Sitting on the banks of Danang's Han River, the statue of the "Carp turning into a Dragon' symbolises strength, authority, and good luck

1. Chair’s Statement

3

2. Company Overview and Strategy

5

3. Portfolio Manager’s Report

7

4. ESG and Climate Change Report

16

5. Corporate Governance Statement

30

6. Audit and Compliance Commiee Report

51

7. Directors’ Remuneration Report

54

8. Board of Directors

55

9. Annual General Meeting

58

10. Report of the Board of Directors

59

11. Independent Auditors’ Report

62

12. Statement of Financial Position

66

13. Statement of Comprehensive Income

67

14. Statement of Changes in Equity

68

15. Statement of Cash Flows

69

16. Notes to the Financial Statements

70

17. Corporate Information

100

18. Investor Information

101

19. Glossary

102

Contents

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

1.

Chair’s Statement

Dear Shareholders,

We are pleased to report the performance of Vietnam

Enterprise Investments Limited (“VEIL” or the “Company”)

for the year ended 31 December 2023.

The Investment Environment

Vietnam’s economy expanded at an impressive 5.1% in

2023, one of the highest rates of growth worldwide. In

particular, Vietnam enjoyed significant Gross Domestic

Product (“GDP”) growth of 6.7% in the fourth quarter,

surpassing the growth rates of 3.4%, 4.3%, and 5.5%

recorded in the preceding quarters and demonstrating a

steady increase in growth momentum throughout 2023.

Vietnam’s economy has now grown to over US$430 billion

from US$409 billion in 2022, with a GDP per capita of

US$4,284, which is expected to reach the upper middle-

income level of circa US$5,000 by 2025. This is the result

of growth measures implemented by the Vietnamese

Government (the “Government”) to stimulate the economy,

including supporting public investment, four interest rate

reductions comprising a total of 150 basis points and new

decrees on debt restructuring and credit disbursement.

Although the local corporate bond and real estate markets

had an adverse effect, there was a modest improvement

in domestic consumption, which increased by 3.5%.

Moreover, a record trade surplus of nearly US$28 billion

contributed to the strength of the Vietnamese Dong.

Inflation remained stable at an average of 3.3% for the year.

In addition, manufacturing Foreign Direct Investment (“FDI”)

in Vietnam was robust in the year with total FDI increasing

by 32.1% to US$36.6 billion, while disbursed capital rose

by 3.5% to US$23.2 billion. These statistics are clear

evidence of Vietnam’s increasing aractiveness for foreign

investment after the establishment of “Comprehensive

Strategic Partnership” accords with the United States,

South Korea, and Japan.

Tourism provided a further tailwind for the economy with

the total number of international travellers increasing from

3.7 million in 2022 to 12.6 million in 2023, approaching pre-

pandemic levels of 18 million in 2019.

In our view, Vietnam emerged from the turmoil caused by

the reform of the bond market into the start of a market

recovery cycle in 2023. Global volatility, stemming from

surging US Treasury yields in September, prompted the

Vietnam Index (the “VN Index”) to retreat from its year-high,

resulting in a more modest full-year return of +11.1%.

However, when compared with regional markets such

as the Philippines PCOMP

1

(+1.5%), Thailand’s election-

affected SET

2

(-11.45%), and China’s SHCOMP

3

(-3.9%),

Vietnam achieved a comparatively strong stock market

performance.

The resignation of the President of Vietnam, in addition to

several other prominent political figures, was aributed

to previous deficiencies. This event is momentous in the

history of the Party, bearing resemblance to comparable

incidents that transpired in 2001 and 2006, thereby

emphasising the need for leadership accountability. Our

analysis, including the case of Van Thinh Phat, interprets

these events as a response to market abuse amidst

remarkably rapid economic growth that has outpaced

the development of institutional frameworks. From our

observations, Vietnam has pursued its unique development

path diligently, unlikely to embrace aggressive political

centralisation. Enhancing the resilience of the domestic

private sector has been a key objective of economic policy,

which has received considerable backing, as evidenced

by the favourable image of Vietnamese billionaires in the

media.

Performance

In terms of the Company’s own performance, VEIL’s Net

Asset Value (“NAV”) per share increased by 10.5% in 2023,

slightly below the VN Index’s 11.1% gain, both in US$ TR

terms. In GBP terms, VEIL’s NAV increased by 4.1% in 2023

compared to the VN Index’s 5.3% gain. Over a 3-year period,

the Company still outperformed the VN Index by 2.6%.

Share Buybacks

In 2023, US$40.27 million was spent repurchasing

5,698,692 shares (compared to 6,808,169 shares in

2022), which represents 2.79% of the weighted average

of outstanding shares. The share price discount to NAV

started the period at 13.9% and ended it at 17.4%, and the

average discount at which shares were bought back was

17.6%. This resulted in a 0.62% accretion to NAV per share

over the period.

1

PCOMP: Philippines Stock Exchange PSEi Index

2

SET: The Stock Exchange of Thailand

3

SHCOMP: Shanghai Stock Exchange Composite Index

Gordon Lawson, Chair

We continue to actively monitor our share price and

discount to NAV and remain commied to executing

buybacks when deemed appropriate to generate accretive

value for shareholders. We note across the emerging

markets sector, and the investment companies sector in

general, discounts have widened versus historical averages

over the period.

Environmental, Social and Governance

As a long-term investor commied to sustainability, we

remain commied to fully integrating environmental, social

and governance (“ESG”) considerations and the financial

impact of climate change into all aspects of the Company’s

investment activity, building ESG factors

into the portfolio

and reporting on climate change risk. We believe VEIL is

a pioneer in Vietnam in this respect. ESG goes beyond

social responsibility, it also provides a perspective on risk

mitigation and value creation. As a long-term investor

commied to sustainability, all investments made by VEIL

are subject to a rigorous ESG screening process adopted

by our manager, Dragon Capital group which upgraded

its own proprietary ESG management system, with the

assistance of the International Finance Corporation (IFC) in

2023 to ensure that the Company adheres to best-in-class

practices. These policies and procedures continue to apply

to VEIL’s entire investment universe.

