Annual Report 2024
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.
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 Report
Contents
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
41
46
47
48
49
50
62
63
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
25
26
31
33
35
39
Governance
Annual Report 2024
Highlights
140.2m
Total Net
Assets (USD)
‘24 ‘23
140.2m
115.3m
5.137
Total Net Value
per share (USD)
‘24 ‘23
5.137
4.157
406.4p
Total Net Value
per share (GBP)
406.4p
‘24 ‘23
329.0p
396.0p
Share
Price
396.0p
‘24 ‘23
27 7.5 p
2.6%
Discount to Net
Asset Value
2.6%
‘24 ‘23
15.7%
As at 27 September 2024 (the latest available date before approval of the accounts), the discount to NAV had moved to
4.0%. The estimated NAV per share and mid-market share price at 27 September 2024 was 406.45p and 390.0p respectively.
Ongoing Charges
Ongoing charges for the year ended 30 June 2024 have been calculated in accordance with the Association of Investment Companies
(the “AIC”) recommended methodology. The ongoing charges for the year ended 30 June 2024 were 2.97% (3.07% as at 30 June 2023).
Refer to page 62 for the definitions of Alternative Performance Measures (“APMs”) together with how they have been calculated.
* Operating expenses per the financial statements less non-recurring expenses of USD 401,824.
Average NAV
Operating Expenses*
Ongoing charges
Year end 30 June 2024 USD
127, 574,317
3,783,976
2.97%
a
b
b/a
Financial Highlights
Total NAV return was 23.6%
Outperformed VNAS index by 14.6% during the year
Outperformed VNAS index on 1, 3, 5, 10 and 15 year basis
Included in FTSE All Share Index Discount to NAV is the lowest of the peer group.
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Operational Highlights
Fund is invested in 24 positions
Top-ten positions account for 63.2% of the NAV
Winner of Citywire’s ‘best emerging market single-country fund’
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Stategic Report
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Focused Investment
Approach
What Makes Us Different
Big enough to be an active and engaged shareholder in
portfolio companies, nimble enough to find and fund less-
known emerging champions.
Right Size for the Vietnam Equity Market
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.
Nimble Access Across Spectrum
High conviction, off-index positions managed by the Investment
Manager’s active ownership capabilities.
Actively Managed Portfolio
VNH is the first London-listed fund focussed on Vietnam to
introduce an annual redemption facility, whereby qualifying
investors can sell some or all of their shares on an annual basis at
NAV less any applicable fees.
Unique Redemption Feature
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 Transparency report.
ESG in the DNA
Portfolio of 24 companies with 63.2% in top-ten
positions. The portfolio has a price-to-earnings
valuation of circa 12.9x 2025 earnings and an
earnings growth forecast of 20%
Company Overview
Investment Manager
Vietnam Specialist, Citywire AAA rated Fund
Manager, 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 Capital Ltd Does:
Active engagement with portfolio companies
on ESG.
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Long-term investment horizon.
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The Company
London listed Investment Company established in
2006. Member of the FTSE All Share Index. 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.
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VietNam Holding Limited
What VietNam Holding Limited Does:
Protect shareholder interests by aspiring to the
highest standards of corporate governance at
both fund & portfolio level.
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Annual Report 2024 Stategic Report
Summary Information
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 admitted to the Main Market (previously the Premium
segment of the Official List) and admitted to trading in 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 2028.
Annual Redemption Facility
The Company has introduced an annual redemption facility that gives
shareholders an opportunity to realise their holding in the Company
at fair market value. The first Redemption Point was on 30 September
2024 and every year thereafter. The redemption facility has no impact
on the going concern of the Company. Refer to further details in
the Directors ‘Report on page 35 and in the Notes to the financial
statements on pages 50 to 51.
Investment Objective
The Company’s investment objective is to achieve long-term capital
appreciation by investing in a diversified portfolio of companies that
have high growth potential at an attractive valuation.
Investment Policy
The Company attempts to achieve its investment objective by investing
in the securities of publicly traded companies in Vietnam, and in the
securities of foreign companies if a majority of their assets and/or
operations are based in Vietnam.
The Company may invest in equity securities or securities that have
equity features, such as bonds that are convertible into equity.
The Company may invest in listed or unlisted securities, either on the
Vietnamese stock exchanges, through purchases on the OTC Market, or
through privately negotiated deals.
The Company may invest its available cash in the Vietnamese domestic
bond market as well as in international bonds issued by Vietnamese
entities.
The Company may utilise derivatives contracts for hedging purposes
and for efficient portfolio management but will not utilise derivatives
for investment purposes.
The Company does not intend to take control of any company or entity
in which it has directly or indirectly invested (the “Investee Company”)
or to take an active management role in any such company. However,
Dynam Capital, Ltd. (“Dynam Capital”), (the “Investment Manager”)
may appoint one of its directors, employees or other appointees to join
the board of an Investee Company and/or may provide certain forms of
assistance to such company, subject to prior approval by the 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:
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.
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
inves tment).
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;
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:
Furthermore, based on the guidelines established by the United Nations
Principles for Responsible Investment (“PRI”), of which the Company is
a signatory:
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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.
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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Stategic ReportAnnual Report 2024
Chairman’s Statement
Dear Shareholder,
I am pleased to present the Annual Report for VietNam Holding Limited
for the twelve-month period ending 30 June 2024.
This year has been another watershed moment for VietNam Holding
Limited: the Fund has outperformed the market, the discount to net
asset value (“NAV”) has fallen to less than 5% and the Company’s
shares have been included in the FTSE All Share and FTSE Small
Company indices.
The Fund’s NAV per share rose 23.6% for the full year to 30 June 2024,
outdoing the Vietnam All Share Index (“VNAS”) which increased by
9.5%. The Fund has outperformed the VNAS for one, three, five, ten
and 15 years. Dynam Capital, the Investment Manager, has delivered
an average annualised Alpha of 600 basis points. The Fund has also
performed better than its peers by a notable margin. It’s no surprise
that Citywire named the Fund ‘the best emerging market single-country
fund’ in November 2023 and awarded the Investment Manager’s team
a coveted triple-A performance in May 2024.
We are happy to report that an overwhelming majority (99%) of
shareholders voted to extend the Fund for a further five years at the
Extraordinary General Meeting (“EGM”) in December 2023 and to
adopt the innovative Annual Redemption feature. Perhaps due to
shareholders’ confidence in the Board’s focus on discount management,
the discount narrowed swiftly to below 5% after the announcement of
the Annual Redemption facility, falling as low as 2%. As a result, the
Board has not had to consider any share buybacks between December
2023 and June 2024. The Fund’s discount is significantly narrower than
those of the other two UK-listed Vietnam funds.
The combination of market-beating NAV performance and a reduced
discount have boosted the share price, which increased by 43% this
fiscal year. This market-leading performance has come without
compromising our commitment to responsible investing. During the
year, the Fund and the Investment Manager supported the second
environmental, social and governance (“ESG”) Investor Conference
in Vietnam. The Investment Manager continues to drive engagement
with portfolio companies on the challenges and potential for improving
governance, climate reporting and climate transition planning. Please
refer to the Sustainability Report for more details on this strategy and
the initiatives undertaken.
Last December, Damien Pierron and Sean Hurst stepped down from
the Board after a long period of dedicated service, and I would like to
reiterate my gratitude for their service to the Fund. I am delighted to
welcome Ms Vu to the board. Ms Connie Hoang Mi Vu joined in March
2024, bringing her extensive experience as an ESG champion. Ms Vu
has taken over as Chair of the ESG Committee, and I am particularly
glad to report that 50% of the board is now female, providing further
diversity to our Board deliberations.
The Board visited Vietnam in early 2024 and will be returning in
November. We are confident the country has a bright future ahead.
Despite global headwinds and local incidents, it has performed very
well. These challenges include weaknesses in the real-estate sector
caused primarily by disruptions in the bond market and project
permitting delays, rather than weak end-demand (which remains
strong) and concerns about the balance sheet strength of one or two
large local corporations (not portfolio companies) exposed to the real-
estate sector. We believe that having a dynamic, active investment
programme led by an on-the-ground research team is the best way
to identify and manage sustainable growth opportunities, as well as
navigate the challenges. Active mandates, like those managed by
Dynam Capital, have shown strong outperformance versus the broader
market. Nimble stock selection and portfolio construction have also
helped to beat peers. The Investment Manager’s Report provides more
information on the portfolio’s performance.
Vietnam remains a dynamic country. In a year marked by global
uncertainties and economic headwinds, its economy has shown
resilience, attracting record amounts of foreign direct investment
(“FDI”) and generating record trade surpluses, as the country solidifies
its position as a leading manufacturing hub. However, the country’s
government office bearers have changed multiple times. Vietnam
has an unusual political structure that is based on a consensus-driven
approach by the primary ‘pillars’ of government, which includes the
General Secretary of the Party, the President, the Prime Minister and
the Chairman of the National Assembly. Many of the reforms happened
during General Secretary Nguyen Phu Trong’s fierce anti-corruption and
malpractice campaign. On 18 July 2024, President To Lam was asked to
temporarily take over some of the duties of General Secretary Trong,
who passed away a day later. On August 3 2024, President To Lam
was unanimously elected as the General Secretary of the 13th Central
Committee of the Communist Party of Vietnam. To Lam comes from
the Ministry of Interior and is a former police officer, so we expect anti-
corruption measures to continue.
Western media have also covered some of the visible outcomes of
this anti-corruption crackdown, including the capital sentences for a
female entrepreneur convicted of several charges of misappropriating
Hiroshi Funaki Chairman
Annual Report 2024 Stategic Report
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state assets as well as money-laundering, mis-selling of bonds, and
fraud. Despite the harsh sentences, Vietnam’s government appears
united on the country’s economic development, which bodes well for
its capital markets and expanding economy.
Vietnam’s capital markets, particularly equities, are driven by local
investors who account for more than 90% of the daily trading volumes
and own more than 80% of the stocks listed on the Ho Chi Minh Stock
Exchange (“HOSE”). Vietnam is still part of the frontier investing world
and makes up 30% of the MSCI frontier index. This year foreign investors
have been net-sellers of Vietnamese equities, but domestic investor
interest remains high, accounting for the market’s 10% rise in value.
The ‘upgrade’ of the market to Emerging, or Secondary Emerging, is still
some way off, despite several positive steps being made. An upgrade
decision by one of the agencies could happen in 2025, but 2026 is more
likely. When this eventually happens, we anticipate the upgrade to be
a catalyst for renewed foreign investor interest, thereby increasing
market liquidity and potentially re-rating some leading companies.
More information can be found in the Investment Manager’s report,
and an article on the topic was included in the Interim Report earlier
this year.
Over the past twelve months there has been a notable increase in
interest in the Fund, as well as a considerable increase in daily liquidity
in the Company’s shares. The Investment Manager, along with our
Broker and distribution partners, has conducted an extensive marketing
campaign, hosting several in-person investor meetings across the
British Isles, as well as several online webinars and roundtables. We are
thrilled that the Company became a member of the FTSE All Share
and FTSE Small Company indices on 25 June 2024. This should help
sustain attractive levels of liquidity in the Company’s shares. We also
have a balanced shareholder register and are pleased to welcome new
investors many of whom purchased the shares through leading UK
wealth management platforms.
Hiroshi Funaki
Chairman
VietNam Holding Limited
1 October 2024
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Stategic ReportAnnual Report 2024
This year we celebrate the 18th anniversary of the Company and
its listing in London. The Company was first listed on AIM in July
2006 and then moved to the Main Market (previously the Premium
segment of the Official List) of the London Stock Exchange in March
2019. In June 2024, the Company joined the FTSE All Share Index. It
has been quite an adventure. As the Chairman of VNH noted in his
letter, liquidity in the Company’s shares has increased significantly,
the discount to Net Asset Value has decreased substantially, and the
Company has received several awards for its long-term performance.
We are delighted with the recognition that we have received from
Citywire and the UK Investor Magazine for being the best single-
country emerging market fund. We are also proud of the fact that
we received top marks from Citywire in their inaugural ranking for
closed-end fund managers: we are the only manager to be rated AAA
in the Equity – Country Specialist Asia Pacific – ex Japan sector.
Macro
Vietnam’s key themes of industrialisation, urbanisation and domestic
consumption are all intact and rising, with GDP growth for the full
year expected to be 6%, its impressive multi-decade average.
A continuous easing of monetary and fiscal policy has fuelled growth,
but two headwinds remain: the slow recovery of the property sector
and a weakening local currency. The overall expansion in the economy
has been buoyed by record levels of Foreign Direct Investment (“FDI”)
(USD 10.8bn disbursed in first half of 2024), and strong growth in
exports (+14.5% YoY for the first half of 2024). Imports have also
increased, particularly those from China. However, these are the
results of manufacturing expansion by importing more raw materials
and semi-finished goods, which have helped lift the manufacturing
PMI level to a near-record high level of 54.7. Overall, the first half
of 2024 saw a USD 11.6bn trade surplus compared to a record full-
year surplus of USD 28bn in 2023. The high levels of trade surplus and
record levels of FDI have helped offset the weakening local currency
and allowed the State Bank to sell around USD 6.4bn to provide more
stability to the Vietnam Dong, which depreciated by 4.6% in the first
half of 2024.
