VietNam
Holding Limited
("VNH" or
the "Company")
Interim
Report
VietNam Holding Limited is pleased
to announce its unaudited results for the six-month period from 1
July 2023 to 31 December 2023. This
announcement contains inside information, which is disclosed in
accordance with the Market Abuse Regulation.
More information on the Company is
available at https://www.vietnamholding.com
VietNam
Holding Limited
(a
non-cellular company limited by shares registered in Guernsey under
the Companies (Guernsey) Law, 2008, on 25 February 2019 with
registered number 66090)
Condensed
Interim Unaudited Financial Statements
for the
six-month period from 1 July 2023 to 31 December 2023
Contents
Chairman's Statement
|
1
|
Investment Manager's Report
|
3
|
Market Report
|
5
|
Interim Report of the Directors
|
8
|
Statement of Directors' Responsibilities
|
13
|
Condensed Interim Unaudited Statement of Financial
Position
|
14
|
Condensed Interim Unaudited Statement of
Comprehensive Income
|
15
|
Condensed Interim Unaudited Statement of Changes in
Equity
|
16
|
Condensed Interim Unaudited Statement of Cash
Flows
|
17
|
Notes to the Condensed Interim Unaudited Financial
Statements
|
18
|
Director Profiles
|
24
|
Key Parties
|
25
|
Chairman's Statement
Dear Shareholder,
I would like to thank all shareholders of
VietNam Holding Limited (the "Company" or the "Fund") who voted at
our recent Annual General Meeting and Extraordinary General
Meeting. The almost unanimous (99%) support for the five-yearly
continuation of the Fund and for the approval of the innovative
redemption facility are much appreciated.
In our meetings ahead of the vote, several
shareholders told us that they were delighted by the Fund's
performance on many fronts: the Net Asset Value ("NAV"); the
outperformance against peers and the broader market; and the
narrower discount between the Fund's NAV per share and its share
price. I will touch on each of these briefly.
Firstly, the NAV per share increased by 8
percent in US dollar ("USD") terms with Total Assets increasing to
USD 123,460,167 as at 31 December 2023, from USD 116,191,137 at 30
June 2023. Total Comprehensive Income was USD 8,904,430 in the
six-month period, a significant increase on the Total Comprehensive
Loss of USD 21,831,338 generated in the corresponding period in
2022. The Investment Manager gives a detailed explanation of the
drivers of this asset performance in the Investment Manager's Report. Let me
add that the Manager has shown nimbleness in decision making and
has delivered a market-beating return in the six-month
period.
Secondly, the increase in the Fund's NAV per
share was 4.8% higher than the Vietnam All Share Total Return Index
("VNASTR"), and 5.8% higher than its closest London listed peer
during this period. Although the Fund is smaller and has a higher
total expense ratio than its peers due to its size, this
market-beating return is after all these fees are accounted for.
Above all, the Fund has outperformed VNASTR over 1, 3, 5 and 10
years.
Lastly, in addition to the Investment Manager's
continuing communication strategy, the Board made appropriate
decisions for implementing share buybacks as a means of addressing
the discount between the share price and the NAV. During the period
in review, the Company bought back 440,212 shares at an average
price of USD 3.697, adding an estimated 0.12% in NAV per share
accretion. The Share buyback authority was renewed by the
Shareholders at the AGM in December 2023, allowing up to 14.99% of
the Company's issued shares to be bought back. Current practice is
that shares bought back are cancelled.
It is worth noting that the Fund has the
narrowest discount of the three London-listed Vietnam focused
funds. Over the last twelve months the discount was at an average
of 13.3% versus 17% for its peers. At the end of December, the
discount was 7.7%, versus an average of 19.5% for peers. I believe
the narrower discount is partly a reflection of the innovative
redemption facility that was proposed to shareholders in November
and unanimously approved in December. Starting this September,
shareholders will have the option to redeem shares on an annual
basis at NAV[1]. Of
course, investors are also free to buy and sell shares in the
market at any time.
In December, I was delighted that the Fund's
outperformance was recognised by both Citywire and UK Investor
Magazine, both of which awarded the Fund 'top emerging market
single country fund.' The Fund has also once again achieved high
marks in the United Nations Principles of Responsible Investing
("PRI") transparency report. We are unashamedly proud of our
efforts in this area. In May 2023, we collaborated with the
Investment Manager in sponsoring and supporting the inaugural ESG
investor conference in Vietnam and will be supporting its sequel on
16 and 17 May 2024 in Ho Chi Minh City. I am fully aware that
some Funds in the industry have been criticised for 'greenwashing'
- mislabelling of efforts, and in certain cases unsubstantiated
statements of ESG activity. In contrast, the Fund has an authentic
approach to ESG and has been at the forefront of responsible
investing for many years. It became a PRI signatory in 2009, just
three years after the PRI was established, and yet has also
maintained an industry-leading level of long-term
outperformance.
In terms of our outlook, the world remains
complex and economic recovery is fragile. Although global inflation
and interest rates may retreat this year, the global economy faces
unprecedented geopolitical risks and events that all countries,
including Vietnam, need to navigate. An estimated sixty percent of
the world's eligible voters go to the polls this year, and some
newly elected governments may choose populist domestic agendas,
which is likely to put some stress on the global system of free
trade that has served the world well over the past seventy years.
Last year Vietnam welcomed both US President Biden, and Chinese
President Xi Jinping, as it seeks to strike a balance between being
a friendly shore for US manufacturers and a strong trading partner
with its Chinese neighbour.
The Manager has successfully navigated the Fund
during the period in review and will continue to seek both
sustainable outperformance and strong risk adjusted returns through
its active management of our concentrated portfolio of
well-researched companies.
I would like to thank my fellow-board members
for their contributions to the Company. At the AGM in December, two
of the long-standing Directors, Sean Hurst and Damien Pierron
retired from the board, and I am grateful for their hard work over
several years. We are in the process of recruiting a new board
member, and details will be released when the appointment is
finalised.
Finally, I would also like to thank all our
shareholders for their continuing support in the Company and look
forward to seeing what 2024, the Year of the Dragon, in the Lunar
calendar will bring.
Hiroshi Funaki
Chairman
VietNam Holding Limited
16 March 2024
Investment Manager's Report
More favourable domestic news in the fourth
quarter of 2023 rekindled local investor confidence. This is
significant since Vietnam's equities market is dominated by 7.5
million domestic individual investors.
Exports began to increase, resulting in a
record full-year trade surplus of USD 28 billion. Foreign Direct
Investment ("FDI") proved to be robust, with disbursed levels of
FDI reaching record levels of USD 23 billion. Public Expenditure
was also positive, hitting a year high of USD 24 billion, with
progress made on certain critical pieces of new infrastructure,
including site work at the new International Airport in Long Thanh.
These encouraging factors, together with ongoing reductions in
domestic funding costs, resulted in renewed activity in the stock
market. Daily liquidity improved (the Average Daily Trade Value
doubled during the year to USD 650 million), and the Vietnam All
Share Index ("VNAS") rose 3.2 percent during the six-month
period.
Not all sectors of the economy were viewed as
favourably, therefore stock selection was crucial to the Fund's
outperformance. During the six-month period under review, the
Fund's NAV increased by 8 percent (versus 3.2 percent for VNAS),
bringing the whole calendar year gain to 22.4 percent (versus 18.0
percent for VNAS).
