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Annual Report
Annual Report
2015
2015
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41
Chairperson’s Statement
Investment Manager’s Report
Portfolio Companies
Sustainability Report
Vietnam: Meeting the Sustainability Challenge
Directors’ Report
Independent Auditors’ Report
Financial Statements
Notes to the Financial Statements
Key Parties
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).
Min-Hwa Hu Kupfer, Chairperson
VietNam Holding Limited
VietNam Holding Annual Report 2015 Performance
1 July 2014 to 30 June 2015
9.0%
NAV per share
23.3%
VNH Share Price
7.6% NAV outperformance of benchmark VNAS
USD adjusted
Share price discount to NAV: improved from
23.9% to 13.0%.
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.
Jean-Christophe Ganz, Chairman
VietNam Holding Asset Management Limited
1
VietNam Holding Annual Report 2015 Chairperson’s Statement
We remain committed to ensuring that VNH is the investment vehicle of
choice for long term, value-oriented Vietnamese equity market investors.
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).
1-Year Performance Comparison (Relative change in %)
VNH NAV
VNH Share Price
VNAS (USD Adjusted)
20%
10%
0%
-10%
Jun 14
Aug 14
Oct 14
Dec 14
Feb 15
Apr 15
Jun 15
Sources: Bloomberg and VNHAM. 1 July 2014 to 30 June 2015.
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 successful macroeconomic
stabilization has been complemented by
the increasing delivery of structural reform
measures over the past year.
2
VietNam Holding Annual Report 2015 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.
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 depth in the
following sections of this annual report.
Min-Hwa Hu Kupfer, Chairperson
VietNam Holding Limited
19 August 2015
It is 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.
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
1 year
2 years
3 years
4 years
5 years
6 years
Rank 1
Rank 2
Rank 3
VEIL: 9.5%
VNH: 35.9%
VNH: 73.1%
VNH: 99.9%
JPM: 65.4%
JPM: 91.8%
VNH: 9.0%
VEEF: 31.6%
JPM: 56.7%
VEH: 77.9%
VNH: 59.3%
VNH: 89.2%
VEH: 6.6%
VEH: 30.7%
VEIL: 52.8%
JPM: 70.1%
VGF: 54.9%
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.
3
VietNam Holding Annual Report 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.
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%
or 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:
In spite of the key risks identified, we
continue to forecast a bright long term
future for the Vietnamese economy and its
stock market.
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.
4
VietNam Holding Annual Report 2015 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
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 are confident that the 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.
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.
5
VietNam Holding Annual Report 2015 Portfolio Companies
Vinamilk’s automatic milking system.
Danang Rubber is specialized in the production
of truck tires.
Binh Minh Plastic’s products meet the highest ISO standards.
Viconship’s port in Hai Phong.
6
VietNam Holding Annual Report 2015 BINH MINH PLASTIC (BMP)
SHAREHOLDER PROFILE (AT 30 JUNE 2015)
FINANCIAL HIGHLIGHTS (USD MILLION)
State Capital Investment Corporation
Foreign investors
Domestic investors
VIETNAM HOLDING’S INVESTMENT (AT 30 JUNE 2015)
Date of first investment
Number of shares
Total investment
Average purchase price
% VNH shareholding
Internal rate of return (annualized)
TRADING INFORMATION (AT 30 JUNE 2015)
Traded on
Date of listing
Total shares outstanding
Share price
52 week high
52 week low
Trailing P/E
Forward 2015 P/E
Price/Book
Sources: BMP annual reports and Bloomberg.
CORE BUSINESS
Binh Minh produces plastic water
pipes and fittings, principally for the
construction industry.
COMPANY BACKGROUND
BMP is a leading manufacturer of plastic
pipes and fittings in Vietnam with a 30%
market share nation-wide and a nearly
50% market share in the South. BMP has
a major factory in the South contributing
90% of revenues and a newer factory in
the North accounting for 10% of revenues.
The company originated as a state-owned
enterprise, was equitized in 2003 and listed
in 2006.
KEY STRENGTHS
BMP has maintained consistent success
thanks to its core competences, which
include a popular brand associated with
high quality products for residential and
civil construction projects, an extended
distribution network with approximately
1,500 outlets across Vietnam and an
experienced management team dedicated to
BMP’s development.
2013
151.0
70.6
99.6
10.4
23.2
17.6
8,134
2.6
29.8
23.3
26.8
0.02
6.4
2014
155.3
80.3
113.9
15.7
22.8
17.7
8,285
1.9
27.7
20.0
23.7
0.03
7.1
30%
49%
21%
25 October 2006
1,813,665
USD 6.48 million
VND 33,853
4.0%
18.7%
HOSE
11 July 2006
45 million
VND 78,000
VND 79,500
VND 61,852
9.4
8.5
1.9
Market capitalization
Equity capital
Revenues
Revenue growth (in VND) (%)
EBIT
NPAT
EPS (VND)
EPS growth (%)
Gross Margin (%)
EBIT Margin (%)
ROE (%)
D/E (x)
Current Ratio (x)
SHARE PRICE PERFORMANCE VS. VNINDEX
500%
400%
300%
200%
100%
0%
-100%
Oct 06
Nov 07
Dec 08
Jan 10
Feb 11
Mar 12
Apr 13
May 14
Jun 15
VNIndex
Construction & Material (excl. BMP)
BMP
capacity of 30,000 tons per annum (around
50% of the main factory’s capacity). The
first phase is expected to be completed in
4Q2015 and will increase BMP’s production
capacity by an additional 5,000 tons by the
end of 2015.
PERFORMANCE & DEVELOPMENT
Despite a major sales discount battle in
the sector, in FY2014 BMP achieved a 16%
increase in revenues compared to FY2013.
However, net profit showed only a slight
increase of 2% due to higher input material
costs. In 1H2015, BMP recorded a spectacular
result with 18% growth in sales and a 42%
jump in pre-tax profit as raw material prices
plunged, following the oil price downturn.
OUTLOOK
Recovery in the economy and especially
in the real estate market, brought about
by a number of governmental policies,
have boosted the demand for construction
materials, including water pipes. Hence,
long-term growth prospects look positive
and are expected to rise by 15%-20% per
annum in the near term future.
In 2014 BMP saved 491,758 kWh of
electricity and 8,360m3 of water compared
to 2013. The company has implemented
a program of classification of garbage
and waste at the origin. The waste was
also processed to meet the national
standards. Additionally, BMP’s plastic
pipes meet the highest ISO standards
for enduring water pressure.
BMP has also been an industry leader in
staff wellness programs, particularly in
health and safety protection. Environmental
issues at factories are assessed by the
Center of Health and Industrial Working
Environment twice per year with necessary
corrective actions being implemented
following the assessments. BMP has better
remuneration packages compared to the
sector average. The company provided 54
courses and 1,800 training hours to nearly
1,600 employees in 2014. In its philanthropic
activities, BMP has built 3 charity houses,
providing plastic pipes to needy residents
and gifts to handicapped children.
BUSINESS STRATEGY AND EXECUTION
BMP’s vision is to affirm its leading industry
position by increasing R&D activities to
enhance product quality, and innovation to
better meet market demand. In addition, BMP
continues to establish new outlets, especially
in Vietnam’s Central and Highlands areas
to capture new market shares. In 2014 BMP
started the construction of a new factory
in the Long An Province with a production
SUSTAINABILITY
BMP is among the pioneers in committing
to sustainable development. Since 2011
BMP has applied ISO environmental
standards and followed the National
Strategy of 3R – Reduce, Reuse, Recycle.
Last year the company installed and started
operating an ERP (Enterprise Resource
Planning) system to improve its corporate
management system.
7
VietNam Holding Annual Report 2015
HAU GIANG PHARMA (DHG)
SHAREHOLDER PROFILE (AT 30 JUNE 2015)
State Capital Investment Corporation (SCIC)
Foreign investors
Domestic investors (excluding SCIC)
VIETNAM HOLDING’S INVESTMENT (AT 30 JUNE 2015)
Date of first investment
Number of shares
Total investment
Average purchase price
% VNH shareholding
Internal rate of return (annualized)
TRADING INFORMATION (AT 30 JUNE 2015)
Listed on
Date of listing
Total shares outstanding
Share price
52 week high
52 week low
Trailing P/E
2015 P/E
Price/Book
Sources: DHG audited financial statements and Bloomberg.
CORE BUSINESS
DHG produces and distributes a variety of
pharmaceutical products.
COMPANY BACKGROUND
Established in 1974 as a state-owned
enterprise, DHG has developed into one
of the leading pharmaceutical companies
in Vietnam. It was equitized in 2004 and
listed in 2006. DHG holds 10% of the
locally produced drug market and 5% of the
overall market including both domestic and
imported drugs.
KEY STRENGTHS
DHG has the most extensive distribution
network in Vietnam with 1,200 sale
representatives, located in 12 subsidiaries
and 24 branches, serving more than
25,000 customers throughout all 64
provinces. In addition, the company has
the largest manufacturing capacity among
its peers with 4.8 billion units per annum,
anticipated to reach 9 billion in 2H2015.
Its modern factories satisfy all WHO-GMP
international standards.
BUSINESS STRATEGY AND EXECUTION
The company continues to enhance
its brand value in the local market via
the advantages of its well-developed
distribution system. DHG has paid great
attention to R&D activities to introduce up
to 10 new products or product upgrades
annually. Its laboratories are ISO certified.
Additionally, DHG maintains a collaboration
with well-known pharmaceutical universities,
such as Ho Chi Minh City Medicine and
8
43%
49%
8%
17 March 2008
2,016,557
USD 6.79 million
VND 39,994
2.3%
17.0%
HOSE
21 November 2006
87 million
VND 73,500
VND 94,348
VND 71,000
12.2
10.1
2.7
FINANCIAL HIGHLIGHTS (USD MILLION)
Market capitalization
Equity capital
Revenue
Revenue growth (in VND) (%)
EBIT
NPAT
EPS (VND)
EPS Growth (%)
Gross margin (%)
EBIT margin (%)
ROE (%)
D/E
Current ratio (x)
SHARE PRICE PERFORMANCE VS. VNINDEX
2013
353.5
93.9
168.2
20.3
37.4
28.1
6,758
21.1
46.5
22.2
29.7
0.06
2.2
2014
391.3
196.5
184.2
10.9
34.2
25.1
6,119
-9.5
54.5
18.5
23.4
0.08
2.1
250%
200%
150%
100%
50%
0%
-50%
-100%
Mar 08
Oct 08
Apr 09
Nov 09
Jun 10
Dec 10
Jul 11
Feb 12
Aug 12
Mar 13
Oct 13
Apr 14
Nov 14
Jun 15
VNIndex
Healthcare (excl. DHG)
DHG
Pharmacy University, for studies of long-
acting treatment products. Furthermore,
it invests heavily in staff training with a
strong emphasis on sales, pharmaceutical
knowledge and preparation for future
company and industry leadership.
