28 April 2022

 

Vietnam Enterprise Investments Limited

("VEIL" or the "Company")

 

Annual Report and Financial Statements for the Year Ended 31 December 2021

 

The Company today announces its annual report and financial statements for the year ended 31 December 2021 (the "Annual Report 2021").

 

The Annual Report 2021 has been submitted to the National Storage Mechanism in accordance with Listing Rule 9.6.1 and will shortly be available for inspection on the National Storage Mechanism website:

https://data.fca.org.uk/#/nsm/nationalstoragemechanism

 

The Annual Report 20221 is also available on the Company's website:

https://www.veil-dragoncapital.com/

 

The primary purpose of this announcement is to inform the market about the publication of the Annual Report 2021. The information below, which has been extracted from the Annual Report 2021, is included solely for the purpose of complying with DTR 6.3.5R and the requirements it imposes on issuers regarding the communication of regulated information. This announcement is not a substitute for reading the Annual Report 2021 in full.

 

Enquiries:

 

Vietnam Enterprise Investments Limited

Rachel Hill

+44 (0) 797 121 4852

+44 (0) 1225 618 150

[email protected]

 

Jefferies International Limited

Stuart Klein

+44 (0) 20 7029 8703

[email protected]

 

Buchanan

Charles Ryland / Henry Wilson / George Beale

+44 (0) 20 7466 5111

[email protected]

 

LEI: 213800SYT3T4AGEVW864

 

Chair's Statement:

 

Dear Shareholders,

 

In 2021, the Vietnamese stock market produced one of the best returns globally with the Vietnam Index (the "VN Index") increasing 39.0%, and the net asset value ("NAV") of Vietnam Enterprise Investments Limited ("VEIL") outperforming by a further 8.1%, achieving a return for investors of 47.1%.  

 

The pandemic created a challenging year for many countries, and Vietnam was no exception. Following the lock-down during the third quarter of 2021 in high infection rate provinces, especially Southern Vietnam, the country constantly and proactively promoted the vaccine campaign and switched from a "Zero-COVID" to a "Live-with-COVID" strategy. Vietnam has since achieved one of the highest vaccination rates in the world. As of December 2021, 98.7% of the adult population has been fully vaccinated and the new goal is to have a similar percentage of adults boosted by the second quarter of 2022. Additionally, with domestic pharmaceutical companies now approved to produce Merck's COVID-19 treatments, the impact from the pandemic is expected to continue to diminish.

 

Although the economy was negatively impacted by COVID-19, GDP recovered in the fourth quarter to end up 2.6% for the entire year. A primary driver was the manufacturing sector, which advanced by 4.1% year-on-year ("yoy"), followed by agriculture at 2.9% yoy, and the services sector at 1.2% yoy. Manufacturing benefited from the effective vaccination strategy that enabled workers to quickly return to factories. The global demand for Vietnamese exports remained solid throughout the year. Total trade for 2021 rose 22.6% to US$668.5 billion. Imports increased 26.6% to US$332.3 billion, heavily pushed by inventory building. Exports grew by 19.1% to US$336.3 billion, which was slower than years past. Exports grew in the second half; what was a cumulative trade deficit of US$1.7 billion in July became a surplus of US$4.0 billion by December. The contribution of FDI was as supportive as ever, at nearly 70% of total trade. This is likely to grow in the coming years as the shift in the global supply-chain continues to favour Vietnam. Lastly, the Regional Comprehensive Economic Partnership ("RCEP") agreement, which became effective from 1 January 2022, will further accelerate the country's growth.

 

2021 saw the Vietnamese stock market make significant progress in its development, size and depth. There are now 63 companies with market capitalisation in excess of US$1 billion. Daily turnover has reached a new normal of US$1 billion, oftentimes much higher. The low interest rate environment drew domestic retail investors into equities and new retail account openings increased nearly fourfold compared with the prior year. The E-KYC process which started in August 2020 was also an important factor that supported the convenience and the speed of new retail openings. Though foreign investment in Southeast Asia reduced in 2021, we expect it will rebound as travel, logistics and business interaction return back to pre-pandemic levels. The market infrastructure will get another boost with the arrival of a new trading system in the second quarter of 2022, which will bring T+0 settlement, allowing for higher trading turnover. Futures, options, warrants and other derivative products are also expected to evolve in the coming year.

 

In valuation terms, the earnings growth forecasts for the top 60 companies in Vietnam averaged 22%, and the price/earnings ratio was at approximately 12x. The Vietnamese market is still below its average five-year valuation, despite a 39.0% run-up by the VN Index.  

 

In terms of our own performance, VEIL's NAV rose significantly by 47.1% in 2021 and was ahead of the VN Index by 8.1%. VEIL's outperformance was led by its core overweight positions in the three key sectors: infrastructure, banks and properties. These industries are widely seen as the main beneficiaries of Vietnam's new era of lower interest rates and infrastructure spending. VEIL's top holdings are leading names in these sectors: Hoa Phat Group (HPG) was on average VEIL's largest position during the year and a key representative of Vietnam's growing infrastructure development. VP Bank (VPB) and Asia Commercial Bank (ACB) are two high performing private sector banks. Khang Dien House (KDH) and Dat Xanh Group (DXG) are two of the countries' top private developers. VEIL also benefited from strong performance in sectors of retail and technology, investing in such companies as Mobile World Group (MWG) and FPT Corp (FPT).

 

In 2021, VEIL has bought back 3,401,261 shares worth approximately US$32.68 million and 1.58% of outstanding shares. We continue to actively monitor our share price and discount to NAV; and remain committed to doing buybacks at appropriate times.

