Annual Report 2021
Vietnam Enterprise Investments Limited
Contents
1. Chair’s Statement
1
2. Company Overview and Strategy
3
3. Portfolio Manager’s Report
5
4. ESG and Climate Change Report
13
5. Corporate Governance Statement
24
6. Report of the Audit and Risk Committee
34
7. Board of Directors
37
8. Annual General Meeting
39
9. Report of the Board of Directors
40
10. Independent Auditors’ Report
43
11. Statement of Financial Position
47
12. Statement of Comprehensive Income
48
13. Statement of Changes in Net Assets Attributable to Ordinary
Shareholders
49
14. Statement of Cash Flows
50
15. Notes to the Financial Statements
51
16. Corporate Information
79
17. Investor Information
80
Vietnam Enterprise Investments Limited - Annual Report 2021
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
1
(“RCEP”) agreement, which became effective from
1 January 2022, will further accelerate the country’s
growth.
1 The Regional Comprehensive Economic Partnership is a free trade agreement among
the Asia-Pacic nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, South
Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand and
Vietnam
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.
1. Chair’s Statement
Vietnam Enterprise Investments Limited - Annual Report 2021
1
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.
1. Chair’s Statement (Continued)
Stanley Chou
Chair
Vietnam Enterprise Investments Limited
28 April 2022
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
2
Investment Objective
VEIL’s objective is to seek medium to long-term capital
appreciation of its assets.
Benchmark
VEIL does not benchmark against any index. However,
VEIL looks to outperform the Vietnam Index (the “VN
Index”), a capitalisation-weighted index of all companies
listed on the Ho Chi Minh Stock Exchange, on a rolling
three-year basis. The VN Index is available on Bloomberg
on “VNINDEX VN Equity <GO>”.
Business Model
VEIL was incorporated in the Cayman Islands on 20
April 1995 under the Companies Law (Revised), Cap. 22,
of the Cayman Islands as an exempted company with
limited liability and is a closed-end investment fund.
VEIL is the longest running fund focused on Vietnam
and the largest which invests primarily in listed and pre-
IPO companies in Vietnam that offer attractive growth
and value metrics, good corporate governance, and
alignment with Vietnam’s underlying growth drivers.
On 5 July 2016, VEIL’s shares were admitted to the
premium segment of the Official List of the Financial
Conduct Authority, and to trading on the London Stock
Exchange’s main market for listed securities. On 18 July
2017, VEIL was included in the FTSE 250 Index.
Investment Policy
Asset Allocation
VEIL seeks to achieve its investment objective by
investing in companies primarily operating in, or with
significant exposure to Vietnam. Whilst VEIL’s portfolio
will reflect a focus on Vietnam, VEIL may also invest up
to, in aggregate, 20% of Net Asset Value (“NAV”) at the
time of investment, in companies operating in, or with
significant exposure to Cambodia and Laos.
VEIL expects that the majority of the investments
comprising the portfolio will be equity securities
admitted to trading on the Ho Chi Minh Stock Exchange,
the Hanoi Stock Exchange, the Unlisted Public Company
Market (“UPCoM”) or on other stock exchanges. VEIL
may, nonetheless, invest in unlisted equity securities and
listed or unlisted debt securities or loan instruments.
The companies in which VEIL will invest may have any
market capitalisation and may operate in any industry. In
respect of the debt securities in which VEIL may invest,
these may be fixed or floating rate and may have any
credit rating or may be unrated.
VEIL may seek exposure to securities directly or
indirectly and VEIL may use derivatives for investment
purposes and efficient portfolio management. VEIL
may invest in investment companies that have, as their
main objective, a focus on investing in securities falling
within VEIL’s investment policy. Investments in other
investment companies will not exceed 10% of NAV at the
time of investment.
VEIL does not intend to take legal or management
control of any investee company. VEIL may also
hold cash or other short-term investments such as
commercial papers or certificates of deposit. Under
normal market conditions, it is expected that VEIL will
be substantially fully invested in investments meeting
its investment policy. However, where considered
prudent to do so (for example, in the event of a lack of
suitable investment opportunities or in times of falling
markets or market volatility), VEIL’s portfolio may reflect
a significant weighting to cash or other short-term
investments.
Investment Restrictions
VEIL will observe the following investment restrictions in
each case calculated at the time of investment:
(a) No more than 20% of the gross assets of VEIL may
be exposed to the creditworthiness or solvency of
a single counterparty;
(b) No more than 20% of the gross assets of VEIL may
be invested in any one issuer; and
(c)
No more than 40% of the gross assets of VEIL may
be invested in any one industrial sector.
Borrowing
VEIL is permitted to borrow money and to charge its
assets. VEIL will not have aggregate borrowings in
excess of 20% of VEIL’s NAV at the time of borrowing.
VEIL may borrow for the purposes of capital flexibility,
including for investment purposes. The Board will
oversee the level of gearing in VEIL, and will review the
position with the Investment Manager on a regular basis.
Changes to Investment Policy
No material change will be made to the investment
policy without the approval of shareholders by ordinary
resolution.
In the event of a breach of the investment policy set out
above and the investment and borrowing restrictions
set out therein, the Investment Manager shall inform
the Board upon becoming aware of the same, and if the
Board considers the breach to be material, notification
will be made to a Regulatory Information Service.
2. Company Overview and Strategy
Vietnam Enterprise Investments Limited - Annual Report 2021
3
2. Company Overview and Strategy (Continued)
Key Performance Indicators
At each Board meeting, the Directors consider a number
of performance measures to assess VEIL’s success in
achieving its objectives. The key performance indicators
(“KPI”) are established industry measures, and are as
follows:
NAV and Share Price
The Board monitors the NAV and share price
performance of VEIL on a three-year rolling basis as
provided in the Portfolio Manager’s Report on pages 5
to 12. Performance for one, three and five years are also
provided in the Portfolio Manager’s Report for reference
purposes.
Performance Against Reference
Performance is measured against the VN Index, on
a three-year rolling basis. The Board also considers
peer group comparative performance over a range of
time periods, taking into consideration the different
investment policies and objectives of those companies.
Discount/Premium to NAV
The discount/premium relative to the NAV represented
by the share price is closely monitored by the Board. The
objective is to avoid large fluctuations in the discount
relative to similar single country investment companies
investing in Asia (ex-Japan) by the use of share
buybacks subject to market conditions. A graph showing
the share price discount/premium relative to the NAV is
also shown on page 10.
Board Composition
The Board supports the principle of boardroom diversity.
The selection policy of the Board is to appoint the best
qualified person for the job, by considering factors such
as diversity of thought, experience and qualifications
for the effective conduct of VEIL’s business. New
appointments are identified against the requirements of
VEIL’s business and the need to have a balanced Board.
As at 31 December 2021, the Board consisted of six
Independent Non-executive Directors and one Non-
Independent Non-executive Director. After the reporting
period, Sarah Arkle, Independent Non-executive
Director, was appointed on 5 January 2022.
Detailed information on the Board’s independence,
composition and diversity is provided on page 27.
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
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3. Portfolio Manager’s Report
Performance Overview
2021 was a remarkable year for Vietnam Enterprise
Investments Limited (“VEIL” or the “Fund”), even as
the COVID-19 pandemic severely impacted Vietnam for
the second year running. The Fund achieved a 47.1%
return for the year and outperformed its reference
index, the Vietnam Index (the “VN Index”) total return
in US$ terms (the “VNI TR$”), by 8.1%. This performance
was the Fund’s second highest annual performance on
record and the biggest outperformance against the VNI
TR$ in the last 10 years for VEIL. 2021 was a difficult
year for Vietnam, including a strict 5-month lock-down
from the middle of the second quarter to the early
fourth quarter during the fourth wave of the COVID-19
outbreak, which was more severely felt, both in terms
of fatalities and economics, than all of the previous
waves combined. Once again, decisive action from the
Vietnamese Government helped to successfully roll out
the biggest vaccination programme ever in the country,
paving the way for the reopening and resumption of
economic activity in the fourth quarter of 2021. Despite
the hardship that COVID-19 had brought over the
last two years, the secular themes, rapid urbanisation
and continued expansion of the middle-class, that
drive the Vietnam story remained. Notably, VEIL’s
positioning in the Banking, Materials & Resources and
Real Estate sectors that gives the Fund’s exposure to
the urbanisation theme, and the Retail and Software
& Services sectors that represented the consumption
theme, all performed exceptionally well in 2021.
600
800
1,000
1,200
1,400
1,600
0
500
1,000
1,500
2,000
2,500
Dec-18
Jun-19
Dec-20Dec-19 Jun-20
Jun-21
Dec-21VN Index
US$m
Vo
lume
VN Inde
x
Graph 2: VN Index Information (Rolling 3-year)
Source: Dragon Capital, Bloomberg
(10.0)
-
10.0
20.0
30.0
40.0
50.0
60.0
2020-12-31 2021-02-28 2021-04-30 2021-06-30 2021-08-31 2021-10-31 2021-12-31
VE
IL - USD (NAV
)
VN Index
-
US
DVN30 - US
D%
Source: Dragon Capital, Bloomberg
Graph 1: One Year Performance (% in US$ terms)
Vietnam Enterprise Investments Limited - Annual Report 2021
5
3. Portfolio Manager’s Report (Continued)
Table 1: Investment Portfolio – Ten Largest Investments
Company Ticker Sector Market value NAV Total return Initial acquisition
US$ % %
Hoa Phat Group HPG Material & Resources 317,018,712 12.16 54.0 18 June 2009
VPBank VPB Banking 279,532,052 1 January 1996
10.72
100.6Asia Commercial Bank 255,179,357 1 December 1996
ACB
Banking9.79
55.3Mobile World Group 250,350,072 9.60
MWG
Retail74.0
3 October 2014Vinhomes VHM Real Estate & Construction 175,670,529 18 May 2018
6.74
22.2Vietcombank 157,738,199 6.05 5.2 7 February 2012
VCB
BankingVingroup VIC Real Estate & Construction 142,949,659 5.48
0.1
22 August 2014FPT Corp FPT Software & Services 111,191,175 4.26 86.9 3 July 2008
Techcombank 102,585,285 3.93 60.6 4 June 2018
TCB
BankingDat Xanh Group 98,679,677 10 March 2016
DXG
Real Estate & Construction3.78
155.4Total 10 investments 1,890,894,718
Source: Dragon Capital and Bloomberg (total return in US$ terms in respective index)
Table 2: Asset Allocation by Asset Class
1
31 December 2021 31 December 2020
% %
Equities 99.4
97.5
Cash
2
0.6
2.5
100.0 100.0
1
For asset allocation by sector, please see Note 5 to the Financial Statements.
2
Cash includes cash and cash equivalents, receivables and payables.
Attribution Analysis
The Materials & Resources sector had another excellent
year driven both by robust domestic demand and
favourable prices. VEIL’s representative in the sector is
Hoa Phat Group (“HPG”), by far the biggest full-valued
chain steel producer in Vietnam. After a strong 2020 in
which Net Sales were up 42% and Net Profit After Tax
and Minority Interest (“NPAT-MI”) was up 79% year-on-
year (“yoy”), HPG went on to deliver an even stronger
2021 in which Net Sales rose 66% to US$6.6 billion and
NPAT-MI surged 156% yoy to US$1.5 billion. With this
result, HPG became the second most profitable listed
company in Vietnam in 2021 and the second ever listed
company in Vietnam to deliver more than US$1 billion in
Net Earnings. The growth was underpinned by a 35% rise
in group sales volume, driven by a sharp rise in volumes
in the Hot-Rolled Coil segment. By the end of 2021,
HPG’s domestic market share rose further to 36.3%,
nearly triple that of its nearest competitor (at 12.5%
market share). Cash flow was remarkable with cash
flow from operations of over US$1.5 billion; and with
the last of the heavy capital expenditure for Phase 1 of
the Dung Quat Mega steel complex completed in 2020,
free cash flow was strong at US$674 million. However,
a large part of HPG’s success in 2021 was undoubtedly
thanks to favourable input and output prices and, as
such, HPG’s share price softened in late fourth quarter of
2021 when investors detected the reversal in trends. As
a result, whilst HPG’s share price rose 54% in 2021, the
price performance significantly lagged the company’s
earnings growth. Looking beyond the short-term
volatility of commodity prices, we believe HPG is still
in a unique position to deliver great long-term growth.
Vietnam’s long-term demand for steel and construction
materials remains high with growing urbanisation,
currently at c.37%. The ramp-up in infrastructure in the
next few years will serve to accelerate the urbanisation
rate that is already among the highest in the region.
For HPG, with the success of Phase 1 achieved, the
company has already started preparations to invest
in Phase 2 expansion of the steel complex, which is
expected to double current capacity. At the end of 2021,
the company was trading at just 6.0x Price-to-Earning
(“PER”) whilst delivering over 46% Return-on-Average-
Equity (“ROAE”), which was coupled with a strong
cash position. The PER is considered to be a highly
undemanding valuation for one of the biggest and most
profitable companies in Vietnam.
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
6
3. Portfolio Manager’s Report (Continued)
2021 was another stress test for the Banking sector
- another year of being hampered by the effects of
COVID-19. Two years of interrupted business and
economic activities created a challenging environment
for banks to maintain their asset quality while finding
growth. Banks that have been able to navigate such
conditions are rising to the forefront of the sector, with
private banks having grown to a size that is comparable
to that of the long-established State-Owned Commercial
Banks (SOCBs). VEIL’s holdings in the Banking sector
consist of what are now the biggest private banks,
including Techcombank (“TCB”), the second biggest
bank by profit in Vietnam, as well as VPBank (“VPB”)
and Asia Commercial Bank (“ACB”).
TCB’s rise in the Banking sector has been a long time in
the making, culminating in a 61% share price increase in
2021. The bank’s operational excellence is exemplary in
the sector. By the end of 2021, TCB’s Current Account-
Saving Account (“CASA”) ratio reached a historic high in
the sector at 50.5%. A high CASA, new syndicated loans
and a low-rate environment, all helped TCB maintain one
of the most competitive cost of funds in the sector. Its
Non-performing Loans (“NPL”) ratio was well maintained
at 0.7% with most of the restructured loans under
special COVID-19 regulation having been provisioned for.
In 2021, TCB reported 46% growth in NPAT-MI driven by
42% growth in Net Interest Income (“NII”) on the back of
Net Interest Margin (“NIM”) expansion to 5.6% from 4.9%
in 2020 and credit growth of 26%, one of the highest
in the sector. TCB’s Capital Adequacy Ratio (“CAR”)
under Basel II standard at 15.0% is one of the highest
in the sector in Vietnam. Even after TCB’s 2021 share
price rally, it was trading at 1.9x Price-to-Book (“PBR”)
on 22% ROE at the end of the year. Given its well-known
commitment to investing in the digital future, we believe
TCB is one of the most exciting names in the sector that
will continue to challenge for the crown of the most
profitable banks in Vietnam in the coming years.
