Final Results

RNS Number : 4851W

VietNam Holding Limited

19 August 2015

 



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

Audited accounts for the year ended 30 June 2015

VietNam Holding Limited, an investment company with a diversified portfolio invested in Vietnamese equities, is pleased to announce its audited accounts for the year ended 30 June 2015.

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

Highlights

·      NAV per Share up 9.0 per cent. to US$ 2.093 from US$ 1.921

·      Share price up 23.3 per cent. to US$ 1.803 from US$ 1.463

Min Kupfer, Chairperson of VNH, commented:

"Our efforts to reduce the discount of the share price to NAV per share saw further progress, with the discount ending the financial year at 13.0%, down from 23.9% at its start. The company bought back 3.37mn shares during the year, bringing its total shares outstanding at 30 June 2015 to 59.42mn (plus 7.82mn treasury shares)."

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

"The ongoing actions to increase the Foreign Ownership Limits on shares of public companies are likely to become a catalyst for Vietnam's graduation from frontier to emerging market status in the MSCI indices. This is in fact one of the government's stated objectives. Previous cases of countries ascending to the emerging stock market status have resulted in increased inward flows of foreign indirect investments, which in turn helped companies to raise the additional capital needed to support higher growth."

For more information please contact:

VietNam Holding Asset Management Limited	Tel: [phone]
Gyentsen Zatul - Investor Relations
Altium Capital Limited (Nominated Adviser)	Tel: [phone]
Tim Richardson
Winterflood Investment Trusts (Broker)	Tel: [phone]
Joe Winkley / Neil Langford
Buchanan Communications	Tel: [phone]
Charles Ryland / Vicky Watkins

About VNH

VNH is a closed end fund listed on the AIM Market of the London Stock Exchange and the Entry Standard Market of the Frankfurt Stock Exchange. VNH's portfolio is actively managed by VietNam Holding Asset Management Limited, an investment management company with offices in Ho Chi Minh City and Zurich, which specializes in the development and management of Vietnamese equity funds.

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 2015

(with Independent Auditors' report thereon)

Chairperson's Statement

Dear Shareholders,

Our financial year ended 30 June 2015 was successful, with an NAV per share increase of 9.0% to USD 2.093 and a share price increase of 23.3% to USD 1.803.  The Vietnam All Share Index (VNAS), the benchmark we use for reference, increased in USD terms by 1.4% for the full 12-month period ending the financial year at 575.4.

Our efforts to reduce the discount of the share price to NAV per share saw further progress, with the discount ending the financial year at 13.0%, down from 23.9% at its start. The company bought back 3.37mn shares during the year, bringing its total shares outstanding at 30 June 2015 to 59.42mn (plus 7.82mn treasury shares).

In April 2015 an EGM approved a bonus issue of warrants (totalling 19.98mn) to all shareholders: 1 warrant per 3 shares held, record date 20 May 2015, exercise price USD 1.998 (equal to the NAV per share on 31 March 2015), exercise dates 1 June 2016, 1 December 2016, and 1 June 2017. We believe it is a propitious time to be raising the company's capital for further investing in Vietnamese equities, given the broadly positive long term economic cycle in Vietnam, the still relatively attractive valuations in the market, and the renewed impetus for economic reform among Vietnamese policy makers.

VietNam Holding's ongoing good performance was strongly supported by a rising GDP growth rate (reaching 6.4% YoY by the second quarter of calendar 2015), benign inflation (running now at only 1% YoY), and a reasonably stable exchange rate (VND 21,821 at time of this writing, after two 1% devaluations so far this calendar year). This solid economic performance was supported by an eighth straight year of impressive foreign direct investment inflow (USD 9-12bn disbursed per year, one of the highest figures relative to GDP in the world). Other factors were the continued strong inward remittances (USD 12bn per year, also a large number relative to GDP), continued export growth (+9% in 1H2015), and improved forex reserves of USD 35-40bn.

Vietnam's successful macroeconomic stabilization has been complemented by the increasing delivery of structural reform measures over the past year. These included the updating of bankruptcy, property and enterprise laws, rationalization in the banking sector, and the establishment of the government-owned Vietnam Asset Management Company (VAMC), which successfully warehoused a large number of bank NPL's.