Outlook

Looking ahead to 2024, challenges persist in the context

of a global slowdown. Nonetheless, a more robust recovery

is expected as Vietnam’s historically low interest rates

penetrate the economy, stimulating domestic demand

and aracting increased participation from corporates

and investors. Disbursed FDI is expected to remain

strong, averaging US$21.1 billion over the last five years

and reaching a record high of US$23.2 billion in 2023. It

is essential that the Government maintains a flexible

monetary policy stance and adheres to its announced

legislative measures to regain the confidence of the private

sector.

To promote economic growth, in January 2024, the State

Bank of Vietnam allocated to banks the complete 15%

annual credit quota at the commencement of the year

instead of the conventional allocation every quarter.

During the fifth Extraordinary Session of the National

Assembly, the amended Law on Credit Institutions, and

the Land Law was approved, demonstrating a dedication

to legislative reform and economic adaptability. While

the implementation of these regulatory reforms remains

subject to the formal adoption of pending additional

circulars, the Government’s prompt approval process

demonstrates its reform-oriented dedication to legislative

change and surmounting obstacles to development.

We anticipate mid teens profit growth for the Top-80

1

listed

companies in 2024, which currently trade at an aractive

2024F PER valuation of 9.6x. This compares favourably with

other regional peers such as Thailand (14.4x), Indonesia

(13.9x), Philippines (11.1x) and Malaysia (13.0x). In the

meantime, any additional positive market developments,

such as the removal of pre-funding requirements or

further advancements related to the Financial Times Stock

Exchange (“FTSE”) Emerging Markets upgrade including a

new trading and selement system, may result in further

foreign inflow.

Given all of these factors, I remain confident in the

Company’s capacity to identify the most aractive

enterprises in terms of sustainable profitability, long-

term viability, and good corporate governance, thanks to

the in-house research team of our Investment Manager,

one of the nation’s largest and most knowledgeable and

experienced teams.

On 1 December 2023, the Company announced a reduction

in the management fee with effect from 1 July 2024.

The

management fee shall be calculated and accrue daily at a

flat rate of 1.5% per annum of the Company’s NAV.

Effective from 1 February 2024, the Board of Directors of

the Company was delighted to welcome Mr Le Anh Tuan as

Lead Portfolio Manager of VEIL, succeeding Mr Vu Huu Dien,

who is transitioning to a new position at Dragon Capital

group and transferring the torch to the next generation.

As announced previously, I will be retiring from the Board

at the end of June 2024

and Sarah Arkle will be taking over

as Chair. Charles Cade was recently appointed as a new

Independent Non-Executive Director. I wish to thank all the

present and past nonexecutive directors for their efforts

and also Dragon Capital for all their hard work. I will continue

to be an investor in VEIL.

For the first time we intend to hold the

Annual General

Meeting in London on 25 June 2024, and I look forward to

meeting our investors there.

1

Dragon Capital’s Top-80 is the 80 biggest companies by market capitalisation

listed across three exchanges, adjusted by free float and screened by liquidity

and ESG critierias.

1.

Chair’s Statement (Continued)

Gordon Lawson

Chair

Vietnam Enterprise Investments Limited

29 April 2024

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

2.

Company Overview and Strategy

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 City Stock Exchange (“HOSE”), on a rolling

three-year basis. The VN Index is available on Bloomberg on

“VNINDEX VN Equity”.

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.

On 5 July 2016, VEIL’s shares were admied to the premium

segment of the Official List of the Financial Conduct

Authority, and to trade on the London Stock Exchange’s

main market for listed securities.

On 18 July 2017, VEIL was included in the Financial Times

Stock Exchange (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 admied

to trading on the HOSE, the Hanoi Stock Exchange (HNX),

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.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

5

2.

Company Overview and Strategy (Continued)

Borrowing

VEIL is permied 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.

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 quarterly, one, three and five-year rolling basis

as provided in the Portfolio Manager’s Report on pages 7 to

15.

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 in the Portfolio Manager’s Report

on pages 7 to 15.

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 2023, the Board consisted of six

Independent Non-Executive Directors and one Non-

Independent Non-Executive Director.

During the reporting period, Charles Cade, Independent

Non-Executive Director, was appointed on 1 October 2023.

Detailed information on the Board’s independence,

composition and diversity is provided under the Corporate

Governance Statement on pages 30 to 50.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

6

3.

Portfolio Manager’s Report

Performance Overview

In 2023 the Vietnamese equity market firmly found its

footing following a difficult year previously. Vietnam

Enterprise Investments Limited (“VEIL”) achieved a 10.5%

Net Asset Value (“NAV”) per share’s

rise, which was only

marginally behind its reference index, the Vietnam Index

(“VN Index”) total return of 11.1%, in USD terms (“TR$”).

Following a turbulent 2022, uncertainty remained at the

start of 2023 but multiple responses from the Vietnamese

Government (the “Government”) to stabilise the economy

helped to alleviate these concerns. Starting with monetary

policy, the State Bank of Vietnam (“SBV”) was among the

first central banks in the world to have shifted to ‘easing’,

with a series of rate cuts ensuring there was sufficient

liquidity in the market via an early and ample credit

quota. On the fiscal side, the Government was active in

resolving the delays in the disbursement process of public

investment, particularly on infrastructure. This led to the

highest disbursement of fiscal spending on record the year.

Both actions together from the Government, established a

firm base for the economy by the mid-year point.

Corporate earnings for 2023, however, painted a more

muted picture as revenue growth for Dragon Capital’s

Top-80

1

largest companies was, on average, up only 1.4%,

whilst earnings per share (“EPS”) growth was 4.3% lower.

There remained bright spots in a year of consolidation as

the Material & Resources, the Software & Services and the

Banking sectors all performed well. On the downside, the

Retail and the Real Estate & Construction sectors were the

biggest detractors to VEIL’s relative performance.

1

Dragon Capital’s Top-80 is the 80 biggest companies by market capitalisation

listed across three exchanges, adjusted by free float and screened by liquidity

and ESG critierias.

