Annual Financial Report

RNS Number : 6434K

Vietnam Enterprise Investments Ltd

23 April 2020

COMPANY ANNOUNCEMENT

For Immediate Release

23 April 2020

Vietnam Enterprise Investments Limited

Annual Report and Financial Statements for the year ended 31 December 2019

Vietnam Enterprise Investments Limited ("VEIL" or the "Company"), a closed-end investment fund listed on the London Stock Exchange, today announces its annual report and financial statements for the year ended 31 December 2019.

Launched in 1995, VEIL is the longest running fund focused on Vietnam. The Company is one of the largest funds investing primarily in listed and pre-IPO companies in Vietnam that offer attractive growth and value metrics, and strong corporate governance. The Company's investment objective is to seek medium to long-term capital appreciation of its assets. VEIL provides investors with access to Vietnam's leading blue chip companies, many of which have reached their foreign ownership limit.

Highlights for the year ended 31 December 2019

Financial highlights*:

• In USD terms, NAV per share rose 3.0% from US$6.56 to US$6.76, underperforming the VN Index total return on a relative basis by 6.8%.

• In GBP terms, NAV per share fell 0.9% from £5.15 to £5.10.

• VEIL's share price rose 3.8% in GBP terms.

• VEIL's share price discount to NAV narrowed from 11.3% at the end of 2018 to 7.0% at the end of 2019, reflecting strong investor interest in Vietnam and VEIL's portfolio performance.

Investment highlights*:

• VEIL and its subsidiaries held the majority of its portfolio in listed equities, with only 0.3% in OTC equities.

• VEIL continued to apply its investment philosophy of investing in companies that have long-term growth potential at the right valuations. The investment team has an excellent track record of identifying the next market leader in highly lucrative sectors in Vietnam where many sectors remain very fragmented.

• In addition to traditional financial analysis when considering an investment, VEIL also vigorously applied its internal ESG screening system which helped the team to identify, analyse and manage ESG risks of its investee companies.

• 2019 marked the return of VEIL to its winning way as VEIL delivered a 3.0% gain for the year, its sixth positive annual return in the last seven years with the only exception being a very difficult 2018. Over the longer term, VEIL has continued to deliver excellent performance with a cumulative 5-year return of 98.8%, outperforming the reference index - the VN Index total return in US$ (the "VN Index") by 12.5%.

(*) Past performance cannot be relied upon as a guide to future performance.

The annual report and financial statements of the Company can be found on VEIL's website: www.veil-dragoncapital.com.

Enquiries:

Vietnam Enterprise Investments Limited

Rachel Hill

rachelhill@dragoncapital.com

+44 7971214852

+44 (0) 1225 618 150

Jefferies International Limited

Stuart Klein

stuart.klein@jefferies.com

+44 (0) 20 7029 8703

Smithfield

Edward Brown

edward.brown@smithfieldgroup.com

+44 (0) 20 3047 2268

VEIL's LEI code is 213800SYT3T4AGEVW864

CHAIR'S STATEMENT

Dear Shareholders,

Vietnam's macro economy continues to achieve solid and sustainable growth, surpassing the Government's forecast for the year. Vietnam's performance, compared to its peers, proves that it is the clear beneficiary from the recent global trade tensions. These benefits have led to an enhanced exposure to international trade, allowing Vietnam to continue to better capture the attention of global investors. A key draw for investors has been the country's strong work ethic, demographics and underlying economic trends that will support Vietnam's long-term growth. A burgeoning middle class and increased share of the global supply chain are expected to underpin Vietnam's high performing economy for several years to come.

The leading macro indicators were encouraging for Vietnam in 2019. GDP rose 7.0% to a ten-year record high, beating the Government's target of 6.7%. The key driver in GDP growth was solid industrial production, which grew 8.9% year-on-year ("y-o-y"), and an improving services sector. Inflation was well controlled at 2.7% despite the surge in foodstuff prices due to pork shortages caused by African Swine Flu. With regard to trade, Vietnam achieved an all-time record high with a surplus of US$11.1 billion thanks to strong FDI driven exports. Overall, FDI continued to perform strongly with total disbursement increasing 6.8% y-o-y to US$20.4 billion, its highest number on record. Supported by a strong forex reserve of US$79 billion, the Vietnamese Dong remained stable with only a minor depreciation of 0.4% for the year.

The Vietnam stock market closed up 9.9% for the year. Net foreign inflow was strong in the first quarter but slowed during the rest of the year due to some equity market headwinds and Vietnam's lack of inclusion in the MSCI and FTSE Emerging Markets lists, resulting in a negative impact on liquidity. The average trading values per day across the Vietnam Index ("VN Index") dropped from US$293 million in 2018 to US$177 million in 2019.

To offset short-term volatilities in the market, the Government has looked to provide regulatory solutions to support the long-term development of the stock market. As an example, the Amended Securities Law which will become effective in January 2021, represents another step in the right direction towards achieving the long-coveted MSCI Emerging Markets Index inclusion. One of the major amendments is the introduction of Non-Voting Depository Receipts which will be a potential solution to the Foreign Ownership Limit rule that has been a major obstacle preventing Vietnam from being upgraded to the MSCI Emerging Markets Index.

In terms of our performance, Vietnam Enterprise Investments Limited ("VEIL") continued to follow a strategy of investing in value and growth. Indices and ETFs drifted towards large cap names that had available foreign ownership headroom, driving up prices. Our lack of exposure to these stocks, due to their high valuations, meant VEIL underperformed the VN Index by 8.5% at the end of the first quarter. However, we outperformed the market for the rest of the year, narrowing the underperformance gap to 6.8% at year end. VEIL's rebound was driven by strong performance across its key holdings in the retail sector (Mobile World Group and Phu Nhuan Jewelry), information technology (FPT Corporation), banking (Military Bank) and real estate (Becamex). In the lead up to recent global market volatility, VEIL consistently outperformed the market with a three-year return of 53.3%, outperforming the market by 1.3%. Over a five-year period, VEIL's asset under management (AUM) increased by 98.8%, outperforming the market by 12.5%.

For 2020, the first few months of the year have been marked by a number of geopolitical challenges, most important of which being COVID-19. While Vietnam is faring better than other countries in terms of the number of cases, we see significant economic and business impact in 2020. As the world adjusts to a new normal, our team views the crisis as offering numerous opportunities.

Looking ahead, the ratification of the EU-Vietnam Free Trade Agreement ("EVFTA") and the EU-Vietnam Investment Protection Agreement by the European Parliament are very encouraging news for Vietnam. The EU is Vietnam's second-largest export market, after the United States. EVFTA could create a number of competitive advantages for Vietnamese goods compared to others in the region.

As a long-term investor committed to sustainability, all investments made by VEIL are subjected to a rigorous environmental, social and governance ("ESG") screening process adopted by Dragon Capital Group ("DCG"). DCG created its own ESG Management System ("ESGM") with the valuable assistance of the International Finance Corporation. The policy and procedures of ESGM are applicable to DCG's investment universe with the goal to systematically manage ESG risks throughout the investment appraisal and management processes.

I am pleased to note, as we approach the 2020 AGM, the benefits that have been accrued to VEIL following our listing on the London Stock Exchange ("LSE"), and subsequent inclusion in the FTSE 250 Index. There has been a notable improvement in daily turnover, which permitted the secondary placement of approximately 37 million shares (at a then-aggregate value of approximately US$250 million) in the first half of 2019; marking a record LSE transaction for a LSE-Main Market listed collective investment scheme. As a result of this, and the Board's awareness of its discount management obligations, the share price has improved by 29.2% since listing (or 7.2% per annum), VEIL's NAV has recorded return of 8.5%, beating both the VN Index (5.06% over same period) and the FTSE 250 (0.79% over same period) (source: Bloomberg). It is worth noting that VEIL has, over this period, developed a more broad and diversified shareholder base, with some 40 institutions owning over one million shares, and over 115 holders owning over 100,000 shares (source: Dealogic).

VEIL firmly believes that through our team's extensive experience, coupled with deep local knowledge, our investments offer shareholders premium access to a dynamic economy. Our track record over the medium and long-term continues to outperform peers and reference index. Our fund size is one of the largest and most stable in Vietnam. Our focus on value offers downside protection from volatile global macro factors. We remain committed to unlocking value for the benefit of all our stakeholders.

Thank you for your continued support, and wishing everyone a safe and healthy 2020.

Stanley Chou

Chair

Vietnam Enterprise Investments Limited

22 April 2020

PORTFOLIO MANAGER'S REPORT

Performance Overview

2019 marked the return of VEIL to its winning way as VEIL delivered a 3.0% gain for the year, its sixth positive annual return in the last seven years with the only exception being a very difficult 2018. In regards to VEIL's reference index, the VN Index total return in US$ (the "VN Index"), it has been an interesting year in which there was an incredibly high concentration of large-cap stocks performance contribution, the likes of which we have never seen before. In particular, the top three contributors accounted for 110% of the VN Index's performance and the top six accounted for 146%. For VEIL, specifically, the highest performing sectors were Banking, Retail and Real Estate & Construction. Notable contributors from the portfolio were Phu Nhuan Jewelry ("PNJ"), Vietnam Engine and Agricultural Machinery Corp ("VEA") and FPT Corp ("FPT"). On the downside, Diversified Financials and Transportation hampered VEIL's overall performance.

Attribution Analysis

VEIL's bank holdings were up a respectable 10.5% for the year driven mostly by strong performance by VEIL's second biggest bank holding Military Bank ("MBB"). As for the company's biggest bank holding, Asia Commercial Bank ("ACB"), its share price performance was disappointing as the stock was essentially flat for the year despite its strong fundamentals. ACB posted a 16.9% growth in Net Interest Income ("NII") on the back of 16.6% loan growth, while its Net Interest Margin ("NIM") remained stable at 3.6%. The bank was one of the first Vietnamese banks to successfully apply the Basel II standard as approved by the State Bank of Vietnam ("SBV"). This meant that ACB was one of the rare exceptions allowed to have its credit growth quota lifted to 17%, up from the sector average of 14%. As a result, ACB's Net Profit After Tax ("NPAT") was up 16.7% year-on-year ("y-o-y"). 2020 could see a number of exciting new developments for ACB as it considers moving from the Hanoi Stock Exchange to the Ho Chi Minh Stock Exchange which may help to attract substantially more interest from institutional investors. Additionally, the bank is setting an earnings growth target of 15% for 2020 while also planning to pay a 20% stock dividend and 10% cash dividend on par value (4.4% cash yield), the first offered cash dividend since 2015. An exclusive Bancassurance deal, which often brings a hefty one-off fee, could also be under consideration. At the end of 2019, ACB was trading at a valuation of 1.1x forward PBR and 5.4x forward PER. Given its top-tier asset quality (non-performing loan ratio at the end of 2019 was 0.5%) and bright prospects, we strongly believe ACB deserves rerating in the years ahead.

