Company Announcements

VietNam Holding Limited

(a non-cellular company limited by shares registered in Guernsey under the Companies (Guernsey) Law, 2008, on 25 February 2019 with registered number 66090)

VietNam Holding Limited ("VNH" or the "Company") is pleased to announce its unaudited results for the six-month period from 1 July 2022 to 31 December 2022

More information on the Company is available at                                                                          www.vietnamholding.com

Dynam Capital, Ltd                                                                                                                        Tel: +84 28 3554 2561

Craig Martin, Chairman

The information contained within the announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

Condensed Interim Unaudited Financial Statements

for the six-month period from 1 July 2022 to 31 December 2022

Contents

Chairman's Statement    

Investment Manager's Report  

Market Report      

Interim Report of the Directors

Statement of Directors' Responsibilities      

Condensed Interim Unaudited Statement of Financial Position  

Condensed Interim Unaudited Statement of Comprehensive Income   

Condensed Interim Unaudited Statement of Changes in Equity 

Condensed Interim Unaudited Statement of Cash Flows 

Notes to the Condensed Interim Unaudited Financial Statements        

Director Profiles   

Key Parties

Chairman's Statement

Dear Shareholder,

VietNam Holding Limited (the "Company" or the "Fund") outperformed a falling equities market during the first six months of the financial year. The net asset value ("NAV") per share declined by 16.8 % in US dollar ("USD") terms during the period versus a decline of 20.5% in the Vietnam All Share Index ("VNAS"). For the calendar year that ended on 31 December, the Fund's NAV per share declined by 30.1% against a 39.8% decline in the VNAS. During that period the Fund maintained its outperformance on a one, three, five and ten-year basis.

As a result of the decline in market value of the Fund's listed holdings, Total Assets decreased to USD 105,983,143 as at 31 December 2022, from USD 129,177,449 at 30 June 2022. Total Comprehensive Loss was USD 21,831,338 in the six-month period, a significant decrease on the Total Comprehensive Income of USD 17,235,713 generated in the corresponding period in 2021.

In addition to the Investment Manager's continuing communications initiatives, the Board made appropriate decisions for implementing share buybacks as a means of addressing the discount between the share price and the NAV. During the period in review, the Company bought back 505,037 shares at an average price of USD 3.248, adding an estimated 0.26 % in NAV per share accretion. The Share buyback authority was renewed by the Shareholders at the AGM in October 2022, allowing up to 14.99% of the Company's issued shares to be bought back. Current practice is that shares bought back are cancelled. 

The Board has kept a very close eye on developments in Vietnam during the last six months having travelled to the country both in June 2022 and March 2023 to meet with the Manager's research team and portfolio companies. We were particularly pleased to witness first-hand the progress the Manager is making with regards to its Environmental, Social and Governance ("ESG") goals. This helps explain why the Fund received two five stars in the UN PRI transparency report and delivered outperformance in the estimated level of Carbon Footprint against the VNAS. The Manager is also continuing its proactive engagement with the Fund's portfolio companies and participation in an ESG conference in Vietnam in May.

2022 marked an important milestone in modern history when as many parts of the world, including Vietnam, were going "back to normal" after two years Covid-19 restrictions, Russia's invasion of Ukraine threw the world into further uncertainty. Although 2022 was a record year for Vietnam's economy, - with its decade high levels of GDP growth (8%), record levels of Foreign Direct Investment, and unmatched trade surplus - it was not a great year for equity investors.

Despite continuing uncertainties globally, 2023 could prove finer for Vietnam. Investors are starting to return to the country's stock markets, with net inflows recorded for the first time since 2019. Additionally, as detailed in the Manager's Report, the market appears to be at historically cheap levels of valuations accompanied with good growth prospects. The Manager also explains how Vietnam can achieve growth despite weakness in the global economy. For example, how reform of the nascent bond market could provide some respite for the real-estate sector in Vietnam, or how the recent government resignations related to corruption scandals can instil some added trust in the country's leadership.

