Annual Financial Report
COMPANY ANNOUNCEMENT
For Immediate Release
8 April 2019
Vietnam Enterprise Investments Limited
Annual Report and Financial Statements for the year ended 31 December 2018
Vietnam Enterprise Investments Limited ("VEIL" or the "Company"), a closed-end investment fund listed on the London Stock Exchange, today announces its annual report and financial statements for the year ended 31 December 2018.
Launched in 1995, VEIL is the longest running fund focused on Vietnam. The Company is one of the largest funds investing primarily in listed and pre-IPO companies in Vietnam that offer attractive growth and value metrics, and strong corporate governance. The Company's investment objective is to seek medium to long-term capital appreciation of its assets. VEIL provides investors with access to Vietnam's leading blue chip companies, many of which have reached their foreign ownership limit.
Highlights for the year ended 31 December 2018
Financial highlights*:
• In USD terms, NAV per share fell 7.1% from US$7.06 to US$6.56, outperforming the VN Index total return on a relative basis by 2.4%.
• In GBP terms, NAV per share fell 1.3% from £5.22 to £5.15.
• VEIL's share price rose 3.8% in GBP terms.
• VEIL's share price discount to NAV at the end of the period narrowed from 15.3%, to 11.3% at the end of 2018, reflecting strong investor interest in VEIL's portfolio performance.
Investment highlights*:
• VEIL held the majority of its portfolio in listed equities, with only 0.5% in OTC/pre-listing equities.
• VEIL maintained its strategy of investing in companies with excellent long-term growth outlooks and management teams that have the ambition of becoming market leaders. VEIL continued to use a value for growth approach while screening for opportunities in the privatisation of state-owned companies and IPOs of private companies.
• Volatile market condition in 2018 meant VEIL posted a negative return for the first time since 2011, though the fund still outperformed the VN Index total return in USD for the 5th consecutive year.
(*) Past performance cannot be relied upon as a guide to future performance.
The annual report and financial statements of the Company can be found on VEIL's website; www.veil-dragoncapital.com/
Enquiries:
Vietnam Enterprise Investments Limited
Rachel Hill
rachelhill@dragoncapital.com
+44 7971214852
+44 (0) 1225 618 150
Jefferies International Limited
Stuart Klein
stuart.klein@jefferies.com
+44 (0) 20 7029 8703
Smithfield
Edward Brown
edward.brown@smithfieldgroup.com
+44 (0) 20 3047 2268
VEIL's LEI code is 213800SYT3T4AGEVW864
CHAIR'S STATEMENT
Dear Shareholders,
As ever, we continue to see a direct correlation between Vietnam's strong macro-economic fundamentals and Vietnam Enterprise Investments Limited's ("VEIL" or the "Company") performance. From a macro perspective, Vietnam's economy grew robustly in 2018 with all major growth indicators continuing to mirror the positive results seen in 2017. This strong momentum resulted in GDP growth climbing to 7.1%, the highest growth rate in ten years. More importantly, inflation continues to be well managed and under control with CPI at 3.5%, comfortably below the Government's target of 4.0%.
As for trade, Vietnam achieved a record high trade surplus of US$7.2 billion thanks to strong FDI driven exports and, with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership ("CPTPP") officially coming into effect as of 30 December 2018, Vietnam's exports are forecasted to grow an additional 4% in 2019. Overall, FDI continued to perform strongly in 2018 with total disbursement reaching a six-year high of US$19.1 billion, up 9.1%. However, total registered FDI declined 13.8% from 2017's record level and, while we expect FDI disbursement to remain strong, it is hard to see an increase in FDI commitment in 2019 due to the high base from big projects.
That being said, this ever-expanding trade surplus meant that the economy was well placed to weather external volatility stemming from a number of sources, including currency fluctuations and a highly active stock market.
The Vietnamese Dong depreciated by 2.2% in 2018, however, it ended the year as one of the most stable currencies in the region. Additionally, the Vietnam Index ("VN Index") increased by 22.4% in the first three months of 2018 and reached an 11-year high of 1,204.3 in early April before undergoing a significant correction leading it to close the year at 893, down 9.4%. While Vietnam's domestic fundamentals remained solid, the second quarter correction was driven by investor concerns around external factors such as trade tensions between the US and China, the impact of a weaker Chinese Yuan on the Dong and increasing foreign outflows from emerging markets.
Despite this turbulence, Vietnam's total equity market capitalisation grew from US$155 billion to US$172 billion by the end of the year. The combination of new listings in the first half of 2018 and improved liquidity, with average trading values per day around US$293 million, has drawn the attention of bigger international players whose additional capital may stretch the market on both the uptrend and the downtrend. These large international investors have also continued to find the derivatives market highly attractive, as daily traded values increased from just a few million US Dollars when first introduced in July 2017 to almost US$321 million by the end of 2018.
However, even within this challenging market landscape, our team's extensive experience and deep local knowledge led VEIL to outperform the market. VEIL beat its benchmark VN Index by 2.4% in 2018 and also outperformed the VN Index on 3-year rolling basis by 20.8%.
Our outperformance was mainly due to strong results from VEIL's top holdings, such as Asia Commercial Bank, Khang Dien House and Sabeco. Asia Commercial Bank increased by 1.5% compared to the Banking sector which dropped 11.5% in the reporting period, which was driven by its excellent earnings growth of 132% in 2018. Khang Dien House posted impressive returns, increasing 25.2%, as net earnings increased 61%. Sabeco posted strong gains of 14.9% on the back of a new management team from Thai Beverage, which has completed a restructure of the business to improve operational efficiencies and corporate governance with a view to unlocking additional value. Further to this, since year end, some of the privatisations VEIL participated in over the last two years such as VEAM Corporation and Tin Nghia saw the value of their businesses grow by 49% and 131% respectively when they listed in 2018.
We remain positive on the 2019 outlook for Vietnam despite uncertainties in global markets. A number of key metrics favour strong domestic performance, which, when supported by key catalysts including the possibility of opening foreign ownership limits and the potential inclusion in MSCI Emerging Market's Index Watch List, all bodes well for the future. GDP growth for the year is expected to reach 7.1% while inflation is anticipated to remain well below the 4.0% Government target. Further to this our local currency remains stable thanks to both the strong trade surplus and high foreign exchange reserves.
With our domestic market's valuation having experienced its recent correction to a more reasonable level, we are confident of our ability to execute on the strong long-term buying opportunity that has been created. With our top 60 companies expect to deliver 10.1% EPS growth of 12.9x forward earnings in 2019, below regional peers such as Thailand, the Philippines, Malaysia and Indonesia, we are able to offer investors good downside protection amidst sensitive global macro factors, all of which is underpinned by our unique expertise that will to allow us to unlock value for the benefit of shareholders.
Subsequent to the reporting period, I had informed the Board that, in line with best practice in corporate governance with regard to tenure, I will step down as Chair of the Company and resign from the Board both effective 30 June 2019, after having served on the Board for more than nine years. The Board has elected Stanley Chou, currently senior independent non-executive director, as Chair of the Company upon my resignation. Mr Chou will offer himself for re-election to the Board in the usual way at the next Annual General Meeting of the Company. I would also like to take this opportunity to thank my colleagues, Directors and Shareholders for your tremendous support during my time as Chair.
Wolfgang Bertelsmeier
Chairman
Vietnam Enterprise Investments Limited
8 April 2019
PORTFOLIO MANAGER'S REPORT
Performance Overview
The 6-year uptrend for Vietnam ended in 2018 as global volatility took centre stage and the country's strong economic fundamentals took a temporary backseat, with the knock-on effect also felt across our portfolio. That being said, this was the fourth consecutive year of outperformance for VEIL. While VEIL's NAV per share (in USD terms) fell 7.1% during the year, it still outperformed its benchmark by 2.4% as the VN Index total return dropped by 9.5% in USD terms. All three of the Fund's biggest sectors, Banking, Real Estate & Construction and Food & Beverage, contributed positively to its relative return. Other notable contributors to the Fund's relative return included holdings in both the Energy and Capital Goods sectors which are respectively represented by PV Gas ("GAS") and Petrolimex ("PLX") for Energy and Vietnam Engine and Agriculture Machinery ("VEA")* for Capital Goods. In contrast, the Materials and Resources sector was the biggest drag on performance, followed by the Retail sector.
(*) VEA was categorised as Automobiles sector in the previous annual and interim reports. However, upon its listing on 2 July 2018, Bloomberg classified it as Capital Goods sector, therefore the Portfolio Manager re-categorised accordingly.
Attribution Analysis
The Food & Beverage sector was the biggest contributor to VEIL's relative performance in 2018 thanks to its overweight holding in Sabeco ("SAB") which rose 8.1.% over the year and its underweight position in Vinamilk ("VNM") which fell 30.4% in the period. After the successful majority divestment by the State, SAB's new owner, Thai Beverage, undertook an overhaul of the executive management. The new team consists of several Thai Beverage group veterans who have already started restructuring various segments of the business including production and distribution. In 2018, SAB provided forward guidance that net sales were up 5.1% however, profit before tax ("PBT") was down 11.4% year-on-year. That said, the company reported that it had gained an additional 2% market share in the second half of the year. Looking ahead to 2019, SAB will continue to focus its efforts on expanding market share while completing a revamp of its product mix towards the premium segment, as well as undertaking an expanded cost cutting program designed to improve margins. In contrast, VNM had a difficult year, falling 30.4%, as the company posted uninspiring financial results by its standards in which net sales increased 2.9% whilst net profit after tax after minority interest ("NPAT-MI") dropped 0.7%. As VNM has now captured over 50% of its domestic market share, achieving significant growth driven by increasing domestic sales has become a rather challenging task. As such, the company has been looking to explore exporting opportunities in other countries, notably Myanmar and China however, neither are yet to materialise in a meaningful way. Nevertheless, the impending agriculture trade agreement between China and Vietnam may pave the way for VNM to enter the Chinese market as VNM's ability to penetrate the market of its own accord is expected to take time. As a result, sentiment on 2019's outlook may pick up should there be tangible progress on the export front however, we believe it is unlikely that the actual impact will be material in the short term.
The Banking sector, which underwent a re-rating in 2017, was impacted by the negative investor sentiment that affected Vietnam's equity market. While still faring better than the VN Index's Banking sector, which fell 11.5%, due to its overweight positions in the sector's better banks, VEIL's bank holdings fell 8.9%. Notably, Asia Commercial Bank ("ACB"), the Fund's largest bank holding, fell just 0.6% in 2018 as it posted historic earnings with PBT surging 140.5% year-on-year. The significant increase was driven by growth in almost all aspects of its core earnings and the fall in provisions (-63.7% year-on-year) after the bank fully cleared out its non-performing loans ("NPL") last year. Specifically, the net interest margin ("NIM") improved 9 basis points ("bps") to 3.6% as cost of funds fell 18 bps to 4.7%. Further to this non-interest income was up 23.1% for the year which helped pre-provisioning operating profit to grow 40.2%. With reported NPL among the lowest in the sector, ACB is well-positioned to achieve further growth over the next few years. Similarly, Military Bank ("MBB") also posted record profit growth with 2018 PBT jumping 75.9% year-on-year however, this wasn't enough to counter the widespread dip in investor confidence as shares fell 8.8%. Following the CEO change in 2017, MBB's strategy has been to aggressively monetise its already excellent asset quality by focusing on further expanding its retail segment and the bank saw its asset yields continue to rise another 31 bps which help expand NIM by 35 bps to 4.2%. Additionally, MBB's efforts to grow its fee income segment were also successful with net fee income increasing 126% year-on-year, contributing 13% of total operating income versus just 8% last year. MBB's share price dip was also partly due to an overhang of over 50 million shares that were needed to be sold by Vietcombank as part of the State Bank of Vietnam's efforts to crack down on intra-bank holdings. In early 2019, MBB announced that it would start a buy back of 108 million shares (5% of total outstanding shares) which market participants believe will relieve some of the pressure on the share price going forward. Both ACB and MBB are still trading at very attractive valuation levels of 1.7x and 1.4x book value while continuing to deliver more than 20% ROE. As such, we expect both these banks will continue to post the highest EPS growth in the sector throughout 2019.
The Real Estate & Construction sector was mixed in 2018 for both VEIL and the VN Index as the tightening regulatory environment meant that new listings were somewhat limited. For VEIL, the two biggest contributors were long-term holdings Khang Dien House ("KDH") and Dat Xanh Group ("DXG") while other notable performers included two newly listed investments Tin Nghia Corp ("TID") and Hai Phat Invest ("HPX"). KDH share rose 25.6% during the year as its NPAT-MI grew by 61.2%. This impressive performance was driven by project handovers at Jamila, Lucasta and Rosita as well as income from land-plot sales at Phong Phu 4 project. KDH is well positioned given its 450ha landbank in Ho Chi Minh City which should provide the company with sufficient development opportunities for several years. The second-best contributor in the Real Estate & Construction sector was DXG which has been steadily enhancing its reputation as one of the most reliable developers in the mid-range segment. The company posted 2018 revenue growth of 61.3% as it looks to cement its position as the largest real estate broker in Vietnam. The real estate brokerage segment now accounts for 52.1% of total revenue, having risen 22.2% over the period. On the other hand, property development now accounts for 34% of total revenue having grown 42.9% year-on-year. Over the next year DXG plans to launch up to 5-6 projects from its 528ha landbank. This is in addition to the handover of the Opal Garden project, as well as the sale of both shophouses and land plots in provinces such as Vung Tau and Can Tho which should contribute materially to revenues. Overall, we remain bullish on both KDH and DXG for the long-term especially given the recent regulatory challenges which favour companies with abundant clean land banks. From a new listing perspective, two investees of VEIL (both TID, one of the biggest residential and industrial property developers in Dong Nai, as well as HPX, an up-and-coming property developer based in Hanoi) were floated on the stock exchange. Both TID and HPX were well received by the market, especially TID, rising 65.5% and 21.4% respectively, further emphasising VEIL's impressive track record when identifying pre-listing opportunities.