Performance

31 December 2023

31 December 2022

Total net assets (US$)

1,743,257,708

1,622,581,751

1,367,475,847

1,348,891,152

Number of outstanding shares

201,026,986

206,725,678

NAV per share (US$)

8.67

7.85

6.80

6.53

5.57

5.83

Discount to NAV (%)

18.1%

10.7%

GBP/US$ exchange rate

1/0.784437

1/0.831324

Ongoing charges (%)

1.96

1.90

2

Following the listing on the London Stock Exchage, the share price is quoted in GBP only.

3

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 2023

31 December 2022

%

%

NAV returns (US$)

7.44

1.38

VN Index (price return - VND terms)

12.20

VN Index (total return - US$ terms)

11.12

4

Source: Bloomberg

3.

Portfolio Manager’s Report (Continued)

NAV and share price are based on US$.

Source: Dragon Capital, Bloomberg

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

(15)

(

10)

(5)

0

5

10

15

20

25

12/2022

03/2023

06/2023

09/2023

12/2023

No. of Shares

(Millions)

%

Turnover Volume (RHS)

Price-US$ (LHS)

NAV-US$ (LHS)

Share Price & NAV

200

400

600

800

1,00

0

1,20

0

1,40

0

1,60

0

0

500

1,000

1,500

2,

000

2,500

12/2020

06/2021

12/2021

06/2022

12/2022

06/2023

12/2023

US$m

Volume

VN Index

VN Index Information (Rolling 3-year)

Source: Dragon Capital, Bloomberg

Source: Dragon Capital, Bloomberg

One Year Performance (% in US$ terms)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

8

3.

Portfolio Manager’s Report (Continued)

Source: Dragon Capital

(50)

(40)

(30)

(

20)

(10)

0

10

20

30

01/2005

11/2008

08/2012

06/2016

03/2020

12/2023

%

Discount & Premium to NAV (%)

10.45

-28.99

4.46

28.25

32.16

11.14

-26.73

1.84

19.55

31.37

11.78

-28.55

4.51

29.35

34.78

1Y

2Y

3Y

4Y

5Y

VEIL (NAV)

VN Index

VN30

Source: Dragon Capital, Bloomberg

Cumulative Performance (% in US$ terms)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

9

3.

Portfolio Manager’s Report (Continued)

Period’s High and Low

Year to 31 December 2023

Year to 31 December 2022

High

Low

High

Low

NAV per share (US$)

9.57

7.70

12.62

5.79

NAV per share (GBP)

7.68

6.35

9.64

5.60

Share price (GBP)

6.54

5.18

7.91

5.00

Source: Dragon Capital, London Stock Exchange

Source of Income (US$)

Year to

31 December 2023

Year to

31 December 2022

Interest income

41,937

114,291

Dividend income

11,456,082

9,663,187

Net changes in fair value of financial assets at fair

value through profit or loss

180,399,537

(891,697,124)

Gains on disposals of investments

7,942,565

4,865,100

Total income

199,840,121

(877,054,546)

Source: Dragon Capital

Ten Year Record

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

Total net assets

US$m

1,743

1,623

2,607

1,800

1,475

1,553

975

793

513

Total net assets

GBPm

1,367

1,349

1,925

1,317

1,113

1,131

1,148

789

n/a

n/a

NAV per share

US$

8.67

7.85

12.21

8.30

6.76

6.56

7.06

4.41

3.59

3.40

NAV per share

GBP

6.80

6.53

9.01

6.07

5.10

5.15

5.22

3.57

n/a

n/a

Share price

US$

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

2.99

2.82

Share price

GBP

5.57

5.83

7.65

5.45

4.745

4.57

4.42

2.96

n/a

n/a

Earnings per share

US$

0.79

(4.42)

3.90

1.52

0.20

(0.50)

2.64

0.82

0.15

0.32

Discount to NAV

%

(18.12)

(10.65)

(15.09)

(10.21)

(6.96)

(11.26)

(15.27)

(17.09)

(16.71)

(17.06)

Source: Dragon Capital

3.

Portfolio Manager’s Report (Continued)

Aribution Analysis

Materials & Resources Sector

The Material and Resources sector was one of the VEIL’s

best performing sectors in 2023 after being among the

worst performers in the previous year. Falling sales volume

and output prices dropped considerably as the property

sector ground to a halt. 2023 marked a strong turnaround

as various measures were announced and implemented

by the Government. These measures were aimed at

supporting both the Real Estate & Construction sector on

the private side as well as to boost infrastructure spending

on the public side, lifting sentiment and share prices.

VEIL maintains its conviction that Hoa Phat Group ("HPG"),

which is the biggest steel conglomerate in Vietnam,

remains the best means of gaining exposure to the

Materials and Resources sector. That said, anticipating a

turnaround in 2023, VEIL also added a new holding in Hoa

Sen Group (“HSG”), the biggest galvanised steel sheet

manufacturer in the country. Both positions rebounded

strongly from distressed valuations, driven by fundamental

recovery throughout the year. As a result, holding

performance in HPG and HSG achieved share price gains of

51.2% and 37.8%, respectively.

For HPG, sales volume in 2023 saw a noteworthy drop of

10% compared with 2022, although after the initial quarter-

on-quarter (“QoQ”) drop in sales volume in the first quarter

of 2023, there was a positive QoQ growth in all subsequent

quarters of the year. Revenue, profit after tax and minority

interest (“NPAT-MI”) followed similar trajectories of growth.

For the 2023FY, HPG delivered US$4.8 billion in top line

and US$261 million in boom line earnings, down 17% and

19.4% year-on-year (“YoY”). On a full year basis, HPG’s

earnings remained modest, just 20% of 2021’s all-time

high. Nevertheless, after two consecutive quarters of

loss in the fourth quarter of 2022 and the first quarter of

2023, investors welcomed the results as an important

signal that the recovery is now well under way. Despite the

challenging market conditions, HPG continued to forge

ahead with the construction of Dung Quat Mega Steel

factory phase 2, which is on track to be operational in 2025.

