REG - VinaCapital Vietnam - Annual Financial Report
24/10/2024 07:00
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RNS Number : 3860J VinaCapital Vietnam Opportunity Fd. 24 October 2024
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 2024.
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 2024
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 2020 2021 2022 2023 2024
Statement of Comprehensive Income (USD'000)
Total (loss)/income from ordinary activities (35,204) 633,220 (100,831) 5,080 100,771
Total expenses from ordinary activities (15,254) (92,436) (20,612) (20,099) (27,865)
Operating (loss)/profit before income tax (50,458) 540,784 (121,443) (15,019) 72,906
Income tax expense - - - - -
(Loss)/profit for the year (50,458) 540,784 (121,443) (15,019) 72,906
(Loss)/profit attributable to ordinary equity holders (50,458) 540,784 (121,443) (15,019) 72,906
Statement of Financial Position (USD'000)
Total assets 877,968 1,429,421 1,222,513 1,157,219 1,145,727
Total liabilities (1,863) (69,648) (42,413) (33,352) 16,489
Net assets 876,105 1,359,773 1,180,100 1,123,867 1,129,238
2020 2021 2022 2023 2024
Share information
Basic (loss)/earnings per share (cents per share) (28) 315 (73) (9) 47
Basic (loss)/earnings per share (pence per share)* (22) 228 (60) (7) 37
Share price at 30 June (USD) 4.07 6.64 5.79 5.46 6.26
Share price at 30 June (GBP)* 3.29 4.82 4.76 4.29 4.96
Ordinary share capital (thousand shares) 176,128 168,418 163,480 160,048 152,031
Market capitalisation at 30 June (USD'000) 716,843 1,119,089 946,576 873,862 951,551
Market capitalisation at 30 June (GBP'000)* 579,462 810,934 777,347 686,605 754,072
Net asset value per ordinary share (USD) 4.97 8.07 7.22 7.02 7.43
Net asset value per ordinary share (GBP)* 4.01 5.85 5.93 5.52 5.88
Ratio
Ongoing charges excluding incentive (income)/fee(‡) 1.7% 1.6% 1.5% 1.7% 1.6%
Incentive (income)/fee(₸) (0.3%) 6.1% (0.6%) (0.1%) 0.8%
Ongoing charges plus incentive fee(₹) 1.4% 7.7% 0.9% 1.6% 2.4%
(‡) Calculated as general and administration expenses divided by average NAV
for the year. Ongoing charges have been prepared in accordance with the 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.
*Alternative performance measure
FINANCIAL HIGHLIGHTS
In the year to 30 June 2024, the Company's NAV per share increased in US
Dollar terms by 5.8% to USD7.43, while the Company's share price increased by
14.6% to USD6.26. Taking account of dividends paid in the year to 30 June
2024, the NAV Total Return in USD terms was 7.8%.
As at years ended 30 June 2022 2023 2024
NAV total return* (%) (8.8) (0.4) 7.8
Share price (USD) 5.79 5.46 6.26
Share Price total return** (%) (12.8) (3.1) 17.6
Dividend per share (US cents) 16.0 14.25 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. Please also refer to the Alternative Performance Measures.
** 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.
CHAIRMAN'S STATEMENT
Dear Shareholder,
It is with a heavy heart that I begin by marking the passing of Andy Ho.
Andy had been lead portfolio manager of the Company since 2007 and was the
Chief Investment Officer of VinaCapital. He died suddenly and unexpectedly
following a stroke in June. Andy's energy and enthusiasm were critical
contributors to the growth of the Company, he developed a strong team
supporting VOF and instigated an investment culture which will endure.
Companies have succession plans in place imagining that they will be
implemented over an extended period as responsibilities pass from one
generation to the next. In this case, VinaCapital's succession plan, which
had been developed with the Board over a number of years, was implemented
immediately with Brook Taylor, CEO of Asset Management at VinaCapital,
stepping in as interim lead. Brook has lived and worked in Vietnam since 1997
and joined VinaCapital initially as Chief Financial Officer in 2007. Andy's
two long-serving deputies, Khanh Vu and Dieu Phuong Nguyen, continue in their
roles as co-lead managers of VOF, positions they have held for the past six
years under Andy's leadership, and they are supported by a well-resourced team
of 15 investment professionals. The Board has been further comforted by the
appointment of Alex Hambly as Chief Investment Officer of VinaCapital. Alex
had been sitting as an independent member of VinaCapital's Investment
Committee for four years having served previously as CEO and CIO of
Prudential's fund management business in Vietnam. He has now joined
VinaCapital in Ho Chi Minh City as a full-time member of the team.
Performance
Over the year under review, the Company's NAV per share increased in USD terms
by 5.8% to USD7.43. Taking account of dividends paid to shareholders, in an
amount of USD21.7 million, the NAV Total Return in USD terms was 7.8%; this
compared favourably with the VN-Index which increased by 4.9% over the period.
Performance would have been even better had it not been for reductions in the
fair values of a number of the unquoted investments in the portfolio. In my
statement accompanying last year's annual accounts, I referred to the progress
that the Investment Manager had made in renegotiating the terms of investments
in the real estate sector. Although the real estate sector has continued its
recovery, liquidity remains very tight and the counterparties to our
investment related to Novaland have defaulted again. Although the Investment
Manager will continue to seek a full recovery of the original investment and
contractual returns, the eventual outcome and its timing remain uncertain. On
that basis, the Board has substantially reduced the fair value of this
investment as at 30 June 2024. Since the year end, revised terms have been
agreed which are currently being documented and the Board will next assess the
situation and review the valuation as at 31 December 2024.
Two of the Company's traditional Private Equity investments have also
experienced problems during the year. IN Holdings has suffered from a
slowdown in its traditional event and conference centre business as well as
finding the integration of the restaurant portfolio acquired in June 2023 more
difficult than anticipated. In addition, Thu Cuc Hospital Group, the hospital
and medical centre business in Hanoi, has experienced increased competition
and other operating difficulties which have adversely affected its business.
The Investment Manager is working with the management teams of both of these
businesses to help them address their challenges but, at least in the short
term, the external valuers appointed by the Board have recommended reductions
in the valuations of both of these companies.
The net result of the fair value movements as at 30 June 2024 was a reduction
of USD44.8 million, being 0.3 USD per share or 3.8% of NAV. Further details of
these investments and the reductions in value are set out in the Investment
Manager's report.
Importantly, over three-year and five-year periods, the Company delivered USD
total returns of -2.1% and 59.4% compared with a 16.2% decline and 30.4%
increase from the VN-Index.
Dividends
Recognising that many shareholders value a regular income, 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 March 2024 we declared a dividend
of 7.0 US cents per share and, today, the Board has declared a dividend of
7.25 US cents per share, 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 2024.
Over time, regular dividends can represent a significant return of capital to
investors. Since VOF first paid a dividend in September 2017, it has
distributed in total 92.85 US cents per share. An investor who bought a share
at the market price of USD3.82 at the 30 June 2017 year-end will have received
dividends totalling 100.1 US cents per share by the end of December this year,
a return of over 26% on their investment, while the market price of their
shares at the end of June this year was USD6.26, an increase of 64%.
Borrowing facility
In March 2024, the Company extended its USD40 million secured revolving credit
facility with Standard Chartered Bank for a third year and the facility will
now run until March 2025.
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 joint brokers,
Deutsche Numis and Barclays Bank, along with distribution partner, Cadarn
Capital 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.
In common with much of the closed-end fund sector, the discount was under
pressure for a large proportion of the year under review and the Company has
renewed its efforts to manage the discount through share buybacks. During the
year, 8 million shares were bought back at a weighted average discount of
20.5% and at a cost of USD45.8 million, which was 4.8% 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 7.8 US cents per share to the
benefit of continuing shareholders and, the Directors believe, helped to
control the volatility of the discount.
Since the year end, the discount has come under further pressure and the
Company has spent a further USD20.1 million on buybacks in the first quarter
of this financial year.
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 all shareholders.
Investment Management Fees
As a result of the exceptional performance in the year ended 30 June 2021, a
balance of USD5.8 million (discounted for the time value of money to USD5.2
million) was brought forward in the Company's accounts as an accrual for
potential payment of incentive fees. In respect of the year under review a
further USD8.8 million was accrued. As the total is below the cap on annual
incentive fee payments of 1.5% of average month-end net assets, USD14.7
million will be paid out on publication of this annual report. 25% of the
incentive fees paid will be invested by VinaCapital in buying shares in the
Company and these may not be sold until they have been owned for at least five
years.
The Board
Since the retirement of Thuy Dam last year, the Board has had lower female
representation than best corporate governance practice requires. During the
second half of the year, we undertook a formal process using a recruitment
consultant with the objective of redressing the balance. Unfortunately, this
has taken longer than we had planned due to a false start with our initial
preferred candidate. We have renewed our search and hope to make an
appointment by early 2025.
Audit Tender
PricewaterhouseCoopers CI LLP had been the external auditor of the Company for
the past eight years and, in compliance with best practice, the Audit
Committee put out the audit to competitive tender in the latter part of
2023. Following a rigorous tender process, the Board of Directors approved
the appointment of Ernst & Young LLP which has carried out the audit of
these financial statements. Full details of the audit tender process are set
out in the Report of the Audit Committee.
Annual General Meeting
All of the Resolutions proposed at the AGM held on 6 December 2023 were voted
in line with the Board's recommendations.
This year's AGM will take place in Guernsey on 4 December 2024 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.
Outlook
The Vietnamese economy continues to grow at a faster rate than most economies
in the world, supported by a strong manufacturing sector and continuing
Foreign Direct Investment. Earnings growth for Vietnamese companies in 2024-25
is forecast to be robust and the Company's portfolio is well positioned to
benefit from further growth.
As the Company looks to the future, the Board believes that Vietnam will
continue to offer interesting and rewarding investment opportunities for
long-term investors and we thank you for your continued support.
Huw Evans
Chairman
VinaCapital Vietnam Opportunity Fund Limited
23 October 2024
INVESTMENT MANAGER'S REPORT - 30 JUNE 2024
During the financial year ended 30 June 2024, the fund's NAV increased by 7.8%
(USDTR) and the Company's share price increased by 17.6% (USDTR).
Total Return in USD terms(1) Financial Year 2024 3 years 5 years
VOF NAV 7.8% -2.1% 59.4%
VOF Share Price 17.6% 1.6% 64.1%
Table: VOF NAV and share price performance
Source: Bloomberg, VinaCapital.
This year's performance is a welcome return to positive NAV returns. The
challenges that impacted the real estate sector and corporate bond activities
in 2022 have been a detractor to the market and fund performance over both the
past financial year, as well as over the 3-year period. As the situation
begins to show signs of improvement this will benefit the fund's performance
given that real estate remains our largest sector allocation.
VOF's investment strategy is set out in its name and remains unchanged - to
seek differentiated investment opportunities by adopting a private equity
approach, using a unique combination of the skills of the team and the scale
of the fund to negotiate terms and conditions not readily available to other
investors.
Furthermore, the fund was the first Vietnam-focused fund to be listed on the
LSE's Main Market, providing investors access to the shares, trading an
average of USD 2.0 million per day(1), remaining one of the most liquid listed
funds on the LSE for investors to access the Vietnam opportunity.
The Company's strategy allows the manager to navigate the limitations of a
fundamentally illiquid market. Thorough due diligence allows us to identify
quality companies, in which we seek to negotiate significant positions, where
we can influence the direction of the investee company and have terms that
provide downside protections. Approximately 80% of the portfolio has been
entered into through a privately negotiated process over the years.
