Audited Annual Accounts and AGM Notice

RNS Number : 5686H

VietNam Holding Limited

18 August 2016

 



VietNam Holding Limited ("VNH" or the "Company")

Audited Annual Accounts and AGM Notice

VietNam Holding Limited ("VNH" or the "Company") (AIM: VNH)  is pleased to announce its audited accounts for the year ended 30 June 2016.

Min Kupfer, Chairperson of VNH, commented:

"Our financial year ended 30 June 2016, marking our tenth anniversary, has been an excellent one for VNH. Our NAV per share rose 28% to USD 2.68 and our share price increased 18% to USD 2.13. In the same period, the USD-adjusted Vietnam All Share Index rose just 7.7%, marking yet another year of benchmark outperformance for your fund."

Copies of the audited accounts are available to download from the Company's website at: http://www.vietnamholding.com/publications/financial-reports.

The Company's Annual General Meeting ("AGM") will be held at Park Hyatt Hotel, Beethoven-Strasse 21, 8002 Zurich, Switzerland on 15 September 2016 at 4.00 p.m. Central European Time.

VNH's board of directors ('the Board') has decided to continue to buy-back Shares in relation to the discount management programme. In addition, the Board has carried out a preliminary review of the potential for the Company to re-domicile and currently believes that the continuation of the Company in Luxembourg would be in the best interests of the Company and its Shareholders.

Therefore, in addition to the ordinary business to be considered at the AGM, resolutions comprising special business will be proposed to authorise the Board to continue the Company's share buy-back programme and to continue the process of investigating the re-domiciling of the Company.

Copies of the notice of AGM and the form of proxy will be emailed, along with the Company's audited financial statements for the year ended 30 June 2016, to VNH shareholders today and are available for download from the Company's website:

http://www.vietnamholding.com/investor-relations/shareholder-circular

This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation.

VietNam Holding Asset Management Limited	Tel: [phone]
Investor Relations Gyentsen Zatul [e-mail] www.vietnamholding.com
Smith & Williamson Corporate Finance Limited Nominated Adviser	Tel: [phone]
Azhic Basirov / Ben Jeynes
Winterflood Investment Trusts Broker	Tel: [phone]
Joe Winkley / Neil Langford
Buchanan Communications Financial Public Relations	Tel: [phone]
Charles Ryland / Vicky Watkins

Chairperson's statement

Dear Shareholders,

Our financial year ended 30 June 2016, marking our tenth anniversary, has been an excellent one for VietNam Holding. Our NAV per share rose 28% to USD 2.68 and our share price increased 18% to USD 2.13. In the same period, the USD-adjusted Vietnam All Share Index rose just 7.7%, marking yet another year of benchmark outperformance for your fund. Moreover, as we show in the table below, we were again the best performing Vietnam equity fund among all closed- and open-ended Vietnam equity funds with assets under management in excess of USD 50m. The result is that at 30 June 2016, VNH ranks number one in Vietnam for all full-year, cumulative performance periods for the last five years.

Vietnam Fund Universe - Historical NAV Performance

Period	VNH	#2 Ranking Fund	VNH Share Price	VNAS Performance
1 year	28.0%	18.2%	18.0%	7.7%
2 years	39.5%	22.6%	45.5%	9.2%
3 years	74.0%	49.0%	71.6%	26.2%
4 years	121.7%	75.8%	101.2%	34.8%
5 years	155.8%	95.4%	176.3%	44.8%

Source: Bloomberg.

Funds covered (NAV greater than USD 50mn and track record of min. 5 years): VNH, Vietnam Enterprise Investments Limited, PXP Vietnam Emerging Equity Fund, DWS Vietnam Fund, JPMorgan Vietnam Opportunities Fund, Vietnam Opportunity Fund, Vietnam Infrastructure Fund.

Total NAV of peers: USD 2.87bn as of 30 June 2016.

At this ten-year anniversary, we can proudly reflect on an exciting history. The early years of the fund mirrored a very difficult period for the Vietnamese stock market, especially the three years from 2006 to 2009 that featured a peak-to-trough index fall of over 80% in USD terms. This was followed by a much friendlier investment environment and the market-leading performance described above.

Meanwhile, the May 2015 issue of warrants has now seen its first exercise date of 1 June 2016, with an unsurprisingly small number (35,927) of warrants converted to shares. To recap, the total issue size was 19.98 million warrants, with each warrant convertible to one share at a price USD 1.998. The remaining exercise dates are 1 December 2016 and 1 June 2017. We expect the bulk of the conversions to occur on the latter date.

Our aggressive efforts to achieve a reduction in the discount of the share price to NAV continue. Periods of heightened market volatility presented regular challenges. In reaction to the surprising result of the UK's referendum on EU membership on 23 June, the discount spiked from 15% to 20%. If we factor in the diluting impact of the remaining warrants on the fund's NAV, the discount would be significantly lower. Nevertheless, your Board continues to prioritize discount reduction. A total of 4.6 million shares were bought and 1.9 million treasury shares were cancelled during the year. There were 10.5 million shares in treasury at June 30, compared to total shares outstanding of 54.9 million.

We pursue a pragmatic approach to discount reduction that mixes buybacks with an openness to the possibility of reselling treasury shares to long term fundamental investors who seek an exposure to Vietnamese equities, and share our core investment philosophy. We believe that such redistribution from shorter-term holders to long term investors is consistent with long term discount reduction. At the time of this writing, we have not placed any treasury shares to investors. However, it is VNH's intention to pay 30% of the incentive fee due to the fund manager in the form of treasury shares.

The story of the overall Vietnamese economy remains impressive. During the past year, underlying GDP growth has continued to be strong, with calendar 2015's rate of 6.8% likely to be followed by a 2016 performance in the region of 6%. The ostensible slowdown reflects the difficulties in the first half of 2016 for the agriculture and oil sectors.  They were impacted by an El Niño induced drought and the continued global oil glut, respectively. Ironically, this serves to highlight the strength of Vietnam's emerging economy, based on growing manufacturing prowess and a continually reducing reliance on commodity and extractive industries. This makes Vietnam a very attractive investment case, in contrast to many other emerging and frontier markets.

Foreign direct investment (FDI) in Vietnam continues its multi-year boom, with USD 7.3bn disbursed during the first half of 2016, up 15% year-on-year. New registrations indicate continued strong growth in the year ahead. Occasionally, fundamentally minded Vietnamese equity investors lament the continued relative smallness and illiquidity of the market. We feel that there is a realistic and optimistic reply to this.  Vietnamese market size and liquidity is indeed showing strong growth, with market capitalization approaching USD 70bn. Trading days of over USD 100m are now the norm on the main southern exchange. At the same time, the potential for accelerated privatization remains an enticing, market-expanding prospect. There is also the comforting knowledge that, in the long run, FDI generates skilled work force, an appreciation for international standards, the impetus to generate entrepreneurial spark and more locally owned businesses. It is also the major driver of ongoing high domestic consumption spending.