Performance
As stated in the interim report as of 31 December 2023, the NAV per
share increased by 8% during the first half of the financial year, while
the Vietnam All Share Index (“VNAS”) increased by 3.2%. The second
half had a 14.4% rise in NAV per share versus an 8.1% increase in
the VNAS. At 30 June 2024, the NAV per share rose by 23.6% for the
full-financial year versus a 9.5% increase in the VNAS. The Company
continues to outperform its peers and has outperformed the VNAS on
a one, three, five, ten, and 15-year basis. The two other London-listed
Vietnam peers, VOF and VEIL, were up by 11.5% and 6.1% respectively
during the corresponding period. The Company’s share price rose by
43% during the financial year due to a combination of a strong NAV
increase and significant narrowing in the discount between the share
price and the NAV. Since the adoption of the Share Redemption
feature, the Company’s discount has, on average, remained below 5%.
This compares to the high-teens level of discounts for peers.
Portfolio
The portfolio remains concentrated, with the top ten holdings
accounting for 63.2% of the portfolio’s Net Asset Value (see table on
page 11). This is the direct result of our active portfolio construction.
Initial position sizing is based on our conviction-led approach to
investment decision making. We often start a new position at a
modest conviction level of roughly 2% of NAV, increasing to a mid-
level of 4-6% and then high conviction level of 8% when we become
more comfortable with the company and more assured about
the sustainability of its strategy. The portfolio is comprised of 24
companies, all of which have been thoroughly researched. At any one
time there are another 12-20 companies that we monitor closely and
review on a regular basis, looking for catalysts for new growth. We
also research promising newer companies, albeit our investment bar
is extremely high, as we seek companies with acceptable valuations,
strong growth prospects and a desire to engage with us on a journey of
improving governance, investor relations and sustainability reporting.
The portfolio valuation is approximately 12.9x PE for 2025, which is
reasonable given the expected Earnings Per Share (“EPS”) growth of
20% for 2025.
Investment Manager’s Report
Vu Quang Thinh Craig MartinCIO and Managing Director Chairman and Managing Director
Annual Report 2024 Stategic Report
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Positioning and Core Themes
Our main investment approach remains focused on industrialisation
(best-in-class manufacturers, international logistics, digitalisation);
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 increasingly interconnected, as industrialisation and
urbanisation continue to drive robust GDP growth while digitalisation
boosts domestic consumption, which is also supported by the ongoing
modernisation of the country’s banking sector.
Industrialisation
Over the last thirty years, Vietnam has emerged as a key manufacturing
hub for a wide range of goods. Foreign direct investment in the industrial
and manufacturing-for-export sectors has propelled the country’s
GDP growth. The ‘Made-in-Vietnam’ trend has been accelerated by
the ‘China-plus-one’ strategy of global manufacturers, seeking to de-
risk their supply chains. The war in Ukraine and economic isolation of
Russia have also presented challenges causing companies to spread
their production more evenly around the world. Some commentators
have called this the beginning of the end of globalisation, but what is
perhaps more likely is the continuation of supply chain restructuring.
Some companies will aim to re-shore manufacturing to their native
country, while others near-shore (e.g., expand production in Mexico for
North American markets) or 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, such as
garment companies and seafood producers, we have chosen to get
most of our exposure to these themes over the past few years through
business-to-business ‘linkages’ mostly through industrial parks and
logistic companies. These typically have a higher quality of earnings,
higher return on equity, and less risk than the individual exporters. A
core holding in this area is the leading port operations and logistics
company, Gemadept (“GMD”), which at 6.4% of NAV is the third largest
position in the portfolio. Gemadept also owns a 30% stake in a leading
air-cargo company, Saigon Air Cargo (“SCS”), which is also a portfolio
company. In addition to premium consumer products, high value light
electronics, semi-conductors and ‘just-in-time’ components are often
transported by air, and as the US Chip Act makes deeper impacts
over the coming years, favouring friendly shores such as Vietnam, the
country’s air cargo services will be in even greater demand.
Urbanisation
Vietnam’s urbanisation level was approximately 37% in 2022 and has
risen to about 40% in 2024. These were the levels reached by China
in 2000, before doubling over the next twenty years. The government
forecasts that Vietnam’s urban population is expected to exceed 50%
by 2030. In a previous annual report, we discussed the multiplier effect
of investments in domestic infrastructure, citing the May 2022 opening
of a new bridge across Ho Chi Minh City’s Saigon River that now
connects the down-town District 1 hub to the Thu Thiem peninsular,
a region already demarcated as a new ‘metropolis’. The delayed but
hopefully soon-to-be-finished metro line in Ho Chi Minh City will
eventually transform the commute from outlying districts to the city
centre. Its tracks, tunnels and elevated sections are all in place, with
the stations mostly complete. When finished, the new international
airport at Long Thanh will also create new areas for residential and
light industrial uses.
While the potential for urban growth remains intact, as 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. We
had a 15% exposure to the real-estate sector at the third quarter of
2022 but were quick to reduce this in the face of weakening near-term
prospects and, indeed, managed to escape the worst of the turmoil
that hit some companies in the sector. At the end of 2023, our exposure
to real estate was 9.4%, and was reduced to 7.8% at 30 June 2024,
with the majority of this going to the industrial park sector rather than
the residential market. For example, we have 5.3% of NAV in IDICO, a
leading industrial park developer. We are confident that some of the
key names in the residential sector will survive and thrive. We see signs
of recovery and evidence of end-user demand, but some developers
have struggled to get projects approved and refinance their bonds and
debt at maturity, while some also have overhanging issues unrelated to
the core real estate activities.
Domestic Consumerism
We believe that Vietnam’s economy is at an inflection point, and
that the consumer sector will grow rapidly in the next years to come.
Vietnam’s GDP has doubled over the past ten years, and its per
capita GDP places the country in the ‘upper middle income’ economic
bracket. The government’s ambition is for the country to reach the
‘high income’ status by 2045. Since the pandemic, higher interest rates,
subdued manufacturing and rising costs dampened consumer demand
in several areas, and we adjusted our portfolios accordingly. Starting
from the fourth quarter of 2023, we began adding back to the sector
again, as our research indicates improved trading prospects. At the end
of June 2023, the sector allocation had dropped to 7.8%, with omni-
channel champion Mobileworld (“MWG”) at 2.7%. As of June 2024,
the sector allocation increased to 12.7%, with MWG returning to the
number two portfolio position at 6.6%.
Banks and financial sector
VNH’s allocation to banks was 26% at 30 June 2024, representing an
underweight position relative to the index. Key portfolio names in the
portfolio include Techcombank, 5.3% NAV, Asia Commercial Bank,
5.0% NAV, MB Bank, 4.8% NAV, and VP Bank, 4.6% NAV. In addition
to banks, we have a 6.3% allocation to several brokerages. This is a
sector we have made strong gains in historically, and we have never
been afraid to take profits. We believe that the sector will benefit from
returning domestic investor appetite, particularly as domestic interest
rates on bank deposits fall.
Attribution
Stock selection and portfolio construction have delivered a strong
outperformance against the broader market. The key stock
performance of the top five holdings is detailed on page 12, but it
8
Stategic ReportAnnual Report 2024
Investment Manager’s Report (continued)
is worth highlighting the performance of our portfolio’s strongest
conviction position, FPT (14.7% of NAV). This ‘overweight’ position has
contributed more than half of the portfolio’s outperformance. FPT’s
share price rose by 31.5% in the first half of the financial year and
then a further 57.2% in the second half. The rapid rise in share price
over the past six months was driven in part by the company’s strong
growth in digitalisation business internationally but also by investor
enthusiasm about potential partnerships with big global players such
as NVIDIA. This excitement is fuelled by the solid performance from
its core business segments, which have contributed to a 21% year-on-
year (“YoY”) increase in revenues for the past six months ending 30
June 2024 and a 22% rise in profits over the same period. FPT traded at
around 10x PE six years ago and is now trading at 24x. Its re-rating was
achieved in part by the spinoff in 2018 of its electronics retail business,
FRT, which was also up 58% in the first half of the year. FPT has been a
long-term portfolio hold, returning a 10x gain on our initial investment
cost.
Liquidity
The Vietnam stock market has grown dramatically over its 24-year
history. From only a handful of listed companies two decades ago, there
are now over 1600 public companies, and fifty companies with more
than USD 1bn in market capitalisation. Portfolio liquidity is robust,
and we estimate that over 95% of the portfolio could be liquidated
in under 30 days. During the past six months, average daily liquidity
has touched close to the equivalent of USD 1bn, which is five times
the pre-pandemic level. Vietnam’s domestic retail investor base is the
dominant driving force in the country’s stock market: there are now
eight million domestic share trading accounts, almost four times the
level in 2018. Foreign investors hold only approximately 15% of the stock
market, and over the past six months, foreigners have been net-selling
Vietnam listed equities to an amount of USD 2bn.
The portfolio’s size and nimbleness, as per our style of investment
management, allows us to navigate across a range of company
sizes, which we believe has contributed to the outperformance of the
Company versus the index and our peers. We have been able to take
profit in sectors that have surged and move swiftly as market forces
and economic mood change.
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 60. As
of 30 June 2024, the portfolio has approximately 2.1% of NAV in cash.
Responsible investing
The Company has been a signatory of the United Nations Principles for
Responsible Investing (“PRI”) since 2009. The Fund was the first fund in
Vietnam to adopt the principles, and since 2012, environmental, social
and governance (“ESG”) principles have been fully integrated into the
Fund’s investment process and engagement strategy. Our authentic
Attribution (continued)
approach has helped us receive top scores from the PRI in its latest
transparency report. There is much discussion about ‘greenwashing’
globally, and we believe our engagement approach is robust and remains
relevant in Vietnam. As part of the investment process ESG issues are
integrated into the initial screening, due diligence, investment decision
and investment monitoring phases. We have developed a proprietary
ESG scoring matrix, which we apply to each company. We do not
expect perfect scores at the beginning, but rather seek to identify
areas for improvement that can be addressed in a meaningful way
during our investment horizon. We use this to focus our engagement
with each portfolio company in face-to-face meetings. For several
years we have been conducting annual carbon footprint assessments
of our portfolio, and we encourage our portfolio companies to do more
on reporting their own carbon and GHG emissions and to evaluate their
contribution to the UN’s 17 Sustainable Development Goals (“SDGs”).
Since 2021, we have been an active member of the Asia Investor Group
on Climate Change and have optimised this experience by assisting our
portfolio companies to address climate transition risks and their own
planning for net-zero. We report on these efforts in greater detail in the
Sustainability Report
.
Outlook
In addition to increased foreign exchange risk, which is already
factored into the current Net Asset Value of the portfolio, political risk
has become a greater concern over the past twelve months. Evolving
political risk is, of course, a global phenomenon, and Vietnam is no
exception. Over the past year or so, there has been a significant push
against corruption in Vietnam, a ‘blazing furnace’ established by
General Secretary Nguyen Phu Trong targeted errant business-people
and government officials, resulting in several resignations. For much
of the year, there were also speculations about Trong’s deteriorating
health, and he died on 19 July 2024, just a day after receiving a Gold
Medal for service to the nation. The Politburo requested that President
To Lam assume some of Trong’s duties on an interim basis, and he was
unanimously elected as General Secretary on 3 August 2024.
We expect to see the government continue to pursue an open policy
to economic development. Vietnam has entered into 16 free trade
agreements over the past two decades and has an ambition to be a
key manufacturing hub. This country continues to attract record levels
of FDI which will further boost export growth. The government policies
are pro-business, and pro-capital markets.
The Prime Minister and the Ministry of Finance want to see continued
development of the stock and bond markets, with an ambition to
increase the size of the stock market and bond market close to an
equivalent size of 100 % and 50% of GDP respectively by 2025. The State
Securities Commission is inviting feedback from market participants on
a recently published final draft circular proposing to remove the pre-
funding requirement on stock trading accounts. They hope to have this
ready by September, ahead of the FTSE Russell review on Vietnam’s
stock market status. Vietnam is on the FTSE Russell Secondary
Emerging Market watchlist, and an upgrade would be very welcome.
In the Interim Report this year we included a more detailed article on
Annual Report 2024 Stategic Report
9
the benefits of a market upgrade, but in simple terms Vietnam would
go from being part of a USD 90bn Frontier Market universe, to part
of a USD 7-8 trillion-dollar emerging market universe. The World Bank
estimates this could add a further USD 20-30bn of net indirect capital
flow within three years.