On 6 June 2024, Andy Ho, the leader of the VinaCapital team, sadly passed away
following a stroke. The succession plan that was in place was swiftly
activated. Brook Taylor, CEO of VinaCapital's Asset Management business
stepped in as interim lead of the fund, supported by Don Lam, CEO of
VinaCapital. Two long-serving deputies of Andy Ho, Khanh Vu and Dieu Phuong
Nguyen have continued as co-lead managers, reporting to Alex Hambly, whose
appointment as Group CIO of VinaCapital was announced in July 2024. Alex has
served as a member of VOF's Executive Investment Committee since 2020, so he
is familiar with the portfolio and the team and brings valuable relevant
experience, including with Prudential in Vietnam where he served as CEO and
CIO of the Vietnam fund management business. The management team leads a
dedicated team of 15 investment professionals supporting VOF. We believe that
this team is well positioned to continue to execute effectively the fund's
investment strategy.
(1)Source: Bloomberg. Based on the average daily trading value over the
12-months period ending 30 June 2024.
Relative Performance
Whilst the VN Index is not a benchmark for the fund, it serves as a useful
comparison for some investors, which we show below, along with other indices
for reference.
Total Return in USD terms(2) Financial Year 2024 3 years 5 years
VOF NAV 7.8% -2.1% 59.4%
VOF Share Price 17.6% 1.6% 64.1%
VN Index 4.9% -16.2% 30.4%
MSCI EM Index 12.9% -13.6% 18.4%
MSCI FM Index 12.7% -8.7% 12.6%
MSCI VN Index -4.8% -41.2% -17.7%
Table: VOF NAV and share price performance, VN Index and other indexes, as of
30 June 2024 (USDTR).
Source: Bloomberg, VinaCapital.
Risk-adjusted returns
The strategy of the fund allows the team to deliver stable risk-adjusted
returns through a lower level of volatility as compared with the VN Index.
As of 30 June 2024, the fund's standard deviation (as measured by the
volatility of the month-end NAV over a 5-year period) is 18% whereas the VN
Index volatility is higher, at 25%.
The fund's Sharpe Ratio (another measure of risk-adjusted returns) is, as of
30 June 2024, 0.42x (as compared to the VN Index of 0.13x).
Sector Allocation
The Company's strategy by its nature demands a bottom-up approach to
fundamental analysis of the businesses in which we invest. To help frame the
strategy, we adopt a top-down sector approach, directing the fund managers to
seek opportunities in the sectors that will benefit from Vietnam's long-term
economic growth. We use the liquidity in the fund to adjust the exposures,
all-the-while remaining diligent to our sell-discipline and operating within
clearly defined portfolio guidelines and limits. Investment and divestment
decisions are made via a process that includes proposals presented to an
Investment Committee of five members, while the Risk Management Committee,
which is independent of the investment team, will discuss potential risks that
may be involved in the investment or divestment decision for the Investment
Committee to consider.
As the fund is not benchmarked to the index there are some significant
differences, most notably in financials where the index is heavily weighted at
43% (including banks which are 38% of index weight, and non-banks at 5%).
Portfolio Top 10 Holdings and Weighted Contribution to Returns for FY2024
Asia Commercial Bank (Quoted: HOSE: ACB, Market Cap: USD4.2 billion, NAV:
13.3%):
The fund first invested in ACB in 2020 through a privately negotiated process
to purchase a large block from an institutional investor and increased its
exposure in 2022, once again through a privately negotiated process.
Established in 1993, ACB is one of the leading publicly listed commercial
banks in Vietnam focusing on the rapidly growing affluent retail and SME
segments. We like it for its high asset quality, strong credit growth, prudent
lending standards, robust risk management philosophy and low exposure to real
estate and corporate bonds (which has been proven right during the course of
2023 and 2024).
During the year ACB delivered a +20.2% return. We remain positive on the
outlook, but we have trimmed some of the position to maintain portfolio
diversification.
FPT Corporation (Quoted: HOSE: FPT, Market Cap: USD7.5 billion, NAV: 11.3%):
The fund first invested in 2017 to acquire a large block of FPT shares through
a privately negotiated process and over the past 12 months has added a further
10% to the holding.
Established in the 1990s, FPT is Vietnam's leading technology and software
service company, which derives most of its revenues from software outsourcing
and broadband services, the growth of which is being driven by growing global
IT spending and increased spending on digital transformation projects by
corporations and local governments in Vietnam.
During the year FPT delivered a +80% return. We remain positive on the
outlook, particularly given Vietnam's cost competitive workforce; average
hourly rates in Vietnam for software engineers are around USD18, versus ~USD29
in India and China. Nevertheless, increasing our exposure in this quality
company needs to be balanced with risk diversification, and as such we monitor
this position closely.
Khang Dien Homes (Quoted: HOSE: KDH, Market Cap: USD1.2 billion, NAV: 10.9%):
The fund first invested in KDH in 2008 before the company was listed, through
a privately negotiated investment. To this day, the manager has served on the
board and supervisory committee and played a key role in the company's
development, contributing to its growth and strategic direction through
several market cycles, including the acquisition of a real estate developer.
Established in 2001, KDH is a leading developer of landed property, including
townhouses and villas in southern Vietnam, particularly known for its strong
presence in Ho Chi Minh City, and its ability to secure and complete land
title and documentation is highly prized by home buyers. The long-term growth
prospects for residential real estate developers like KDH remain very
promising, driven by the persistent demand for new housing units across the
country. The business is well managed with solid fundamentals and a prudent
net debt-to-equity ratio (the lowest amongst its peer group) and minimal
exposure to corporate bond issuance, which have been problems for lesser
quality real estate developers.
During the year KDH delivered a +20% return. We remain positive on the
outlook, given that we anticipate a recovery in the real estate sector by late
2024 and into 2025, which is expected to boost KDH's approvals and sales of
new projects and result in high take-up rates on those projects. For example,
in December 2023 KDH launched a project in District 9 of Ho Chi Minh City,
which saw almost 100% sales and deposits received within the first two
weekends of the project launch.
Hoa Phat Group (Quoted: HOSE: HPG, Market Cap: USD7.1 billion, NAV: 9.1%):
The fund first invested in Hoa Phat in 2007 before it was listed, through a
privately negotiated transaction. The company was still outside of the top-10
steel producer in the country, in what was then a highly fragmented market.
The manager has served on the board and played a key role in the company's
development, contributing to its growth and strategic direction for several
years, but has since stepped down from both the board and supervisory
committee.
Established in 1992, HPG today is Vietnam's largest steel producer by a wide
margin with over 30% market share. The company supplies high-quality
construction steel for a variety of sectors, including factories, industrial
parks, logistics, infrastructure projects and residential developments.
During the year HPG delivered a +8% return as the impact of slower demand from
real estate projects was partially offset by demand from FDI projects and
infrastructure. Global industry executives have voiced concerns over China
dumping excess steel due to over-capacity. In response, Vietnam's steel
companies are expected to shift focus from exports to the domestic market in
anticipation of eventual trade barriers on steel imports in various countries,
including potentially exports from Vietnam. Furthermore, Vietnam's government
initiated its own anti-dumping investigation on hot-rolled coil steel imports
from China and India in late July 2024, which should also help support
domestic steel demand by limiting foreign competition. We remain positive on
the outlook, given that we anticipate a recovery in the real estate sector by
late 2024 and into 2025. Nevertheless, we have been trimming down our position
in HPG over recent years, and today HPG is no longer a top three holding in
the portfolio.
Airports Corporation of Vietnam (Quoted: UPCoM: ACV, Market Cap: USD10.4
billion, NAV: 8.1%):
In 2015, VOF acquired ACV via a little-publicised state-run privatisation
process (known as an equitisation auction process here in Vietnam), being one
of small handful of international investors who participated in the company.
Established in 2012 when the Ministry of Transport merged three corporations
namely Northern, Middle and Southern Airports Corporations. Today, ACV is the
largest airport operator and aviation infrastructure developer in Vietnam,
managing 21 of the 22 airports nationwide, and has been a key beneficiary of
the ongoing recovery in domestic and international passenger travel, which is
now approaching pre-Covid levels.
During the year ACV delivered a strong +52% return. We remain positive on the
outlook as tourism and air travel in Vietnam continue to grow. Additionally,
ACV's new investments, such as the development of Tan Son Nhat Terminal 3 in
Ho Chi Minh City, are set to add 20 million passengers per year upon its
expected completion in May 2025. ACV is also expanding its capacity with the
construction of Cargo Terminal 1 in Phase 1 of Long Thanh International
Airport, which is projected to be operational by 2027, accommodating an
additional 25 million passengers and 1.2 million tons of cargo annually.
Tam Tri Hospital Group (Unquoted, TMMC, NAV: 4.3%):
The fund first invested in Tam Tri in 2018 by way of a privately negotiated
transaction, since when a representative of the manager has served on the
Board and played a key role in the company's development.
In October 2022, the fund made a second investment into the Tam Tri medical
platform and simultaneously integrated Thai Hoa International Hospital (an
existing investment in our private equity portfolio) into this platform to
create one of the leading private hospital platforms that stretches from
Vietnam's central region down to Ho Chi Minh City, and into the Mekong Delta
region where an improvement in the level of healthcare services is sorely
needed.
Established in 2013, Tam Tri is Vietnam's largest hospital chain by asset
network. After the roll-up of the Thai Hoa hospital platform and several
other bolt-on investments in existing hospitals within the major metropolitan
cities within Vietnam, the Tam Tri platform has seven operating hospitals in
key locations across the country and one more under construction.
IN Holdings (Unquoted, INH, NAV: 3.4%):
Established in 2007, IN Holdings is the market leader in Vietnam's conference
and hospitality industry, operating in renowned venues such as the GEM Centre
which opened in 2014, and the White Palace convention centres in and around Ho
Chi Minh City.
The Company took a shareholding in IN Holdings in 2020 at a cost of USD20.0
million. Since that time, the shareholding has been valued at each year-end
by KPMG, the Company's external valuer. As at 30 June 2023, the shareholding
was valued at USD25.6 million. Taking into account exchange rate and other
movements during this financial year, the carrying value on VOF's balance
sheet as at 30 June 2024 was USD23.2 million. In addition, in the second half
of 2023, VOF extended two loans totalling USD28.9 million to IN Holdings to
fund the acquisition of a significant portfolio of over 40 F&B outlets
from NovaGroup.
Over the past year, the convention centres have suffered from the general
slowdown in the domestic economy and IN Holdings' growth projections have been
scaled back. Furthermore, the integration of the F&B portfolio has been
challenging and the restaurants have not met their profit projections.
Finally, the Vietnamese authorities revoked IN Holdings' licence to develop a
project in Can Tho which had previously been carried on IN Holdings' balance
sheet as an asset and which has now been written off.
Taking into account all these factors, KPMG, the external valuers valued the
Company's shareholding in IN Holdings as at 30 June 2024 at USD9.4 million, a
reduction of USD13.8 million. The loans to IN Holdings are carried on the
Company's balance sheet at USD28.5 million.
Thu Cuc Hospital Group (Unquoted, TCI, NAV: 3.3%):
Established in 2011, Thu Cuc developed into Hanoi's largest private healthcare
provider, serving mid- and high-income individuals seeking high-quality
medical services unavailable at local public hospitals.
The fund invested in 24.4% of the equity of Thu Cuc in 2020 at a cost of
USD21.7 million. Since that time, the shareholding has been valued at each
year-end by KPMG, the Company's external valuer. As at 30 June 2023, the
shareholding was valued at USD47.2 million. Taking into account exchange rate
and other movements during this financial year, the carrying value on the
Company's balance sheet as at 30 June 2024 was USD48.3 million.
During the year, performance was below the strong recovery post-pandemic.
Lacklustre spending by consumers and increased competition has led to a
reduction in earnings and this has resulted in KPMG valuing the Company's
shareholding in Thu Cuc at USD37.1 million as at 30 June 2024, a reduction of
USD11.2 million. However, Vietnam remains high on the agenda of international
investors looking to enter the healthcare market, and we believe that a
stabilisation and recovery in the business performance of TCI will highlight
the uniqueness of this asset.
Phu Nhuan Jewelry (HOSE: PNJ, Market Cap: USD1.3bn, NAV: 4.1%):
The fund first invested in 2007 through a privately negotiated process, and
one of our team for several years sat on the board of this publicly listed
company.
