Annual Financial Report

RNS Number : 7775L

VietNam Holding Limited

15 August 2013

 



VietNam Holding Limited

("VNH" and/or "the Company")

Final Results for the Year ended 30 June 2013

VietNam Holding Limited (AIM : VNH), an investment company with a diversified portfolio invested in Vietnamese equities, is pleased to announce its results for the year ended June 30, 2013.

Highlights:

NAV

· NAV at June 30, 2013 - US$ 1.648 per share

· NAV at June 30, 2012 - US$ 1.295 per share

Financials

· Gain: US$ 18,748,643

· Earnings per share: US$ 0.35

Min-Hwa Hu Kupfer, Chairperson of VNH, commented:

"In a gradually improving macro-economic and policy environment, the VNH portfolio has once again managed to outperform the market by a substantial margin: from 1 July 2012 to 30 June 2013 the NAV per share increased by 27.3%, compared with the Vietnam Index's 12.3% USD adjusted gain. Since 30 June 2007, when VNH's capital was 80% deployed, the return of NAV per share outperformed the USD adjusted Index by 38.58% cumulatively."

Jean-Christophe Ganz, Chairman, VietNam Holding Asset Management, added:

"Between June 2007 and June 2013, VNH's Agricultural and Domestic Consumption portfolio sectors outperformed the benchmark VNI by a large margin. They remain the two dominant investment themes and primary focus of our portfolio.

The substantial out-performance of the VNH portfolio compared to the VNI is primarily due to the relatively better performance of the small- and mid-cap firms listed on HOSE compared to their large-cap peers. Our mid- and small-cap-centric portfolio continues to reflect both investment themes. "

For more information please contact:

VietNam Holding Asset Management Limited

Gyentsen Zatul Telephone: [phone]

- Investor Relations

Oriel Securities Limited (Nominated Adviser and Broker)

Stewart Wallace / Neil Winward

Telephone: [phone]

VietNam Holding Limited (an exempt company under the Companies Law and incorporated with limited liability in the Cayman Islands)

Financial Statements

For the year ended 30 June 2013 (with Independent Auditors' report thereon)

VietNam Holding Limited

Chairperson's statement

Year ended 30 June 2013

Dear Shareholders,

Over the past year there were a number of encouraging developments in Vietnam's macro-economic profile that have led to a respectable performance by the country's equity markets. The Market and Economic Overview section of this Annual Report provides a more thorough synopsis, but in general we believe that the most recent economic indicators and policy measures are all broadly in conformity with a more sustainable growth pattern for Vietnam.

In this gradually improving macro-economic and policy environment, the VNH portfolio has once again managed to outperform the market by a substantial margin: from 1 July 2012 to 30 June 2013 the NAV per share increased by 27.3%, compared with the Vietnam Index's 12.3% USD adjusted gain. Since 30 June 2007, when VNH's capital was 80% deployed, the return of NAV per share outperformed the USD adjusted Index by 38.58% cumulatively.

This six year record of outperformance is the result of three key factors: the impressive growth in VNH's two main investment themes - Vietnam's thriving agricultural sector and its growing domestic consumption - a rigorous process of portfolio rebalancing based on our value investing disciplines and our commitment to sustainability principles.

At the end of 2012 the VNH Board approved the implementation of the Investment Manager's proposed portfolio management policy, thereby formalizing certain portfolio diversification and asset allocation rules. The Investment Manager's Report which follows will highlight how the VNH portfolio has undergone a marked transformation over recent months, reinforcing our focus on under-valued small- and mid-cap listed companies. This portfolio re-balancing process also led to a decrease in the number of portfolio companies from 29 at the beginning of the fiscal year to 25 at the end of June, 2013 and a 22% portfolio company turnover for the year.

While VNH's share price outperformed the USD adjusted VNI during the full fiscal 2013 period, the most impressive gains were achieved in the last 6 months of the period, during which the VNH share price advanced by 35.5%.

Recognizing the importance of lowering the share price discount, VNH continued its share re-purchase program, accumulating a total of 1.14 million shares over the past fiscal year, to be kept in treasury. This represents 2% of the original share capital. In addition, through various established investor relations activities, VNH reached out to investors in Zurich, Geneva, Frankfurt, Munich, London, Edinburgh and Paris. As a result, the 52-week average of the share price discount was reduced from 30% a year ago to 21% at the end of June, 2013.

Another measure to narrow the discount in the long run is the VNH warrants program, which presently has 17,939,357warrants in issuance with a strike price of $1.196 per share and a final exercise date of 25 September, 2013. If successfully converted, the warrants would result in a substantial number of new VNH shares in circulation, potentially improving trading liquidity and hence a possible further reduction of the share price discount.

Our active engagement with existing and prospective investee companies has been a cornerstone of VNH's investment approach from the inception of the fund. This involves regular visits by VNH's directors and the investment team, as well as an on-going dialogue on issues that we deem to be crucial for the respective companies. Ever since our adoption of the principles of sustainable investing, issues concerning environmental, social impact and corporate governance (ESG) topics have been an integral part of this active engagement program. A recent example of this was the case of Dong Phu Rubber (DPR) which came under scrutiny from an international NGO earlier this year for alleged "land grabs" by its parent company in neighboring Cambodia and Laos. After DPR's management displayed little interest in directly engaging with VNH on this matter, our position in the company has been steadily reduced.

There have been some attractive recent developments in Vietnam's equity markets - such as increasing interest in small- and mid-cap stocks by institutional investors, and plans to lift the aggregate foreign ownership limits in listed firms. We believe that VNH is well positioned to capture any upside potential arising from these changes.

