Annual Report 2023
Highlights
Company Overview
Summary Information
Chairman’s Statement
Investment Manager’s Report
Top Five Portfolio Companies
Sustainability Report
Principal Risks and Risk Management
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Strategic ReportContents
Independent Auditor’s Report
Statement of Financial Position
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Alternative Performance Measures
Corporate Information
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67
68
Financial Statements
Director Profiles and Disclosure of Directorships
Corporate Governance Report
Audit and Risk Committee Report
Directors’ Remuneration Policy and Report
Directors’ Report
Statement of Directors’ Responsibilities
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Governance
LSE-listed investment company focused solely on Vietnam: the fastest-
growing economy in South East Asia. Invests in high-growth companies,
focusing on domestic consumption, industrialisation and urbanisation.
Capturing the growth of Vietnam through an actively managed,
high-conviction portfolio of companies.
Our Purpose
Our Vision
Owning a portfolio of companies with the potential to double their
underlying earnings over the next four to five years. Active stock
selection balanced between high-growth small-and-medium
companies and best-in-class blue chips. Seeking companies that
can benefit from enhanced valuations by following a trajectory of
better Environmental, Social, Governance practices.
Annual Report 2023
Average NAV
Operating expenses*
Ongoing charges
Financial Highlights
As at 13 October 2023 (the latest available date before approval of the accounts), the discount to NAV had moved to
16.4%. The estimated NAV per share and mid-market share price at 13 October 2023 was 365.0p and 305.0p respectively.
Ongoing Charges
Ongoing charges for the year ended 30 June 2023 have been calculated in accordance with the Association of Investment
Companies (the “AIC”) recommended methodology. The ongoing charges for the year ended 30 June 2023 were 3.07%.
Refer to page 67 for the definitions of Alternative Performance Measures (“APMs”) together with how they have been
calculated.
Year end 30 June 2023 USD
111,710,032
3,433,537
3.07%
a
b
b/a
*Operating expenses per the financial statements less non-recurring expenses of USD 8,557.
Highlights
115.3m
Total Net
Assets (USD)
‘23 ‘22
115.3m
128.8m
4.157
Total Net Value
per share (USD)
‘23 ‘22
4.157
4.408
329.0p
Total Net Value
per share (GBP)
329.0p
‘23 ‘22
363.0p
27 7. 5p
Share
Price
277.5 p
‘23 ‘22
309.5p
15.7%
Discount to Net
Assets Value
15.7%
‘23 ‘22
14.7%
Total NAV return was -5.7%
•
Outperformed VNAS index by 4.3% during the year
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Outperformed VNAS index on 1, 3, 5 and 10 year basis
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Operational Highlights
Fund is invested in 26 positions
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Top-ten positions account for 62.4% of the NAV
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Fund received two five stars in latest UN PRI Transparency Report
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Strategic Report
Big enough to be an active and engaged shareholder in portfolio companies, nimble
enough to find and fund less- known emerging champions.
The Company is able to invest in best-in-class names across the spectrum of firm size
with the flexibility to include pre-IPO, small-mid caps and large caps in the portfolio.
High conviction, off-index positions managed by the Investment Manager’s active
ownership capabilities.
Since its early days the Company has been an active adherent to best practice
in Environmental, Social and Governance issues, believing that better-managed
companies on these dimensions will be worth more in the longer-term. The Company
has been a signatory of the United Nations Principles for Responsible Investing (“PRI”)
for over a decade and received five-star scores in the recent PRI report.
What Makes Us Different
Right Size for the
Vietnam Equity Market
ESG in the DNA
Nimble Access
Across Spectrum
Actively Managed
Portfolio
Company Overview
Focused Investment
Approach
Portfolio of 26 companies with 62.4% in top-ten
positions. The portfolio has a price-to-earnings
valuation of circa 8x and an earnings growth
forecast of circa 17% for 2024.
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Premium Listed London Investment Company
established in 2006. Seeks to achieve long-term
capital appreciation by investing in a diversified
portfolio of companies in Vietnam that have
high growth potential at an attractive valuation.
Capturing the growth of Vietnam through long
term investment in an actively managed,
high-conviction portfolio of companies.
•
Vietnam Holding
What Vietnam Holding Does:
The Company
Protect shareholder interests by aspiring to the
highest standards of corporate governance
at both fund & portfolio level.
•
Vietnam specialist, regulated by the Guernsey
Financial Services Commission. Partner-
owned business whose sole focus is asset
management. Appointed Investment Manager
on 16 July 2018.
Top-down & bottom-up research driven
fundamental analysis.
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Dynam Capital Ltd
What Dynam Does:
Investment Manager
Active engagement with portfolio
companies on ESG.
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Long-term investment horizon.
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Annual Report 2023 Strategic Report
Annual Report 2023
The Company
VietNam Holding Limited (the “Company”, the “Fund”
or “VNH”) 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.
The Shares were admitted to trading on AIM in June
2006 and changed to a Premium Listing on the Official
List of the UK Listing Authority and admitted to trading
on the Main Market of the London Stock Exchange on 8
March 2019. The Company also listed on the Official List
of The International Stock Exchange on 8 March 2019. The
Company has an unlimited life with a continuation vote
in 2023.
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
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:
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Summary Information
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 VNH 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:
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).
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Strategic Report
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Furthermore, based on the guidelines established by the
United Nations Principles for Responsible Investment
(“PRI”), 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.
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Any material change to the investment policy will only
be made with the approval of Shareholders by ordinary
resolution.
Shareholder Information
Sanne Group (Guernsey) Limited (the “Administrator”) is
responsible for calculating the NAV per share and delegates
this function under a legal contractual arrangement to
Standard Chartered Bank (Singapore) Limited (the “Sub-
Administrator”), previously Standard Chartered Bank,
Singapore Branch until its transference under the Banking
Act on 13 May 2019. The estimated NAV per ordinary share
is calculated as at the close of business each business
day by the Investment Manager and published at close
of business in Vietnam the same day. The monthly NAV is
calculated by the Sub-Administrator on the last business
day of every month and announced by a Regulatory News
Service within 10 business days.
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Annual Report 2023
Annual Report 2023
Dear Shareholder,
I am pleased to present the Annual Report for VietNam Holding
Limited for the twelve-month period ending 30 June 2023.
Although this has been a turbulent year globally, including
in Vietnam, I am pleased to report that the Fund has once
again outperformed peers and the Vietnam All Share Index
(“VNAS”).
I wrote in the interim report earlier this year about many of
the reasons for the market disturbances. Some were global,
however, some also were very local. As the Investment Manager
notes in his report, there is often a ‘game of two halves’ going
on, and this year has been no exception.
In the first six months of the financial year, the Company’s Net
Asset Value (“NAV”) per share declined by 16.8%, but in the
second half of the year (from 1 January 2023 until 30 June 2023)
rose by 13.3%. The total NAV return was still negative, at -5.7%,
but this was 4.3% better than the VNAS.
The Company’s Total Assets were USD 116,191,137 at 30 June
2023, a decrease of 10.1% from USD 129,177,449 at 30 June 2022.
Total Comprehensive loss was USD 8,622,089 at 30 June 2023
compared with a loss of USD 7,719,310 in the corresponding period
in 2022. Although VNH’s NAV has declined in absolute numbers,
the focus, active management, and nimble performance of
the Investment Manager have led to a significant relative
outperformance against the market as a whole, as well as most
of its peers.
The share price has fluctuated throughout the year, reaching
a year high of GBP 3.375 per share and a low of GBP 2.21 per
share. Contributing factors to the ups and downs include
the NAV’s movements, the GBP/USD exchange rate and the
discount volatility.
Market and Opportunity
The Board visited Vietnam in March of this year and sat down
with the Investment Manager to go through their strategy,
meet with the research team and also to review in depth with
the team one of the top five holdings.
Chairman’s Statement
We came away from the meeting feeling confident about
several fronts. Firstly, Vietnam remains a dynamic investment
opportunity. Despite periods of volatility and market depression,
the underlying macro story and potential for the country and
its companies are both tremendous and distinctive. Secondly,
its public markets offer a rare mix of growth that is not based
on financial gearing and is at modest valuation levels and
indeed at historical lows. Thirdly the structural improvements in
liquidity will continue this year with more enhancements made
to the stock market infrastructure, which also makes us more
convinced that it is only a matter of time before the market is
considered for an upgrade to Emerging Market Status. Finally,
Dynam Capital, our Investment Manager has proven themselves
to be a nimble, focused team, punching above their weight, and
delivering superior risk adjusted returns in both financial and
environmental, social and governance (“ESG”) terms.
Progress over past 5 years
When we appointed Dynam Capital five years ago, we set out
three main objectives. Firstly, to provide solid risk adjusted
returns for shareholders. Secondly, to build on and develop
an ESG centered investment strategy fit for purpose. Thirdly,
to use all means possible to narrow the discount between
the Company’s share price and NAV. In addition, we also set
forth a dedicated marketing plan to broaden the shareholder
base, in an attempt to increase the visibility of the Fund and its
liquidity and ultimately attract retail and wealth management
platforms, which we felt would be natural buyers of a focused,
yet niche investment company structure.
I report on each of these below:
Risk Adjusted Returns
Performance
In the twelve months to 30 June 2023 the Company’s NAV
per share declined by 5.7%, while the market as a whole,
as measured by the VNAS, declined by 10.0%. In the first six
months of the financial year the NAV per share fell by 16.8%,
against an index fall of 20.5%, and in the second six months the
Company’s NAV rose by 13.3% in line with the index, which rose
by 13.2%. At 30 June 2023, the Company has outperformed the
VNAS on 1, 3, 5 and 10-year measures.
Performance monitoring remains a key focus of the Board
and we engage closely with our Investment Manager in this
respect through monthly conference calls as well as quarterly
presentations. A more detailed account of the Company’s
annual performance is also provided in the Investment
Manager’s Report.
ESG Strategy
Responsible Investing and Sustainability Reporting
The Investment Manager and the Board have been committed
to responsible investing and aligned approach to ESG years
Hiroshi Funaki - Chairman
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Hiroshi Funaki
Chairman
VietNam Holding Limited
13 October 2023
before the mainstream global investing community moved in
this direction. The Company has been a signatory to the United
Nations’ Principles on Responsible Investing (“PRI”) since 2009,
and in its most recent PRI assessment scored two ‘five-stars’
reflecting our efforts to contribute to responsible investing in
Vietnam in a meaningful way.
The Company and the Investment Manager were sponsors of
the inaugural ESG Investing Conference held in Ho Chi Minh City
on 31 May and 1 June 2023. We helped the organisers deliver
two full days of content to a packed audience of close to 350
participants.
We also have been measuring the carbon footprint of both the
Company and the portfolio for several years, and this year’s
findings are in the
Sustainability Report
. It is worth noting that
unlike in previous years, when the portfolio had a significantly
lower carbon footprint than the market as a whole, at this
reporting date, our footprint is slightly higher than the index.
The key reason for this is that we have backed a company that
is in transition – Petro Vietnam Services (“PVS”) which has one
of the country’s largest fleets of specialised offshore supply
vessels, historically used to implement and maintain oil and gas
infrastructure. PVS has stated its ambition to become one of
the leading service providers in renewable energy – specifically
onshore and offshore wind energy. Over time, we believe PVS’s
transition to clean energy will result in a lower overall carbon
impact, even if it distorts our reported carbon footprint for the
reporting period.
Discount
During the year the Company’s shares traded at an average
discount to NAV of 15.7%. The Board seeks to manage the
discount through regular share buybacks, as detailed below.
In addition to delivering a strong relative performance of
the Company’s portfolio, the Investment Manager, in close
cooperation with the Board and the Company’s broker and
marketing agent, has maintained an active investor relations
program. For much of the year the discount has been the
narrowest of the three London listed investment companies
focused on Vietnam. At the time of writing the discount was
16.4%.
Marketing
With the help of the Investment Manager, Dynam Capital, the
Board has further developed the Company’s marketing activity
throughout the year to help narrow the discount, improve
liquidity in the Company’s shares, and widen our Shareholder
base.
The Investment Manager has been actively promoting the
Company and along with our broker and sales partners has
conducted roadshows, topical seminars, podcasts, and several
webinars. Articles produced by the Investment Manager
have also appeared in trade media, illustrating some of our
core investment themes, and other exciting developments
in the market. Our analysis shows that the marketing and
communications efforts continue to bear fruit. We are delighted
to see a greater number of wealth management platforms on
the share register having also seen the overall mix of investors
broaden considerably over recent years. The Investment
Manager has maintained a strong social media presence for
the Company as well. We welcome all Shareholders who may
be reading this Annual Report for the first time and thank all
existing holders for their ongoing support.
Share Buybacks
The Board has a mandate to authorise the purchase up to
14.99% of the Company’s shares each year in the open market
at prices below NAV per share, and this was renewed at the
AGM on 1 November 2022. In the year from 1 July 2022 to
30 June 2023, the Company bought back 1,500,563 shares
(representing 5.1% of the shares outstanding at 1 July 2022) at
a weighted average discount of 15.2%. This resulted in a 0.78%
accretion to NAV per share. From September 2017, when the
current Board was appointed, through until 30 June 2023, the
Company has bought back 14.82 million shares at a weighted
average discount of -15.4%. This represents a 3.4% accretion to
NAV per share.
Continuation vote
As you will know, at the AGM in 2018 we told shareholders we
would bring a five-yearly continuation vote to the 2023 AGM,
which will take place this November.
As detailed above, we believe the market opportunity for the
Fund remains, despite the Company’s relatively modest size,
and that the Investment Manager is doing an excellent job in
delivering on the Company’s investment objectives.
The Board (and Dynam Capital) maintain a regular dialogue
with shareholders and believe that many share our view that the
Company should continue for a further five years. A resolution
to that effect will be put to shareholders at the Company’s AGM
later this year. As such, the Directors will be recommending that
shareholders vote to approve the continuation of the Company
for a further five years and we propose a new continuation vote
to be held in November 2028.
On behalf of the Board, I would like to extend a further thank-
you to shareholders for your ongoing support throughout the
past year. While the global mood is gloomy, we believe Vietnam
remains a bright spot – an attractive investment destination
with good prospects for further growth over the years to come.
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Annual Report 2023
Annual Report 2023
Investment Manager’s Report
This year marks the 17th anniversary of the Company and
its listing in London
1
. Over this time, the Company, which
is just six years younger than Vietnam’s stock market,
has seen Vietnam grow dramatically not only in absolute
terms, but in stature and visibility. While the country’s
stock markets have also grown at an average annual rate
of 4%, VNH has outperformed the market on a 1, 3, 5 and
10-year basis. Nevertheless, the market can be volatile
and there have often been periods, lasting 6 to 12 months
of significant weakness in the equity markets. The past
twelve months was, as with previous annual periods, a
‘game of two halves’.
From 1 July to 31 December 2022, Vietnam’s stock market
experienced a sharp decline. Markets are always fickle
friends, and in Vietnam, they are often also hostage to the
mood of the country’s seven million or so domestic retail
investors. That mood darkened in Q4 last year following
the arrests of some high-profile property entrepreneurs,
which brought the bond and real estate markets to an
abrupt halt in the face of uncertainties over issuing bonds
and refinancing existing obligations. Several large, listed
property groups faced liquidity and solvency issues, and
were forced to start the lengthy process of restructuring
their borrowings from local and international investors.
Towards the end of December, two deputy prime
ministers were removed from office, and in January 2023,
the President stepped down, for failure to resign in the
mistakes of some government officials, and in the wake
of a scandals relating to PPE procurement and COVID-19
repatriation flights.
The mood has brightened somewhat in more recent
months. Interest rate cuts, bottom fishing by local and
regional investors, and a returning ‘sense of order’, despite
the global disorder, have all helped the stock market to post
six-month gains of around 13.2% at the end of June 2023.
This ‘sense of order’ includes ever increasing levels of foreign
direct investment (“FDI”) and a record trade surplus, albeit
because of imports falling faster than exports. Vietnam
has a very open trade-based economy, and weaker global
demand for technology goods - computers, tablets, mobile
phones and accessories – has naturally hit its usually high
export growth. This also has had a knock-on effect on
consumer confidence.
The record USD 12.25 billion trade surplus in the first half
of calendar 2023 and rising levels of disbursed FDI have
enabled the country to keep a relatively stable foreign-
exchange balance, stemming off the weakness in the
Vietnam Dong seen last year.
Inflation has also remained under control. Unlike in Europe
or the US, Vietnam has a lower energy exposure in its cost
of goods basket: half of its energy mix is domestically
sourced, including a reliance on hydropower.
Portfolio
Investors in the Company should recognise the value of
having a closed-end fund structure. This means that
we do not need to ordinarily maintain liquidity for the
sake of funding redemptions. We have a concentrated
portfolio that allows us to take conviction positions
in core companies. For example, our top-holding, FPT,
has averaged between 10-15% of the portfolio over
the past five years. This would not be possible in a
regulated open-end fund (UCITS for example). Our top
ten positions account for 62% of the portfolio and our
top 5 for 41%.
1
The Company was initially listed on AIM in July 2006 and then moved to
the premium segment of the main board of the London Stock Exchange
in March 2019.
Vu Quang Thinh
CIO and Managing Director
Craig Martin
Chairman and Managing Director
Strategic Report
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The level of concentration means that we need to be
focused on finding robust companies, with strong positions
in their sectors and industries, and with the ability to
compound their earnings over a five to ten year period.
As an example of this FPT has a compound annual growth
rate in earnings of 21.5% in the last 3 years.
We use our size to our advantage. We navigate nimbly
around the market capitalisation opportunity set
in Vietnam. Although our median portfolio market
capitalisation remains at around USD 1bn, a decrease of
6% over the year, we are uniquely size agnostic.
Phu Nhuan Jewelry JSC (“PNJ”), for example, was a USD
100m market cap company when the Company first
invested over a decade ago - putting it at the small-to-
medium category. As at 31 August 2023, it has a market
capitalisation equivalent to USD 1.096bn, making it a
‘large cap’ company.
We do not have to sell companies when they become
large, and nor do we have to reduce the smaller companies
on liquidity grounds. Our portfolio philosophy is an active
one: our active weight has been around 70% over the past
five years, and our portfolio turnover has been in the range
of 30 to 40%.
Performance
As described in the interim report as of 31 December 2022,
the first six months of the financial year saw significant
volatility in the Vietnamese stock market. During this
period, the NAV per share fell by 16.8%, outperforming
the Vietnam All Share Index’s (“VNAS”) decline of 20.5%.
Towards the end of the second half of the financial year,
the equity markets themselves started to recover, rising by
13.2% as of June 2023 with the Company’s NAV per share
similarly finishing the period up.
At 30 June 2023, the NAV per share declined by 5.7% for
the full financial year in accordance with the drop reported
for the previous financial year. Nonetheless, unlike this
time last year, we are optimistic about the second half of
calendar 2023. The Company continues to outperform its
peers, and has also outperformed the VNAS on a 1, 3, 5
and 10-year basis. The Company’s share price still fell by
10% during the financial year due to a combination of the
5.7% decline in NAV per share and a slightly wider discount
between the share price and the NAV.
Liquidity
Portfolio liquidity remains robust, and we estimate that
over 95% of the portfolio could be liquidated in less than
30 days.
The portfolio’s size and nimbleness as per our style of
investment management means that we can navigate
across the spectrum of company sizes, and we believe this
has contributed to the outperformance of the Company
versus the index and our peers. We have been able to take
profit in sectors that surged last year and move swiftly as
market forces and economic mood changes.
Although the Fund’s investment policy allows up to 20%
of the assets to be invested in unlisted or pre-IPO ‘private
equity’ type deals, the Fund is currently only invested
in listed securities, and all are valued as ‘Level 1’ – see
Valuation in the notes to the Financial Statements page
65. In 2018 we increased the exposure to some pre-IPO
opportunities, including making a three-year convertible
loan to a logistics company, but following the complete
return of that investment, we have not made any further
such investments. Given the forthcoming continuation
vote, we did not want to set false expectations in the
minds of potential investee companies or do the Board
or shareholders in the Company a disservice by tying
their hands to a significant illiquid position should the
continuation vote not pass.
As of 30 June 2023, the portfolio has about 1.5% of NAV
in cash.
Positioning and Core Themes
Our main investment approach remains focused
on industrialisation (best-in-class manufacturers,
international logistics); urbanisation (purposeful real
estate, transportation, clean energy, and clean water); and
domestic consumption and its enablers (sustainable retail,
domestic logistics, products, and finance). These themes
are inter-linked, as industrialisation and urbanisation foster
further robust growth in GDP and domestic consumption,
and are underpinned by the banking sector.
Industrialisation
Over the past thirty years Vietnam has emerged as a
key manufacturing centre for a wide range of goods.
The country’s GDP growth has been fueled by FDI into
the industrial and manufacturing-for-export sectors.