Although state-owned enterprises have been the subject of a renewed privatization effort, they failed to reach the government's 2015 target of 289 partial sales (recently reduced to 171 - also likely to be unachieved). This was disappointing, but an improvement compared to the 2008-13 period. Finally and most welcome, Vietnam is moving to raise foreign ownership limits in its stock market, from the general 49% limit to as much as 100%.

As an active market participant, VietNam Holding supports the government's introduction of further reforms and market liberalization, including the planned launch of a derivatives market by 2016.  As more financial instruments are developed and become readily available, our investment management team will continue to explore and to test their applicability in hedging our underlying equity portfolio. 

Vietnam's policy makers deserve credit for restoring monetary and macroeconomic stability. It is this big-picture transformation that has enabled almost four years of rising Vietnamese equities: a 64.6% appreciation in local currency for the VNAS from the end of 2011 to 30 June 2015. This economic and market rebound has provided the very positive backdrop for VietNam Holding's achievement of a cumulative +104.2% NAV increase and a growth in share price of 141.1% over the same period.

Vietnam Fund Universe - Historical NAV Performance

As illustrated below, the NAV performance of VNH in the past year ranked second among 11 Vietnam country funds that have been invested in Vietnamese equities for at least five years. It is also encouraging to note that in the last six years, VietNam Holding is the only one of its peers with its NAV reaching a top-two performance in each of the comparison periods. We believe that our track record of consistently generating competitive returns can be best explained by the long-term value approach of the investment manager and its theme-based asset allocation strategy combined with a strong focus on sustainability.

Period	Rank 1	Rank 2	Rank 3
1 year	VEIL: 9.5%	VNH: 9.0%	VEH: 6.6%
2 years	VNH: 35.9%	VEEF: 31.6%	VEH: 30.7%
3 years	VNH: 73.1%	JPM: 56.7%	VEIL: 52.8%
4 years	VNH: 99.9%	VEH: 77.9%	JPM: 70.1%
5 years	JPM: 65.4%	VNH: 59.3%	VGF: 54.9%
6 years	JPM: 91.8%	VNH: 89.2%	VOF: 52.9%

Sources: Bloomberg and company websites. As per 30 June 2015. Where 30 June data not available, closest date to 30 June is used.

Funds covered: VNH, Lumen Vietnam Fund, PXP Vietnam Emerging Equity Fund (VEEF), DWS Vietnam Fund, Fullerton Vietnam Fund, JPMorgan Vietnam Opportunities Fund (JPM), Vietnam Enterprise Investments Limited (VEIL), Vietnam Growth Fund (VGF), Vietnam Equity Holding (VEH), Vietnam Opportunity Fund (VOF), and Vietnam Infrastructure Fund.

On behalf of the VNH board, I wish to thank all of our shareholders for their continued support, and the VietNam Holding Asset Management team for its ongoing excellent performance. We remain committed to ensuring that VNH is the investment vehicle of choice for long term, value-oriented Vietnamese equity market investors who share our commitment to environmental concerns, corporate responsibility and transparent governance. We will cover these key ESG considerations in more depth in the following sections of this annual report.

Min-Hwa Hu Kupfer

Chairperson

VietNam Holding Limited

19 August 2015

Investment Manager's Report

Bull markets never last forever, but there are good reasons to believe that Vietnam's current one will enjoy plenty of support for the coming year.

During the first half of 2015, the pace of its markets' growth has been measured. At a 12.4x historic earnings valuation as of mid-year Vietnam stands at 28% below its closest regional peer Malaysia, and lower than all other regional peers by 60% and more.  The profitability of Vietnamese corporations as reflected by their average 15% equity return and 10% profit margin reflects a recovering economy that has plenty of room for further growth.

The ongoing actions to increase the Foreign Ownership Limits on shares of public companies are likely to become a catalyst for Vietnam's graduation from frontier to emerging market status in the MSCI indices. This is in fact one of the government's stated objectives. Previous cases of countries ascending to the emerging stock market status have resulted in increased inward flows of foreign indirect investments, which in turn helped companies to raise the additional capital needed to support higher growth.