Once completed, the expansion will raise HPG’s production

capacity by approximately 65% to over 14 million tonnes of

steel annually, increasing gradually over 12-18 months. This

will be met by demand from a reviving real estate sector,

Government infrastructure projects, and an export market

to Europe and South East Asia which accounts for 50% of

hot rolled coil exports.

As for HSG, the company posted US$1.3 billion in sales and

US$33 million in NPAT-MI. For both companies, much of

2024 will depend on further progress in the Government’s

initiatives to reinvigorate investments in both the

private and public sectors. Given the progress that has

already been achieved in the last 12 months, there is an

expectation for stronger growth in 2024, which bodes well

for the sector’s overall outlook.

Investment Portfolio – Ten Largest Investments (as of 31 December 2023)

Company

Ticker

Sector

Market

value

VNI

weight

NAV

Total

return

Initial

acquisition

US$

%

%

%

Hoa Phat Group

HPG

Material & Resources

159,338,731

3.6

9.1

51.2

18 June 2009

Vietnam Prosperity Bank

VPB

Banking

155,670,609

3.4

8.9

9.7

1 January 1996

Asia Commercial Bank

ACB

Banking

145,565,879

2.1

8.4

27.2

1 December 1996

Vietcombank

VCB

Banking

116,515,899

9.9

6.7

15.4

7 February 2012

FPT Corporation

FPT

Software &

Services

106,704,113

2.7

6.1

43.1

3 July 2008

Mobile World Group

MWG

Retail

83,431,718

1.4

4.8

(2.0)

3 October 2014

Vinhomes

VHM

Real Estate & Construction

64,128,427

4.2

3.7

(12.4)

18 May 2018

PVGas

GAS

Energy

61,546,161

3.8

3.5

(9.9)

23 November 2010

Techcombank

TCB

Real Estate & Construction

58,105,036

2.5

3.3

19.8

3 January 2019

Gelex Corp.

GEX

Consumer Durables

54,527,817

0.4

3.1

85.3

1 February 2019

Total 10 investments

1,005,534,390

3.

Portfolio Manager’s Report (Continued)

Banking Sector

2023 was always going to be a challenging year for banking

sector due to the weak macro environment for the sector.

On the one hand, timely responses from the SBV, in addition

to various initiatives to support local corporates, prevented

a potential liquidity crisis in the banking system and the

economy. Nonetheless, there remain questions over the

Banking sector’s asset quality as well as how the potential

rise in non-performing loans (“NPL”) might affect earnings.

Despite these concerns, VEIL’s bank holdings still delivered

an average share price return of 16.1%, underpinned by a

particularly strong performance by Asia Commercial Bank

(“ACB”), up 27.2%, and MB Bank (“MBB”), up 25.2% for the

year.

ACB is now established as a preferred stock for exposure

to Vietnam’s banking sector during more challenging times,

given it is well-known for a more conservative approach

to lending, leading to a stronger quality in its loan book.

Additionally, the bank had very limited exposure to the

property and energy generation sectors, the two sectors

that were most impacted by the liquidity crunch in late

2022. In 2023, ACB was able to deliver 17.9% growth for

its loan book, noticeably above the sector’s 13.7% credit

growth. Whilst Net Interest Margin (“NIM”) contracted 40

bps, a similar trend was seen in the rest of the sector with

tight cost controls leading to NPAT-MI growing 17.2% for

the year. An impressive feat in a difficult year, considering

the banking sector NPAT-MI growth was only 4.2%.

As for MBB, it is a long-term holding in VEIL at 3.0% weight,

in comparison to 2.1% in the VN Index. MBB is the biggest

private commercial bank by assets, it faced a number of

difficulties coming into 2023 given the tough economic

conditions. MBB’s cost of funds rose to an estimated 4.3%

from 2.9% at the end of 2022, leading to a NIM contraction

from 5.7% to 4.9%. The NPL ratio also ticked up to 1.6%

from 1.1%. By the end of 2023, however, there was a clear

improving trend QoQ, most notably in current and savings

accounts (CASA) ratio which managed to stay flat after a

significant dip during the year. Good cost control in addition

to a drop in provisioning for expenses meant that MBB was

still able to report a remarkable 18.3% NPAT-MI growth for

2023. The story of MBB in 2023 reflects the wider recovery

of the sector at large. VEIL expects a further acceleration in

the improving trajectory of the sector in 2024. Despite the

solid share price performance, the valuation of the Banking

sector remains near its 5-year low of 1.4 times price to book

ratio, offering an aractive opportunity for long-term value

creation.

Software & Services Sector

FPT Corporation (“FPT”) was a star performer for VEIL

in 2023, with the company’s share price rising 43.1%

during the year. FPT’s resilient business result astounded

investors as the company delivered 19.5% in revenue

and 21.8% in NPAT-MI growth. Double

-digit pre-tax profit

growth was seen across all three of its traditional business

segments, in which IT software servicing delivered 24%

growth, telecom

achieved 15% growth while education and

others achieved 36% growth. In 2023, the aractions of FPT

started to move beyond the performance of its traditional

business. Investors anticipate ventures such as cloud

services, data centres and the potential for it to become a

leading player in Vietnam’s budding semiconductor value

chain will start to bear fruit in the near future. Whilst the

stock traded on a 20.7 times price to earnings ratio by the

end of 2023, relatively steep compared with

the VN Index’s

average of around 10-12 times, it consistently delivers

annual earnings growth of 20% and therefore remains one

of the most sought-after stocks by foreign investors.

Retail Sector

Mobile World Group (“MWG”) had arguably saw the

toughest year since its listing in 2014 with its share price

dropping 2.0% for the year. The company’s business result

was perhaps the best evidence of the impact of economic

headwinds on discretionary spending. Revenue growth for

both the mobile phone and consumer electronics segments

dropped by 11.5% YoY and its combined profit before tax

of the two segments fell an enormous 96% YoY. The silver

lining for MWG was the constant monthly improvement

in its grocery business for which the top line was growing

17% YoY in 2023 and the loss for this segment was only one

third of 2022. By the end of 2023, the company had reached

the break-even point of its grocery business, Bach Hoa

Xanh (“BHX”) on a company level. Nevertheless, for the

full year 2023, MWG’s consolidated net revenue was down

11% and NPAT-MI was down 96%. Part of the reason for

the large drop in earnings was due to a painful destocking

of excess inventories in exchange for market share, a

phenomenon also experienced by other global retailers.