VEIL's long-term underweight position in the Energy sector continues to serve the Fund well as a volatile oil price impacted the majority of stocks in the sector throughout the year. Specifically, the two biggest stocks in the sector, GAS, which VEIL holds half VN Index's weighting, and PLX, which VEIL does not hold, both fell 9.2% and 27.4% respectively. As for 2019, volatile and or lower oil prices mean greater uncertainty for GAS, whose share price can be directly correlated to the price of oil. As for PLX, a sudden fall in the oil price would mean its inventory would be impacted in the short-term.
In the Capital Goods sector, one of VEIL's investees, VEA, listed with strong support from investors resulting in a 50.8% increase. The company is widely perceived as the best option for investors wanting to tap into the fast-growing market for personal car sales in Vietnam. VEA posted 40.1% growth in NPAT-MI in 2018 primarily driven by the growth of its joint venture with Honda Vietnam. Even after VEA's strong share price rally in 2018, the stock is still trading at a very reasonable valuation of just 8.x times PER and the company is likely to maintain its impressive double-digit cash yield in 2019.
In contrast to the strong performance seen across this range of sectors, the Materials and Resources sector suffered heavily as an uncertain outlook for property, driven by a tougher regulatory environment and dramatic movements in raw materials price dampened sentiment. Hoa Phat Group ("HPG"), the biggest steel maker in Vietnam, fell 9.4% as a result despite posting profit growth of 7.1%. The company is investing in the biggest non-FDI steel complex in Dung Quat which is due to double its capacity by the end of 2019 to 4 million tons per year. We believe that once the short-term volatility has subsided, HPG will once again emerge as one of the best stock options as it is well placed to benefit from the upside of growth in both property and infrastructure construction across Vietnam.
Lastly, Mobile World ("MWG"), the Fund's top holding and the main representation of the Retail sector across the portfolio, fell 12.1% in 2018 despite posting an impressive 30.5% growth in NPAT-MI. The stock simply fell out of favour with local retail investors as questions were asked over the future potential for its latest growth driver, Green Grocery chain. Nevertheless, investor sentiment appeared to improve towards the end of 2018 as the company reported that the Green Grocery chain had broken even from an EBITDA perspective. Additionally, MWG also stepped up its investor relations efforts as a way to attract more local retail investors to the long-term growth story of the company. Trading at just 12.x times 2018's earnings, we believe MWG offers great value for the long term and is perhaps one of the most exciting players in Vietnam's lucrative Retail sector.
Outlook
After a difficult 2018, most market participants have a cautious view of 2019. However, as we believe Vietnam's strong economic fundamentals and macro story are still largely intact, having already corrected to just 12.x times forward 2019's PER, there is a strong case for the stock market to find its footing in the year ahead. Additionally, the Government has reiterated its commitment to continue focusing on the long-term development of the financial market. The long-awaited covered warrant is due to be launched in 2019 whilst instructions have been issued to several major state-owned enterprises ("SOEs") to restructure their organisations in preparation for IPO. There is still an ample pipeline of private company IPOs and SOE privatisations however, heightened market volatility had halted this for much of the second half of 2018. As such, we believe that we are likely to see some of these opportunities returning to the market.
Within this market landscape we believe stock-picking, one of VEIL's unique strengths, will become more important than ever as the market becomes more diverged between the fundamentally good stocks and trading stocks. At the same time, we will continue to be active in screening for both IPO and SOE privatisation opportunities that can offer long-term growth at reasonable valuations. Finally, and as always, we remain committed to assisting our investees in unlocking value for the benefit of shareholders.
Vu Huu Dien
Investment Manager
Vietnam Enterprise Investments Limited
8 April 2019
REPORT OF THE BOARD OF DIRECTORS
The Directors of Vietnam Enterprise Investments Limited (the "Company") present their report and the audited financial statements of the Company for the year ended 31 December 2018.
Principal Activity
The Company is an investment holding company incorporated as an exempted company with limited liability in the Cayman Islands on 20 April 1995. The shares of the Company have been listed on the main market of the London Stock Exchange since 5 July 2016 (until 4 July 2016: listed on the Irish Stock Exchange). The principal activity of the Company is investing directly or indirectly in a diversified portfolio of listed and unlisted securities in Vietnam.
Results and Dividends
The Company's profit for the year ended 31 December 2018 and its financial position at that date are set out in the attached financial statements. The Directors have taken the decision not to pay a dividend in respect of the year ended 31 December 2018 (2017: Nil).
Share Capital
Details of movements in the Company's share capital during the year are presented in Note 11. As at 31 December 2018, the Company had 219,579,878 Ordinary Shares and 1,000 Management Shares outstanding (31 December 2017: 220,125,680 Ordinary Shares and 1,000 Management Shares).
Directors
The Directors of the Company during the year were:
Wolfgang Bertelsmeier Chair & Independent Non-Executive Director
Stanley Chou Senior Independent Non-Executive Director
Derek Eu-Tse Loh Independent Non-Executive Director
Gordon Lawson Independent Non-Executive Director
Vi Le Peterson Independent Non-Executive Director (from 24 April 2018)
Dominic Scriven O.B.E Non-Executive Director
In accordance with Article 91 of the Restated and Amended Memorandum and Articles of Association (the "Articles"), the Independent and Non-independent Non-executive Directors are required to submit themselves for re-election at the next occurring Annual General Meeting ("AGM"). All the Independent Non-executive Directors were duly re-appointed at the AGM held on 4 June 2018 following the expiry of their respective term. Dominic Scriven O.B.E also submitted himself for re-election, even though the Articles do not explicitly require him to stand for election, and was duly re-appointed. Vi Le Peterson was newly appointed as an Independent Non-executive Director on 24 April 2018.
Directors' Rights to Acquire Shares or Debentures
At no time during the year was the Company a party to any arrangement to enable the Company's Directors or their respective spouses or minor children to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
Directors' Interests in Shares
Dominic Scriven O.B.E., a Non-executive Director of the Company, is a beneficial shareholder of the Company, holding 36,423 Ordinary Shares of the Company as at 31 December 2018 (31 December 2017: Nil).
Dominic Scriven O.B.E also has indirect interests in shares of the Company as he is a key shareholder of Dragon Capital Group Limited, the parent company of Dragon Capital Limited which holds the Management Shares of the Company. Dragon Capital Group Limited is also the ultimate parent company of Enterprise Investment Management Limited, the Investment Manager of the Company and Dragon Capital Markets Limited. As at 31 Dec 2018, Dragon Capital Markets Limited beneficially held 2,700,359 Ordinary Shares of the Company for investment and proprietary trading purposes (31 December 2017: 3,700,359 Ordinary Shares).
Gordon Lawson, an Independent Non-executive Director of the Company, is a beneficial shareholder of the Company, holding 25,000 Ordinary Shares of the Company as at 31 December 2018 (31 December 2017: 25,000 Ordinary Shares).
Apart from the above, no other Director had a direct or indirect interest in the share capital of the Company, or its underlying investments at the end of the year, or at any time during the year.
Directors' Interests in Contracts
Dominic Scriven O.B.E has indirect interests in the Investment Management agreement between the Company and Enterprise Investment Management Limited where he is a Director. There were no further contracts of significance in relation to the Company's business in which a Director of the Company had a material interest, whether directly or indirectly, at the end of the year or at any time during the year.
Substantial Shareholders
As at 31 December 2018, the Company's register of shareholders showed that the following shareholder held more than a 10% interest in the issued Ordinary Share capital of the Company.
|
Registered shareholders |
Number of Ordinary Shares held |
% of total Ordinary Shares in issue |
|
Computershare Investor Services PLC (*) |
220,920,746 |
100% |
(*) Computershare Investor Services PLC was appointed to acts as depositary in respect of a facility for the issue of depositary interests representing the Company's Ordinary Shares.
Subsequent Events
Details of the significant subsequent events of the Company are set out in Note 17 to the financial statements.
Auditors
KPMG Limited, Vietnam
Directors' Responsibility in Respect of the Financial Statements
The Board of Directors is responsible for ensuring that the financial statements of the Company are properly drawn up so as to give a true and fair view of the financial position of the Company as at 31 December 2018 and of its financial performance and its cash flows for the year then ended. When preparing these financial statements, the Board of Directors is required to:
· adopt appropriate accounting policies which are supported by reasonable and prudent judgments and estimates and then apply them consistently;
· comply with the requirements of International Financial Reporting Standards ("IFRSs") or, if there have been any departures in the interest of true and fair presentation, ensure that these have been appropriately disclosed, explained and quantified in the financial statements;
· maintain adequate accounting records and an effective system of internal controls;
· prepare the financial statements on a going concern basis unless it is inappropriate to assume that the Company will continue its operations in the foreseeable future; and
· control and direct effectively the Company in all material decisions affecting its operations and performance and ascertain that such decisions and/or instructions have been properly reflected in the financial statements.
The Board of Directors is also responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the financial position of the Company. It is also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The important events that have occurred during the year ended 31 December 2018 are described in the Chair's Statement and the Investment Manager's Report. A detailed description of the principal risks and uncertainties faced by the Company are set out in Note 16 to the financial statements.
The Directors confirm to the best of their knowledge that:
· the financial statements have been prepared in conformity with IFRS and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company, and the undertakings included in the Financial Statements taken as a whole as required by the United Kingdom Financial Conduct Authority Disclosure Guidance and Transparency Rules ("DTR") 4.1.12R and are in compliance with the requirements set out in the Companies Law;
· the financial statements include a fair review of the information required by DTR 4.1.8R and DTR 4.1.11R, which provide an indication of important events and a description of principal risks and uncertainties during the year; and
· the Annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position, performance, business model and strategy.
The Board of Directors confirms that they have complied with the above requirements in preparing the financial statements.
Approval of the Financial Statements
The Board of Directors hereby approves the accompanying financial statements which give a true and fair view of the financial position of the Company as of 31 December 2018, and of its financial performance and its cash flows for the year then ended in accordance with IFRS.