In addition, recent structural reform measures presented by the government reflect Vietnam policy makers' increased commitment to achieve a vigorous modernization of the country. The number of free trade agreements signed or under negotiation, in particular the Trans-Pacific Partnership (TPP) will provide strong support to the implementation of these reforms. These free trade agreements will also provide a quantum boost to Vietnam's exports and inward direct investment. Equally important, the TPP will bring changes in the law and regulations concerning state enterprises, the environment, intellectual property, and investor protection. This should push policy makers further in the direction of transparent and progressive economic policies.

There are other directly market-related concerns to monitor. Here are a few issues that we are watching carefully:

Firstly a sizeable trade deficit has reappeared this year for the first time since 2011. Export growth of 9% in the first half of the year was outstripped by a 17% growth in imports, resulting in a trade deficit for the first 6 months of over USD 6bn or 3% of GDP.

Secondly, the government's ability to finance its customary annual budget deficit of approximately 5% will be a challenge. Yet, it will also positively impact the development of the domestic fixed income market as the authorities have started expanding a long-term yield curve for government bonds. Indeed, the government issued 20-year paper for the first time this year. Meanwhile, public indebtedness is now creeping up to the government's self-imposed limit of 65% of GDP.

A third source of concern to the equity markets is the slow, but recently accelerated pace of State Owned Enterprises (SOEs) reform. The SOEs continue to negatively impact the economy due to their disproportionate absorption of scarce capital, the misallocation of their resources, and the productivity drag they cause.  

Finally, there is the slow-motion resolution of the Non-Performing Loans crisis of the past five years. As noted in the Chairperson's letter, the State Bank of Viet Nam showed substantial progress over the past few quarters in using the VAMC to centrally warehouse the system's bad debts, thus restoring bank liquidity, and reviving credit growth. The stock market has reacted positively to these achievements; however, the risk of a job only half-done remains.

In spite of the key risks identified above, we continue to forecast a bright long term future for the Vietnamese economy and its stock market. The second half of this calendar year promises attractive stock market returns, and we expect this trend to continue next year.

This year's VNH annual report theme is Sustainability. Since the outset of our corporate existence, we have emphasized the promotion of good corporate governance both through the annual public Vietnam Holding Forum events as well as through our contacts with the Investee Companies in the portfolio.

Starting in 2008, we became aware of increasing environmental challenges which we believed were not sufficiently addressed.  As in the case of corporate governance, we felt strongly that environmental issues would become increasingly significant risk factors for investors in Vietnam. With support and encouragement from our largest shareholders, VietNam Holding formally adopted the incorporation of the sustainable investment principles.

We decided to elevate ESG (i.e. Environmental, corporate Social responsibility and corporate Governance issues) analysis to the same level of importance as the traditional financial analysis in our company review process.  There are no ESG reporting requirements for corporations by the stock exchange. Therefore, we engage directly with the corporate world to collect the required data and information.  Each Board member of VNH and VNHAM has 'adopted' selected Investee Companies, which they visit at least once a year to emphasize the importance of ESG and help develop it within the companies. This allows us to engage at the companies' top management level, obtain corporate buy-in and improve risk analysis.

Our Investee Companies achieved substantial progress over the past several years, in many different areas:

·      The number of segregated CEO/Chairpersons tripled since 2012;

·      50% of our investees added independent board members;

·      A third of our investees launched an investor relations team;

·      25% of investees ranked in the annual list of the Top 10 Annual Reports.

You will find company-specific ESG progress in the descriptions of each of our top 10 portfolio companies in this annual report.

In 2010, VNH had mandated the sustainability-rating agency Inrate to assess its portfolio and to provide advice and training to VNHAM analysts. The aim was to transfer sustainability knowledge and to translate major ESG issues into a Vietnamese context. As a result, our sustainability approach was tailored to the Vietnamese context.

As our market awareness and expectations continue to rise and because our ESG analytical approach is constantly progressing, we felt that a second critical review and update was necessary. Accordingly, VNH mandated Inrate to carry out a formal review of VNHAM's ESG practices over the last six months.  Inrate's report on this Best Practice Review will be published on our website as soon as it is finalized. We are confident that this assessment of our ESG practices and programs will lead to an even more positive impact on our portfolio companies and to increased VNH shareholder value, which remains our top priority.