The trend of ‘made-in-Vietnam’ has been accelerated by
the ‘China-plus-one’ strategy of global manufacturers,
seeking to de-risk their supply chains. The war in Ukraine,
and the economic isolation of Russia, has also played
into these fears, with many companies looking to spread
their production more evenly over the world. Some
commentators have called this the beginning of the end of
globalisation. What is perhaps more likely is a continuation
of the trend of supply chain restructuring. Some companies
will look to re-shore manufacturing back home, others to
8
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Investment Manager’s Report (continued)
near-shore (i.e., increase production in Mexico for North
American markets) and others to friend-shore. The latter
category is where Vietnam is likely to attract the most
increased interest.
Although in the past we have invested in manufacturers,
including garment companies and seafood producers, we
have chosen to obtain most of the exposure to these themes
during the past year through the business-to-business
‘linkages’, mainly through industrial parks and logistic
companies. These typically have a higher quality of earnings
and higher return on equity than the individual exporters. A
core holding in this area is the leading port operations and
shipping company Gemadept (“GMD”), which at 5.4% of
NAV is the sixth largest position in the portfolio.
Urbanisation
Vietnam’s urbanisation level in 2022 was about 37%. This is
a level that China reached in 2000, before doubling within
twenty years. According to a UN forecast
2
, Vietnam’s
urban population is expected to reach 44% by 2030. In
last year’s annual report, we spoke about the multiplier
effect of investments in domestic infrastructure, giving
as an example the opening in May 2022 of a new bridge
across Ho Chi Minh City’s Saigon River, connecting the
down-town District 1 hub to the Thu Thiem peninsular, a
region already demarcated to be a new ‘metropolis’.
While the prospects for urban growth remain intact –
because Vietnam will need to build millions of new houses
over the next two decades – the real estate sector has been
in the doldrums for much of this year. At the end of 2022,
we had a 15% exposure to the real-estate sector, but were
quick to reduce this in the face of weakening short-term
potentials and, indeed, managed to escape the worst of
the turmoil to hit some of the companies in the sector. At
the end of 2023, our exposure to real-estate was 9.4% and
much of this was to the industrial park sector, as opposed
to the frozen residential market. We are confident that
some of the key names in the sector will survive and thrive,
and we may well add back to some of these in the months
ahead.
Domestic Consumerism
We believe the Vietnam economy is at an inflection point
in its development, and that the consumer sector will
develop strongly in years to come. In May 2023, we hosted
a webinar on the retail sector and invited a speaker from
PNJ to address our investors and talk about some of the
key longer-term trends. That said, higher interest rates,
rising costs and weaker manufacturing for export during
Industrialisation (continued)
2
https://population.un.org/wup/Publications/Files/WUP2018-Highlights.
pdf
the year have softened consumer demand in several
categories. Our portfolio companies have not escaped,
and our two retail champions, PNJ (jewellery) and Mobile
World Group (“MWG”) (an omni-channel, omni-sector
retailer) have seen their share prices depressed. At the
end of June 2022, the portfolio had approximately 17.8%
exposure to the domestic retail sector, including PNJ, 8.1%
of NAV, and MWG, 9.2% of NAV. By the end of June 2023,
the sector allocation had reduced to 7.8%, with PNJ and
MWG down to 5.1% and 2.7% respectively.
Banks and financial sector
VNH’s allocation to banks has increased again from 22%
at 30 June 2022 to 30% at 30 June 2023, as we see a more
favorable interest rate environment, and renewed credit
growth. Although 30% is significant, and the limit for
a single sector in the Fund’s investment policy, this is an
underweight position relative to the index. Key portfolio
names in the portfolio include Sacombank (“STB”), 10.1%
of NAV; MBB, 5.7% of NAV; VCB 5.7% of NAV; Vietin Bank
(“CTG”), 3.0% of NAV; ACB, 3.3% of NAV; and VP Bank,
1.8% of NAV.
In addition to banks, we have also re-entered the brokerage
sector, with a 10% allocation across several brokerages.
This is a sector we have made strong gains in historically,
and we have never been afraid to take profits. We think
that the sector will also benefit from returning domestic
investor appetite, in part as domestic interest rates on
bank deposits are reduced.
Responsible investing
The Company is firmly focused on sustainability and has
placed environmental, social and governance (“ESG”)
principles at the heart of its investment criteria for over a
decade, having become an early signatory to the United
Nations Principles for Responsible Investing (“PRI”) in 2009,
just three years after the principles were published, and
before any other fund in Vietnam. The Company received
two ‘five-star’ grades in its most recent PRI assessment
report.
Each component of ESG is equally important. For Vietnam,
the ‘S’ has been at work in its society for many decades and
the pandemic has forced further efforts at several of our
portfolio companies on harmonising staff, shareholders
and impacts on society at large. ‘G’ has always been a key
pillar for VNH’s investment approach, and we have been
at the forefront of advocating and training for corporate
Strategic Report
9
Strategic Report
governance at our investee companies since the Company’s
formation 17 years ago. Our CEO, Vu Quang Thinh, is a co-
founder and member of the board of the Vietnam Institute
of Directors (“VIOD”), and highly regarded for encouraging
companies in Vietnam to improve their corporate
governance standards. We actively engage with our
portfolio companies, urging them to give more attention
to investor relations and transparent reporting. We have
also been advising some of them specifically on how to get
the balance right in aligning interests between staff and
shareholders through the structure and implementation
of employee share option plans. The ‘E’ aspect of ESG
has, and rightly so, taken centre stage in many investors’
minds and at the same time become a greater priority for
Vietnamese people. On the climate front, the Investment
Manager and the Company have both affirmed the Paris
Agreement and our commitment to the Task Force for
Climate-related Financial Disclosure (“TCFD”). Dynam
Capital has also joined the Asia Investor Group on Climate
Change (“AIGCC”) and intends to contribute more to the
advocacy of climate risk reporting. More details of this can
be found in the
Sustainability Report
.
We were sponsors of the inaugural ESG Investor
Conference held over two days at the end of May 2023
where we reiterated our focus to ‘Doing More, Measuring
More and Reporting More’. Over the two days it became
apparent that the ESG journey is one that the Fund can
both participate in, and benefit from. We do not need to
sacrifice consistent returns as a responsible investor. There
may be opportunities in the short term that we choose
to pass on. We look for companies that can compound
their earnings over a five-year period. The discipline that
comes with an integrated ESG approach can help deliver
longer-term sustainable growth that outweighs the
short-term benefits of one or two stocks that could ‘pop’
in a portfolio.
Outlook
As we move into the second half of 2023, sentiment globally
remains subdued. Although recessionary risks remain less
severe for Asia than in the West, a global recession is
still possible, and this could hit Vietnam’s export growth
further.
In last year’s annual report, we emphasised the
favourable economic effects of government spending on
infrastructure. This was under-budget in the first half of
2022 and struggled to achieve expectations in the second
half, probably because certain officials were nervous
about making necessary decisions. Nevertheless, there is
mounting evidence of these expenditures happening with
far less political commotion.
In recent months, we have also seen a steady rebound in
domestic and international tourism in Vietnam. In May
2023, Chinese tourists started to return to Vietnam after a
three-year absence. North Asia has historically been a key
source of international tourism for Vietnam. In fact, the
level of added activity is putting further pressure on the
country’s airports.
We are optimistic on the prospects of further recovery over
the next six to twelve months, and believe that patience
by investors in the Fund will be rewarded. The Chairman
of VNH mentioned the upcoming continuation vote in his
letter. We believe we have delivered value for investors
over the five years in which Dynam Capital has been the
Investment Manager and look forward to the continuation
of our investment mandate.
Our objective is to position the portfolio for growth within
a three to five-year investment horizon. As always, this
means looking through short-term noises and volatility
in search of longer-term value derived from robust
compounding growth of well-managed companies with
proven sustainable business strategies.
We remain committed to delivering on the trust put in us
by the board of VNH, and by the investors in the Company,
many of whom we have met with or spoken to over the
course of the past twelve months.
As an Investment Manager, we aim to execute simple
things well while staying active and nimble throughout the
process. Our team is honoured to manage the Fund and
will continue to focus on ‘Doing More, Measuring More and
Reporting More’ to you, our investors.
10
Annual Report 2023
Annual Report 2023
FPT Corporation
Mobile World Investment Corp
Gemadept Corp
Phu Nhuan Jewelry JSC
Sacombank
Khang Dien House
Hai An Transport & Stevedori
Military Commercial Bank JSC
Vietnam Prosperity JSC Bank
Vietnam JS Commercial Bank F
Total
FPT Corporation
Sacombank
PV Technical Services JSC
Military Commercial Bank JSC
Vietcombank
Gemadept Corp
Phu Nhuan Jewelry JSC
IDICO Corp JSC
Ho Chi Minh City Securities
Asia Commercial Bank
Total
Top 10 companies as at 30 June 2023
Top 10 companies as at 30 June 2022
Sector
Sector
% NAV
% NAV
Top 10 Companies by NAV as at 30 June 2023 (and as at 30 June 2022)
Telecommunications
Banks
Oil and Gas
Banks
Banks
Industrial Goods and Services
Retail
Real Estate
Financial Services
Banks
12.6%
10.1%
6.9%
5.7%
5.7%
5.4%
5.1%
4.0%
3.6%
3.3%
62.4%
Telecommunications
Retail
Industrial Goods and Services
Retail
Banks
Real Estate
Industrial Goods and Services
Banks
Banks
Banks
11.5%
9.2%
8.5%
8.1%
5.6%
5.4%
5.4%
5.2%
4.6%
4.0%
67. 5%
Dynam Capital, Ltd
13 October 2023
Investment Manager’s Report (continued)
Strategic Report
11
Strategic Report
About the Company
Founded in 1988, FPT is a software developer that provides a range
of IT and telecom services to international and local companies.
The company has held the leading position in the local IT industry
in Vietnam since 1996, is a brand-name distributor and retailer of
IT and communication products, supplies broadband internet and
Pay-TV services, and operates educational programs in Science,
Technology, Education and Math (“STEM”) for 108,100 students at
various age-groups.
FPT has transformed itself from an IT services company to an end-
to-end digital transformation service provider and operates from
290 offices and branches across 29 countries (as of 31 December
2022) and continues to expand its overseas presence. Its digital
transformation services’ revenue reached a record USD 312m
in 2022. The company also owns and operates core telecoms
infrastructure in Vietnam with a main North-South backbone,
which has recently been upgraded from copper wire to fiber-optic
cables.
Financial indicators
(as at 31 December)
VietNam Holding’s investment
Share information
20212022
Capital (USD million)
Revenue (USD million)
EBIT (USD million)
NPAT (USD million)
Diluted EPS (VND)
Revenue growth
NPAT growth
Gross margin
EBIT margin
ROE
D/E
Date of first investment
Ownership
Percentage of NAV
Internal rate of return (annualised)
Stock Exchange
Date of listing
Market capitalisation (USD million)
Free float
Foreign ownership
10 December 2012
0.36%
12.6%
25.4%
HOSE
13 December 2006
4,027
84.4%
49%
390.1
1,532.7
232.8
229.9
3,618
18.6%
20.0%
38.2%
15.2%
26.7%
0.94
465.1
1,866.0
288.1
275.2
4,429
21.7%
19.7%
39.0%
15.4%
27. 8%
0.49
FPT Corp (“FPT”)
As at 30 June 2023
As of 31 December 2022, FPT employees 42,408 employees,
including 28,533 engineers and technology experts, across its eight
subsidiaries.
Recent Developments
Despite the challenging economic conditions, FPT achieved a
strong financial performance with revenue and profit after tax
of USD 1,866m and USD 275m, a 21.7% and 19.7% YoY growth,
respectively. Global outsourcing revenue was the main driver with
30.2% growth and the number of large contracts (over USD 5mn
in contract value) also rose significantly to 31 from 19 last year.
The US market grew the most, by 50% in 2022, and accounted for
35% of the total global outsourcing revenue. In domestic services,
FPT products also performed well with sales up by 54.3% YoY and
reaching USD 48.78mn.
The Education, Investment, and ‘others’ segment achieved USD
160mn in revenue and USD 60mn in profit before tax, an increase
of 68.6% YoY and 23.8% YoY, respectively.
Sustainability Strategy
FPT has developed a sustainable development strategy to ensure
the balance of economic development, community support, and
environmental protection. In terms of objectives and activities,
FPT has referred to Vietnam’s action plan to implement the 2030
commitments to sustainable development and GRI Sustainability
Reporting Standards.
ESG Achievements
FPT has chosen ten of the seventeen UN Sustainable Development
Goals (“SDGs”) that align most with its vision and values: No
Poverty, Good Health & Well-being, Quality Education, Gender
Equality, Clean Water and Sanitation, Affordable and Clean
Energy, Decent Work and Economic Growth, Industry, Innovation,
and Infrastructure, Reduced Inequality, and Partnerships For The
Goals.
FPT released its comprehensive environmental, social, and
governance (“ESG”) report for 2022 following GRI standards,
demonstrating its dedication to providing transparent information
to its investors, shareholders, and other stakeholders. The company
also strives to report on its water and energy consumption, indoor
air quality in the workplace, and diversity, equity, and inclusion
(“DEI”) metrics. FPT is in the top three Vietnamese Publicly Listed
Companies for corporate governance scores in the ASEAN region.
The company has been named on the ASEAN’s CG score list for two
consecutive years.
ESG Challenges
FPT has set targets for building green office buildings but has not
yet started measuring its total carbon emissions. In addition, as
human resources are a key success factor for IT companies today,
FPT will need to find ways to attract and retain talent in the face
of industry competition.
Top Five Portfolio Companies
12
Annual Report 2023
Annual Report 2023
About the Company
In 1991, STB became the first commercial joint-stock bank to be
established in Ho Chi Minh City. In 1996, it became the first bank
to issue shares to the public, then the first bank to be listed on
the Ho Chi Minh Stock Exchange in 2006. In 2012, it was subject
to hostile changes in the shareholder base and management
teams, followed by a merger with a weak bank in 2015. In 2017, a
new chairman and management team took over running the bank
and initiated a comprehensive restructuring plan approved by the
State Bank of Vietnam (“SBV”). Over the past five years, most of
the bank’s legacy problems have been resolved, with the balance
expected to be completed by the end of 2023 or early 2024
In 2022, STB ranked the tenth largest bank by assets in the industry
with an extensive network of 566 branches and transaction points.
STB implemented Basel II from 1 January 2020, committing to more
prudent risk management practices.
Financial indicators
(as at 31 December)
VietNam Holding’s investment
Share information
20212022
Capital (USD million)
Total Operating Income (USD million)
NPAT (USD million)
EPS (VND)
TOI growth
NPAT growth
ROA
ROE
CAR
NPL
Equity multiplier
Date of first investment
Ownership
Percentage of NAV
Internal rate of return (annualised)
Stock Exchange
Date of listing
Market capitalisation (USD million)
Free float
Foreign ownership
24 July 2020
0.5%
10.1%
6.0%
HOSE
13 July 2006
2,382
94.5%
26%
810.3
761.0
146.6
1,630
1.7%
26.2%
0.7%
10.8%
9.9%
1.5%
15.2
799.3
1,108.4
213.7
2,674
45.7%
45.8%
0.9%
13.8%
9.5%
0.9%
15.3
Sacombank (“STB”)
As at 30 June 2023
Top Five Portfolio Companies (continued)
STB has won many awards, including “
Most Innovative Retail Bank
in Vietnam
” from International Business Magazine, “
Vietnam’s
Best bank for medium and small sized enterprise
s” from Asia
Money, “
Most trusted bancassurance service provider in Vietnam
2022
” from Global Banking & Finances, “
Best Workplaces in Asia in
2022
” from HR Asia.
Recent Developments
In 2022, STB’s consolidated NPAT rose 45.8% YoY to USD 213.7
million, with total credit growing 13% YoY. The Non-Performing
Loan (“NPL”) ratio significantly improved to 0.9% of total credit
from 1.5% a year before, while loan loss coverage increased to
131% of NPLs. It has focused on clearing up bad debts, and the
proportion of the problem ‘legacy’ assets to total assets declined
to 4.3% in 2022 from 28.1% in 2016.
Sustainability Strategy
STB has pursued a sustainability-oriented corporate governance
model. In 2022, it continued to meet all the criteria of the
Corporate Sustainability Index (“CSI”) and was awarded the “Top
50 Corporate Sustainability Award 2023” from Nhip Cau Dau
Tu Magazine. STB has implemented environmental and social
management system (“ESMS”) in compliance with international
standards.
STB was the first private bank to implement Directive No 03/
CT-NHNN on promoting green credit growth, alongside three of
Vietnam’s state-owned commercial banks, including Vietcombank,
BIDV and Agribank.
ESG Achievements
STB has improved its sustainability report by following the GRI
standards. In addition, the company’s Board of Directors has
created committees and councils in compliance with the law and
in reference to best practices on corporate governance. The bank
has documented its environmental and social risk appetite and
developed a rigorous environmental and social impact assessment
process. The bank has also carried out an employee satisfaction
survey.
ESG Challenges
STB is aware of the national net-zero commitment and reports its
key environmental performance indicators in its annual report,
however, it could do better by estimating and disclosing its total
carbon emissions and consider the application of the Task Force
on Climate-related Financial Disclosures (“TCFD”) framework
to integrate climate into its governance and risk management
framework.
Strategic Report
13
Strategic Report
About the Company
PVS is a member of PetroVietnam (“PVN”) and one of few domestic
providers of technical services for the Oil & Gas industry. It is also
a company that is transitioning towards renewable energy services
in a significant manner. It holds majority stakes in offshore support
vessels (“OSV”) and floating storage (“FSO/FPSO”) vessels, with
a total fleet of 18 vessels, provides specialised mechanical and
construction (“M&C”) services and operates maritime supply
bases.
Recent Developments
PVS is transforming itself into a leading global contractor for
offshore wind power projects. In August 2022, PVS’s subsidiary,
PTSC M&C, signed an MoU with Orsted to collaborate on offshore
wind projects in Vietnam. Orsted is currently the world’s largest
developer of offshore wind power as it has a total installed
capacity of 7.5 GW with 11.8 GW either under construction or
awarded around the world. We believe the signing of this MoU will
help PTSC M&C to enter offshore wind power projects and develop
its capacity in this new field.
Financial indicators
(as at 31 December)
VietNam Holding’s investment
Share information
20212022
Capital (USD million)
Revenues (USD million)
EBIT (USD million)
NPAT (USD million)
Diluted EPS (VND)
Revenue growth
NPAT growth
Gross margin
EBIT margin
ROE
D/E
Date of first investment
Ownership
Percentage of NAV
Internal rate of return (annualised)
Stock Exchange
Date of listing
Market capitalisation (USD million)
Free float
Foreign ownership
5 September 2022
1.2%
6.9%
25.5%
HNX
20 September 2007
657
48.5%
20.8%
205.4
612.9
24.6
32.2
887
-29.9%
5.0%
6.1%
4.0%
5.9%
0.10
202.7
694.2
28.2
40.0
1,575
13.3%
24.2%
5.6%
4.1%
7.4%
0.11
PV Technical Services JSC (“PVS”)
As at 30 June 2023
In addition, revenues from traditional services for the Block B – O
Mon natural gas project will be a growth engine for the next 5
years. Block B – O Mon is one of the largest gas projects in Vietnam
to date. According to PVN, an estimated USD 19bn will be added to
the state budget during the project’s 20-year lifetime for upstream
and downstream projects.
Sustainability Strategy
Although classified in the oil and gas sector, PVS is transitioning its
business to supporting offshore wind power projects. The company
has signed MOUs with many partners to cooperate in developing
domestic as well as overseas projects. PVS is utilising its fleet of
specialised offshore vessels in the construction, operation, and
maintenance of nearshore windfarms in Ben Tre, Tra Vinh, and Ca
Mau provinces and offshore wind farms in Binh Thuan province.
The company has also secured two contracts overseas with total
value of USD 320mn.
ESG Achievements
The company is trying to improve its governance structure and has
sent its CEO and Board Members to attend corporate governance
courses organised by the Vietnam Institute of Directors. The
Health, Safety and Environmental (“HSE”) Management System
of PVS follows international standards and is certified by BSI
Group, and the company organises regularly HSE training for its
employees. There were no labour and environmental accidents
recorded in 2022.
ESG Challenges
As a state-owned company, PVS needs to improve its Investor
Relations (“IR”) activities. For example, much of the content on
the company’s website is not available in English yet. Governance
issues can also emerge when the company is largely controlled by
the State.
14
Annual Report 2023
Annual Report 2023
About the Company
MBB was founded in 1994 and is the sixth largest bank in Vietnam
by total assets. Its IPO took place in 2004 and it listed its shares
in November 2011. MBB is a well-regarded financial group with six
subsidiaries offering a full range of services, including banking,
securities, consumer finance, life insurance, non-life insurance,
fund management and asset management.