PERFORMANCE AND DEVELOPMENT
DHG recorded a 2014 net profit of USD 25.1
million, down 9.5% YoY. However, net profit
would have been up 8% YoY if adjusted
for extraordinary income from the Eugica
product line sales of USD 6 million in 2013.
In 2014 the company also cut output of
low-margin products to increase available
capacity for high-margin products such as
Hapacol, a pain-relief medicine.
OUTLOOK
DHG forecasts slow growth rates of only
2.2% YoY and 6% YoY in 2015 sales and pre-
tax profit respectively, as it seems to have
reached a maturity phase. In order to help
resume its previous high net profit growth
rates, the company plans to review and
restructure its operations, including the sales
network, and the manufacturing, human
resources and marketing departments. The
preferential tax rates applied to the new
factory for the period of 15 years from 2015
(0% in first 5 years and 10% in the next 10
years) will also play an important role as
catalyst for mid-term net profit growth.
SUSTAINABILITY
DHG has an environment protection
policy, enforced by its Environment and
Labor Safety Committee. Samples of input
materials go through stringent quality
control before production. In 2014, monthly
water usage was 25,316m3, down 3% YoY.
The 2014 natural gas consumption dropped
13% YoY. Furthermore, DHG has used LED
lighting systems instead of fluorescent to
conserve power.
The company continues to provide annual
training in areas such as occupational safety,
emergency rescue, sales and management. In
2014, the total number of training hours was
243,718, equivalent to 82.2 hours per worker.
Nonresident employees are entitled to
receive financial assistance for visits to their
families once per year. The average income
of an employee at DHG has increased 45.4%
since 2009 from USD 611.3 to USD 888.8 in
2014. Labor productivity in 2014 increased
3% YoY.
Through programs such as Doctor-Patient
Interface, Health Bridge and Medical Journal,
DHG has helped to disseminate medical
knowledge to the Mekong Delta area
to promote better disease prevention. It
spent USD 0.4 million, up 50% YoY, for its
community services such as providing free
medical check-ups for 59,190 people in
Vietnam, Lao and Cambodia.
VietNam Holding Annual Report 2015
DANANG RUBBER (DRC)
SHAREHOLDER PROFILE (AT 30 JUNE 2015)
FINANCIAL HIGHLIGHTS (USD MILLION)
Vinachem
Foreign investors
Domestic investors
VIETNAM HOLDING’S INVESTMENT (AT 30 JUNE 2015)
Date of first investment
Number of shares
Total investment
Average purchase price
% VNH shareholding
Internal rate of return (annualized)
TRADING INFORMATION ( AT 30 JUNE 2015)
Listed on
Date of listing
Total shares outstanding
Share price
52 week high
52 week low
Trailing P/E
2015 P/E
Price/Book
Sources: DRC audited financial statements and Bloomberg.
CORE BUSINESS
DRC produces rubber tires and inner tubes
for motorbikes, automobiles and a growing
number of other wheeled vehicles.
COMPANY BACKGROUND
DRC is the largest local tire manufacturer in
term of total sales. It focuses on automotive
vehicle tires, especially truck tires and
off-the-road (OTR) tires, which together
accounted for 86% of total revenue in 2014.
In addition to its annual manufacturing
capacity of 5mn bicycle tires, 2mn motorbike
tires, 0.78mn bias ply auto tires, DRC has
also led the move of local producers into the
radial tire segment by setting up the first
radial tire factory with an initial capacity
of 0.3mn units. Moreover, DRC is the only
producer of off-the-road (OTR) tires in
Vietnam. The company was equitized in 2006
and listed on HOSE in the same year.
KEY STRENGTHS
DRC continues to focus on its core tire
manufacturing activities, optimizing its
strengths in OTR tires and the heavy
truck segment. The management team is
strong and dedicated and has contributed
significantly to the company’s consistent
product and business development.
BUSINESS STRATEGY AND EXECUTION
Automobile tires remain the company’s
primary strategic product line, on the basis
of growing demand, strong brand equity
and an established distribution network.
DRC continues to invest in high-value, high
margin products – such as OTR and radial
51%
38%
11%
22 May 2007
3,567,837
USD 8.66 million
VND 42,081
3.9%
45.6%
HOSE
29 December 2006
91 million
VND 53,000
VND 57,120
VND 39,119
13.6
12.4
3.0
Market Capitalization
Equity capital
Revenue
Revenue growth (in VND) (%)
EBIT
NPAT
EPS (VND)
EPS Growth (%)
Gross margin (%)
EBIT margin (%)
ROE (%)
D/E
Current ratio (x)
SHARE PRICE PERFORMANCE VS. VNAS INDEX
2013
153.7
65.4
133.7
1.0
25.7
17.9
4,519
20.0
25.6
19.2
29.5
1.0
1.4
2014
217.6
71.8
153.1
15.9
25.3
16.6
4,246
-6.0
24.7
16.5
24.2
0.7
1.4
80%
60%
40%
20%
0%
-20%
Jul 13
Dec 13
Jun 14
Dec 14
Jun 15
VNAS Index
Automobiles & Parts (excl. DRC)
DRC
tires – to drive future growth. The export
market accounts for 11% of its revenues. DRC
finished construction of a phase-1 radial tire
factory with annual capacity of 300,000 tires
per year, which started operating in 3Q2013.
DRC has already proven the marketability of
this new radial product.
PERFORMANCE & DEVELOPMENT
DRC was immediately successful in boosting
radial tire sales, achieving 115,000 units sold
in 2014, or 17.5% of total revenue, compared
to 15,000 units sold in 2H2013. Overall,
revenue and gross profit increased by 16%
and 12% respectively, while net profit
decreased by 6%, largely driven by the high
initial costs of the new radial tire business,
including rising interest and higher than
planned sales expenses.
OUTLOOK FOR 2015-2016
Vietnam’s automobile sales continue to
increase strongly, up 43% YoY in 2014 and
58% YoY in 1H15. Domestic demand for truck
tires in Vietnam is expected to remain high
in both the short- and long-term, driven by
an expected recovery in GDP growth, more
highway construction, and the Ministry of
Transportation’s 2014 Circular No.6 limiting
truckloads. According to TechSci Research,
Vietnam’s tire market will grow at over 8%
CAGR in 2014-2019 as the top tire brands in
the country, Bridgestone, Michelin, DRC are
expected to lead the market thanks to their
high quality and brand availability.
Moreover, DRC is also in a good position to
benefit from the surge in demand for heavy-
duty radial tires, which is expected to grow
at 20% CAGR from 2014-2018. In 1H2015
DRC sold 84,600 radial units, up 82% YoY. It
is expected to sell 200,000-240,000 units
in 2015 and reach full capacity of 300,000
units sold in 2016. Phase 2 of the radial tire
factory is also under plan to be constructed
within 2H2015-2016, doubling its capacity
to 600,000 units, at one third of the capex
spent on phase 1. DRC should experience
a slight increase in earnings in 2015, with
more impressive business result projected
for 2016.
SUSTAINABILITY
All of DRC’s products meet either local or
international quality standards such as
Vietnam’s QCVN, the USA’s DOT, and the
EU’s EMARK. The company has an Initiative
Department that works on solutions for cost
saving and productivity improvement. In
2014, the company applied 177 initiatives
saving VND 21bn. The company has
installed state-of-the-art air filters and
fire extinguishing systems at all of its
new factories and workshops. DRC applies
clear segregation of duties between its
Chairman and its CEO. The company has
been an industry leader in implementing
staff wellness programs, covering primarily
health and safety aspects. In 2014, DRC was
awarded Best Company in Labor Wellness by
Da Nang City.
9
VietNam Holding Annual Report 2015 FPT CORPORATION (FPT)
SHAREHOLDER PROFILE (AT 30 JUNE 2015)
State Capital Investment Corporation (SCIC)
Foreign investors
Domestic investors (excluding SCIC)
VIETNAM HOLDING’S INVESTMENT (AT 30 JUNE 2015)
Date of first investment
Number of shares
Total investment
Average purchase price
% VNH shareholding
Internal rate of return (annualized)
TRADING INFORMATION (AT 30 JUNE 2015)
Listed on
Date of listing
Total shares outstanding
Share price
52 week high
52 week low
Trailing P/E
2015 P/E
Price/Book
Sources: FPT audited financial statements and Bloomberg.
CORE BUSINESS
FPT operates as a software developer, a
provider of IT and telecom services, and a
major distributor/retailer of ICT products.
COMPANY BACKGROUND
FPT started its IT business from 1990 and
has held the leading position in the local
industry since 1996. It went public in 2002
and was listed on the Ho Chi Minh Stock
Exchange in 2006.
KEY STRENGTHS
FPT’s main competitive advantages consist
of its high-quality human resources
department, supported by its 100% owned
subsidiary FPT University, a comprehensive
telecom infrastructure with a private North-
South backbone – recently upgraded to
fiber cables, and a reputable brand name.
FPT is the largest software exporter in
Vietnam with 8,528 programmers. A private
telecom network enables FPT to expand its
market to second-tier cities. The company is
represented in all 63 provinces of Vietnam
and in 19 other countries with a strong base
of more than 350 global customers and
partners including well-known companies
such as Microsoft and IBM.
