TIDMVOF
RNS Number : 0271R
VinaCapital Vietnam Opportunity Fd.
24 October 2023
VINACAPITAL VIETNAM OPPORTUNITY FUND LIMITED
(a non-cellular company incorporated in the Bailiwick of
Guernsey under The Companies (Guernsey) Law, 2008, on 22 March 2016
with registered number 61765.)
VinaCapital Vietnam Opportunity Fund Limited ("VOF" or the
"Company") is pleased to announce its audited results for the year
ended 30 June 2023.
More information on the Company https://vinacapital.com/investment-solutions/offshore-funds/vof/overview/
is available at:
The information contained within the announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations ("MAR"). Upon the publication of this
announcement via Regulatory Information Service ("RIS"), this
inside information is now considered to be in the public
domain.
Annual Report and Financial Statements for the year ended 30
June 2023
COMPANY STRUCTURE AND LIFE
The Company is a Guernsey domiciled closed-ended investment
company. The Company is classified as a registered closed-ended
Collective Investment Scheme under the Protection of Investors
(Bailiwick of Guernsey) Law, 2020 and is subject to the Companies
(Guernsey) Law, 2008, as amended (the "Guernsey Law"). Prior to
March 2016 the Company was a limited liability company incorporated
in the Cayman Islands.
The Company is quoted on the Main Market of the LSE with a
Premium Listing (ticker: VOF).
The Company does not have a fixed life, but the Board considers
it desirable that shareholders should have the opportunity to
review the future of the Company every fifth year, by way of voting
on a special resolution proposing that the Company ceases to
continue. The next such resolution will be put to the Company's
annual general meeting in December 2023. For further information,
please refer to the section headed "Life of the Company".
INVESTMENT POLICY
Investment Objective
The Company's objective is to achieve medium to long-term
returns through investment in assets either in Vietnam or in
companies with a substantial majority of their assets, operations,
revenues or income in, or derived from, Vietnam.
Investment Policy
All of the Company's investments will be in Vietnam or in
companies with at least 75% of their assets, operations, revenues
or income in, or derived from, Vietnam at the time of
investment.
-- No single investment may exceed 20% of the NAV of the Company
at the time of investment.
-- The Company may from time to time invest in other funds focused
on Vietnam. This includes investments in other funds managed
by VinaCapital Investment Management Limited (the "Investment
Manager" or "VinaCapital"). Any investment or divestment
of funds managed by the Investment Manager will be subject
to prior approval by the Board.
-- The Company may from time to time make co-investments alongside
other investors in private equity, real estate or similar
assets. This includes, but is not restricted to, co-investments
alongside other funds managed by the Investment Manager.
-- The Company will not invest in other listed closed-ended
funds.
The Company may gear its assets through borrowings which may
vary substantially over time according to market conditions and any
or all of the assets of the Company may be pledged as security for
such borrowings. Borrowings will not exceed 10% of the Company's
total assets at the time that any debt is drawn down.
From time to time the Company may hold cash or low risk
instruments such as government bonds or cash funds denominated in
either VND or USD, either in Vietnam or outside Vietnam.
HISTORICAL FINANCIAL INFORMATION
Years ended 30 June 2019 2020 2021 2022 2023
Statement of Comprehensive Income (USD'000)
Total (loss)/income from ordinary activities^ (9,334) (35,204) 633,220 (100,831) 5,080
Total expenses from ordinary activities (18,763) (15,254) (92,436) (20,612) (20,099)
Operating (loss)/profit before income tax (28,097) (50,458) 540,784 (121,443) (15,019)
Income tax expense - - - - -
(Loss)/profit for the year (28,097) (50,458) 540,784 (121,443) (15,019)
(Loss)/profit attributable to ordinary equity holders (28,097) (50,458) 540,784 (121,443) (15,019)
Statement of Financial Position (USD'000)
Total assets^ 974,633 877,968 1,429,421 1,222,513 1,157,219
Total liabilities (19,384) (1,863) (69,648) (42,413) (33,352)
Net assets 955,249 876,105 1,359,773 1,180,100 1,123,867
2019 2020 2021 2022 2023
Share information
Basic (loss)/earnings per share (cents per share)^ (15) (28) 315 (73) (9)
Basic (loss)/earnings per share (pence per share)*^ (12) (22) 228 (60) (7)
Share price at 30 June (USD) 4.34 4.07 6.64 5.79 5.46
Share price at 30 June (GBP)* 3.41 3.29 4.82 4.76 4.29
Ordinary share capital (thousand shares) 184,809 176,128 168,418 163,480 160,048
Market capitalisation at 30 June (USD'000) 802,069 716,843 1,119,089 946,576 873,862
Market capitalisation at 30 June (GBP'000)* 630,197 579,462 810,934 777,347 686,605
Net asset value per ordinary share (USD)^ 5.17 4.97 8.07 7.22 7.02
Net asset value per ordinary share (GBP)*^ 4.06 4.01 5.85 5.93 5.52
Ratio
Ongoing charges excluding incentive ( income)/fee (++) 1.7% 1.7% 1.6% 1.5% 1.7%
Incentive (income)/fee (0.3%) (0.3%) 6.1% (0.6%) (0.1%)
Ongoing charges plus incentive fee 1.4% 1.4% 7.7% 0.9% 1.6%
^ The figures for 2019 above include adjustments to the share
prices of some investments at 30 June 2019 in order to adjust for
pricing anomalies identified by the Board. Please refer to the
Annual Report and Financial Statements for the year ended 30 June
2019 for a complete explanation.
* Following the change of domicile to Guernsey in 2016, the
Company's shares have been quoted in Pounds Sterling ("GBP"). USD
NAV per share is translated to GBP using the rate of exchange at 30
June each year.
(++) Calculated as general and administration expenses divided
by average NAV for the year. Ongoing charges have been prepared in
accordance with the Association of Investment Companies ("AIC")
recommended methodology.
Calculated as total incentive fee/(income) divided by average
NAV for the year. The calculation can be found in the glossary.
Calculated as the sum of general and administration expenses and
total incentive fee/(income) divided by average NAV for the year.
The calculation can be found in the glossary.
FINANCIAL HIGHLIGHTS
In the year to 30 June 2023, the Company's NAV per share
decreased in US Dollar terms by 2.8% to USD7.02, while the
Company's share price decreased by 5.7% to USD5.46. Taking account
of dividends paid in the year to 30 June 2023, the NAV Total Return
in USD terms was -0.4% and the Share Price total return was
-3.1%*.
As at/years ended 30 June 2021 2022 2023
NAV total return* (%) 65.6 (8.8) (0.4)
Share price (USD) 6.64 5.79 5.46
Increase/(decrease) in Share Price
total return** (%) 63.1 (12.8) (3.1)
Discount to NAV per share*** (%) (17.7) (19.8) (22.2)
Dividend per share (US cents) 11.5 16.0 14.25
* Expressed in percentage terms, is a measure of the investment
return earned by the Company, calculated by taking the change in
the NAV over the period in question and dividing by the starting
NAV. This assumes that any dividends paid in the period are
reinvested at the prevailing NAV per share on the ex-dividend date
and that the dividend would grow at the same rate of return as the
NAV per share after re-investment. A numerical reconciliation of
the NAV total return can be found in the glossary. This footnote
applies to all disclosures of NAV Total Return throughout this
Annual Report and Financial Statements.
** Expressed in percentage terms, is a measure of the return to
shareholders, calculated by taking the change in the share price
over the period in question and dividing by the starting share
price. This assumes that any dividends paid in the period are
reinvested at the prevailing share price on the ex-dividend date
and that the dividend would grow at the same rate of return as the
share price after re-investment. The Share Price total return is
provided by an independent third-party provider of investment
statistics - see glossary. This footnote applies to all disclosures
of Share Price total return throughout this Annual Report and
Financial Statements.
*** Calculated as NAV per share less share price divided by NAV
per share. The calculation can be found in the glossary.
CHAIRMAN'S STATEMENT
Dear Shareholder,
Since it touched a high point at the end of February 2022, the
Vietnamese equity market has been adversely affected by conditions
in the global economy and international capital markets. In the
second half of 2022, the negative sentiment was exacerbated by a
crackdown by the Vietnamese government on corruption and poor
business practices, particularly in the real estate sector.
A number of the investments in the private equity component of
the portfolio are investments described as "public equities with
private terms" or "PEPT" where the Company has invested in
instruments issued by public companies but where the Investment
Manager has negotiated downside protection. A number of these were
issued by companies in the real estate sector. At the time the
Board approved the interim accounts, with one event of default
having taken place and with the prospect of further such events, it
was not clear how the specific protections the Investment Manager
had put in place would work. As a result, the Board reduced the
overall fair values of these investments by USD52.9 million as at
31 December 2022 and I reported at the half year that the Company's
NAV per share declined by 14.5% in the six months to 31 December
2022.
Since the beginning of 2023, some confidence has returned to the
equity market and the real estate market has shown signs of a
return to stability, although recovery is likely to take some time
. Against that background, the Investment Manager has made good
progress in renegotiating terms and improving the security of the
PEPT investments. In each case, the Investment Manager continues to
work towards a full recovery over time of the original investment
and contractual returns and, reflecting this, the Board has
approved an increase in the fair values of these investments of
USD26.8 million as at 30 June. Separately, our independent valuers
recommended increases in the carried values of five "traditional"
private equity investments as at 30 June 2023 compared with their
values as at 31 December 2022 and, as a whole, the increase in the
PEPT and Private Equity investments in the second half of the year
totalled USD54.3 million. These uplifts, alongside an overall
improvement in listed equity valuations, contributed materially to
a recovery in NAV in the second half of our accounting year- an
overall rise of 14.9%.
The NAV total return(1) for the whole year under review was
-0.4%. We regularly remind shareholders that they should view their
holding in the Company as a long term investment and, over a
five-year period, the NAV total return(2) was 45.0%. The Board
believes that this is a strong outcome, especially considering the
challenges posed by COVID-19 and the more recent resurgence of
global inflation and reduced economic growth. Our Investment
Manager does not follow any benchmark in managing the portfolio but
the Board is aware that investors will always compare the Company's
performance with the VN Index. The NAV outperformed the index over
the year under review and the five-year period by 5.7 % points and
21.9% points respectively.
(1) The NAV declined by 2.8% over the year under review and,
accounting for dividends paid, the NAV Total Return (which is an
Alternative Performance Measure: see Glossary) was -0.4%
2 The NAV increased by 30.5% over the five years from 30 June
2018 to 30 June 2023 and, accounting for dividends paid, the NAV
Total Return (which is an Alternative Performance Measure: see
Glossary) was 45.0%
Dividends
Our policy is to pay out dividends of approximately 1% of NAV
per share, twice each year and normally declared in March and
October. In October 2022 we declared a dividend of 8.0 cents per
share and in March 2023 we declared a dividend of 6.25 cents per
share. The reduction in the half yearly dividend reflected the
decline in NAV per share over that period.
The Directors recognise the importance of regular dividends for
some shareholders and, in October 2023, declared a dividend of 7.0
cents per share, the increase broadly reflecting the increase in
NAV in the second half of the financial year. This will be payable
to shareholders on or around 4 December 2023.
Borrowings
In March 2023, the Company extended its USD40 million secured
revolving credit facility with Standard Chartered Bank for a
further year. This facility provides an additional source of
short-term liquidity for the Investment Manager, particularly as it
manages the Company's cash flows in some illiquid investments.
Marketing and the Discount
We continue actively to promote the Company. Our Investment
Manager makes great efforts to encourage investment and is assisted
by our brokers, Numis Securities Limited, distribution partner,
Cadarn Capital and Barclays Bank Limited PLC which provides
investor engagement services. A wide variety of information is
available to existing and potential investors with the aim of
stimulating demand for the shares: a detailed fact sheet is issued
each month and regular updates on the Vietnamese market and economy
in both written and video form are posted to our website. You can
sign up to be notified of new publications at
https://vof.vinacapital.com and I particularly recommend the video
updates, which really help bring the case for investment to
life.
The discount was under pressure for a large proportion of the
year under review, in common with much of the closed-end fund
sector, and the Company has renewed its efforts to manage the
discount through share buybacks. During the year, 3.4 million
shares were bought back, which was 2.1% of shares in issue at the
start of the period. The discounts at which these shares were
bought resulted in an increase in the NAV of some 2.7 US cents per
share to the benefit of continuing shareholders and, the Directors
believe, helped to control the volatility of the discount.
We will continue to publicise the long-term potential of
investment in Vietnam and the benefits of the Company's unique
approach to investing and will continue to use share buybacks where
we believe that these are in the best interests of the
shareholders.
Investment Management Fees
As a result of the exceptional performance in the year ended 30
June 2021, a balance of USD22.8 million (discounted for the time
value of money to USD20.4 million) was brought forward in the
Company's accounts as an accrual for potential payment of incentive
fees in this and future years. As a result of the decline in NAV
this year no further incentive fees were accrued and, of the amount
carried forward, USD1.2 million has been clawed back. USD15.8
million will be paid out on publication of this annual report and
USD5.8 million will be carried forward and may be paid out in
future years, depending on the investment performance. Note that
the amount to be paid out does not affect this year's ongoing
charges ratio as it was accounted for in the 2020/21 accounting
year - and also the amount clawed back has reduced the ratio for
this year.
The Board recognises that there is downward pressure on
investment management fees in many parts of the world. However, we
also recognise that Vietnam is a developing market and the types of
investment which the Company typically makes require a high level
of resources, both in negotiating investments and in managing
existing holdings. Against this background, we announced in March
2023 that we had agreed with VinaCapital that the management fees
with effect from 1 July 2023 are as follows:
(a) Base Fees
-- 1.30% of net assets up to the first US$1,000 million of net
assets.(3)
-- 1.00% of net assets between US$1,000 million and US$1,500
million.
-- 0.75% of net assets between US$1,500 million and US$2,000
million.
-- 0.50% of net assets above US$2,000 million.
3 To 30 June 2023: 1.50% of net assets, levied on the first
USD500 million of net assets and 1.25% of net assets, levied on net
assets between USD500 million and USD1,000 million. Base fee levels
for net assets of over $1,000 million unchanged.
(b) Incentive Fees
-- To the extent that the NAV as at any year end commencing 30
June 2024 is above the higher of a 10%(4) compound annual
return and the high water mark having accounted for any share
buy backs, share issues and/or dividends, the incentive fee
payable on any increase in the NAV with effect from 30 June
2023 above the higher of the high water mark and the 10% annual
return target is calculated at a rate of 10%(5) ;
-- The maximum amount of incentive fees that can be paid in any
one year is, as previously, capped at 1.5% of the weighted
average month-end NAV during that year.
-- Any incentive fees earned in excess of this 1.5% cap will
be accrued if they are expected to be paid out in subsequent
years.
25% of any incentive fees paid will be invested in shares in the
Company. These may not be sold until they have been owned for at
least five years.
4 To 30 June 2023: 8% compound annual return
5 To 30 June 2023: calculated at a rate of 12.5%
The Board
Thuy Dam retired from her position as Director of the Company on
18 April 2023. Thuy had been a Director for nine years and her
retirement was in compliance with best corporate governance
practice. She made an important contribution to the Company,
providing the Board with insight and representation in all matters
Vietnamese. The Board has valued her contribution greatly and she
will be missed at both a business and a personal level. The Board
would like to wish her all the best in her future endeavours.
Thuy played an important role in the identification of a
replacement Vietnamese director, and this work culminated in the
appointment of Hai Thanh Trinh as a Director of the Company on 30
June 2022. Thuy acted as a mentor to Hai from his appointment and
the Board is pleased that he is now well settled into his role.
Annual General Meeting
This year's AGM will take place in Guernsey on 6 December 2023
at Aztec Group, Trafalgar Court, Les Banques, St Peter Port,
Guernsey, GY1 3PP. Notice of the AGM is sent to registered
shareholders with the Annual Report and Financial Statements.
Most of the resolutions are routine matters which appear at each
AGM, but I would like to draw shareholders' attention in particular
to Resolution 14. This concerns the "discontinuation" of the
Company. Every fifth year, shareholders are asked to vote on
whether the Company should continue as currently constituted. This
vote will be structured as a special resolution for
"discontinuation", whereby the Company will continue in operation
unless more than 75% of those voting elect to "discontinue". This
unusual structure means that shareholders who wish the Company to
continue should vote against the resolution. The Directors have
considered the opportunities available to the Company and the
resources and investment track record of the Investment Manager and
are unanimously of the view that the Company should continue in
operation. We therefore recommend that shareholders vote against
Resolution 14 at the AGM as those Directors who hold shares intend
to do themselves.
Outlook
The world is going through a difficult period as governments and
central banks strive to control inflation. In setting interest
rates, central banks continue to wrestle with the dilemma that
higher rates may help to control inflation but at the same time
reduce growth. Having increased interest rates significantly to
protect the currency, the Vietnamese central bank has now reduced
rates decisively to reduce the pressures in the real estate sector
and help stimulate growth in domestic consumption.
The real estate sector in Vietnam has liquidity problems and, as
one of the largest sectors in the Company's portfolio, these
continue to be of concern. However, we do expect the situation to
improve over time as there is a shortage of supply and pent-up
demand, particularly for apartments in the major cities. Elsewhere,
there is evidence that manufacturers are beginning to receive
increased orders and Foreign Direct Investment remains strong.
After slower growth in 2023, there are reasons to be optimistic
that GDP growth in Vietnam will return to historic levels next
year.
While during 2023 the equity market has recovered some of the
ground lost in 2022, listed Vietnamese equities are still trading
at a low valuation compared with regional peers and their own past
levels. With the usual caveat that returns are likely to be
volatile and buffeted by extraneous events, combining the low
valuation with continued economic growth gives cause for optimism
for Vietnamese equities. It is hoped that the recent elevation of
the relationship between Vietnam and the United States to a
Comprehensive Strategic Partnership will yield significant economic
benefits over time.
As the Company looks to the future, the Board believes that
Vietnam will continue to offer interesting and rewarding investment
opportunities for patient, long-term investors and, particularly in
light of this year's discontinuation vote, we thank you for your
continued support.
Huw Evans
Chairman
VinaCapital Vietnam Opportunity Fund Limited
23 October 2023
INVESTMENT MANAGER'S REPORT - 30 JUNE 2023
Macroeconomic Highlights
Vietnam's economy grew by 8% in its 2022 post-COVID-19
re-opening boom, being one of the fastest-growing economies in Asia
in 2022. However, from a financial year perspective, for the
twelve-month period ending 30 June 2023, economic growth and market
performance should be viewed in two separate and distinct periods
reflecting differing economic and market conditions.
The first half of the financial year, from 30 June 2022 to 31
December 2022 saw a significant decline in corporate debt issuance
and public equity trading liquidity which negatively affected the
stock market and company performance. While there were several
arrests of business leaders during 2022, it was the surprising
arrest of Madame Truong My Lan, the owner and controller of many
real estate holdings and the largest private bank in Vietnam, that
exacerbated the market decline, particularly in the real estate
sector.
The second half of the financial year, from 1 January 2023 to 30
June 2023 saw market liquidity and stock market performance
recover, with government support across various parts of the
economy, including the reduction of policy interest rates, the
revision of corporate bond regulations, and other measures to help
the real estate sector. While certainly more can be done with
regards to improving capital market regulations and real estate
policies, the improvements to the sector coupled with the
Government support during the second half of the financial year
were meaningful and diverted significant capital out of idle bank
deposits and into the capital markets.
Vietnam's GDP grew by 9.5% year-on-year from 30 June to 31
December 2022, in contrast to the stock market which declined by
16.3%, in USD total return terms. In the second half of the
Company's financial year from 1 January to 30 June 2023, the stock
market staged a partial recovery, rising by 12.2% during the
six-month period. However, Vietnam's GDP growth slowed to 3.7%
year-on-year, reflecting a drop in manufacturing output and
exports, a slow recovery in international tourist arrivals, and
ongoing issues with real estate project approvals that are
dampening sentiment and spending by local consumers.
Despite Vietnam's disappointing GDP growth in the first half of
calendar year 2023, we believe that the worst of the country's
economic downturn has passed given that exports and manufacturing
appear to have now bottomed, while the government's twin policy
drives of boosting infrastructure spending and lowering interest
rates should support the country's economic growth.
Vietnam's economy has been impacted by the slow-down in the US
and European economies which collectively account for nearly half
of Vietnam's total exports. The weak demand for "Made in Vietnam"
products in 2023 was not unexpected, given the surge of inventories
at US retailers last year, leading them to reduce and/or cancel
orders. The growth of manufacturing output in Vietnam fell from
9.7% y-o-y in the first half of calendar year 2022 to 0.4% in the
first half of calendar year 2023, knocking more than 2% points off
Vietnam's GDP growth rate. However, it appears that consumer
electronics inventories may have already passed the bottom, as
evidenced by two months (June and July 2023) of month-on-month
growth in Vietnam's exports of laptops and other consumer
electronics. We expect orders for factories producing high-tech
products in Vietnam to recover further in the remainder of calendar
year 2023.
Another significant driver of GDP is foreign tourist arrivals,
which have now recovered to about 70% of pre-COVID-19 levels.
However, Chinese tourists, who previously accounted for 30% of
foreign tourist arrivals in Vietnam pre-COVID-19, have not returned
in a meaningful way despite China's reopening earlier this year.
Historically, tourism has contributed about 8% of Vietnamese GDP
and any further recovery in tourism will be a strong positive for
Vietnam's growth looking ahead.
Crackdown on corporate bond issuances have impacted the Real
Estate sector and impacted stock markets
Towards the end of calendar year 2022, we saw some major
political changes with the replacement of two Deputy Prime
Ministers and in January 2023 the resignation of Vietnam's
President. While there may yet be further changes and
investigations, we do not expect these to have a significant
negative long-term impact on the economy and stock market. Rather,
these changes should be positive for the investment environment and
economy over time.
The headline arrests of some business leaders for the misuse of
funds raised through the issuance of corporate bonds caused a
decline in markets in the second half of calendar year 2022. The
cost of debt increased substantially causing significant
difficulties for corporate issuers to access new funding or
roll-over expiring debt. In addition, the government issued a
revised decree around the issuance of corporate bonds making it
more difficult for private individuals to invest. At one stage
during November 2022 the yields for some corporate bonds in the
real estate sector were driven up to 30-40%. Most issuers had to
step in either to purchase their outstanding bonds and/or
renegotiate existing terms and tenors. This liquidity crunch
particularly impacted real estate developers as well as hitting
overall market confidence. As concerns grew over several large real
estate developers' ability to access credit, in particular Novaland
(HOSE: NVL, NAV: 3.3%) and Phat Dat Real Estate (HOSE: PHR, not
held), the stock market began to fall in October and the resulting
pressure from margin calls led to large falls in share prices.
Investors, especially retail investors, were unnerved and the
public equity markets recorded a significant decline during the
final quarter of 2022.
The arrests led to concerns over the security of deposits at
Saigon Commercial Bank (SCB). Faced with the potential for a run on
the banks, the government sought the help of Vietinbank (CTG), the
third largest State-Owned Commercial Bank, to oversee SCB and
instil confidence by increasing its deposit rates. Consequently,
other banks increased their deposit rates in order to retain
customer deposits.
In 2022, the US Fed hiked rates by 425 basis points (bps),
prompting the State Bank of Vietnam ("SBV") to hike policy interest
rates twice last year. Unlike the rate increases in other
economies, the increases in policy rates in Vietnam were not in
response to hot inflation numbers, given Vietnam's inflation in
2022 and into 2023 was low, hovering between 2.0% and 4%, but were
to defend and stabilise the USD-VND exchange rate.
The tightening of liquidity, particularly during the last
quarter of 2022 and which persisted into early 2023 kept local
deposit rates at around 9-10%. This, coupled with a stable currency
against a strengthening USD resulted in Vietnamese depositors and
businesses leaving money in the bank rather than investing into
shares or real estate.
The net result was that the corporate bond market has
effectively been closed for most of 2023. Lending conditions remain
tight for real estate developers as banks are reluctant to extend
more credit to developers during this period of uncertainty. It
seems that this "liquidity crunch" is isolated to real estate
developers, rather than being a system-wide issue as lending to
manufacturers and other corporates continues. However, while
interest rates were high there was little motivation to invest in
capital equipment to expand businesses when orders for "Made in
Vietnam" goods were weak.
Falling interest rates and improving credit liquidity should act
as a positive signal for the real estate and banking sectors, and
for the equity market in general.
Real Estate sector recovery will be slow and gradual
Although liquidity has improved and interest rates have
declined, pain is still being felt by many real estate businesses,
particularly those that borrowed aggressively in the bond market.
Cash flows of these companies are weak, needing debt agreements to
be restructured.
The relationships between banks and real estate developers
issuing bonds are very close. Most of the corporate bonds are
distributed through commercial banks with some bonds being backed
by banks, whether directly with collateral, or indirectly through a
promise to be market makers of these instruments. Inevitably, banks
involved in corporate bonds have been negatively impacted. One of
the Company's largest holdings, Asia Commercial Bank (HOSE: ACB,
NAV: 12.7%) does not have significant exposure to real estate
corporate bond activities and continues to see steady earnings
growth through its focus on small and medium enterprise businesses,
and retail customers.
The real estate sector contributes about 10% of GDP and made up
approximately 19% of the stock market weight average. The sector
fell by 33.1% during the financial year, compared with the VN Index
which declined by 6.1% in USD total return terms ($TR)(6) . The
challenges discussed above have meant that there has been very
little construction and few project sales during the first six
months of the calendar year 2023. We see signs that the situation
will improve in 2024 and into 2025.
A recovery in the real estate sector would make a significant
contribution to Vietnam's GDP growth next year, especially since
the demand for new housing units far outstrips the supply of newly
constructed apartments and homes.
VOF has provided funding to three real estate developers which
defaulted or are at risk of default in their repayment obligations.
Restructuring efforts for these investments are discussed in more
detail below.
6 An alternative performance measure: see Glossary.
Public spending will be a key driver of growth
Public spending will be a key driver for Vietnam's economy in
2024 and we expect that the government will continue to boost
investment to help to offset the negative impact of the slowdown in
exports and production. Infrastructure spending has grown by 40%
over the first six months of 2023 compared with the same period
last year and could reach over USD20 billion this year. In
addition, a USD5 billion subsidy programme for affordable housing
purchases has been introduced. Together these government
initiatives could help boost 2023 GDP growth by about 1% point.
FDI continues to be resilient
Finally, Vietnam will continue to be a prime destination for
FDI(7) , particularly for multinationals looking to produce for
export and seeking an alternative manufacturing base to China.
Vietnam has been the biggest beneficiary of the US-China trade war
because of its low wages, proximity to Asian supply chains, and its
geo-politically aligned "friend-shoring" appeal, which means that
it has minimal risk of facing high tariffs from the US. These
factors have drawn multinationals to invest in Vietnam and
increased its exports in recent years, especially of high-tech
products.