 

VEIL continued to expand its environmental, social and governance ("ESG") and climate change programme. We fully believe and support in better ESG, and VEIL is a clear leader in Vietnam. ESG goes beyond social responsibility, it also provides a perspective on risk mitigation and value creation. As a long-term investor committed to sustainability, all investments made by VEIL are subjected to a rigorous ESG screening process adopted by our manager, Dragon Capital Group (the "Group"). The Group created its own ESG management system, with the valuable assistance of the International Finance Corporation ("IFC") to ensure that it delivers best in class practices. These policies and procedures are applied to VEIL's entire investment universe.

 

Looking ahead, there are numerous uncertainties in 2022 due to inflation, rising oil prices, Federal Reserve rate hikes, and the Russia-Ukraine crisis. The tension between U.S and China continues to have positive spillover effect on emerging markets such as Vietnam. To fight the pandemic, the Vietnamese Government initiated a US$15 billion stimulus package and most of it will be deployed in 2022. With the country in healthy shape, the economy is well positioned to achieve a GDP target of 6.0-6.5% this coming year.  

 

Growth and liquidity in the Vietnam market remains one of the highest in Southeast Asia. VEIL is confident of its ability to continue to identify the best companies in terms of business growth, profitability, and management. Our historical track record over the short, medium and long-term continues to outperform peers and relevant indexes.

 

On behalf of the Board, we thank our shareholders for their continued support and trust in VEIL. This will be my last Chair's Statement, as I will step down in 2022. It has been a privilege to serve as Chair for the past four years, and Director for over a decade. It has been my honour to be part of such a wonderful team at VEIL.  

 

Stanley Chou

Chair

Vietnam Enterprise Investments Limited

28 April 2022

 

Responsibility Statement:

 

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 2021 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 ("IFRS") 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 2021 are described in the Chair's Statement and the Portfolio Manager's Report. A detailed description of the principal risks and uncertainties faced by the Company are set out in Note 13 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 Rule ("DTR") 4.1.12R and are in compliance with the requirements set out in the Companies Law;

-  the Annual Report and financial statements include a fair review of the development and performance of the business and the position of the Company and the undertakings included in the financial statements taken as a whole, together with a description of principal risks and uncertainties that they face; 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 Directors confirm that they have complied with the above requirements in preparing the financial statements.

 

Principal Risks and Uncertainties:

 

The Audit and Risk Committee is responsible for reviewing the effectiveness of the Company's system of internal control. The Board reviews the ongoing processes for identifying, evaluating and monitoring the principal risks and uncertainties faced by the Company.

 

This process, together with key procedures established with a view to providing effective and efficient financial control, has been in place throughout the year ended 31 December 2021.

 

The Board recognises that these control systems can only be designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and provide reasonable, but not absolute, assurance against material misstatement or loss.

 

Risk assessment and the review of internal controls are undertaken by the Audit and Risk Committee, in the context of the Company's overall investment objective. During the reporting period, the Audit and Risk Committee defined an Enterprise Risk Management Framework template which is being used to monitor the various principal risks and uncertainties including the key business, operational, compliance, ESG and financial risks facing the Company.

 

Given the nature of the Company's activities and the fact that most functions are sub-contracted, the Directors have obtained information from key third party service providers regarding the controls operated by them in order to enable the Board to make an appropriate risk and control assessment.

 

The Board has reviewed the scope of the Audit and Risk Committee and is satisfied that all principal risks and uncertainties to which the Company is subject are appropriately managed.

 

The Directors confirm that they have carried out a robust assessment of the principal risks and uncertainties facing the Company, including those that would threaten its business model, future performance, solvency or liquidity on a quarterly basis. This includes an assessment of strategic, business, financial, operational, IT and compliance risks. The principal risks and uncertainties identified by the Board, together with the way in which the Board seeks to manage those risks and uncertainties, can be found in Note 13 to the financial statements. The Directors have not identified any other principal risk or uncertainty during the reporting period.

 

Financial statements:

 

Statement of financial position as at 31 December 2021

 

	Note	31 December 2021	31 December 2020	Change
		US$	US$	in %
CURRENT ASSETS
Financial assets at fair value through profit or loss	5(i)	2,602,412,178	1,776,972,384
Other receivables		1,686,695	918,374
Balances due from brokers		1,232,092	-
Cash and cash equivalents	6	9,853,132	24,769,597
TOTAL ASSETS		2,615,184,097	1,802,660,355	45.07
CURRENT LIABILITIES
Balances due to brokers		4,209,904	-
Accounts payable and accruals	7	3,996,271	2,969,152
TOTAL LIABILITIES		8,206,175	2,969,152	176.38
EQUITY
Issued share capital	8	2,135,347	2,169,360
Share premium	8	509,842,442	542,487,042
Retained earnings		2,095,000,133	1,255,034,801
TOTAL EQUITY		2,606,977,922	1,799,691,203	44.86
NET ASSETS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS		2,606,977,922	1,799,691,203	44.86
NUMBER OF ORDINARY SHARES IN ISSUE	8	213,533,847	216,935,108
NET ASSET VALUE PER ORDINARY SHARE	9	12.21	8.30	47.11

 

Approved by the Board of Directors on 28 April 2022.