Portfolio Performance
Our overweight position in Telecommunications, led by
top holding FPT (14.9% of NAV), increased by 27.6 percent during
the period, resulting in a 42.6 percent year-end gain. In November,
FPT announced an internal objective of quintupling its worldwide IT
outsourcing revenues to USD 5 billion by 2028 (this would still
only be a fraction of the USD 20 to USD 30 billion in annual
revenues that Indian IT companies like Infosys and TCS enjoy). The
company also has a strong domestic education business (140,000
students enrolled in Science, Technology, Engineering and Maths, or
STEM) and is a leading provider of corporate and residential
broadband telecommunication services, with more than four million
subscribers (similar to Talk-Talk in the UK).
We hold another telecommunication stock, CTR (1.7% of
NAV), though it is technically classified as construction and
materials. CTR generates half of its revenues from its
telecommunications infrastructure business (telecom towers). It
rose by 26.4 percent during the period, and 80 percent for the
entire year. In December, the Ministry of Information and
Telecommunications announced that 2G bandwidth would be
discontinued in September 2024. 2G accounts for roughly one-sixth
of all usage on Viettel's network (Viettel is CTR's parent
company), implying that more 4G infrastructure is needed,
especially in the rural areas. This should benefit CTR in the
medium term.
Industrials performed well with our overweight
position in port operator Gemadept (6.5% of NAV) increasing by 34.9
percent during the six-month period and 56 percent for the whole
year. Industrial Park developer, IDC (5.5% of NAV) rose 24.4
percent during the period and 75.4 percent for the year. These two
sectors benefit from the 'made in Vietnam' theme, as global
manufacturers invest in factories to make goods for the global
markets. Rather than trying to select a single factory or brand, we
are investing in the business-to-business enablers, such as
logistics and industrial parks.
Gemadept has enjoyed strong profit growth over
the past three years, with an unprecedented gain in 2023 from the
sale of one of its older ports. This gain helped to
offset some of the weakness caused by decreased global
commerce in the first half of 2023. While we expect the relative
growth in total profits for Gemadept to be lower in 2024, the main
port operations are seeing increasing utilisation (higher
throughput volume) and may benefit from higher service
fees.
IDC is one of Vietnam's major industrial park
(IP) developers, with 10 projects spanning 4,000 hectares of
industrial property. Industrial real-estate outperformed
residential and commercial counterparts during the period. The
company has benefitted from the influx of FDI into a range of
sectors, including industrial, materials and consumer
staples.
One of our new positions in the year, FRT (4.9%
of NAV), a leading retailer (with a pharmaceutical brand and a
digital goods brand) rose 45.4 percent during the period, following
a weaker first half, for a total stock price return of 25 percent.
The traditional digital goods retailing segment suffered a loss in
2023 due to deteriorating consumer sentiment, while the newer,
fast-growing pharmacy business proved to be more resilient and
profitable (with double the gross margin as digital goods). The
company opened 560 pharmacies in 2023, taking its total store count
to 1,497. As a comparison, Boots, the UK's largest chain, has 2,200
stores.
Not everything went up as expected, and our
bank holdings (our largest sector, though an underweight to the
market) fell by 3.6 percent, with Sacombank (5% of NAV) down by 9
percent in the period (though up 21 percent for the year) and
Vietcombank (5% of NAV) down by 8 percent (though up 15 percent
over the year). MBB (5.6% of NAV) remains a strong conviction in
the banking sector delivering an impressive 25 percent YoY
increase. MBB's profit for the year was USD 1.1 billion, a 15.7
percent YoY increase, thanks to a high Net Interest Margin of 4.8%
and excellent customer reach.
The bank has a strong digital offering, and by
the end of 2023 it had 26 million customers using its mobile
banking app, a 30 percent increase for the year. This follows the
high growth rate of e-commerce in the broader Vietnamese economy
which at 37 percent per annum is the highest in
Asia[2].
Economic Outlook
We are pleased to have outperformed over 1, 3, 5, and
10 years, but we will not rest on our laurels. The Vietnamese stock
market is volatile, and so requires active on-the-ground research
and interaction capabilities. Our portfolio includes 25 holdings,
with the top ten accounting for 61.5 percent of NAV. Having said
that, we know the positions well and are engaged with the boards
and management of each company we hold. Also, liquidity in the
market remains sufficient, so the portfolio could be liquidated in
less than 30 days.
As the Chairman points out, today's world is complex
and often chaotic, and exporting economies such as Vietnam are
impacted by trade and tariff disruptions. As we write this report,
terrorists are attacking ships on the Red Sea maritime route, and
the Panama Canal's severe drought has cut the number of crossings
by 36 percent[3].
2024 is also a year when 60 percent of the world's
population goes to the polls. Taiwan and Bangladesh held elections
in January, Pakistan and Indonesia in February, and India and the
United States of America face presidential elections later this
year. In the past, the Republican front-runner has made comments
about levelling the playing field regarding trade with the US,
signaling a policy of renewed trade tariffs if elected in
November's presidential election.
The positive backdrop to the external challenges
facing Vietnam is the relatively robust domestic macroeconomic
conditions. The country has robust FX reserves of around USD 100
billion, which have been bolstered by the record trade surplus and
FDI levels achieved in 2023. Additionally, inflation remains
modest, and government bond yields are at near record lows.
There are also encouraging indicators of
domestic spending on infrastructure. The new international airport
at Long Thanh in Dong Nai Province (approximately 50km from Ho Chi
Minh City) is taking shape, new ports and roads are being built,
and the Hanoi and Ho Chi Minh City metro systems might finally see
the light of day. Infrastructure has a multiplier effect on
economic growth, especially new 'green field' projects. This is
often shown as an improvement in the lives of local communities and
increased opportunities for Vietnam's numerous Small to Medium
sized Enterprises.
Another positive development is in the capital
market infrastructure. The delayed stock exchange upgrade may not
solve every problem when it comes online later in 2024, but it may
provide enough of an impetus to remove prefunding requirements for
stock trading accounts. This small technical adjustment may be all
that is needed to see the FTSE Russell upgrade Vietnam from
frontier market to secondary emerging market (see the Market Report).
As the Chairman of the Fund notes, we continue
to be nimble and innovative. We do not take our outperformance to
the market and our peers for granted and look forward to delivering
on our pledges to 'do more, measure more and report more' to our
investors and stakeholders during the year to come.
Dynam Capital, Ltd
16 March 2024
Market Report
Emerging from
the Frontier
Last year in an article, 'A new frontier in
Vietnam', we noted how Vietnam accounted for 30% of the MSCI
Frontier Market Index and highlighted the challenges to being
upgraded to the MSCI Emerging Market Index. Now, there is another
chance of an upgrade but on a different index, the FTSE Russell
Secondary Emerging Market Index. So, what are the prospects
for Vietnam now?
Vietnam was added to the FTSE Russell's Watch
List in September 2018 for a possible reclassification from
Frontier to Secondary Emerging market status. However, progress
towards such an upgrade has been painfully slow, in part due to
Covid-19, but also because Vietnam falls short of satisfying the
criteria used by FTSE Russell.
Unlike MSCI's three categories, Developed,
Emerging and Frontier, FTSE has four that a country's stocks can be
classified as: Developed, Advanced Emerging, Secondary Emerging and
Frontier. Eligibility for a given status is determined by six main
criteria (MSCI uses five) and a total of 24 sub-criteria (MSCI has
18).