Established in 1988, PNJ has developed into a leading jewelry company in
Vietnam with over 60% market share in the high-end segment, being a
well-respected and trusted brand amongst consumers thanks to its long history
and continuously evolving portfolio of jewelry that young consumers respond
well to. PNJ benefits from the fast-growing discretionary and luxury spending
of the country's emerging middle class.
During the year PNJ delivered a +19% return. We remain positive on the outlook
for the sector and the ability of management to maintain strong growth.
Vietnam Prosperity Bank (HOSE: VPB, Market Cap: USD 5.8 billion, NAV: 3.8%):
The fund first invested in VPB via a privately negotiated purchase in March
2020 during the onset of the global pandemic. A sharp correction in the
local market created an opportunity for the manager to take a shareholding in
this fast-growing commercial bank at a reasonable valuation. In June 2023, the
fund invested a further USD39.5 million by way of a privately negotiated
transaction.
Established in 1993, VPB owns a comprehensive ecosystem of financial services
to serve the fast-growing retail segments (banks, brokerages, insurance,
consumer finance). It is also one of the four banks to receive a substantial
credit growth quota for the next five years from the State Bank of Vietnam (we
expect growth of more than 20% per annum vs. the sector's expected 14% growth)
owing to its role in the restructuring of a weaker bank, GP Bank. Currently,
VPB is focused on addressing its high NPLs, particularly those related to the
real estate sector (developers and retail mortgages) and manufacturing/SMEs.
During the year VPB's return was flat. Despite the challenges, we remain
positive on the outlook for the sector and the company and expect a recovery
in performance in the first half of 2024 to accelerate in 2025.
Valuation adjustments to privately negotiated investments
In 2021, the Company entered into a structured investment related to the
NovaGroup Joint Stock Company ("NovaGroup"), which is the holding company of
the listed company Novaland Joint Stock Company ("Novaland", HOSE: NVL). As at
30 June 2022, this investment had a carrying value of USD58.5 million
representing principal and accrued interest. The terms of the transaction
included downside cover including collateral supporting the investment and
other legal protections.
Towards the end of 2022, the real estate market in Vietnam experienced
liquidity problems and, in December 2022, the borrower defaulted on payments
due in respect of the investment. Revised repayment terms were agreed with the
borrower which resulted in a revised valuation as at 30 June 2023 of USD37.2
million.
As at 31 December 2023, the assumptions were reviewed by the Board and the
valuation of the investment was reduced to USD33.5 million. Furthermore, on 30
June 2024 the borrower defaulted on the revised repayment schedule and the
Board further reassessed the value of the investment as at that date to
USD14.2 million, resulting in a reduction in fair value of USD19.3 million.
Since the year end, revised terms have been agreed with the borrower which are
currently being documented.
The valuations at each half year are determined using a model based on the
payments due to be made by the borrower discounted at a rate which takes into
account the cost of money and, more particularly, the Board's assessment of
the risk at that time that the payments might not be made. As time has passed
and the borrower has now failed to pay on two occasions, the discount rate has
increased - hence the further reduction in fair value as at 30 June 2024.
However, it is worth noting that we continue to dedicate considerable time and
effort with a view to obtaining a full recovery of the original investment and
contractual returns. If liquidity is re-established in the real estate market
and the borrower honours its commitments, the cash recovery to the Company
will be substantially higher than the valuation today.
Dat Xanh Services and HTL remain in breach of their agreements with the fund
and the valuations of these investments have been reduced by USD 0.8 million
and USD 3.0 million respectively.
Divestment Activity during the Period
As mentioned above, where appropriate the fund trims the portfolio, and during
the period the manager sold shares in: HPG (USD34.4 million), QNS (USD28.3
million), OCB (USD17.1 million), ACB (USD15.8 million), VPB (USD12.2 million),
KDH (USD10.0 million) and others (USD12.2 million).
The fund fully exited three investments: KDC (USD30.6 million), CTD (USD14.3
million) and Nova Consumer Group (USD25.9 million) which was restructured and
swapped into the assets of the Nova Group F&B portfolio which was
transferred into IN Holdings as described above.
Macroeconomic Highlights
Vietnam saw strong GDP growth of 6.4% over the first six months of the
calendar year 2024, compared to 5.1% GDP growth for the full year in 2023.
This growth was primarily driven by external factors, particularly by the
strength of the US economy, which has boosted exports to the US - Vietnam's
largest export market - and driven by the recovery of Vietnam's manufacturing
sector. However, internal factors are detracting from growth, with domestic
consumption remaining muted and with a slower pace of government spending on
infrastructure development.
There are signs that public spending will continue to drive the country's GDP
growth in the second half of 2024. Export growth (+15%) outpaced manufacturing
output growth (+9%) in the first half of 2024, which means that manufacturers
will need to import more input materials to ramp up production for rising
orders. This could lead to a modest trade deficit and potentially add further
pressure on the VN Dong.
We expect GDP growth to remain at 6.5% in 2025, unchanged from 2024, despite
signs of a slowing US economy and reduced demand for "Made in Vietnam"
products. We are optimistic that the government will significantly increase
new real estate project approvals, which will indirectly boost consumer
confidence and spending, as well as accelerate infrastructure projects to
support the economy in 2025. In other words, Vietnam's GDP growth will likely
transition from being driven by external factors in 2024 to being driven by
internal factors in 2025.
The USD-VND exchange rate has continued to depreciate in 2024. Earlier this
year, the SBV intervened in markets to support the VN Dong. We expect interest
rates to remain low and accommodative as the US Fed takes a less aggressive
stance on monetary policy, leading to a stabilization of the USD-VND exchange
rate.
Vietnam will continue to be a prime destination for FDI, particularly for
multinationals looking to produce for export and seeking an alternative
manufacturing base to China. FDI inflows grew by 8% y-o-y to USD 10.8 billion
in the first half of 2024, equivalent to about 5% of GDP. The value of newly
planned projects jumped by 43% y-o-y to USD 13.5 billion, ensuring a strong
pipeline of initiatives that will expand the country's industrial production
capacity for years to come. Furthermore, companies have now started relocating
more complex manufacturing-related activities to Vietnam.
We believe that Government policies are likely to remain focused on attracting
FDI and boosting Vietnam's economy. These policies have been remarkably
consistent over the past twenty years, and we firmly believe they will
continue to drive the country's development in the long-term.
Market Outlook
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, with signs of a recovery now expected from 2025
and onwards. Interest rates are expected to remain moderately low and
accommodative, 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 expect core EPS(1) growth to further accelerate from 12% in 2024 to 24% in
2025 and note that Vietnam's 9.4x P/E valuation for FY25 is attractively
valued compared to its historic norm and compared to its regional EM peers.
In addition, foreign outflows have slowed and we would not be surprised if
inflows accelerate next year, especially if more progress is made in Vietnam's
upgrade from a Frontier to an Emerging Markets stock market by FTSE-Russell.
1 See Glossary
Vietnam's banking sector has the biggest weighting in the benchmark VN-Index
(38%) and the second biggest weighting in VOF's portfolio (20.2%). Banks are
benefitting from several positive fundamental factors, including accelerating
credit growth and improving asset quality. We expect sector-wide earnings to
grow by 16% this year, driven by 14% credit growth (in line with recent
years), in turn driven by increasing demand from household businesses,
homebuyers and public infrastructure projects. Additionally, asset quality has
stabilized since Q1-2024, as banks find it easier to seize and liquidate real
estate collateral backing NPLs, aided by the recovery of the country's real
estate market. During the financial year, VOF has taken on more banking sector
exposure with investments in a leading commercial bank Vietnam Prosperity Bank
(HOSE: VPB), which we discuss above.
Vietnam's real estate sector is the second-largest weighting in the VN-Index
(14%) and the largest weighting in VOF's portfolio (21.8%). There are clear
signs that the market is starting to recover, with real estate transaction
activity increasing from 25% year-over-year in the first quarter of 2024 to
40% in the first half of the year. Additionally, the government is showing
commitment to revitalizing real estate development, evidenced by the
accelerated implementation of a new land law originally scheduled for early
2025 but enacted ahead of schedule. Mortgage rates also remain accommodative.
Vietnam's consumer sector has the third largest weight in the VN-Index (12.9%
weight). In 2024, retail sales in Vietnam resumed growing at an 8-10% rate
(following a challenging year in 2023), which is in-line with its pre-COVID-19
norm. After the end of the financial year, VOF increased its exposure to the
consumer sector by investing in KIDO Group to fund the acquisition of Tho
Phat, a market leader in steamed buns with a large-scale distribution network.
We look forward to continuing to make investments that take advantage of the
growing domestic economy and rising personal incomes in Vietnam. We continue
to monitor the market landscape for opportunities across various sectors.
ESG Reporting and Voting
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 description of both the Board's 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 that 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 to 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.
Our research team has made over 117 assessments of publicly listed companies,
covering 100% 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 all of the funds that
VinaCapital manages, a core principle is that we seek to actively participate
and vote 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;
· Compensation issues, including remuneration and operating expenses for
the board of directors and supervisory board, adjustments in management
rewards, the purchase of liability insurance for executives, Employee Stock
Ownership Programs (ESOPs), and rewards for surpassing board performance
targets;
· Business routine issues, encompassing the report regarding the audit
committee, business results and plans, and amendments and supplements to the
company's charter, including changes to the legal representative, fiscal year,
company name, headquarters, business certification, business registration,
business lines, and transactions with subsidiaries; and
· Any other issue that may significantly affect the Company's
interests.
During the year up to 30 June 2024, 24 investments held in the VOF portfolio
held their AGM. This included public and private companies, where VOF achieved
a 100% voting participation rate representing 177 resolutions, in compliance
with our voting proxy. Of the 177 resolutions that we voted on, we abstained 5
and voted against 1 of these resolutions, while we supported the remaining 171
resolutions.
Of the 177 resolutions, 18 votes related to ESG matters, representing 10.2% of
voting resolutions. The ESG 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. The other two categories where the majority of votes fall are:
77 votes related to Business Routine matters, representing 43.5% of voting
resolutions, and 22 votes related to Compensation matters, representing 12.4%
of voting resolutions.
A detailed report outlining the manager's approach to ESG is available on
VinaCapital's web site at vinacapital.com/esg.
Looking Ahead - A Focus on Growth Sectors
We remain positive on domestic consumer sentiment and the spending power of
Vietnam's rising middle-income class. In recent years we have been underweight
consumer sector companies in the portfolio, partly owing to weak earnings
growth arising from the pandemic or competitive forces, or companies with
unproven and unprofitable business models and growth engines, or where local
consumer-focused companies have significant challenges competing with regional
and global players that entered the local market. This phase of
rationalisation continues, offering good opportunities to identify potential
winners.
For investors who have confidence in the long-term growth potential for the
market, valuations are attractively priced and are below historical averages.
We would like to express our sincere thanks to our diligent and dedicated
investment team who have worked tirelessly through this recent period of
volatility and personnel challenges, as well as the unwavering support and
guidance of our independent board of directors. Most importantly, we 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 market.
Khanh
Vu
Dieu Phuong Nguyen
Co-Portfolio Manager
Co-Portfolio Manager
Deputy Managing Director Deputy
Managing Director
23 October 2024
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 Group Chief Operating Officer of the Investment Manager
and Chief Executive Officer of Asset Management. 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.
Alex Hambly
Chief Investment Officer
Alex Hambly is the Group Chief Investment Officer of the Investment Manager,
appointed in July 2024, and, since 2020, he has served as a member of VOF's
Investment Committee. He has over 30 years of global investment experience
working with Barclays, HSBC, British International Investment, Prudential and
a leading Asian family office. In this time, he has lived and worked in the
UK, India, Vietnam and Singapore. From 2003 to 2007 he served as Chief
Executive Officer and Chief Investment Officer of Prudential's fund management
business in Vietnam, and in total he has more than 12 years' investment
experience in Vietnam. He holds a Bachelor of Arts (Hons) degree in Modern
History from Durham University, UK.
