Annual Financial Report
16 August 2012
VietNam Holding Limited
("VNH" and/or "the Company")
Final Results for the Year ended 30 June 2012
VietNam Holding Limited (AIM : VNH), an investment company with a diversified portfolio invested in Vietnamese equities, is pleased to announce its results for the year ended June 30, 2012.
Highlights:
NAV
· NAV at June 30, 2011 - US$ 1.122 per share
· NAV at June 30, 2012 - US$ 1.295 per share
Portfolio
· Percentage of net asset value invested in equities is at 96%
· Investment portfolio is diversified over 29 different companies
Financials
· Gain: US$ 8,920,493
· Earnings per share: USD 0.16
Min-Hwa Hu Kupfer, Chairperson of VNH, commented:
"I am pleased to report that while the VNI fell by 2.4% in the full fiscal year, VNH's own NAV rose by 12.4%. Combined with the 3% accretion which resulted from the Company's share buy-back program during the same period, this generated an NAV per share increase of 15.4% to USD 1.295."
Jean-Christophe Ganz, Chairman, VietNam Holding Asset Management, added:
"Our disciplined focus on two well-chosen investment themes continues to be the main reason for this performance…During the last 12 months, investments in the two theme sectors have generated returns of 29.5% and 20.8% respectively…VNH's continuing adherence to value investing principles is evidenced by its comparatively lower portfolio valuations. The portfolio's trailing P/E at June 30, 2012 was 6.94x, a full 36.6% lower than the PE of the overall market. VNH's portfolio dividend yield was 6.9%, 65% higher than that of the companies constituting the VNI…The VNI had a trailing P/E of 10.95x as of mid-year and a dividend yield of 4.17%."
For more information please contact:
|
VietNam Holding Asset Management Limited |
|
|
Gyentsen Zatul |
Telephone: +41 43 500 2810 |
|
- Investor Relations |
|
|
|
|
|
Oriel Securities Limited (Nominated |
|
|
Adviser and Broker) |
|
|
Joe Winkley / Tom Yeadon / Neil |
Telephone: +44 20 7710 7600 |
|
Winward |
|
VietNam Holding Limited
(an exempt company under the Companies Law and
incorporated with limited liability in the Cayman Islands)
Financial Statements
For the year ended 30 June 2012
(with Independent Auditors' report thereon)
Dear Shareholders,
I have pleasure in presenting the VietNam Holding annual report for 2012.
In my chairperson's statement last year, I indicated that VNH was well positioned for a more inspiring performance in the year ahead. Unfortunately, the global economic backdrop over the last twelve months has not been helpful for a strong and sustained rally in Vietnamese equities. Like their Asian peers, Vietnamese companies have been obliged to navigate a challenging international business environment, and portfolio investors remain rightly unsettled by the problems faced in Europe and elsewhere. Markets are fragile and investor sentiment is weak.
And yet, despite the hostile international business environment, Vietnam's stock markets performed surprisingly well in the first half of 2012. In Ho Chi Minh City, the VNI rose by 20%, while the smaller HNX in Hanoi rose by 21%. These performances compare favorably with benchmark indices such as the MSCI EM Asia Index, which rose by 4% during the same period.
As for VNH's own performance, I am pleased to report that while the VNI fell by 2.4% in the full fiscal year, VNH's own NAV rose by 12.4%. Combined with the 3% accretion which resulted from the Company's share buy-back program during the same period, this generated an NAV per share increase of 15.4% to USD 1.295.
This out-performance serves as a vindication of the asset allocation strategy conducted over the last year, more details of which are provided in the investment manager's report that follows. We remain fully committed to the underlying value investing approach, and in applying the principles of ESG investing in all that we do.
The macro-economic situation in Vietnam has changed considerably over the last twelve months. In August 2011, overall inflation was 23% YoY, the highest in Asia, and food price inflation was at a punishing 34% YoY. Vietnamese firms were caught in a vice-like grip between higher input prices and reduced consumer demand. But a series of monetary and other policy measures - including the enforcement of a sharp contraction in credit growth - were introduced by the government in the second half of 2011. By June 2012, consumer price increases had dropped to a more manageable 6.9% YoY. Interest rates have also lessened considerably for VND-denominated loans.
The cost has been a more modest growth rate. Whereas GDP growth in the first half of 2011 was 5.6%, in the first half of 2012 it was 4.3%. It is widely anticipated that Vietnam's total growth in 2012 will probably not be more than 5%, well below the average pace set in recent years. There is continuing recognition by Vietnamese policy-makers that macro-economic growth must be sustainable, and that social and environmental issues should not be overlooked on the road to modernity. The dash for growth at all costs seems to be over.
Despite this back-drop, overall earnings growth by Vietnam's corporate sector remains commendably robust, and valuations remain low. Thus, we anticipate further advances in the stock market indices in the year ahead. This should provide a helpful tailwind for VNH's own NAV performance, which will be further enhanced by our proven investment strategy.
In this context, VNH enacted a bonus warrants issue in late May 2012. One warrant was issued for every three VNH shares, and they now trade on the London AIM. The maturity date is 13 December 2012, with a strike price of USD1.196 per share; the NAV per share in February 2012.
In addition, VNH has taken the step of creating treasury shares as a tool for further controlling discounts in its share price, relative to our NAV. Since September 2011, the company has bought back shares on 18 occasions.
We have been encouraged that market reaction to the discount control measure, and the bonus warrants issue, have been positive, as evidenced by the healthy 37.3% increase in VNH's share price over the last twelve months.
Readers may detect a change from previous years in the broad format of this annual report. We have sought to adopt a more tailored approach to its structure and content. The aim is to provide greater depth of information on the structure of the portfolio, and how we have developed it.
Finally, I wish to express my thanks to the members of the Senior Advisory Council of VNH, each of whom has continued to provide invaluable expertise and guidance.
I hope that you enjoy reading this report as much as we have enjoyed developing and growing VNH's portfolio in recent years.
Min-Hwa Hu Kupfer
Chairperson
VietNam Holding Limited
13 August 2012
Dear Shareholders,
In her preceding letter, Mrs. Kupfer has referred to both the excellent performance of the Vietnamese stock markets during the first half of 2012, as well as to the rewarding increase in VNH's net asset value. The VNH portfolio has outperformed the benchmark index VNI both in the bear market second half 2011, as well as during the bull market first half of 2012. One conclusion is clear and rewarding: our disciplined focus on two well-chosen investment themes continues to be the main reason for this performance.