Jean-Christophe Ganz

Chairman
VietNam Holding Asset Management Limited

19 August 2015

Directors' Report

The Board of Directors continues to play a key role in the operation of the Company. It 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 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 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 companies are also subject to the approval of the Board.

As a Cayman Islands incorporated company that is admitted for trading on AIM and with a secondary listing on the Entry Standard of the Deutsche Börse, the Company is not required to, and does not comply with any particular 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 Shareholders. In reflection of this strong belief, the Company has adopted a comprehensive code of ethics. The Directors also comply with the AIM Rules, including Rule 21 relating to directors' dealings. The Company has additionally adopted a code for directors' dealings in securities of the Company based on the model code annexed to chapter 9 of the Listing Rules.

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 internal compliance 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. 

In fiscal year 2015, the Board met quarterly and additionally held three telephonic meetings.  A main corporate item during the year was the issuance of 19,977,746 warrants, which was approved by shareholders in an Extraordinary General Meeting in April 2015.  At the same time, shareholders also granted the Company a deferral of its next continuation vote from 2016 to 2018.  The Board demonstrated that allowing the Company to continue to operate in its current form for three additional years should provide a better period for the warrants to fulfill their potential value. The warrants were admitted to AIM for trading on 5 June 2015.

Concurrently with each formal 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 ratified, as the case may be, the asset allocation limits and target position of each equity investment in every quarterly review. 

As part of these actions, the Board approved and monitored portfolio rebalancing activities in which the Investment Manager exited twelve portfolio companies and initiated nine new investments, lowering the number of equity holdings in the portfolio from twenty-six a year ago to twenty-three at 30 June 2015.   Among the exits were four investments where the Company held more than 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. Additional investor presentations were made in Basel and Frankfurt. The Board regularly reviewed other investor-relations activities, any coverage 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 Corporate Governance Committee also met four times together with the quarterly Board meetings.  As part of each meeting's agenda, the Investment Manager presented its strategic plans, financial position, and organizational development activities. 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 Committee also 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.  

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 2015, the Company's Directors Base Fees were:

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

-      Professor Rolf Dubs               USD 20,000

-      Mr. Nguyen Quoc Khanh        USD 20,000

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 rendering services related to Committee and Board initiatives.

The total remuneration of the Company's Directors in FY2014-15 as the result of meeting attendance and Committee work was USD 189,500 as follows:

-      Mrs. Min-Hwa Hu Kupfer, Chairperson                                                                        USD 85,000

-      Professor Rolf Dubs, Director & Chair of Corp. Governance Committee             USD 53,000

-      Mr. Nguyen Quoc Khanh, Director & Chair of Audit Committee                             USD 51,500

In addition, Mrs. Kupfer was awarded a USD 35,000 discretionary bonus as the Board recognized her contribution to the Company during the prior fiscal year, which ended on 30 June 2014.    

Ownership of VietNam Holding

-      Mrs. Min-Hwa Hu Kupfer                 36,667 shares

-      Professor Rolf Dubs                       30,000 shares, 10,000 warrants

-      Mr. Nguyen Quoc Khanh                 10,000 shares, 3,333 warrants

During the fiscal year, Professor Rolf Dubs and Mr. Nguyen Quoc Khanh received 10,000 and 3,333 warrants respectively resulting from the latest warrant issuance.  As a US resident, Mrs. Kupfer is restricted from receiving the 12,222 warrants as issued.  Therefor, upon their final maturity, should the warrants be sufficiently in the money, a Trustee appointed by the Company may at its discretion exercise the warrants that were restricted from distribution at the time of their issuance.   The Trustee will immediately sell the resulting shares on the market and Mrs. Kupfer may receive from the Trustee the proceeds from such sale net of costs (if the amount is greater than USD 20).

On behalf of the Board of Directors:

Min-Hwa Hu Kupfer

Chairperson

19 August 2015

Independent Auditor's Report

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

Report on the financial statements

We have audited the accompanying financial statements on pages 10 to 25 of VietNam Holding Limited ("the Company"), which comprise the statement of financial position as at 30 June 2015, 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.