MBB is also one the most profitable banks in the sector, bolstered
by its advantages of extensive branch network, low funding cost,
and high CASA resulting from its large corporate enterprise client
base and support from its major shareholders. MB has consistently
committed to its prudent asset-quality management. It was one
of the first pilot banks in Vietnam to implement the Basel II since
April 2019.
MBB has won many awards, including “
Brand Vietnam Awards
2022
” form Branch Finance, “
Top 50 Best Listed Companies
”
from Forbes, “
Outstanding Performance Bank
” from Napas and
“
Outstanding Bank for Small and Medium Enterprises
” from
International Data Group (“IDG”).
Financial indicators
(as at 31 December)
VietNam Holding’s investment
Share information
20212022
Capital (USD million)
TOI (USD million)
NPAT (USD million)
EPS (VND)
TOI growth
NPAT growth
ROA
ROE
CAR
NPL
Equity multiplier
Date of first investment
Ownership
Percentage of NAV
Internal rate of return (annualised)
Stock Exchange
Date of listing
Market capitalisation (USD million)
Free float
Foreign ownership
25 May 2017
0.2%
5.7%
12.5%
HOSE
1 November 2011
3,883
58.9%
23%
1,624.0
1, 587. 6
568.3
3,133
33.9%
52.4%
2.4%
23.5%
11.3%
0.9%
9.7
1,922.4
1,933.1
769.8
3,856
21.8%
35.5%
2.7%
25.6%
11.5%
1.1%
9.2
Military Commercial Joint Stock Bank
(“MBB”)
Top Five Portfolio Companies (continued)
Recent Developments
In 2022, MBB’s consolidated NPAT increased by 35.5% YoY to
USD 769.8 million. Total credit expanded 25% YoY. Retail loans
constituted 48%, compared to 46% a year before, which implied a
robust growth of 32% YoY.
The Non-Performing Loan (“NPL”) ratio increased slightly to 1.1%
in 2022 from 0.9% in 2021, meanwhile loan loss coverage was
maintained at a high level of 238% of NPLs.
Sustainability Strategy
MBB has carried out guidelines from the Government and the
State Bank on environmental protection, social responsibility,
social risk management in credit activities, and green growth. MB
has integrated environmental and social impact assessments into
the processes for credit appraisal, supervision, and monitoring.
MBB has prioritised green projects, agriculture and forestry
projects, environmental and social projects, high technology, and
safe agriculture programs, and provided preferential interest rates
and conditions. In addition, MBB complies with the State Bank’s
regulations on lending to prioritised sectors including agriculture,
export, supporting industries, small and medium-sized enterprises
(“SME”s) and high technology businesses.
ESG Achievements
MBB is considered one of the most prudent and conservative banks
in the industry. It was among ten pilot banks to implement Basel
II since 2014, officially integrated these standards in 2016 and fully
applied the three pillars of the Basel II in 2020.
MBB was awarded the “
Outstanding Bank for Green Credit
” for its
pioneering role in green credit promotion and contribution to the
country’s sustainable development and environmental protection.
In 2022, green finance accounted for 8.7% of the total loan book.
ESG Challenges
MBB faces the competing challenges of maintaining loan quality
across its growing loan book and embedding ESG into its strategy
in a robust manner. Since 2020, MBB introduced its sustainable
development framework and outlined key opportunities and
challenges in terms of corporate governance and business ethics,
emission reduction, safety management and staff’s wellness,
environment, community, and social responsibilities.
As at 30 June 2023
Strategic Report
15
Strategic Report
About the Company
VCB was founded in 1963 and is one of four State Owned
Commercial Banks (“SOCB”s) in Vietnam, with the state owning of
74.8% of the company. Its IPO was in 2007 and it listed its shares
on the Ho Chi Minh Stock Exchange in 2009. In 2011, Japan Mizuho
Corporate Bank become its strategic partner with a stake of 15%.
As of 2022, VCB is the third largest bank in Vietnam by total assets,
with a market share of 9.6% of all loans and 10.7% of all deposits.
As a SOCB, VCB has significantly contributed to the stability and
growth of the domestic economy, upholding the role of a major
foreign trade bank in facilitating efficient domestic economic
growth and being a ‘thought leader’ in the national and regional
financial community. VCB is a universal bank, providing a full range
of financial services.
VCB has won a variety of significant awards, including “
Top 10
Strongest Brands in Vietnam
” from the Vietnam Economic Review;
“
Top 10 Prestigious Commercial Banks
” from Vietnam Report; “
Best
Risk Management Bank
” from International Finance Magazine,
“
Strongest bank by Balance sheet
” from Asian Banker. It was also
Financial indicators
(as at 31 December)
VietNam Holding’s investment
Share information
20212022
Capital (USD million)
Total Operating Income (USD million)
NPAT (USD million)
EPS (VND)
TOI growth
NPAT growth
ROA
ROE
CAR
NPL
Equity multiplier
Date of first investment
Ownership
Percentage of NAV
Internal rate of return (annualised)
Stock Exchange
Date of listing
Market capitalisation (USD million)
Free float
Foreign ownership
12 August 2022
0.03%
5.7%
24.5%
HOSE
30 June 2009
20,066
25.1%
24%
1,594.2
2,434.1
946.3
4,162
14.5%
18.3%
1.6%
21.7%
9.3%
0.6%
13.0
2,006.6
2,886.7
1,268.6
5,821
18.6%
34.1%
1.9%
24.4%
10.0%
0.7%
13.4
Vietcombank (“VCB”)
As at 30 June 2023
the only Vietnamese bank in The Banker’s global “
Top 500 leading
banks
”, the only Vietnamese Bank in the Asian Banker’s list of “
Top
30 Strongest Banks in Asia Pacific region
” from the Asian Banker,
and the only Vietnamese company on Forbes’ “
The World’s Top
1,000 Public Companies
”.
Recent Developments
In 2022, VCB’s consolidated NPAT increased 34.1% YoY to USD
1,268.6 million, the highest level of profitability among Vietnam’s
banks. Its total loan book increased by 19% YoY and total deposits
increased by 9% YoY, leading to a year-end stipulated loan to
deposit ratio of 74%. Despite supporting its borrowers by quickly
cutting interest rates, VCB was able to expand its Net Interest
Margin (“NIM”) from 3.15% in 2021 to 3.39% in 2022 by growing
its retail lending business. VCB was also able to maintain a robust
level of growth in its earnings, without sacrificing prudence - the
Non-Performing Loan (“NPL”) ratio was just 0.7% and the loan loss
coverage of NPLs was 317%.
Sustainability Strategy
VCB’s sustainability report was in line with the Global Report
Initiative (“GRI”) and reported on general information, economic
standards (GRI 200), environmental standards (GRI 300), social
standards (GRI 400), and disclosed information on its corporate
governance policy (GRI 100).
The bank has also embedded the State Bank of Vietnam’s guidelines
for environmental risk management in its credit activities and
is trying to promote social awareness of climate change and
environmental protection to its stakeholders.
ESG Achievements
In 2022, VCB’s efforts to make more ‘green’ loans and support
sustainable transition for key industries accounted for more than
4% of its total loan book, three times the level in 2019. It has also
contributed an average of USD 20 million per annum to social
welfare activities since 2000.
VCB was selected as the bank with the best working environment
in Vietnam according to the survey results of “Top 100 Best
Workplaces in Vietnam”.
ESG Challenges
VCB has consistently proven itself as the leading Vietnamese
bank in term of quality and operational efficiency. However, the
weak economic environment poses challenges to banks that are
trying to balance maintaining asset quality with seeking a greater
exposure to newer green finance initiatives, especially those in the
renewable energy sector.
16
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As the whole world is experiencing exponential change
in this post-pandemic era, we can see how challenging it
is to navigate the risks and the opportunities. However,
if there is one thing certain it is that the COVID-19 years
accelerated the focus on environmental, social and
governance (“ESG”) matters, and this is true in Vietnam.
As the public’s expectations continue to rise and change
fast, building sustainable business strategies is no longer
simply an option for any company.
The 2022 Edelman Trust Barometer global report
1
on
more than 36,000 respondents in 28 countries shows
that businesses are increasingly expected to fill the
voids left by governments and policy makers on climate
change, economic inequality, workforce reskilling and
racial injustice. According to the survey results, nearly
60% of consumers buy brands based on their values and
beliefs, almost 60% of employees choose a workplace
based on shared values and expect their CEO to take a
stand on societal issues, and 64% of investors look to back
businesses proven to be aligned with their stated values.
Nevertheless, 2022 was not a favourable year for ESG funds
and their performance suffered. After years of dramatic
growth, investment in ESG securities has declined sharply,
with research firm Morningstar reporting a 70% drop in
inflows compared to the year before and the number of
new funds launched down by 60%. The overall downfall in
many stock markets is certainly a factor, but the retreat
also coincides with a backlash against the entire ESG
concept in the United States, which stems mainly from
the argument that some financial companies no longer
make decisions in the best interest of their shareholders
or clients, but instead use their financial power to push
forward social and political agendas.
In Europe, several initiatives have been delayed, including
the development of social and transition taxonomies and
the adoption of remaining technical screening criteria for
the EU Green Taxonomy. In addition, the Russia-Ukraine
conflict has arguably shifted political dynamics around
eligible activities for the Green Taxonomy. Noteworthy,
in this regard, is the inclusion of gas and nuclear under
certain criteria.
New Wave of Regulatory Forces
Despite shifting priorities, there have been large steps
taken globally in implementing further ESG regulations.
Key trends include increased greater disclosure, a renewed
focus on ‘greenwashing’, and the expansion of related
priorities from climate change to other environmental
issues, such as biodiversity. Notable is the Taskforce for
Nature-related Financial Disclosure (“TNFD”), which has
been developed to supplement the TCFD by calling for
organisations to report and act on evolving nature related
Sustainability Report
1
2022 Edelman Trust Barometer Reveals Even Greater Expectations of
Business to Lead as Government Trust Continues to Spiral | Edelman
risks beyond climate change, with the aim of supporting a
shift in global financial flows away from nature-negative
outcomes and toward nature-positive outcomes. TNFD’s
40 Taskforce Members represent financial institutions,
corporates and market service providers with over USD
20trn in assets under management.
For Vietnam, rapid urbanisation and industrialisation
have had detrimental impacts on the environment and
natural assets. Climate change, urban solid waste, and air
pollution are key environmental issues that the Vietnamese
government is keen to address over the next few years. In
fact, 2021 and 2022 saw significant changes in Vietnam’s
green policy commitments. The country’s ambitious
net-zero targets for 2050 could be seen as a milestone,
paving a way for the transformational interventions
needed to address climate change challenges, including
the development of cleaner transportation and energy
systems.
Since the target was set, the government has taken firm
steps in building a legal corridor for responding to climate
change issues and implementing the commitments made.
Decree No.06/2022/ND-CP in January 2022 includes
regulations on the reduction of greenhouse gas (“GHG”)
emissions and protection of the ozone layer. This new
legislation specifies how companies will be given guidance
on the scheme and undergo a pilot operation that is
followed by a carbon credit trading market due to being
formally launched in 2028.
Additionally, in June 2022, Vietnam’s government approved
the circular economy development scheme and set several
ambitious targets. The scheme aims to reduce the intensity
of GHGs per GDP by at least 15% by 2030. By 2025, the
country aims to reuse, recycle, and treat 85% of plastic
waste, reducing half its plastic waste in oceans, as well the
volume of non-biodegradable plastic bags and disposable
plastic products in use.
In terms of energy development, in December 2022,
the Vietnamese government finalised the Just Energy
Transition Partnership with the G7 and others. The
partnership will mobilise an initial USD 15.5 billion of public
and private finance over the next three to five years and
aims to help Vietnam reduce its reliance on coal and
transition to renewable sources of energy through a mix
of loans, grants, technology transfers, and technical
assistance programmes. If the partnership meets its goals,
Vietnam will see peak GHG emissions by 2030 instead of
2035 and reduce its annual power sector emissions by 30%
by significantly increasing its reliance renewables.
Strategic Report
17
Strategic Report
In mid-May this year, the long-awaited National Power
Development Plan VIII (“PDP8”) was approved by the
Prime Minister, setting out ambitious goals for renewable
energy and liquefied natural gas (“LNG”) expansion in the
next three years to phase out coal after 2030. The scale of
the transition needed to meet the goals of PDP8 through
2030 and Vietnam’s commitment to net-zero emissions
by 2050 means there are enormous opportunities in
the energy sector, especially in developing energy
storage technologies, such as lithium batteries, pumped
hydropower, heat storage, and smart grids that aim to
ensure a high level of stability and integration of renewable
energy in the power system.
Following the ASEAN Taxonomy for Sustainable Finance,
Vietnam’s Green Taxonomy is also under the stakeholder
consultation process for finalisation. The Green Taxonomy
for green credit and green bond covers eight sectors, 83
green economic activities and green investment projects
with environmental screening criteria, thresholds, and
indicators, contributing to the eight environmental goals
in the Law on Environmental Protection.
ESG Moving up the Corporate Agenda in Vietnam
ESG awareness in Vietnam might have come later than
in the US and Europe, but the intuition and application
of practices have been growing steadily in recent years.
According to PWC Vietnam’s ESG Readiness report 2022,
about 80% of Vietnam’s companies have made related
commitments or plan to do so in the next two to four years.
The top reason cited for pursuing ESG is “brand image and
reputation” (82 %), while the second most cited reason is
‘to remain competitive’ (68%). Another report by KPMG
Vietnam, Vietnam’s Customer Experience Excellence 2022,
shows that up to 93% of customers in Vietnam are willing
to pay more for ESG-integrated products and services.
The report shows Vietnamese consumers are becoming
conscious of lifestyle choices and aware of the effects of
their consumption. These survey results speak volumes
about the increasing interest in ESG in Vietnam.
The country continues to emerge as an important alternative
manufacturing base to China, and its participation in
free trade agreements created more opportunities for
enterprises to be part of the global supply chain. ESG
considerations are prerequisites for many such deals, and
so compliance is necessary to remain competitive with
developed markets where green economy and compliance
standards are being continuously upgraded. Enhanced
sustainability reporting, following global standards, and
climate related disclosures, and preparing infrastructure
for a clean energy transition are the key ESG aspects that
Vietnamese enterprises need to focus on in 2023 and
beyond to meet the demand of investors, consumers, and
other stakeholders.
As a long-term, responsible investor, ESG integration has
always been at the heart of our investment approach. With
our motto ‘do more, measure more and report more’, we
have made substantial progress for the past one year in our
ESG journey. Our PRI Transparency Report for 2021 received
five-star scores, and our very first climate-risk assessment
report was featured in the Asia Investor Group on Climate
Change (“AIGCC”)’s Report on Net-zero investment in Asia,
the 4
th
edition. We also supported the successful inaugural
ESG Investment Conference in Vietnam as a gold sponsor
of the event held in early June this year. Our Investment
Manager continues to actively engage with companies on
improving ESG practices of investee companies and bring
the ones with good practices into the spotlight. What’s
more, the Investment Manager has developed a rigorous
ESG rating system that can be used for both company
assessment and engagement.
VNH’s New ESG Scorecard
After almost two years of pilot testing, our Investment
Manager has developed its own holistic ESG rating
framework to be included throughout the investment
process. The new ESG Scorecard has 80 questions covering
a wide variety of ESG factors that we consider material to
a company from an investor perspective, including board
of directors structure and composition, shareholder rights,
risk management, internal control, employee policies
and customer rights, diversity and inclusion, community
outreach, environmental protection, and climate change
commitments. With the new scorecard, we expect to
understand potential risks and opportunities of an investee
company better through an ESG lens. In fact, during the
financial year, we have made several decisions to increase
or decrease our investment value in several stocks based
on these ESG factors, such as discovering emerging
opportunities in the clean energy transition or finding out
an issue in customer privacy that might cause a drop in a
stock value.
Vietnam’s Evolving Climate Change Initiatives
According to the recent report by the United Nations
in March 2023, Vietnam remains one of the 20 most
vulnerable countries to climate change. In 2022, Vietnam
experienced some of the worst environmental impacts
it had seen since 2007 from typhoon Noru and tropical
storm Sonca. The report highlights the risk of further
rapid decline in biodiversity, depletion of natural resources
and damaged ecosystems, making the country more
vulnerable to climate change and its socioeconomic
implications. The country was estimated by the World
Bank to lose about USD 10 bn in 2020, or 3.2% of its gross
domestic product, to climate impacts. By 2050, the costs
to the economy generated by climate change could total
as much as USD 523 bn. The World Bank suggests that
the current economic models are not the ones that will
18
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Annual Report 2023
Sustainability Report (continued)
bring Vietnam to a green, sustainable, and equitable
future
2
. Although the country is not among the highest
GHG emitters globally, it has shown one of the fastest
growth rates in per capita GHG emissions since Vietnam’s
economy is powered primarily by fossil fuels. Therefore,
the country needs systematic changes if it is to effectively
address the impacts of climate change.
At COP26, Vietnam made a strong commitment
to achieving its net-zero target by 2050. Since that
conference in Glasgow in 2021, the government’s efforts
in driving its energy strategies and relevant policies
have shown the country’s willingness to address climate
change issues by itself. According to Vietnam’s National
Climate Change Strategy (“NCCS”) to 2050, announced
by the government in July 2022, Vietnam’s GHG emissions
will peak in 2035 and reduce rapidly by 60-90% across
all sectors. Later in November 2022, the Nationally
Determined Contribution (“NDC”) stated to the UNFCCC
that by 2030 Vietnam will reduce its GHG emissions by
15.8% unconditionally (by its own national effort and
resources) and by 43.5% conditionally (with international
support).
The Fund’s Stewardship Role
As a long-term investor focused on the Vietnamese
market, we support the efforts of the government and
the business sector in Vietnam to address climate change
and its socioeconomic effects. During the financial year,
our Investment Manager has been actively contributing
to the national and regional dialogue to drive forward
the net-zero transition. Our efforts for managing the
portfolio’s carbon emissions and climate risks have been
featured in the AIGCC’s 4
th
edition of Net-zero Investment,
and the Investment Manager had the opportunity to
present the key highlights of Vietnam’s climate change
and energy policies to the Asian investment community
in the workshop hosted by AIGCC.
Climate change is also the main topic for engagement
with companies in our portfolio. Followed by the webinar
in 2022, the Investment Manager has been working with
companies to help them prepare for their ESG and carbon
footprint reports. We are happy to see that the number
of portfolio companies reporting their total carbon
emissions has increased this year, some of which have
decided to do so after our engagement meetings, for
example, PNJ and GMD.
As we navigate to a net-zero world, VNH has identified its
focus points for climate change over the next two years:
Vietnam’s Evolving Climate Change Initiatives
(continued)
2
Vietnam Country Climate and Development Report (worldbank.org)
Continue to measure and track the portfolio’s
carbon footprint to identify carbon-intensive sectors,
integrate climate risks and opportunities into our
broader risk management framework, and identify
investment opportunities in low-carbon sectors;
Improve our climate related disclosures following
the guidelines of the Task Force on Climate-related
Financial Disclosures; considering disclosures following
the guidelines of the Task Force on Nature-related
Financial Disclosures; and
Encourage more companies in the portfolio to
measure their total carbon emissions and to create a
decarbonisation roadmap.
VNH’s Task Force on TCFD
2023 is the second year we have assessed the climate risks
of the portfolio and this time with lessons learnt from the
first one. VNEEC, a Vietnamese environmental consultant,
was engaged to estimate total carbon emissions of all
listed companies in the VNH portfolio as of 31 December
2022. This was followed by an assessment of the portfolio’s
climate risks and alignment with the Paris Agreement goals
using scenario analysis and the implied temperature rise
metric. We also went deeper into estimating the impact
value of companies that are more susceptible to transition
risks, according to the assessment report, and integrated
that data into our financial models. Our response to
the core elements of the TCFD recommendations are
summarised in the following sections.
Leading Sustainable Governance
VNH’s board publicly announced its support of the Paris
Agreement and the Task Force on Climate-Related Financial
Disclosures in 2021. During the Annual General Meeting
in 2021, the Board also endorsed a belief statement for
climate, which was later published through media release
and the Fund’s website.
Additionally, the Company’s ESG Committee has been
working closely with the Investment Manager to enhance
its investment strategy by further incorporating climate
related risks and opportunities into the investment process
and overall risk management.
Sustainability matters are also incorporated into the
reports sent to investors. In addition, board members
and directors of the Investment Manager have attended
seminars and training in the UK and Asia on climate and
sustainability issues and continue to advocate for greater
adherence and involvement from peers. The Investment
Manager promotes and supports climate initiatives
through industry bodies, such as the AIC, the Singapore
•
•
•
Strategic Report
19
Strategic Report
Portfolio carbon footprint is the key metric we use
to measure and keep track of our progress towards
reducing carbon emissions. Our target is to keep the
portfolio carbon footprint 20% below the benchmark
index, the Vietnam All share Index (“VNAS”), and
in 2020 and 2021, the portfolio’s footprint was an
average of 40% below the index’s. In 2022, this target
was not achieved due to the Fund’s investment in two
oil and gas stocks that we see having great potential
in transitioning to net-zero. As explained above, the
largest of these, PVS, has concrete plans in place to
adapt its business model in support of clean energy,
and the Investment Manager has been carefully
monitoring the company’s new projects.