The two complementary investment themes that drive our portfolio performance are growing domestic consumer spending as the country moves to middle income status, and the considerable potential shown by Vietnam's often overlooked agricultural production and processing sector. Across a range of agricultural products, Vietnamese farmers achieve some of the highest yields in the world. During the last 12 months, investments in the two theme sectors have generated returns of 29.5% and 20.8% respectively. The aggregate of the two grew from 67% to 70% of the total portfolio at 30 June this year.
The agri-business portfolio outperformed the VNI by 13.4% in the first half of the fiscal year, and by 31.9% for the full year. The consumer portfolio outperformed it by 23.2% during the first half as well as for the full year. On a local currency basis and neglecting the VNH's administrative, board and management expenses, the total portfolio has outperformed the VNI by a gratifying 26.2% for the full year.
Together with increasing asset allocations to the two main theme portfolios, shifts also took place among the components within each theme. By the end of 2011, VNHAM had taken key steps to re-balance its portfolio. In the expectations of a stock market upturn in the new year, we reduced weightings in defensive shares and increased allocations to equity positions in companies with a higher beta and greater promise.
The valuations of Vietnam's listed equities continue to be very attractive. The VNI - which covers 86% of the market capitalization of all listed equities in both Hanoi and Ho Chi Minh City - had a trailing P/E of 10.95x as of mid-year, compared to China's (Shanghai Composite) at 11.98x, India's 14.62x, Thailand's 15.07x and Indonesia's 19.98x. The VNI's dividend yield of 4.17% is also higher than that of any of its peers, Thailand's 3.67% being the closest rival.
VNH's continuing adherence to value investing principles is evidenced by its comparatively lower portfolio valuations. The portfolio's trailing P/E at 30 June 2012 was 6.94x, a full 36.6% lower than the PE of the overall market. VNH's portfolio dividend yield was 6.9%, 65% higher than that of the companies constituting the VNI.
These achievements are the result of the inspired leadership by our new CEO, Mr. Vu Quang Thinh. Mr. Thinh has strengthened his team over the past 12 months by recruiting the right persons, introducing many new management tools, and by transmitting his skills and experience to his colleagues on a daily basis. As a result, the team is today more competent and motivated than ever before.
We are also grateful for the active support of the members of our Advisory Council. Our three Vietnamese members have been of invaluable assistance in anticipating economic pressure points and important shifts in the country's monetary policies. Our Swiss member has been an important discussion partner and a source of inspiration for our warrants issuance.
Finally, my assumption of the Chairmanship was greatly expedited by the active support of my predecessor, Donald Van Stone, who has resumed his previous position as Vice Chairman. Our resident Asian board member, Iris Fang, continues as a valuable decision maker and trusted advisor to our local team in Ho Chi Minh City.
We operate in a challenging market and have generated success with a positive difference. That difference is the result of a competent team, well managed and well guided by dedicated experts. We are grateful to all of them.
Jean-Christophe Ganz
Chairman
VietNam Holding Asset Management Limited
13 August 2012
Dear Shareholders,
The Board of Directors makes all policy decisions on investment strategies, portfolio allocations, investment risk profiles, capital increases and profit distributions to Shareholders. It also appoints the Investment Manager, to whom it provides such instructions as may be appropriate.
The Board is responsible for reviewing the Company's Investment Policy and the performance of its investment portfolio. In particular, the Board is required to approve all investments which are over 4% of the Net Asset Value at the time that the investment is made. Sales of investments where the Company holds 4% and greater of the total share capital of the respective portfolio companies are also subject to the approval of the Board.
Presently the Board consists of three non-executive Directors, all of whom are regarded by the Board as independent, including the Chairperson, and subject to re-election annually. The Board takes careful consideration when recommending Directors for re-election and views that the length of service alone does not necessarily restrict Directors from seeking re-election.
Mrs. Min-Hwa Hu Kupfer, Chairperson
Professor Rolf Dubs
Mr. Nguyen Quoc Khanh
The Board comprises two committees, an Audit Committee and a Corporate Governance Committee. Recognizing the importance of sound governance commensurate with the size of the Board and the interests of the Shareholders, the Directors work closely on all Board matters. Both committees are made up of all three Directors.
The Audit Committee, chaired by Mr. Nguyen Quoc Khanh, is responsible for appointing the Company's auditors, subject to Shareholder approval, and reviewing the results of all audits. It is also responsible for establishing Internal Business Controls and Audit procedures. The Internal Compliance Audit function has been delegated to an external Service Provider, which submits periodic internal audit reports to the Chairperson of the Board's Audit Committee.
The Corporate Governance Committee, chaired by Professor Rolf Dubs, is responsible for the governance of the Company and the Company's relationships with multiple constituents, including the Investment Manager and its affiliates. It has adopted a code of ethics and other best practices of corporate governance which it considers appropriate for the size and activities of the Company.
The Board met quarterly and held three telephonic board meetings during the year. One of the key strategic decisions reached by the Board in early 2012 was the issuance of bonus share of warrants. After receiving the approval of the Shareholders in an Extraordinary General Meeting held on 11 April 2012, the warrants were issued to shareholders pro rata on the basis of one warrant for every three ordinary shares held and commenced trading on AIM on 29 May 2012.
Concurrently with each board meeting, the Board reviewed with the Investment Manager the investment performance, asset allocation, investment pipelines, divestures, industry trends and peer group comparison. The Board also reviewed the progress of investing in seven new portfolio companies and decided on transactions that required its level of approval authorities.
The Company held investor presentations twice in the year in Zurich, Geneva and London where the Board members met and engaged with shareholders. Investor relations and communications, including marketing, website, road show activities, share buy-back and share price discount control, were also reviewed quarterly during the board meetings.
The Board reviews regularly the service qualities, costs and terms of the Company's service providers. To improve administrative efficiency, the Board decided to change the Company's custodian and administrator functions from Credit Suisse Zurich and Luxemburg respectively to Standard Chartered Singapore effective December 2011.
The Audit Committee held four meetings in the past year in parallel with the board meetings. Subsequent to the move of the custodian and administrative roles, the auditors were changed from KPMG Audit S.à. r.l. in Luxembourg to KPMG LLP in Singapore to facilitate coordination among the Company's service providers. The Committee approved the amendments to the internal operational procedures and financial reporting policy and procedures to reflect the above mentioned changes, including account operational authority delegation. Risk Management and Compliance reporting were reviewed and risk control issues were evaluated by the Committee during each of the quarterly meetings. The Committee Chair worked with the CEO of the Investment Manager for the planning of the next internal field audit which is scheduled to take place in fiscal 2013.