Perhaps the most striking micro-economic fact in the past year has been that while the Chinese renminbi has continued to experience weakness, the Vietnamese dong has actually risen slightly against the dollar. It seems the currency markets have finally begun to appreciate the distinctions between China and Vietnam. Although the challenge China faces to reorient its economy has not gone away, it is good to see that Vietnam is not being tarred with the same brush. As we have argued before, Vietnam is at a very different stage of economic development than China, and is in a very resilient position to China risk compared to most other major Asian countries.

The outlook for Vietnam over the next ten years appears to be at least as positive as it has been over the last ten. The Vietnamese authorities have learned many valuable lessons and gained much valuable experience, all of which adds to the fundamental attraction of the country as an investment destination. There is now a critical size and momentum to the Vietnamese economy and stock market. These factors make for a very exciting future that long term, fundamental, ESG-integrated value investing will be well placed to profit from.

Thank you, our shareholders, for your continued support, and thanks to the VietNam Holding Asset Management team for its continued excellent performance.

Min-Hwa Hu Kupfer

Chairperson
VietNam Holding Limited

18 August 2016

Investment manager's report

VietNam Holding Asset Management is very pleased with both the investment performance of VNH's portfolio as well as its share price performance as set out in the Chairperson's Statement. In last year's Report, we claimed that "Bull Markets never last forever, but there are good reasons to believe that Vietnam's current one will enjoy plenty of support in the coming year". Reality turned out to be far better than our expectations.

However, the very positive outcome of the past five years does not mask the fact that VNH's NAV performance over the first five years of our corporate life was negative by -41.6%. We are most appreciative to the many investors in those early days who have remained both patient and loyal.  Thanks to their support, we have been able to more than make up for those lean first five years and we realize now that in many ways those challenging early days laid the foundation for where we are today. Both Vietnam's political and business leaders have learned valuable lessons from their five years of "growth-at-any-cost" trials.  Economic and monetary policies were adjusted to bring annual inflation rates of over 20% to low single digits. A growing number of business leaders supported their growth objectives with realistic business plans and focused on strengthening their companies' core competencies, balance sheets and earnings.

As a result, Vietnamese companies have enjoyed several years of high earnings growth. This year, Vietnamese listed companies are likely to show the highest earnings-per-share (EPS) growth in Asia. 

The EPS growth of our portfolio companies last year was 18%. This year, we estimate it to be at around the same level. Nevertheless, the portfolio P/E of 12.7x remains lower than that of the total market.

We launched VietNam Holding Ltd as a value investment vehicle. In 2006, that was a rather unusual approach in a notoriously short-term oriented market environment. We refined the value style successfully by defining precise investment and divestment criteria and by strictly abiding by them. Towards the end of the first decade we observed that Vietnam's economic growth, the second fastest in the world, created increasing environmental, social and corporate governance (ESG) challenges. This led us to fully commit to sustainable investment principles and to become in 2009 the first signatory of the UN Principles for Responsible Investment active in Vietnam.  

Fully set on not wanting to just pay lip-service to this commitment, VNHAM systematically reviews the ESG practices of our investee companies as a fundamental component of our investment strategy.  We then track each company's progress on a variety of relevant ESG indicators. We were aware that there was no available ESG reporting on the listed companies in Vietnam, or in nearly all emerging market countries for that matter. To be able to collect the data directly from the companies themselves, we have developed a direct engagement approach aimed at their top management. By involving the board members of both VNH and of VNHAM, we have initiated a unique Company Engagement Program. Each board member is assigned to several portfolio companies and visits them regularly, together with our local analysts.  Through this we can ensure that we have a direct line of communication with the top management, which allows us to review previously agreed milestones and propose new objectives for the future.

We strongly believe that this combination of value investment and sustainable investment criteria has been key to selecting the high performing companies in our portfolio. Indeed, a CEO or Chairman who is willing to make a commitment to invest in clean technology, consider the needs of all stakeholders, and improve corporate transparency is a strategic manager with a long-term perspective and a broad view of risk. In all of our experience, this future-oriented thinking is a frequent proxy for high-quality corporate management and thus company success.

We could not successfully implement this investment strategy without a strong team of motivated and proactive analysts. Our research managers and strategists have acquired the additional skills and the dual approach to investing that are essential to our strategy. We take this opportunity to thank them for their commitment in implementing an investment philosophy that remains singular and strikingly successful in Vietnam.

Aside from our active direct engagement with the portfolio companies, we also organize an annual VNH Forum.  These semi-public events are typically attended by the senior executives of over 50 companies. The Forum keynote speakers present the current global best practices in a wide range of ESG areas.  Subsequently, a panel of local experts discuss how these foreign practices and standards may be relevant and applicable for Vietnamese enterprises. We can thus contribute to building awareness of the sustainability issues among the local business community.  We will continue to pursue this effort to spread the importance of the ESG theme in the years to come.

Our affiliated VNH Foundation, a philanthropic institution registered in Switzerland, has provided charitable support in Vietnam since its launch in 2007. Current projects are focused on assisting handicapped or socially and educationally marginalized children and young adults. Since its inception, VNHAM has assigned one third of any earned incentive fees to the VNH Foundation. To date, we have donated over USD 2.8 million to our philanthropic sister organization, which has also received over half a million USD from private donors.

In the last twelve months, our team has accomplished much more than we could have ever anticipated. Our team members have worked very hard and remained focused on our core principles and objectives throughout the year.  On behalf of the Board of Directors of VietNam Holding Asset Management, I express our sincere thanks to them.

Jean-Christophe Ganz

Chairman
VietNam Holding Asset Management Limited

18 August 2016

Directors' Report

The Board of Directors plays a key role in the operation of VietNam Holding Ltd. In consultation with the creator of the VNH Group, Mr. Juerg Vontobel, the Board sets the Company's Founding Principles. The Board makes all policy decisions on investment strategies, environmental, social and governance matters ("ESG"), asset allocations, investment risk profiles, capital increases and profit distributions to Shareholders. It also appoints the Investment Manager, to whom it provides appropriate guidance and instruction.

The Board is also responsible for reviewing the Company's Investment Policy and the performance of its investment portfolio. In particular, the Board is required to approve all investments, which are over 4% of the Company's Net Asset Value at the time the investment is made. Sales of investments where the Company holds 4% or greater of the total share capital of the respective portfolio company are also subject to the approval of the Board.