Signed on behalf of the Board by:
Wolfgang Berterlsmeier
Chair
Signed on behalf of the Audit Committee by:
Stanley Chou
Chair of the Audit Committee
Vietnam Enterprise Investments Limited
8 April 2019
CONDENSED FINANCIAL STATEMENTS
Audited Statement of Financial Position as at 31 December 2018
|
|
Note |
31 December 2018 |
31 December 2017 |
Change |
|
|
|
US$ |
US$ |
in % |
|
CURRENT ASSETS |
|
|
|
|
|
Financial assets at fair value through profit or loss |
6 |
1,472,751,786 |
1,602,661,219 |
|
|
Other receivables |
|
568,429 |
1,134,004 |
|
|
Balance due from brokers |
7 |
516,059 |
- |
|
|
Cash and cash equivalents |
8 |
32,791,633 |
32,443,551 |
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
1,506,627,907 |
1,636,238,774 |
(7.92) |
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
Balances due to brokers |
7 |
3,788,426 |
- |
|
|
Borrowings |
9 |
60,000,000 |
80,000,000 |
|
|
Accounts payable and accruals |
10 |
2,817,513 |
2,961,669 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
66,605,939 |
82,961,669 |
(19.71) |
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
Issued share capital |
11 |
2,195,808 |
2,201,266 |
|
|
Share premium |
11 |
556,891,643 |
560,096,358 |
|
|
Retained earnings |
|
880,934,517 |
990,979,481 |
|
|
|
|
|
|
|
|
TOTAL EQUITY |
|
1,440,021,968 |
1,553,277,105 |
(7.29) |
|
NET ASSETS ATRIBUTABLE TO |
|
1,440,021,968 |
1,553,277,105 |
(7.29) |
|
|
|
|
|
|
|
NUMBER OF ORDINARY SHARES IN ISSUE |
11 |
219,579,878 |
220,125,680 |
|
|
|
|
|
|
|
|
NET ASSET VALUE PER ORDINARY SHARE |
12 |
6.56 |
7.06 |
(7.08) |
Audited Statement of Comprehensive Income for the Year Ended 31 December 2018
|
|
Note |
2018 |
2017 |
|
|
|
US$ |
US$ |
|
INCOME |
|
|
|
|
Bank interest income |
|
39,832 |
15,834 |
|
Bond interest income |
|
13,805 |
- |
|
Dividend income |
|
9,497,102 |
9,171,229 |
|
Net changes in fair value of financial assets at fair value through profit or loss |
6 |
(160,010,507) |
584,221,626 |
|
Gains on disposals of investments |
|
79,887,179 |
18,234,758 |
|
Other income |
|
- |
23,977 |
|
|
|
|
|
|
TOTAL INCOME |
|
(70,572,589) |
611,667,424 |
|
|
|
|
|
|
EXPENSES |
|
|
|
|
Administration fees |
13 |
(1,263,588) |
(1,194,259) |
|
Custodian fees |
13 |
(958,560) |
(754,817) |
|
Directors' fees |
13 |
(152,354) |
(150,007) |
|
Management fees |
13 |
(30,417,508) |
(24,122,990) |
|
Legal and professional fees |
|
(572,607) |
(553,497) |
|
Brokerage fee and structuring fee |
|
(1,597,570) |
- |
|
Restructuring fee of short-term borrowings |
|
(900,000) |
(1,590,000) |
|
Interest expense |
|
(2,713,397) |
(1,246,673) |
|
Withholding taxes |
|
(14,621) |
(39,636) |
|
Other operating expenses |
|
(419,267) |
(347,256) |
|
|
|
|
|
|
TOTAL EXPENSES |
|
(39,009,472) |
(29,999,135) |
|
NET (LOSS)/PROFIT BEFORE EXCHANGE (LOSSES)/GAINS |
|
(109,582,061) |
581,668,289 |
|
EXCHANGE (LOSSES)/GAINS |
|
|
|
|
Net foreign exchange (losses)/gains |
|
(462,903) |
1,063 |
|
(LOSS)/PROFIT BEFORE TAX |
|
(110,044,964) |
581,669,352 |
|
Income tax |
14 |
- |
- |
|
|
|
|
|
|
NET (LOSS)/PROFIT AFTER TAX FOR THE YEAR |
|
(110,044,964) |
581,669,352 |
|
OTHER COMPREHENSIVE INCOME FOR THE YEAR |
|
- |
- |
|
|
|
|
|
|
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR |
|
(110,044,964) |
581,669,352 |
|
|
|
|
|
|
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR ATTRIBUTABLE TO ORDINARY SHAREHOLDERS |
|
(110,044,964) |
581,669,352 |
|
|
|
|
|
|
BASIC (LOSSES)/EARNINGS PER ORDINARY SHARE |
15 |
(0.50) |
2.64 |
Audited Statement of changes in net assets attributable to Ordinary Shareholders for the year ended 31 December 2018
|
|
Issued share capital |
Share premium |
Retained earnings |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
|
Balance at 1 January 2017 |
2,209,217 |
563,283,425 |
409,310,129 |
974,802,771 |
|
Total comprehensive income for the year: |
|
|
|
|
|
Net profit for the year |
- |
- |
581,669,352 |
581,669,352 |
|
|
|
|
|
|
|
Transactions with shareholders, recognised directly in equity: |
|
|
|
|
|
Repurchase of Ordinary Shares |
(7,951) |
(3,187,067) |
- |
(3,195,018) |
|
|
|
|
|
|
|
Balance at 1 January 2018 |
2,201,266 |
560,096,358 |
990,979,481 |
1,553,277,105 |
|
|
|
|
|
|
|
Total comprehensive loss for the year: |
|
|
|
|
|
Net loss for the year |
- |
- |
(110,044,964) |
(110,044,964) |
|
|
|
|
|
|
|
Transactions with shareholders, recognised directly in equity: |
|
|
|
|
|
Repurchase of Ordinary Shares |
(5,458) |
(3,204,715) |
- |
(3,210,173) |
|
|
|
|
|
|
|
Balance at 31 December 2018 |
2,195,808 |
556,891,643 |
880,934,517 |
1,440,021,968 |
Audited Statement of Cash Flow for the Year Ended 31 December 2018
|
|
Note |
2018 |
2017 |
|
|
|
US$ |
US$ |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
(Loss)/profit for the year |
|
(110,044,964) |
581,669,352 |
|
Adjustments for: |
|
|
|
|
Bank interest income |
|
(39,832) |
(15,834) |
|
Bond interest income |
|
(13,805) |
- |
|
Dividend income |
|
(9,497,102) |
(9,171,229) |
|
Net changes in fair value of financial assets at fair value through profit or loss |
|
160,010,507 |
(584,221,626) |
|
Gains on disposals of investments |
|
(79,887,179) |
(18,234,758) |
|
|
|
|
|
|
|
|
(39,472,375) |
(29,974,095) |
|
|
|
|
|
|
Net cash flows from subsidiaries carried at fair value |
|
177,572,707 |
23,722,850 |
|
Changes in other receivables and balances due from brokers |
|
47,299 |
403,877 |
|
Changes in balances due to brokers and accounts payable and accruals |
|
3,644,270 |
1,009,875 |
|
|
|
|
|
|
|
|
141,791,901 |
(4,837,493) |
|
Proceeds from disposals of investments |
|
240,140,412 |
86,491,374 |
|
Purchases of investments |
|
(367,927,014) |
(114,659,715) |
|
Bank interest income received |
|
39,832 |
15,834 |
|
Bond interest income received |
|
13,805 |
- |
|
Dividends received |
|
9,499,319 |
8,790,687 |
|
|
|
|
|
|
Net cash generated from/(used) in operating activities |
|
23,558,255 |
(24,199,313) |
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Proceeds from short-term borrowings |
|
60,000,000 |
40,000,000 |
|
Repayments of borrowings |
|
(80,000,000) |
- |
|
Repurchase of Ordinary Shares |
|
(3,210,173) |
(3,195,018) |
|
|
|
|
|
|
Net cash (used in)/generated from financing activities |
|
(23,210,173) |
36,804,982 |
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
348,082 |
12,605,669 |
|
Cash and cash equivalents at the beginning of the year |
|
32,443,551 |
19,837,882 |
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR |
8 |
32,791,633 |
32,443,551 |
Notes to the Financial Statements for the Year Ended 31 December 2018
1. THE COMPANY
Vietnam Enterprise Investments Limited (the "Company") is a closed-end investment fund incorporated as an exempted company with limited liability in the Cayman Islands on 20 April 1995. It commenced operations on 11 August 1995, the date on which the initial subscription proceeds were received.
The investment objective of the Company is to invest directly or indirectly in publicly or privately issued securities of companies, projects and enterprises issued by Vietnamese entities, whether inside or outside Vietnam.
The Company's Ordinary Shares have been listed on the main market of the London Stock Exchange since 5 July 2016 (until 4 July 2016: listed on the Irish Stock Exchange). The Company is established for an unlimited duration.
The Company had the following investments in subsidiaries and joint operation as at 31 December 2018, for the purpose of investment holding:
|
Subsidiaries |
Country of incorporation |
Principal activities |
% Ownership |
|
|
|
|
|
|
Grinling International Limited |
British Virgin Islands |
Investment holding |
100% |
|
Wareham Group Limited |
British Virgin Islands |
Investment holding |
100% |
|
Goldchurch Limited |
British Virgin Islands |
Investment holding |
100% |
|
VEIL Holdings Limited |
British Virgin Islands |
Investment holding |
100% |
|
Venner Group Limited |
British Virgin Islands |
Investment holding |
100% |
|
Rickmansworth Limited |
British Virgin Islands |
Investment holding |
100% |
|
Geffen Limited (*) |
British Virgin Islands |
Investment holding |
100% |
|
VEIL Cement Limited (*) |
British Virgin Islands |
Investment holding |
100% |
|
VEIL Estates Limited (*) |
British Virgin Islands |
Investment holding |
100% |
|
VEIL Industries Limited (*) |
British Virgin Islands |
Investment holding |
100% |
|
VEIL Infrastructure Limited |
British Virgin Islands |
Investment holding |
100% |
|
VEIL Paper Limited (*) |
British Virgin Islands |
Investment holding |
100% |
|
Amersham Industries Limited |
British Virgin Islands |
Investment holding |
100% |
|
Balestrand Limited |
British Virgin Islands |
Investment holding |
100% |
|
Asia Reach Investment Limited |
British Virgin Islands |
Investment holding |
100% |
(*) Those subsidiaries were dissolved in 2018.
|
Joint operation |
Country of incorporation |
Principal activities |
% Ownership |
|
|
|
|
|
|
Dragon Financial Holdings Limited |
British Virgin Islands |
Investment holding |
90% |
As at 31 December 2018 and 31 December 2017, the Company had no employees.
2. BASIS OF PREPARATION
(a) Statement of compliance
The Company's financial statements as at and for the year ended 31 December 2018 have been prepared in accordance with IFRS. They were authorized for issue by Company's Board of Directors on 8 April 2019.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis, except for financial instruments classified as financial assets at fair value through profit or loss which are measured at fair value. The methods used to measure fair values are described in Note 4(c)(iii).
(c) Functional and presentation currency
The financial statements are presented in United States Dollar ("US$"), which is the Company's functional currency.
Functional currency is the currency of the primary economic environment in which the Company operates. If indicators of the primary economic environment are mixed, then management uses its judgment to determine the functional currency that most faithfully represents the economic effect of the underlying transactions, events and conditions. The Company's investments and transactions are denominated in US$ and VND. Share subscriptions and dividends are made and paid in US$. Borrowings are made in US$. The expenses (including management fees, custodian fees and administration fees) are denominated and paid in US$. Accordingly, management has determined that the functional currency of the Company is US$.
(d) Use of estimates and judgments
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have significant effect on the amounts recognised in the financial statements are discussed as follows:
Assessment as investment entity
Entities that meet the definition of an investment entity within IFRS 10 - Consolidated Financial Statements are required to account for investments in controlled entities, as well as investments in associates and joint ventures, at fair value through profit and loss. Subsidiaries that provide investment related services or engage in permitted investment related activities with investees continue to be consolidated unless they are also investment entities.
The criteria which define an investment entity are currently as follows:
- An entity that obtains funds from one or more investors for the purpose of providing those investors with investment services;
- An entity that commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and
- An entity that measures and evaluates the performance of substantially all of its investments on a fair value basis.
The Board of Directors has made an assessment and concluded that the Company meets the above listed criteria of an investment entity. The investment objective of the Company is to provide shareholders with attractive capital returns by investing directly or indirectly through its subsidiaries in a diversified portfolio of listed and unlisted securities in Vietnam. The Company has always measured its investment portfolio at fair value. The exit strategy for all investments held by the Company and its subsidiaries is assessed regularly, documented and submitted to the Investment Committee for approval.
The Company also meets the additional characteristics of an investment entity, in that it has more than one investment; the investments are predominantly in the form of equities and similar securities; it has more than one investor and its investors are not related parties. The Board has concluded that the Company therefore meets the definition of an investment entity. These conclusions will be reassessed on an annual basis for changes in any of these criteria or characteristics.
Fair value of financial instruments
The most significant estimates relate to the fair valuation of each subsidiary and the fair valuation of financial instruments with significant unobservable inputs in their underlying investment portfolio.
The Board has assessed the fair valuation of each subsidiary to be equal to its net asset value at the reporting date, and the primary constituent of net asset value across subsidiaries is their underlying investment portfolio.
Within the underlying investment portfolio, the fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Board uses its judgments to select a variety of valuation methods and make assumptions that are mainly based on market conditions existing at each reporting date.
Impairment of receivables
The Directors determine the allowance for impairment of receivables on a regular basis. This estimate is based on the Directors' review of each individual account balance taking into account the credit history of the debtors and prevailing market conditions.
(e) Going concern
The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future (being a period of 12 months from the date these financial statements were approved). Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, borrowing facilities and investment commitments. Therefore, the financial statements have been prepared on the going concern basis.
3. CHANGE IN ACCOUNTING POLICIES
The Company has initially applied IFRS 9 Financial Instruments published in July 2014 from 1 January 2018. A number of other new standards are also effective from 1 January 2018 but they do not have a material effect on the Company's financial statements.
Due to the transition methods chosen by the Company in applying the standard, comparative information throughout these financial statements has not been restated to reflect the requirements of the new standard.
IFRS 9 Financial Instruments
IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial Instruments: Recognition and Measurement.
As a result of the adoption of IFRS 9, The Company has adopted consequential amendments to IAS 1 Presentation of Financial Statements, which require impairment of financial assets to be presented in a separate line item in the statement of comprehensive income. For the year ended 31 December 2018, the impairment loss on cash and cash equivalent, balances due from brokers, other receivables were nil (2017: nil).
Additionally, the Company has adopted consequential amendments to IFRS 7 Financial Instruments: Disclosures, which are applied to disclosures about 2018 but have not generally been applied to comparative information.
The adoption of IFRS 9 had no material impact on the net assets attributable to Ordinary Shareholders of the Company.
(i) Classification and measurement of financial assets and financial liabilities
IFRS 9 contains three principal classification categories for financial assets: measured at amortised cost, fair value through other comprehensive income ("FVOCI") and fair value through profit or loss ("FVTPL"). The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. IFRS 9 eliminates the previous IAS 39 categories of held to maturity, loans and receivables and available for sale.
IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities.
The adoption of IFRS 9 has not had any effect on the Company's accounting policies related to financial liabilities.
For an explanation of how the Company classifies and measures financial instruments and accounts for related gains and losses under IFRS 9, see Note 4(c)(ii).