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 2015, 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 Chartered Accountants

Singapore

19 August 2015

Statement of financial position as at 30 June 2015

	Note	2015	2014
		USD	USD
Assets
Cash and cash equivalents		4,146,270	2,459,814
Investments in securities at fair value	3	120,754,647	118,526,227
Accrued dividends		500,219	625,811
Receivables on sale of investments		620,123	693,059
Other receivables		2,123	-
Total assets		126,023,382	122,304,911
Equity
Share capital	5	114,375,064	120,094,331
Retained earnings		9,984,471	392,362
Total equity, representing net assets attributable to shareholders		124,359,535	120,486,693
Liabilities
Payables on purchase of investments		955,420	605,360
Other payables		144	-
Accrued expenses		708,283	1,212,858
Total liabilities		1,663,847	1,818,218
Total equity and liabilities		126,023,382	122,304,911

Statement of comprehensive income for the year ended 30 June 2015

	Note	2015	2014
		USD	USD
Dividend income from equity securities at fair value through profit or loss		4,070,467	4,087,013
Net gain from equity securities at fair value through profit or loss	7	9,990,217	23,123,195
Net foreign exchange loss		(125,693)	(16,647)
Net investment income		13,934,991	27,193,561
Investment management fees	8	2,444,321	2,142,403
Incentive fees	8	580,890	954,449
Advisory fees		185,162	149,834
Administrative and accounting fees	10	93,032	95,281
Custodian fees	9	141,333	141,827
Directors' fees and expenses	8	317,586	296,238
Brokerage fees		71,822	56,571
Audit fees		36,457	42,334
Publicity and investor relations fees		160,510	267,344
Insurance costs		15,500	45,000
Administrative expenses		199,860	229,240
Risk management expenses		67,626	100,000
Technical assistance for investee companies		28,783	41,260
Total operating expenses		4,342,882	4,561,781
Change in net assets attributable to shareholders		9,592,109	22,631,780
Earnings per share - basic and diluted	14	0.16	0.37

Statement of change in equity for the year ended 30 June 2015

		Share Capital	Reserve for own shares	Retained earnings	Total
		USD	USD	USD	USD
Balance at 1 July 2013		110,944,115	(1,436,175)	(22,239,418)	87,268,522
Total comprehensive income for the year
Change in net assets attributable to shareholders		-	-	22,631,780	22,631,780
Total comprehensive income		-	-	22,631,780	22,631,780
Contributions and distributions
Issuance of ordinary shares		15,189,736	-	-	15,189,736
Repurchase of own shares (note 5)		-	(4,597,450)	-	(4,597,450)
Warrants issuance cost		(5,895)	-	-	(5,895)
Total contributions and distributions		15,183,841	(4,597,450)	-	10,586,391
Balance at 30 June 2014		126,127,956	(6,033,625)	392,362	120,486,693
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

Statement of cash flows for the year ended 30 June 2015

	Note	2015	2014
		USD	USD
Cash flows from operating activities
Change in net assets attributable to shareholders		9,592,109	22,631,780
Adjustments to reconcile change in net assets attributable to shareholders to net cash from operating activities:
Dividend income		(4,070,467)	(4,087,013)
Net gain from equity securities at fair value through profit or loss		(9,990,217)	(23,123,195)
Purchase of investments		(52,747,130)	(38,903,628)
Proceeds from sale of investments		60,858,987	27,339,735
Net foreign exchange loss		125,693	16,647
Decrease in receivables on sale of investments		70,813	632,995
(Decrease)/Increase in accrued expenses		(409,130)	875,529
Increase in other payables		144	-
Dividends received		4,196,059	3,835,310
Net cash from/(used in) operating activities		7,626,861	(10,781,840)
Cash flows from financing activities
Issuance of ordinary shares*		-	15,189,736
Repurchase of own shares	5	(5,672,230)	(4,597,450)
Warrants issuance cost		(142,482)	(5,895)
Net cash (used in)/from financing activities		(5,814,712)	10,586,391
Net increase/(decrease) in cash and cash equivalents		1,812,149	(195,449)
Cash and cash equivalents at beginning of the year		2,459,814	2,671,910
Effect of exchange rate fluctuations on cash held		(125,693)	(16,647)
Cash and cash equivalents at end of the year		4,146,270	2,459,814

Significant non-cash transaction:

*On 27 August 2014, the Company announced that in partial payment of the incentive fee due to VietNam Holding Asset Management Limited ("VNHAM"), the Company's Investment Manager, for the year ended 30 June 2014, it had agreed that 63,499 ordinary shares of US$1.00 each in the Company ("Ordinary Shares") then held as treasury shares would be transferred to VNHAM (the "Transfer"). The Transfer took place with effect from 25 March 2015.