With the destocking process complete by the end of 2023,

VEIL expects a significant earnings rebound for 2024.

Additionally, the company is in the final stage of finalising

a placement of 5% of BHX which would put a value on the

previously loss-making business. The placement should

further re-rate the consolidated valuation of MWG.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

12

3.

Portfolio Manager’s Report (Continued)

Similarly, the share price

of Phu Nhuan Jewelry’s (“PNJ”)

fell 4.4% in 2023 as the company faced an overall weaker

demand for its jewellery business. Revenue for PNJ fell 2%

during the year as the company experienced drops in both

retail and wholesale demand of 8% and 31% respectively.

Nevertheless, as the gold price was seing a record high

in 2023, their gold bar trading business was booming.

Revenue for this segment was up 21% and cushioned the

fall in its traditional businesses. As a result, PNJ was able to

deliver a positive NPAT-MI growth of 9% for the year.

Overall, 2023 was a year that saw both MWG and

PNJ further solidify their leadership positions in their

respective markets. Whilst challenging, 2023 also brought

opportunities that both companies took full advantage of.

PNJ managed to open 48 new retail gold stores whilst most

of its competitors, the majority of which were individual

private retail stores were on the back foot. MWG, on the

other hand, offered aractive promotions and discounts

that increased its overall presence and market share in

the mobile phone and consumer electronics segments.

2024 may still see some initial traces of weak demand, but

an acceleration in growth is expected in the second half

of 2024. With that outlook in mind, both of the VEIL’s retail

holdings are expected to see a substantial recovery in their

boom lines, especially in the case of MWG.

Real Estate & Construction Sector

The Real Estate & Construction sector has been in the

spotlight since late 2022 as the impact of the liquidity

crunch hit both developers and buyers. 2023 was a year

of averting further crises and by the end of the year, the

task was deemed a success. Credit must first go to the

Government for the swift and decisive action on easing

both monetary policy and its efforts in unlocking the legal

boleneck. These efforts have certainly helped stem fears

of mass defaults in the sector. Whilst it may take more

time for the sector to fully recover to the pre-2022 level,

new policies implemented in the past twelve months mean

the sector should operate in a structurally healthier way.

Policies have focused on increasing transparency in land

acquisition and compensation, stricter regulation on the

selling practices in the sector, and a beer overall legal

framework to bring new projects to the market.

Among VEIL’s top holdings, there were certain

outperformers such as Khang Dien House (“KDH”) and

Dat Xanh Group (“DXG”), both of which rebounded from

previously distressed levels of valuation. KDH saw a

share price gain of 26.9% for the year as one of the few

developers that successfully launched a new project. The

Privia sales launch of over 1,000 high-rise units was well-

absorbed and should anchor 2024 earnings. Additionally,

KDH successfully brought in Keppel Land as a partner

for two of its projects by selling 49% stakes at a value of

around US$130 million. The transaction further solidifies

KDH’s financial position and helps to accelerate its land

clearance at the 329ha mega project in Tan Tao which will

be the main long-term growth driver for the company.

As for DXG, the company was among the few developers

that did not materially suffer from the fall-out in the bond

market. 2023 was a quiet year by DXG’s standards, however,

the company was quietly expanding its landbank and

making progress at a number of key projects to be launched

in 2024. Despite the relatively weak business results, in

which revenue and NPAT-MI growth were down 33% and

20% respectively, investors were bargain-hunting in the

case of DXG after it became clear that the company would

not face default risk. DXG’s share price saw an increase of

56.1% to trade closer to its historical average valuation of

1.5 times price to book by the end of 2023.

The major underperformer for VEIL in the sector was

Vinhomes (“VHM”) as its share price fell 12.4% for the year.

The company remains one of the best property developers

in Vietnam in VEIL’s view, as it delivered a top-line growth

of 66.0% and a boom-line growth of 15.7%. Nevertheless,

the share performance of VHM reflected investor concern

regarding a larger question on the potential liquidity issues

of affiliated companies within its group. By the end of 2023,

VHM had fallen to the lowest valuation since its listing

at just 1.2 times price to book, an undemanding level of

valuation for the biggest property developer in Vietnam.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

13

3.

Portfolio Manager’s Report (Continued)

Source: Dragon Capital, Bloomberg

99.6%

0.4%

Asset Allocation by Asset Class

31 December 2023

Equities

Cash and cash

equivalents,

receivables and

payables

99.3%

0.7%

Asset Allocation by Asset Class

31 December 2022

36%

20%

16%

7%

6%

5%

3%

3%

3% 1%

Asset Allocation by Sector

31 December 2023

Banking

Real Estate & Construction

Material & Resources

Diversified Financials

Software & Services

Retail

Energy

Food & Beverages

Consumer Durables

Transportation

39%

22%

9%

6%

5%

8%

4%

2%

4%

1%

Asset Allocation by Sector

31 December 2022

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

14

Outlook

After a tough 18 month period, investors should be able to

look forward to a much brighter outlook in 2024. In terms

of the macroeconomic outlook, Vietnam’s stability remains

a strong point for the economy with inflation remaining

manageable, averaging 3.3% in 2023, and the foreign

exchange rate relatively benign. Much of the Government’s

focus is now on growing the economy. From a monetary

perspective, Vietnam is now in full-easing mode with the

interest rate falling back to 2022 level. The SBV has also

granted full credit growth quota to the banks from the

start of the year instead of on a quarterly basis, ensuring

there is no shortage of capital for the local economy. After

fiscal spending hit a record high in 2023 of US$27.8 billion,

the Government once again put forward an ambitious plan

of fiscal spending of over US$28 billion. At the same time,

various task forces of top-ranking Government officials,

some of whom were set up in 2023, were asked to directly

work with local corporates to resolve the legal issues that

have historically hamstrung private investments. For 2024,

the Government has set a GDP growth target of 6.0%.