7 See Glossary
Improving economic outlook as policy measures take effect
While many of the challenges that we have discussed above still
remain, it now appears that more fundamental drivers introduced in
recent months are finally having a positive effect. Globally,
inflation appears to be moderating in developed markets, and the US
Fed appears to be taking a less aggressive stance on monetary
policy. Domestically, a sense of calm is settling in as the real
estate sector improves and there are signs of a return to
stability, although any robust recovery is likely to take some
time. Interest rates were reduced earlier than anticipated, while
supportive measures for the corporate bond and real estate market
were introduced to help further strengthen the recovery in the real
estate sector.
We believe that all of these factors will contribute to
confidence returning to the economy and market .
Market Highlights
Vietnam's stock market experienced one of the most volatile
years in its history during 2022 and ended the calendar year down
by 34.1% in USD, total return terms ($TR). However, we are
reporting over the financial year period ending 30 June 2023 and,
as such, it is useful to look at the performance of the market over
two distinct periods, with the first between July and December
2022, and then the second half of the financial year, from January
to June 2023.
With the cost of debt rising significantly on the back of rising
global interest rates and with other domestic challenges, investor
confidence has remained weak, and this is clearly reflected in
market liquidity which has declined from its peak levels. That
said, the market liquidity remains robust and has improved in
recent months.
Market liquidity and participation improves
During 2023, with green shoots across the field, domestic retail
investors found some confidence to return to the market. In June
2023, the market saw the highest level of market turnover in a
year, with average daily turnover up +36% month-on-month, to
USD723.0 million (for the VN Index). Overall, the average daily
trading volume in Vietnam's three exchanges has increased from
USD400 - USD500 million during late 2022 to over USD1 billion on
several occasions during the summer of 2023.
Calendar year-to-date , foreign investors are still net buyers
in the market to the tune of some USD83 million, as flows increase
from ETF mandates that originate from regional markets. Foreign
buying activity has been concentrated in brokers (i.e., non-bank
financial sector), with USD118.0 million net buying during the
first half of the calendar year, reflecting the view that brokers
will be a natural proxy to capture the stock market momentum for
the remainder of the year.
The lowering of deposit rates has encouraged retail investors to
return to the stock market, with new account openings reaching
146,000 in June 2023, after an impressive 105,000 new accounts
opened in May, 4.6 times higher than April levels. As retail
investor participation continues to grow, we have seen total stock
margin lending balances of brokers increase 22% quarter-on-quarter
as of 30 June 2023, estimated to be USD6.3 billion - albeit around
25% lower than the peak levels.
Valuations remain appealing
Vietnam remains attractively valued. On prospective financial
year ("FY") 2023 earnings, PER(8) and EV/EBITDA multiples are all
well below their 5-year averages.
Our research team believes that the macroeconomic picture for
Vietnam remains remarkably strong and resilient long-term. While
earnings growth for 2023 has been trending lower, with consensus
estimates currently at 7.8% growth for 2023, looking ahead the
outlook for 2024 is robust, with the market expecting to deliver
32.1% earnings growth, one of the fastest growth rates in ASEAN,
while still attractively priced at an estimated 12.3x forward
price-to-earnings ratio for 2023.
While it is now encouraging to see improvements in both the
policy cycle (lower rates, low inflation, stable currency,
increased public spending), and the sentiment cycle (higher trading
volumes, improved liquidity, rising valuations), we will
nevertheless continue to monitor the recovery in the business cycle
and the impact on earnings and economic growth as it relates to the
investment opportunities that we seek for the Company.
8 See Glossary
Fund Performance Highlights
Over the long term, we expect the economic performance of
Vietnam to drive investment returns and our approach to managing
the Company's portfolio seeks to take advantage of this economic
growth. However, over the year under review, Vietnam's economy has
been affected by volatility in global markets, exacerbated by
domestic issues in the real estate market.
For the year ended 30 June 2023, the NAV per share of the fund
declined by -0.4% in USD, total return terms ($TR).
Historical long-term performance remains positive despite
short-term challenges over the past financial year
While the VN Index is not a benchmark for the Company, it serves
as a useful comparison for some investors.. Over the same 12-month
period, the VN Index declined by 6.1% ($TR). Over the first half of
the financial year, the VN Index declined by 16.3%, while over the
second half of the financial year from January to June 2023, the VN
Index increased by 12.2%. Importantly, over a 3-year and 5-year
period, the fund has delivered +50.1% and +45.0% total returns
respectively, versus +40.1% and 23.1% for the VN Index. The
Company's share price total return over the same periods are -3.1%
(12-months), +44.2% (3-year) and +44.1% (5-year).
Total Return in USD terms 6 months July to Dec 2022 6 months Jan to June 2023 Financial 3 years 5 years
Year 2023
VOF NAV -13.4% +14.9% -0.4% +50.1% +45.0%
VN Index -16.3% +12.2% -6.1% +40.1% +23.1%
Table: VOF and VN Index performance, up to 30 June 2023.
Source: Bloomberg, VinaCapital.
Dividends and Share Buyback
During the financial year, the Company received USD13.7 million
in dividends from its portfolio companies and, in return, the
Company continues to maintain its dividend policy and reward its
shareholders with regular dividend pay-outs equivalent to
approximately 1% of NAV every half year. Dividends paid totalled
USD23.0 million for the financial year. The Company continues to be
the only Vietnam dedicated listed closed-ended fund to pay a
regular dividend.
In addition to dividends, the Company's share buyback programme
remains active and during the financial year, the Company bought
back USD18.2 million worth of shares and, since the commencement of
the buyback program in 2011, the Company has bought (and cancelled)
a cumulative total of 163 million shares, equivalent to
approximately USD458 million that has been spent on the share
buyback programme since its introduction.
Financial sector was the leading contributor to market
performance, followed by Healthcare
The best performing sectors over the financial year were
Healthcare (+21.9%), followed by Financial Services (+13.5%), and
Energy (+5.1%). The Financial Services sector has the largest
sector weight in the index - 38.1% - and, on a weighted
contribution basis, was the leading contributor to market
performance, contributing 5.8% to index performance.
The outlook for the Financial Services sector and, within it,
the commercial banks, is enhanced by the SBV's recent accommodative
monetary policy and borrowing rates at commercial banks have
reduced by 250 bps in 2023 to date. Furthermore, the SBV have
reaffirmed their desire to see higher credit growth for the year as
part of their economic support measures, raising the credit growth
limits for commercial banks by 14% year-on-year. This means that if
credit is fully extended out into the economy, there may be a total
of approximately USD70 billion of new credit disbursed in calendar
year 2023. Note that by 30 June 2023, banks reported just 4.7%
year-to-date credit growth, which points to a robust rate of credit
disbursement for the remainder of the year even if commercial banks
choose not to fully utilise their allotments.
The largest holding in the portfolio, ACB (NAV 12.7%), one of
Vietnam's leading commercial banks, was the second largest
contributor to the Company's annual performance , with ACB
delivering a +8.5% return during the period and contributing almost
+1.0% to total NAV performance.
The best performing sector for the VN Index over the financial
year was the Healthcare sector (+21.9%), led mostly by several
domestic pharmaceutical companies. However, given the sector's
index weight of just 0.7%, on a weighted contribution basis, it
delivered 0.2% contribution to the overall index performance. The
Company's portfolio, through our Private Equity investments, has
8.4% NAV weight to the Healthcare sector, demonstrating that the
portfolio gives investors an off-index allocation to some of the
most exciting and growth-oriented segments of the domestic
economy.
The only other sector in the VN Index that contributed a
positive performance during the financial year was the Energy
sector, up 5.1%, but owing to the sector's modest index weight, on
a weighted contribution basis, added just 0.1% to the index
performance. The Energy sector within the portfolio performed well
during the period, with PVS (+37%) showing strong positive returns
and helping to narrow the portfolio's losses during the market
volatility.
On a weighted contribution basis, Financial Services delivered
+1.3% to total return, while the Energy sector added +0.5% to the
Company portfolio return over the financial year.
Real Estate was one of the worst performing sectors and largest
detractor to market performance
As discussed above, the Real Estate sector was one of the worst
performing sectors in the market, down 27.5% over the financial
year period, and only second to the Consumer Discretionary sector,
which was the worst performing, down by 28.4% over the same period.
However, as the Real Estate sector is the second largest
constituent of the VN Index, at 19.2% weight on average, it
contributed the most in holding back market performance, and on a
weighted contribution basis, took away 6.8% from the overall market
performance during the financial year, offsetting any of the gains
made by the top three sectors.
The Real Estate sector had the biggest negative impact on the
portfolio, with a decline of 10% during the financial year , due to
the valuation adjustments made to the several unquoted investments
held in the sector, and the performance of some of the publicly
listed Real Estate investments in the portfolio. On a weighted
contribution basis, the Real Estate sector detracted -2.9% from the
overall fund performance. Within the sector, KDH (-11%), VHM
(-12%), NVL (-10%), DXS (-14%) were the biggest underperformers
during the financial year.
Closely aligned to the fortunes of the Real Estate sector is the
Construction Materials sector which over the financial year,
declined by 6.5%. With the sector's 7.4% index weight, on a
weighted contribution basis, this detracted 0.6% from the overall
index return. However, within the individual companies within the
Materials sector, performance was led by Hoa Phat Group (HOSE: HPG,
NAV: 11.3%), the largest steel producer in Vietnam, which saw its
share price increase by 17.3% over the financial year, with much of
the gain over the January to June 2023 period, during which the
price increased by 45.3% . HPG saw its strongest year-to-date
monthly sales volume increase in June, up by 2.7% month-on-month to
640,000 tonnes, thanks to a combination of strong recovery in
domestic demand and improved export volume growth.
Quarter-on-quarter sales volume growth reached 11.4% to 1.8 million
tonnes sold, delivering a net profit of USD43.0 million (+152%
quarter-on-quarter). Consensus estimates for the full calendar year
2023 indicate that HPG should be able to deliver approximately
USD315.0 million in net profit as a result of a strong improvement
in sales volume, margin expansion thanks to cheaper input costs,
and higher utilisation rates from their factories as all blast
furnaces (several of which had been shut due to weak demand over
the past year) should now all be back online.
Given the Materials sector performance, led by HPG, the fund's
position in HPG delivered a +15.9% return during the period and
contributed almost +1.5% to total NAV performance.
Illiquidity in the corporate bond market, a sizable wall of
maturing bonds facing many developers and the inability to secure
loans all lead to concerns. While mortgage rates have reduced in
recent months, demand and buyer sentiment remain weak which will
limit the recovery of the sector in the short term.
However, a recent report from CBRE research indicates that
transaction volumes in Ho Chi Minh City and Hanoi condominiums have
seen a pick-up in demand with 46% and 12% quarter-on-quarter growth
in the second quarter of 2023, respectively, equivalent to 2,200
units in HCMC and 1,400 units in Hanoi sold during the quarter. The
easing of interest rates and a clearer impact from the government's
directives to support the sector (e.g., attempts to untie the legal
knots that entangle project approvals, as well as easing
restrictions on credit flow), all point to a gradual recovery for
the real estate sector that may commence in the second half of the
year, and then continue in 2024 and 2025.
Policy measures to stimulate and support the real estate market
appear to be taking effect. This follows an aggressive deleveraging
within the sector in late 2022, as described above. We are
certainly not out of the woods yet, and it remains a tough year for
pre-sales for real estate developers, which is a leading indicator
of subsequent profitability performance. Delays in the legal
approvals for projects and weak market sentiment have also deterred
developers from new project launches, limiting the prospects for
future growth.
Valuation adjustments to privately negotiated investments
In addition to the quoted investments in the portfolio, the
Company had made a number of investments in private instruments
issued by public companies ("PEPT") in the Real estate sector.
This year, the valuations of these investments have received
particular scrutiny following defaults or potential for default by
the counterparties. When the investments were originally made, the
Investment Manager negotiated "downside protections" in the form of
put options to the sponsor, as well as other rights, supplemented
by collateral in the form of shares. With the turmoil in the real
estate market at the end of 2022, however, it was not clear how
these protections would take effect in the event of a default.
The Company has the following PEPT investments with
NovaGroup:
-- Two relate to Novaland which defaulted at the end of 2022.
The Investment Manager has taken additional measures to protect
the Company's position as both a creditor and shareholder
including rescheduling the payments and taking security in
the form of real assets. The Investment Manager continues
to work with the NovaGroup to recover the full value of the
investment cost and returns that are owed to the Company.
-- Nova Consumer Group (NCG), a subsidiary of NovaGroup, failed
to list on a stock exchange by 1 January 2023. VOF has a
minority shareholding in NCG and under the terms of the investment
agreement, we have put back the shares to NovaGroup. However,
NovaGroup failed to honour its commitment to buy. We are
seeking to enforce the contract and to protect our investment
returns through a negotiation of payment terms and an asset
swap, under which a portfolio of food & beverage outlets,
restaurants and cafes that were owned by NovaGroup was transferred
to IN Holdings, another investment in our Private Equity
portfolio in June 2023. We discuss this further below under
Investment Activities.
Other PEPT investments include Dat Xanh Services (DXS) and Hung
Thinh Land (HTL), with which renegotiations to extend payment terms
have also now been concluded.
In November 2022, the carrying values of all of these
investments were reduced by USD26.2 million. When the Board
prepared the 31 December 2022 interim accounts in March 2023, with
the prospect of further events of default, the valuations of these
investments were reviewed again and a further reduction of USD26.7
million was made.
Over the past six months, progress has been made in
renegotiating terms and the Board has approved a revaluation of
these unquoted investments totaling USD26.8 million as at 30 June
2023. The carrying values of these investments are still below
their original cost and expected returns and we continue to work
with the counterparties with a view to obtaining a full recovery of
the original investment and contractual returns. Without downside
protections in the above investments, we would have experienced
much larger losses.
"Traditional" private equity investments
As part of the year-end processes, the Board engages KPMG, an
independent firm, to value the traditional private equity
investments. A number of these have done well, particularly those
in the Healthcare sector as it recovers from COVID-19. Over a total
of five investments, Thu Cuc International Hospital, Tam Tri
Medical, In Holdings, Chicilon Media and Hung Vuong Corporation, an
uplift on value of USD27.5 million as at 30 June 2023 has been
approved.
Investment Activities
While the investment team has spent a considerable amount of
time resolving the existing investments that have been impacted by
the downturn in the real estate market, activity continues with
investments and the pipeline remains robust and interesting.
During the last financial year, USD179 million worth of
transactions were executed in aggregate across the Public Equity
and Private Equity portfolios, with USD65 million in investments
and USD114 million in divestments. We highlight some of these
below.
Chicilon Media: Investment into Vietnam's leading digital
advertising infrastructure platform
We have long sought to increase our exposure to the digital
communications and consumer sector, and specifically companies that
benefit from the rising awareness and increasing sophistication in
consumer behaviour, thanks to a wider recognition of international
and domestic brands. In early February we announced that we had
made a private equity investment into Chicilon Media, Vietnam's
leading digital advertising platform. VinaCapital led a consortium
to invest USD38 million, of which the Company invested USD31
million. As is typical in our private equity investments, we will
receive one board seat and have privately negotiated terms of
investment.
Founded in 2006, Chicilon Media's LCD screens are located in the
lifts and lobbies of residential and commercial buildings across
Vietnam, reaching the growing urban middle class, the most-prized
target audience for both local and global consumer brands. The
company has consistently delivered double-digit revenue growth on
average and has remained profitable, even during the pandemic.
Following the post-COVID-19 reopening of the economy, Chicilon
Media has seen a strong recovery of its business, as evidenced by
its net profit quadrupling in 2022 year-on-year. When Chicilon
Media launched, there were nine building lift advertising companies
in the market; today, there are only two, with Chicilon Media being
four times the size of its closest competitor in terms of market
share.
Chicilon Media is an ideal example of the type of market-leading
company which we like to invest in. It is well-established and
linked to sectors that are benefitting from Vietnam's growing
middle class and strong domestic consumption story. Its management
team have a clear vision and strategy, are experienced, and
recognise the need to innovate in their business. In addition to
currently leading the market, they also evolve with it by investing
in advanced equipment and have a strong commitment to research and
development.
IN Holdings / IN Dining: additional investment
The GEM Centre recently won Vietnam's best convention centre
award conferred by the World MICE Awards(9) . The GEM Centre is one
of the most prominent event and conference centres in HCMC and has
held events for companies such as Amazon, Samsung, IBM, and Lexus.
It is the flagship asset in a portfolio of centres that forms part
of our investment in IN Holdings, one of the leading convention,
banquet, and hospitality groups in Vietnam. We invested into IN
Holdings in 2020 and, while the period during the pandemic was
difficult, the team was able to keep all locations operating and
now, post-pandemic, business performance is improving.
In June 2023, VOF increased its investment in IN Holdings,
helping them to acquire a significant portfolio of restaurants from
NovaGroup as part of the negotiations discussed above. These
restaurants included regional restaurant brands Crystal Jade, JUMBO
Seafood, Sushi Tei, and Gloria Jeans Coffee, as well as several
home-grown brands. This expansion into food and beverages has seen
the creation of IN Dining and we have appointed senior members to
the management and operations team, including a new CEO and
financial controller to help turn-around and grow this
platform.
9 Part of the World Travel Awards (MICE is an acronym for
Meetings, Incentives, Conferences and Exhibitions)
Tam Tri Medical platform expansion through a roll-up
strategy
In December 2022, we completed the roll-up of two of the
hospital platforms in the private equity portfolio, with Thai Hoa
International Hospital now integrated into the larger platform of
Tam Tri Medical. This merger has created a platform for 970
in-patient beds, spread across Vietnam including in HCMC, Danang,
Nha Trang, and Dong Thap. The healthcare sector has experienced a
compound annual growth rate of 10% since 2017 which is expected to
continue in the future, and our platform specifically targets the
rising middle-income class in Vietnam where demand for private
healthcare is rapidly growing.
Subsequent to the financial year end, Tam Tri Medical has
further expanded with the acquisition of two additional hospitals,
one in Quang Nam in the central region of the country, and a
significant hospital located near the international airport in Ho
Chi Minh City, approximately 8-10km from the city centre. This
expansion will bring on additional capacity to the Tam Tri Medical
system over the coming years.
Investment Strategy and Liquidity
The Company's private approach to investing, whether it be
public or private market opportunities, is what sets the Company
apart from other funds that focus on Vietnam. When we invest, we
always try to protect the investment on the downside. As we have
seen over the past financial year, in times of market turmoil or in
instances where the counterparty is unable to honour their
commitments to us, we are able to use the downside protections and
legally enforceable terms to seek the best possible returns.
Today, the size of the Company is an important factor which
allows us to deploy large, meaningful amounts into investment
opportunities. This is important as it demonstrates: (1) our
conviction in the company we are investing in; (2) the size and
scale of the company is large enough that it will attract interest
from other investors; (3) the size of the investment, and the
investment returns need to "move the dial" in terms of investment
returns; and (4) the effort to negotiate, carry out due diligence,
monitor and exit investments consumes roughly the same amount of
time and effort whether large or small.
Rather than having to seek liquidity directly on the stock
market, VOF seeks to negotiate positions of entry, whether they be
into private companies where we take significant minority stakes,
or into publicly listed companies, where the investment manager can
participate in private placement opportunities or negotiate large
blocks of shares in off-market transactions or have terms of
investment not generally available to investors in the stock
market.
ESG Reporting and Voting
VinaCapital published its first Annual ESG Report 2022 which can
be found on VinaCapital's website vinacapital.com/esg/.
As with last year's Annual Report, this year we have included a
discussion of our Responsible Investment approach and principles in
the Corporate Governance Statement of the Annual Report where a
more complete picture of both the Board and Investment Manager's
commitments to ESG is discussed.
It is helpful to reiterate VinaCapital's commitment to adopting
and implementing the United Nations-supported PRI, which
VinaCapital believes is in the best long-term interests of its
investors and portfolio companies, and which contributes to a more
long-term oriented, transparent, sustainable, and well-governed
investment market. We take a pragmatic approach to adopting ESG in
our investment activities, while realising the limitations of
investing in a developing market. We therefore focus less on
screening companies solely on ESG issues, and more on stewardship
activities where we believe a patient timeframe and active
engagement can improve outcomes. This is further reflected in our
approach to voting and ensuring that we actively participate in
voting across our portfolio companies.
For publicly listed companies, VinaCapital has implemented a
rigorous framework to assess ESG risks and encourage companies to
improve their practices when warranted. Our portfolio managers, and
in-house ESG and research teams regularly engage with management on
ESG policies and practices. The discussions around ESG revolve
around our proprietary framework of over 200 questions, that cover
17 areas of focus, including management and corporate structure;
business ethics; energy, water, pollution, waste management, and
greenhouse gas emissions; biodiversity; employee related issues
such as wages, health, employment conditions; and community
impacts.
Currently our research team has made over 100 assessments of
publicly listed companies, including the majority of those held in
the VOF public equity portfolio.
Voting Activities
As stewards of our investors' capital, we systematically engage
with our investee companies on ESG matters. Our engagement takes
various forms including voting, direct discussions with management,
and educational initiatives.
As part of VinaCapital's Voting Policy that applies to the funds
that VinaCapital manages, a core principle is that we seek to
actively participate and vote, directly or through voting, on all
resolutions. We will generally exercise the voting rights for
resolutions associated with the following matters:
-- Corporate governance issues, including changes in the statutes
of incorporation (such as amendments to the memorandum and/or
articles of association), takeover, merger or disposal, acquisition
and other corporate restructuring, and anti-takeover provisions;
-- Changes to capital structure, including increases and decreases
of capital and preferred stock issuances, approval of rights,
bonus issue and warrants, and special dividend distributions
(dividends in specie);
-- Amendments to stock option schemes and other management compensation
issues;
-- Environmental, Social and Corporate responsibility issues;
and
-- Any other issue that may significantly affect the Company's
interests.
During the year up to June 2023, all 26 investments held in the
VOF portfolio held their AGM. This included public and private
companies, where we are pleased to report that 100% of resolutions
raised by companies held in our portfolio were voted on. Of the 216
resolutions that we voted on, we abstained or voted against 12 of
these resolutions, while we supported the remaining 204
resolutions.
The largest category of resolutions that we voted on concerned
ESG. This category predominately captures resolutions that relate
to the "Governance" element of ESG, including for example: the
appointment and removal of board members, and members of the
supervisory committee; appointment of external auditors; or
amendments to the company charter and internal policies. There were
very few resolutions tabled by the portfolio companies that relate
to Environmental or Social matters, perhaps a reflection of the
stage of immaturity of this developing market in addressing these
concerns.
Conclusion
For investors who have confidence in the long-term growth
potential for the market, valuations are attractively priced and
are below historical averages. The investment team at VinaCapital
looks forward to the future with optimism.
I would like to express my sincere thanks to our diligent and
dedicated investment team who have worked tirelessly through this
past period of volatility and challenges, as well as the unwavering
support and guidance of our independent board of directors. Most
importantly, I thank our shareholders who remain invested and have
entrusted us to carry out the execution of our strategy to deliver
long-term performance in this exciting, yet challenging emerging
market we invest in.
Andy Ho
Managing Director and Chief Investment Officer
23 October 2023
VINACAPITAL MANAGEMENT TEAM
Don Lam
Group Chief Executive Officer
Don Lam is a founding partner of the Investment Manager and has
more than 20 years' experience in Vietnam. He has overseen the
Investment Manager's growth from the manager of a single USD10
million fund in 2003 into a leading investment management and real
estate development firm in Southeast Asia, with a diversified
portfolio of more than USD3 billion in assets under management.
Before founding the Investment Manager, Mr Lam was a partner at
PricewaterhouseCoopers (Vietnam), where he led the corporate
finance and management consulting practices throughout the
Indochina region. Additionally, Mr Lam set up the VinaCapital
Foundation whose mission is to empower the children and youth of
Vietnam by providing opportunities for growth through health and
education projects. He is active in the World Economic Forum and is
a member of several business task forces and committees in Vietnam.
He has a degree in Commerce and Political Science from the
University of Toronto and received an honorary doctorate from the
Royal Melbourne Institute of Technology Vietnam. He is a Chartered
Accountant and is a member of the Institute of Chartered
Accountants of Canada. He also holds a Securities Licence in
Vietnam.
Brook Taylor
Chief Executive Officer, VinaCapital Asset Management
Brook Taylor is the Chief Executive Officer of the Investment
Manager. Mr Taylor has more than 20 years of management experience,
including more than eight years as a senior partner with major
accounting firms. Previously, he was deputy managing partner of
Deloitte in Vietnam and head of the firm's audit practice. He was
also managing partner of Arthur Andersen Vietnam and a senior audit
partner at KPMG. Mr Taylor has lived and worked in Vietnam since
1997. Mr Taylor's expertise spans a broad range of management and
finance areas including accounting, business planning, audit,
corporate finance, taxation, and risk management. He holds an
Executive MBA from INSEAD and a Bachelor of Commerce and
Administration from Victoria University of Wellington.
Andy Ho
Managing Director and Group Chief Investment Officer
Andy Ho is Managing Director and Group Chief Investment Officer
of the Investment Manager, where he oversees the capital markets,
fixed income and private equity investment teams. Previously, Mr Ho
was Director of Investment at Prudential Vietnam's fund management
company, where he managed the capital markets portfolio and
Prudential's investment strategy. He has also held management
positions at Dell Ventures (the investment Company of Dell Computer
Corporation) and Ernst & Young. Mr Ho is a leading authority on
capital markets investment, privatisations, and private equity
deals and structures in Vietnam, where he has led private placement
deals totalling almost USD1 billion. He holds an MBA from the
Massachusetts Institute of Technology and is a Certified Public
Accountant in the United States.
Dieu Phuong Nguyen
Deputy Managing Director
Dieu Phuong joined VinaCapital in 2005 and is responsible for
the Company's private equity investments and deal sourcing. Ms
Phuong has led several private equity and private placement
investments for the Company and holds board positions at several of
the Company's investee companies including Khang Dien House (HOSE:
KDH). Ms Phuong has previous experience at KPMG Vietnam where she
covered international and local banks and holds a BA from the
Banking University of Vietnam and is a fellow member of the ACCA
(UK).
Khanh Vu
Deputy Managing Director
With over eleven years at VinaCapital, Khanh Vu is responsible
for the Investment Manager's capital markets, portfolio management,
investor relations and communication activities for the Company. He
is also an active member of the fund's Investment Committee,
involved in deal sourcing, investment execution and monitoring. Mr
Vu has over 15 years of investment experience and has been based in
Vietnam for the last nine years. Mr Vu has held managerial
positions in corporate finance, asset management, investment
banking, and professional services. Prior to VinaCapital, he was at
Macquarie Bank based in New York and Sydney, with his last posting
on the buy-side infrastructure asset management team. Prior to
that, he held various positions with Deloitte & Touché and
Arthur Andersen, based in Sydney. Mr Vu holds both master's and
bachelor's degrees from the University of New South Wales, Sydney,
and a Graduate Diploma of Applied Finance granted by the Financial
Services Institute of Australia where he is a Fellow.