The Corporate Governance Committee also met four times along with the quarterly board meetings. The Investment Manager presented its strategic plans, financial positions and organizational issues during each of the Committee meetings. The Committee conducted the annual performance review of the Investment Manager and approved the annual Key Performance Indicators as jointly recommended by the CEO and the Board of the Investment Manager. The Committee oversaw the annual certification of "VNH Code of Ethics" by all employees and board members of the Investment Manager and the Company.
Remuneration
The remuneration of each of the Company's Directors contains two parts:
1. Base Fee
2. Committee and Board related services, including attendance of Committee and Board meetings, based on the number of work days.
In 2012, the Company's Directors Base Fees were:
- Mrs. Min-Hwa Hu Kupfer USD 28,000
- Professor Rolf Dubs USD 20,000
- Mr. Nguyen Quoc Khanh USD 20,000
For attendance in person at each Committee and Board meeting, which took place quarterly, each Director was paid USD 1,500. For attending any Committee or Board meeting held telephonically, each Director was paid USD 750 per meeting. Each Director was also compensated USD 1,500 per day for rendering services related to Committee and Board work as well as Investor Relations.
The total remuneration of the Company's Directors in fiscal 2012 as the result of meeting attendance and additional days worked was USD 173,000 as follows:
|
- Mrs. Min-Hwa Hu Kupfer, Chairperson |
USD 84,250 |
|
- Professor Rolf Dubs, Director & Chair of Corp. Governance Committee |
USD 48,500 |
|
- Mr. Nguyen Quoc Khanh, Director & Chair of Audit Committee |
USD 40,250 |
There has been no change made to the Company's Directors' remuneration policy in the past year.
Ownership of VietNam Holding
|
- Mrs. Min-Hwa Hu Kupfer |
30,000 shares and 6,666 warrants |
|
- Professor Rolf Dubs |
10,000 shares and 25,000 warrants |
|
- Mr. Nguyen Quoc Khanh |
NIL |
During the year, the Directors increased their ownership of the Company from 20,000 shares to 40,000 shares as Mrs. Kupfer and Professor Dubs each acquired 10,000 shares. Including the 25,000 warrants that were purchased by Professor Dubs, the Board in total held 31,666 warrants issued by the Company as of 30 June 2012.
In the opinion of the Board of Directors, the accompanying financial statements together with the notes have been properly drawn up and give a true and fair view of the Company's financial position as at 30 June 2012 and the results of its operations and its cash flows for the year then ended in accordance with the International Financial Reporting Standards as adopted by the European Union.
On behalf of the Board of Directors
Min-Hwa Hu Kupfer
Chairperson
13 August 2012
To the Shareholders of
VietNam Holding Limited
c/o Card Corporate Services Ltd.
Fourth Floor, Zephyr House
122 Mary Street
PO Box 709 GT
Grand Cayman
KY1-1107, Cayman Islands
INDEPENDENT AUDITORS' REPORT
Report on the financial statements
We have audited the accompanying financial statements on pages 12 to 26 of VietNam Holding Limited ("the Company"), which comprise the statement of financial position as at 30 June 2012, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
Management's responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at 30 June 2012, and of its financial performance and its cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union.
Other matter
The financial statements of the Company as at and for the year ended 30 June 2011 were audited by KPMG Audit S.à r.l. who expressed an unmodified opinion on those statements on 19 August 2011.
KPMG LLP
Certified Public Accountants
Singapore
13 August 2012
|
|
Note |
2012 |
2011 |
|
|
|
USD |
USD |
|
Assets |
|
|
|
|
Cash and cash equivalents |
2 |
3,070,132 |
2,439,854 |
|
Investments in securities at fair value |
2, 3 |
66,709,452 |
60,139,513 |
|
Accrued dividends |
|
143,418 |
54,740 |
|
Other receivables |
5 |
73,695 |
11,203 |
|
Total assets |
|
69,996,697 |
62,645,310 |
|
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
6 |
110,484,090 |
112,181,354 |
|
Retained earnings |
|
(40,988,061) |
(49,908,554) |
|
Total equity |
|
69,496,029 |
62,272,800 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Payable on purchase of investments |
|
64,856 |
- |
|
Accrued expenses |
|
435,812 |
372,510 |
|
Total liabilities |
|
500,668 |
372,510 |
|
Total equity and liabilities |
|
69,996,697 |
62,645,310 |
|
|
|
|
|
|
Total equity represented by: |
|
|
|
|
Net assets attributable to shareholders (last traded prices) |
|
70,477,461 |
62,716,109 |
|
Adjustment from last traded prices to bid - market prices |
|
(981,432) |
(443,309) |
|
Net assets attributable to shareholders (bid - market prices) |
|
69,496,029 |
62,272,800 |
The net asset value per share based on last traded prices was USD 1.295 as at 30 June 2012 (2011: USD 1.122) calculated as per the prospectus, and the net asset value per share based on bid-market prices, calculated as per IFRS, was USD 1.277 as at 30 June 2012 (2011: USD 1.114). This is based on 54,417,112 shares outstanding (2011: 55,906,862).