The Manager will continue to seek both sustainable outperformance and strong risk adjusted returns through its active management of our concentrated portfolio of well-researched researched companies.

I would like to thank all our shareholders, old and new, for their continued support of the Company. 2022 has been a very challenging year for investors globally, and we look forward to better results in 2023. Later in 2023 there will be a five-yearly continuation vote for the Company, and we will be in touch with investors during the year with information about the procedures for the vote.

Hiroshi Funaki

Chairman

VietNam Holding Limited

21 March 2023

Investment Manager's Report

The last six months of 2022 saw a period of significant volatility in the Vietnamese stock market, resulting in the Vietnam All Share index ("VNAS") falling by 20.5%. Its performance diverged significantly from the underlying economy and reflected twin fears among domestic investors about the weak global outlook and the increased scrutiny of some domestic tycoons and government officials in the crack-down on corruption.

Vietnam's macro-economic performance for the full year was remarkably robust with record levels of disbursed Foreign Direct Investment ("FDI"), (USD 22.4bn), the second highest trade surplus of all time (USD 11.2bn), high levels of GDP growth (8%), low levels of inflation (3.15%) and modest currency devaluation (3.4%), despite the stock market playing victim of its own success. In the previous 18 months, record numbers of new investors flocked to the stock market, taking advantage of unrivalled access to mobile trading apps, and streamlined 'KYC' on-boarding processes. These domestic retail investor flows had driven the market to record levels of liquidity and performance in 2021, but in the face of weak global outlook and domestic scandals in 2022, the profit-taking, coupled with margin calls in a soft and volatile market, created fearful market conditions. Much of the selling was indiscriminate, bringing overall market pricing down to levels not seen for several years. Some of the nervousness was focused on the real-estate market on the back of scandals relating to misuse of the proceeds from corporate bonds issuances that culminated in the arrest of a significant property tycoon. The arrest coincided with a restriction on bank credit and the inability to access either bank loans or bonds, pushing one or two large property developers into default on some of their financing obligations. Markets were also rattled by the purges and resignations of political appointees, which were mostly related to inappropriate procurement practices of Covid-19 test-kits and Covid-related repatriation flights. It appears the chain of command is also the chain of responsibility, and at the end of the year two deputy-prime ministers were removed from power. Then, in early January, just before the Lunar New Year 'Tet' holiday, President Nguyen Xuan Phuc announced his retirement.

Despite all this noise Vietnam continued to cement its position as a key manufacturing hub, with 'made in Vietnam' appearing on an increasing amount of the world's inventory of running shoes, garments, and IT accessories. Bilateral trade reached USD 733bn in 2022, another record year. In fact, over the last five years trade has increased by more than 52%. China is the largest trading partner (USD 178bn) followed by the United States (USD 124bn), Korea (USD 87bn), Japan (USD 48bn) and Taiwan (USD 28bn). Trade with the US has doubled over the last five years, which is indicative of the changing global patterns of trade. When President Trump tweeted against China in 2018, many manufacturers accelerated plans to produce more in Vietnam. The deepening trade war and deterioration in trust between US and China has brought many investors to the friendly shores of Vietnam. Four percent of US imports are now from Vietnam, a level that was quite unimaginable just a few decades ago. Trade can be fickle, and some of the gains came at China's expense because of dislocations brought about by Covid-19 and China's zero-Covid policy response. China has now abandoned this policy, and notwithstanding a soft global economy, may regain some of this market share. However, Vietnam's role in a China-plus-one world supply chain is unlikely to be challenged anytime soon.

FDI and global trade have driven growth In Vietnam's economy, broadly measured by GDP, at an average level of 6.5% per annum for the past three decades. In December, Vietnam posted an 8% growth number, its highest in a decade, and 2023 looks likely to remain on the multi-decade track. The domestic consumer in Vietnam has benefitted by economic growth, and per capita GDP is now equivalent to approximately USD 4,000, which is four times where it was when the stock market first opened in the country 20 years ago.