As for MBB, the bank delivered an impressive 18.7% share price increase. Under the stewardship of CEO Mr Luu Trung Thai, MBB has moved towards a more retail-orientated strategy which delivered strong growth, highlighted by a 30.4% y-o-y increase in NPAT. MBB also became compliant with Basel II standards, allowing for higher credit growth. The bank posted 23.4% in NII growth, driven by retail lending which stood at 40.5% of its total loan book, up from 37.7% last year. As a result, NIM expanded to 4.9% in 2019 from 4.5% a year ago. MBB successfully raised VND2,315 billion (US$99.6 million) in new capital which should help to shore up the bank's Capital Adequacy Ratio for future growth. Like ACB, MBB is trading at a very undemanding valuation of just 1.0x forward PBR and 5.2x forward PER. We continue to be convinced that MBB will remain one of the leading Vietnamese retail banks in future.

In term of overall contribution, the Retail sector was VEIL's largest alpha contributor in 2019, with VEIL's top holding, Mobile World Group ("MWG") posting an impressive 33.4% share price gain. In contrast, VEIL's other company in the sector, FPT Retail ("FRT") fell 65.7% to the lowest point since its listing in April 2018. In 2019, MWG proved that it was capable of sustaining strong profits whilst expanding its business by rolling out its new venture, Green Grocery. MWG's revenue grew by 18.1%, driven by various factors namely: (1) the continued expansion of consumer electronics stores (store count up 36% to 1,018 stores); (2) the optimisation of high performing mobile phone stores into mini consumer electronics stores; (3) rolling out 253 hand-watch point-of-sales within existing stores; and (4) the continued expansion of Green Grocery stores which have now reached 1,008 in total (net increase of 603 stores vs. 405 stores at the end of 2018). NPAT growth was even more impressive at 33.2% y-o-y, driven by a higher gross profit margin, improving to 19.1% in 2019 from 17.8% in 2018, as optimisation initiatives were rolled out across the company in addition to a better product mix. We firmly believe MWG remains the best company to tap into the lucrative but highly fragmented retail market. FRT, on the other hand, has fallen out of favour with investors as the company decided to invest its capital in new business lines such as retail pharmacy, as well as cosmetic and beauty products. These segments have become a drag on profitability whilst the company's traditional segment of mobile phone retailing appears to be nearing a saturation point for its current market. As a result, FRT posted a net profit after tax and minority interest ("NPAT-MI") of VND214 billion, down 38.4% y-o-y.

The Real Estate & Construction sector had a tough year in 2019, although that might not be clear looking at the VN Index's property sector performance, which was up 14.7% for the year. This is primarily because Vingroup ("VIC"), the listed parent company of listed subsidiaries Vinhomes ("VHM") and Vincome Retails ("VRE"), accounted for 81% of the sector weight and delivered 106% of the sector performance, implying the rest of the sector underperformed. Among the three companies within the group, we continue to favour VHM, up 17.0% y-o-y, for its leading position in the property market both in terms of scale and execution.

In 2019, VHM was the most profitable listed company in Vietnam with pre-sales hitting nearly US$4.0 billion, up more than 30% compared to 2018 on the back of strong bulk sales. The company achieved VND51,826 billion in net sales, up 34.0% y-o-y and NPAT-MI of VND21,305 billion, up 49.2% y-o-y. Outside of VIC's group of companies, the rest of the Real Estate & Construction sector was a mixed bag. Performance in the market diverged in 2019, and this is partly attributed to a tighter legal environment that has continued to hamper developers' ability to launch new projects.

Given this market context, winners were rare, and few and far between. Within VEIL's portfolio, long-term holding and pioneer of Ho Chi Minh City's gated community model, Khang Dien House ("KDH"), posted a solid gain of 7.8%. The company's high legal standards and processes relating to its projects are starting to earn KDH a reputation for being a trusted name at a time when the issue dominates the sector. The company delivered its fifth consecutive year of double-digit growth since becoming profitable in 2014, reporting NPAT-MI growth of 13.3% y-o-y. This is a trend we expect the company to maintain in 2020 with the hand-over of the Safira project and the future sales of the Verosa Park project.

Another property winner for VEIL in 2019 was Becamex IDC ("BCM"), one of the biggest industrial park developers in the country. The company benefited from production shifts from China to Vietnam as a result of the US-China trade war. It was further bolstered by the announcement that BCM is working to move from the UPCoM to the Ho Chi Minh Stock Exchange. Financially, 2019 was another strong year for the company as it delivered top line growth of 28.4% and bottom line growth of 15.2%. Whilst the trade war certainly helped with the production shift to Vietnam from other countries, especially China, this trend happened long before 2019 as FDI inflow has been growing steadily over the last decade and a half. As such, we believe BCM will remain a great long-term bet in this sector.

On the other hand, Dat Xanh Group ("DXG") lagged behind VEIL's other property holdings. Despite the issues that the Real Estate & Construction sector faces, DXG recorded a modest growth in NPAT-MI of 3.2%. Nevertheless, the severity of the anti-corruption campaign and increased legal scrutiny hampered progress at one of the company's key projects, Gem Riverside, for more than a year. This soured investor sentiment, leading to a 22.5% drop in share price in 2019. That said, the company remains the biggest property brokerage in Vietnam and whilst its project development segment was hit in 2019, the company has been building up landbanks in second tier cities. These landbanks should help DXG to return to double-digit growth in 2020 and beyond, while waiting for the legal issues to be resolved and make the market more favourable. Given its compelling forward valuation of just 4.5x PER 2020, DXG offers a great medium-to-long term opportunity in the Real Estate & Construction sector.

VEIL's long-term approach to software company FPT paid off. FPT had a strong financial year, delivering an impressive 58.1% share price performance. The company reported excellent earnings growth across both of its key segments which saw 30% growth in Profit Before Tax ("PBT") in its Software outsourcing segment, and a 30% growth in PBT for its Telecom service segment. In 2019, the company focused on obtaining new clients in the US, EU and APAC markets and bolstered its already strong presence in Japan. In terms of its Telecom services, its broadband subscriber base continued to increase at a double-digit rate, whilst other services including PayTV also saw double-digit growth. As a result, FPT was able to record 19.7% NPAT-MI growth for the year.

2019 marked an important year for PNJ in the Consumer Durables sector, as it rolled out the SAP-driven ERP system. Unfortunately, the application of the new system ran into issues during the second quarter impacting the top and bottom lines. Once fine-tuned, PNJ rebounded strongly in the second half of 2019, delivering a robust 24.4% NPAT-MI growth which in turn helped drive the share price rise 24.6%.

A star performer at the half-way point of 2019, VEA's meteoric share price rise slowed in the second half of 2019 to close up 25.7%. The stock peaked in July having risen nearly 65% at that point, making it one of VEIL's most successful stories in the privatisation space in recent years. Strong profit taking activities, coupled with a slight deterioration in earnings, hampered the share price in the second half. Nevertheless, VEA's valuation remains quite attractive at just 7.5x PER 2020 and up to 9-10% cash yield and it has become a noteworthy value play in the market.

The Diversified Financials sector was the biggest drag on VEIL's performance. VEIL took a big hit on Vietcapital Securities, which were down 29.1% and 34% respectively, proving to be VEIL's worst performers. This was due to tougher market conditions for prop trading and short-term investment banking challenges. This was coupled with a wave of new Korean brokers entering the market which has made competing against low-cost market participants a long-term worry for local brokers. Additionally, Masan Group ("MSN") also fell 27.1% as investors fled the stock after the company announced its venture into the lucrative, but notoriously challenging, Retail sector via the merger between Masan Consumer Holdings and Vincom Commerce, the retailing arm of VIC.

The Transportation sector was the second biggest drag on VEIL's performance. This can be directly attributed to Airport Corporation of Vietnam ("ACV") as the company fully divested from Vietjet Air ("VJC") during 2019. VEIL participated in VJC's IPO during the year. This deal highlights the strength of the team on the ground in being able to identify growth opportunities before they come to market and leverage strong relationships with local businesses. These attributes allow VEIL to become the first mover when these opportunities arise. VEIL's investment into VJC delivered a final IRR of 120% over a period of more than two and a half years. As for ACV, despite reporting a 35.8% growth in NPAT-MI in 2019, the stock was still down 15.6%. Investor sentiment towards ACV was weakening throughout 2019 due to the prolonged delay in the Government's ability to finalise the rights to own or operate the runway. Nevertheless, given its monopoly and the growing appetite for air travel in Vietnam, we believe that ACV is still a great long-term bet for the future.

COVID-19*

Vietnam has undergone two waves of COVID-19 outbreaks, of which the first was successfully contained before the second one hit. The second wave started on 6 March 2020, bringing significant economic and social consequences, and is still ongoing. Vietnam's officials promptly introduced a series of aid packages to minimise the economic damage caused by the pandemic.

Immediately upon the outbreak of the virus, Vietnam implemented measures to prevent its spread. This included the suspension of all international flights until 30 April 2020, measures to limit local transmission and the aggressive tracking down of related contacts. On 1 April 2020, the Government implemented the highest level of virus infection prevention - a national partial lockdown and mass social distancing for two weeks.

So far, Vietnam's drastic measures are showing promising results. As of 7 April 2020, there were only 127 active cases, and no fatalities yet. We believe Vietnam has the situation under control and expect most cities in the country to resume socio-economic activity fairly soon.

At the same time, the authorities are making efforts to stabilise financial markets. The SBV has lowered a wide range of policy rates by 0.2-1.0%, most notably the open market operations rate, which was reduced by 50 bps. It also supported funding when market liquidity dried up. And thanks to SBV support, commercial banks are able to offer 1-2% preferential credit packages (totalling US$14.5 billion for tenors of longer than one year) and exercise forbearance for COVID-19-affected borrowers.

Beside monetary policy, we expect strong measures from fiscal's side to be key driver. Disbursement of public investment into infrastructure is expected at US$30 billion for 2020-21, equivalent to 5.5% of annual GDP. At the same time, to secure and maintain the labour force after the outbreak, the authorities announced an unprecedented package of US$2.6 billion, giving monthly US$80 payments to poor and low-earning individual businesses and households in the second quarter of 2020.

COVID-19 is having a profound negative effect on the global economy. For now, Vietnam's Government is focusing all resources on controlling the spread of the disease, thereby temporarily putting a large part of the economy into a coma. However, the Government is expected to announce more large stimulus packages as soon as the epidemic is over to bring the economy back to normal. When Vietnam contains the pandemic, and the economy rebounds as expected, the country can become an economic bright spot in the world as companies shift production away from what is now recognised as having been an excessive concentration in China.

(*) the information is as of 13 April 2020.

Outlook

Despite the concentration of performance in 2019, the return of a strong Vietnamese equity market was a welcome sign after a difficult 2018. The macro themes driving Vietnam's future growth appear unblemished, with strong GDP growth, relatively benign inflation, well-controlled credit and stable FX; perfect conditions for a strong equity market which continues to offer great value for growth compared to its regional peers.

