Income income/(fee) ratio represents the finance expense and incentive
income/(fee) for the year divided by the average NAV for the year.
The incentive income/(fee) ratio is calculated as follows:
( incentive (income)/fee for the year) ÷ average NAV for the year
Being (- USD1,169) ÷ USD1,066,000
Independent Valuer A qualified independent professional services firm
IPO Initial public offering - the means by which most listed companies achieve
their stock market listing.
IRR The internal rate of return. A measure of the total return on an investment
taking account of the amount and timing of all amounts invested and amounts
realised. The IRR is expressed as an annualised percentage. The use of IRR
enables different investments with differing cash flow profiles to be compared
on a like for like financial basis.
IRS US Internal Revenue Service
JPY Japanese Yen
KPI Key performance Indicator
LDR Loan-to-Deposit ratio
LSE The London Stock Exchange.
MBA Master of Business Administration
NAV Net Asset Value, being the total value of the Company's assets less its
liabilities (the net assets)
NAV per share NAV divided by the number of shares in issue.
NAV Total Return Expressed in percentage terms, is a measure of the investment return earned by
the Company, calculated by taking the change in the NAV over the period in
question and dividing by the starting NAV. This assumes that any dividends
paid in the period are reinvested at the prevailing NAV per share on the
ex-dividend rate and that the dividend would grow at the same rate of return
as the NAV per share after re-investment.
The NAV Total Return is calculated as follows:
Total return over 1 year:
30 June 2023: NAV per share 7.02 a
Dividends paid 0.143 b
Effect of dividend reinvestment* 0.022 c
30 June 2022 NAV per share 7.22 d
NAV Total Return (%) - 0.4% =((a+b+c)/d)-1
Total return over 3 years:
30 June 2023: NAV per share 7.02 a
Dividends paid 0.418 b
Effect of dividend reinvestment* 0.02 c
30 June 2020 NAV per share 4.97 d
NAV Total Return (%) 50.1% =((a+b+c)/d)-1
Total return over 5 years:
30 June 2023: NAV per share 7.02 a
Dividends paid 0.638 b
Effect of dividend reinvestment* 0.12 c
30 June 2018 NAV per share 5.38 d
NAV Total Return (%) 45% =((a+b+c)/d)-1
* The total return is calculated by assuming that dividends paid out are
re-invested into the NAV on the ex-dividend date. After each dividend payment,
the value of the amount notionally reinvested is then assumed to change
proportionally to subsequent changes in the NAV per share. This is accounted
for in the "Effect of dividend reinvestment" row.
NovaGroup Unlisted parent company of Novaland and Nova Consumer Group
NCG Nova Consumer Group
NPAT Net profit after tax
OECD Organisation for Economic Co-operation and Development
Ongoing Charges excluding Incentive Fee Ratio The Ongoing Charges excluding Incentive Fee Ratio represents the annualised
ongoing charges (excluding finance costs, transaction costs and taxation)
divided by the average NAV of the Company for the year and has been prepared
in accordance with the AIC's recommended methodology. Ongoing charges reflect
expenses likely to recur in the foreseeable future.
The Ongoing Charges excluding Incentive Fee Ratio is calculated as follows (in
USD'000):
Sum of general and administration expenses and total incentive (income)/fee ÷
average NAV for the year
Being: (USD17,710) ÷ USD1,066,000
Ongoing Charges plus Incentive Fee Ratio The Ongoing Charges plus Incentive Fee Ratio represents the annualised ongoing
charges (excluding transaction costs and taxation) divided by the average NAV
of the Company for the year and has been prepared in accordance with the AIC's
recommended methodology. Ongoing charges reflect expenses likely to recur in
the foreseeable future.
The Ongoing Charges plus Incentive Fee Ratio is calculated as follows in
USD'000):
Sum of general and administration expenses and total incentive (income)/fee ÷
average NAV for the year
Being: (USD17,710 - 1,169) ÷ USD1,066,000
OTC Over-The-Counter
P/E Price-to-earnings
P&L Profit or Loss
PMI Purchasing Manager Index
PRI Principles of Responsible Investing
Private Equity This consists of investments in private companies, structured investments, and
bonds with privately negotiated terms.
PEPT Public Equities with Private Terms
PTO Public tender offer
PwC CI PricewaterhouseCoopers CI LLP
q-o-q Quarter-on-quarter
ROE Return on equity
SBV State Bank of Vietnam
SCB Saigon Commercial Bank
SCC State Securities Commission of Vietnam
Share Price Total Return A measure of the investment return to shareholders, taking account of the
change in share price over the period in question and assuming that any
dividends paid in the period are reinvested at the prevailing share price at
the time that the shares begin to trade ex-dividend. Share price total returns
are calculated by [Bloomberg or a recognised independent provider of market
statistics]
SID Senior Independent Director
UK Companies Act Companies Act 2006
UK Code The UK Corporate Governance Code issued in July 2018
UPCoM UPCoM listing of the Hanoi Stock Exchange
US United States of America
USD United States Dollar.