Dieu Phuong Nguyen
Co-Portfolio Manager, 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
Co-Portfolio Manager, Deputy Managing Director
Khanh Vu joined VinaCapital in 2010 and 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
Company's Investment Committee, involved in deal sourcing, investment
execution and monitoring. Mr Vu has over twenty years of investment experience
and has been based in Vietnam for the last twelve 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 & Touche 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
Company's investment performance. Mr Kokalari has worked in Vietnam for
fifteen years and was previously the Head of Research at CIMB Securities
Vietnam, and the Chief Investment Officer 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 2005 he
has acted as a Director of a number of companies and funds. He holds an MA in
Biochemistry from Cambridge University. Huw is a UK resident.
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, Syncona Ltd
(formerly BACIT Ltd) and a former independent member of the operating board of
Genesis Investment Management, LLP. Peter is a Guernsey resident.
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 has been a
non-executive director of a number of companies and financial institutions in
emerging 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. Julian is a UK resident.
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. Kathryn is a UK resident.
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). Hai is a Vietnam resident.
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
JPMorgan Asia Growth & Income Plc London
Hai Thanh Trinh
Van Phu Investment Joint Stock Company Vietnam
*Resigned from the board of directors on 17 January 2024
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.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 2024, 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 the UK Listing
Rule 6.6.1.
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 Response
(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
Investment Manager, the Corporate Brokers, and its marketing and distribution
advisors on market conditions and the views of shareholders. Huw Evans met a
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
number of activities and made a number of decisions which fall under the scope
of Section 172.
· Throughout the year, the Board regularly reviewed with the Corporate Broker
the discount to net asset value at which the Company's shares trade and
supervised the share buyback programme.
· In response to a request from one shareholder, the Board considered whether to
put in place a conditional tender offer but decided that this was not in the
best interests of the Company or of shareholders as a whole. Detailed reasons
for this decision were set out in the Half Year Report for the six months
ended 31 December 2023.
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.
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 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 that a patient timeframe and active engagement can
improve outcomes.
VinaCapital's engagement takes various forms including voting, direct
discussions with management, and educational initiatives, among others. ESG
forms a core part of the due diligence and investment activities that the
Company carries out, particularly in 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 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.
In the year to 30 June 2024, VinaCapital's research team made over 117
assessments of publicly listed companies, including those held in the
Company's public equity portfolio. VinaCapital applies this evaluation to the
listed part of VOF'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 would like the 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 VOF's owners A detailed explanation of the Company's approach is set out under Relations
and its customers, obtaining investment returns from VOF. A well-informed and With Shareholders below.
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 joint Corporate Brokers and the other
organisations engaged in promoting the Company on relations with, any views
In considering shareholders, the Board's key considerations are: expressed by, 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;
- Control of costs; and
- An acceptable balance between risk and reward in investments.
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.
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, 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://vof.vinacapital.com).
A detailed analysis of the substantial shareholders of the Company and reports
from the joint Corporate Brokers on investor sentiment and industry issues are
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.
The Directors welcome the views of all shareholders and place considerable
importance on communications with them. 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 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 one meeting in person with the
Investment Manager in Vietnam and two meetings in Europe. In addition, four
formal Board meetings were held during the year under review by video
conference during which the portfolio and its performance was reviewed. 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, the
Management Engagement Committee, the Remuneration Committee and the Nomination
Committee. 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 Board notes that the AIC
Code permits the Chairman of the Board to be a member of the Audit Committee
of an investment company. In light of the fact that the Board consists of only
five members and, recognising the Chairman's accounting qualification and
experience, the Audit Committee resolved to continue the Chairman's
appointment to the Committee.
The Audit Committee is responsible for monitoring the process of production
and ensuring the integrity of the Company's Financial Statements and reports
to the Board on 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, joint 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
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 is the SID. 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 2024 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: UK Listing Rule 6.6.6R(11): The data in the above table was reviewed by
each individual board member.
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. 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. Currently, 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 in
2023, 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 SID. 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 2024, 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 8 6 1 1 1
Attendance
Huw Evans 8 6 1 1 1
Peter Hames 8 6 1 1 1
Julian Healy 8 6 1 1 1
Kathryn Matthews 8 6 1 1 1
Hai Thanh Trinh 8 6 1 1 1
Meetings of the Management Engagement Committee, Remuneration Committee and
Nomination Committee were held on 6 October 2023 and on 3 and 4 October 2024.
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. The next external review will take place in 2025.
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 provider.
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, continued throughout the year under review and Company's investments. The Investment Manager has continued to review existing
were further heightened by the outbreak of conflict between Israel and Hamas and potential investments with particular attention to the economic effects of
in October 2023. increased global inflation and geopolitical tension.
There is also a risk of an increase in the geopolitical tensions in the Asia
region and between some Asian and Western countries. Some countries and
trading blocks are increasingly adopting protectionist trading policies, which
could be detrimental to international trade.
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. Along with other headwinds faced by the real estate sector, moves by relevant, political developments relating to Vietnam.
the Vietnamese Government to tackle corruption in particular since 2022 have
had a detrimental effect on values and development activity in the real estate
sector. There is a continuing risk that more recent efforts to stimulate the
sector will not be successful.
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 unlisted
possible price or that the timing of deals is not optimal due to the presence investments. The Investment Manager is based in Vietnam and closely monitors
of co-investors who may have different liquidity or timing requirements. 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 and key third
services (in particular, those of the Investment Manager and the party suppliers on the adequacy of their internal policies, controls and risk
Administrator) and any control failures or gaps in these systems and services management. It also receives formal assurance each year from the Investment
could result in a loss or damage to the Company. Manager on the adequacy and effectiveness of its 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. The internal controls reports from Aztec Group and Standard
Chartered Bank are reviewed annually and any exceptions raised are considered
in order to assess the integrity and robustness of the internal controls in
place at both Aztec Group and Standard Chartered Bank.
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 prepared by the Investment Manager using industry
The fair valuation of operating assets and private equity investments is standard methodologies and all valuations are reviewed by the Audit Committee
carried out according to international valuation standards. The investments 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 19(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 key service providers, the
Company could be damaged and suffer losses if any of these policies were As to its non-Vietnamese regulatory and legal responsibilities: (i) the
breached. 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 41.
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.
Emerging risks
In June 2024, Andy Ho, VinaCapital's Chief Investment Officer and the lead
portfolio manager for VOF, unexpectedly passed away. VOF and VinaCapital
implemented its contingency plan and members of VinaCapital staff stepped in
to provide continuity in Andy's role for VOF.
(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 an internal audit
department 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 2024. 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 2024 and 30 June 2023, the interests of the Directors in shares
of the Company are as follows:
Shares held Percentage Shares held Percentage
as at 30 June 2024 of total shares at 30 June 2024 as at 30 of total shares at 30 June
June 2023 2023
Huw Evans 55,000 0.036% 35,000 0.022%
Peter Hames 8,000 0.005% 8,000 0.005%
Julian Healy 20,000 0.013% 15,000 0.009%
Kathryn Matthews 9,464 0.006% 9,464 0.006%
Hai Thanh Trinh - - - -
There have been no changes to any holdings between 30 June 2024 and the date
of this report.
Substantial Shareholdings
As at 30 June 2024 and 30 September 2024, the Directors are aware of the
following shareholders with holdings of more than 3% of the ordinary shares of
the Company:
30 June 2024 30 September 2024
Number of Percentage Number of Percentage
ordinary of issued ordinary of issued
shares share capital shares share capital
Shareholder
Lazard Asset Management 18,070,535 11.88 17,520,332 11.76
City of London Investment Management 15,901,349 10.46 15,833,208 10.63
Allspring Global Investments 7,894,806 5.19 7,353,859 4.94
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 2025. 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 has a credit
facility of $40m which was undrawn as at 30 June 2024 and which will mature in
March 2025.
For these reasons, the Directors have adopted the going concern basis in
preparing the financial statements.
Viability Statement
The Board considers viability as part of its continuing programme of
monitoring risk. In preparing the Viability Statement, in accordance with the
AIC Code the Directors have assessed the prospects of the Company over a
longer period than the 12 months required by the 'Going Concern' provision.
The Board has considered the Company's business and investment cycles and is
of the view that three years is a suitable time horizon to consider the
continuing viability of the Company, balancing the uncertainties of investing
in Vietnam against having due regard to viability over the longer term.
In assessing the Company's viability, the Board has performed a robust
assessment of controls over the principal risks. The Board considers, on an
ongoing basis, each of the principal and emerging risks as set out above. The
Board evaluated various scenarios of possible future circumstances including a
material increase in expenses and a continued significant and prolonged fall
in the value of its assets and the Vietnamese equity market in general. The
Board also considered the latest assessment of the portfolio's liquidity. The
Board monitors income and expense projections for the Company, with the
majority of the expenses being predictable and modest in comparison with the
assets of the Company. A significant proportion of the Company's expenses is
the ad valorem management fee, which would naturally reduce if the market
value of the Company's assets were to fall.
The Board has concluded that there is a reasonable expectation that the
Company will be able to continue to operate and meet its liabilities as they
fall due over the next three years.
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 2024.
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'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, 2018 and 2023 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 2028.
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 and again for a further 12 month period in March 2024. 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 3.1 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 Company's NAV total return;
· the Company's share price total return; 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.
Please 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 2024, the Board declared a dividend of 7.25 US cents per share.
The dividend is payable on or around 4 December 2024 to shareholders on record
at 1 November 2024.
On behalf of the Board
Huw Evans
Chairman
VinaCapital Vietnam Opportunity Fund Limited
23 October 2024
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 2024; 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 2024
REPORT OF THE AUDIT COMMITTEE
On the following pages, we present the Report of the Audit Committee for the
year ended 30 June 2024, 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 2024 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.
Audit Tender Process
The accounting year ended 30 June 2024 would have been the ninth accounting
year of PwC CI as the external auditor of the Company and, in line with
industry best practice, the Board concluded that the audit for the year to 30
June 2024 should be put out to tender. The Audit Committee led a rigorous
tender process, including agreeing the selection criteria against which the
tendering firms would be assessed, the tender timetable and requirements for
the firms' proposal documents and presentations. An outline of the process
undertaken is set out as follows:
A tender process commenced in the fourth quarter of 2023, formally led by the
Audit Committee but with support and input from the Company's Advisers,
Investment Manager and Administrators. Taking account of this input, the
Committee produced a request for proposal (RFP) which was designed to assess
possible auditors and which covered, inter alia, independence and governance,
response to the minimum technical requirements, approach, quality assurance,
technical competence, experience and continuity of key team members, resources
and ability to meet deadlines, transition and deliverables and value-added
Services. Three audit firms were issued RFPs and, of these, EY and PwC CI
participated in the audit tender.
Various meetings in Guernsey and in Vietnam took place, both virtually and
in-person, with the members of the Committee and including when appropriate
the Investment Manager, Advisers and Administrators.
Given that it is a formal requirement that the Audit Committee recommends two
potential auditors to the Board and indicates its preference for the
appointment, the Audit Committee recommended that the Board consider PwC CI
and EY as potential auditors based on their proposals and credentials. The
Audit Committee recommended EY as the preferred candidate, based on their
response to the RFP and detailed discussions with the proposed Audit
Engagement Partners and Audit Manager.
External Auditor - review
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 EY as
External Auditor, to be independent of the Company. PwC CI reviewed the half
year report for the period to 31 December 2023. No other non-audit activities
were carried out by EY, nor by PwC CI. The review of the half year report was
assurance related and the Committee believes that PwC CI was best placed to
provide this service for the shareholders and that this did 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 2024 is the first year for which EY is the External Auditor and 2024
was the first year for which Richard Le Tissier 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. The Committee also considered the effects
on management of the portfolio following Andy Ho's unexpected death and the
effective operation of the existing contingency plan for the loss of key staff
at VinaCapital.
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 UPCoM 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 Independent Valuer
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.
