TIDMVNF
RNS Number : 0804Y
PXP Vietnam Fund Limited
26 November 2014
26 November 2014
PXP Vietnam Fund Limited
Final results for the year ended 30 September 2014
OBJECTIVE AND HIGHLIGHTS
Objective
The investment objective of PXP Vietnam Fund Limited ("the
Company") is to seek long-term capital appreciation of its assets
by investing in a portfolio of equity securities of Vietnamese
companies, whether established with domestic or foreign ownership,
which are either listed companies or prelisting companies.
Financial summary
Financial position at 30 % change
September 2014 2013
Total Net Assets US$88,334,000 US$70,158,000 25.9%
Ordinary Shares of US$0.05
in issue 12,000,000 12,000,000
Net Asset Value ("NAV") per
share US$7.361 US$5.847 25.9%
Share price US$6.88 US$4.82 42.7%
Discount 6.5% 17.6%
Results for the year to 30 2014 2013
September
Net profit US$18,539,000 US$21,662,000
Earnings per share US$1.54 US$1.81
Expense ratio 2.92% 2.55%
Relative performance
Cumulative performance for years to 30 September 2014
NAV per share Viet Nam
Index
(US$)
% %
1 year 25.9 21.0
2 years 79.7 50.0
3 years 111.1 37.5
4 years 72.0 21.0
5 years 22.1 -13.3
6 years 73.7 2.6
7 years -31.8 -56.6
8 years 46.2 -13.9
9 years 177.9 55.1
10 years 207.2 90.8
Year's high and low Year to 30 September
2014
----------------------------
High Low
NAV per share US$7.538 US$5.813
Share price US$7.00 US$4.80
Vietnam market data
Vietnam market data at 30 % change
September 2014 2013
Vietnamese dong ("VND")/US
dollar ("US$")
exchange rate 21,209 21,119 0.4%
Viet Nam Index 598.80 492.63 21.6%
Viet Nam Index adjusted US$
rate 397.86 328.72 21.0%
CHAIRMAN'S STATEMENT
Performance and outlook
Over the 12 months to 30 September 2014, the Net Asset Value per
share of PXP Vietnam Fund Limited increased by 25.9%. This compares
to a gain in the Viet Nam Index ("VNI") in US dollar terms of 21.0%
over the same period. The portfolio of the Company was invested
predominantly in Vietnamese listed equities throughout the year and
delivered strong performance over a range of industries.
Vietnam macroeconomic conditions remained stable throughout this
financial year. Price inflation which had reduced from over 20% in
2011 to 6.3% year-on-year in September 2013, fell further to 3.6%
year-on-year in September 2014. The annual trade surpluses achieved
in both years 2012 and 2013 have been followed by a trade surplus
of US$2.4 billion for the first nine months of 2014. The Vietnamese
dong (the "Dong") continued to be relatively stable, with a fall of
only 0.4% against the US dollar over the financial year. Vietnam
GDP growth of 5.6% for the first nine months of 2014 was the
highest level for the corresponding period since 2011, and GDP can
be expected to advance for the remainder of the year, with the
subdued credit growth in the economy earlier in the year picking up
to a more respectable 7.3% for the first nine months of 2014, and
with expanding industrial output being driven by foreign direct
investment.
After a steady first quarter to the Company's financial year,
the Vietnam stock markets rallied strongly from January 2014, with
the VNI gaining 20% from a close of 504.63 points on 31 December
2013 to reach a high of 607.55 points on 24 March 2014. The upturn
in confidence and involvement from domestic investors over this
period was augmented by renewed foreign inflows. In April 2014, the
progress of the market was dampened by a tightening of margin
lending to domestic retail investors. Then in early May 2014, the
siting by a Chinese company of an exploration rig near the disputed
Paracel Islands, off the east coast of Vietnam, caused a drop of
8.2% in the VNI over three trading days. After a few days of
increased volatility, the market calmed and began a strong climb
which endured for four months, with the VNI increasing by 26.7%
from a traded low of 508.51 points on 13 May 2014 to a traded high
of 644.56 points on 3 September 2014. Profit-taking pressure in the
remainder of the month brought the VNI down to a financial year
close of 598.80 points.
The market traded in a narrow band through October and November
2014, and the VNI closed at 588.03 points on 21 November 2014.