Whilst there might be some remnants of challenging times

earlier on in the year, VEIL believes investors can look

forward to an accelerating growth outlook for Vietnam in

2024.

In 2023, despite negative EPS growth in Dragon Capital’s

Top-80 of -4.3%, the VN Index TR$ was still +11.1%,

reflecting improving investor sentiment on the outlook

for the economy. We anticipate mid teens EPS growth for

2024 for the Top-80, whilst its price to forward EPS ratio

trades at just 9.6x. In VEIL’s view, a very aractive growth

and value profile compared with Vietnam’s regional peers.

The portfolio is now well positioned in the key sectors that

should benefit from the macro backdrop of a boost in public

and private investment as well as a material recovery in

consumption in 2024.

Le Anh Tuan

Lead Portfolio Manager

Vietnam Enterprise Investments Limited

29 April 2024

3.

Portfolio Manager’s Report (Continued)

Le Anh Tuan, Lead Portfolio Manager

Le Anh Tuan, MA of Corporate Finance from the University

of Economics Ho Chi Minh City, commenced his career in

Internal Auditor & Planning Dept in a Singaporean FMCG

Co. for the period from 2003 to 2006. Tuan joined Dragon

Capital in 2006 as Senior Analyst focusing on property and

agri-fishery sectors, and was promoted to Deputy Portfolio

Manager of VEIL in 2010. In May 2013, Tuan moved to a SMA

mandate for an European Sovereign Wealth Fund as Deputy

Portfolio Manager. In 2016, Tuan was further promoted

to the sole Portfolio Manager of the SMA, demonstrating

exemplary growth not only as a portfolio manager but

also in his leadership acumen. Since February 2024, Tuan

became VEIL’s Lead Portfolio Manager.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

15

Summary of Key ESG Metrics

As a long-term investor commied to sustainability,

Vietnam Enterprise Investments Limited (“VEIL”) has

integrated environment, social and governance (“ESG”)

considerations throughout the investment process.

VEIL screens and assesses the ESG performance of all

investee companies, except for those in the financial

sector. The portfolio’s greenhouse gas (“GHG”) emissions

are presented using the Task Force on Climate-Related

Financial Disclosure (“TCFD”)’s recommended metric of

weighted average carbon intensity (“WACI”), in comparison

to local benchmarks. Three key E-S-G activities and metrics

were summarised and presented as follows:

Highlight ESG metrics in 2023

ESG integration

throughout

the investment

process

ESG analysis was conducted for 100%

of non-financial investee companies

in portfolio

WACI of VEIL

portfolio (as of 31

December 2023)

- 143 tonne CO

2

e/$M invested

- 31% lower than VN Index

*

Voting

At 100% investee companies

Engagement on

business outlook

and governance

At 100% investee companies

Focus ESG

engagement

15 cases with investee companies

CVaR

*

- BAU

*

physical CVaR in 2050: US$63.6

million (3.7% of NAV

*

)

- Transition CVaR: US$15.9 million

(0.9% of NAV)

Targets for 2024

(1) Ensure that all investee companies,

including financial institutions,

achieve an ESG scoring and rating.

(2) Maintain a WACI for VEIL that is

consistently lower than the VN Index.

(3) Engage with top 10% companies in

VEIL portfolio ranking the highest on

climate risk on their climate adaptation

policy, strategy and ability to absorb

the losses.

* Note:

VN Index: Vietnam Index;

BAU: Business as usual;

CVaR: Climate Value at Risk;

NAV: Net asset value.

(The meanings of physical and transition CVaR are in section 4. Metrics and

Targets - Climate change assessment in 2023)

**

“Dragon Capital” includes Dragon Capital Group Limited (an ultimate parent

of the Investment Manager of VEIL) and its subsidiaries and affiliates including

investment managers, corporate parents, subsidiaries and funds and SMAs

under any such entities’ management.

VEIL’s Commitment to Responsible

Investment

At VEIL, responsible investment is essential for the

stakeholders and the greater good of society. Our

investment strategy at VEIL is geared towards maximising

risk-adjusted returns and alpha generation, while also

diligently assessing and addressing ESG and climate-

related risks as part of VEIL’s fiduciary duty to investors.

This entails placing significant emphasis on environmental,

social, and governance factors in VEIL’s investment

decisions and integrating them throughout its investment

process to optimise performance VEIL recognises the

interconnectedness of climate change, GHG emissions,

and biodiversity loss, and is commied to addressing these

global challenges as active, long-term investors. VEIL

also encourages its investee companies to improve their

sustainability practices and engage with policymakers to

promote positive change.

Scope of the Report

The International Financial Reporting Standards (“IFRS”) S1

and S2 encompass the IFRS framework, which delineates

globally accepted accounting principles. These standards

specifically emphasise sustainability reporting, with

IFRS S1 mandating companies to disclose material

information concerning all sustainability-related risks and

opportunities that could reasonably affect their prospects.

IFRS S2 delineates the requirements for climate-related

disclosures.

VEIL does not harbour sustainability-related risks within its

own operations because the human resources provided for

VEIL belongs to Dragon Capital group

**

(“Dragon Capital”)

who will report on the sustainability risks and opportunities

separately. Hence, this report centres on assessing risks

and opportunities linked to VEIL’s investment activities.

Specifically, it examines ESG-related risks at investee

companies, the physical climate risks associated with

properties under investee companies, and the scope three

financed emissions of the portfolio as of 31 December

2023. These standards become effective in January 2024,

signifying that the initial report in compliance with IFRS S1

and S2 should be for the year 2024 and published in 2025.

4.

Given that VEIL has embraced TCFD since 2021 for climate

risk reporting and has conducted ESG screening for the

entire investment portfolio since 2016, data from 2023

for VEIL are available for the application of IFRS S1 and

S2. Consequently, this ESG and Climate Change Report

has been formulated in alignment with these standards.