 

Dominic Scriven O.B.E 

Director

Vietnam Enterprise Investments Limited

 

Statement of comprehensive income for the year ended 31 December 2021

 

	Note	2021	2020
		US$	US$
INCOME
Bank interest income		22,395	19,145
Dividend income		7,505,712	7,762,121
Net changes in fair value of financial assets at fair value through profit or loss	5(ii)	721,527,436	346,398,761
Gains on disposals of investments		157,569,945	8,972,704
TOTAL INCOME		886,625,488	363,152,731
EXPENSES
Administration fees	10	(1,382,403)	(936,822)
Custody fees	10	(985,863)	(731,557)
Directors' fees	10	(189,090)	(165,000)
Management fees	10	(40,552,937)	(27,335,507)
Legal and professional fees		(849,392)	(462,278)
Brokerage fee and structuring fee		(100,000)	(740,238)
Structuring fee of short-term borrowings		(1,500,000)	(1,570,153)
Interest expenses		(1,722,924)	(600,009)
Withholding taxes		(2,381)	(2,675)
Other operating expenses		(103,883)	(95,829)
TOTAL EXPENSES		(47,388,873)	(32,640,068)
NET GAIN BEFORE EXCHANGE GAINS		839,236,615	330,512,663
EXCHANGE GAINS
Net foreign exchange gains		728,717	439,310
PROFIT BEFORE TAX		839,965,332	330,951,973
Income tax	11	-	-
NET PROFIT AFTER TAX FOR THE YEAR		839,965,332	330,951,973
OTHER COMPREHENSIVE INCOME FOR THE YEAR		-	-
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		839,965,332	330,951,973
TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO ORDINARY SHAREHOLDERS		839,965,332	330,951,973
BASIC EARNINGS PER ORDINARY SHARE	12	3.90	1.52

 

Statement of changes in net assets attributable to Ordinary Shareholders for the year ended 31 December 2021

 

	Issued share capital	Share premium	Retained earnings	Total
	US$	US$	US$	US$
Balance at 1 January 2020	2,180,628	548,355,321	924,082,828	1,474,618,777
Total comprehensive income for the year:
Net profit for the year	-	-	330,951,973	330,951,973
Transactions with shareholders, recognised directly in equity:
Repurchase of Ordinary Shares	(11,268)	(5,868,279)	-	(5,879,547)
Balance at 1 January 2021	2,169,360	542,487,042	1,255,034,801	1,799,691,203
Total comprehensive income for the year:
Net profit for the year	-	-	839,965,332	839,965,332
Transactions with shareholders, recognised directly in equity:
Repurchase of Ordinary Shares	(34,013)	(32,644,600)	-	(32,678,613)
Balance at 31 December 2021	2,135,347	509,842,442	2,095,000,133	2,606,977,922

 

Statement of cash flows for the year ended 31 December 2021

 

	Note	2021	2020
		US$	US$
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year		839,965,332	330,951,973
Adjustments for:
Bank interest income		(22,395)	(19,145)
Bank interest expense		1,722,924	600,009
Dividend income		(7,505,712)	(7,762,121)
Net changes in fair value of financial assets at fair value through profit or loss		(721,527,436)	(346,398,761)
Gains on disposals of investments		(157,569,945)	(8,972,704)
		(44,937,232)	(31,600,749)
Net cash flows from subsidiaries carried at fair value		77,527,696	61,403,645
Changes in other receivables and balances due from brokers		(1,232,092)	77,290
Changes in balances due to brokers and accounts payable and accruals		5,237,023	(572,654)
		36,595,395	29,307,532
Proceeds from disposals of investments		561,091,049	226,139,022
Purchases of investments		(584,961,158)	(241,673,807)
Bank interest income received		22,395	19,145
Bank interest expense paid		(1,722,924)	(600,009)
Dividends received		6,737,391	7,983,941
Net cash generated from operating activities		17,762,148	21,175,824
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings		420,000,000	210,000,000
Repayments of borrowings		(420,000,000)	(210,000,000)
Repurchase of Ordinary Shares		(32,678,613)	(5,879,547)
Net cash used in financing activities		(32,678,613)	(5,879,547)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS		(14,916,465)	15,296,277
Cash and cash equivalents at the beginning of the year		24,769,597	9,473,320
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	6	9,853,132	24,769,597

 

Notes to the Financial Statements for the year ended 31 December 2021

 

These notes form an integral part, of and should be read in conjunction with, the accompanying financial statements.

 

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. As required by the Company's Restated and Amended Memorandum and Articles of Association (the "Articles"), at the annual general meeting ("AGM") held on 18 June 2020, a special resolution to wind up the Company on 31 December 2022 was put to the meeting but was not passed. In accordance with the Articles, the Company will put before the AGM in 2025 a special resolution to wind up the Company effective on 31 December 2027.

 

The Company had the following investments in subsidiaries and joint operation as at 31 December 2021, 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%
VEIL Infrastructure 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%

 

(*) This subsidiary was dissolved in 2021.

 

Joint operation	Country of incorporation	Principal activities	% Ownership
Dragon Financial Holdings Limited	British Virgin Islands	Investment holding	90%

 

As at 31 December 2021 and 31 December 2020, the Company had no employees.

 

2.   BASIS OF PREPARATION

 

(a)  Basis of accounting

                                                                                                             

The Company's financial statements as at and for the year ended 31 December 2021 have been prepared in accordance with IFRS. They were authorised for issue by Company's Board of Directors on 28 April 2022.

                                                                                                             

(b)  Basis of measurement

 

These 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 3(c)(iii).