Notes to the financial statements

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 & CARD 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

These 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"), 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 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.

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.

(c) Changes in accounting policies

Except for the changes below, the Company has consistently applied the accounting policies as set out in Note 2 (d) to (l) to all periods presented in these financial statements.

The Company has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1 July 2014.

(a) Investment Entities (Amendments to IFRS 10, IFRS 12 and lAS 27) (2012)

The Fund has adopted Investment Entities (Amendments to IFRS 10, IFRS 12 and lAS 27) (2012) (the amendments) with a date of initial application of 1 July 2014. Management concluded that the Fund meets the definition of an investment entity. The Fund has no subsidiaries; therefore, the amendments did not have an impact on the Fund's financial statements.

(b) Offsetting Financial Assets and Financial Liabilities (Amendments to lAS 32) (2014)

The amendments clarify that an entity currently has a legally enforceable right to set off if that right is not contingent on a future event; and, enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the entity and all counterparties gross settlement is equivalent to net settlement if and only if the gross settlement mechanism has features that eliminates or results in insignificant credit and liquidity risk; and, process receivables and payables in a single settlement process or cycle. The adoption of the above amendment did not have an impact on the financial statements.

(d) 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.

(e) 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 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

2                                     

(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 2015, 3.1% (2014: 1.2%) 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.

(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.

(h) 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.

(i) Taxation

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 end of the reporting period, 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 income 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% (2014: 0.1%) on the sales proceeds of the onshore sale of equity investments.

(j) 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.

 

(k) 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 in a separate line item.

(l) Fee and commission expense

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

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 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:

	2015		2014
	Fair value in USD	% of net assets	Fair value in USD	% of net assets
Shares and similar investments - listed	116,850,605	93.96%	117,131,478	97.22
Shares and similar investments - unlisted	3,904,042	3.14%	1,394,749	1.16
	120,754,647	97.10%	118,526,227	98.38

At 30 June 2015, a 5% reduction in the market value of the portfolio would have led to a reduction in NAV and profit or loss of USD6,037,732 (2014: USD5,926,311 ). 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 2014 the Company had the following foreign currency exposures:

		Fair value
		2015	2014
		USD	USD
Vietnamese Dong		122,940,708	120,036,280
Pound Sterling		24,575	11,144
Swiss Franc		26,470	13,350
Euro		14,469	997
		123,006,222	120,061,771

At 30 June 2015, 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 USD6,147,035  (2014: USD6,001,814), USD1,229  (2014: USD557), USD1,324  (2014: USD668) and USD723  (2014: USD50) 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 2015, 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 USD5,268,735 (2014: USD3,778,684).

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 2015 and 30 June 2014. All of the Company's investment income can be attributed to Vietnam for the years ended 30 June 2015 and 30 June 2014.

 

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. The ISIN number of the ordinary shares is KYG9361X043.

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 and 2014.

	2015	2014
	No. of shares	No. of shares
Total shares issued and fully paid (after repurchases and cancellations) at beginning of the year	67,537,240	54,836,792
Shares issued upon exercise of warrants during the period	-	12,700,448
Shares cancellation	(301,501)	-
	67,235,739	67,537,240
Repurchased and reserved for own shares
At beginning of the year	(4,815,215)	(1,306,381)
During the year	(3,369,285)	(3,508,834)
Shares reissued to ordinary shares	63,499	-
Shares cancellation	301,501	-
	(7,819,500)	(4,815,215)
Total outstanding ordinary shares with voting rights	59,416,239	62,722,025

As a result, as at 30 June 2015 the Company has 59,416,239 (2014: 62,722,025) ordinary shares with voting rights in issue (excluding the reserve for own shares), and 7,819,500 (2014: 4,815,215) 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 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 were listed on London Alternative Investment market. At the reporting date 19,977,746 warrants are outstanding.