Michael Kokalari
Chief Economist
Michael Kokalari, CFA serves as VinaCapital's Chief Economist,
and is responsible for providing thought leadership and technical
acumen on a wide range of global and local macroeconomic issues
with a view to maximising the firm's investment performance. Mr
Kokalari has worked in Vietnam for nine years, and was previously
the Head of Research at CIMB Securities Vietnam, and the CIO of
Saigon Asset Management. Earlier in his career, Mr Kokalari was a
derivatives trader in Tokyo & London where he ran multi-billion
dollar trading books for Lehman Brothers, JP Morgan Chase, Credit
Suisse First Boston, BNP Paribas and West LB. Mr Kokalari
co-authored the CFA guide to Credit Derivatives, and was a
contributor to "Risk Management: Foundations for a Changing
Financial World" (published in 2010), along with Nobel Prize
winners Myron Scholes and William Sharpe of Stanford University. Mr
Kokalari holds an MS Engineering in Computational Mathematics from
Stanford University, an MS Mathematics from Stanford, an MS
Management from the Graduate School of Business at Stanford, and a
BA Mathematics from Clark University, where he was a Gryphon and
Pleiades Scholar.
BOARD OF DIRECTORS
Huw Evans
Non-executive Chairman (Independent)
(Appointed 27 May 2016)
Huw Evans qualified in London as a Chartered Accountant with
KPMG (then Peat Marwick Mitchell) in 1983. He subsequently worked
for three years in the Corporate Finance Department of Schroders
before joining Phoenix Securities Limited in 1986. Over the next
twelve years he advised a wide range of companies in financial
services and other sectors in the UK and overseas on mergers and
acquisitions and more general corporate strategy. Since moving to
Guernsey in 2005 he has acted as a Director of a number of Guernsey
based companies and funds. He returned to the UK in 2023 and is now
UK resident. He holds an MA in Biochemistry from Cambridge
University.
Peter Hames
Non-executive Director (Independent)
(Appointed 24 June 2021)
Peter Hames spent 18 years of his investment career in
Singapore, where in 1992 he co-founded Aberdeen Asset Management's
Asian operation and, as director of Asian Equities, he oversaw
regional fund management teams responsible for running a number of
top-rated and award-winning funds. Peter is a former director of
Polar Capital Technology Trust plc. and Syncona Ltd (formerly BACIT
Ltd). Peter is also an independent member of the operating board of
Genesis Investment Management, LLP and is a director of The Genesis
Emerging Markets Investment Company.
Julian Healy
Non-executive Director (Independent)
(Appointed 23 July 2018)
Julian Healy has over thirty years' experience of banking,
private equity and investment management in emerging and frontier
markets. He holds an MA in Modern Languages from Cambridge
University and is a member of the Institute of Chartered
Accountants in England and Wales. He has been a non-executive
director of a number of companies and financial institutions in
emerging markets.
Kathryn Matthews
Non-executive Director (Independent)
(Appointed 10 May 2019)
Kathryn Matthews has been involved in financial services for the
last 40 years. Her last executive role was as Chief Investment
Officer, Asia Pacific (ex-Japan), for Fidelity International. Prior
to that, Kathryn held senior appointments with William M Mercer,
AXA Investment Managers, Santander Global Advisers and Baring Asset
Management. She has previously been on the Board of Directors of a
number of investment companies including Fidelity Asian Values and
JPMorgan Chinese Investment Trust. She is currently on the Board of
JPMorgan Asia Growth and Income Fund, British International
Investment Ltd and is Chairman of Barclays Investment Solutions
Ltd.
Hai Thanh Trinh
Non-executive Director (Independent)
(Appointed 30 June 2022)
Hai Thanh Trinh has over 35 years' business experience, having
held various managerial and senior executive positions at financial
services institutions in Vietnam and in the United States including
Indochina Capital, New York Life and BAOVIET Insurance Group. Prior
to joining the Company, he used to serve as an Independent Director
at Saigon Hanoi Commercial Bank, and An Binh Commercial Bank. He
currently also serves as Independent Director and Chairman of the
Audit Committee of Van Phu Invest, a listed real estate developer
in Vietnam. He holds an MBA in Finance and Investment from The
George Washington University, a FFSI (Fellow of LOMA Financial
Services Institute) and a LLIF granted by LIMRA Leadership
Institute and The Wharton School (University of Pennsylvania).
Thuy Bich Dam retired from the Board with effect from 18 April
2023.
DISCLOSURE OF DIRECTORSHIPS IN OTHER PUBLIC COMPANIES LISTED ON
RECOGNISED STOCK EXCHANGES
Directorships Stock Exchange
Company Name
Huw Evans
Third Point Investors Limited London
Peter Hames
None -
Julian Healy
Fidelity Emerging Markets Limited London
Kathryn Matthews
Perpetual Limited Australia
JPMorgan Asia Growth & Income Plc London
Hai Thanh Trinh
Van Phu Investment Joint Stock Company Vietnam
The Board is required to declare any potential conflicts at each
meeting. During the year, no Director reported any potential
conflicts that may affect their independence.
CORPORATE GOVERNANCE STATEMENT
The Board is responsible for strategy and has established an
annual programme of agenda items under which it reviews the
objectives and strategy for the Company.
To comply with the UK Listing Regime, the Company must comply
with the requirements of the UK Code. The Company is also required
to comply with the Guernsey Code. The Company is a member of the
AIC and by complying with the AIC Code, the Company is deemed to
comply with both the UK Code and the Guernsey Code. The Board has
considered the Principles and Provisions of the AIC Code. The AIC
Code addresses the Principles and Provisions set out in the UK
Code, as well as setting out additional Provisions on issues that
are of specific relevance to the Company as an investment company.
The Board considers that reporting against the Principles and
Provisions of the AIC Code, which has been endorsed by the
Financial Reporting Council and the Guernsey Financial Services
Commission provides relevant information to shareholders. The AIC
Code is available on the AIC website ( www.theaic .co.uk). It
includes an explanation of how the AIC Code adopts the Principles
and Provisions set out in the UK Code to make them relevant for
investment companies.
The UK Code includes provisions relating to the role of the
chief executive, executive directors' remuneration and the need for
an internal audit function. For the reasons set out in the AIC
Code, and as explained in the UK Corporate Governance Code, the
Board considers that these provisions are not relevant to the
Company, being an externally managed investment company. The
Company has therefore not reported further in respect of these
provisions.
The Board is of the view that throughout the year ended 30 June
2023 the Company complied with the recommendations of the AIC Code.
Key issues affecting the Company's corporate governance
responsibilities, how they are addressed by the Board and
application of the AIC Code are presented below.
Provision 1 of the AIC Code requires the annual report to set
out the following information:
How opportunities and risks to the An overview of the Company's
future success of the business have performance is set out in the
been considered and addressed Chairman's Statement, and a more
detailed review is set out in
the Investment Manager's Report.
A detailed review of risk management
is set out below.
The sustainability of the company's The sustainability of the business
business model model is set out in the Viability
Statement below.
How its governance contributes to The approach to governance is
the delivery of its strategy set out in this section of the
Annual Report, in particular
the section 172 statement below
and the description of the board
structure.
There is no information that is required to be disclosed under
Listing Rule 9.8.4.
Section 172 Statement
Section 172 of the UK Companies Act applies directly to UK
domiciled companies. Nonetheless, the intention of the AIC Code is
that the matters set out in section 172 are reported on by all
London listed investment companies, irrespective of domicile,
provided that this does not conflict with local company law.
Section 172 states that: A director of a company must act in the
way he or she considers, in good faith, would be most likely to
promote the success of the company for the benefit of its members
as a whole, and in doing so have regard (amongst other matters) to
the six items (a) to (f) in the table below. A summary of relevant
activities is also included in the table:
Section 172(1) statement area Reference
(a) the likely consequences of any decision in the long In managing the Company, the aim of the Board and the
term, Investment Manager is always to ensure
the long-term sustainable success of the Company and,
therefore, the likely long-term consequences
of any decision are a key consideration. In managing the
Company during the year under review,
the Board acted in the way which it considered, in good
faith, would be most likely to promote
the Company's long-term sustainable success and to achieve
its wider objectives for the benefit
of shareholders as a whole, having had regard to the
Company's wider stakeholders and the
other matters set out in section 172 of the UK Companies
Act.
(b) the interests of the Company's employees, The Company does not have any employees.
(c) the need to foster the Company's business The Board's approach is described under "Stakeholders"
relationships with suppliers, customers and below.
others,
(d) the impact of the Company's operations on the The Board's approach is described under ESG below.
community and the environment,
(e) the desirability of the Company maintaining a The Board's approach is described under "Culture and
reputation for high standards of business Values" below.
conduct, and
(f) the need to act fairly as between members of the The Board's approach is described under "Stakeholders"
company. below.
Actions taken by the Board which fall under the scope of Section 172
During the year, the Board received regular quarterly -- The Board and the Investment Manager agreed a reduction
reports from the Investment Manager, in management fees with effect
the Corporate Broker, and its marketing and distribution from 1 July 2023, as described in the Chairman's
advisors on market conditions and Statement.
the views of shareholders. Huw Evans met a number of the -- Throughout the year, the Board regularly reviewed with
Company's major shareholders in order the Corporate Broker the discount
to understand their views on the Company. Based on market to net asset value at which the Company's shares trade and
intelligence received, the Board supervised the share buyback programme.
undertook a number of activities and made a number of -- In October 2022, the Company appointed Barclays Bank
decisions which fall under the scope Plc to provide investor engagement
of Section 172. services which should help further develop the Company's
shareholder base.
-- The Board decided to reduce the half yearly dividend in
March 2023 to 6.5 cents per share
in line with the reduction in the NAV. In October 2023, in
recognition that the NAV had increased
as at 30 June 2023, the dividend was increased to 7.0
cents per share.
Purpose
The Company is an investment company and its purpose is to
provide non-Vietnamese investors with the opportunity to achieve
medium to long-term returns through investment in Vietnam.
Culture and Values
The Directors' overarching duty is to promote the success of the
Company for the benefit of investors, with due consideration of
other stakeholders' interests. The Company's approach to investment
is explained in the Investment Manager's Report. The Board applies
various policies and practices to ensure that the Board's culture
is in line with the Company's purpose, values and strategy. The
Directors aim to achieve a supportive business culture combined
with constructive challenge.
The Company has a number of policies and procedures in place to
assist with maintaining a culture of good governance including
those relating to diversity, conflicts of interest, and dealings in
the Company's shares. The Company's policy is to have zero
tolerance of corruption, bribery and tax evasion either by the
Company and its officers or by its suppliers.
The Board assesses and monitors compliance with these policies
regularly through Board meetings and the annual evaluation process.
The Board seeks to appoint the most appropriate service providers
for the Company's needs and evaluates the services on a regular
basis. The Board considers the culture of the Investment Manager
and other service providers through regular reporting and by
receiving regular presentations as well as through ad hoc
interaction.
The Board also seeks to control the Company's costs, thereby
enhancing performance and returns for the Company's shareholders.
The Directors consider the impact on the community and
environment.
ESG
The Board takes a close interest in ESG issues. It receives
regular reports from the Investment Manager on the development of
best practice in Vietnam and on the Investment Manager's approach
to ESG. It also receives reports on engagement with individual
investee companies. As management of the portfolio is delegated to
the Investment Manager, the practical implementation of policy
rests with the Investment Manager. A description of the Investment
Manager's approach to ESG issues is set out below and examples of
how the Investment Manager carries out their ESG due diligence are
included in the Investment Manager's Report.
Investment Manager's Approach to Responsible Investing
Responsible investing has been and continues to be a core tenet
of VinaCapital's investment philosophy and process. VinaCapital, as
a firm, has long recognised that ESG issues can have a significant
impact on value creation across the investment cycle. The
Investment Manager has adopted a Responsible Investment policy to
formalise its approach to incorporating environmental, social, and
corporate governance considerations across its investment
activities. In developing this policy, VinaCapital has considered a
range of codes and standards, including the United
Nations-supported PRI, the IFC's Performance Standards on
Environmental and Social Sustainability, and its internal
policies.
As more institutional investors invest into Vietnam and
Vietnamese businesses expand, ESG related matters have taken on
greater importance. In recent years, the Investment Manager has
witnessed situations in which shareholder value declined
significantly when businesses polluted the environment, ignored
global standards, relocated families from land without paying
adequate compensation, or did not adhere to international best
practices with respect to corporate governance.
VinaCapital has developed a framework to identify ESG risks at
potential investee companies, and helps businesses improve their
practices, where appropriate, by incorporating ESG terms as part of
its overall terms of investment in private opportunities.
VinaCapital engages expert advisors and consultants to evaluate ESG
risks as part of its due diligence activities prior to investing,
as well as monitoring any applicable remediation actions
post-investment.
VinaCapital has committed to adopting and implementing the PRI,
which VinaCapital believes is in the best long-term interests of
its investors, and which contributes to a more long-term oriented,
transparent, sustainable, and well-governed investment market.
While VinaCapital aims to adopt best practices of ESG in its
investment activities and at its portfolio companies, VinaCapital
also takes a pragmatic approach, recognising the limitations of
investing in developing markets. VinaCapital therefore focuses less
on screening companies solely on ESG issues, and more on
stewardship activities where VinaCapital believes a patient
timeframe and active engagement can improve outcomes.
VinaCapital believes ESG considerations materially impact long
term value creation and has therefore integrated ESG considerations
into the investment decision making process. This is typically done
through a combination of screening and active stewardship, where
possible. As stewards of its investors' capital, VinaCapital
systematically engages with its investee companies on ESG matters.
VinaCapital's engagement
takes various forms including voting, direct discussions with
management, and educational initiatives, among others.
Specifically, ESG forms a core part of the due diligence and
investment activities that the Company carries out, particularly
when it comes to making private equity investments, as this is an
area in which VinaCapital can exert influence within its portfolio
companies. Through its private equity investment approach,
VinaCapital has an opportunity to carry out ESG due diligence using
external consultants, or through its in-house ESG expertise.
The due diligence review typically identifies weaknesses
relative to local and international standards. Such weaknesses do
not necessarily deter the Company from making an investment but
rather provide a clear roadmap for improvement. Importantly, with
the recommendations for change, VinaCapital can gauge whether a
sponsor is motivated to make these improvements to their business.
VinaCapital feels that the greatest value added to the business and
in society comes from the motivation for change and the actions
that a company takes to improve ESG weaknesses and, thus,
VinaCapital gravitates more towards these types of opportunities
and sponsors.
For publicly listed companies, VinaCapital has implemented a
rigorous framework to assess ESG risks and encourage companies to
improve their practices when warranted.
Currently VinaCapital's research team has made over 100
assessments of publicly listed companies, including those held in
the Company's public equity portfolio. VinaCapital applies this
evaluation to the listed part of the Company's portfolio to
determine the weighted average results of the portfolio at the
current point in time. With this understanding, VinaCapital can set
a benchmark as to where it will like Company's portfolio to be in
the next twelve to twenty-four months. Actions such as encouraging
management teams to make impactful improvements or divesting
holdings that rank poorly by ESG standards will be taken to achieve
VinaCapital's objectives.
Investment Manager's Approach to Voting
As stewards of its investors' capital, VinaCapital
systematically engages with its investee companies on governance
and voting matters. VinaCapital's engagement takes various forms
including voting, direct discussions with management, and education
initiatives, among others.
As part of VinaCapital's Voting Policy that applies to all funds
that VinaCapital manages, a core principle is that VinaCapital
seeks to actively participate and vote, directly or through proxy
voting, on all resolutions.
VinaCapital has published its ESG Policy on VinaCapital's
website and encourages investors to review the policies and
principles that guide VinaCapital's approach to responsible
investing and stewardship.
Stakeholders
The Company is an externally managed investment company whose
activities are all outsourced. It does not have any employees. The
Board has identified its key stakeholders, and how the Company
engages with them, in the table below:
Stakeholder Key Considerations Engagement
Shareholders As an investment company, A detailed explanation
the shareholders are, of the Company's approach
in effect, both its owners is set out under Relations
and its customers, obtaining With Shareholders below.
investment returns from
the Company. A well-informed The Board receives regular
and supportive shareholder reports from the Investment
base is crucial to the Manager as well as independent
long-term sustainability reports from the Corporate
of the Company. Understanding Broker and the other
the views and priorities organisations engaged
of shareholders is, therefore, in promoting the Company
fundamental to retaining on relations with, any
their continued support. views expressed by,
shareholders.
In considering shareholders,
the Board's key considerations The Board provides shareholders
are: with the opportunity
- Overall investment to review the future
returns; of the Company every
- The ability to maintain, five years.
and potentially grow,
the dividend;
- Controlling the discount
(and potentially the
premium) at which shares
trade to net asset value;
and
- Control of costs.
Investment Manager Management of the investment The Board engages in
portfolio is delegated regular, open and detailed
to the Investment Manager. communication with the
Investment performance Investment Manager.
is crucial to the long-term It reviews in detail
success of the Company. the overall performance
of the Company and of
individual investments.
The relationship with
and performance of the
Investment Manager is
monitored and reviewed
by the Management Engagement
Committee.
In setting investment
management fees, the
Board seeks to achieve
an appropriate balance
between value for money
and an incentive to
retain a strong and
capable portfolio management
team along with supporting
staff and infrastructure.
Stakeholder Key Considerations Engagement
Administrator & Company The Administrator and The Administrator and
Secretary and other Company Secretary are Company Secretary attend
key service providers. key to the effective all Board meetings.
running of the Company.
The Management Engagement
The Company has a number Committee undertakes
of other key service an annual review of
providers, each of which the key service providers,
provides an important encompassing performance,
service to the Company level of service and
and ultimately to its cost. Each provider
shareholders. is an established business,
and each is required
to have in place suitable
policies to ensure that
they maintain high standards
of business conduct,
treat customers fairly,
and employ corporate
governance best practice.
All bills and expense
claims from suppliers
are paid in full, on
time and in compliance
with the relevant contracts.
While portfolio investments are not stakeholders in the
conventional sense, the Board acknowledges its responsibility to
ensure where possible that investee companies adhere to good
standards of conduct with regard to their own stakeholders. In some
cases, the Investment Manager may have the capacity to affect these
matters directly; in others, the scale of the Company's investment
gives it the ability to influence the management of its investee
holdings.
Relations with Shareholders
The Company aims to provide shareholders with a full
understanding of the Company's investment objective, policy and
activities, its performance and the principal investment risks by
means of informative annual and half year reports. This is
supplemented by the publication by the Investment Manager of a
monthly fact sheet, both daily and weekly estimates of the NAV per
share and a regular series of video presentations, all of which are
available on the Company's websit e (https://
vof.vinacapital.com).
A detailed analysis of the substantial shareholders of the
Company and a report from the Corporate Broker on investor
sentiment and industry issues is provided to the Directors at each
Board meeting. The Chairman and representatives of the Investment
Manager are available to meet shareholders to discuss strategy and
to understand any issues and concerns which they may have. The
results of such meetings are reported at the following Board
meeting.
Shareholders wishing to communicate with the Chairman, the SID
or any other member of the Board, may do so by writing to the
Company, for the attention of the Company Secretary, at the
Registered Office. The Directors welcome the views of all
shareholders and place considerable importance on communications
with them.
The Annual General Meeting of the Company provides a forum for
shareholders to meet and discuss issues with the Directors of the
Company.
Re-election and Tenure of Directors
As set out in the AIC Code, Directors submit themselves for
annual re-election and in any event as soon as it is practical
after their initial appointment to the Board. The Board has adopted
a formal policy requiring that Directors should stand down at the
AGM following the ninth anniversary of their initial
appointment.
The individual performance of each Director standing for
re-election has been evaluated by the other members of the Board
and a recommendation will be made to shareholders to vote in favour
of their re-election at the AGM.
Board Proceedings and Relationship with the Investment
Manager
The Chairman encourages open debate to foster a supportive and
co-operative approach for all participants.
The Board meets formally six times each year and representatives
of the Investment Manager are in attendance, when appropriate, at
each meeting. During the year under review, the Board held two
meetings in person with the Investment Manager in Vietnam and two
in Europe. In addition two formal Board meetings were held during
the year under review by video conference during which the
portfolio and its performance was reviewed. Going forward, the
Board will continue to arrange a combination of video conferences
and meetings in person, while recognising the cost and the
environmental impact of international travel.
The Board, at its regular meetings, undertakes reviews of key
investment and financial data, revenue projections and expenses,
analyses of asset allocation, transactions, share price and NAV
performance, marketing and shareholder communication strategies,
the risks associated with pursuing the investment strategy, peer
company information and industry issues. In addition to the
scheduled meetings, ad hoc meetings of the Board are held during
the year to deal with any significant matters which arise which are
attended by those directors who are available at the time.
The Board has agreed a schedule of matters specifically reserved
for decision by the Board. This includes establishing the
investment objectives, strategy and benchmarks, the permitted types
or categories of investments, the markets in which transactions may
be undertaken, the level of permitted borrowings, the amount or
proportion of the assets that may be invested in any category of
investment or in any one investment, and the Company's treasury
share and share buyback policies. Representatives of the Investment
Manager attend each meeting of the Board to address questions on
specific matters and to seek approval for specific transactions
which the Investment Manager is required to refer to the Board. The
Board has delegated discretion to the Investment Manager to
exercise voting powers in investee companies on the Company's
behalf.
The Investment Manager is generally responsible for routine
announcements of information but the Board is responsible for
communications regarding major corporate issues.
The Directors have access to the advice and services of the
Company Secretary, who is responsible to the Board for ensuring
that the Directors are aware of the procedures to be followed. The
Company Secretary is also responsible for ensuring good information
flows between all parties.
At Board meetings the Company Secretary provides a report in
which the Directors are given key information on the Company's
regulatory and statutory requirements as they arise, including
information on the role of the Board, matters reserved for its
decision, the terms of reference for the Board Committees, the
Company's corporate governance practices and procedures and the
latest financial information. It is the Chairman's responsibility
to ensure that the Directors have sufficient knowledge to fulfil
their roles and Directors are encouraged to undertake training
courses where appropriate.
Continued appointment of the Investment Manager
Following an annual appraisal carried out by the Management
Engagement Committee, the Board considers that it is in the best
interests of shareholders to continue with the appointment of
VinaCapital Investment Management Ltd as the Investment
Manager.
Board Committees
There are four Board committees in operation: the Audit
Committee, Management Engagement Committee, Remuneration Committee
and Nomination Committee. The chairmanship and membership of each
Committee throughout the year, and the number of meetings held
during the year, are shown in the table below. A summary of the
duties of each of the Committees is provided below. The chairman of
each Committee presents their findings to the Board at the next
Board meeting following each Committee meeting.
The terms of reference of each committee can be obtained from
the Company Secretary.
Audit Committee
The Audit Committee, which meets at least three times a year,
comprises all of the Directors and is chaired by Julian Healy.
The Audit Committee is responsible for monitoring the process of
production and ensuring the integrity of the Company's Financial
Statements and advises the Board whether the Annual Report and
Financial Statements are fair, balanced and understandable. The
Audit Committee is also responsible for overseeing the relationship
with the External Auditor and the Company's process for assessing
and managing risk. The responsibilities and activities of the Audit
Committee are set out in detail in the Report of the Audit
Committee below.
Management Engagement Committee
The Management Engagement Committee comprises all of the
Directors and is chaired by Kathryn Matthews. The Committee's
responsibilities include reviewing the performance of the
Investment Manager under the Investment Management Agreement and
considering any variation to the terms of the agreement. The
Management Engagement Committee also reviews the performance of the
Company Secretary, Corporate Brokers, Custodian, Administrator,
Registrar, other key service providers and any matters concerning
their respective agreements with the Company.
Remuneration Committee
The Remuneration Committee comprises all of the Directors and is
chaired by Peter Hames. The Committee's responsibilities include
reviewing the ongoing appropriateness and relevance of the
remuneration policy; determining the individual remuneration of the
chairman and each non-executive director; and the selection and
appointment of any remuneration consultants who advise the
Committee.
The Directors' Remuneration Report is set out below.
Nomination Committee
The Nomination Committee comprises all of the Directors and is
chaired by Huw Evans. The Committee's responsibilities include
reviewing the structure, size and composition of the Board and
making recommendations to the Board in respect of any changes;
succession planning for the Chairman and the remaining
non-executive directors; making recommendations to the Board
concerning the membership and chairmanship of the Board committees;
identifying and nominating for the approval of the Board candidates
to fill Board vacancies; and, before any new appointment is
recommended, evaluating the balance of skills, knowledge,
experience and diversity within the Board and preparing an
appropriate role description. The Committee will seek to ensure
that for any recruitment process a suitably diverse list of
candidates is considered. The Company's policy is that in making
appointments it will seek to avoid any discrimination based on age,
gender, ethnicity, sexual orientation, disability or educational,
professional and socio-economic backgrounds. The Chairman absents
himself from discussions on succession to his own role.
Board Composition
As at the date of this report the Board consists of five
non-executive directors, each of whom is independent of the
Investment Manager. No member of the Board is a Director of another
investment company managed by the Investment Manager, nor has any
Board member been an employee of the Company, its Investment
Manager or any of its service providers.
Julian Healy was appointed as the SID on 2 December 2021. The
SID provides shareholders with someone whom they can contact if
they have concerns which cannot be addressed through the normal
channels. The SID is also available to act as an intermediary
between the other Directors and the Chairman (if required). The
role serves as an important check and balance in the governance
process.
The Board reviews the independence of the Directors at least
annually.
Board Diversity
The Board believes that each Director has appropriate
qualifications, industry experience and expertise to guide the
Company and that the Board as a whole has an appropriate balance of
skills, experience, background and knowledge. As at the date of
this report, the Board comprises four men and one woman. One of the
directors is Vietnamese and resident in Vietnam. The Directors'
biographies can be found within the Board of Directors section. The
gender identity and ethnic background reporting as at 30 June 2023
is provided below.
Gender Identity Number of Board Percentage of the Board
members
Male 4 80%
Female 1 20%
Ethnic Background Number of Board Percentage of the Board
members
White British or other
White (including minority
white groups) 4 80%
Asian 1 20%
Note: Listing Rule 9.8.6R(11): 'As the Board consists of five
individuals the data in the above table was reviewed by each of the
individual board members'
As an externally managed company, the Company does not have any
employees. The Board acknowledges the importance of diversity for
the effective functioning of the Board which helps create an
environment for success and effective decision making. The Board is
aware of the recommendations of the Hampton Alexander Review on
gender diversity and the Parker Review on ethnic diversity and
inclusion on company boards. At present the board does not meet the
target on gender diversity but does meet the target on ethnic
diversity. Prior to the appointment of Mr Hai Trinh and the
subsequent retirement of Ms Thuy Dam, the board did meet the target
on gender diversity. The board's decision to appoint Mr Hai Trinh
was on the basis that he was the strongest candidate available to
fill the vacancy. As the Board is made up wholly of non-executive
directors it only has two roles which are classed in the UK Listing
Rules as "senior", namely the Chairman and Senior Independent
Director. At present neither of these roles is filled by a female
director. The Board is focused on addressing all of the relevant
targets and, through its Nomination Committee, will keep these
matters under regular review and will take account of the targets
when appointing further board members in the future.