We will continue to work collaboratively to keep the
global average temperature from rising above 2°C
or higher than pre-industrial levels. Our target is
measured by the implied temperature rise of the
portfolio and the number of climate initiatives that
we support through communications, policy dialogue,
•
•
Institute of Directors, AIGCC, and the Vietnam Institute
of Directors (“VIOD”), which is a member of the ASEAN
Network for Climate Governance.
Strategy for 2021-2025
As most Vietnam’s companies are at the early stage of
incorporating climate change into their business strategies,
we continue to focus our engagement activities on raising
portfolio companies’ awareness and providing them with
guidelines to measure their total carbon emissions and
adopt or develop low-carbon technology.
We identify physical risks, for example, acute weather
events, as well as transition risks, which include policy, legal
and market risks. We do this across sectors in accordance
with our core investment themes: industrialisation,
urbanisation, and the domestic consumer. In our analysis,
we prioritise the best-in-class companies in terms of
their adoption of technological solutions to lower carbon
emissions and their disclosures on carbon footprint in their
annual reports, favouring those that prove to be engaged
in strong climate-resilient strategies.
Based on the United Nations Environment Programme
Finance Initiative (“UNEP FI”), which assesses the sector
transition risk exposure in terms of direct and indirect
emission costs, low carbon capital expenditure and
change in revenue, the largest portion of VNH’s portfolio
in 2022 (43% of the NAV) is allocated in the financial and
information technology sector. This sector is categorised
as “low” transition risks, while another 41% of the portfolio
is invested in sectors with “moderate” exposure ratings.
In the financial year, the Fund has invested in two stocks
in the oil and gas sector, which is categorised as “high”
risk exposure. However, PVS, the largest of these two
companies, is transitioning its business to support offshore
wind power projects and has signed MOUs with many
partners to develop domestic as well as overseas green
energy projects. PVS is also utilising its fleet of specialised
offshore vessels in the construction, operation, and
maintenance of nearshore windfarms in Ben Tre, Tra Vinh
and Ca Mau provinces and offshore wind farms in Binh
Thuan province. To date, it has secured two contracts
overseas with a total value of USD 350m.
The portfolio’s implied temperature rise calculation is
based on the two models developed by the Climate
Action Tracker
3
. The first is the domestic modeled
pathway, which is in line with the Vietnamese
government’s net-zero commitment made in 2021
and centered on Vietnam reducing its emission to
86.8 MtCO
2
e (excluding LULUCF
4
in 2050) to reach the
1.5°C target. The data for this was updated in 2022. The
3
https://climateactiontracker.org/
4
LULUCF is the abbreviation of “Land use, land-use change and
forestry”. The reasons for focusing on emissions excl. LULUCF because of
the importance of decreasing CO
2
and other GHG emissions from fossil
fuel combustion, industry, agriculture and waste sources, and because
of large data uncertainty around LULUCF emissions data.
second model is the effort-sharing model, which sets the
budget considering each country’s economic capabilities.
Based on the calculation of VNEEC, VNH’s 2022 portfolio is
3.71°C and 2.21°C for the domestic and the effort-sharing
pathways, respectively. This means that the implied
temperature rise of VNH’s 2022 portfolio is higher than 2°C
and is not aligned with the effort-sharing model nor the
domestic one. Nevertheless, the report by VNEEC indicates
that VNH’s implied temperature rise is still better than
those in developed and emerging markets.
Risk Management
The ESG Committee works closely with the Audit and Risk
Committee and the Investment Manager to incorporate
climate risks into the overall risk management framework
(see page 26).
The Investment Manager integrates climate risk assessment
into every stage of the investment processes from initial
screening and due diligence to investment decision and
monitoring. Risks as well as the opportunities they present
are discussed regularly during the Investment Committee’s
meetings and managed at the portfolio level.
Metrics and Targets
20
Annual Report 2023
Annual Report 2023
Sustainability Report (continued)
Metrics and Targets (continued)
company engagement, and networking. Although the implied temperature rise of the 2022 portfolio is higher than
2°C, we are offsetting this by actively joining in policy dialogue, supporting climate initiatives, and accelerating our
engagement with companies to help them with their own transitions.
From 2022 onwards, we will annually conduct more quantitative analysis to assess the climate risk exposure of the
portfolio and how such risks are translated into financial impacts, for example, the potential financial loss from physical
risks, carbon price and their effect on performance. We will also identify businesses and investment opportunities that
can benefit from this transition risk process. We use the Weighted Average Carbon Intensity (“WACI”) metric to assess
the portfolio’s exposure to carbon-intensive companies expressed in tCO
2
/$M revenue, and this is calculated at 178.23
tCO
2
/$M for VNH’s 2022 portfolio based on Scope 1 and 2 emissions of all companies. VNH’s WACI is more impressive
than the MSCI Emerging Market Index’s, being approximately 51% less carbon intensive, and slightly higher than the
MSCI World Index which only includes the developed countries, such as the US, Western Europe, and Japan.
In the long term, from 2025, and with shareholder approval, we will set a firm target percentage for low-carbon
investment in our portfolio.
•
•
•
Portfolio Carbon Footprint
The attributable carbon footprints of portfolio firms are compared to the attributable carbon footprints of an identical
amount invested in companies in the VNAS. The VNH portfolio’s carbon footprint in 2022 is 5.6% higher than the VNAS
benchmark. More specifically, the total carbon emissions of the VNH 2022 portfolio are 20,539 tCO
2
e, whereas a comparable
investment in VNAS would produce 19,455 tCO
2
e. In other words, the VNH portfolio released 1,084 tCO
2
e higher than the
VNAS Index benchmark. The portfolio’s sector allocation resulted in -14.9% (equal to 2,906 tCO
2
e) less carbon-intensive
emissions than the benchmark’s weighted emission. However, the portfolio’s stock selection is 20.5% (equal to 3,990 tCO
2
e)
more carbon-intensive than the benchmark’s weighted emission. In terms of carbon emissions, the two new oil and gas
equities are the primary contributors to the portfolio’s underperformance against the VNAS benchmark.
Total Emissions Scope 1 and 2 (tCO
2
e)
Total Emissions Scope 1, 2 and 3 (tCO
2
e)
Carbon footprint (tCO
2
e/ USDM Invested)
Difference between
VNH Portfolio vs.
VNAS benchmark
1,084
901
5.6%
VNAS benchmarkVNH Portfolio
19,455
39,978
184.54
20,539
40,879
194.83
The UN’s 17 Sustainable Development Goals
The 17 Sustainable Development Goals (“SDGs”), also known as the Global Goals, were adopted by the United Nations
(“UN”) in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy
peace and prosperity. With only less than a decade left, it is crucial that we accelerate our actions if we are to make any
meaningful change. The country’s Voluntary National Review shows that Vietnam is currently on track to achieve four of the
17 SDGs that the country has committed to for the 2030 Agenda. These include SDG 1, “No poverty”; SDG 6, “Clean water
and sanitation”; SDG 9, “Industry, innovation and infrastructure”; and SDG 10, “Reduced inequalities”. 2022 marked the 45th
Anniversary of Vietnam’s relationship with the UN, and together with the Government of Vietnam, the UN launched a new
five-year Sustainable Development Cooperation Framework (“CF”) for the 2022 to 2026 period.
The CF specifies four priority outcomes linked to SDG goals for Vietnam for the next three years, namely inclusiveness and
social development; climate-change response and disaster resilience; environmental sustainability and shared prosperity
through economic transformation; and governance and access to justice. Progress will be measured against 46 outcome
and 57 output indicators. We have already seen the UN expand its dialogue in Vietnam to encourage private sector firms to
incorporate the UN principles of responsible business into their operations.
We consider the 17 SDGs to be the most holistic framework that companies can start with in developing their sustainability
strategy. We are pleased to see that the SDGs have been incorporated in many of our portfolio companies’ annual reports,
with detailed illustrations of how the SDGs are embedded in their business activities and corporate culture.
Strategic Report
21
Strategic Report
For example, FPT, the largest holding in VNH’s portfolio, contributes greatly to SDG 4, “Quality Education”, with their
extensive education programmes for staff, their families, and communities. In their 2022 annual report, FPT reported on the
10 SDGs that the company focuses on most with specific results for each goal.
GMD, another company in our portfolio, has also made efforts to align its business with the SDGs, especially SDG 9, “Build
resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation with its extensive green
smart port ecosystem” and SDG 13, “Climate Action”.
Additionally, the banking sector, which at 30 June 2023 accounts for around 30% of VNH’s portfolio, has made significant
progress in contributing to the SDGs in recent years, for example, by providing more loans and products to support climate
change, energy transition and underprivileged groups. Vietnamese banks also have been improving their sustainability
disclosures. For example, Vietnam Prosperity JSC Bank (“VPB”), the “greenest” bank in our portfolio, has taken many
steps to improve its environmental and social management by following international standards and adopting the TCFD
framework. VPB has set targets to reach net-zero emissions in its operations by 2027 and plans to meet this by maintaining
its loan balance for coal related activities under 0.5% of total portfolio, raising a minimum of USD 1bn in green finance to
support clients in their climate change efforts; and ultimately aiming to achieve zero-loan balance for coal related activities
and net-zero financings by 2050. STB, our second largest holding, has been actively embedding the SDGs into its business
strategy and risk management system and reports its progress on this through its adoption of the GRI standards.
Among our portfolio companies, CTG, FPT, MBB, PNJ and VPB are the ones in the Vietnam Sustainability Index (“VNSI”)
2023, which features the top 20 sustainable listed companies on HOSE measured in terms of their ESG contributions. DGW,
PNJ and CTG are investee companies that made it in the top 100 sustainable companies in Vietnam having been included in
the Corporate Sustainability Index 2022 developed by the Vietnam Business Council for Sustainable Development (“VBCSD”)
under the Vietnam Chamber of Commerce and Industry (“VCCI”).
The Importance of G in ESG
Corporate Governance (“CG”) is an integral part of any successful business as it guarantees accountability, transparency,
and ethical behaviours. As an investor, we highly value companies that prove good corporate governance practices. The CG
part in our ESG scorecard has been developed based on both national regulations and international guidelines, including
the Law on Enterprises, the Law on Securities, Decree 155 on corporate governance of public companies, Circular 96 on
disclosure of information of public companies, the International Finance Corporation’s (“IFC”) CG Code of Best Practices
for public companies, and the ASEAN CG Scorecard. It covers a wide range of governance issues, including board structure,
company’s commitment to corporate governance, risk management and control system, transparency and disclosure,
shareholder rights and board oversight of environmental and social issues.
With Vietnam’s equity market coming closer to being upgraded to an emerging market status, and therefore potentially
attracting even more foreign investment, many companies have applied the World’s Bank’s IFC ESG guidebook and other
international guidelines to improve their corporate governance framework. We have observed significant improvements
over the past year in board-level oversight of ESG issues at our portfolio companies. At least three companies in our top
ten holdings have set up a dedicated board committee to address key ESG matters, and many have sent their directors
to corporate governance training courses, hosted by the IFC and VIOD, to help them drive effective sustainable strategies.
In addition, we have been pleased to see enhanced investor relations activities and greater transparency across all our
portfolio companies. For example, with monthly performance updates and quarterly reports, as well as more content
available in English. As noted above, we also are seeing more sustainability reports from companies following GRI standards,
and this includes better investor relations support to address questions from investors. FPT, our biggest holding, is in the Top
3 Vietnamese Publicly Listed Companies for best corporate governance scores in the ASEAN region. It has been named on
the ASEAN’s CG score list in two consecutive years.
Dedicated Company Engagement Program
The Investment Manager actively sets up face-to-face meetings with several portfolio companies through the Company
Engagement Programme to discuss business strategy and how ESG issues are addressed. During the financial year, the team
continued to have in-depth meetings with GMD and PNJ to help improve their ESG practices with practical solutions in the
short and medium term. Through different conversations, we saw the willingness and strong commitment from the boards
22
Annual Report 2023
Annual Report 2023
Sustainability Report (continued)
Dedicated Company Engagement Program (continued)
of these companies in driving the overall sustainability agenda for their business. Both PNJ and GMD have established an
ESG committee under the board and developed three-year plans for carrying out a sustainability strategy.
Shareholder Voting
During the financial year, the Company voted at the Annual General Meetings (“AGM”) on every portfolio company in which
it held an equity position. This year the AGMs were held in both online and offline modes. The Investment Manager attended
22 AGMs on behalf of the Company and voted 100% in favour of all agenda items. The Investment Manager considered
each issue based on its merits related to the strategic objectives of the investee company and its long-term performance.
As part of its usual practice, the Investment Manager discusses the agenda items with each of the investee companies’
board of directors. In all cases during the past year, the Company voted for every agenda item proposed by the companies’
boards of directors.
Membership and Partnership to Promote ESG Practices
PRI
The Company’s investment policy is aligned with the United Nations’ Principles on Responsible Investing (“PRI”), which the
Company has been a signatory of since 2009. Each year, the Company reports on its responsible investment activities through
the PRI Transparency Report. In its 2021 report, the Company received five-star scores for all sections. The improvement in
active ownership activities was noted, particularly in some of our criteria, such as the engagement approach, escalation
strategy, number of companies engaged with, the topics covered, and the way we share insights from engagements with
our stakeholders.
Vietnam Institute of Directors
Mr Vu Quang Thinh, the CEO of Dynam Capital, is a founding member of VIOD, a professional organisation promoting
corporate governance standards and best practices in the Vietnamese corporate sector. VIOD was legally formed in 2018
with technical support from the IFC, which is a member of the World Bank Group and the Switzerland’s State Secretariat for
Economic Affairs (“SECO”). Governed by a board of directors comprised of various private sector representatives, VIOD has
close collaboration with and is supported by the State Securities Commission of Vietnam (“SSC”), HOSE and HNX under the
Vietnam Corporate Governance Initiative (“VCGI”). With the support of SSC, VIOD will continue to represent Vietnam for
participation in the ASEAN Corporate Governance Scorecard. Our close collaboration with VIOD will continue to play a key
role in fostering good corporate governance in Vietnam over the coming years.
Asia Investor Group on Climate Change
Dynam Capital, our Investment Manager, is a member of AIGCC. Dynam Capital signed on the 2022 Global Investor
Statement to Governments on the Climate Crisis with more than 602 investors representing almost USD 42tn in assets under
management to raise their climate ambition and implement meaningful policies to address the climate crisis. In addition,
Dynam Capital has been applying AIGCC’s Investor Climate Action Plan to set out VNH’s climate strategy, while regularly
attending AIGCC’s monthly member meetings (including training sessions) on climate change.
Supporting local initiatives
In the financial year, the Investment Manager promoted greater ESG awareness in Vietnam through supporting Vietcetera
and Raise Partners, the two young organisations that hosted the very first ESG Investor Conference in Vietnam. The
Investment Manager also helped strengthen the sustainability conversation in Vietnam through published articles in the
Vietnam Investment Review (“VIR”) magazine, and Dear Our Communities, a start-up that produces podcasts and creative
media to help young people in the country learn more about sustainability issues and relevant career opportunities.
Strategic Report
23
Strategic Report
Principal Risks and Risk Management
The Board has carried out a robust assessment of the Company’s emerging and principal risks and considers with the
assistance of the Investment Manager the risks and uncertainties faced by the Company in the form of a risk matrix and
heat map. The investment management of the Company has been delegated to the Company’s Investment Manager.
The Investment Manager’s investment process takes into account the material risks associated with the Company’s
portfolio and the holdings in which the Company is invested. The Board monitors the portfolio and the performance of
the Investment Manager at regular Board meetings. The principal risks and the descriptions of the mitigating actions
taken by the Board are summarised in the table below.
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 the
behaviour of domestic and international investors.
Parts of the portfolio may be prone to enhanced
liquidity and price risk.
The Board is regularly briefed on political and economic
developments by the Investment Manager. The
Investment Manager publishes a monthly report on the
Company which includes information and commentary
on the macroeconomic developments in Vietnam.
The inherent liquidity levels in the portfolio have been
considered explicitly in the viability of the Company and
the Board is reasonably satisfied that even in periods of
distress and low liquidity there would be an adequate
level of assets that could be realised to meet the
liabilities of the Company as they fall due.
The Board has noted that the underlying market liquidity
in Vietnam has increased dramatically during the last
year, and the portfolio composition has also included a
higher percentage of larger and more liquid companies.
Key Risk Description Mitigating Action
Market Risk
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.
The Investment Manager keeps shareholders and other
potential investors regularly informed on Vietnam in
general and the Company’s portfolio in particular. At
each Board meeting the Board receives reports from
the Investment Manager, from Cavendish Securities
plc, its broker, and is updated on the composition of the
shareholder register. In 2019 the Company migrated its
domicile from Cayman Islands to Guernsey and moved
its trading from AIM to a premium listing on the Main
Market of the LSE in order to make the shares attractive
to a wider audience of potential investors. In seeking to
narrow the discount, the Board has also implemented
an on-going share buy-back programme.
Investor
Sentiment
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.
The Board receives regular reports on the performance
of the portfolio and its underlying assets. The
Investment Manager reports to the Board at each Board
meeting, and the Board monitors the performance of
the Investment Manager.
Investment
Performance
24
Annual Report 2023
Annual Report 2023
Principal Risks and Risk Management (continued)
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.
The Board reviews the valuation of the portfolio with the
Investment Manager regularly.
The daily estimated NAV is calculated by the Investment
Manager.
The monthly NAV is calculated by the Fund Administrator.
Key Risk Description Mitigating Action
Fair Valuation
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.
The Board maintains a close contact with the
Investment Manager and reviews the performance of
the Investment Manager on a regular basis.
Investment
Management
Agreement
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.
The Board receives regular reports from the Investment
Manager and Fund Administrator on their policies,
controls, and risk management.
Operational
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 polices were breached.
The Company is administered in Guernsey by a Fund
Administrator which reports to the Board at each Board
meeting on compliance matters. The Board receives
training and updates on compliance matters. The
Investment Manager is regulated in Guernsey and has
extensive compliance and risk management policies in
place.
Legal and
Regulatory
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.
The Board and the Investment Manager learned many
valuable lessons during COVID-19 - the Board remains in
regular contact with the Investment Manager, receiving
regular updates on the development of any new
threats whilst continuing to ensure that the key service
providers to the Company all have functional Business
Continuity Plans.
Pandemic Risk
Strategic Report
25
Strategic Report
Climate change is happening faster than models
earlier predicted, threatening the safety of billions of
people on the planet. Vietnam is one of the twenty
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 carbon intensive activities and may necessitate a
significant, and costly, technology shift.
The Board, through the Investment Manager, has
engaged a specialist consulting firm in Vietnam to
help estimate the portfolio’s carbon footprint and
identify the carbon-intensive sectors. The Investment
Manager has undertaken to analyse the physical and
transition risks of climate-sensitive industries to develop
an appropriate investment and engagement strategy
and to encourage investee companies to do more on
climate-related risk assessment and disclosures. The
Investment Manager monitors investee companies that
are identified to be at high climate risk.
The Investment Manager is a member of the Asia
Investor Group on Climate Change and keeps abreast
of the changes in policies that may impact transition
and other climate-related risks. The Board is in regular
contact with the Investment Manager and receives
reports through the ESG Committee and the Audit and
Risk Committee.
Key Risk Description Mitigating Action
Climate Risk
New risks beyond those identified as Principal Risks can
develop. These Emerging Risks may have a detrimental
or existential impact on the Company.
The Board reviews the risk matrix and risk register
that captures and tracks emerging risks as part of its
overall risk management practices. Emerging Risks are
identified and recorded with a description of their root
cause, a risk assessment, a description of mitigating
actions, a monitoring plan, and a net risk rating.
Changes in risk ratings are presented to the Board on
a quarterly basis. There are no emerging risks to bring
to the attention of the shareholders at the date of the
Annual Report.
Emerging Risks
26
Annual Report 2023
Annual Report 2023
Name Stock Exchange
Disclosure of Directorships in Public Companies Listed on Recognised Stock Exchanges
All of the Directors are Non-executive Directors and the majority are independent of the Investment Manager.
Hiroshi Funaki (Chairman)
Mr Funaki has been actively involved in raising, researching and trading Vietnam funds since 1995. He worked at Edmond de
Rothschild Securities from 2000 to 2015 where he led the Investment Companies team, focusing on Emerging Markets and
Alternative Assets. Prior to that he was Head of Research at Robert Fleming Securities, also specialising in closed-end funds.
He currently acts as an investment adviser to a Family Office. He has a MA in Mathematics and Philosophy from Oxford
University and is a UK resident.