 

(c)  Functional and presentation currency

                                                                                                             

These 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, custody 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 subsidiaries 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 financial assets

 

The Directors determine the allowance for impairment of financial assets on a regular basis. This estimate is based on the Company's historical experience and informed credit assessment and including looking forward information.

 

(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.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The following significant accounting policies have been applied consistently to all periods presented in these financial statements.

 

(a)  Subsidiaries and joint operation

 

Subsidiaries are investees controlled by the Company. The Company controls an investee when it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

 

The Company is an investment entity and measures investments in its subsidiaries at fair value through profit or loss (see Note 2(d)). In determining whether the Company meets the definition of an investment entity, the Board considered the Company and its subsidiaries as a whole. In particular, when assessing the existence of investment exit strategies and whether the Company has more than one investment, the Board took into consideration the fact that all subsidiaries were formed in connection with the Company in order to hold investments on behalf of the Company.

 

Joint operation is a joint arrangement whereby the Company has joint control and rights to the assets and obligations for the liabilities relating to the arrangement. The Company recognises its share of identifiable assets, liabilities and transactions of the joint operation. Assets, liabilities and transactions of the joint operation are accounted for in accordance with the relevant accounting policies as presented in Note 3.

 

(b)  Foreign currency transactions

 

Transactions in foreign currencies are translated into the respective functional currencies of the Company and its subsidiaries at the exchange rates at the dates of the transactions.

 

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into the functional currency at the exchange rate at the date on which the fair value was determined.

 

Foreign currency differences arising on translation are recognised in profit or loss as net foreign exchange gain or loss, except for those arising on financial instruments at fair value through profit or loss ("FVTPL"), which are recognised as a component of net changes in fair value of financial instruments at FVTPL.

 

(c)  Financial assets and financial liabilities

 

(i)       Recognition and initial measurement

                                                                                                             

The Company initially recognises financial assets and financial liabilities at fair value 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 recognised 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 are directly attributable to its acquisition or issue.

 

(ii)      Classification and subsequent measurement

 

Classification of financial assets

 

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 flows.

-  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).

 

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.

 

Subsequent measurement of financial assets

 

Financial assets at FVTPL

 

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.

 

Financial assets at amortised cost

 

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 gain/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 or loss.

 

Cash and cash equivalents, 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 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

 

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 debtor 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.

 

However, if the financial assets were credit-impaired, then the estimate of credit losses would be based on a specific assessment of the expected cash shortfalls and on the original effective interest rate.

 

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.

 

(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 asset, 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 or loss. Any interest in such transferred financial assets that is 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 or substantially all of the risks and 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 repurchase transactions.

 

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expired.

 

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.

        

(d)  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.

 

(e)  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 which is similar to the issuance of share capital.

 

(f)   Segment reporting

 

The Company is organised and operates as one operating segment - investment in equity securities in Vietnam. Consequently, no segment reporting is provided in the Company's financial statements.

 

(g)  Provisions

 

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a finance cost.

 

(h)  Interest income

 

Interest income, including interest income from non-derivative financial assets at fair value through profit or loss, are recognised in profit or loss, using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts, without consideration of future credit losses, over the expected life of the financial instrument or through to the next market based repricing date to the net carrying amount of the financial instrument on initial recognition.

 

Interest received or receivable are recognised in profit or loss as interest income.

 

(i)   Dividend income

 

Dividend income is recognised in profit or loss on the date on which the right to receive payment is established. For listed equity securities, this is usually the ex-dividend date. For unlisted equity securities, this is usually the date on which the shareholders approve the payment of a dividend.

 

Dividend income from equity securities designated as at fair value through profit or loss is recognised in profit or loss in a separate line item.

 

(j)   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.

 

(k)  Expenses

 

All expenses, including management fees and incentive fees, are recognised in profit or loss on an accrual basis.

 

(l)   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 2021 and 2020.

 

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.

 

(m) 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 joint venture;

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.

 

Dragon Capital Group Limited, together with its subsidiaries (including Dragon Capital Management (HK) Limited), associates, and investment companies/funds under their management, are considered related parties to the Company.

 

4.   TRANSACTIONS WITH RELATED PARTIES

 

Dominic Scriven O.B.E, a Non-executive Director, is a beneficial shareholder of the Company, holding 36,423 Ordinary Shares of the Company as at 31 December 2021 (31 December 2020: 36,423 Ordinary Shares). 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, which was the Investment Manager of the Company until 31 March 2021 and Dragon Capital Management (HK) Limited, which is the Investment Manager of the Company from 1 April 2021, and Dragon Capital Markets Limited. As at 31 December 2021, Dragon Capital Markets Limited beneficially held 1,010,359 Ordinary Shares of the Company for investment and proprietary trading purposes (31 December 2020: 1,010,359 Ordinary Shares).

 

Gordon Lawson, a Senior Independent Non-executive Director, is a beneficial shareholder of the Company, holding 25,000 Ordinary Shares of the Company as at 31 December 2021 (31 December 2020: 25,000 Ordinary Shares).

 

 

Sarah Arkle, an Independent Non-executive Director, is a beneficial shareholder of the Company, holding 4,696 Ordinary Shares of the Company as at 31 December 2021 (31 December 2020: 4,696 Ordinary Shares).

 

During the year, the Directors, with exception of Dominic Scriven O.B.E, earned US$189,090 (2020: US$165,000) for their participation on the Board of Directors of the Company.

 

During the year, total broker fees paid to Ho Chi Minh City Securities Corporation - an associate of Dragon Capital Group Limited and one of the securities brokers of the Company and its subsidiaries - amounted to US$671,844 (2020: US$380,878). As at 31 December 2021, the broker fee payable to this broker was US$4,477 (31 December 2020: Nil).