As a Cayman Islands incorporated fund that is admitted to trading on London's AIM market, the Company is not required to and does not adhere to any official code of corporate governance. However, the Directors recognise the importance of sound corporate governance commensurate with the size of the Company and the interests of its Shareholders. In reflection of this strong belief, the Company has adopted a comprehensive code of ethics. The Directors also comply with AIM Rules and other relevant UK regulations, including the Market Abuse Regulation relating, inter alia, to directors' dealings, which came into effect on July 3, 2016. Accordingly, the Company has additionally adopted a dealing policy in accordance with AIM Rule 21.

Presently, the Board consists of three non-executive Directors, all of whom are regarded by the Board as independent, including the chairperson, and are subject to re-election annually:

Mrs. Min-Hwa Hu Kupfer, Chairperson

Professor Rolf Dubs

Mr. Nguyen Quoc Khanh

The Board gives careful consideration when recommending Directors for re-election, and believes that length of service alone does not necessarily restrict Directors from seeking re-election. 

The Board maintains two committees: an Audit Committee, and a Corporate Governance Committee. Both committees are made up of all three Directors who work closely on all board and committee matters.

The Audit Committee, chaired by Mr. Nguyen Quoc Khanh, is responsible for appointing the Auditors, subject to Shareholder approval, and reviewing the results of all audits. It is also responsible for establishing internal business controls and audit procedures.

The Corporate Governance Committee, chaired by Professor Rolf Dubs, is responsible for the governance of the Company and the Company's relationships with multiple constituents, including the Investment Manager and its affiliates. 

Recognizing the importance of a set of sustainability principles that guides the Company and its investing, an ESG Committee was established jointly with the Investment Manager in the past year. The ESG Committee is chaired by Mr. Vu Quang Thinh, Vice Chairman and CEO of VietNam Holding Asset Management.

In the fiscal year 2016, the Board met quarterly and additionally held three telephonic meetings. 

During this period the Board concluded that concentrating the trading activities of the Company's shares in London was likely to benefit the overall trading liquidity in the shares. Following this decision, the Company ceased the secondary listing of its shares on the Entry Standard of Frankfurt Stock Exchange as of the end of September, 2015.  

Given the majority of the Company's Shareholder base is located in Europe, the Board believes that it would be desirable for the Company to re-domicile from the Cayman Islands to a European jurisdiction. Having considered a number of different jurisdiction, the Directors currently believe that Luxembourg is the most appropriate jurisdiction for a re-domiciliation of the Company. A resolution will be proposed at the upcoming 2016 Annual General Meeting on 15 September, asking Shareholders to authorize the Board to continue the preparation for re-domiciling.

Concurrently with each formal meeting, the Board reviewed with the Investment Manager the status and the performance of the portfolio, including investment themes, pipelines, divestitures, industry trends and peer group performance comparisons. Following the recommendations made under the portfolio management policy of the Investment Manager, the Board approved or ratified the asset allocation limits and target position of each investment.

As part of these actions, the Board approved and monitored portfolio rebalancing activities in which the Investment Manager exited nine portfolio companies and initiated nine new investments, maintaining the number of equity holdings in the portfolio at twenty-three as of June 30, 2016. Among the exits were three investments where the Company held at least 4% of the outstanding shares of the respective portfolio companies.

The Company's share buy-back program and share price discount control efforts were also reviewed quarterly during the Board meetings. As has been the case for several years, the Company held investor presentations in Zurich and London at which the Directors met and engaged with shareholders. The Board regularly reviewed other investor-relations activities, all coverages by brokerage research and investment analysts, and all investor communications.

The Audit Committee held four meetings in the past year in parallel with the Board meetings. In each one, the Chair of the Investment Manager's Risk Management Committee reviewed with the Audit Committee the Master Risk Matrix. In addition, it reviewed compliance reporting and evaluated risk control issues. The Committee Chairperson worked closely with the Investment Manager and its Risk & Compliance Committee to formulate the objectives and the scope of this year's internal audit, to be conducted in two phases. Phase One constituted a field test that focused on the risk management framework and assessment. It was carried out by Ernst & Young Vietnam Ltd in the second quarter of 2016.  Phase Two, which is scheduled to take place in the second half of 2016, will address the Company's compliance and risk management assessment.

The Corporate Governance Committee also met four times in line with the quarterly board meetings. As part of each meeting's agenda, the Chairman of the Committee led the review with the Investment Manager as it presented its strategic plans, financial position, and organizational development activities. An evaluation of the Board's own undertakings together with a review of the on-going projects of the Board were also held during each meeting.  

A main initiative of the Committee in the last twelve months was to set the objectives and goals of the Company for the period of 2016 - 2018. Action plans relating to each goal were also established during the Committee discussions. 

The Committee conducted the yearly performance review of the Investment Manager and approved the Key Performance Indicators as jointly recommended by the CEO and the Board of the Investment Manager. The Committee also oversaw the annual certification of the "VNH Code of Ethics" by all employees and Board members of both the Investment Manager and the Company.  

Throughout the year, the Committee evaluated the communications between the Chairperson and the Board members, the timeliness and completeness of the Board meeting material submission, and the overall effectiveness of each Board meeting. 

The ESG Committee met four times.  It finalized the ESG Policy, the internal operational manual of the Investment Manager on Environmental, Social, and Governance integration, and upgraded the tools for ESG screening, analysis and risk management. The Committee also embarked on a project with the South Pole Group of Switzerland to assess the carbon footprint of the Company's portfolio.

In each meeting, the Committee held a comprehensive quarterly de-brief of the most recent engagement visits with the portfolio companies that were undertaken by the Directors and the Board members of the Investment Manager.  A review of all ESG activities during the quarter that were pertinent to the portfolio companies was also a part of each committee meeting.

Remuneration

The remuneration of each of the Company's Directors contains two parts:

1.     Base Fee

2.     Committee and Board related service, including attendance of Committee and Board meetings, based on the number of days worked.

In 2016, the Company's Directors' Base Fees were:

- Mrs. Min-Hwa Hu Kupfer        USD 60,000

- Professor Rolf Dubs               USD 50,000

- Mr. Nguyen Quoc Khanh        USD 50,000

These Base Fees represent an increase of USD 30,000 each to Professor Dubs and Mr. Nguyen Quoc Khanh and USD 32,000 to Mrs. Min-Hwa Hu Kupfer.  For attendance in person at each Committee and Board meeting, which took place quarterly, each Director was paid USD 1,500 per day. For attending any Committee or Board meeting held telephonically, each Director was paid USD 750 per meeting. Each Director was also compensated USD 1,500 for each day of service related to Committee and Board initiatives.