VPB’s share price delivered an impressive 101% return in
2021 and was the best performing bank among VEIL’s
bank holdings. The strong rally was driven partly by
the finalisation of the strategic placement of 49% in FE
Credit, its consumer finance arm, to SMBC Consumer
Finance Co. Ltd. The deal helped unlock significant
value in FE Credit that has now been priced into VPB’s
share price. Fundamentally, 2021 has not been the
strongest year for VPB due to the COVID-19 impact on
the consumer finance business. On a consolidated level,
VPB’s Provisioning Operating Profit (“PPOP”) was up
21% but a surge in provisioning expense (up 31% yoy)
ultimately brought NPAT-MI growth to just 13% yoy. The
parent bank remained the bright spot with Pre-Tax Profit
(“PBT”) of the parent bank alone up 89% yoy. Given the
focus on the parent bank going forward, and in addition
to the capital raised from the FE Credit placement, more
exciting growth numbers are expected in the coming
years.
ACB also had a great 2021 with the share price rising
55%. Well-known in the sector as one of the banks with
the best quality assets, ACB finished 2021 with a NPL
ratio of just 0.8% and more than 209% in Loan-Loss-
Reserves ratio, reflecting the conservative nature of
the bank. The bank delivered a 30% increase in NII and
a 29% increase in Non-Interest Income in 2021. NIM
continues its expanding trend to 4.0% from 3.7% in
2020 thanks to a rising CASA ratio which reached 25%
by the end of 2021, the highest CASA ratio achieved for
the Bank. PPOP rose 46% yoy, though similar to TCB,
ACB has mostly provisioned for all of its restructured
loans under COVID-regulation with little risk of a spill-
over effect into 2022. As a result, provisioning expense
surged 2.5x in 2021 which resulted in NPAT-MI growth
of 25% for the year. Given the foundations ACB have
laid down in 2021, investors are looking forward to
more exciting growth in 2022. As VEIL’s longest bank
holding at 25 years, ACB offers a unique opportunity in
the banking sector that continues to be well balanced
between growth and a lower risk profile.
47.11
80.62
86.13
72.95
176.87
39.00
63.17
79.30
62.34
147.97
46.26
81.03
88.64
65.03
163.13
1Y 2Y 3Y 4Y 5Y
VE
IL (NAV
)
VN Index (r
eference index)
VN30 (c
omp)Source: Dragon Capital, Bloomberg
Graph 3: Cumulative Performance (% in US$ terms)
Vietnam Enterprise Investments Limited - Annual Report 2021
7
3. Portfolio Manager’s Report (Continued)
Table 4: Source of Income (US$)
Year to 31 December 2021 Year to 31 December 2020
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 721,527,436 346,398,761
Gains on disposals of investments 157,569,945 8,972,704
Total 886,625,488 363,152,731
Source: Dragon Capital
The Real Estate sector also had a strong 2021 as the
gradual ramp up in infrastructure throughout the
year started unlocking value for land banks that had
previously been dormant. Of VEIL’s property holdings,
Dat Xanh Group (“DXG”) had an exceptionally strong
year with a 155% share price increase after a tough 2020.
The company posted all-time high Net Sales of US$441
million, up 249% yoy, and NPAT-MI of US$51 million from
a loss of US$22 million in 2020, back to pre-pandemic
earnings levels. The rebound in earnings in 2021 was on
the back of handovers from the Gem Sky World project,
whilst major progress was made at Gem Riverside (over
3,100 units) that could see DXG re-launch the project
in the first half of 2022. Given the time lapsed and the
property price appreciation since the first launch (2018),
DXG is likely going to target a higher end segment for
the relaunch which would boost the overall profit of
the project. During the last two years, whilst COVID-19
restrictions have made progress in sales difficult, DXG
has been active on acquiring more land banks, especially
in the Binh Duong area. Over the next few years, DXG
is in a great position to launch 20-30 hectares of new
projects in the Ho Chi Minh City and Binh Duong areas
that could secure solid earnings growth for the company
for the next 3-5 years.
A theme that had emerged during 2020 and continued
to gather momentum into 2021 was the Industrial Park
sector. Beside Becamex IDC (“BCM”), the biggest
industrial park developer in the Binh Duong area, which
rose 60% during the year, VEIL also bought into Kinh
Bac City (“KBC”), one of the biggest private developers
in the Industrial Park sector. KBC has been one of the
more impressive turnaround stories in the last five years.
The company has long been known for its vast land
banks in great locations but uneven execution due to
various factors, not least the stringent legal environment
over the last five years. 2021 saw the breakthrough in
many aspects of its business including the revival of
the Trang Cat project, a 600 hectare urban zone that
was more than a decade in the making. The company
also posted Net Sales of US$187 million in 2021, up
97% yoy, whilst its Net Earnings After Minority Interest
were US$34 million, up over 2.5x yoy. In its most recent
Extraordinary General Meeting, KBC guided 2022 Net
Sales of US$426 million, up 120% yoy, and Net Earnings
of US$196 million, up 3.7x yoy, underlining the bright
outlook of the company once their assets have been
unlocked.
Table 3: Major Sector Return and Contribution
Sector Portfolio return VN Index return Portfolio contribution
% % %
Banking 16.5
49.3
41.6Real Estate & Construction 44.2 41.4 11.7
Materials & Resources 54.0 68.3 6.9
Retail 74.5 78.5 5.8
Software & Services 88.2 85.8 3.4
Diversified Financials 126.8 117.4
2.0
Capital Goods 151.3 50.9 1.3
Consumer Durables & Apparel 22.1 61.3
0.5
Energy 15.3 14.5
0.0
Source: Dragon Capital, Bloomberg
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
8
3. Portfolio Manager’s Report (Continued)
VEIL’s representative in the consumer sector, Mobile
World Group (“MWG”), the biggest retailer in the
country had a great 2021, as its share price soared
74%. 2021 was anything but straightforward for a
retailer such as MWG. The country’s extended period
of lock-down enticed retailers to get creative and
utilise unconventional approaches to serve their
customers, something that MWG’s Bach Hoa Xanh
(Green Grocery, “BHX”) achieved tremendously well.
Once the restrictions were lifted, however, the pent-
up demand in the economy meant both the mobile
phone and consumer electronics segments were able to
deliver exceptional results in the fourth quarter of 2021.
Even with nearly half a year operating under severely
restricted operations, MWG was still able to deliver 13%
Net Sales growth and 25% in NPAT-MI growth in 2021
compared with 2020. The unique conditions in 2021
also provided plenty of opportunities as a number of
smaller players in various segments were wiped out, at
the same time, increasing the availability of well-located
commercial space. Following the lock-down period,
MWG started to pilot programmes for several new
segments such as AVAKids for mom-and-kid products,
AVASports for sporting goods, AVAFashion for apparel
products and a renewed focus on An Khang Pharmacy.
The chairman of MWG recently shared his vision for
2022: beside the on-going expansion and refining the
traditional segments of mobile phone and consumer
electronics, BHX is expected to slow its expansion
to focus on efficiency and profitability. The chairman
also left the door open for a potential pre-IPO/IPO
opportunity at BHX which could unlock substantial
hidden value for MWG.
Last, but not least, was the Software & Services sector
which, for VEIL, is represented by FPT Corp (“FPT”),
one of Vietnam’s leading tech companies. The share
price rallied 87% in 2021 with a considerable rerating
reflecting improved investor sentiment and a much-
improved Investor Relations programme. Fundamentally,
the company was still able to maintain its double-digit
growth with top line growth of 20% yoy and bottom line
23% yoy in 2021. The top line growth was underpinned
by strong corporate digital transformation demand both
from US/APAC and domestic markets (up 23% yoy), as
well as a solid Telecom’s business (up 11% yoy) and an
increasingly exciting Education business (up 43% yoy).
In its latest guidance, FPT shared that the company is
well positioned to deliver similarly good numbers for
2022 if not better.
Table 5: Ten Year Record
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Total net
assets US$m 400.85 792.65 974.80 1,553.28
473.78
512.941,440.02 1,474.62
1,799.69 2,606.98
Total net
assets GBPm 1,148.24 1,130.67 1,113.13 1,316.57 1,924.75
n/a n/a n/a n/a
788.91NAV per
share US$ 2.38 3.59 4.41 7.06 6.56 12.21
3.07
3.40 6.76
8.30NAV per
share GBP 5.22 5.15 5.10
n/a n/a n/a n/a
3.576.07
9.01
Share
price US$ 1.91 2.47 2.82 2.99
n/a n/a n/a n/a n/a n/a
Share
price GBP 4.42 4.57 4.745 5.45 7.65
n/a n/a n/a n/a
2.96Earnings
per share US$ 0.40 0.64 0.32 2.64 (0.50) 0.20 1.52 3.90
0.15
0.82Discount
to NAV % (19.75) (19.54) (17.06) (16.71) (17.09) (15.27) (11.26) (6.96) (10.21) (15.09)
Source: Dragon Capital
Vietnam Enterprise Investments Limited - Annual Report 2021
9
3. Portfolio Manager’s Report (Continued)
Source: Dragon Capital
(50)
(40)
(30)
(20)
(10)
0
10
20
30
Ja
n-
05 Jul-
07No
v-
09
Ap
r-1
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ep
-1
4F
eb-1
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%
Graph 5: Discount/Premium to NAV (%)
NAV and share price are based on US$.
0.0
0.5
1.0
1.5
2.
0
2.
5
-10
0
10
20
30
40
50
60
2020-12-31
2021-01-31 2021-02-28 2021-03-3
12
021-04-3
02
021-05-31 2021-06-3
02
021-07-31 2021-08-3
12
021-09-3
02
021-10-3
12
021-11-30 2021-12
-31
Tu
rnover Volume (RHS)
Price-US$
(L
HS
)
NA
V-US
$ (LHS
)Graph 4: Share Price & NAV
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
10
3. Portfolio Manager’s Report (Continued)
Table 6: Performance
31 December 2021 31 December 2020
Total net assets (US$) 2,606,977,922 1,799,691,203
Total net assets (GBP) 1,924,750,049 1,316,574,898
Number of outstanding shares 213,533,847 216,935,108
NAV per share (US$) 12.21 8.30
NAV per share (GBP) 9.010
6.07
Share price (GBP) 7.65 5.45
Discount to NAV (%)
1
(15.1) (10.21)
GBP/US$ exchange rate 1/0.738307 1/0.731556
Ongoing charges (%)
2
1.89 2.13
1
Following the listing on the London Stock Exchage, the share price is quoted in GBP only.
2
Calculated as operational expenses divided by average NAV for the year. Ongoing charges have been prepared in accordance with the Association of Investment Companies (“AIC”)
recommended methodology.
31 December 2021 31 December 2020
% %
NAV returns (US$) 44.86
22.04
NAV returns (GBP) 46.19
18.28
Share price returns (GBP) 40.37
14.86
VN Index (price return - VND terms)
35.73
14.87
VN Index (total return - US$ terms)
3
39.00
17.40
3
Source: Bloomberg
Table 7: Period
’
s High and LowYear to 31 December 2021 Year to 31 December 2020
High Low High Low
NAV per share (US$) 12.62 8.00 8.30 4.47
NAV per share (GBP)
9.47
5.836.07
3.60Share price (GBP) 7.80 10.48 5.56 3.27
Source: Dragon Capital, London Stock Exchange
Vietnam Enterprise Investments Limited - Annual Report 2021
11
Outlook
With a large part of the world, including Vietnam, now
vaccinated, the yearning for a sense of normalisation is
perhaps even more than it was a year ago. Undoubtedly,
potential new variants of the COVID-19 virus may
complicate matters but the desire and the determination
of nations that have a highly vaccinated population to
get back to normal life is high. A stimulus package of
US$15 billion has been put together in order to jump
start the Vietnamese economy with a target of 6.0-6.5%
GDP growth this year. Despite global macroeconomic
headwinds in the form of surging inflation, a disruptive
supply chain and an environment in which Central Banks
are looking to tighten monetary policies, Vietnam’s solid
macroeconomic position remains steadfast. Inflation is
relatively low compared with the West and the State
Bank of Vietnam is likely to continue its accommodative
monetary policy to support the economy. With steady
FDI and a surplus trade balance, foreign exchange
is expected to be stable. The key focus domestically
is now, perhaps, on the roll-out of the infrastructure
spending programme. An effective implementation
could help Vietnam get back to pre-pandemic GDP
growth of 7.0%, if not more.
Looking back at the 2020-2021 period during which
almost all aspects of life and business were heavily
disrupted, Dragon Capital Group’s (the “Group’s”) top-
60, which accounts for 60% of the VN Index market cap,
continued to deliver very competitive EPS growth of
5.6% in 2020 and 42% in 2021. This helped to keep the
Group’s top-60 within a very reasonable range between
13.0-15.0x earnings in the last two years, despite the
VN Index continuing to hit new all-time highs. Against
this macro backdrop, we continue to see our positions
in the three interlocking sectors of Banking, Real
Estate and Materials & Resources doing well around
the infrastructure investment theme. In contrast, Retail
and Software & Services are still a great way to play
the Consumption theme that is expected to rebound
strongly as the “re-opening” economy accelerates. Given
the current level of the index and the opportunities
in the market, we expect 2022 to be a good year for
deal-making activities, a historical strength for the Fund.
VEIL has anchored most of the biggest IPOs and capital
raising exercises in Vietnam in the last ten years and we
are actively looking for the next market leader in our
deal pipeline.
3. Portfolio Manager’s Report (Continued)
Portfolio Manager
Vu Huu Dien
Dien has a master’s degree in Business and Information System co-granted by
the Solvay Business School of ULB (Bruxelles, Belgium) and the Ho Chi Minh City
Open University. In 2000, he joined Dragon Capital as a senior analyst and later
was promoted to Head of Corporate Finance and then Co-Manager of Vietnam
Enterprise Investments Limited (“VEIL”), Vietnam Growth Fund Limited (“VGF”)
and Vietnam Dragon Fund Limited. Since 2010, he is the Portfolio Manager of
VEIL and, in 2015, VGF was merged into VEIL, making VEIL the largest Vietnam-
focused investment fund. He is also a Deputy CIO, leading Dragon Capital’s deal
origination group and helping the CIO oversee the investment team.
Vu Huu Dien
Portfolio Manager
Vietnam Enterprise Investments
Limited
28 April 2022
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
12
4. ESG and Climate Change Report
ESG - OUR JOURNEY
Responsible Investment Policy
As a long-term investor committed to sustainability, all
investments made by Vietnam Enterprise Investments
Limited (“VEIL”) are subjected to a rigorous
environmental, social and governance (“ESG”) screening
process adopted by Dragon Capital Group (the
“Group”).
2022 will mark the 20
th
year since the Group first
implemented its ESG Policy. Since the implementation of
the initial policy that simply reflected the desire to invest
responsibly and sustainably in Vietnam, the ESG Policy
has gone through seven revisions over the last 20 years.
The most crucial revision was, perhaps, the formal
establishment and implementation, in collaboration with
the International Finance Corporation (“IFC”), of an ESG
Management System (“ESMS”) in 2016, that today, has
become central to every aspect of VEIL’s investment
process.
ESG Management System, Procedure and Updates
The ESMS involves a 10-step ESMS screening procedure,
which includes:
(1) a pre-screening check against an exclusion list and
to identify high-risk areas;
(2) 43 in-depth questions to assess the company’s E&S
performance in accordance with the IFC’s eight
Performance Standards; and
(3) a post-investment monitoring and engagement
process.