 

5.   FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

 

(i)   Financial assets at fair value through profit or loss reported in the statement of financial position:

 

	31 December 2021	31 December 2020
	US$	US$
Directly held investments (a)	1,137,326,975	769,940,680
Investments in subsidiaries (b)	1,465,085,203	1,007,031,704
	2,602,412,178	1,776,972,384

 

(ii)  Net change in fair value of financial assets at fair value through profit or loss reported in the statement of comprehensive income:

 

	2021	2020
	US$	US$
Unrealised gains of investments directly held by the Company (a)	185,946,241	107,411,400
Fair value movements in investments in subsidiaries (b)	535,581,195	238,987,361
	721,527,436	346,398,761

 

(a) The cost and carrying value of directly held listed and unlisted investments of the Company were as follows:

 

	31 December 2021	31 December 2020
	US$	US$
Listed investments
Investments, at cost	700,877,999	519,437,945
Unrealised gains	436,448,976	250,502,735
At carrying value	1,137,326,975	769,940,680
Unlisted investments
Investments, at cost	3,762,362	3,762,362
Unrealised losses	(3,762,362)	(3,762,362)
At carrying value	-	-
	1,137,326,975	769,940,680

 

Movements of investments directly held by the Company during the year were as follows:

 

	31 December 2021	31 December 2020
	US$	US$
Opening balance	769,940,680	638,021,791
Purchases	584,961,158	241,673,807
Sales	(403,521,104)	(217,166,318)
Unrealised gains	185,946,241	107,411,400
Closing balance	1,137,326,975	769,940,680

 

(b) Investments in subsidiaries are fair valued at the subsidiary's net asset value with the major 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/decrease in the fair value of the subsidiary.

 

The net assets of the Company's subsidiaries comprised:

 

	31 December 2021	31 December 2020
	US$	US$
Cash and cash equivalents	4,698,609	22,261,057
Financial assets at fair value through profit or loss (c)	1,455,238,030	983,928,129
Other receivables	1,417,772	842,518
Balances due from brokers	3,730,792	-
Total assets	1,465,085,203	1,007,031,704
Total liabilities	-	-
Net assets	1,465,085,203	1,007,031,704

 

Movements in the carrying value of investments in subsidiaries during the year were as follows:

 

	31 December 2021	31 December 2020
	US$	US$
Opening balance	1,007,031,704	829,447,988
Net cash flows from subsidiaries	(77,527,696)	(61,403,645)
Fair value movements in investments in subsidiaries	535,581,195	238,987,361
Closing balance	1,465,085,203	1,007,031,704

 

(c) The cost and carrying value of underlying financial assets at FVTPL held by the Company's subsidiaries were as follows:

 

	31 December 2021	31 December 2020
	US$	US$
Listed investments
Investments, at cost	733,697,244	593,496,859
Unrealised gains	721,540,786	390,431,270
At carrying value	1,455,238,030	983,928,129

 

Movements of investments held by the Company's subsidiaries during the year were as follows:

 

	31 December 2021	31 December 2020
	US$	US$
Opening balance	983,928,129	808,293,291
Purchases	569,500,379	283,071,136
Sales	(386,253,924)	(272,310,465)
Settlement	(43,046,070)	-
Unrealised gains	331,109,516	164,874,167
Closing balance	1,455,238,030	983,928,129

 

Investment portfolio by sector was as follows:

 

	31 December 2021		31 December 2020
	US$	%	US$	%
Banking	930,989,729	36	591,569,248	33
Real Estate & Construction	726,542,405	28	410,471,646	23
Material & Resources	347,931,918	13	223,764,582	13
Retail	250,350,072	10	207,845,312	12
Software & Services	111,191,175	4	71,236,340	4
Diversified Financials	110,950,794	4	-	-
Consumer Durables	43,307,640	2	39,093,283	2
Energy	31,876,434	1	49,524,028	3
Transportation	25,623,344	1	67,422,278	4
Food & Beverages	13,801,493	1	92,942,092	5
Net monetary assets kept by subsidiaries	9,847,174	-	23,103,575	1
	2,602,412,178	100	1,776,972,384	100

 

(d) Restrictions

 

The Company receives income in the form of dividends from its investments in unconsolidated subsidiaries and there are no significant restrictions on the transfer of funds from these entities to the Company.

 

(e) Support

 

The Company provides or receives ongoing support to/from its subsidiaries for the purchase/sale of portfolio investments. During the year, the Company received support from its unconsolidated subsidiaries as noted in Note 5(b). The Company has no contractual commitments or current intentions to provide any other financial or other support to its unconsolidated subsidiaries.

 

6.   CASH AND CASH EQUIVALENTS

 

	31 December 2021	31 December 2020
	US$	US$
Cash in banks	9,853,132	24,769,597

 

7.   ACCOUNTS PAYABLE AND ACCRUALS

 

	31 December 2021	31 December 2020
	US$	US$
Management fees	3,670,990	2,782,125
Administration fees	263,281	95,027
Other payables	62,000	92,000
	3,996,271	2,969,152

 

8.   ISSUED SHARE CAPITAL AND SHARE PREMIUM

 

	31 December 2021	31 December 2020
	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 2020: 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	(58,546)	(39,857)
Shares in circulation:
Ordinary Shares	2,135,337	2,169,350
Management Shares	10	10
Outstanding issued share capital in circulation	2,135,347	2,169,360

 

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 or to require his Ordinary shares to be redeemed by the Company. The Company may, in its complete discretion, consider requests from holders of Ordinary Shares to have their Ordinary Shares redeemed by the Company. The Company may also, from time to time, repurchase its shares, including fraction of shares.