By adhering to these standards, VEIL can enhance

transparency, comparability, and accountability in its

reporting practices. In accordance with these standards,

VEIL presents four sections: (1) Governance; (2) Strategy;

(3) Risk Management; and (4) Metrics and Targets, aimed

at fostering sustainable growth and resilience within the

organisation.

This application of IFRS S1 and S2 is also marked in the 21-

year ESG journey of Dragon Capital as below:

Key report contents

1. Governance

- The Board’s oversight of ESG and

climate related risks and opportunities.

- ESG Working group role in assessing and

managing ESG and climate related risks

and opportunities.

2. Strategy

- Recognition of ESG and climate related

risks and opportunities associated with

VEIL portfolio.

- Overall approaches to understand and

mitigate these risks.

- ESG and associated policies:

responsible investment policy,

including exclusion list, voting and

active ownership policy, modern slavery

statement, grievance mechanism, non-

discrimination policy.

3. Risk

Management

- VEIL’s process for assessing ESG risks:

ESG management system.

- VEIL’s process for managing ESG and

climate related risks: active ownership.

- VEIL’s process to assessing climate

related risks: climate change assessment.

4. Metrics and

Targets

- Metrics on active ownership: Voting

and engagement statistics and advocacy

activities.

- Metrics on climate change assessment:

physical and transition climate risks.

- Forward-looking targets.

DRAGON CAPITAL’S ESG JOURNEY

Our 21-year ESG journey started in 2002,

with many important milestones achieved

ESG JOURNEY

2013

2016

PRI SIGNATORY

Dragon Capital

became a signatory

Created in partnership with the IFC

performance standards and OECD

principles

2019

2024

Strategic agreement to

strengthen biodiversity research

FIRST ESG POLICY

Dragon Capital started first

ESG policy and management

system

2002

For Scope 1 and 2 activities

of Dragon Capital’s

operations

Co-organised and

sponsored for 15 years

2005

4.

ESG and Climate Change Report (Continued)

Director

Position in VEIL

Backgrounds / Expertise / Experiences

Gordon Lawson

Chair & Independent Non-Executive

Director

Gordon Lawson brings extensive City experience,

including equity trading and hedge fund management. As

Chair of the Board since July 2022, his leadership fosters

effective governance and strategic oversight.

Vi Peterson

Senior Independent Non-Executive

Director

Vi Peterson’s international business consultancy

background enriches strategic decision-making. She

has over 15 years financial management experience

in banking as well as risk management experience as

chair of risk management commiees. Her role as Senior

Independent Non-Executive Director and Nomination

and Remuneration Commiee Chair underscores her

commitment to transparency and accountability.

Entela Benz-Saliasi

Independent Non-Executive Director /

Chair of Risk Management Commiee

Entela Benz-Saliasi’s expertise in financial asset

management and climate risk enhances the Board’s risk

oversight. Her leadership promotes sustainable practices

and addresses climate-related financial risks.

Low Suk Ling

Independent Non-Executive Director /

Chair of Audit and Compliance

Commiee

Low Suk Ling has over 13 years of experience as a general

counsel in regulated and listed financial institutions. As

Audit and Compliance Commiee Chair, she strengthens

compliance and fosters a culture of integrity and

transparency.

Sarah Arkle

Independent Non-Executive Director /

Chair of Management Engagement

Commiee

Sarah Arkle’s investment management experience and

advocacy for diversity enrich board effectiveness. Her

leadership promotes stakeholder engagement and

inclusive decision-making.

Charles Cade

Independent Non-Executive Director

Charles Cade’s esteemed career in investment analysis,

including pivotal roles at Numis, Winterflood, HSBC, and

Merrill Lynch, enriches governance discussions. His

expertise underscores the Board’s dedication to diversity

and excellence in decision-making.

Dominic Scriven

O.B.E

Non-Executive Director

Dominic Scriven O.B.E’s extensive finance experience,

particularly in emerging markets, contributes to

sustainable business practices. His advocacy for

responsible investment and market development aligns

with VEIL’s commitment to ESG objectives.

1.

GOVERNANCE

Board of Directors

The Board of Directors of VEIL (the “Board”) offers advice on

sustainability reports prepared by the ESG Working Group,

based on its basic responsible investment policy which

states: “Dragon Capital seeks to optimise risk-adjusted

performance by integrating ESG factors throughout the

investment process and across its actively managed funds,

comprising public equity and fixed income funds”.

The Board embodies diversity and gender equality,

reflecting a blend of backgrounds, expertise and

experiences. Each Director brings unique perspectives,

contributing to effective governance and strategic

decision-making.

The Directors’ backgrounds, expertise and experiences

are presented below, in accordance with ESG and TCFD

guidance.

The full biography of each Director can be found in the

Board of Directors on pages 55 to 57.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

18

Climate change has progressively become a central topic

in ESG discussions. The Board recognises the importance

of understanding of the challenges posed to Vietnam,

its economy, businesses and communities by climate

change and has appointed the Independent Non-Executive

Director, Entela Benz-Saliasi in 2019, who is a specialist in

the subject with noted credentials.

Since 2020, the Board has chosen to follow the

recommendations of TCFD, which include four pillars: (1)

Governance; (2) Strategy; (3) Risk Management; and (4)

Metrics and 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 2023, the Board discussed the topic of sustainability as

follows:

Themes

Overview

Physical

climate risk

Aware of the climate value at risk for

portfolio in term of physical climate risk.

WACI of VEIL

versus VN

Index

- 5-year historical comparison of WACI

between VEIL and the VN Index.

- Comparison WACI of sectors to

sectors.

- Discussion on seing target for

portfolio level.

ESG Working Group

In 2023, the “ESG Working Group”, including members from

ESG core team and VEIL’s Portfolio Managers of Dragon

Capital, held the following discussion on sustainability:

•

TCFD report, including physical and transition

climate risk;

•

Financial Conduct Authority (FCA)’s sustainability

disclosure requirements (SDR) and investment

labels;

•

Upgrading ESG management system to consolidate

the new ESG standards worldwide; and

•

Engagement strategies for VEIL’s investee

companies.

4.

ESG and Climate Change Report (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

19

4.