Although the outlook for the Vietnam stock markets remains positive
due to stable economic conditions and the fundamental
attractiveness of Vietnamese listed stocks, the upside potential is
likely to be hindered if the Government does not push through
meaningful reforms of the market, including increased access for
foreign investors.
C Share Offer
Following the recommendation of the Board of Directors, at the
annual general meeting of the Company held on 30 May 2014 (the
"2014 AGM") the shareholders passed a resolution to renew the
authority given to the Board at the 2012 annual general meeting
(the "2012 AGM") and renewed at the 2013 annual general meeting, to
issue up to 20 million C Shares on the same terms and conditions as
approved at the 2012 AGM for a further three months from the date
of the 2014 AGM.
The C Share Offer was launched on 10 June 2014. Subsequently,
due to the discount to net asset value of the Ordinary Shares
widening during the offer period and general market conditions, the
anticipated level of interest in the C Share Offer from existing
holders of Ordinary Shares and potential new investors did not
materialise, and the C Share Offer was cancelled on 27 June
2014.
Proposed merger
PXP Vietnam Asset Management Limited, the Investment Manager,
has submitted a proposal to the Board that the Company merge with
PXP Vietnam Emerging Equity Fund Limited, a Cayman Islands
open-ended mutual fund which is also managed by the Investment
Manager (the "Merger").
A shareholder circular concerning the proposed Merger (the
"Circular") will shortly be despatched to shareholders. The
Circular will include notice of an Extraordinary General Meeting
("EGM") to be held on 17 December 2014 at which shareholders will
be invited to vote on the Merger proposal.
It is the opinion of the Board that the proposed Merger is in
the best interests of shareholders as a whole, and the Board will
recommend that shareholders vote in favour of the Merger at the
EGM.
Share price
The Company's shares are listed on the London Stock Exchange
plc's Main Market for listed securities as a premium listing of
equity shares. The share price increased by 42.7% over the year to
30 September 2014, from US$4.82 to US$6.88. The announcement on 18
September 2014 of preliminary discussions which may lead to
proposals for a merger between the Company and PXP Vietnam Emerging
Equity Fund Limited resulted in a narrowing of the discount from
13% to end the financial year at 6.5%.
Dividend
The Directors have declared the payment of a dividend for the
year ended 30 September 2014 of 7.5 cents per Ordinary Share,
representing the excess of dividends received by the Company over
its expenses for the year ended 30 September 2014. This dividend is
to be paid on 30 December 2014 to shareholders on the register at 5
December 2014 (ex-dividend date 4 December 2014).
Corporate governance
The Company has established corporate governance processes which
the Board believes are appropriate for an investment company with a
premium listing on the London Stock Exchange.
Directorate
At the annual general meeting of the Company held on 30 May
2014, all five Directors were re-elected. The Directors
collectively have substantial experience in asset management,
investment and business in Asia.
Philip Smiley
Chairman
21 November 2014
For further information, please contact:
PXP Vietnam Asset Management Limited (the "Investment
Manager")
Kevin Snowball
Tel: +84 (0) 8 3827 6040
khsnowball@pxpam.com
Panmure Gordon
Paul Fincham / Jonathan Becher
Tel: +44 (0)207 886 2500
INVESTMENT MANAGER'S REPORT
The Company is managed by PXP Vietnam Asset Management Limited,
a British Virgin Islands company incorporated in October 2002.
Kevin Snowball, the Chief Executive Officer of the Investment
Manager has been Portfolio Manager since the Company's inception in
2003.
Mr Snowball worked in Hong Kong from 1985 to 1995 as a
specialist manager and trader of proprietary funds in equity and
equity derivatives markets in Hong Kong and South East Asia. During
that period, among other activities he established the Hong Kong
equity derivatives businesses of Baring Securities and Deutsche
Morgan Grenfell. On returning to the United Kingdom in 1995, Mr
Snowball expanded his coverage to encompass global emerging markets
at Dresdner Kleinwort Benson, Bear Stearns International and ABN
Amro before returning to Asia and co-founding PXP Vietnam Asset
Management Limited in 2002.
Review of the year
During the year under review the Company's Net Asset Value
("NAV") per share increased by 25.9%, from US$5.847 to US$7.361.
This compares with an increase in the Viet Nam Index ("VNI") of
21.0% in US dollar terms over the same period. The Vietnamese dong
(the "Dong") depreciated by 0.4% over the Financial Year.