Vietnam’s political structure can be perplexing for foreign investors,
and its consensus-based approach to policy execution can sometimes
result in measured (slow) decision making. In previous annual reports,
we discussed the problems in meeting budgeted levels of government
infrastructure spending. This was under-budget in 2022 and 2023, most
likely due to certain officials’ reluctance to make difficult decisions. It is
encouraging to see a five percent increase in public expenditure on new
infrastructure year-to-date, with USD 10bn spent in the first six months
of 2024, and a USD 28bn target for the full calendar year.
Visitors travelling by air to Ho Chi Minh City will have undoubtedly
experienced the queues upon arrival (and departure). This is the result
of a spike in international arrivals, which have already returned to pre-
Covid levels, combined with increased domestic travel, putting strain
on the airport, which is already overcapacity. The government has been
putting pressure on authorities to speed up the construction of the new
international airport at Long Thanh, roughly 50km away from Ho Chi
Minh City’s District 1. It now appears that the initial phase of the airport
will be completed in 2026, six months ahead of schedule. Before that,
the third terminal at the existing Tan Son Nhat International Airport is
due to be completed in the first half of 2025.
Recent developments in the power sector bode well for the rising
adoption of renewable energy. Over the past decade, installed solar
and wind in Vietnam has gone from almost zero to 20 Gigawatts.
This was accomplished despite a relatively weak Power Purchase
Agreement (“PPA”) framework and a single monopoly buyer, the
state-owned utility EVN. The new Decree 80, passed on 11 July, now
allows for the direct purchase of rooftop generated solar energy. This
is essentially a soft de-regulation of the energy market. This is positive
for growth in solar power in a country that has high solar irradiance.
The government is also planning longer-term initiatives to tap into the
country’s significant wind power potential through offshore, nearshore
and onshore wind farms.
As with the rest of the world, the rapid technological changes and
digitalisation initiatives in Vietnam require vast amounts of processing
power and storage. In another encouraging development, data centres
can now be wholly owned by foreign investors under new legislation
enacted in November 2023, which came into recent effect. The growth
of domestic data centres is a key aspect of Vietnam’s growing digital
transformation, and FPT should also benefit as a technology enabler.
So, the outlook remains positive. Despite considerable domestic
political changes, we do not see any change to the momentum related
to policy. We also expect foreign exchange risks to reduce when the
US Fed starts to lower interest rates, and the interest rate differential
between the US and Vietnam (and other Asian countries) softens. The
stock market growth over the past year has been domestically driven.
Once the year of extraordinary global political turbulence is past, and
markets are reassessed for relative attractiveness, we believe emerging
markets and Vietnam in particular (albeit officially a frontier market)
will rally further.
10
Stategic ReportAnnual Report 2024
Top 10 Companies by NAV as at 30 June 2024 (and as at 30 June 2023)
FPT Corporation
Sacombank
PV Technical Services JSC
Military Commercial Bank JSC
Vietcombank
Gemadept Corporation
Phu Nhuan Jewelry JSC
IDICO Corporation JSC
Ho Chi Minh City Securities
Asia Commercial Bank
Total
Top 10 companies as at 30 June 2023 Sector % NAV
FPT Corporation
Mobile World Investment Corporation
Gemadept Corporation
PV Technical Services JSC
Techcombank
IDICO Corp JSC
Asia Commercial Bank
Military Commercial Bank JSC
Vietnam Prosperity JSC Bank
Hoa Phat Group JSC
Total
Top 10 companies as at 30 June 2024 Sector % NAV
Telecommunications
Retail
Industrial Goods and Services
Oil and Gas
Banks
Real Estate
Banks
Banks
Banks
Industrial Goods and Services
14.7%
6.6%
6.4%
6.1%
5.3%
5.3%
5.0%
4.8%
4.6%
4.4%
63.2%
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%
Dynam Capital, Ltd
1 October 2024
Investment Manager’s Report (continued)
Annual Report 2024 Stategic Report
11
About the Company
Founded in 1988, FPT is Vietnam’s leading technology firm, offering a
comprehensive range of services including software development, IT
services, and telecommunications. The company is also a well-known
distributor and retailer of IT products and a key player in the education
sector, with programs spanning multiple levels for 145,000 students
nationwide.
FPT currently operates across more than 30 countries and territories.
This extensive international network enables FPT to deliver diverse
IT services and solutions globally, serving clients in sectors such as
automotive, finance, and healthcare. The company has successfully
transformed itself from an IT outsourcing service provider to an end-
to-end digital transformation partner. In 2023, revenue from digital
transformation services reached a record USD 410 million. Additionally,
FPT provides broadband internet to four million subscribers and owns
telecommunications infrastructure, including a main North-South link,
recently upgraded from copper wires to fiber-optic cables.
As of 31 December 2023, FPT employed 48,162 individuals, including
32,392 engineers and technology experts.
Recent Developments
FPT delivered a strong financial performance in 2023, with revenue and
profit after tax of USD 2,067 million and USD 306 million, respectively,
reflecting a 19.6% and 20.0% year-on-year growth in local currency.
Global IT Services was the primary growth driver, with a 28.4% year-
on-year increase. Notably, for the first time, FPT surpassed USD 1
billion in revenue from IT services in foreign markets, showcasing the
competitiveness of Vietnamese businesses on the global stage. FPT
continues to ascend the technology value chain by prioritising the
development of AI, Cloud, Big Data, and specialised domains with high
growth potential, such as healthcare, finance, and automotive. Revenue
from digital transformation services, which accounted for nearly half of
the total revenue from foreign markets, underscores this strategic shift.
The Education segment also demonstrated robust growth, with revenue
increasing by 31% in local currency to reach USD 242 million. In 2023,
FPT Education expanded its network of training facilities, establishing a
presence in over 20 provinces and cities nationwide.
Sustainability Strategy
FPT has developed a sustainable development strategy that balances
three key factors: economic growth, community support, and
environmental protection. The company’s objectives and activities are
aligned with Vietnam’s action plan to implement the 2030 commitments
for sustainable development, as well as the GRI Sustainability Reporting
Standards.
ESG Achievements
In 2023, FPT made significant progress toward Sustainable Development
Goal 4 (“SDG 4”) – Quality Education, evidenced by its ranking of 201-
300 in the global university rankings for sustainable development, as
published by the Times Higher Education (“THE”) Impact Rankings. The
company actively engages in sustainability and ESG rating platforms
to strengthen its ESG strategy and track progress. FPT received a Silver
rating on its ESG performance according to the EcoVadis survey and was
awarded the “Best Country Award for Overall CSR Excellence” and the
“Best Community Programme Award” at the Global CSR & ESG Summit
and Awards 2023.
In terms of corporate governance, FPT has made significant efforts to
align with international standards. The company was recognised as one
of the Top 10 Large-Cap Enterprises with the Best Corporate Governance
in the 2023 Vietnam Listed Companies Awards, organised by the Ho
Chi Minh City Stock Exchange (“HoSE”), Hanoi Stock Exchange, and the
Investment Newspaper.
ESG Challenges
While FPT has measured and disclosed its greenhouse gas (“GHG”)
emissions for Scope 1 and Scope 2, the company has not yet reported
its Scope 3 emissions. Given FPT’s global expansion, it is increasingly
important for the company to measure indirect emissions throughout
its supply chain to develop a comprehensive decarbonisation plan that
addresses all three scopes of emissions.
Financial indicators
(as at 31 December)
VietNam Holding’s investment
Share information
20222023
Equity (USD million)
Revenue (USD million)
EBIT (USD million)
NPAT (USD million)
Diluted EPS (VND)
Revenue growth
NPAT grow th
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
0.3%
14.7%
27.9 %
HOSE
13 December 2006
7,4 89
85.9%
40.5%
1,075.1
1,866.0
288.1
275.2
3,847
21.7%
19.7%
39.0%
15.4%
27.8%
0.49
1,175.9
2,067.1
332.0
306.0
4,661
10.8%
11.2%
38.6%
16.1%
28.2%
0.47
FPT Corporation (“FPT”)
As at 30 June 2024
Top Five Portfolio Companies
12
Stategic ReportAnnual Report 2024
About the Company
Founded in 2004 as a single store selling mobile phones, MWG has grown to
become Vietnam’s largest retailer by revenue and physical store count, now
exceeding 5,000 locations. MWG operates under several brands, offering a
wide range of merchandise, including consumer electronics, groceries, and
pharmaceuticals. As of the end of 2023, the company employed over 60,000
people.
As a modern-trade consolidator, MWG has revolutionised the Vietnamese
retail landscape by continuously expanding its footprint, exploring new
formats, and diversifying product offerings to meet evolving consumer
needs. MWG now commands over 50% market share in mobile phones and
consumer electronics, while its grocery chain ‘Bach Hoa Xanh’ has recently
become the market leader in terms of revenue.
In addition to its core brick-and-mortar business, MWG has been enhancing
its e-commerce capabilities to respond to the growing trend of online
shopping in Vietnam. The company has invested significantly in its online
platforms and logistics infrastructure to better serve customers and
compete with other major e-commerce players in the market. Online
revenue accounted for 14% of total revenue in 2023, with a transaction
value of USD 700 million, positioning MWG among the top e-commerce
players in Vietnam. The company’s omni-channel approach, supported by
its extensive store network, fast delivery, and customer-centric culture, is a
key competitive advantage.
Recent Developments
2023 was one of the most challenging years for MWG, with revenue declining
by 18% year-on-year to USD 4.7 billion, and net profit dropping by 96% to
just USD 6.6 million, marking the lowest earnings since 2013. This downturn
was driven by a challenging economic environment and reduced demand for
non-essential goods, including electronics and household appliances, which
are core products for MWG. Additionally, intensified competition in the ICT
retail market led to a prolonged price war, further pressuring MWG’s pricing
strategies and profit margins.
However, there are signs of recovery. For 2024, management has announced
an ambitious target, projecting a 14-fold increase in after-tax profit to USD 96
million and a modest 6% growth in revenue to USD 5 billion. This plan reflects
MWG’s strategy to rebound from its 2023 performance by restructuring and
enhancing core activities. The ICT business has already shown positive growth
and improved margins as the price war among retailers has ended and
domestic consumption gradually recovers. Additionally, the grocery chain
‘Bach Hoa Xanh,’ which incurred a loss of USD 46 million in 2023, is expected
to turn profitable in 2024, driven by steady improvements in revenue per store
and operational efficiency. ‘Bach Hoa Xanh’ is anticipated to be a key growth
driver in the coming years, as ongoing urbanisation shifts consumer buying
behavior from traditional wet markets to modern retail outlets.
Sustainability Strategy
Mobile World Investment Corporation (“MWG”) has implemented several key
sustainability strategies to enhance its long-term growth and operational
efficiency. These include community engagement initiatives, such as
promoting eco-friendly products and practices, and Circular Economy
Initiatives, which aim to reduce plastic waste and promote recycling. MWG’s
various brands have undertaken projects to collect used batteries, recycle
advertising materials into organic fertilisers, and contribute to a circular
economy. The company prioritises its employees, followed by customers
and then shareholders. The performance-linked ESOP (Employee Stock
Ownership Plan) programs have been instrumental in retaining talented
individuals within the company and motivating top managers to explore new
market segments.
ESG Achievements
Over the past two years, MWG has made significant progress in ESG
(Environmental, Social, and Governance) implementation and has
become a leader in ESG among Vietnamese public companies. In terms of
governance, MWG has established a dedicated ESG committee within the
Board and hired a full-time ESG officer. The company has also improved
its ESG communications by adopting GRI (Global Reporting Initiative)
standards in its sustainability report, incorporating more quantitative
social and environmental data, and publishing a monthly ESG newsletter to
communicate its ESG/CSR activities to investors.
ESG Challenges
As consumer awareness of sustainable and healthier lifestyles continues
to grow, integrating ESG into its business model presents both challenges
and opportunities for MWG. Successfully addressing these challenges will be
crucial for the company to enhance its competitiveness and distinguish itself
from other retailers in the country.
Top Five Portfolio Companies (continued)
Financial indicators
(as at 31 December)
VietNam Holding’s investment
Share information
20222023
Equity (USD million)
Revenue (USD million)
EBIT (USD million)
NPAT (USD million)
Diluted EPS (VND)
Revenue growth
NPAT grow th
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
11 September 2017
0.3%
6.6%
7.4%
HOSE
14 July 2014
3,585
77.1%
47.5%
1,014.7
5,656.3
281.7
173.9
2,810
7.0%
-17.5%
23.1%
5.0%
18.5%
0.69
917.7
4,646.6
17.1
6.6
115
-17.9%
-96.2%
19.0%
0.4%
0.7%
1.08
Mobile World Investment Corporation (“MWG”)
As at 30 June 2024
Annual Report 2024 Stategic Report
13
About the Company
Established in 1993 through the privatisation of a state-owned company,
Gemadept (“GMD”) began as a maritime agent and freight forwarder.