The financial statements on pages 12 to 26 were approved by the Board of Directors on 13 August 2012 and were signed on its behalf by
Min-Hwa Hu Kupfer Nguyen Quoc Khanh
Chairperson of the Board of Directors Chairman of the Audit Committee
|
|
Note |
2012 |
2011 |
|
|
|
USD |
USD |
|
|
|
|
|
|
Interest income |
7 |
- |
234 |
|
Dividend income from equity securities at fair value through profit or loss |
|
4,307,641 |
2,532,812 |
|
Net gain/(loss) from equity securities at fair value through profit or loss |
2,8 |
7,219,778 |
(15,710,047) |
|
Net foreign exchange (loss)/gain |
2 |
(56,113) |
7,382 |
|
Net investment income/(loss) |
|
11,471,306 |
(13,169,619) |
|
|
|
|
|
|
Investment management fees |
9 |
1,290,909 |
1,449,229 |
|
Advisory fees |
|
146,115 |
111,452 |
|
Accounting fees |
11 |
98,250 |
100,000 |
|
Custodian fees |
10 |
101,460 |
140,642 |
|
Directors' fees and expenses |
9 |
255,885 |
276,087 |
|
Brokerage fees |
|
62,268 |
67,369 |
|
Audit fees |
|
51,076 |
59,746 |
|
Publicity and investor relations fees |
|
233,278 |
297,381 |
|
Insurance costs |
|
45,000 |
45,000 |
|
Administrative expenses |
|
226,810 |
159,500 |
|
Risk management expenses |
|
30,096 |
58,150 |
|
Technical assistance for investee companies |
|
9,666 |
34,377 |
|
Total operating expenses |
|
2,550,813 |
2,798,933 |
|
|
|
|
|
|
Change in net assets attributable to shareholders |
|
8,920,493 |
(15,968,552) |
|
|
|
|
|
|
Earnings per share - basic and diluted |
15 |
0.16 |
(0.29) |
|
|
|
Share capital |
Reserve for own shares |
Retained earnings |
Total |
|
|
|
USD |
USD |
USD |
USD |
|
|
|
|
|
|
|
|
Balance at 1 July 2010 |
|
112,500,000 |
- |
(33,940,002) |
78,559,998 |
|
|
|
|
|
|
|
|
Repurchase and cancellation of shares |
|
(318,646) |
- |
- |
(318,646) |
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
|
|
|
|
|
Change in net assets attributable to shareholders |
|
- |
- |
(15,968,552) |
(15,968,552) |
|
Balance at 30 June 2011 |
|
112,181,354 |
- |
(49,908,554) |
62,272,800 |
|
|
|
|
|
|
|
|
Balance at 1 July 2011 |
|
112,181,354 |
- |
(49,908,554) |
62,272,800 |
|
|
|
|
|
|
|
|
Repurchase and cancellation of shares (note 6) |
|
(965,429) |
- |
- |
(965,429) |
|
Repurchase of own shares (note 6) |
|
- |
(176,302) |
- |
(176,302) |
|
Warrants issuance cost |
|
(555,533) |
- |
- |
(555,533) |
|
|
|
(1,520,962) |
(176,302) |
- |
(1,697,264) |
|
Total comprehensive income for the year |
|
|
|
|
|
|
Change in net assets attributable to shareholders |
|
- |
- |
8,920,493 |
8,920,493 |
|
Balance at 30 June 2012 |
|
110,660,392 |
(176,302) |
(40,988,061) |
69,496,029 |
|
|
|
|
|
|
|
|
|
Note |
2012 |
2011 |
|
|
|
USD |
USD |
|
Cash flows from operating activities |
|
|
|
|
Change in net assets attributable to shareholders |
|
8,920,493 |
(15,968,552) |
|
Adjustments for: |
|
|
|
|
Interest income |
|
- |
(234) |
|
Dividend income |
|
(4,307,641) |
(2,532,812) |
|
Net (gain)/loss from equity securities at fair value through profit or loss |
|
(7,219,778) |
15,710,047 |
|
Purchase of investments |
|
(17,068,156) |
(5,702,247) |
|
Proceeds from sale of investments |
|
17,794,054 |
5,873,827 |
|
Net foreign exchange loss |
|
56,113 |
101,092 |
|
|
|
(1,824,915) |
(2,518,879) |
|
Net decrease in other receivables and payables |
|
(10,393) |
(164,993) |
|
Cash used in operations |
|
(1,835,308) |
(2,683,872) |
|
Interest received |
|
- |
234 |
|
Dividends received |
|
4,218,963 |
2,560,631 |
|
Net cash from/(used in) operating activities |
|
2,383,655 |
(123,007) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Payment for buy-back of shares |
6 |
(965,429) |
(318,646) |
|
Repurchase of own shares |
6 |
(176,302) |
- |
|
Warrants issuance cost paid |
|
(555,533) |
- |
|
Net cash used in financing activities |
|
(1,697,264) |
(318,646) |
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
686,391 |
(441,653) |
|
Cash and cash equivalents beginning of the year |
|
2,439,854 |
2,982,599 |
|
Effect of exchange rate fluctuations on cash held |
|
(56,113) |
(101,092) |
|
Cash and cash equivalents at end of the year |
|
3,070,132 |
2,439,854 |
1 THE COMPANY
VietNam Holding Limited ("VNH" or "the Company") is a closed-end investment holding company incorporated on 20 April 2006 as an exempt company under the Companies Law in the Cayman Islands and commenced its operations on 15 June 2006, to invest principally in securities of former State-owned Entities ("SOEs") in Vietnam, prior to, at or after the time such securities become listed on the Vietnam stock exchange, including the initial privatisation of the SOEs. The Company may also invest in the securities of private companies in Vietnam, whether Vietnamese or foreign owned, and the securities of foreign companies if a significant portion of their assets are held or operations are in Vietnam.
The investment objective of the Company is to achieve long-term capital appreciation by investing in a diversified portfolio of companies that have high growth potential at an attractive valuation.
In 2013, the Board will propose at the Company's annual general meeting, an ordinary resolution that the Company will continue in existence. If such resolution is passed, the Company will continue its operations and a similar resolution will be put to shareholders in 2016. If either of such resolutions is not passed the Board will, at that annual general meeting or at an extraordinary general meeting held within six months of that annual general meeting, propose a resolution to wind up the Company or one or more resolutions to implement a reconstruction, amalgamation or other material alteration to the Company or its activities or any other appropriate alternative based upon current circumstances. Shareholders will only be able to realise their investment by selling their ordinary shares or participating in any redemption or purchase of ordinary shares by the Company.
VietNam Holding Asset Management Limited ("VNHAM") has been appointed as the Company's Investment Manager and is responsible for the day-to-day management of the Company's investment portfolio in accordance with the Company's investment policies, objectives and restrictions.
During the year, the custodian changed from Credit Suisse Zurich to Standard Chartered Bank, Singapore Branch, and the sub-custodian changed from HSBC (Vietnam) to Standard Chartered Bank (Vietnam) Limited. The administrator also changed from Credit Suisse Fund Service (Luxembourg) S.A. to Standard Chartered Bank, Singapore Branch. As a consequence of this, KPMG LLP in Singapore was appointed as auditors in place of KPMG Audit S.à. r.l. in Luxembourg.
The registered office of the Company is CARD Corporate Services Ltd., Fourth Floor, Zephyr House, 122 Mary Street, PO Box 709 GT, Grand Cayman, KY1-1107, Cayman Islands.
2 PRINCIPAL ACCOUNTING POLICIES
(a) Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and interpretations adopted by the International Accounting Standards Board and the European Union.