Expanding the ESG Core Team
The process is overseen by the ESG Core Team, which
consists of a cross-section of senior members of the
Group, supported by the Research Team. In recognition
of the increasingly complex ESG challenges facing the
investment world today, the team is looking to expand
the ESG Core Team with the addition of dedicated ESG
personnel.
The incoming ESG managers will be tasked with
expanding the team’s knowledge, identifying key trends
in international ESG standards and ensuring compliance
by all investments made by VEIL.
Further Integrating ESMS Into the Investment Process
Having integrated the ESMS into the Group’s internal
systems at the time of its inception, allowing the ESG
Core Team to monitor the compliance of all investments
made by VEIL, the ESG Core Team has further integrated
the ESMS into the newly-established internal knowledge
database.
The new integration allows VEIL’s Portfolio Manager to
efficiently manage and track all existing and prospective
investments, and to keep a record of previous incidents
and engagements in one centralised database.
Upgrading the ESMS
It has been five years since the introduction of the ESMS
and the ESG Core Team has decided that now is the
right time to incorporate all the experiences and lessons
of the last five years into upgrading the current ESMS.
The new system is expected to better address key
areas of focus in the current ESMS framework whilst
streamlining other areas that are rarely triggered for
VEIL’s investees.
Establishing an ESG Rating at VEIL Portfolio Level
A new initiative trialled in 2021 is a system that
extrapolates the current individual ESG rating of each
of VEIL’s investees into a rating for the portfolio as a
whole. This process allows VEIL’s Portfolio Manager to
have an overall view of the ESG risk at portfolio level
and highlights areas that require particular focus and
monitoring in terms of E&S risk.
As the ESG Core Team works to upgrade the current
ESMS, a system that evaluates the E&S risk at portfolio
level will be developed as well as enhancing the existing
process for screening individual companies.
Scoring the Unscored: The Banking Sector
The current ESMS screening procedure was originally
established to evaluate the E&S risks of non-financial
enterprises in Vietnam. Overtime, the ESG Core
Team has increasingly recognised the need to find a
framework in order to evaluate the financial sector and,
specifically, the Banking sector, which is the biggest
sector in the Vietnam Index.
A screening process has been established which
references different frameworks, including the
Sustainable Banking Assessment (“SUSBA”) by WWF,
the Group’s current ESMS Toolkit by IFC, and ESG
disclosures by Global Banks such as HSBC, MUFG, Wells
Fargo and Citibank.
Trial screenings have been carried out and the
performance of the banks will be monitored in order
to help the ESG Core Team refine the current process
before incorporating it into the new ESMS.
Vietnam Enterprise Investments Limited - Annual Report 2021
13
4. ESG and Climate Change Report (Continued)
Active Ownership
Active ownership has been a key element of VEIL’s and
the Group’s approach to promoting good corporate
governance and safeguarding its shareholders interests.
The three main components of the ESG Core Team’s
active ownership strategy are: advocacy, voting rights
and engagement.
Advocacy
Policy advocacy is essential for responsible investors,
and a key to strengthening the stability and integrity
of the financial sector and delivering wider economic
benefits. The Group has been at the forefront of investor
initiatives to encourage corporate sustainability,
transparency and accountability, and is involved in
dialogue with policy makers on legislation for capital
markets, renewable energy and ESG practices.
One of the biggest challenges to ESG practices in
Vietnam is the lack of awareness from local businesses,
companies and regulators. To address this, the Group
has been a keen and a long-term advocate for the
promotion of ESG awareness and adoption in Vietnam.
The advocacy efforts of the ESG Core Team have ranged
from: (1) organising workshops and seminars to improve
knowledge and understanding of ESG; to (2) promoting
disclosure and transparency via its sponsorship of the
Annual Report Award from 2008 until its transformation
to the Listed Company Award in 2017; to most recently
(3) a submission to the State Securities Commission
(SSC), the governing body of capital markets in
Vietnam, for the consideration of mandatory disclosure
of greenhouse gas emissions by public companies in
Vietnam.
In May 2021, the Vietnam Business Forum (VBF)
made the decision to establish the Environmental
Working Group (“EWG”). The objective of the EWG
is to examine the effects of environmental issues on
businesses in Vietnam and make suggestions on how
the Government and businesses can work together
to address those matters for the benefit of Vietnam,
including its businesses, people and animals. The Group
has been an active member of the EWG. In August 2021,
the Group provided its comments and suggestions on
draft government legislation relating to environment
protection and natural resource use.
The Group is a member and a sponsor of several leading
local and international initiatives for the promotion of
sustainability and governance. The full list can be found
in Table 1 on pages 15.
Voting Rights
Within the ESG framework, the exercising of voting
rights is one of the primary tools for VEIL to ensure its
interest and those of its investees are aligned and well-
protected. The Group diligently and prudently votes on
behalf of VEIL at all shareholder meetings called by its
investees, whether general or extra-ordinary.
One new feature of the voting process, that has become
prominent in the last two years due to the COVID-19
pandemic is e-voting, and the Group similarly ensures
that all of its e-votes are registered adequately.
Engagement
The Group believes that it has a fiduciary responsibility
to actively monitor and engage with the companies in
which VEIL invests.
For the Group and VEIL, engagement is another primary
and essential tool within the ESG framework to influence
investee companies to take positive steps toward
improving ESG practices and disclosures. The ESG Core
Team maintains a dialogue with all of VEIL’s investee
companies on a regular basis.
Through frequent conversations and discussions with
senior management of VEIL’s investee companies, the
Group shares its views on, and experience of, company
business strategy and development, mergers and
acquisitions, operation performance, remunerations, ESG
issues and general risk management, as well as more
specific and topical issues such as climate change.
For serious incidents which require more detailed
engagement, the Group may engage specialist service
providers to contribute their expertise. In such cases,
the Group sets engagement objectives based on the
particular issues and circumstances of the investee
company, and where such companies fail to meet
the appropriate standards (and/or represent a risk to
shareholder value), the Group works to encourage and
guide improvement.
Table 2 on page 16 to 17 sets out some examples of
engagements through in-house-led discussions in 2021.
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
14
4. ESG and Climate Change Report (Continued)
Institutional Investors
Group on Climate
Change (“IIGCC”)
Member Since 2010
IIGCC is an investor network on climate change; the group works
with business and policy makers, as well as investors to help mobilise
capital for the transition to a more sustainable economy.
Asian Corporate
Governance
Association (“ACGA”)
Member Since 2010
ACGA is an independent organisation dedicated to implementing
effective corporate governance practices throughout Asia. ACGA
believes that good governance is fundamental to the region’s
economies and capital markets.
Principles for
Responsible
Investment (“PRI”)
Member Since 2013
The Group believes that joining UN PRI as a signatory highlights
its ongoing commitment to the promotion of a more sustainable
financial system. It also helps the Group’s professionals to engage
with and learn from their peers about the challenges related to ESG.
Nexus for
Development
Member Since 2013
Nexus for Development drives access to finance in developing
economies across Asia to increase sustainable energy and water
resource development, advance climate positive solutions, and scale
local implementers.
The Vietnam Institute
of Directors (“VIOD”)
Member Since 2018
Established in 2018 VIOD aims to advance board professionalism,
promote business ethics and transparency, create a pool of
independent directors, build a network to connect corporate leaders
and stakeholders, and help companies gain investor confidence.
Dragon Capital
Chair in Biodiversity
Economics at the
University of Exeter
Appointed in May 2020
The creation of the “Dragon Capital Chair in Biodiversity Economics”
will look to address the central question of whether there is any
correlation between biodiversity and the success of the economy
and whether individuals and organisations can, and should, place an
economic value on biodiversity.
Institute of Strategy
Policy on Natural
Resources and
Environment
(“ISPONRE”)
Strategic agreement to strengthen biodiversity since 2019
Undertakes the E&S valuation of Ca Mau’s wetland and Pu Mat
national park that demonstrates the economic value of biodiversity
and the consequences of their degradation. Thus, advocating for
mainstreaming considerations for the conservation and restoration of
biodiversity and ecosystems values.
Vietnam Listed
Company Awards
(“VLCA”)
Co-organiser and sole sponsor since 2008
VLCA was initiated in 2008 by the Group. VLCA has been co-
organised by the Ho Chi Minh Stock Exchange, the Hanoi Stock
Exchange, the Vietnam Investment Review and the Group. Since 2013,
a further ESG awareness push, ARA’s organisers have launched a
more general industry-wide initiative in the form of the Sustainability
Reporting Awards and Best Corporate Governance Awards.
Table 1: List of Leading International and Local Organisations
Vietnam Enterprise Investments Limited - Annual Report 2021
15
4. ESG and Climate Change Report (Continued)
Table 2: Sample of Engagement Report
Company Industry Issue Details of engagement Decision and outcome
Company
A
Steel In May 2021,
Company A
announced the
acquisition of an
iron ore mine in
the Roper Valley,
Australia, which
posed an E&S risk.
The open-pit,
20-year life iron
ore mine has large
reserves (300MT)
ranging in low
grade ore 56-58%.
Reserve potential
will be explored
for one year and
then production
is expected to
commence in 2022.
Desktop research on the
Roper Valley iron ore
mining project using the
previous owner’s notice of
intent document conducted
by the environmental
consulting agency.
Phone interview with
Company A’s CEO to
address the Group’s ESG
concerns and to request the
ESMS report submitted to
Australian Government (10
June 2021).
the Group advised
Company A’s Chairman
and CEO on the promotion
of ESG practices and
public communication of
sustainability to the market.
The Group’s key findings on
E&S potential
impacts
and
proposed mitigationmeasures covered following aspects:
• Surface Water
• Ground Water
• Biodiversity & Threatened Species
• Historic & Cultural Heritage
• Social & Economic
• Noise & Vibration
• Air Emissions
Positive:
Company A’s management
openly discussed with the Group and the
Group’s comments were well-received.
Company
B
Real
Estate
Concerns over
Company B’s
capital raising
plans via private
placements:
• Ambiguity on
pricing
• At significant
discount rate
(20-30%) to
market price
As this would impact
minority shareholders’
value, the Group raised
concerns and proposed
alternative plans to
Company B’s management
to mitigate governance
issues while making sure
that Company B could still
raise capital for its business
expansion.
The Group suggested a minimum price
based on peers’ and Company B’s own
historical valuations; the Group does not
accept the minimum price to be lower than
book value in any scenario and voiced its
strong opinion on this.
Positive:
The Group’s proposals were well-
received by Company B’s management.
Company
C
Real
Estate
Concerns over
Company C’s
capital raising
plans via private
placements:
• Ambiguity on
pricing
• At significant
discount rate
(20-30%) to
market price
As this would impact
minority shareholders’
value, the Group raised
concerns and proposed
alternative plans to
Company B’s management
to mitigate governance
issues while making sure
that Company B could still
raise capital for its business
expansion.
The Group suggested a minimum price
based on peers’ and Company B’s own
historical valuations; the Group does not
accept the minimum price to be lower than
book value in any scenario and voiced its
strong opinion on this.
Positive:
The Group’s proposals were well-
received by Company B’s management.
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
16
4. ESG and Climate Change Report (Continued)
Company Industry Issue Details of engagement Decision and outcome
Bank A Banking E&S
assessment
for banking
sector
In 2021, the Group developed
an E&S assessment for
the banking sector based
on the SUSBA framework
and by referring to many
global banking ESG reports
(including HSBC, Wells
Fargo, Citibank, MFUJ etc.)
The Group conducted
interviews with both state-
owned commercial banks
(“SOCBs”) as well as private
banks in Vietnam to study
their E&S risk management
systems.
While the SOCBs will need
more time to construct
E&S management systems,
private banks are ahead of
the curve and particularly
Bank A.
The E&S risk management system used in Bank
A’s credit extension activities was built in 2016
in accordance with IFC standards and with the
support and advice of experts from the IFC.
According to the E&S risk management policy in
Bank A, all projects are classified and assessed
for E&S risk before granting credit. For projects
that are sensitive or have serious E&S risks, Bank
A applies the following principles in turn:
• In-depth evaluation of E&S; Require the
establishment of an E&S Action Plan
and implementation of effective risk
prevention solutions; Increased frequency
of post-disbursement monitoring on E&S
compliance.
• Refusing to grant credit if the loan does not
meet Bank A’s E&S hedging conditions.
• So far, no limit yet for coal fired power
plants but coming guidance would apply no
credit limit to this segment.
In 2021-2025, Bank A will also focus on
developing green credit and social credit (for
example, credit for women-owned enterprises).
Currently, green loans make up 3.5% of Bank A’s
loan portfolio.
In August 2021, the German Organization for
International Cooperation (GIZ) implemented an
action plan to help the banking sector in Vietnam
build capacity to identify, assess and disclose
gas risks and opportunities, in accordance with
TCFD standards. Bank A has been selected as
one of the pilot banks for this project, to be
directly involved in climate risk assessment tools
and opportunities as well as exploring climate
impact studies in Vietnam. Training activities
were carried out and completed by the end of
December 2021. Having receiving received the
relevant training and experience, Bank A will
develop a roadmap to disclose climate-related
financial risks.
Positive:
Bank A’s management has openly
discussed E&S assessment with the Group and,
in the Group’s opinion, Bank A is proactive
and ahead of its peers in constructing E&S
management system.
Vietnam Enterprise Investments Limited - Annual Report 2021
17
4. ESG and Climate Change Report (Continued)
Assessing and Understanding the Impact of
Climate Related Risks
Governance and Strategy
Climate change has progressively become a central
topic in ESG discussions. The Board of Directors of VEIL
recognises the importance of understanding of the
challenges posed to Vietnam, its economy, businesses
and communities by climate change and has appointed a
Board member, Entela Benz-Saliasi, who is a specialist in
the subject with noted credentials.
In continuation from last year, the Board has chosen
to follow the recommendations of the Task Force
on Climate-Related Financial Disclosure (“TCFD”),
which include four pillars: Governance, Strategy, Risk
Management and Metrics & Targets. TCFD remains in
favour with regulatory support in the UK (where VEIL is
listed) and Hong Kong (where the Investment Manager is
regulated).
In order to meet the complexities of, and the rising focus
on, climate change, the Group has elected to retain
the service of a third-party specialist, Intensel Limited
(“Intensel”), to continue its analysis of the impact of
climate change on VEIL’s portfolio.
The subscription to Intensel’s Software-as-a-Service
(“SaaS”) will allow the ESG Core Team to perform an
analysis of the impact of climate change on VEIL’s
portfolio on an on-demand basis, both periodically and
at any time there are changes to the investees in the
portfolio. SaaS customisation feature also allows for
greater accuracy of the analysis.
The assessment of ESG risks in the portfolio has become
a regular agenda item for the Board’s discussions since
2021. The key assumptions and findings in relation to
VEIL’s portfolio as at the end of 2021 are discussed in
the sections below.
Climate Assumption
A fundamental debate when it comes to climate change
has been the projected pathway of the impact of climate
change under different scenarios.
Representative Concentration Pathways (“RCPs”) are
greenhouse gas concentration trajectories adopted
by the IPCC and used in the IPCC’s Fifth Assessment
Report. The RCPs describe four scenarios in which the
Earth’s climate might change in the future, for climate
research and modeling purposes.