6%
49%
45%
08 January 2007
4,277,002
USD 9.09 million
VND 37,163
1.1%
18.7%
HOSE
21 November 2006
397 million
VND 46,400
VND 49,901
VND 38,556
10.8
10.0
2.2
FINANCIAL HIGHLIGHTS (USD MILLION)
2013
2014
Market capitalization
Equity capital
Revenue
Revenue growth (in VND) (%)
EBIT
NPAT
EPS (VND)
EPS Growth (%)
Gross margin (%)
EBIT margin (%)
ROE (%)
D/E
Current ratio (x)
SHARE PRICE PERFORMANCE VS. VNAS INDEX
614.7
341.7
1,289.0
9.9
126.3
76.7
4,684
3.6
20.5
9.8
29.9
0.6
1.4
772.1
370.0
1,536.8
20.8
123.6
76.8
4,746
1.3
19.2
8.0
27.0
0.9
1.3
160%
140%
120%
100%
80%
60%
40%
20%
0%
Dec 12 Feb 13 Apr 13
Jun 13 Aug 13 Oct 13 Dec 13 Feb 14 Apr 14
Jun 14 Aug 14 Oct 14 Dec 14 Feb 15 Apr 15
Jun 15
VNAS Index
FPT (FPT is the only company in the Telecommunications sector)
of providing 2,000 BrS Engineers to work
globally by 2017. FPT has also committed
to be a pioneer in the Smart Revolution
by applying the S.M.A.C (social, mobile,
analytics and cloud) concept as of 2014. This
is an important prerequisite which helps
ensure that FPT can position itself in more
advanced IT stages, and will thus improve its
competitiveness on a global scale.
PERFORMANCE AND DEVELOPMENT
FPT’s 2014 net profit registered at USD
76.3 million, up 1.5% YoY (in VND). Poor
performance of the online gaming segment
and capital expenditures on fiber optic
conversion project of USD 40 million
which occurred in 2013 and 2014 put a
downward pressure on the overall profits.
However, an annual growth of 14% in 2014
pre-tax profits of overseas earnings helped
compensate less positive results in other
sectors to maintain a positive total net profit
growth. FPT’s software outsourcing business
for Japan, US, Europe and Asia Pacific (APAC)
markets recorded an impressive 2014
revenue growth of 37% YoY. In 2014, FPT
also acquired RWE IT Slovakia, an in-house
IT service of a leading utilities company in
Germany, to expand its European market.
of fixed-line internet users, estimated at
25-30% of the population, lower than
36% of APAC countries, should continue
to increase according to the Vietnam
Telecommunications Authority. Furthermore,
mobile devices are expected to see average
growth of 20% in 2015 (source: International
Data Corporation).
SUSTAINABILITY
FPT has a strong emphasis on training, with
1,718 technology and management training
sessions having been provided in 2014. Each
employee received 3.6 training courses with
a total of 10 hours. To prepare for its future
leadership, FPT has implemented Talent
Internship programs to recruit talented
candidates for management training.
Moreover, FPT’s Leadership Institute club has
nurtured potential executives via mentoring
and coaching programs. The company was
granted the Vietnam HR Awards 2014 in the
categories of the best working environment
and the best HR policy.
Furthermore, FPT’s new environmental
friendly campus in Da Nang received the
EDGE (Excellence in Design for Greater
Efficiencies) award by the IFC. Its two
university and data centers have also
implemented energy efficiency solutions to
save 341 MWh and 255 MWh, respectively
in 2014. The company also donated USD
1.4 million for social programs such as
sponsoring 122 scholarships and 100 cleft
lip and palate operations.
BUSINESS STRATEGY AND EXECUTION
FPT aims to become an internationally
recognized IT service provider. It has been
concentrating on growing its foreign
markets via acquisitions of IT departments
of global firms, and via its 10,000 Bridge
System Engineers (BrSE) training program,
created in November 2014 with the goal
OUTLOOK
In 2015 sales and pre-tax profit targets are
set to grow 13% and 16% YoY, respectively.
A government decision effective on February
15, 2015 has encouraged IT leasing activities
to not only help computerize government
offices but also boost the development of
local IT services. In addition, the number
10
VietNam Holding Annual Report 2015 HUNG VUONG CORPORATION (HVG)
SHAREHOLDER PROFILE (AT 30 JUNE 2015)
FINANCIAL HIGHLIGHTS (USD MILLION)
Foreign investors
Domestic investors
VIETNAM HOLDING’S INVESTMENT (AT 30 JUNE 2015)
Date of first investment
Number of shares
Total investment
Average purchase price
% VNH shareholding
Internal rate of return (annualized)
17%
83%
29 December 2011
7,477,547
USD 6.68 million
VND 16,841
4.0%
33.4%
TRADING INFORMATION (AT 30 JUNE 2015)
HOSE
Listed on
16 Nov 2009
Date of listing
189 million
Total shares outstanding
VND 19,500
Share price
VND 26,255
52 week high
VND 15,536
52 week low
Trailing P/E
12.0
2015 PE 11.1
1.4
Trailing P/B
Market capitalization
Equity capital
Revenue
Revenue growth (in VND) (%)
EBIT
NPAT
EPS (VND)
EPS Growth (%)
Gross margin (%)
EBIT margin (%)
ROE (%)
D/E
Current ratio (x)
SHARE PRICE PERFORMANCE VS. VNAS INDEX
320%
280%
240%
200%
160%
120%
80%
40%
0%
-40%
2013
139.5
110.9
526.7
43.6
25.7
11.8
1,890
(5.9)
8.9
4.9
10.6
1.9
1.2
2014
165.5
110.4
701.5
34.9
33.9
13.7
2,201
16.5
7.5
4.8
12.3
2.0
1.3
Sources: HVG audited financial statements and Bloomberg.
Dec 11 Mar 12
Jun 12
Sep 12 Dec 12 Mar 13
Jun 13
Sep 13 Dec 13 Mar 14
Jun 14
Sep 14 Dec 14 Mar 15
Jun 15
VNAS Index
Food & Beverage (excl. HVG)
HVG
CORE BUSINESS
HVG is in the business of farming,
processing and exporting pangasius fish and
shrimp products, as well as the production
of fish feed.
COMPANY BACKGROUND
In 2014, Hung Vuong (HVG) was the largest
pangasius exporter in Vietnam with USD
215 million revenue in exports, representing
12.3% of Vietnam’s total pangasius export
turnover. Established as a private company
in 2003, HVG’s products are shipped to the
EU, the US, Russia, Mexico, Ukraine, Australia,
Hong Kong, the Middle East, South America
and South East Asia.
KEY STRENGTHS
Hung Vuong has developed an integrated
vertical value chain from fish hatcheries,
feed manufacturing and fish farming to
processing, cold storage warehousing and
exporting. Vertical integration enables Hung
Vuong to stabilize production and improve
profit margins. HVG’s production capacity
is among the largest in the industry with
16 processing plants, 6 feed mills, 1,282
hectares of aquaculture zones (434ha for
fish and 848ha for shrimp) and more than
10,000 employees. It has a total processing
capacity of 335,100 tons of fish, 28,000 tons
of shrimp and 905,000 tons of fish feed per
year. HVG has developed a strong customer
base with more than 40 international
distributors.
BUSINESS STRATEGY AND EXECUTION
HVG continues to concentrate on its core
business by growing its production capacity
and expanding aquaculture zones to better
secure the increasing demand for sustainably
farmed fish. It is also restructuring the
company into groups of related business
lines for more efficient management. HVG’s
growth strategy has been based on both
M&A activities and internal growth. After
acquiring Agifish, a leading pangasius
exporter in 2012, HVG went on to acquire a
leading pangasius feed producer, Viet Thang
Feed (VTF) in 2013. In 2014, HVG acquired
one of Vietnam’s leading shrimp exporters,
Sao Ta Food (FMC).
To prepare for these spectacular growth
opportunities, HVG designated 2015 as the
year of investment and capacity expansion.
The company is building three new fish
processing factories, one shrimp processing
factory and a cold warehouse in the Mekong
Delta. HVG’s subsidiary, Viet Thang Feed’s
capacity will be raised to 800,000 tons per
annum from the current 500,000 tons per
annum. These investment projects promise
outstanding development for the whole
group from 2016 onward.
PERFORMANCE & DEVELOPMENT
In 2014, HVG recorded a revenue growth of
34.9% and a net profit after tax growth of
17.2%, thanks to significant contributions
from the trading of fish feed and soya
beans, and robust growth in export markets
including EU, Brazil, Mexico and Ukraine. In
2014, HVG’s export to EU markets almost
tripled and made up 26% of total export
revenue, compared to about 9% in 2013.
OUTLOOK
International free trade agreements, which
were concluded in 2014 and 2015, are
expected to create tax benefits and great
export opportunities for the fishery industry
in Vietnam. Additionally, the ASEAN Plus
6 agreement among China, India, Japan,
Korea, Australia, New Zealand and the
ASEAN countries, to be signed in 2016, will
enhance exports to neighboring countries.
Vietnam’s pangasius exports are forecast to
grow by 10%-15% per annum to reach USD
2.5bn-3bn by 2020.
SUSTAINABILITY
HVG located its aquaculture zones close
to clean sources of water in the Mekong
Delta to ensure quality standards are met.
HVG has also been active in promoting
the application of global standards in
all pangasius and shrimp enterprises in
Vietnam. All of HVG’s processing factories
meet the most strict global quality
certifications.
Hung Vuong was the first Vietnamese
seafood company to qualify for The World
Wildlife Fund’s Aquaculture Stewardship
Council certification. The World Wildlife Fund
(WWF) has actively supported Vietnam in
improving the sustainable development of
pangasius aquaculture through a five-year
Aquaculture Improvement Program. In our
engagement with the company, we raised
our concern about potential key-man risk
and recommended more segregation of
duties in the management system. We also
suggested that the company apply ERP
systems as their scale is growing fast under
a very complicated group structure.
11
VietNam Holding Annual Report 2015 PHU NHUAN JEWELRY (PNJ)
SHAREHOLDER PROFILE (AT 30 JUNE 2015)
FINANCIAL HIGHLIGHTS (USD MILLION)
Foreign investors
Domestic investors
49%
51%
VIETNAM HOLDING’S INVESTMENT (AT 30 JUNE 2015)
08 December 2009
Date of first investment
4,578,324
Number of shares
USD 8.28 million
Total investment
VND 25,267
Average purchase price
% VNH shareholding
4.7%
Internal rate of return (annualized) 20.4%
TRADING INFORMATION (AT 30 JUNE 2015)
Listed on
Date of listing
Total shares outstanding
Share price
52 week high
52 week low
Trailing P/E
2015 P/E
Price/Book
HOSE
23 Mar 2009
98 million
VND 39,500
VND 41,600
VND 21,855
13.9
12.5
2.8
Market capitalization
Equity capital
Revenue
Revenue growth (in VND) (%)
EBIT
NPAT
EPS (VND)
EPS Growth (%)
Gross margin (%)
EBIT margin (%)
ROE (%)
D/E
Current ratio (x)
SHARE PRICE PERFORMANCE VS. VNAS INDEX
160%
120%
80%
40%
0%
-40%
-80%
2013
109.7
62.5
425.1
29.4
15.1
7.8
2,239
-36.6
7.5
3.6
12.7
0.98
1.2
2014
141.1
60.6
433.1
3.2
19.5
11.4
3,208
43.3
9.7
4.5
19.7
0.98
1.3
Sources: PNJ audited financial statements and Bloomberg.