(b) Basis of preparation
The financial statements are presented in USD and rounded to the nearest USD. They are prepared on a fair value basis for financial assets and financial liabilities at fair value through profit or loss. Other financial assets and liabilities are stated at amortised cost.
The shares were issued in USD and the listings of the shares are in USD and Euro. The performance of the Company is measured and reported to the investors in USD, although the primary activity of the Company is to invest in the Vietnamese market. The Board of Directors considers the USD as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The financial statements are presented in USD, which is the Company's functional and presentation currency.
The preparation of financial statements in accordance with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expense. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
2 PRINCIPAL ACCOUNTING POLICIES (continued)
The estimated and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other components. The Company is engaged in a single segment of business, being investment in Vietnam. The Board, as a whole, has been determined as constituting the chief operating decision maker of the Company. The key measure of performance used by the Board to assess the Company's performance and to allocate resources is the total return on the Company's net asset value calculated as per the prospectus. Therefore a reconciliation between the measure of net assets value used by the Board and that contained in these financial statements has been provided in a footnote to the statement of financial position.
The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.
There were no new IFRS standards applied for the year ended 30 June 2012.
(c) Foreign currency translation
Transactions in foreign currencies other than the functional currency are translated at the rate ruling on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are re-translated to USD at the rates ruling on the year-end date. Foreign currency exchange differences arising on translation and realised gains and losses on disposals or settlements of monetary assets and liabilities are included in the statement of comprehensive income. Foreign currency exchange differences relating to financial instruments at fair value through profit or loss are included in the realised and unrealised gains and losses on those investments. All other foreign currency exchange differences relating to other monetary items, including cash and cash equivalents, are included in net foreign exchange gains and losses in the statement of comprehensive income.
(d) Financial instruments
(i) Classification
The Company designated all its investments as financial assets at fair value through profit or loss category. Financial instruments are designated at fair value through profit or loss upon initial recognition. These include financial assets that are not held for trading purposes and which may be sold. These are investments in exchange-traded equity instruments and unlisted equity instruments.
Financial assets that are classified as loans and receivables include accrued dividends.
Cash and cash equivalents are measured at amortised cost.
Financial liabilities that are not at fair value through profit or loss include accrued expenses.
(ii) Recognition
Financial assets and liabilities at fair value through profit or loss are recognised initially on the trade date, which is the date that the Company becomes a party to the contractual provisions of the instrument. Other financial assets and liabilities are recognised on the date they are originated.
Financial assets and financial liabilities at fair value through profit or loss are recognised initially at fair value, which transaction costs recognised in profit or loss. Financial assets or financial liabilities not at fair value through profit or loss are recognised initially at fair value plus transaction costs that are directly attributable to their acquisition or issue.
(iii) Derecognition
A financial asset is derecognised when the Company no longer has control over the contractual rights that
comprise that asset. This occurs when the rights are realised, expire or are surrendered.
Financial assets that are sold are derecognised, and the corresponding receivables from the buyer for the payment are recognised on the trade date, being the date the Company commits to sell the assets.
A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expired.
2 PRINCIPAL ACCOUNTING POLICIES (continued)
(iv) Measurement
Financial instruments are measured initially at cost. For financial assets acquired, cost is the fair value of consideration given. Subsequent to initial recognition, all financial assets at fair value through profit or loss are measured at fair value. Transaction costs on financial assets and financial liabilities at fair value through profit or loss are expensed immediately.
Valuation
Investments are recorded at fair value. The fair value of the securities is based on their quoted bid price at the reporting date without any deduction for transaction costs.
If the securities are not listed, the value of the relevant securities is ascertained by the Board of Directors in good faith using valuation methods which it considers fair in the circumstances including quotes received from brokers and other third party sources where possible.
As at 30 June 2012, 12.5% (2011: 16.6%) of the valuations of the net assets of the Company were based on quotes obtained from brokers.
Any increases or decreases in values are recognised in the statement of comprehensive income as an unrealised gain or loss.
(v) Gains and losses on subsequent measurement
Gains and losses arising from a change in the fair value of financial instruments are recognised in the statement of comprehensive income.
(vi) Impairment
Financial assets that are stated at cost or amortised cost are reviewed at each reporting date to determine whether there is objective evidence of impairment. If any such indication exists, an impairment loss is recognised in the statement of comprehensive income as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate.
If in a subsequent period the amount of an impairment loss recognised on a financial asset carried at amortised cost decreases and the decrease can be linked objectively to an event occurring after the write-down, the impairment is reversed through the statement of comprehensive income.
(vii) Specific instruments
Cash and cash equivalents
Cash comprises current deposits with banks and fixed deposits. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.
(e) Interest income and expense
Interest income and expense is recognised in the statement of comprehensive income using the effective rate method.
Interest income includes the amortisation of any discount or premium on zero coupon bonds, which is taken as income on the basis of yield to redemption, from the date of purchase.
(f) Formation expenses
Costs attributable to the establishment of the Company have been expensed in full.
(g) Offsetting
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when the Company has a legally enforceable right to set off the recognised amounts and the transactions are intended to be settled on a net basis or simultaneously, e.g. through a market clearing mechanism.
2 PRINCIPAL ACCOUNTING POLICIES (continued)
(h) Amounts due to/from brokers
Amounts due to/from brokers represent security purchases and sales transactions which are contracted for but not yet delivered at the end of the accounting period.
(i) Taxation
At present, no income, profit, capital, or capital gain taxes are levied in the Cayman Islands, and accordingly, no provision for such taxes has been recorded by the Company in the accompanying financial statements. In the event that such taxes are levied, the Company has received an undertaking from the Governor in Cabinet of the Cayman Islands exempting it from all such taxes for a period of twenty years from 2 May 2006.
(j) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effect.
Repurchase, disposal and reissue of share capital (treasury shares)
When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the reserve for own share account. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is presented in non-distributable capital reserve.
(k) Adoption of new and revised standards
Adoption of new standards and amendments to existing standards
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2012, and have not been applied in preparing these financial statements. None of these are expected to have significant effect on the measurement of the amounts recognised in the financial statements of the Company.
IFRS 13 - Fair Value Measurement
Effective date 1 January 2013, early adoption permitted.
IFRS 13 replaces the fair value measurement guidance spread throughout various IFRS's with a single source.
The standard defines fair value, establishes a framework for measurement and sets out disclosures requirements. The standard does not create any new requirements to measure assets and liabilities at fair value.
The fair value definition has been refined to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, i.e. an exit price.