An area of focus over the last few years was the Government's privatisation programme and IPO pipeline. The two-year anti-corruption probe and 2018's challenging market conditions halted much of this pipeline. However, we believe there is still a substantial pipeline coming through which will present interesting opportunities to the market. In the past, VEIL was one of the most active investors in screening, sourcing and participating in these new opportunities. The portfolio management team identified the pipeline as a great source of new investment ideas and will continue to monitor its progress closely. As part of our work with these and other companies we invest in, VEIL's portfolio management team is committed to assist with various value-added activities including advising the management on the improvement of corporate governance standards and investor relation activities. Additionally, the portfolio management team gradually works to raise environmental and social awareness among its investees.

The large-cap rally in 2019 has widened the valuation gap between large-cap and mid-cap stocks to its widest point for several years. As a result, a number of interesting opportunities have begun to appear within the mid-cap space, some of which, given the right management and financial backing, can deliver excellent long-term growth at a very reasonable valuation.

Vu Huu Dien

Investment Manager

Vietnam Enterprise Investments Limited

22 April 2020

REPORT OF THE BOARD OF DIRECTORS

The Directors of Vietnam Enterprise Investments Limited ("the Company") present their report and the audited financial statements of the Company for the year ended 31 December 2019.

Principal activity

The Company is an investment holding company incorporated as an exempted company with limited liability in the Cayman Islands on 20 April 1995. The shares of the Company have been listed on the main market of the London Stock Exchange since 5 July 2016 (until 4 July 2016: listed on the Irish Stock Exchange). The principal activity of the Company is investing directly or indirectly in a diversified portfolio of listed and unlisted securities in Vietnam.

Results and dividends

The Company's profit for the year ended 31 December 2019 and its financial position at that date are set out in the attached financial statements. The Directors have taken the decision not to pay a dividend in respect of the year ended 31 December 2019 (2018: Nil).

Share capital

Details of movements in the Company's share capital during the year are presented in Note 10. As at 31 December 2019, the Company had 218,061,888 Ordinary Shares and 1,000 Management Shares outstanding (31 December 2018: 219,579,878 Ordinary Shares and 1,000 Management Shares).

Directors

The Directors of the Company during the year were:

Non-executive Director:

Dominic Scriven O.B.E

Independent Non-executive Directors:

Wolfgang Bertelsmeier - Chair (until 30 June 2019)

Stanley Chou - Chair (from 30 June 2019)

Gordon Lawson - Senior Independent Non-Executive Director (from 30 June 2019)

Derek Eu-Tse Loh

Vi Peterson

Entela Benz-Saliasi (from 16 May 2019)

In accordance with Article 91 of the Restated and Amended Memorandum and Articles of Association (the "Articles"), the Independent and Non-independent Non-executive Directors are required to submit themselves for re-election at the next occurring Annual General Meeting ("AGM"). All the Independent Non-executive Directors were duly re-appointed at the AGM held on 8 July 2019 following the expiry of their respective terms. Dominic Scriven O.B.E also submitted himself for re-election and was duly re-appointed. Entela Benz-Saliasi was newly appointed as an Independent Non-executive Director on 16 May 2019. Wolfgang Bertelsmeier stepped down as Chair of the Company and resigned from the Board of Directors, both taking effect from 30 June 2019. Stanley Chou was elected to replace Wolfgang Bertelsmeier as Chair of the Company, taking effect from 30 June 2019. The Board Committees were reviewed and their composition was re-constituted, taking effect from 1 July 2019.

Directors' rights to acquire shares or debentures

At no time during the year was the Company a party to any arrangement to enable the Company's Directors or their respective spouses or minor children to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Directors' interests in shares

Dominic Scriven O.B.E also has indirect interests in shares of the Company as he is a key shareholder of Dragon Capital Group Limited, the parent company of Dragon Capital Limited which holds the Management Shares of the Company. Dragon Capital Group Limited is also the ultimate parent company of Enterprise Investment Management Limited, the Investment Manager of the Company and Dragon Capital Markets Limited. As at 31 December 2019, Dragon Capital Markets Limited beneficially held 2,295,359 Ordinary Shares of the Company for investment and proprietary trading purposes (31 December 2018: 2,700,359 Ordinary Shares).

Gordon Lawson, an Independent Non-executive Director of the Company, is a beneficial shareholder of the Company, holding 25,000 Ordinary Shares of the Company as at 31 December 2019 (31 December 2018: 25,000 Ordinary Shares).

Apart from the above, no other Director had a direct or indirect interest in the share capital of the Company, or its underlying investments at the end of the year, or at any time during the year.

Directors' interests in contracts

Dominic Scriven O.B.E has indirect interests in the Investment Management agreement between the Company and Enterprise Investment Management Limited where he is a Director. There were no further contracts of significance in relation to the Company's business in which a Director of the Company had a material interest, whether directly or indirectly, at the end of the year or at any time during the year.

Substantial shareholders

As at 31 December 2019, the Company's register of shareholders showed that the following shareholder held more than 10% interest in the issued Ordinary Share capital of the Company:

Registered shareholders

Number of Ordinary Shares held

% of total Ordinary

Shares in issue

Computershare Investor Services PLC (*)

220,920,746

100%

(*) Computershare Investor Services PLC was appointed to act as depositary in respect of a facility for the issue of depositary interest representing the Company's Ordinary Shares.

Subsequent events

Details of the significant subsequent events of the Company are set out in Note 16 to the financial statements.

Auditors

KPMG Limited, Vietnam

Directors' responsibility in respect of the financial statements

The Board of Directors is responsible for ensuring that the financial statements of the Company are properly drawn up so as to give a true and fair view of the financial position of the Company as at 31 December 2019 and of its financial performance and its cash flows for the year then ended. When preparing these financial statements, the Board of Directors is required to:

· adopt appropriate accounting policies which are supported by reasonable and prudent judgments and estimates and then apply them consistently;

· comply with the requirements of International Financial Reporting Standards ("IFRS") or, if there have been any departures in the interest of true and fair presentation, ensure that these have been appropriately disclosed, explained and quantified in the financial statements;

· maintain adequate accounting records and an effective system of internal controls;

· prepare the financial statements on a going concern basis unless it is inappropriate to assume that the Company will continue its operations in the foreseeable future; and

· control and direct effectively the Company in all material decisions affecting its operations and performance and ascertain that such decisions and/or instructions have been properly reflected in the financial statements.

The Board of Directors is also responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the financial position of the Company. It is 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 important events that have occurred during the year ended 31 December 2019 are described in the Chair's Statement and the Portfolio Manager's Report. A detailed description of the principal risks and uncertainties faced by the Company are set out in Note 15 to the financial statements.

The Directors confirm to the best of their knowledge that:

· the financial statements have been prepared in conformity with IFRS and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company, and the undertakings included in the financial statements taken as a whole as required by the United Kingdom Financial Conduct Authority Disclosure Guidance and Transparency Rules ("DTR") 4.1.12R and are in compliance with the requirements set out in the Companies Law;

· the financial statements include a fair review of the information required by DTR 4.1.8R and DTR 4.1.11R, which provide an indication of important events and a description of principal risks and uncertainties during the year; and

· the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position, performance, business model and strategy.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

Approval of the financial statements

The Board of Directors hereby approves the accompanying financial statements which give a true and fair view of the financial position of the Company as at 31 December 2019, and of its financial performance and its cash flows for the year then ended in accordance with IFRS.

Signed on behalf of the Board by:

Stanley Chou

Chair

22 April 2020

Signed on behalf of the Audit and Risk Committee by:

Gordon Lawson

Chair of the Audit and Risk Committee

22 April 2020

CONDENSED FINANCIAL STATEMENTS

Audited Statement of Financial Position as at 31 December 2019

	Note	31 December 2019	31 December 2018	Change
		US$	US$	in %
CURRENT ASSETS
Financial assets at fair value through profit or loss	5	1,467,469,779	1,472,751,786
Other receivables		1,140,194	568,429
Balance due from brokers	6	77,290	516,059
Cash and cash equivalents	7	9,473,320	32,791,633

TOTAL ASSETS		1,478,160,583	1,506,627,907	-1.89

CURRENT LIABILITIES
Balances due to brokers	6	864,287	3,788,426
Borrowings	8	-	60,000,000
Accounts payable and accruals	9	2,677,519	2,817,513

TOTAL LIABILITIES		3,541,806	66,605,939	-94.68

EQUITY
Issued share capital	10	2,180,628	2,195,808
Share premium	10	548,355,321	556,891,643
Retained earnings		924,082,828	880,934,517

TOTAL EQUITY		1,474,618,777	1,440,021,968	2.40
NET ASSETS ATRIBUTABLE TO ORDINARY SHAREHOLDERS		1,474,618,777	1,440,021,968	2.40

NUMBER OF ORDINARY SHARES IN ISSUE	10	218,061,888	219,579,878

NET ASSET VALUE PER ORDINARY SHARE	11	6.76	6.56	3.05

Audited Statement of Comprehensive Income for the Year Ended 31 December 2019

	Note	2019	2018
		US$	US$
INCOME
Bank interest income		20,283	39,832
Bond interest income		-	13,805
Dividend income		9,178,449	9,497,102
Net changes in fair value of financial assets at fair value through profit or loss	5	55,262,042	(160,010,507)
Gains on disposals of investments		13,543,010	79,887,179

TOTAL INCOME		78,003,784	(70,572,589)

EXPENSES
Administration fees	12	(974,416)	(1,263,588)
Custodian fees	12	(779,036)	(958,560)
Directors' fees	12	(168,159)	(152,354)
Management fees	12	(28,878,855)	(30,417,508)
Legal and professional fees		(652,853)	(572,607)
Brokerage fee and structuring fee		(242,470)	(1,597,570)
Restructuring fee of short-term borrowings		(1,500,000)	(900,000)
Interest expense		(1,476,950)	(2,713,397)
Withholding taxes		(2,468)	(14,621)
Other operating expenses		(224,748)	(419,267)

TOTAL EXPENSES		(34,899,955)	(39,009,472)
NET GAIN/(LOSS) BEFORE EXCHANGE GAINS/(LOSSES)		43,103,829	(109,582,061)
EXCHANGE GAINS/(LOSSES)
Net foreign exchange gains/(losses)		44,482	(462,903)
PROFIT/(LOSS) BEFORE TAX		43,148,311	(110,044,964)
Income tax	13		-

NET PROFIT/(LOSS) AFTER TAX FOR THE YEAR		43,148,311	(110,044,964)
OTHER COMPREHENSIVE INCOME FOR THE YEAR			-

NET PROFIT/(LOSS) AFTER TAX FOR THE YEAR		43,148,311	(110,044,964)

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR ATTRIBUTABLE TO ORDINARY SHAREHOLDERS		43,148,311	(110,044,964)

BASIC EARNINGS/(LOSSES) PER ORDINARY SHARE	14	0.20	(0.50)