In addition, we are enthusiastic about the newly structured content of our theme-directed, rebalanced portfolio and the opportunities it presents in a promising market. Our entire team is focused on maximizing the opportunity on NAV and shareholder value growth. As we do so, your interest and investment in our Company continues to be most appreciated.

Min-Hwa Hu Kupfer
Chairperson
VietNam Holding Limited
14August 2013

VietNam Holding Limited

Investment Manager's Report

Year ended 30 June 2013

As noted by Mrs. Kupfer in her preceding letter, VNH has enjoyed another banner year, with portfolio results clearly outperforming the Vietnam Index. This is in no small part due to the continued strong work of our skilled CEO, Mr. Vu Quang Thinh, and his very competent team of specialists. For the second year since joining us, he has led our colleagues through an uncertain market to the achievement of aggressive goals.

In addition to this team orientation and dedication, there were two important factors which contributed to our success: the concentration on our two main investment themes and the successful rebalancing of our portfolio. I would like to elaborate on these factors and on the key decisions behind them.

Between June 2007 and June 2013, VNH's Agricultural and Domestic Consumption portfolio sectors outperformed the benchmark VNI by a large margin. They remain the two dominant investment themes and primary focus of our portfolio. The relative concentration of the two varies with both individual stock performance and our rebalancing efforts. As a result, during the past year the Agricultural sector declined from 37% to 31% of the portfolio, while Domestic Consumption holdings increased from 33% to 42% of the portfolio.

Mrs. Kupfer also stated in her report that VNH's Agriculture and Domestic Consumption portfolios both maintained and increased their impressive accumulated outperformance over the VNI benchmark last year. The substantial outperformance of the VNH portfolio compared to the VNI is primarily due to the impressive performance of the Domestic Consumption theme portfolio. In particular the four pharmaceutical and health care companies, which represent over 20% of our portfolio, had a particularly good year with a weighted average price increase of 71.42% over the past 12 months. On the other hand, for practically all of Vietnam's key agricultural export products the past year was very challenging. By June 2013 rice prices had decreased 9.7% from their peak last year and coffee prices by 6.2%. In addition, natural rubber prices having declined by 20.6% during the year, cashew nuts by 9.5% and pepper by 13.5%. For all these commodities, Vietnam is the largest or second largest global exporter.

This global decline in agricultural commodity prices has left a marked impact on the share performances of most companies in our agricultural portfolio. Yet, while we have reduced our agricultural exposure during the rebalancing exercise, we are unwavering in our conviction that this theme will continue to offer attractive investment returns for VNH shareholders.

While maintaining this dual sector concentration this year, we undertook an extensive review of the Vietnamese stock market's overall valuation levels as well as that of its main segments. We noticed an increasingly wide valuation gap between the few large companies, which make up 80% of the market capitalization, and the bulk of the companies which represent the remaining 20%*. Based on this observation, we rebalanced the VNH portfolio to further emphasize our historic focus on medium sized companies. The rebalancing resulted in a further VNH portfolio shift from large-cap firms to additional mid-cap investments. While a total of 27 firms make up 80% of the Ho Chi Minh City Stock Exchange ("HOSE") USD 11.8 bn free-float, VNH's portfolio contains only 8 out of these 27 large-caps. These 8 companies make up about one-third of VNH's total equity portfolio. The remaining 17 VNH portfolio companies are mid- and small-caps.

The substantial out-performance of the VNH portfolio compared to the VNI is primarily due to the relatively better performance of the small- and mid-cap firms listed on HOSE compared to their large-cap peers. Our mid- and small-cap-centric portfolio continues to reflect both investment themes.

The valuation gap between the VNH portfolio firms and the comparative HOSE segments is also noteworthy. The weighted average trailing P/E of VNH's large caps is 41% lower, compared to the corresponding HOSE large caps. The VNH mid- and small-caps' weighted average trailing P/E looks even more attractive. It is 46% lower than the P/E of the overall market segment.

These markedly lower valuations attest to VNH's adherence to value investment principles. This value investment approach is further validated by the comparison of the portfolio companies' weighted average 21.16% EPS growth over the past 5 years compared to the overall market's growth rate of just 4.66%.

While focusing our efforts on the continued strong financial performance of the fund and the safe, transparent and professional operation of our Company, we have actively maintained our orientation as a sustainable investor with vigorous inclusion of ESG principles in all of our management and investment decisions. This includes a very effective plan of active engagement with our investee companies, involving staff, management and the Board Members of both VNH and VNHAM. Our goal is to be a supportive partner with all of the companies in our portfolio, assisting them with the time and talents of the many years of global experience on the VietNam Holding team.

We are most thankful to our CEO, Vu Quang Thinh, and his dedicated staff in Vietnam. A special mention is also much deserved by our administrative and investor relations specialists in Zurich, our Advisory Council, and our Board members and Senior Advisor.

The three local members of our Advisory Council continue to provide us with invaluable insights into the current and anticipated economic and political events likely to impact the Vietnam market. Our Swiss advisor has provided important input regarding investor expectations, and has shared valuable and critical suggestions on the structure and presentation of our warrant options plan. We thank them all wholeheartedly.

As has been true from the inception of the fund and this Company, the role of our Board members is vital to our operation and our continued success. We are blessed with directors and a Senior Advisor who bring a wealth of global wisdom and experience to the Company. Without them we simply could not do what we do. They continue to serve in a way that is sincerely appreciated and will never be underestimated.

Jean-Christophe Ganz

Chairman
VietNam Holding Asset Management Limited

14 August 2013

************************************

Source: Bloomberg and VNHAM. As at 30 June 2013.