The exit price term is the key concept. Fair values must only reflect considerations that would be taken in to account by market participants. This excludes costs incurred in the structure of any transaction and any characteristic of the asset or liability that is purely a function of the holding entity and will not transfer with the asset or liability. Common examples of entity specific characteristics are large market positions "blockage factors" or contractual limitations on use or sale between the entity and another party.
Non financial assets are covered by IFRS 13 and are measured at their highest and best use taking in to account all factors in which market participants would factor in to its highest and best use. If the asset is not being used in such a way this must be disclosed.
An entity shall use fair value measurements techniques that are appropriate to the circumstances, for which sufficient data is available and that maximises the use of observable inputs and minimises the use of unobservable inputs. If a level 1 input exists this must be used without adjustment except in very limited circumstances.
2 PRINCIPAL ACCOUNTING POLICIES (continued)
The disclosures requirements under IFRS 13 are primarily the fair value hierarchy disclosures currently effective within IFRS 7.
3 FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
Financial assets of the Company include investments in securities, cash and cash equivalents and accrued income. Financial liabilities are comprised of accrued charges. Accounting policies for financial assets and liabilities are set out in note 2.
The Company's investment activities expose it to various types of risk that are associated with the financial instruments and the markets in which it invests. The most important types of financial risk to which the Company is exposed are market risk, currency risk, credit risk and liquidity risk.
Asset allocation is determined by the Company's Investment Manager who manages the distribution of the assets to achieve the investment objectives. Divergence from target asset allocations and the composition of the portfolio is monitored by the Investment Manager.
Market risk
Market risk is the risk that the value of a financial asset will fluctuate as a result of changes in market prices, whether or not those changes are caused by factors specific to the individual asset or factors affecting all assets in the market. The Company is predominately exposed to market risk within its securities purchased on the Vietnamese market.
The overall market positions are monitored continuously by the Investment Manager and at least quarterly by the Board of Directors.
The Company's investments in securities are exposed to market risk and are disclosed by the following generic investment types:
|
|
2012 |
2011 |
||
|
|
Fair value in USD |
% of net assets |
Fair value in USD |
% of net assets |
|
Description |
|
|
|
|
|
Shares and similar investments - listed |
58,014,009 |
83.48 |
49,743,084 |
80.08 |
|
Shares and similar investments - unlisted |
8,695,443 |
12.51 |
10,396,429 |
16.74 |
|
|
66,709,452 |
95.99 |
60,139,513 |
96.82 |
At 30 June 2012, a 5% reduction in the market value of the portfolio would have led to a reduction in net asset value of USD 3,335,473 (2011: USD 3,006,976). A 5% increase in market value would have lead to an equal and opposite effect.
Currency risk
The Company may invest in financial instruments and enter into transactions denominated in currencies other than its functional currency. Consequently, the Company is exposed to risks that the exchange rate of its currency relative to other currencies may change and have an adverse effect on the value of the Company's assets or liabilities denominated in currencies other than USD.
The Company's net assets are calculated every month based on the most up to date exchange rates while the general economic and foreign currency environment is continuously monitored by the Investment Manager and reviewed by the VNH Board of Directors at least once each quarter.
The Company may enter into arrangements to hedge currency risks if such arrangements become desirable and practicable in the future in the interest of efficient portfolio management.
3 FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (continued)
As at 30 June 2012 the Company had the following currency exposures:
|
|
|
Fair value |
|
|
|
|
2012 |
2011 |
|
|
|
USD |
USD |
|
|
|
|
|
|
Vietnamese Dong |
|
67,652,030 |
60,958,283 |
|
Euro |
|
50,618 |
1,141,235 |
|
Swiss Franc |
|
286,397 |
- |
|
Pound Sterling |
|
573,908 |
- |
|
|
|
68,562,953 |
62,099,518 |
At 30 June 2012, a 5% reduction in the value of the Vietnamese Dong, Euro, Swiss Franc, Pound Sterling would have lead to a reduction in net asset value of USD 3,382,602 (2011: USD 3,047,914) , USD 2,531 (2011: USD 57,062), USD 14,320 (2011: USD nil) and USD 28,695 (2011: USD nil) respectively. A 5% increase in value would have lead to an equal and opposite effect.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company.
At 30 June 2012, the following financial assets were exposed to credit risk (including settlement risk): cash and cash equivalents, accrued dividend and other receivables. The total amount of financial assets exposed to credit risk amounted to USD 3,256,836 (2011: USD 2,505,797).
Substantially all of the assets of the Company are held by Standard Chartered Bank, Singapore Branch. Bankruptcy or insolvency of the bank and custodian may cause the Company's rights with respect to cash and securities held by the bank and custodian to be delayed or limited. The Company monitors its risk by monitoring the credit quality and financial positions of the bank and custodian the Company uses.
Liquidity risk
The Company, a closed-end investment company, invests in companies through listings on the Vietnam stock exchange or on other stock exchanges. There is no guarantee however that the Vietnam stock exchange will provide liquidity for the Company's investments. The Company may have to resell such investments in privately negotiated transactions.
The Company's overall liquidity risks are monitored on at least a quarterly basis by the Board of Directors. The Company is a closed-end investment company so shareholders cannot redeem their shares directly from the Company.
Interest rate risk
The majority of the Company's financial assets are non-interest-bearing. Interest-bearing financial assets and interest-bearing financial liabilities mature or reprice in the short-term, no longer than twelve months. As a result, the Company is subject to limited exposure to interest rate risk due to fluctuations in the prevailing levels of market interest rates.
4 OPERATING SEGMENTS
Information on gains and losses derived from investments are disclosed in the statement of comprehensive income.
The Company is domiciled in the Cayman Islands. Entity wide disclosures are provided as the Company is engaged in a single segment of business, investing in Vietnam. In presenting information on the basis of geographical segments, segment investments and the corresponding segment net investment income arising thereon are determined based on the country of domicile of the respective investment entities.
All of the Company's investments in securities at fair value are domiciled in Vietnam as at 30 June 2012 and 2011. All of the Company's investment income can be attributed to Vietnam for the years ended 30 June 2012 and 2011.