FTSE developed the criteria with consultation
from the international institutional investor community and it
publishes an annual review of all markets against this criteria
each September. If a country is under consideration for a status
change, either up or down, it is included in the Watch List.
Vietnam is currently on this list for an upgrade, while Pakistan is
on the list for a downgrade.
When and if an upgrade happens, Vietnam will leave
the likes of Bangladesh, Mongolia and Sri Lanka and join the same
league as Indonesia and the Philippines. Vietnam, Indonesia, and
the Philippines already share the 'lower middle' GNI per capita
ratings by the World Bank.
The countries only differ on 11 out of 24
criteria:
Category
|
Indonesia
|
Philippines
|
Vietnam
|
Credit Worthiness
|
Investment
|
Investment
|
Speculative
|
Market monitored by regulatory
authority
|
Restricted
|
Pass
|
Pass
|
No or simple registration process for foreign
investors
|
Pass
|
Pass
|
Restricted
|
Reasonable Transaction Costs
|
Pass
|
Not Met
|
Pass
|
Short Sales Permitted
|
Restricted
|
Restricted*
|
Not Met
|
Developed Derivatives Market
|
Not Met
|
Not Met
|
Restricted
|
Off Exchange transactions permitted
|
Pass
|
Pass
|
Not Met
|
Efficient Trading Mechanism
|
Pass
|
Pass
|
Restricted
|
Central Counterparty Clearing
|
Pass
|
Pass
|
Not Met
|
Settlement (free delivery)
|
Restricted
|
Restricted
|
Not Met
|
Account structure operating at the Custodian
level
|
Restricted
|
Restricted
|
Not Met
|
Source: FTSE
Russell, September 2023
*The Philippines introduced short selling in
October 2023
Vietnam does not meet the 'Settlement'
criterion because of the need for pre-funding of stock accounts and
pre-trading check to ensure availability of funds prior to trade
execution. Nevertheless, it will remain on the Watch List as a
Frontier market and reviewed for possible reclassification in
2025.
"Although
progress on the planned market reforms has remained slow, a
recommitment to the work required has been made by senior levels of
government. In addition, the State Securities Commission (SSC) has
demonstrated renewed energy in seeking a workable solution that
would remove the need for pre-funding.", a
leading brokerage in Vietnam said.
Viva
Vietnam
The rapid rise of the retail investor in
Vietnam has transformed the country's capital markets. There are an
estimated 7.5 million trading accounts in Vietnam, which is
equivalent to approximately 8% of the population. This is
comparable to the European average of 7.9% (euronerd.com). However,
unlike Europe, where institutional investors account for most of
the stock market activity, domestic retail investors dominate
Vietnam's market. Furthermore, daily liquidity in Vietnam now
averages close to USD 1 billion, with more than 80% of this
activity coming from domestic investors.
Despite increasing local interest and the
growth in size and liquidity of its stock market, leading global
equity index providers continue to classify Vietnam as a 'Frontier'
country. It is the largest and arguably most developed constituent
of the FTSE Russell Frontier Index, with Vietnamese companies
accounting for 37% of the indices' USD 93 billion. Additionally,
five Vietnam companies are in the top-ten of the index.
Indices are widely used as a benchmark for
active and passive global institutional investors and fund
managers. When a country's stocks are included in the index, there
is typically an increased allocation from investors who use that
benchmark. So, to be in line with the index, a Frontier market
investor may allocate 37% to Vietnamese stocks. If Vietnam is
upgraded to Secondary Emerging market, it might be expected to have
an allocation of 1% to 2%. That looks small, but the FTSE Emerging
Market capitalisation is USD 6.6 trillion dollars (seventy times
bigger than the Frontier Market), so Vietnam will see a much
smaller share of a much larger pie.
The stakes are
high
It goes without saying that when and if Vietnam
is classified as an emerging market, the country would attract
significantly more foreign capital and potentially see a re-rating
in the valuation of several companies listed on its stock markets.
Some studies have also suggested that such an upgrade would also
reduce market risk, lower the cost of capital, and make the equity
market more suitable as a source of domestic financing.
The benefits for the Vietnamese government in
pursuing this upgrade include the following:
1. Enhanced Global Investment and
Economic Growth: Achieving emerging market status would
significantly increase foreign investment inflows, providing
capital for infrastructure, technology, and various sectors. This
influx of investment would accelerate economic growth,
creating more jobs and enhancing the overall standard of
living.
2. International Recognition and
Credibility: Being classified as an emerging market would affirm
Vietnam's economic stability and progress on the global stage. This
recognition would improve trade relations, open new partnership
opportunities, and potentially lead to more favourable
international agreements.
3. Market and Economic Resilience:
The process of upgrading would necessitate and encourage the
implementation of robust financial regulations and practices. This
would not only attract more investors but also ensure a more
resilient and diversified economy, better equipped to handle global
economic fluctuations.
Vietnamese authorities could assist the stock
market in achieving an upgraded status in the following
ways:
1. Regulatory Reforms and Transparency:
Implementing and enforcing stricter regulatory standards,
particularly those related to corporate governance, financial
disclosures, and transparency. Aligning with international best
practices will build investor confidence and meet the criteria set
by global market classification entities.
2. Market Infrastructure and
Accessibility Improvements: Enhancing the stock market
infrastructure to ensure efficient trading, clearing, and
settlement processes. Additionally, easing restrictions on foreign
ownership and investment, and simplifying the process for foreign
investors to participate in the market.
3. Economic Diversification and Stability
Measures: Encouraging diversification in the economy, which in turn
diversifies the stock market, reducing reliance on a few sectors.
Implementing policies that promote economic stability, such as
controlling inflation and maintaining fiscal discipline, will
further bolster investor confidence.
Moving forward
The most important point is that taking these
incremental steps towards inclusion will benefit everyone investing
in Vietnam in the long run. Although the initial influx to the
market may be modest, ranging between USD 3 and USD 5 billion, the
government would greatly appreciate the prestige.
Eventual inclusion would be a huge move for
Vietnam, putting it more firmly on investors' radars, and there
will be plenty of opportunities to reap even before that
happens.
The market is appealingly cheap, with stocks
trading at around 10 times earnings and companies forecasting an
average of 20% growth in earnings in 2024. Weak global growth and
domestic sentiment depressed the stock market in much of 2023, but
with a better second half, funds like VietNam Holding Limited
("VNH") managed to generate strong overall returns (up 23% on the
year). Although foreigners were net sellers of Vietnamese equities
in 2023, perhaps as we enter the Year of the Dragon the prospects
of a possible upgrade next year by one of the key index producers
would shine more light on the market again and attract greater
foreign investor inflows.
Growth at a reasonable price has been one of
VNH's mantras during the past six years for its concentrated
portfolio of public companies listed on the Vietnam stock
exchanges. Whether you view Vietnam as the biggest Frontier Market,
or one of the smaller Emerging Markets, it is a country that could
add sensible diversification to your portfolio in 2024.
This article
has been written by Craig Martin, Chairman of Dynam Capital. Dynam
is the Fund manager for LSE-listed VNH.
Interim Report of the Directors
The Board of Directors (the "Directors") submits its
report together with the Condensed Interim Unaudited Financial
Statements of VietNam Holding Limited (the "Company") for the
six-month period from 1 July 2023 to 31 December 2023 (the
"six-month period").