The following table and the accompanying notes below explain the original measurement categories under IAS 39 and the new measurement categories under IFRS 9 for each class of The Company's financial assets and financial liabilities as at 1 January 2018.
There is no material effect of adopting IFRS 9 on the carrying amounts of financial assets and financial liabilities as at 1 January 2018.
|
|
Note |
Original classification under IAS 39 |
New classification under IFRS 9 |
Original carrying amount under IAS 39 |
New carrying amount under IFRS 9 |
|
|
|
|
|
US$ |
US$ |
|
Financial assets |
|
|
|
|
|
|
Equity securities investment (*) |
6 |
Designated as at FVTPL |
Mandatorily at FVTPL |
1,602,661,219 |
1,602,661,219 |
|
Other receivables |
|
Loans and receivables |
Amortised cost |
1,134,004 |
1,134,004 |
|
Cash and cash equivalents |
8 |
Loans and receivables |
Amortised cost |
32,443,551 |
32,443,551 |
|
|
|
|
|
|
|
|
|
|
|
|
1,636,238,774 |
1,636,238,774 |
|
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
Accounts payable and accruals |
10 |
Amortised cost |
Amortised cost |
2,961,669 |
2,961,669 |
|
Borrowings |
9 |
Amortised cost |
Amortised cost |
80,000,000 |
80,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
82,961,669 |
82,961,669 |
(*) Under IAS 39, these equity securities investments were designated as at FVTPL because they were managed on a fair value basis and their performance was monitored on this basis. These assets have been classified as mandatorily measured at FVTPL under IFRS 9.
The adoption of IFRS 9 has not had a material impact on the classification of financial assets and financial liabilities of the Company.
(ii) Impairment of financial assets
IFRS 9 replaces the 'incurred loss' model in IAS 39 with an 'expected credit loss' (ECL) model. The new impairment model applies to financial assets measured at amortised cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. Under IFRS 9, credit losses are recognised earlier than under IAS 39 - see Note 4(c)(v).
The application of IFRS 9's impairment requirements at 1 January 2018 does not have material impact on the Company's financial statements.
(iii) Transition
Changes in accounting policies resulting from the adoption of IFRS 9 have been applied retrospectively, except as described below:
- Comparative periods have not generally been restated. Differences in the carrying amounts of financial assets resulting from the adoption of IFRS 9 are recognised in net assets attributable to Ordinary Shareholders as at 1 January 2018. Accordingly, the information presented for 2017 does not reflect the requirements of IFRS 9, but rather those of IAS 39.
- The following assessments have been made on the basis of the facts and circumstances that existed at the date of initial application:
· The determination of the business model within which a financial asset is held.
· The revocation of previous designations of certain financial assets as measured at FVTPL.
This change in accounting policy does not have any material impact on the Company's financial statements for the year ended 31 December 2018.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies have been applied consistently to all periods presented in these financial statements, except if mentioned otherwise (see Note 3).
(a) Financial assets and financial liabilities
(i) Recognition and initial measurement
The Company initial recognises financial assets and financial liabilities at FVTPL on the trade date, which is the date on which the Company becomes a party to the contractual provisions of the instrument. Other financial assets and financial liabilities are recognises on the date on which they are originated.
A financial asset or financial liability is measured initially at fair value plus, for an item not at FVTPL, transaction costs that they are directly attributable to its acquisition or issue.
(ii) Classification and subsequent measurement
Classification of financial assets - Policy applicable from 1 January 2018
On initial recognition, the Company classifies financial assets as measured at amortised cost or FVTPL
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest.
All other financial assets of the Company are measured at FVTPL.
Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
- The documented investment strategy and the execution of this strategy in practice. This includes whether the investment strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;
- How the performance of the portfolio is evaluated and reported to the Company's management;
- The risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
- How the investment manager is compensated: e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
- The frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company's continuing recognition of the assets.
The Company has determined that it has two business models.
- Held-to-collect business model: this includes cash and cash equivalents, balances due from brokers and other receivables. These financial assets are held to collect contractual cash flow.
- Other business model: this includes debt securities, equity investments and unlisted private equities. These financial assets are managed and their performance is evaluated, on a fair value basis, with frequent sales taking place.
Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:
- contingent events that would change the amount or timing of cash flows;
- leverage features;
- prepayment and extension features;
- terms that limit the Company's claim to cash flows from specified assets (e.g. non-recourse features); and
- features that modify consideration of the time value of money (e.g. periodical reset of interest rates).
For a reconciliation of line items in the statement of financial position to the categories of financial instruments, as defined by IFRS 9, see Note 3.
Reclassifications
Financial assets are not reclassified subsequent to their initial recognition unless the Company were to change its business model for managing financial assets, in which case all affected financial assets would be reclassified on the first day of the first reporting period following the change in the business model.
Classification of financial assets - Policy applicable before 1 January 2018
The Company classifies financial assets into the following categories:
Financial assets at fair value through profit or loss
· Designated at fair value through profit or loss - investments in equity instruments.
Loans and receivables
· Cash and cash equivalents and other receivables.
The Company designed all debt and equity investments as at FVTPL on initial recognition because it managed these securities on a fair value basis in accordance with its documented investment strategy. Internal reporting and performance measurement of these securities were on a fair value basis.
For a reconciliation of line items in the statement of financial position to the categories of financial instruments, as defined by IAS 39, see Note 3.
Subsequent measurement of financial assets
· Financial assets at fair value through profit or loss
These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income and expense and foreign exchange gains and losses, are recognised in profit or loss in "net income from instruments at FVTPL" in statement of comprehensive income.
· Financial assets at amortised cost (2017: loans and receivables)
These assets are subsequently measured at amortised cost using the effective interest method. Interest income is recognised in "interest income calculated by using the effective interest method", foreign exchange gains and losses are recognised in "net foreign exchange loss" and impairment is recognised in "impairment losses on financial instruments" in the statement of comprehensive income. Any gain or loss on derecognition is also recognised in profit and loss.
Cash and cash equivalent, balances due from brokers and other receivables are included in this category.
Financial liabilities - Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL.
A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
Financial liabilities at amortised cost: This includes balances due to brokers, borrowings and accounts payable and accruals.
(iii) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Company has access at that date. The fair value of a liability reflects its non-performance risk.
When available, the Company measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The Company measures instruments quoted in an active market at a mid price, because this price provides a reasonable approximation of the exit price.
If there is no quoted price in an active market, then the Company uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.
The Company recognises transfer between levels of the fair value hierarchy as at the end of the reporting period during which the change has occurred.
(iv) Amortised cost measurement
The 'amortised cost' of a financial asset or liability is the amount at which the financial asset or financial liability is measured on initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.
(v) Impairment
Policy applicable from 1 January 2018
The Company recognises loss allowances for expected credit losses ("ECLs") on financial assets measured at amortised cost.
The Company measures loss allowances at an amount equal to lifetime ECLs, except for following, which are measured at 12-month ECLs:
- Financial assets that are determined to have low credit risk at the reporting date; and
- Other financial assets for which credit risk (i.e. the risk of default occurring over the expected life of the asset) has not increased significantly since initial recognition
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company's historical experience and informed credit assessment and including forward-looking information.
The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.
The Company considers a financial asset to be in default when:
- the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realising security (if any is held); or
- the financial asset is more than 90 days past due.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive).
ECLs are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
- significant financial difficulty of a debtor;
- a breach of contract such as a default or being more than 90 days past due; or
- it is probable that the debtor will enter bankruptcy or other financial reorganisation.
Presentation of allowance for ECLs in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof.
Policy applicable before 1 January 2018
Financial assets not classified at FVTPL were assessed at each reporting date to determine whether there was objective evidence of impairment. A financial asset or a group of financial assets was 'impaired' if there was objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset(s) and that loss event(s) had an impact on the estimated future cash flows of that asset(s) that could be estimated reliably.
Objective evidence that financial assets were impaired included significant financial difficulty of the borrower or issuer, default or delinquency by a borrower, restructuring of the amount due on terms that the Company would not otherwise consider, indications that a borrower or issuer would enter bankruptcy, disappearance of an active market for a security or adverse changes in the payment status of the borrower.
An impairment loss in respect of a financial asset measured at amortised cost was calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses were recognised in profit or loss and reflected in an allowance account against receivables. Interest on the impaired asset continued to be recognised. If an event occurring after the impairment was recognised caused the amount of impairment loss to decrease, then the decrease in impairment loss was reversed through profit or loss.
(vi) Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
On derecognition of a financial assets, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset that is derecognised) and the consideration received (including any new asset obtained less any new liability assumed) is recognised in profit and loss. Any interest in such transferred financial assets that is created or created or retained by the Company is recognised as a separate asset or liability.
The Company enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets or a portion of them. If all substantially all if the risks and the rewards are retained, then the transferred assets are not derecognised. Transfers of assets with retention of all or substantially all of the risks and rewards include sale and purchase transactions.
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
(vii) Offsetting
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legally enforceable right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis for gains and losses from financial instruments at FVTPL and foreign exchange gains and losses.
(b) Cash and cash equivalents
Cash and cash equivalents comprise deposits with banks and highly liquid financial assets with maturities of three months or less from the date of acquisition that are subject to an insignificant risk of changes in their fair value and are used by the Company in the management of short-term commitments, other than cash collateral provided in respect of derivatives and securities borrowing transactions.
(c) Share capital
Issuance of share capital
Management Shares and Ordinary Shares are classified as equity. The difference between the issued price and the par value of the shares less any incremental costs directly attributable to the issuance of shares is credited to share premium.
Repurchase of Ordinary Shares
When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Par value of repurchased shares is presented as deductions from share capital and the excess over par value of repurchased shares is presented as deductions from share premium. When repurchased shares are sold or reissued subsequently, the amount received is recognised as an increase in share capital and share premium similar with issuance of share capital.
(d) Net income from financial instruments at fair value through profit or loss
Net income from financial instruments at fair value through profit or loss include all realised and unrealised fair value changes and foreign exchange differences, but excludes interest and dividend income, and dividend expense on securities sold short.
Net realised gain/loss from financial instruments at fair value through profit or loss is calculated using the weighted average cost method.
(e) Basic earnings per share and Net Asset Value per share
The Company presents basic earnings per share ("EPS") for its Ordinary Shares. Basic EPS is calculated by dividing net profit or loss attributable to the Ordinary Shareholders by the weighted average number of Ordinary Shares outstanding during the year. The Company did not have potentially dilutive shares as of 31 December 2018 and 2017.
Net asset value ("NAV") per share is calculated by dividing the NAV attributable to the Ordinary Shareholders by the number of outstanding Ordinary Shares as at the reporting date. NAV is determined as total assets less total liabilities. Where Ordinary Shares have been repurchased, NAV per share is calculated based on the assumption that those repurchased Ordinary Shares have been cancelled.
(f) Related parties
A party is considered to be related to the Company if:
a) The party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, the Company; (ii) has an interest in the Company that gives it significant influence over the Company, or (iii) has joint control over the Company;
b) The party is an associate;
c) The party is a jointly controlled entity;
d) The party is a member of the key management personnel of the Company;
e) The party is a close member of the family of any individual referred to in (a) or (d);
f) The party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or
g) The party is a post-employment benefit plan for the benefit of the employees of the Company, or of any entity that is related party of the Company.
Other investment companies/funds under the management of Dragon Capital Investment Management Limited, the parent company of the Investment Manager, or entities of Dragon Capital Group Limited (including Ho Chi Minh City Securities Corporation ("HSC") and Vietnam Investment Fund Management Joint Stock Company ("VFM") and its funds under management) are also considered related parties to the Company.
5. TRANSACTIONS WITH RELATED PARTIES
Dominic Scriven O.B.E., the Non-executive Director of the Company, is a beneficial shareholder of the Company, holding 36,423 Ordinary Shares of the Company as at 31 December 2018 (31 December 2017: Nil). Dominic Scriven O.B.E also has indirect interests in the share capital of the Company as he is a shareholder of Dragon Capital Group Limited, the parent company of Dragon Capital Limited which holds the Management Shares of the Company. Dragon Capital Group Limited is also the ultimate parent company of Enterprise Investment Management Limited, the Investment Manager of the Company and Dragon Capital Markets Limited. As at 31 December 2018, Dragon Capital Markets Limited beneficially held 2,700,359 Ordinary Shares of the Company for investment and proprietary trading purposes (31 December 2017: 3,700,359 Ordinary Shares).
Gordon Lawson, a Director of the Company, is a beneficial shareholder of the Company, holding 25,000 Ordinary Shares of the Company as at 31 December 2018 (31 December 2017: 25,000 Ordinary Shares).
During the year, the Directors, with exception of Dominic Scriven O.B.E, earned US$152,354 (31 December 2017: US$150,007) for their participation on the Board of Directors of the Company.
During the year, total broker fees paid to HSC - an associate of Dragon Capital Group Limited and one of the securities brokers of the Company and its subsidiaries - amounted to US$272,799 (2017: US$184,154). As at 31 December 2018, there was no broker fee payable to this broker (31 December 2017: US$2,470).