After 31 years of operation, the company has grown into one of the most
integrated port and logistics providers in Vietnam. As a pioneer in smart
and sustainable port-logistics models, GMD operates a network of five
ports and logistics facilities, providing 3PL (Third-Party Logistics) services
that span from sea to air, serving both domestic and multinational
corporations.
GMD’s seaports are strategically located in two primary zones: the Hai
Phong port zone in the North and the Cai Mep-Thi Vai port zone in the
South. In the North, GMD owns Nam Dinh Vu port, the largest port in
the region, with a designed capacity of 1,000,000 Twenty-foot Equivalent
Units (“TEUs”) per annum. In the South, GMD owns its first deep-water
port, Gemalink, which has a designed capacity of 1,500,000 TEUs for
Phase 1. The commencement of Gemalink in 2021 marked a significant
turning point for GMD, transforming it into a deep-water port operator
expected to play an increasingly important role in regional trade flows
within Southeast Asia.
Recent Developments
In 2023 and Q1 2024, GMD strategically divested its Nam Hai Dinh Vu
and Nam Hai ports due to their limitations in handling larger vessels. This
decisive move allowed GMD to rapidly achieve full capacity utilisation at
Nam Dinh Vu port’s Phase 2, which began operations in Q1 2023, with
plans to start Phase 3 in 2024. Once all three phases are operational,
Nam Dinh Vu will become the largest port in the North, with a total
capacity of 2.0 million TEUs.
Gemalink port, the largest deep-water port in its zone, is expected to
be the key growth driver for GMD over the next four years. According to
the Vietnam Seaports Association, Gemalink has captured a 27% market
share of container throughput in the Cai Mep-Thi Vai port area within
just three years of operation. Gemalink is well-positioned to capitalise on
the structural shift of cargo flows from regional ports to the Cai Mep-Thi
Vai port area in Southern Vietnam. Benefiting from Vietnam’s impressive
trade growth, the Cai Mep-Thi Vai port area, with a capacity of 9.1 million
TEUs per annum, has witnessed average growth of 25-30% over the
last five years. Gemalink’s Phase 1 has already reached 90% utilisation,
creating momentum to begin Phase 2 in Q4 2024.
Upon completion of both phases, Gemalink will become the largest
deep-sea port in the Cai Mep-Thi Vai cluster, with a total capacity of up
to 3.0 million TEUs.
Sustainability Strategy
As a leading nationwide corporation in port operations and logistics,
GMD is committed to sustainable development goals closely aligned
with its production and business activities. The company’s leadership and
employees are dedicated to creating a smarter and greener future for the
community. GMD continues to invest in digital transformation projects,
applying advanced technologies such as Smart Port, Smart Gate, and
River Gate to automate and optimise operational processes, thereby
increasing productivity, saving time and costs, and conserving energy.
Additionally, GMD is utilising renewable energy for most operations at its
ports and distribution centers, while also implementing green projects
and initiatives such as mangrove reforestation, developing green systems
at ports, and raising environmental awareness among employees and
local communities.
ESG Achievements
Following the establishment of an ESG working group led by GMD’s CEO
in 2022, the company made significant progress in ESG implementation
in 2023. GMD measured and disclosed GHG emissions for its three ports
in accordance with ISO 14064 standards. The company achieved the
national green-port standard for Dung Quat Port and began replicating
the green port model at its other three main ports. GMD’s focus on
ESG integration has opened up more financial opportunities, including
signing a Sustainability Linked Loan Agreement with HSBC in May 2024.
ESG Challenges
GMD has not yet disclosed its total carbon emissions. Additionally, it will
require time and significant effort to build human capacity and obtain
international certifications for its entire port and logistics system. GMD
also owns a non-core rubber plantation project in Cambodia, which
presents a potential ESG concern. However, senior management has
recently reaffirmed their intention to divest this project in 2024.
Financial indicators
(as at 31 December)
VietNam Holding’s investment
Share information
20222023
Equity (USD million)
Revenue (USD million)
EBIT (USD million)
NPAT (USD million)
Diluted EPS (VND)
Revenue growth
NPAT grow th
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
16 August 2019
0.9%
6.4%
29.5%
HOSE
06 May 2002
1,013
93.7%
47.8%
337.0
165.3
44.6
49.2
3,034
19.9%
59.0%
44.1%
27.0%
15.5%
0.26
382.3
151.1
43.9
99.5
7,207
-8.6%
102.2%
46.2%
29.0%
28.7%
0.20
Gemadept Corporation (“GMD”)
As at 30 June 2024
14
Stategic ReportAnnual Report 2024
About the Company
PVS, a 51%-owned subsidiary of PetroVietnam (“PVN”), provides an
extensive range of technical services for the oil & gas, energy, and
industrial sectors. The company holds a majority market share in
offshore support vessels (OSV/ship segment), mechanics & construction
(“M&C”), supply base (port segment), and floating oil storage (“FSO/
FPSO”), with a fleet of 18 vessels. PVS operates not only in Vietnam but
also in international markets, including Taiwan, Malaysia, Singapore, and
Poland.
Recent Developments
As one of the key service providers in the oil & gas sector, PVS is poised
to be a major beneficiary of the Block B project, a mega-project with a
capital expenditure of USD 12 billion. Block B, estimated to hold 107 bcm
in gas reserves, will guarantee Vietnam’s gas supply for power generation
and is expected to contribute USD 19 billion to the State budget over
the project’s 20-year lifespan. The commencement of this significant
project, Block B – O Mon, is expected to drive growth across Vietnam’s
oil and gas value chain, strengthening the industry’s fundamentals and
contributing to PVS’s earnings growth in the coming years.
In addition to its operations in oil & gas, PVS is strategically positioned
to benefit from the global energy transition towards renewables,
particularly in offshore wind generation. With its extensive experience
in offshore technical services, PVS is expected to play a pivotal role in
the development of offshore wind generation in Vietnam and the wider
region.
In August 2022, PVS’s subsidiary, PTSC M&C, signed a Memorandum of
Understanding (“MoU”) with Ørsted, the world’s largest developer of
offshore wind power, to collaborate on offshore wind projects in Vietnam.
Ørsted currently has a total installed capacity of 7.5 GW, with 11.8 GW
either under construction or awarded worldwide. This MoU is anticipated
to facilitate PTSC M&C’s entry into the offshore wind power market and
strengthen its capacity in this emerging field. PVS has already secured
USD 1.5 billion in offshore wind backlogs and is cooperating with major
global players, expanding its reach to overseas markets such as Taiwan
and Singapore. This lays a robust foundation for PVS’s next phase of
growth.
Sustainability Strategy
Although primarily classified within the oil and gas sector, PVS is actively
transitioning its business towards supporting offshore wind power
projects. The company has signed MoUs with global partners to develop
both domestic and international projects. PVS is leveraging its fleet
of specialised offshore vessels to support the construction, operation,
and maintenance of nearshore wind farms in Ben Tre, Tra Vinh, and Ca
Mau provinces, as well as offshore wind farms in Binh Thuan province.
Additionally, the company has secured two overseas contracts with a
total value of USD 350 million.
ESG Achievements
PVS is committed to enhancing its governance structure and has taken
proactive steps by enrolling its CEO and Board Members in corporate
governance courses organised by the Vietnam Institute of Directors
(“VIOD”). The company’s Health, Safety, and Environmental (“HSE”)
Management System meets ISO standards and is certified by the BSI
Group. PVS regularly conducts HSE training for its employees to ensure
adherence to the highest standards. In 2023, PVS initiated a greenhouse
gas (“GHG”) emission inventory, marking a significant step in its
sustainability journey.
ESG Challenges
To achieve its objective of becoming a leading service solution provider
in the energy sector at both regional and global levels, PVS must develop
a comprehensive strategy and action plan to align its ESG practices
with international standards. While the company has made progress in
enhancing its health, safety, and environmental management systems,
there is a need for PVS to improve its ESG communications and reporting
to investors and other relevant stakeholders.
Top Five Portfolio Companies (continued)
Financial indicators
(as at 31 December)
VietNam Holding’s investment
Share information
20222023
Equity (USD million)
Revenue (USD million)
EBIT (USD million)
NPAT (USD million)
Diluted EPS (VND)
Revenue growth
NPAT grow th
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
1.1%
6.1%
26.3%
HNX
20 September 2007
762
48.4%
20.8%
553.5
693.9
32.4
44.5
1,438
13.2%
38.2%
6.2%
4.7%
8.2%
0.11
532.1
761.1
25.1
41.6
1,579
9.7%
-6.5%
5.4%
3.3%
8.0%
0.13
PV Technical Services JSC (“PVS”)
As at 30 June 2024
Annual Report 2024 Stategic Report
15
About the Company
Established in 1993, TCB is the sixth largest bank in Vietnam by total
assets. The bank went public in 2018, listing on the Ho Chi Minh City
Stock Exchange. As of 2023, TCB operated a network of 301 branches and
transaction offices, with 11,614 employees. The bank held loan and deposit
market shares of 3.8% and 3.4%, respectively.
TCB has placed a strong emphasis on investing in data and technology,
becoming an industry leader in digital transformation. In 2016, it became
the first bank in Vietnam to launch the “E-banking zero fee” program,
which accelerated new customer acquisition, significantly reduced
operating costs, and resulted in a high Current Account Savings Account
(“CASA”) ratio.
The bank adopted Basel II in 2019 and implemented Basel III in 2023. Its
capital adequacy ratio (“CAR”) reached 14.5% in 2023, well above the
State Bank of Vietnam’s (“SBV”) minimum requirement of 8%.
In 2023, TCB was assigned an A+ initial credit rating with a ‘Stable’ outlook
by FiinRatings. The bank also received several prestigious awards, including
Best Integrated Corporate Banking Platform Globally and Best Mobile
Banking App in Asia Pacific by Global Finance, Best Retail Bank in Vietnam
and Best Private Retail Bank in Vietnam by The Asian Banker, Best Bank in
Vietnam by Finance Asia, and Best Domestic Bank by Asia Money.
Recent Developments
In recent years, TCB has had significant exposure to the real estate sector,
both through major developers and mortgage loans. As a result, its
performance was adversely affected when the real estate market cooled
in 2023. Net profit after tax (“NPAT”) declined by 17.5% year-on-year to
USD 714.6 million, although the bank maintained a well-controlled non-
performing loan (“NPL”) ratio of 1.2%.
To mitigate the impact of the real estate market downturn, TCB
management has set a long-term diversification plan to shift focus
towards retail and SME customers, beyond real estate. In 2023, loans
provided to non-real estate-related sectors for both large corporates and
SMEs increased by 60% year-on-year, compared to the bank’s total credit
growth of 23.3% year-on-year.
Despite tight liquidity conditions in 2023, TCB’s total deposits grew by
26.9% year-on-year, while its CASA ratio reached 40%, the highest in the
industry. However, the net interest margin (“NIM”) narrowed to 4.2% in
2023 from 5.1% the previous year, due to the rising cost of funds.
In the first half of 2024, TCB regained growth momentum, with NPAT
increasing by 38.8% year-on-year to USD 493.9 million. This growth was
driven by strong loan expansion of 14.2% year-to-date.
Sustainability Strategy
With the vision of “Change banking, Change lives,” TCB has committed
to create greater value for customers and shareholders by pioneering
solutions that meet their needs. The bank’s mission is to lead the digital
transformation of the financial industry, enabling individuals, businesses,
and corporations to progress and thrive sustainably.
ESG Achievements
TCB places a high priority on investor relations (“IR”) activities and was
recognised with the “IR Award 2023” for being among the “Top 3 Investor
Relations Activities selected by Financial Institutions.” The bank has also
received numerous awards for being one of the best places to work in
Vietnam, with approximately 90% satisfaction recorded in its Employee
Engagement Survey (“EES”) results.
In terms of governance, TCB strengthened its ESG governance framework
in 2023 by establishing clear roles and responsibilities for the Board of
Directors (“BOD”) and CEO in managing and monitoring ESG risks. The
bank also created a dedicated sub-committee and appointed a dedicated
BOD member for ESG oversight.
At the end of 2023, TCB increased its green credit exposure, reaching USD
547 million—representing 5.2% of its total loan book—distributed across
sectors such as sustainable transportation, renewable and clean energy,
and other environmentally friendly industries.
ESG Challenges
In terms of governance, TCB faces the challenge of diversifying its Board
and management team in terms of gender. Currently, the representation
of women in the BOD, Supervisory Board, and Executive team is relatively
low at 19%. Additionally, the bank has not yet disclosed its greenhouse
gas (“GHG”) emissions or adopted the Global Reporting Initiative (“GRI”)
standards in its sustainability reports.