The Company is registered in Guernsey as a
non-cellular company with limited liability. The registered office
of the Company is 1 Royal Plaza, Royal Avenue, St Peter Port,
Guernsey, GY1 2HL.
Investment Objective
The Company's investment objective is to achieve
long-term capital appreciation by investing in a diversified
portfolio of companies that have high growth potential at an
attractive valuation.
Investment Policy
The Company attempts to achieve its investment
objective by investing in the securities of publicly traded
companies in Vietnam, and in the securities of foreign companies if
a majority of their assets and/or operations are based in Vietnam.
The Company may invest in equity securities or securities that have
equity features, such as bonds that are convertible into
equity.
The Company may invest in listed or unlisted
securities, either on the Vietnamese stock exchanges, through
purchases on the OTC Market, or through privately negotiated
deals.
The Company may invest its available cash in the
Vietnamese domestic bond market as well as in international bonds
issued by Vietnamese entities.
The Company may utilise derivatives contracts for
hedging purposes and for efficient portfolio management but will
not utilise derivatives for investment purposes.
The Company does not intend to take control of any
company or entity in which it has directly or indirectly invested
(the "Investee Company") or to take an active management role in
any such company. However, Dynam Capital, Ltd. ("Dynam Capital"),
(the "Investment Manager") may appoint one of its directors,
employees or other appointees to join the board of an Investee
Company and/or may provide certain forms of assistance to such
company, subject to prior approval by the Company's Board.
The Company integrates environmental, social and
corporate governance ("ESG") factors into its investment analysis
and decision-making process. Through its Investment Manager, the
Company actively incorporates ESG considerations into its ownership
policies and practices and engages Investee Companies in pursuit of
appropriate disclosure and the improvement of material issues.
The Company may invest:
● up to 25% of its Net Asset Value
("NAV") (at the time of investment) in companies with shares traded
outside of Vietnam if a majority of their assets and/or operations
are based in Vietnam;
● up to 20% of its NAV (at the time of
investment) in direct private equity investments; and
● up to 20% of its NAV (at the time of
investment) in other listed investment funds and holding companies
which have the majority of their assets in Vietnam.
Borrowing Policy
The Company is permitted to borrow money and to grant
security over its assets provided that such borrowings do not
exceed 25% of the latest available NAV of the Company at the time
of the borrowing unless the Shareholders in general meeting
otherwise determine by ordinary resolution.
Investment Restrictions and Diversification
The Company will adhere to the general principle of
risk diversification in respect of its investments and will observe
the following investment restrictions:
● the Company will not invest more than 10% of
its NAV (at the time of investment) in the shares of a single
investee company;
● the Company will not
invest more than 30% of its NAV (at the time of investment) in any
one sector;
● the Company will not invest directly
in real estate or real estate development projects, but may invest
in companies which have a large real estate component, if their
shares are listed or are traded on the OTC Market; and
● the Company will not invest in any
closed-ended investment fund unless the price of such investment
fund is at a discount of at least 10% to such investment fund's NAV
(at the time of investment).
Furthermore, based on the guidelines established by
the United Nations Principles for Responsible Investment, of which
the Company is a signatory:
● the Company will not invest in
companies known to be significantly involved in the manufacturing
or trading of distilled alcoholic beverages, tobacco, armaments or
in casino operations or other gambling businesses;
● the Company will not invest in
companies known to be subject to material violations of Vietnamese
laws on labour and employment, including child labour regulations
or racial or gender discriminations; and
● the Company will not invest in
companies that do not commit to reducing in a measurable way
pollution and environmental problems caused by their business
activities.
Principal Risks
Market Risk
Vietnam is an increasingly open trading nation, and
the changes in terms of international trade, disruption to supply
chains and impositions of tariffs could impact directly and
indirectly the Vietnamese Economy and the companies in which the
Company is invested. The Vietnamese economy can also be impacted by
the global-macro economic conditions, and also geopolitical
tensions. The Vietnamese capital markets are relatively young, and
liquidity levels can change abruptly responding to changes in
behaviour of domestic and international investors.
Parts of the portfolio may be prone to enhanced
liquidity and price risk.
Investor Sentiment
Vietnam is currently classified as a Frontier Market
by MSCI, and the timetable for any inclusion as an Emerging Market
is unsure. Investor attitudes to Frontier and Emerging Markets can
change, leading to reduced demand for the Company's shares, and an
increase in the discount to NAV per share.
Investment Performance
The performance of the Company's investment portfolio
could be poor, either absolutely or in relation to the Company's
peers, or to the market as a whole.
Fair Valuation
The risks associated with the fair valuation of the
portfolio could result in the NAV of the Company being misstated.
The quoted companies in the portfolio are valued at market price,
but it may be difficult to liquidate, where large positions are
held, at these prices in an orderly fashion in the ordinary course
of market activity. The values of the Company's underlying
investments are denominated in Vietnamese Dong, whereas the
Company's accounts are prepared in US Dollars. The Company does not
hedge its Vietnamese Dong exposures so exchange rate fluctuations
could have a material effect on the NAV.
Investment Management Agreement
The fund management activities are outsourced to the
Investment Manager. If the Investment Manager became unable to
carry out these activities or if the Investment Management
Agreement was terminated, there could be disruptions to the
management of the portfolio until a suitable replacement is
found.
Operational
The Company has no employees and is dependent on a
number of third parties for the provision of services (including
Investment Management, Fund Administration and Custody). Any
control failures or gaps in the services provided could result in
damage or loss to the Company.
Legal and Regulatory
Failure to comply with relevant regulation and
legislation in relevant jurisdictions may have an impact on the
Company. Although there are compliance policies (including
anti-bribery policies) in place at the Company, the Investment
Manager and all service providers, the Company could be damaged or
suffer losses if any of these policies were breached.
Pandemic Risk
The global reach, impact and disruption to markets
resulting from the recent outbreaks of Covid-19 showed the
devastating effects that a global pandemic could cause. Lockdowns,
quarantine measures and restrictions on travel caused sustained
global economic disruption and the slowdown in growth caused some
industries and companies to face severe financial pressures.
Climate Risk
Climate change is happening faster than models
earlier predicted, threatening the safety of billions of people on
the planet. Vietnam is one of the five countries most vulnerable to
climate change. The country's diverse geography means it is hit by
sea level rise, typhoons, landslides, flooding and droughts, and
weather events are expected to worsen in coming years. Two types of
climate-related risks have been identified.
(1) Physical risks: sea level rise, floods and
typhoons that put infrastructure or real estate companies with
projects in coastal areas or low-lying levels at higher risk from
physical impacts of climate change.
(2) Transition risks: climate policy and rising
carbon prices may cause higher prices and impact the viability of
companies that rely on fossil fuels or those in high carbon
intensity activities and may necessitate a significant, and costly,
technology shift.
Emerging Risks
New risks beyond those identified as Principal Risks
can develop. These Emerging Risks may have a detrimental or
existential impact on the Company.
Life of the Company
The Company does not have a fixed life, but the
Directors consider it desirable that shareholders should have the
opportunity to review the future of the Company at appropriate
intervals. Accordingly, the Directors intend that every fifth year
a special resolution will be proposed that the Company shall
continue in existence. If the resolution is not passed the
Directors will be required to formulate proposals to be put to
shareholders to either wind up the Company or implement a
reconstruction, amalgamation or other material alteration to the
Company or its activities. The Directors last tabled such a
resolution at the Annual General Meeting of the Company on 21
December 2023. The resolution was passed, allowing the Company to
continue as currently constituted. The next such vote is expected
to be tabled at the Annual General Meeting in 2028.