The consumer is becoming better informed and more digital, while e-commerce is growing at 37% per annum, the highest rate in Southeast Asia. Overall retail sales grew rapidly in 2022 and at double digits (20% year-on-year in December 2022), showing strong underlying consumer demand. Some of our portfolio's retail companies saw growth at levels more than the pre-Covid levels, not just 'pent-up' demand replacing sales lost to the pandemic. Phu Nhuan Jewellery ("PNJ") is a case in point. PNJ, the second largest company in the portfolio (10.9% of Net Asset Value, NAV), has around half of all the branded retail jewellery business in Vietnam and opened 38 new stores in 2022 (taking the store count to 364) with plans to open 40 stores throughout 2023. Over the last five years PNJ has maintained its Return on Equity at around 20% (versus the Index level of 15%) and has very little debt. We view this company as an 'earnings compounder' and a core holding. Over the last decade it has increased its market value from USD 100m to USD 1bn.

Despite the large growth in domestic wealth, the World Bank estimated in 2018 that less than 40% of the adult population have bank accounts. Credit card penetration is only 4%, versus 21% In China and 54% In Taiwan. As such, the scope for the growth in the banking sector, and financial services in general, remains significant. Opportunities are also backed by the fact that banking stocks are at historically low levels of 0.8 to 1.0 Price to Book. The banking sector accounts for 38.6% of the VNAS, and the Fund's six bank holdings account for 30.8% of the Fund's NAV.

Portfolio Performance

In the period of 1 July to 31 December 2022, the Fund's NAV per share declined by 16.8% versus a decline In the VNAS of 20.5%. This brings the Fund's overall return for 2022 to -30.1% versus a -39.8% decline In the VNAS Index.

The second half of calendar 2022, the period under review, required nimble stock and sector selection. In the face of a domestic liquidity crunch for the real-estate sector, we reduced the Fund's exposure to the sector, which declined by 38% (our sector picks by 29%), and we were underweight at 11.7% for real-estate versus the index level of 18.5%. We have maintained strong conviction on FPT, a leading technology and telecommunication champion, resulting in an 11.8% allocation to the sector versus the index's 4.5%. The Fund is also overweight in the retail sector (16.7% versus 5.7%) and our holdings overall performed better than the benchmark with a decline of 24.2% versus 31.2% for the index, apart from MWG which fell by 40% during the period. Two of our bank holdings - Sacombank and Vietin Bank managed to make positive returns during the period, and the sector buffeted the overall declines in the real-estate, transportation, and retail sectors.

Economic Outlook

Vietnam's trade levels are close to 200% of GDP - making it one of the most open economies in the world. Although the country has a diversified mix of trading partners, it will not be able to escape global headwinds resulting from economic recession in those export markets. Trade levels in December showed slowing demand for many goods, and it could take several months for inventory levels and demand levels to normalise. In Vietnam's favour is the fact that it produces a wide range of goods, and in many instances is a low-cost producer. Although demand may fall for some categories and therefore impact employment at the factories and industrial parks, the country will still be expected to earn foreign exchange from the many basic commodities it produces in quantity, including coffee, rice, rubber, pork, fruit and vegetables. The latter categories may also see firmer demand from China as the country opens-up from strict Covid restrictions.