Dec 09
Jun 10
Dec 10
Jun 11
Dec 11
Jun 12
Dec 12
Jun 13
Dec 13
Jun 14
Dec 14
Jun 15
VNAS Index
Retail (excl. PNJ)
PNJ
already existing stores and the addition
of 17 new stores. With an aggressive store
opening plan, PNJ revised its total number of
stores target for 2017 from 200 to 250.
SUSTAINABILITY
PNJ has firm policies to ensure that its
precious stone purchases are from legitimate
sources and do not come from conflict zones
or have other questionable origins. The
company has also reduced its raw material
waste to under the industry standard of 1%.
In addition, since 2012 the company has
implemented several HR projects such as
restructuring its organizational hierarchy,
standardizing the hiring process, reforming
the HR operating model, building a
leadership competency framework and
setting KPIs. These efforts have played a key
role in PNJ delivering its recent impressive
business results. Due to such positive HR
changes, PNJ received the Towers Watson
2015 HR Professional Award and several
prestigious 2015 JNA (Jewelry News Asia)
prizes, including Employer of the Year, and
Retailer of the Year. The JNA awards have
put PNJ on a par with major regional players
such as Chow Tai Fook (Hong Kong) and
Pranda (Thailand).
CORE BUSINESS
PNJ is the largest local producer and retailer
of jewelry products in Vietnam.
COMPANY BACKGROUND
The company’s jewels range from low-end to
luxury to serve different consumer segments
through its nationwide network of 186 retail
stores (95 gold class, 83 silver class, and 8
premium class stores) and 3,000 wholesalers.
PNJ enjoys a market share of 23%.
KEY STRENGTHS
PNJ is justifiably proud of its rich, 27-year
experience in the jewelry industry, with a
professionally managed and well-respected
brand image. The company has expanded its
extensive distribution network far beyond
its closest competitor, which operates less
than 40 stores. An experienced team of
jewelry designers and nearly 1,000 skilled
goldsmiths make up one of the company’s
strongest assets. PNJ is the only jewelry
house in Vietnam with a manufacturing
capacity of 4 million items per annum.
BUSINESS STRATEGY AND EXECUTION
Concentrating on its core features of
creativity, sophistication and reliability,
PNJ aims to become a leading company
in the Asian jewelry industry. Its 10-year
strategy (2012-2022) seeks to maintain
and accomplish the four cornerstones
of international jewelry standards:
design quality, production scale, modern
management and manufacturing systems,
and well-developed craftsman skills.
The company has cooperated with
consultants from Italy, as well as Value
Partners, and dominant global industry
players such as Zales in the US, all to
improve its design abilities, operations, and
retail systems. PNJ has also implemented an
ERP system to optimize its inventory level
and production process.
PERFORMANCE AND DEVELOPMENT
PNJ’s 2014 performance was remarkable.
Its profit after tax (PAT) advanced 48.6% YoY.
Nevertheless the company only achieved
79.94% of its 2014 target sales as it
curtailed its low-margin gold bar trading
activities and concentrated more on its high-
margin jewelry business, which generated
85% of total gross profits. PNJ’s jewelry
business has amongst other reasons also
rapidly grown due to a government circular,
which strictly controls the quality of gold
products and as a result has curtailed the
market share of smaller, lower quality shops.
The 2014 sales and gross profit of PNJ’s
jewelry business grew 21.7% and 37% YoY
respectively. Furthermore, PNJ successfully
divested its noncore investments in Saigon
Fuel Company and Que Huong Liberty Hotel
in 2014.
OUTLOOK
PNJ aims to boost its 2015 consolidated
sales and PAT by 13% YoY and 20% YoY
to USD 378 million and USD 14 million
respectively. The 1H2015 PAT of the parent
company already reached USD 8.3 million,
up 43.8% YoY and equivalent to 59.3% of
the consolidated target. This was due to
significant sales growth of 27% YoY in
12
VietNam Holding Annual Report 2015 THIEN LONG GROUP (TLG)
SHAREHOLDER PROFILE (AT 30 JUNE 2015)
FINANCIAL HIGHLIGHTS (USD MILLION)
Foreign investors
Domestic investors
VIETNAM HOLDING’S INVESTMENT (AT 30 JUNE 2015)
Date of first investment
Number of shares
Total investment
Average purchase price
% VNH shareholding
Internal rate of return (annualized)
TRADING INFORMATION (AT 30 JUNE 2015)
Listed on
Date of listing
Total shares outstanding
Share price
52 week high
52 week low
Trailing P/E
2015 PE
Trailing P/B
20.5%
79.5%
25 January 2013
1,946,201
USD 6.24 million
VND 21,583
7.3%
66.6%
HOSE
16 Nov 2009
27 million
VND 70,000
VND 73,000
VND 32,984
12.4
11.1
2.5
Market capitalization
Equity capital
Revenue
Revenue growth (in VND) (%)
EBIT
NPAT
EPS (VND)
EPS Growth (%)
Gross margin (%)
EBIT margin (%)
ROE (%)
D/E
Current ratio (x)
SHARE PRICE PERFORMANCE VS. VNAS INDEX
500%
400%
300%
200%
100%
0%
-100%
2013
2014
47.0
66.4
29.9
34.2
67.1
80.0
15.6
14.7
9.0
9.7
5.6
6.9
4,351
5,501
16.4
26.4
36.8
36.9
13.4
12.1
21.7
19.7
0.4 0.3
2.5
2.1
Sources: TLG audited financial statement and Bloomberg.
Jan 13 Apr 13
Jun 13 Aug 13 Oct 13 Dec 13 Feb 14 May 14
Jul 14 Sep 14 Nov 14
Jan 15 Mar 15
Jun 15
VNAS Index
Retail (excl. TLG)
TLG
CORE BUSINESS
TLG is a major producer and distributor of
pens and stationery.
COMPANY BACKGROUND
Founded in 1981, TLG is the leading
producer and distributor of pens and
stationery in Vietnam, with a 60% market
share of pens and 30% of office supplies.
TLG’s products are certified with numerous
global quality and environmental standards
and meet the same requirements as those
of leading international industry producers
such as BIC, Crayola, TOMA and Mitsubishi.
The company exports its products under the
Bizner, FlexOffice and Colokit brand names
to more than 40 countries around the world.
KEY STRENGTHS
The company has earned strong brand
recognition over a distribution network of
more than 130 wholesalers and 53,000
points of sales located amongst other in
Germany, China, Japan, USA, Thailand, Laos
and Cambodia. The company applies a very
tight quality control system on well-selected
input materials and innovative production
systems. Thien Long branded molds and
machines, which adhere to international
standards, help the company to be active
in both design and production. A strong
learning culture is incorporated in their
commitment to sustainable development
and social responsibility.
BUSINESS STRATEGY AND EXECUTION
The company set a clear vision to become
the leading supplier of pens and stationery
in Asia. The company is expanding its
export markets to Japan, the US and
Europe. Diversification of brand names and
product ranges is continuously worked on
to insure coverage of all market segments.
The company is enhancing R&D towards
automation, high productivity and high
quality completion.
PERFORMANCE & DEVELOPMENT
TLG enjoyed a successful year in 2014
with remarkable growth of 14.7% in
revenue and 26.5% in net profit after tax.
This achievement followed their strong
investments into human resources, R&D for
new products, manufacturing technologies
and an expanded distribution network in
2013. Success in COGS and financial expense
control helped the company to improve
profit margins over the last 3 years, resulting
in average growth of 22.4% in profit after
tax while revenue rose an average of 15.6%
in the period 2012-2014.
OUTLOOK
In order to fulfill its value chain, TLG set
medium term targets to improve automation
in production by increasing the usage ratio
of self-developed equipment and molds. The
TLG group invests heavily in technology and
the transfer of technical knowledge from
foreign companies in order to enhance the
in-house manufacturing of ink and other
materials. At the same time, new trade
agreements are expected to open exciting
new opportunities for greater export sales.
SUSTAINABILITY
Integrated ISO Management Systems have
all been fully applied on group scale in
TLG. The group established the Innovation
Team, which proposes initiatives to
reduce pollution and the use of resources,
materials and energy for cost saving and
environmental protection purpose. Any
employee or department may raise related
issues and solutions with the Innovation
Team and they will be rewarded for their
contribution to the company’s sustainable
development.
TLG conducts annual surveys on the salary
and compensation packages of its peers in
order to build a competitive remuneration
scheme for its employees. The company also
provides insurance packages and training
courses beyond the requirements of local
labor laws.
For 13 years, TLG has participated in the
University Entrance Exam Support and
Consultation programs by sponsoring
the publication of educational material
for young students, and transporting
underprivileged children to often distant
testing sites for university examinations.
13
VietNam Holding Annual Report 2015 TRAPHACO (TRA)
SHAREHOLDER PROFILE (AT 30 JUNE 2015)
State Capital Investment Corporation (SCIC)
Foreign investors
Domestic investors (excluding SCIC)
VIETNAM HOLDING’S INVESTMENT (AT 30 JUNE 2015)
Date of first investment
Number of shares
Total investment
Average purchase price
% VNH shareholding
Internal rate of return (annualized)
TRADING INFORMATION (AT 30 JUNE 2015)
Listed on
Date of listing
Total shares outstanding
Share price
52 week high
52 week low
Trailing P/E
2015 P/E
Price/Book
Sources: TRA audited financial statements and Bloomberg.
CORE BUSINESS
TRA produces and distributes herbal
pharmaceutical products.
COMPANY BACKGROUND
TRA is the leading manufacturer of herbal
medicinal products in Vietnam. Its herbal
product sales have contributed around 80%
of the total sales of self-manufactured goods.
Originally a state-owned enterprise, TRA was
equitized in 2000 and listed in 2008.
KEY STRENGTHS
TRA is nationally recognized as a leading
supplier of high-quality traditional
medicines, having achieved many significant
awards such as the International Arch
of Europe Quality Award 2012 and
International Best Enterprise Award. TRA
enjoys a valuable competitive advantage
with a nationwide distribution system based
on major centers in Ha Noi, Da Nang and
Ho Chi Minh, 18 branches, 6 subsidiaries,
and numerous affiliated companies serving
18,000 customers.