During the period, there was no trading amount dealt on the Company's behalf by VFM - a subsidiary of Dragon Capital Group Limited and its subsidiaries (2017: US$20,545). As at 31 December 2018, there was no payable amount to this party (31 December 2017: Nil)
6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
|
|
31 December 2018 |
31 December 2017 |
|
US$ |
US$ |
|
|
Directly held investments (a) |
613,929,733 |
547,011,237 |
|
Investments in subsidiaries (b) |
858,822,053 |
1,055,649,982 |
|
|
1,472,751,786 |
1,602,661,219 |
(a) The cost and carrying value of directly held listed and unlisted investments of the Company were as follows:
|
|
31 December 2018 |
31 December 2017 |
|
US$ |
US$ |
|
|
Listed investments |
|
|
|
Investments, at cost |
474,416,747 |
231,428,645 |
|
Unrealised gains |
128,968,867 |
265,213,203 |
|
At carrying value (d) |
603,385,614 |
496,641,848 |
|
|
|
|
|
Unlisted investments |
|
|
|
Investments, at cost |
14,911,125 |
50,225,446 |
|
Unrealised (losses)/gains |
(4,367,006) |
143,943 |
|
At carrying value (d) |
10,544,119 |
50,369,389 |
|
|
|
|
|
|
613,929,733 |
547,011,237 |
Movements of investments directly held by the Company during the year were as follows:
|
|
31 December 2018 |
31 December 2017 |
|
US$ |
US$ |
|
|
Opening balance |
547,011,237 |
329,143,330 |
|
Purchases |
367,927,014 |
114,659,715 |
|
Sales |
(160,253,233) |
(68,256,616) |
|
Unrealised (losses)/gains |
(140,755,285) |
171,464,808 |
|
Closing balance |
613,929,733 |
547,011,237 |
(b) Investments in subsidiaries are fair valued at the subsidiary's net asset value with the significant part being attributable to the underlying investment portfolio. The underlying investment portfolio is valued under the same methodology as directly held investments of the Company, with any other assets or liabilities within subsidiaries fair valued in accordance with the Company's accounting policies. All cash flows to/from subsidiaries are treated as an increase/reduction in the fair value of the subsidiary.
The net asset of the Company's subsidiaries comprised.
|
|
31 December 2018 |
31 December 2017 |
|
US$ |
US$ |
|
|
Cash and cash equivalents |
19,208,229 |
31,559,842 |
|
Financial assets at fair value through profit or loss (c) |
848,094,361 |
1,018,259,850 |
|
Other receivables |
621,972 |
741,163 |
|
Balances due from brokers |
683,779 |
5,089,127 |
|
Total assets |
868,608,341 |
1,055,649,982 |
|
|
|
|
|
Balance due to brokers |
9,786,288 |
- |
|
Total liabilities |
9,786,288 |
- |
|
Net asset |
858,822,053 |
1,055,649,982 |
Movements in the carrying value of investments in subsidiaries during the year were as follows:
|
|
31 December 2018 |
31 December 2017 |
|
US$ |
US$ |
|
|
Opening balance |
1,055,649,982 |
666,616,014 |
|
Net cash flows from subsidiaries |
(177,572,707) |
(23,722,850) |
|
Fair value movements on investments of subsidiaries |
(19,255,222) |
412,756,818 |
|
Closing balance |
858,822,053 |
1,055,649,982 |
(c) The cost and carrying value of underlying financial assets at FVTPL held by the Company's subsidiaries were as follows:
|
|
31 December 2018 |
31 December 2017 |
|
US$ |
US$ |
|
|
Listed investments |
|
|
|
Investments, at cost |
600,418,009 |
528,505,794 |
|
Unrealised gains |
245,016,873 |
422,875,746 |
|
At carrying value (d) |
845,434,882 |
951,381,540 |
|
|
|
|
|
Unlisted investments |
|
|
|
Investments, at cost |
3,083,797 |
57,078,916 |
|
Unrealised (losses)/gains |
(424,318) |
9,799,394 |
|
At carrying value (d) |
2,659,479 |
66,878,310 |
|
|
|
|
|
|
848,094,361 |
1,018,259,850 |
Movements of investments held by the Company's subsidiaries during the year were as follows:
|
|
31 December 2018 |
31 December 2017 |
|
US$ |
US$ |
|
|
Opening balance |
1,018,259,850 |
662,690,197 |
|
Purchases |
238,983,482 |
247,949,253 |
|
Sales |
(221,066,386) |
(128,475,635) |
|
Unrealised (losses)/gains |
(188,082,585) |
236,096,035 |
|
Closing balance |
848,094,361 |
1,018,259,850 |
(d) As at 31 December 2018 and 2017, the Company held the following listed and unlisted investments directly and/or indirectly through its subsidiaries:
|
|
The Company |
|||
|
|
31 December 2018 |
31 December 2017 |
||
|
|
Cost |
Carrying value |
Cost |
Carrying value |
|
|
US$ |
US$ |
US$ |
US$ |
|
Listed investments |
|
|
|
|
|
Vietnam listed equities |
|
|
|
|
|
SAB |
57,326,571 |
75,419,315 |
1,965,754 |
2,462,042 |
|
MWG |
25,323,726 |
58,019,994 |
25,323,726 |
66,924,842 |
|
VHM |
49,008,122 |
39,363,814 |
- |
- |
|
VNM |
4,004,071 |
36,436,584 |
2,809,824 |
90,982,577 |
|
HPG |
13,555,378 |
34,499,807 |
10,784,135 |
38,256,989 |
|
NVL |
25,653,823 |
25,001,229 |
- |
- |
|
PNJ |
22,239,856 |
23,558,163 |
10,568,071 |
13,525,651 |
|
KDH |
10,543,906 |
22,288,560 |
10,693,657 |
18,257,884 |
|
VCB |
13,012,920 |
21,981,262 |
13,087,272 |
25,467,049 |
|
MBB |
14,918,104 |
21,649,370 |
27,538,913 |
44,796,280 |
|
TCB |
35,120,561 |
21,227,893 |
- |
- |
|
MSN |
21,191,693 |
19,733,348 |
4,009,173 |
5,775,552 |
|
HPX |
11,528,254 |
19,565,003 |
- |
- |
|
GAS |
14,387,728 |
18,390,674 |
13,758,134 |
21,083,975 |
|
PC1 |
14,523,059 |
15,633,967 |
16,988,261 |
25,368,903 |
|
DXG |
10,331,950 |
15,476,191 |
3,289,704 |
6,962,351 |
|
FPT |
10,518,207 |
14,690,603 |
18,206,053 |
30,558,771 |
|
IDC (*) |
14,730,997 |
13,748,769 |
14,730,997 |
16,973,725 |
|
PDR |
13,978,432 |
11,325,997 |
- |
- |
|
HDB |
11,847,310 |
11,056,136 |
- |
- |
|
VJC |
9,227,927 |
9,312,352 |
- |
- |
|
VGC |
8,292,104 |
9,167,951 |
9,607,893 |
16,275,485 |
|
DIG |
5,282,274 |
8,379,100 |
4,473,373 |
9,858,770 |
|
TID |
3,227,316 |
7,394,678 |
- |
- |
|
BSR (*) |
10,550,117 |
6,754,064 |
- |
- |
|
CRE |
5,395,406 |
6,337,573 |
- |
- |
|
BCM |
8,198,033 |
6,270,403 |
- |
- |
|
NKG |
10,587,415 |
5,837,065 |
12,989,631 |
25,628,605 |
|
FRT |
3,554,865 |
5,443,157 |
- |
- |
|
IMP |
3,018,705 |
4,317,743 |
3,018,705 |
4,156,061 |
|
VEA |
1,732,340 |
3,749,515 |
- |
- |
|
VRE |
3,619,511 |
3,240,041 |
7,313,144 |
8,305,077 |
|
SSI |
2,834,515 |
2,914,450 |
1,531,700 |
1,986,412 |
|
POW |
2,568,009 |
2,747,075 |
- |
- |
|
SJS |
1,673,842 |
1,727,743 |
1,246,919 |
1,790,969 |
|
VPB |
773,225 |
610,670 |
- |
- |
|
DQC |
110,028 |
88,970 |
110,028 |
132,866 |
|
NBB |
26,447 |
26,385 |
- |
- |
|
HSG |
- |
- |
5,766,633 |
9,843,528 |
|
KBC |
- |
- |
5,203,241 |
4,583,122 |
|
BCI |
- |
- |
2,686,456 |
3,083,485 |
|
VGT (*) |
- |
- |
2,073,027 |
1,814,259 |
|
SAM |
- |
- |
1,654,221 |
1,786,618 |
|
|
|
|
|
|
|
Total listed investments |
474,416,747 |
603,385,614 |
231,428,645 |
496,641,848 |
|
|
Subsidiaries |
|||
|
|
31 December 2018 |
31 December 2017 |
||
|
|
Cost |
Carrying value |
Cost |
Carrying value |
|
|
US$ |
US$ |
US$ |
US$ |
|
Listed investments |
|
|
|
|
|
Vietnam listed equities |
|
|
|
|
|
SAB |
9,866,009 |
12,977,239 |
12,525,690 |
17,688,125 |
|
MWG |
50,094,091 |
60,129,419 |
50,111,911 |
69,358,019 |
|
VHM |
39,396,702 |
31,077,066 |
- |
- |
|
VNM |
313 |
2,851 |
840,769 |
27,224,234 |
|
HPG |
26,078,774 |
24,426,823 |
5,826,744 |
20,670,518 |
|
NVL |
2,900,046 |
3,445,958 |
- |
- |
|
PNJ |
16,149,402 |
14,416,796 |
2,377,688 |
2,870,231 |
|
KDH |
39,890,094 |
76,568,286 |
29,798,413 |
52,875,551 |
|
VCB |
482,039 |
151,170 |
3,180,707 |
5,849,343 |
|
MBB |
29,063,646 |
44,642,728 |
29,330,778 |
51,862,145 |
|
MSN |
10,711,676 |
10,023,712 |
6,072,306 |
8,747,765 |
|
HPX |
5,772,822 |
9,458,261 |
- |
- |
|
GAS |
11,413,384 |
17,477,108 |
28,551,312 |
48,325,781 |
|
PC1 |
4,642,960 |
4,906,198 |
3,565,533 |
4,589,370 |
|
DXG |
18,538,192 |
31,324,180 |
13,279,202 |
27,214,003 |
|
FPT |
17,505,023 |
26,100,343 |
24,103,005 |
43,506,957 |
|
IDC (*) |
7,289,204 |
7,066,697 |
9,146,954 |
10,892,314 |
|
VJC |
5,894,074 |
10,116,763 |
20,178,890 |
54,664,489 |
|
VGC |
13,054,763 |
15,215,969 |
15,127,123 |
26,189,581 |
|
DIG |
25,298,700 |
23,651,497 |
23,959,815 |
28,559,654 |
|
TID |
4,669,354 |
10,901,769 |
- |
- |
|
CRE |
3,121,628 |
3,666,739 |
- |
- |
|
BCM |
16,589,014 |
13,683,251 |
- |
- |
|
NKG |
9,801,399 |
4,452,585 |
9,948,058 |
14,480,162 |
|
FRT |
9,841,625 |
15,050,426 |
- |
- |
|
IMP |
15,439,339 |
22,820,423 |
12,795,203 |
19,160,231 |
|
VEA |
15,764,346 |
39,188,316 |
- |
- |
|
VRE |
12,561,213 |
9,971,010 |
- |
- |
|
SSI |
2,882,954 |
3,446,864 |
2,708,323 |
3,804,659 |
|
POW |
21,965,033 |
23,319,922 |
- |
- |
|
SJS |
3,855,682 |
3,987,030 |
3,855,567 |
5,639,658 |
|
VPB |
21,859,171 |
17,810,680 |
32,019,901 |
33,501,707 |
|
DQC |
8,442,535 |
4,484,045 |
8,442,534 |
6,696,403 |
|
NBB |
5,643,765 |
6,237,808 |
5,781,096 |
6,398,343 |
|
HSG |
- |
- |
11,851,532 |
11,810,596 |
|
KBC |
- |
- |
5,169,148 |
4,733,582 |
|
VGT (*) |
- |
- |
10,883,392 |
9,524,858 |
|
SAM |
- |
- |
3,611,243 |
3,900,273 |
|
ACB (**) |
43,046,070 |
51,516,397 |
43,046,070 |
52,317,641 |
|
ACB |
28,087,185 |
101,687,455 |
28,033,448 |
102,311,702 |
|
VCI |
13,542,228 |
14,378,200 |
21,880,844 |
32,025,030 |
|
CTD |
- |
- |
16,496,441 |
23,937,646 |
|
CII |
13,762,177 |
19,062,186 |
13,762,177 |
25,984,863 |
|
ACV (*) |
7,230,712 |
43,849,296 |
9,507,086 |
76,478,611 |
|
HDG |
6,441,066 |
10,933,613 |
6,752,782 |
11,188,094 |
|
VIC |
1,829,599 |
1,807,803 |
3,984,109 |
6,399,401 |
|
|
|
|
|
|
|
Total listed investments |
600,418,009 |
845,434,882 |
528,505,794 |
951,381,540 |
(*) BSR, IDC, VGT and ACV are listed on Unlisted Public Company Market ("UPCoM").