*We have selected the free-float market capitalization rather than the total market capitalization because several so-called large-caps are former state-owned companies, which have been only partially privatized. As an example, the single-largest company listed on HOSE is Petrovietnam Gas (GAS) with a total market capitalization of USD 5.3 bn as of June 30, 2013. However, only 3.3% of this company is held by independent shareholders. Therefore, the difference of the total market capitalization of the VNI of USD 34.8 bn is quite large when compared to the smaller market capitalization of the HOSE free-float of USD 11.8 bn, both as of mid-year 2013.

VietNam Holding Limited

Market and Economic Overview

Year ended 30 June 2013

The period from July 2012 to June 2013 saw the government endeavoring to regain control of Vietnam's weakened macro-economic situation. While there have been some positive movements in this regard, it remains a work in progress. Concerns about the fragility of the banking sector, the stalled property sector, and efforts to better control the large State corporations continue to challenge policy-makers and investors alike.

In 2H2012 the economy grew by 5.3%, and by 4.9% in 1H2013. The government has been aiming for 5.5% GDP growth for calendar 2013, but the consensus view is that 5.2% may be a more likely result.

By the end of June 2013, YTD inflation was a mere 2.4% and YoY inflation was 6.7%, suggesting that the government's battle to contain consumer prices is gradually being won. This gave some room for monetary loosening, with ceilings on interest rates being gradually lowered. But despite the lower cost of borrowing, credit growth has been anemic in 1H2013. Commercial banks are no longer permitted to offer customers gold deposit accounts, and gold trading in Vietnam has effectively been re-nationalized. Meanwhile the value of the VND has held relatively steady against the USD over the last twelve months, ending 1H2013 at 21,170, compared with 20,840 at the end of 2012.

Only three of the last twelve months saw a score above 50 in the Purchasing Manager's Index (which indicates a positive rate of growth in the manufacturing sector), and the index saw nine months of contraction, ending 1H2013 at 46.4. The main culprit has been weak domestic demand for products, rather than any marked decline in export orders. Export orders have been driven by the foreign-invested enterprise sector, displaying fairly consistent net trade surpluses, despite the continued rise in FDI inflow pledges and disbursements. Samsung in particular has become an important source of export earnings for Vietnam, from its US$2.5bn cellphone assembly plant in Bac Ninh. A second Samsung plant is being constructed in Thai Nguyen at a cost of an additional US$2.0bn. After squeezing out a rare trade surplus of roughly US$280m in 2012, a more normal trade deficit was seen for Vietnam in 1H2013, of US$1.4bn. Exports were US$62.1bn and imports US$63.5bn; a rise of 16.1% and 17.4% on 1H2012, respectively.

A much-touted initiative to establish a State-owned asset management company - a form of 'bad bank' - with a mandate to acquire approximately US$4bn in bad debt from the loan books of local banks - had not materialized by the end of June 2013. Details on the precise modalities of its operation also remained uncertain and a number of development and ratings agencies cautioned that such an initiative could not be expected to completely address the banking sector's large debt overhang. In addition, a State Bank of Vietnam directive stating that all commercial banks should abide by more stringent non performing loan and provisioning rules was put back from June 2013 to June 2014. Similarly, a government strategy to reform the large State corporations, which was due for unveiling in June 2013, had not been launched by mid-July. Such delays do little to instill investor confidence in the earnestness of the leadership to address some of the more fundamental challenges that lie behind Vietnam's current economic environment.

Nonetheless, the equity markets have been generally optimistic over the last twelve months. After retreating for much of 2H2012, the markets rallied strongly in December 2012 and January 2013, and then made more modest gains in March and May. As a result, the VNI was up 13.9% between July 1, 2012 and June 30, 2013, ending June at 481; down from a three-year peak of 528 seen earlier in the month, but still up 16.3% for 1H2013 overall.

As of the end of June 2013, the Ho Chi Minh City stock market's total capitalization was equivalent to US$38.2bn, compared to US$4.8bn for the Hanoi equity market. Companies making up the large cap index VN30 alone accounted for the majority - around US$26.6bn - of the HOSE. Ho Chi Minh City is home to 308 listed firms, while Hanoi has 388. Seven more companies listed their shares in 1H2013, while 22 de-listed themselves. Roughly US$110m of new equity funding was raised by companies listed on the country's stock markets in the first half of 2013, down about 58% on the same period in 2012. The State Securities Commission has announced its desire to merge the Hanoi and Ho Chi Minh City stock exchanges, probably in 2014 or 2015.

In May 2013 the National Assembly introduced what will be an annual vote of confidence by its 500 delegates on the performance of Vietnam's 49 most senior government officials. The results were made public, and both the Prime Minister and the Governor of the State Bank of Vietnam, along with a number of ministers, accrued relatively low confidence scores.

We will view the remainder of 2013 with guarded optimism.

VietNam Holding Limited

Directors' report

Year ended 30 June 2013

The Board of Directors makes all policy decisions on investment strategies, portfolio allocations, investment risk profiles, capital increases and profit distributions to Shareholders. It also appoints the Investment Manager, to whom it provides such instructions as may be appropriate.

The Board is 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 Net Asset Value at the time the investment is made. The sale of any investment in which the Company holds 4% or more of the total share capital of the respective portfolio company is also subject to the approval of the Board.