Although there can be no certainty as to whether any or all of the warrants will be exercised, if the bonus issue proceeds and all of the warrants are exercised on the exercised 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 USD124,359,535 (2014:USD120,486,693) 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 (2014: none).

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

		2015	2014
		USD	USD
Net gain from equity securities at fair value through profit or loss:
Realised gain		16,802,070	38,415
Adjustment to fair value of equity securities at fair value through profit or loss		(6,811,853)	23,084,780
		9,990,217	23,123,195

 

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 2015 was USD2,444,321 (2014: USD2,142,403).

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.  Excess performance amount is calculated as follows:

Excess Performance amount = (Adjusted NAV per share - Initial High Water Mark) x Weighted Average number of shares

The initial high water mark is equal to 30 September 2013 NAV per share increased by 8%. After the initial accounting period (i.e. 30 June 2015), the initial high water mark will be compounded by 5% annually.

The fee is calculated and payable as set out in the Investment Management Agreement Side Letter dated 11 September 2013.

		2015	2014
		USD	USD
Performance fee		580,890	954,449

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 USD224,500 (2014: USD170,750) and expenses were USD93,085  (2014: USD125,488).

Directors' ownership of shares and warrants

As at 30 June 2015, three Directors, Min-Hwa Hu Kupfer, Nguyen Quoc Khanh and Rolf Dubs held 36,667 (2014: 36,667), 10,000 (2014: 10,000) and 30,000 (2014: 30,000) ordinary shares of the Company respectively, representing 0.06% (2014: 0.06%), 0.02% (2014: 0.02%) and 0.05%(2014: 0.05%) of the total shares outstanding.

During the year, Min-Hwa Hu Kupfer, Nguyen Quoc Khanh and Rolf Dubs exercised nil (2014: 6.667), nil (2014: nil) and nil (2014: 10,000) warrants to subscribe ordinary shares, amounting to nil (2014: 16,667) and nil (2014: 0.13%) 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 USD141,333  (2014: USD141,827).

 

 

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 USD93,032 (2015: USD95,281).

11.    CONTROLLING PARTY

The Directors are not aware of any ultimate controlling party as at 30 June 2015 or 30 June 2014.

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 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 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
2015
Financial assets classified at fair value upon initial recognition
Equity investments	116,337,749	4,416,898	-	120,754,647
2014
Financial assets classified at fair value upon initial recognition
Equity investments	117,131,478	-	1,394,749	118,526,227

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 nil (2014: USD139,475).

Level 3 reconciliation

		Financial assets designated at fair value through profit or loss
		2015	2014
		USD	USD
Balance at 1 July		1,394,749	7,913,006
Sales		-	(10,192,834)
Purchases		-	1,417,353
Transfers to level 1		(1,394,749)	-
Total gains and losses recognised in profit or loss *		-	2,257,224
Balance at 30 June		-	1,394,749

     *     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	Fair value through profit or loss	Loans and receivables	Other liabilities	Total carrying amount
		USD	USD	USD	USD
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 from sale of investments		-	620,123	-	620,123
Other receivable		-	2,123	-	2,123
		120,754,647	5,268,735	-	126,023,382
Payables on purchase of investments		-	-	955,420	955,420
Other payable		-	-	144	144
Accrued expenses		-	-	708,283	708,283
		-	-	1,663,847	1,663,847

2014
Cash and cash equivalents		-	2,459,814		-		2,459,814
Investments in securities at fair value	3	118,526,227	-		-		118,526,227
Accrued dividends		-	625,811		-		625,811
Receivables from sale of investments		-		693,059		-		693,059
		118,526,227	3,778,684		-		122,304,911
Payables on purchase of investments		-		-		605,360		605,360
Accrued expenses		-	-		1,212,858		1,212,858
		-	-		1,818,218		1,818,218

14.    EARNINGS PER SHARE

The calculation of earnings per share at 30 June 2015 was based on the change in net assets attributable to ordinary shareholders of USD9,592,109 (2014: USD22,631,780) and the weighted average number of shares outstanding of 60,782,065 (2014: 60,599,915).

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 2014, and have not been applied in preparing these financial statements. Those that may be relevant to the Company are set out below. The Company does not plan to adopt these standards early.

 

END

 

 

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