(**) This is ACB P-notes held under Asia Reach Investment Limited.
|
|
The Company |
|||
|
|
31 December 2018 |
31 December 2017 |
||
|
|
Cost |
Carrying |
Cost |
Carrying |
|
|
US$ |
US$ |
US$ |
US$ |
|
Unlisted investments |
|
|
|
|
|
Vietnam OTC equities |
|
|
|
|
|
HDB (***) |
- |
- |
17,888,579 |
17,620,558 |
|
HPX (***) |
- |
- |
11,528,254 |
11,529,271 |
|
FRT (***) |
- |
- |
5,712,667 |
7,579,594 |
|
VEA (***) |
- |
- |
3,843,120 |
5,614,514 |
|
BCM (***) |
- |
- |
4,776,790 |
4,777,841 |
|
TID (***) |
- |
- |
2,713,674 |
3,247,611 |
|
Ricons |
4,711,685 |
4,063,375 |
- |
- |
|
|
|
|
|
|
|
Private Equities |
|
|
|
|
|
Besra Gold |
3,762,362 |
- |
3,762,362 |
- |
|
|
|
|
|
|
|
Vietnam Corporate bonds |
|
|
|
|
|
HSC - Corporate bonds |
6,437,078 |
6,480,744 |
- |
- |
|
|
|
|
|
|
|
Total unlisted investments |
14,911,125 |
10,544,119 |
50,225,446 |
50,369,389 |
|
Total |
489,327,872 |
613,929,733 |
281,654,091 |
547,011,237 |
|
|
Subsidiaries |
|||
|
|
31 December 2018 |
31 December 2017 |
||
|
|
Cost |
Carrying |
Cost |
Carrying value |
|
|
US$ |
US$ |
US$ |
US$ |
|
Unlisted investments |
|
|
|
|
|
Vietnam OTC equities |
|
|
|
|
|
HDB (***) |
- |
- |
13,095,297 |
12,899,093 |
|
HPX (***) |
- |
- |
5,284,153 |
5,284,249 |
|
FRT (***) |
- |
- |
9,202,427 |
12,209,388 |
|
VEA (***) |
- |
- |
15,372,478 |
22,458,056 |
|
BCM (***) |
- |
- |
8,871,183 |
8,873,134 |
|
TID (***) |
- |
- |
3,922,088 |
4,799,969 |
|
Ricons |
3,083,797 |
2,659,479 |
- |
- |
|
|
|
|
|
|
|
Private Equities |
|
|
|
|
|
VFMVF2 |
- |
- |
1,331,290 |
354,421 |
|
|
|
|
|
|
|
Total unlisted investments |
3,083,797 |
2,659,479 |
57,078,916 |
66,878,310 |
|
Total |
603,501,806 |
848,094,361 |
585,584,710 |
1,018,259,850 |
(***) BCM, TID, VEA were listed in the Unlisted Public Company Market ("UPCoM") in 2018. HDB, HPX, FRT were listed in the Ho Chi Minh City Stock Exchange ("HOSE") in 2018.
Investment portfolio by sector was as follows:
|
|
31 December 2018 |
|
31 December 2017 |
|
|
|
US$ |
% |
US$ |
% |
|
Real Estate & Construction |
430,649,308 |
29 |
286,165,704 |
18 |
|
Banking |
292,333,761 |
20 |
346,625,518 |
22 |
|
Retail |
138,642,996 |
9 |
156,071,843 |
10 |
|
Food & beverage |
124,835,989 |
9 |
138,356,978 |
9 |
|
Material & Resources |
93,600,200 |
6 |
163,155,464 |
10 |
|
Diversified Financials |
76,039,504 |
5 |
84,011,172 |
5 |
|
Others |
74,205,688 |
5 |
95,775,396 |
6 |
|
Energy |
68,688,843 |
5 |
69,409,756 |
4 |
|
Transportation |
63,278,411 |
4 |
131,143,100 |
8 |
|
Consumer Durables |
42,547,974 |
3 |
34,564,268 |
2 |
|
Software & Services |
40,790,946 |
3 |
74,065,728 |
5 |
|
Pharmaceuticals |
27,138,166 |
2 |
23,316,292 |
1 |
|
|
1,472,751,786 |
100 |
1,602,661,219 |
100 |
7. BALANCES DUE FROM/DUE TO BROKERS
|
|
31 December 2018 |
31 December 2017 |
|
|
US$ |
US$ |
|
Sale transactions awaiting settlement |
516,059 |
- |
|
|
|
|
|
Purchase transactions awaiting settlement |
3,788,426 |
- |
8. CASH AND CASH EQUIVALENTS
|
|
31 December 2018 |
31 December 2017 |
|
|
US$ |
US$ |
|
Cash in banks |
32,791,633 |
32,443,551 |
9. BORROWINGS
|
|
31 December 2018 |
31 December 2017 |
|
|
US$ |
US$ |
|
Standard Chartered Bank - Singapore Branch |
|
|
|
Secured Bank Loan |
60,000,000 |
80,000,000 |
Movements of short-term borrowings during the year were as follows:
|
|
31 December 2018 |
31 December 2017 |
|
|
US$ |
US$ |
|
Opening balance |
80,000,000 |
40,000,000 |
|
Repayments during the year |
(80,000,000) |
- |
|
Additions during the year |
60,000,000 |
40,000,000 |
|
|
|
|
|
Closing balance |
60,000,000 |
80,000,000 |
Terms and conditions of outstanding short-term borrowings are as follows:
|
|
|
|
31 December 2018 |
|
|
|
Interest rate per annum (%) |
Date of Maturity
|
Nominal value US$ |
Carry amount US$ |
|
|
|
|
|
|
|
Secured Bank Loan |
4.7658 |
6 December 2019 |
60,000,000 |
60,000,000 |
As at 31 December 2018 and 2017, the bank loans were secured by the Company's investments with total carrying value of US$214,551,241 (31 December 2017: US$294,229,601).
These loans have been rolled over subsequent to the date of maturity.
10. ACCOUNTS PAYABLE AND ACCRUALS
|
|
31 December 2018 |
31 December 2017 |
|
|
US$ |
US$ |
|
Management fees |
2,405,644 |
2,501,610 |
|
Administration fees |
159,239 |
215,713 |
|
Other payables |
252,630 |
244,346 |
|
|
|
|
|
|
2,817,513 |
2,961,669 |
11. ISSUED SHARE CAPITAL AND SHARE PREMIUM
|
|
31 December 2018 |
31 December 2017 |
|
|
US$ |
US$ |
|
Authorised: |
|
|
|
500,000,000 Ordinary Shares at par value of US$0.01 each |
5,000,000 |
5,000,000 |
|
300,000,000 Conversion Shares at par value of US$0.01 each |
3,000,000 |
3,000,000 |
|
1,000 Management Shares at par value of US$0.01 each |
10 |
10 |
|
|
8,000,010 |
8,000,010 |
|
Issued and fully paid: |
|
|
|
220,920,746 Ordinary Shares at par value of US$0.01 each (31 December 2017: 220,920,746 Ordinary Shares at par value of US$0.01 each) |
2,209,207 |
2,209,207 |
|
1,000 Management Shares at par value of US$0.01 each |
10 |
10 |
|
|
2,209,217 |
2,209,217 |
|
Treasury Shares: |
|
|
|
Ordinary Shares |
(13,409) |
(7,951) |
|
|
|
|
|
Shares in circulation: |
|
|
|
Ordinary Shares |
2,195,798 |
2,201,256 |
|
Management Shares |
10 |
10 |
|
|
|
|
|
Outstanding issued share capital in circulation |
2,195,808 |
2,201,266 |
Holders of Ordinary Shares present in person or by proxy or by authorised representative shall have one vote and, on a poll, every holder of Ordinary Shares present in person or by proxy or by authorised representative shall have one vote for every Ordinary Share of which he is the registered holder. The Ordinary Shares carry rights to dividends as set out in Articles 106 to 114 of the Articles. In a winding up, the Ordinary Shares carry a right to a return of the nominal capital paid up in respect of such Ordinary Shares, and the right to share in the manner set out in the Articles in surplus assets remaining after the return of the nominal capital paid up on the Ordinary Shares and Management Shares, provided that in a winding up the assets available for distribution among the members are more than sufficient to repay the whole of the nominal capital paid up at the commencement of the winding up. No holder of Ordinary Shares has the right to request the redemption of any of his Ordinary Shares at his option.
The Conversion Shares carry the exclusive right to dividends in respect of assets attributable to the Conversion Shares, in accordance with the provisions of Articles 106 to 114. No dividend or other distribution shall be declared, made or paid by the Company on any of its shares by reference to a record date falling between the Calculation Date and the Conversion Date as set out in the Articles. The new Ordinary Shares to be issued on conversion shall rank in full pari passu with the existing Ordinary Shares for all dividends and other distributions with a record date falling after the conversion date. In order for the holder of the Conversion Shares to participate in the winding up of the Company, the Conversion Shares, if any, which are in existence at the date of the winding up of the Company will for all purposes be deemed to have been automatically converted into Ordinary Shares and Deferred Shares immediately prior to the winding up, on the same basis as if conversion had occurred 28 business days after the calculation date arising as a result of the resolution or the court to wind up the Company.
Until conversion, the consent of the holders of the Conversion Shares voting as a separate class and the holders of the Ordinary Shares voting as a separate class shall be required in accordance with the provisions of Article 14 to effect any variation or abrogation in their respective class rights.
During the year, no Conversion Shares were in issue, and no Conversion Shares were in issue as at 31 December 2018 and 2017.
The Management Shares shall not be redeemed by the Company, and do not carry any right to dividends. In a winding up, Management Shares are entitled to a return of paid up nominal capital out of the assets of the Company, but only after the return of nominal capital paid up on Ordinary Shares. The Management Shares each carry one vote on a poll. The holders of the Management Shares have the exclusive right to appoint two individuals to the Board.
As at 31 December 2018 and 2017, the following shareholder owned more than 10 percent of the Company's issued Ordinary Share capital.
|
Registered shareholders |
Number of Ordinary Shares held |
% of total Ordinary Shares in issue |
|
|
|
|
|
Computershare Investor Services PLC (*) |
220,920,746 |
100% |
|
In which: |
|
|
|
Bill & Melinda Gates Foundation Trust |
25,049,173 |
11.34% |
(*) Computershare Investor Services PLC acts as depositary in respect of a facility for the issue of depositary interests representing the Company's Ordinary Shares.
Movements in Ordinary Share capital during the year were as follows:
|
|
Shares |
Year ended 31 December 2018 US$ |
Shares |
Year ended 31 December 2017 US$ |
|
|
|
|
|
|
|
Balance at the beginning of the year |
220,125,680 |
2,201,256 |
220,920,746 |
2,209,207 |
|
Repurchase of Ordinary Shares during the year |
(545,802) |
(5,458) |
(795,066) |
(7,951) |
|
Balance at the end of the year |
219,579,878 |
2,195,798 |
220,125,680 |
2,201,256 |
Movements in share premium during the year were as follows:
|
|
Year ended 31 December 2018 US$ |
Year ended 31 December 2017 US$ |
|
|
|
|
|
Balance at the beginning of the year |
560,096,358 |
563,283,425 |
|
Repurchase of Ordinary Shares during the year |
(3,204,715) |
(3,187,067) |
|
Balance at the end of the year |
556,891,643 |
560,096,358 |
12. NET ASSET VALUE PER ORDINARY SHARE
The calculation of the NAV per Ordinary Share was based on the net assets attributable to the Ordinary Shareholders of the Company as at 31 December 2018 of US$1,440,021,968 (31 December 2017: US$1,553,277,105) and the number of outstanding Ordinary Shares in issue as at that date of 219,579,878 shares (31 December 2017: 220,125,680 Ordinary Shares).
13. FEES
The management, administration and custodian fees are calculated based on the NAV of the Company.
Administration fees
Prior to 30 September 2018, Standard Chartered Bank (the "Administrator") was entitled to receive a fee of 0.06% of the gross assets per annum. With effect from 1 October 2018, this fee is calculated at 0.048% of the gross assets per annum. Administration fees are payable monthly in arrears and subject to a minimum monthly fee of US$4,000 per fund. During the year, total administration fees amounted to US$1,263,588 (2017: US$1,194,259). As at 31 December 2018, an administration fee of US$159,239 (31 December 2017: US$215,713) was payable to the Administrator.
Custodian fees
Standard Chartered Bank (the "Custodian") is entitled to receive a fee of 0.05% (2017: 0.05%) of the assets under custody per annum, payable monthly in arrears and subject to a minimum monthly fee of US$500 per custody account. In addition, the Custodian is entitled to US$20 per listed transaction and US$10 per scripless securities. During the year, total custodian fees amounted to US$958,560 (2017: US$754,817). There were no custodian fees payable as at 31 December 2018 and 2017.
Directors' fees
During the year, total directors' fees amounted to US$152,354 (2017: US$150,007). There were no directors' fees payable as at 31 December 2018 and 2017. Dominic Scriven O.B.E has permanently waived his rights to receive directors' fees for his services as Director of the Company.