Appointment of New Directors
The Board seeks to ensure that any vacancies arising are filled
by the best qualified candidates. The Board's policy is that the
Company's Directors should bring a wide range of skills, knowledge,
experience, backgrounds and perspectives to the Board. All
appointments are made on merit, and in the context of the skills,
knowledge and experience that are needed for the Board to be
effective. Part of the remit of the Board's Nomination Committee
is, before any new appointment is recommended, evaluating the
balance of skills, knowledge, experience and diversity within the
Board.
For new appointments to the Board, nominations are sought from
the Directors and from other relevant parties, and independent
search consultants are appointed when appropriate. Candidates are
then interviewed by members of the Nomination Committee. The Board
has a breadth of experience relevant to the Company, and the
Directors believe that any changes to the Board's composition can
be managed without undue disruption. Any incoming Directors of the
Company participate in a full, formal and tailored induction
programme.
Board and Committee Meetings
During the year ended 30 June 2023, the number of scheduled
Board and Committee meetings attended by each Director was as
follows:
Management
Engagement Nomination Remuneration
Board Audit Committee Committee Committee Committee
Meetings Meetings Meetings Meetings Meetings
Number of meetings 7 6 N/A N/A 1
Attendance
Huw Evans 7 6 _ _ 1
Thuy Bich Dam
(1) 5 5 _ _ _
Peter Hames 7 6 _ _ 1
Julian Healy 7 6 _ _ 1
Kathryn Matthews 7 6 _ _ 1
Hai Thanh Trinh 7 6 _ _ 1
(1) Thuy Bich Dam retired on 18 April 2023.
Meetings of the Management Engagement Committee, Remuneration
Committee and Nomination Committee were held on 6 October 2023. In
addition to the scheduled meetings noted above, a number of ad hoc
Board and Committee meetings were held during the year which were
attended by those Directors available at the time.
Board Performance
The Board has a formal process to evaluate its own performance
and that of its Chairman annually. The provisions of the AIC Code
require a FTSE 350 company to have its annual evaluation carried
out in conjunction with an independent agency every three years and
a review was carried out in 2022 by an external evaluator,
Lintstock Ltd. During the year under review an internal assessment
was conducted by the Directors. This review raised no issues of
significance, and the Board was satisfied that the structure, mix
of skills and operation of the Board continue to be effective and
relevant for the Company.
Internal Controls and Risk
(i) Risk Management System
Day to day management of risk is the responsibility of the
Investment Manager, whose ERM framework provides a structured
approach to managing risk across all of its managed funds by
establishing a risk management culture through education and
training, formalised risk management procedures, defining roles and
responsibilities with respect to managing risk, and establishing
reporting mechanisms to monitor the effectiveness of the framework.
The Audit Committee works closely with the Investment Manager on
the application, consideration and review of the ERM framework to
the Company's risk environment.
Regular risk assessments and reviews of internal controls are
undertaken by the Audit Committee. At each meeting, the Board
considers both previously identified and emerging risks. The
Administrator and Company Secretary and other service providers are
also encouraged to provide their views on emerging risks. The
reviews cover the strategic, investment, operational and financial
risks facing the Company. In arriving at its judgement of the risks
which the Company faces, the Board has considered the Company's
operations in light of the following factors:
-- the nature and extent of risks which it regards as acceptable
for the Company to bear within its overall business objective;
-- the threat of such risks becoming reality;
-- the Company's ability to reduce the incidence and impact
of risk on its performance; and
-- the cost to the Company and benefits related to the Company
of third parties operating the relevant controls.
(ii) Internal Control Assessment Process
Responsibility for the establishment and maintenance of an
appropriate system of internal control rests ultimately with the
Board. However, the Board is dependent on the Investment Manager
and other service providers to achieve this and a process has been
established which seeks to:
-- review the risks faced by the Company and the controls in
place to address those risks;
-- identify and report changes in the risk environment;
-- identify and report changes in the operational controls;
-- identify and report on the effectiveness of controls and errors arising; and
-- ensure no override of controls by the Investment Manager or
Administrator or any other service providers.
The key procedures which have been established to provide
effective internal financial controls are as follows:
-- investment management is provided by the Investment Manager.
The Board is responsible for the overall investment policy
and monitors the investment performance, actions and regulatory
compliance of the Investment Manager at regular meetings;
-- accounting for the Company and subsidiaries is provided by
Aztec Group;
-- fund administration is provided by Aztec Group;
-- custody of those assets which can be held by a third-party
custodian is undertaken by Standard Chartered Bank;
-- the Management Engagement Committee monitors the contractual
arrangements with each of the key service providers and their
performance under these contracts;
-- mandates for authorisation of investment transactions and
expense payments are set by the Board and documented in the
Investment Management Agreement;
-- the Board receives financial information produced by the Investment
Manager and by Aztec Group on a regular basis. Board meetings
are held regularly throughout the year to review such information;
and
-- actions are taken to remedy any significant failings or weaknesses,
if identified.
(iii) Risk Management
For the purposes of making the Viability Statement, the Board
has undertaken a robust review of the principal risks and
uncertainties facing the Company including those that would
threaten its business model, future performance, solvency or
liquidity. A risk matrix and heat map prepared by the Investment
Manager and subject to detailed scrutiny by the Audit Committee are
the key tools in this review, along with a mechanism at each
quarterly Audit Committee meeting to consider and monitor any
emerging risks. The principal risks are described in the following
table together with a description of the mitigating actions taken
by the Board.
Geopolitical
Description Mitigating Action
Risks to global growth emerged The Investment Manager takes full
in February 2022 as a result of account of economic risks in managing
the conflict between Russia and the Company's investments. While
Ukraine and continued throughout there has been little direct effect
the year under review. from the war in Ukraine, the Investment
There is also a risk of an increase Manager has reviewed existing
in the geopolitical tensions in and potential investments with
the Asia region. particular attention to the economic
effects of increased global inflation,
particularly in energy and food
prices.
Macroeconomic and Market
Description Mitigating Action
Opportunities for the Company The Board is regularly briefed
to invest in Vietnam have come on political and economic developments
about through the liberalisation by the Investment Manager. The
of the Vietnamese economy. Were Investment Manager publishes a
the pace or direction of change monthly report on the Company
to the economy to alter in the which includes information and
future, the interests of the Company comment on macroeconomic and,
could be damaged. where relevant, political developments
relating to Vietnam.
Changes in the equilibrium of
international trade caused, for
example, by the imposition of
tariffs could affect the Vietnamese
economy and the companies in which
the Company is invested.
As Vietnam becomes increasingly
connected with the rest of the
world, significant world events
will have a greater impact on
the country. The consequences
of these events are not always
known and, in the past, have led
to increased uncertainty and volatility
in the pricing of investments.
The continuing effects of the
Russian invasion of Ukraine, in
particular on global commodity
prices, remain a cause for concern.
The effects continue to be felt
in heightened inflation and higher
interest rates intended to combat
this.
Investment Performance
Description Mitigating Action
The Investment Management Agreement The Board maintains close contact
requires the Investment Manager with the Investment Manager and
to provide competent, attentive, key personnel of the Investment
and efficient services to the Manager attend each Board meeting.
Company. If the Investment Manager
was not able to do this or if The Board reviews the performance
the Investment Management Agreement of the Investment Manager annually
were terminated, there could be and provides feedback to the Investment
no assurance that a suitable replacement Manager on matters that could
could be found and, under those be improved.
circumstances, the Company could
suffer a loss of value. The Board monitors the Company's
portfolio of underlying investments
The performance of the Company's and receives regular reports on
investment portfolio could be the performance of the portfolio
poor, either absolutely or in and on the underlying investments.
relation to the Company's peers. The Investment Manager seeks to
Within the portfolio, individual limit risks by investing in a
investments could suffer a partial portfolio with limits on exposure
or total loss of value. For some to market sectors and to individual
structured investments, downside investments. Privately negotiated
protections are subject to risk investments are closely scrutinised
that the counterparty is unable at all stages from initial investment,
to meet their obligations. through ongoing regular monitoring
and at the exit stage. During
There is a risk that privately the year under review, particular
negotiated deals are not executed attention was paid to the risks
at the best possible price or and thence the valuations of PEPT
that timing of deals is not optimal investments, as described in the
due to the presence of co-investors Chairman's Statement. The Investment
who may have different liquidity Manager is based in Vietnam and
or timing requirements. closely monitors all developments
which may affect investee companies.
There is also a risk that the The Investment Manager attends
Investment Manager is not able all Board meetings.
to access suitable private equity
investments. Private equity investments
are subject to higher execution
risk than the risks associated
with trading in public markets.
Satisfactory performance of private
equity investments relies on detailed
and continuing management oversight.
Operational
Description Mitigating Action
The Company is dependent on third The Board receives regular reports
parties for the provision of all from the Investment Manager on
systems and services (in particular, its internal policies, controls
those of the Investment Manager and risk management. It also receives
and the Administrator) and any formal assurance each year from
control failures or gaps in these the Investment Manager on the
systems and services could result adequacy and effectiveness of
in a loss or damage to the Company. its internal controls, including
those concerning cyber risk.
The Board has taken measures to
ensure segregation of functions
by appointing Aztec Group as the
Company's independent administrator
and Standard Chartered Bank as
custodian for those assets which
can be held by a third-party custodian.
Fair Valuation
Description Mitigating Action
The risks associated with the The Board reviews the fair valuation
fair valuation of the portfolio of the listed and unlisted investment
could result in the NAV of the portfolio with the Investment
Company being misstated. Manager at the end of each quarter
and focuses in particular on any
The quoted companies in the portfolio unexpected or sharp movements
are valued at market price but in market prices.
many of the holdings are of a
size which would make them difficult The weekly, monthly and year-end
to liquidate at these prices in NAV calculations are prepared
the ordinary course of market by the Company's Administrator
activity. and reviewed by the Investment
Manager.
The unlisted securities are valued
at their quoted prices on UPCoM The Board has appointed independent
or using quotations from brokers, external valuers to assist in
but many of the holdings are of determining fair values of certain
a size which may make them difficult private equity investments at
to liquidate at these prices in the year end in accordance with
the ordinary course of market International Financial Reporting
activity. Standards.
The fair valuation of operating The remaining valuations are estimated
assets and private equity investments by the Investment Manager using
is carried out according to international pricing analysis and discounted
valuation standards. The investments cash flows and, in all cases,
are not readily liquid and may valuations are reviewed by the
not be immediately realisable Audit Committee and approved by
at the stated carrying values. the Board.
The values of the Company's underlying
investments are, on a 'look-through'
basis, mainly denominated in VND
whereas the Company's Financial
Statements are prepared in USD.
The Company makes investments
and receives income and proceeds
from sales of investments in USD.
The Company does not hedge its
VND exposure, so exchange rate
fluctuations could have a material
effect on the NAV. The sensitivity
of the NAV to exchange rates is
set out in Note 20(a) of the Financial
Statements.
Legal and Regulatory
Description Mitigating Action
Failure to comply with relevant The laws and regulations in Vietnam
regulation and legislation in continue to develop. The Investment
Vietnam, Guernsey, Singapore, Manager maintains a risk and compliance
the British Virgin Islands or department which monitors compliance
the UK may have an impact on the with local laws and regulations
Company. as necessary. Locally based external
lawyers (typically members of
Although there are anti-bribery major international law firms)
and corruption policies in place are engaged to advise on portfolio
at the Company, the Investment transactions where necessary.
Manager and all other service
providers, the Company could be As to its non-Vietnamese regulatory
damaged and suffer losses if any and legal responsibilities: (i)
of these policies were breached. the Company is administered in
Guernsey by Aztec Group which
reports to the Board at each Board
meeting on Guernsey compliance
matters and more general issues
applicable to Guernsey companies
listed on the LSE, and (ii) the
Investment Manager monitors legal,
regulatory and tax issues in Singapore
and the BVI, where the Company
owns subsidiaries.
The Investment Manager and other
service providers confirm to the
Board at least annually that they
maintain anti-bribery and corruption
policies and are required to disclose
any breaches of these policies.
Changing investor sentiment
Description Mitigating Action
As a Company investing mainly The Investment Manager has an
in Vietnam, changes in investor active Investor Relations programme,
sentiment towards Vietnam and/or keeping shareholders and other
emerging and frontier markets potential investors regularly
in general may lead to the Company informed on Vietnam in general
becoming unattractive to investors. and on the Company's portfolio
The clamp down in recent years in particular. At each Board meeting
by the Vietnamese government highlights the Board receives reports from
the risks associated with corruption the Investment Manager, from the
in Vietnam and may lead to international corporate Broker and from the
investors adopting a more cautious UK Marketing and Distribution
approach to investment in the partner and is updated on the
country. Changes in international composition of, and any movements
investor sentiment could lead in, the shareholder register.
to reduced demand for its shares The Chairman also communicates
and a widening discount. regularly with major shareholders
directly, independent of the Investment
Manager.
In seeking to make the Company
attractive to investors seeking
an income the Company pays regular
dividends.
In seeking to close the discount,
the Board has also approved and
implemented an extensive share
buy-back programme, which is discussed
under Discount Management on page
49.
ESG Risk
Description Mitigating Action
As responsible investors, the As set out in the Corporate Governance
Board and Investment Manager are Statement under "ESG" and in the
aware of the growing focus on Investment Manager's Report under
ESG matters. There is a risk that "ESG and Voting Principles", the
the value of an investment could Board takes a close interest in
be damaged for example by a failure ESG issues and receives regular
of governance and/or a failure reports on progress in this increasingly
to protect the environment, employees important area. The Investment
or the wider community in which Manager integrates ESG analysis
a company operates. As evidence into its portfolio management
of the effects of climate change process. VinaCapital has increased
grows, there is increasing focus its resources focused on ESG matters
by shareholders on investment and its engagement with investee
companies' role in influencing companies. Climate change and
investee companies' approach to other ESG risks are also considered
environmental risks. when valuing investments both
before investment and when held
in VOF's portfolio.
China changed its policy on lock downs to control COVID-19 in
October 2022, becoming the last major economy to do so. The Board
and the Investment Manager remain aware of the risk of further
pandemic outbreaks but the immediate risk to economic performance
has reduced and the risk from COVID-19 is no longer considered to
be a principal risk.
(iv) Internal Audit Function
The Audit Committee has reviewed the need for an internal audit
function for the Company itself. The Committee has concluded that
the systems and procedures employed by the Investment Manager and
the Administrator, including their own internal audit functions,
currently provide sufficient assurance that a sound system of
internal control, which safeguards the Company's assets, is
maintained. As all operations of the Company are outsourced to
third parties, an internal audit function specific to the Company
is therefore considered unnecessary. The Investment Manager has
appointed KPMG Vietnam as its internal auditor and the
Administrator has appointed KPMG Channel Islands Limited as its
internal auditor.
Directors' Dealings
The Company has adopted a Code of Directors' Dealings in
Securities.
International Tax Reporting
For purposes of the US Foreign Account Tax Compliance Act, the
Company registered with the IRS as a Guernsey reporting FFI,
received a Global Intermediary Identification Number
(GUHZUZ.99999.SL.831), and can be found on the IRS FFI list.
The CRS is a global standard developed for the automatic
exchange of financial account information developed by the OECD,
which was adopted in Guernsey and which came into effect on 1
January 2016.
The Company made its latest report for CRS and FATCA to the
Guernsey Director of Income Tax in June 2023. The Board ensures
that the Company is compliant with Guernsey regulations and
guidance in this regard.
Share Capital and Treasury Shares
The number of shares in issue at the year-end is disclosed in
note 11 to the Financial Statements.
Directors' Interests in the Company
As at 30 June 2023 and 30 June 2022, the interests of the
Directors in shares of the Company are as follows:
Shares Percentage
held of total
as at shares
30 at 30 June
Shares Percentage
held of total
as at shares
30 June at 30 June
2023 2023 June 2022 2022
Huw Evans 35,000 0.022% 35,000 0.021%
Peter Hames 8,000 0.005% 8,000 0.005%
Julian Healy 15,000 0.009% 15,000 0.009%
Kathryn Matthews 9,464 0.006% 9,464 0.006%
Hai Thanh Trinh - - - -
Thuy Bich Dam (Retired 18 - - - -
April 2023)
There have been no changes to any holdings between 30 June 2023
and the date of this report.
Substantial Shareholdings
As at 30 June 2023 and 30 September 2023, the Directors are
aware of the following shareholders with holdings of more than 3%
of the ordinary shares of the Company:
30 June 2023 30 September 2023
Percentage Percentage
of issued of issued
share capital share capital
Number Number
of of
ordinary ordinary
Shareholder shares shares
Lazard Asset Management 22,096,493 13.80% 19,831,742 12.49%
City of London Investment
Management 17,183,753 10.73% 17,097,049 10.77%
Hargreaves Lansdown 10,531,517 6.58% 10,732,980 6.76%
Allspring Global Investments 9,182,624 5.74% 8,921,195 5.62%
Interactive Investor 7,279,641 4.55% 7,398,947 4.66%
Janus Henderson 5,883,262 3.67% 5,800,229 3.65%
Going Concern and Viability Statement
Under the AIC Code and applicable regulations, the Directors are
required to satisfy themselves that it is reasonable to assume that
the Company is a going concern. The Directors have considered
carefully the liquidity of the Company's investments and the level
of cash balances as at the reporting date as well as reviewing
forecast cash flows up to 31 December 2024. The Company has
substantial assets and the Board monitors the liquidity of the
portfolio to ensure that more than enough cash could be realised
from asset sales to meet any unexpected liability over the period.
The Company does have a modest credit facility which could easily
be repaid were the need to arise.
An additional factor which the Directors have considered is the
discontinuation vote which will be put to shareholders at the AGM
in December 2023. If the resolution were to be passed, the
Directors will be required to formulate proposals to be put to
shareholders to reorganise, unitise or reconstruct the Company or
for the Company to be wound up. The Board tabled such resolutions
in 2008, 2013 and 2018 and on each occasion the resolution was not
passed.
In seeking to ensure that shareholders retain confidence in the
Company, the Investment Manager meets regularly with shareholders
and has an active investor relations programme. In addition, the
Chairman communicates independently with significant shareholders.
The Directors cannot predict the outcome of the discontinuation
vote in December and, therefore, recognise that a material
uncertainty exists which may cast doubt on the ability of the
Company to continue as a going concern. That having been said, the
Directors currently have no indication that the resolution will be
passed and, therefore, continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
The Company is exposed to many risks and uncertainties, the
principal of which are listed in the Report of the Board of
Directors. As noted, the Directors monitor and assess these risks
on a regular basis as well as considering any other risks which
emerge from time to time. The Directors confirm that they believe
that their assessment of the principal risks facing the Company is
robust and, for the purposes of complying with the AIC Code, that
they have assessed the viability of the Company over the three
years to 30 June 2026. The Directors consider this period
sufficient given the inherent uncertainty of the investment world
and the specific issues which the Company faces in investing in
Vietnam.
As referred to above, a discontinuation vote will be put to
shareholders at the AGM in December 2023. The directors have no
reason to believe that the resolution will be passed and, in
assessing the viability of the Company, have assumed that it will
continue in its present form throughout the period of
assessment.
The Directors, having considered the above risks and other
factors, have a reasonable expectation that the Company will be
able to continue in operation and meet its liabilities as they fall
due over the three-year period of their assessment.
REPORT OF THE BOARD OF DIRECTORS
The Board submits its Annual Report together with the Financial
Statements of the Company for the year ended 30 June 2023.
The Company is a Guernsey domiciled closed-ended investment
company. The Company is classified as a registered closed-ended
Collective Investment Scheme under the Protection of Investors
(Bailiwick of Guernsey) Law, 2020 and is subject to the Companies
(Guernsey) Law, as amended (the "Guernsey Law"). Prior to March
2016 the Company was a limited liability company incorporated in
the Cayman Islands.
The Company is quoted on the Main Market of the LSE with a
Premium Listing (ticker: VOF).
The Company's investments continue to be managed by the
Investment Manager.
Principal Activities
Through its investments in subsidiaries and associates, the
Company's objective is to achieve medium to long-term returns
through investment in assets either in Vietnam or in companies with
a substantial majority of their assets, operations, revenues, or
income in, or derived from, Vietnam.
Life of the Company
The Company does not have a fixed life but the Board considers
it desirable that shareholders should have the opportunity to
review the future of the Company at appropriate intervals.
Accordingly, the Board intends that every fifth year a special
resolution will be proposed that the Company ceases to continue. If
the resolution is not passed, the Company will continue to operate
as currently constituted. If the resolution is passed, the
Directors will be required to formulate proposals to be put to
shareholders to reorganise, unitise, or reconstruct the Company or
for the Company to be wound up. The Board tabled such resolutions
in 2008, 2013 and 2018 and on each occasion the resolution was not
passed, allowing the Company to continue as currently constituted.
The next such resolution will be put to shareholders in December
2023.
Investment Objective
The Company's objective is to achieve medium to long-term
returns through investment in assets either in Vietnam or in
companies with a substantial majority of their assets, operations,
revenues, or income in, or derived from, Vietnam.
Investment Policy
All of the Company's investments will be in Vietnam or in
companies with at least 75% of their assets, operations, revenues
or income in, or derived from, Vietnam at the time of
investment.
-- No single investment may exceed 20% of the NAV of the Company
at the time of investment.
-- The Company may from time to time invest in other funds
focused on Vietnam. This includes investments in other funds
managed by the Investment Manager. Any investment or divestment
of funds managed by the Investment Manager will be subject
to prior approval by the Board.
-- The Company may from time to time make co-investments alongside
other investors in private equity, real estate, or similar
assets. This includes, but is not restricted to, co-investments
alongside other funds managed by the Investment Manager.
-- The Company will not invest in other listed closed-ended
funds.
The Company may gear its assets through borrowings which may
vary over time according to market conditions and any or all of the
assets of the Company may be pledged as security for such
borrowings. Borrowings will not exceed 10% of the Company's total
assets at the time that any debt is drawn down.
From time to time the Company may hold cash or low risk
instruments such as government bonds or cash funds denominated in
either VND or USD, either in Vietnam or outside Vietnam.
Gearing
The Board sets the Company's policy on the use of gearing. The
Company negotiated a USD40 million secured revolving credit
facility with Standard Chartered Bank in March 2022 which was
renewed for a further 12 month period in March 2023. The Investment
Manager draws funds under the facility from time to time to manage
the Company's cash balances and liquidity.
Valuation Policy
The accounting policy for valuations can be found in note 2.7 to
the Financial Statements.
Key Performance Indicators
The Chairman's Statement and the Investment Manager's Report
provide details of the Company's activities and performance during
the year.
In light of the Company's Investment Objective, the KPIs used to
measure the progress of the Company are:
-- the movement in the Company's NAV total return;
-- the movement in the Company's share price; and
-- discount of the share price in relation to the NAV.
Information relating to the KPIs can be found in the Financial
Highlights section.
A discussion of progress against the KPIs is included in the
Chairman's Statement.
Distribution Policy
Dividend Policy
The Company intends to pay a dividend representing approximately
1% of NAV twice each year, normally declared in March and
October.
The policy will be subject to shareholder approval at each
annual general meeting.
Share Buybacks
The Company may also distribute capital by means of share
buybacks when the Board believes that it is in the best interests
of shareholders to do so. The share buyback programme will be
subject to Shareholder approval at each annual general meeting.
Discount Management
The Board operates the share buyback programme in line with the
objective of ensuring that the share price more closely reflects
the underlying NAV per share.
The Board retains responsibility for setting the parameters for
the discount management policy, for overseeing the management of
the buyback programme and for ensuring that its policy is
implemented. The Board intends to continue to seek to manage the
discount through the continued use of share buybacks and active
marketing of the Company. The Board's objective is to achieve a
narrowing of the discount in a manner that is sustainable over the
longer term. The Board and the Investment Manager consult regularly
with shareholders and with the corporate broker with a view to
assessing and improving the effectiveness of the buyback programme.
Further comments on the buyback programme are set out in the
Chairman's Statement.
Refer to note 11 of the Financial Statements for details of
share buybacks during the year under review.
Subsequent Events after the Reporting Date
On 23 October 2023, the Board declared a dividend of 7.0 US
cents per share. The dividend is payable on or around 4 December
2023 to shareholders on record at 3 November 2023.
On behalf of the Board
Huw Evans
Chairman
VinaCapital Vietnam Opportunity Fund Limited
23 October 2023
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Financial
Statements for each financial year which give a true and fair view
of the state of affairs of the Company and of its profit or loss
for that year in accordance with IFRS and the Guernsey Law.
International Accounting Standard 1 - Presentation of Financial
Statements requires that financial statements present fairly for
each financial period the Company's financial position, financial
performance and cash flows. This requires the faithful
representation of the effects of transactions, other events and
conditions in accordance with the definitions and recognition
criteria for assets, liabilities, income and expenses set out in
the IASB's "Framework for the preparation and presentation of
financial statements". In virtually all circumstances a fair
presentation will be achieved by compliance with all applicable
IFRS.
The Directors are also responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to ensure that the Financial
Statements have been prepared in accordance with the Guernsey Law
and IFRS. They are also responsible for safeguarding the assets of
the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the oversight of the
maintenance and integrity of the corporate and financial
information in relation to the Company's website; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
they were initially presented on the website. Legislation in
Guernsey governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
In preparing the Financial Statements the Directors are required
to:
-- ensure that the Financial Statements comply with the Company's
Memorandum & Articles of Incorporation and IFRS;
-- select suitable accounting policies and apply them consistently;
-- present information including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- make judgements and estimates that are reasonable and prudent;
-- prepare the Financial Statements on the going concern basis,
unless it is inappropriate to presume that the Company will
continue in business; and
-- provide additional disclosures when compliance with the
specific requirements of IFRS is insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the Company's financial position
and financial performance.
The Directors confirm that they have complied with these
requirements in preparing the Financial Statements.
Responsibility Statement of the Directors in Respect of the
Financial Statements
The Directors consider that the Annual Report and Financial
Statements, taken as a whole, are fair, balanced and understandable
and provide information necessary for shareholders to assess the
Company's position, performance, business model and strategy. Each
of the Directors confirms to the best of each person's knowledge
and belief that:
a) the Financial Statements have been prepared in accordance
with IFRS and give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company as at and for
the year ended 30 June 2023; and
b) the Annual Report includes a fair review of the development
and performance of the business and the position of the Company,
together with a description of the principal risks and
uncertainties that the Company faces.