5 OTHER RECEIVABLES
|
|
|
2012 |
2011 |
|
|
|
USD |
USD |
|
|
|
|
|
|
Other receivables |
|
43,286 |
11,203 |
|
Prepayment |
|
30,409 |
- |
|
|
|
73,695 |
11,203 |
6 SHARE CAPITAL
Ordinary shares of USD 1.00 each
The ordinary shares have been created pursuant to the Companies Law in the Cayman Islands. The Company was incorporated with an authorised share capital of USD 100,000,000 divided into 100,000,000 ordinary shares of USD 1.00 each. According to the Companies Law and articles of association, the Company may from time to time redeem all or any portion of the shares held by the shareholders upon giving notice of not less than 30 calendar days to the shareholders.
On 6 June 2006, the Board resolved that 56,250,000 ordinary shares would be allotted at a placing price of USD 2.00 per ordinary share at, but conditional upon, admission. The ordinary shares' ISIN number is KYG9361X043.
On 23 September 2010, during its annual general meeting, the shareholders approved a Share Repurchase Programme.
|
|
|
|
No. of shares |
|
|
|
|
|
|
Shares issued in 2006 |
|
|
56,250,000 |
|
|
|
|
|
|
Repurchased and cancelled: |
|
|
|
|
Year ended 30 June 2011 |
|
|
(343,138) |
|
Year ended 30 June 2012 |
|
|
(1,324,750) |
|
Total shares repurchased and cancelled |
|
|
(1,667,888) |
|
|
|
|
|
|
Number of share after repurchased and cancelled |
|
|
54,582,112 |
|
Repurchased and reserved for own shares |
|
|
(165,000) |
|
Total outstanding ordinary shares with voting rights |
|
|
54,417,112 |
As a result, the Company now has 54,417,112 ordinary shares with voting rights in issue (excluding the reserve for own shares), and 165,000 are held as reserve for own shares.
The Company strives to invest the capital raised to meet the Company's investment objectives which are to achieve long term capital appreciation through a diversified portfolio of companies that have high potential in Vietnam. The Company achieves this aim by investing principally in securities of former State-owned Entities ("SOEs") in Vietnam prior to, at or after such securities becoming listed on the Vietnam stock exchange.
The Company does not have any externally imposed capital requirements.
Incremental costs directly attributable to the issue or redemption of ordinary shares are recognised directly in equity as a deduction from the proceeds or part of the acquisition cost.
The Company's general intention is to reinvest the capital received on the sale of investments. However, the Board may from time to time and at its discretion, either use the proceeds of sales of investments to meet the Company's expenses or distribute them to shareholders. Alternatively, the Board may redeem ordinary shares with such proceeds for shareholders pro rata to their shareholding upon giving notice of not less than 30 calendar days to shareholders (subject always to applicable law) or repurchase ordinary shares at a price not exceeding the last published net asset value per share.
Warrants
On 21 May 2012, the Company issued a Prospectus for a bonus issue of warrants to shareholders pro rata, on the basis of one warrant for every three ordinary shares held. The exercise date of these warrants is on 13 December 2012 with exercise price of USD 1.196 per share.
6 SHARE CAPITAL (continued)
A total of 18,194,037 warrants were issued and were listed on the London Alternative Investment Market. At the reporting date, 18,194,037 warrants were outstanding.
Although there can be no certainty as to whether any or all of the warrants will be exercised, if the bonus issue proceeds and all of the warrants are exercised on the exercise date at the exercise price, the maximum net proceeds that could arise on such exercise would be approximately USD 21.8 million. The net proceeds arising on the exercise of the warrants will be invested in accordance with the Company's investment policy.
7 INTEREST INCOME
|
|
|
2012 |
2011 |
|
|
|
USD |
USD |
|
|
|
|
|
|
Interest income arising from financial assets that are not at fair value through profit or loss: |
|
|
|
|
Cash and cash equivalents |
|
- |
234 |
|
Total interest income recognised on financial assets |
|
- |
234 |
8 NET GAIN/(LOSS) FROM EQUITY SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
|
|
|
2012 |
2011 |
|
|
|
USD |
USD |
|
|
|
|
|
|
Net gain/(loss) from equity securities at fair value through profit of loss: |
|
|
|
|
Realised loss |
|
(18,307,227) |
(599,410) |
|
Adjustment to fair value of equity securities at fair value through profit or loss |
|
25,527,005 |
(15,110,637) |
|
|
|
7,219,778 |
(15,710,047) |
9 RELATED PARTY TRANSACTIONS
Investment management fees
The Investment Manager is entitled to an investment management fee of 2% per annum on the monthly net assets under management. The fee is payable monthly and is calculated by reference to the NAV at the end of the preceding month. In addition, the Investment Manager is reimbursed by the Company for administrative functions that it performs on behalf of the Company.
The Company will pay the Investment Manager a performance bonus each year at the rate of 20% of the annual increase in net asset value over the higher of an annualised hurdle rate of 5% and a "high water mark" requirement.
The total fees accruing to the Investment Manager for the year to 30 June 2012 were USD 1,290,909 (2011: USD 1,449,229) as a management fee and USD nil (2011: USD 159,500) for administrative support.
No performance fee was due as at 30 June 2012 or at 30 June 2011.
Directors' fees and expenses
The Board will determine the fees payable to each Director, subject to a maximum aggregate amount of USD 350,000 per annum being paid to the Board as a whole. The Company will also pay reasonable expenses incurred by the Directors in the conduct of the Company's business including travel and other expenses. The Company will pay for directors and officers liability insurance coverage.
The charges for the year for the Directors fees were USD173,000 (2011: USD153,500) and expenses were USD 82,885 (2011: USD122,587).
9 RELATED PARTY TRANSACTIONS (continued)
Directors' ownership of shares
As at 30 June 2012, two Directors, Min-Hwa Hu Kupfer and Rolf Dubs held 30,000 (2011: 20,000) and 10,000 (2011: nil) ordinary shares of the Company respectively, representing 0.06% (2011: 0.04%) and 0.02% (2011: nil) of the total shares outstanding.
As at 30 June 2012, Min-Hwa Hu Kupfer and Rolf Dubs held 6,666 (2011: nil) and 25,000 (2011: nil) warrants to subscribe ordinary shares respectively, representing 0.04% (2011: nil) and 0.14% (2011: nil) of the total warrants issued.
10 CUSTODIAN FEES
The custodian fees are as follows:
Custodian fees are charged at a minimum of USD 12,000 per annum and received as a fee of 0.08% on the assets under administration ("AUA") per annum. Custodian fees comprise safekeeping fees, transaction fees, money transfer fees and other fees. Safekeeping of unlisted securities up to 20 securities is charged at USD 12,000 per annum. Transaction fees, money transfers fees and other fees are charged on a transaction basis.