Domestic spending on public infrastructure is expected to be a strong catalyst for economic growth in 2023. The Government was running behind its plans in 2022 but has earmarked a total of USD 30 billion for 2023. This may provide a buffer against headwinds from the global trading partners, many of whom may be close to or entering, recession in 2023. The domestic infrastructure expenditure is expected to cover core sections, including road and rail infrastructure. Improvements in these areas will support greater productivity for Vietnam's manufacturing centres and have a knock on or multiplier effect for the economy as a whole. Vietnam is still a rural-based country with urbanisation at less than 40%. While the country has made good strides in digital Infrastructure - mobile phone penetration is high and internet connectivity is affordable for much of the population - the arterial road network requires further development and the railway connections between the major cities need significant upgrades. A long-term project to connect Hanoi and Ho Chi Minh City in six hours with a high speed 'bullet-train' was reignited in 2022 and has been cited as one of the ways to help Vietnam deliver on the promises of Net-Zero by 2050. The single-track rail line today is old (completed in 1936) and slow, as the 1,726-kilometre journey between the cities takes more than 30 hours. Air-travel is the main commercial alternative, and the two-hour flight is the fourth busiest domestic air route in the world, according to the Director of the Civil Aviation Authority.

Vietnam was quick to open to foreign visitors in 2022 and, as the Chairman notes, the Board of the Fund has visited the country twice over the last twelve months. The rebounding effect of tourism should continue in 2023 and may be accelerated by the return of Chinese tourists in the second quarter, perhaps when the peak of recent Covid infections in China has passed.

Although domestic investors have been nursing their wounds, as mentioned before, foreign investors have started returning to Vietnam's stock market, attracted in part by historically low valuations with the overall market on a Price to Earnings ratio of 10x. As a result, 2022 saw the first net foreign inflows since 2019. Vietnam is still a frontier market, and 'emerging' status is elusive for now. 2023 should see the implementation of a new stock exchange infrastructure, but until foreign investors are convinced that there is a level playing field in terms of market access, Vietnam will remain the most developed of the Frontier Markets and the largest for some time to come.

Force for Good

At the 2021 United Nations Climate Change Conference in Glasgow (COP26) Vietnam bravely set out its Net-Zero ambitions, ahead of many other countries. Prime Minister Pham Minh Chinh pledged alongside more than 40 other countries around the world to phase out coal and commit to achieving Net-Zero carbon emissions by 2050. The Prime Minister called for fairness and justice in dealing with global climate urgencies and discussed the Government's plans for trying to align its policies both with international investors' corporate governance expectations and Vietnamese citizens' own health and prosperity in mind. At last year's COP27 in Egypt, Vietnam reaffirmed its commitment and the Group of Seven ("G7") industrialised nations have offered USD 15bn in funding to assist with the country's transition away from coal.

As detailed in last year's Annual Report, the Fund received two five stars in the United Nations Principles for Responsible Investing ("UNPRI") transparency report. The Fund has always believed its stewardship role as a responsible investor is a very important one when it comes to environmental and social matters in Vietnam, and as Investment Manager we have been enhancing our active engagement with boards and senior management of our portfolio companies regarding climate and other environmental, social and governance ("ESG") risks. Over the last six months we have been pleased by the progress made at some of our core holdings and have been able to provide some advice and assistance to these companies in their own ESG journey. We intend to build on this work in 2023 and are planning to sponsor and support one of the first ESG conferences in the country scheduled for the end of May 2023.

Dynam Capital, Ltd

21 March 2023

Market Report

The following is an article written by Craig Martin, Chairman of Dynam Capital, Ltd which was published in the UK in Investor Magazine on 6 February 2023.

A new frontier in Vietnam

Vietnam currently accounts for 30% of the MSCI Frontier Market Index, making it the largest and most developed constituent of it, so when can we expect the country to step up to the Emerging Market Index?

The rapid rise of the retail investor in Vietnam has transformed the country's capital markets. Two and a half million new trading accounts were opened in the past year alone, with the overall market value surpassing US$ 300 billion since the stock market opened two decades ago. Daily liquidity now averages close to US$1 billion, and more than 80% of this activity comes from domestic investors, whose investment into the stock market replaced US $2 billion or so of foreign capital that was pulled out of Vietnam during the pandemic years.