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. The Board takes careful consideration when recommending Directors for re-election and considers that the length of service alone does not necessarily restrict Directors from seeking re-election. Those currently serving as Directors are:

Mrs. Min-Hwa Hu Kupfer, Chairperson

Professor Rolf Dubs

Mr. Nguyen Quoc Khanh

The Board maintains two committees, an Audit Committee and a Corporate Governance Committee. Recognizing the importance of sound governance commensurate with the size of the Board and the interests of the Shareholders, the Directors work closely on all Board matters. Both committees are made up of all three Directors.

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 internal compliance and audit function has been delegated to an external audit firm, which submits periodic internal audit reports to the Chairperson of the Board's Audit Committee.

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. It has adopted a code of ethics and other best practices of corporate governance which it considers appropriate for the size and activities of the Company.

The Board met quarterly and held two additional telephonic Board meetings during fiscal year 2013. After careful consideration of the Vietnam market conditions and outlook, as well as the potential costs and benefits associated with the proposed changes, the Board called an Extraordinary General Meeting in November 2012 and obtained shareholder approval to extend the maturity of the Company's 18.19 million warrants outstanding that were due to expire in December of last year. Under this approved extension, the warrant holders are given two exercise dates in addition to the original date of exercise. The final exercise date of the warrants is now September 25, 2013.

Concurrently with each board meeting, the Board reviewed extensively with the Investment Manager the status and the performance of the portfolio, including investment themes, pipelines, divestures, industry trends and peer group performance comparisons. Following the recommendations made under the portfolio management policy of the Investment Manager, the Board approved and/or ratified the asset allocation limits and target position of each equity investment in every quarterly review. The Board monitored and approved the portfolio rebalancing activities where the Investment Manager exited nine portfolio companies and initiated five new investments thereby reducing the number of equity holdings in the portfolio from twenty-nine to twenty-five during fiscal year 2013.

The share buy-back program and share price discount control programs were also reviewed quarterly during the board meetings. As had been the case in the past several years, the Company continued to hold its regular investor presentations in Europe to meet and engage with shareholders.

The Board also reviewed regularly the on-going expenditures of the Company, the variance between actual expenses incurred as compared to the respective budgeted items as well as the, costs, terms and performance of its service providers.

The Audit Committee held four meetings in the past year in parallel with the board meetings. Risk Management and Compliance reporting were reviewed and risk control issues were evaluated by the Committee in each of the quarterly meetings. During the year, the Risk Management Committee of the Board of the Investment Manager was formalized.

Working with the Risk Management Committee Chair and the CEO of the Investment Manager, the Audit Committee Chair oversaw the internal audit which took place in the second quarter of 2013. This is the fourth internal audit of the Investment Manager since the inception of the Fund. Its focus was to identify risks and controls associated with the investment process, including investment research, investment selection and portfolio management, and to test the operating effectiveness of the controls over the investment process. The Committee reviewed the internal audit findings, encompassing the management responses and the agreed action plan to address issues which were highlighted during the field testing and in the final report.

The Corporate Governance Committee also met four times concurrently with the quarterly board meetings. The Investment Manager presented its strategic plans, financial positions and organizational development during each of the Committee meetings.

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 "VNH Code of Ethics" by all employees and Board members of the Investment Manager and the Company.

Starting in December 2012, the Committee began the practices of evaluating in each of its quarterly meetings the effectiveness of the Board, including how well the Directors are engaged in and informed of the key developments of the Company by its Chairperson. The results of the evaluations will be incorporated into an annual review of Board performance.

Since the second quarter of 2013, the Investment Manager has provided advisory services to a separate Vietnam equity fund. A Conflict of Interest Policy of the Investment Manager has since been presented and accepted by the Committee.

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 2013, the Company's Directors' Base Fees were:

- Mrs. Min-Hwa Hu Kupfer           $ 28,000

- Professor Rolf Dubs                 $ 20,000

- Mr. Nguyen Quoc Khanh          $ 20,000

For attendance in person at each Committee and Board meeting, which took place quarterly, each Director was paid $1,500. For attending any Committee or Board meeting held telephonically, each Director was paid $750 per meeting. Each Director was also compensated $1,500 per day for rendering services related to Committee and Board initiatives.

The total remuneration of the Company's Directors in FY2012-13 as the result of meeting attendance and additional days worked was USD 159,500 as follows:

-Mrs. Min-Hwa Hu Kupfer, Chairperson                                                  USD 82,000

-Professor Rolf Dubs, Director & Chair of Corp. Governance Committee USD 41,000

-Mr. Nguyen Quoc Khanh, Director & Chair of Audit Committee               USD 36,500

There has been no change made to the Company's Directors' remuneration policy in the past year.

Ownership of VietNam Holding

- Mrs. Min-Hwa Hu Kupfer               30,000 shares and 6,666 warrants

- Professor Rolf Dubs                      20,000 shares and 15,000 warrants

- Mr. Nguyen Quoc Khanh               10,000 shares

During the year, the Directors increased their ownership of the Company from 40,000 shares to 60,000 shares as Mr. Khanh acquired 10,000 shares and Professor Dubs exercised 10,000 warrants and converted them into shares. As of June 30, 2013, the Board holds 21,666 warrants issued by the Company.

In 2012-2013, there were no related-party transactions between the Company and any of its Directors, other than that mentioned in the accounts.

On behalf of the Board of Directors:

Min-Hwa Hu Kupfer

Chairperson

14August 2013

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

Telephone   [phone] Fax              [phone] Internet        www.kpmg.com.sg

To the Shareholders of
VietNam Holding Limited

c/o Card Corporate Services Ltd.