The methodologies and valuations as at 30 June 2024 were discussed and
subsequently approved by the Audit Committee in meetings with the Independent
Valuer and the Investment Manager in September and October 2024. 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 had regular interaction and formal meetings with EY
following EY's initial appointment to discuss its proposed approach to the
audit and in particular its deployment of resources in Guernsey and Vietnam,
including before the start of the audit to discuss formal planning and 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 EY, PwC CI
and to other EY and PwC CI member firms for audit and non-audit services
during the years ended 30 June 2024 and 30 June 2023.
Year ended Year ended
30 June 2024 30 June 2023
USD'000 USD'000
Audit and assurance services
- Annual audit paid to EY 518 -
- Annual audit paid to PwC CI - 543
- Interim review to PwC CI 96 91
Total 614 634
The Audit Committee considers EY and PwC CI to be independent of the Company.
Further, the Audit Committee has obtained EY's confirmation that the services
provided by other EY member firms to the wider VinaCapital organisation do not
prejudice its independence with respect to its role as auditor of the Company.
Terms of reference
During the year under review, the Audit Committee reviewed and recommended to
the Board revisions to its Terms of Reference taking full account of the
Financial Reporting Council's Minimum Audit Standard.
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 2024 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 EY 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 EY be reappointed for the financial year to 30 June 2025.
Julian Healy
Audit Committee Chairman
23 October 2024
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 last approved by shareholders at the AGM which was held on 5 December
2022.
The policy is formally reviewed every three years and 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
With effect from 1 October 2023, Directors' individual annual remuneration
was:
Director Description Total annual remuneration
with effect from 1 October 2023
Huw Evans USD115,000 as Chair USD115,000
Julian Healy USD80,000 directors' fee USD100,000
USD10,000 as Chair of the Audit Committee
USD10,000 for work on valuations
Kathryn Matthews USD80,000 directors' fee USD85,000
USD5,000 as Chair of the Management Engagement Committee
Peter Hames USD80,000 directors' fee USD95,000
USD5,000 as Chair of the Remuneration Committee
USD10,000 for work on listed investments
Hai Trinh USD80,000 directors' fee USD85,000
USD5,000 for additional work carried out in Vietnam
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 2024 30 June 2023
with effect
from
1 October 2023
USD USD USD
Huw Evans 115,000 112,500 105,000
Thuy Bich Dam(1) - - 67,942
Peter Hames(2) 95,000 92,500 80,548
Julian Healy 100,000 97,500 90,000
Kathryn Matthews(3) 85,000 85,000 85,000
Hai Thanh Trinh 85,000 83,750 80,000
471,250 508,490
(1) Thuy Bich Dam was previously the chairman of the Remuneration Committee
and retired from the board on 18 April 2023.
(2) Peter Hames was appointed chair of the Remuneration Committee on 10 May
2023.
(3) Kathryn Matthews is the chair of the Management Engagement Committee.
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
4 December 2024. A similar resolution was put to the previous AGM in December
2023 and votes cast were as follows: -
Vote cast Shares voted Percentage
In favour 76,270,074 99.83%
Against 55,345 0.07%
Withheld 72,092 0.09%
The Directors' Remuneration will remain at the current level for the year to
30 June 2025.
On behalf of the Board
Peter Hames
Remuneration Committee Chairman
23 October 2024
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF VINACAPITAL VIETNAM OPPORTUNITY FUND LIMITED
Opinion
We have audited the financial statements of VinaCapital Vietnam Opportunity
Fund Limited (the "Company") for the period ended 30 June 2024, which comprise
the Statement of Financial Position, the Statement of Changes in Equity, the
Statement of Comprehensive Income, the Statement of Cash Flows and the related
notes 1 to 20, including material accounting policy information. The financial
reporting framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board.
In our opinion, the financial statements:
► give a true and fair view of the state of the Company's affairs as
at 30 June 2024 and of its profit for the period then ended;
► have been properly prepared in accordance with IFRS; and
► have been properly prepared in accordance with the requirements of
The Companies (Guernsey) Law 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(ISAs) and applicable law. 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 are independent of the Company
in accordance with the ethical requirements that are relevant to our audit of
the financial statements as required by the Crown Dependencies' Audit Rules
and Guidance, as applied to Guernsey incorporated Market Traded Companies, and
we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Overview of our audit approach
Key audit matters ► Misstatement or manipulation of the valuation of the Company's
underlying level 3 investments that contain significant judgement or estimates
Materiality ► Overall materiality of $22.0m which represents approximately 2% of
Total Shareholders' Equity.
An overview of the scope of our audit
Tailoring the scope
In accordance with our engagement letter date 23 May 2024, we have
communicated how we have tailored the scope of our audit. Our assessment of
audit risk, our evaluation of materiality and our allocation of performance
materiality determine our audit scope for the Company. This enables us to form
an opinion on the financial statements. We take into account size, risk
profile, the organisation of the Company and effectiveness of controls,
including controls and changes in the business environment when assessing the
level of work to be performed.
The audit was led from Guernsey, and the audit team included individuals from
the Guernsey and Ho Chi Minh City offices of Ernst & Young and operated as
an integrated audit team. In addition, we engaged our Valuation, Modelling and
Economics ("VME") industry valuation specialists who assisted us in auditing
the valuation of unquoted investments held through the underlying
subsidiaries.
Climate change
The Company has explained climate-related risks in the Risk Management section
of the Corporate Governance Statement and forms part of the "Other
information", rather than the audited financial statements. Our procedures on
these disclosures therefore consisted solely of considering whether they are
materially inconsistent with the financial statements, or our knowledge
obtained in the course of the audit or otherwise appear to be materially
misstated.
Our audit effort in considering climate change was focused on the adequacy of
the Company's disclosures in the financial statements as set out in the
conclusion that there was no further impact of climate change to be taken into
account as the investments are valued based on fair value as required by IFRS,
which incorporates climate risk into the valuation although this is not
assessed to be a significant input. The Company has made reference to how ESG
factors have been considered in the valuation of their private equity
investments in note 3.1 (a.2) to the financial statements.
Based on our work we have not identified the impact of climate change on the
financial statements to be a key audit matter or to impact a key audit matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period. These matters 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.
Risk How the matter was addressed in the audit
Misstatement or manipulation of the valuation of the Company's underlying Our audit procedures consisted of:
level 3 investments that contain significant judgement or estimates (2024:
$224.4 million, consisting of Private equity investments $158 million, Loans · Obtaining an understanding of the investment valuation process
and receivables at FVTPL $62.4 million and Other net assets $3 million 2023: and controls by performing a walkthrough and evaluating the implementation and
$319.0 million) design effectiveness of relevant controls;
Refer to the Report of the Audit Committee (page 45); material accounting · Meeting with the Investment Manager and the appointed third-party
policies (page 63); critical estimates and judgements (page 67); and Note 8 of specialist to obtain an understanding of the investment methodologies,
the financial statements including the critical estimates and judgements applied to determine the fair
value at 30 June 2024;
· On a sample basis, with the assistance of EY VME specialists we
obtained and inspected valuation papers and reports from the Investment
Manager and specialist and:
o assessed if the valuation methodology was appropriate and consistent with
the requirements of IFRS;
o vouched certain key inputs, including initial investment price and
quantity, and particulars surrounding collateral and floor protection, into
the valuation models to supporting agreements;
o tested the mathematical accuracy of the models by reperforming key
calculations;
o engaged EY VME specialists to assess if the overall reported value fell
within a range of reasonable outcomes;
The valuation basis of the Company's underlying level 3 investments are o utilising VME specialists knowledge we challenged the appropriateness of
described in Notes 3.1 and 19(c) In determining the value, the Investment the inputs used in the models, including significant estimates such as
Manager, or their appointed third-party specialist ("specialist") in selected discount rates, terminal growth rates, prospective financial information,
instances, have used a number of valuation methodologies which utilise comparable company multiples and recent relevant transaction data and compared
significant unobservable inputs, and require significant judgement and those against our own market data; and
estimations.
o where applicable, performed a 'look back' comparison to the available
The fair value of the underlying level 3 investment portfolio may be misstated actual results from previous reporting periods to determine the historical
or manipulated due to the application of inappropriate methodologies or inputs accuracy of previous forecasts. Where there were material variances between
to the valuations. actual results and previous forecasts, we performed follow-up inquiries with
the Investment Manager to ascertain whether these differences were recurring
The valuation of the Company's investments is the primary driver of the of whether adjustments to the use of forecasts figures in the current period
Company's Total Shareholders' Equity and the total return generated for would be required;
shareholders.
· We performed audit procedures specifically designed to address
the risk of management influence and the override of controls in the valuation
of investments. This included making inquiries of the specialist, assessing
the data used in the valuation for consistency with other evidence gained
during the audit and performing journal entry testing on entries which impact
the valuation of the underlying level 3 investments; and
· We assessed whether the additional disclosures required for estimates
and valuation assumptions disclosed in the notes were made in accordance with
IFRS 13.
Our application of materiality
As communicated in our engagement letter on 23 May 2024, we will communicate
how we have applied materiality in planning and performing the audit. We apply
the concept of materiality in planning and performing the audit, in evaluating
the effect of identified misstatements on the audit and in forming our audit
opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the
aggregate, could reasonably be expected to influence the economic decisions of
the users of the financial statements. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the Company to be $22.0 million, which is
approximately 2% of Total Shareholders' Equity. We believe that Total
Shareholders' Equity provides us with the best measure of materiality as it is
the Company's primary performance measure for internal and external reporting.
During the course of our audit, we reassessed initial materiality and elected
to update materiality at 30 June 2024 as it, in our professional judgment, was
more appropriate to use the actual results for the financial year.
Performance materiality
The application of materiality at the individual account or balance level.
It is set at an amount to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds
materiality.
On the basis of our risk assessments, together with our assessment of the
Company's overall control environment, our judgement was that performance
materiality was 50% of our materiality, namely $11.0m. We have set
performance materiality at this percentage due to this being our first year
engaged as external auditor of the Company. Our objective in adopting this
approach was to ensure that total uncorrected and undetected audit differences
in the financial statements did not exceed our materiality level.
Reporting threshold
An amount below which identified misstatements are considered as being clearly
trivial.
We agreed with the Audit Committee that we would report to them all
uncorrected audit differences in excess of $1.1m, which is set at 5% of
materiality, as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
Management is responsible for the other information. The other information
comprises all information in the Annual Report the( )but does not include the
financial statements and our auditor's report thereon.
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 in this regard.
Report on other legal and regulatory requirements
Guernsey Company Law exception reporting
We have nothing to report in respect of the following matters in relation to
which the Companies (Guernsey) Law, 2008 requires us to report to you if, in
our opinion:
► proper accounting records have not been kept by the Company, or
proper returns adequate for our audit have not been received from branches not
visited by us; or
► the financial statements are not in agreement with the Company's
accounting records and returns; or
► we have not received all the information and explanations we require
for our audit.
Corporate Governance Statement
We have reviewed the Directors' statement 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 by the Listing Rules.
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 or our knowledge obtained during the
audit:
► Directors' statement with regards to the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified on page 44.
► Directors' explanation as to its assessment of the Company's
prospects, the period this assessment covers and why the period is appropriate
on page 44.
► Director's statement on whether it has a reasonable expectation that
the Company will be able to continue in operation and meets its liabilities on
page 44.
► Directors' statement on fair, balanced and understandable on page
44.
► Board's confirmation that it has carried out a robust assessment of
the emerging and principal risks on page 32.
► The section of the annual report that describes the review of
effectiveness of risk management and internal control systems on page 37 and;
► The section describing the work of the audit committee on page 45.
Responsibilities of Directors
As explained more fully in the Directors' responsibilities statement on page
43, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, 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 have 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 the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment
and maintain professional skepticism 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
management.
· 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. 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, actions taken to
eliminate threats or safeguards applied.