Yet despite greater local interest and this increasing size and liquidity of the stock market, Vietnam is still classified as a 'Frontier' country by leading global equity index providers. It is the largest and arguably most developed constituent of the MSCI Frontier Markets Index (MSCI FM), with Vietnamese companies accounting for 30% of the US$88 billion represented in the index, but the curveball of a year that was 2022 has inevitably delayed its inclusion in the much larger - US$6 Trillion - MSCI Emerging Market (MSCI EM).

Indices, such as the MSCI FM and the much larger MSCI EM, are widely used as a benchmark for active and passive global institutional investors and fund managers. The MSCI FM comprises 99 companies from 29 countries and six Vietnamese listed companies are already in the top ten stocks. When a country's stocks are included in the index, there is typically an increased allocation from investors who use that benchmark.

The high stakes and potential growing aches

To be eligible for inclusion in the MSCI EM, a company must have a market capitalisation of at least US$ 1 billion, as well as a minimum level of trading activity and liquidity. The country must also have regulations in place that allow foreign investors access to its stock market, along with a sufficiently developed infrastructure for trading and settlement. Interestingly, other Asian countries, including China, India, Indonesia, Korea, Malaysia, Philippines, Thailand, and Taiwan already represent a third of the 24 constituents of the MSCI EM. 

It goes without saying that when and if Vietnam was to be included, the country would attract significantly more foreign capital and potentially see a re-rating in the valuation of several of the companies listed on its stock markets. Some studies have also suggested that such an upgrade would also reduce market risk, lower the cost of capital, and make the equity market more suitable as a source of domestic financing.

Today Vietnam does not fully meet the 18 criteria for inclusion set by MSCI and falls short on the key aspects of openness and equal treatment for foreign investors. As MSCI's evaluation is based on feedback from institutional investors, brokers, and custodians, there would need to be a visible and demonstrable improvement in areas such as the amount of 'free float' available to foreigners after taking into consideration foreign ownership restrictions. Currently more than 10% of Vietnam's market is impacted by such ownership restrictions, and more than 1% of the Vietnam Index suffers from lack of room for investors as a result.

Although progress has been made, there are short-term and mid-term impediments to improving the perception in investors' minds. Exchange infrastructure needs to be enhanced with a facilitating central counterparty clearing system that reduces trade settlement periods and removes the current requirement to 'pre-fund' investor accounts. Theoretically, much of this can be addressed when the stock market system is upgraded. The good news is that the Vietnam Securities Depository and Clearing Corporation (VSDC) was established in December 2022, and this should allow the new 'KRX' trading platform to go live midway this year. However, we still have mid-term issues, which are primarily about easing capital flows and opening more of the addressable market to foreign investors.MSCI conducts its reviews of countries annually and usually announces its findings every June. The review process for Vietnam as with all countries would be done in stages, not overnight. First, if enough progress is identified, Vietnam would be added to the watchlist 'for potential upgrade'. One year later, if all went to plan, there would be an announcement made stating that the country would be included. Then, assuming all is well another year on, it would receive actual inclusion. It had been hoped that the first phase could be completed by June 2023, leading to inclusion by June 2025, but given the roller-coaster ride of 2022, this timeframe has probably slipped by at least one year.

Moving forward

The most important point is that these incremental steps needed for eventual inclusion would benefit everyone investing in Vietnam in the long-term. Although the actual amount of inflow to the market might be modest, maybe US$5 to US $10 billion initially, the prestige would also be welcomed by the government. Indeed, over the last twelve months or so, the focus of the general secretary of the Communist Party, Nguyen Phu Trong, has been on cleaning up misconduct in the system by pursuing private and public corruption and refining some of the rules related to bond issuance. Last year, the heads of the stock market and the regulator were removed, and there have been some short-term delays in implementing upgraded market infrastructure. A new chairwoman has been appointed to the State Securities Commission and she has just reaffirmed the launch of the new exchange trading platform and additional capital market developments.