Audited Statement of changes in net assets attributable to Ordinary Shareholders for the year ended 31 December 2019

	Issued share capital	Share premium	Retained earnings	Total
	US$	US$	US$	US$
Balance at 1 January 2018	2,201,266	560,096,358	990,979,481	1,553,277,105
Total comprehensive income for the year:
Net loss for the year	-	-	(110,044,964)	(110,044,964)

Transactions with shareholders, recognised directly in equity:
Repurchase of Ordinary Shares	(5,458)	(3,204,715)	-	(3,210,173)

Balance at 1 January 2019	2,195,808	556,891,643	880,934,517	1,440,021,968

Total comprehensive loss for the year:
Net profit for the year	-	-	43,148,311	43,148,311

Transactions with shareholders, recognised directly in equity:
Repurchase of Ordinary Shares	(15,180)	(8,536,322)	-	(8,551,502)

Balance at 31 December 2019	2,180,628	548,355,321	924,082,828	1,474,618,777

Audited Statement of Cash Flow for the Year Ended 31 December 2019

	Note	2019	2018
		US$	US$
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) for the year		43,148,311	(110,044,964)
Adjustments for:
Bank interest income		(20,283)	(39,832)
Bond interest income		-	(13,805)
Dividend income		(9,178,449)	(9,497,102)
Net changes in fair value of financial assets at fair value through profit or loss		(55,262,042)	160,010,507
Gains on disposals of investments		(13,543,010)	(79,887,179)

		(34,855,473)	(39,472,375)

Net cash flows from subsidiaries carried at fair value		69,908,995	177,572,707
Changes in other receivables and balances due from brokers		438,779	47,299
Changes in balances due to brokers and accounts payable and accruals		(3,064,133)	3,644,270

		32,428,168	141,791,901
Proceeds from disposals of investments		141,409,959	240,140,412
Purchases of investments		(137,231,895)	(367,927,014)
Bank interest income received		20,283	39,832
Bond interest income received		-	13,805
Dividends received		8,606,674	9,499,319

Net cash generated from/(used) in operating activities		45,233,189	23,558,255

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from short-term borrowings		100,000,000	60,000,000
Repayments of borrowings		(160,000,000)	(80,000,000)
Repurchase of Ordinary Shares		(8,551,502)	(3,210,173)

Net cash (used in)/generated from financing activities		(68,551,502)	(23,210,173)

NET INCREASE IN CASH AND CASH EQUIVALENTS		(23,318,313)	348,082
Cash and cash equivalents at the beginning of the year		32,791,633	32,443,551

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	7	9,473,320	32,791,633

Notes to the Financial Statements for the Year Ended 31 December 2019

1. THE COMPANY

Vietnam Enterprise Investments Limited ("the Company") is a closed-end investment fund incorporated as an exempted company with limited liability in the Cayman Islands on 20 April 1995. It commenced operations on 11 August 1995, the date on which the initial subscription proceeds were received.

The investment objective of the Company is to invest directly or indirectly in publicly or privately issued securities of companies, projects and enterprises issued by Vietnamese entities, whether inside or outside Vietnam.

The Company's Ordinary Shares have been listed on the main market of the London Stock Exchange since 5 July 2016 (until 4 Jul 2016: listed on the Irish Stock Exchange). The Company is established for an unlimited duration.

The Company had the following investments in subsidiaries and joint operation as at 31 December 2019, for the purpose of investment holding:

Subsidiaries	Country of incorporation	Principal activities	% Ownership

Grinling International Limited	British Virgin Islands	Investment holding	100%
Wareham Group Limited	British Virgin Islands	Investment holding	100%
Goldchurch Limited	British Virgin Islands	Investment holding	100%
VEIL Holdings Limited	British Virgin Islands	Investment holding	100%
Venner Group Limited	British Virgin Islands	Investment holding	100%
Rickmansworth Limited	British Virgin Islands	Investment holding	100%
VEIL Infrastructure Limited	British Virgin Islands	Investment holding	100%
Amersham Industries Limited	British Virgin Islands	Investment holding	100%
Balestrand Limited	British Virgin Islands	Investment holding	100%
Asia Reach Investment Limited	British Virgin Islands	Investment holding	100%

Joint operation	Country of incorporation	Principal activities	% Ownership

Dragon Financial Holdings Limited	British Virgin Islands	Investment holding	90%

As at 31 December 2019 and 31 December 2018, the Company had no employees.

2. BASIS OF PREPARATION

(a) Basis of accounting

The Company's financial statements as at and for the year ended 31 December 2019 have been prepared in accordance with IFRS. They were authorised for issue by Company's Board of Directors on 22 April 2020.

(b) Basis of measurement

These financial statements have been prepared on the historical cost basis, except for financial instruments classified as financial assets at fair value through profit or loss which are measured at fair value. The methods used to measure fair values are described in Note 3(c)(iii).

These financial statements are presented in United States Dollar ("US$"), which is the Company's functional currency.

Functional currency is the currency of the primary economic environment in which the Company operates. If indicators of the primary economic environment are mixed, then management uses its judgment to determine the functional currency that most faithfully represents the economic effect of the underlying transactions, events and conditions. The Company's investments and transactions are denominated in US$ and VND. Share subscriptions and dividends are made and paid in US$. Borrowings are made in US$. The expenses (including management fees, custodian fees and administration fees) are denominated and paid in US$. Accordingly, management has determined that the functional currency of the Company is US$.

(d) Use of estimates and judgments

In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have significant effect on the amounts recognised in the financial statements are discussed as follows:

Assessment as investment entity

Entities that meet the definition of an investment entity within IFRS 10 - Consolidated Financial Statements are required to account for investments in controlled entities, as well as investments in associates and joint ventures, at fair value through profit and loss. Subsidiaries that provide investment related services or engage in permitted investment related activities with investees continue to be consolidated unless they are also investment entities.

The criteria which define an investment entity are currently as follows:

- An entity that obtains funds from one or more investors for the purpose of providing those investors with investment services;

- An entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and

- An entity that measures and evaluates the performance of substantially all of its investments on a fair value basis.

The Board of Directors has made an assessment and concluded that the Company meets the above listed criteria of an investment entity. The investment objective of the Company is to provide shareholders with attractive capital returns by investing directly or indirectly through its subsidiaries in a diversified portfolio of listed and unlisted securities in Vietnam. The Company has always measured its investment portfolio at fair value. The exit strategy for all investments held by the Company and its subsidiaries is assessed regularly, documented and submitted to the Investment Committee for approval.

The Company also meets the additional characteristics of an investment entity, in that it has more than one investment; the investments are predominantly in the form of equities and similar securities; it has more than one investor and its investors are not related parties. The Board has concluded that the Company therefore meets the definition of an investment entity. These conclusions will be reassessed on an annual basis for changes in any of these criteria or characteristics.

Fair value of financial instruments

The most significant estimates relate to the fair valuation of subsidiaries and the fair valuation of financial instruments with significant unobservable inputs in their underlying investment portfolio.

The Board has assessed the fair valuation of each subsidiary to be equal to its net asset value at the reporting date, and the primary constituent of net asset value across subsidiaries is their underlying investment portfolio.

Within the underlying investment portfolio, the fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Board uses its judgments to select a variety of valuation methods and make assumptions that are mainly based on market conditions existing at each reporting date.

Impairment of receivables

The Directors determine the allowance for impairment of receivables on a regular basis. This estimate is based on the Directors' review of each individual account balance taking into account the credit history of the debtors and prevailing market conditions .

(e) Going concern

The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future (being a period of 12 months from the date these financial statements were approved). Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, borrowing facilities and investment commitments. Therefore, the financial statements have been prepared on the going concern basis.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies have been applied consistently to all periods presented in these financial statements.

(a) Subsidiaries and joint operation

Subsidiaries are investees controlled by the Company. The Company controls an investee when it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Joint operation is a joint arrangement whereby the Company has joint control and rights to the assets and obligations for the liabilities relating to the arrangement.

The Company is an investment entity and measures investments in its subsidiaries at fair value through profit or loss (see Note 2(d)). In determining whether the Company meets the definition of an investment entity, the Board considered the Company and its subsidiaries as a whole. In particular, when assessing the existence of investment exit strategies and whether the Company has more than one investment, the Board took into consideration the fact that all subsidiaries were formed in connection with the Company in order to hold investments on behalf of the Company.

(b) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of the Company and its subsidiaries at the exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into the functional currency at the exchange rate at the date on which the fair value was determined.

Foreign currency differences arising on translation are recognised in profit or loss as net foreign exchange gain or loss, except for those arising on financial instruments at fair value through profit or loss ("FVTPL"), which are recognised as a component of net changes in fair value of financial instruments at FVTPL.

(i) Recognition and initial measurement

The Company initially recognises financial assets and financial liabilities at fair value on the trade date, which is the date on which the Company becomes a party to the contractual provisions of the instrument. Other financial assets and financial liabilities are recognised on the date on which they are originated.

A financial asset or financial liability is measured initially at fair value plus, for an item not at FVTPL, transaction costs that they are directly attributable to its acquisition or issue.

(ii) Classification and subsequent measurement

Classification of financial assets

On initial recognition, the Company classifies financial assets as measured at amortised cost or FVTPL.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest.

All other financial assets of the Company are measured at FVTPL.

Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

- The documented investment strategy and the execution of this strategy in practice. This includes whether the investment strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

- How the performance of the portfolio is evaluated and reported to the Company's management;

- The risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

- How the investment manager is compensated: e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

- The frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company's continuing recognition of the assets.

The Company has determined that it has two business models:

- Held-to-collect business model : this includes cash and cash equivalents, balances due from brokers and other receivables. These financial assets are held to collect contractual cash flows.

- Other business model : this includes debt securities, equity investments and unlisted private equities. These financial assets are managed and their performance is evaluated, on a fair value basis, with frequent sales taking place.

Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

- contingent events that would change the amount or timing of cash flows;

- leverage features;

- prepayment and extension features;

- terms that limit the Company's claim to cash flows from specified assets (e.g. non-recourse features); and

- features that modify consideration of the time value of money (e.g. periodical reset of interest rates).

Reclassifications

Financial assets are not reclassified subsequent to their initial recognition unless the Company is to change its business model for managing financial assets, in which case all affected financial assets would be reclassified on the first day of the first reporting period following the change in the business model.

Subsequent measurement of financial assets

· Financial assets at fair value through profit or loss

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income and expense and foreign exchange gains and losses, are recognised in profit or loss in "net income from instruments at FVTPL" in the statement of comprehensive income.

· Financial assets at amortised cost

These assets are subsequently measured at amortised cost using the effective interest method. Interest income is recognised in "interest income calculated by using the effective interest method", foreign exchange gains and losses are recognised in "net foreign exchange gain/loss" and impairment is recognised in "impairment losses on financial instruments" in the statement of comprehensive income. Any gain or loss on derecognition is also recognised in profit or loss.