Directors' Statement
So far as each of the Directors is aware, there is no relevant
audit information of which the Company's External Auditor is
unaware, and each Director has taken all of the steps that they
ought to have taken as a Director to make themselves aware of any
relevant audit information and to establish that the Company's
External Auditor is aware of that information. In the opinion of
the Board, the Annual Report and Financial Statements taken as a
whole, are fair, balanced and understandable and provide the
information necessary to assess the Company's position,
performance, business model and strategy.
On behalf of the Board
Huw Evans
Chairman
VinaCapital Vietnam Opportunity Fund Limited
23 October 2023
REPORT OF THE AUDIT COMMITTEE
On the following pages, we present the Report of the Audit
Committee for the year ended 30 June 2023, setting out the Audit
Committee's structure and composition, principal duties and key
activities during the year. As in previous years, the Audit
Committee has reviewed the Company's financial reporting, the
independence and effectiveness of the External Auditor and the
internal control and risk management systems of the service
providers.
Structure and Composition
The Audit Committee is chaired by Julian Healy. All other
Directors of the Company are members of the Audit Committee. Huw
Evans, who is the Chairman of the Company, is a member of the Audit
Committee but does not chair it. His membership of the Audit
Committee is considered appropriate given his extensive knowledge
of the Company and its investments. Julian Healy and Huw Evans are
both Chartered Accountants.
Appointment to the Audit Committee is for an indefinite period
provided that members remain independent of the Investment Manager
and meet the criteria for membership of the Audit Committee.
The Committee conducts formal meetings at least three times a
year. The table in the Corporate Governance Statement sets out the
number of Audit Committee meetings held during the year ended 30
June 2023 and the number of such meetings attended by each
Committee member. The External Auditor is invited to attend those
meetings at which the audit plan for the year is reviewed and at
which the annual and interim reports are considered. The External
Auditor and the Audit Committee Chairman meet every year without
the presence of either the Administrator or the Investment Manager
and at other times if the Audit Committee deems this to be
necessary.
Principal Duties
The role of the Audit Committee includes:
-- monitoring the integrity of the published Financial Statements
of the Company and advising the Board on whether, taken as
a whole, the Annual Report and Financial Statements are fair,
balanced and understandable and provide the information necessary
for shareholders to assess the Company's performance, business
model and strategy;
-- recommending to the Board the valuation of investments;
-- reviewing and reporting to the Board on the significant issues
and judgements made in the preparation of the Company's Annual
Report and Financial Statements, having regard to matters
communicated by the External Auditor, significant financial
returns to regulators and other financial information;
-- monitoring and reviewing the quality and effectiveness of
the External Auditor and their independence and making recommendations
to the Board on their appointment, reappointment, replacement
and remuneration; and
-- carrying out a robust assessment of the principal risks facing
the Company and including in the Annual Report and Financial
Statements a description of those risks and explaining how
they are being managed or mitigated.
External Auditor
PwC CI was appointed as the External Auditor with effect from 24
May 2016 following the change of domicile of the Company from the
Cayman Islands to Guernsey. The accounting year ended 30 June 2023
is therefore the eighth accounting year for which PwC CI has been
the External Auditor.
The independence and objectivity of the External Auditor is
reviewed by the Audit Committee, which also reviews the terms under
which the External Auditor is appointed to perform any non-audit
services. The Audit Committee has established policies and
procedures governing the engagement of the External Auditor to
provide non-audit services. These are that the External Auditor may
not provide a service which:
-- places them in a position to audit their own work;
-- creates a mutuality of interest;
-- results in the External Auditor functioning as a manager or employee of the Company; and
-- puts the External Auditor in the role of advocate of the Company.
The audit and any non-audit fees proposed by the External
Auditor each year are reviewed by the Audit Committee taking into
account the Company's structure, operations and other requirements
during the period and the Committee makes recommendations to the
Board.
The Audit Committee has examined the scope and results of the
external audit, its cost effectiveness and the independence and
objectivity of the External Auditor, with particular regard to
non-audit fees, and considers PwC CI as External Auditor, to be
independent of the Company. The only non-audit activity carried out
by PwC CI was the review of the Half Yearly Report. This activity
is assurance related and the Committee believes that PwC CI is best
placed to provide this service for the shareholders and that this
does not compromise its independence.
The External Auditor is required to rotate the Audit Engagement
Partner responsible for the Company's audit every five years. The
accounting year to 30 June 2023 was the third year for which Evelyn
Brady has been the Audit Engagement Partner.
Key Activities
The following sections discuss the principal assessments made by
the Audit Committee during the year:
Risk Management
The Audit Committee received and reviewed detailed reports on
the principal risks facing the Company from the Investment Manager.
The Audit Committee's reviews focused on changes to the risks and
also considered whether the Company was subject to any new or
emerging risks, taking account of the views of the Investment
Manager, of other service providers and of Committee members' own
awareness of issues which may affect the Company. In the year under
review, particular attention was paid to the key risks as described
in the Corporate Governance Statement, namely risks under the
headings: (i) geopolitical (ii) macroeconomic and market (iii)
investment performance, (iv) operational, (v) fair valuation, (vi)
legal and regulatory, (vii) changing investor sentiment and (viii)
ESG.
Significant Financial Statement Issues
(a) Valuation of Investments
The Chairman of the Audit Committee and the Chairman of the
Board committed a considerable amount of time to initial review and
oversight of the valuations of investments throughout the year and
particularly when considering valuations at the financial year-end.
Their observations formed a key part of the Audit Committee's
review of valuations.
In relation to the listed investments and unlisted investments
where an active market exists, the Audit Committee confirmed that
the Investment Manager has used the market values published by the
relevant stock exchanges as at the Statement of Financial Position
date.
In relation to the operating asset and private equity
investments, the Audit Committee ensured that the Investment
Manager and, where relevant, the Independent Valuer have applied
appropriate valuation methodologies.
Members of the Audit Committee meet the Independent Valuer and
the Investment Manager at least annually to discuss the valuation
process. In seeking to determine the fair value of the Company's
operating asset and private equity investments, the Committee
reviews the reports from the organisations providing valuations
along with the Investment Manager's valuation and recommendations.
Each individual valuation is reviewed in detail and, where an
Independent valuer has been retained, their recommendation may be
accepted or modified. Refer to note 3 of the Financial Statements
for further information on the valuation of investments held by the
Company.
On two occasions during the year under review the Committee
considered and recommended adjustments to the values of some of the
Company's valuations which were additional to the normal half
yearly reviews. These adjustments were agreed by the Board and
communicated to shareholders via Stock Exchange announcements which
were issued on 29 November 2022 and 10 March 2023.
The methodologies and valuations as at 30 June 2023 were
discussed and subsequently approved by the Audit Committee in
meetings with the Independent Valuer and the Investment Manager in
September and October 2023. In these meetings, the Audit Committee
challenged the unobservable inputs applied to projected future
returns and in particular as to whether these take due account of
the effects of heightened global inflation, macroeconomic and
specific company and industry risks, as well as any possible
effects of climate change.
The Independent Valuer and the Investment Manager were invited
to justify the approach to these issues and confirmed that due
account had been taken of the relevant risks.
The Audit Committee regularly reviews the movement in valuations
year on year including sensitivity factors affecting the
valuations.
(b) Calculation of the incentive fee and determination of fair
value of the liability
The incentive fee is calculated by the Administrator, which is
independent of the Investment Manager.
The Audit Committee sought assurance both that the incentive fee
and associated accruals were correctly calculated in compliance
with the investment management agreement and that an appropriate
discount rate was used and correctly applied in arriving at the
present value of incentive fees which may potentially be paid in
future years, on the basis that the NAV remains constant. As in
previous years, the Audit Committee instructed CES Investments Ltd
to perform an independent, full review of the relevant
calculations. Following this exercise, the Audit Committee was
satisfied that the assumptions used were appropriate and the
calculations were accurate.
Effectiveness of the Audit
The Audit Committee held formal meetings with PwC CI before the
start of the audit to discuss formal planning, to discuss any
potential issues, to agree the scope that would be covered and,
after the audit work was concluded, to discuss the significant
issues which arose.
Following evaluation, the Audit Committee was satisfied that
there had been appropriate focus and challenge on the significant
and other key areas of audit risk and assessed the quality of the
audit to be good. The Audit Committee undertakes an evaluation of
the performance of the External Auditor annually.
Audit fees and Safeguards on Non-Audit Services
The table below summarises the remuneration paid by the Company
to PwC CI and to other PwC member firms for audit and non-audit
services during the years ended 30 June 2023 and 30 June 2022.
Year ended Year ended
30 June 2023 30 June 2022
USD'000 USD'000
Audit and assurance services
- Annual audit 543 413
- Interim review 91 91
Total 634 504
The Audit Committee considers PwC CI to be independent of the
Company. Further, the Audit Committee has obtained PwC CI's
confirmation that the services provided by other PwC member firms
to the wider VinaCapital organisation do not prejudice its
independence with respect to its role as auditor of the
Company.
Conclusion and Recommendation
On the basis of its work carried out over the year, and
assurances given by the Investment Manager and the Administrator,
the Audit Committee is satisfied that the Financial Statements
appropriately address the critical judgements and key estimates
(both in respect of the amounts reported and the disclosures). The
Audit Committee is also satisfied that the significant assumptions
used to determine the values of assets and liabilities have been
appropriately scrutinised and challenged and are sufficiently
robust. At the request of the Board, the Audit Committee considered
and was satisfied that the 30 June 2023 Annual Report and Financial
Statements, taken as a whole, were fair, balanced and
understandable and that they provided the necessary information for
shareholders to assess the Company's position, performance,
business model and strategy.
The Investment Manager and the Administrator confirm to the
Committee that they were not aware of any material misstatements
including matters relating to the presentation of the Financial
Statements. The Audit Committee confirms that it is satisfied that
PwC CI has fulfilled its responsibilities with diligence and
professional scepticism.
Following the review process on the effectiveness of the
independent audit and the review of audit and non-audit services,
the Audit Committee has recommended that PwC CI be reappointed for
the coming financial year.
Julian Healy
Audit Committee Chairman
23 October 2023
DIRECTORS' REMUNERATION REPORT
Directors' Remuneration Policy
The Board's policy is that the remuneration of the independent
non-executive Directors should reflect the experience and time
commitment of the Board as a whole and is determined with reference
to comparable organisations and available market information each
year.
The non-executive Directors of the Company are entitled to such
rates of annual fees as the Board at its discretion shall from time
to time determine. In addition to the annual fee, under the
Company's Articles of Association, if any Director is requested to
perform extra or special services they will be entitled to receive
such additional remuneration as the Board may think fit.
No component of any Director's remuneration is subject to
performance factors.
The rates of fees per Director are reviewed annually, although
these reviews will not necessarily result in any changes in
remuneration. Annual fees are pro-rated where a change takes place
during a financial year.
Limit on Aggregate Total Directors' Fees
At the AGM on 10 December 2018, a resolution was approved by
shareholders to increase the maximum aggregate total remuneration
to USD650,000.
Recruitment Remuneration Principles
1. The remuneration package for any new Chairman or
non-executive Director will be the same as the prevailing rates
determined on the basis set out above. The fees and entitlement to
reclaim reasonable expenses will be set out in Directors' Letters
of Appointment.
2. The Board will not pay any introductory fee or incentive to
any person to encourage them to become a Director but may pay the
fees of search and selection specialists in connection with the
appointment of any new non-executive Director.
3. The Company intends to appoint only non-executive Directors for the foreseeable future.
Service Contracts
None of the Directors has a service contract with the Company.
Non-executive Directors are engaged under Letters of Appointment
and are subject to annual re-election by shareholders.
Loss of Office
Directors' Letters of Appointment expressly prohibit any
entitlement to payment on loss of office.
Scenarios
The Chairman's and non-executive Directors' remuneration is
fixed at annual rates, and there are no other scenarios where
remuneration will vary unless there are payments for extra or
special services in their role as Directors. It is accordingly not
considered appropriate to provide different remuneration scenarios
for each Director.
Statement of Consideration of Conditions Elsewhere in the
Company
As the Company has no employees, a process of consulting with
employees on the setting of the Remuneration Policy is not
relevant.
Other Items of Remuneration
None of the Directors has any entitlement to pensions or
pension-related benefits, medical or life insurance schemes, share
options, long-term incentive plans, or performance-related
payments. No Director is entitled to any other monetary payment or
any assets of the Company except in their capacity (where
applicable) as shareholders of the Company.
Directors' and Officers' liability insurance is maintained and
paid for by the Company on behalf of the Directors. The Company has
also provided indemnities to the Directors in respect of costs or
other liabilities which they may incur in connection with any
claims relating to their performance or the performance of the
Company whilst they are Directors.
No Director was interested in any contracts with the Company
during the year or subsequently other than in their role as a
Director.
Review of the Remuneration Policy
The Board has agreed that there would be a formal review before
any change to the Remuneration Policy is made; and, at least once a
year, the Remuneration Policy will be reviewed to ensure that it
remains appropriate.
Shareholder approval of the Directors' Remuneration Policy
An ordinary resolution for the approval of the Directors'
Remuneration Policy was put to the shareholders at the AGM which
was held on 5 December 2022. The results of this resolution
were:-
Vote cast Shares voted Percentage
In favour 69,932,273 99.93%
Against 38,367 0.05%
Withheld 10,955 0.02%
The directors intend to put forward a further resolution for
approval of the Directors' Remuneration Policy not later than the
Company's AGM in 2025.
Directors' Remuneration Implementation Report
For the year ended 30 June 2023, Directors' individual annual
remuneration was:
Fees
Position (USD)
Chair of the Company 105,000
Chair of the Audit Committee 90,000
Chairs of the Remuneration and Management Engagement
Committees 85,000
Other directors 80,000
There are no long-term incentive schemes provided by the Company
and no performance fees are paid to Directors.
Directors' Emoluments for the Year
The Directors over the past two years have received the
following emoluments in the form of fees:
Year ended
Annual fee 30 June 30 June
2023 2022
USD USD USD
Steve Bates(1) 105,000 - 44,226
Huw Evans(2) 105,000 105,000 98,723
Thuy Bich Dam(3) 85,000 67,942 80,000
Peter Hames(4) 85,000 80,548 80,000
Julian Healy 90,000 90,000 90,000
Kathryn Matthews(5) 85,000 85,000 80,000
Hai Thanh Trinh(6) 80,000 80,000 219
508,490 473,168
(1) Steve Bates retired from his position as chairman of the
Board on 2 December 2021.
(2) Huw Evans was appointed chairman of the Board on 2 December
2021.
(3) Thuy Bich Dam was appointed chairman of the Remuneration
Committee and retired from the board on 18 April 2023.
(4) Peter Hames was appointed chair of the Remuneration
Committee on 10 May 2023.
(5) Kathryn Matthews is the chair of the Management Engagement
Committee.
(6) Hai Trinh was appointed as a member of the Board on 30 June
2022.
In addition, Directors were reimbursed for their expenses
incurred in performance of their duties, including attendance at
Board and Annual General Meetings.
Shareholder Approval of the Directors' Remuneration
Implementation Report
An ordinary resolution for the approval of the Directors'
Remuneration Implementation Report will be put to the shareholders
at the AGM to be held on 6 December 2023. A similar resolution was
put to the previous AGM in December 2022 and votes cast were as
follows: -
Vote cast Shares voted Percentage
In favour 69,935,359 99.93%
Against 34,245 0.05%
Withheld 11,991 0.02%
Directors' Fees with effect from 1 October 2023
Vietnam is an emerging market where regulation of investment
activities is at an early stage and the Investment Manager is
inexperienced in the investment disciplines practiced in more
developed markets. Each Director has experience in developed
markets and the Board constantly seeks to use this experience to
improve the processes operating within the Investment Manager. For
its part, the Investment Manager recognises that this external
influence will improve the professionalism of the investment
process over time to the benefit of its broader business. The
Directors have worked with the Investment Manager to improve the
investment process in both listed and unlisted equities. Further,
the Chairman of the Audit Committee and the company Chairman spend
a considerable amount of time at each half-yearly report reviewing
valuations of unlisted investments.
Each October, the directors attend the VinaCapital conference in
Vietnam followed by meetings with the senior management of
VinaCapital. The Board meets formally and holds an away day at
which broader strategy matters are discussed. This series of
meetings typically takes a week. In addition to this, the Chairman
travels to Vietnam in March again to meet the VinaCapital team and
to maintain the relationship with Hai Trinh. Individual members of
the Board have also travelled to Vietnam in between Board meetings
to address specific issues with the Investment Manager.
This degree of oversight means that the work load of individual
directors is considerably higher than that for a typical investment
company. With this in mind, the Remuneration Committee engaged an
independent consultant, Stephenson Executive Search Limited, to
review the directors' work load and remuneration. Taking account of
the consultant's recommendations, the Board agreed the following
levels of directors' remuneration with effect from 1 October
2023:-
Director Description Total annual remuneration
with effect from 1
October 2023
Huw Evans $115,000 as Chair $115,000
$80,000 directors' fee
$10,000 as Chair of the Audit
Committee
Julian Healy $10,000 for work on valuations $100,000
$80,000 directors' fee
$5,000 as Chair of the Management
Kathryn Matthews Engagement Committee $85,000
$80,000 directors' fee
$5,000 as Chair of the Remuneration
Committee
$10,000 for work on listed
Peter Hames investments $95,000
$80,000 directors' fee
$5,000 for additional work
Hai Trinh carried out in Vietnam $85,000
On behalf of the Board
Peter Hames
Chair
Remuneration Committee
23 October 2023
Independent auditor's report to the members of VinaCapital
Vietnam Opportunity Fund Limited
Report on the audit of the financial statements
Our opinion
In our opinion, the financial statements give a true and fair
view of the financial position of VinaCapital Vietnam Opportunity
Fund Limited (the "company") as at 30 June 2023, and of its
financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards and
have been properly prepared in accordance with the requirements of
The Companies (Guernsey) Law, 2008.
What we have audited
The company's financial statements comprise:
-- the statement of financial position as at 30 June 2023;
-- the statement of comprehensive income for the year then ended;
-- the statement of changes in equity for the year then ended;
-- the statement of cash flows for the year then ended; and
-- the notes to the financial statements, which include
significant accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing ("ISAs"). Our responsibilities under those
standards are further described in the Auditor's responsibilities
for the audit of the financial statements section of our
report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements of the company, as required by the Crown Dependencies'
Audit Rules and Guidance. We have fulfilled our other ethical
responsibilities in accordance with these requirements.
Material uncertainty related to going concern
We draw attention to note 2.2 to the financial statements which
indicates that the company is due to hold a discontinuation vote at
its Annual General Meeting in December 2023.This event or condition
indicates that a material uncertainty exists that may cast
significant doubt on the company's ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
Our audit approach
Overview
Audit scope-- The principal activity of the company comprises investing
in a portfolio of investments in Vietnam (referred to
as "financial assets at fair value through profit or
loss") through a structure of unconsolidated holding
companies.
-- In establishing the overall approach to the company's
audit, we determined the type of work that needed to
be performed by us or by our assisting teams from other
PwC network firms.
-- We tailored the audit scope taking into account the type
of financial assets at fair value through profit or loss
held, the accounting processes and controls operated
by the company and the overall market to which the company
is exposed through its financial assets at fair value
through profit or loss.
-- We conducted our audit of the financial information and
records provided by Aztec Financial Services (Guernsey)
Limited (the "Administrator") to whom the Board of Directors
has delegated the provision of administrative functions.
The company and the unconsolidated holding companies
are administered by the Administrator and all financial
information and records are available in Guernsey. We,
together with our assisting teams from other PwC network
firms, also had significant interaction with the Investment
Manager in completing aspects of our audit work.
Key audit matters-- Material uncertainty related to going concern
-- Valuation of the underlying level 3 investments, recognised
as part of financial assets at fair value through profit
or loss
Materiality
-- Overall materiality: USD 16.9 million (2022: USD 17.7 million)
based on 1.5% of net assets.
-- Performance materiality: USD 12.6 million (2022: USD 13.3
million).
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we considered where the directors made
subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits, we also addressed the risk of management override of
internal controls, including among other matters, consideration of
whether there was evidence of bias that represented a risk of
material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditor's
professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditor, including those which had
the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the
results of our procedures thereon, were addressed in the context of
our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on
these matters. In addition to the matter described in the Material
uncertainty related to going concern section, we have determined
the matters described below to be the key audit matters to be
communicated in our report.
This is not a complete list of all risks identified by our
audit.
Key audit matter How our audit addressed the key
audit matter
Valuation of the underlying
level 3 investments, recognised
as part of financial assets
at fair value through profit
or loss
As detailed in notes 3.1(a) 1. We understood and evaluated the
and 8 to the financial statements, controls over the valuation process
the company's financial assets and the areas where significant
at fair value through profit judgements and estimates are made;
or loss include the underlying 2. We obtained and evaluated the
level 3 investments (i.e. final reports issued by the Investment
investments in private equities, Manager and by the valuation experts
operating asset and loans to the Board so as to understand
and receivables designated the critical accounting estimates,
at fair value through profit judgements and valuation methodologies
or loss) totalling USD 332.7 adopted to determine the fair value
million (2022: USD 308.6million). of the underlying level 3 investments;
3. Confirmed and assessed the independence,
The underlying level 3 investments objectivity and competence of the
as detailed in notes 3.1(a.2), valuation experts engaged by the
3.1(a.3) and 3.1(a.4), are Board;
valued on methodologies considered 4. We engaged our valuation experts
most appropriate by the Directors, to provide audit support in evaluating,
including fair values derived challenging and concluding on the
from internal valuations prepared fair valuations of certain underlying
by the Investment Manager level 3 investments. With the assistance
and fair values determined of our experts, we have (a) assessed
by valuation experts engaged and challenged the appropriateness
by the Board, using industry of valuation methodologies and approaches
standard private equity valuation and (b) challenged and commented
techniques which are then on models which were adopted by
adjusted for the relevant the company, including significant
unconsolidated holding companies' estimates such as cash flow projections,
residual net assets. discount rates and terminal growth
rates;
5. In evaluating the critical estimates
and judgements underpinning the
fair value of the underlying level
There is a risk that the fair 3 investments, we challenged the
valuation of the underlying assumptions used, we corroborated
level 3 investments may be the information received against
materially misstated as these third party sources where applicable
fair values rely on the use and our view and understanding of
of appropriate methodologies various economic indicators; and
and judgemental inputs as 6. We tested the mathematical accuracy
well as the skill and knowledge of the valuation models and verified
of the Investment Manager the significant inputs into the
and valuation experts engaged models by agreement to third party
by the Board to develop and sources where applicable.
report on these valuations. Based on the audit work detailed
above we have nothing to report
There is also the inherent to those charged with corporate
risk that the Investment Manager governance .
or the Board may unduly influence
the independent experts in
their determination of the
fair valuations for these
investments.
This is a main area of focus
and a significant risk and
we have deemed this area to
be a key audit matter.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
company, the accounting processes and controls, the industry in
which the company operates, and we considered the risk of climate
change and the potential impact thereof on our audit approach.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Overall materiality USD 16.9 million (2022: USD 17.7 million).
How we determined 1.5% of net assets
it
Rationale for benchmark We believe that net asset is the most appropriate
applied benchmark because this is the key metric
of interest to the members of the company.
It is also the generally accepted measure
used for companies in this industry.
We use performance materiality to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our
audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining
sample sizes. Our performance materiality was 75% (2022: 75%) of
overall materiality, amounting to USD 12.6 million (2022: USD 13.3
million) for the company financial statements.
In determining the performance materiality, we considered a
number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and
concluded that an amount at the upper end of our normal range was
appropriate.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above USD 0.84 million
(2022: USD 0.89 million) as well as misstatements below that amount
that, in our view, warranted reporting for qualitative reasons.
Reporting on other information
The other information comprises all the information included in
the Annual Report and Financial Statements (the "Annual Report")
but does not include the financial statements and our auditor's
report thereon. The directors are responsible for the other
information.
Our opinion on the financial statements does not cover the other
information and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If, based
on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact. We have nothing to report based on these
responsibilities.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Statement of Directors'
Responsibilities, the directors are responsible for the preparation
of the financial statements that give a true and fair view in
accordance with International Financial Reporting Standards, the
requirements of Guernsey law and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited
number of items for testing, rather than testing complete
populations. We will often seek to target particular items for
testing based on their size or risk characteristics. In other
cases, we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
As part of an audit in accordance with ISAs, we exercise
professional judgement and maintain professional scepticism
throughout the audit. We also:
-- Identify and assess the risks of material misstatement of
the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal control.
-- Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the company's internal
control.
-- Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by the directors.
-- Conclude on the appropriateness of the directors' use of
the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant
doubt on the company's ability to continue as a going concern
over a period of at least twelve months from the date of
approval of the financial statements. If we conclude that
a material uncertainty exists, we are required to draw attention
in our auditor's report to the related disclosures in the
financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report.
However, future events or conditions may cause the company
to cease to continue as a going concern.
-- Evaluate the overall presentation, structure and content
of the financial statements, including the disclosures, and
whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We describe
these matters in our auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Use of this report
This report, including the opinions, has been prepared for and
only for the members as a body in accordance with Section 262 of
The Companies (Guernsey) Law, 2008 and for no other purpose. We do
not, in giving these opinions, accept or assume responsibility for
any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Report on other legal and regulatory requirements
Company Law exception reporting
Under The Companies (Guernsey) Law, 2008 we are required to
report to you if, in our opinion:
-- we have not received all the information and explanations we require for our audit;
-- proper accounting records have not been kept; or
-- the financial statements are not in agreement with the accounting records.
We have no exceptions to report arising from this
responsibility.
Corporate governance statement
The Listing Rules require us to review the directors' statements
in relation to going concern, longer-term viability and that part
of the corporate governance statement relating to the company's
compliance with the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities with
respect to the corporate governance statement as other information
are described in the Reporting on other information section of this
report.
The company has reported compliance against the 2019 AIC Code of
Corporate Governance (the "Code") which has been endorsed by the UK
Financial Reporting Council as being consistent with the UK
Corporate Governance Code for the purposes of meeting the company's
obligations, as an investment company, under the Listing Rules of
the FCA.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit, and we have
nothing material to add or draw attention to in relation to:
-- The directors' confirmation that they have carried out a
robust assessment of the emerging and principal risks;
-- The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify emerging
risks and an explanation of how these are being managed or
mitigated;
-- The directors' statement in the financial statements about
whether they considered it appropriate to adopt the going concern
basis of accounting in preparing them, and their identification of
any material uncertainties to the company's ability to continue to
do so over a period of at least twelve months from the date of
approval of the financial statements;
-- The directors' explanation as to their assessment of the
company's prospects, the period this assessment covers and why the
period is appropriate; and
-- The directors' statement as to whether they have a reasonable
expectation that the company will be able to continue in operation
and meet its liabilities as they fall due over the period of its
assessment, including any related disclosures drawing attention to
any necessary qualifications or assumptions.