Sadly, as we saw, sentiment among the six million or so domestic investors weakened for much of 2022 as global markets declined and local anti-corruption cases rattled local real estate stocks. Vietnam's market fell by more than 35% and became one of the world's laggards despite it being its champion only one year before. Thus, the market certainly could do with some positive news, as the eyes of investors likely stay on global events, such as the war and fear of recession and trajectory of US interest rates and inflation. Closer to home, investors will be watching signs of greater stability in the bond and real-estate markets. 

Nevertheless, there is no urgency for Emerging Market inclusion amongst domestic investors and for foreign investors who wish to invest in Vietnam they can already do so through specialised funds, such as Vietnam Holding. Eventual inclusion would be a significant step for Vietnam, putting it more firmly on investors' radars, but looking down the road there will be many opportunities to reap even before that happens.

Interim Report of the Directors

The Board of Directors (the "Directors") submits its report together with the Condensed Interim Unaudited Financial Statements of VietNam Holding Limited (the "Company") for the six-month period from 1 July 2022 to 31 December 2022 (the "six-month period").

The Company is registered in Guernsey as a non-cellular company with limited liability. The registered office of the Company is 1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey, GY1 2HL.

Investment Objective

The Company's investment objective is to achieve long-term capital appreciation by investing in a diversified portfolio of companies that have high growth potential at an attractive valuation.

Investment Policy

The Company attempts to achieve its investment objective by investing in the securities of publicly traded companies in Vietnam, and in the securities of foreign companies if a majority of their assets and/or operations are based in Vietnam. The Company may invest in equity securities or securities that have equity features, such as bonds that are convertible into equity.

The Company may invest in listed or unlisted securities, either on the Vietnamese stock exchanges, through purchases on the OTC Market, or through privately negotiated deals.

The Company may invest its available cash in the Vietnamese domestic bond market as well as in international bonds issued by Vietnamese entities.

The Company may utilise derivatives contracts for hedging purposes and for efficient portfolio management but will not utilise derivatives for investment purposes.

The Company does not intend to take control of any company or entity in which it has directly or indirectly invested (the "Investee Company") or to take an active management role in any such company. However, Dynam Capital, Ltd. ("Dynam Capital"), (the "Investment Manager") may appoint one of its directors, employees or other appointees to join the board of an Investee Company and/or may provide certain forms of assistance to such company, subject to prior approval by the Company's Board.

The Company integrates environmental, social and corporate governance ("ESG") factors into its investment analysis and decision-making process. Through its Investment Manager, the Company actively incorporates ESG considerations into its ownership policies and practices and engages Investee Companies in pursuit of appropriate disclosure and the improvement of material issues.

The Company may invest:

●       up to 25% of its Net Asset Value ("NAV") (at the time of investment) in companies with shares traded outside of Vietnam if a majority of their assets and/or operations are based in Vietnam;

●        up to 20% of its NAV (at the time of investment) in direct private equity investments; and

●       up to 20% of its NAV (at the time of investment) in other listed investment funds and holding companies which have the majority of their assets in Vietnam.

Borrowing Policy

The Company is permitted to borrow money and to grant security over its assets provided that such borrowings do not exceed 25% of the latest available NAV of the Company at the time of the borrowing unless the Shareholders in general meeting otherwise determine by ordinary resolution.

Investment Restrictions and Diversification

The Company will adhere to the general principle of risk diversification in respect of its investments and will observe the following investment restrictions:

●        the Company will not invest more than 10% of its NAV (at the time of investment) in the shares of a single investee company;

●        the Company will not invest more than 30% of its NAV (at the time of investment) in any one sector;

●       the Company will not invest directly in real estate or real estate development projects, but may invest in companies which have a large real estate component, if their shares are listed or are traded on the OTC Market; and

●        the Company will not invest in any closed-ended investment fund unless the price of such investment fund is at a discount of at least 10% to such investment fund's NAV (at the time of investment).