Fourth Floor, Zephyr House

122 Mary Street

PO Box 709 GT

Grand Cayman

KY1-1107, Cayman Islands

INDEPENDENT AUDITORS' REPORT

Report on the financial statements

We have audited the accompanying financial statements on pages 14to 28of VietNam Holding Limited ("the Company"), which comprise the statement of financial position as at 30 June 2013, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising 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.

KPMG LLP (Registration No. T08LL1267L), an accounting limited liability partnership registered in Singapore under the Limited Liability Partnership Act (Chapter 163A) and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

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.

KPMG LLP (Registration No. T08LL1267L), an accounting limited liability partnership registered in Singapore under the Limited Liability Partnership Act (Chapter 163A) and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

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 2013, and of its financial performance and its 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 CharteredAccountants

Singapore

14 August 2013

VietNam Holding Limited
Statement of financial position as at 30 June 2013
		Note		2013	2012
				USD	USD
	Assets
	Cash and cash equivalents			2,671,910	3,070,132
	Investments in securities at fair value	3		83,939,007	66,709,452
	Accrued dividends			374,108	143,418
	Receivables on sale of investments	5		1,326,054	-
	Other receivables	5		-	73,695
	Total assets			88,311,079	69,996,697
	Equity
	Share capital	6		109,507,940	110,484,090
	Retained earnings			(22,239,418)	(40,988,061)
	Total equity			87,268,522	69,496,029
	Liabilities
	Payables on purchase of investments			705,228	64,856
	Accrued expenses			337,329	435,812
	Total liabilities			1,042,557	500,668
	Total equity and liabilities			88,311,079	69,996,697
	Total equity represented by:
	Net assets attributable to shareholders (last traded prices)			88,198,156	70,477,461
	Adjustment from last traded prices to bid - market prices			(929,634)	(981,432)
	Net assets attributable to shareholders (bid - market prices)			87,268,522	69,496,029

The net asset value per share based on last traded prices was USD1.648 as at 30 June 2013(2012: USD1.295) calculated as per the prospectus, and the net asset value per share based on bid-market prices, calculated as per IFRS, was USD1.630 as at 30 June 2013(2012: USD1.277). This is based on 53,530,411 shares outstanding (2012: 54,417,112).

The financial statements on pages 14 to 28 were approved by the Board of Directors on 14 August 2013 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 2013
				Note			2013				2012
							USD				USD
	Dividend income from equity securities at fair value through profit or loss						4,043,206				4,307,641
	Net gain from equity securities at fair value through profit or loss			7			17,445,739				7,219,778
	Net foreign exchange loss						(31,491)				(56,113)
	Net investment income						21,457,454				11,471,306
	Investment management fees			8			1,465,670				1,290,909
	Advisory fees						163,327				146,115
	Accounting fees			10			83,250				98,250
	Custodian fees			9			76,159				101,460
	Directors' fees and expenses			8			214,511				255,885
	Brokerage fees						62,000				62,268
	Audit fees						43,667				51,076
	Publicity and investor relations fees						278,082				233,278
	Insurance costs						50,000				45,000
	Administrative expenses						177,145				226,810
	Risk management expenses						60,000				30,096
	Technical assistance for investee companies						35,000				9,666
	Total operating expenses						2,708,811				2,550,813
	Change in net assets attributable to shareholders						18,748,643				8,920,493
	Earnings per share - basic and diluted			14			0.35				0.16
VietNam Holding Limited
Statement of changes in equity for the year ended 30 June  2013
			Share capital	Reserve for own shares						Retained earnings			Total
			USD	USD						USD			USD
	Balance at 1 July 2011		112,181,354	-						(49,908,554)			62,272,800
	Repurchase and cancellation of shares (note 6)		(965,429)	-						-			(965,429)
	Repurchase of own shares (note 6)		-	(176,302)						-			(176,302)
	Warrants issuance cost		(555,533)	-						-			(555,533)
			(1,520,962)	(176,302)						-			(1,697,264)
	Total comprehensive income for the year
	Change in net assets attributable to shareholders		-	-						8,920,493			8,920,493
	Balance at 30 June 2012		110,660,392	(176,302)						(40,988,061)			69,496,029
	Balance at 1 July 2012		110,660,392	(176,302)						(40,988,061)			69,496,029
	Issuance of ordinary shares		304,598	-						-			304,598
	Repurchase and cancellation of shares (note 6)		-	-						-			-
	Repurchase of own shares (note 6)		-	(1,259,873)						-			(1,259,873)
	Warrants issuance cost		(20,875)	-						-			(20,875)
			110,944,115	(1,436,175)						(40,988,061)			68,519,879
	Total comprehensive income for the year
	Change in net assets attributable to shareholders		-	-						18,748,643			18,748,643
	Balance at 30 June 2013		110,944,115	(1,436,175)						(22,239,418)			87,268,522
VietNam Holding Limited
Statement of cash flows for the year ended 30 June 2013
						Note		2013				2012
								USD				USD
	Cash flows from operating activities
	Change in net assets attributable to shareholders							18,748,643				8,920,493
	Adjustments to reconcile change in net assets attributable to shareholders to net cash from operating activities:
	Dividend income							(4,043,206)				(4,307,641)
	Net gain from equity securities at fair value through profit or loss							(17,445,739)				(7,219,778)
	Purchase of investments							(15,961,424)				(17,068,156)
	Proceeds from sale of investments							15,491,926				17,794,054
	Net foreign exchange loss							31,491				56,113
	Decrease/(Increase) in other receivables							73,695				(73,695)
	(Decrease)/Increase in accrued expenses							(98,483)				63,302
	Dividends received							3,812,516				4,218,963
	Net cash from operating activities							609,419				2,383,655
	Cash flows from financing activities
	Issuance of ordinary shares							304,598				-
	Payment for buy-back of shares					6		-				(965,429)
	Repurchase of own shares					6		(1,259,873)				(176,302)
	Warrants issuance cost							(20,875)				(555,533)
	Net cash used in financing activities							(976,150)				(1,697,264)
	Net (decrease)/increase in cash and cash equivalents							(366,731)				686,391
	Cash and cash equivalents at beginning of the year							3,070,132				2,439,854
	Effect of exchange rate fluctuations on cash held							(31,491)				(56,113)
	Cash and cash equivalents at end of the year							2,671,910				3,070,132

VietNam Holding Limited

Notes to the Financial statements

Year ended 30 June 2013

 

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.