The four RCPs range from very high (“RCP 8.5”) through
to very low (“RCP 2.6”) future concentrations and are
defined by their total “radiative forcing” values in the
year 2100.
The three scenarios that have been chosen for VEIL’s
analysis are:
(1) RCP 8.5: otherwise known as the Business as
usual (“BAU”) scenario. Under this scenario, it is
assumed that there will be no change to current
behaviours and, as a result, no nation will meet
its Nationally Determined Contributions (“NDCs”)
under the Paris Agreement. Thus, RCP 8.5
effectively provides a worst-case scenario impact
assessment. In this scenario, global temperature is
expected to rise around 4 degrees by 2100.
(2) RCP 4.5: the intermediate stabilisation pathway.
Under this scenario, global temperature is
expected to rise around 3 degrees by 2100.
(3) RCP 2.6: the very stringent pathway. Under
this scenario, global temperature increases are
expected to keep below 2 degrees by 2100.
Risk Management
Under TCFD recommendations, the two primary climate-
related risks are “Physical Risk” (extreme weather
conditions) and “Transition Risk” (regulatory and
carbon). As a developing country, the NDC committed
to by Vietnam under the Paris Agreement is much less
onerous than those of more developed countries. As
such, Transition Risk is less of an issue for Vietnam than
Physical Risk.
In the following sections, both Risks will be assessed
following the TCFD’s guidance that at least one of the
following three sets of metrics should be disclosed:
Implied Temperature Rise, Climate Value at Risk (“VaR”)
and Weighted Average Carbon Intensity (“WACI”).
Physical Risk
Vietnam’s geographical features, being located close
to the equator and having a long coastline with rapid
urbanisation in the Mekong Delta, mean the country is
susceptible to a number of extreme weather conditions:
(1) river flooding; (2) rainfall floods; (3) storm surges; (4)
typhoons; and (5) extreme heat.
For its analysis of Physical Risk, the Group evaluates
the potential VaR of the physical assets that, which are
most critical to the operation of VEIL’s investees under
different RCP scenarios in the target period 2030-
2050. This exercise gives the Group an insight into the
potential damage each weather event would have on
these assets and VEIL’s investees.
Physical Risk assessment is particularly relevant for
VEIL due to its investees’ high concentration of business
operations in two main cities : Hanoi and Ho Chi Minh
City. Both are at high risk of flooding (from river, rainfall
and storm surge) with 69% of Hanoi and 61% of Ho Chi
Minh City considered low-lying.
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
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4. ESG and Climate Change Report (Continued)
0
10
5K
m
0
1
2
3
4
5
Very
High Vulnerable
to floods
Very
High
High
Moderate
Low
Very
lo
w
Hano
i
Ho Chi Minh
City
01
0
5K
m
HAND (m
)
0
Ve
erabry high
Vu
ln
le
to
flood
s1
Ve
ry high
2 Hi
gh
3 M
ode
ra
te
4
Lo
w
5
Ve
ry Lo
w
HAND (m
)
Chart 1: River Flooding and Rainfall Flood Risk in Hanoi and Ho Chi Minh City
(Source: Intensel)
Pr
esent Day RCP 2.6 RCP 4.5 RCP 8.5
Chart 2: Areas around Hanoi and Ho Chi Minh City Most Affected in the Event of Storm Surge
(Source: Intensel)
Vietnam Enterprise Investments Limited - Annual Report 2021
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4. ESG and Climate Change Report (Continued)
Pr
esent Day RCP 2.6 RCP 4.5 RCP 8.5
Chart 3: Areas of Central Vietnam At Highest Risk of Typhoon Damage
(Source: Intensel)
Pr
esent Day
RCP 2.6 RCP 4.5 RCP 8.5
Chart 4: Areas of Southern Vietnam At Most Exposed to Extreme Heat Events
(Source: Intensel)
Given its close proximity to the equator, Southern Vietnam is the area most exposed to extreme heat events;
however, under RCP 4.5 and 8.5, the rising temperature by the year 2050 is also expected to have a material effect
on assets in Central and Northern Vietnam.
Additionally, one of VEIL’s top-5 investments also has its main production facility in Central Vietnam, which is highly
vulnerable to the increasing risk of typhoon damage. The current model predicts a potentially high risk of typhoon
for the central area under RCP 4.5 and 8.5, including up to Category 5 levels of wind speed.
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
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Under a RCP 8.5 scenario, the current model predicts that up to 7.4% of value of the physical assets (tn The Group’s
assessment) of VEIL’s investees could be at risk due to the combination of the five extreme weather events analysed
above by the year 2030. This figure rises to 8.5% by the year 2050.
4. ESG and Climate Change Report (Continued)
Loss in %
6
4
2
0
2020
5.8%
2050
2050
2030
2020
8.5%
2030
Ye
ar
7.4%
Year Loss for RCP 8.5
8
Chart 5: Annual Loss Estimate Under RCP 8.5 by 2050
(Source: Intensel)
Loss in %
6
4
2
0
6.7%
2.6
Representative concentration path
ways (RCP
s)
4.5 8.5
6.7%
8.5%
RCP 8.5
RCP 4.5
RCP 2.6
RCP Loss for Year 2050
8
Chart 6: Annual Loss Estimate By 2050 Under Various RCP Scenarios
(Source: Intensel)
Taking 2050 as the year of assessment, the potential Climate VaR for the physical assets (in the Group’s assessment)
of VEIL’s investees under scenarios RCP 2.6, RCP 4.5 and RCP 8.5 are 6.7%, 6.7% and 8.5% respectively.
Under a RCP 8.5 scenario, all five weather events in the Group’s assessment are expected to pose greater challenges
than historical events have ever posed.
Rainfall Flood
Historical data
Projected impact
Medium-High
Medium
Medium
High
Ty
phoon
Storm Surge
Extreme Heat
River Flood
i
i
i
i
Medium-High
i
Chart 7: Projected Physical Risk Exposure Compares to Historical
(Source: Intensel)
Vietnam Enterprise Investments Limited - Annual Report 2021
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Transition Risk
Whilst Vietnam remains comfortably on track to
not exceed its disclosed NDCs, due to its status as a
developing country, the Government recognises the
climate change risks facing the country.
Thus, at the 26
th
United Nation Climate Change
Conference, the Prime Minister of Vietnam made a
commitment to reach net-zero emissions for the country
by 2050.
This announcement shows not only that the Government
of Vietnam recognise the challenges it faces but also
its determination to transform the economy and to
contribute to solve the climate change issue.
Metrics
TCFD recommends that reporting entities disclose
management metrics regarding relevant climate-related
risks and forward-looking targets.
For the Group and VEIL, both of these remain an
immense challenge because of the scarcity of any
carbon or climate data disclosures among listed
companies in Vietnam. Furthermore, the methodology
and the models used to estimate the metrics
recommended by TCFD remain relatively new in
Vietnam.
In light of the lack of data availability, to assess the
Physical Risk, the Group has used the Intensel’s SaaS
platform that models Earth’s Climate using a system of
AI-enhanced Numerical Weather Prediction models at
asset-level precision. The platform uses an engineering
approach and robust financial modelling to convert
climate risk into dollar value.
The estimate for 2021 came to US$91 million, up from
US$55 million last year. The increase was in part due to:
(1) the increase in value of the assets under assessment
over the last 12 months, thus resulting in a higher
estimated loss; (2) the change in composition of the
portfolio; and (3) an improvement in data accuracy.
However, relative to the Total Net Assets of the VEIL’s
portfolio, 2021’s figure (3.5% of VEIL’s Total Net Assets
at the end of 2021) was only 0.5% higher than last year’s
figure (3.0% of VEIL’s Total Net Assets at the end of
2020).
For Transition Risk, by benchmarking VEIL’s portfolio
companies to similar companies in other jurisdictions,
the Group was able to arrive at an estimate of the annual
greenhouse gas emissions of the VEIL portfolio.
The figure for 2021 stood at around 115,000 tonnes of
carbon dioxide equivalent, nearly 40% less than the
previous year’s estimate of 190,000 tonnes.
The key difference between the estimates has been (1)
a smaller exposure to the Oil and Gas sector in 2021
as compared to 2020; and (2) an improvement in data
classification.
Since the last annual report, the carbon credit under
the EU Cap and Trade system has steadily increased
from US$52/tonne to US$80/tonne. So, despite a much
smaller estimate of carbon emissions than last year,
the theoretical cost of offsetting VEIL’s carbon output
annually only dropped around 8% to US$9.20 million
compared to US$9.95 million in 2020.
Weighted Average Carbon Intensity
As carbon metrics disclosures by Vietnamese companies
remains a distant goal, other benchmark comparisons
drawn from similar companies in other jurisdictions were
used to produce an estimated WACI for VEIL, which
stands at 110 tCO2e/$M.
This is slightly higher than last year’s estimate of 97
tCO2e/$M; however, it remains only around one third of
the same metric published by the MSCI Emerging Market
Index (322.9) and less than half of the MSCI Emerging
Market ESG Leaders (225.4).
Forward looking target
The Group continues to work with various regulatory
bodies on two initiatives: the first being the disclosure of
carbon information by listed companies and the second
being a process and/or platform, through which carbon
credit certifications could be obtained and traded
among interested parties.
Carbon Neutrality of Investment Manager
The Group has been carbon neutral for scope one, two
and three activities, since 2005. This has been achieved
through biogas offset programmes established by the
Netherlands Development Organisation and Vietnam’s
Ministry of Agriculture and Rural Development.
Over the lifespan of the project, 179,583 biogas plants
have been built in 55 provinces, benefiting 850,000
Vietnamese users and approximately 485,000 tonnes of
CO2 are reduced annually.
The programme is certified to the Gold Standard of
Voluntary Carbon Emission Reductions.
4. ESG and Climate Change Report (Continued)
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
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4. ESG and Climate Change Report (Continued)
Notes on Data Sources and Climate Modeling
Disclosure and concrete data accumulation remain the
biggest challenges to assessing ESG risk, in general and
in particular, climate change risk.
Despite the recent commitments from the Government
of Vietnam at COP26, initiatives locally to improve the
disclosure of these data have yet to materialise into
actual policy.
As a result, the assessment of VEIL’s climate-risk
exposure remains a best-effort estimate, though it is an
important starting point.
The study of potential physical and transitional
risks from climate change for the VEIL portfolio was
performed by Intensel Limited.
Intensel is a Climatech intelligence firm based in Hong
Kong specialising in the assessment of physical and
related financial risks of climate change.
Intensel’s platform consists of terabytes of climate and
socioeconomic data, using peer-reviewed models like
RCMs- WRF, GCM data sets, Hec-Ras, Hec-HMS, SLOSH
by NOAA, among others, in addition to several credible
tapped and untapped satellite sources.
The stress-test scenarios and forward-looking climate
analysis to provide a broader range of climate and
financial projections on a street (asset) level globally.
Intensel’s rigorous methodology remains consistent and
adaptable to new datasets, allowing all modelling and
output to be globally scalable, while standardised and
interregional comparable.
Entela Benz-Saliasi is a director and shareholder in
Intensel. The Group is a convertible lender to Intensel.
Biodiversity
IFC Performance Standard 6 (PS6)
Under the current ESMS, all existing and prospective
investments are screened for their risk exposure for
potential impacts to the existing biodiversity sphere in
their existing operation and future expansion.
Dragon Capital Chair in Biodiversity Economics
The Dragon Capital Chair in Biodiversity Economics was
established in 2020 at Exeter University in the UK with
the aim of researching the link between conventional
economics and the growing study of natural capital.
The Chair has four areas of focus: (1) academic research
into the measurement of biodiversity; (2) public policy
initiatives; (3) financial sector responses; and (4)
institutional frameworks.
Institute of Strategy, Policy on Natural Resources and
Environment
The Institute of Strategy, Policy on Natural Resources
and Environment (ISPONRE) is the core research
institute of Vietnam’s Ministry of Natural Resources and
the Environment.
The Group is sponsoring two projects whose object is to
ascertain and validate the value of ecosystem services
in two separate locations: a mangrove forest in southern
Vietnam and a national park in central Vietnam. The
studies were delayed due to the COVID-19 pandemic and
results are now expected in 2022.
The Modern Slavery Act 2015
The Modern Slavery Act 2015 (the “Act”) requires
companies to meet the reporting requirements of
Section 54 of the Act and to produce a modern slavery
and human trafficking statement.
As an investment fund, VEIL has no direct employees,
whilst its supply chain consists mainly of professional
services providers and the like. Therefore, the reporting
provisions of the Act do not apply to VEIL directly.
Day-to-day management of the investments, including
investment decision making, monitoring and divestment,
is carried out by the Investment Manager, Dragon Capital
Management (HK) Limited, part of the Dragon Capital
group.
Nevertheless, VEIL has put a statement on its website
to demonstrate its commitment and responsibility, as
a FTSE 350 constituent, to the reporting provisions
of the Act. The statement can be found on the
following website: https://www.veil-dragoncapital.com/
modern-slavery-statement/.
Vietnam Enterprise Investments Limited - Annual Report 2021
23
5. Corporate Governance Statement
Introduction
The Board of Directors is committed to high standards
of corporate governance and has put in place a
framework for corporate governance which it believes is
appropriate for a listed investment company.
Compliance with Corporate Governance Codes
The Board of Directors of the Company has considered
the Principles and Provisions of the AIC Code of
Corporate Governance (the “AIC Code”). The AIC Code
addresses the Principles and Provisions set out in the UK
Corporate Governance Code (the “UK Code”), as well
as setting out additional Provisions on issues that are of
specific relevance to the Company.
The Board of Directors considers that reporting against
the Principles and Provisions of the AIC Code, which
has been endorsed by the Financial Reporting Council
provides more relevant information to shareholders.
The Company has complied with the Principles and
Provisions of the AIC Code.
The AIC Code is available on the AIC website (www.
theaic.co.uk). It includes an explanation of how the
AIC Code adapts the Principles and Provisions set out
in the UK Code to make them relevant for investment
companies.
Section 172 of the UK Companies Act 2006
The Board is aware of the duty under Section 172 of the
UK Companies Act 2006 for directors of UK companies
to act in the way which they consider, in good faith,
would be most likely to promote the success of the
Company for the benefit of its members as a whole and,
in doing so, to have regard (amongst other matters) to:
(a) the likely consequences of any decision in the
long-term;
(b) the interests of the Company’s employees;
(c)
the need to foster the Company’s business
relationships with suppliers, customers and others;
(d) the impact of the Company’s operations on the
community and the environment;
(e)
the desirability of the Company maintaining a
reputation for high standards of business conduct;
and
(f) the need to act fairly as between members of the
Company.
(the “s.172 matters”).
Section 172 of the UK Companies Act 2006 is not
directly applicable to the Company as a non-UK
company. However, in accordance with Provision 5 of
the 2019 AIC Code, the Board is required to disclose
how the s.172 matters have been considered in board
discussions and decision-making.
The Company maintains a long-term strategy with no
employees. The Board and the Investment Manager have
adequate and regular shareholder liaison. During the
reporting period, the Board and the Investment Manager
have taken steps to explicitly use the Company’s
investments and influence to advocate for a low-carbon,
environmentally sustainable and inclusive economy.