Financial indicators
(as at 31 December)
VietNam Holding’s investment
Share information
20222023
Equity (USD million)
TOI (USD million)
NPAT (USD million)
EPS (VND)
TOI growth
NPAT grow th
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
21 March 2024
0.1%
5.3%
-14.9%
HOSE
4 June 2018
6,463.7
68.2%
11.07%
1,535.1
1,718.3
866.5
5,725
7.8%
9.5%
3.2%
19.6%
15.2%
0.7%
19.3
1,424.4
1,573.8
714.6
5,104
-8.4%
-17.5%
2.4%
14.8%
14.4%
1.2%
23.4
Techcombank (“TCB”)
As at 30 June 2024
16
Stategic ReportAnnual Report 2024
Global context: anti-greenwashing, AI and
data-driven ESG strategies
In the evolving landscape of sustainability,
2023 proved to be a pivotal year marked by
various advancements in environmental,
social, and governance (“ESG”) practices. From
our perspective, we would highlight three key
global trends central to this progression: the
intensification of anti-greenwashing efforts,
the integration of artificial intelligence (“AI”)
in ESG reporting, and the widespread adoption
of data-driven approaches to sustainability
strategies.
Anti-Greenwashing Initiatives:
The credibility of corporate sustainability
efforts is under scrutiny as stakeholders
demand greater transparency and
accountability. Greenwashing, the practice
of making misleading or false claims about
environmental practices, has become a major
concern. The ESG Attitudes Tracker, a survey
conducted by the UK-based Association
of Investment Companies (“AIC”), showed
reduced enthusiasm in ESG investing among
private investors from 2021 to 2023. For
investors who do not consider ESG factors
when investing, the top reason given is that
they prioritise financial performance over ESG
issues. However, ‘not being convinced by ESG
claims from asset managers’ is a close second,
perhaps showing the need for a new labelling
regime, and one with clearer standards that
investors can rely on. In response, governments
and regulatory bodies worldwide have
introduced stringent measures to combat
greenwashing and eco-related corruption.
Enhanced regulations and standards, such as
the EU’s Corporate Sustainability Reporting
Directive (“CSRD”) and California’s climate
disclosure laws, are forcing companies to
substantiate their environmental claims with
robust, verifiable data. These initiatives are
crucial in restoring trust and ensuring that
sustainability claims are reflective of genuine
environmental impact.
1
AI-Driven ESG Strategies:
The incorporation of AI technologies into
ESG frameworks is revolutionising how
organisations approach sustainability. AI’s
ability to analyse vast amounts of data
enables companies to gain deeper insights
into their environmental impact, optimise
resource use, and predict future sustainability
relying more on renewable energy, it also could
reduce its annual power sector emissions by
30%.
In addition, the National Circular Economy
Development Scheme set several ambitious
targets, including reducing the intensity of
GHGs per its GDP by at least 15% by 2030.
Furthermore, 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 by
2025. To support this, the Extended Producer
Responsibility (“EPR”) regulations became
effective at the start of 2024. This places
responsibility on producers and importers to
manage waste associated with the full life
cycle of their products.
Since the approval of the National Power
Development Plan (“PDP”) 8, we have seen
the passing of more regulations and decrees
to support the development of the renewable
energy sector, such as the Decree on Direct
Power Purchase Agreements (“DPPA”) allowing
businesses in Vietnam to purchase electricity
directly from private firms producing renewable
energy. The scale of the transition needed
between 2030 and 2050 to meet the goals and
Vietnam’s commitment to net-zero emissions
by 2050 presents enormous opportunities in
the energy sector. For example, energy storage
technologies, including lithium batteries,
pumped hydropower and heat storage, will
need to be developed, as will smart grids to
ensure a high level of stability and integration
of renewable energy in the power system.
ESG Moving up the Corporate Agenda in
Vietnam
Awareness of ESG in Vietnam might have come
later than in the US and Europe, but the focus
and implementation of practices continue to
gain ground. With Vietnam emerging as an
important alternative manufacturing base
to China, the country’s participation in free
trade agreements has created opportunities
for enterprises to be part of the global supply
chain and ESG considerations are prerequisites
for many of these deals. For example,
trends. This year, AI has played a critical role in
enhancing the accuracy and efficiency of ESG
reporting, providing real-time data analytics
and enabling predictive modelling. These
capabilities are not only improving operational
inefficiencies but also helping companies to
proactively address potential ESG risks.
2
Data-Driven Sustainability:
The shift towards data-driven ESG practices
marks a significant transformation in
how companies manage and report their
sustainability efforts. By leveraging advanced
data analytics, organisations can track
and measure their ESG performance with
greater precision. This data-centric approach
facilitates better decision-making, ensures
compliance with regulatory requirements,
and enhances transparency. By integrating
comprehensive data analytics, companies
can identify areas for improvement,
benchmark their performance against
industry standards, and communicate their
sustainability achievements more effectively
to stakeholders.
3
Vietnam context: brighter prospects for
green growth development
The rise of green policy commitments
Vietnam’s green policy commitments
have progressed significantly over the past
three years. The country’s ambitious net-
zero targets for 2050 could be seen as a
marker, highlighting the transformational
interventions that are needed to address
climate change challenges, including the
development of cleaner transportation and
energy systems. At the end of 2023, the
government unveiled further steps to achieve
the nation’s net-zero targets. At COP28 in
Dubai, Vietnam’s Prime Minister Pham Minh
Chinh announced a Resource Mobilisation
Plan to establish a Just Energy Transition
Partnership (“JETP”) between Vietnam and
the International Partnership Group (“IPG”).
The partnership seeks to mobilise an initial USD
15.5bn of public and private finance over the
next three to five years 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 reach its GHG
emission targets by 2030 instead of 2035. By
1
S&P Global 2024; Morrison Foerster 2024
2
MSCI 2024; MIT Sloan Review 2024
3
Thompson Reuters 2024
Sustainability Report
Annual Report 2024 Stategic Report
17
Vietnam’s export industries are increasingly
influenced by international ESG regulations,
particularly from the European Union
(“EU”). The EU’s Corporate Sustainability
Due Diligence Directive and the Carbon
Border Adjustment Mechanism (“CBAM”)
require Vietnamese exporters to adhere to
new environmental and social rules. This has
forced Vietnamese companies to consider ESG
matters more seriously and ensure compliance
with international sustainability criteria.
In the financial year, we also observed
there was an increased focus on corporate
governance, with regulations pushing for
greater transparency and accountability
in corporate operations. With the support
of the State Securities Commission of
Vietnam, the revised G20/OECD Principles of
Corporate Governance become available in
Vietnamese, offering another helpful resource
for Vietnamese enterprises to improve their
corporate governance practices needed for a
just transition towards a sustainable economy.
Another important regulation that enforces
Vietnamese enterprises to improve their
“social” impacts is the Vietnam’s Decree on
Personal Data Protection, which became
active in July 2023. This new decree marks
a significant milestone in Vietnam’s
commitment to protect personal data and
enhance privacy rights in the digital age. It
requires companies, especially those that are
involved in e-commerce, fintech, healthcare
technology, and smart production to develop
concrete measures for data collection,
processing, transfer and data security to avoid
fines and penalties as well as reputational
damage.
The Fund’s Stewardship Role
As a long-term, responsible investor, ESG
integration has always been at the heart of
our investment philosophy. With our motto
“do more, measure more and report more”, we
have continuously made progress in our ESG
journey. VietNam Holding has been a signatory
of the Principles for Responsible Investment
(“PRI”) since 2009 while the Investment
Manager, Dynam Capital also became a
signatory in 2022. Our PRI Transparency Report
for 2023 received 5-star assessment scores
across all modules. In addition, we supported
a very successful Vietnam ESG Investor
Conference 2024 as a Title Sponsor. We have
been proactive in company engagement to
improve ESG practices of investee companies,
bringing those with exemplary practices into
the spotlight.
Identifying climate change implications is a
critical global issue that affects all sectors,
and we support the efforts of Vietnam’s
government and business sector to address
climate change and its socioeconomic
effects. During the financial year, the
Investment Manager has been working
closely with companies to help them prepare
for their ESG and carbon footprint reports.
We are pleased to say that the number of
portfolio companies reporting their total
carbon emissions has increased this year,
especially as some decided to do so following
our engagement meetings.
As we navigate to a net-zero world, VNH has
identified its focus points for climate change
over the next two years:
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 in line with 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
The Investment Manager engaged VNEEC,
a Vietnamese environmental consultant,
to estimate total carbon emissions of all
listed companies in the VNH portfolio as of
31 December 2023. 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
dug deeper into estimating the impact
value of companies and industries that
•
•
•
are more susceptible to transition risks,
according to the assessment report, and
integrated that data into our portfolio
construction and investment analysis. Our
response to the core elements of the TCFD
recommendations are summarised in the
below table.
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 collaboration. The Investment Manager
promotes and supports climate initiatives
through industry bodies, such as the AIC, the
Singapore 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
18
Stategic ReportAnnual Report 2024
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 Vietnam All Share Index (“VNAS”). The total carbon emissions of VNH portfolio in 2023 are 41.3% (equivalent to 10,210 tCO
2
e)
lower than the VNAS benchmark, because of both sector allocation and stock picking. The total carbon emissions of 2023 Portfolio is also lower
than that of 2022 Portfolio (14,522 and 20,539 tCO
2
e respectively), due to reducing investment in carbon-intensive Energy and Materials stocks.
Sustainability Report (continued)
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”). We are proud to report that
the 2023 portfolio’s carbon footprint is 41.3% below the VNAS benchmark.
Portfolio’s Weighted Average Carbon Intensity (“WACI”): We use the WACI metric to assess the portfolio’s exposure to carbon-intensive
companies expressed in tCO
2
/$M revenue, and this is calculated at 107.98 tCO
2
/$M for VNH’s 2023 portfolio based on Scope 1 and 2 emissions
of all companies, which is lower than the 2022 WACI at 178.23 tCO
2
/$M.
Low-carbon investment: 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’s implied temperature rise (“ITR”): The portfolio’s ITR calculation is based on the two models developed by the Climate Action
Tracker
4
. The first model is the domestic modelled pathways, in which, with domestic efforts, Vietnam shall reduce its emission to 114 MtCO
2
e
(excluding LULUCF
5
) in 2050 to reach the 1.5°C target. The second model is the effort-sharing model, which sets the budget considering each
country’s economic capabilities, and what is considered as “fair”. The remaining budget of Viet Nam in 2050 for reaching the 1.5°C target
is 233 MtCO
2
e in the effort-sharing model. Based on the calculation of VNEEC, the ITR of VNH’s 2023 portfolio is 3.85°C and 2.80°C for the
domestic and the effort-sharing pathways, respectively. This means that the ITR of the 2023 portfolio is higher than 2°C. We are offsetting
this by actively joining in policy dialogue, supporting climate initiatives, and enhancing our engagement with companies to help them with
their own transitions.
•
•
•
•
4
https://climateactiontracker.org/
5
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.
Strategy for 2021-2025 (continued)
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
2023 (47.5% of the NAV) is allocated in the financial and information technology sector. These sectors are categorised as “low” transition risks,
while another 40.3% of the portfolio is invested in sectors with “moderate” exposure ratings.
In the financial year, the Fund continued to hold its investment in PVS – a state-owned company in the oil and gas sector, which has entered the
portfolio from the previous year, and is categorised as “high” risk exposure. However, PVS, 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.
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 24).
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
Annual Report 2024 Stategic Report
19
Keeping in line with the UN SDGs
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 a little
over five years 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 45
th
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 would be wise to start with when 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.
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. GMD, another company in our top five holdings, 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 accounts for approximately 26% of VNH’s portfolio at 30 June 2024, has made notable progress
in committing to the SDGs in recent years. For example, by providing more loans and other products linked to climate change, helping to
accelerate the clean energy transition and support underprivileged groups. Vietnamese banks also have been improving their sustainability
disclosures. During the financial year, we saw increasing competition among banks when it came to ESG reporting, with MBB, ACB, VPB
taking the lead.
Seven of our portfolio companies, CTG, FPT, MBB, MWG, PNJ, VCB and VPB, are in the Vietnam Sustainability Index (“VNSI”) 2024, which
features the top 20 sustainable listed companies on HOSE measured in terms of their ESG practices. The number of our portfolio companies
included in the VNSI has increased significantly this year, with their total weights accounting for 36.2% of VNH’s portfolio at 30 June 2024.
PNJ is also included in the Corporate Sustainability Index 2023 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 governance is actually happening in practice. 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.
Total Emissions Scope 1 and 2 (tCO
2
e) 14,522 -10,210
Total Emissions Scope 1, 2 and 3 (tCO
2
e) 38,843 -12,745
Carbon footprint (tCO
2
e/ USDM Invested) 118.53
24,732
51,588
201.86 -41.3%
Difference between
VNH Portfolio vs.
VNAS benchmarkVNAS benchmarkVNH Portfolio
20
Stategic ReportAnnual Report 2024
The Importance of G in ESG (continued)
Although Vietnam’s equity markets are still
classified as Frontier Markets by MSCI and
FTSE Russell, we think it is a matter of time
before they are upgraded. In anticipation of
this, many leading companies have employed
the World 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 among our portfolio companies.