Our review of the directors' statement regarding the longer-term
viability of the company was substantially less in scope than an
audit and only consisted of making inquiries and considering the
directors' process supporting their statements; checking that the
statements are in alignment with the relevant provisions of the
Code; and considering whether the statement is consistent with the
financial statements and our knowledge and understanding of the
company and its environment obtained in the course of the
audit.
In addition, based on the work undertaken as part of our audit,
we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the
financial statements and our knowledge obtained during the
audit:
-- The directors' statement that they consider the Annual
Report, taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess the
company's position, performance, business model and strategy;
-- The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems;
and
-- The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to
report when the directors' statement relating to the company's
compliance with the Code does not properly disclose a departure
from a relevant provision of the Code specified under the Listing
Rules for review by the auditors.
Evelyn Brady
For and on behalf of PricewaterhouseCoopers CI LLP
Chartered Accountants and Recognised Auditor
Guernsey, Channel Islands
23 October 2023
STATEMENT OF FINANCIAL POSITION
30 June 30 June
2023 2022
Note USD'000 USD'000
TOTAL ASSETS
Financial assets at FVTPL 8 1,137,428 1,205,940
Prepayments and other assets 10 658 943
Cash and cash equivalents 6 19,133 15,630
Total assets 1,157,219 1,222,513
TOTAL LIABILITIES
Accrued expenses and other payables 12 18,125 22,060
Loans and other borrowings 13 10,000 -
Deferred incentive fees 16(b) 5,227 20,353
Total liabilities 33,352 42,413
SHAREHOLDERS' EQUITY
Share capital 11 267,087 285,314
Retained earnings 856,780 894,786
Total shareholders' equity 1,123,867 1,180,100
Total liabilities and shareholders'
equity 1,157,219 1,222,513
Net asset value, USD per share 18 7.02 7.22
Net asset value, GBP per share 5.52 5.93
The Financial Statements were approved by the Board of Directors
on 23 October 2023 and signed on its behalf by:
Huw Evans Julian Healy
Chairman Director
The accompanying notes are an integral part of these Financial
Statements.
STATEMENT OF CHANGES IN EQUITY
Retained Total
Share capital earnings equity
For the year ended 30 June USD'000 USD'000 USD'000
2022 Note
Balance at 1 July 2021 317,112 1,042,661 1,359,773
Loss for the year - (121,443) (121,443)
Total comprehensive loss - (121,443) (121,443)
Transactions with shareholders
Shares repurchased 11 (31,798) - (31,798)
Dividends paid 9 - (26,432) (26,432)
Balance at 30 June 2022 285,314 894,786 1,180,100
Retained
For the year ended 30 June Share Capital earnings Total equity
2023 Note USD'000 USD'000 USD'000
Balance at 1 July 2022 285,314 894,786 1,180,100
Loss for the year - (15,019) (15,019)
Total comprehensive loss - (15,019) (15,019)
Transactions with shareholders
Shares repurchased 11 (18,227) - (18,227)
Dividends paid 9 - (22,987) (22,987)
Balance at 30 June 2023 267,087 856,780 1,123,867
The accompanying notes are an integral part of these Financial
Statements.
STATEMENT OF COMPREHENSIVE INCOME
Year ended
30 June 30 June 2022
2023
Note(s) USD'000 USD'000
Dividend income 14 53,126 58,250
Net losses on financial assets
at FVTPL 8, 15 (48,046) (167,289)
General and administration expenses 16(a) (17,710) (20,248)
Finance cost (577) -
Facility set-up costs 10 (1,134) (364)
16(b),
Finance expense 19 (1,847) (6,977)
3, 16(b),
Incentive fee clawback 19 1,169 15,185
Operating loss (15,019) (121,443)
Loss before tax (15,019) (121,443)
Corporate income tax 17 - -
Loss for the year (15,019) (121,443)
Total comprehensive loss for the
year (15,019) (121,443)
Earnings per share
- basic and diluted (USD per share) 18 (0.09) (0.73)
- basic and diluted (GBP per share) 18 (0.07) (0.60)
All items were derived from continuing activities.
The accompanying notes are an integral part of these Financial
Statements.
STATEMENT OF CASH FLOWS
Year ended
30 June 30 June 2022
2023
Note USD'000 USD'000
Operating activities
Loss before tax (15,019) (121,443)
Adjustments for:
Net losses on financial assets at
FVTPL 15 48,046 167,289
Dividend income 14 (53,126) (58,250)
Facility set-up costs 10 1,134 364
Loan interest expense 577 -
16(b),
Incentive fee clawback 19 (b) (1,169) (15,185)
Finance expense 16(b) 1,847 6,977
(17,710) (20,248)
Decrease/(Increase) in prepayments
and other assets 10 285 (855)
Decrease in liabilities 12,16(b) (20,173) (16,671)
(37,598) (37,774)
Purchases of financial assets at
FVTPL 8 (68,110) (226,944)
Return of capital from financial
assets at FVTPL 8 88,576 206,823
Dividends received 14 53,126 58,250
Net cash generated from operating
activities 35,994 355
Financing activities
Purchase of shares into treasury 11 (17,955) (34,154)
Proceeds from short term loans and
borrowings 13 60,000 -
Repayment of short term loans and
borrowings 13 (50,000) -
Loan interest paid (506) -
Facility set-up costs 10 (1,043) (364)
Dividends paid 9 (22,987) (26,432)
Net cash used in financing activities (32,491) (60,950)
Net change in cash and cash equivalents
for the year 3,503 (60,595)
Cash and cash equivalents at the
beginning of the year 6 15,630 76,225
Cash and cash equivalents at the
end of the year 6 19,133 15,630
The accompanying notes are an integral part of these Financial
Statements.
1. GENERAL INFORMATION
The Company registered on 22 March 2016 as a closed-ended
investment scheme with limited liability under the Guernsey Law.
The Company is registered in Guernsey with registration number
61765. Prior to that date the Company was incorporated in the
Cayman Islands as an exempted company with limited liability.
The Company is classified as a registered closed-ended
Collective Investment Scheme under the Protection of Investors
(Bailiwick of Guernsey) Law 2020 and is subject to the Guernsey
Law.
The Company's objective is to achieve medium to long-term
returns through investment either in Vietnam or in companies with a
majority of their assets, operations, revenues or income in, or
derived from, Vietnam.
On 30 March 2016, the Company's shares were admitted to the Main
Market of the LSE with a Premium Listing under the ticker symbol
VOF. Prior to that date, the Company's shares were traded on the
AIM market of the LSE.
The Company does not have a fixed life, but the Board considers
it desirable that shareholders should have the opportunity to
review the future of the Company at appropriate intervals.
Accordingly, the Board intends that every fifth year a special
resolution will be proposed that the Company ceases to continue. If
the resolution is not passed, the Company will continue to operate
as currently constituted. If the resolution is passed, the
Directors will be required to formulate proposals to be put to
shareholders to reorganise, unitise or reconstruct the Company or
for the Company to be wound up. The Board tabled such resolutions
in 2008, 2013 and 2018 and on each occasion the resolution was not
passed, allowing the Company to continue as currently
constituted.
The Financial Statements for the year ended 30 June 2023 were
approved for issue by the Board on 23 October 2023.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these Financial Statements are set out below. These policies have
been consistently applied to all years presented, unless otherwise
stated.
Statement of Compliance
The Financial Statements have been prepared in accordance with
IFRS, which comprise standards and interpretations approved by the
IASB together with applicable legal and regulatory requirements of
the Guernsey Law.
2.1 Basis of preparation
The Financial Statements have been prepared using the historical
cost convention, as modified by the revaluation of financial assets
at fair value through profit or loss, and financial liabilities at
fair value through profit or loss. The Financial Statements have
been prepared on a going concern basis.
The preparation of Financial Statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires judgement to be exercised in the process of applying the
Company's accounting policies. The areas involving a higher degree
of judgement or complexity, or areas where assumptions and
estimates are significant to the Financial Statements, are
disclosed in note 3.
2.2 Going concern
Under the AIC Code and applicable regulations, the Directors are
required to satisfy themselves that it is reasonable to assume that
the Company is a going concern. The Directors have considered
carefully the liquidity of the Company's investments and the level
of cash balances as at the reporting date as well as reviewing
forecast cash flows up to 31 December 2024.
An additional factor which the Directors have considered is the
discontinuation vote which will be put to shareholders at the AGM
in December 2023. If the resolution were to be passed, the
Directors will be required to formulate proposals to be put to
shareholders to reorganise, unitise or reconstruct the Company or
for the Company to be wound up. The Board tabled such resolutions
in 2008, 2013 and 2018 and on each occasion the resolution was not
passed,
In seeking to ensure that shareholders retain confidence in the
Company, the Investment Manager meets regularly with shareholders
and has an active investor relations programme. In addition, the
Chairman communicates independently with significant shareholders.
The Directors cannot predict the outcome of the discontinuation
vote in December and, therefore, recognise that a material
uncertainty exists which may cast doubt on the ability of the
Company to continue as a going concern. That having been said, the
Directors currently have no indication that the resolution will be
passed and, therefore, continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
2.3 Changes in accounting policy and disclosures
The Board has considered the new standards and amendments that
are mandatorily effective from 1 January 2022 and determined that
these do not have a material impact on the Company and are not
expected significantly to affect the current or future periods.
2.4 Subsidiaries and associates
The Company meets the definition of an Investment Entity within
IFRS 10 and therefore does not consolidate its subsidiaries but
measures them instead at fair value through profit or loss. The
Company has also applied the exemption from accounting for its
associates using the equity method as permitted by IAS 28.
Any gain or loss arising from a change in the fair value of
investments in subsidiaries and associates is recognised in the
Statement of Comprehensive Income.
Refer to note 3 for further disclosure on accounting for
subsidiaries and associates.
2.5 Segment reporting
In identifying its operating segments, management follows the
subsidiaries' sectors of investment which are based on internal
management reporting information. The operating segments by
investment portfolio include: capital markets, operating asset,
private equity investments and other net assets (including cash and
cash equivalents, bonds, and short-term deposits).
Each of the operating segments is managed and monitored
individually by the Investment Manager as each requires appropriate
resources and approaches. The Investment Manager assesses segment
profit or loss using a measure of operating profit or loss from the
underlying investment assets of the subsidiaries. Refer to note 4
for further disclosure regarding allocation to segments.
2.6 Foreign currency translation
(a) Functional and presentation currency
The functional currency of the Company is the USD. The Company's
Financial Statements are presented in USD.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the Statement of Comprehensive Income.
Non-monetary items measured at historical cost are translated
using the exchange rates at the date of the transaction.
Non-monetary items measured at fair value are translated using the
exchange rates at the date when the fair value was determined.
2.7 Financial instruments
(a) Recognition and derecognition
Financial assets and financial liabilities are recognised when
the Company becomes a party to the contractual provisions of the
financial instrument. Purchases and sales of financial assets are
recognised on the trade date, being the date on which the Company
commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been
transferred and the Company has transferred substantially all of
the risks and rewards of ownership. A financial liability is
derecognised when it is extinguished, discharged, cancelled or
expires.
(b) Classification of financial assets
The Company classifies its financial assets based on the
Company's business model for managing those nancial assets and the
contractual cash ow characteristics of the nancial assets.
The Company has classified all investments in equity securities
as financial assets at FVTPL as they are managed, and performance
is evaluated on a fair value basis. The Company is primarily
focused on fair value information and uses that information to
assess the assets' performance and to make decisions. The Company
has not taken the option to designate irrevocably any investment in
equity as fair value through other comprehensive income.
The Company's receivables and cash and cash equivalents are
classified as financial assets at amortised cost as these are held
to collect contractual cash flows which represent solely payments
of principal and interest.
(c) Initial and subsequent measurement of financial assets
Except for those trade receivables that do not contain a
significant financing component and are measured at the transaction
price in accordance with IFRS 15, financial assets are initially
measured at fair value plus, in the case of a financial asset not
at FVTPL, transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial
assets at FVTPL are expensed in the Statement of Comprehensive
Income.
Subsequent to initial recognition, investments at FVTPL are
measured at fair value with gains and losses arising from changes
in the fair value recognised in the Statement of Comprehensive
Income.
All other financial assets are subsequently measured at
amortised cost using the effective interest rate method, less any
impairment.
(d) Impairment of financial assets
At each reporting date, the Company measures the loss allowance
on debt assets carried at amortised cost at an amount equal to the
lifetime expected credit losses if the credit risk has increased
signi cantly since initial recognition.
If, at the reporting date, the credit risk has not increased
signi cantly since initial recognition, the Company measures the
loss allowance at an amount equal to 12-month expected credit
losses. The expected credit losses are estimated using a provision
matrix based on the Company's historical credit loss experience,
adjusted for factors that are specific to the debtors, general
economic conditions and an assessment of both the current as well
as the forecast direction of conditions at the reporting date,
including time value of money where appropriate. The measurement of
expected credit losses is a function of the probability of default,
loss given default (i.e., the magnitude of the loss if there is a
default) and the exposure at default.
The assessment of the probability of default and loss given
default is based on historical data adjusted by forward-looking
information.
(e) Classification and measurement of financial liabilities
Financial liabilities are initially measured at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, other than those classified as at fair value
through profit or loss in which case transaction costs are
recognised directly in profit or loss.
Subsequently, financial liabilities are measured at amortised
cost using the effective interest method except for financial
liabilities designated at fair value through profit or loss and
held for trading, which are carried subsequently at fair value with
gains or losses recognised in the Statement of Comprehensive
Income.
The Company's financial liabilities include trade and other
payables and loans and other borrowings which are measured at
amortised cost using the effective interest method.
2.8 Cash and cash equivalents
In the Statement of Cash Flows, cash and cash equivalents
includes deposits held at call with banks, other short-term highly
liquid investments with original maturities of three months or less
and bank overdrafts.
2.9 Share capital
Ordinary shares are classified as equity. Share capital includes
the nominal value of ordinary shares that have been issued and any
premiums received on the initial issuance of shares. Incremental
costs directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the
proceeds.
When the Company purchases its equity share capital (treasury
shares), the consideration paid, including any directly
attributable incremental costs (net of income taxes) is deducted
from equity attributable to the Company's equity holders.
When such treasury shares are subsequently reissued, any
consideration received, net of any directly attributable
incremental transaction costs and the related income tax effects,
is included in equity attributable to the Company's equity
holders.
2.10 Dividend Income
Dividend income is recognised when the right to receive payment
is established, it is probable that the economic benefits
associated with the dividend will flow to the Company, and the
amount of the dividend can be measured reliably.
2.11 Operating expenses
Operating expenses are accounted for on an accrual basis.
2.12 Related parties
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or operational
decisions. Enterprises and individuals that directly, or indirectly
through one or more intermediary, control, or are controlled by, or
under common control with, the Company, including subsidiaries and
fellow subsidiaries are related parties of the Company.
Associates are individuals owning directly, or indirectly, an
interest in the voting power of the Company that gives them
significant influence over the entity, key management personnel,
including directors and officers of the Company, the Investment
Manager and their close family members. In considering related
party relationships, attention is directed to the substance of the
relationship and not merely the legal form.
2.13 Offsetting financial instruments
Financial assets and liabilities are offset, and the net amount
is reported in the Statement of Financial Position, when there is a
legally enforceable right to offset the recognised amounts and
there is an intention to settle on a net basis or realise the asset
and settle the liability simultaneously. The legally enforceable
right must not be contingent on future events, and it must be
enforceable in the normal course of business and in the event of
default, insolvency or bankruptcy of the company or the
counterparty.
2.14 Dividend distribution
Dividend distributions to the Company's shareholders are
recognised as a liability in the Company's Financial Statements and
disclosed in the Statement of Changes in Equity in the period in
which the dividends are approved by the Board.
2.15 Loans and borrowings
All loans and borrowings are initially recognised at fair value
less directly attributable transaction costs, such as set up costs.
After initial recognition interest bearing loans and borrowings are
subsequently measured at amortised cost using the effective
interest rate method. Facility set up costs are charged to the
Statement of Comprehensive Income over the period of the
facility.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
When preparing the Financial Statements, the Company relies on a
number of judgements, estimates and assumptions about recognition
and measurement of assets, liabilities, income and expenses. Actual
results may differ from the judgements, estimates and
assumptions.
3.1 Critical accounting estimates and assumptions
(a) Fair value of subsidiaries and associates and their
underlying investments
The Company holds its investments through a number of
subsidiaries and associates which were established for this
purpose. At the end of each half of the financial year, the fair
values of investments in subsidiaries and associates are reviewed
and the fair values of all material investments held by these
subsidiaries and associates are assessed. As at 30 June 2023, 100%
(30 June 2022: 100%) of the financial assets at fair value through
profit and loss relate to the Company's investments in subsidiaries
and associates that have been fair valued in accordance with the
policies set out above.
The shares of the subsidiaries and associates are not publicly
traded; return of capital to the Company can only be made by
divesting the underlying investments of the subsidiaries and
associates. As a result, the carrying value of the subsidiaries and
associates may not be indicative of the value ultimately realised
on divestment.
The underlying investments include listed and unlisted
securities, one operating asset and private equity investments (
including investments classified as "public equity with private
terms") . Where an active market exists (for example, for listed
securities), the fair value of the subsidiary or associate reflects
the valuation of the underlying holdings, as disclosed below. Where
no active market exists, valuation techniques are used.
Information about the significant judgements, estimates and
assumptions which are used in the valuation of the investments is
discussed below.
(a.1) Valuation of assets that are traded in an active
market
The fair values of listed securities are based on quoted market
prices at the close of trading on the reporting date. The fair
values of unlisted securities which are traded on Vietnam's
Unlisted Public Company Market ("UPCoM") are based on published
prices at the close of business on the reporting date. For other
unlisted securities which are traded in an active market, fair
value is the average quoted price at the close of trading obtained
from a minimum sample of five reputable securities companies at the
reporting date. Other relevant measurement bases are used if broker
quotes are not available or if better and more reliable information
is available.
(a.2) Valuation of investments in private equities
As at the financial year-end, the Company's underlying
investments in private equities are fair valued by an Independent
Valuer or by the Investment Manager using a number of methodologies
such as adjusted net asset valuations, discounted cash flows,
income related multiples, price-to-book ratios, structured
financial arrangements and blended models. The projected future
cash flows are driven by management's business strategies and goals
and its assumptions of growth in GDP, market demand, inflation, ESG
risk, etc. For the principal investments, the Independent Valuer
and, where relevant, the Investment Manager selects appropriate
discount rates that reflect the level of certainty of the quantum
and timing of the projected cash flows.
For the year ended 30 June 2023, methods, assumptions and data
were consistently applied when compared to last year, except for
certain underlying private equity investments where a change in
methodology was deemed appropriate to reflect the change in the
market conditions or investment-specific factors. As at the
reporting date, some private equity investments have changed the
valuation methodology from market price model to scenario-based
discounted cash flow model as a result of exercising put-options
and restructuring of the counterparty obligations due to
default.
The Investment Manager then made recommendations to the Audit
Committee of the fair values as at 30 June 2023 and the Audit
Committee, having considered these, then made recommendations for
approval by the Board. Refer to note 20(c) which sets out a
sensitivity analysis of the significant unobservable inputs used in
the valuations of the private equity investments.
(a.3) Loans and receivables at FVTPL
For the year ended 30 June 2023, two underlying investments that
were previously classified as private equity have been restructured
and classified as loans and receivables at FVTPL due to
defaults.
In the prior year, these underlying investments are fair valued
by the Investment Manager using the discounted cash flows
model.
For the current year, these underlying loans and receivables
designated at FVTPL are fair valued by an Independent Valuer or by
the Investment Manager using methodologies such as a scenario-based
model using probability-weighted average of discounted cash flows
and investment cost plus expected return. Refer to note 20(c) which
sets out a sensitivity analysis of the significant unobservable
inputs used in the valuations.
(a.4) Valuation of the operating asset
At each year-end, the fair value of the principal underlying
operating asset is based on valuations by independent specialist
appraisers, Jones Lang LaSalle. These valuations are based on
certain assumptions which are subject to uncertainty and might
result in valuations which differ materially from the actual
results of a sale. The estimated fair values provided by the
independent specialist appraisers are then used by the Independent
Valuer as the primary basis for estimating fair value of the
Company's subsidiaries and associates that hold these properties in
accordance with accounting policies set out in note 2.7. Refer to
note 20(c) which sets out a sensitivity analysis of the significant
unobservable inputs used in the valuation of the operating asset.
At year end, the valuation was reviewed and recommended to the
Board by the Audit Committee.
In conjunction with making its judgement for the fair value of
the Company's principal operating asset, the Independent Valuer
also considers information from a variety of other sources
including:
i. current prices in an active market for properties of similar nature, condition or location;
ii. current prices in an active market for properties of
different nature, condition or location (or subject to different
lease or other contracts), adjusted to reflect those
differences;
iii. recent prices of similar properties in less active markets,
with adjustments to reflect any changes in economic conditions
since the date of the transactions that occurred at those
prices;
iv. recent developments and changes in laws and regulations that
might affect zoning and/or the Company's ability to exercise its
rights in respect to properties and therefore fully realise the
estimated values of such properties;
v. discounted cash flow projections based on estimates of future
cash flows, derived from the terms of external evidence such as
current market rents, occupancy and room rates, and sales prices
for similar properties in the same location and condition, and
using discount rates that reflect current market assessments of the
uncertainty in the amount and timing of the cash flows; and
vi. recent compensation prices made public by the local
authority in the province where the property is located.
(b) Incentive Fee
For the accounting years ended 30 June 2022 and 30 June 2023,
the incentive fee was calculated as follows:
-- To the extent that the NAV as at any year end commencing
30 June 2019 was above the higher of an 8% compound annual
return and the high water mark initially set in 2019, having
accounted for any share buy backs, share issues and/or dividends,
the incentive fee payable on any increase in the NAV with
effect from 30 June 2019 above the higher of the high water
mark and the 8% annual return target was calculated at a
rate of 12.5%;
-- The maximum amount of incentive fees that can be paid out
in any one year was capped at 1.5% of the average month-end
NAV during that year; and
-- Any incentive fees earned in excess of this 1.5% cap were
accrued if they were expected to be paid out in subsequent
years.
Any incentive fees payable within 12 months are classified under
accrued expenses and other payables in the Statement of Financial
Position. The fair values of any additional incentive fees
potentially payable beyond 12 months after the end of the reporting
period are classified as deferred incentive fees in the Statement
of Financial Position.
At the end of each financial period, the Board makes a judgement
in considering the total amount of any accrued incentive fees which
are likely to be settled beyond 12 months after the end of the
reporting period. In determining the fair value of the non-current
liability at a Statement of Financial Position date the Board
may
apply a discount to reflect the time value of money and the
probability and phasing of payment. An annualised discount rate of
8% was applied to the deferred incentive fees carried forward as at
the accounting years ended 30 June 2022 and 30 June 2023. Any
unwinding of the discount recorded in the previous financial period
is recorded in finance expense in the Statement of Comprehensive
Income.
For further details of the incentive fees earned and accrued at
the yearend please refer to note 16(b).
Revisions to the fee arrangements for accounting years
commencing 1 July 2023 are set out in note 21.
(a) Eligibility to qualify as an investment entity
The Company has determined that it is an investment entity under
the definition of IFRS 10 as it meets the following criteria:
i. The Company has obtained funds from investors for the purpose
of providing those investors with investment management
services;
ii. The Company's business purpose is to invest funds solely for
returns from capital appreciation, investment income or both;
and
iii. The performance of investments made by the Company are
substantially measured and evaluated on a fair value basis.
The Company has the typical characteristics of an investment
entity:
-- It holds more than one investment;
-- It has more than one investor;
-- It has investors that are not its related parties; and
-- It has ownership interests in the form of equity or similar interests.
As a consequence, the Company does not consolidate its
subsidiaries and accounts for them at fair value through profit or
loss. The Company has applied the exemption from accounting for its
subsidiaries using the equity method as permitted by IAS 28.
(b) Judgements about active and inactive markets
The Board considers that the Ho Chi Minh Stock Exchange, the
Hanoi Stock Exchange and UPCoM are active markets for the purposes
of IFRS 13. Consequently, the prices quoted by those markets for
individual shares as at the balance sheet date can be used to
estimate the fair value of the Company's underlying
investments.
Notwithstanding the fact that these stock exchanges can be
regarded as active markets, the size of the Company's holdings in
particular stocks in relation to daily market turnover in those
stocks would make it difficult to conduct an orderly transaction in
a large number of shares on a single day. However, the Board
considers that, if the Company were to offer a block of shares for
sale, the price which could be achieved in an orderly transaction
is as likely to be at a premium to the quoted market price as at a
discount.
Consequently, when taken across the whole portfolio of the
Company's underlying quoted investments, the Board considers that
using the quoted prices of the shares on the various active markets
is generally a reasonable determination of the fair value of the
securities.
In the absence of an active market for quoted or unquoted
investments which may include positions that are not traded in
active markets, valuations may be adjusted to reflect illiquidity
and/or non-transferability, which are generally based on available
market information, and in determining the fair value one or more
valuation techniques may be utilised.
4. SEGMENT ANALYSIS
Dividend income is allocated based on the underlying investments
of subsidiaries which declared dividends. Net gains/losses on
financial assets at fair value through profit or loss are allocated
to each segment with reference to the assets held by each
respective subsidiary. General and administration expenses, finance
costs and loan facility set-up costs are allocated based on the
investment sector. Finance expenses, accrued expenses and other
payables are allocated to each segment with reference to the
percentage allocation on the investments holding.
The financial assets at fair value through profit or loss are
measured based on the investment sector. Other assets and
liabilities are classified as other net assets.
Segment information can be analysed as follows:
Statement of Comprehensive Income
Capital Operating Private Other
Net
Markets* Asset Equity Assets** Total
USD'000 USD'000 USD'000 USD'000 USD'000
Year ended 30 June 2023
Dividend income 21,819 - 31,307 - 53,126
Net gains/(losses) on
financial assets at FVTPL 13,017 10,075 (81,319) 10,181 (48,046)
General and administration
expenses (note 16 (a)) (12,111) (209) (3,903) (1,487) ( 17,710)
Finance cost (399) - (130) (48) (57 7)
Facility set-up costs (1,13
(note 10) (785) - (253) (96) 4)
Finance expense (1,278) - (412) (157) ( 1,847)
Incentive clawed back
income 809 - 261 99 1,169
Profit/(loss) before ( 15,019
tax 21,072 9,866 (54,449) 8,492 )
Capital Operating Private Other
Net
Markets* Asset Equity Assets** Total
USD'000 USD'000 USD'000 USD'000 USD'000
Year ended 30 June 2022
Dividend income 30,705 - 27,545 - 58,250
Net (losses)/gains on
financial assets at FVTPL (217,275) 155 49,831 - (167,289)
General and administration
expenses (note 16) (14,522) (206) (4,905) (615) (20,248)
Facility set-up costs
(note 10) (262) (4) (88) (10) (364)
Finance expense (5,004) (71) (1,690) (212) (6,977)
Incentive clawed back
income 10,890 154 3,679 462 15,185
(Loss)/profit before
tax (195,468) 28 74,372 (375) (121,443)
* Capital markets include listed securities and unlisted
securities, valued at their prices on UPCoM or using quotations
from brokers.