Philip Scales (Audit and Risk Committee Chairman)
Mr Scales has over 40 years’ experience working in offshore corporate, trust, and third-party fund administration. For 18
years, he was managing director of Barings Isle of Man (subsequently to become Northern Trust) where he specialised
in establishing offshore fund structures, mainly in the closed-ended arena (both listed and unlisted entities). Mr Scales
subsequently co-founded FIM Capital Limited where he is Deputy Chairman. He is a Fellow of the Institute of Chartered
Secretaries and Administrators and holds a number of directorships of listed companies and collective investment schemes.
He is an Isle of Man resident.
Sean Hurst (Senior Independent Director and Remuneration and Nomination Committee Chairman)
Mr Hurst was co-founder, director and chief investment officer of Albion Asset Management, a French regulated asset
management company, from 2005 to 2009. He is an experienced multi-jurisdictional director including roles at Main Market
and AIM-listed funds and numerous offshore and UCITS funds. He is currently non-executive chairman of both JPEL Private
Equity Ltd and DCI Advisors Ltd. Mr Hurst was formerly a non-executive director of AIM-listed ARC Capital Holdings Ltd, The
CIAM Fund (SICAV) and The Satellite Event-Driven UCITS Fund. He holds an MBA in Finance from CASS Business School in
London and is a resident of France.
Damien Pierron (Management Engagement Committee Chairman)
Mr Pierron is currently Managing Partner at Ankaa Ventures, a Venture Capital firm active in Seed stage in Europe. In his
last position, he was a managing director in Societe Generale. Mr Pierron has over 20 years’ experience in M&A and Private
equity gained at, among others, Lafarge Holcim, OC&C Strategy Consultants, Natixis and Societe Generale. He is a CFA
charterholder and holds an Engineering Degree in Mathematics, Physics and Economy from Ecole Polytechnique in Paris and
a Master’s Degree in Quantitative Innovation from Ecole Nationale Superieure des Mines de Paris. He is a Dubai resident.
Saiko Tajima (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 9 years, she has invested in and helped develop tech start-ups in Tokyo, Seoul, and Sydney. She is a Certified Public
Accountant in the US and is a UK resident.
Sean Hurst London
London
Philip Scales Channel Islands
Director Profiles and Disclosure of Directorships
Company Name
JPEL Private Equity Ltd
DCI Advisors Ltd
First World Hybrid Real Estate plc
Governance
27
The Directors are responsible for the determination of
the overall management of the Company including its
investment policy and strategy. This includes the review
of investment activity, performance and control and
supervision of the Investment Manager and other advisers.
The Directors are all non-executive and the majority are
independent of the Investment Manager.
The Board is also responsible for its own composition,
capital raising, meeting statutory obligations and public
disclosure, financial reporting and entering into any
material contracts on behalf of the Company.
The Directors have access to the advice and services of the
Administrator and Secretary, who are responsible to the
Board for ensuring that Board procedures are followed and
that it complies with Company Law, applicable rules and
regulations of the Guernsey Financial Services Commission,
the London Stock Exchange and The International Stock
Exchange.
Where necessary, in carrying out their duties, the Directors
may seek independent professional advice at the expense
of the Company.
The Board of the Company has considered the Principles
and Provisions of the Association of Investment Companies
Code of Corporate Governance issued in February 2019
(“AIC Code”). The AIC Code addresses the Principles and
Provisions set out in the UK Corporate Governance Code
(the “UK Code”), as well as setting out additional Provisions
on issues that are of specific relevance to the 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 more relevant information
to Shareholders. The Board considers by reporting against
the AIC Code, they are meeting their obligations under the
UK Code, the 2011 GFSC Finance Sector Code of Corporate
Governance and associated disclosure requirements under
paragraph 9.8.6 of the Listing Rules.
The AIC Code is available on the AIC website (www.theaic.
co.uk). It includes an explanation of how the AIC Code
adapts the Principles and Provisions set out in the UK Code
to make them relevant for investment companies.
Except as disclosed within this report, the Board is of the view
Corporate Governance Report
that the Company complied with the recommendations of
the AIC Code and the relevant provisions of the AIC Code
during the year ended 30 June 2023. 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.
The AIC Code includes a provision relating to the
appointment of a Senior Independent Director and the
Board confirms that Sean Hurst is the appointed Senior
Independent Director of the Company. Liaison with
Shareholders is dealt with mainly by the Chairman of the
Company and the Senior Independent Director working
closely with the Company’s Advisors.
Directors’ Responsibilities to Stakeholders
Section 172 of the UK Companies Act 2006 applies directly
to UK domiciled companies, however the AIC Code requires
that the matters set out in Section 172 are reported by all
companies, irrespective of domicile. This requirement does
not conflict with the Companies Law in Guernsey.
Section 172 recognises that Directors are responsible for
acting in a way that they consider, in good faith, is most
likely to promote the success of the Company for the
benefit of its shareholders as a whole. In doing so, they are
also required to consider the broader implications of their
decisions and operations on other key stakeholders and
their impact on the wider community and the environment.
Key decisions are defined as those that are material to
the Company, but also those that are significant to any
of the Company’s key stakeholder groups. The Company’s
engagement with its key stakeholders is outlined on page
32 of the corporate governance section of this report.
Board Independence and Composition
The Directors are all non-executive and the majority are
independent. Four of the Board members were appointed
in September/October 2017 following the retirement of the
previous Board and the fifth member was appointed in
May 2019 following the retirement of a Board member at
the 2018 AGM.
Mr Funaki is a Director of Discover Investment Company
which holds 1,415,776 ordinary shares in the Company
representing 5.01% of the issued share capital. The Board
are satisfied that this does not have any impact on Mr
Funaki’s independence as a Director of the Company.
28
Annual Report 2023 Governance
Annual Report 2023
As detailed in note 8 of the financial statements, Directors own shares in the Company as follows:
Corporate Governance Report (continued)
Board Independence and Composition (continued)
Hiroshi Funaki
Sean Hurst
Philip Scales
Damien Pierron
Saiko Tajima
19,887
5,312
10,077
4,644
5,000
The Board reviews the independence of the Directors regularly and at least annually.
The Board acknowledges the benefits of greater diversity and welcomes the recommendations from the Hampton-
Alexander Review on gender diversity and the Parker Review on ethnic representation. The Remuneration and Nomination
Committee will consider diversity generally when making recommendations for appointments to the Board but with the
principal aim that any new appointment is filled by the most appropriate candidate based on a range of skills, knowledge
and experience appropriate for an investment trust.
In all of the Board’s activities, there has been and will be no discrimination on the grounds of gender, race, ethnicity, religion,
sexual orientation, age or physical ability.
The Board notes the new Listing Rules requirements regarding the targets on board diversity:
at least 40% of individuals on the Board are women;
at least one senior Board position (chairman, chief executive officer (“CEO”), senior independent director or chief
financial officer (“CFO”)) is held by a woman; and
at least one individual on the Board is from a minority ethnic background, defined to include those from an ethnic group
other than a white ethnic group, as specified in categories recommended by the Office for National Statistics.
•
•
•
As required by the Listing Rules, reporting against these targets is set out in the tables below in the prescribed format. The
data was collected on a self-identifying basis.
Male
Female
Not specified
Number in
Executive team
Percentage of
Executive Team
-
-
-
N/A
N/A
N/A
No of senior positions
on the Board
Percentage of
Board
Gender
identity / sex
No of Board
Members
4
1
-
80%
20%
-
4
1
-
White British or other (including
other minorities)
Asian/ Asian British
Mixed/ multiple Ethnic groups
Not specified
-
-
-
-
N/A
N/A
N/A
N/A
Ethnic Background
3
2
-
-
-
60%
40%
-
-
3
2
-
-
-
Number in
Executive team
Percentage of
Executive Team
No of senior positions
on the Board
Percentage of
Board
No of Board
Members
Governance
29
Governance
The Board notes that as at 30 June 2023 it does not currently meet the target in relation to the number of women on the
Board but will be considering the target when future Board appointments are made.
The Company is an externally managed investment trust meaning there is no CEO or CFO, however the Board considers that
the Chairman of any of the Company’s Committees to be a senior position.
The Board notes also that 40% of the team members employed by the Investment Manager and its subsidiary in Vietnam
are female and 90% are ethnically Vietnamese.
The Board believes the current board members have the appropriate qualifications, experience, and expertise to manage
the Company. The Directors’ biographies can be found on page 27.
Board Meetings and Attendance
The Board meets regularly during the year with representatives from the Investment Manager present. In addition,
representatives from the Company’s Broker and Administrator attend Board and committee meetings by invitation. At each
quarterly Board meeting the performance of the portfolio is formally reviewed and during the year, Board members also
attend investment meetings with members of the Investment Manager’s senior team. The Board members have a range
of skills covering investment management, banking, compliance, and corporate governance as well as prior experience of
acting as directors of companies listed on the London Stock Exchange.
The Company’s brokers and lawyers are consulted on any matters where external expertise is required, and external advisers
attend board meetings as invited by the Chairman to report on and/or discuss specific matters relevant to the Company.
During the year 4 Board meetings were held and the record of attendance at each Board and committee meeting was as
follows:
Hiroshi Funaki
Sean Hurst
Philip Scales
Damien Pierron
Saiko Tajima
Audit and Risk
Board
Remuneration
and
Nomination
Management
Engagement
4 (4)
4 (4)
4 (4)
4 (4)
4 (4)
2 (2)
2 (2)
2 (2)
2 (2)
2 (2)
Environmental,
Social and
Governance
4 (4)
4 (4)
4 (4)
4 (4)
4 (4)
2 (2)
2 (2)
2 (2)
2 (2)
2 (2)
2 (2)
2 (2)
2 (2)
2 (2)
2 (2)
Tenure of Board Members and Succession Planning
The Company has adopted a formal policy that neither the Chairman nor any other Director shall serve for more than 9
years.
Re-election of Directors
The Board has agreed that all Directors should submit themselves for annual re-election.
Mr Hurst, Mr Funaki, Mr Pierron, Mr Scales and Ms Tajima will all stand for re-election at the 2023 AGM.
The individual performance of each Director standing for re-election or election has been evaluated by the other members
of the Board and a recommendation will be made that Shareholders vote in favour of their re-election at the AGM in
November 2023.
Administration
On 7 October 2019 the Board appointed Sanne Group (Guernsey) Limited to provide corporate governance, secretarial,
compliance and accounting services to the Company.
30
Annual Report 2023
Annual Report 2023
Conflicts of Interest
The Directors are reminded at each Board meeting of their
obligations to notify any changes in their statement of
conflicts and also to declare any benefits received from
third parties in their capacity as a Director.
A register of conflicts is maintained by the Administrator
and formally reviewed on a quarterly basis. Each Director
is required to declare any potential conflicts of interest on
an ongoing basis.
Performance Evaluation
During the year the Board undertook an evaluation
exercise into the effectiveness of both the Board and the
Committees. The programme was undertaken by the
Administrator and no significant issues were identified.
The Remuneration and Nomination Committee will again
consider whether for the next evaluation due in 2023, an
external facilitator should be appointed to undertake the
evaluations.
Professional Development and Training
New Directors are provided with all relevant information
regarding the Company’s business and given the
opportunity to meet with key functionaries prior to
appointment. They are also provided with induction
training.
It is the responsibility of each Director to ensure that they
maintain sufficient knowledge to fulfil their role and so
are encouraged to participate in seminars and training
courses where appropriate.
Committees of the Board
Four Committees have been formed, an Audit and Risk
Committee, a Remuneration and Nomination Committee,
a Management Engagement Committee and an ESG
Committee. Since September/October 2017 the Company
has been through a period of considerable change and
apart from the Management Engagement Committee,
all Board members are members of each committee.
The Chairman of the Company does not Chair any of the
Committees.
Details of the Chairman of each committee, together with
the number of meetings held during the year are shown
on page 30. A summary of the Terms of Reference of each
committee is detailed below and a copy of the Terms of
Reference are available on the Company’s website www.
vietnamholding.com.
Audit and Risk Committee
The Chairman of the Audit and Risk Committee is Philip
Corporate Governance Report (continued)
Scales and the Committee meets at least twice per annum.
All members of the Board are members of the Committee.
This includes the Chairman of the Company where, given
the size of the Board, the experience of all members and
the independence of the Company Chairman, it is felt
appropriate that all Board members play a role in the
Audit and Risk Committee. The principal responsibility of
the Committee is to monitor the production of the Interim
and Annual Financial Statements and to present these to
the Board for approval.
Other duties include reviewing the internal financial
controls and monitoring third party service providers,
review and monitor the external auditor’s independence
and objectivity along with the effectiveness of the audit
process and to make recommendations to the Board
in relation to the appointment of the External Auditor
together with their remuneration.
A report of the Audit and Risk Committee is detailed on
pages 35 to 36.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee is chaired
by Sean Hurst and all members of the Board are members
of the Committee. The Board considers that a majority
of the Directors are independent and therefore eligible to
be members of the Committee. The Committee meets at
least once in each year and at such other times as may be
considered necessary.
The principal duties of the Remuneration and Nomination
Committee are to review the fees paid to the Non-executive
Directors, to consider the appointment of external
remuneration consultants, to review the structure, size
and composition of the Board, make recommendations
to the Board for any changes and to consider succession
planning. The Committee also undertakes the evaluation
of the appointment of any additional or replacement
Directors and ensures they are provided with training
and induction. The Committee arranges for an annual
evaluation of all Board and Committee members.
During the year the Committee reviewed the fees
paid to Directors and resolved that no changes be
recommended.
The AIC Code includes a provision relating to the
appointment of a Senior Independent Director of which
Sean Hurst occupies this role
No new Board appointments were considered during the
year, but the Committee reaffirmed the policy that no
Director should serve for more than 9 years.
Governance
31
Governance
Management Engagement Committee
The Chairman of the Management Engagement
Committee is Damien Pierron and the Committee shall
meet at least once a year. All members of the Board
other than Saiko Tajima are members of the Committee.
The principal duties of the Committee are to review
the performance and appointment of the Investment
Manager together with their remuneration and to review
the effectiveness and competitiveness of the other
main service providers and functionaries together with
reviewing their performance.
A share buy-back sub-committee consisting of Hiroshi
Funaki and Sean Hurst has been formed under the
Management Engagement Committee and meets
regularly to review and monitor the share buy-back
programme. Damien Pierron also joins the share buy-
back sub-committee on an ad-hoc basis.
During the year the Committee reviewed the performance
of the Investment Manager, Administrator and Sub-
Administrator, Corporate Broker and Registrar. No
changes were recommended as a result of these reviews.
Environmental, Social and Governance Committee
The ESG Committee was established in 2021 and is chaired
by Saiko Tajima with all members of the Board forming
the Committee. The aim of the Committee is to establish
a unified view of ESG, increasing understanding of all
three aspects: environmental, social and governance, and
to promote the robust standards of corporate governance
that the Company adopts.
The purpose of the ESG Committee, which shall meet
at least once a year, is to support the Company’s on-
going commitment to environmental, health and safety,
corporate social responsibility, corporate governance,
sustainability, and other public policy matters relevant to
the Company (collectively, “ESG Matters”).
Shareholder Engagement
The Company is committed to listening and
communicating openly with its Shareholders to ensure
that its strategy, business model and performance are
clearly understood. All Board members have responsibility
for Shareholder liaison, but Shareholder contact is mainly
dealt with by the Chairman of the Company and the
Senior Independent Director in close liaison with the
Company Advisors.
Copies of the Annual Report are sent to all Shareholders
and can be downloaded from the website. Other
Company information including the Interim Report is also
available on the website.
The Company holds an AGM each year, which gives
investors the opportunity to enter into dialogue with
the Board and for the Board to receive feedback and
take action as necessary. The Investment Manager also
participates in meetings with investors arranged by
the Company’s Broker and has arranged seminars and
webinars to update current and prospective investors
on the developments in the Vietnamese market and the
performance of the Company. The Investment Manager
also updates the Company’s website and sends out
monthly factsheets on the Company to investors who
have registered to receive such updates. The Company
has a LinkedIn page which is administered by the
Investment Manager.
The Board reviews proxy voting reports and any significant
negative response is discussed with relevant Shareholders
and, if necessary, where appropriate or possible, action is
taken to resolve any issues. In the interest of transparency
and best practice, the level of proxy votes (for, against
and vote withheld) lodged on each resolution is declared
at all general meetings and announced.
Corporate Policies
Anti-Bribery and Corruption Policy
The Board is committed to the prevention of bribery
throughout the organisation and will take every step
necessary to ensure to the best of its ability that business
is conducted fairly, honestly and openly. It has adopted
a formal policy to combat fraud, bribery and corruption
and will seek annual confirmation from the Investment
Manager and other service providers it engages that they
have similar policies in place. Furthermore, the Board has
zero tolerance to the criminal facilitation of tax evasion.
These policies apply to the Company and to each of its
Directors. Further, the policies are shared with each of the
Company’s service providers, each of which confirms its
compliance annually to the Board.
Criminal Facilitation of Tax Evasion Policy
The Board has taken steps to ensure there is no criminal
facilitation of tax evasion. This applies to the Company
and to each of its Directors, as well as service providers. A
policy has been adopted by the Board.
General Data Protection Regulation
The Company abides by general data protection
regulation. As it is established in the Bailiwick of Guernsey,
under The Data Protection (Bailiwick of Guernsey) Law,
2017, the Company has registered with the Office of the
Data Protection Authority.
32
Annual Report 2023
Annual Report 2023
The Company
Global Greenhouse Gas Emissions
The Company has no significant greenhouse gas emissions
to report from its operations for the year to 30 June 2023,
nor does it have responsibility for any other emission
producing sources. The Company is very conscious of
its own carbon footprint in carrying out its business
activities. The main source of this for the Company is in
the international and domestic air travel of the Board of
Directors and members of the Investment Manager in
conducting the business of the Company and meeting
with Shareholders. During the year members of the
Board travelled to Madrid, Zurich and Ho Chi Minh City
in conducting the business of the Company whilst some
meetings were held via video conference. The estimated
carbon footprint of travel activities (that have not already
been offset at source) amounts to approximately 56.1
tonnes of CO
2
e.
The Company engaged a specialist consulting firm to
estimate the carbon footprint of the portfolio, and this is
detailed in the
Sustainability Report
.
Gender Metrics
The Board of the Company recognises the governance
mechanism to ensure there is diversity amongst the
Directors and as such a female was appointed to the
Board in May 2019. The Board is committed to treating
all equally and considers all aspects of diversity including
gender and ethnic diversity. The Remuneration and
Nomination Committee will consider diversity when
making recommendations for appointments to the Board
but with the principal aim that any new appointment is
filled by the most appropriate candidate based on a range
of skills, knowledge and experience appropriate for an
investment trust.
Corporate Governance Report (continued)
Governance
33
Annual Report 2023
The main items that the Audit and Risk Committee (the
“Committee”) has considered and reviewed during the
year ended 30 June 2023 were:
Audit and Risk Committee Report
the content of the Interim Report and the Annual
Report;
the independence and effectiveness of the External
Auditor;
the internal control and risk management systems and
the work of the service providers; and
the control framework with the assistance of the
Investment Manager and Administrator.
monitored the integrity of the financial statements of
the Company and any formal announcements relating
to the Company’s financial performance;
reviewed the Company’s internal financial controls and
the internal control and risk management systems of
the Company and its third-party service providers;
made recommendations to the Board in relation to
the appointment of the External Auditor and their
remuneration;
reviewed and monitored the External Auditor’s
independence and objectivity and the effectiveness of
the audit process; and
challenged the Investment Manager on the scenarios
used to support the going concern basis and the
ongoing viability assessment.
•
•
•
•
•
•
•
•
•
Internal Control
As a company with a Board consisting of Non-executive
Directors and which outsources the day-to-day activities
of portfolio management, administration, accounting
and company secretarial to external service providers, the
Board considers the provision of an internal audit function
is not relevant to the position of the Company.
The Committee reviews the internal financial control
systems for their effectiveness and through the
Management Engagement Committee, monitors the
performance of the external service providers. The Board
recognises its ultimate responsibility for the Company’s
system of internal controls to ensure the maintenance of
proper accounting records, the reliability of the financial
information upon which business decisions are made and
that the assets of the Company are safeguarded. Through
these procedures, the Directors have kept under review the
effectiveness of the internal control system throughout the
year and up to the date of this report. There were no issues
arising from this review.
Membership and Attendance
The Committee membership currently consists of all
Board members under the Chairmanship of Philip Scales.
This includes the Chairman of the Company where, given
the size of the Board, the experience of all members and
the independence of the Company Chairman, it is felt
appropriate that all Board members play a role in the
Audit and Risk Committee. The Terms of Reference allow
appointments to the Committee for a period of up to 3
years and this may be extended for two further 3-year
periods provided that the Director remains independent.
The Committee holds at least two meetings a year which
are to review the Annual and Half-Year Reports of the
Company and also for audit planning purposes and a
review of risks relevant to the Company. Details of the
number of committee meetings held during the year
ended 30 June 2023 and the number of those attended by
each committee member are shown on page 30.