 

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 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 2021 and 2020.

 

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 2021 and 2020, the following shareholder owned more than 10% of the Company's issued Ordinary Share capital:

 

	31 December 2021		31 December 2020
	Number of Ordinary Shares held	% of total Ordinary Shares in issue	Number of Ordinary Shares held	% of total Ordinary Shares in issue
Inter Fund Management S.A.	26,491,515	12.41	26,259,515	12.10
Bill & Melinda Gates Foundation	25,087,859	11.75	25,128,192	11.58

 

Movements in Ordinary Share capital during the year were as follows:

 

	Year ended 31 December 2021		Year ended 31 December 2020
	Shares	US$	Shares	US$
Balance at the beginning of the year	216,935,108	2,169,350	218,061,888	2,180,618
Repurchase of Ordinary Shares during the year	(3,401,261)	(34,013)	(1,126,780)	(11,268)
Balance at the end of the year	213,533,847	2,135,337	216,935,108	2,169,350

 

Movements in share premium during the year were as follows:

 

	Year ended 31 December 2021	Year ended 31 December 2020
	US$	US$
Balance at the beginning of the year	542,487,042	548,355,321
Repurchase of Ordinary Shares during the year	(32,644,600)	(5,868,279)
Balance at the end of the year	509,842,442	542,487,042

 

9.   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 2021 of US$2,606,977,922 (31 December 2020: US$1,799,691,203) and the number of outstanding Ordinary Shares in issue as at that date of 213,533,847 shares (31 December 2020: 216,935,108 shares).

 

10.  FEES

 

The management, administration and custody fees are calculated based on the NAV of the Company.

 

Administration fees

 

Standard Chartered Bank (the "Administrator") is entitled to receive a fee of 0.048% (2020: 0.048%) of the gross assets per annum, 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$1,382,403 (2020: US$936,822). As at 31 December 2021, an administration fee of US$263,281 (31 December 2020: US$95,027) was payable to the Administrator.

 

Custody fees

 

Standard Chartered Bank (the "Custodian") is entitled to receive a fee of 0.04% (2020: 0.04%) 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 custody fees amounted to US$985,863 (2020: US$731,557). There were no custody fees payable as at 31 December 2021 and 2020.

 

Directors' fees

 

During the year, total directors' fees amounted to US$189,090 (2020: US$165,000). There were no directors' fees payable as at 31 December 2021 and 2020. 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 July 2021,the management fee was 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.

 

With effect from 1 July 2021, the management fee is calculated and accrued daily on the following basis:

 

-  1.85% per annum on the first US$1.25 billion of the NAV;

-  1.65% 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$40,552,937 (2020: US$27,335,507). As at 31 December 2021, a management fee of US$3,670,990 (31 December 2020: US$2,782,125) remained payable to the Investment Manager.

 

Audit and non-audit fees

 

During the year, included in the legal and professional fees of the Company were audit and related fees amounting to US$82,000 (2020: US$82,000) paid to the auditor, KPMG Limited. In addition, the non-audit fees payable to KPMG LLP were US$30,000 in 2021 (2020: US$30,000).

 

11.  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.

 

Vietnam tax

 

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 distributed from after-tax profits by Vietnamese investee companies to foreign corporate investors are not subject to Vietnamese withholding taxes.

 

Hong Kong tax

 

A fund would be exposed to Hong Kong Profits Tax ("HKPT") if:

 

a)   it carries on trade or business in Hong Kong;

b)   profits from that trade or business have a Hong Kong source;

c)   those profits are not capital profits; and

d)   the profits are not exempted under the Offshore Persons Exemption or the Funds Exemption.

 

Under such circumstances, HKPT will be charged at a rate of 16.5% (2020: 16.5%) in respect of any profits which arise in or are derived from Hong Kong and which are not capital profits or exempt profits.

 

The Offshore Persons Exemption is provided under Section 20AC of the Inland Revenue Ordinance ("IRO") and applies to exempt non-fund and non-resident persons from HKPT subject to satisfying certain conditions. Effective from 1 April 2019, the Funds Exemption under Section 20AN of the IRO provides that funds within the meaning of Section 20AM, resident and non-resident, will be exempt from HKPT subject to certain conditions.

 

The Directors believe the Company satisfies all of the requirements for the Funds Exemption under Section 20AN of the IRO post 1 April 2019 and therefore shall not be subject to.

 

See Note 13(B) for further details.

 

12.  BASIC EARNINGS PER ORDINARY SHARE

 

The calculation of basic earnings per Ordinary Share for the year was based on the net profit for the year attributable to the Ordinary Shareholders of US$839,965,332 (2020: net profit of US$330,951,973) and the weighted average number of Ordinary Shares outstanding of 215,418,418 shares (2020: 217,600,160 shares) in issue during the year.