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 our report
This report is made solely to the Company's members, as a body, in accordance
with Article 262 of the Companies (Guernsey) Law 2008. Our audit work has
been undertaken so that we might state to the Company's members those matters
we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Other matter - Predecessor Auditor
The Financial statements of the Company for the year ended 30 June 2023 were
audited by another firm of auditors whose report, dated 23 October 2023,
expressed an unmodified opinion on those statements.
Richard Geoffrey Le Tissier
for and on behalf of Ernst & Young LLP
Guernsey
23 October 2024
STATEMENT OF FINANCIAL POSITION
30 June 2024 30 June 2023
Note USD'000 USD'000
ASSETS
Financial assets at FVTPL 8 1,108,320 1,137,428
Prepayments and other assets 10 638 658
Cash and cash equivalents 6 36,769 19,133
Total assets 1,145,727 1,157,219
LIABILITIES
Accrued expenses and other payables 12 16,489 18,125
Loans and other borrowings 13 - 10,000
Deferred incentive fees 15(b) - 5,227
Total liabilities 16,489 33,352
SHAREHOLDERS' EQUITY
Share capital 11 221,284 267,087
Retained earnings 907,954 856,780
Total shareholders' equity 1,129,238 1,123,867
Total liabilities and shareholders' equity 1,145,727 1,157,219
Net asset value, USD per share 17 7.43 7.02
Net asset value, expressed in GBP per share 5.88 5.52
The Financial Statements were approved by the Board of Directors on 23 October
2024 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 2023 Note USD'000 USD'000 USD'000
Balance at 30 June 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
Note Share capital USD'000 Retained earnings USD'000 Total equity USD'000
For the year ended 30 June 2024
Balance at 30 June 2023 267,087 856,780 1,123,867
Profit for the year - 72,906 72,906
Total comprehensive income - 72,906 72,906
Transactions with shareholders
Shares repurchased 11 (45,803) - (45,803)
Dividends paid 9 - (21,732) (21,732)
Balance at 30 June 2024 221,284 907,954 1,129,238
The accompanying notes are an integral part of these Financial Statements.
STATEMENT OF COMPREHENSIVE INCOME
Year ended
30 June 2024 30 June 2023
Note(s) USD'000 USD'000
Dividend income 14 53,380 53,126
Other income 937 -
Net gains/(losses) on financial assets at FVTPL 8 46,454 (48,046)
General and administration expenses 15(a) (18,098) (17,710)
Finance cost - (577)
Facility set-up costs 10 (319) (1,134)
Finance expense 15(b), 18 (603) (1,847)
Incentive (fee) / income 3, 15(b), 18 (8,845) 1,169
Operating profit/(loss) 72,906 (15,019)
Profit/(loss) before tax 72,906 (15,019)
Income tax 16 - -
Profit/(loss) for the year 72,906 (15,019)
Total comprehensive income/(loss) for the year 72,906 (15,019)
Earnings per share
- basic and diluted (USD per share) 17 0.47 (0.09)
- basic and diluted expressed in GBP per share 17 0.37 (0.07)
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 2024 30 June 2023
Note USD'000 USD'000
Operating activities
Profit/(loss) before tax 72,906 (15,019)
Adjustments for:
Net (gains) / losses on financial assets at FVTPL (46,454) 48,046
Dividend income 14 (53,380) (53,126)
Facility set-up costs 10 319 1,134
Loan interest expense - 577
Finance expense 15(b) 603 1,847
(26,006) (16,541)
Decrease in prepayments and other assets 10 20 285
Decrease in liabilities 12 (7,262) (21,342)
(33,248) (37,598)
Purchases of financial assets at FVTPL 8 (122,637) (68,110)
Return of capital from financial assets at FVTPL 8 198,199 88,576
Dividends received 14 53,380 53,126
Net cash generated from operating activities 95,694 35,994
Financing activities
Purchase of shares into treasury 11 (46,007) (17,955)
Proceeds from short term loans and borrowings 13 - 60,000
Repayment of short term loans and borrowings 13 (10,000) (50,000)
Loan interest paid (65) (506)
Facility set-up costs 10 (254) (1,043)
Dividends paid 9 (21,732) (22,987)
Net cash used in financing activities (78,058) (32,491)
Net change in cash and cash equivalents for the year 17,636 3,503
Cash and cash equivalents at the beginning of the year 6 19,133 15,630
Cash and cash equivalents at the end of the year 6 36,769 19,133
The accompanying notes are an integral part of these Financial Statements.
NOTES TO THE 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, 2018 and most recently in
December 2023. 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 at the annual general meeting which is expected to be held
in December 2028.
The Financial Statements for the year ended 30 June 2024 were approved for
issue by the Board on 23 October 2024.
2. SUMMARY OF MATERIAL 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 FVTPL. 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.
During the financial year ended 30 June 2024, certain prior year comparatives
have been updated to reflect current year presentation.
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 2025.
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.
After making enquiries of the Investment Manager and having reassessed the
principal risks, the Directors consider it appropriate 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 2023 and standards that are issued but not yet
effective from 1 January 2023 and has 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
FVTPL. 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
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 FVTPL 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.
The Company's financial liabilities include trade and other payables and loans
and other borrowings which are measured at amortised cost.
2.8 Cash and cash equivalents
In the Statement of Cash Flows, cash and cash equivalents includes cash at
bank and term deposits with original maturities of three months or less.
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 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 when a legal obligation to pay the dividend has been
established.
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 investments held by these
subsidiaries and associates are assessed. As at 30 June 2024, 100% (30 June
2023: 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 underlying 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 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. UPCoM is a
stock trading market for limited liability companies or unlisted joint-stock
companies. The shares of some companies which have not been registered or do
not meet the conditions for listing on the HOSE and HNX exchanges, are traded
in UPCoM. For other UPCoM 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 2024, 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.
The Investment Manager then made recommendations to the Audit Committee of the
fair values as at 30 June 2024 and the Audit Committee, having considered
these, then made recommendations for approval by the Board. Refer to note
19(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 2024, the 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 19(c) which sets out a sensitivity analysis of
the significant unobservable inputs used in the valuations.
(a.4) Valuation of the operating asset
At the year-end the principal underlying operating asset was under contract to
be sold and was valued at the agreed sale price, which was duly received after
the year-end.
At previous year-ends, the fair value of the principal underlying operating
asset was based on valuations by independent specialist appraisers, Jones Lang
LaSalle.
(b) Incentive Fee
For the accounting year ended 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.
With effect from 1 July 2023 the incentive fee is calculated as follows:
· To the extent that the NAV as at any year end is above the higher of a 10%
compound annual return and a 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 above the higher of the high
water mark and a 10% annual return target is calculated at a rate of 10%;
· The maximum amount of incentive fees that can be paid out in any one year is
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 are accrued if they are
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 an assessment of the
total amount of any accrued incentive fees which is 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% as at
the accounting year ended 30 June 2024 (2023: 8%) was applied to the deferred
incentive fees carried forward. Any unwinding of the discount recorded in the
previous financial period is recorded in finance expense in the Statement of
Comprehensive Income.
3.2 Critical judgements in applying the Company's accounting policies
(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 FVTPL. The Company has applied the exemption from
accounting for its subsidiaries and its associates 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.
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 FVTPL are allocated to each segment with reference to the assets held by
each respective subsidiary. Management fees within general and administration
expenses, and finance expenses are allocated based on total investment
holdings in each investment sector and all other general expenses are
unallocated and included in Other Net Assets. Finance costs and loan facility
set-up costs are unallocated and included in Other Net Assets. Management fees
payable and incentive fees payable to the Investment manager included in
accrued and other expenses are allocated based on total investment holdings in
each investment sector. The remaining accrued and other expenses payable are
unallocated due to their nature and general use and are included under Other
Net Assets.
The financial assets at FVTPL are measured based on the investment sector.
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 2024
Dividend income 53,380 - - - 53,380
Other income - - - 937 937
Net gains/(losses) on financial assets at FVTPL 93,630 (1,619) (26,911) (18,646) 46,454
General and administration expenses (note 15 (a)) (10,864) (128) (2,035) (5,071) (18,098)
Facility set-up costs (note 10) - - - (319) (319)
Finance expense (462) (5) (86) (50) (603)
Incentive fee (6,765) (80) (1,267) (733) (8,845)
Profit/(loss) before tax 128,919 (1,832) (30,299) (23,882) 72,906
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 53,126 - - - 53,126
Net (losses)/gains on financial assets at FVTPL 13,017 (2,830) (68,414) 10,181 (48,046)
General and administration expenses (note 15 (a)) (9,746) (168) (3,140) (4,655) (17,710)
Finance cost (399) - (130) (48) (577)
Facility set-up costs (note 10) - - - (1,134) (1,134)
Finance expense (1,263) (22) (407) (155) (1,847)
Incentive income 799 14 258 98 1,169
Profit/(loss) before tax 55,534 (3,006) (71,833) 4,287 (15,019)
* Capital markets include listed securities and UPCoM securities, valued at
their prices on UPCoM or using quotations from brokers.
** Other Net Assets is not a segment in itself and has been included to
reconcile to the Statement of Comprehensive Income.
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 2024
Financial assets at FVTPL 847,649 9,996 158,802 91,873 1,108,320
Prepayments and other assets - - - 638 638
Cash and cash equivalents - - - 36,769 36,769
Total assets 847,649 9,996 158,802 129,280 1,145,727
Total liabilities
Accrued expenses and other payables 12,126 143 2,272 1,948 16,489
Total liabilities 12,126 143 2,272 1,948 16,489
Net asset value 835,523 9,853 156,530 127,332 1,129,238
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 11,853 205 3,819 2,248 18,125
Deferred incentive fees 3,637 63 1,172 355 5,227
Loans and borrowings - - - 10,000 10,000
Total liabilities 15,490 268 4,991 12,603 33,352
Net asset value 775,886 13,393 249,983 84,605 1,123,867
*Capital markets include listed securities and UPCoM securities, valued at
their prices on UPCoM or using quotations from brokers.
** Other net assets of USD91.0 million (30 June 2023: USD77.4 million) include
cash and cash equivalents, prepayments, loans and receivables at FVTPL and
other net assets of the subsidiaries and associates. Other Net Assets is not a
segment in itself and has been included to reconcile to the Statement of
Financial Position.
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 may be 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 2024, the restricted cash held in these Vietnamese
subsidiaries and associates amounted to USD nil (30 June 2023: 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 2024
and 30 June 2023:
As at
30 June 2024 30 June 2023
Subsidiary Country of incorporation % of Company interest % of Company interest Nature of the business
Allwealth Worldwide Limited * BVI - 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
Fraser Investment Holdings Pte. Limited Singapore 100.00 100.00 Holding company for listed securities
Hospira Holdings Limited Singapore 100.00 100.00 Holding company for investments
Longwoods Worldwide Limited BVI 100.00 100.00 Holding company for listed securities
Navia Holdings Limited BVI 100.00 100.00 Holding company for investments
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, an operating asset 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
*Allwealth Worldwide Limited was restructured to be held indirectly through
Clipper Ventures Limited during the year.
5.2 Indirect interests in subsidiaries
The Company had the following indirect interests in subsidiaries at 30 June
2024 and 30 June 2023:
As at
30 June 2024 30 June 2023
% 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 Limited BVI Holding company for private equity Clipper Ventures Limited 100.00 100.00
Allwealth Worldwide Limited BVI Holding company for investments Clipper Ventures Limited 80.02 -
Chifley Investments Pte. Ltd Singapore Holding company for investments Belfort Worldwide Limited 85,91 85,91
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 100.00 100.00
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 85.91
Liva Holdings 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 private equity Halley Four Limited 79.40 79.40
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. Ltd Singapore Holding company for listed securities Navia Holdings Limited 61.26 61.26
** Halley Five Limited repurchased its issued shares from Cappricio and
Clipper Ventures. Only 1 share owned by Clipper Ventures remained in issue at
30 June 2024.
5.3 Direct interests in associates
The company did not have any directly owned associates as at 30 June 2024 or
30 June 2023.
5.4 Indirect interests in associates
The Company had the following indirect interests in associates at 30 June 2024
and 30 June 2023:
As at
30 June 2024 30 June 2023
% 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 37.80
Thu Cuc Medical & Beauty Care Joint Stock Company BVI Private equity investment Aldrin One Pte. Ltd 24.39 24.39
5.5 Financial rsks
At 30 June 2024, 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 19. 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 2024 30 June 2023
USD'000 USD'000
Cash at banks 36,769 19,133
As at 30 June 2024, 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 2024 was USD57.5 million (30 June 2023: USD22.8
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 2023: USD
nil).