Nearly one-third of portfolio companies have
established dedicated sub-committees to
address key ESG matters. The majority have
sent their directors on corporate governance
training courses, and more than one-third of
the companies in the portfolio have certified
directors in their board. In addition, we are
pleased to see enhanced investor relations
activities and greater transparency across all
our portfolio companies. This includes more
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 (Global Reporting Initiative)
standards, and this includes improved investor
relations support to address questions from
investors.
Dedicated Company Engagement Program
The Investment Manager is active in arranging
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 portfolio companies to
help improve their ESG practices with practical
solutions in the short and medium term.
Although each engagement and conversation
is different, we saw an overall willingness
and strong commitment from the boards of
our top-holdings to prioritise sustainability
matters in their business agendas.
In the financial year, our engagement with
investee companies focused on the following
ESG topics:
Sustainability Report (continued)
Encouraging companies to develop a
decarbonisation roadmap with science-
based targets;
Discussing how they could establish a
satisfactory ESOP plan; and
Discussing the potential roles and
responsibilities of an ESG officer.
Encouraging companies to improve
their ESG public disclosures in line with
international best practices;
Shareholder Voting
During the financial year, the Company voted
at the Annual General Meetings (“AGM”) on
every portfolio company. This year the AGMs
were held in both online and offline modes.
The Investment Manager attended 19 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 2023 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 (VIOD)
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
(“AIGCC”)
Dynam Capital, our Investment Manager, is
a member of AIGCC. Dynam Capital signed
up to the 2022 Global Investor Statement to
Governments on the Climate Crisis, alongside
more than 602 investors representing almost
USD 42tn in assets under management, to ask
governments to raise their climate ambitions
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, together with the
Investment Manager, we actively advocated
for ESG awareness in Vietnam through being
the title sponsor for the Vietnam ESG Investor
Conference 2024. The Investment Manager
also helped strengthen the sustainability
conversation in Vietnam through supporting
local media such as The Saigon Times, 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 seek relevant
career opportunities.
Annual Report 2024 Stategic Report
21
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.
Key Risk Description Mitigating Action
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.
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 the Main Market (previously
the Premium segment of the Official List) 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
Principal Risks and Risk Management
22
Stategic ReportAnnual Report 2024
Key Risk
Description Mitigating Action
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.
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
Principal Risks and Risk Management (continued)
Annual Report 2024 Stategic Report
23
Key Risk
Description Mitigating Action
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.
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
24
Stategic ReportAnnual Report 2024
Director Profiles and Disclosure of Directorships
All of the Directors are Non-executive Directors and the majority are independent of the Investment Manager.
Disclosure of Directorships in Public Companies Listed on Recognised Stock Exchanges
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.
Hiroshi Funaki
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.
Saiko Tajima
(Remuneration and Nomination
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 and
is Chairman of FIM Holdings Limited. 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.
Philip Scales
(Audit and Risk Committee Chairman and
Management Engagement Committee Chairman)
Ms Vu is a partner at Raise Partners, a consultancy that advises clients
on ESG strategy and partnerships. She has over 20 years of experience
in ESG and international development and is one of Vietnam’s leading
experts on human trafficking, modern slavery, and labour migration.
Ms Vu is a Board Member of the Belgium Luxembourg Chamber of
Commerce Vietnam and a Vice-Chair of the European Chamber
of Commerce’s Women in Business Committee. She has a BA from
University of Michigan and MPA in International Nonprofit Policy &
Management from New York University.
Connie Hoang Mi Vu
(Environmental, Social and
Governance Committee Chairman)
Philip Scales
Name Company Name Stock Exchange
Channel IslandsFirst World Hybrid Real Estate plc
Annual Report 2024 Governance
25
26
Governance
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 and its advisors are aware of the new code and will carry out a
review to ensure that it remains compliant.
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 also
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 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 2024. 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.
Liaison with Shareholders is dealt with by the Chairman of the Company
and the Directors working closely with the Company’s Advisors.
Corporate Governance Report
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 pages 29 to 30 of the corporate governance
section of this report.
Board Independence and Composition
The Directors are all Non-executive and the majority are independent.
Two of the Board members were appointed in September/October 2017
following the retirement of the previous Board and the third member
was appointed in May 2019 following the retirement of a Board
member at the 2018 AGM. The fourth member was recently appointed
in March 2024 following the resignation of two Board members at the
2023 AGM.
Mr Funaki is a Director of Discover Investment Company which at 30
June 2024 held 1,415,776 ordinary shares in the Company representing
5.2% 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. As detailed in note 8 of the financial statements, Directors
own shares in the Company as follows:
Hiroshi Funaki
Philip Scales
Saiko Tajima
19,887
10,077
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.
26
Annual Report 2024 Governance
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.
•
•
•
Board Independence and Composition (continued)
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:
The Board is pleased to announce that as at 30 June 2024, it achieved a 50/50 gender representation.
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 25.
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, ESG and corporate
governance as well as prior experience of acting as directors of companies listed on the London Stock Exchange.
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
N/A
N/A
N/A
-
-
-
2
2
-
50%
50%
-
2
2
-
Number in
Executive team
Percentage of
Executive Team
No of senior positions
on the Board
Percentage of
Board
Gender identity / sex
No of Board
Members
White British or other (including
other minorities)
Asian/ Asian British
Mixed/ multiple Ethnic groups
Not specified
1
3
-
-
25%
75%
-
-
1
3
-
-
N/A
N/A
N/A
N/A
-
-
-
-
Ethnic Background
Number in
Executive team
Percentage of
Executive Team
No of senior positions
on the Board
Percentage of
Board
No of Board
Members
Corporate Governance Report (continued)
Annual Report 2024 Governance
27
28
Governance
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:
Sean Hurst and Damien Pierron stood down at the AGM and resigned as Directors of the Company effective 21 December 2023.
Re-election of Directors
The Board has agreed that all Directors should submit themselves for annual re-election.
Mr Funaki, Mr Scales, Ms Tajima and Ms Vu will all stand for re-election at the 2024 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 2024.
Administration
On 7 October 2019 the Board appointed Sanne Group (Guernsey) Limited to provide corporate governance, secretarial, compliance and accounting
services to the Company.
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 2025, an external facilitator should be
appointed to undertake the evaluations in line with AIC recommendations.
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.
Hiroshi Funaki
Philip Scales
Saiko Tajima
Connie Hoang Mi Vu
4 (4)
4 (4)
4 (4)
1 (1)
4 (4)
4 (4)
4 (4)
1 (1)
2 (2)
2 (2)
2 (2)
1 (1)
2 (2)
2 (2)
2 (2)
1 (1)
2 (2)
2 (2)
2 (2)
1 (1)
Audit and Risk
Board
Remuneration and
Nomination
Management
Engagement
Environmental,
Social and
Governance
Annual Report 2024
Corporate Governance Report (continued)
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 28. 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 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 31 to 32.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee is chaired by Saiko
Tajima 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 Board appointed Connie Hoang Mi Vu as an Independent Non-
executive Director with effect from 25 March 2024.
Management Engagement Committee
The Chairman of the Management Engagement Committee is Philip
Scales 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
Philip Scales has been formed under the Management Engagement
Committee and meets periodically to review and monitor the share
buy-back programme.
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 Connie
Hoang Mi Vu 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. Shareholder contact is dealt with
by the Chairman of the Company and the Directors 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
Annual Report 2024 Governance
29
30
Governance
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.
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 2024, 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 Vienna, Hong Kong, Dubai 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 64.19 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 the Board
now achieves a 50/50 gender representation. 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.
Annual Report 2024
The main items that the Audit and Risk Committee (the “Committee”)
has considered and reviewed during the year ended 30 June 2024 were:
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 2024 was
USD 134.9 million which represented 96.3% of the Company’s NAV (30
June 2023: USD 113.2 million and 98.2% 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 2024
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.
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
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 2024 and the number of those attended by each
committee member are shown on page 28.
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.
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.
•
•
•
•
•
•
•
•
•
Principal Duties
During the year the Committee has:
Annual Report 2024 Governance
31
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 2024 are GBP 66,900 (2023: GBP 62,200).
Non audit fees payable to KPMG for 2024 were GBP nil (2023: 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 22 to 24. 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.
Philip Scales
Audit and Risk Committee Chairman
1 October 2024
32
GovernanceAnnual Report 2024
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 2024 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 2024 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
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 2024 and the previous year is as follows:
Sean Hurst and Damien Pierron stood down at the AGM and resigned as Directors of the Company effective 21 December 2023.
Year ended 30 June 2023
Director
Total
USD
Total
USD
Base Fees
USD
Hiroshi Funaki (Chairman)
Philip Scales (Audit and Risk Committee Chairman)
Saiko Tajima
Connie Hoang Mi Vu
Sean Hurst (Resigned)
Damien Pierron (Resigned)
Total
60,000
55,000
50,000
-
55,901
50,000
270,901
6,750 11,250
6,000 6,750
6,000 6,750
1,500 -
3,078 11,700
3,215 11,832
26,543 48,282
66,750 71,250
61,000 61,750
56,000 56,750
14,820 -
30,837 67,601
28,215 61,832
257,622 319,183
60,000
55,000
50,000
13,320
27,759
25,000
231,079
Base Fees
USD
Additional
Ad hoc fees
USD
Additional
Ad hoc fees
USD
Year ended 30 June 2024
Directors’ Remuneration Policy and Report
Annual Report 2024 Governance
33
34
GovernanceAnnual Report 2024
The Directors present the Annual Report and Financial Statements of
the Company for the year ended 30 June 2024.
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 21 December 2023 the
Shareholders voted in favour of the continuance resolution, authorising
the Company to operate in its current form through to the 2028 Annual
General Meeting when a similar resolution will be put forward for
Shareholders’ approval.
Dynam Capital, Ltd has been appointed as the Company’s Investment
Manager and is responsible for the day-to-day management of the
Company’s investment portfolio in accordance with the Company’s
investment policies, objectives and restrictions.
Annual Redemption Facility
At the Extraordinary General Meeting of the Company held on 21
December 2023 shareholders voted in favour of a proposal that
introduced an innovative redemption structure that gives shareholders
an annual opportunity to realise their holding in the Company at fair
market value. The first Redemption Point was on 30 September 2024
and every year thereafter.
As part of the introduction of the redemption facility the Company was
accepted into the Reporting Fund regime by HMRC with effect from 1
July 2024. Further details on the tax consequences are detailed in the
Circular dated 27 November 2023.
Shareholders are advised to consider their investment objectives
and their own individual financial and tax circumstances and should
seek independent professional tax advice and advice from their own
independent financial adviser authorised under the Financial Services
and Markets Act 2000 as appropriate.
Results
The net profit for the year ended 30 June 2024 amounted to USD
26,522,608 (2023: loss of USD 8,622,089). There were no dividends
declared during the year ended 30 June 2024 (2023: 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
Directors’ Report
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 continued to improve during the
year. The Director’s also note that the portfolio is composed of a high
percentage of larger and more liquid stocks. 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.
At the Annual General Meeting and Extraordinary General meeting
held on 21 December 2023, shareholders voted in favour of the
Company continuing for a further five years as well as the introduction
of an annual Redemption Facility. The first Redemption Date was 30
September 2024.
On 1 October, the Company announced a total of 3,406,598 ordinary
shares were validly tendered for redemption and will be redeemed under
the 2024 redemption opportunity. These ordinary shares represent
approximately 12.6% of the ordinary shares in issue as at 31 August
2024. The Board resolved that the redemption price will be based on
VNH’s official net asset value per share as at 30 September 2024 and it
is anticipated that payments will be made to redeeming shareholders
by the end of October 2024. The portfolio liquidity remains relatively
high, and the investment manager does not anticipate any difficulty
in raising the cash required. Therefore, the Board is confident that the
redemption facility will not cause any material uncertainty over the
going concern of the Company.
The Directors have a reasonable expectation that 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 principal risks in the current, medium
and long-term, as detailed in the Principal Risks and Risk Management
on pages 22 to 24 and in the Investment Manager’s Report on pages 7
to 10. 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
Annual Report 2024 Governance
35
or liquidity. The sensitivity analysis was applied to the forecasted cash
flows. Based on this assessment, the Board has determined that a three-
year viability period to 30 June 2027 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 notes the
approval and adoption by shareholders of an annual Share Redemption
facility, with the first redemption period being in September 2024. Given
that the Company’s assets are listed equities, and that the Investment
Manager has estimated that on prevailing market conditions more than
95% of the portfolio could be liquidated in less than 30 days, the Board
is comfortable that enough liquidity could be generated to satisfy
any amount of redemption request made by shareholders. The Board
also travelled to Vietnam in January 2024, meeting with the research
team of the Investment Manager, portfolio companies and market
commentators, and will visit again in November 2024.