In 2013, the Board of Directors ("the Board") will propose at the Company's annual general meeting, an ordinary resolution that the Company will continue in existence. If such resolution is passed, the Company will continue its operations and a similar resolution will be put to shareholders in 2016. If either of such resolutions is not passed the Board will, at that annual general meeting or at an extraordinary general meeting held within six months of that annual general meeting, propose a resolution to wind up the Company or one or more resolutions to implement a reconstruction, amalgamation or other material alteration to the Company or its activities or any other appropriate alternative based upon current circumstances. Shareholders will only be able to realise their investment by selling their ordinary shares or participating in any redemption or purchase of ordinary shares by the Company.

VietNam Holding Asset Management Limited ("VNHAM") is 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 Branchand 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 CARD Corporate Services Ltd., Fourth Floor, Zephyr House, 122 Mary Street, PO Box 709 GT, Grand Cayman, KY1-1107, Cayman Islands.

2                    PRINCIPAL ACCOUNTING POLICIES

(a) Statement of compliance

The financial statements have been prepared in accordance with 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"). 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 listings of the shares on the AIM market of the London Stock Exchange and the Entry Standard of the Frankfurt Stock Exchange are in USD and Euro, respectively. 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 financial statements are presented in USD, which is the Company's functional currency.

The preparation of financial statements in accordance with IFRS 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.

2                    PRINCIPAL ACCOUNTING POLICIES (continued)

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 Boardto 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. Therefore a reconciliation between the measure of NAVused by the Board and that contained in these financial statements has been provided in a footnote to the statement of financial position.

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

There were no new IFRS standards applied for the year ended 30 June 2013.

(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 designated all its investments as financial assets at fair value through profit or loss category. Financial instruments are designated 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 equity instruments and unlisted equity instruments.

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, which 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.

2                   PRINCIPAL ACCOUNTING POLICIES (continued)

(iv) Measurement

Financial instruments are measured initially at cost. For financial assets acquired, cost is the fair value of consideration given. Subsequent to initial recognition, all financial assets at fair value through profit or loss are measured at fair value. Transaction costs on financial assets and financial liabilities at fair value through profit or loss are expensed immediately.

Valuation

Investments are recorded at fair value. The fair value of the securities is based on their quoted bid price at the reporting date without any deduction for transaction costs.

If the securities are not listed, the value of the relevant securities is ascertained by the Board in good faith using valuation methods which it considers fair in the circumstances including quotes received from brokers and other third party sources where possible.

As at 30 June 2013, 9.0% (2012: 12.5%) of the valuations of the net assets of the Company were based on quotes obtained from brokers.

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) 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.

(f) Offsetting

Financial assets and liabilities are offset and the net amount is reported in the statement of financial position 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.

(g) 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 accounting period.

2                   PRINCIPAL ACCOUNTING POLICIES (continued)

(h) Taxation

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% (2012: 0.1%) on the sales proceeds of the onshore sale of equity investments. This is included in net gain/(loss) from equity securities at fair value through profit or loss.

(i) 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 effect.

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.

(j) Adoption of new and revised standards

Adoption of new standards and amendments to existing standards

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2012, and have not been applied in preparing these financial statements. None of these are expected to have significant effect on the measurement of the amounts recognised in the financial statements of the Company.

IFRS 13 - Fair Value Measurement

Effective for the Company's financial statements for the year ending 30 June 2014.

IFRS 13 replaces the fair value measurement guidance spread throughout various IFRS's with a single source.

The standard defines fair value, establishes a framework for measurement and sets out disclosures requirements. The standard does not create any new requirements to measure assets and liabilities at fair value.

The fair value definition has been refined to be 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, i.e. an exit price.

The exit price term is the key concept. Fair values must only reflect considerations that would be taken in to account by market participants. This excludes costs incurred in the structure of any transaction and any characteristic of the asset or liability that is purely a function of the holding entity and will not transfer with the asset or liability. Common examples of entity specific characteristics are large market positions "blockage factors" or contractual limitations on use or sale between the entity and another party.

Non financial assets are covered by IFRS 13 and are measured at their highest and best use taking in to account all factors in which market participants would factor in to its highest and best use. If the asset is not being used in such a way this must be disclosed.

An entity shall use fair value measurements techniques that are appropriate to the circumstances, for which sufficient data is available and that maximises the use of observable inputs and minimises the use of unobservable inputs. If a level 1 input exists this must be used without adjustment except in very limited circumstances.

The disclosures requirements under IFRS 13 are primarily the fair value hierarchy disclosures currently effective within IFRS 7.

3                    FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS

Financial assets of the Company include investments in securities, cash and cash equivalents and accrued income. Financial liabilities comprise accrued charges. 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, 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:

	2013		2012
	Fair value in USD	% of net assets	Fair value in USD	% of net assets
Shares and similar investments - listed	76,026,001	87.12	58,014,009	83.48
Shares and similar investments - unlisted	7,913,006	9.07	8,695,443	12.51
	83,939,007	96.19	66,709,452	95.99

At 30 June 2013, a 5% reduction in the market value of the portfolio would have led to a reduction in NAV and profit or loss of USD4,196,950 (2012: USD3,335,473). A 5% increase in market value would have lead 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.