Cash and cash equivalents, balances due from brokers and other receivables are included in this category.

Financial liabilities - Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL.

A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

Financial liabilities at amortised cost: This includes balances due to brokers, borrowings and accounts payable and accruals.

(iii) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Company has access at that date. The fair value of a liability reflects its non-performance risk.

When available, the Company measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The Company measures instruments quoted in an active market at a mid price, because this price provides a reasonable approximation of the exit price.

If there is no quoted price in an active market, then the Company uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The Company recognises transfer between levels of the fair value hierarchy as at the end of the reporting period during which the change has occurred.

(iv) Amortised cost measurement

The 'amortised cost' of a financial asset or liability is the amount at which the financial asset or financial liability is measured on initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.

(v) Impairment

The Company recognises loss allowances for expected credit losses ("ECLs") on financial assets measured at amortised cost.

The Company measures loss allowances at an amount equal to lifetime ECLs, except for following, which are measured at 12-month ECLs:

- Financial assets that are determined to have low credit risk at the reporting date; and

- Other financial assets for which credit risk (i.e. the risk of default occurring over the expected life of the asset) has not increased significantly since initial recognition.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company's historical experience and informed credit assessment and including forward-looking information.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Company considers a financial asset to be in default when:

- the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realising security (if any is held); or

- the financial asset is more than 90 days past due.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive).

ECLs are discounted at the effective interest rate of the financial asset.

Credit-impaired financial assets

At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable data:

- significant financial difficulty of a debtor;

- a breach of contract such as a default or being more than 90 days past due; or

- it is probable that the debtor will enter bankruptcy or other financial reorganisation.

Presentation of allowance for ECLs in the statement of financial position

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

Write-off

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof.

(vi) Derecognition

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.

On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset that is derecognised) and the consideration received (including any new asset obtained less any new liability assumed) is recognised in profit or loss. Any interest in such transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability.

The Company enters into transactions whereby it transfers assets recognised in its statement of financial position but retains either all or substantially all of the risks and rewards of the transferred assets or a portion of them. If all or substantially all of the risks and rewards are retained, then the transferred assets are not derecognised. Transfers of assets with retention of all or substantially all of the risks and rewards include sale and purchase transactions.

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expired.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

(vii) Offsetting

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legally enforceable right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis for gains and losses from financial instruments at FVTPL and foreign exchange gains and losses.

(d) Cash and cash equivalents

Cash and cash equivalents comprise deposits with banks and highly liquid financial assets with maturities of three months or less from the date of acquisition that are subject to an insignificant risk of changes in their fair value and are used by the Company in the management of short-term commitments, other than cash collateral provided in respect of derivatives and securities borrowing transactions.

(e) Share capital

Issuance of share capital

Management Shares and Ordinary Shares are classified as equity. The difference between the issued price and the par value of the shares less any incremental costs directly attributable to the issuance of shares is credited to share premium.

Repurchase of Ordinary Shares

When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Par value of repurchased shares is presented as deductions from share capital and the excess over par value of repurchased shares is presented as deductions from share premium. When repurchased shares are sold or reissued subsequently, the amount received is recognised as an increase in share capital and share premium which is similar to the issuance of share capital.

(f) Segment reporting

The Company is organised and operates as one operating segment - investment in equity securities in Vietnam. Consequently, no segment reporting is provided in the Company's financial statements.

(g) Provisions

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a finance cost.

(h) Interest income

Interest income, including interest income from non-derivative financial assets at fair value through profit or loss, are recognised in profit or loss, using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts, without consideration of future credit losses, over the expected life of the financial instrument or through to the next market based repricing date to the net carrying amount of the financial instrument on initial recognition.

Interest received or receivable are recognised in profit or loss as interest income.

(i) Dividend income

Dividend income is recognised in profit or loss on the date on which the right to receive payment is established. For listed equity securities, this is usually the ex-dividend date. For unlisted equity securities, this is usually the date on which the shareholders approve the payment of a dividend.

Dividend income from equity securities designated as at fair value through profit or loss is recognised in profit or loss in a separate line item.

(j) Net income from financial instruments at fair value through profit or loss

Net income from financial instruments at fair value through profit or loss include all realised and unrealised fair value changes and foreign exchange differences, but excludes interest and dividend income, and dividend expense on securities sold short.

Net realised gain/loss from financial instruments at fair value through profit or loss is calculated using the weighted average cost method.

(k) Expenses

All expenses, including management fees and incentive fees, are recognised in profit or loss on an accrual basis.

(l) Basic earnings per share and Net Asset Value per share

The Company presents basic earnings per share ("EPS") for its Ordinary Shares. Basic EPS is calculated by dividing net profit or loss attributable to the Ordinary Shareholders by the weighted average number of Ordinary Shares outstanding during the year. The Company did not have potentially dilutive shares as of 31 December 2019 and 2018.

Net asset value ("NAV") per share is calculated by dividing the NAV attributable to the Ordinary Shareholders by the number of outstanding Ordinary Shares as at the reporting date. NAV is determined as total assets less total liabilities. Where Ordinary Shares have been repurchased, NAV per share is calculated based on the assumption that those repurchased Ordinary Shares have been cancelled.

(m) Related parties

A party is considered to be related to the Company if:

a) The party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, the Company; (ii) has an interest in the Company that gives it significant influence over the Company, or (iii) has joint control over the Company;

b) The party is an associate;

c) The party is a jointly controlled entity;

d) The party is a member of the key management personnel of the Company;

e) The party is a close member of the family of any individual referred to in (a) or (d);

f) The party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or

g) The party is a post-employment benefit plan for the benefit of the employees of the Company, or of any entity that is related party of the Company.

Other investment companies/funds under the management of Dragon Capital Investment Management Limited, the parent company of the Investment Manager, or entities of Dragon Capital Group Limited (including Ho Chi Minh City Securities Corporation ("HSC") and Vietnam Investment Fund Management Joint Stock Company ("VFM") and its funds under management) are also considered related parties to the Company.

(n) Standards issued but not yet effective

Following new standards and interpretations are effective for annual periods beginning after 1 January 2019 and earlier application is permitted; however, the Company has not early adopted new or amended standards in preparing these financial statements:

- Amendments to the References to Conceptual Framework in IFRS Standards;

- Definition of Business (Amendments to IFRS 3);

- Definition of Material (Amendments to IAS 1 and IAS 8);

- IFRS 17 Insurance Contracts; and

- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7).

These standards and interpretations are not expected to have a significant impact on the Company's financial statements.

4. TRANSACTIONS WITH RELATED PARTIES

Dominic Scriven O.B.E, a Non-executive Director of the Company, is a beneficial shareholder of the Company, holding 36,423 Ordinary Shares of the Company as at 31 December 2019 (31 December 2018: 36,423). Dominic Scriven O.B.E also has indirect interests in the share capital of the Company as he is a shareholder of Dragon Capital Group Limited, the parent company of Dragon Capital Limited which holds the Management Shares of the Company. Dragon Capital Group Limited is also the ultimate parent company of Enterprise Investment Management Limited, the Investment Manager of the Company and Dragon Capital Markets Limited. As at 31 December 2019, Dragon Capital Markets Limited beneficially held 2,295,359 Ordinary Shares of the Company for investment and proprietary trading purposes (31 December 2018: 2,700,359 Ordinary Shares).

Gordon Lawson, a Director of the Company, is a beneficial shareholder of the Company, holding 25,000 Ordinary Shares of the Company as at 31 December 2019 (31 December 2018: 25,000 Ordinary Shares).

During the year, the Directors, with exception of Dominic Scriven O.B.E, earned US$168,159 (31 December 2018: US$152,354) for their participation on the Board of Directors of the Company.

During the year, total broker fees paid to HSC - an associate of Dragon Capital Group Limited and one of the securities brokers of the Company and its subsidiaries - amounted to US$185,724 (2018: US$272,799). As at 31 December 2019, the broker fee payable to this broker was US$1,262 (31 December 2018: Nil).

5. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

	31 December 2019	31 December 2018
	US$	US$
Directly held investments (a)	638,021,791	613,929,733
Investments in subsidiaries (b)	829,447,988	858,822,053
	1,467,469,779	1,472,751,786

(a) The cost and carrying value of directly held listed and unlisted investments of the Company were as follows:

	31 December 2019	31 December 2018
	US$	US$
Listed investments
Investments, at cost	490,218,772	474,416,747
Unrealised gains	145,235,320	128,968,867
At carrying value	635,454,092	603,385,614

Unlisted investments
Investments, at cost	8,474,046	14,911,125
Unrealised losses	(5,906,347)	(4,367,006)
At carrying value	2,567,699	10,544,119

	638,021,791	613,929,733

Movements of investments directly held by the Company during the year were as follows:

	31 December 2019	31 December 2018
	US$	US$
Opening balance	613,929,733	547,011,237
Purchases	137,231,895	367,927,014
Sales	(127,866,949)	(160,253,233)
Unrealised gains/(losses)	14,727,112	(140,755,285)
Closing balance	638,021,791	613,929,733

(b) Investments in subsidiaries are fair valued at the subsidiary's net asset value with the significant part being attributable to the underlying investment portfolio. The underlying investment portfolio is valued under the same methodology as directly held investments of the Company, with any other assets or liabilities within subsidiaries fair valued in accordance with the Company's accounting policies. All cash flows to/from subsidiaries are treated as an increase/decrease in the fair value of the subsidiary.

The net assets of the Company's subsidiaries comprised:

	31 December 2019	31 December 2018
	US$	US$
Cash and cash equivalents	14,151,289	19,208,229
Financial assets at fair value through profit or loss (c)	808,293,291	848,094,361
Other receivables	1,776,595	621,972
Balances due from brokers	5,991,507	683,779
Total assets	830,212,682	868,608,341

Balances due to brokers	764,694	9,786,288
Total liabilities	764,694	9,786,288
Net assets	829,447,988	858,822,053

Movements in the carrying value of investments in subsidiaries during the year were as follows:

	31 December 2019	31 December 2018
	US$	US$
Opening balance	858,822,053	1,055,649,982
Net cash flows from subsidiaries	(69,908,995)	(177,572,707)
Fair value movements in investments in subsidiaries	40,534,930	(19,255,222)
Closing balance	829,447,988	858,822,053

(c) The cost and carrying value of underlying financial assets at FVTPL held by the Company's subsidiaries were as follows:

	31 December 2019	31 December 2018
	US$	US$
Listed investments
Investments, at cost	579,652,391	600,418,009
Unrealised gains	226,960,342	245,016,873
At carrying value	806,612,733	845,434,882

Unlisted investments
Investments, at cost	3,083,797	3,083,797
Unrealised losses	(1,403,239)	(424,318)
At carrying value	1,680,558	2,659,479

	808,293,291	848,094,361

Movements of investments held by the Company's subsidiaries during the year were as follows:

	31 December 2019	31 December 2018
	US$	US$
Opening balance	848,094,361	1,018,259,850
Purchases	102,170,069	238,983,482
Sales	(122,935,687)	(221,066,386)
Unrealised losses	(19,035,452)	(188,082,585)
Closing balance	808,293,291	848,094,361

Investment portfolio by sector was as follows:

	31 December 2019		31 December 2018
	US$	%	US$	%
Real Estate & Construction	528,930,805	36	449,711,494	31
Banking	312,652,181	21	292,333,761	20
Retail	165,216,625	11	138,642,996	9
Material & Resources	83,867,483	6	93,600,200	6
Food & Beverages	77,676,185	5	124,835,989	8
Software & Services	58,801,389	4	40,790,946	3
Consumer Durables	56,287,529	4	42,547,975	3
Energy	44,045,307	3	68,688,843	5
Transportation	35,825,994	2	63,278,411	4
Diversified Financials	23,789,427	2	56,977,318	4
Pharmaceuticals	22,747,559	2	27,138,166	2
Net monetary assets kept by subsidiaries	21,154,697	2	10,727,692	1
Capital Goods	11,592,901	1	42,937,831	3
Other sectors	24,881,697	1	20,540,164	1
	1,467,469,779	100	1,472,751,786	100

(d) Restrictions

The Company receives income in the form of dividends from its investments in unconsolidated subsidiaries and there are no significant restrictions on the transfer of funds from these entities to the Company.