The total remuneration of the Company's Directors in FY2015-16 as the result of meeting attendance and Committee work was USD 261,000 as follows:

- Mrs. Min-Hwa Hu Kupfer, Chairperson                                                                    USD 83,750

- Professor Rolf Dubs, Director & Chair of Corp. Governance Committee         USD 82,250

- Mr. Nguyen Quoc Khanh, Director & Chair of Audit Committee                           USD 65,000

In addition, Mrs. Kupfer was awarded a USD 30,000 discretionary bonus as the Board recognized her contribution to the Company during the prior fiscal year, which ended on 30 June 2015.    

Ownership of VietNam Holding

	Holdings as of 30 June 2015		Holdings as of 30 June 2016
	Shares	Warrants	Shares	Warrants
Mrs. Min-Hwa Hu Kupfer	36,667	-	36,667	-
Professor Rolf Dubs	30,000	10,000	35,152	10,000
Mr. Nguyen Quoc Khanh	10,000	3,333	13,468	3,333

On behalf of the Board of Directors:

Min-Hwa Hu Kupfer

Chairperson
18 August 2016

INDEPENDENT AUDITORS' REPORT

To the Shareholders of
VietNam Holding Limited

c/o Collas Crill Corporate Services Limited

Floor 2, Willow House

Cricket Square

PO Box 709

George Town, Grand Cayman

Cayman Islands, KY1-1107

Report on the financial statements

We have audited the accompanying financial statements of VietNam Holding Limited ("the Company"), which comprise the statement of financial position as at 30 June 2016, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at 30 June 2016 and the financial performance, changes in equity and cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union.

KPMG LLP

Public Accountants and

Chartered Accountants

Singapore

18 August 2016

VietNam Holding Limited Statement of financial position as at 30 June 2016
	Note	2016	2015
		USD	USD
Assets
Cash and cash equivalents		5,281,215	4,146,270
Investments in securities at fair value	3	143,391,112	120,754,647
Accrued dividends		832,445	500,219
Receivables on sale of investments		3,055,954	620,123
Other receivables		24,840	2,123
Total assets		152,585,566	126,023,382
Equity
Share capital	5	105,477,448	114,375,064
Retained earnings		41,398,421	9,984,471
Total equity, representing net assets attributable to shareholders		146,875,869	124,359,535
Liabilities
Payables on purchase of investments		1,124,964	955,420
Other payables		137	144
Accrued expenses		4,584,596	708,283
Total liabilities		5,709,697	1,663,847
Total equity and liabilities		152,585,566	126,023,382

The financial statements were approved by the Board of Directors on 18 August 2016 and were signed on its behalf by

The accompanying notes form an integral part of these financial statements.

Min-Hwa Hu Kupfer                                                                        Nguyen Quoc Khanh

Chairperson of the Board of Directors                                       Chairman of the Audit Committee

VietNam Holding Limited Statement of comprehensive income for the year ended 30 June 2016
	Note	2016	2015
		USD	USD
Dividend income from equity securities at fair value through profit or loss		4,247,751	4,070,467
Net gain from investments in securities at fair value through profit or loss	7	35,428,336	9,990,217
Net foreign exchange loss		(44,734)	(125,693)
Interest income from investments in securities		76,657	-
Net investment income		39,708,010	13,934,991
Investment management fees	8	2,460,388	2,444,321
Incentive fees	8	4,542,553	580,890
Advisory fees		143,345	185,162
Administrative and accounting fees	10	95,073	93,032
Custodian fees	9	122,024	141,333
Directors' fees and expenses	8	376,336	317,586
Brokerage fees		67,734	71,822
Audit fees		40,580	36,457
Publicity and investor relations fees		103,772	160,510
Insurance costs		15,500	15,500
Administrative expenses		206,643	199,860
Risk management expenses		45,884	67,626
Technical assistance for investee companies		74,228	28,783
Total operating expenses		8,294,060	4,342,882
Change in net assets attributable to shareholders		31,413,950	9,592,109
Basic earnings per share	14	0.55	0.16
Diluted earnings per share	14	0.53	0.16

VietNam Holding Limited Statement of changes in equity for the year ended 30 June 2016
		Share	Reserve for	Retained
		capital	own shares	earnings	Total
		USD	USD	USD	USD
Balance at 1 July 2014		126,127,956	(6,033,625)	392,362	120,486,693
Total comprehensive income for the year
Change in net assets attributable to shareholders		-	-	9,592,109	9,592,109
Total comprehensive income		-	-	9,592,109	9,592,109
Contributions and distributions
Issuance of ordinary shares		95,445	-	-	95,445
Shares cancellation		(292,655)	292,655	-	-
Repurchase of own shares (note 5)		-	(5,672,230)	-	(5,672,230)
Warrants issuance cost		(142,482)	-	-	(142,482)
Total contributions and distributions		(339,692)	(5,379,575)	-	(5,719,267)
Balance at 30 June 2015		125,788,264	(11,413,200)	9,984,471	124,359,535
Balance at 1 July 2015		125,788,264	(11,413,200)	9,984,471	124,359,535
Total comprehensive income for the year
Change in net assets attributable to shareholders		-	-	31,413,950	31,413,950
Total comprehensive income		-	-	31,413,950	31,413,950
Contributions and distributions
Issuance of ordinary shares		129,871	-	-	129,871
Repurchase of own shares (note 5)		-	(8,630,599)	-	(8,630,599)
Warrants issuance cost		(396,888)	-	-	(396,888)
Total contributions and distributions		(267,017)	(8,630,599)	-	(8,897,616)
Balance at 30 June 2016		125,521,247	(20,043,799)	41,398,421	146,875,869

VietNam Holdings Limited Statement of cash flows for the year ended 30 June 2016
	Note	2016	2015
		USD	USD
Cash flows from operating activities
Change in net assets attributable to shareholders		31,413,950	9,592,109
Adjustments to reconcile change in net assets attributable to shareholders to net cash from operating activities:
Dividend income		(4,247,751)	(4,070,467)
Interest income		(76,657)	-
Net gain from investments in securities at fair value through profit or loss		(35,428,336)	(9,990,217)
Purchase of investments		(47,964,534)	(52,747,130)
Proceeds from sale of investments		60,925,949	60,858,987
Net foreign exchange loss		44,734	125,693
(Increase)/decrease in receivables on sale of investments		(2,435,831)	70,813
Increase/(decrease) in accrued expenses		4,006,184	(409,130)
(Decrease)/increase in other payables		(7)	144
Dividends received		3,915,525	4,196,059
Interest received		53,973	-
Net cash from operating activities		10,207,199	7,626,861
Cash flows from financing activities
Repurchase of own shares	5	(8,630,599)	(5,672,230)
Warrants issuance cost		(396,888)	(142,482)
Net cash used in financing activities		(9,027,487)	(5,814,712)
Net increase in cash and cash equivalents		1,179,712	1,812,149
Cash and cash equivalents at beginning of the year		4,146,270	2,459,814
Effect of exchange rate fluctuations on cash held		(44,767)	(125,693)
Cash and cash equivalents at end of the year		5,281,215	4,146,270

VietNam Holding Limited

 

Notes to the financial statements

 

Year ended 30 June 2016

 

1                    THE COMPANY

VietNam Holding Limited ("VNH" or "the Company") is a closed-end investment holding company incorporated on 20 April 2006 as an exempt company under the Companies Law in the Cayman Islands and commenced its operations on 15 June 2006, to invest principally in securities of former State-owned Entities ("SOEs") in Vietnam, prior to, at or after the time such securities become listed on the Vietnam stock exchange, including the initial privatisation of the SOEs. The Company may also invest in the securities of private companies in Vietnam, whether Vietnamese or foreign owned, and the securities of foreign companies if a significant portion of their assets are held or operations are in Vietnam.