Stock market
The VNI began the Company's Financial Year in fairly muted
fashion, although it transpired that the index would not trade
below the 30 September 2013 close during the entirety of the period
under review. The 500 point level of the VNI proved a fairly strong
resistance level in the first six weeks of the period due to the
tiresomely slavish adherence to technicals over fundamentals on the
part of local soothsayers, but once surmounted in the latter part
of October 2013 the rally was back on and now supported by the
former sceptics, to the extent that the path to 600 and beyond was
relatively smooth.
All great fun until the beginning of April 2014, when the
gushing faucets of margin facilitation were tightened, leading to a
slight hesitation in the euphoria of recognition that all those
monetary policy improvements had laid the groundwork very nicely
for a good, old-fashioned bull market. It had made a pleasant
change for a while to have some company in the wilderness into
which we had been shouting "it's time to buy Vietnam" for a couple
of years.
Unfortunately, China then decided to use the East Sea (the one
to its south) as the proving ground for a new era of regional
hegemony and so a giant oil rig unexpectedly arrived in disputed
waters on an otherwise fair morning early in May. The onshore
ramifications of that act have been very well documented elsewhere,
but in essence; cue local protests which quickly escalated into a
couple of days' anti-Chinese rioting with Taiwanese and South
Korean factories bearing the brunt of a heady mix of misdirected
nationalistic fervour and protests about working conditions. The
authorities, having failed to see that one coming, put a stop to it
in short order but not before the index had completed a (healthy)
mid-teen percentage pullback from the April high. Once order had
been restored the market reacted by storming to multi-year highs
between mid-May and the start of September 2014 before entering
another mild and orderly period of consolidation which continues at
the time of writing.
Economy
The Vietnamese Government has undoubtedly made significant
progress through the resolute application of consistently strong
monetary policy over the past three years or so. The Dong has been
among the most stable currencies in Asia during that period,
obviously assisted to an extent by the managed exchange rate
against the US dollar, but the pressures previously caused by high
inflation and large trade deficits have been negated for the time
being at least, and both are expected to continue to improve,
particularly over the longer term as trade surpluses become the
norm.
The Consumer Price Index rose by 6.04% in 2013, a steady
improvement after the 18.6% and 9.3% levels recorded by the General
Statistics Office for 2011 and 2012 respectively. The rate of
inflation has continued to decline into 2014 with the latest
reading, for October 2014, now at 3.23% on an annualised basis,
well below the Government's 2014 target of 7%.
The move up the value chain driven by higher value add
manufacturing as the country diversifies production from garments
to electronics made a significant contribution to Vietnam achieving
a trade surplus in 2013 after the first for 20 years in 2012, with
another well on track to be recorded in 2014. This potentially
sustained move from deficit to surplus several years ahead of
expectations remains at the core of our bullishness from a
macroeconomic standpoint, assisting the Government to attain its
objectives of keeping inflation under control and the currency
stable for considerably longer than the previous three-year
boom-bust cycles.
Gross Domestic Product ("GDP") growth picked up to 5.4% in 2013
after 5% in 2012 and we concur with the Government's forecast for
an acceleration to 5.8% in 2014. Although this still compares
somewhat poorly with the average of 7% achieved over the previous
decade we see growth continuing to improve in 2015, returning close
to the mean by the end of 2016.
The issue of non-performing loans in the banking system remains
a concern but with lower interest rates and a stronger economy
providing some breathing space whilst legislation is prepared to
enable a more effective long-term resolution than is currently in
place we remain hopeful that help is at hand.
Outlook and strategy
Domestic macroeconomic conditions remain supportive of the
continuation of the current bull market into a fourth year, the VNI
having bottomed with the end of the last mini-cycle at the
beginning of 2012. How easily the macro translates into further
gains will, in our opinion, be determined by the Government's
willingness and ability to deliver ongoing improvements in the
stock market.
The relaxation of foreign ownership limits has been pending for
over a year now, possibly due to a combination of the need to
unravel the issue of conflicting legislation with some resistance
in the hard core, who perhaps both mistrust foreign investors in
general and misunderstand the nature and long-term economic
benefits of a fully functional stock market. Add to this a
seemingly more inclusive decision-making process (equals less
decisive) at the top of the pyramid and Vietnam runs the risk of
continuing to retard progress beyond the attention span of foreign
institutional investors and that would be a great pity.