** Other Net Assets include cash and cash equivalents, loans and
receivables at FVTPL, interest and other net assets of the
subsidiaries and associates at fair value.
Statement of Financial Position
Capital Operating Private Other
Net
Markets* Asset Equity Assets** Total
USD'000 USD'000 USD'000 USD'000 USD'000
As at 30 June 2023
Financial assets at FVTPL 791,376 13,661 254,974 77,417 1,137,428
Prepayments and other assets - - - 658 658
Cash and cash equivalents - - - 19,133 19,133
Total assets 791,376 13,661 254,974 97,208 1,157,219
Total liabilities
Accrued expenses and other
payables 12,610 218 4,065 1,232 18,125
Deferred incentive fees 3,637 63 1,172 355 5,227
Loans and borrowings 7,042 - 2,270 688 10,000
Total liabilities 23,289 281 7,507 2,275 33,352
Net asset value 768,087 13,380 247,467 94,933 1,123,867
Capital Operating Private Other
Markets* Asset Equity Net Total
Assets**
USD'000 USD'000 USD'000 USD'000 USD'000
As at 30 June 2022
Financial assets at FVTPL 876,743 12,413 296,156 20,628 1,205,940
Prepayments and other assets - - - 943 943
Cash and cash equivalents - - - 15,630 15,630
Total assets 876,743 12,413 296,156 37,201 1,222,513
Total liabilities
Accrued expenses and other
payables 15,821 224 5,344 671 22,060
Deferred incentive fees 14,596 207 4,931 619 20,353
Total liabilities 30,417 431 10,275 1,290 42,413
Net asset value 846,326 11,982 285,881 35,911 1,180,100
* Capital markets include listed securities and unlisted
securities. The unlisted securities are comprised of securities
valued at their prices on UPCoM or using quotations from
brokers.
** Other net assets of USD77.4 million (30 June 2022: USD20.6
million) include cash and cash equivalents, prepayments, loans and
receivables at FVTPL and other net assets of the subsidiaries and
associates at fair value.
5. INTERESTS IN SUBSIDIARIES AND ASSOCIATES
There is no legal restriction to the transfer of funds from the
BVI or Singapore subsidiaries to the Company. Cash held in directly
owned as well as indirectly owned Vietnamese subsidiaries and
associates is subject to restrictions imposed by co-investors and
the Vietnamese government and therefore it cannot be transferred
out of Vietnam unless such restrictions are satisfied. As at 30
June 2023, the restricted cash held in these Vietnamese
subsidiaries and associates amounted to USD nil (30 June 2022: USD
nil).
The Company has not entered into a contractual obligation to,
nor has it committed to provide, current financial or other support
to an unconsolidated subsidiary during the year.
5.1 Directly-owned subsidiaries
The Company had the following directly-owned subsidiaries as at
30 June 2023 and 30 June 2022:
As at
30 June 30 June
2023 2022
Country of incorporation % of Company % of Company
Subsidiary interest interest Nature of the business
British Virgin Holding company for
Allwealth Worldwide Limited Islands ("BVI") 100.00 100.00 investments
Holding company for listed
and
Asia Value Investment Limited BVI 100.00 100.00 unlisted securities
Holding company for
Belfort Worldwide Limited BVI 100.00 100.00 private equity
Holding company for listed
Boardwalk South Limited BVI 100.00 100.00 securities
Holding company for
Clearfield Pacific Limited BVI 100.00 100.00 investments
Holding company for listed
securities
Clipper Ventures Limited BVI 100.00 100.00 and private equity
Holding company for
Darasol Investments Limited BVI 100.00 100.00 investments
Holding company for
unlisted
securities and private
Foremost Worldwide Limited BVI 100.00 100.00 equity
Fraser Investment Holdings Holding company for listed
Pte. Limited Singapore 100.00 100.00 securities
Goldcity Worldwide Limited - 100.00 Holding company for
* BVI investments
Holding company for
Hospira Holdings Limited BVI 100.00 100.00 private equity
Holding company for listed
Longwoods Worldwide Limited BVI 100.00 100.00 securities
Holding company for listed
Navia Holdings Limited BVI 100.00 100.00 securities
Holding company for listed
Portal Global Limited BVI 100.00 100.00 securities
Holding company for listed
Preston Pacific Limited BVI 100.00 100.00 securities
Holding company for
unlisted
Rewas Holdings Limited BVI 100.00 100.00 securities
Holding company for
Turnbull Holding Pte. Ltd. Singapore 100.00 100.00 investments
Holding company for listed
and
Vietnam Enterprise Limited BVI 100.00 100.00 unlisted securities
Holding company for listed
and
Vietnam Investment Limited BVI 100.00 100.00 unlisted securities
Holding company for listed
Vietnam Investment Property and
Holdings Limited BVI 100.00 100.00 unlisted securities
Vietnam Investment Property Holding company for listed
Limited BVI 100.00 100.00 securities
Vietnam Master Holding Holding company for
2 Limited BVI 100.00 100.00 private equity
Holding company for listed
and
Vietnam Ventures Limited BVI 100.00 100.00 unlisted securities
Holding company for
VinaSugar Holdings Limited BVI 100.00 100.00 investments
Holding company for listed
and
unlisted securities,
operating
VOF Investment Limited BVI 100.00 100.00 assets and private equity.
Holding company for listed
VOF PE Holding 5 Limited BVI 100.00 100.00 securities
Holding company for listed
Windstar Resources Limited BVI 100.00 100.00 securities
* Goldcity Worldwide Limited has been restructured during the
year to be held 100% under Clipper Ventures Limited.
5.2 Indirect interests in subsidiaries
The Company had the following indirect interests in subsidiaries
at 30 June 2023 and 30 June 2022:
As at
30 June 30 June
2023 2022
% of % of
Company's Company's
Country Immediate indirect indirect
of
Indirect subsidiary incorporation Nature of the business Parent interest interest
Abbott Holding Pte. Holding company for Hospira Holdings
Limited* Singapore private equity Limited 100.00 100.00
Holding company for
Aldrin One Pte. Ltd. Singapore private equity Halley One Limited 81.31 81.31
Holding company for
Aldrin Three Pte. Ltd. Singapore private equity Halley Three Limited 80.07 80.07
Holding company for Clipper Ventures
Aldrin Two Pte. Ltd. Singapore investments Limited 100.00 100.00
Holding company for Clipper Ventures
Allright Assets Ltd BVI private equity Limited 100.00 100.00
Chifley Investments
Pte. Holding company for Belfort Worldwide
Ltd Singapore investments Limited 85.91 100.00
Holding company for Clipper Ventures
Clipper One Limited BVI investments Limited 100.00 100.00
Goldcity Worldwide
Limited Holding company for Clipper Ventures
* BVI investments Limited 100.00 -
Gorton Investments Pte Holding company for Belfort Worldwide
Ltd Singapore investments Limited 100.00 100.00
Holding company for Clipper Ventures
Halley Five Limited BVI investments Limited 80.90 80.90
Holding company for Clipper Ventures
Halley Four Limited BVI investments Limited 79.40 79.40
Holding company for Clipper Ventures
Halley One Limited BVI investments Limited 81.31 81.31
Holding company for Clipper Ventures
Halley Three Limited BVI investments Limited 80.07 80.07
Holding company for Clipper Ventures
Halley Two Limited BVI investments Limited 85.91 83.46
Howard Holdings Pte. Holding company for Allwealth Worldwide
Limited** Singapore investments Limited - 100.00
Holding company for
Liva Holding Limited BVI private equity Halley Five Limited 80.90 80.90
Menzies Holding Pte. Holding company for Belfort Worldwide
Ltd. Singapore investments Limited 100.00 100.00
PA Investment
Opportunity Holding company for Vietnam Enterprise
II Limited BVI investments Limited 100.00 100.00
Sharda Holdings Holding company for Clipper Ventures
Limited BVI private equity Limited 89.64 89.64
Holding company for
Tempel Four Limited BVI investments Halley Four Limited 79.40 79.40
Thai Hoa International Medical and healthcare Abbott Holding
Hospital JSC Vietnam services Pte. Limited - 81.07
Victory Holding Holding company for
Investment listed securities Clipper Ventures
Limited BVI and private equity Limited 87.58 87.58
Vietnam Opportunity
Fund Holding company for Belfort Worldwide
II Pte. Ltd. Singapore private equity Limited 68.00 68.00
Whitlam Holding Pte. Holding company for Navia Holdings
Limited Singapore listed securities Limited 61.26 61.26
*Thai Hoa International Hospital JSC was sold to Tam Tri Medical
by Abbott Holdings Pte. Ltd during the year.
** Howard Holdings Pte Ltd was struck off from the register on 8
May 2023.
5.3 Direct interests in associates
The company did not have any directly-owned associates as at 30
June 2023 or 30 June 2022.
5.4 Indirect interests in associates
The Company had the following indirect interests in associates
at 30 June 2023 and 30 June 2022:
As at
30 June 30 June
2023 2022
% of % of
Company's Company's
Country Company's indirect indirect
of subsidiary
holding
Indirect incorporation Nature of the direct interest in interest interest
associate business the
associate
Hung Vuong Operating assets VOF Investment
Corporation Vietnam investment Limited 31.04 31.04
Vietnam
Opportunity Fund
II Pte. Ltd. and
Tam Tri Medical Private equity Clearfield
* Vietnam investment Pacific Limited 37.80 23.80
Thu Cuc Medical
& Beauty Care
Joint Stock Private equity Aldrin One Pte.
Company BVI investment Ltd 24.39 24.39
Chicilon Media** Vietnam Private equity Chifley Investment 14.84 -
investment Pte.
Ltd
* Clearfield Pacific Limited acquired an additional equity
holding in Tam Tri Medical during the year, increasing the
Company's aggregate shareholding in the portfolio company.
** In February 2023, Chifley Investments Pte Ltd invested USD30
million to acquire a 14.84% interest in Chicilon Media.
5.5 Financial risks
At 30 June 2023, the Company owned a number of subsidiaries and
associates for the purpose of holding investments in listed and
unlisted securities, operating asset and private equity
investments. The Company, via these underlying investments, is
subject to financial risks which are further disclosed in note 20.
The Investment Manager makes investment decisions after performing
extensive due diligence on the underlying investments, their
strategies, financial structure and the overall quality of
management.
6. CASH AND CASH EQUIVALENTS
30 June 2023 30 June
2022
USD'000 USD'000
Cash at banks 19,133 15,630
As at 30 June 2023, cash and cash equivalents were denominated
in USD and GBP.
The Company's overall cash position including cash held in
directly held subsidiaries as at 30 June 2023 was USD22.8 million
(30 June 2022: USD30.1 million). Please refer to note 8 for details
of the cash held by the Company's subsidiaries. As mentioned in
note 5, the restricted cash held in the Vietnamese subsidiaries and
associates amounted to USD nil (30 June 2022: USD nil).
7. FINANCIAL INSTRUMENTS BY CATEGORY
Financial
Financial assets at Financial
assets at fair value liabilities
amortised through profit at amortised
cost or loss cost Total
USD'000 USD'000 USD'000 USD'000
As at 30 June 2023
Financial assets at FVTPL - 1,137,428 - 1,137,428
Financial liabilities - - (33,352) (33,352)
Cash and cash equivalents 19,133 - - 19,133
Total 19,133 1,137,428 (33,352) 1,123,209
Financial assets/(liabilities) denominated
in:
- GBP 92 - - 92
- USD 19,041 1,137,428 (33,352) 1,123,117
As at 30 June 2022
Financial assets at FVTPL - 1,205,940 - 1,205,940
Financial liabilities - - (42,413) (42,413)
Cash and cash equivalents 15,630 - - 15,630
Total 15,630 1,205,940 (42,413) 1,179,157
Financial assets/(liabilities) denominated
in:
- GBP 162 - - 162
- USD 15,468 1,205,940 (42,413) 1,178,995
As at 30 June 2023 and 30 June 2022, the carrying amounts of all
financial and other assets approximate their fair values.
All financial liabilities are short term in nature and their
carrying values approximate their fair values. There are no
financial liabilities that must be accounted for at fair value
through profit or loss (30 June 2022: nil).
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial assets at fair value through profit and loss comprise
the Company's investments in subsidiaries and associates. The
underlying assets and liabilities of the subsidiaries and
associates at fair value are included in the following table.
30 June 2023 30 June 2022
Within Over 12 Within 12 Over 12
12 Months Months Months Months
USD'000 USD'000 USD'000 USD'000
Cash and cash equivalents 3,705 - 14,472 -
Ordinary shares - listed 687,039 - 704,878 -
Ordinary shares - unlisted
* 104,337 - 171,865 -
Private equity** - 254,974 9,853 286,303
Operating asset - 13,661 12,413 -
Loans and Receivables
at FVTPL*** 64,059 - - -
Other net assets 9,653 - 6,156 -
868,793 268,635 919,637 286,303
* Unlisted Securities include OTC traded securities and unlisted
securities publicly traded on UPCoM of the Hanoi Stock
Exchange.
** Private equity includes underlying investments in PEPT.
*** On a look-through basis, following the change in the
structure of the underlying investments, these are now classified
as loans and receivables at FVTPL.
The major underlying investments held by the direct subsidiaries
and indirect subsidiaries and associates of the Company were in the
following industry sectors.
30 June 30 June 2022
2023
USD'000 USD'000
Real Estate 268,002 321,138
Financials 211,226 229,229
Materials 169,780 182,182
Consumer Discretionary 98,927 76,704
Consumer Staples 96,062 116,388
Health Care 94,181 65,976
Industrial 86,081 97,804
Information Technology 62,702 63,595
Energy 37,109 32,296
As at 30 June 2023, the largest underlying holding, Asia
Commercial Bank, within financial assets at fair value through
profit or loss amounted to 12.7% of the NAV of the Company. (As at
30 June 2022: the holding in Asia Commercial Bank amounted to 11.6%
of NAV)
There have been no changes in the classification of financial
assets at fair value through profit or loss shown as Level 3 during
the year ended 30 June 2023.
Changes in Level 3 financial assets at fair value through profit
or loss
The fair values of the Company's investments in subsidiaries and
associates are estimated using approaches as described in note 3.1.
As observable prices are not available for these investments, the
Company classifies them as Level 3 fair values.
For the year ended
30 June 2023 30 June 2022
USD'000 USD'000
Opening balance 1,205,940 1,353,108
Purchases 68,110 226,944
Return of capital (88,576) (206,823)
Net losses for the period (48,046) (167,289)
1,137,428 1,205,940
9. DIVIDS
The dividends paid in the reporting period were as follows;
Year ended Dividend Net dividend
30 June rate
2023 per share payable
(cents) (USD'000) Record Ex-dividend Pay date
date date
4 November 3 November 5 December
Dividend 8.0 12,940 2022 2022 2022
11 April
Dividend 6.25 10,047 2023 6 April 2023 11 May 2023
22,987
Year ended Dividend Net dividend
30 June rate
2022 per share payable
(cents) (USD'000) Record Ex-dividend Pay date
rate date
5 November 4 November 6 December
Dividend 8.0 13,288 2021 2021 2021
8 April
Dividend 8.0 13,144 2022 7 April 2022 10 May 2022
26,432
Under the Guernsey Law, the Company can distribute dividends
from capital and revenue reserves, subject to the net asset and
solvency test. The net asset and solvency test considers whether a
company is able to pay its debts when they fall due, and whether
the value of a company's assets is greater than its liabilities.
The Board confirms that the Company passed the net asset and
solvency test for each dividend paid.
10. PREPAYMENTS AND OTHER ASSETS
30 June 2023 30 June
2022
USD'000 USD'000
Deferred expenses 517 900
Prepayments 141 43
658 943
Due to the short-term nature of the prepayments and other
assets, their carrying amount is considered to be the same as their
fair value.
The Company exited Indochina Food Industries Pte. Ltd through
the sale of 100% of VinaSugar Holding Limited in 2012 for a total
consideration of USD28.45 million. As at 30 June 2023 and 30 June
2022, the Buyer had paid USD19.75 million with USD8.7 million
remaining outstanding. In June 2014, the Company approved a loan of
USD2.9 million to Indochina Food Industries Pte. Ltd to provide
immediate relief for the business. Together with the existing
receivable of USD8.7 million, the total USD11.6 million is
receivable but has been fully provided for.
On 18 March 2022, the Company entered into a revolving credit
facility with Standard Chartered Bank (Singapore) Limited. Interest
charged on the facility is the aggregate of Margin plus the
Compounded Reference Rate. Costs totalling USD1.26 million were
incurred in relation to this arrangement, which have been
capitalised as a prepayment and is amortised over the period of the
facility. The outstanding amount of USD0.9 million (30 June 2022:
USD0.36 million) has been expensed to the Statement of
Comprehensive Income upon expiry of the facility on the 18 of March
2023.
On 18 March 2023, the expired revolving credit facility was
renewed by a further 1 year through exercise of an extension option
in the original agreement. Costs totalling USD0.7 million were
incurred in relation to this new arrangement, which have been
capitalised as a prepayment and are being amortised over the period
of the new facility. In these financial statements, an amount of
USD0.2 million (30 June 2022: USD0.36 million) has been expensed to
the Statement of Comprehensive Income and deferred expenses of
USD0.5 million (30 June 2022; USD0.9 million) is recorded on the
Statement of Financial Position as at 30 June 2023.
11. SHARE CAPITAL
The Company may issue an unlimited number of shares, including
shares of no par value or shares with a par value. Shares may be
issued as (a) shares in such currencies as the Directors may
determine; and/or (b) such other classes of shares in such
currencies as the Directors may determine in accordance with the
Articles and the Guernsey Law and the price per Share at which
shares of each class shall first be offered to subscribers shall be
fixed by the Board. The minimum price which may be paid for a share
is USD0.01. The Directors will act in the best interest of the
Company and the shareholders when authorising the issue of any
shares and shares will only be issued at a price of at least the
prevailing Net Asset Value at the time of issue, so that the NAV
per share is not diluted.
Issued capital
30 June 2023 30 June 2022
Number Number
of of
shares USD'000 shares USD'000
Issued and fully paid at
1 July 179,662,704 491,301 184,600,992 491,301
Cancellation of treasury
shares (13,432,142) - (4,938,288) -
Issued and fully paid at
year end 166,230,562 491,301 179,662,704 491,301
Shares held in treasury (6,182,716) (224,214) (16,182,716) (205,987)
Outstanding shares at year
end 160,047,846 267,087 163,479,988 285,314
Treasury shares
30 June 2023 30 June 2022
Number of Number of
shares shares
Opening balance at 1 July 16,182,716 16,182,716
Shares repurchased during the
year 3,432,142 4,938,288
Shares cancelled during the year (13,432,142) (4,938,288)
Closing balance at year
end 6,182,716 16,182,716
In October 2011, the Board first sought and obtained shareholder
approval to implement a share buyback programme. The share buyback
programme has been approved again at subsequent general meetings of
the Company.
During the year ended 30 June 2023, 3.4 million shares (30 June
2022: 4.9 million) were repurchased at a cost of USD18.2 million
(30 June 2022: USD31.8 million) of which USD0.3 million (30 June
2022: USD nil) was payable at the year-end (see note 12) and 13.4
million shares (30 June 2022: 4.9 million) were cancelled.
12. ACCRUED EXPENSES AND OTHER PAYABLES
30 June 2023 30 June
2022
USD'000 USD'000
Incentive fees payable to the Investment
Manager (note 19(b)) 15,803 20,284
Management fees payable to the Investment
Manager (note 19(a)) 1,233 1,272
Expenses recharged payable to the Investment
Manager (note 19(a)) 73 98
Revolving credit facility costs payable
(note 10) 91 25
Shares repurchase payable (note 11) 272 -
Other payables 653 381
18,125 22,060
All accrued expenses and other payables are short-term in
nature. Therefore, their carrying values are considered a
reasonable approximation of their fair values. Further details on
the payables to other related parties are disclosed in note 19.
13. LOANS AND OTHER BORROWINGS
30 June 2023 30 June
2022
USD'000 USD'000
Net loan liability at beginning of the year - -
Revolving credit facility drawdowns 60,000 -
Revolving credit facility repayments (50,000) -
Net loan liability due 10,000 -
On 18 March 2022, the Company entered into a USD40.0 million
revolving credit facility ("the Facility") with Standard Chartered
Bank (Singapore) Limited, known as the Agent. The Company drew
USD40.0 million and repaid the same by the maturity date of 18
March 2023.
On 18 March 2023, the Company exercised an extension option on
the Facility. USD20.0 million was drawn down under the facility and
USD10.0 million has been repaid. Interest charged on the facility
is the aggregate of margin plus the compounded reference rate.
Security for the Facility has been provided by way of a charge
over the Group's assets under the Facility.
In accordance with the loan Facility Agreement the Group has
various non-financial and financial covenants that are required to
be met. The two financial covenants are detailed below. Throughout
the year, these financial covenants have been met.
Covenants Requirement
Loan to Value Ratio Must not exceed 10%
Asset Cover Ratio Must not be less than
3.25:1
14. DIVID INCOME
Year ended
30 June 2023 30 June
2022
USD'000 USD'000
Dividend
income 53,126 58,250
The above table sets out dividends received by the Company from
its subsidiaries. These represent distributions of income received
as well as the proceeds from disposals of assets at subsidiaries,
and do not reflect the dividends earned by the underlying investee
companies. During the year, the subsidiaries received a total
amount of USD13.7 million in dividends from their investee
companies (30 June 2022: USD15.9 million).
15. NET LOSSES ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT
OR LOSS
Year ended
30 June 2023 30 June
2022
USD'000 USD'000
Financial assets at fair value through
profit or loss:
- Unrealised losses, net (48,046) (167,289)
(48,046) (167,289)
16(a). GENERAL AND ADMINISTRATION EXPENSES
Year ended
30 June 2023 30 June
2022
USD'000 USD'000
Management fees (note 19(a)) 14,252 17,256
Custodian, secretarial and other professional
fees 1,066 1,139
Audit fees 611 512
Directors' fees and expenses (note
19(c)) 525 480
Expenses recharged by the Investment
Manager (note 19(a)) 156 132
Other expenses 1,100 729
17,710 20,248
16(b). DEFERRED INCENTIVE FEE
As a result of exceptional performance in 2021, a deferred
liability in respect of incentive fees of USD 22.8 million was
carried forward as at 30 June 2022. In the Statement of Financial
Position as at 30 June 2022, this amount was discounted to USD20.4
million as described in note 3.1(b) and was recorded as a deferred
liability. For the year ended 30 June 2023, USD1.2 million of the
liability was clawed back as a result of the decline in the
Company's NAV over the year, reducing the liability as at 30 June
2023 to USD21.6 million. Of this amount, USD15.8 million (see note
12) is accrued and will be paid out immediately following the
publication of this annual report. The remaining incentive fee
liability of USD5.8 million has been discounted to USD5.2 million
as described in note 3.1(b) and is recorded as a deferred liability
in the Statement of Financial Position.
17. INCOME TAX EXPENSE
The Company has been granted Guernsey tax exempt status in
accordance with the Income Tax (Exempt Bodies) (Guernsey) Ordinance
1989 (as amended).
The majority of the subsidiaries are domiciled in the BVI and so
have a tax-exempt status whilst the remaining subsidiaries are
established in Vietnam and Singapore and are subject to corporate
income tax in those countries. The income tax payable by these
subsidiaries is taken into account in determining their fair values
in the Statement of Financial Position.
18. EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE
(a) Basic
Basic earnings per share is calculated by dividing the profit or
loss from operations of the Company by the weighted average number
of ordinary shares in issue during the year excluding ordinary
shares purchased by the Company and held as treasury shares (note
11).
Year ended
30 June 2023 30 June
2022
Loss for the year (USD'000) (15,019) (121,443)
Weighted average number of ordinary
shares in issue 161,660,260 165,674,093
Basic earnings per share (USD per
share) (0.09) (0.73)
The basic earnings per share in GBP is (0.07) at 30 June 2023
(30 June 2022: earnings per share in GBP was 0.60).
(b) Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company
has no category of potentially dilutive ordinary shares. Therefore,
diluted earnings per share is equal to basic earnings per
share.
(c) NAV per share
NAV per share is calculated by dividing the net asset value of
the Company by the number of outstanding ordinary shares in issue
as at the reporting date excluding ordinary shares purchased by the
Company and held as treasury shares (note 11). NAV is determined as
total assets less total liabilities. The basic NAV per share is
equal to the diluted NAV per share.
30 June 2023 30 June
2022
Net asset value (USD'000) 1,123,867 1,180,100
Number of outstanding ordinary shares
in issue (note 11) 160,047,846 163,479,988
Net asset value per share (USD per
share) 7.02 7.22
19. RELATED PARTIES
The Investment Management Agreement between the Company and the
Investment Manager can be terminated by either party giving six
months' notice. In certain circumstances the Company may be
required to pay compensation to the Investment Manager of an amount
up to six months' fees in lieu of notice.
(a) Management fees
For accounting years ended 30 June 2022 and 2023, the Investment
Manager received a fee at the annual rates set out below, paid
monthly in arrears.
-- 1.50% of net assets, levied on the first USD500 million of net assets;
-- 1.25% of net assets, levied on net assets between USD500 million and USD1,000 million;
-- 1.00% of net assets, levied on net assets between USD1,000 million and USD1,500 million;
-- 0.75% of net assets, levied on net assets between USD1,500 million and USD2,000 million; and
-- 0.50% of net assets, levied on net assets above USD2,000 million.
Total management fees incurred for the year amounted to USD14.4
million (30 June 2022: USD17.4 million), of which USD0.1 million
(30 June 2022: USD0.1 million) was in relation to recharge of
expenses incurred. In total USD1.3 million (30 June 2022: USD1.4
million) was payable to the Investment Manager at the reporting
date.
(b) Incentive fees
As described in notes 12 and 16(b), as at 30 June 2023, an
incentive fee of USD 15.8 million will be paid out immediately on
publication of these accounts. A deferred incentive fee of USD5.8
million will be carried forward for potential payment in future
years and is discounted to USD5.2 million. A total of USD 21.0
million is accounted for in the Statement of Financial
Position.
Further, as set out in note 16(b), USD1.2 million was clawed
back from the amount previously accrued and a discounted amount of
USD5.2 million remains accrued and is potentially payable in future
years.
25% of any incentive fee paid to the Investment Manager is used
by the Investment Manager to purchase shares in the Company in the
open market. In practice such purchases are generally made
alongside, and at the same price as, share buybacks made by the
Company.
As set out in note 21, the fee arrangements were modified with
effect from 1 July 2023.