The External Auditor is invited to attend committee
meetings where the Annual and Half-Year Reports are
considered, and separate meetings are held with the
External Auditor where the Investment Manager is not
present.
Principal Duties
During the year the Committee has:
A copy of the Terms of Reference of the Committee is
available either from the Company’s website or from the
Company’s Administrator.
Valuation of Investments
The fair value of the Company’s investments at 30 June
2023 was USD 113.2 million which represented 97.4% of the
Company’s NAV (30 June 2022: USD 120.9 million and 93.9%
respectively). The valuation of investments is the most
significant factor in relation to the accuracy of the financial
statements.
The Committee reviewed the portfolio valuation as at 30
June 2023 and obtained confirmation from the Investment
Manager that the Company’s policies on the valuation
of investments had been followed. The Committee also
made enquiries of the Sub-Administrator and Custodian,
both of whom are independent of the Company, to check
procedures are in place to ensure the portfolio is valued
correctly.
The Committee agreed to the approach to the audit of the
valuation of investments with the External Auditor prior to
the commencement of the audit. All the investments will be
independently checked by the External Auditor. The results
of the audit in this area were reported by the External
Auditor and there were no significant disagreements
between the Investment Manager, the Sub-Administrator
and the External Auditor’s conclusions.
Governance
35
Governance
Philip Scales
Audit and Risk Committee Chairman
13 October 2023
The Board reviews the changes in valuations at each
quarterly Board meeting.
External Audit
KPMG Channel Islands Limited (“KPMG”) has been
the External Auditor since the Company re-domiciled
in Guernsey on 25 February 2019. The Committee held
meetings with KPMG before the start of the audit to
discuss formal planning and to discuss any possible
issues along with the scope of the audit and appropriate
timetable. Informal meetings have also been held with the
Chairman of the Committee in order that the Chairman is
kept up to date with the progress of the audit and formal
reporting required by the Committee.
Annually, the Committee reviews the performance of
KPMG in order to recommend to the Board whether or not
the Auditors should be reappointed for the next year.
Audit fees payable to KPMG for 2023 are GBP 62,200
(2022: GBP 56,000). Non audit fees payable to KPMG for
2023 were GBP nil (2022: GBP nil).
The Committee has reviewed KPMG’s report on their
independence and objectivity, including their structure for
the audit of the Company and is satisfied that the services
provided by KPMG do not prejudice its independence. The
Committee will continue to review any non-audit services
that may be provided by KPMG in order to ensure their
continuing independence and integrity.
Risk Management
An outline of the risk management framework and principal
risks is detailed on pages 24 to 26. The Committee will
keep under review financial and operational risk including
reviewing and obtaining assurances from key service
providers for the controls for which they are responsible.
Anti-Bribery and Corruption
The Company has a zero-tolerance approach to bribery
and corruption, in line with the UK Bribery Act 2010. An
Anti-Bribery and Corruption Policy has been adopted and
is kept under review.
Annual Report
The Committee has reviewed the Annual Report along
with reports and explanations from the Company’s
Investment Manager, Administrator, and other service
providers. The Committee is satisfied that the Annual
Report is fair, balanced, and understandable and that it
provides the necessary information for Shareholders to
assess the Company’s performance, business model, and
strategy.
The Committee is satisfied that KPMG has fulfilled its
responsibilities in respect of the annual audit and has
recommended that KPMG be re-appointed for the
forthcoming financial year.
36
Annual Report 2023
Annual Report 2023
Remuneration Policy
The Directors are entitled to receive fees for their services which reflect their experience and the time commitment required.
At the Annual General Meeting to be held in November 2023 an ordinary resolution seeking approval for the Directors’
remuneration report will be put to Shareholders.
Directors’ Remuneration
Directors’ fees are paid within limits established in the Articles of Incorporation which shall not exceed an aggregate of
USD 350,000 in any financial year (or such sum as the Company shall from time to time determine). The Directors may also
be paid reasonable travelling, hotel and other out-of-pocket expenses properly incurred in attending Board, committee
meetings or general meetings. The Remuneration Committee reviews the Directors’ fees periodically although the review
will not necessarily result in any increase. For the year ended 30 June 2023 annual Directors’ fees remained at USD 50,000
with the Chairman of the Company receiving an additional USD 10,000 per annum or prorated as applicable and the Senior
Independent Director and the Chairman of the Audit and Risk Committee receiving an additional USD 5,000 per annum or
prorated as applicable.
The Directors are also paid a per diem fee of USD 1,500 for each Board meeting attended and USD 750 for a committee
meeting attended, either in person or by telephone.
The Company has no bonus schemes, pension schemes, share options or other long-term incentive schemes in place for
the Directors.
The single total figure of remuneration for each Director who served during the year ended 30 June 2023 and the previous
year is as follows:
Hiroshi Funaki
(Chairman)
Sean Hurst
(Senior Independent Director)
Philip Scales
(Audit and Risk Committee Chairman)
Damien Pierron
Saiko Tajima
Total
60,000
55,185
55,000
50,000
50,000
270,185
60,000
55,901
55,000
50,000
50,000
270,901
10,125
10,125
9,000
9,424
9,000
47,674
11,250
11,700
6,750
11,832
6,750
48,282
71,250
67,601
61,750
61,832
56,750
319,183
70,125
65,310
64,000
59,424
59,000
317,859
Director
Year ended 30 June 2022
Total
USD
Total
USD
Base Fees
USD
Base Fees
USD
Additional
Ad hoc fees
USD
Additional
Ad hoc fees
USD
Directors’ Remuneration Policy and Report
Year ended 30 June 2023
Governance
37
Governance
Annual Report 2023
The Directors present the Annual Report and Financial Statements of the Company for the year ended 30 June 2023.
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.
The investment objective of the Company is to achieve long-term capital appreciation by investing in a diversified portfolio
of companies that have high growth potential at an attractive valuation.
At the Extraordinary General Meeting held on 31 October 2018 the Shareholders voted in favour of the continuance
resolution, authorising the Company to operate in its current form through to the 2023 Annual General Meeting when a
similar resolution will be put forward for Shareholders’ approval.
Dynam Capital, Ltd has been appointed as the Company’s Investment Manager and is responsible for the day-to-day
management of the Company’s investment portfolio in accordance with the Company’s investment policies, objectives
and restrictions.
Results
The net loss for the year ended 30 June 2023 amounted to USD 8,622,089 (2022: net loss USD 7,719,310). There were no
dividends declared during the year ended 30 June 2023 (2022: USD nil).
Going Concern
The financial position of the Company, its cash flows and liquidity position are described in Financial Statements and the
Notes to Financial Statements. These also contain the Company’s objectives, policies, processes for managing its capital, its
financial risks management objectives, details of its financial instruments, and its exposures to credit risk and liquidity risk.
The Company’s forecasts and projections have been stress tested taking into account the potential for (i) asset value
declines, (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 Vietnamese stocks has improved over the last six months. The Director’s also
note that the portfolio is composed of a higher percentage of larger and more liquid stocks than in the prior year. Lastly, the
Directors note that at year-end the portfolio is comprised of cash and quoted stocks only. The Company’s liquidity position,
taking into account cash held and with the ability to sell underlying assets to meet share buybacks, tenders 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 are required to propose a continuation Ordinary Resolution at the Company’s Annual General Meeting
scheduled for November 2023. If the Resolution is not passed then the Directors are required to convene an Extraordinary
General Meeting within six months of the 2023 Annual General Meeting to propose a resolution either to wind up the
Company or to implement a reconstruction, amalgamation or other material alteration to the Company or its activities or
any other appropriate alternative based on current circumstances as the Board thinks fit.
Currently, the Board does not know the number of shareholders who will vote to approve the continuation of the Company
for a further five years. Based on the uncertainty of the continuation vote, there is therefore a material uncertainty over the
going concern of the Company.
The Directors have a reasonable expectation that, assuming the continuation vote is passed, the Company will have
adequate resources to continue its operations for the foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the financial statements.
Viability Statement
The Board has considered the viability period for the Company, using the criteria set out in the UK Corporate Governance
Code. The Board considered the current position of the Company, and its longer-term prospects, strategies as well as its
Directors’ Report
Governance
39
Governance
principal risks in the current, medium and long-term, as detailed in the Principal Risks and Risk Management on pages 24
to 26 and in the Investment Manager’s Report on pages 7 to 11. The strategy provides long term direction and is reviewed
annually and further tested in a series of robust downside financial scenarios as part of the annual review. These scenarios
included an assessment of those risks that would threaten its strategic objectives, its business-as-usual state, its business
model and its future performance, solvency, or liquidity. The sensitivity analysis was applied to the forecasted cash flows.
Based on this assessment, and subject to the passing of the continuation vote to be held later in the year, the Board has
determined that a three-year viability period to 30 June 2026 is an appropriate period and that the Company will be able
to continue in operation and meet its liabilities as they fall due over the period of three years. The Board also travelled
to Vietnam in March 2023, meeting with the research team of the Investment Manager, portfolio companies and market
commentators.
In arriving at this conclusion, the Board considered.
- The volatility of global economic conditions, the war in Ukraine and inflation:
The Board considered the impact and effectiveness of mitigation strategies being mandated by governments in impacted
countries; the adverse financial impact already being experienced by the Company: the disruption to economic activity and
financial pressures and impact on investments in the Company’s portfolio. The Board also engaged with the Investment
Manager on the longer-term impact of climate change, and other societal change factors, to the portfolio. Additionally,
the Board took into consideration the impact on the capital markets in Vietnam; the existence and effectiveness of
business continuity plans of the Company and its service providers that had been implemented during the COVID-19
pandemic. The Board reviewed macro-reports and updates from the Investment Manager detailing the impacts of rising
inflation and rising interest rates in the US and Europe on Vietnam, risks of global recession and also the direct impacts
of the continuing war in Ukraine.
- Business environment:
Despite the visible signs of post-Covid recovery which the Board were able to see first-hand on their visit to Vietnam
in March 2023, evidenced in part by greater travel freedoms and broader economic recovery, the domestic real-estate
market, bond market and consumer market have faced some challenges. The Company’s strategy for investing in a
portfolio of equities in Vietnam and targeting growth in the value of the portfolio over the medium term is unchanged
and this coupled with a nimble approach to portfolio construction has helped the Company navigate the uncertain
market conditions. The combination of potential structural opportunities that may benefit Vietnam as a destination for
manufacturing, and the opportunities within the growing domestic market provide attractive investment opportunities.
The direct impact of the war in Ukraine on Vietnam appears to be manageable, with less than 1% of trade to Russia and
Ukraine. The levels of inflation in Vietnam are less pronounced than those in Europe and the US, and the macro-economic
position appears to be stronger than in many other frontier and emerging economies.
- Operations:
2022 was thankfully free from the significant operational changes caused by the COVID-19 pandemic. The restrictions
in place during the pandemic tested the Business Continuity protocols of the Investment Manager and the other service
providers. The smooth operation of the Company through the various restrictions and lockdowns brought about by Covid
have reassured the Board that these protocols are effective and can, if necessary, operate effectively without the need
for physical meetings or an office presence. The Board, Investment Manager, Administrator, and other service providers
have all demonstrated that they can work effectively and efficiently, and if needed remotely.
- Investment:
The liquidity of the Company’s underlying portfolio is relatively high: although average daily trading volumes on Vietnam’s
stock markets declined during the first half of the year, the volumes recovered in the second half. All investments are in
listed companies which have relatively high liquidity. At year end there were no unquoted investments, and all securities
are ‘Level 1’. It is estimated that the portfolio can be readily liquidated in less than ten trading days and 99% of the
portfolio in less than 30 days. The portfolio is un-geared and, as it holds all listed securities, has sufficient liquidity to
meet the Company’s liabilities.
The current portfolio is low to medium risk based on assessments both individually and in combination of liquidity risk,
credit risk, interest rate risk and currency risk. The Investment Manager and the Board review and evaluate the portfolio
on a monthly basis.
•
•
40
Annual Report 2023
Annual Report 2023
Viability Statement (continued)
- Principal risks:
The Board’s review considered the Company’s cash flows and income flows, with reference to operational, business, market,
currency, liquidity, interest rate and credit risk associated in financial instruments set out in Note 3 (Financial Instruments
and Associated Risks) and Note 4 (Operating Segments) of the financial statements on pages 59 to 62. The statistical
modelling is used to quantify these risks, which ensures that the Company holds sufficient financial assets and capital to
mitigate the impact of these risks.
- Incomes and expenses:
Directors’ Report (continued)
The Company has a portfolio that generates investment income through dividends payments. The cash dividends
received can be used to partially offset the Company’s on-going expenses. In the year under review, total on-going
expenses were covered 0.49 times by investment income. In the following year, the current investment income is
forecast to cover 0.47 times the amount of on-going expenses. In the stress-tested scenario with significant declines in
cash dividends forecasted, the investment income is forecast to cover 0.59 times on-going expenses.
The Company maintains a cash buffer of approximately 1.0% of NAV to help meet on-going expenses.
•
•
Given the adequate levels of cover set out above, the cash buffer, the liquidity levels and the overall portfolio risk, the Board
has reasonable expectations that the Company can continue in operation and meet its liabilities over the forecast period.
The Company’s viability depends on the global economy and markets continuing to function. The Board has also considered
the possibility of a wide-ranging collapse in corporate earnings and/or the market value of listed securities. To the latter
point, it should be borne in mind that a significant proportion of the Company’s expenses are in investment management
fees linked to the level of net assets of the Company, which are therefore variable in nature and would naturally reduce if
the market value of the Company’s assets were to fall.
In order to maintain viability, the Company has robust risk controls as set out in the Directors’ Report and the risk management
and control framework have the objectives of monitoring and reducing the likelihood and impact of operational risks
including poor judgement in decision-making, risk-taking that exceeds the levels agreed by the Board, human error, or
control processes being deliberately ignored.
In this context, the Board considers that the prospects for economic activity will remain such that the investment objective,
policy and strategy of the Company will be viable for the foreseeable future and through a period of at least three years
from 30 June 2023, assuming the continuation vote to be tabled to shareholders is passed.
Key Performance Indicators (“KPIS”)
To ensure the Company meets its objectives the Board evaluates the performance of the Investment Manager at least at
each quarterly Board meeting and takes into the following performance indicators:
NAV – reviews the performance of the portfolio
Discount to NAV – and reviews the average discount for the Company’s share price against its peer group.
•
•
Share Capital and Share Buy-Backs
An active discount control mechanism to address the imbalance between the supply of and demand for ordinary shares
using share buy backs is employed by the Broker and monitored by the Board. At the Annual General Meeting (“AGM”) of
the Company held on 1 November 2022, the Company was granted the general authority to purchase in the market up to
14.99% of the ordinary shares in issue. This authority will expire at the AGM to be held in November 2023.
In the year ended 30 June 2023 1,500,563 ordinary shares had been bought back and cancelled under the Company’s share
buyback programme. Since the last AGM and up to 12 October 2023, being the latest practicable date prior to publication
of the report, the Company bought back and cancelled 1,364,849 ordinary shares.
Governance
41
Governance
Share Buy-Backs to the Year-Ended 30 June 2023
60,474
-
(2,655)
(56,884)
935
Opening balance at 1 July
Share issued during the year
Shares repurchased during the year
Tender Offer
Closing balance at 30 June
Number of
Shares
Number of
Shares
USD’000 USD’000
29,225,667
-
(1,500,563)
-
27,7 25,10 4
42,623,935
-
(661,084)
(12,737,18 4)
29,225,667
935
-
(4,941)
-
(4,006)
30 June 202230 June 2023
Substantial Share Interests
The following shareholders owned 5% or more of the shares in issue of the Company, as stated on the share register as at
30 June 2023.
Number of
ordinary shares
Percentage of
total shares in
issue
Shareholder
Lynchwood Nominees Limited
Citibank Nominees (Ireland) Designated Activity Company
Vidacos Nominees Limited
The Bank of New York (Nominees) Limited
Chase Nominees Limited
Hargreaves Lansdown (Nominees) Limited
Euroclear Nominees Limited
5,867,737
5,319,732
2,550,070
2,225,658
1,660,120
1,589,250
1,531,105
21.16
19.19
9.20
8.03
5.99
5.73
5.52
Notification of Shareholdings
In the year to 30 June 2023 the Company received notifications in accordance with Chapter 5 of the DTR (which covers the
acquisition and disposal of major shareholdings and voting rights), of the following changes to voting rights by shareholders
of the Company. It should be noted that for non-UK issuers, the thresholds prescribed under DTR 5.1.2 for notification of
holdings commence at 5% of total voting rights, however notifications received below 5% have been received and are
included in this reporting.
Number of
voting rights
Percentage of total
voting rights as at
announcement date
Announcement
date
Shareholder
Discover Investment Company 1,415,776 5.0 24 May 2023
Since 30 June 2023 the Company has not received any DTR 5.1.2 notifications of holdings.
42
Annual Report 2023
Annual Report 2023
The Directors are responsible for preparing the Annual
Report and Financial Statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law they are
required to prepare the financial statements in accordance
with International Financial Reporting Standards as
adopted by the EU and applicable law. Under company law
the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view
of the state of affairs of the Company and of its profit or
loss for that period.
In preparing these financial statements, the Directors are
required to:
select suitable accounting policies and then apply
them consistently;
make judgements and estimates that are reasonable,
relevant and reliable;
state whether applicable accounting standards have
been followed, subject to any material departures
disclosed and explained in the financial statements;
assess the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to
going concern; and
use the going concern basis of accounting unless they
either intend to liquidate the Company or to cease
operations or have no realistic alternative but to do so.
the financial statements, prepared in accordance with
the International Financial Reporting Standards as
adopted by the EU (“IFRS”), give a true and fair view
of the assets, liabilities, financial position and profit or
loss of the Company; and
the Directors’ Report includes a fair review of the
development and performance of the business and
the position of the issuer, together with a description
of the principal risks and uncertainties that they face.
We consider the Annual Report and Financial Statements
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to
assess the Company’s position and performance, business
model and strategy.
For and on behalf of the Board
•
•
•
•
•
•
•
Hiroshi Funaki
Chairman
13 October 2023
The Directors are responsible for keeping proper
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that its financial statements
comply with the Companies (Guernsey) Law, 2008. They
are responsible for such internal control as they determine is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking
such steps as are reasonably open to them to safeguard
the assets of the Company and to prevent and detect
fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website. Legislation in
Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
The Directors who hold office at the date of approval
of this Director’s Report confirm that so far as they are
aware, there is no relevant audit information of which the
Company’s auditor is unaware, and that each Director has
taken all the steps he ought to have taken as a Director to
make themselves aware of any relevant audit information
and to establish that the Company’s auditor is aware of
that information.
Compliance with Disclosure and Transparency Directive
We confirm that to the best of our knowledge:
Statement of Directors’ Responsibilities
in Respect of the Annual Report and the Financial Statements
Governance
43
Annual Report 2023
The risk
Our response
Our opinion is unmodified
We have audited the financial statements of VietNam Holding Limited (the “Company”), which comprise the statement of
financial position as at 30 June 2023, the statements of comprehensive income, changes in equity and cash flows for the
year then ended, and notes, comprising significant accounting policies and other explanatory information.
In our opinion, the accompanying financial statements:
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company
in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to public interest entities. We
believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
Material uncertainty relating to going concern
give a true and fair view of the financial position of the Company as at 30 June 2023, and of the Company’s financial
performance and cash flows for the year then ended;
are prepared in accordance with International Financial Reporting Standards as adopted by the EU (“IFRS”); and
comply with the Companies (Guernsey) Law, 2008.
•
•
•
Independent Auditor’s Report
to the Members of VietNam Holding Limited
Going Concern:
Refer to page 39 of the Director’s Report.
We draw attention to note 2(b) of the
financial statements which indicates
that in accordance with the Articles of
Incorporation, the Directors are required
to propose an Ordinary Resolution
(“Resolution”) at the Company’s Annual
General Meeting scheduled for the year
2023. If such resolution is not passed the
Board shall, at that annual general meeting
or at an extraordinary general meeting held
within six months of that annual general
meeting, propose a resolution either to
wind up the Company or to implement
a reconstruction, amalgamation or other
material alteration to the Company or
its activities or any other appropriate
alternative based on current circumstances
as the Board thinks fit.
This condition constitutes a material
uncertainty that may cast significant doubt
on the Company’s ability to continue as a
going concern.
Our opinion is not modified in respect of this
mat ter.
Disclosure Quality:
The financial statements explain how the
directors have formed a judgement that it
is appropriate to adopt the going concern
basis of preparation for the Company.