3                    FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (continued)

As at 30 June 2013the Company had the following currency exposures:

		Fair value
		2013	2012
		USD	USD
Vietnamese Dong		85,981,766	67,652,030
Pound Sterling		176,749	573,908
Swiss Franc		40,784	286,397
Euro		947	50,618
		86,200,226	68,562,953

At 30 June 2013, a 5% reduction in the value of the Vietnamese Dong, Pound Sterling,Swiss Franc,Euro would have lead to a reduction in NAV and profit or loss of USD4,299,085 (2012: USD3,382,602), USD8,837 (2012: USD28,695), USD2,039(2012: USD14,320) and USD47 (2012: USD2,531)respectively. A 5% increase in value would have lead to an equal and opposite effect.

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 2013, the following financial assets were exposed to credit risk (including settlement risk): cash and cash equivalents, accrued dividend, receivable from sale of investments and other receivables. The total amount of financial assets exposed to credit risk amounted to USD4,372,073 (2012:USD3,256,836).

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 exchangesor on other stock exchanges. There is no guarantee however that the Vietnam stock exchangeswill 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.

Interest rate risk

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.

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 2013 and 30 June 2012. All of the Company's investment income can be attributed to Vietnam for the years ended 30 June 2013 and 30 June 2012.

5                    OTHER RECEIVABLES

		2013	2012
		USD	USD
Other receivables		-	43,286
Prepayment		-	30,409
		-	73,695

6                    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. 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 Boardresolved that 56,250,000 ordinary shares would be allotted at a placing price of USD2 per ordinary share. The ISIN number of the ordinary shares is KYG9361X043.

On 23 September 2010, during its annual general meeting, the shareholders approved a Share Repurchase Programme.

			No. of shares
Shares issued and fully paid in 2006			56,250,000
Repurchased and cancelled:
Year ended 30 June 2011			(343,138)
Year ended 30 June 2012			(1,324,750)
Year ended 30 June 2013			-
Total shares repurchased and cancelled			(1,667,888)
Number of shares after repurchases and cancellations			54,582,112
Repurchased and reserved for own shares
Year ended 30 June 2012			(165,000)
Year ended 30 June 2013			(1,141,381)
			(1,306,381)
Shares issued upon exercise of warrants			254,680
Total outstanding ordinary shares with voting rights			53,530,411

As a result, the Company now has 53,530,411(2012: 54,417,112)ordinary shares with voting rights in issue (excluding the reserve for own shares), and 1,306,381(2012: 165,000) are held as reserve for own shares.

The Company strives to invest the capital raised to meet the Company's investment objectives which are to achieve long term capital appreciation through a diversified portfolio of companies that have high potential in Vietnam. The Company achieves this aim by investing principally in securities of former State-owned Entities ("SOEs") in Vietnam prior to, at or after such securities becoming listed on the Vietnam stock exchange.

The Company does not have any externally imposed capital requirements.

Incremental costs directly attributable to the issue or redemption of ordinary shares are recognised directly in equity as a deduction from the proceeds or part of the acquisition cost.

The Company's general intention is to reinvest the capital received on the sale of investments. However, the Boardmay 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.

6                   SHARE CAPITAL (continued)

Warrants

On 21 May 2012, 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 date of these warrants was initially on 13 December 2012 with an exercise price of USD1.196 per share. Both Shareholders and Warrantholders gave their approval to a proposal of extension of the term of the warrants through the addition of two exercise dates, 25 April 2013 and 25 September 2013.

A total of 18,194,037 (2012: 18,194,037)warrants were issued and were listed on AIM. At the reporting date,17,939,357 (2012: 18,194,037)warrants were outstanding.

On 13 December 2012 and 25 April 2013, 32,930 and 221,750 shares were issued following the exercise of subscription rights by holders of the warrants.

Although there can be no certainty as to whether any or all of the remaining warrants will be exercised, if the bonus issue proceeds and all of the remaining warrants are exercised on the exercise date at the exercise price, the maximum net proceeds that could arise on such exercise would be approximately USD21.8 million. The net proceeds arising on the exercise of the remaining warrants will be invested in accordance with the Company's investment policy.

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

		2013	2012
		USD	USD
Net gain from equity securities at fair value through profit or loss:
Realised loss		(7,217,354)	(18,307,227)
Adjustment to fair value of equity securities at fair value through profit or loss		24,663,093	25,527,005
		17,445,739	7,219,778

8                    RELATED PARTY TRANSACTIONS

Investment management fees

The Investment Manager is entitled to an investment management fee of 2% per annum on the monthly net assets under management. The fee is payable monthly and is calculated by reference to the NAV at the end of the preceding month. In addition, the Investment Manager is reimbursed by the Company for administrative functions that it performs on behalf of the Company.

The Company will pay the Investment Manager a performance bonus each year at the rate of 20% of the annual increase in net asset value over the higher of an annualised hurdle rate of 5% and a "high water mark" requirement.

The total fees accruing to the Investment Manager for the year to 30 June 2013were USD1,465,670 (2012: USD1,290,909) as a management fee.

No performance fee was due as at 30 June 2013or at 30 June 2012.

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 paysreasonable 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 USD159,500 (2012: USD173,000) and expenses were USD55,011 (2012: USD82,885).