This aims to deliver long-term sustainable returns
through different aspects including making better
decisions by systematically and explicitly integrating
environmental, social and governance (“ESG”) factors
into the investment process. More information on the
Company’s operations, conduct of business, and fair
treatment can be found in the ESG and Climate Change
Report on pages 13 to 23.
Listing Rule 9.8.4C
Listing Rule 9.8.4C requires the Company to include
certain information in a single identifiable section of this
annual report or a cross reference table indicating where
the information required in LR 9.8.4 R is set out.
The Directors confirm that there are no disclosures to
be made in this regard, other than in accordance with
LR 9.8.4(5) and LR 9.8.4(6), the information of which is
detailed in Note 10 to the financial statements (under
“Directors’ fees”), and LR 9.8.4(10), the information of
which is detailed on page 41 under “Directors’ Interests
in Contracts”.
Directors
The following were Directors during the year to 31
December 2021 and to the date of this annual report:
• Stanley Chou: Chair
• Gordon Lawson: Senior Independent Non-
executive Director
• Derek Loh: Independent Non-executive Director
(resigned on 30 June 2021)
• Vi Peterson: Independent Non-executive Director
• Entela Benz-Saliasi: Independent Non-executive
Director
• Low Suk Ling: Independent Non-executive Director
(appointed on 1 July 2021)
• Dominic Scriven O.B.E: Non-executive Director
As of 31 December 2021, the Board consisted of six Non-
executive Directors, five of whom were independent of
the Investment Manager, whose individual knowledge
and experience provide a balance of skills and expertise
relevant to the Company and it was considered that
they commit sufficient time to the Company’s affairs.
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
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5. Corporate Governance Statement (Continued)
Sarah Arkle, Independent Non-executive Director, was
appointed on 5 January 2022. The biographical details
of the Directors are provided on pages 37 to 38.
The Chair, Stanley Chou, is non-executive and
independent of the Investment Manager. The Chair leads
and ensures the effectiveness of the Board in all matters
relating to the Company, including receiving accurate
and timely information. There is a clear separation of
roles and responsibilities between the Chair of the
Board, the Chairs of the Committees (the Audit and Risk
Committee, the Management Engagement Committee
and the Nomination and Remuneration Committee), the
Directors, the Investment Manager and the Company’s
third party service providers.
Dominic Scriven O.B.E is a Director of Dragon Capital
Group Limited, the parent of the Investment Manager.
He is also a Director of the Investment Manager and
acting as the Chairman of the Dragon Capital group. He
is, therefore, not an independent Director. There are no
Executive Directors on the Board.
Details of the individual board remuneration of Directors
and their beneficial interests in the Company as well
as details of the Committees and their composition
are disclosed in this Corporate Governance Statement.
Dominic Scriven O.B.E does not participate in any
Committee.
New Directors are provided with an induction
programme, which is designed and approved by
the Board as a standard procedure. Following the
appointment, the Chair reviews and agrees with new
Directors their training and development needs covering
specific Company matters as well as industry issues.
The Board is supplied, via the Investment Manager, with
information to enable the Directors to discharge their
duties. The Investment Manager, with the support of
the Company’s Legal Advisers, provides the Board with
regular updates on regulatory issues and on the latest
corporate governance rules and regulations.
Directors’ Duties and Responsibilities
The Directors have adopted a set of Reserved Powers,
which establish the key purpose of the Board and detail
its major duties. These duties cover the following areas
of responsibility:
• Statutory obligations and public disclosure;
• Strategic matters and financial reporting;
• Board composition and accountability to
shareholders;
• Risk assessment and management, including
reporting, compliance, monitoring, governance and
control;
• Review the portfolio, assess strategy, assess the
performance of service providers;
• Act as a point of contact for shareholders,
independent of the Investment Manager; and
• Other matters having material effects on the
Company.
These Reserved Powers of the Board have been adopted
by the Directors to demonstrate clearly the importance
with which the Board takes its fiduciary responsibilities
and as an ongoing means of measuring and monitoring
the effectiveness of its actions.
The Board meets at least quarterly. Each meeting
is attended by representatives from the Investment
Manager. Representatives from the Investment Manager
are also in attendance at relevant Committee meetings if
requested by the Committee Chairs. Open, constructive
debate and discussion is encouraged by the Chair of the
Board and each Committee’s Chair to ensure that the
best interests of the Company are maintained.
The Board has standing agenda items for its quarterly
scheduled Board meetings and periodic Audit and Risk
Committee, Management Engagement Committee and
Nomination and Remuneration Committee meetings
to review the Investment Manager’s performance,
risk management and other matters relating to the
operations and regulation of the Company. This includes
reviewing the portfolio performance, attribution analysis,
contributors and detractors to performance, weightings
and portfolio information including purchases and sales,
ESG as well as the macro economy and stock market
outlook.
The Board also performs a review of the share price
performance, the discount and the share buyback policy,
as well as credit facilities. The Board sets the overall
Company strategy and regularly reviews its progress to
ensure that its goals and objectives are being met. The
Board continually monitors the share price discount to
Net Asset Value (“NAV”) daily and exercises its right to
buy back shares when the Board considers that it is in
shareholders’ interests to do so.
The matter is reviewed at each quarterly Board
meeting with the Directors receiving updates from the
Investment Manager which includes updates from the
Company’s Corporate Broker.
Board and Committees
The Board has established three committees: the Audit
and Risk Committee, the Management Engagement
Committee and the Nomination and Remuneration
Committee. The responsibilities of the three Committees
are described below. Dominic Scriven O.B.E does not
participate in any Committee.
Vietnam Enterprise Investments Limited - Annual Report 2021
25
5. Corporate Governance Statement (Continued)
On 6 September 2021, the Company announced the
reconstitution of the Committees as follows:
Audit and Risk Committee
• Chair: Entela Benz-Saliasi
• Members: Gordon Lawson, Low Suk Ling
Management Engagement Committee
• Chair: Gordon Lawson
• Members: Stanley Chou, Vi Peterson
Nomination and Remuneration Committee
• Chair: Vi Peterson
• Members: Entela Benz-Saliasi, Low Suk Ling
Audit and Risk Committee
The Audit Committee was formed on the listing of the
Company on the main market of the London Stock
Exchange on 5 July 2016. With effect from 1 July 2018,
the Audit Committee was expanded to become the
Audit and Risk Committee.
Detailed information on the Audit and Risk Committee
can be found in the Report of the Audit and Risk
Committee on pages 34 to 36.
Management Engagement Committee
The Management Engagement, Nomination &
Remuneration Committee was formed upon listing
of the Company on the main market of the London
Stock Exchange on 5 July 2016. With effect from 1 July
2018, the Management Engagement, Nomination &
Remuneration Committee was split into the Management
Engagement Committee and the Nomination and
Remuneration Committee.
The Chair of the Management Engagement Committee
reports to the Board after each meeting on all matters
within its duties and responsibilities. The Management
Engagement Committee makes recommendations to
the Board as it deems appropriate on any area within its
remit where action or improvement is needed.
The Board considers the arrangements for the provision
of investment management services to the Company
on an on-going basis and a formal review is conducted
annually by the Management Engagement Committee
which consists solely of Directors independent of the
Investment Manager. The review considers investment
strategy, investment process, performance and
risk and is carried out through meetings between
the Management Engagement Committee and the
Investment Manager.
As part of this review, the Board considered the quality
and continuity of the personnel assigned to handle
the Company’s affairs, the investment process and the
results achieved to date. The Directors believe that the
Investment Manager has the resources and ability to
deliver the results which they seek.
During the reporting period, the Management
Engagement Committee met twice to discuss and
assess service providers covering marketing and
research, fund administration, custody, corporate
broker and investment management of the Company.
In particular, an evaluation of the annual management
fee and charging structure by the Investment Manager
resulted in a reduction of fees as shown on page 65. The
Management Engagement Committee was satisfied with
their performance as well as their fees.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee performs
an annual review of the Directors’ skills, experience,
length of service and knowledge of the Company and
the structure, size and composition (including gender)
of the Board. The skills, experience and length of
service of each Director are detailed in the Directors’
biographies on pages 37 to 38.
The selection policy of the Board is to appoint the best
qualified person for the job, by considering the Board’s
diversity, in order to achieve a combination of skills,
experience and knowledge. The Board is satisfied that
the current blend of diversity, skills and experience
prompts informed decision making and does not deem it
necessary to alter the mix at present.
The Nomination and Remuneration Committee
periodically reviews the level of Directors’ fees
relative to other comparable companies and in light
of the Directors’ responsibilities. In doing so, the
Nomination and Remuneration Committee has access to
independent research.
The Board’s policy is that the remuneration of Non-
executive Directors should reflect the responsibilities
of the Board, the experience of the Board as a
whole and be fair and comparable to that of other
investment companies of similar size, capital structure
and investment objective. Details of the Directors’
remuneration can be found on page 27 and in Note
10 to the financial statements. The Directors’ interests
(including interests of connected persons) can be found
within the Report of the Board of Directors on pages 40
to 42.
The Nomination and Remuneration Committee, which is
entirely comprised of independent Directors, regularly
reviews the Board’s structure, size and composition
and makes recommendations to the Board with regard
to any adjustment that seem appropriate, considers
the rotation and renewal of the Board, approves the
candidate specification for all Board appointments,
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
26
5. Corporate Governance Statement (Continued)
approves the process by which suitable candidates are
identified and short-listed, and nominates candidates for
consideration by the full Board, whose responsibility is
to formally make appointments.
During the reporting period, the Nomination and
Remuneration Committee met twice to discuss,
among other matters, succession planning for the
next three years and key-person risk matrix. One of
the independent directors, Derek Loh, had reached
his 10-year tenure serving with the Company and
expressed his wish to hand over his position to a newly
appointed director whose knowledge and experience
provide a balance of skills and expertise relevant to the
Company. On 1 July 2021, Low Suk Ling was appointed
as Independent Non-executive Director.
The Nomination and Remuneration Committee
continued considering a number of proposed candidates
identified by Trust Associates Ltd., an international
search consultancy for candidates of independent
directors. Among other criteria, candidates for
succession planning are reviewed in terms of their
capabilities, diversity and skills.
As of 31 December 2021, independence of the Board
of Directors is maintained as five of the six Non-
executive Directors on the Board are independent of the
Investment Manager. The Nomination and Remuneration
Committee also confirms that the Directors’ knowledge
and experience can provide a balance of skills and
expertise which are relevant to the Company. Sarah
Arkle, Independent Non-executive Director, was
appointed on 5 January 2022.
Directors’ Remuneration Report
The Nomination and Remuneration Committee is
responsible for determining the level of Directors’ fees.
The terms of reference are available on request. The
Board has prepared this Remuneration Report duly
considering the recommendations of the AIC Code.
This part of the Remuneration Report provides details
of the Company’s Remuneration Policy for the Directors.
This policy takes into consideration the principles of
the UK Code and the AIC’s recommendations regarding
the application of those principles to investment
companies. Directors’ remuneration is determined by the
Nomination and Remuneration Committee.
The Directors are non-executive, and their fees are
set within the limits of the Company’s Restated and
Amended Memorandum and Articles of Association (the
“Articles”) which limit the aggregate fees payable to the
Board of Directors per annum, currently to US$400,000.
The level of the cap may be increased by shareholders’
resolutions from time to time.
Subject to this overall limit, the Board’s policy is that
the remuneration of Non-executive Directors should
reflect the nature of their duties, responsibilities and the
value of their time spent and be fair and comparable to
that of other investment trusts and companies that are
similar in size, have a similar capital structure and have
a similar investment objective. No shareholder views
were sought in setting the Remuneration Policy although
any comments received from shareholders would be
considered on an on-going basis.
Fee rates were established by reference to current
market levels:
• Member of Board only: US$25,000 per annum
(from 1 January 2021 to 30 September 2021);
US$45,000 per annum from 1 October 2021
• Chair of the Board: +US$10,000 per annum
• Chair of the Audit and Risk Committee: +US$5,000
per annum
• Member of the Audit and Risk Committee:
+US$2,500 per annum
• Chair of the Management Engagement Committee:
+US$5,000 per annum
• Member of the Management Engagement
Committee: +US$2,500 per annum
• Chair of the Nomination and Remuneration
Committee: +US$5,000 per annum
• Member of the Nomination and Remuneration
Committee: +US$2,500 per annum
Board Independence, Composition and Diversity
The Board supports the principle of boardroom diversity
and Parker Review. The selection policy of the Board
is to appoint the best qualified person for the job,
by considering factors such as diversity of thought,
experience and qualifications, and ethnic and gender
diversity, for the effective conduct of the Company’s
business. New appointments are identified against the
requirements of the Company’s business and the need to
have a balanced Board.
As of 31 December 2021, the Board consisted of five
Independent Non-executive Directors and one Non-
Independent Non-executive Director. Sarah Arkle,
Independent Non-executive Director, was appointed on
5 January 2022.
Directors’ Appointment and Policy on Payment of
Loss of Office
Each Director has an appointment letter with the
Company. The terms of the appointment provide that
a Director will be subject to re-election at each Annual
General Meeting (“AGM”). A Director may be removed
from office following three months’ notice.
Vietnam Enterprise Investments Limited - Annual Report 2021
27
5. Corporate Governance Statement (Continued)
The Board does not have a formal policy requiring
Directors to stand down after a certain period. The
Board has the Nomination and Remuneration Committee
which regularly reviews the Board’s structure, size,
diversity (including gender and ethnic diversity) and
composition and makes recommendations to the Board
with regard to any adjustment that seems appropriate.
Directors’ & Officers’ liability insurance cover is
maintained by the Company on behalf of the Directors.
Appointment
• All the Directors are non-executive, appointed
under the terms of Letters of Appointment.
• The Directors will be subject to election at the first
AGM after their appointment and to re-election
annually thereafter.
• New appointments to the Board will be placed on
the fee applicable to all Directors at the time of
appointment (currently US$45,000).
• No incentive or introductory fees will be paid to
encourage a directorship.
• The Directors are not eligible for bonuses, pension
benefits, share options, long-term incentive
schemes or other benefits.
• The Company indemnifies the Directors for costs,
charges, losses, expenses and liabilities which may
be incurred in the discharge of duties, as a Director
of the Company.
Performance, Service Contracts, Compensation and
Loss of Office
• No Director has a service contract.
• Compensation will not be due upon leaving office.
• No Director is entitled to any other monetary
payment of any asset of the Company.
Re-election of Directors
All Directors stand for re-election annually at the AGM.
The Nomination and Remuneration Committee
considers the effectiveness of individual directors and
makes recommendations to the Board in respect of
re-elections.
Conflict of Interests
Directors are fiduciaries, so must act in good faith and
in the best interests of the Company, avoid or recuse
themselves from conflicts of interest, and not use their
position or knowledge gained from the Company for
any personal profit or advantage (beyond their agreed
remuneration). Only Directors who have no material
interest in the matter being considered will be able to
participate in the Board approval process. Directors are
required to disclose all actual and potential conflicts of
interest to the Chair in advance of any proposed external
appointment.