Annual Redemption
Facility
At the Extraordinary General Meeting of the Company
held on 21 December 2023 shareholders voted in favour of a proposal
that introduced an innovative redemption structure that gives
shareholders an annual opportunity to realise their holding in the
Company at fair market value. The first Redemption Point is
expected to be on 30 September 2024.
It is expected that the introduction of the
redemption facility will result in the Company being treated as an
"offshore fund" for the purposes of UK taxation. UK resident
Shareholders should note that the Company expects to apply to HMRC
for approval as a "reporting fund" for the purposes of the Offshore
Fund Rules. The Company expects to comply with the requirements for
obtaining and maintaining reporting fund status, but Shareholders
should note that this cannot be guaranteed. Further details on the
tax consequences are detailed in the Circular dated 27 November
2023.
Shareholders are advised to consider their investment
objectives and their own individual financial and tax circumstances
and should seek independent professional tax advice and advice from
their own independent financial adviser authorised under the
Financial Services and Markets Act 2000 as appropriate.
Results
The results of the Company for the six-month period
and the state of its financial affairs as at the reporting date are
set out in the Condensed Interim Unaudited Financial Statements on
pages 14 to 23.
Performance
To ensure the Company meets its objectives the
Directors evaluate the performance of the Investment Manager at
least at each quarterly Board meeting and take into account the
following performance indicators:
● NAV - reviews the
performance of the portfolio
● Discount to NAV - and
reviews the average discount for the Company's shares against its
peer group.
Related Parties
Details of related party transactions that have taken
place during the period and any material changes, if any, are set
out in note 6 of the Condensed Interim Unaudited Financial
Statements.
Share Repurchase Programme
Details of the Company's share repurchase programme
are set out in note 4 of the Condensed Interim Unaudited Financial
Statements.
Board of Directors
The members of the Board during the six-month period
and up to the date of this report were:
Name
|
Position
|
|
Hiroshi Funaki
|
Non-Executive Chairman
|
|
Philip Scales
|
Non-Executive Director; Audit and Risk Committee
Chairman and Management Engagement Committee Chairman
|
Saiko Tajima
|
Non-Executive Director; Environmental, Social and
Governance Committee Chairman and Remuneration and Nomination
Committee Chairman
|
|
Sean Hurst and Damien Pierron stood
down at the AGM and resigned as Directors of the Company effective
21 December 2023.
Directors' Interest in the Company
As at 31 December 2023 and 30 June 2023, the
interests of the Directors in shares of the Company were as
follows:
|
Shares held
as at 31 December 2023
|
Shares held
as at 30 June 2023
|
Hiroshi Funaki
|
19,887
|
19,887
|
Sean Hurst
|
Resigned
|
5,312
|
Philip Scales
|
10,077
|
10,077
|
Damien Pierron
|
Resigned
|
4,644
|
Saiko Tajima
|
5,000
|
5,000
|
Going Concern
The Board considered it appropriate to prepare the
Condensed Interim Unaudited Financial Statements on the going
concern basis, as explained in the basis of preparation paragraph
in note 2 to the Condensed Interim Unaudited Financial Statements.
In making this statement, the Board has made enquiries of the
Investment Manager and reviewed the Principal Risks. The Board also
considered the levels of working capital available to the Company,
the closed-ended nature of the Company, the liquidity of the
investment portfolio, forecasts of future cash flows, other
geopolitical factors. There were no identified material
uncertainties to the Company's ability to continue.
On behalf of the Board
Hiroshi
Funaki
Philip Scales
Chairman
Director
VietNam Holding
Limited
VietNam Holding Limited
16 March
2024
16 March 2024
Statement of Directors' Responsibilities
The Directors are responsible for preparing this
interim financial report in accordance with applicable law and
regulations. The Directors confirm that to the best of their
knowledge:
● the Condensed Interim Unaudited
Financial Statements have been prepared in accordance with IAS 34
Interim Financial Reporting; and
● the Chairman's Statement, the
Investment Manager's Report and the Interim Report of the Directors
include a fair review of information required by:
(i) DTR 4.2.7R of the UK Disclosure and Transparency
Rules, being an indication of important events, which have occurred
during the first six months and their impact on the Condensed
Unaudited Interim Financial Statements, and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(ii) DTR 4.2.8R of the UK Disclosure and Transparency
Rules, being related party transactions, which have taken place in
the first six months, and which have materially affected the
financial position or performance of the Company during that
period, and any material changes in the related party transactions
disclosed in the last Annual Report.
On behalf of the Board
Hiroshi
Funaki
Philip Scales
Chairman
Director
16 March 2024
16 March 2024
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included on
the Company's website, and for the preparation and dissemination of
financial statements. Legislation in Guernsey governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Condensed Interim Unaudited Statement of Financial
Position as at 31 December 2023
|
|
Unaudited
As at 31.12.23
|
Audited
As at 30.06.23
|
|
Notes
|
USD
|
USD
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Investments at fair value through profit or loss
|
7
|
120,510,213
|
113,225,102
|
Total non-current assets
|
|
120,510,213
|
113,225,102
|
Current assets
|
|
|
|
Cash and cash equivalents
|
|
2,949,954
|
1,750,069
|
Accrued dividends
|
|
-
|
877,375
|
Receivables on sale of investments
|
|
-
|
338,591
|
Total current assets
|
|
2,949,954
|
2,966,035
|
Total assets
|
|
123,460,167
|
116,191,137
|
Equity
|
|
|
|
Share capital
|
4
|
166,645,041
|
166,645,041
|
Reserve for own shares
|
|
(172,281,084)
|
(170,650,584)
|
Retained earnings
|
|
128,169,250
|
119,264,820
|
Total equity
|
|
122,533,207
|
115,259,277
|
Liabilities
|
|
|
|
Payables on purchase of investments
|
|
645,078
|
343,745
|
Payables on repurchase of shares
|
|
-
|
246,469
|
Accrued expenses
|
|
281,882
|
341,646
|
Total liabilities
|
|
926,960
|
931,860
|
Total equity and
liabilities
|
|
123,460,167
|
116,191,137
|
The Condensed Interim Unaudited Financial Statements
on pages 14 to 23 were approved by the Board of Directors on 16
March 2024 and were signed on its behalf by
Hiroshi Funaki
Philip Scales
Chairman of the Board of
Directors
Chairman of the Audit and Risk Committee
The accompanying notes on pages 18 to 23 form an
integral part of these financial statements.