The investment objective of the Company is to achieve long-term capital appreciation by investing in a diversified portfolio of companies that have high growth potential at an attractive valuation.

During the Extraordinary General Meeting in April 2015 the shareholders voted in favour of the continuance resolution, authorising the Company to operate in its current form through to the 2018 Annual General Meeting when a similar resolution will be put forward for shareholders' approval.

VietNam Holding Asset Management Limited ("VNHAM") has been appointed as the Company's Investment Manager and is responsible for the day-to-day management of the Company's investment portfolio in accordance with the Company's investment policies, objectives and restrictions.

Standard Chartered Bank, Singapore Branch and Standard Chartered Bank (Vietnam) Limited are the custodian and the sub-custodian respectively. Standard Chartered Bank, Singapore Branch is also the administrator.

The registered office of the Company is Collas Crill Corporate Services Limited, Floor 2, Willow House, Cricket Square, PO Box 709, George Town, Grand Cayman, Cayman Islands, KY1-1107.

2                    PRINCIPAL ACCOUNTING POLICIES

(a) Statement of compliance

These financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

(b) Basis of preparation

The financial statements are presented in United States dollars ("USD"), which is the Company's functional currency. They are prepared on a fair value basis for financial assets and financial liabilities at fair value through profit or loss. Other assets and liabilities are stated at amortised cost.

The Company's shares were issued in USD and the listing of the shares on the AIM market of the London Stock Exchange is in USD as well. The performance of the Company is measured and reported to the investors in USD, although the primary activity of the Company is to invest in the Vietnamese market. The Board considers the USD as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions.

The preparation of financial statements in accordance with IFRS as adopted by the European Union requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expense. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimated and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other components. The Company is engaged in a single segment of business, being investment in Vietnam. The Board, as a whole, has been determined as constituting the chief operating decision maker of the Company. The key measure of performance used by the Board to assess the Company's performance and to allocate resources is the total return on the Company's net asset value ("NAV") calculated as per the prospectus.

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

(c) Foreign currency translation

Transactions in foreign currencies other than the functional currency are translated at the rate ruling on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are re-translated to USD at the rates ruling on the year-end date. Foreign currency exchange differences arising on translation and realised gains and losses on disposals or settlements of monetary assets and liabilities are included in the statement of comprehensive income. Foreign currency exchange differences relating to financial instruments at fair value through profit or loss are included in the realised and unrealised gains and losses on those investments. All other foreign currency exchange differences relating to other monetary items, including cash and cash equivalents, are included in net foreign exchange gains and losses in the statement of comprehensive income.

(d) Financial instruments

(i) Classification

The Company classifies all its investments as financial assets at fair value through profit or loss category. Financial instruments are classified at fair value through profit or loss upon initial recognition. These include financial assets that are not held for trading purposes and which may be sold. These are investments in exchange-traded securities and unlisted securities.

Financial assets that are classified as loans and receivables include accrued dividends.

Cash and cash equivalents are measured at amortised cost.

Financial liabilities that are not at fair value through profit or loss include accrued expenses.

 

(ii) Recognition

Financial assets and liabilities at fair value through profit or loss are recognised initially on the trade date, which is the date that the Company becomes a party to the contractual provisions of the instrument. Other financial assets and liabilities are recognised on the date they are originated.

Financial assets and financial liabilities at fair value through profit or loss are recognised initially at fair value, with transaction costs recognised in profit or loss. Financial assets or financial liabilities not at fair value through profit or loss are recognised initially at fair value plus transaction costs that are directly attributable to their acquisition or issue.

(iii) Derecognition

A financial asset is derecognised when the Company no longer has control over the contractual rights that comprise that asset. This occurs when the rights are realised, expire or are surrendered.

Financial assets that are sold are derecognised, and the corresponding receivables from the buyer for the payment are recognised on the trade date, being the date the Company commits to sell the assets.

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expired.

(iv) 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 last traded price.

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

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

As at 30 June 2016, nil% (2015: 3.1%) of the valuations of the net assets of the Company were based on quotes obtained from brokers, while 1.3% (2015: nil%) of the valuations of the net assets of the Company were based on valuation techniques.

Any increases or decreases in values are recognised in the statement of comprehensive income as an unrealised gain or loss.

 

(v) Gains and losses on subsequent measurement

Gains and losses arising from a change in the fair value of financial instruments are recognised in the statement of comprehensive income.

(vi) Impairment

Financial assets that are stated at cost or amortised cost are reviewed at each reporting date to determine whether there is objective evidence of impairment. If any such indication exists, an impairment loss is recognised in the statement of comprehensive income as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate.

If in a subsequent period the amount of an impairment loss recognised on a financial asset carried at amortised cost decreases and the decrease can be linked objectively to an event occurring after the write-down, the impairment is reversed through the statement of comprehensive income.

(vii) Cash and cash equivalents

Cash comprises current deposits with banks and fixed deposits. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

(e) Offsetting

Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when, and only when, the Company has a legally enforceable right to set off the recognised amounts and the transactions are intended to be settled on a net basis or simultaneously, e.g. through a market clearing mechanism.

(f) Amounts due to/from brokers

Amounts due to/from brokers represent security purchases and sales transactions which are contracted for but not yet delivered at the end of the reporting period.

 

(g) Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

Repurchase, disposal and reissue of share capital (treasury shares)

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. Repurchased shares are classified as treasury shares and are presented in the reserve for own share account. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is presented in non-distributable capital reserve.

(h) Tax

Tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The measurement of deferred taxes reflects the tax consequences that would follow the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.  Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised.  Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

In determining the amount of current and deferred tax, the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due.  The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience.  This assessment relies on estimates and assumptions and may involve a series of judgements about future events.  New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.