In deciding whether to approve an individual Director’s
participation, the other Directors will act in a way they
consider to be in good faith in assessing the materiality
of the conflict in accordance with the Company’s
Articles.
The Board believes that its powers of authorisation
of conflicts of interest have operated effectively. The
Board also confirms that its procedure for the approval
of conflicts of interest, if any, has been followed by
the Directors. As of 31 December 2021, none of the
Directors had a material interest in any contract
which is significant to the Company’s business other
than Dominic Scriven in relation to the Investment
Management Agreement as further detailed on page 41
(Directors’ Interests in Contracts).
The Board notes that, subsequent to 31 December 2021,
an affiliate of the Investment Manager subscribed to
a second convertible note issued by Intensel Limited
(“Intensel”) (a Hong Kong company which provides
climate risk analysis) in the amount of US$200,000.
This is in addition to the US$200,000 convertible note
issued by Intensel to the affiliate in April 2021 (and
disclosed by the Company as a subsequent event in the
2020 Annual Report), but does not materially increase
the interest of the affiliate in Intensel.
Entela Benz-Saliasi has a material interest in, and is a
director of Intensel, which may provide services in the
future to the Company (such as analysis of investee
companies), but any such services are not expected
to be materially significant. As at 31 December 2021,
the Company had not engaged Intensel to provide any
services.
The Directors’ holdings in the Company can be found
within the Report of the Board of Directors on pages 40
to 42.
Performance Evaluation
The Board undertakes an annual evaluation of its own
performance and that of its committees and individual
directors, including the Chair. The Board also considers
the independence of each Director.
A vital part of any Board’s effectiveness is its
composition. This is an area that the Board should
continually evaluate to reflect its strategic priorities and
increase performance. As such, Amrop Singapore was
appointed in July 2021 to undertake a comprehensive
analysis and evaluation of the VEIL Board and to provide
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28
5. Corporate Governance Statement (Continued)
key recommendations and insights into its composition
and where any potential adjustments would be
beneficial.
The Board is satisfied that the performance of each
committee and individual Director, including the Chair,
is effective and they demonstrate commitment to their
role.
Induction/Information and Professional
Development
The Directors are provided, on a regular basis, with
key information on the Company’s policies, regulatory
requirements and its internal controls. Regulatory and
legislative changes affecting Directors’ responsibilities
are advised to the Board as they arise along with
changes to best practice from, amongst others, the
Company Secretary and the Auditor. Advisers to the
Company also prepare reports for the Board from time
to time on relevant topics and issues.
When a new Director is appointed to the Board, he/she
will be provided with all relevant information regarding
the Company and his/her duties and responsibilities as a
Director. In addition, a new Director will also spend time
with representatives of the Investment Manager in order
to learn more about its processes and procedures.
Attendance at Scheduled Meetings of the Board
and its Committees for the Year
Table 1 on page 36 lists the number of Board and
Committee meetings attended by each Director. During
the year ended 31 December 2021, there were four Board
meetings, two Audit and Risk Committee meetings, two
Management Engagement Committee meetings and two
Nomination and Remuneration Committee meetings.
Relationship with the Investment Manager, the
Company Secretary and the Administrator
The Board has delegated various duties to external
parties including the management of the investment
portfolio, the custodial services (including safeguarding
of assets), registration services and day-to-day company
secretarial, administration and accounting services.
Each of these contracts was entered into after full and
proper consideration by the Board of the quality and
cost of services offered, including the control systems
in operation in so far as they relate to the affairs of the
Company.
Investment Manager
From 1 January 2021 to 31 March 2021, Enterprise
Investment Management Limited provided investment
management and advisory services to the Company
in accordance with the terms of an investment
management agreement dated 23 May 2016 between the
Company and the Investment Manager (the “Investment
Management Agreement”).
With effect from 1 April 2021, following an internal
re-organisation of the Dragon Capital group and with
permission of the Board, the Investment Management
Agreement has been transferred to Dragon Capital
Management (HK) Limited. Both Enterprise Investment
Management Limited and Dragon Capital Management
(HK) Limited are part of the Dragon Capital group
and the terms of appointment of Dragon Capital
Management (HK) Limited, including the fees to be
charged by Dragon Capital Management (HK) Limited,
are the same as those that applied to Enterprise
Investment Management Limited.
References in this annual report to the Investment
Manager shall mean Enterprise Investment Management
Limited and/or Dragon Capital Management (HK)
Limited, as the context requires.
Under the Investment Management Agreement, the
Investment Manager is entitled to receive a monthly
management fee for its services, which accrues daily
based on the prevailing NAV.
From 1 August 2017 to 30 June 2021, the annual
management fee payable to the Company’s Investment
Manager was 2.00% per annum of NAV for the first
US$1.25 billion of the Company’s NAV, reducing to 1.75%
per annum for NAV between US$1.25 billion and US$1.5
billion and further reducing to 1.50% per annum for NAV
above US$1.5 billion.
With effect from 1 July 2021, the management fee
was amended to 1.85% per annum of NAV for the first
US$1.25 billion of the Company’s NAV, reducing to 1.65%
per annum for NAV between US$1.25 billion and US$1.5
billion and further reducing to 1.50% per annum for NAV
above US$1.5 billion.
The Investment Manager is not entitled to a performance
fee.
The Investment Manager’s appointment will continue
until terminated under the provisions of the Investment
Management Agreement. The Company has a right
to terminate the Investment Management Agreement
giving 24 months’ notice in writing to the Investment
Manager. The Investment Management Agreement
may also be terminated with immediate effect on the
occurrence of certain events, including insolvency or
material and continuing breach.
The Investment Manager has invested the assets of the
Company with a view to spreading investment risk in
accordance with its published investment policy as set
out in the Portfolio Manager’s Report on pages 5 to 12.
Vietnam Enterprise Investments Limited - Annual Report 2021
29
5. Corporate Governance Statement (Continued)
The Board, on the advice of the Management
Engagement Committee, continues to believe that in
light of the Company’s strategy and performance, the
appointment of the Investment Manager on the terms
set out above and in Note 10 to the financial statements
is in the interest of the Company’s shareholders as a
whole.
Both the Board and the Investment Manager have
formalised agreements and have a clear understanding
of the operational policies laid out between the parties.
These rules are detailed in a number of ways – with the
Investment Management Agreement or through other
policies such as discount management.
The Board is ultimately responsible for ensuring that
a sound system of internal controls of the Company is
maintained to safeguard shareholders’ investments and
the Company’s assets.
The Audit and Risk Committee undertakes an annual
review of the effectiveness of the Company’s system
of internal controls and the Directors believe that
an appropriate framework is in place to meet the
requirement of ensuring a sound system of internal
controls is in place by the Company.
Furthermore, the Board has an ongoing process for
identifying, evaluating and managing risks to which
the Company is exposed including those contained
within the performance of the investment management
activities. The principal risks and uncertainties facing
the Company are disclosed in Note 13 to the financial
statements. These principal risks and uncertainties are
monitored as part of the normal oversight process.
Risk management and the operation of the internal
control systems within the Company are primarily the
responsibility of the Investment Manager, which operates
under commercial independence with flexibility to
ensure that principal risks and uncertainties are clearly
managed and that systems of control operate effectively
and efficiently.
The Investment Manager monitors the portfolio on a
daily basis and ensures that the appropriate controls
are exercised over the Company’s assets. The systems
of internal control operated by the Company are
designed to manage rather than eliminate the risk of
failure in achieving its objectives and will only provide
reasonable and not absolute assurance against material
misstatement or loss.
The Board receives and considers reports regularly
from the Investment Manager, with ad hoc reports and
information supplied to the Board as required. The
Investment Manager takes decisions as to the purchase
and sale of individual investments, within the delegated
authority established by the Board. The Investment
Manager complies with the risk limits as determined
by the Board and has systems in place to monitor cash
flows and the liquidity risk of the Company.
The Investment Manager and Standard Chartered
Bank (the “Administrator”) also ensure that all
Directors receive, in a timely manner, all relevant
financial information about the Company’s portfolio.
Representatives of the Investment Manager, the
Corporate Broker and the Legal Adviser attend Board
meetings as required, enabling the Directors to probe
further on matters of concern.
The Directors have access to the advice and service
of the Company Secretary through its appointed
representative who is responsible to the Board for
ensuring that Board procedures are followed, and that
applicable rules and regulations are complied with.
The Board, the Investment Manager and those service
providers operate in a supportive, co-operative and
open environment.
At each Board meeting, a representative of the
Investment Manager is in attendance to present verbal
and written reports covering its activity, the portfolio
and investment performance over the preceding period.
Ongoing communication with the Board is maintained
by formal meetings.
The Investment Manager ensures that Directors have
timely access to all relevant management, financial and
regulatory information to enable informed decisions to
be made. The Investment Manager contacts the Board as
required for specific guidance on particular issues.
Administrator and Custodian
Custody and settlement services are undertaken by
Standard Chartered Bank. The Board has delegated
the exercise of voting rights attaching to the securities
held in the portfolio to the Investment Manager. The
Investment Manager follows a proxy voting policy
when voting, which provides for certain matters to be
reviewed on a case-by-case basis.
Proxy voting is an important part of the corporate
governance process, and the Investment Manager views
its obligation to manage the voting rights of the shares
in investee companies seriously as it would manage any
other asset. Consequently, votes are cast both diligently
and prudently, based on its reasonable judgment of
what will best serve the financial considerations of the
Company.
So far as is practicable, the Investment Manager
votes at all of the meetings called by companies in
which the Company invests. In order to do this, the
Investment Manager agrees its stance on a variety of key
corporate governance issues, including disclosure and
transparency, board composition, committee structure,
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30
5. Corporate Governance Statement (Continued)
director independence, auditor rotation and social and
environmental issues. These guidelines form the basis
of its proxy voting decisions, although they are equally
cast on a case-by-case basis, taking into account the
individual circumstances of each vote.
Company Secretary
The Company appointed Maples Secretaries (Cayman)
Limited as the Company Secretary with effect from 21
October 2013.
Shareholder Engagement
The Board believes that the maintenance of good
relations with shareholders is important for the long-
term prospects of the Company. It has, since admission,
sought engagement with shareholders. Where
appropriate the Chair and other Directors are available
for discussion about governance and strategy with major
shareholders and the Chair ensures communication of
shareholders’ views to the Board.
The Board receives a monthly analysis of beneficial
shareholders of the Company. During the year ended 31
December 2021, the Investment Manager had periodic
meetings with larger shareholders to discuss aspects
of the Company’s performance. The Directors are made
fully aware of their views.
The Chair and Directors make themselves available
as and when required to address shareholder queries.
Shareholders wishing to raise questions are encouraged
to write to the Company’s Administrator at the address
shown on page 79 or contact the Investment Manager
using the contact details also provided on pages 79 to
80.
The Board believes that the AGM provides an
appropriate forum for investors to communicate with the
Board and encourages participation. The AGM will be
attended by at least one Director.
There is an opportunity for individual shareholders to
question the Directors at the AGM. Details of proxy
votes received in respect of each resolution will be
made available to shareholders at the AGM and will be
posted on the Company’s website and the London Stock
Exchange’s website following the AGM.
The Board actively leads or participates in discussions
on, or approves the content of, all significant external
communications. During this process, relevant
stakeholders such as the Investment Manager, the
Auditors, the Legal Adviser and the Corporate Broker
are engaged as and when required.
The Board aims to keep shareholders informed and
up to date with information about the Company. This
includes information contained within annual reports,
interim reports, monthly reports, weekly reports, weekly
factsheets, and frequent webinars especially during the
pandemic, as well as notices of any significant event to
registered shareholders.
The Company also releases information through the
London Stock Exchange. The Company’s website (www.
veil-dragoncapital.com) displays the latest news, price
and performance information and portfolio details.
Shareholders also have the opportunity to download
the latest Company information from the website.
Internal Audit
The Company does not have its own internal audit
function but places reliance on the internal audit,
compliance and other control functions of its service
providers.
Internal Control
The Audit and Risk Committee is responsible for
reviewing the effectiveness and efficiency 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.
Detailed information on the risk management and
internal controls in relation to the Company’s financial
reporting process can be found in the Report of the
Audit and Risk Committee on pages 34 to 36.
Principal Risks and Uncertainties
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.
Viability Statement
The Directors have assessed the prospects of the
Company over a three-year period to 31 December 2024.
The Directors believe that this period is appropriate
because it would provide the Investment Manager the
time needed to successfully unlock the value of the
Company’s underlying portfolio.
In their assessment of the viability of the Company,
the Directors have considered each of the Company’s
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31
5. Corporate Governance Statement (Continued)
principal risks and uncertainties, including the total
collapse of one or more of the Company’s significant
holdings, together with the Company’s income and
expenditure projections, credit facility and assets
that are easily realisable and that can be sold to meet
funding requirements.
Following the Board’s detailed analysis, it has concluded
that, based on the Company’s current position, the
principal risks and uncertainties that it faces and
their potential impact on its future development and
prospects, there is a reasonable expectation that the
Company will be able to continue in operation and meet
its liabilities when they fall due over the three-year
period to 31 December 2024.
Going Concern
The Directors have reviewed the liquidity of the
Company’s portfolio and the Company’s ability to meet
its obligations as they fall due for a period of at least 12
months from the date that these financial statements
were approved.
On the basis of that review and after due consideration
of the balance sheet and activities of the Company
and the Company’s assets, liabilities, commitments and
financial resources, the Directors have concluded that
the Company has adequate resources to continue its
operational existence for the foreseeable future. For this
reason, the Directors have adopted the going concern
basis in preparing the financial statements.
Annual General Meeting
The AGM took place at 2406, 24/F, 9 Queen’s Road,
Central, Hong Kong on 27 August 2021 at 2:00pm (Hong
Kong time).
The result of this AGM can be found on page 39.
Authority for Share Buyback and Discount
Management
The shareholders approved at the Company’s AGM on
27 August 2021 a special resolution to undertake share
buybacks up to a maximum amount equal to 14.99%
of the issued share capital. This special resolution was
passed and shall expire on the earlier of 31 December
2022 and the conclusion of the Company’s next annual
general meeting.
The Directors’ intention is to implement an active
discount management policy if they believe it to be in
shareholders’ interests as a whole and as a means of
correcting any imbalance between the supply of and
demand for the Company’s Ordinary Shares of US$0.01
each (the “Shares”).
A share buyback programme was carried out in 2021.
The details of the share buyback programme in 2021
can be found on the London Stock Exchange website
https://www.londonstockexchange.com/stock/VEIL/
vietnam-enterprise-investments-limited/analysis. In total
3,401,261 Shares were bought back for a consideration
of US$32,678,613 during the year, representing 1.54% of
the issued share capital.
The Shares bought back are held in treasury. As of 31
December 2021, the Company held 7,386,899 Shares in
treasury.
Following the above buybacks, the total number of
Shares in issue was 213,533,847 (excluding Shares
held in treasury) as of 31 December 2021. This number
represents the total voting rights in the Company as
at that date and may be used by shareholders as the
denominator for the calculations by which they can
determine if they are required to notify their interest in,
or a change to their interest in the Company under the
FCA’s Disclosure Guidance and Transparency Rules.