VND / VN Dong Vietnamese Dong
VN Index The Ho Chi Minh Stock Exchange Index, a capitalisation-weighted index of all
companies listed on the Ho Chi Minh Stock Exchange.
VOF VinaCapital Vietnam Opportunity Fund Limited
y-o-y Year-on-year
Total return over 3 years:
30 June 2023: NAV per share 7.02 a
Dividends paid 0.418 b
Effect of dividend reinvestment* 0.02 c
30 June 2020 NAV per share 4.97 d
NAV Total Return (%) 50.1% =((a+b+c)/d)-1
Total return over 5 years:
30 June 2023: NAV per share 7.02 a
Dividends paid 0.638 b
Effect of dividend reinvestment* 0.12 c
30 June 2018 NAV per share 5.38 d
NAV Total Return (%) 45% =((a+b+c)/d)-1
* The total return is calculated by assuming that dividends paid out are
re-invested into the NAV on the ex-dividend date. After each dividend payment,
the value of the amount notionally reinvested is then assumed to change
proportionally to subsequent changes in the NAV per share. This is accounted
for in the "Effect of dividend reinvestment" row.
NovaGroup
Unlisted parent company of Novaland and Nova Consumer Group
NCG
Nova Consumer Group
NPAT
Net profit after tax
OECD
Organisation for Economic Co-operation and Development
Ongoing Charges excluding Incentive Fee Ratio
The Ongoing Charges excluding Incentive Fee Ratio represents the annualised
ongoing charges (excluding finance costs, transaction costs and taxation)
divided by the average NAV of the Company for the year and has been prepared
in accordance with the AIC's recommended methodology. Ongoing charges reflect
expenses likely to recur in the foreseeable future.
The Ongoing Charges excluding Incentive Fee Ratio is calculated as follows (in
USD'000):
Sum of general and administration expenses and total incentive (income)/fee ÷
average NAV for the year
Being: (USD17,710) ÷ USD1,066,000
Ongoing Charges plus Incentive Fee Ratio
The Ongoing Charges plus Incentive Fee Ratio represents the annualised ongoing
charges (excluding transaction costs and taxation) divided by the average NAV
of the Company for the year and has been prepared in accordance with the AIC's
recommended methodology. Ongoing charges reflect expenses likely to recur in
the foreseeable future.
The Ongoing Charges plus Incentive Fee Ratio is calculated as follows in
USD'000):
Sum of general and administration expenses and total incentive (income)/fee ÷
average NAV for the year
Being: (USD17,710 - 1,169) ÷ USD1,066,000
OTC
Over-The-Counter
P/E
Price-to-earnings
P&L
Profit or Loss
PMI
Purchasing Manager Index
PRI
Principles of Responsible Investing
Private Equity
This consists of investments in private companies, structured investments, and
bonds with privately negotiated terms.
PEPT
Public Equities with Private Terms
PTO
Public tender offer
PwC CI
PricewaterhouseCoopers CI LLP
q-o-q
Quarter-on-quarter
ROE
Return on equity
SBV
State Bank of Vietnam
SCB
Saigon Commercial Bank
SCC
State Securities Commission of Vietnam
Share Price Total Return
A measure of the investment return to shareholders, taking account of the
change in share price over the period in question and assuming that any
dividends paid in the period are reinvested at the prevailing share price at
the time that the shares begin to trade ex-dividend. Share price total returns
are calculated by [Bloomberg or a recognised independent provider of market
statistics]
SID
Senior Independent Director
UK Companies Act
Companies Act 2006
UK Code
The UK Corporate Governance Code issued in July 2018
UPCoM
UPCoM listing of the Hanoi Stock Exchange
US
United States of America
USD
United States Dollar.
VND / VN Dong
Vietnamese Dong
VN Index
The Ho Chi Minh Stock Exchange Index, a capitalisation-weighted index of all
companies listed on the Ho Chi Minh Stock Exchange.
VOF
VinaCapital Vietnam Opportunity Fund Limited
y-o-y
Year-on-year
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. END FR NKNBPFBDDBKBRecent news on VinaCapital Vietnam Opportunity Fund
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AnnouncementREG - VinaCapital Vietnam - Daily Net Asset Value
AnnouncementREG - VinaCapital Vietnam - Daily Net Asset Value
AnnouncementREG - VinaCapital Vietnam - Dividend Declaration - Currency of Payment
AnnouncementREG - VinaCapital Vietnam - Daily Net Asset Value
Announcement