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 tried and tested 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 continuing visible signs of economic recovery which the
Board were able to see first-hand on their visit to Vietnam in January
2024, evidenced in part by greater tourist arrivals (back to pre-
pandemic levels) 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:
2023 was thankfully free from any significant operational changes.
The restrictions in place during the pandemic of 2020-2022 tested the
Business Continuity protocols of the Board, the Investment Manager
and other service providers. The smooth operation of the Company
through the various restrictions and lockdowns 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 95% of the portfolio can be readily liquidated
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.
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 0.78
times by investment income. In the following year, the current
investment income is forecast to cover 0.75 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 0.66 times on-going expenses.
The Company maintains a cash buffer to help meet on-going
expenses. At 30 June 2024 this was 2.1% of NAV.
- 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 54
to 57. 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:
•
•
•
•
36
GovernanceAnnual Report 2024
Viability Statement (continued)
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 2024.
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:
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 buybacks is
employed by the Broker and monitored by the Board. At the Annual General Meeting (“AGM”) of the Company held on 21 December 2023, 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 2024.
In the year ended 30 June 2024 440,212 ordinary shares had been bought back and cancelled under the Company’s share buyback programme.
Since the last AGM and up to 27 September 2024, being the latest practicable date prior to publication of the report, the Company bought back
and cancelled 196,505 ordinary shares.
Share Buy-Backs to the Year-Ended 30 June 2024
Directors’ Report (continued)
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.
•
•
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
27,7 25,104
-
(440,212)
-
29,225,667
-
(1,500,563)
-
27,284,892 27,725,10 4
(4,006)
-
(1,631)
-
935
-
(4,941)
-
(5,637) (4,006)
30 June 2024 30 June 2023
Annual Report 2024 Governance
37
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 2024.
Notification of Shareholdings
In the year to 30 June 2024 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.
Since 30 June 2024 the Company has not received any DTR 5.1.2 notifications of holdings.
Lynchwood Nominees Limited
Citibank Nominees (Ireland) Designated Activity Company
Vidacos Nominees Limited
Hargreaves Lansdown (Nominees) Limited
Chase Nominees Limited
Interactive Investor Services Nominees Limited
The Bank of New York (Nominees) Limited
Euroclear Nominees Limited
5,618,653
5,060,667
2,034,758
1,729,256
1,698,750
1,548,506
1,524,001
1,509,967
20.59
18.55
7.46
6.34
6.23
5.68
5.59
5.53
Number of
ordinary shares
Percentage of total
shares in issue
Shareholder
City of London Investment Management Company Limited 1,3 47,816 4.9 6 March 2024
Number of
voting rights
Percentage of total
voting rights as at
announcement date
Announcement
date
Shareholder
38
GovernanceAnnual Report 2024
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:
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
Statement of Directors’ Responsibilities
in Respect of the Annual Report and the Financial Statements
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
•
•
•
•
•
•
•
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:
Hiroshi Funaki
Chairman
1 October 2024
Annual Report 2024 Governance
39
40
GovernanceAnnual Report 2024
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 2024, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising material
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.
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. 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 key audit matter was as follows (unchanged from 2023):
Independent Auditor’s Report
to the Members of VietNam Holding Limited
give a true and fair view of the financial position of the Company as at 30 June 2024, 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.
•
•
•
The risk Our response
Valuation of Investments in securities at
fair value
$134,971,131; (2022: $113,225,102)
Refer to page 31 of the Audit and Risk
Committee Report, note 2d accounting
policies and note 12 disclosures.
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 2024 Financial Statements
41
Our application of materiality and an overview of the scope of our audit
Materiality for the financial statements as a whole was set at $2,650,000, determined with reference to a benchmark of net assets of
$140,151,385 of which it represents approximately 2.0% (2023: 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% (2023: 75%) of materiality for the financial statements as a whole, which equates to $1,980,000. 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 $132,500, 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 no material uncertainties that could have 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 (the “going concern period”).
In our evaluation of the directors’ conclusions, we considered the inherent risks to the Company’s business model and analysed how those risks
might affect the Company’s financial resources or ability to continue operations over the going concern period. The risks that we considered
most likely to affect the Company’s financial resources or ability to continue operations over this period was availability of capital to meet
operating costs and other financial commitments.
We considered whether these risks could plausibly affect the liquidity going concern period by comparing severe, but plausible downside
scenarios that could arise from these risks individually and collectively against the level of available financial resources indicated by the
Company’s financial forecasts.
We considered whether the disclosure in note 2(b) to the financial statements gives a full and accurate description of the directors’ assessment
of going concern.
Our conclusions based on this work:
42
we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate;
we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or conditions
that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for the going concern
period; and
we have nothing material to add or draw attention to in relation to the directors’ statement in the notes to the financial statements on the
use of the going concern basis of accounting with no material uncertainties that may cast significant doubt over the Company’s use of that
basis for the going concern period, and that statement is materially consistent with the financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Company will continue
in operation.
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:
•
•
•
Annual Report 2024 Financial Statements
Fraud and breaches of laws and regulations – ability to detect (continued)
Independent Auditor’s Report
to the Members of VietNam Holding Limited (continued)
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.
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 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.
•
•
•
•
•
Annual Report 2024 Financial Statements
43
the directors’ confirmation within the Viability Statement (page 35 - 37) 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 35 - 37) 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.
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.
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.
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:
We are also required to review the Viability Statement, set out on page 35 - 37 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:
•
•
•
•
•
•
•
•
•
44
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 2024 Financial Statements
Respective responsibilities
Independent Auditor’s Report
to the Members of VietNam Holding Limited (continued)
Directors’ responsibilities
As explained more fully in their statement set out on page 39, 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.
Andrew J. Salisbury
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors
Guernsey
1 October 2024
Annual Report 2024 Financial Statements
45
Statement of Financial Position
As at 30 June 2024
The financial statements on pages 46 to 61 were approved by the Board of Directors on 1 October 2024 and were signed on its
behalf by
The accompanying notes on pages 50 to 61 form an integral part of these financial statements.
Philip Scales
Chairman of the Audit and Risk Committee
Hiroshi Funaki
Chairman of the Board of Directors
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 113,225,1023
Current assets
Cash and cash equivalents
Accrued dividends and interest
Receivables on sale of investments
1,750,069
877,375
338,591
2,894,425
73,797
2,451,845
Equity
Share capital
Reserve for own shares
Retained earnings
166,645,041
(170,650,584)
119,264,820
166,645,041
(172,281,084)
145,787,428
5
5
-
-
239,813
343,745
246,469
341,646
Total non-current assets 113,225,102134,971,131
Total current assets 2,966,0355,420,067
Total assets 116,191,137
140,391,198
Total equity 115,259,277140,151,385
Total liabilities 931,860239,813
Total equity and liabilities
116,191,137140,391,198
134,971,131
2024
USD
2023
USD
Notes
46
Financial StatementsAnnual Report 2024
The accompanying notes on pages 50 to 61 form an integral part of these financial statements.
Statement of Comprehensive Income
For the year ended 30 June 2024
Dividend income from equity securities at fair value through profit or loss
Net gain/(loss) from investments at fair value through profit or loss
Net foreign exchange loss
1,684,306
(6,494,742)
(369,559)
30,708,408
2,237,255
81,744
362,837
127,617
214,218
7,769
1,154,360
8
8
9
10
(5,179,995)
1,936,485
22,846
417,177
101,674
201,614
75,153
687,145
Total operating income/(loss)
Investment management fees
Advisory fees
Directors’ fees and expenses
Custodian fees
Administrative and accounting fees
Audit fees
Other expenses
Total operating expenses
Other comprehensive income
Total comprehensive income/(loss) for the year
3,442,094
4,185,800
-
26,522,608
-
(8,622,089)
Profit/(Loss) for the year
(8,622,089)26,522,608
Basic and diluted income/(loss) per share (0.30)0.97
Notes
2,949,474
28,035,973
(27 7,039)
2024
USD
2023
USD
Annual Report 2024 Financial Statements
47
The accompanying notes on pages 50 to 61 form an integral part of these financial statements.
Balance at 1 July 2022
Total comprehensive loss for the year
Change in net assets attributable to shareholders
128,822,167
(8,622,089)
127,886,909
(8,622,089)
166,645,041
-
(165,709,783)
-
Balance at 1 July 2023
Total comprehensive income for the year
Change in net assets attributable to shareholders
(170,650,584)
-
119,264,820
26,522,608
115,259,277
26,522,608
166,645,041
-
Transactions in shares
Repurchase of own shares
Total comprehensive loss for the year
(4,940,801)
-
(4,940,801)
-
Transactions in shares
Repurchase of own shares (1,630,500)
(1,630,500)
-
-
(1,630,500)
(1,630,500)
-
-
(8,622,089)(8,622,089)--
(4,940,801)-(4,940,801)-
Balance at 30 June 2023
Total comprehensive income for the year
Total transactions in shares
Total transactions in shares
115,259,277119,264,820
(170,650,584)
166,645,041
--
Balance at 30 June 2024 140,151,385145,787,428(172,281,084)166,645,041
Share
capital
USD
Reserve for
own shares
USD
Total
USD
Retained
earnings
USD
26,522,60826,522,608
Statement of Changes in Equity
For the year ended 30 June 2024
48
Financial StatementsAnnual Report 2024
Statement of Cash Flows
For the year ended 30 June 2024
The accompanying notes on pages 50 to 61 form an integral part of these financial statements.
Cash flows from operating activities
Total comprehensive income/(loss) for the year
Adjustments to reconcile total comprehensive income/(loss) to
net cash from operating activities:
Dividend income
Net (gain)/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
Dividends received
Interest received
Net cash from/(used in) operating activities
Cash flows used in financing activities
Repurchase of own shares
Net increase/(decrease) 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
(4,694,332)
1,750,069
3,298,364
(1,876,969)
(1,346,721)
(4,694,332)
(1,876,969)
2,894,425
2024
USD
2023
USD
Notes
26,522,608
7
(2,949,474)
(28,035,973)
27 7,039
(65,175,759)
69,503,097
(101,833)
3,258,659
-
1,421,395
1,750,069
(27 7,039)
(13,636)
849,559
16,144
(6,041,053)
8,160,681
(369,559)
(1,684,306)
6,494,742
369,559
(50,826,239)
52,069,545
(8,622,089)
Annual Report 2024 Financial Statements
49
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 Main Market (previously the Premium
Segment of the 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 21 December 2023 the Shareholders voted in favour of the continuance resolution, authorising the
Company to operate in its current form through to the 2028 Annual General Meeting when a similar resolution will be put forward for Shareholders’
approval.
Dynam Capital, Ltd has been appointed as the Company’s Investment Manager and is responsible for the day-to-day management of the
Company’s investment portfolio in accordance with the Company’s investment policies, objectives and restrictions.
Sanne Group (Guernsey) Limited is the Company’s administrator.
Standard Chartered Bank (Singapore) Limited and Standard Chartered Bank (Vietnam) Limited are the custodian and the sub-custodian
respectively. Standard Chartered Bank (Singapore) Limited is also the sub-administrator.
The registered office of the Company is 1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey, GY1 2HL.
2. Material 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 continued to improve during the year. The Director’s also note that the portfolio is
composed of a higher percentage of larger and more liquid stocks. 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. At the Annual General Meeting and Extraordinary General meeting held on 21 December 2023,
shareholders voted in favour of the Company continuing for a further five years as well as the introduction of an annual Redemption Facility. The
first Redemption Date was 30 September 2024.
Notes to the Financial Statements
For the year ended 30 June 2024
50
Financial StatementsAnnual Report 2024
2. Material Accounting Policies (continued)
On 1 October, the Company announced a total of 3,406,598 ordinary shares were validly tendered for redemption and will be redeemed under the
2024 redemption opportunity. These ordinary shares represent approximately 12.6% of the ordinary shares in issue as at 31 August 2024. The Board
resolved that the redemption price will be based on VNH’s official net asset value per share as at 30 September 2024 and it is anticipated that
payments will be made to redeeming shareholders by the end of October 2024. The portfolio liquidity remains relatively high, and the investment
manager does not anticipate any difficulty in raising the cash required. Therefore, the Board is confident that the redemption facility will not cause
any material uncertainty over the going concern of the Company.
The Directors have a reasonable expectation that 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.
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the
financial statements are included 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.
(c) Foreign currency translation
Transactions in foreign currencies are translated into USD 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
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.
(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:
Notes to the Financial Statements
For the year ended 30 June 2024 (continued)
The entity’s business model for managing the financial assets
The contractual cash flow characteristics of the financial assets
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, accrued dividends and interest, cash and cash equivalents
and receivables on sale of investments.
•
•
Annual Report 2024 Financial Statements
51
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.
Financial liabilities - Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL.
A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition.
Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit and loss.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange
gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit and loss.
Financial liabilities measured at amortised cost
Other financial liabilities are measured at amortised cost. The Company includes in this category trade and other payables.