BUSINESS STRATEGY AND EXECUTION
TRA has implemented an aggressive
expansion strategy by acquiring small
provincial pharmaceutical companies with
existing local distribution networks. It has
also regularly improved its private and
partnered herbal plantations to ensure the
quality and availability of input materials.
It has through this become a local leader
in clean and sustainable herbal medicine
production. To strengthen its profits, it has
shifted its product mix to high margin items.
14
36%
46%
18%
20 December 2007
2,573,748
USD 9.66 million
VND 49,841
10.4%
22.1%
HOSE
26 November 2008
25 million
VND 82,000
VND 84,000
VND 68,234
12.2
10.5
2.8
FINANCIAL HIGHLIGHTS (USD MILLION)
Market capitalization
Equity capital
Revenue
Revenue growth (in VND) (%)
EBIT
NPAT
EPS (VND)
EPS Growth (%)
Gross margin (%)
EBIT margin (%)
ROE (%)
D/E
Current ratio (x)
SHARE PRICE PERFORMANCE VS. VNINDEX
2013
98.9
32.4
80.2
20.1
12.0
7.1
6,255
24.5
42.9
15.0
26.0
0.17
2.3
2014
84.2
36.8
77.7
-1.9
10.1
6.9
5,910
-5.5
43.3
13.0
19.8
0.04
3.0
600%
450%
300%
150%
0%
-150%
Dec 07
Nov 08
Oct 09
Oct 10
Sep 11
Aug 12
Jul 13
Jun 14
Jun 15
VNIndex
Healthcare (excl. TRA)
TRA
co-operation joining TRA with farmers, local
authorities and scientists. Local authorities
provide enforcements, guidelines and
encouragements to farmers to apply GACP.
Scientists provide more persuasive advice
and improved techniques to farmers.
Finally, TRA pledges to purchase all the
cultivated plants.
In 2014, the company organized 65
training sessions, mainly in customer
services and operations for 2,731 employees
with a total budget of USD 0.1 million.
Regarding energy usage, TRA was able to
reduce its 2014 electricity consumption by
6% compared to 2013.
The company’s budget for annual
community activities is about 1-3% of its
total revenues. TRA’s 2014 contribution was
around USD 1 million. The disbursements
have typically been allocated to Agent
Orange victims as well as to a number of
national relief organizations.
Additionally, TRA has successfully carried out
a new sales policy to significantly reduce
dependence on major wholesalers while
bringing the retail component of total sales
to 80% in 2014.
PERFORMANCE AND DEVELOPMENT
TRA reported slight declines of -1.9% YoY
and -2.8% YoY in revenues and profits after
tax, respectively in 2014 after registering
impressive growth rates of 24% to 34% in
3 consecutive years, due to the planned
structural changes in sales system. On the
other hand, the restructuring efforts helped
increase TRA’s 2014 gross margin to 43.3%,
from 42.9% in 2013 thanks to better margins
from the retail distributors.
OUTLOOK
The company conservatively targets growth
rates of +13% YoY and +30% YoY in sales
and net profits, respectively in 2015. With its
focus on sales to retailers and a restructured
sales management system, the targets
are likely achievable. In the long run, high
growth will be enhanced by important
catalysts such as more aggressive promotion
campaigns for its brand name, input material
quality control, and more ambitious new
herbal medicine products.
SUSTAINABILITY
In June 2014, the Company was the first
in the North to receive the WHO-GACP
(Good Agricultural Collection Practices)
certification by the Ministry of Health for
the farming of four important medicinal
plants. TRA executes GACP via 4-party
VietNam Holding Annual Report 2015 VINAMILK (VNM)
SHAREHOLDER PROFILE (AT 30 JUNE 2015)
State Capital Investment Corporation
Foreign investors
Domestic investors
45%
49%
6%
VIETNAM HOLDING’S INVESTMENT (AT 30 JUNE 2015)
25 December 2006
Date of first investment
1,509,194
Number of shares
USD 7.81 million
Total investment
Average purchase price
VND 31,267
% VNH shareholding 0.2%
65.4%
Internal rate of return (annualized)
TRADING INFORMATION (AT 30 JUNE 2015)
FINANCIAL HIGHLIGHTS (USD MILLION)
Market capitalization
Equity capital
Revenues
Revenue growth (in VND) (%)
EBIT
NPAT
EPS (VND)
EPS growth (%)
Gross Margin (%)
EBIT Margin (%)
ROE (%)
D/E (x)
Current Ratio (x)
SHARE PRICE PERFORMANCE VS. VNINDEX
2013
2014
4,467.3
5,337.7
901.1
836.8
1,634.2
1,475.9
13.0
16.5
353.9
382.0
305.3
311.6
6,068
6,533
-7.1
13.0
35.1
36.1
25.9
21.7
39.6 39.6
0.08
0.02
2.8
2.6
900%
750%
600%
450%
300%
150%
0%
-150%
Oct 08 Mar 09 Aug 09
Jan 10
Jun 10 Nov 10 Apr 11 Sep 11 Feb 12
Jul 12 Dec 12 May 13 Oct 13 Mar 14 Aug 14
Jan 15
Jun 15
VNIndex
Food & Beverage (excl. VNM)
VNM
HOSE
19 January 2006
1 billion
VND 113,000
VND114,000
VND90,787
18.1
16.3
5.4
Jun 15
annually measures the usage of fuel oil,
gas, electricity, bio-gas, CNG, water and
different types of waste volume and sets
specific targets for reduction every year. Fuel
oil use decreased significantly from 2012
to 2014 thanks to substitution with more
environmentally friendly CNG/biomass.
Vinamilk established several
communication channels for employee
feedback, including six-monthly appraisal
meetings, quarterly employee surveys and
a direct hot-line system. In 2014, Vinamilk
ranked 2nd in the list of the top 100
workplaces in Vietnam and was named
the most attractive employer in regards
to salaries, bonuses and quality of life in a
well-known national survey.
In the seven year history of the “Stand High
Vietnam Milk Fund”, VNM has given nearly
23.5 million glasses of milk to more than
310 thousand disadvantaged Vietnamese
children and continues to do so with the
ultimate goal of “bringing milk to every
child in Vietnam, everyday”.
PERFORMANCE AND DEVELOPMENT
The company reported a slight decrease in
net profit in 2014 for a number of reasons:
weaker aggregate demand, a government
decreed price cap on powdered milk
products for children under 6, higher raw
material prices and surging depreciation
expenses from two new factories.
OUTLOOK
VNM has targeted revenues of USD 3bn by
2017 (2015-2017 CAGR of 20%) and average
net profit growth of at least 10% in the
same period. Liquid milk factory capacity
will be brought to 800 million liters per
annum by 2017 while the powdered milk
factory is expected to satisfy 40% of
domestic demand by 2020. The company’s
prospects look more attractive in the long
term with stronger recovery in domestic
demand and full efficiency from its new
factories and oversea investments.
SUSTAINABILITY
VNM’s five cow farms are the only ones in
South East Asia and are among just seven
farms in Asia to achieve the Global G.A.P
certification. The cows are 100% senior
breed HF imported from Australia and New
Zealand with full genealogy information.
In 2014, VNM bettered over 100 consumer
products from 70 countries to win the Award
of the Global Food Industry for the quality of
its liquid milk products.
At the end of 2014, 8 of 13 VNM factories
are running energy management systems
in accordance with ISO standards. VNM
15
Traded on
Date of listing
Total shares outstanding
Share price
52 week high
52 week low
Trailing P/E
2015PE
Price/Book
Sources: VNM annual reports and Bloomberg.
CORE BUSINESS
VNM is a world-class producer and
distributor of dairy and beverage products.
COMPANY BACKGROUND
Vinamilk (VNM) is the leading dairy product
manufacturer and distributor in Vietnam,
with an average market share of over 50% in
most product segments.
KEY STRENGTHS
VNM differentiates its sustainable business
strategies through product innovation based
on a strong R&D commitment, an extensive
network of distributors and a growing
export capacity. VNM takes pride in its well-
established distribution network which is
comprised of both modern and traditional
channels, totaling more than 215,000 outlets
across the country. According to a recent
survey, VNM is the only food brand regularly
purchased by more than 80% of the urban
households in Vietnam.
BUSINESS STRATEGY AND EXECUTION
VNM’s vision is to continue being Vietnam’s
most sustainable and fastest growing dairy
food company and ultimately to be among
the top 50 dairy producers globally, with
sales revenues above USD 3bn by 2017. The
company pioneered technology investments
with an advanced and automated packaging
and product quality solution based on
the Tetra Plant Master Production and
Warehouse system. To meet increasing
demands, VNM aims to have at least 9 dairy
farms on an industrial scale with a total herd
of around 46,000 cows within 5 years.
VietNam Holding Annual Report 2015
VICONSHIP (VSC)
SHAREHOLDER PROFILE (AT 30 JUNE 2015)
Foreign investors
Domestic investors
VIETNAM HOLDING’S INVESTMENT (AT 30 JUNE 2015)
Date of first investment
Number of shares
Total investment
Average purchase price
% VNH shareholding
Internal rate of return (annualized)
TRADING INFORMATION (AT 30 JUNE 2015)
Traded on
Date of listing
Total shares outstanding
Share price
52 week high
52 week low
Trailing P/E
2015 P/E
Price/Book
49%
51%
17 March 2008
3,522,571
USD 7.81 million
VND 19,014
8.5%
24.9%
HOSE
12 December 2007
41 million
VND 48,400
VND 49,839
VND 39,640
7.8
8.5
1.6
FINANCIAL HIGHLIGHTS (USD MILLION)
Market capitalization
Equity capital
Revenues
Revenue growth (in VND) (%)
EBIT
NPAT
EPS (VND)
EPS growth (%)
Gross Margin (%)
EBIT Margin (%)
ROE (%)
D/E (x)
Current Ratio (x)
SHARE PRICE PERFORMANCE VS. VNINDEX
2013
72.0
41.9
37.8
1.6
14.6
11.5
5,823
4.7
38.3
38.6
27.2
0.01
2.3
2014
80.4
49.5
42.0
12.5
14.3
11.7
6,014
3.3
35.0
34.0
23.4
0.01
2.0
480%
400%
320%
240%
160%
80%
0%
-80%
-160%
Sources: VSC audited financial statements and Bloomberg.