At present, no income, profit, capital, or capital gain taxes are levied in the Cayman Islands, and accordingly, no provision for such taxes has been recorded by the Company in the accompanying financial statements. In the event that such taxes are levied, the Company has received an undertaking from the Governor in Cabinet of the Cayman Islands exempting it from all such taxes for a period of twenty years from 2 May 2006.

The Company is liable to Vietnamese tax of 0.1% (2015: 0.1%) on the sales proceeds of the onshore sale of equity investments.

(i) Interest income and expense

Interest income and expense is recognised in the statement of comprehensive income using the effective rate method.

Interest income includes the amortisation of any discount or premium on zero coupon bonds, which is taken as income on the basis of yield to redemption, from the date of purchase.

(j) Dividend income

Dividend income is recognised in profit or loss on the date on which the right to receive payment is established. For quoted equity securities, this is usually the ex-dividend date. For unquoted 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 as a separate line item.

(k) Fee and commission expense

Fees and commission expenses are recognised in profit or loss as the related services are performed.

(l) Earnings per share

The Company presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all potentially dilutive ordinary shares, which comprise warrants granted to shareholders. 

3                    FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS

Financial assets of the Company include investments in securities at fair value, cash and cash equivalents and accrued dividends. Financial liabilities comprise payables on purchase of investments and accrued expenses. Accounting policies for financial assets and liabilities are set out in note 2.

The Company's investment activities expose it to various types of risk that are associated with the financial instruments and the markets in which it invests. The most important types of financial risk to which the Company is exposed are market risk, currency risk, interest rate risk, credit risk and liquidity risk.

Asset allocation is determined by the Company's Investment Manager who manages the distribution of the assets to achieve the investment objectives. Divergence from target asset allocations and the composition of the portfolio is monitored by the Investment Manager.

Market risk

Market risk is the risk that the value of a financial asset will fluctuate as a result of changes in market prices, whether or not those changes are caused by factors specific to the individual asset or factors affecting all assets in the market. The Company is predominately exposed to market risk within its securities purchased in the Vietnamese market.

The overall market positions are monitored continuously by the Investment Manager and at least quarterly by the Board. 

The Company's investments in securities are exposed to market risk and are disclosed by the following generic investment types:

	2016		2015
	Fair value in USD	% of net assets	Fair value in USD	% of net assets
Investments in listed securities	141,479,379	96.3	116,850,605	94.0
Investments in unlisted securities	1,911,733	1.3	3,904,042	3.1
	143,391,112	97.6	120,754,647	97.1

At 30 June 2016, a 5% reduction in the market value of the portfolio would have led to a reduction in NAV and profit or loss of USD7,169,556 (2015: USD6,037,732 ). A 5% increase in market value would have led to an equal and opposite effect on NAV and profit or loss.

Currency risk

The Company may invest in financial instruments and enter into transactions denominated in currencies other than its functional currency. Consequently, the Company is exposed to risks that the exchange rate of its currency relative to other currencies may change and have an adverse effect on the value of the Company's assets or liabilities denominated in currencies other than USD.

The Company's net assets are calculated every month based on the most up to date exchange rates while the general economic and foreign currency environment is continuously monitored by the Investment Manager and reviewed by the Board at least once each quarter.

The Company may enter into arrangements to hedge currency risks if such arrangements become desirable and practicable in the future in the interest of efficient portfolio management.

As at 30 June 2016, the Company had the following foreign currency exposures:

		Fair value
		2016	2015
		USD	USD
Vietnamese Dong		149,607,240	122,940,708
Pound Sterling		748	24,575
Swiss Franc		-	26,470
Euro		2,319	14,469
		149,610,307	123,006,222

At 30 June 2016, a 5% reduction in the value of the Vietnamese Dong, Pound Sterling, Swiss Franc, Euro versus the US Dollar would have led to a reduction in NAV and profit or loss of USD7,480,362 (2015: USD6,147,035), USD37 (2015: USD1,229), USDnil (2015: US1,324) and USD116 (2015: USD723) respectively. A 5% increase in value would have led to an equal and opposite effect.

Interest rate risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The majority of the Company's financial assets are non-interest-bearing. Interest-bearing financial assets and interest-bearing financial liabilities mature or reprice in the short-term, no longer than twelve months. As a result, the Company is subject to limited exposure to interest rate risk due to fluctuations in the prevailing levels of market interest rates.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company.

At 30 June 2016, the following financial assets were exposed to credit risk (including settlement risk): cash and cash equivalents, investments in unlisted securities, accrued dividends, receivables on sale of investments and other receivables. The total amount of financial assets exposed to credit risk amounted to USD11,106,187 (2015: USD5,268,735).

Substantially all of the assets of the Company are held by the Company's custodian, Standard Chartered Bank, Singapore Branch. Bankruptcy or insolvency of the custodian may cause the Company's rights with respect to cash and securities held by the custodian to be delayed or limited. The Company monitors its risk by monitoring the credit quality and financial positions of the custodian the Company uses.

Liquidity risk

The Company, a closed-end investment company, invests in companies through listings on the Vietnam stock exchanges. There is no guarantee however that the Vietnam stock exchanges will provide liquidity for the Company's investments. The Company also invests in equity securities which are not listed on stock exchanges. The Company may have to resell such investments in privately negotiated transactions.

The Company's overall liquidity risks are monitored on at least a quarterly basis by the Board. The Company is a closed-end investment company so shareholders cannot redeem their shares directly from the Company.

4                    OPERATING SEGMENTS

Information on gains and losses derived from investments are disclosed in the statement of comprehensive income.

The Company is domiciled in the Cayman Islands. Entity wide disclosures are provided as the Company is engaged in a single segment of business, investing in Vietnam. In presenting information on the basis of geographical segments, segment investments and the corresponding segment net investment income arising thereon are determined based on the country of domicile of the respective investment entities.

All of the Company's investments in securities at fair value are in Vietnam as at 30 June 2016 and 30 June 2015. All of the Company's investment income can be attributed to Vietnam for the years ended 30 June 2016 and 30 June 2015.

5                    SHARE CAPITAL

Ordinary shares of USD1 each

The ordinary shares have been created pursuant to the Companies Law in the Cayman Islands. The Company was incorporated with an authorised share capital of USD100,000,000 divided into 100,000,000 ordinary shares of USD1 each. On 23 September 2010, during its Annual General Meeting, the shareholders approved that the Company's authorised share capital be increased by USD100,000,000, divided into 200,000,000 shares of a nominal or par value of USD1.00 each.  According to the Companies Law and articles of association, the Company may from time to time redeem all or any portion of the shares held by the shareholders upon giving notice of not less than 30 calendar days to the shareholders.

On 6 June 2006, the Board resolved that 56,250,000 ordinary shares would be allotted at a placing price of USD2 per ordinary share.