The charges for the year for the Custodian fees were USD 101,460 (2011: USD 140,642).
11 ADMINISTRATIVE AND ACCOUNTING FEES
The administrator received a fee of 0.07% per annum for assets under administration ("AUA") less than USD 100,000,000; or 6 basis points per annum for AUA greater than USD 100,000,000 calculated on the basis of the net assets of the Company, subject to an annual minimum amount of USD 5,500 per month.
The charges for the year for the Administration and Accounting fees were USD 98,250 (2011: USD 100,000).
12 CONTROLLING PARTY
The Directors are not aware of any ultimate controlling party as at 30 June 2012 or 30 June 2011.
13 FAIR VALUE INFORMATION
For certain of the Company's financial instruments not carried at fair value, such as cash and cash equivalents, accrued dividends and other assets and creditors and accrued charges, the amounts approximate fair value due to the immediate or short term nature of these financial instruments.
Other financial instruments are measured at fair value on the statement of the net assets attributable to shareholders.
Fair value estimates are made at a specific point in time, based on market conditions and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgement and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity securities and debt instruments on exchanges (for example, London Stock Exchange, Frankfurt Stock Exchange, New York Stock Exchange) and exchanges traded derivatives like futures (for example, Nasdaq, S&P 500).
13 FAIR VALUE INFORMATION (continued)
· Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This level includes the majority of the OTC derivative contracts, traded loans and issued structured debt. The sources of input parameters like LIBOR yield curve or counterparty credit risk are Bloomberg and Reuters.
· Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). This level includes equity investments and debt instruments with significant unobservable components. This hierarchy requires the use of observable market data when available. The Company considers relevant and observable market prices in its valuations where possible.
The carrying amounts of financial assets at 30 June 2012 and 30 June 2011 are as follows:
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
USD |
USD |
USD |
USD |
|
|
|
|
|
|
|
At 30 June 2012 |
|
|
|
|
|
|
|
|
|
|
|
Financial assets designated at fair value upon initial recognition |
|
|
|
|
|
Equity investments |
58,014,009 |
- |
8,695,443 |
66,709,452 |
14 |
||||
|
|
|
|
|
|
|
At 30 June 2011 |
|
|
|
|
|
|
|
|
|
|
|
Financial assets designated at fair value upon initial recognition |
|
|
|
|
|
Equity investments |
49,743,084 |
- |
10,396,429 |
60,139,513 |
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assessing whether an input is significant requires judgement including consideration of factors specific to the asset or liability. Moreover, if a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that fair value measurement is a Level 3 measurement.
Although the Company believes that its estimates of fair value are appropriate, the use of different assumptions could lead to different measurements of fair value. For fair value measurements in Level 3, if the reasonable possible alternative assumptions were increased/decreased by 10%, the impact on profit/(loss) would be USD 869,544 (2011: USD 1,039,643).
Level 3 Reconciliation
|
|
|
Financial assets designated at fair value through profit or loss |
|
|
|
|
2012 |
2011 |
|
|
|
|
|
|
All amounts stated in USD |
|
|
|
|
Opening balance |
|
10,396,429 |
16,607,618 |
|
Sales |
|
(3,764,155) |
(4,548,218) |
|
Total gains and losses recognised in profit or loss * |
|
2,063,169 |
(1,662,971) |
|
Closing balance |
|
8,695,443 |
10,396,429 |
* Total gains or losses recognised in profit or loss for assets and liabilities held at the end of the reporting period, as presented in the statement of comprehensive income.
14 CLASSIFICATIONS AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
The table below provides a breakdown of the line items in the Company's statement of financial position to the categories of financial instruments.
|
|
Note |
Designated as at fair value |
Loans and receivables |
Other liabilities |
Total carrying amount |
|
|
|
USD |
USD |
USD |
USD |
|
30 June 2012 |
|
|
|
|
|
|
Cash and cash equivalents |
2 |
- |
3,070,132 |
- |
3,070,132 |
|
Investments in securities at fair value |
2,3 |
66,709,452 |
- |
- |
66,709,452 |
|
Accrued dividends |
|
- |
143,418 |
- |
143,418 |
|
Other receivables |
5 |
- |
73,695 |
- |
73,695 |
|
|
|
66,709,452 |
3,287,245 |
- |
69,996,697 |
|
|
|
|
|
|
|
|
Payable on purchase of investments |
|
- |
- |
64,856 |
64,856 |
|
Accrued expenses |
|
- |
- |
435,812 |
435,812 |
|
|
|
- |
- |
500,668 |
500,668 |
|
30 June 2011 |
|
|
|
|
|
|
Cash and cash equivalents |
2 |
- |
2,439,854 |
- |
2,439,854 |
|
Investments in securities at fair value |
2,3 |
60,139,513 |
- |
- |
60,139,513 |
|
Accrued dividends |
|
- |
54,740 |
- |
54,740 |
|
Other receivables |
5 |
- |
11,203 |
- |
11,203 |
|
|
|
60,139,513 |
2,505,797 |
- |
62,645,310 |
|
|
|
|
|
|
|
|
Accrued expenses |
|
- |
- |
372,510 |
372,510 |
|
|
|
- |
- |
372,510 |
372,510 |
|
|
|
|
|
|
|
15 EARNINGS PER SHARE
The calculation of earnings per share at 30 June 2012 was based on the change in net assets attributable to ordinary shareholders of USD 8,920,493 (2010: (USD 15,968,552)) and the weighted average number of shares outstanding of 54,998,948 (2011: 55,906,862).
At the reporting date, the warrants in issue are anti-dilutive and hence disregarded in the calculation of diluted earnings per share.
|
Directors |
Min-Hwa Hu Kupfer
|
|
Investment Manager |
VietNam Holding Asset Management Limited
|
|
Company Secretary |
CARD Corporate Services Ltd.
|
|
Nominated Advisor (AIM) |
Oriel Securities Limited
|
|
Entry Standard Advisor |
Close Brothers Seydler Bank AG
|
|
Corporate Broker |
Oriel Securities Limited
|
|
Custodian |
Standard Chartered Bank
|
|
Registrar |
Capita Registrars Limited
|
|
Administrator |
Standard Chartered Bank |
|
Legal Adviser (English Law) |
Norton Rose LLP
|
|
Legal Adviser (Cayman Island Law) |
Charles Adams Ritchie & Duckworth
|
|
Independent Auditor |
KPMG LLP
|
This information is provided by RNS
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