There is no doubt that Vietnam is currently in a sweet spot as
far as foreign direct and fixed income investors are concerned,
with impressive flows continuing into electronics plants and
supporting industries in particular as the Government, buoyed by
recent success, considers further sovereign bond issues. The
equitisation to listing process, however, which should be providing
welcome new supply to the stock market, is unfortunately teetering
on the edge of being a complete waste of time. The Vietnam Airlines
IPO was lauded locally as being a success having been
oversubscribed by a whisker due to two local banks having taken up
over 98% of the shares. With no foreign institutional participation
whatsoever and no firm listing date in the plan we would question
that interpretation. If we understand economic theory at all,
raising money from foreign investors by privatising state owned
enterprises would have an impact on the overall size of the economy
whereas selling overpriced state assets to local banks (one of
which is 77% owned by the state) is more akin to taking money out
of one pocket and putting it into another.
Our fear is complacency; that Vietnam is ostensibly now doing so
well from a macroeconomic perspective that the two crucial reforms
that will aid the development of the stock market - namely more
supply and better access for foreign investors (who can already buy
up to 100% of subsidiaries of listed companies but only 49% of the
listed entity itself for some unfathomable reason) - have
disappeared from the list of things that will provide benefits to
the advance of the country as a whole. The danger is that
over-confidence makes you think you can get the timing right within
the cycle and you figure out that you got the length of the cycle
wrong when it is too late to do anything about it. The Government
may of course (we hope) prove once again that it knows what it is
doing in spite of increasing scepticism (at least from equity
market commentators) and make the necessary adjustments sooner
rather than (too) late(r). Time will tell but for the time being at
least there are definite early signs of disappointment at the slow
progress of reform.
Otherwise, as usual, we will continue with our long-term
strategy to build and maintain a high conviction portfolio
providing Shareholders with access to the highest quality companies
listed in Vietnam.
On behalf of the Investment Manager
Kevin Snowball
21 November 2014
SUMMARY OF TEN LARGEST INVESTMENTS
Ten largest investments as at 30 September Valuation % of
2014 US$'000 NAV
%
----------------------------------------------------------- ---------- -------
VNM Viet Nam Dairy Products JSC (Vinamilk)
Vinamilk is the largest producer and distributor
of dairy products in Vietnam and is continuing
to expand its production capacity to capitalise
on growing demand. VNM is currently the
second largest listed company in Vietnam,
is arguably the country's most respected
company internationally and has been the
cornerstone of the Company's portfolio
since 2005. 18,070 20.5
---------------------------------------------------------- ---------- -------
HCM Ho Chi Minh City Securities Corporation
Ho Chi Minh City Securities Corporation
is the second largest broker in terms
of market share on the Ho Chi Minh City
Stock Exchange with over 11% as at 30
September 2014. HCM offers securities
brokerage, research and investment banking,
and is recognised for its experienced,
relatively conservative management team
and good corporate governance standards. 8,599 9.7
---------------------------------------------------------- ---------- -------
HPG Hoa Phat Group JSC
Hoa Phat Group JSC is Vietnam's largest
construction steel producer with 18% market
share and is the leader in this sector
in northern Vietnam. HPG has significant
cost advantages over its domestic competitors
due to its Basic Oxygen Furnace facility
and its vertically integrated production
process. 7,706 8.7
---------------------------------------------------------- ---------- -------
REE Refrigeration Electrical Engineering Corporation
REE Corporation was one of the first two
listed stocks on the Ho Chi Minh City
Stock Exchange. Its core businesses include
mechanical and engineering services -
in which it is the largest and longest
established company in Vietnam - the manufacture
and distribution of white goods and office
leasing. REE has been focusing its investment
portfolio in utilities and energy in recent
years which accounted for nearly 50% of
its total assets as at June 2014. 6,117 6.9
---------------------------------------------------------- ---------- -------
PVD Petrovietnam Drilling and Well Services
JSC
Petrovietnam Drilling and Well Services
JSC provides drilling, drilling-related
services and other technical services.