 

(a)  Net profit attributable to the Ordinary Shareholders

 

	Year ended 31 December 2021	Year ended 31 December 2020
	US$	US$
Net profit attributable to the Ordinary Shareholders	839,965,333	330,951,973

 

(b)  Weighted average number of Ordinary Shares

 

	Year ended 31 December 2021	Year ended 31 December 2020
Issued Ordinary Shares at the beginning of the year	216,935,108	218,061,888
Effect of Ordinary Shares repurchased during the year	(1,516,690)	(461,728)
Weighted average number of Ordinary Shares	215,418,418	217,600,160

 

(c)  Basic earnings per Ordinary Share

 

	Year ended 31 December 2021	Year ended 31 December 2020
	US$	US$
Basic earnings per Ordinary Share	3.90	1.52

 

13.  FINANCIAL RISK MANAGEMENT AND UNCERTAINTY

 

A.   Financial risk management

 

The Company and its subsidiaries mainly invest 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 2021 and 2020, 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 2021	31 December 2020
	US$	US$
Other receivables (i)	1,686,695	918,374
Balances due from brokers (i)	1,232,092	-
Cash and cash equivalents (ii)	9,853,132	24,769,597
	12,771,919	25,687,971

 

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 2021 and 2020, 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 2021	31 December 2020
	US$	US$
Other receivables (i)	1,417,772	842,518
Balances due from brokers (i)	3,730,792	-
Cash and cash equivalents (ii)	4,698,609	22,261,057
	9,847,173	23,103,575

 

(i)   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 2021 and 2020 were past due.

 

(ii)  Cash and cash equivalents

 

Cash and cash equivalents of the Company and its subsidiaries were held mainly with well-known financial institutions in Singapore and Vietnam. Regarding the credit rating profile of these financial institutions, the Directors believe credit risks from these deposits was minimal 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 other 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 2021 and 2020, 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 index level	Effects on net assets	Change in index level	Effects on net assets
	2021	2021	2020	2020
Market Indices	%	US$m	%	US$m
VN Index	52	1,362	51	918
VN Index	(52)	1,362	(51)	(918)

 

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 2021
ASSETS
Other receivables	-	-	1,686,695	1,686,695
Balances due from brokers	-	-	1,232,092	1,232,092
Cash and cash equivalents	9,853,132	-	-	9,853,132
TOTAL ASSETS	9,853,132	-	2,918,787	12,771,919
LIABILITIES
Balances due to brokers	-	-	(4,209,904)	(4,209,904)
Accounts payable and accruals	-	-	(3,996,271)	(3,996,271)
TOTAL LIABILITIES	-	-	(8,206,175)	(8,206,175)
NET INTEREST SENSITIVITY GAP	9,853,132	-	N/A	N/A

 

	Up to 1 year	1 - 5 years	Non-interest bearing	Total
	US$	US$	US$	US$
31 December 2020
ASSETS
Other receivables	-	-	918,374	918,374
Cash and cash equivalents	24,769,597	-	-	24,769,597
TOTAL ASSETS	24,769,597	-	918,374	25,687,971
LIABILITIES
Accounts payable and accruals	-	-	(2,969,152)	(2,969,152)
TOTAL LIABILITIES	-	-	(2,969,152)	(2,969,152)
NET INTEREST SENSITIVITY GAP	24,769,597	-	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$98,531 (31 December 2020: US$247,696). 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 2021
ASSETS
Other receivables	-	-	1,417,772	1,417,772
Balances due from brokers	-	-	3,730,792	3,730,792
Cash and cash equivalents	4,698,609	-	-	4,698,609
TOTAL ASSETS	4,698,609	-	5,148,564	9,847,173
TOTAL LIABILITIES	-	-	-	-
NET INTEREST SENSITIVITY GAP	4,698,609	-	N/A	N/A

 

	Up to 1 year	1 - 5 years	Non-interest bearing	Total
	US$	US$	US$	US$
31 December 2020
ASSETS
Other receivables	-	-	842,518	842,518
Cash and cash equivalents	22,261,057	-	-	22,261,057
TOTAL ASSETS	22,261,057	-	842,518	23,103,575
TOTAL LIABILITIES	-	-	-	-
NET INTEREST SENSITIVITY GAP	22,261,057	-	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$46,986 (31 December 2020: US$222,611). 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 2021 and 2020. Included in the table are the assets and liabilities categorised by their base currency.

 

31 December 2021
(Denominated in VND)	US$
ASSETS
Financial assets at fair value through profit or loss	1,137,326,975
Other receivables	1,686,695
Balances due from brokers	1,232,092
Cash and cash equivalents	9,771,199
TOTAL ASSETS	1,150,016,961
LIABILITIES
Balances due to brokers	4,209,904
NET CURRENCY POSITION	1,145,807,057

 

31 December 2020
(Denominated in VND)	US$
ASSETS
Financial assets at fair value through profit or loss	769,940,680
Other receivables	918,374
Cash and cash equivalents	22,357,187
TOTAL ASSETS	793,216,241
LIABILITIES	-
NET CURRENCY POSITION	793,216,241

 

As at 31 December 2021, had the US$ strengthened or weakened by 1% (31 December 2020: 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 2020.

 

	Denominated in
	VND
	US$
2021	11,344,624
2020	7,853,626

 

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 2021 and 2020. Included in the table are the assets and liabilities categorised by their base currency.

 

31 December 2021
(Denominated in VND)	US$
ASSETS
Financial assets at fair value through profit or loss	1,455,238,030
Other receivables	1,417,772
Balances due from brokers	3,730,792
Cash and cash equivalents	4,698,609
TOTAL ASSETS	1,465,085,203
LIABILITIES	-
NET CURRENCY POSITION	1,465,085,203

 

31 December 2020
(Denominated in VND)	US$
ASSETS
Financial assets at fair value through profit or loss	983,928,129
Other receivables	842,518
Cash and cash equivalents	22,260,850
TOTAL ASSETS	1,007,031,497
LIABILITIES	-
NET CURRENCY POSITION	1,007,031,497

 

As at 31 December 2021, had the US$ strengthened or weakened by 1% (31 December 2020: 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 2020.