Jun 15
Mar 08
Oct 08
May 09
Jan 10
Aug 10
Mar 11
Oct 11
Jun 12
Jan 13
Aug 13
Mar 14
Nov 14
Jun 15
VNIndex
Industrial Goods & Services (excl. VSC)
VSC
CORE BUSINESS
VSC is active in four integrated businesses
comprising port services, container yards,
cargo forwarding and truck transportation.
COMPANY BACKGROUND
VSC was founded in 1985 in Haiphong
as part of the Vinalines Group. In 2002 it
was equitized and was subsequently listed
on HOSE in 2008. VSC is the only port
services company without state ownership.
VSC operates an international seaport
(Green Port), which can simultaneously
accommodate two ships of up to 20,000
DWT (deadweight tons) each. Green Port
accounts for about 60% of VSC’s total
revenues and almost 80% of its net profits.
The company’s extensive 278,550m2
container yards are strategically located in
Haiphong near Green Port. This segment
contributes 20% of revenues and nearly
10% of profits. Truck transport and cargo
forwarding add 20% and 10% of total
revenues and profits, respectively.
KEY STRENGTHS
VSC has built its reputation on the
quality of its services, with professional
management, a clear growth strategy and
a consistent long-term vision. VSC provides
a complete range of facilities from cargo
loading to warehousing, container yard
operation, in-land truck transport and
freight forwarding.
16
BUSINESS STRATEGY AND EXECUTION
VSC has now completed its Green Port
Logistic Center with two 7,500 square meter
storage facilities on 15ha of land. The
company also plans to construct a container
port in the center of Dinh Vu Port with a
capacity of 500,000 twenty-foot containers
(TEU) per year. This will raise the total
capacity of VSC there to 800,000 TEU per
year. VSC also holds a 22% stake in a facility
located next to the Dinh Vu Port, one of the
most profitable ports in the Hai Phong area.
PERFORMANCE AND DEVELOPMENT
Revenues and net income increased by
12.5% and a more moderate 3.3% YoY
respectively in FY2014. Strong revenue
growth was achieved by impressive increases
in the volume handled by the Container
Freight Station and in inland transportation
activity, at 21% and 40% respectively. In
2104, VSC successfully divested some low-
profit-margin facilities such as two of its
barges. However, fierce competition in the
Hai Phong port area forced VSC to spend
more on promotional activities, which led
to lower operating margins. The company
continues to maintain a healthy balance
sheet with a high cash balance and a very
low debt ratio.
OUTLOOK
In 2015, VSC expects to report a slight
growth of 4.2% YoY in revenue and a decline
of -5.5% YoY in net profit. Revenue growth
will derive from the new logistics center
that may run at 100% capacity compared
to 70% in 2014. Yet, its net profits margins
continue to be squeezed due to the absence
of VND 47bn in extraordinary earnings and
increased spending on promotional activities
as noted. Management still targets a 2015
dividend ratio at 20% on par thanks to
its abundant cash position. With the new
VIP Green Port coming into operation, we
forecast a growth of 16.7% in revenue and
20.5% in net profit in 2016.
SUSTAINABILITY
Segregation of duties between the Chairman
and the CEO has been consistently applied
since 2011. Following our recommendation
during VNH’s Director Engagement Program
visits, Viconship has been more active
in designing and applying policies and
programs on labor safety and environmental
protection, including in the areas of energy
efficiency and port cleanliness. Moreover,
VSC began using an international standards
auditor in 2013 (KPMG), and enhanced their
investor relationship activities by improved
interaction with investment funds and
brokerage firms in Vietnam.
Furthermore, the Company also organizes
diversified programs and social activities
for employees. Specifically, 17 management
level staff were sent overseas for training,
134 staff at middle level attended training
courses in Vietnam and overseas, 42 staff
were sent to English language training
courses, while 545 staff attended periodic
technical training.
VietNam Holding Annual Report 2015
Sustainability Report
As a long-term investor, we remain committed to the application of sound
sustainability criteria in our value investing approach.
SUSTAINABLE INVESTING
As Vietnam’s modernization continues to shape the society
in which we deploy assets, major macro-shifts can be
discerned, posing both challenges and opportunities. Rural
development, urbanization and the growth of a more
affluent demographic are examples of the trends that
continue to seed change in local values and consumer
patterns. As a responsible investor, we choose to invest in
enterprises that demonstrate a commitment to positive
change within the communities in which they operate and
serve. By investing in the growth of living standards, more
inclusive economic participation and higher value-added
products we can capitalize on the positive developments
of our portfolio companies. VNH avoids investments
involving products and services with known negative
effects. The fund’s exclusion criteria cover businesses
dealing in tobacco, firearms, distilled alcohol and gambling,
among others. In addition, each short-listed investment is
thoroughly screened for controversial business practices in
an intensive due diligence process. Companies engaged in
pollution, child labor, bribery or other damaging business
practices are excluded from our investment consideration.
VNH and its investment manager remain fully committed
to pursuing a focused discussion of crucial ESG issues in
our constant dialogue with investee companies.
Director Engagement
The Boards of Directors of VNH and its investment
manager are committed to the established practice of
engaging portfolio company executives in face-to-face
meetings. Each VNH and VNHAM director is assigned
to selected portfolio companies according to their
industry specialization. In concert with members of the
investment team, they follow a systematic engagement
schedule of personal meetings with the management
of our portfolio companies. The assigned analyst briefs
each director on the important financial and ESG issues
in advance of every visit, and directly benefits from
attendance at the meetings. An important aspect of the
directors’ engagement is the element of seniority that the
directors bring to the relationship. When meeting with
the most senior VNH representatives, local executives are
challenged to answer and discuss pertinent and well-
informed inquiries.
As part of the investment process, our investment team
identifies key environmental, social and governance (ESG)
issues through tailored industry analysis methods and
direct requests for information from target companies.
When sustainability issues have a real or potentially
significant impact on revenues or costs, they are
systematically factored into the investment analysis.
By monitoring these material performance indicators,
VNH engages individual portfolio companies on the
basis of their ESG profile and seeks to catalyze positive
change. Our divestment policy captures companies that
fail to demonstrate real awareness of – or to consider
improvements in – key sustainability issues.
ACTIVE ENGAGEMENT
As an active investor, VietNam Holding assigns a high
priority to the engagement mandate entrusted to us by our
shareholders. During the past fiscal year, our investment
team has further developed its engagement initiatives,
adding to the impressive results that have already been
achieved. Many of the improvements in the areas of
environmental practices, corporate social responsibility
and corporate governance described in the previous
section were the result of our active engagement.
Through these direct engagement visits VNH emphasizes
the importance of enhanced company disclosure and
transparency. In many cases, tangible progress in annual
reports and company websites are noted, which rewards
VNH’s ongoing commitment to spread ESG awareness and
enforcement throughout Vietnam’s corporate community.
Results to date prove the effectiveness of our approach,
and the directors of VNH and VNHAM will continue to
develop their active engagement program.
VNH Forum
The VNH Forum events showcase international best
practices through select international key-note speakers
and panel sessions which also feature many local experts.
The Forums target the senior executives of both private
and state-owned enterprises. Through these events,
VNH seeks to foster awareness of value investment and
sustainability principles within Vietnam’s investment
community. Past speakers have included local and
international experts from finance, industry, academia and
government bodies.
17
VietNam Holding Annual Report 2015 VNHAM’s investment analyst, Nguyen Anh Cuong (right) with the CEO of Dak
Pone Hydropower (middle) and an advisor of Vietnam Energy and Environmental
Consultancy, VNEEC (left) during the site visit in May 2015.
Dak Pone Hydropower is located in Kon Tum Province, a rural and
mountainous region in Central Vietnam.
The 2015 Forum will focus on Corporate Responsibility.
Our key note speaker Prof. Klaus Leisinger, a former
Chairman of the Novartis Sustainable Development
Foundation, was appointed by Kofi Annan as the Special
Advisor to the United Nations Secretary General for the
UN Global Compact. He is a Professor at the University
of Basel, and teaches Corporate Ethics and Corporate
Responsibility at several other universities. Prof.
Leisinger will also host a special workshop on “Corproate
Responsiblity for Pharmaceutical Corporations in an
Emerging Economy“ for executives of Vietnam’s major
pharmaceutical companies.
Shareholder Voting
Over the past fiscal year VNH voted at the Annual General
Meetings (AGMs) of every portfolio company in which the
fund held an equity position at the time of the AGM.
The voting activity of VNH during that period was as
follows:
•
• VNH attended 22 AGMs in which a total of more than
200 individual agenda items were proposed. The
investment team considered each issue on the basis
of strategic merit and long-term profitability.
In most cases, VNH voted for the agenda items
proposed by the companies’ boards of directors. We
voted “No” at the AGM of three investee companies:
(i) on a planned expansion into a business which
was totally unrelated to any of the company’s core
competencies, (ii) on an ESOP with an overly generous
share allocation ratio, and (iii) no segregation of duty
between the Chairperson and the CEO. We abstained
from voting in four other cases: (i) a steel production
company to penetrate an unrelated business, (ii)
aggressive capital raising plans for two consecutive
years, (iii) the appointment of a new independent
board member, who we feared to be too busy with
his own business to contribute to this investee
company, and finally (iv) an investee company to
retain a wholesale business with notoriously thin
profit margins.
CO2 OFFSETTING
VNH is very conscious of its corporate carbon footprint.
With offices in Vietnam and Switzerland as well as
an international Board of Directors, the emission of
greenhouse gases tied to our activity is relatively high
compared to the size of the organization. The Company
has been offsetting its CO2 emissions since 2010.
The carbon footprint of our business activities for the
respective fiscal years is calculated by considering the
international and domestic air travel of our directors
and staff as well as the energy consumption of our two
offices. For the past fiscal year we have estimated that
the carbon footprint of our travel activity amounts to
430.06 tons of CO2, while the energy consumed in our
offices amounts to 88.57 tons. As in the previous years
we offset the total 518.63 tons of CO2 by supporting
the Dak Pone hydropower project located in Kon Tum
Province, Central Vietnam.
By providing this rural and mountainous region with
reliable and sustainable energy, this project displaces
diesel generators and wood-fired lighting and heating.
This leads to better air quality and reduces respiratory
and eye diseases. In an effort to support sustainable
development in the local communities, the project
owner has funded the construction of canals, bridges,
roads and a school. Also, local farmers are encouraged
to broaden their agricultural activities in order to make
them more sustainable. This includes implementing
aquaculture, which reduces the need for logging to
create more farmland.