PVD has over 50% of the drilling market
in Vietnam. Currently it operates ten
rigs consisting of five of its own and
five leased. PVD has posted strong growth
with compound average growth rates for
revenues and net profits of 25.2% and
28.8% for the last three years. 5,720 6.5
---------------------------------------------------------- ---------- -------
STB Sai Gon Thuong Tin Commercial Joint Stock
Bank (Sacombank)
Sacombank was the first Vietnamese bank
to be listed (in 2006) and is one of the
three largest private joint stock banks
in the country with total assets of US$8.5
billion as at 30 June 2014, having grown
its loan book and shareholders' equity
by 622% and 496% respectively between
2006 and 2014. 5,462 6.2
---------------------------------------------------------- ---------- -------
FPT FPT Corporation
FPT Corporation is Vietnam's leading I.T.
services company with top three market
share across most business lines including
systems integration, software outsourcing
and internet services. Substantial labour
cost advantages over Indian and other
international peers underpin its growing
software outsourcing business. 4,631 5.2
---------------------------------------------------------- ---------- -------
HAG Hoang Anh Gia Lai JSC
Hoang Anh Gia Lai JSC has traditionally
been one of the leading real estate developers
in Vietnam, with a main focus on the mid-end
sector, but has diversified into rubber,
sugar, hydropower and mining. HAG is currently
restructuring by spinning off most of
its Vietnamese real estate assets to focus
on its agriculture businesses and its
real estate business in Myanmar. 3,664 4.1
---------------------------------------------------------- ---------- -------
DRC Da Nang Rubber JSC
Da Nang Rubber JSC is one of the leading
tyre manufacturers in Vietnam with over
30 years in operation. It ranks number
one in producing tyres for cars and trucks
in the domestic market and was the first
company in Vietnam to produce radial tyres.
DRC has a key niche product, off-the-road
(OTR) tyres which are sold to Vinacomin,
the country's largest state-owned coal
mining company. 2,706 3.1
---------------------------------------------------------- ---------- -------
VSC Vietnam Container Shipping JSC
Vietnam Container Shipping JSC is one
of the leading container transport companies
in Vietnam. VSC has its own container
terminal and warehouse in Hai Phong City
which is running near full capacity, and
has trucking lines for container and conventional
cargo moving services throughout Vietnam. 2,665 3.0
---------------------------------------------------------- ---------- -------
65,340 73.9
PRINCIPAL RISKS AND UNCERTAINTIES
The Board confirms that there is an ongoing process for
identifying, evaluating and managing the principal risks affecting
the Company, which fall under the headings of market risks,
performance risks, share price risks, regulatory risks and control
systems risks. The Audit Committee performs a risk assessment and
risk management process which is updated and reviewed at least on
an annual basis. The Board reviews and agrees policies for managing
risks, and the summaries of these are set out below.
Market risks
The Company's assets consist mainly of listed securities and the
principal risks are market related such as price volatility,
foreign exchange risk and inflation risk. The Company is exposed to
market price risk on all of its investments and is subject to
additional risks arising from the concentration of investments in
the Vietnamese stock markets, resulting in the Company being
heavily dependent on the performance of these particular stock
markets.
The siting by a Chinese company of an exploration rig in
disputed waters off the coast of Vietnam in May 2014 has
highlighted the risks to the Vietnamese economy and stock market
from any similar incidents in future, including: uncertainty over
the impact on trade with China and the risk that anti-Chinese
protests could damage Vietnam's position as a manufacturing and
production base.
The Company invests across a range of industries. The current
intention is to invest no more than 40% of the Company's assets at
the time of investment in any one sector.
Performance risks
The achievement of the Company's performance objective requires
the acceptance of risk. Strategy, asset allocation and stock
selection might lead to underperformance in comparison to the VNI.
The Investment Manager has significant discretion, subject to the
Company's investment objective, policy and guidelines, in
selecting, evaluating, executing, monitoring and realising
investments on the Company's behalf. The Investment Manager has
substantial experience in investing and managing investments in
Vietnam, but there is no guarantee that its investments for and the
management of the Company will produce long-term capital
appreciation of the assets of the Company.
Management of these risks is carried out by the Board which, at
each Board meeting, considers the asset allocation of the portfolio
at an industry sector level and reviews significant holdings,
recent trading and expenses. The Investment Manager is responsible
for actively monitoring the portfolio selected in accordance with
the investment policy and restrictions. The NAV per share of the
Company is calculated and published each working day.
As at 30 September 2014 the holding of the Company in Vinamilk
represents 20.5% of the net assets of the Company. The original
purchases of Vinamilk shares were in compliance with the investment
restriction that the Company will not invest more than 10% of its
net asset value at the time of the investment in the shares of a
single investee company. The share price performance of Vinamilk
both absolute and relative to the rest of the portfolio over a
number of years has resulted in a high concentration of net asset
value of the Company in this position. The Board recognises that
action is required to limit this concentration of risk and the
Investment Manager intends to make sales if necessary to restrict
the weighting to a maximum of 30% of net asset value.