 

	Denominated in
	VND
	US$
2021	14,505,794
2020	9,970,609

 

(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 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 2021	Level 1	Level 2	Level 3	Total
	US$	US$	US$	US$
Financial assets at fair value through profit or loss
Listed investments	1,137,326,975	-	-	1,137,326,975
Investments in subsidiaries	-	-	1,465,085,203	1,465,085,203
	1,137,326,975	-	1,465,085,203	2,602,412,178

 

As at 31 December 2020	Level 1	Level 2	Level 3	Total
	US$	US$	US$	US$
Financial assets at fair value through profit or loss
Listed investments	769,940,680	-	-	769,940,680
Investments in subsidiaries	-	-	1,007,031,704	1,007,031,704
	769,940,680	-	1,007,031,704	1,776,972,384

 

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.

 

	Level 1		Level 2		Level 3
	2021	2020	2021	2020	2021	2020
	US$	US$	US$	US$	US$	US$
Opening balance	769,940,680	635,454,092	-	2,567,699	1,007,031,704	829,447,988
Purchases	584,961,158	237,276,984	-	4,396,823	-	-
Sales	(403,521,104)	(208,057,811)	-	(9,108,507)	-	-
Net cash flows from subsidiaries	-	-	-	-	(77,527,696)	(61,403,645)
Unrealised gains recognised in profit or loss	185,946,241	105,267,415	-	2,143,985	535,581,195	238,987,361
Closing balance	1,137,326,975	769,940,680	-	-	1,465,085,203	1,007,031,704
Total unrealised gains for the year included in net changes in fair value of financial assets at fair value through profit or loss	185,946,241	105,267,415	-	2,143,985	535,581,195	238,987,361

 

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 2021	Level 1	Level 2	Level 3	Total
	US$	US$	US$	US$
Financial assets at fair value through profit or loss
Listed investments	1,455,238,030	-	-	1,455,238,030
	1,455,238,030	-	-	1,455,238,030

 

As at 31 December 2020	Level 1	Level 2	Level 3	Total
	US$	US$	US$	US$
Financial assets at fair value through profit or loss
Listed investments	983,928,129	-	-	983,928,129
	983,928,129	-	-	983,928,129

 

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
	2021	2020	2021	2020	2021	2020
	US$	US$	US$	US$	US$	US$
Opening balance	983,928,129	806,612,733	-	1,680,558	-	-
Transfer from level 2 to level 1		-	-	-	-	-
Purchases	569,500,379	283,071,136	-	-	-	-
Sales	(386,253,924)	(269,226,667)	-	(3,083,798)	-	-
Settlement	(43,046,070)	-	-	-	-	-
Unrealised gains	331,109,516	163,470,927	-	1,403,240	-	-
Closing balance	1,455,238,030	983,928,129	-	-	-	-
Total unrealised gains included in net changes in fair value of financial assets at fair value through profit or loss	331,109,516	163,470,927	-	1,403,240	-	-

 

(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 fair value	Amortised cost	Total carrying amount
As at 31 December 2021	US$	US$	US$
Assets
Financial assets at fair value through profit or loss	2,602,412,178	-	2,602,412,178
Other receivables	-	1,686,695	1,686,695
Balances due from brokers	-	1,232,092	1,232,092
Cash and cash equivalents	-	9,853,132	9,853,132
	2,602,412,178	12,771,919	2,615,184,097
Liabilities
Balances due to brokers	-	4,209,904	4,209,904
Accounts payable and accruals	-	3,996,271	3,996,271
	-	8,206,175	8,206,175

 

	Designated at fair value	Amortised cost	Total carrying amount
As at 31 December 2020	US$	US$	US$
Assets
Financial assets at fair value through profit or loss	1,776,972,384	-	1,776,972,384
Other receivables	-	918,374	918,374
Cash and cash equivalents	-	24,769,597	24,769,597
	1,776,972,384	25,687,971	1,802,660,355
Liabilities
Accounts payable and accruals	-	2,969,152	2,969,152
	-	2,969,152	2,969,152

 

(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 in 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, and as a result, provision for tax liabilities have not been made in the financial statements.

 

The Offshore Persons Exemption is provided under Section 20AC of the Inland Revenue Ordinance ("IRO") and applies to exempt non-fund and non-resident persons from Hong Kong Profits Tax ("HKPT") subject to satisfying certain conditions. Effective from 1 April 2019, the New Funds Exemption under Section 20AN of the IRO provides that funds within the meaning of Section 20AM, resident and non-resident, will be exempt from HKPT subject to certain conditions. The Directors believe that they have implemented steps to enable The Company to satisfy all the conditions to be exempted from HKPT for the year ended 31 December 2021.

 

If the Company does not meet the exemption criteria under the Funds Exemption, the Company is exposed to Hong Kong Profits Tax at a rate of 16.5% in respect of any profits which arise in or are derived from Hong Kong and which are not capital profits or exempt profits if it is treated as carrying on a trade or business in Hong Kong either on its own account or through any person as an agent.

 

14.  SUBSEQUENT EVENTS

 

From 1 January to 26 April 2022, the Company repurchased 3,570,864 Ordinary Shares for a total consideration of US$35,202,492.

 

15.  APPROVAL OF THE FINANCIAL STATEMENTS

 

The financial statements were approved and authorised for issue by the Board of Directors on 28 April 2022.