Management fees
Prior to 1 August 2017, the Investment Manager was entitled to receive a management fee equal to 2% per annum of the NAV, accrued daily and payable monthly in arrears. With effect from 1 August 2017, the management fee is calculated and accrued daily on the following basis:
- 2% per annum on the first US$1.25 billion of the NAV;
- 1.75% per annum on the portion of the NAV in excess of US$1.25 billion and less than or equal to US$1.5 billion; and
- 1.5% per annum on the portion of the NAV above US$1.5 billion.
During the year, total management fees amounted to US$30,417,508 (2017: US$24,122,990). As at 31 December 2018, a management fee of US$2,405,644 (31 December 2017: US$2,501,610) remained payable to the Investment Manager.
Audit and related fees
During the year, included in the legal and professional fees of the Company was audit and related fees amounted to US$112,380 (2017: US$83,000) paid to the auditor, KPMG Limited. There were no other advisory fees paid to the auditor in 2018 (2017: nil).
14. INCOME TAX
Under the current law of the Cayman Islands and the British Virgin Islands, the Company and its subsidiaries are not required to pay any taxes in the Cayman Islands or the British Virgin Islands on either income or capital gains and no withholding taxes will be imposed on distributions by the Company to its shareholders or on the winding-up of the Company.
In accordance with Circular No. 103/2014/TT-BTC issued by the Ministry of Finance of Vietnam taking effective from 1 October 2014 proving guidelines on the fulfilment of tax obligations of foreign entities, foreign individuals doing business in Vietnam or earning income in Vietnam, the Company is subject to 0.1% withholding tax on proceeds from transferring certificates of deposits, shares of public companies in accordance with the Law on Securities and 5% withholding tax on the interest received from any Vietnamese companies. Dividends remitted by Vietnamese investee companies to foreign corporate investors are not subject to withholding taxes.
See Note 16(B) for further details.
15. BASIC EARNINGS PER ORDINARY SHARE
The calculation of basic earnings per Ordinary Share for the year was based on the net loss for the year attributable to the Ordinary Shareholders of US$110,044,964 (2017: net profit of US$581,669,352) and the weighted average number of Ordinary Shares outstanding of 219,831,535 shares (2017: 220,237,538 shares) in issue during the year.
(a) Net (losses)/profit attributable to the Ordinary Shareholders
|
|
Year ended 31 December 2018 US$ |
Year ended 31 December 2017 US$ |
|
Net profit attributable to the Ordinary Shareholders |
(110,044,964) |
581,669,352 |
(b) Weighted average number of Ordinary Shares
|
|
Year ended 31 December 2018 US$ |
Year ended 31 December 2017 US$ |
|
Issued Ordinary Shares at the beginning of the year |
220,125,680 |
220,920,746 |
|
Effect of Ordinary Shares repurchased during the year |
(294,145) |
(683,208) |
|
|
|
|
|
Weighted average number of Ordinary Shares |
219,831,535 |
220,237,538 |
(c) Basic (losses)/earnings per Ordinary Shares
|
|
Year ended 31 December 2018 US$ |
Year ended 31 December 2017 US$ |
|
Basic (losses)/earnings per Ordinary Share |
(0.50) |
2.64 |
16. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY
A. Financial risk management
The Company and its subsidiaries mainly invested in listed and unlisted investments in Vietnam, and are exposed to credit risk, liquidity risk and market risks arising from the financial instruments they hold. The Company has formulated risk management policies and guidelines which govern its overall business strategies, its balance for risk and its general risk management philosophy, and has established processes to monitor and control transactions in a timely and accurate manner. In essence, the Company and its Investment Manager practise portfolio diversification and have adopted a range of appropriate restrictions and policies, including limiting the Company's cash investment in each investment to not more than 20% of the Company's capital at the time of investment. Nevertheless, the markets in which the Company operates and the investments that the Company makes can provide no assurance that the Company will not suffer a loss as a result of one or more of the risks described above, or as a result of other risks not currently identified by the Investment Manager.
The nature and extent of the financial instruments outstanding at the reporting date and the risk management policies employed by the Company are discussed in the following notes.
(a) Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company, resulting in a financial loss to the Company.
The Company's listed and unlisted investments will only be traded on or subject to the rules of recognised stock exchanges or with counterparties which have, or whose parent company has been approved based on a set of defined criteria by the Investment Manager. All transactions in listed and unlisted securities are settled/paid for upon delivery using approved brokers. The risk of default is considered minimal since the delivery of securities sold is made only once the broker has received payment. A purchase payment is only made once the securities have been received by the broker. If either party fails to meet their obligations, the trade will fail.
As at 31 December 2018 and 2017, the Company's credit risk arose principally from its other receivables, balances due from brokers, cash and cash equivalents and investments in debt securities.
The maximum exposure to credit risk faced by the Company is equal to the carrying amounts of these balances as shown on the statement of financial position. The maximum exposure to credit risk at the reporting date was as follows:
|
|
31 December 2018 US$ |
31 December 2017 US$ |
|
Investments in debt securities (i) |
6,480,744 |
- |
|
Other receivables (ii) |
568,429 |
1,134,004 |
|
Balances due from brokers (ii) |
516,059 |
- |
|
Cash and cash equivalents (iii) |
32,791,633 |
32,443,551 |
|
|
40,356,865 |
33,577,555 |
The Company invests substantially all of its assets in its subsidiaries together with which it is managed as an integrated structure. The Directors decided that the objectives of IFRS 7 Financial Instruments: Disclosures are met by providing disclosures on the credit risk of the underlying financial assets held by the subsidiaries.
As at 31 December 2018 and 2017, the subsidiaries' credit risk arose principally from the subsidiaries' other receivables, balances due from brokers and cash and cash equivalents.
The maximum exposure to credit risk faced by the subsidiaries is equal to the carrying amounts of other receivables, balances due from brokers and cash and cash equivalents which were as follows at the reporting date:
|
|
31 December 2018 US$ |
31 December 2017 US$ |
|
Other receivables (ii) |
621,972 |
741,163 |
|
Balances due from brokers (ii) |
683,779 |
5,089,127 |
|
Cash and cash equivalents (iii) |
19,208,229 |
31,559,842 |
|
|
20,513,980 |
37,390,132 |
(i) Investments in debt securities
Investments in debt securities represented corporate bonds of a Vietnamese company. The Directors do not foresee any significant credit risks from these bonds.
(ii) Other receivables and balances due from brokers
Other receivables represented dividends receivable from investee companies. Balances due from brokers represented receivables from sales of securities. Credit risk relating to these amounts was considered as minimal due to the short-term settlement period involved.
No receivables as at 31 December 2018 and 2017 were past due.
(iii) Cash and cash equivalents
Cash and cash equivalents of the Company and its subsidiaries were held mainly with well-known financial institutions. The Directors do not foresee any significant credit risks from these deposits and do not expect that these financial institutions may default and cause losses to the Company.
(b) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial assets. The Company also regularly monitors current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer term.
As at 31 December 2018 and 2017, all the contractual maturities of non-derivative financial liabilities of the Company and its subsidiaries were payable within a year.
(c) Market risk
Market risk is the risk that changes in market prices, such as equity prices, interest rates and foreign exchange rates, will affect the income of the Company and the value of its holdings of financial instruments. The objectives of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
Equity price risk
Equity price risk is the risk that the fair values of equities decrease as a result of changes in the levels of the equity indices and the values of individual securities. The trading equity price risk exposure arises from the Company's investment portfolio. The Company is exposed to equity price risk on all of its directly held and underlying listed and unlisted equity investments for which an active over-the-counter market exists. The Company's equity price risk is managed by the Investment Manager who seeks to monitor the risk through a careful selection of securities within specified limits.
Equity price risk for the Company's underlying listed investments principally relates to investments listed on the Ho Chi Minh City Stock Exchange and the Hanoi Stock Exchange in Vietnam. The Investment Manager's best estimate of the effect on net assets and losses due to a reasonably possible change in equity indices, with all other variables held constant was as follows:
|
|
Change in |
Effects on |
Change in |
Effects on |
|
|
2018 |
2018 |
2017 |
2017 |
|
Market Indices |
% |
US$m |
% |
US$m |
|
|
|
|
|
|
|
VN Index |
48 |
687.08 |
50 |
554.14 |
|
VN Index |
(48) |
(687.08) |
(50) |
(554.14) |
Equity price risk for the Company's underlying unlisted investments principally related to investments in Over-the-counter and private equities in Vietnam. Valuation of these investments is made using appropriate valuation methodologies. The methodology of valuation of these investments takes into consideration a variety of factors, which means that the unlisted investments are also exposed to equity price risk.
Interest rate risk
The Company and its subsidiaries are exposed to risks associated with the effect of fluctuations in the prevailing levels of floating market interest rates on its financial position and cash flows. The Company and its subsidiaries have the ability to borrow funds from banks and other financial institutions in order to increase the amount of capital available for investments. Consequently, the level of interest rates at which the Company and its subsidiaries can borrow will affect the operating results of the Company and its subsidiaries. The Investment Manager monitors overall interest sensitivity of the Company and its subsidiaries on a monthly basis.
The table below summarises the Company's exposure to interest rate risk. Included in the table are the Company's assets and liabilities at carrying value, categorised by maturity date. The net interest sensitivity gap represents the contractual amounts of all interest sensitive financial instruments.
|
|
Up to 1 year |
1 - 5 years |
Non-interest bearing |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
|
31 December 2018 |
|
|
|
|
|
ASSETS |
|
|
|
|
|
Other receivables |
- |
- |
568,429 |
568,429 |
|
Balances due from brokers |
- |
- |
516,059 |
516,059 |
|
Cash and cash equivalents |
32,791,633 |
- |
- |
32,791,633 |
|
|
|
|
|
|
|
TOTAL ASSETS |
32,791,633 |
- |
1,084,488 |
33,876,121 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Borrowings |
(60,000,000) |
- |
- |
(60,000,000) |
|
Balances due to brokers |
- |
- |
(3,788,426) |
(3,788,426) |
|
Accounts payable and accruals |
- |
- |
(2,817,513) |
(2,817,513) |
|
|
|
|
|
|
|
TOTAL LIABILITIES |
(60,000,000) |
- |
(6,605,939) |
(66,605,939) |
|
NET INTEREST SENSITIVITY GAP |
(27,208,367) |
- |
N/A |
N/A |
|
|
Up to 1 year |
1 - 5 years |
Non-interest bearing |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
|
31 December 2017 |
|
|
|
|
|
ASSETS |
|
|
|
|
|
Other receivables |
- |
- |
1,134,004 |
1,134,004 |
|
Cash and cash equivalents |
32,443,551 |
- |
- |
32,443,551 |
|
|
|
|
|
|
|
TOTAL ASSETS |
32,443,551 |
- |
1,134,004 |
33,577,555 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Borrowings |
(80,000,000) |
- |
- |
(80,000,000) |
|
Accounts payable and accruals |
- |
- |
(2,961,669) |
(2,961,669) |
|
|
|
|
|
|
|
TOTAL LIABILITIES |
(80,000,000) |
- |
(2,961,669) |
(82,961,669) |
|
NET INTEREST SENSITIVITY GAP |
(47,556,449) |
- |
N/A |
N/A |
A change of 100 basis points in interest rates would have increased or decreased the net assets attributable to the Ordinary Shareholders by US$272,084 (31 December 2017: US$475,564). This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
The Company invests substantially all of its assets in its subsidiaries together with which it is managed as an integrated structure. The Directors decided that the objectives of IFRS 7 Financial Instruments: Disclosures are met by providing disclosures on the interest risk of the underlying investments held by the subsidiaries.
The table below summarises the subsidiaries' exposure to interest rate risk. Included in the table are the subsidiaries' assets and liabilities categorised by maturity date. The net interest sensitivity gap represents the net carrying amounts of all interest sensitive financial instruments.
|
|
Up to 1 year |
1 - 5 years |
Non-interest bearing |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
|
31 December 2018 |
|
|
|
|
|
ASSETS |
|
|
|
|
|
Other receivables |
- |
- |
621,972 |
621,972 |
|
Balances due from brokers |
- |
- |
683,779 |
683,779 |
|
Cash and cash equivalents |
19,208,229 |
- |
- |
19,208,229 |
|
|
|
|
|
|
|
TOTAL ASSETS |
19,208,229 |
- |
1,305,751 |
20,513,980 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Balances due to brokers |
- |
- |
(9,786,288) |
(9,786,288) |
|
|
|
|
|
|
|
TOTAL LIABILITIES |
- |
- |
(9,786,288) |
(9,786,288) |
|
NET INTEREST SENSITIVITY GAP |
19,208,229 |
- |
N/A |
N/A |
|
|
Up to 1 year |
1 - 5 years |
Non-interest bearing |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
|
31 December 2017 |
|
|
|
|
|
ASSETS |
|
|
|
|
|
Other receivables |
- |
- |
741,163 |
741,163 |
|
Balances due from brokers |
- |
- |
5,089,127 |
5,089,127 |
|
Cash and cash equivalents |
31,559,842 |
- |
- |
31,559,842 |
|
|
|
|
|
|
|
TOTAL ASSETS |
31,559,842 |
- |
5,830,290 |
37,390,132 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
Balances due to brokers |
- |
- |
- |
- |
|
|
|
|
|
|
|
TOTAL LIABILITIES |
- |
- |
- |
- |
|
NET INTEREST SENSITIVITY GAP |
31,559,842 |
- |
N/A |
N/A |
A change of 100 basis points in interest rates would have increased or decreased the net assets attributable to the Company by US$192,082 (31 December 2017: US$315,598). This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
Foreign currency risk
Foreign currency risk is the risk that changes in foreign exchange rates will affect the Company and its subsidiaries' income or the value of its holding of financial instruments. The Company and its subsidiaries ensure that the net exposure to this risk is kept to an acceptable level by buying or selling foreign currencies at spot rates to address short-term imbalances where necessary.