7. FINANCIAL INSTRUMENTS BY CATEGORY
Financial assets at amortised cost Financial assets at FVTPL Financial liabilities at amortised cost Total
USD'000 USD'000 USD'000 USD'000
As at 30 June 2024
Financial assets at FVTPL - 1,108,320 - 1,108,320
Financial liabilities - - (16,489) (16,489)
Cash and cash equivalents 36,769 - - 36,769
Total 36,769 1,108,320 (16,489) 1,128,600
Financial assets/(liabilities) denominated in:
- GBP 200 - - 200
- USD 36,569 1,108,320 (16,489) 1,128,400
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 2024 and 30 June 2023, 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 FVTPL (30 June 2023: 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 2024 30 June 2023
Within 12 Months Over 12 Months Within 12 Months Over 12 Months
USD'000 USD'000 USD'000 USD'000
Cash and cash equivalents 20,809 - 3,705 -
Ordinary shares - listed 743,106 - 687,039 -
Ordinary shares - UPCoM 104,543 - 104,337 -
Private equity - 158,802 - 254,974
Operating asset - 9,996 - 13,661
Loans and Receivables at FVTPL 62,438 - 64,059 -
Other net assets 8,626 - 9,653 -
939,522 168,798 868,793 268,635
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 2024 30 June 2023
USD'000 USD'000
Real Estate 231,000 268,002
Financials 227,600 211,226
Materials 149,100 169,780
Information Technology 127,500 62,702
Consumer Discretionary 118,700 98,927
Industrial 96,900 86,081
Health Care 86,100 94,181
Energy 34,085 37,109
Consumer Staples 7,900 96,062
As at 30 June 2024, the largest underlying holding, Asia Commercial Bank,
within financial assets at FVTPL amounted to 13.3% of the NAV of the Company.
(As at 30 June 2023: the holding in Asia Commercial Bank amounted to 12.7% 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
2024.
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(a). As observable
prices are not available for these investments, the Company classifies them as
Level 3 fair values.
For the year ended
30 June 2024 30 June 2023
USD'000 USD'000
Opening balance 1,137,428 1,205,940
Purchases 122,637 68,110
Return of capital (198,199) (88,576)
Net gains/(losses) for the year 46,454 (48,046)
1,108,320 1,137,428
9. DIVIDENDS
The dividends paid in the reporting period were as follows;
Year ended Dividend rate Net dividend
30 June 2024 per share payable
(cents) (USD'000) Record date Ex-dividend date Pay date
Dividend 7.0 11,030 3 November 2023 2 November 2023 4 December 2023
Dividend 7.0 10,702 5 April 2024 4 April 2024 13 May 2024
Year ended Dividend rate Net dividend
30 June 2023 per share payable
(cents) (USD'000) Record rate 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
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 2024 30 June 2023
USD'000 USD'000
Deferred expenses 329 517
Prepayments 238 141
Receivables 71 -
638 658
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 2024 and 30 June 2023, 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 was
fully provided for at 30 June 2023 and written off at 30 June 2024.
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 were
capitalised as a prepayment and were amortised over the period of the
facility. The outstanding amount of USD0.9 million was expensed to the
Statement of Comprehensive Income on expiry of the facility on the 18(th) of
March 2023.
On 18 March 2023, the expired revolving credit facility was renewed for a
further 1 year through the exercise of an extension option in the original
agreement. Costs totalling USD0.7 million were incurred in relation to this
arrangement, which were capitalised as a prepayment and were amortised over
the period of the further facility. In these financial statements, an amount
of USD0.5 million (30 June 2023: USD0.2 million) has been expensed in the
Statement of Comprehensive Income on expiry of the facility on the 18(th) of
March 2024.
In March 2024, the Company agreed to extend the Facility for a third year and
it will now run until March 2025. Costs totalling USD0.4 million were incurred
in relation to this arrangement. In these financial statements, an amount of
USD0.1 million had been expensed in the Statement of Comprehensive Income and
deferred expenses of USD0.3 million (30 June 2023: USD0.5 million) are
recorded on the Statement of Financial Position as at 30 June 2024.The Company
had not drawn any amount on the new facility at 30 June 2024.
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 2024 30 June 2023
Number of Number of
shares USD'000 shares USD'000
Issued and fully paid at start of year 166,230,562 491,301 179,662,704 491,301
Cancellation of treasury shares (8,017,246) - (13,432,142) -
Issued and fully paid at year end 158,213,316 491,301 166,230,562 491,301
Shares held in treasury (6,182,716) (270,017) (6,182,716) (224,214)
Outstanding shares at year end 152,030,600 221,284 160,047,846 267,087
Treasury shares
30 June 2024 30 June 2023
Number of Number of
shares shares
Opening balance at start of year 6,182,716 16,182,716
Shares repurchased during the year 8,017,246 3,432,142
Shares cancelled during the year (8,017,246) (13,432,142)
Closing balance at year end 6,182,716 6,182,716
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 2024, 8 million shares (30 June 2023: 3.4
million) were repurchased at a cost of USD45.8 million (30 June 2023: USD18.2
million) of which USD0.07 million (30 June 2023: USD 0.3 million) was payable
at the year-end (see note 12) and 8 million shares (30 June 2023: 13.4
million) were cancelled.
12. ACCRUED EXPENSES AND OTHER PAYABLES
30 June 2024 30 June 2023
USD'000 USD'000
Incentive fees payable to the Investment Manager (note 18(b)) 14,675 15,803
Management fees payable to the Investment Manager (note 18(a)) 1,180 1,233
Expenses recharged payable to the Investment Manager (note 18(a)) - 73
Revolving credit facility costs payable (note 10) 112 91
Shares repurchase payable (note 11) 68 272
Other payables 454 653
16,489 18,125
All accrued expenses and other payables are short-term in nature. Therefore,
their carrying values are considered to be a reasonable approximation of their
fair values. Further details on the payables to other related parties are
disclosed in note 18.
13. LOANS AND OTHER BORROWINGS
30 June 2024 30 June 2023
USD'000 USD'000
Net loan liability at beginning of the year 10,000 -
Revolving credit facility drawdowns - 60,000
Revolving credit facility repayments (10,000) (50,000)
Net loan liability due - 10,000
As noted above, on 18 March 2022, the Company entered into a USD40.0 million
revolving credit facility ("the Facility") with Standard Chartered Bank
(Singapore) Limited. In the year to 30 June 2023, the maximum amount drawn
down at any one time was USD40m. The USD40m had been repaid in full when the
facility was renewed on 18 March 2023. Interest charged on the Facility is the
aggregate of margin plus the compounded reference rate. On 18 March 2023,
the Company exercised an option extending the Facility to 18 March 2024. USD
10.0 million outstanding on the facility as at 30 June 2023 was repaid during
the period. In March 2024, the Company agreed to extend the Facility for a
third year and it will now run until March 2025. The Company had not drawn any
amount on the new facility at 30 June 2024.
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 2024 30 June 2023
USD'000 USD'000
Dividend income 53,380 53,126
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 USD20.3 million in dividends from
their investee companies (30 June 2023: USD13.7 million).
15(a). GENERAL AND ADMINISTRATION EXPENSES
Year ended
30 June 2024 30 June 2023
USD'000 USD'000
Management fees (note 18(a)) 14,204 14,252
Custodian, secretarial and other professional fees 1,416 1,066
Audit fees for the audit of the annual report 518 611
Directors' fees and expenses (note 18(c)) 481 525
Expenses recharged by the Investment Manager (note 18(a)) 73 156
Other expenses 1,406 1,100
18,098 17,710
15(b). DEFERRED INCENTIVE FEE
As a result of performance in prior accounting years, a liability of
USD21.6million was carried forward in the Company's accounts as at 30 June
2023. Of this amount, USD15.8 million was paid out following the publication
of the annual report for the year to 30 June 2023 and a balance of USD5.8
million was carried forward as an accrual for potential payment of incentive
fees in future years. As at 30 June 2023 this was discounted to USD5.2 million
to reflect the time value of money and the probability of payment. In
addition, the NAV total return for the 12-month period ending 30 June 2024
has resulted in a further incentive fee accrual of USD8.8 million. Incentive
fees are only paid out following the publication of annual accounts. On this
assumption, USD14.7 million will be payable when the annual report is
published in October 2024 and is classified as a current liability as at 30
June 2024.
16. 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.
17. 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 2024 30 June 2023
Profit/(Loss) for the year (USD'000) 72,906 (15,019)
Weighted average number of ordinary shares in issue 156,068,503 161,660,260
Basic earnings per share (USD per share) 0.47 (0.09)
FX rate (GBP to USD) 1.26 1.27
Basic earnings per share expressed in GBP 0.37 (0.07)
(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 2024 30 June 2023
Net asset value (USD'000) 1,129,238 1,123,867
Number of outstanding ordinary shares in issue (note 11) 152,030,600 160,047,846
Net asset value per share (USD per share) 7.43 7.02
FX rate (GBP to USD) 1.26 1.27
Net asset value, expressed in GBP per share 5.88 5.52
18. 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 2023, the Investment Manager received a fee
at the annual rates set out below, paid monthly in arrear.
● 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.
With effect from 1 July 2023, the Investment Manager receives a fee at an
annual rate at the rates set out below, payable monthly in arrear.
● 1.30% of net assets, levied on the first USD1,000 million of net
assets;
● 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 USD14.2 million (30
June 2023: USD14.3 million), of which USD0.07 million (30 June 2023: USD0.2
million) was in relation to recharge of expenses incurred. In total USD1.2
million (30 June 2023: USD1.2 million) was payable to the Investment Manager
at the reporting date.
(b) Incentive fees
As described in notes 12 and 15(b), as at 30 June 2024, an incentive fee of
USD14.7 million (30 June 2023: USD15.8 million) will be paid out immediately
on publication of these accounts and is accounted for in the Statement of
Financial Position.
25% of any incentive fee paid to the Investment Manager is used by the
Investment Manager to purchase shares in the Company. In practice such
purchases are generally made alongside, and at the same price as, share
buybacks made by the Company.
(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 2024 30 June 2023
USD USD USD
Huw Evans 115,000 112,500 105,000
Peter Hames 95,000 92,500 80,548
Julian Healy 100,000 97,500 90,000
Kathryn Matthews 85,000 85,000 85,000
Hai Thanh Trinh 85,000 83,750 80,000
Thuy Bich Dam* - - 67,942
471,250 508,490
*Retired on 18 April 2023
In addition to annual fee, Directors' expenses of USD9,995 (30 June 2023:
USD12,518) were incurred during the year. In total the annual fees and
expenses of Directors for the year were USD481,245 (30 June 2023: USD525,199),
of which USD nil was outstanding at 30 June 2024 (30 June 2023: USD nil).
(d) Shares held by related parties
Shares held Shares held
as at 30 June 2024 as at 30 June 2023
Huw Evans 55,000 35,000
Peter Hames 8,000 8,000
Julian Healy 20,000 15,000
Kathryn Matthews 9,464 9,464
Andy Ho - 248,084
As at 30 June 2024, Stephen Westwood, the co-owner of CES Investments Ltd
which provides consultancy services to the Company, owned 6,000 shares (30
June 2023: 6,000 shares) in the Company.
As at 30 June 2024, the Investment Manager owned 4,009,897 shares (30 June
2023: 3,303,397 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.
19. 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 FVTPL.