The Directors will only make such buybacks through
the market at prices (after allowing for costs) below the
relevant prevailing NAV per Share under the guidelines
established from time to time by the Board. Buybacks
of Shares may be made only in accordance with Cayman
law, the Disclosure Guidance and Transparency Rules
and the authority granted by shareholders at the
Company’s AGM on 27 August 2021.
Under the FCA’s Listing Rules, the maximum price that
may be paid by the Company on the buybacks of any
Share pursuant to a general authority is 105% of the
average of the middle market quotations for the Shares
for five business days immediately preceding the date
of the relevant buyback or, if higher, that stipulated by
regulatory technical standards referred to in Article 5(6)
of the UK version of the Market Abuse Regulation (EU)
No. 596/2014 (which forms part of UK law by virtue of
the European Union (Withdrawal) Act 2018).
Shares bought back by the Company may be cancelled
or held in treasury (up to a maximum of 10% of the
total number of issued Shares at any time may be held
in treasury). Shares may be re-issued from treasury
but, unless previously approved by shareholders, will
not be issued at a price which, taking account of issue
expenses, would be less than the last reported NAV per
Share.
A buyback of Shares pursuant to the share buyback
programme on any trading day may represent a
significant proportion of the daily trading volume
in the Shares on the main market of the London
Stock Exchange (and could exceed the 25% limit of
the average daily trading volume of the preceding
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32
5. Corporate Governance Statement (Continued)
20 business days as referred to in the UK version of
Commission Delegated Regulation (EU) No. 2016/1052
on buyback programmes, which forms part of UK law by
virtue of the European Union (Withdrawal) Act 2018).
Any buyback of Shares by the Company will be notified
by an announcement through a Regulatory Information
Service by no later than 7:30am (UK time) on the
following business day.
Shareholders should note that the buyback of Shares
by the Company is at the absolute discretion of the
Directors and is subject, amongst other things, to the
amount of cash available to the Company to fund such
buybacks. Accordingly, no expectation or reliance should
be placed on the Directors exercising such discretion on
any one or more occasions.
Management Shares
Dragon Capital Limited holds 1,000 management shares
of the Company. Dragon Capital Limited is 100% owned
by Dragon Capital Group Limited which is the ultimate
parent company of the Investment Manager of the
Company.
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. Subject always to the requirements of the rules
of any exchange on which the Company’s shares
may be trading from time to time, the holders of the
management shares have the right to appoint two
individuals to the Board.
Substantial Shareholdings
As at 31 December 2021, the following shareholders
owned more than 10% of the Company’s issued Ordinary
Share capital:
Inter Fund Management S.A.
• Number of Ordinary Shares held: 26,491,515
• % of total Ordinary Shares in issue: 12.41%
Bill & Melinda Gates Foundation
• Number of Ordinary Shares held: 25,087,859
• % of total Ordinary Shares in issue: 11.75%
Vietnam Enterprise Investments Limited - Annual Report 2021
33
6. Report of the Audit and Risk Committee
Composition
From 1 January 2021 until 5 September 2021, the Audit
and Risk Committee was chaired by Gordon Lawson and
its members include Derek Loh and Entela Benz-Saliasi
who were all Independent, Non-executive Directors.
Since 6 September 2021, the Audit and Risk Committee
has been chaired by Entela Benz-Saliasi and its members
include Gordon Lawson and Low Suk Ling who are all
Independent, Non-executive Directors.
The Audit and Risk Committee met twice during the year
under review. Table 1 on
page 36
shows the dates and attendees of the Audit and Risk Committee meetings.
The Company’s Auditors and Investment Manager’s
representatives were invited to attend meetings as
necessary.
In the opinion of the Board, the Audit and Risk
Committee of the Company complies with the
recommendations and requirements of the AIC Code of
Corporate Governance (the “AIC Code”).
Role and Responsibilities
The role of the Audit and Risk Committee is to assist the
Board in applying financial reporting and internal control
principles and to maintain an appropriate relationship
with the Auditors.
The Audit and Risk Committee assesses the prospects
of the Company and principal risks and uncertainties
facing the Company. Following such assessment, the
Audit and Risk Committee reasonably expects that the
Company will be able to continue in operation and meet
its liabilities as they fall due over the period of their
assessment.
The responsibilities of the Audit and Risk Committee are
set out in formal Terms of Reference which are regularly
reviewed. In the year under review, the main duties
undertaken were:
Financial Reporting
The Audit and Risk Committee shall monitor the
integrity of the financial statements of the Company,
including its annual and interim reports, interim
management statements and any other formal
announcement relating to its financial performance
and review significant financial reporting issues and
judgments which they contain.
Where the Audit and Risk Committee is not satisfied
with any aspect of the proposed financial reporting, it
shall report its views to the Board.
Risk
The Audit and Risk Committee shall oversee the process
of identifying, assessing, and controlling both the
Company and portfolio risks to prevent, mitigate or
transfer such risks.
In particular, the Audit and Risk Committee shall review
and challenge where necessary:
• Investment risks comprising, but not limited to,
market, credit, liquidity, leverage risk and ESG and
climate change-related risks; and
• Business operational risks.
Internal Controls and Risk Management Systems
The Audit and Risk Committee shall review the adequacy
and effectiveness of the Company’s internal financial
controls and internal control and risk management
systems and review and approve the statements to
be included in the annual report concerning internal
controls and risk management.
Internal Audit
The Audit and Risk Committee shall consider at least
once a year whether there is a need for an internal audit
function and provide an explanation of the reasons
for an absence of such a function for inclusion in the
relevant section of the annual report.
External Audit
The Audit and Risk Committee shall monitor and
review the external auditor’s quality, independence and
objectivity and make recommendations to the Board
in relation to the appointment, re-appointment and
removal of the external auditor.
Conflicts
The Audit and Risk Committee shall provide oversight
and guidance to the Board in relation to actual and
potential conflicts of interest between the Company
and any related party or provider of services to the
Company. Related parties shall mean the members of
the Board, the Investment Manager and/or its parent
and sister companies (the “Investment Manager
Group”) together with the owners and directors of the
Investment Manager Group.
Internal Controls and Risk Management Systems
in Relation to the Company’s Financial Reporting
Process
The Audit and Risk Committee is responsible for
reviewing the effectiveness of the Company’s system
of internal control. The Board reviews the ongoing
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34
6. Report of the Audit and Risk Committee (Continued)
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.
External Auditor
The Audit and Risk Committee reviews and makes
recommendations to the Board with regard to the re-
appointment of the external auditor, taking into account
its qualifications, expertise and resources, independence
and the effectiveness of the external audit process.
The Audit and Risk Committee meets with the external
auditor at least once a year to discuss any key issue
arising from the audit and/or monitor the external
auditor’s compliance with the relevant ethical and
professional guidance on the rotation of the audit
partner, the level of fees paid by the Company compared
to the overall fee income of the firm, office and partner
and other related requirements.
KPMG Limited (“KPMG”) was first appointed as the
Company’s external auditor in 2008 and during the audit
tenure from 2008 to 2021, four audit partners have been
rotated to perform the service.
KPMG’s rotation policies are consistent with the
Code of Ethics of the International Ethics Standards
Board for Accountants (the “IESBA”) and require the
firm to comply with any stricter applicable rotation
requirement. The firm’s partners are subject to periodic
rotations of their responsibilities for audit clients under
applicable laws, regulations, independence rules and
KPMG International policy.
These requirements place limits on the number of
consecutive years that partners in certain roles may
provide statutory audit services to a client, followed by
a “time-out” period during which time these partners
may not participate in the audit, provide quality control
for the audit, consult with the engagement team or the
client regarding technical or industry-specific issues or
in any way influence the outcome of the audit.
KPMG also has policies, which are consistent with the
IESBA principles and applicable laws and regulations,
which address the scope of services that can be
provided to audit clients. KPMG’s policies require the
audit engagement partner to evaluate the threats
arising from the provision of non-audit services and the
safeguards available to address those threats.
Fees paid to KPMG for audit, audit-related, and non-
audit services are set out in Note 10 to the financial
statements and summarised below.
In order to safeguard the auditor’s independence and
objectivity, the Company only engaged a KPMG affiliate
to perform non-audit services where such affiliate was
clearly best suited to perform the service, and the
provision of service did not pose any conflict of interest
with the audit or audit-related work.
2021
• Audit fees: US$82,000
• Non-audit fees: US$30,000
2020
• Audit fees: US$82,000
• Non-audit fees: US$30,000
The Audit and Risk Committee reviews the effectiveness
and efficiency of the audit provided by KPMG on an
annual basis and remains satisfied with the effectiveness
and efficiency of the audit based on their performance.
In addition, the Audit and Risk Committee engaged the
Financial Reporting Council (the “FRC”) in the UK to
perform a review of the audit of the financial statements
of the Company for the year ended 31 December 2020.
The FRC’s assessment for the audit work of the external
auditor i.e. KPMG was rated “good practice” with no key
findings arising from the review.
Vietnam Enterprise Investments Limited - Annual Report 2021
35
6. Report of the Audit and Risk Committee (Continued)
Table 1: Attendance of the Board and the Committees Meetings (for the year ended 31 December 2021)
Director Board meetings ARC meetings MEC meetings NRC meetings
Date
20/1
22/4 16/11
30/8
22/42 7/ 1 0
20/1
28/1016/3 13/7
Stanley Chou C C C C M M
Derek Loh
1
X X M C
Gordon Lawson X X X X C M M C
Vi Peterson X X X X C M M C
Entela Benz-Saliasi X X X X M C M C
Low Suk Ling
2
X X M M
Dominic Scriven O.B.E X X X X
ARC = Audit and Risk Committee / MEC = Management Engagement Committee / NRC = Nomination and Remuneration Committee
C = Chair / M = Member / X = Attended
1
Derek Lor resigned on 30 June 2021. /
2
Low Suk Ling was appointed on 1 July 2021.
Audit Review
Prior to the Audit and Risk Committee meeting held
on 5 April 2019, as part of good corporate governance,
the Chair of the Audit and Risk Committee requested a
review of the external auditor, KPMG.
The Audit and Risk Committee conducted a tender
process in order to make recommendations to the Board
of Directors regarding which external auditor should be
appointed for the Company going forward. The Audit
and Risk Committee engaged with various audit firms
as a potential replacement, however, only one audit firm
responded positively.
The Audit and Risk Committee noted that the candidate
was presently the internal auditor of the Dragon
Capital group which could pose a conflict of interest.
In addition, the candidate’s Vietnam office is not yet
approved by the FRC.
Therefore, the conclusions that VEIL’s Audit and Risk
Committee reached were that there are limited choices
for auditors in Vietnam with relevant experience and
that KPMG is the only FRC qualified auditor in Vietnam.
As a result, pursuant to a careful assessment, KPMG
were reappointed. Further, KPMG has regularly rotated
its audit partner for VEIL every three years during the
tenure of their appointment (in total four audit partners)
to follow best audit practices and ensure independence.
Its rotation policies are consistent with the Code of
Ethics of the International Ethics Standards Board for
Accountants and require the firm to comply with any
stricter applicable rotation requirement.
As such the VEIL board is satisfied that there are no
independence concerns. In addition, the balance of fees
paid to the auditor is reasonable and that the VEIL has
a track record of disclosing the appropriate information
about these services in its filings.
As a matter of governance, the Audit and Risk
Committee reviews the effectiveness and efficiency of
the audit provided by KPMG on an annual basis and
remains satisfied with the effectiveness and efficiency of
the audit based on their performance.
The Board of Directors accepted and approved this
conclusion at a board meeting held shortly after the
relevant Audit and Risk Committee meeting. The re-
appointment of KPMG was proposed at the next AGM
held on 27 August 2021 and the resolution was passed.
Entela Benz-Saliasi
Chair of the Audit and Risk Committee
Vietnam Enterprise Investments Limited
28 April 2022
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36
7. Board of Directors
Chair & Independent Non-executive Director
(Appointed January 2016 / Chair from June 2019)
Stanley Chou
Stanley Chou is Managing Director of SCA International
Ltd. He also co-founded the Victory Fund, a
Luxembourg based equity fund. He has been investing
in Vietnam since 2005.
Senior Independent Non-executive Director
(Appointed July 2014 / Senior INED from June 2019)
Gordon Lawson
Educated at Birmingham University, Gordon earned an
MBA from Cranfield Business school and worked with
Salomon Brothers/Citigroup, London before founding
Pendragon in 1999. He later became Chairman of
Indochina Capital Vietnam plc. He is an advisor and
director of various companies. He was also certified
from Society of Investment Analysts exams. During
his professional career and as Chair of Audit and
Risk Committee, he has analysed audited financial
statements in depth as well as worked with auditors for
various accounting policies, practices, and governance.
Independent Non-executive Director
(Appointed April 2018)
Vi Peterson
Vi is an international business consultant based
in Melbourne Australia, advising multinational
corporations in Thailand and Vietnam. She serves on
various company, not-for-profit and university boards.
She is a former banking executive and Australian Senior
Trade Commissioner to Vietnam.
Independent Non-executive Director
(Appointed May 2019)
Entela Benz-Saliasi
Entela serves as Adjunct Associate Professor at the
Department of Finance, HKUST Business School in Hong
Kong. Alongside teaching, she has been acting as a
consultant for Impact and ESG Investing since 2007. She
is the founder and CEO of Intensel, a fintech company
that leveraged AI/ML and geospatial data for assessing
climate risks. She sits on various boards in Hong
Kong and the Philippines. As a financial professional
she worked in the Investment bank and hedge fund
industry before moving into a more academic role.
Her combined academic and industry expertise have a
strong focus on the impact of intangible information on
cash flows and ultimately
the company’s fair value.
Trained as a quant,
she is well-positioned
to understand the
intricacies of companies’
financial statements and
therefore audit reports.
Vietnam Enterprise Investments Limited - Annual Report 2021
37
Independent Non-executive Director
(Appointed January 2022)
Sarah Arkle
Sarah Arkle is an investment professional with over
thirty years’ experience. Originally working for Save
and Prosper Group and WI Carr (Overseas) Ltd, she
joined Threadneedle Asset Management (now Columbia
Threadneedle) in 1983. She held various fund and senior
management positions there, including ten years as
Chief Investment Officer, before retiring in 2011. Since
2012, Sarah has been a member of the Prince’s Trust
Women Supporting Women Group. She is currently
Chairman of JPMorgan Emerging Markets Investment
Trust and Non-executive Director of Vietnam Enterprise
Investments Limited.
Non-executive Director
(Appointed May 1995)
Dominic Scriven O.B.E
UK-born Dominic founded Dragon Capital in 1994. A
Vietnamese speaker, he promotes the capital markets
of Vietnam internationally, and is a director of various
Vietnamese public companies. His interests range
from Vietnamese art to eliminating the illegal trade in
wildlife.
Board & Committees
As of 5 January 2022, the Board consists of seven Non-
executive Directors, six of whom are independent of
the Investment Manager, whose individual knowledge
and experience provide a balance of skills and expertise
relevant to the Company and it is considered that they
commit sufficient time to the Company’s affairs. The
Board has established three committees: the Audit
and Risk Committee, the Management Engagement
Committee and the Nomination and Remuneration
Committee. All members of the committees are
independent. Dominic Scriven O.B.E who is the
Chairman of Dragon Capital Group Limited, the ultimate
parent of the Investment Manager, does not participate
in any Committee.