8                    RELATED PARTY TRANSACTIONS (continued)

Directors' ownership of sharesand warrants

As at 30 June 2013, threeDirectors, Min-Hwa Hu Kupfer, Nguyen Quoc Khanh and Rolf Dubs held 30,000 (2012: 30,000), 10,000 (2012: Nil)and 20,000 (2012: 10,000) ordinary shares of the Company respectively, representing 0.06% (2012: 0.06%), 0.02%(2012: Nil) and 0.04% (2012: 0.02%) of the total shares outstanding.

As at 30 June 2013, Min-Hwa Hu Kupferand Rolf Dubs held 6,666 (2012: 6,666) and 15,000 (2012: 25,000) warrants to subscribe ordinary shares, representing 0.04% (2012: 0.04%) and 0.08% (2012: 0.14%) 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 of 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 USD 76,159 (2012: USD101,460).

10                 ADMINISTRATIVE AND ACCOUNTING FEES

The administrator receives a fee of 0.07% per annum for assets under administration ("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 USD83,250 (2012: USD98,250).

11                 CONTROLLING PARTY

The Directors are not aware of any ultimate controlling party as at 30 June 2013 or 30 June 2012.

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 and other assets and creditors and accrued charges, 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 the net assets attributable to shareholders.

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

12                 FAIR VALUE INFORMATION (continued)

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

·        Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity securities and debt instruments on exchanges (for example, London Stock Exchange, Frankfurt Stock Exchange, New York Stock Exchange) and exchanges traded derivatives like futures (for example, Nasdaq, S&P 500).

·        Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This level includes the majority of the OTC derivative contracts, traded loans and issued structured debt. The sources of input parameters like LIBOR yield curve or counterparty credit risk are Bloomberg and Reuters.

·        Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). This level includes equity investments and debt instruments with significant unobservable components. This hierarchy requires the use of observable market data when available. The Company considers relevant and observable market prices in its valuations where possible.

The carrying amounts of financial assets at 30 June 2013 and 30 June 2012 are as follows:

	Level 1	Level 2	Level 3	Total
	USD	USD	USD	USD
2013
Financial assets designated at fair value upon initial recognition
Equity investments	76,026,001	-	7,913,006	83,939,007
2012
Financial assets designated at fair value upon initial recognition
Equity investments	58,014,009	-	8,695,443	66,709,452

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.

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. For fair value measurements in Level 3, if the reasonable possible alternative assumptions were increased/decreased by 10%, the impact on profit/(loss) would be USD791,301 (2012: USD869,544).

12                 FAIR VALUE INFORMATION (continued)

 

Level 3 reconciliation

		Financial assets designated at fair value through profit or loss
		2013	2012
		USD	USD
Balance at 1 July		8,695,443	10,396,429
Sales		-	(3,764,155)
Total gains and losses recognised in profit or loss *		(782,437)	2,063,169
Balance at 30 June		7,913,006	8,695,443

*   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                 CLASSFICATIONS AND FAIR VALUES 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	Designated as at fair value through profit or loss	Loans and receivables	Other liabilities	Total carrying amount
		USD	USD	USD	USD
2013
Cash and cash equivalents		-	2,671,910	-	2,671,910
Investments in securities at fair value	3	83,939,007	-	-	83,939,007
Accrued dividends		-	374,108	-	374,108
Receivables from sale of investments		-	1,326,054	-	1,326,054
Other receivables	5	-	-	-	-
		83,939,007	4,372,072	-	88,311,079
Payables on purchase of investments		-	-	705,228	705,228
Accrued expenses		-	-	337,329	337,329
		-	-	1,042,557	1,042,557

2012
Cash and cash equivalents				-		3,070,132	-	3,070,132
Investments in securities at fair value		3		66,709,452		-	-	66,709,452
Accrued dividends				-		143,418	-	143,418
Other receivables		5		-		73,695	-	73,695
				66,709,452		3,287,245	-	69,996,697
Payables on purchase of investments			-		-		64,856	64,856
Accrued expenses				-		-	435,812	435,812
				-		-	500,668	500,668

14                 EARNINGS PER SHARE

The calculation of earnings per share at 30 June 2013was based on the change in net assets attributable to ordinary shareholders of USD18,748,643 (2012: USD8,920,493) and the weighted average number of shares outstanding of 53,894,886 (2012: 54,998,948).

At the reporting date, the warrants in issue are anti-dilutive and hence disregarded in the calculation of diluted earnings per share.

VietNam Holding Limited

Key Parties

Directors

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

Investment Manager

VietNam Holding Asset Management Limited
P.O. Box 3175
Road Town, Tortola
British Virgin Islands

Company Secretary

CARD Corporate Services Ltd.
Fourth Floor, Zephyr House
122 Mary Street
PO Box 709 GT
Grand Cayman
KY1 - 1107, Cayman Islands

Nominated Advisor (AIM)

Oriel Securities Limited
150 Cheapside
London EC2V 6ET
United Kingdom

Entry Standard Advisor

Close Brothers Seydler Bank AG
Schillerstrasse 27 -29
60313 Frankfurt
Germany

Corporate Broker

Oriel Securities Limited
150 Cheapside
London EC2V 6ET
United Kingdom

VietNam Holding Limited

Key Parties (continued)

Custodian

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

Registrar

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

Administrator

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

Legal Adviser (English Law)

Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
United Kingdom

Legal Adviser (Cayman Island Law)

Charles Adams Ritchie & Duckworth
Zephyr House
122 Mary Street,
PO Box 709 GT
Grand Cayman
KY1 - 1107, Cayman Islands

Independent Auditor

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

 

END

 

 

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