Condensed Interim Unaudited Statement of
Comprehensive Income
|
Note
|
Unaudited
01.07.23-
31.12.23
USD
|
Unaudited
01.07.22-
31.12.22
USD
|
Dividend income from investments at fair value
through profit or loss
|
|
1,263,069
|
809,155
|
Net gain/(loss) from investments at fair value
through profit or loss
|
5
|
9,740,456
|
(20,501,018)
|
Net foreign exchange loss
|
|
(104,425)
|
(408,115)
|
Net investment
income/(loss)
|
|
10,899,100
|
(20,099,978)
|
|
|
|
|
Investment management fees
|
6
|
1,045,166
|
965,443
|
Directors' fees and expenses
|
6
|
212,915
|
190,646
|
Administrative and accounting fees
|
|
106,560
|
99,863
|
Custodian fees
|
|
53,852
|
79,417
|
Audit fees
|
|
41,467
|
37,762
|
Other expenses
|
|
534,710
|
358,229
|
Total operating expenses
|
|
1,994,670
|
1,731,360
|
Other comprehensive
income
|
|
-
|
-
|
Total comprehensive income/(loss)
for the period
|
|
8,904,430
|
(21,831,338)
|
Basic and diluted earnings/(loss) per share
|
|
USD 0.32
|
(USD 0.75)
|
The accompanying notes on pages 18 to 23 form an
integral part of these financial statements.
Condensed Interim Unaudited Statement of Changes in
Equity
|
Share
capital
|
Reserve for
own shares
|
Retained
earnings
|
Total
|
|
USD
|
USD
|
USD
|
USD
|
Balance at 1 July 2022
|
166,645,041
|
(165,709,783)
|
127,886,909
|
128,822,167
|
Total comprehensive loss for the
period
|
|
|
|
|
Change in net assets attributable to shareholders
|
-
|
-
|
(21,831,338)
|
(21,831,338)
|
|
166,645,041
|
(165,709,783)
|
106,055,571
|
106,990,829
|
Contributions and
distributions
|
|
|
|
|
Repurchase of own shares (note 4)
|
-
|
(1,627,485)
|
-
|
(1,627,485)
|
|
-
|
(1,627,485)
|
-
|
(1,627,485)
|
Balance at 31 December
2022
|
166,645,041
|
(167,337,268)
|
106,055,571
|
105,363,344
|
|
|
|
|
|
Balance at 1 July 2023
|
166,645,041
|
(170,650,584)
|
119,264,820
|
115,259,277
|
Total comprehensive income for the
period
|
|
|
|
|
Change in net assets attributable to shareholders
|
-
|
-
|
8,904,430
|
8,904,430
|
|
166,645,041
|
(170,650,584)
|
128,169,250
|
124,163,707
|
Contributions and
distributions
|
|
|
|
|
Repurchase of own shares (note 4)
|
-
|
(1,630,500)
|
-
|
(1,630,500)
|
|
-
|
(1,630,500)
|
-
|
(1,630,500)
|
Balance at 31 December
2023
|
166,645,041
|
(172,281,084)
|
128,169,250
|
122,533,207
|
The accompanying notes on pages 18 to 23 form an
integral part of these financial statements.
Condensed Interim Unaudited Statement of Cash
Flows
|
Unaudited
01.07.23 -
31.12.23
|
Unaudited
01.07.22 -
31.12.22
|
|
USD
|
USD
|
Cash flows from operating
activities
|
|
|
Total comprehensive income/(loss) for the period
|
8,904,430
|
(21,831,338)
|
Adjustments to reconcile total comprehensive
income/(loss) to net
cash from operating activities:
|
|
|
Dividend income
|
(1,263,069)
|
(809,155)
|
Net (gain)/loss from investments at fair value
through profit or loss
|
(9,740,456)
|
20,501,018
|
Purchase of investments
|
(26,434,224)
|
(25,555,631)
|
Proceeds from sale of investments
|
29,190,902
|
26,750,546
|
Net foreign exchange loss
|
104,425
|
408,115
|
Decrease in receivables on sale of investments
|
338,591
|
-
|
Decrease in accrued expenses
|
(59,764)
|
(70,160)
|
(Decrease)/Increase in repurchases of shares
payable
|
(246,469)
|
80,978
|
Dividends received
|
2,140,444
|
867,927
|
Net cash from operating
activities
|
2,934,810
|
342,300
|
|
|
|
Cash flows used in financing
activities
|
|
|
Repurchase of own shares
|
(1,630,500)
|
(1,627,485)
|
Net cash used in financing
activities
|
(1,630,500)
|
(1,627,485)
|
|
|
|
Net increase/(decrease) in cash and
cash equivalents
|
1,304,310
|
(1,285,185)
|
Cash and cash equivalents at beginning of the
period
|
1,750,069
|
8,160,681
|
Effect of exchange rate fluctuations on cash held
|
(104,425)
|
(408,115)
|
Cash and cash equivalents at end of
the period
|
2,949,954
|
6,467,381
|
The accompanying notes on pages 18 to 23 form an
integral part of these financial statements.
Notes to the Condensed Interim Unaudited Financial
Statements
For the six-month period from 1 July 2023 to 31
December 2023
1 The Company
VietNam Holding Limited (the "Company") is a
closed-end investment company that was incorporated in the Cayman
Islands on 20 April 2006 as an exempted company with limited
liability under registration number 166182. On 25 February 2019,
the Company, via a process of cross-border continuance, transferred
its legal domicile from the Cayman Islands to Guernsey and was
registered as a closed-ended company limited by shares incorporated
in Guernsey with registered number 66090.
On 8 March 2019, the Company's ordinary shares were
cancelled from trading on AIM and admitted to the Premium segment
of the official list of the UK Listing Authority ("Official List")
and trading on the main market of the London Stock Exchange ("Main
Market"). On the same date the Company's shares were admitted to
listing and trading on the Official List of The International Stock
Exchange ("TISE").
The investment objective of the Company is to achieve
long-term capital appreciation by investing in a diversified
portfolio of companies that have high growth potential at an
attractive valuation.
At the Annual General Meeting held on 21 December
2023 the Shareholders voted in favour of the continuance
resolution, authorising the Company to operate in its current form
through to the 2028 Annual General Meeting when a similar
resolution will be put forward for Shareholders' approval.
Dynam Capital, Ltd has been appointed as the
Company's Investment Manager and is responsible for the day-to-day
management of the Company's investment portfolio in accordance with
the Company's investment policies, objectives and restrictions.
Sanne Group (Guernsey) Limited is the Company's
administrator.
Standard Chartered Bank (Singapore) Limited and
Standard Chartered Bank (Vietnam) Limited are the custodian and the
sub-custodian respectively. Standard Chartered Bank (Singapore)
Limited is also the sub-administrator.
The registered office of the Company is 1 Royal
Plaza, Royal Avenue, St Peter Port, Guernsey, GY1 2HL.
2 Principal Accounting Policies
(a) Statement of compliance
The Condensed Interim Unaudited Financial Statements
(the "financial statements") have been prepared in accordance with
IAS 34 Interim Financial Reporting, the Disclosure Guidance
Transparency Rules of the UK's Financial Conduct Authority and the
Listing Rules.
The financial statements do not include all of the
information required for full financial statements and should be
read in conjunction with the Company's audited financial statements
for the year ended 30 June 2023 which were prepared in accordance
with International Financial Reporting Standards as adopted by the
EU ("IFRS"). The accounting policies used by the Company are the
same as those applied by the Company in its annual financial
statements as at and for the year ended 30 June 2023.
The Directors have assessed the impact, or potential
impact, of all New Accounting Requirements. In the opinion of the
Directors, there are no mandatory New Accounting Requirements
applicable in the current period that had any material effect on
the reported performance, financial position, or disclosures of the
Company. Consequently, no mandatory New Accounting
Requirements are listed. The Company has not early adopted any New
Accounting Requirements that are not mandatory.