(e) Support

The Company provides or receives ongoing support to/from its subsidiaries for the purchase/sale of portfolio investments. During the year, the Company received support from its unconsolidated subsidiaries as noted in Note 5(b). The Company has no contractual commitments or current intentions to provide any other financial or other support to its unconsolidated subsidiaries.

6. B ALANCES DUE FROM/DUE TO BROKERS

	31 December 2019	31 December 2018
	US$	US$
Sale transactions awaiting settlement	77,290	516,059
Purchase transactions awaiting settlement	864,287	3,788,426

In accordance with the Company's policy of trade date accounting for regular sale and purchase transactions, sale transactions awaiting settlement represent amounts receivable for securities sold and purchase transactions awaiting settlement represent amounts payable for securities purchased, but not yet settled as at the reporting date.

7. CASH AND CASH EQUIVALENTS

	31 December 2019	31 December 2018
	US$	US$
Cash in banks	9,473,320	32,791,633

8. BORROWINGS

	31 December 2019	31 December 2018
	US$	US$
Standard Chartered Bank - Singapore Branch
Secured Bank Loan	-	60,000,000

Movements of short-term borrowings during the year were as follows:

	31 December 2019	31 December 2018
	US$	US$
Opening balance	60,000,000	80,000,000
Additions during the year	100,000,000	60,000,000
Repayments during the year	(160,000,000)	(80,000,000)
Closing balance	-	60,000,000

9. ACCOUNTS PAYABLE AND ACCRUALS

	31 December 2019	31 December 2018
	US$	US$
Management fees	2,530,565	2,405,644
Administration fees	84,954	159,239
Other payables	62,000	252,630
	2,677,519	2,817,513

10. ISSUED SHARE CAPITAL AND SHARE PREMIUM

	31 December 2019	31 December 2018
	US$	US$
Authorised:
500,000,000 Ordinary Shares at par value of US$0.01 each	5,000,000	5,000,000
300,000,000 Conversion Shares at par value of US$0.01 each	3,000,000	3,000,000
1,000 Management Shares at par value of US$0.01 each	10	10
	8,000,010	8,000,010
Issued and fully paid:
220,920,746 Ordinary Shares at par value of US$0.01 each (31 December 2018: 220,920,746 Ordinary Shares at par value of US$0.01 each)	2,209,207	2,209,207
1,000 Management Shares at par value of US$0.01 each	10	10
	2,209,217	2,209,217
Treasury Shares:
Ordinary Shares	(28,589)	(13,409)

Shares in circulation:
Ordinary Shares	2,180,618	2,195,798
Management Shares	10	10

Outstanding issued share capital in circulation	2,180,628	2,195,808

Holders of Ordinary Shares present in person or by proxy or by authorised representative shall have one vote and, on a poll, every holder of Ordinary Shares present in person or by proxy or by authorised representative shall have one vote for every Ordinary Share of which he is the registered holder. The Ordinary Shares carry rights to dividends as set out in Articles 106 to 114 of the Articles. In a winding up, the Ordinary Shares carry a right to a return of the nominal capital paid up in respect of such Ordinary Shares, and the right to share in the manner set out in the Articles in surplus assets remaining after the return of the nominal capital paid up on the Ordinary Shares and Management Shares, provided that in a winding up the assets available for distribution among the members are more than sufficient to repay the whole of the nominal capital paid up at the commencement of the winding up. No holder of Ordinary Shares has the right to request the redemption of any of his Ordinary Shares at his option.

The Conversion Shares carry the exclusive right to dividends in respect of assets attributable to the Conversion Shares, in accordance with the provisions of Articles 106 to 114. No dividend or other distribution shall be declared, made or paid by the Company on any of its shares by reference to a record date falling between the Calculation Date and the Conversion Date as set out in the Articles. The new Ordinary Shares to be issued on conversion shall rank in full pari passu with the existing Ordinary Shares for all dividends and other distributions with a record date falling after the conversion date. In order for the holder of the Conversion Shares to participate in the winding up of the Company, the Conversion Shares, if any, which are in existence at the date of the winding up of the Company will for all purposes be deemed to have been automatically converted into Ordinary Shares and Deferred Shares immediately prior to the winding up, on the same basis as if conversion occurred 28 business days after the calculation date arising as a result of the resolution or the court to wind up the Company.

Until conversion, the consent of the holders of the Conversion Shares voting as a separate class and the holders of the Ordinary Shares voting as a separate class shall be required in accordance with the provisions of Article 14 to effect any variation or abrogation in their respective class rights.

During the year, no Conversion Shares were in issue, and no Conversion Shares were in issue as at 31 December 2019 and 2018.

The Management Shares shall not be redeemed by the Company, and do not carry any right to dividends. In a winding up, Management Shares are entitled to a return of paid up nominal capital out of the assets of the Company, but only after the return of nominal capital paid up on Ordinary Shares. The Management Shares each carry one vote on a poll. The holders of the Management Shares have the exclusive right to appoint two individuals to the Board.

As at 31 December 2019 and 2018, the following shareholder owned more than 10 percent of the Company's issued Ordinary Share capital:

Registered shareholders	Number of Ordinary Shares held	% of total Ordinary Shares in issue
Computershare Investor Services PLC (*)	220,920,746	100%
In which:
Bill & Melinda Gates Foundation Trust	25,049,173	11.48%

(*) Computershare Investor Services PLC act as depositary in respect of a facility for the issue of depositary interest representing the Company's Ordinary Shares.

Movements in Ordinary Share capital during the year were as follows:

	Year ended 31 December 2019		Year ended 31 December 2018
	Shares	US$	Shares	US$
Balance at the beginning of the year	219,579,878	2,195,798	220,125,680	2,201,256
Repurchase of Ordinary Shares during the year	(1,517,990)	(15,180)	(545,802)	(5,458)
Balance at the end of the year	218,061,888	2,180,618	219,579,878	2,195,798

Movements in share premium during the year were as follows:

	Year ended 31 December 2019 US$	Year ended 31 December 2018 US$
Balance at the beginning of the year	556,891,643	560,096,358
Repurchase of Ordinary Shares during the year	(8,536,322)	(3,204,715)
Balance at the end of the year	548,355,321	556,891,643

11. NET ASSET VALUE PER ORDINARY SHARE

The calculation of the NAV per Ordinary Share was based on the net assets attributable to the Ordinary Shareholders of the Company as at 31 December 2019 of US$1,474,618,777 (31 December 2018: US$1,440,021,968) and the number of outstanding Ordinary Shares in issue as at that date of 218,061,888 shares (31 December 2018: 219,579,878 Ordinary Shares).

12. FEES

The management, administration and custodian fees are calculated based on the NAV of the Company.

Administration fees

Standard Chartered Bank (the "Administrator") is entitled to receive a fee of 0.048% (2018: 0.048%) of the gross assets per annum, payable monthly in arrears and subject to a minimum monthly fee of US$4,000 per fund. During the year, total administration fees amounted to US$974,416 (2018: US$1,263,588). As at 31 December 2019, an administration fee of US$84,954 (31 December 2018: US$159,239) was payable to the Administrator.

Custodian fees

Standard Chartered Bank (the "Custodian") is entitled to receive a fee of 0.04% (2018: 0.05%) of the assets under custody per annum, payable monthly in arrears and subject to a minimum monthly fee of US$500 per custody account. In addition, the Custodian is entitled to US$20 per listed transaction and US$10 per scripless securities. During the year, total custodian fees amounted to US$779,036 (2018: US$958,560). There were no custodian fees payable as at 31 December 2019 and 2018.

Directors' fees

During the year, total directors' fees amounted to US$168,159 (2018: US$152,354). There were no directors' fees payable as at 31 December 2019 and 2018. Dominic Scriven O.B.E has permanently waived his rights to receive directors' fees for his services as Director of the Company.

Management fees

Prior to 1 August 2017, the Investment Manager was entitled to receive a management fee equal to 2% per annum of the NAV, accrued daily and payable monthly in arrears. With effect from 1 August 2017, the management fee is calculated and accrued daily on the following basis:

· 2% per annum on the first US$1.25 billion of the NAV;

· 1. 75 % per annum on the portion of the NAV in excess of US$1.25 billion and less than or equal to US$1.5 billion; and

· 1.5% per annum on the portion of the NAV above US$1.5 billion.

During the year, total management fees amounted to US$28,878,855 (2018: US$30,417,508). As at 31 December 2019, a management fee of US$2,530,565 (31 December 2018: US$2,405,644) remained payable to the Investment Manager.

Audit and related fees

During the year, included in the legal and professional fees of the Company were audit and related fees amounting to US$82,000 (2018: US$112,380) paid to the auditor, KPMG Limited. There were no advisory fees paid to the auditor in 2019 (2018: nil).

13. INCOME TAX

Under the current law of the Cayman Islands and the British Virgin Islands, the Company and its subsidiaries are not required to pay any taxes in the Cayman Islands or the British Virgin Islands on either income or capital gains and no withholding taxes will be imposed on distributions by the Company to its shareholders or on the winding-up of the Company.

In accordance with Circular No. 103/2014/TT-BTC issued by the Ministry of Finance of Vietnam taking effective from 1 October 2014 proving guidelines on the fulfilment of tax obligations of foreign entities, foreign individuals doing business in Vietnam or earning income in Vietnam, the Company is subject to 0.1% withholding tax on proceeds from transferring certificates of deposits, shares of public companies in accordance with the Law on Securities and 5% withholding tax on the interest received from any Vietnamese companies. Dividends remitted by Vietnamese investee companies to foreign corporate investors are not subject to withholding taxes.