The Nomination and Remuneration Committee is
responsible for ensuring that the Board comprises
the appropriate balance and composition of skills,
experience, length of service, knowledge of the
Company and diversity (including gender and ethnic
diversity) as well as determining a fair and market-
competitive compensation for members of the Board.
As of 5 January 2022, the Board’s diverse ethnic
backgrounds and nationalities include Vietnam/
Australia/USA, Singapore, Hong Kong, Switzerland/
Albania, and the UK. Four out of the seven Board
members are female. Two out of three committees are
chaired by female directors.
Independent Non-executive Director
(Appointed July 2021)
Low Suk Ling
Suk Ling currently serves as Associate General Counsel
(Asia) for Marsh, the largest operating company of
Marsh & McLennan Companies, a global professional
services firm with business in risk management,
insurance and investment advising. In this role, she
oversees the company’s legal, compliance and risk
management functions in Asia.
7. Board of Directors (Continued)
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38
8. Annual General Meeting
Annual General Meeting Summary
The Board of Directors of the Company announced that
at the Annual General Meeting of the Company held
on 27 August 2021 (the “2021 AGM”), the resolutions
numbered 1 to 10 in the notice of meeting for the 2021
AGM were passed by the required majority on a poll
vote.
Special Resolution
(9) To authorise the Company generally and
unconditionally to make market purchases of its
ordinary shares of US$0.01 each provided that:
(i) the maximum aggregate number of ordinary
shares that may be purchased is 14.99 per
cent. of issued share capital (excluding shares
held in treasury as at the date of this Notice
(32,238,422 shares));
(ii) the minimum price which may be paid for each
ordinary share is US$0.01;
(iii) the maximum price (excluding expenses)
which may be paid for each ordinary share is
the higher of:
(a) 105 per cent. of the average market value
of an ordinary share in the Company for
the five business days prior to the day the
purchase is made; and
(b) the higher of the price of the last
independent trade and the highest
current independent bid as stipulated by
Regulatory Technical Standards adopted
by the European Commission pursuant
to Article 5 (6) of the Market Abuse
Regulation; and
(iv) the authority conferred by this resolution shall
expire on 31 December 2022 or, if earlier, at
the conclusion of the Company’s next annual
general meeting save that the Company may,
before the expiry of the authority granted
by this resolution, enter into a contract to
purchase ordinary shares which will or may be
executed wholly or partly after the expiry of
such authority.
(10) To amend regulation 95 of the Articles of
Association of the Company by deleting the figure
“US$200,000” and replacing it with the figure
“US$400,000”.
Ordinary Resolutions
(1) To receive and adopt the audited financial
statements for the year ended 31 December 2020
together with the auditor’s and Directors’ reports
thereon.
(2) To re-appoint KPMG Ltd. of Vietnam as auditor
of the Company and to authorise the Board to fix
their remuneration.
(3) To re-elect Stanley Chou as a Director of the
Company.
(4) To re-elect Gordon Lawson as a Director of the
Company.
(5) To re-elect Vi Peterson as a Director of the
Company.
(6) To re-elect Entela Benz-Saliasi as a Director of the
Company.
(7) To elect Low Suk Ling as a Director of the
Company.
(8) To re-elect Dominic Scriven as a Director of the
Company.
Vietnam Enterprise Investments Limited - Annual Report 2021
39
9. Report of the Board of Directors
The Directors of Vietnam Enterprise Investments Limited (the “Company”) present their report and the audited
financial statements of the Company for the year ended 31 December 2021.
Principal Activity
The Company is an investment holding company incorporated as an exempted company with limited liability in the
Cayman Islands on 20 April 1995. The shares of the Company have been listed on the main market of the London
Stock Exchange since 5 July 2016 (until 4 July 2016: listed on the Irish Stock Exchange). The principal activity of the
Company is investing directly or indirectly in a diversified portfolio of listed and unlisted securities in Vietnam.
Results and Dividends
The Company’s profit for the year ended 31 December 2021 and its financial position at that date are set out in the
attached financial statements. The Directors have taken the decision not to pay a dividend in respect of the year
ended 31 December 2021 (2020: Nil).
Share Capital
Details of movements in the Company’s share capital during the year are presented in Note 8. As at 31 December
2021, the Company had 213,533,847 Ordinary Shares and 1,000 Management Shares outstanding (31 December 2020:
216,935,108 Ordinary Shares and 1,000 Management Shares).
Directors
The Directors of the Company during the year were:
Non-executive Director:
• Dominic Scriven O.B.E
Independent Non-executive Directors:
• Stanley Chou – Chair
• Gordon Lawson – Senior Independent Non-executive Director
• Vi Peterson
• Entela Benz-Saliasi
• Low Suk Ling (from 1 July 2021)
• Sarah Arkle (from 5 January 2022)
• Derek Eu-Tse Loh (until 30 June 2021)
In accordance with Article 91 of the Restated and Amended Memorandum and Articles of Association (the “Articles”),
the Independent and Non-independent Non-executive Directors are required to submit themselves for re-election
at the next occurring Annual General Meeting (“AGM”). All the Independent Non-executive Directors were duly re-
appointed at the AGM held on 27 August 2021 following the expiry of their respective terms. Dominic Scriven O.B.E
also submitted himself for re-election and was duly re-appointed.
Directors’ Rights to Acquire Shares or Debentures
At no time during the year was the Company a party to any arrangement to enable the Company’s Directors or their
respective spouses or minor children to acquire benefits by means of the acquisition of shares in, or debentures of,
the Company or any other body corporate.
Directors’ Interests in Shares
Dominic Scriven O.B.E, a Non-executive Director, 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).
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
40
Dominic Scriven O.B.E also has indirect interests in shares of the Company as he is a key shareholder of Dragon
Capital Group Limited, the parent company of Dragon Capital Limited which holds the Management Shares of the
Company. Dragon Capital Group Limited is also the ultimate parent company of Enterprise Investment Management
Limited, which was the Investment Manager of the Company until 31 March 2021, 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).
Apart from the above, no other Director had a direct or indirect interest in the share capital of the Company, or its
underlying investments at the end of the year, or at any time during the year.
Directors’ Interests in Contracts
Dominic Scriven O.B.E has indirect interests in the Investment Management agreement between the Company and
Dragon Capital Management (HK) Limited, the Investment Manager of the Company, due to his shareholding in Dragon
Capital Group Limited, the ultimate parent company of the Investment Manager.
There were no further contracts of significance in relation to the Company’s business in which a Director of the
Company had a material interest, whether directly or indirectly, at the end of the year or at any time during the year.
Substantial Shareholders
As at 31 December 2021, the following shareholders owned more than 10 percent of the Company’s issued Ordinary
Share capital:
Number of Ordinary
Shares held
% of total Ordinary
Shares in issue
Inter Fund Management S.A. 26,491,515 12.41
Bill & Melinda Gates Foundation 25,087,859 11.75
Subsequent Events
Details of the significant subsequent events of the Company are set out in Note 14 to the financial statements.
Auditors
KPMG Limited, Vietnam
Directors’ Responsibility in Respect of the Financial Statements
The Board of Directors is responsible for ensuring that the financial statements of the Company are properly drawn up
so as to give a true and fair view of the financial position of the Company as at 31 December 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;
9. Report of the Board of Directors (Continued)
Vietnam Enterprise Investments Limited - Annual Report 2021
41
Signed on behalf of the Board by:
Stanley Chou
Chair
Vietnam Enterprise Investments Limited
28 April 2022
Signed on behalf of the Audit and Risk Committee by:
Entela Benz-Saliasi
Chair of the Audit and Risk Committee
Vietnam Enterprise Investments Limited
28 April 2022
•
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.
Approval of the Financial Statements
The Board of Directors hereby approves the accompanying financial statements which give a true and fair view of the
financial position of the Company as at 31 December 2021, and of its financial performance and its cash flows for the
year then ended in accordance with IFRS.
9. Report of the Board of Directors (Continued)
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42
10. Independent Auditors’ Report
Vietnam Enterprise Investments Limited - Annual Report 2021Vietnam Enterprise Investments Limited - Annual Report 2021
10. Independent Auditors’ Report (Continued)
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
10. Independent Auditors’ Report (Continued)
Vietnam Enterprise Investments Limited - Annual Report 2021
10. Independent Auditors’ Report (Continued)
Vietnam Enterprise Investments Limited - Annual Report 2021Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
11. 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
Dominic Scriven O.B.E
Director
Vietnam Enterprise Investments Limited
Approved by the Board of Directors on
28 April 2022
.The accompanying notes are an integral part of these financial statements
Vietnam Enterprise Investments Limited - Annual Report 2021
47
Vietnam Enterprise Investments Limited - Annual Report 2021
12. Statement of Comprehensive Income
For the year ended 31 December 2021
The accompanying notes are an integral part of these financial statements
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 (165,000 )
(189,090 )
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
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48
13. Statement of Changes in Net Assets Attributable to Ordinary
Shareholders
For the year ended 31 December 2021
The accompanying notes are an integral part of these financial statements
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
Vietnam Enterprise Investments Limited - Annual Report 2021
49
14. Statement of Cash Flows
For the year ended 31 December 2021
The accompanying notes are an integral part of these financial statements
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 77,290
(1,232,092 )
Changes in balances due to brokers and accounts payable
and accruals 5,237,023
(572,654 )
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
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50
15. 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
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$”), which is the Company’s functional currency.
Vietnam Enterprise Investments Limited - Annual Report 2021
51
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
2. BASIS OF PREPARATION (Continued)
Functional currency is the currency of the primary economic environment in which the Company operates. If indicators
of the primary economic environment are mixed, then management uses its judgment to determine the functional
currency that most faithfully represents the economic effect of the underlying transactions, events and conditions.
The Company’s investments and transactions are denominated in US$ 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.
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
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2. BASIS OF PREPARATION (Continued)
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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021
53
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
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54
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021
55
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021
57
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
58
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021
59
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, 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
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
60
5. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
(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
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021
61
5. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
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
3Transportation 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
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
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5. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Continued)
(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
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021
63
8. ISSUED SHARE CAPITAL AND SHARE PREMIUM (Continued)
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
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
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8. ISSUED SHARE CAPITAL AND SHARE PREMIUM (Continued)
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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021
65
10. FEES (Continued)
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
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
66
12. BASIC EARNINGS PER ORDINARY SHARE (Continued)
(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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021
67
13. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY (Continued)
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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
68
13. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY (Continued)
(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 51 918
52
1,362VN 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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021
69
13. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY (Continued)
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
31 December 2021 US$ US$ US$ US$
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
31 December 2020 US$ US$ US$ US$
ASSETS
Other receivables - - 918,374 918,374
Cash and cash equivalents -
24,769,597
-24,769,597
TOTAL ASSETS 918,374 25,687,971
24,769,597
-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$247,696). This analysis assumes that all other variables,
in particular foreign currency rates, remain constant.
The Company invests substantially all of its assets in its subsidiaries together with which it is managed as an integrated
structure. The Directors decided that the objectives of IFRS 7
Financial Instruments: Disclosures
are met by providing disclosures on the interest risk of the underlying investments held by the subsidiaries.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
70
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
13. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY (Continued)
The table below summarises the subsidiaries’ exposure to interest rate risk. Included in the table are the subsidiaries’
assets and liabilities categorised by maturity date. The net interest sensitivity gap represents the net carrying amounts
of all interest sensitive financial instruments.
Up to 1 year 1 – 5 years
Non-interest
bearing Total
31 December 2021 US$ US$ US$ US$
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
31 December 2020 US$ US$ US$ US$
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$222,611). This analysis assumes that all other variables, in particular
foreign currency rates, remain constant.
Foreign currency risk
Foreign currency risk is the risk that changes in foreign exchange rates will affect the Company and its subsidiaries’
income or the value of its holding of financial instruments. The Company and its subsidiaries ensure that the net
exposure to this risk is kept to an acceptable level by buying or selling foreign currencies at spot rates to address
short-term imbalances where necessary.
Vietnam Enterprise Investments Limited - Annual Report 2021
71
13. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY (Continued)
The table below summarises the exposure of the Company to currency risks as at 31 December 2021 and 2020.
Included in the table are the assets and liabilities categorised by their base currency.
31 December 2021 (Denominated in VND) US$
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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021 Vietnam Enterprise Investments Limited - Annual Report 2021
72
13. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY (Continued)
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
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
Vietnam Enterprise Investments Limited - Annual Report 2021
73
13. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY (Continued)
(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.
15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
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15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
13. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY (Continued)
(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
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15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
13. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY (Continued)
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 - -
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15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
13. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY (Continued)
(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
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
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.
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15. Notes to the Financial Statements (Continued)
For the year ended 31 December 2021
13. FINANCIAL RISK MANAGEMENT AND UNCERTAINTY (Continued)
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.
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16. Corporate Information
Company Secretary
Maples Secretaries (Cayman) Limited
PO Box 1093
Queensgate House
Grand Cayman KY1-1102
Cayman Islands
Investment Manager
Dragon Capital Management (HK) Limited
Unit 2406, 24/F
9 Queen’s Road
Central
Hong Kong
Vietnam Custodian
Standard Chartered Bank (Vietnam) Ltd.
1810-1815, Keangnam Hanoi Landmark, E6
Pham Hung
Me Tri Ward
South Tu Liem District
Hanoi
Vietnam
Registrar
Computershare Investor Services (Cayman)
Limited
Windward 1
Regatta Office Park
West Bay Road
Grand Cayman KY1-1103
Cayman Islands
Corporate Broker
Jefferies International Limited
100 Bishopsgate
London EC2N 4JL
United Kingdom
Registered Office
Vietnam Enterprise Investments Limited
c/o Maples Corporate Services Limited
PO Box 309
Ugland House
Grand Cayman KY1-1104
Cayman Islands
Administrator and Offshore Custodian
Standard Chartered Bank
Standard Chartered @ Changi
No 7, Changi Business Park
Crescent
Level 03
Singapore 486028
Legal Adviser to the Company
Stephenson Harwood LLP
1 Finsbury Circus
London EC2M 7SH
United Kingdom
Auditors
KPMG Limited
10
th
Floor Sun Wah Tower
115 Nguyen Hue
District 1
Ho Chi Minh City
Vietnam
Depositary
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
United Kingdom
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79
17. Investor Information
Enquiries
For institutional investors based in Europe: dcme@dragoncapital.com
Other enquiries globally: veil@dragoncapital.com / info@dragoncapital.com
Dragon Capital Management (HK) Limited
Unit 2406, 24/F
9 Queen’s Road
Central
Hong Kong
Tel: +852 3979 8100
Fax: +852 3979 8199
Dragon Capital Vietfund Management Joint Stock
Company
1501 Me Linh Point
2 Ngo Duc Ke
District 1, Ho Chi Minh City
Vietnam
Tel: +84 28 3823 9355
Fax: +84 28 3823 9366
Dragon Capital Markets (Europe) Limited
Cambridge House
Henry Street
Bath, BA1 1BT
United Kingdom
Tel: +44 1225 618 150
Fax: +44 1225 618 151
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