Share price risks
The share price of the Company may vary significantly. The price
of the Company's shares and its premium or discount to NAV is not a
factor that the Company is able to control.
The Company's share price, NAV and discount volatility are
monitored daily by the Investment Manager and considered by the
Board at each of its meetings.
Regulatory risks
The investment activities of the Company are primarily focused
on Vietnam. The value of the Company's assets may be affected by
regulatory changes, which could include changes in Vietnamese
government policies relating to foreign investment, taxation,
securities market regulations and foreign currency conversion and
repatriation.
The Investment Manager reports to the Board on any regulatory
developments in Vietnam. The Audit Committee considers regulatory
risks in general and any Vietnam-specific matters in the annual
risk assessment process.
Control systems risks
The Company is dependent on the Investment Manager's control
systems and those of its Custodian, Administrator and Registrar,
all of which are monitored and managed by the Investment Manager.
The Investment Manager provides a regular report to the Audit
Committee on compliance matters and internal control.
GOING CONCERN
The Company's assets consist mainly of securities which are
readily realisable and the Company has no gearing and does not have
a significant level of financial or contingent liabilities. The
Board receives reports from the Investment Manager for its regular
Board meetings, including portfolio analysis and financial position
of the Company.
Despite the risks associated with investment in Vietnam, the
Directors have a reasonable expectation that the Company has
adequate resources to continue its business, with its stated
objective and strategy, for the foreseeable future. Thus they
continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
SHARE CAPITAL
The Company's authorised share capital comprises 30,000,000
Ordinary Shares with a par value of US$0.05 per share and
20,000,000 C Shares with a par value of US$0.05 per share. As at 30
September 2014: 12,000,000 Ordinary Shares were issued and fully
paid and no C Shares were issued.
RELATED PARTY TRANSACTIONS
Related parties include any entities and individuals owning,
directly or indirectly, an interest in the voting power of the
Company that gives them control or significant influence over the
Company. The Company's Directors, Investment Manager, directors and
key management personnel of the Investment Manager, including close
members of the family of these individuals and entities which are
controlled, jointly controlled or significantly influenced by, or
for which significant voting power in such entity resides with,
directly or indirectly, these individuals, also constitute related
parties.
Directors
In accordance with the Company's Articles of Association any
non-independent Director shall be subject to annual re-election at
a meeting of shareholders and any independent Director shall retire
and be subject to re-election at the third annual general election
after that at which he was last elected. Mr Philip Smiley, Mr Urs
Bolzern, Mr Antony Jordan, Mr Christopher Vale and Ms Trinh Thanh
Mai stood for re-election at the annual general meeting on 30 May
2014 and were re-elected. It is the current intention of the Board
that all Directors will be subject to annual re-election at a
meeting of shareholders.
The total amount of fees payable to the Directors for the year
ended 30 September 2014 was US$105,000 (30 September 2013:
US$105,000) and the outstanding fees payable as at 30 September
2014 was US$105,000 (30 September 2013: US$92,000).
During the year ended 30 September 2014, Mr Urs Bolzern sold
40,000 shares of the Company.
Interests of the Directors in the Company's shares:
Number of shares
As at 30 September
-------------------------
Director 2014 2013
US$ US$
Philip Smiley
(held by a trust of which Philip Smiley's
family are the principal beneficiaries) 41,000 41,000
Urs Bolzern 40,000 80,000
Antony Jordan - -
Christopher Vale - -
Trinh Thanh Mai - -
Investment Manager
Management fee payable to PXP Vietnam Asset Management Limited
(the "Investment Manager") for the year to 30 September 2014 was
US$1,610,000 (30 September 2013: US$1,195,000) and there was no
outstanding fee payable at 30 September 2014 or at 30 September
2013. The Investment Manager does not receive an incentive or
performance fee.
During the year ended 30 September 2014, the Investment Manager
purchased 100,000 shares of the Company.
As at 30 September 2014, the Investment Manager held 546,536
shares of the Company (30 September 2013: 446,536 shares), of which
10,000 shares are non-beneficial. Mr Kevin Snowball and Ms Joelle
Daumas-Snowball, owners of the ultimate holding company of the
Investment Manager, own as at 30 September 2014 either
individually, jointly or through a company that they jointly own, a
further 175,825 shares of the Company (30 September 2013: 175,825
shares).