See Note 15(B) for further details.

14. BASIC EARNINGS/(LOSSES) PER ORDINARY SHARE

The calculation of basic earnings/(losses) per Ordinary Share for the year was based on the net profit for the year attributable to the Ordinary Shareholders of US$43,148,311 (2018: net loss of US$110,044,964) and the weighted average number of Ordinary Shares outstanding of 218,807,255 shares (2018: 219,831,535 shares) in issue during the year.

(a) Net profit/(loss) attributable to the Ordinary Shareholders

Year ended

31 December

2019

US$

Year ended

31 December

2018

US$

Net profit/(loss) attributable to the Ordinary Shareholders

43,148,311

(110,044,964)

(b) Weighted average number of Ordinary Shares

	Year ended 31 December 2019	Year ended 31 December 2018
Issued Ordinary Shares at the beginning of the year	219,579,878	220,125,680
Effect of Ordinary Shares repurchased during the year	(772,623)	(294,145)
Weighted average number of Ordinary Shares	218,807,255	219,831,535

Year ended

31 December

2019

US$

Year ended

31 December

2018

US$

Basic earnings/(losses) per Ordinary Share

0.20

(0.50)

15. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY

A. Financial risk management

The Company and its subsidiaries mainly invested in listed and unlisted investments in Vietnam , and are exposed to credit risk, liquidity risk and market risks arising from the financial instruments they hold. The Company has formulated risk management policies and guidelines which govern its overall business strategies, its balance for risk and its general risk management philosophy, and has established processes to monitor and control transactions in a timely and accurate manner. In essence, the Company and its I nvestment M anager practise portfolio diversification and have adopted a range of appropriate restrictions and policies, including limiting the Company's cash investment in each investment to not more than 20% of the Company's capital at the time of investment. Nevertheless, the markets in which the Company operates and the investments that the Company makes can provide no assurance that the Company will not suffer a loss as a result of one or more of the risks described above, or as a result of other risks not currently identified by the Investment Manager.

The nature and extent of the financial instruments outstanding at the reporting date and the risk management policies employed by the Company are discussed in the following notes.

(a) 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, resulting in a financial loss to the Company.

The Company's listed and unlisted investments will only be traded on or subject to the rules of recognised stock exchanges or with counterparties which have, or whose parent company has been approved based on a set of defined criteria by the Investment Manager. All transactions in listed and unlisted securities are settled/paid for upon delivery using approved brokers. The risk of default is considered minimal since the delivery of securities sold is made only once the broker has received payment. A purchase payment is only made once the securities have been received by the broker. If either party fails to meet their obligations, the trade will fail.

As at 31 December 2019 and 2018, the Company's credit risk arose principally from its other receivables, balances due from brokers, cash and cash equivalents and investments in debt securities.

The maximum exposure to credit risk faced by the Company is equal to the carrying amounts of these balances as shown on the statement of financial position. The maximum exposure to credit risk at the reporting date was as follows:

	31 December 2019 US$	31 December 2018 US$
Investments in debt securities	-	6,480,744
Other receivables (i)	1,140,194	568,429
Balances due from brokers (i)	77,290	516,059
Cash and cash equivalents (ii)	9,473,320	32,791,633
	10,690,804	40,356,865

The Company invests substantially all of its assets in its subsidiaries together with which it is managed as an integrated structure. The Directors decided that the objectives of IFRS 7 Financial Instruments: Disclosures are met by providing disclosures on the credit risk of the underlying financial assets held by the subsidiaries.

As at 31 December 2019 and 2018, the subsidiaries' credit risk arose principally from the subsidiaries' other receivables, balances due from brokers and cash and cash equivalents.

The maximum exposure to credit risk faced by the subsidiaries is equal to the carrying amounts of other receivables, balances due from brokers and cash and cash equivalents which were as follows at the reporting date:

	31 December 2019 US$	31 December 2018 US$
Other receivables (i)	1,776,595	621,972
Balances due from brokers (i)	5,991,507	683,779
Cash and cash equivalents (ii)	14,151,289	19,208,229
	21,919,391	20,513,980

(i) Other receivables and balances due from brokers

Other receivables represented dividends receivable from investee companies. Balances due from brokers represented receivables from sales of securities. Credit risk relating to these amounts was considered as minimal due to the short-term settlement period involved.

No receivables as at 31 December 2019 and 2018 were past due.

(ii) Cash and cash equivalents

Cash and cash equivalents of the Company and its subsidiaries were held mainly with well-known financial institutions in Singapore and Vietnam. Regarding the credit rating profile of these financial institutions, the Directors believe credit risks from these deposits was minimal and do not expect that these financial institutions may default and cause losses to the Company.

(b) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Company also regularly monitors current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer term.

As at 31 December 2019 and 2018, all the contractual maturities of non-derivative financial liabilities of the Company and its subsidiaries were payable within a year.

Market risk is the risk that changes in market prices, such as equity prices, interest rates and foreign exchange rates, will affect the income of the Company and the value of its holdings of financial instruments. The objectives of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

Equity price risk

Equity price risk is the risk that the fair values of equities decrease as a result of changes in the levels of the equity indices and the values of individual securities. The trading equity price risk exposure arises from the Company's investment portfolio. The Company is exposed to equity price risk on all of its directly held and underlying listed and unlisted equity investments for which an active over-the-counter market exists. The Company's equity price risk is managed by the Investment Manager who seeks to monitor the risk through a careful selection of securities within specified limits.

Equity price risk for the Company's underlying listed investments principally relates to investments listed on the Ho Chi Minh City Stock Exchange and the Hanoi Stock Exchange in Vietnam. The Investment Manager's best estimate of the effect on net assets and losses due to a reasonably possible change in equity indices, with all other variables held constant was as follows:

	Change in index level	Effects on net assets	Change in index level	Effects on net assets
	2019	2019	2018	2018
Market Indices	%	US$m	%	US$m
VN Index	16	232.86	48	687.08
VN Index	(16)	(232.86)	(48)	(687.08)

Equity price risk for the Company's underlying unlisted investments principally related to investments in over-the-counter and private equities in Vietnam. Valuation of these investments is made using appropriate valuation methodologies. The methodology of valuation of these investments takes into consideration a variety of factors, which means that the unlisted investments are also exposed to equity price risk.

The outbreak of novel coronavirus (COVID-19) continues to spread throughout countries across the world, Vietnam included. In the first quarter of 2020, COVID-19 has already had a negative impact on Vietnam's markets performance, which is expected to affect the Company's asset value and performance in 2020. Using the equity prices as of 20 April 2020, the aggregate fair value of the Company's financial assets at fair value through profit and loss as at 31 December 2019 would have decreased by US$298,442,201, with all other variables held constant.

	31 December 2019	20 April 2019	Movement
	US$	US$	US$
Financial assets at fair value through profit or loss
· Listed investments	1,442,066,825	1,143,963,771	(298,103,054)
· Unlisted investments	4,248,258	3,909,111	(339,147)
Financial assets at fair value through profit or loss	1,446,315,083	1,147,872,882	(298,442,201)

Interest rate risk

The Company and its subsidiaries are exposed to risks associated with the effect of fluctuations in the prevailing levels of floating market interest rates on its financial position and cash flows. The Company and its subsidiaries have the ability to borrow funds from banks and other financial institutions in order to increase the amount of capital available for investments. Consequently, the level of interest rates at which the Company and its subsidiaries can borrow will affect the operating results of the Company and its subsidiaries. The Investment Manager monitors overall interest sensitivity of the Company and its subsidiaries on a monthly basis.

The table below summarises the Company's exposure to interest rate risk. Included in the table are the Company's assets and liabilities at carrying value, categorised by maturity date. The net interest sensitivity gap represents the contractual amounts of all interest sensitive financial instruments.

	Up to 1 year	1 - 5 years	Non-interest bearing	Total
	US$	US$	US$	US$
31 December 2019
ASSETS
Other receivables	-	-	1,140,194	1,140,194
Balances due from brokers	-	-	77,290	77,290
Cash and cash equivalents	9,473,320	-	-	9,473,320
TOTAL ASSETS	9,473,320	-	1,217,484	10,690,804

LIABILITIES
Balances due to brokers	-	-	(864,287)	(864,287)
Accounts payable and accruals	-	-	(2,677,519)	(2,677,519)
TOTAL LIABILITIES	-	-	(3,541,806)	(3,541,806)

NET INTEREST SENSITIVITY GAP	9,473,320	-	N/A	N/A

	Up to 1 year	1 - 5 years	Non-interest bearing	Total
	US$	US$	US$	US$
31 December 2018
ASSETS
Other receivables	-	-	568,429	568,429
Balances due from brokers	-	-	516,059	516,059
Cash and cash equivalents	32,791,633	-	-	32,791,633
TOTAL ASSETS	32,791,633	-	1,084,488	33,876,121

LIABILITIES
Borrowings	(60,000,000)	-	-	(60,000,000)
Balances due to brokers	-	-	(3,788,426)	(3,788,426)
Accounts payable and accruals	-	-	(2,817,513)	(2,817,513)
TOTAL LIABILITIES	(60,000,000)	-	(6,605,939)	(66,605,939)

NET INTEREST SENSITIVITY GAP	(27,208,367)	-	N/A	N/A

A change of 100 basis points in interest rates would have increased or decreased the net assets attributable to the Ordinary Shareholders by US$94,733 (31 December 2018: US$272,084). This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

The Company invests substantially all of its assets in its subsidiaries together with which it is managed as an integrated structure. The Directors decided that the objectives of IFRS 7 Financial Instruments: Disclosures are met by providing disclosures on the interest risk of the underlying investments held by the subsidiaries.

The table below summarises the subsidiaries' exposure to interest rate risk. Included in the table are the subsidiaries' assets and liabilities categorised by maturity date. The net interest sensitivity gap represents the net carrying amounts of all interest sensitive financial instruments.

	Up to 1 year	1 - 5 years	Non-interest bearing	Total
	US$	US$	US$	US$
31 December 2019
ASSETS
Other receivables	-	-	1,776,595	1,776,595
Balances due from brokers	-	-	5,991,507	5,991,507
Cash and cash equivalents	14,151,289	-	-	14,151,289
TOTAL ASSETS	14,151,289	-	7,768,102	21,919,391

LIABILITIES
Balances due to brokers	-	-	(764,694)	(764,694)
TOTAL LIABILITIES	-	-	(764,694)	(764,694)

NET INTEREST SENSITIVITY GAP	14,151,289	-	N/A	N/A

	Up to 1 year	1 - 5 years	Non-interest bearing	Total
	US$	US$	US$	US$
31 December 2018
ASSETS
Other receivables	-	-	621,972	621,972
Balances due from brokers	-	-	683,779	683,779
Cash and cash equivalents	19,208,229	-	-	19,208,229
TOTAL ASSETS	19,208,229	-	1,305,751	20,513,980

LIABILITIES
Balances due to brokers	-	-	(9,786,288)	(9,786,288)
TOTAL LIABILITIES	-	-	(9,786,288)	(9,786,288)

NET INTEREST SENSITIVITY GAP	19,208,229	-	N/A	N/A

A change of 100 basis points in interest rates would have increased or decreased the net assets attributable to the Company by US$141,512 (31 December 2018: US$192,082). This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Foreign currency risk

Foreign currency risk is the risk that changes in foreign exchange rates will affect the Company and its subsidiaries' income or the value of its holding of financial instruments. The Company and its subsidiaries ensure that the net exposure to this risk is kept to an acceptable level by buying or selling foreign currencies at spot rates to address short-term imbalances where necessary.