That judgment is based on an evaluation
of the inherent risks to the Company’s
business model and how those risks, in
particular, the Resolution, might affect the
Company’s financial resources or ability
to continue operations over a period of
at least a year from the date of approval
of the financial statements (the “Going
Concern Period”). The risk for our audit is
whether or not those risks are such that
they amounted to a material uncertainty
that may cast significant doubt on the
ability of the Company to continue as a
going concern. If so, that fact is required to
be disclosed (as has been done) and, along
with a description of the circumstances, is a
key financial statement disclosure.
Our audit procedures included but were not
limited to:
We obtained and inspected the directors’
approved written assessment of going
concern on the Company and corroborated
the assessment with our knowledge of the
business. We considered the risk that the
outcome of the Resolution could affect
the Company for the going concern period
by considering outcomes of previous
continuation Resolutions, inspecting
minutes of meetings held by the directors,
inquiring with management as to their
assessment of the likelihood of shareholder
support for the Resolution, and considering
key financial metrics including the discount
of the Company’s share price against its net
asset value.
Assessing disclosures:
We considered whether the going concern
disclosure in note 2(b) to the financial
statements gives a full and accurate
description of the directors’ assessment of
going concern, including the identified risks
and dependencies.
Financial Statements
45
The risk
Our response
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified
by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. Going concern is a significant key audit matter and is described in the ‘Material
uncertainty relating to going concern’ section of our report. 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. In arriving at our audit opinion above, the other key audit matter was as follows (unchanged from 2022):
Valuation of Investments in securities at fair value
$113,225,102; (2022: $120,957,996)
Refer to page 35 of the Audit and Risk Committee Report, note 2d accounting policies and note 12 disclosures.
Our application of materiality and an overview of the scope of our audit
Materiality for the financial statements as a whole was set at $2,160,000, determined with reference to a benchmark of net
assets of $115,259,277 of which it represents approximately 2.0% (2022: 2.0%).
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements
in individual account balances add up to a material amount across the financial statements as a whole. Performance
materiality for the Company was set at 75% (2022: 75%) of materiality for the financial statements as a whole, which equates
to $1,620,000. We applied this percentage in our determination of performance materiality because we did not identify any
factors indicating an elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding $108,000, in addition
to other identified misstatements that warranted reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality level specified above, which has informed our identification of
significant risks of material misstatement and the associated audit procedures performed in those areas as detailed above.
Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the
Company or to cease its operations, and as they have concluded that the Company’s financial position means that this is
realistic. . They have also concluded that there are material uncertainties that could cast significant doubt over its ability to
continue as a going concern for at least a year from the date of approval of the financial statements.
46
Basis:
The Company’s investment portfolio consists of listed equity
securities trading on the Vietnamese stock exchange (the
“Investments”). These Investments, carried at a fair value, are
valued by the Company based on quoted prices in an active
market for that instrument.
Risk:
The valuation of investments, due to their magnitude in the
context of the financial statement as a whole, is considered to be
the area which has the greatest effect on our overall audit strategy
and allocation of resources in planning and completing our audit.
Our audit procedures included:
Internal Controls:
We evaluated the design and implementation of the key control over
the valuation of Investments.
Use of KPMG Specialists:
We engaged our own valuation specialist to independently price
100% of Investments to third party pricing sources.
Assessing disclosures:
We considered the Company’s disclosures (see notes 2b and 2d)
in relation to the use of estimates and judgements regarding the
valuation of investments and the Company’s investment valuation
policies and fair value disclosures in note 12 “Fair Value Information”
for compliance with IFRS.
Annual Report 2023 Financial Statements
Annual Report 2023
Going concern (continued)
An explanation of how we evaluated management’s assessment of going concern is set out in the ‘Material uncertainty
relating to going concern’ section of our report.
Our conclusions based on this work:
Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
As required by auditing standards, we perform procedures to address the risk of management override of controls, in
particular the risk that management may be in a position to make inappropriate accounting entries. On this audit we do
not believe there is a fraud risk related to revenue recognition because the Company’s revenue streams are simple in nature
with respect to accounting policy choice, and are easily verifiable to external data sources or agreements with little or no
requirement for estimation from management. We did not identify any additional fraud risks.
We performed procedures including
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial
statements from our sector experience and through discussion with management (as required by auditing standards), and
from inspection of the Company’s regulatory and legal correspondence, if any, and discussed with management the policies
and procedures regarding compliance with laws and regulations. As the Company is regulated, our assessment of risks
involved gaining an understanding of the control environment including the entity’s procedures for complying with regulatory
requirements.
The Company is subject to laws and regulations that directly affect the financial statements including financial reporting
legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our
procedures on the related financial statement items.
The Company is subject to other laws and regulations where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or
impacts on the Company’s ability to operate. We identified financial services regulation as being the area most likely to have
such an effect, recognising the regulated nature of the Company’s activities and its legal form. Auditing standards limit
the required audit procedures to identify non-compliance with these laws and regulations to enquiry of management and
we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is appropriate;
we have nothing material to add or draw attention to in relation to the directors’ statement in Note 2(b) to the
financial statements on the use of the going concern basis of accounting, and their identification therein of a material
uncertainty over the Company’s ability to continue to use that basis for the going concern period.
enquiring of management as to the Company’s policies and procedures to prevent and detect fraud as well as enquiring
whether management have knowledge of any actual, suspected or alleged fraud;
reading minutes of meetings of those charged with governance; and
using analytical procedures to identify any unusual or unexpected relationships.
Identifying journal entries and other adjustments to test based on risk criteria and comparing any identified entries to
supporting documentation; and
incorporating an element of unpredictability in our audit procedures.
•
•
•
•
•
•
•
Independent Auditor’s Report
to the Members of VietNam Holding Limited
Financial Statements
47
Financial Statements
the directors’ confirmation within the Viability Statement (page 39 - 41) that they have carried out a robust assessment
of the emerging and principal risks facing the Company, including those that would threaten its business model, future
performance, solvency or liquidity;
the emerging and principal risks disclosures describing these risks and explaining how they are being managed or mitigated;
the directors’ explanation in the Viability Statement (page 39 - 41) as to how they have assessed the prospects of
the Company, over what period they have done so and why they consider that period to be appropriate, and their
statement as to whether they have a reasonable expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement, set out on page 39 - 41 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures are materially consistent with the financial statements and our
audit knowledge.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material inconsistency between the directors’ corporate
governance disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is materially consistent with the financial
statements and our audit knowledge:
•
•
•
48
inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to
us or evident from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have properly planned and performed our audit in accordance
with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing
standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual
report 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 an audit opinion or 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.
Disclosures of emerging and principal risks and longer term viability
We are required to perform procedures to identify whether there is a material inconsistency between the directors’
disclosures in respect of emerging and principal risks and the viability statement, and the financial statements and our
audit knowledge. we have nothing material to add or draw attention to in relation to:
Annual Report 2023
Annual Report 2023
Corporate governance disclosures (continued)
Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 43, the directors are responsible for: the preparation of the
financial statements including being satisfied that they give a true and fair view; such internal control as they determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error; 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 they either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
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 our opinion in an auditor’s report. Reasonable assurance
is a high level of assurance but does not guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The purpose of this report and restrictions on its use by persons other than the Company’s members as a body
This report is made solely to the Company’s members, as a body, in accordance with section 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.
the directors’ statement that they consider that the annual report and financial statements taken as a whole is fair,
balanced and understandable, and provides the information necessary for shareholders to assess the Company’s
position and performance, business model and strategy;
the section of the annual report describing the work of the Audit Committee, including the significant issues that the
audit committee considered in relation to the financial statements, and how these issues were addressed; and
the section of the annual report that describes the review of the effectiveness of the Company’s risk management and
internal control systems.
We are required to review the part of Corporate Governance Statement relating to the Company’s compliance with the provisions
of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report in this respect.
We have nothing to report on other matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to
report to you if, in our opinion:
Andrew J. Salisbury
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors
Guernsey
14 October 2023
•
•
•
Independent Auditor’s Report
to the Members of VietNam Holding Limited
the Company has not kept proper accounting records; or
the financial statements are not in agreement with the accounting records; or
we have not received all the information and explanations, which to the best of our knowledge and belief are necessary
for the purpose of our audit.
•
•
•
Financial Statements
49
Financial Statements
Liabilities
Payables on purchase of investments
Payables on repurchase of shares
Accrued expenses
Assets
Non-current assets
Investments at fair value through profit or loss 120,957,9963
Current assets
Cash and cash equivalents
Accrued dividends and interest
Receivables on sale of investments
8,160,681
58,772
-
1,750,069
87 7,375
338,591
Equity
Share capital
Reserve for own shares
Retained earnings
166,645,041
(165,709,783)
127,886,909
166,645,041
(170,650,584)
119,264,820
5
5
-
-
355,282
343,745
246,469
341,646
Total non-current assets 120,957,996113,225,102
Total current assets 8,219,4532,966,035
Total assets
129,17 7,4 49116,191,137
Total equity 128,822,167115,259,277
2022
USD
2023
USD
Notes
Statement of Financial Position
As at 30 June 2023
The financial statements on pages 50 to 66 were approved by the Board of Directors on 13 October 2023 and were signed
on its behalf by
The accompanying notes on pages 54 to 66 form an integral part of these financial statements.
Total liabilities 355,282931,860
Total equity and liabilities 129,17 7,4 49116,191,137
Philip Scales
Chairman of the Audit and Risk Committee
Hiroshi Funaki
Chairman of the Board of Directors
113,225,102
50
Annual Report 2023
Annual Report 2023
Total operating loss
Investment management fees
Advisory fees
Directors’ fees and expenses
Custodian fees
Administrative and accounting fees
Audit fees
Other expenses
Dividend income from equity securities at fair value through profit or loss
Net loss from investments at fair value through profit or loss
Net foreign exchange loss
1,811,555
(5,211,105)
(67,666)
1,684,306
(6,494,742)
(369,559)
7
8
8
9
10
(3,4 67,216)
2,7 37,80 4
15,715
385,292
152,863
216,939
71,428
672,053
(5,179,995)
1,936,485
22,846
417,177
101,674
201,614
75,153
687,145
Total operating expenses 4,252,0943,442,094
Loss for the year (7,719, 310)(8,622,089)
(8,622,089)
Other comprehensive income
Total comprehensive loss for the year
-
(7,719, 310)
-
2022
USD
2023
USD
Notes
Statement of Comprehensive Income
For the year ended 30 June 2023
Basic and diluted loss per share (0.24)(0.30)14
The accompanying notes on pages 54 to 66 form an integral part of these financial statements.
Financial Statements
51
Financial Statements
Balance at 1 July 2021
Total comprehensive loss for the year
Change in net assets attributable to shareholders
196,080,470
(7,719, 310)
135,606,219
(7,719, 310)
(106,170,790)
-
166,645,041
-
Balance at 1 July 2022
Total comprehensive loss for the year
Change in net assets attributable to shareholders
128,822,167127,886,909(165,709,783)
-
166,645,041
-
Transactions in shares
Repurchase of own shares
(59,538,993)-(59,538,993)-
Transactions in shares
Repurchase of own shares (4,940,801)-(4,940,801)
(4,940,801)
-
Total comprehensive loss for the year (7,719, 310)(7,719, 310)--
Total transactions in shares (59,538,993)-(59,538,993)-
Balance at 30 June 2022 128,822,167127,886,909(165,709,783)166,645,041
Total comprehensive loss for the year --
Total transactions in shares (4,940,801)--
Balance at 30 June 2023 115,259,277
119,264,820
(170,650,584)166,645,041
Share
capital
USD
Reserve for
own shares
USD
Total
USD
Retained
earnings
USD
The accompanying notes on pages 54 to 66 form an integral part of these financial statements.
Statement of Changes in Equity
For the year ended 30 June 2023
(8,622,089)(8,622,089)
(8,622,089)(8,622,089)
52
Annual Report 2023
Annual Report 2023
Cash flows from operating activities
Total comprehensive loss for the year
Adjustments to reconcile total comprehensive loss
to net cash from operating activities:
Dividend income
Net loss from investments at fair value through profit or loss
Net foreign exchange loss
Purchase of investments
Proceeds from sale of investments
Changes in working capital
Decrease in accrued expenses
Decrease in prepayments
Dividends received
Interest received
61,736,003
2,197,010
6,031,337
(59,538,993)
8,160,681
(7,719, 310)
7
(1,346,721)
(4,694,332)
(6,041,053)
8,160,681
(369,559)
(4,694,332)
1,750,069
(8,622,089)
(1,684,306)
6,494,742
369,559
(50,826,239)
52,069,545
(13,636)
-
849,559
16,144
(1,811,555)
5,211,105
67,666
(82,229,529)
146,502,030
(76,630)
9,290
1,690,983
91,953
Net cash (used in)/from operating activities
Cash flows used in financing activities
Repurchase of own shares
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash held
Net cash used in financing activities
Cash and cash equivalents at end of the year
2022
USD
2023
USD
Notes
The accompanying notes on pages 54 to 66 form an integral part of these financial statements.
Statement of Cash Flows
For the year ended 30 June 2023
(59,538,993)
(67,666)
Financial Statements
53
Financial Statements
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 Extraordinary General Meeting held on 31 October 2018 the Shareholders voted in favour of the continuance
resolution, authorising the Company to operate in its current form through to the 2023 Annual General Meeting when a
similar resolution will be put forward for Shareholders’ approval.
Dynam Capital, Ltd has been appointed as the Company’s Investment Manager and is responsible for the day-to-day
management of the Company’s investment portfolio in accordance with the Company’s investment policies, objectives
and restrictions.
Sanne Group (Guernsey) Limited is the Company’s administrator.
Standard Chartered Bank (Singapore) Limited and Standard Chartered Bank (Vietnam) Limited are the custodian and the
sub-custodian respectively. Standard Chartered Bank (Singapore) Limited is also the sub-administrator.
The registered office of the Company is 1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey, GY1 2HL.
2. Significant Accounting Policies
(a) Statement of compliance
These financial statements, which give a true and fair view, have been prepared in accordance with the International
Financial Reporting Standards (“IFRSs”) as adopted by the European Union and comply with the Companies (Guernsey)
Law, 2008.
(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, (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
Vietnamese stocks has improved over the last six months. The Director’s also note that the portfolio is composed of a higher
percentage of larger and more liquid stocks than in the prior year. Lastly, the Directors note that at year-end the portfolio
is comprised of cash and quoted stocks only. The Company’s liquidity position, taking into account cash held and with the
ability to sell underlying assets to meet share buybacks, tenders 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 are
Notes to the Financial Statements
For the year ended 30 June 2023
54
Annual Report 2023
Annual Report 2023
Notes to the Financial Statements
For the year ended 30 June 2023 (continued)
required to propose a continuation Ordinary Resolution at the Company’s Annual General Meeting scheduled for November
2023. If the Resolution is not passed then the Directors are required to convene an Extraordinary General Meeting within
six months of the 2023 Annual General Meeting to propose a resolution either to wind up the Company or to implement
a reconstruction, amalgamation or other material alteration to the Company or its activities or any other appropriate
alternative based on current circumstances as the Board thinks fit. Currently, the Board does not know the number of
shareholders who will vote to approve the continuation of the Company for a further five years. Based on the uncertainty
of the continuation vote, there is therefore a material uncertainty over the going concern of the Company. The Directors
have a reasonable expectation that, assuming the continuity vote is passed, the Company will have adequate resources to
continue its operations for the foreseeable future. Thus, they 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 as adopted by the European Union 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 Board considers 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.
(c) Foreign currency translation
Transactions in foreign currencies other than the functional currency are translated at the applicable rates on the dates
of the transactions. Monetary assets and liabilities denominated in foreign currencies are re-translated to USD at the
applicable rates on the year-end date. Foreign currency exchange differences arising on translation and realised gains
and losses on disposals or settlements of monetary assets and liabilities are included in the Statement of Comprehensive
Income. Foreign currency exchange differences relating to investments at fair value through profit or loss are included in
the realised and unrealised gains and losses on those investments within “Net gain/(loss) from investments at fair value
through profit or loss” on the Statement of Comprehensive Income. All other foreign currency exchange differences relating
to other monetary items, including cash and cash equivalents, are included in net foreign exchange gains and losses in the
Statement of Comprehensive Income.
(d) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
2. Significant Accounting Policies (continued)
Financial Statements
55
Financial Statements
(i) Classification
In accordance with IFRS 9, the Company classifies its financial assets and financial liabilities at initial recognition into the
categories of financial assets and financial liabilities discussed below.
Financial assets
The Company classifies its financial assets as subsequently measured at amortised cost or measured at fair value through
profit or loss on the basis of both:
The entity’s business model for managing the financial assets
The contractual cash flow characteristics of the financial assets
Its contractual terms do not give rise to cash flows on specified dates that are solely payments of principal and interest
(SPPI) on the principal amount outstanding; or
It is not held within a business model whose objective is either to collect contractual cash flows, or to both collect
contractual cash flows and sell; or
At initial recognition, it is irrevocably designated as measured at FVTPL when doing so eliminates or significantly
reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or
recognising the gains and losses on them on different bases.
(a)
(b)
(c)
•
•
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding. The Company includes in this category
accrued income, cash and cash equivalents and receivables on sale of investments.
Financial assets measured at fair value through profit or loss (“FVTPL”)
A financial asset is measured at fair value through profit or loss if:
The Company measures all its investments at FVTPL.
(ii) Recognition and initial measurement
Financial assets and liabilities at fair value through profit or loss are recognised initially on the trade date, which is the
date that the Company becomes a party to the contractual provisions of the instrument. Other financial assets and
liabilities are recognised on the date they are originated.
Financial assets and financial liabilities at fair value through profit or loss are recognised initially at fair value, with
transaction costs recognised in the Statement of Comprehensive Income. Financial assets or financial liabilities not at
fair value through profit or loss are recognised initially at fair value plus transaction costs that are directly attributable
to their acquisition or issue.
(iii) Subsequent measurement
After initial measurement, the Company measures financial instruments which are classified as FVTPL at fair value.
Subsequent changes in the fair value of those financial instruments are recorded in net gain or loss on financial
assets and liabilities at FVTPL in the Statement of Comprehensive Income. Interest and dividends earned or paid on
these instruments are recorded separately in interest income or expense and dividend income in the Statement of
Comprehensive Income.
56
Annual Report 2023
Annual Report 2023
Notes to the Financial Statements
For the year ended 30 June 2023 (continued)
(iv) Derecognition
A financial asset is derecognised when the Company no longer has control over the contractual rights that comprise that
asset. This occurs when the rights are realised, expire or are surrendered. Financial assets that are sold are derecognised,
and the corresponding receivables from the buyer for the payment are recognised on the trade date, being the date the
Company commits to sell the assets.
A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or
expired.
(v) Fair value measurement
‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the principal or, in its absence, the most advantageous market
to which the Company has access at that date. The fair value of a liability reflects its non-performance risk.
When available, the Company measures the fair value of an instrument using the quoted price in an active market
for that instrument. A market is regarded as ‘active’ if transactions for the asset or liability take place with sufficient
frequency and volume to provide pricing information on an ongoing basis. The Company measures instruments quoted
in an active market at the last traded price.
If there is no quoted price in an active market, then the Company uses valuation techniques that maximise the use of
relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all
of the factors that market participants would consider in pricing a transaction.
The Company recognises transfers between levels of the fair value hierarchy as at the end of the reporting period during
which the change has occurred.
Any increases or decreases in fair value are recognised in the Statement of Comprehensive Income as an unrealised gain
or loss from investments at FVTPL.
(vi) Impairment of financial assets
At each reporting date, the Company measures the loss allowance on financial 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 accounts receivables, 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 exposure at the default. The assessment of the probability of default and loss given default is based on
historical data adjusted by forward-looking information.
(vii) Cash and cash equivalents
Cash comprises current deposits with banks. Cash equivalents are short-term highly liquid investments that are readily
convertible to known amounts of cash, are subject to an insignificant risk of changes in value and are held for the purpose
of meeting short-term cash commitments rather than for investment or other purposes.
(e) Offsetting
Financial assets and liabilities are offset, and the net amount is reported in the Statement of Financial Position when,
and only when, the Company has a legally enforceable right to set off the recognised amounts and the transactions are
intended to be settled on a net basis or simultaneously, e.g. through a market clearing mechanism.
2. Significant Accounting Policies (continued)
Financial Statements
57
Financial Statements
(f) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised
as a deduction from equity, net of any tax effects.
Repurchase, disposal and reissue of share capital (treasury shares)
Where the Company purchases its own share capital, the consideration paid, which includes any directly attributable
costs, is recognised as a deduction from equity shareholders’ funds through the Company’s reserves for own shares.
The reserves for own shares represents share capital which can be reissued in the future or subsequently cancelled.
When such shares are subsequently sold or re-issued to the market any consideration received, net of any directly
attributable incremental transaction costs, is recognised as an increase in equity shareholders’ funds through the
reserve of own shares account. The Directors have cancelled all the shares repurchased during the current and the
previous year.