MERGER PROPOSALS
PXP Vietnam Asset Management Limited, the Investment Manager,
has submitted a proposal to the Board that the Company merge with
PXP Vietnam Emerging Equity Fund Limited ("VEEF"), a Cayman Islands
open-ended mutual fund which is also managed by the Investment
Manager (the "Merger").
The rationale for the proposal is that the shareholders of both
constituent entities would benefit from being members of an
enlarged fund with the combination of similarly focused investment
portfolios, savings from economies of scale and a reduction in
concentration risk for shareholders. As the surviving entity in the
proposed Merger, VEEF, is an open-ended fund with a monthly
subscription and redemption cycle, the Company's shareholders would
benefit after the merger from having the opportunity to subscribe
for new shares or redeem their shares at Net Asset Value (less a
redemption fee) on a monthly basis.
Under the proposed Merger, the Company's shareholders would have
their shares cancelled in return for the issue of new participating
shares in VEEF based on a share exchange ratio which would be
calculated on the basis of the respective net asset values per
share of the Company and VEEF on the valuation date, which is 31
December 2014.
The effective date of the Merger, if approved by shareholders,
is expected to be 2 February 2015.
The consent of shareholders is required to approve the Merger
under The Companies Law (2013 Revision) of the Cayman Islands, by
the passing of a special resolution in a general meeting. The
consent of shareholders is further required under the Listing Rules
to cancel the listing of the Company's shares on the premium
segment of the Official List of the United Kingdom Listing
Authority ("UKLA") once the Merger has been implemented.
A shareholder circular concerning the proposed Merger (the
"Circular") will shortly be despatched to shareholders. The
Circular will include notice of an Extraordinary General Meeting to
be held on 17 December 2014 at which shareholders will be invited
to vote on the Merger proposal.
If the Merger proposals are approved, it is intended that the
Company will apply to the UKLA for the cancellation of the listing
of its shares on the Official List of the UKLA.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Board of Directors is responsible for the financial
statements which give a true and fair view of the financial
position of the Company as at 30 September 2014 and of its
financial performance, cash flows and changes in shareholders'
equity for the year then ended. In preparing these financial
statements, the Board of Directors is required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent; and
-- prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Board of Directors is responsible for ensuring that proper
accounting records are kept which disclose, with reasonable
accuracy at any time, the financial position of the Company and
which enable financial statements to be prepared which comply with
International Financial Reporting Standards. The Board of Directors
is also responsible for safeguarding the assets of the Company and
thus for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
We confirm to the best of our knowledge:
-- The financial statements have been prepared in accordance
with International Financial Reporting Standards and give a true
and fair view of the assets, liabilities, financial position,
financial performance and cash flows of the Company.
-- The Directors' Report includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that it faces.
-- The Annual Report for the year ended 30 September 2014 taken
as a whole is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company's
performance, business model and strategy.
Approved by the Board of Directors on 21 November 2014
and signed on its behalf by
Philip Smiley
Chairman
21 November 2014
BALANCE SHEET
As at 30 September
------------------------
2014 2013
US$'000 US$'000
Assets
Current assets
Financial assets at fair value
through profit or loss 86,736 69,833
Receivables and prepayments 25 154
Cash and cash equivalents 1,911 317
Total assets 88,672 70,304
Equity
Capital and reserves attributable
to equity holders
of the Company
Issued capital 600 600
Share premium 33,953 33,953
Cumulative translation reserve (16,151) (15,686)
Other reserve - (102)
Retained earnings 69,932 51,393
Total equity 88,334 70,158
Liabilities
Current liabilities
Due to brokers 153 -
Accrued fees and other payables 185 146
Total liabilities 338 146
Total equity and liabilities 88,672 70,304
Net asset value per share
(US$ per share) 7.361 5.847
INCOME STATEMENT
Year ended 30 September
-----------------------------
2014 2013
US$'000 US$'000
Income
Interest income - 1
Dividend income 3,337 3,244
Net gains on financial assets
at fair value
through profit or loss 17,630 20,008
Net investment income 20,967 23,253