The table below summarises the exposure of the Company to currency risks as at 31 December 2018 and 2017. Included in the table are the assets and liabilities categorised by their base currency.
|
31 December 2018 |
Denominated in VND |
|
|
US$ |
|
ASSETS |
|
|
Financial assets at fair value through profit or loss |
613,929,733 |
|
Other receivables |
568,429 |
|
Balances due from brokers |
516,059 |
|
Cash and cash equivalents |
12,174,343 |
|
TOTAL ASSETS |
627,188,564 |
|
|
|
|
LIABILITIES |
|
|
Balance due to brokers |
3,788,426 |
|
|
|
|
NET CURRENCY POSITION |
623,400,138 |
|
|
|
|
31 December 2017 |
Denominated in VND |
|
|
US$ |
|
ASSETS |
|
|
Financial assets at fair value through profit or loss |
547,011,237 |
|
Other receivables |
1,134,004 |
|
Cash and cash equivalents |
8,714,364 |
|
TOTAL ASSETS |
556,859,605 |
|
|
|
|
LIABILITIES |
- |
|
|
|
|
NET CURRENCY POSITION |
556,859,605 |
At 31 December 2018, had the US$ strengthened or weakened by 2% (31 December 2017: 1%) against the VND with all other variables held constant, the net assets attributable to the Ordinary Shareholders would have been decreased or increased by the amounts shown below. This analysis was performed on the same basis as in 2017.
|
|
Denominated in VND |
|
|
US$ |
|
2018 |
12,223,532 |
|
2017 |
5,513,461 |
The Company invests substantially all of its assets in its subsidiaries together with which it is managed as an integrated structure. The Directors decided that the objectives of IFRS 7 Financial Instruments: Disclosures are met by providing disclosures on the currency risk of the underlying investments held by the subsidiaries.
The table below summarises the exposure of the subsidiaries to currency risks as at 31 December 2018 and 2017. Included in the table are the assets and liabilities categorised by their base currency.
|
31 December 2018 |
Denominated in VND |
|
|
US$ |
|
ASSETS |
|
|
Financial assets at fair value through profit or loss |
848,094,361 |
|
Other receivables |
621,972 |
|
Balances due from brokers |
683,779 |
|
Cash and cash equivalents |
19,208,045 |
|
TOTAL ASSETS |
868,608,157 |
|
|
|
|
LIABILITIES |
|
|
Balances due to brokers |
9,786,288 |
|
|
|
|
NET CURRENCY POSITION |
858,821,869 |
|
31 December 2017 |
Denominated in VND |
|
|
US$ |
|
ASSETS |
|
|
Financial assets at fair value through profit or loss |
1,018,259,850 |
|
Other receivables |
741,163 |
|
Balances due from brokers |
5,089,127 |
|
Cash and cash equivalents |
26,559,658 |
|
TOTAL ASSETS |
1,050,649,798 |
|
|
|
|
LIABILITIES |
- |
|
|
|
|
NET CURRENCY POSITION |
1,050,649,798 |
At 31 December 2018, had the US$ strengthened or weakened by 2% (31 December 2017: 1%) against VND with all other variables held constant, the net assets attributable to the Company would have been decreased or increased by the amounts shown below. This analysis was performed on the same basis as in 2017.
|
|
Denominated in VND |
|
|
US$ |
|
|
|
|
2018 |
16,839,644 |
|
2017 |
10,402,473 |
(d) Fair values of financial assets and liabilities
(i) Valuation model
The fair values of financial instruments that are traded in active markets are based on quoted prices or broker price quotations. For all other financial instruments, the Company determines fair values using other valuation techniques.
For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgment depending on liquidity, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.
The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements.
· Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments.
· Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are not considered active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data.
· Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments but for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.
The Company makes its investments through wholly owned subsidiaries, which in turn own interests in various listed and unlisted equity and debt securities. The net asset value of the subsidiaries is used for the measurement of fair value. The fair value of the Company's underlying investments, however is measured in accordance with the valuation methodology which is in consistent with that for directly held investments.
(ii) Fair value hierarchy - Financial instruments measured at fair value
The table below analyses the Company's financial instruments measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position. All fair value measurements below are recurring.
|
As at 31 December 2018 |
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
· Listed investments |
603,385,614 |
- |
- |
603,385,614 |
|
· Unlisted investments |
- |
4,063,376 |
6,480,743 |
10,544,119 |
|
· Investments in subsidiaries |
- |
- |
858,822,053 |
858,822,053 |
|
|
603,385,614 |
4,063,376 |
865,302,796 |
1,472,751,786 |
|
As at 31 December 2017 |
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
· Listed investments |
496,641,848 |
- |
- |
496,641,848 |
|
· Unlisted investments |
- |
50,369,389 |
- |
50,369,389 |
|
· Investments in subsidiaries |
- |
- |
1,055,649,982 |
1,055,649,982 |
|
|
496,641,848 |
50,369,389 |
1,055,649,982 |
1,602,661,219 |
The following table shows a reconciliation from the opening balances to the closing balances for fair value measurements of the Company in three levels of the fair value hierarchy.
|
2018 |
Level 1 |
Level 2 |
Level 3 |
|
|
2018 |
2018 |
2018 |
|
|
US$ |
US$ |
US$ |
|
Opening balance |
496,641,848 |
50,369,389 |
1,055,649,982 |
|
Transfer from level 2 to level 1 |
46,463,084 |
(46,463,084) |
- |
|
Purchases |
356,778,251 |
4,711,685 |
6,437,078 |
|
Sales |
(160,253,233) |
- |
- |
|
Net cash from subsidiaries |
- |
- |
(177,572,707) |
|
Unrealised (losses)/gains recognised in profit or loss |
(136,244,336) |
(4,554,614) |
(19,211,557) |
|
Closing balance |
603,385,614 |
4,063,376 |
865,302,796 |
|
Total unrealised (losses)/gains for the year included in net changes in fair value of financial assets at fair value through profit or loss |
(136,166,650) |
(4,554,614) |
(19,211,557) |
|
2017 |
Level 1 |
Level 2 |
Level 3 |
|
|
US$ |
US$ |
US$ |
|
Opening balance |
319,063,843 |
10,079,487 |
666,616,014 |
|
Transfer from level 2 to level 1 |
2,073,027 |
(2,073,027) |
- |
|
Purchases |
74,601,123 |
40,058,592 |
- |
|
Sales |
(68,256,616) |
- |
- |
|
Net cash from subsidiaries |
- |
- |
(23,722,850) |
|
Unrealised gains recognised in profit or loss |
169,160,471 |
2,304,337 |
412,756,818 |
|
Closing balance |
496,641,848 |
50,369,389 |
1,055,649,982 |
|
Total unrealised gains for the year included in net changes in fair value of financial assets at fair value through profit or loss |
169,160,471 |
2,304,337 |
412,756,818 |
The Company invests substantially all of its assets in its subsidiaries together with which it is managed as an integrated structure. The Directors decided that the objectives of IFRS 7 Financial Instruments: Disclosures are met by providing disclosures on the fair value hierarchy of the underlying investments held by the subsidiaries.
The table below analyses the subsidiaries' financial instruments measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position. All fair value measurements below are recurring.
|
As at 31 December 2018 |
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
· Listed investments |
793,117,240 |
52,317,642 |
- |
845,434,882 |
|
· Unlisted investments |
- |
2,659,479 |
- |
2,659,479 |
|
|
793,117,240 |
54,977,121 |
- |
848,094,361 |
|
As at 31 December 2017 |
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
· Listed investments |
951,381,540 |
- |
- |
951,381,540 |
|
· Unlisted investments |
- |
66,878,310 |
- |
66,878,310 |
|
|
951,381,540 |
66,878,310 |
- |
1,018,259,850 |
The following table shows a reconciliation from the opening balances to the closing balances for fair value measurements of investments through the subsidiaries in three levels of the fair value hierarchy.
|
|
Level 1 |
Level 2 |
Level 3 |
|
|
2018 |
2018 |
2018 |
|
|
US$ |
US$ |
US$ |
|
Opening balance |
899,063,899 |
119,195,951 |
- |
|
Transfer from level 2 to level 1 |
55,747,626 |
(55,747,626) |
- |
|
Transfer from level 3 to level 1 |
- |
- |
- |
|
Purchases |
235,899,686 |
3,083,797 |
- |
|
Sales |
(219,735,098) |
(1,331,290) |
- |
|
Unrealised (losses)/gains |
(177,858,873) |
(10,223,711) |
- |
|
Closing balance |
793,117,240 |
54,977,121 |
- |
|
Total unrealised (losses)/gains included in net changes in fair value of financial assets at fair value through profit or loss |
(177,858,873) |
(10,223,711) |
- |
|
2017 |
Level 1 |
Level 2 |
Level 3 |
|
|
US$ |
US$ |
US$ |
|
Opening balance |
601,886,978 |
57,006,611 |
3,796,608 |
|
Transfer from level 2 to level 1 |
10,883,392 |
(10,883,392) |
- |
|
Transfer from level 3 to level 1 |
3,337,041 |
- |
(3,337,041) |
|
Purchases |
218,581,068 |
29,368,185 |
- |
|
Sales |
(128,475,635) |
- |
- |
|
Unrealised gains/(losses) |
192,851,055 |
43,704,547 |
(459,567) |
|
Closing balance |
899,063,899 |
119,195,951 |
- |
|
Total unrealised gains/(losses) included in net changes in fair value of financial assets at fair value through profit or loss |
192,851,055 |
43,704,547 |
(459,567) |
(e) Classification of financial assets and financial liabilities
The following table shows the classification of financial assets and financial liabilities of the Company:
|
|
Designated at |
Amortised |
Total carrying amount |
|
As at 31 December 2018 |
US$ |
US$ |
US$ |
|
Assets |
|
|
|
|
Financial assets at fair value through profit or loss |
1,472,751,786 |
- |
1,472,751,786 |
|
Balances due from brokers |
- |
568,429 |
568,429 |
|
Other receivables |
- |
516,059 |
516,059 |
|
Cash and cash equivalents |
- |
32,791,633 |
32,791,633 |
|
|
1,472,751,786 |
33,876,121 |
1,506,627,907 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Borrowings |
- |
60,000,000 |
60,000,000 |
|
Balances due to brokers |
- |
3,788,426 |
3,788,426 |
|
Accounts payable and accruals |
- |
2,817,513 |
2,817,513 |
|
|
- |
66,605,939 |
66,605,939 |
|
|
Designated at |
Amortised |
Total carrying amount |
|
As at 31 December 2017 |
US$ |
US$ |
US$ |
|
Assets |
|
|
|
|
Financial assets at fair value through profit or loss |
1,602,661,219 |
- |
1,602,661,219 |
|
Other receivables |
- |
1,134,004 |
1,134,004 |
|
Cash and cash equivalents |
- |
32,443,551 |
32,443,551 |
|
|
1,602,661,219 |
33,577,555 |
1,636,238,774 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Borrowings |
- |
80,000,000 |
80,000,000 |
|
Accounts payable and accruals |
- |
2,961,669 |
2,961,669 |
|
|
- |
82,961,669 |
82,961,669 |
(f) Capital management
The Company considers the capital under management as equal to net assets attributable to the Ordinary Shareholders. The Company has engaged the Investment Manager to allocate the net assets in such a way to generate investment returns that are commensurate with the investment strategies of the Company.
B. Uncertainty
Although the Company and its subsidiaries are incorporated in the Cayman Islands and the British Virgin Islands, respectively, where tax is exempt, their activities are primarily focused on Vietnam. In accordance with the prevailing tax regulations in Vietnam, if an entity was treated as having a permanent establishment, or as otherwise being engaged in a trade or business in Vietnam, income attributable to or effectively connected with such permanent establishment or trade or business may be subject to tax in Vietnam. As at the date of this report the following information is uncertain:
· Whether the Company and its subsidiaries are considered as having permanent establishments in Vietnam;
· The amount of tax that may be payable, if the income is subject to tax; and
· Whether tax liabilities (if any) will be applied retrospectively.
The implementation and enforcement of tax regulations in Vietnam can vary depending on numerous factors, including the identity of the tax authority involved. The administration of laws and regulations by government agencies may be subject to considerable discretion, and in many areas, the legal framework is vague, contradictory and subject to different and inconsistent interpretation. The Directors believe that it is unlikely that the Company will be exposed to tax liabilities in Vietnam.
17. SUBSEQUENT EVENTS
There is no significant subsequent event of the Company up to the date of this report.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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