All non-mandatory New Accounting Requirements in
issue are either not yet permitted to be adopted or, in the
Directors' opinion, would have no material effect on the reported
performance, financial position, or disclosures of the Company and
consequently have neither been adopted, nor listed.
(b) Basis of preparation
The financial statements are presented in United
States Dollars ("USD"), which is the Company's functional currency.
The financial statements have been prepared on a going concern
basis, applying the historical cost convention, except for the
measurement of investments at fair value through profit or
loss.
Going concern
The Directors have reasonable expectations and are
satisfied that the Company has adequate resources to continue its
operations and meet its commitments for the foreseeable future and
they continue to adopt the going concern basis for the preparation
of the financial statements. In making this statement, the
Directors confirm the Company's forecasts and projections have been
stress tested taking into account the potential for (i) asset value
declines and (ii) declines in cash dividends from equities held in
the portfolio and (iii) share buybacks and tender offers. The
Directors note that the underlying liquidity of the Vietnamese
stocks has increased significantly during the period with average
daily traded volumes doubling from the previous six-month period.
The Company's liquidity position, taking into account cash held and
with the ability to sell underlying assets to meet share buybacks,
tender offers and to meet the operating costs of the Company, shows
that the Company is able to operate with appropriate liquidity and
be able to meet its liabilities as they fall due. The Directors
therefore have a reasonable expectation that the Company will have
adequate resources to continue its operations for the foreseeable
future and continue to adopt the going concern basis of accounting
in preparing the financial statements.
Critical accounting estimates and judgements
The preparation of financial statements in accordance
with IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and the
reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimated and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised if the
revision affects only that period or in the period of the revision
and future periods if the revision affects both current and future
periods.
The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are discussed
below.
Functional currency
The Company's shares were issued in USD and the
listing of the shares on the Main Market and TISE is in USD. The
performance of the Company is measured and reported to the
investors in USD, although the primary activity of the Company is
to invest in the Vietnamese market. The Directors consider the USD
as the currency that most faithfully represents the economic
effects of the underlying transactions, events and conditions.
Fair value of financial instruments
The fair value of financial instruments that are not
traded in an active market is determined by using valuation
techniques. The Company uses its judgement to select a variety of
methods and make assumptions that are mainly based on market
conditions existing at each reporting date.
3 Operating Segments
An operating segment is a component of the Company
that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to
transactions with any of the Company's other components. The
Company is engaged in a single segment of business, being
investment in Vietnam. The Board, as a whole, has been determined
as constituting the chief operating decision maker of the Company.
The key measure of performance used by the Directors to assess the
Company's performance and to allocate resources is the total return
on the Company's NAV calculated as per the prospectus.
Information on gains and losses derived from
investments are disclosed in the statement of comprehensive
income.
The Company is domiciled in Guernsey, Channel
Islands. Entity wide disclosures are provided as the Company is
engaged in a single segment of business, investing in Vietnam. In
presenting information on the basis of geographical segments,
segment investments and the corresponding segment net investment
income arising thereon are determined based on the country of
domicile of the respective investment entities.
All of the Company's investments in securities at
fair value are in Vietnam as at 31 December 2023 and 30 June
2023.
All of the Company's investment income can be
attributed to Vietnam for the periods ended 31 December 2023 and 31
December 2022.
4 Share Capital
Ordinary shares of USD 1.00 each
Pursuant to its redomiciliation to Guernsey, the
Company re-registered with an authorised share capital of USD
200,000,000 divided into 200,000,000 shares of a nominal or par
value of USD 1.00 each. In line with the Company's Articles of
Incorporation Amended and restated by special resolution on 21
December 2023, the Company may from time to time redeem all or any
portion of the shares held by the Shareholders on annual basis upon
giving notice of not less than 30 calendar days.
On 8 March 2019 the Company's ordinary shares were
cancelled from trading on AIM and admitted to the Premium segment
of the Official List and trading on the Main Market. On the same
date the Company's shares were admitted to listing and trading on
the TISE.
|
31.12.23
|
30.06.23
|
|
No. of shares
|
No. of shares
|
Total shares issued and fully paid (after repurchase
and
cancellations) at and beginning of the
period/year
|
27,725,104
|
29,225,667
|
Shares cancellation
|
(440,212)
|
(1,500,563)
|
|
27,284,892
|
27,725,104
|
Repurchased and reserved for own shares
|
|
|
At beginning of the period/year
|
-
|
-
|
During the period/year
|
(440,212)
|
(1,500,563)
|
Shares cancellation
|
440,212
|
1,500,563
|
|
-
|
-
|
|
|
|
Total outstanding ordinary shares
with voting rights
|
27,284,892
|
27,725,104
|
As a result, as at 31 December 2023 the Company has
27,284,892 (30 June 2023: 27,725,104) ordinary shares with voting
rights in issue (excluding the reserve for own shares), and nil (30
June 2023: nil) are held as reserve for own shares.
The Company does not have any externally imposed
capital requirements.
The Company's general intention is to reinvest the
capital received on the sale of investments. However, the Directors
may from time to time and at their discretion, either use the
proceeds of sales of investments to meet the Company's expenses or
distribute them to shareholders. Alternatively, the Company may
repurchase its own ordinary shares with such proceeds from
shareholders pro rata to their shareholding upon giving notice of
not less than 30 calendar days to shareholders (subject always to
applicable law) or repurchase ordinary shares at a price not
exceeding the last published net asset value per share.
5 Net Gain/(Loss) from Investments at Fair Value
through Profit or Loss
|
6 months to
|
6 months to
|
|
31.12.23
|
31.12.22
|
|
USD
|
USD
|
Realised gain/(loss) on disposal of investments at
fair value through profit or loss
|
3,516,636
|
(3,268,922)
|
Unrealised gain/(loss) on investments at fair value
through profit or loss
|
6,223,820
|
(17,232,096)
|
|
9,740,456
|
(20,501,018)
|
6 Related Party Transactions
Investment management fees
The Company entered into a new investment management
agreement with Dynam Capital, Ltd on 26 June 2018. The agreement
was amended and restated on 8 October 2018 and further amended and
restated on 1 October 2020. The Board and the Investment Manager
agreed to modify the management fee (previously on a sliding scale
of 1.5% per annum on NAV below USD 300 million, 1.25% per annum on
NAV between USD 300 - USD 600 million, and 1.0% per annum on NAV
above USD 600 million) effectively from 1 November 2020.
Pursuant to the agreement the Investment Manager is
entitled to receive a monthly management fee, paid in the manner
set out as below:
● On the amount of the
Net Asset Value of the Company up to but excluding USD 300 million,
one-twelfth of 1.75%;
● On the amount of the
Net Asset Value of the Company between and including USD 300
million up to and including USD 600 million, one-twelfth of 1.5%;
and
● On the amount of the
Net Asset Value of the Company that exceeds USD 600 million,
one-twelfth of 1%.
The management fee accruing to the Investment Manager
for the six-month period to 31 December 2023 was USD 1,045,166
(period ended 31 December 2022: USD 965,443). An amount of USD
172,801 (30 June 2023: USD 162,201) was outstanding as at 31
December 2023.
Directors' fees and expenses
The Board of Directors determines the fees payable to
each Director, subject to a maximum aggregate amount of USD 350,000
(2022: USD 350,000) per annum being paid to the Board of Directors
as a whole. The Company also pays reasonable expenses incurred by
the Directors in the conduct of the Company's business including
travel and other expenses. The Company pays for directors and
officers liability insurance coverage. The charges for the
six-month period to 31 December 2023 for the Directors fees were
USD 163,052 (period ended 31 December 2022: USD 160,564) and
expenses were USD 49,863 (2022: USD 30,082).