Expenses
Management fee (1,610) (1,195)
Custodian, administration and
secretarial fees (116) (90)
Transaction costs (27) (20)
Directors' fees (105) (105)
Foreign exchange loss - net (1) (1)
Other operating expenses (569) (180)
Total operating expenses (2,428) (1,591)
Profit before tax 18,539 21,662
Income tax expense - -
Net profit for the year 18,539 21,662
Earnings per share - basic
(US$ per share) 1.54 1.81
STATEMENT OF COMPREHENSIVE INCOME
Year ended 30 September
-----------------------------
2014 2013
US$'000 US$'000
Net profit for the year 18,539 21,662
Other comprehensive income/(loss)
Items that will not be reclassified
to profit or loss:
Currency translation differences (465) (674)
Items that may be reclassified
subsequently to
profit or loss:
Reclassification of C Shares issue
fees 102 9
Total other comprehensive loss
for the year (363) (665)
Total comprehensive income for
the year 18,176 20,997
STATEMENT OF CHANGES IN EQUITY
Cumulative
Issued Share translation Other Retained
capital premium reserve reserve earnings Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 October
2012 600 33,953 (15,012) (111) 29,731 49,161
Net profit for the year - - - - 21,662 21,662
Other comprehensive
income/(loss):
Currency translation
differences - - (674) - - (674)
C Shares issue fees - - - 9 - 9
Total comprehensive
income/(loss) for the
year ended
30 September 2013 - - (674) 9 21,662 20,997
Balance at 30 September
2013 600 33,953 (15,686) (102) 51,393 70,158
Net profit for the year - - - - 18,539 18,539
Other comprehensive
income/(loss):
Currency translation
differences - - (465) - - (465)
Reclassification of
C Shares issue fees - - - 102 - 102
Total comprehensive
income/(loss) for the
year ended
30 September 2014 - - (465) 102 18,539 18,176
Balance at 30 September
2014 600 33,953 (16,151) - 69,932 88,334
STATEMENT OF CASH FLOWS
Year ended 30 September
-----------------------------
2014 2013
US$'000 US$'000
Cash flows from operating activities
Purchases of financial assets (7,018) (6,558)
Proceeds from sales of financial assets 7,458 5,067
Dividends received 3,466 3,208
Interest received - 1
Operating expenses paid (2,312) (1,624)
Net cash generated from operating activities 1,594 94
Increase in cash and cash equivalents 1,594 94
Cash and cash equivalents at beginning
of year 317 223
Cash and cash equivalents at end of
year 1,911 317
NOTES TO THE FINANCIAL STATEMENTS
Net asset value per share and earnings per share
As at 30 September
------------------------------
2014 2013
Net asset value (US$) 88,334,000 70,158,000
Number of shares in issue 12,000,000 12,000,000
Net asset value per share (US$ per
share) 7.361 5.847
Year ended 30 September
------------------------------
2014 2013
US$ US$
Net profit for the year (US$) 18,539,000 21,662,000
Weighted average number of ordinary
shares in issue 12,000,000 12,000,000
Basic earnings per share (US$ per share) 1.54 1.81
Costs of cancelled C Share Offer
Legal and professional fees and expenses incurred in the year
ended 30 September 2014 in connection with the proposed offer of C
Shares amounted to US$307,000. Following the cancellation of the C
Share Offer on 27 June 2014, the balance of fees and expenses
incurred prior to 30 September 2013 in preparation for the C Share
Offer of US$102,000 (which had been posted to "Other reserve") was
reclassified to the income statement, giving a total amount of fees
and expenses incurred in connection with the C Share Offer of
US$409,000 which is included within legal and professional fees in
the income statement for the year ended 30 September 2014.
The above statements have been prepared on the basis of the
accounting policies as set out in the annual financial statements
to 30 September 2014. This announcement was approved by the Board
on 21 November 2014. It is not the Company's annual financial
statements. The financial statements for the financial year ended
30 September 2014 have been approved and audited. The financial
statements for the financial years ended 30 September 2014 and 30
September 2013 received unqualified audit reports.
The annual report and financial statements of the Company for
the year ended 30 September 2014 have been submitted to the Central
Bank of Ireland and the UK Listing Authority and will shortly be
available for inspection on the UK National Storage Mechanism
(NSM):
www.hemscott.com/nsm.do
(Documents will usually be available for inspection within two
business days of this notice being given)
The annual report and financial statements will be posted to
shareholders as soon as is practicable and in any event no later
than 31 January 2015. The annual report and financial statements
will shortly be available in the section relating to the Company on
the website of the Investment Manager at www.pxpam.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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