(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.
(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.
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)
52
Financial StatementsAnnual Report 2024
2. Material Accounting Policies (continued)
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.
(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.
Notes to the Financial Statements
For the year ended 30 June 2024 (continued)
Annual Report 2024 Financial Statements
53
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% (2023: 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.
3. Financial Instruments and Associated Risks
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, payables on repurchase of
shares 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.
54
Financial StatementsAnnual Report 2024
3. Financial Instruments and Associated Risks (continued)
The Company’s investments in securities are exposed to market risk and are disclosed by the following generic investment types:
At 30 June 2024, 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 7,004,547 (2023: USD 5,766,009), USD 325 (2023: USD 11,556), USD 9 (2023: USD 9) and USD 223 (2023:
USD 227) 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 2024, 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 5,420,067 (2023:
USD 2,966,035).
At 30 June 2024, a 5% reduction in the market value of the portfolio would have led to a reduction in NAV and profit or loss of USD 6,748,557 (2023:
USD 5,661,255). 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.
As at 30 June 2024, the Company had the following foreign currency exposures:
Notes to the Financial Statements
For the year ended 30 June 2024 (continued)
98.24
98.24
Investments in listed securities
Fair value
in USD
2023
Fair value
in USD
% of
net assets
% of
net assets
134,971,131
134,971,131
113,225,102
113,225,102
96.30
96.30
2024
115,320,188
(231,119)
175
4,536
Vietnamese Dong
Pound Sterling
Swiss Franc
Euro
Fair value
2024
USD
2023
USD
140,090,931
6,498
174
4,456
140,102,059 115,093,780
Annual Report 2024 Financial Statements
55
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 2024, 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 (2023: 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 2024, the total of cash and cash equivalents, and short-
term receivables was USD 5,420,067 (2023: USD 2,966,035). The Directors assessed the lifetime expected credit loss as at 30 June 2024 and concluded
it to be immaterial (2023: 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.
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:
2024
Cash and cash equivalents
Investment at fair value through profit and loss
Accrued dividends and interest
Receivables on sale of investments
2023
Cash and cash equivalents
Investment at fair value through profit and loss
Accrued dividends and interest
Receivables on sale of investments
Payables in purchase of investments
Payables on repurchase of shares
Accrued expenses
Total financial assets
Total financial assets
Accrued expenses
Total financial liabilities
Total financial liabilities
2,894,425
-
-
-
1,750,069
-
-
-
-
-
-
2,894,425
1,750,069
-
-
-
-
-
73,797
2,451,845
-
-
877,375
338,591
343,745
246,469
341,646
2,525,642
1,215,966
239,813
239,813
931,860
-
134,971,131
-
-
-
113,225,102
-
-
-
-
-
134,971,131
113,225,102
-
-
-
2,894,425
134,971,131
73,797
2,451,845
1,750,069
113,225,102
877,375
338,591
343,745
246,469
341,646
140,391,198
116,191,137
239,813
239,813
931,860
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
USD
No fixed
maturity
USD
Over
3 months
to 5 years
USD
1 to 3
months
USD
On demand
USD
0 to 1
month
USD
56
Financial StatementsAnnual Report 2024
4. Operating Segments
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses,
including revenues and expenses that relate to transactions with any of the Company’s other components. The Company is engaged in a single
segment of business, being investment in Vietnam. The Board, as a whole, has been determined as constituting the chief operating decision maker
of the Company. The key measure of performance used by the 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.
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:
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 Articles of Incorporation Amended and restated by
special resolution on 21 December 2023, the Company may from time to time redeem all or any portion of the shares held by the Shareholders on
annual basis upon giving notice of not less than 30 calendar days.
On 8 March 2019 the Company’s ordinary shares were cancelled from trading on AIM and admitted to the Main Market (previously Premium
segment of the 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 TISE.
Notes to the Financial Statements
For the year ended 30 June 2024 (continued)
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 2024, no individual investment exceeded 20% of the net assets attributable to Shareholders (2023: none).
All of the Company’s investments in securities at fair value are in Vietnam as at 30 June 2024 and 30 June 2023. All of the Company’s investment
income can be attributed to Vietnam for the years ended 30 June 2024 and 30 June 2023.
5. Share Capital
•
•
•
29,225,667
-
(1,500,563)
27,725,10 4
27,725,10 4
—
(1,500,563)
—
1,500,563
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
Total outstanding ordinary shares with voting rights
Repurchased and reserved for own shares
At beginning of the year
During the year
Shares reissued to ordinary shares
Shares cancellation
2024
No. of shares
2023
No. of shares
27,7 25,104
-
(440,212)
27,284,892
27,284,892
-
(440,212)
-
440,212
Annual Report 2024 Financial Statements
57
As a result, as at 30 June 2024 the Company has 27,284,892 (2023: 27,725,104) ordinary shares with voting rights in issue (excluding the reserve for
own shares), and nil (2023: 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.
During the year ended 30 June 2024 the Company repurchased and cancelled 440,212 ordinary shares (2023: 1,500,563 ordinary shares) under the
Company’s share buyback programme (representing 1.6% of the ordinary shares outstanding at 1 July 2023) at a weighted average NAV discount
of -9.9%. This resulted in a -0.16% 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.
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.
6. Net Assets Attributable to Shareholders
Total equity of USD 140,151,385 (2023: USD 115,259,277) represents net assets attributable to Shareholders. NAV per share as at 30 June 2024 is USD
5.137 (2023: USD 4.157).
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:
The management fee accruing to the Investment Manager for the year ended 30 June 2024 was USD 2,237,255 (2023: USD 1,936,485). An amount
of USD 203,206 (30 June 2023: USD 162,201) was outstanding as at 30 June 2024.
7. Net Gain/(Loss) from Investments at Fair Value through Profit or Loss
8. Related Party Transactions
1,874,662
(1,660,823)
(7, 20 0,8 04)
492,223
Realised gain on disposal of investments
Realised foreign currency loss
Unrealised gain/(loss) on investments at fair value through profit or loss
Unrealised foreign currency (loss)/gain
2024
USD
2023
USD
18,459,534
(2,011,711)
15,781,434
(4,193,284)
28,035,973 (6,494,742)
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%.
•
•
•
58
Financial StatementsAnnual Report 2024
Directors’ fees and expenses
The Board determines the fees payable to each Director, subject to a maximum aggregate amount of USD 350,000 (2023: 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 257,622 (2023: USD 319,183) and expenses were USD 105,215 (2023: USD 97,994).The total
Directors’ fees and expenses for the year were USD 362,837 (2023: USD 417,177).
As at 30 June 2024, USD nil (2023: nil) of Directors’ fees were outstanding.
Ownership of shares
As at 30 June 2024, Directors held 34,964 ordinary shares in the Company (2023: 44,920) as listed below
Mr Funaki is also a Director of Discover Investment Company which at 30 June 2024 held 1,415,776 ordinary shares in the Company representing
5.2% of the issued share capital.
Mr Craig Martin, Chairman of the Investment Manager holds 73,386 shares in the Company. During the year he purchased 6,300 shares.
Custodian fees are charged at a minimum of USD 12,000 (2023: 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 (2023: 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 127,617 (2023: USD 101,674), of which USD 11,780 (2023: USD 9,500) were outstanding
at year end.
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 150,580 (2023: USD 145,590), of which USD 500 (2023: USD 1,120) 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 63,638 (2023: USD
56,024), of which USD 5,384 (2023: USD 4,744) were outstanding at year end.
Total administrative and accounting fees for the year were USD 214,218 (2023: USD 201,614).
The Directors are not aware of any ultimate controlling party as at 30 June 2024 or 30 June 2023.
Notes to the Financial Statements
For the year ended 30 June 2024 (continued)
Hiroshi Funaki
Philip Scales
Saiko Tajima
19,887
10,077
5,000
Shares
Shares
Shares
9. Custodian Fees
10. Administrative and Accounting Fees
11. Controlling Party
8. Related Party Transactions (continued)
Annual Report 2024 Financial Statements
59
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.
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.
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 2024 (2023: nil).
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.
12. Fair Value Information
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.
•
•
•
2024
Financial assets classified at fair value upon initial recognition
Investments in securities
2023
Financial assets classified at fair value upon initial recognition
Investments in securities
134,971,131
113,225,102
-
-
-
-
134,971,131
113,225,102
Total
USD
Level 1
USD
Level 2
USD
Level 3
USD
60
Financial StatementsAnnual Report 2024
The table below provides a breakdown of the line items in the Company’s Statement of Financial Position to the categories of financial instruments.
The calculation of basic and diluted earnings per share at 30 June 2024 was based on the total comprehensive income for the year attributable to
Shareholders of USD 26,522,608 (2023: loss of USD 8,622,089) and the weighted average number of shares outstanding of 27,383,130 (2023: 28,685,603).
On 1 October 2024, the Company announced that the first annual redemption facility had resulted in 3,406,598 Ordinary Shares being validly tendered
for redemption. These ordinary shares represent approximately 12.6% of the ordinary shares in issue as at 31 August 2024. The Board resolved that the
redemption price will be based on VNH’s official net asset value per share as at 30 September 2024.The net asset value per share is expected to be
announced by mid-October 2024 and it is anticipated that payments will be made to redeeming shareholders by the end of October 2024.
From 1 July 2024 to the date of signing these financial statements, there were no other material events that require disclosures and/or adjustments in
these financial statements.
(i) Standards and amendments to existing standards effective 1 July 2023
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 2024 that have been early adopted by the Company
There are no standards effective after 30 June 2024 that are relevant to the Company.
Notes to the Financial Statements
For the year ended 30 June 2024 (continued)
13. Classifications of Financial Assets and Liabilities
14. Earnings Per Share
15. New and Amended Standards and Interpretations
16. Events After the Reporting Date
2024
Cash and cash equivalents
Investment in securities at fair value
Accrued dividends and interest
Receivables on sale of investments
2023
Cash and cash equivalents
Investment in securities at fair value
Accrued dividends and interest
Receivables on sale of investments
Accrued expenses
Payables in purchase of investments
Payables on repurchase of shares
Accrued expenses
-
134,971,131
-
-
2,894,425
-
73,797
2,451,845
2,894,425
134,971,131
73,797
2,451,845
-
-
-
-
1,750,069
-
877,375
338,591
-
-
-
-
-
113,225,102
-
-
-
-
-
-
-
-
341,646
343,745
246,469
134,971,131 5,420,067
2,966,035 -113,225,102
- 239,813-
--
931,860--
1,750,069
113,225,102
877,375
338,591
341,646
343,745
246,469
140,391,198
116,191,137
239,813
239,813
931,860
-
239,813
Total carrying
Amount
USD
Financial liabilities
at amortised cost
USD
Financial assets at
amortised cost
USD
Fair value through
Profit or loss
USD
Annual Report 2024 Financial Statements
61
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 2024 were 2.97%.
a) Average NAV
Calculated using twelve monthly closing average NAV for the year ended 30 June 2024.
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
30 June 2024
Page
a
b
((b-a)/a)
1
1
1
406.4
396.0
2.6%
Average NAV
Operating expenses
Ongoing charges
30 June 2024
USD
Page
a
b
b/a
1
1
1
127, 574,317
3,783,976
2.97%
Total annual expenses
Less: non-recurring expenses
Operating expenses
USD
Page
c
d
b=c+d
47 4,185,800
(401,824)
3,783,976
62
Financial StatementsAnnual Report 2024
Corporate Information
Mr. Hiroshi Funaki
Mr. Philip Scales
Ms. Saiko Tajima
Ms. Connie Hoang Mi Vu
Carey Olsen (Guernsey) LLP
Carey House
Les Banques
St Peter Port
Guernsey
GY1 4BZ
Dynam Capital, Ltd
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey
GY1 2HL
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey
GY1 1WR
Sanne Group (Guernsey) Limited
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey
GY1 2HL
Dynam Consultancy and Services
Company Limited
Floor 12, Deutsches Haus,
33 Le Duan,
Ben Nghe Ward, District 1
Ho Chi Minh City,
Vietnam
Standard Chartered Bank (Singapore) Limited
7 Changi Business Park Crescent
Level 3, Securities Services
Singapore 486028
Cavendish Securities plc
One Bartholomew Close
London
EC1A 7BL
(Nominated Adviser (AIM) until transference to LSE Main Market)
Stephenson Harwood LLP
1 Finsbury Circus
London
EC2M 7SH
Computershare Investor Services (Guernsey) Limited
1st Floor, Tudor House
Le Bordage
St Peter Port
Guernsey
GY1 1DB
Directors Guernsey Legal Adviser
Investment Manager Auditor
Registered Office, Company Secretary and Administrator Market Researcher
Sub-Administrator, Custodian and Principal Bankers Corporate Broker and Financial Adviser
UK Legal Adviser Registrar
Annual Report 2024 Financial Statements
63