Furthermore, based on the guidelines established by the United Nations Principles for Responsible Investment, of which the Company is a signatory:

●      the Company will not invest in companies known to be significantly involved in the manufacturing or trading of distilled alcoholic beverages, tobacco, armaments or in casino operations or other gambling businesses;

●       the Company will not invest in companies known to be subject to material violations of Vietnamese laws on labour and employment, including child labour regulations or racial or gender discriminations; and

●        the Company will not invest in companies that do not commit to reducing in a measurable way pollution and environmental problems caused by their business activities.

Principal Risks

Market Risk

Vietnam is an increasingly open trading nation, and the changes in terms of international trade, disruption to supply chains and impositions of tariffs could impact directly and indirectly the Vietnamese Economy and the companies in which the Company is invested. The Vietnamese economy can also be impacted by the global-macro economic conditions, and also geopolitical tensions such as the conflict between Russia and Ukraine. The Vietnamese capital markets are relatively young, and liquidity levels can change abruptly responding to changes in behaviour of domestic and international investors.

Parts of the portfolio may be prone to enhanced liquidity and price risk.

Investor Sentiment

Vietnam is currently classified as a Frontier Market by MSCI, and the timetable for any inclusion as an Emerging Market is unsure. Investor attitudes to Frontier and Emerging Markets can change, leading to reduced demand for the Company's shares, and an increase in the discount to NAV per share.

Investment Performance

The performance of the Company's investment portfolio could be poor, either absolutely or in relation to the Company's peers, or to the market as a whole.

Fair Valuation

The risks associated with the fair valuation of the portfolio could result in the NAV of the Company being misstated. The quoted companies in the portfolio are valued at market price, but it may be difficult to liquidate, where large positions are held, at these prices in an orderly fashion in the ordinary course of market activity. The values of the Company's underlying investments are denominated in Vietnamese Dong, whereas the Company's accounts are prepared in US Dollars. The Company does not hedge its Vietnamese Dong exposures so exchange rate fluctuations could have a material effect on the NAV.

Investment Management Agreement

The fund management activities are outsourced to the Investment Manager. If the Investment Manager became unable to carry out these activities or if the Investment Management Agreement was terminated, there could be disruptions to the management of the portfolio until a suitable replacement is found.

Principal Risks (continued)

Operational

The Company has no employees and is dependent on a number of third parties for the provision of services (including Investment Management, Fund Administration and Custody). Any control failures or gaps in the services provided could result in damage or loss to the Company.

Legal and Regulatory

Failure to comply with relevant regulation and legislation in relevant jurisdictions may have an impact on the Company. Although there are compliance policies (including anti-bribery policies) in place at the Company, the Investment Manager and all service providers, the Company could be damaged or suffer losses if any of these policies were breached.

Covid-19

Further widespread outbreaks of contagious diseases, such as novel coronavirus (Covid-19) could pose a health concern through fast person-to-person spread, resulting in an illness that can lead to death. Lockdowns, quarantine measures and restrictions on travel can cause sustained economic disruption and slowdown in growth and can cause some industries and companies to face severe financial pressures that can lead to job losses and in extreme cases bankruptcies, impacting the value of the investments held by the Company, and weakening investor confidence. Key service providers to the Company could face loss of personnel, diminution in service capability and could impact the ongoing operations of the Company.

Climate Risk

Climate change is happening faster than models earlier predicted, threatening the safety of billions of people on the planet. Vietnam is one of the five countries most vulnerable to climate change. The country's diverse geography means it is hit by sea level rise, typhoons, landslides, flooding and droughts, and weather events are expected to worsen in coming years. Two types of climate-related risks have been identified.

(1) Physical risks: sea level rise, floods and typhoons that put infrastructure or real estate companies with projects in coastal areas or low-lying levels at higher risk from physical impacts of climate change.

(2) Transition risks: climate policy and rising carbon prices may cause higher prices and impact the viability of companies that rely on fossil fuels or those in high carbon intensity activities and may necessitate a significant, and costly, technology shift.

Emerging Risks

New risks beyond those identified as Principal Risks can develop. These Emerging Risks may have a detrimental or existential impact on the Company.