(c) Directors' Remuneration
The Directors who served during the past two years received the
following emoluments in the form of fees:
Year ended
Annual 30 June 30 June
fee 2023 2022
USD USD USD
Steve Bates* 105,000 - 44,226
Huw Evans 105,000 105,000 98,723
Thuy Bich Dam 85,000 67,942 80,000
Peter Hames 85,000 80,548 80,000
Julian Healy 90,000 90,000 90,000
Kathryn Matthews 85,000 85,000 80,000
Hai Thanh Trinh 80,000 80,000 219
508,490 473,168
* Steve Bates retired as a director effective 2 December
2021.
In addition to annual fee, Directors' expenses of USD12,518 (30
June 2022: USD6,843) were incurred during the year. In total the
annual fees and expenses of Directors for the year were USD521,008
(30 June 2022: USD480,011), of which USD nil was outstanding at 30
June 2023 (30 June 2022: USD219).
(d) Shares held by related parties
Shares held Shares held
as at 30 June 2023 as at 30 June
2022
Thuy Bich Dam* - -
Huw Evans 35,000 35,000
Peter Hames 8,000 8,000
Julian Healy 15,000 15,000
Kathryn Matthews 9,464 9,464
Hai Thanh Trinh - -
Andy Ho 248,084 248,084
* Thuy Bich Dam retired as a director effective 18 April
2023.
As at 30 June 2023, Stephen Westwood, the co-owner of CES
Investments Ltd which provides consultancy services to the Company,
owned 6,000 shares (30 June 2022: 6,000 shares) in the Company.
As at 30 June 2023, the Investment Manager owned 3,303,397
shares (30 June 2022: 2,354,275 shares) in the Company.
(e) Controlling party
In the opinion of the Directors on the basis of shareholdings
advised to them, the Company has no immediate nor ultimate
controlling party.
20. FINANCIAL RISK MANAGEMENT
(a) Financial risk factors
The Company has set up a number of subsidiaries and associates
for the purpose of holding investments in listed and unlisted
securities, operating asset and private equity investments in
Vietnam and overseas with the objective of achieving medium to
long-term capital appreciation and providing investment income. The
Company accounts for these subsidiaries and associates as financial
assets at fair value through profit or loss.
The Company's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise
potentially adverse effects on the Company's financial performance.
The Company's risk management is coordinated by the Investment
Manager which manages the distribution of the assets to achieve the
investment objectives.
The changes in the management of risk or in any risk management
policies during the financial year ended 30 June 2023 is documented
in the corporate governance section of the annual report.
The Company is subject to a variety of financial risks: market
risk, credit risk and liquidity risk.
(i) Market risk
Market risk comprises price risk, foreign exchange risk and
interest rate risk. Market risk is the risk that the fair value or
future cash flows of a financial instrument will fluctuate because
of changes in market prices, interest rates and/or foreign exchange
rates.
The investments are subject to market fluctuations and the risk
inherent in the purchase, holding or selling of investments and
there can be no assurance that appreciation or maintenance in the
value of those investments will occur.
The Company's subsidiaries and associates invest in listed and
unlisted equity securities and are exposed to market price risk of
these securities. The majority of the underlying equity investments
are traded on either of Vietnam's stock exchanges, the Ho Chi Minh
Stock Exchange or the Hanoi Stock Exchange, as well as UPCoM.
All securities investments present a risk of loss of capital.
This risk is managed through the careful selection of securities
and other financial instruments within specified limits and by
holding a diversified portfolio of listed and unlisted instruments.
In addition, the performance of investments held by the Company's
subsidiaries is monitored by the Investment Manager on a regular
basis and reviewed by the Board of Directors on a quarterly
basis.
Market price sensitivity analysis
If the prices of the underlying listed and unlisted securities
had increased/decreased by 10%, the Company's financial assets held
at fair value through profit or loss would have been higher/lower
by USD79.1 million (30 June 2022: USD87.7 million).
See note 20(c) for a sensitivity analysis of the fair values of
, operating assets, private equity and loans and receivables at
FVTPL.
Depending on the development stage of a project and its
associated risks, the Independent Valuer uses discount rates in the
range from 13 - 23% and terminal growth rates of 5 - 13.5% (30 June
2022: 13 - 19% and 5%, respectively).
Foreign exchange risk
The Company makes investments in USD and receives income and
proceeds from sales in USD. Nevertheless, investments are made in
entities which are often exposed to the VND, and these entities are
therefore sensitive to the foreign exchange rate of the VND against
USD. On a 'look-through' basis, therefore, the Company is exposed
to movements in the exchange rate of the VND against the USD. In
addition, the Company has exposure to GBP and Euro ("EUR") through
operational transactions in these currencies.
The Company's NAV would fluctuate by the following amounts were
the foreign exchange rate to increase by 1%.
30 June 2023 30 June 2022
USD'000 USD'000
VND (11) (12)
GBP (3) -
There would be the reverse impact should the foreign exchange
rate decrease by 1%.
Interest rate risk
The Company's exposure to interest rate risk relates to the
Company's cash and cash equivalents and loans and other borrowings.
The Company is subject to risk due to fluctuations in the
prevailing levels of market interest rates.
(ii) Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company.
The Company's maximum credit exposure consists of the carrying
amount financial assets of the Company and its subsidiaries and
associates at the year end.
30 June 2023 30 June 2022
USD'000 USD'000
Financial assets at FVTPL 77,614 20,300
Cash and cash equivalents 19,133 15,630
Other net assets 658 943
97,405 36,873
On a look-through basis, the Company is exposed to counterparty
credit risk on cash and cash equivalents, financial assets at FVTPL
and other net assets.
All cash held by the Company and its subsidiaries and associates
is placed with a financial institution with a credit rating of A+.
Other net assets includes other receivables which are considered
short-term and are held by subsidiaries and associates from sister
companies and from third parties and considered unrated.
The Company's exposure in financial assets at FVTPL is a result
of the Company's exercise of the put options and restructure of
counterparty's obligation due to default. However, the credit risk
associated with these investments is reduced by collateral secured
amounting to USD18.7 million.
For the year ended 30 June 2023, included in the fair value of
the financial asset at fair value through profit or loss is an
amount of USD 63.4 million which represents the changes in the
credit risk as a result of exercising put options and restructuring
of obligations.
At 30 June 2023 and 30 June 2022, USD11.6 million of receivables
of the Company relating to the sale of a direct investment were
fully impaired, as described in note 10. In determining the
impairment the Directors have made judgements as to whether there
is a probability of default or observable data available indicating
that there has been a significant change to the debtor's ability to
pay. The Investment Manager is also investigating the collateral
against which the receivables may be secured and whether mechanisms
exist to recover value from the collateral. The Investment Manager
is examining the possibility of recovering the receivables in
question; however, it was concluded that there is still a
reasonable expectation of recovery thus no write-off of the fully
impaired receivables has been made.
(iii) Liquidity risk
Liquidity risk is the risk that the Company may not be able to
generate sufficient cash resources to settle its obligations in
full as they fall due or can only do so on terms that are
materially disadvantageous.
Listed securities held by the Company's subsidiaries are
considered readily realisable, as the majority are listed on
Vietnam's stock exchanges.
At the year end, the Company's non-derivative financial
liabilities have contractual maturities which are summarised in the
table below. The amounts in the table are the contractual
undiscounted cash flows.
30 June 2023 30 June 2022
Within Over 12 Within Over
12 12 12
Months Months Months Months
USD'000 USD'000 USD'000 USD'000
Incentive fee payable/deferred 15,803 5,227 20,284 20,353
Payables to related parties
(note 12) 1,306 - 1,370 -
Other payables (note 12) 1,016 - 406 -
The Company manages its liquidity risk by investing
predominantly in securities through its subsidiaries that it
expects to be able to liquidate within 12 months or less. The
following table analyses the expected liquidity of the assets held
by the Company:
30 June 2023 30 June 2022
Within Over 12 Within Over
12 12 12
Months Months Months Months
USD'000 USD'000 USD'000 USD'000
Cash and cash equivalents 19,133 - 15,630 -
Prepayments and other assets 658 - 943 -
Financial assets at FVTPL on
underlying investments (Note
8) 868,793 268,635 919,637 286,303
888,584 268,635 936,210 286,303
(b) Capital management
The Company's capital management objectives are:
-- To ensure the Company's ability to continue as a going concern.
-- To provide investors with an attractive level of investment income; and
-- To preserve a potential capital growth level.
The Company is not subject to any externally imposed capital
requirements other than the covenants as disclosed in note 13. The
Company has engaged the Investment Manager to allocate the net
assets in such a way so as to generate a reasonable investment
return for its shareholders and to ensure that there is sufficient
funding available for the Company to continue as a going
concern.
(c) Fair value estimation
Capital as at the year-end is summarised as follows:
30 June 2023 30 June 2022
USD'000 USD'000
Net assets attributable to equity
shareholders 1,123,867 1,180,100
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined
as follows:
-- Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- Level 2: Inputs other than quoted prices included within
Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that
is, derived from prices); and
-- Level 3: Inputs for the asset or liability that are not
based on observable market data (that is, unobservable
inputs).
There are no financial liabilities of the Company which were
carried at fair value through profit or loss as at 30 June 2023 and
30 June 2022.
The level into which financial assets are classified is
determined based on the lowest level of significant input to the
fair value measurement.
Financial assets measured at fair value in the Statement of
Financial Position are grouped into the following fair value
hierarchy:
Level 3 Total
USD'000 USD'000
As at 30 June 2023
Financial assets at fair value
through profit or loss 1,137,428 1,137,428
As at 30 June 2022
Financial assets at fair value
through profit or loss 1,205,940 1,205,940
The Company classifies its investments in subsidiaries and
associates as Level 3 because they are not publicly traded, even
when the underlying assets may be readily realisable. There were no
transfers between the Levels during the year ended 30 June 2023 and
30 June 2022.
If these investments were held at the Company level, they would
be presented as follows:
Level Level Level Total
1 2 3
USD'000 USD'000 USD'000 USD'000
As at 30 June 2023
Cash and cash equivalents 3,705 - - 3,705
Ordinary shares - listed 687,039 - - 687,039
- unlisted * 98,099 6,238 - 104,337
Private equity investments - - 254,974 254,974
Loans and receivables at
FVTPL - - 64,059 64,059
Operating asset - - 13,661 13,661
Other net assets - - 9,653 9,653
788,843 6,238 342,347 1,137,428
Level Level Level Total
1 2 3
USD'000 USD'000 USD'000 USD'000
As at 30 June 2022
Cash and cash equivalents 14,472 - - 14,472
Ordinary shares - listed 704,878 - - 704,878
- unlisted* 166,003 5,862 - 171,865
Private equity investments - - 296,156 296,156
Operating asset - - 12,413 12,413
Other net assets - - 6,156 6,156
885,353 5,862 314,725 1,205,940
* Unlisted securities are valued at their prices on UPCoM or
using quotations from brokers.
Investments whose values are based on quoted market prices in
active markets, and are therefore classified within Level 1,
include actively traded equities on Ho Chi Minh City Stock
Exchange, Hanoi Stock Exchange or UPCoM at the Statement of
Financial Position date. Financial instruments which trade in
markets that are not considered to be active but are valued based
on prices dealer quotations are classified within Level 2. These
include investments in OTC equities. As Level 2 investments include
positions that are not traded in active markets, valuations may be
adjusted to reflect illiquidity and/or non-transferability, which
are generally based on available market information.
Private equity investments, the operating asset, loans and
receivables at FVTPL and other asset that do not have an active
market are classified within Level 3. The Company uses valuation
techniques to estimate the fair value of these assets based on
significant unobservable inputs as described in note 3.2. There
were no movements into or out of the Level 3 category during the
year.
The Company considers the appropriateness of the valuation model
inputs, as well as the valuation results using various valuation
methods and techniques which are generally recognised as standard
within the industry. The change in the significant unobservable
inputs shown in the table below shows the impact which a reasonable
potential shift in the input variables would have on the valuation
result.
Set out below is the sensitivity analysis which shows the
changes in the Company's net asset value, on a look through basis,
based on the significant unobservable input assumptions used in the
valuation of Level 3 investments as at 30 June 2023, keeping all
other assumptions constant. The changes in discount rates by +/- 1%
is considered appropriate for the market in which the Company is
operating.
Segment Valuation Valuation Discount Cap Terminal Multiples Sensitivities in discount rates and cap
rates/terminal
technique (USD'000) rate rate growth growth rate (USD'000)
rate
Change in discount rate
Operating Discounted 13,661 15% n/a 13.5% n/a -1% 0% 1%
assets cash flows Change in -1% 14,406 13,812 13,262
terminal growth 0% 14,241 13,661 13,123
1% 14,088 13,520 12,995
Private Discounted 210,540 13%-23% n/a 5% n/a -1% 0% 1%
equity cash flows Change in -1% 213,655 200,433 189,488
terminal growth 0% 226,630 210,540 196,563
1% 241,417 222,074 206,725
Private Multiples 11,392 n/a n/a n/a 8.03 Change in -1% 0% 1%
equity EBITDA margin 11,270 11,392 11,483
Loans at Scenario -1% 0% 1%
FVTPL based 37,212 21% n/a n/a n/a 37,755 37,212 36,681
* The above sensitivity analysis includes those underlying Level
3 private equity investments that have been valued using the
valuation methodologies noted above. The difference between the
balance of USD319.0 million recorded as Level 3 private equity
investments and loans and receivables at FVTPL earlier in note 20
and the three above balances of USD259.1 million relates to four
underlying investments, whose fair value measurement and inputs are
not subject to the same sensitivities.
Set out below is the sensitivity analysis which shows the
changes in the Company's net asset value, on a look through basis,
based on the significant unobservable input assumptions used in the
valuation of Level 3 investments as at 30 June 2022, keeping all
other assumptions constant. The changes in discount rates by +/- 1%
is considered appropriate for the market in which the Company is
operating.
At 30 June 2022, the operating asset was valued at USD12.4
million by reference to its expected sale price and any changes in
unobservable input assumptions such as discount rate and cap rate
are not considered to be relevant.
Segment Valuation Valuation Discount Cap Terminal Multiples Sensitivities in discount rates and cap
rates/terminal
technique (USD'000) rate rate growth growth rate (USD'000)
rate
Change in sales growth
rate
Private Discounted 195,104 13%-19% n/a 5% n/a -1% 0% 1%
equity cash flows * Change
in -1% 197,887 189,001 181,228
terminal 0% 205,558 195,104 185,615
growth 1% 214,041 202,004 192,055
Private Multiples 13,100 n/a n/a n/a 10.8x Change in sales growth
rate
equity -1% 0% 1%
Change
in -1% 13,100 13,100 13,139
terminal 0% 13,100 13,100 13,139
growth
rate 1% 13,123 13,123 13,161
* The above sensitivity analysis includes those underlying Level
3 private equity investments that have been valued using the
valuation methodologies noted above. The difference between the
balance of USD296.2 million recorded as Level 3 private equity
investments earlier in note 20 and the two above balances of
USD208.2 million relates to three underlying investments, two of
those were valued using the quoted market price at the year end and
the other was valued using the net selling price and are thus not
subject to the same sensitivities.
Specific valuation techniques used to value the Company's
underlying investments include:
-- Quoted market prices or dealer quotes.
-- Use of discounted cash flow techniques to calculate the
present value of estimated future cash flows; and
-- Other techniques, such as the latest market transaction price.
(d) Incentive fee
Set out below is the sensitivity analysis which shows the
changes in the Company's deferred and accrued incentive fee payable
based on the significant unobservable input assumptions used in the
calculation as at
30 June, keeping all other assumptions constant. The changes in
discount rates of +/- 1% and NAV of +/-10%
are considered appropriate for the market in which the Company
is operating.
As at 30 June 2023
Discount rate
-1% 0% +1%
Change in NAV +10% 17,889 17,630 17,378
0% 5,297 5,227 5,159
-10% - - -
Note that if the NAV were to be 10% lower then the incentive fee
payable in 2023 on publication of this Annual Report would have
been reduced to USD 7.6 million.
As at 30 June 2022
Discount rate
-1% 0% +1%
Change in NAV +10% 53,485 52,943 52,414
0% 40,918 40,637 40,362
-10% 27,692 27,595 27,500
21. SUBSEQUENT EVENTS
This Annual Report and Financial Statements were approved by the
Board on 23 October 2023.
On 23 October 2023, the Board declared a dividend of 7.0 US
cents per share. The dividend is payable on or around 4 December
2023 to shareholders on record at 3 November 2023.
Investment Management Fees
Revisions to the fee arrangements for accounting years
commencing 1 July 2023 are listed below:
(a) the Investment Manager will receive a fee at the annual
rates set out below, paid monthly in arrears.
-- 1.30% of net assets, levied on net assets on the first USD1,000 million;
-- 1.00% of net assets, levied on net assets between USD1,000 million and USD1,500 million;
-- 0.75% of net assets, levied on net assets between USD1,500 million and USD2,000 million; and
-- 0.50% of net assets, levied on net assets above USD2,000 million.
(b) The incentive fee is 10% of any increase in NAV above an 10%
p.a. hurdle rate, with the cap on incentive fees paid out in any
year at 1.5% of weighted average of month-end net assets.
MANAGEMENT AND ADMINISTRATION
Directors Registrar
Thuy Bich Dam (retired on 18
April 2023) Computershare Limited
Huw Evans 13 Castle Street
Peter Hames St Helier
Julian Healy Jersey, JE1 1ES
Kathryn Matthews Channel Islands
Hai Thanh Trinh
Registered Office Independent Auditor
PO Box 656 PricewaterhouseCoopers CI LLP
Trafalgar Court PO Box 321
Les Banques Royal Bank Place
St Peter Port 1 Glategny Esplanade
Guernsey, GY1 3PP St Peter Port
Channel Islands Guernsey, GY1 4ND
Channel Islands
Investment Manager Investment Advisor
VinaCapital Investment Management VinaCapital Fund Management JSC
Ltd
1(st) and 2(nd) Floors, Elizabeth
House 17th Floor, Sun Wah Tower
Les Ruettes Brayes 115 Nguyen Hue Blvd, District 1
St Peter Port Ho Chi Minh City
Guernsey, GY1 1EW Vietnam
Channel Islands
Administrator and Corporate
Secretary UK Marketing and Distribution Partner
Aztec Financial Services (Guernsey)
Limited Cadarn Capital Limited
PO Box 656 Moor Place
Trafalgar Court 1 Fore St Avenue
Les Banques London EC2Y 9DT
St Peter Port
Guernsey, GY1 3PP
Channel Islands
Corporate Broker Custodian
Standard Chartered Bank (Vietnam)
Numis Securities Limited Limited
45 Gresham Street Unit 1810-1815, Keangnam
London EC2V 7BF Cau Giay New Urban Area
United Kingdom Me Tri Com Hanoi
Vietnam
Marketing and Investor Engagement
(Global) Public Relations (London)
Barclays Bank PLC Camarco
1 Churchill Place, 40 Strand
London, E14 5HP London, WC2N 5RW
United Kingdom United Kingdom
Investment Manager's Offices:
Ho Chi Minh City
17th Floor, Sun Wah Tower
115 Nguyen Hue Blvd., District 1
Ho Chi Minh City
Vietnam
Phone: +84-28 3821 9930
Fax: +84-28 3821 9931
Hanoi
2(nd) Floor, International Centre Building
17 Ngo Quyen, Hoan Kiem District
Hanoi
Vietnam
Phone: +84-424 3936 4630
Fax: +84-424 3936 4629
Singapore
6 Temasek Boulevard
# 42-01 Suntec Tower 4
Singapore 038986
Phone: +65 6332 9081
Fax: +65 6333 9081
GLOSSARY AND ALTERNATIVE PERFORMANCE MEASURES
Term Definition
2H23 The second half of 2023
2Q23 The second quarter of calendar year 2023
Agent Standard Chartered Bank (Singapore) Limited
ACB Asia Commercial Bank
ADTV Average daily trading value
AGM Annual General Meeting
AIC The Association of Investment Companies
AIC Code The AIC Code of Corporate Governance which was
issued in February 2019
ASEAN The Association of Southeast Asian Nations
Board The Board of Directors
BVI British Virgin Islands
CBRE Coldwell Banker Richard Ellis
Company VinaCapital Vietnam Opportunity Fund Limited
COVID-19 The disease caused by SARS-CoV-2, the coronavirus
that emerged in December 2019
CRS Common Reporting Standard
Discount to NAV Discount to NAV per Share is calculated as follows
per Share (in USD):
(NAV at year end - Share Price at year end)
÷ NAV at year end
Being (7.02 - 5.46) ÷ 7.02
EBITDA Earnings before interest, tax, depreciation
and amortisation. A measure of the gross profit
of a company.
ERM Enterprise Risk Management
ESG Environmental, Social, and Governance
ETF Exchange Traded Fund
External Auditor PricewaterhouseCoopers CI LLP
Facility The revolving credit facility as disclosed in
note 13.
FATCA Foreign Account Tax Compliance Act
F&B Food and Beverage services
FDI Foreign direct investments.
FFI Foreign Financial Institution
Financial Statements The Audited Financial Statement
FVTPL Fair value through profit or loss
FY Financial year. The Company's financial year
runs from 1 July to 30 June.
GBP British Pound Sterling.
GDP Gross Domestic Product. GDP is a monetary measure
of the market value of all the final goods and
services produced in a specific time period
in a country or wider region.
GICS Global Industry Classification Standard
Guernsey Code The Guernsey Code of Corporate Governance
Guernsey Law The Companies (Guernsey) Law, 2008 as amended.
HCMC Ho Chi Minh City
HNX The Hanoi Stock Exchange
HOSE The Ho Chi Minh Stock Exchange.
IAS International Accounting Standard
IASB International Accounting Standards Board
IFC International Finance Corporation
IFRS International Financial Reporting Standards
Incentive (Income)/Fee Income income/(fee) ratio represents the finance
Ratio expense and incentive income/(fee) for the year
divided by the average NAV for the year.
The incentive income/(fee) ratio is calculated
as follows:
( incentive (income)/fee for the year) ÷
average NAV for the year
Being (- USD1,169) ÷ USD1,066,000
Independent Valuer A qualified independent professional services
firm
IPO Initial public offering - the means by which
most listed companies achieve their stock market
listing.
IRR The internal rate of return. A measure of the
total return on an investment taking account
of the amount and timing of all amounts invested
and amounts realised. The IRR is expressed as
an annualised percentage. The use of IRR enables
different investments with differing cash flow
profiles to be compared on a like for like financial
basis.
IRS US Internal Revenue Service
JPY Japanese Yen
KPI Key performance Indicator
LDR Loan-to-Deposit ratio
LSE The London Stock Exchange.
MBA Master of Business Administration
NAV Net Asset Value, being the total value of the
Company's assets less its liabilities (the net
assets)
NAV per share NAV divided by the number of shares in issue.
NAV Total Return Expressed in percentage terms, is a measure
of the investment return earned by the Company,
calculated by taking the change in the NAV over
the period in question and dividing by the starting
NAV. This assumes that any dividends paid in
the period are reinvested at the prevailing
NAV per share on the ex-dividend rate and that
the dividend would grow at the same rate of
return as the NAV per share after re-investment.
The NAV Total Return is calculated as follows:
Total return over 1 year:30 June 2023: NAV per
share 7.02 a
Dividends paid 0.143 b
Effect of dividend reinvestment* 0.022 c
30 June 2022 NAV per
share 7.22 d
NAV Total Return (%) - 0.4% =((a+b+c)/d)-1
Total return over 3 years:30 June 2023: NAV per share 7.02 a
Dividends paid 0.418 b
Effect of dividend reinvestment* 0.02 c
30 June 2020 NAV per share 4.97 d
NAV Total Return (%) 50.1% =((a+b+c)/d)-1
Total return over 5 years:30 June 2023: NAV per
share 7.02 a
Dividends paid 0.638 b
Effect of dividend
reinvestment* 0.12 c
30 June 2018 NAV per
share 5.38 d
NAV Total Return (%) 45% =((a+b+c)/d)-1
* The total return is calculated by assuming
that dividends paid out are re-invested into
the NAV on the ex-dividend date. After each
dividend payment, the value of the amount notionally
reinvested is then assumed to change proportionally
to subsequent changes in the NAV per share.
This is accounted for in the "Effect of dividend
reinvestment" row.
NovaGroup Unlisted parent company of Novaland and Nova
Consumer Group
NCG Nova Consumer Group
NPAT Net profit after tax
OECD Organisation for Economic Co-operation and Development
Ongoing Charges The Ongoing Charges excluding Incentive Fee
excluding Incentive Ratio represents the annualised ongoing charges
Fee Ratio (excluding finance costs, transaction costs
and taxation) divided by the average NAV of
the Company for the year and has been prepared
in accordance with the AIC's recommended methodology.
Ongoing charges reflect expenses likely to recur
in the foreseeable future.
The Ongoing Charges excluding Incentive Fee
Ratio is calculated as follows (in USD'000):
Sum of general and administration expenses and
total incentive (income)/fee ÷ average
NAV for the year
Being: (USD17,710) ÷ USD1,066,000
Ongoing Charges The Ongoing Charges plus Incentive Fee Ratio
plus Incentive Fee represents the annualised ongoing charges (excluding
Ratio transaction costs and taxation) divided by the
average NAV of the Company for the year and
has been prepared in accordance with the AIC's
recommended methodology. Ongoing charges reflect
expenses likely to recur in the foreseeable
future.
The Ongoing Charges plus Incentive Fee Ratio
is calculated as follows in USD'000):
Sum of general and administration expenses and
total incentive (income)/fee ÷ average
NAV for the year
Being: (USD17,710 - 1,169) ÷ USD1,066,000
OTC Over-The-Counter
P/E Price-to-earnings
P&L Profit or Loss
PMI Purchasing Manager Index
PRI Principles of Responsible Investing
Private Equity This consists of investments in private companies,
structured investments, and bonds with privately
negotiated terms.
PEPT Public Equities with Private Terms
PTO Public tender offer
PwC CI PricewaterhouseCoopers CI LLP
q-o-q Quarter-on-quarter
ROE Return on equity
SBV State Bank of Vietnam
SCB Saigon Commercial Bank
SCC State Securities Commission of Vietnam
Share Price Total A measure of the investment return to shareholders,
Return taking account of the change in share price
over the period in question and assuming that
any dividends paid in the period are reinvested
at the prevailing share price at the time that
the shares begin to trade ex-dividend. Share
price total returns are calculated by [Bloomberg
or a recognised independent provider of market
statistics]
SID Senior Independent Director
UK Companies Act Companies Act 2006
UK Code The UK Corporate Governance Code issued in July
2018
UPCoM UPCoM listing of the Hanoi Stock Exchange
US United States of America
USD United States Dollar.
VND / VN Dong Vietnamese Dong
VN Index The Ho Chi Minh Stock Exchange Index, a capitalisation-weighted
index of all companies listed on the Ho Chi
Minh Stock Exchange.
VOF VinaCapital Vietnam Opportunity Fund Limited
y-o-y Year-on-year
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FR NKNBPFBDDBKB
(END) Dow Jones Newswires
October 24, 2023 02:05 ET (06:05 GMT)
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