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 2024 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 UPCoM 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 UPCoM securities had
increased/decreased by 10%, the Company's financial assets held at FVTPL would
have been higher/lower by USD84.8 million (30 June 2023: USD79.1 million).
See note 19(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 14 - 25% and terminal
growth rates of 5 - 13.5% (30 June 2023: 13 - 23% and 5 - 13.5%,
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 10% (30 June 2023: 1%).
30 June 2024 30 June 2023
USD'000 USD'000
VND (100) (11)
GBP (50) (3)
There would be the reverse impact should the foreign exchange rate decrease by
10% at 30 June 2024 (30 June 2023: 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.
The interest rate risk is not material as the Company had repaid its loans and
borrowings in full at year end 30 June 2024 and the Company had no other
financial assets which are directly affected by changes in 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 of
financial assets of the Company and its subsidiaries and associates at the
year end.
30 June 2024 30 June 2023
USD'000 USD'000
Financial assets at FVTPL 92,275 77,614
Cash and cash equivalents 36,769 19,133
129,044 96,747
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
include other receivables which are considered short-term and are held by
subsidiaries and associates from sister companies and from third parties and
are considered unrated.
The Company's exposure in financial assets at FVTPL is a result of the
Company's exercise of the put options which were restructured as a receivable
due to counterparty default. However, the credit risk associated with these
investments is reduced by collateral secured amounting to USD17.8 million (30
June 2023: USD18.7 million).
(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 2024 30 June 2023
Within 12 Over 12 Within 12 Over 12
Months Months Months Months
USD'000 USD'000 USD'000 USD'000
Incentive fee payable/deferred 14,675 - 15,803 5,227
Payables to related parties (note 12) 1,180 - 1,306 -
Other payables (note 12) 634 - 1,016 -
Loans and borrowings - - 10,000 -
16,489 - 28,125 5,227
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 2024 30 June 2023
Within 12 Over 12 Within 12 Over 12
Months Months Months Months
USD'000 USD'000 USD'000 USD'000
Cash and cash equivalents 36,769 - 19,133 -
Financial assets at FVTPL (note 8) 939,522 168,798 868,793 268,635
976,291 168,798 887,926 268,635
(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.
Capital as at the year-end is summarised as follows:
30 June 2024 30 June 2023
USD'000 USD'000
Total shareholders' equity 1,129,238 1,123,867
(c) Fair value estimation
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 FVTPL
as at 30 June 2024 and 30 June 2023.
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 2024
Financial assets at FVTPL 1,108,320 1,108,320
As at 30 June 2023
Financial assets at FVTPL 1,137,428 1,137,428
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 2024 and 30 June 2023.
If the investments held by the subsidiaries and associates were instead held
at the Company level, they would be presented as follows:
Level 1 Level 2 Level 3 Not measured at fair value Total
USD'000 USD'000 USD'000 USD'000 USD'000
As at 30 June 2024
Cash and cash equivalents - - - 20,809 20,809
Ordinary shares - listed 743,106 - - - 743,106
Ordinary shares - UPCoM 98,898 5,645 - - 104,543
Private equity investments - - 158,802 - 158,802
Loans and receivables at FVTPL - - 62,438 - 62,438
Operating asset - - 9,996 - 9,996
Other net assets - - 2,983 5,643 8,626
842,004 5,645 234,219 26,452 1,108,320
Level 1 Level 2 Level 3 Not measured at fair value Total
USD'000 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
Ordinary shares - UPCoM 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
785,138 6,238 332,694 13,358 1,137,428
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
quoted by dealers 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 assets 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 the table below. 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 2024, keeping all other assumptions constant. The changes in
discount rates by +/- 1% are 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)
Private equity Discounted cash flows 150,636 14%-25% n/a 5% n/a
Change in discount rate
-1% 0% 1%
Change in -1% 153,624 142,844 133,842
terminal growth 0% 164,328 150,636 139,277
1% 171,039 156,979 145,036
Private equity Multiples 8,421 n/a n/a n/a 8.69
Change in -1% 0% 1%
EBITDA margin 8,327 8,421 8,515
Loans at FVTPL Discounted cash flows 62,438 10%-17% n/a n/a n/a
-1% 0% 1%
63,178 62,438 61,724
Private equity
Multiples
8,421
n/a
n/a
n/a
8.69
Change in -1% 0% 1%
EBITDA margin 8,327 8,421 8,515
Loans at FVTPL
Discounted cash flows
62,438
10%-17%
n/a
n/a
n/a
-1% 0% 1%
63,178 62,438 61,724
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% are 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 19 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.
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.
20. SUBSEQUENT EVENTS
This Annual Report and Financial Statements were approved by the Board on 23
October 2024.
On 23 October 2024, the Board declared a dividend of 7.25 US cents per share.
The dividend is payable on or around 4 December 2024 to shareholders on record
at 1 November 2024.
MANAGEMENT AND ADMINISTRATION
Directors Registrar
Huw Evans Computershare Limited
Peter Hames 13 Castle Street
Julian Healy St Helier
Kathryn Matthews Jersey, JE1 1ES
Hai Thanh Trinh Channel Islands
Registered Office Independent Auditor
PO Box 656 Ernst & Young LLP
Trafalgar Court PO Box 9
Les Banques Royal Chambers
St Peter Port St Julian's Avenue
Guernsey, GY1 3PP St Peter Port
Channel Islands Guernsey GY1 4AF
Channel Islands
Investment Manager (Appointed 23 April 2024)
VinaCapital Investment Management Ltd
1(st) and 2(nd) Floors, Elizabeth House PricewaterhouseCoopers CI LLP
Les Ruettes Brayes PO Box 321
St Peter Port Royal Bank Place
Guernsey, GY1 1EW 1 Glategny Esplanade
Channel Islands St Peter Port
Guernsey, GY1 4ND
Channel Islands
Administrator and Corporate Secretary (Retired 22 April 2024)
Aztec Financial Services (Guernsey) Limited
PO Box 656 Investment Advisor
Trafalgar Court VinaCapital Fund Management JSC
Les Banques 17th Floor, Sun Wah Tower
St Peter Port 115 Nguyen Hue Blvd, District 1
Guernsey, GY1 3PP Ho Chi Minh City
Channel Islands Vietnam
Joint Corporate Broker UK Marketing and Distribution Partner
Deutsche Numis Cadarn Capital Limited
45 Gresham Street Moor Place
London EC2V 7BF 1 Fore St Avenue
United Kingdom London EC2Y 9DT
Joint Corporate Broker Custodian
Barclays Bank PLC Standard Chartered Bank (Vietnam) Limited
1 Churchill Place, Unit 1810-1815, Keangnam
London, E14 5HP Cau Giay New Urban Area
United Kingdom Me Tri Com Hanoi
Vietnam
Public Relations (London)
Camarco
40 Strand
London, WC2N 5RW
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: +84-24-3936 4630
Fax: +84-24-3936 4629
Singapore
6 Temasek Boulevard
# 42-01 Suntec Tower 4
Singapore 038986
Phone: +65 6332 9081
Fax: +65 6333 9081
GLOSSARY
Term Definition
ACB Asia Commercial Bank
AGM Annual General Meeting
AIC The Association of Investment Companies
AIC Code The AIC Code of Corporate Governance which was issued in February 2019
Aztec or Aztec Group Aztec Financial Services (Guernsey) Limited, the Company's Administrator and
Corporate Secretary
Board The Board of Directors
BVI British Virgin Islands
Company VinaCapital Vietnam Opportunity Fund Limited
Core EPS Earnings Per Share (excluding unusual, non-recurring or non-operational items)
COVID-19 The disease caused by SARS-CoV-2, the coronavirus that emerged in December
2019
CRS Common Reporting Standard
EBITDA Earnings before interest, tax, depreciation and amortisation. A measure of the
gross profit of a company.
EPS Earnings Per Share (excludes non - operating items)
ESG Environmental, Social, and Governance
External Auditor or EY Ernst & Young 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.
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.
Guernsey Code The Guernsey Code of Corporate Governance
Guernsey Law The Companies (Guernsey) Law, 2008 as amended.
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
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
KPI Key performance Indicator
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.
NCG Nova Consumer Group
NovaGroup Unlisted parent company of Novaland and Nova Consumer Group
NPL Non-performing loan
OECD Organisation for Economic Co-operation and Development
OTC Over-The-Counter
P/E Price-to-earnings
Private Equity This consists of investments in private companies, structured investments, and
bonds with privately negotiated terms.
PWC CI PricewaterhouseCoopers CI LLP
SBV State Bank 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
ALTERNATIVE PERFORMANCE MEASURES
For the year ended 2024
Basic (loss)/earnings per share (pence per share) Basic (loss)/earnings per share (pence per share) is calculated as follows.
Basic (loss)/earnings per share (cents per share) divided by the closing USD
to GBP exchange rate at 30 June 2024.
Being (47 ÷ 1.26)
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 (7.43 - 6.26) ÷ 7.43
Incentive Fee Ratio The Incentive fee ratio represents the incentive fee for the year divided by
the average NAV for the year.
The incentive fee ratio is calculated as follows:
(incentive fee for the year) ÷ average NAV for the year
Being (USD8,845) ÷ USD1,117,850
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 date 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 2024: NAV per share 7.43 a
Dividends paid 0.14 b
Effect of dividend reinvestment* 0.00 c
30 June 2023 NAV per share 7.02 d
NAV Total Return (%) 7.8% =((a+b+c)/d)-1
Total return over 3 years:
30 June 2024: NAV per share 7.43 a
Dividends paid 0.443 b
Effect of dividend reinvestment* 0.03 c
30 June 2021 NAV per share 8.07 d
NAV Total Return (%) -2.1% =((a+b+c)/d)-1
Total return over 5 years:
30 June 2024: NAV per share 7.43 a
Dividends paid 0.668 b
Effect of dividend reinvestment* 0.14 c
30 June 2019 NAV per share 5.17 d
NAV Total Return (%) 59.4% =((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.
Ongoing Charges excluding Incentive Fee Ratio The Ongoing Charges excluding Incentive Fee Ratio represents the annualised
ongoing charges (excluding incentive fees, 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 fee ÷ average
NAV for the year
Being: (USD18,098) ÷ USD1,117,850
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 fee ÷ average
NAV for the year
Being: (USD18,098 + 8,845) ÷ USD1,117,850
Share price at 30 June (GBP) The GBP share price is calculated as the USD share price ÷ closing exchange
rate at 30 June 2024.
Total return over 3 years:
30 June 2024: NAV per share 7.43 a
Dividends paid 0.443 b
Effect of dividend reinvestment* 0.03 c
30 June 2021 NAV per share 8.07 d
NAV Total Return (%) -2.1% =((a+b+c)/d)-1
Total return over 5 years:
30 June 2024: NAV per share 7.43 a
Dividends paid 0.668 b
Effect of dividend reinvestment* 0.14 c
30 June 2019 NAV per share 5.17 d
NAV Total Return (%) 59.4% =((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.
Ongoing Charges excluding Incentive Fee Ratio
The Ongoing Charges excluding Incentive Fee Ratio represents the annualised
ongoing charges (excluding incentive fees, 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 fee ÷ average
NAV for the year
Being: (USD18,098) ÷ USD1,117,850
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 fee ÷ average
NAV for the year
Being: (USD18,098 + 8,845) ÷ USD1,117,850
Share price at 30 June (GBP)
The GBP share price is calculated as the USD share price ÷ closing exchange
rate at 30 June 2024.
For the year ended 2023
Basic (loss)/earnings per share (pence per share) Basic (loss)/earnings per share (pence per share) is calculated as follows.
Basic (loss)/earnings per share (cents per share) divided by the closing USD
to GBP exchange rate at 30 June 2023.
Being (-9 ÷ 1.2716)
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
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
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 date 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.
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.
Ongoing Charges excluding Incentive Fee Ratio The Ongoing Charges excluding Incentive Fee Ratio represents the annualised
ongoing charges (excluding incentive fees, 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 ÷ 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
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