Life of the Company

The Company does not have a fixed life, but the Directors consider it desirable that shareholders should have the opportunity to review the future of the Company at appropriate intervals. Accordingly, the Directors intend that every fifth year a special resolution will be proposed that the Company shall continue in existence. If the resolution is not passed the Directors will be required to formulate proposals to be put to shareholders to either wind up the Company or implement a reconstruction, amalgamation or other material alteration to the Company or its activities. The Directors last tabled such a resolution at the Extraordinary General Meeting of the Company on 31 October 2018 and it was passed, allowing the Company to continue as currently constituted. The Fund has a formal continuation vote in 2023 and it is the current intention of the Board to table a continuation resolution at the 2023 Annual General meeting.

Results

The results of the Company for the six-month period and the state of its financial affairs as at the reporting date are set out in the Condensed Interim Unaudited Financial Statements on pages 13 to 21.

Performance

To ensure the Company meets its objectives the Directors evaluate the performance of the Investment Manager at least at each quarterly Board meeting and take into account the following performance indicators:

·      NAV - reviews the performance of the portfolio

·      Discount to NAV - and reviews the average discount for the Company's shares against its peer group.

Related Parties

Details of related party transactions that have taken place during the period and any material changes, if any, are set out in note 6 of the Condensed Interim Unaudited Financial Statements.

Share Repurchase Programme

Details of the Company's share repurchase programme are set out in note 4 of the Condensed Interim Unaudited Financial Statements.

Board of Directors

The members of the Board during the six-month period and up to the date of this report were:

Directors' Interest in the Company

As at 31 December 2022 and 30 June 2022, the interests of the Directors in shares of the Company were as follows:

Going Concern

The Board considered it appropriate to prepare the Condensed Interim Unaudited Financial Statements on the going concern basis, as explained in the basis of preparation paragraph in note 2 to the Condensed Interim Unaudited Financial Statements. In making this statement, the Board has made enquiries of the Investment Manager and reviewed the principal risks. The Board also considered the levels of working capital available to the Company, the closed-ended nature of the Company, the liquidity of the investment portfolio, forecasts of future cash flows, the impact of the Covid-19 pandemic and other geopolitical factors such as the conflict between Russia and Ukraine. There were no identified material uncertainties to the Company's ability to continue.

On behalf of the Board:

Hiroshi Funaki                                                                          Philip Scales

Chairman                                                                                     Director

VietNam Holding Limited                                                           VietNam Holding Limited

21 March 2023                                                                            21 March 2023

Statement of Directors' Responsibilities

The Directors are responsible for preparing this interim financial report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge: 

n the Condensed Interim Unaudited Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting; and

n the Chairman's Statement, the Investment Manager's Report and the Interim Report of the Directors include a fair review of information required by:

(i) DTR 4.2.7R of the UK Disclosure and Transparency Rules, being an indication of important events, which have occurred during the first six months and their impact on the Condensed Unaudited Interim Financial Statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

(ii) DTR 4.2.8R of the UK Disclosure and Transparency Rules, being related party transactions, which have taken place in the first six months, and which have materially affected the financial position or performance of the Company during that period, and any material changes in the related party transactions disclosed in the last Annual Report.

On behalf of the Board

Hiroshi Funaki                                                                          Philip Scales

Chairman                                                                                     Director

21 March 2023                                                                            21 March 2023

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, and for the preparation and dissemination of financial statements.  Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Condensed Interim Unaudited Statement of Financial Position as at 31 December 2022

The Condensed Interim Unaudited Financial Statements on pages 13 to 21 were approved by the Board of Directors on 21 March 2023 and  were signed on its behalf by

Hiroshi Funaki                                                                                 Philip Scales

Chairman of the Board of Directors                                                   Chairman of the Audit and Risk Committee

The accompanying notes on pages 17 to 21 form an integral part of these financial statements.