On 23 September 2010, during its annual general meeting, the shareholder approved a Share Repurchase Programme. The approvals were renewed at the Company's annual general meetings in 2011, 2012, 2013, 2014 and 2015.

	2016	2015
	No. of shares	No. of shares
Total shares issued and fully paid (after repurchases and cancellations) at beginning of the year	67,235,739	67,537,240
Shares issued upon exercise of warrants during the period	35,927	-
Shares cancellation	(1,929,046)	(301,501)
	65,342,620	67,235,739
Repurchased and reserved for own shares
At beginning of the year	(7,819,500)	(4,815,215)
During the year	(4,629,554)	(3,369,285)
Shares reissued to ordinary shares	32,335	63,499
Shares cancellation	1,929,046	301,501
	(10,487,673)	(7,819,500)
Total outstanding ordinary shares with voting rights	54,854,947	59,416,239

As a result, as at 30 June 2016 the Company has 54,854,947 (2015: 59,416,239) ordinary shares with voting rights in issue (excluding the reserve for own shares), and 10,487,673 (2015: 7,819,500) are held as reserve for own shares.

The Company does not have any externally imposed capital requirements.

The Company's general intention is to reinvest the capital received on the sale of investments. However, the Board may from time to time and at its discretion, either use the proceeds of sales of investments to meet the Company's expenses or distribute them to shareholders. Alternatively, the Board of Directors may redeem ordinary shares with such proceeds for shareholders pro rata to their shareholding upon giving notice of not less than 30 calendar days to shareholders (subject always to applicable law) or repurchase ordinary shares at a price not exceeding the last published net asset value per share.

Warrants

On 19 May 2015, the Company issued a Prospectus for a bonus issue of warrants to shareholders pro rata, on the basis of one warrant for every three ordinary shares held. The exercise dates of these warrants will be on 1 June 2016, 1 December 2016 and 1 June 2017 with the exercise price of USD1.998. A total of 19,977,746 warrants were issued and admitted to trading on the AIM Market. As at 30 June 2016, 19,941,819 (2015: 19,977,746) warrants are outstanding. During the year, there was an exercise of 35,927 (2015: none) warrants to subscribe for 35,927 ordinary shares at a price of USD1.998 per ordinary share.

Although there can be no certainty as to whether all of the warrants will be exercised, if the bonus issue proceeds and all of the warrants are exercised on the exercise dates at the exercise price, the maximum net proceeds that could arise on such exercise would be approximately USD39.92 million. The net proceeds arising on the exercise of the warrants will be invested in accordance with the Company's investment policy.

6                    NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS

Total equity of USD146,875,869 (2015: USD124,359,535) represents net assets attributable to shareholders. There is no difference between net assets attributed to shareholders calculated as per the prospectus and in accordance with the Company's policy (2015: none).

7                    NET GAIN FROM INVESTMENTS IN SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

		2016	2015
		USD	USD
Net gain from investments in securities at fair value through profit or loss:
Realised gain		2,625,360	16,802,070
Adjustment to fair value of investments in securities at fair value through profit or loss		32,802,976	(6,811,853)
		35,428,336	9,990,217

8                    RELATED PARTY TRANSACTIONS

Investment management fees

The Company's Shareholders approved an amendment to the Investment Manager Agreement as detailed in the Company's circular dated 16 August 2013. Pursuant to the amended agreement the Investment Manager is entitled to receive a monthly management fee, paid in the manner set out as below:

-     On the amount of the Net Asset Value of the Company up to and including USD100 million, one-twelfth of two per cent.;

-     On the amount of the Net Asset Value of the Company above USD100 million up to and including USD150 million, one-twelfth of 1.75 per cent.; and

-     On the amount of the Net Asset Value of the Company that exceeds USD150 million, one-twelfth of 1.50 per cent.

The management fee accruing to the Investment Manager for the year to 30 June 2016 was USD2,460,388 (2015: USD2,444,321).

Incentive fees

The Company will pay the Investment Manager an incentive fee equal to 15 per cent of the Excess Performance amount each year, subject to certain criteria being met. The fee is calculated and payable as set out in the Investment Management Agreement Side Letter dated 11 September 2013. Excess performance amount is calculated as follows:

Excess Performance amount = (A - B) x C

Where:

A             is the closing NAV per share as at the end of the reporting period

B            is equal to the higher of:

               (i) the Initial High Water Mark increased by five per cent per annum on a compound basis; and

               (ii) the highest previous value for A in respect of a reporting period in which an incentive fee was paid, increased by five per cent per annum on an compound basis.

C            is equal to the time weighted average number of shares in issue as at the end of the reporting period

		2016	2015
		USD	USD
Performance fee		4,542,553	580,890

Directors' fees and expenses

The Board determines the fees payable to each Director, subject to a maximum aggregate amount of USD350,000 per annum being paid to the Board as a whole. The Company also pays reasonable expenses incurred by the Directors in the conduct of the Company's business including travel and other expenses. The Company pays for directors and officers liability insurance coverage.

The charges for the year for the Directors fees were USD261,000 (2015: USD224,500) and expenses were USD115,336 (2015: USD93,086).

Directors' ownership of shares and warrants

As at 30 June 2016, three Directors, Min-Hwa Hu Kupfer, Nguyen Quoc Khanh and Rolf Dubs held 36,667 (2015: 36,667), 13,468 (2015: 10,000) and 35,152 (2015: 30,000) ordinary shares of the Company respectively, representing 0.06% (2015: 0.06%), 0.02% (2015: 0.02%) and 0.06% (2015: 0.05%) of the total shares outstanding.

During the year, Min-Hwa Hu Kupfer, Nguyen Quoc Khanh and Rolf Dubs exercised nil (2015: nil), 3,333 (2015: nil) and 10,000 (2015: nil) warrants to subscribe ordinary shares, amounting to 13,333 (2015: nil) and 0.07% (2015: nil) of the total warrants issued respectively.

9                    CUSTODIAN FEES

Custodian fees are charged at a minimum of USD12,000 per annum and received as a fee at 0.08% on the assets under administration ("AUA") per annum. Custodian fees comprise safekeeping fees, transaction fees, money transfer fees and other fees. Safekeeping of unlisted securities up to 20 securities is charged at USD12,000 per annum. Transaction fees, money transfers fees and other fees are charged on a transaction basis.

The charges for the year for the Custodian fees were USD122,024  (2015: USD141,333).

 

10                 ADMINISTRATIVE AND ACCOUNTING FEES

The administrator receives a fee of 0.07% per annum for AUA less than USD100,000,000; or 0.06% per annum for AUA greater than USD100,000,000 calculated on the basis of the net assets of the Company, subject to an annual minimum amount of USD5,500 per month.

The charges for the year for the Administration and Accounting fees were USD95,073 (2015: USD 93,032).