As at 31 December 2023, USD 12,747 (30 June 2023: USD
nil) of Directors' fees were outstanding.
Directors' ownership of shares
As at 31 December 2023, Directors held 34,964
ordinary shares in the Company (30 June 2023: 44,920) as listed
below.
Hiroshi
Funaki
19,887 Shares
Philip Scales
10,077 Shares
Saiko Tajima
5,000 Shares
7 Fair Value Information
For certain of the Company's financial instruments
not carried at fair value, such as cash and cash equivalents,
accrued dividends, other receivables, receivables/payable upon
sales/purchase of investments and accrued expenses, the amounts
approximate to fair value due to the immediate or short-term nature
of these financial instruments.
Other financial instruments are measured at fair
value through profit or loss.
Fair value estimates are made at a specific point in
time, based on market conditions and information about the
financial instrument. These estimates are subjective in nature and
involve uncertainties and matters of significant judgement and
therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
● Level
1: Inputs that are quoted market prices (unadjusted) in
active markets for identical instruments. This level includes
listed equity securities on exchanges (for example, Ho Chi Minh
Stock Exchange).
● Level
2: Inputs other than quoted prices included within Level 1
that are observable either directly (i.e., as prices) or indirectly
(i.e., derived from prices). This level includes instruments valued
using: quoted prices for identical or similar instruments in
markets that are considered less than active; quoted market prices
in active markets for similar instruments; or other valuation
techniques in which all significant inputs are directly or
indirectly observable from market data.
● Level
3: Inputs that are not based on observable market data
(i.e., unobservable inputs). This level includes all instruments
for which the valuation technique includes inputs not based on
observable data and the unobservable inputs have a significant
effect on the instrument's valuation.
The table below analyses financial instruments
measured at fair value at the reporting date by the level in the
fair value hierarchy into which the fair value measurement is
categorised. The amounts are based on the values recognised in the
statement of financial position. All fair value measurements below
are recurring.
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
USD
|
USD
|
USD
|
USD
|
As at 31.12.23
|
|
|
|
|
|
|
|
|
|
Financial assets classified at fair
value upon initial
recognition
|
|
|
|
|
Investments in securities
|
120,510,213
|
|
-
|
120,510,213
|
|
|
|
|
|
As at 30.06.23
|
|
|
|
|
|
|
|
|
|
Financial assets classified at fair
value upon initial
recognition
|
|
|
|
|
Investments in securities
|
113,225,102
|
-
|
-
|
113,225,102
|
|
|
|
|
|
There were no transfers between levels during the
period.
The level in the fair value hierarchy within which
the fair value measurement is categorised in its entirety is
determined based on the lowest level input that is significant to
the fair value measurement in its entirety. Assessing whether an
input is significant requires judgement including consideration of
factors specific to the asset or liability. Moreover, if a fair
value measurement uses observable inputs that require significant
adjustment based on unobservable inputs, that fair value
measurement is a Level 3 measurement.
8 Basic and Diluted Earnings per Share
The calculation of basic and diluted earnings per
share at 31 December 2023 was based on the change in net assets
attributable to ordinary shareholders of USD 8,904,430 (period
ended 31 December 2022: USD (21,831,338)) and the weighted average
number of shares outstanding of 27,481,368 (period ended 31
December 2022: 28,991,146).
9 Subsequent Events
There were no other material events that require
disclosure and/or adjustments in these financial statements.
Director Profiles
Hiroshi Funaki (Chairman)
Mr Funaki has been actively involved in raising,
researching and trading Vietnam funds since 1995. He worked at
Edmond de Rothschild Securities from 2000 to 2015 where he led the
Investment Companies team, focusing on Emerging Markets and
Alternative Assets. Prior to that he was Head of Research at Robert
Fleming Securities, also specialising in closed-end funds. He
currently acts as an investment adviser to a Family Office. He has
a MA in Mathematics and Philosophy from Oxford University.
Philip Scales (Audit and Risk
Committee Chairman and Management Engagement Committee
Chairman)
Mr Scales has over 40 years' experience working in
offshore corporate, trust, and third-party fund administration. For
18 years, he was managing director of Barings Isle of Man
(subsequently to become Northern Trust) where he specialised in
establishing offshore fund structures, mainly in the closed-ended
arena (both listed and unlisted entities). Mr Scales subsequently
co-founded FIM Capital Limited where he is Group Chairman. He is a
Fellow of the Institute of Chartered Secretaries and Administrators
and holds a number of directorships of listed companies and
collective investment schemes.
Saiko Tajima (Remuneration
and Nomination Committee Chairman and Environmental, Social and
Governance Committee Chairman)
Ms Tajima has over 20 years' experience in finance,
of which 8 years have been spent in Asian real estate asset
management and structured finance. Working for Aozora Bank and
group companies of Lehman Brothers and Capmark, she focused on
financial analysis, monitoring and reporting to lenders, borrowers,
auditors, regulators and rating agencies. Over the last 8 years,
she has invested in and helped develop tech start-ups in Tokyo,
Seoul and Sydney. She is a Certified Public Accountant in the
US.
Key Parties
Directors
|
Investment Manager
|
Hiroshi Funaki
|
Dynam Capital, Ltd
|
Philip Scales
|
1 Royal Plaza
|
Saiko Tajima
|
Royal Avenue
|
|
St Peter Port
|
|
Guernsey
|
|
GY1 2HL
|
|
|
Registered Office,
|
Sub-Administrator,
|
Company Secretary and
Administrator
|
Custodian and Principal
Bankers
|
Sanne Group (Guernsey) Limited
|
Standard Chartered Bank (Singapore) Limited
|
1 Royal Plaza
|
7 Changi Business Park Crescent
|
Royal Avenue
|
Level 3, Securities Services
|
St Peter Port
|
Singapore 486028
|
Guernsey
|
|
GY1 2HL
|
|
|
|
Corporate Broker and Financial
Adviser
|
UK Legal Adviser
|
Cavendish Securities plc
|
Stephenson Harwood LLP
|
(As from 8
September 2023, formerly finnCap Ltd))
|
1 Finsbury Circus
|
One Bartholomew Close
|
London
|
London
|
EC2M 7SH
|
EC1A 7BL
|
|
(Nominated Adviser (AIM) until
transference to LSE Main Market)
|
|
|
|
Market Researcher
|
Guernsey Legal Adviser
|
Dynam Consultancy and Services Company Limited
|
Guernsey Legal Adviser
|
Floor 12, Deutsches Haus,
|
Carey Olsen (Guernsey) LLP
|
33 Le Duan,
|
Carey House
|
Ben Nghe Ward, District 1
|
Les Banques
|
Ho Chi Minh City,
|
St Peter Port
|
Vietnam
|
Guernsey
|
|
GY1 4BZ
|
|
|
Registrar
|
Auditor
|
Computershare Investor Services (Guernsey)
Limited
|
KPMG Channel Islands Limited
|
1st Floor, Tudor House
|
Glategny Court
|
Le Bordage
|
Glategny Esplanade
|
St Peter Port
|
St Peter Port
|
Guernsey
|
Guernsey
|
GY1 1DB
|
GY1 1WR
|