In an effort to better understand the capacity and the
impact of the Dak Pone project, a member of VNHAM’s
investment team visited this hydropower plant in May
2015. VNH was introduced to Dak Pone by Swiss-based
South Pole Group, a globally leading developer and
promoter of emission reduction projects. Through the
project’s advisor, Vietnam Energy and Environmental
Consultancy (VNEEC), South Pole arranged the site visit in
this very remote area.
18
VietNam Holding Annual Report 2015 IT infrastructure in the central control room.
The power house supplies electricity for roughly 11,400 households
in the region.
VNHAM’s delegate found that overall, the project
deserves its Gold Standard® certification. The hydropower
plant proved to be in good shape and economically
sound, while acting responsibly towards the environment
as well as the local population.
ASrIA
Discussions with residents in the surrounding areas
showed that people are generally happy with the
developments since the beginning of the project. It
was noted that land compensations had been paid
adequately and that the construction of the dam has had
no significant consequences for the environment. In line
with the Gold Standard® guidelines, biodiversity is well
maintained and the fish passage is not endangered by
the project.
Global Compact
Encouraged by these findings VNH continues to
support and promote this commendable project which
has had a very positive impact on the sustainable
development of the local community while preserving
the region’s environment.
UN PRI
PARTNERSHIPS
Through the long-term relationships of our senior staff
and advisors, and during the past nine eventful years as
an investor in Vietnam, VNH has developed a strong local
and international network of partnerships. The following
organizations have contributed to shaping VNH’s strategy
and profile, and continue to support our desire to bring
forward the sustainability agenda in Vietnam:
South Pole Group
VNH continues to support the Association
for Sustainable & Responsible Investment
in Asia. We look forward to further
association initiatives that encourage
the sustainable investment dialogue
in Vietnam within the context of Asia’s
private and public capital markets.
VietNam Holding Asset Management has
been a founding and active member of the
Global Compact network in Vietnam since
2007. Managed by the United Nations,
the Global Compact is a strategic policy
initiative for companies that wish to align
their activities with ten key principles in
the public and private sectors. At VNH, we
continue to do so.
At its AGM in 2009, shareholders voted
to endorse the comprehensive alignment
of VNH’s investment policy with the
United Nations Principles for Responsible
Investment. As a consequence, ESG
factors are now fully incorporated into
our investment analysis and engagement
strategy.
South Pole Carbon has helped VNH to
calculate its CO2 footprint for the past
five fiscal years and to identify a suitable
project in Vietnam to properly and
meaningfully offset harmful emissions.
South Pole Carbon is a Swiss-based global
leader in the development of emission
reduction projects, the providing of climate
action solutions, and active carbon asset
management.
19
VietNam Holding Annual Report 2015 Vietnam: Meeting the Sustainability Challenge
Like all rapidly changing emerging markets,
Vietnam faces its share of sustainability issues.
Moving quickly from an agricultural economy to one
based on consumer products and export goods, the
country increasingly faces the need to protect its many
resources for its future generations. It was not always
so. For much of its troubled history, the watchword in
Vietnam was survivability, not sustainability. That is
rapidly changing and concerned organizations such as
the VietNam Holding family of companies are doing their
part to help.
Encouraged by outside assistance, Vietnam has done
much in the last ten years to increase public and
governmental awareness of sustainability issues and their
possible solutions. Since 2004, sustainable development
has been a major objective of the Communist Party of
Vietnam. As a result, a number of key ministries and local
governments have designed and enacted sustainable
development policies in support of that objective.
They are focused on protecting Vietnam’s environment,
building and maintaining social fairness and equality, and
achieving this in a lawful and transparent way.
In 2012, the National Council on Sustainable
Development was established to advise Vietnam’s
Prime Minister and provide guidance to ensure proper
sustainability implementation and monitoring on a
national scale. Vietnam has also established the Vietnam
Business Council on Sustainable Development (VBCSD)
to facilitate businesses in integrating environmental,
social and governance (ESG) related concerns into their
practices. VietNam Holding Asset Management is a
co-founder of the VBCSD.
Over the last few years, Vietnam has introduced a range
of anti-corruption measurements, which facilitated
the pursuit of investigations against corrupt business
leaders as well as government officials. Several of these
investigations lead to trials and convictions to long jail
terms. However, the general perception is that these
efforts are well short of an unconditional commitment
to fight large-scale corruption.
One of Vietnam’s governance challenges is that most
public employees’ official earnings are so low that
resorting to securing creative complimentary sources
of income is a necessity to maintain a minimum
sustainable living standard rather than an action driven
by greed. This is true not just for the military and police,
but petty corruption can be found in the education,
health and many other public sectors. It has been
reported that a qualified and experienced surgeon has
a lower income than the typical taxi driver. Adjusting
all the salaries across the entire public sector would not
only create havoc to the national budget, but would also
rekindle inflation.
In addition to generating gradual improvement in
corporate and public governance issues, Vietnam has also
achieved encouraging social results, including poverty
reduction, job creation, broader education and improved
health. The country’s poverty rate has been reduced
significantly from about 29% in 2002 to near 9.5% today.
Vietnam’s gender equality index is higher than many
countries with a similar level of development and income.
The human development index has also improved over
the years. Yet it still remains comparatively low with
Vietnam ranking 121st in 2014, up from 128th in 2011
among 187 countries surveyed1.
Environmental laws and policies have been regularly
amended and revised during the last few years and now
provide much-improved guidelines for environmental
protection in specific industries. Funding has been
increased for environmental protection, pollution
prevention and control, and biodiversity conservation.
Vietnam has now mobilized the necessary resources to
build a system of clean water supply for over 80% of the
urban population. The rate of urban solid waste collection
has also improved, and is now estimated at about 82% in
downtown areas.
Encouraged by outside assistance,
Vietnam has done much in the last ten
years to increase public and governmental
awareness of sustainability issues and
their possible solutions.
1 UNDP 2014 Human Development Report.
20
VietNam Holding Annual Report 2015 Vietnam’s impressive economic growth
has seen energy demand more than
double between 2001 and 2011. It is likely
to double again in the next 10 years if
economic growth remains robust.
The Asian Development Bank has committed to provide
Vietnam with over USD 5bn during 2014-2017, a modest
but important portion of which will support a range of
social and environmental projects and sectors. The Asian
Football Confederation financed nearly USD 120 million
in 2014, of which about 20% was dedicated to climate
change and environmental improvement.
These global organizational efforts, together with those
of concerned companies such as VietNam Holding,
will continue to play a key role in meeting the many
sustainability challenges inherent in the progression
of Vietnam’s vibrant and fast growing economy, and its
changing and demanding population.
Vietnam has also developed a green growth strategy
to cope with climate change. The strategy includes
restructuring, restricting and gradually phasing out
industries that require extensive resources and pollute
the environment, the forced reductions in greenhouse gas
emissions, and the increase of renewable energy use and
available sustainable consumption.
For Vietnam’s businesses, the sustainability landscape
has been steadily evolving. Increasing media coverage
of issues such as climate change, air and wastewater
pollution, poor labor practices and corruption are
catalysts for positive change. As a result of programs
such as VietNam Holding’s own annual Forums, concerned
organizations are playing a key role in broadening ESG
awareness and education. Vietnam’s CEOs are more aware
than ever that satisfying societal needs and protecting
the interests of future generations are increasingly
important to the success of their businesses.
Much remains to be done. Natural resources,
particularly water and biodiversity resources have
significantly diminished. Environmental pollution and
wasteful exploitation of land and mineral resources due
through economic development remain critical issues
and are the focus of continued governmental and private
sector efforts.
Vietnam’s impressive economic growth has seen energy
demand more than double between 2001 and 2011. It is
likely to double again in the next 10 years if economic
growth remains robust. New ‘green standards’ were
recently launched and have attracted both developers
and investors. The IFC expects that about 20% of newly
constructed buildings in Vietnam will be certified with
the new standards by 2021.
Numerous global entities play a growing role. The
World Bank is one of the biggest donors that also assist
Vietnam in dealing with such issues. Most of the USD
3.09bn with which it will finance on-going projects are
related to environment and resource improvements.
21
VietNam Holding Annual Report 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 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 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 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.
22
VietNam Holding Annual Report 2015 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:
In 2015, the Company’s Directors Base Fees were:
Mrs. Min-Hwa Hu Kupfer
Professor Rolf Dubs
Mr. Nguyen Quoc Khanh
USD 28,000
USD 20,000
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
Professor Rolf Dubs
Director & Chair of Corp. Governance Commitee
Mr. Nguyen Quoc Khanh
Director & Chair of Audit Commitee
USD 85,000
USD 53,000
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
Professor Rolf Dubs
Mr. Nguyen Quoc Khanh
36,667 shares
30,000 shares, 10,000 warrants
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:
1. Base Fee
2. Committee and Board related service, including
attendance
based on the number of days worked.
of Committee and Board meetings,
Min-Hwa Hu Kupfer
Chairperson
19 August 2015
23
VietNam Holding Annual Report 2015 Independent Auditors’ Report
KPMG LLP
16 Raffles Quay #22-00
Hong Leong Building
Singapore 048581
T: +65 6213 3388
F: +65 6225 0984
W: 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
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
24
VietNam Holding Annual Report 2015
Statement of Financial Position
as at 30 June 2015
Assets
Cash and cash equivalents
Investments in securities at fair value
Accrued dividends
Receivables on sale of investments
Other receivables
Total assets
Equity
Share capital
Retained earnings
Total equity, representing net assets attributable to shareholders
Liabilities
Payables on purchase of investments
Other payables
Accrued expenses
Total liabilities
Total equity and liabilities
Note
3
2015
USD
2014
USD
4,146,270
120,754,647
500,219
620,123
2,123
2,459,814
118,526,227
625,811
693,059
–
126,023,382
122,304,911
5
114,375,064
9,984,471
120,094,331
392,362
124,359,535
120,486,693
955,420
144
708,283
1,663,847
605,360
–
1,212,858
1,818,218
126,023,382
122,304,911
The financial statements on pages 25 to 40 were approved by the Board of Directors on 19 August 2015 and were signed on its
behalf by
Min-Hwa Hu Kupfer
Chairperson of the Board of Directors
Nguyen Quoc Khanh
Chairman of the Audit Committee
The accompanying notes form an integral part of these financial statements.