11                 CONTROLLING PARTY

The Directors are not aware of any ultimate controlling party as at 30 June 2016 or 30 June 2015.

12                 FAIR VALUE INFORMATION

For certain of the Company's financial instruments not carried at fair value, such as cash and cash equivalents, accrued dividends, other receivables, receivables/payable upon sales/purchase of investments and accrued expenses, the amounts approximate fair value due to the immediate or short term nature of these financial instruments.

Other financial instruments are measured at fair value on the statement of comprehensive income.

Fair value estimates are made at a specific point in time, based on market conditions and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgement and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

·        Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments. This level includes listed equity securities on exchanges (for example, Ho Chi Minh Stock Exchange).

·        Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly (i.e., as prices) or indirectly (i.e., derived from prices). This level includes instruments valued using: quoted prices for identical or similar instruments in markets that are considered less than active; quoted market prices in active markets for similar instruments; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data.

·        Level 3: Inputs that are not based on observable market data (i.e. unobservable inputs). This level includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation.

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

	Level 1	Level 2	Level 3	Total
	USD	USD	USD	USD
2016
Financial assets classified at fair value upon initial recognition
Investments in securities	126,523,082	14,956,297	1,911,733	143,391,112
2015
Financial assets classified at fair value upon initial recognition
Investments in securities	116,337,749	4,416,898	-	120,754,647

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assessing whether an input is significant requires judgement including consideration of factors specific to the asset or liability. Moreover, if a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that fair value measurement is a Level 3 measurement.

Valuation techniques used in measuring Level 3 fair values, as well as the significant unobservable inputs used:

Investment type	Valuation technique	Significant unobservable inputs		Inter-relationship between key unobservable inputs and fair value measurement
Convertible bond	•       Discounted cash flows (in valuing the straight bond); and •       Black-Scholes model (in valuing the conversion feature)	•       Risk-adjusted discount rate (2016: 9.5%; 2015: nil); •       Dividend yield (2016: 5.91%; 2015: nil)		The estimated fair value will increase (decrease) if: •       the risk-adjusted discount rate was lower (higher); •       the dividend yield was lower (higher)

Although the Company believes that its estimates of fair value are appropriate, the use of different assumptions could lead to different measurements of fair value. Management considers that any reasonably possible changes to the unobservable input will not result in a significant financial impact.

Level 3 reconciliation

		Financial assets at fair value through profit or loss
		2016	2015
		USD	USD
Balance at 1 July		-	1,394,749
Purchases		1,790,510	-
Transfers to level 1		-	(1,394,749)
Total gains and losses recognised in profit or loss *		121,223	-
Balance at 30 June		1,911,733	-

*   Total gains or losses recognised in profit or loss for assets and liabilities held at the end of the reporting period, as included in the statement of comprehensive income.

13                 CLASSIFICATIONS OF FINANCIAL ASSETS AND LIABILITIES

The table below provides a breakdown of the line items in the Company's statement of financial position to the categories of financial instruments.

	Note	Fair value through profit or loss	Loans and receivables	Other liabilities	Total carrying amount
		USD	USD	USD	USD
2016
Cash and cash equivalents		-	5,281,215	-	5,281,215
Investments in securities at fair value	3	143,391,112	-	-	143,391,112
Accrued dividends		-	832,445	-	832,445
Receivables on sale of investments		-	3,055,954	-	3,055,954
Other receivables		-	24,840	-	24,840
		143,391,112	9,194,454	-	152,585,566
Payables on purchase of investments		-	-	1,124,964	1,124,964
Other payables		-	-	137	137
Accrued expenses		-	-	4,584,596	4,584,596
		-	-	5,709,697	5,709,697

 

2015
Cash and cash equivalents				-	4,146,270	-	4,146,270
Investments in securities at fair value		3		120,754,647	-	-	120,754,647
Accrued dividends				-	500,219	-	500,219
Receivables on sale of investments			-		620,123	-	620,123
Other receivables			-		2,123	-	2,123
				120,754,647	5,268,735	-	126,023,382
Payables on purchase of investments			-		-	955,420	955,420
Other payables				-	-	144	144
Accrued expenses				-	-	708,283	708,283
				-	-	1,663,847	1,663,847

 

14                 EARNINGS PER SHARE

The calculation of basic earnings per share at 30 June 2016 was based on the change in net assets attributable to ordinary shareholders of USD 31,413,950 (2015: USD 9,592,109) and the weighted average number of shares outstanding of 57,315,656 (2015: 60,782,065). The calculation of diluted earnings per share at 30 June 2016 was based on the change in net assets attributable to ordinary shareholders of USD 31,413,950 (2015: USD 9,592,109) and the diluted weighted average number of shares outstanding of 59,095,991 (2015: 60,782,065). As at 30 June 2015, 19,977,746 warrants were excluded from diluted weighted average number of shares calculation as their effect would have been anti-dilutive.

15                 NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

 

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2015, and have not been applied in preparing these financial statements. Those that may be relevant to the Company are set out below. The Company is currently assessing the potential impact of adopting these new standards and interpretations on the financial statements of the Company. The Company does not plan to adopt these standards early.

·    IFRS 9 replaces most of the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. It includes revised guidance on classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. IFRS 9 is mandatory for adoption by the Company on 1 January 2018.

Key Parties

Directors

Min-Hwa Hu Kupfer
Professor Dr. Rolf Dubs
Nguyen Quoc Khanh

Investment Manager

VietNam Holding Asset Management Limited
c/o Collas Crill Corporate Services Limited

Floor 2, Willow House

Cricket Square

PO Box 709

George Town, Grand Cayman

Cayman Islands, KY1-1107

Registered Office, Company Secretary and Cayman Islands Legal Advisor

c/o Collas Crill Corporate Services Limited

Floor 2, Willow House

Cricket Square

PO Box 709

George Town, Grand Cayman

Cayman Islands, KY1-1107

Nominated Adviser (AIM)

Smith & Williamson Corporate Finance Limited

25 Moorgate
London EC2R 6AY

United Kingdom

Corporate Broker (AIM)

Winterflood Investment Trusts

The Atrium Building

Cannon Bridge House

25 Dowgate Hill

London EC4R 2GA

United Kingdom

Administrator, Custodian and Trustee

Standard Chartered Bank
7 Changi Business Park Crescent
Level 3, Securities Services
Singapore 486028

Registrar

Capita Registrars
34 Beckenham Road
Beckenham, Kent BR3 4TU
United Kingdom

UK Legal Adviser

Dickson Minto W.S.

Broadgate Tower

20, Primrose Street

London EC2A 2EW

United Kingdom

Independent Auditor

KPMG LLP
16 Raffles Quay #22-00
Hong Leong Building
Singapore 048581

 

END

 

 

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