The table below summarises the exposure of the Company to currency risks as at 31 December 2019 and 2018. Included in the table are the assets and liabilities categorised by their base currency.

31 December 2019
(Denominated in VND)	US$
ASSETS
Financial assets at fair value through profit or loss	638,021,791
Other receivables	1,140,194
Balances due from brokers	77,290
Cash and cash equivalents	4,525,610
TOTAL ASSETS	643,764,885

LIABILITIES
Balances due to brokers	864,287

NET CURRENCY POSITION	642,900,598

31 December 2018
(Denominated in VND)	US$
ASSETS
Financial assets at fair value through profit or loss	613,929,733
Other receivables	568,429
Balances due from brokers	516,059
Cash and cash equivalents	12,174,343
TOTAL ASSETS	627,188,564

LIABILITIES
Balances due to brokers	3,788,426

NET CURRENCY POSITION	623,400,138

As at 31 December 2019, had the US$ strengthened or weakened by 1% (31 December 2018: 2%) against the VND with all other variables held constant, the net assets attributable to the Ordinary Shareholders would have been decreased or increased by the amounts shown below. This analysis was performed on the same basis as in 2018.

	Denominated in VND
	US$
2019	6,365,352
2018	12,223,532

The Company invests substantially all of its assets in its subsidiaries together with which it is managed as an integrated structure. The Directors decided that the objectives of IFRS 7 Financial Instruments: Disclosures are met by providing disclosures on the currency risk of the underlying investments held by the subsidiaries.

The table below summarises the exposure of the subsidiaries to currency risks as at 31 December 2019 and 2018. Included in the table are the assets and liabilities categorised by their base currency.

31 December 2019
(Denominated in VND)	US$
ASSETS
Financial assets at fair value through profit or loss	808,293,291
Other receivables	1,776,595
Balances due from brokers	5,991,507
Cash and cash equivalents	14,151,106
TOTAL ASSETS	830,212,499

LIABILITIES
Balances due to brokers	764,694

NET CURRENCY POSITION	829,447,805

31 December 2018
(Denominated in VND)	US$
ASSETS
Financial assets at fair value through profit or loss	848,094,361
Other receivables	621,972
Balances due from brokers	683,779
Cash and cash equivalents	19,208,045
TOTAL ASSETS	868,608,157

LIABILITIES
Balances due to brokers	9,786,288

NET CURRENCY POSITION	858,821,869

As at 31 December 2019, had the US$ strengthened or weakened by 1% (31 December 2018: 2% against VND with all other variables held constant, the net assets attributable to the Company would have been decreased or increased by the amounts shown below. This analysis was performed on the same basis as in 2018.

	Denominated in VND
	US$
2019	8,212,355
2018	16,839,644

(d) Fair values of financial assets and liabilities

(i) Valuation model

The fair values of financial instruments that are traded in active markets are based on quoted prices or broker price quotations. For all other financial instruments, the Company determines fair values using other valuation techniques.

For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgment depending on liquidity, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements.

· Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments.

· Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are not considered active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data.

· Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments but for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

The Company makes its investments through wholly owned subsidiaries, which in turn own interests in various listed and unlisted equity and debt securities. The net asset value of the subsidiaries is used for the measurement of fair value. The fair value of the Company's underlying investments, however is measured in accordance with the valuation methodology which is in consistent with that for directly held investments.

(ii) Fair value hierarchy - Financial instruments measured at fair value

The table below analyses the Company's financial instruments measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position. All fair value measurements below are recurring.

The following table shows a reconciliation from the opening balances to the closing balances for fair value measurements of the Company in three levels of the fair value hierarchy.

2019	Level 1	Level 2	Level 3
	US$	US$	US$
Opening balance	603,385,614	4,063,376	865,302,796
Transfer from level 2 to level 1	-	-	-
Purchases	137,231,895	-	-
Sales	(121,429,871)	-	(6,437,078)
Net cash flows from subsidiaries	-	-	(69,908,995)
Unrealised gain/(losses) recognised in profit or loss	16,266,454	(1,495,677)	40,491,265
Closing balance	635,454,092	2,567,699	829,447,988
Total unrealised (losses)/gains for the year included in net changes in fair value of financial assets at fair value through profit or loss	16,266,454	(1,495,677)	40,491,265

2018	Level 1	Level 2	Level 3
	US$	US$	US$
Opening balance	496,641,848	50,369,389	1,055,649,982
Transfer from level 2 to level 1	46,463,084	(46,463,084)	-
Purchases	356,778,251	4,711,685	6,437,078
Sales	(160,253,233)	-	-
Net cash flows from subsidiaries	-	-	(177,572,707)
Unrealised gain/(losses) recognised in profit or loss	(136,244,336)	(4,554,614)	(19,211,557)
Closing balance	603,385,614	4,063,376	865,302,796
Total unrealised (losses)/gains for the year included in net changes in fair value of financial assets at fair value through profit or loss	(136,244,336)	(4,554,614)	(19,211,557)

The Company invests substantially all of its assets in its subsidiaries together with which it is managed as an integrated structure. The Directors decided that the objectives of IFRS 7 Financial Instruments: Disclosures are met by providing disclosures on the fair value hierarchy of the underlying investments held by the subsidiaries.

The table below analyses the subsidiaries' financial instruments measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position. All fair value measurements below are recurring.

As at 31 December 2019	Level 1	Level 2	Level 3	Total
	US$	US$	US$	US$
Financial assets at fair value through profit or loss
· Listed investments	806,612,733	-	-	806,612,733
· Unlisted investments	-	1,680,558	-	1,680,558
	806,612,733	1,680,558	-	808,293,291

As at 31 December 2018	Level 1	Level 2	Level 3	Total
	US$	US$	US$	US$
Financial assets at fair value through profit or loss
· Listed investments	793,117,240	52,317,642	-	845,434,882
· Unlisted investments	-	2,659,479	-	2,659,479
	793,117,240	54,977,121	-	848,094,361

The following table shows a reconciliation from the opening balances to the closing balances for fair value measurements of investments through the subsidiaries in three levels of the fair value hierarchy.

2019	Level 1	Level 2	Level 3
	US$	US$	US$
Opening balance	793,117,240	54,977,121	-
Transfer from level 2 to level 1	52,317,641	(52,317,641)	-
Purchases	102,170,069	-	-
Sales	(122,935,687)	-	-
Unrealised (losses)/gains	(18,056,530)	(978,922)	-
Closing balance	806,612,733	1,680,558	-
Total unrealised (losses)/gains included in net changes in fair value of financial assets at fair value through profit or loss	(18,056,530)	(978,922)	-

2018	Level 1	Level 2	Level 3
	US$	US$	US$
Opening balance	899,063,899	119,195,951	-
Transfer from level 2 to level 1	55,747,626	(55,747,626)	-
Transfer from level 3 to level 1	-	-	-
Purchases	235,899,686	3,083,797	-
Sales	(219,735,098)	(1,331,290)	-
Unrealised (losses)/gains	(177,858,873)	(10,223,711)	-
Closing balance	793,117,240	54,977,121	-
Total unrealised (losses)/gains included in net changes in fair value of financial assets at fair value through profit or loss	(177,858,873)	(10,223,711)	-

(e) Classification of financial assets and financial liabilities

The following table shows the classification of financial assets and financial liabilities of the Company:

	Designated at fair value	Amortised cost	Total carrying amount
As at 31 December 2019	US$	US$	US$
Assets
Financial assets at fair value through profit or loss	1,467,469,779	-	1,467,469,779
Balances due from brokers	-	77,290	77,290
Other receivables	-	1,140,194	1,140,194
Cash and cash equivalents	-	9,473,320	9,473,320
	1,467,469,779	10,690,804	1,478,160,583

Liabilities
Balances due to brokers	-	864,287	864,287
Accounts payable and accruals	-	2,677,519	2,677,519
	-	3,541,806	3,541,806

	Designated at fair value	Amortised cost	Total carrying amount
As at 31 December 2018	US$	US$	US$
Assets
Financial assets at fair value through profit or loss	1,472,751,786	-	1,472,751,786
Balances due from brokers	-	568,429	568,429
Other receivables	-	516,059	516,059
Cash and cash equivalents	-	32,791,633	32,791,633
	1,472,751,786	33,876,121	1,506,627,907

Liabilities
Borrowings	-	60,000,000	60,000,000
Balances due to brokers	-	3,788,426	3,788,426
Accounts payable and accruals	-	2,817,513	2,817,513
	-	66,605,939	66,605,939

(f) Capital management

The Company considers the capital under management as equal to net assets attributable to the Ordinary Shareholders. The Company has engaged the Investment Manager to allocate the net assets in such a way to generate investment returns that are commensurate with the investment strategies of the Company.

B. Uncertainty

Although the Company and its subsidiaries are incorporated in the Cayman Islands and the British Virgin Islands, respectively, where tax is exempt, their activities are primarily focused in Vietnam. In accordance with the prevailing tax regulations in Vietnam, if an entity was treated as having a permanent establishment, or as otherwise being engaged in a trade or business in Vietnam, income attributable to or effectively connected with such permanent establishment or trade or business may be subject to tax in Vietnam. As at the date of this report the following information is uncertain:

· Whether the Company and its subsidiaries are considered as having permanent establishments in Vietnam;

· The amount of tax that may be payable, if the income is subject to tax; and

· Whether tax liabilities (if any) will be applied retrospectively.

The implementation and enforcement of tax regulations in Vietnam can vary depending on numerous factors, including the identity of the tax authority involved. The administration of laws and regulations by government agencies may be subject to considerable discretion, and in many areas, the legal framework is vague, contradictory and subject to different and inconsistent interpretation. The Directors believe that it is unlikely that the Company will be exposed to tax liabilities in Vietnam.

16. SUBSEQUENT EVENTS

In March 2020, the Company repurchased, through Rickmansworth Limited, 196,997 Ordinary Shares of the Company with total value of US$746,884.17. Shares repurchased will, for as long as they are held by Rickmansworth Limited, be held for the benefit of the Company.

17. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the Board of Directors on 22 April 2020.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR FIFVTSVIVFII

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Vietnam Enterprise Investments (DI) (VEIL)

Wednesday, 15th January 2025

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