25
VietNam Holding Annual Report 2015
Statement of Comprehensive Income
for the year ended 30 June 2015
Dividend income from equity securities at fair value through profit or loss
Net gain from equity securities at fair value through profit or loss
Net foreign exchange loss
Net investment income
Note
7
2015
USD
2014
USD
4,070,467
9,990,217
(125,693)
4,087,013
23,123,195
(16,647)
13,934,991
27,193,561
Investment management fees
Incentive fees
Advisory fees
Administrative and accounting fees
Custodian fees
Directors’ fees and expenses
Brokerage fees
Audit fees
Publicity and investor relations fees
Insurance costs
Administrative expenses
Risk management expenses
Technical assistance for investee companies
Total operating expenses
Change in net assets attributable to shareholders
8
8
10
9
8
2,444,321
580,890
185,162
93,032
141,333
317,586
71,822
36,457
160,510
15,500
199,860
67,626
28,783
2,142,403
954,449
149,834
95,281
141,827
296,238
56,571
42,334
267,344
45,000
229,240
100,000
41,260
4,342,882
4,561,781
9,592,109
22,631,780
Earnings per share – basic and diluted
14
0.16
0.37
The accompanying notes form an integral part of these financial statements.
26
VietNam Holding Annual Report 2015
Statement of Changes in Equity
for the year ended 30 June 2015
Balance at 1 July 2013
Total comprehensive income for the year
Change in net assets attributable to shareholders
Total comprehensive income
Contributions and distributions
Issuance of ordinary shares
Repurchase of own shares (note 5)
Warrants issuance cost
Total contributions and distributions
Balance at 30 June 2014
Share
capital
USD
Reserve for
own shares
USD
Retained
earnings
USD
Total
USD
110,944,115
(1,436,175)
(22,239,418)
87,268,522
–
–
–
–
22,631,780
22,631,780
22,631,780
22,631,780
15,189,736
–
(5,895)
15,183,841
126,127,956
–
(4,597,450)
–
(4,597,450)
(6,033,625)
–
–
–
15,189,736
(4,597,450)
(5,895)
–
392,362
10,586,391
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
Total comprehensive income
Contributions and distributions
Issuance of ordinary shares
Shares cancellation
Repurchase of own shares (note 5)
Warrants issuance cost
Total contributions and distributions
Balance at 30 June 2015
–
–
–
–
9,592,109
9,592,109
9,592,109
9,592,109
95,445
(292,655)
–
(142,482)
–
292,655
(5,672,230)
–
–
–
–
–
95,445
–
(5,672,230)
(142,482)
(339,692)
125,788,264
(5,379,575)
(11,413,200)
–
9,984,471
(5,719,267)
124,359,535
The accompanying notes form an integral part of these financial statements.
27
VietNam Holding Annual Report 2015
Statement of Cash Flows
for the year ended 30 June 2015
Cash flows from operating activities
Change in net assets attributable to shareholders
Adjustments to reconcile change in net assets attributable
to shareholders to net cash from operating activities:
Dividend income
Net gain from equity securities at fair value through profit or loss
Purchase of investments
Proceeds from sale of investments
Net foreign exchange loss
Decrease in receivables on sale of investments
(Decrease)/Increase in accrued expenses
Increase in other payables
Dividends received
Net cash from/(used in) operating activities
Cash flows from financing activities
Issuance of ordinary shares*
Repurchase of own shares
Warrants issuance cost
Net cash (used in)/from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the year
Note
2015
USD
2014
USD
9,592,109
22,631,780
(4,070,467)
(9,990,217)
(52,747,130)
60,858,987
125,693
70,813
(409,130)
144
4,196,059
(4,087,013)
(23,123,195)
(38,903,628)
27,339,735
16,647
632,995
875,529
–
3,835,310
7,626,861
(10,781,840)
5
–
(5,672,230)
(142,482)
15,189,736
(4,597,450)
(5,895)
(5,814,712)
10,586,391
1,812,149
2,459,814
(125,693)
4,146,270
(195,449)
2,671,910
(16,647)
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.
28
VietNam Holding Annual Report 2015
Notes to the Financial Statements
Year ended 30 June 2015
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.
PRINCIPAL ACCOUNTING POLICIES
2
(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.
29
VietNam Holding Annual Report 2015 Notes to the Financial Statements
Year ended 30 June 2015
2
PRINCIPAL ACCOUNTING POLICIES (continued)
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
30
VietNam Holding Annual Report 2015 2
PRINCIPAL ACCOUNTING POLICIES (continued)
(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.
31
VietNam Holding Annual Report 2015 Notes to the Financial Statements
Year ended 30 June 2015
2
PRINCIPAL ACCOUNTING POLICIES (continued)
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.
32
VietNam Holding Annual Report 2015 2
PRINCIPAL ACCOUNTING POLICIES (continued)
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.
33
VietNam Holding Annual Report 2015 Notes to the Financial Statements
Year ended 30 June 2015
3
FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
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
Shares and similar investments – listed
Shares and similar investments – unlisted
Fair value
in USD
116,850,605
3,904,042
120,754,647
% of net
assets
93.96%
3.14%
97.10%
Fair value
in USD
117,131,478
1,394,749
118,526,227
% of net
assets
97.22
1.16
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:
Vietnamese Dong
Pound Sterling
Swiss Franc
Euro
2015
USD
122,940,708
24,575
26,470
14,469
Fair value
2014
USD
120,036,280
11,144
13,350
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.
34
VietNam Holding Annual Report 2015
3
FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (continued)
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.
35
VietNam Holding Annual Report 2015
Notes to the Financial Statements
Year ended 30 June 2015
5
SHARE CAPITAL (continued)
Total shares issued and fully paid (after repurchases and cancellations) at beginning of the year
Shares issued upon exercise of warrants during the period
Shares cancellation
Repurchased and reserved for own shares
At beginning of the year
During the year
Shares reissued to ordinary shares
Shares cancellation
2015
No. of shares
67,537,240
–
(301,501)
67,235,739
(4,815,215)
(3,369,285)
63,499
301,501
(7,819,500)
2014
No. of shares
54,836,792
12,700,448
–
67,537,240
(1,306,381)
(3,508,834)
–
–
(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).
36
VietNam Holding Annual Report 2015
7 NET GAIN FROM EQUITY SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
Net gain from equity securities at fair value through profit or loss:
Realised gain
Adjustment to fair value of equity securities at fair value through profit or loss
2015
USD
2014
USD
16,802,070
(6,811,853)
38,415
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.
Performance fee
2015
USD
2014
USD
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.
37
VietNam Holding Annual Report 2015
Notes to the Financial Statements
Year ended 30 June 2015
8
9
RELATED PARTY TRANSACTIONS (continued)
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.
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.
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 exchange 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.
38
VietNam Holding Annual Report 2015
12 FAIR VALUE INFORMATION (continued)
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.
2015
Financial assets classified at fair value upon initial recognition
Equity investments
2014
Financial assets classified at fair value upon initial recognition
Equity investments
Level 1
USD
Level 2
USD
Level 3
USD
Total
USD
116,337,749
4,416,898
–
120,754,647
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
Balance at 1 July
Sales
Purchases
Transfers to level 1
Total gains and losses recognised in profit or loss *
Balance at 30 June
2015
USD
1,394,749
–
–
(1,394,749)
–
2014
USD
7,913,006
(10,192,834)
1,417,353
–
2,257,224
–
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.
39
VietNam Holding Annual Report 2015
Notes to the Financial Statements
Year ended 30 June 2015
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.
2015
Cash and cash equivalents
Investments in securities at fair value
Accrued dividends
Receivables from sale of investments
Other receivable
Payables on purchase of investments
Other payable
Accrued expenses
2014
Cash and cash equivalents
Investments in securities at fair value
Accrued dividends
Receivables from sale of investments
Payables on purchase of investments
Accrued expenses
Note
3
3
Fair value
through profit
or loss
USD
–
120,754,647
–
–
–
120,754,647
–
–
–
–
–
118,526,227
–
–
118,526,227
–
–
–
Loans and
receivables
USD
4,146,270
–
500,219
620,123
2,123
5,268,735
–
–
–
Other
liabilities
USD
Total carrying
amount
USD
–
–
–
–
–
–
955,420
144
708,283
4,146,270
120,754,647
500,219
620,123
2,123
126,023,382
955,420
144
708,283
–
1,663,847
1,663,847
2,459,814
–
625,811
693,059
3,778,684
–
–
–
–
–
–
–
–
605,360
1,212,858
1,818,218
2,459,814
118,526,227
625,811
693,059
122,304,911
605,360
1,212,858
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.
40
VietNam Holding Annual Report 2015
Key Parties
Directors
Min-Hwa Hu Kupfer
Professor Dr. Rolf Dubs
Nguyen Quoc Khanh
Investment Manager
VietNam Holding Asset
Management Limited
c/o Collas Crill & CARD Ltd.
Fourth Floor, Zephyr House
122 Mary Street
PO Box 709 GT
Grand Cayman
KY1-1107
Cayman Island
Registered Office, Company Secretary
and Cayman Islands Legal Advisor
Collas Crill & CARD Ltd.
Fourth Floor, Zephyr House
122 Mary Street
PO Box 709 GT
Grand Cayman
KY1 - 1107, Cayman Islands
Registrar
Capita Registrars
34 Beckenham Road
Beckenham, Kent BR3 4TU
United Kingdom
UK Legal Adviser
Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
United Kingdom
Independent Auditor
KPMG LLP
16 Raffles Quay #22-00
Hong Leong Building
Singapore 048581
Nominated Advisor (AIM)
Altium Capital Limited
30 St. James’s Square
London SW1Y 4AL
United Kingdom
Listing Partner and Designated
Sponsor (Entry Standard)
ODDO Seydler Bank AG
Schillerstrasse 27 -29
60313 Frankfurt
Germany
Corporate Broker (AIM)
Winterflood Investment Trusts
The Atrium Building
Cannon Bridge House
25 Dowgate Hill
London EC4R 2GA
United Kingdom
Administrator, Custodian and Trustee
Standard Chartered Bank
7 Changi Business Park Crescent
Level 3, Securities Services
Singapore 486028
VietNam Holding became a signatory of the UN Principles for
Responsible Investment (PRI) in 2009. Our investment practices and
corporate behavior incorporate environmental, social and corporate
governance issues. We promote the principles in our markets and
align the fund’s goals with the broader objectives of sustainable
progress.
Designed and produced by Mediasterling:
www.mediasterling.com
www.vietnamholding.com
VietNam Holding Annual Report 2015 V
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VietNam Holding Ltd
c/o CARD Corporate Services Ltd.
Fourth Floor, Zephyr House
122 Mary Street
PO Box 709 GT
Grand Cayman