(g) Tax
Tax expense comprises current tax. Current tax is recognised in the Statement of Comprehensive Income except to the
extent that it relates to items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted
or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
The Company is a tax resident in Guernsey and is subject to the standard rate of 0% on taxable income.
The Company is liable to Vietnamese transactional tax of 0.1% (2022: 0.1%) on the sales proceeds of the onshore sale
of equity investments. The related taxes on onshore sales proceeds are accounted for at net amount in the Statement
of Comprehensive Income.
(h) Interest income and expense
Interest income and expense is recognised in the Statement of Comprehensive Income using the effective rate method.
The effective interest rate method is a method of calculating the amortised cost of a financial asset or financial
liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash payments or receipts throughout the expected life of the
financial instrument – or, when appropriate, a shorter period – to the net carrying amount of the financial asset or
financial liability.
When calculating the effective interest rate, the Directors estimate cash flows considering all contractual terms of
the financial instrument but do not consider future credit losses. The calculation includes all fees and points paid or
received between parties to the contract that are an integral part of the effective interest rate, transaction costs and
all other premiums or discounts.
(i) Dividend income
Dividend income is recognised in the Statement of Comprehensive Income on the date on which the right to receive
payment is established. For listed equity securities, this is usually the ex-dividend date. Dividend income from equity
securities designated as at fair value through profit or loss is recognised in the Statement of Comprehensive Income
as a separate line item.
(j) Fee and commission expense
Fees and commission expenses are recognised in the Statement of Comprehensive Income as the related services are
performed.
(k) Earnings per share
The Company presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the year, adjusted for own shares held.
58
Annual Report 2023
Annual Report 2023
Notes to the Financial Statements
For the year ended 30 June 2023 (continued)
Financial assets of the Company include investments at fair value through profit or loss, cash and cash equivalents,
receivables on sale of investments, and accrued dividends and interest. Financial liabilities comprise payables on purchase
of investments and accrued expenses. Accounting policies for financial assets and liabilities are set out in note 2.
The Company’s investment activities expose it to various types of risk that are associated with the financial instruments and
the markets in which it invests. The most important types of financial risk to which the Company is exposed are market risk
(which includes price risk, currency risk, and interest rate risk), credit risk and liquidity risk.
Asset allocation is determined by the Company’s Investment Manager who manages the distribution of the assets to achieve
the investment objectives. Divergence from target asset allocations and the composition of the portfolio is monitored by
the Investment Manager.
Market risk
Market risk is the risk that the value of a financial asset will fluctuate as a result of changes in market prices (e.g. interest
rates, foreign exchange rates, equity prices and credit spreads) whether or not those changes are caused by factors specific
to the individual asset or factors affecting all assets in the market. The Company is exposed to market risk within its
investments purchased in the Vietnamese market.
The overall market positions are monitored continuously by the Investment Manager and at least quarterly by the Board.
The Company’s investments in securities are exposed to market risk and are disclosed by the following generic investment
types:
3. Financial Instruments and Associated Risks
93.90
-
93.90
Investments in listed securities
Investments in unlisted securities
Fair value
in USD
2022
Fair value
in USD
% of
net assets
% of
net assets
113,225,102
-
113,225,102
120,957,996
-
120,957,996
98.24
-
98.24
2023
At 30 June 2023, a 5% reduction in the market value of the portfolio would have led to a reduction in NAV and profit or loss
of USD 5,661,255 (2022: USD 6,047,900). A 5% increase in market value would have led to an equal and opposite effect on
NAV and profit or loss.
Currency risk
The Company may invest in financial instruments and enter into transactions denominated in currencies other than its
functional currency. Consequently, the Company is exposed to risks that the exchange rate of its currency relative to other
currencies may change and have an adverse effect on the value of the Company’s financial assets or liabilities denominated
in currencies other than USD.
The Company’s net assets are calculated every month based on the most up to date exchange rates while the general
economic and foreign currency environment is continuously monitored by the Investment Manager and reviewed by the
Board at least once each quarter.
The Company may enter into arrangements to hedge currency risks if such arrangements become desirable and practicable
in the future in the interest of efficient portfolio management.
Financial Statements
59
Financial Statements
As at 30 June 2023, the Company had the following foreign currency exposures:
2023
USD
2022
USD
Vietnamese Dong
Pound Sterling
Swiss Franc
Euro
128,235,094
632,133
163
4,497
128,871,887
115,320,188
(231,119)
175
4,536
115,093,780
Fair value
At 30 June 2023, a 5% reduction in the value of the Vietnamese Dong, Pound Sterling, Swiss Franc, Euro versus the US
Dollar would have led to a reduction in NAV and profit or loss of USD 5,766,009 (2022: USD 6,411,755), USD 11,556 (2022:
USD 31,607), USD 9 (2022: USD 8) and USD 227 (2022: USD 225) respectively. A 5% increase in value would have led to
an equal and opposite effect.
Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in
market interest rates.
The majority of the Company’s financial assets are non-interest-bearing. Interest-bearing financial assets and interest-
bearing financial liabilities mature or reprice in the short-term, no longer than twelve months. As a result, the Company
is subject to limited exposure to interest rate risk due to fluctuations in the prevailing levels of market interest rates.
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 with the Company.
At 30 June 2023, the following financial assets were exposed to credit risk (including settlement risk): cash and cash
equivalents, receivables on sale of investments and accrued dividends and interest. The total amount of financial
assets exposed to credit risk amounted to USD 2,966,035 (2022: USD 8,219,453).
Substantially all the assets of the Company are held by the Company’s custodian, Standard Chartered Bank (Singapore)
Limited. Bankruptcy or insolvency of the custodian may cause the Company’s rights with respect to cash and securities
held by the custodian to be delayed or limited. The Company monitors its risk by monitoring the credit quality and
financial positions of the custodian the Company uses.
As at 30 June 2023, the Company’s custodian, Standard Chartered Bank (Singapore) Limited, was rated as A+ by
Standard and Poor’s, A1 by Moody’s and A+ by Fitch (2022: A by Standard and Poor’s, A1 by Moody’s and A+ by Fitch).
Financial assets subject to IFRS 9’s impairment requirements
The Company’s financial assets subject to the expected credit loss model within IFRS 9 are cash and cash equivalents,
and short-term receivables, including accrued dividends and interest, and receivables on sale of investments. As at 30
June 2023, the total of cash and cash equivalents, and short-term receivables was USD 2,966,035 (2022: USD 8,219,453).
The Directors assessed the lifetime expected credit loss as at 30 June 2023 and concluded it to be immaterial (2022:
loss immaterial). There is not considered to be any concentration of credit risk within these assets. No assets are
considered impaired and no amounts have been written off in the year.
All short-term receivables are expected to be received in three months or less. An amount is considered to be in default
if it has not been received 30 days after it is due.
60
Annual Report 2023
Annual Report 2023
Notes to the Financial Statements
For the year ended 30 June 2023 (continued)
Liquidity risk
The Company, a closed-end investment company, invests in companies through listings on the Vietnam stock exchanges.
There is no guarantee however that the Vietnam stock exchanges will provide liquidity for the Company’s investments.
The Company’s overall liquidity risks are monitored on at least a quarterly basis by the Board. The Company is a closed-end
investment company so Shareholders cannot repurchase their shares directly from the Company.
The Board has considered that there may be periods of time when parts of the portfolio are prone to higher liquidity risk,
but is satisfied overall that the fixed liabilities of the Company can be met by income or from selling sufficient marketable
securities even at periods of higher illiquidity.
Payables on purchase of investments and accrued expenses are generally payable within one year.
The table below summarises the maturity profile of the Company’s financial assets and liabilities based on contractual
undiscounted receipts and payments:
3. Financial Instruments and Associated Risks (continued)
Cash and cash equivalents
Investment at fair value through profit and loss
Accrued dividends and interest
Receivables on sale of investments
Total financial assets
Total
USD
2023
No fixed
maturity
USD
Over
3 months
to 5 years
USD
1 to 3
months
USD
On demand
USD
0 to 1
month
USD
1,750,069
113,225,102
87 7,375
338,591
116,191,137
-
113,225,102
-
-
113,225,102
-
-
-
-
-
-
-
87 7,375
338,591
1,215,966
1,750,069
-
-
-
1,750,069
-
-
-
-
-
Payables in purchase of investments
Payables on repurchase of shares
Accrued expenses
Total financial liabilities
343,745
246,469
341,646
931,860
-
-
-
-
-
-
-
-
343,745
246,469
341,646
931,860
-
-
-
-
-
-
-
-
Cash and cash equivalents
Investment at fair value through profit and loss
Accrued dividends and interest
Total financial assets
Accrued expenses
Total financial liabilities
2022
8,160,681
120,957,996
58,772
129,17 7,4 49
355,282
355,282
-
120,957,996
-
120,957,996
-
-
-
-
-
-
-
-
-
-
58,772
58,772
355,282
355,282
8,160,681
-
-
8,160,681
-
-
-
-
-
-
-
-
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 Board to assess the Company’s performance and to allocate resources is the total return on the Company’s NAV
calculated as per the prospectus.
4. Operating Segments
Financial Statements
61
Financial Statements
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.
In line with the Company’s investment policy, the Company may invest:
up to 25% of its 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.
•
•
•
As of 30 June 2023, no individual investment exceeded 20% of the net assets attributable to Shareholders (2022: none).
All of the Company’s investments in securities at fair value are in Vietnam as at 30 June 2023 and 30 June 2022. All of
the Company’s investment income can be attributed to Vietnam for the years ended 30 June 2023 and 30 June 2022.
5. Share Capital
Ordinary shares of USD 1 each
Pursuant to its redomiciliation to Guernsey, the Company re-registered with an authorised share capital of USD 200,000,000
divided into 200,000,000 shares of a nominal or par value of USD 1.00 each. In line with the Company’s new Articles of
Incorporation, the Company may from time to time repurchase all or any portion of the shares held by the Shareholders
upon giving notice of not less than 30 calendar days.
On 8 March 2019 the Company’s ordinary shares were cancelled from trading on AIM and admitted to the Premium segment
of the Official List and trading on the Main Market. On the same date the Company’s shares were admitted to listing and
trading on the TISE.
Total shares issued and fully paid (after repurchases and cancellations) at beginning of the year
Shares issued upon exercise of warrants during the year
Shares cancellation
Repurchased and reserved for own shares
At beginning of the year
During the year
Shares reissued to ordinary shares
Shares cancellation
Total outstanding ordinary shares with voting rights
2023
No. of shares
2022
No. of shares
42,623,935
-
(13,398,268)
29,225,667
-
(13,398,268)
-
13,398,268
29,225,667
29,225,667
-
(1,500,563)
27,7 25,10 4
-
(1,500,563)
-
1,500,563
27,7 25,10 4
As a result, as at 30 June 2023 the Company has 27,725,104 (2022: 29,225,667) ordinary shares with voting rights in issue
(excluding the reserve for own shares), and nil (2022: nil) are held as reserve for own shares.
Reserve for own shares
Reserve for own shares are the Company’s own shares which had been repurchased. The amount represents share capital
which can be reissued in the future or subsequently cancelled. All reserves are available for distribution subject to a solvency
assessment.
62
Annual Report 2023
Annual Report 2023
Notes to the Financial Statements
For the year ended 30 June 2023 (continued)
During the year ended 30 June 2023 the Company repurchased and cancelled 1,500,563 ordinary shares (2022: 661,084
ordinary shares) under the Company’s share buyback programme (representing 5.1% of the ordinary shares outstanding at
1 July 2022) at a weighted average NAV discount of 15.2%. This resulted in a 0.78% accretion to NAV per share.
Holders of ordinary shares are entitled to attend, speak and vote at general meetings of the Company. Each ordinary share
(excluding shares in treasury) earns one vote. Treasury shares do not carry voting rights.
Capital Management
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 Board may
from time to time and at its 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 NAV per share.
5. Share Capital (continued)
6. Net Assets Attributable to Shareholders
Total equity of USD 115,259,277 (2022: USD 128,822,167) represents net assets attributable to Shareholders. NAV per share as
at 30 June 2023 is USD 4.157 (2022: USD 4.408).
7. Net (Loss)/Gain from Investments at Fair Value through Profit or Loss
Realised gain on disposal of investments
Realised foreign currency (loss)/gain
Unrealised loss on investments at fair value through profit or loss
Unrealised foreign currency gain/(loss)
2023
USD
2022
USD
50,172,287
253,204
(54,419,413)
(1,217,183)
(5,211,105)
1,874,662
(1,660,823)
(7,200,804)
492,223
(6,494,742)
8. 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 year ended 30 June 2023 was USD 1,936,485 (2022: USD
2,737,804). An amount of USD 162,201 (30 June 2022: USD 200,421) was outstanding as at 30 June 2023.
Financial Statements
63
Financial Statements
Directors’ fees and expenses
The Board 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 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 year for the Directors’ fees were USD 319,183 (2022: USD 317,859) and expenses were USD 97,994 (2022:
USD 67,433). The total Directors’ fees and expenses for the year were USD 417,177 (2022: USD 385,292).
As at 30 June 2023, USD nil (2022: USD 9,012) of Directors’ fees were outstanding.
Ownership of shares
As at 30 June 2023, Directors held 44,920 ordinary shares in the Company (2022: 44,920) as listed below.
Hiroshi Funaki
Sean Hurst
Philip Scales
Damien Pierron
Saiko Tajima
19,887
5,312
10,077
4,644
5,000
Shares
Shares
Shares
Shares
Shares
Mr Funaki is also a Director of Discover Investment Company which holds 1,415,776 ordinary shares in the Company
representing 5.01% of the issued share capital. Discover Investment Company acquired 10,000 shares during the year.
Mr Craig Martin, Chairman of the Investment Manager holds 67,086 shares in the Company. During the year he purchased
7,400 shares during the year.
9. Custodian Fees
Custodian fees are charged at a minimum of USD 12,000 (2022: USD 12,000) per annum and received as a fee at 0.08% on
the assets under administration (“AUA”) per annum. Custodian fees comprise safekeeping fees, transaction fees, money
transfer fees and other fees. Safekeeping of unlisted securities up to 20 securities is charged at USD 12,000 (2022: USD
12,000) per annum. Transaction fees, money transfers fees and other fees are charged on a transaction basis.
The charges for the year for the Custodian fees were USD 101,674 (2022: USD 152,863), of which USD 9,500 (2022: USD
13,000) were outstanding at year end.
10. Administrative and Accounting Fees
In accordance with the new Administration Agreement between the Company and Sanne Group (Guernsey) Limited (the
“Administrator”) dated 7 October 2019, the Administrator is entitled to receive a fee of 0.08% per annum of NAV up to USD
100,000,000, 0.07% of NAV thereafter subject to a minimum fee of USD 140,000 per annum. The administration fees are
accrued monthly and are payable quarterly in advance. The charges for the year for Administration fees were USD 145,590
(2022: USD 139,207), of which USD 1,120 (2022: USD 1,130) were outstanding at year end.
The Sub-Administrator receives a fee as consideration for the services provided to the Company at such rates as may be agreed
in writing from time to time between the Company and the Sub-Administrator. The charges for the year for Administration
fees were USD 56,024 (2022: USD 77,731), of which USD 4,744 (2022: USD 5,303) were outstanding at year end.
Total administrative and accounting fees for the year were USD 201,614 (2022: USD 216,939).
11. Controlling Party
The Directors are not aware of any ultimate controlling party as at 30 June 2023 or 30 June 2022.
64
Annual Report 2023
Annual Report 2023
Notes to the Financial Statements
For the year ended 30 June 2023 (continued)
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 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.
12. Fair Value Information
There were no transfers between levels during the year.
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.
There are no level 3 assets held at 30 June 2023 (2022: nil).
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
USD
Level 2
USD
Level 3
USD
Total
USD
2023
Financial assets classified at fair value upon initial recognition
Investments in securities
2022
Financial assets classified at fair value upon initial recognition
Investments in securities
113,225,102
120,957,996
-
-
-
-
113,225,102
120,957,996
Financial Statements
65
Financial Statements
13. Classifications of Financial Assets and Liabilities
The table below provides a breakdown of the line items in the Company’s Statement of Financial Position to the categories
of financial instruments.
Cash and cash equivalents
Investment in securities at fair value
Accrued dividends
Receivables on sale of investments
2023
Fair value through
Profit or loss
USD
Loans and
receivables
USD
Total carrying
amount
USD
Other
liabilities
USD
1,750,069
113,225,102
87 7,375
338,591
116,191,137
-
-
-
-
-
1,750,069
-
87 7,375
338,591
2,966,035
-
113,225,102
-
-
113,225,102
Accrued expenses
Payables in purchase of investments
Payables on repurchase of shares
341,646
343,745
246,469
931,860
341,646
343,745
246,469
931,860
-
-
-
-
-
-
-
-
Cash and cash equivalents
Investment in securities at fair value
Accrued dividends
Accrued expenses
8,160,681
120,957,996
58,772
129,17 7,4 49
355,282
355,282
-
-
-
-
355,282
355,282
8,160,681
-
58,772
8,219,453
-
-
-
120,957,996
-
120,957,996
-
-
2022
14. Earnings Per Share
The calculation of basic and diluted earnings per share at 30 June 2023 was based on the total comprehensive loss for the
year attributable to Shareholders of USD 8,622,089 (2022: loss of USD 7,719,310) and the weighted average number of shares
outstanding of 28,685,603 (2022: 31,987,327).
15. New and Amended Standards and Interpretations
(i) Standards and amendments to existing standards effective 1 July 2022
The Board of Directors has assessed the impact, or potential impact, of all new standards and amendments to existing
standards. In the opinion of the Board of Directors, there are no mandatory new standards and amendments applicable
in the current year that had any material effect on the reported performance, financial position, or disclosures of the
Company.
(ii) Standards effective after 30 June 2023 that have been early adopted by the Company
There are no standards effective after 30 June 2023 that are relevant to the Company.
16. Events After the Reporting Date
It was announced on 8 September 2023 that finnCap plc and Cenkos Securities plc had successfully merged to form a new
group known as Cavendish Securities plc, the Corporate Broker and Financial Adviser of the Company.
From 1 July 2023 to the date of signing these financial statements, there were no other material events that require
disclosures and/or adjustments in these financial statements.
66
Annual Report 2023
Annual Report 2023
Discount or Premium
The amount, expressed as a percentage, by which the ordinary share price is either higher (premium) or lower (discount)
than the NAV per ordinary share.
Ongoing charges
Ongoing charges have been calculated in accordance with the Association of Investment Companies (the “AIC”)
recommended methodology by taking the regularly incurred annual operating expenses of running the Company expressed
as a percentage of average NAV.
The ongoing charges for the year ended 30 June 2023 were 3.07%.
a) Average NAV
Calculated using twelve monthly closing average NAV for the year ended 30 June 2023.
b) Operating expenses
Total annual expenses incurred by the Company less the cost of project and one-off expenses i.e. non-recurring expenses.
Alternative Performance Measures (“APMs”)
NAV per ordinary share (pence)
Ordinary share price (pence)
Discount
Average NAV
Operating expenses
Ongoing charges
Total annual expenses
Less: non-recurring expenses
Operating expenses
30 June 2023
30 June 2023
USD
USD
Page
Page
Page
a
b
((b-a)/a)
a
b
b/a
c
d
b=c+d
1
1
1
1
1
1
51
329.0
277.5
15.7%
111,710,032
3,433,537
3.07%
3,442,094
(8,557)
3,433,537
Financial Statements
67
Annual Report 2023
Directors
Mr. Hiroshi Funaki
Mr. Sean Hurst
Mr. Philip Scales
Mr. Damien Pierron
Ms. Saiko Tajima
Investment Manager
Dynam Capital, Ltd
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey
GY1 2HL
Registered Office, Company
Secretary and Administrator
Sanne Group (Guernsey) Limited
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey
GY1 2HL
Sub-Administrator, Custodian
and Principal Bankers
Standard Chartered Bank (Singapore) Limited
7 Changi Business Park Crescent
Level 3, Securities Services
Singapore 486028
UK Legal Adviser
Stephenson Harwood LLP
1 Finsbury Circus
London
EC2M 7SH
Guernsey Legal Adviser
Carey Olsen (Guernsey) LLP
Carey House
Les Banques
St Peter Port
Guernsey
GY1 4BZ
Auditor
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey
GY1 1WR
Market Researcher
Dynam Consultancy and Services
Company Limited
Floor 12, Deutsches Haus,
33 Le Duan,
Ben Nghe Ward, District 1
Ho Chi Minh City,
Vietnam
Corporate Broker and Financial Adviser
Cavendish Securities plc (
As from 8
September 2023, formerly finnCap Ltd
)
One Bartholomew Close
London
EC1A 7BL
(Nominated Adviser (AIM) until
transference to LSE Main Market)
Registrar
Computershare Investor Services
(Guernsey) Limited
1st Floor, Tudor House
Le Bordage
St Peter Port
Guernsey
GY1 1DB
Corporate Information
68
Financial Statements