ESG and Climate Change Report (Continued)

2.

STRATEGY

Recognition of risks and opportunities associated with ESG

and climate change is an important step to set strategy for

sustainable development in general. In this section, VEIL

highlights the risks and opportunities which are deemed to

be material to VEIL, including ESG performance of investee

companies’ level and portfolio level, as well as climate

change assessment.

ESG and climate

change risks and

opportunities

Potential impacts

ESG related

incidents

at investee

companies

Public perceptions of investee

companies could impact reputation

and company valuation.

Overall ESG

performance

of investee

companies

Creating long-term value in capturing

consumer trends while enhancing

internal and external resource

management.

Physical climate

risk

- Loss event-driven impacts,

related to the severity and increase

frequency of the extreme weather

events (including floods, wildfires,

droughts and hurricanes, among

others).

- Overall shifts in climatic behaviour,

such as extreme temperature and

precipitation paerns, sea level rise,

etc.

- Both chronic and acute climate

events, may induce losses to the

investee companies. Damage to the

assets/factories as well as potential

operational disruption might increase

the liquidity risk, financing risk and

market risk overall.

Transition climate

risk

- Policy changes and legal risks.

- Disruptive technologies reducing

demand for clients’ products or

services.

- Changing public perceptions of

products or companies.

Based on the ESG and climate change risks and

opportunities listed above, Dragon Capital and VEIL applies

the following approaches to understand and mitigate the

risks or capture opportunities:

•

ESG management system;

•

Active ownership, including engagement policy

especially when ESG related incident occurs; and

•

Climate change risk assessment.

Details of each approach are presented in the Risk

Management section below.

ESG and associated policies

VEIL follows the Dragon Capital’s responsible investment

policy which highlights its mission, beliefs and approach

in responsible investment spectrum. The responsible

investment policy also describes the ESG integration

process, including ESG management system, active

ownership and a list of activities excluded from investment.

The responsible investment policy is available in the Dragon

Capital’s website:

hps://www.dragoncapital.com/about/

responsible-investment/

Further, VEIL has anti-slavery and human trafficking

statement in compliance with the Modern Slavery Act

2015 (

hps://www.veil-dragoncapital.com/modern-

slavery-statement/). The Code of Conduct and Employee

Handbooks of Dargon Capital group also have a statement

for grievance mechanism and non-discrimination. These

state that Dragon Capital is commied to providing

equal employment and advancement opportunities to

all individuals, and ensure that employment decisions

at Dragon Capital are based on individual merit, abilities

and qualifications. Consistent with these principles, it is

Dragon Capital’s policy not to discriminate in employment

opportunities or practices based on race, colour, religion,

sexual orientation, gender expression, ethnicity, national

origin, age, marital status or disability.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

20

4.

ESG and Climate Change Report (Continued)

3.

RISK MANAGEMENT

ESG management system

The ESG management system (“ESMS”) will help Dragon

Capital and VEIL to screen the ESG risk and opportunities,

assess overall ESG performance of investee companies

before making the investment decision.

Further, the ESMS also includes the monitoring and

reporting steps at investee companies as well as the VEIL

side.

The ESMS involves an 8-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 investee

companies’ environmental and social (“E&S”)

performance in accordance with the International

Finance Corporation (“IFC”)’s eight Performance

Standards; and

3)

a post-investment monitoring and engagement

process.

The ESMS is undergoing an upgrade which will adopt the

ESG standards worldwide.

Active ownership

Active ownership has been a key element of VEIL’s and

Dragon Capital’s approach to promoting good corporate

governance and safeguarding its shareholders interests.

The three main components of the active ownership

strategy of Dragon Capital’s ESG core team are: (i)

advocacy; (ii) voting rights; and (iii) engagement.

(i) Advocacy

Advocacy is essential for responsible investors to promote

sustainability and accountability in the financial sector.

ESG practices face significant challenges in Vietnam,

including a lack of awareness among local businesses,

companies, and weak enforcement. To help overcome

these challenges, Dragon Capital is commied to

advocating for promoting ESG awareness and adoption in

Vietnam. The ESG Core Team is dedicated to promoting

ESG practices and driving positive change within the

capital market. Dragon Capital participates workshops and

seminars to enhance understanding of ESG issues and work

with policymakers, institutions, and business associates to

improve ESG practices. Dragon Capital’s sole sponsorship

of the Vietnam Listed Companies Awards (VLCA) from 2008

until its transformation demonstrates its commitment

to transparency and disclosure. Dragon Capital is also a

member and sponsor of several local and international

initiatives for sustainability and governance.

02.

Refrain from investing or financing

companies and activities involved

in

’s Exclusion List

activities.

Determine potential E&S risks of the

proposed transaction by using the

requirements of IFC Performance

Standards as a framework.

Refrain from investing in or

financing companies and

activities on Dragon Capital’s

exclusion list.

Assign risk scores to each company. The

total managed risk rating is intended to

provide an indication of the level of E&S

risk associated proposed investment.

Assess the investee company’s

governance practices and

identify opportunities for

systematic improvement.

Monitors the ESG factors periodically

at the portfolio level. Regularly

review the portfolio to evaluate an

increase or decrease of positions.

All assessments, and analysis of ESG

risks are presented to the Investment

Committee as an integral part of the

investment process.

Document all findings

from the screening.

Monitor closely investee

companies and engage

immediately on ESG

issues.

4.

ESG and Climate Change Report (Continued)

(ii) Voting Rights

VEIL believes that exercising its voting rights is a critical

component of responsible investing. Dragon Capital, on

behalf of VEIL and at the approval of the Board, participates

diligently and prudently in all shareholder meetings

called by its investee companies, whether general or

extraordinary, to protect its interests and those of its

investee companies. VEIL recognises the importance of

adapting to changes in the voting landscape and ensuring

that all its e-votes are properly registered. While in-person

voting remains an essential feature of the voting process,

VEIL also acknowledges the growing popularity of e-voting

as a convenient and accessible alternative.

Through voting, VEIL seeks to promote sustainable

practices and drive positive change in the companies it

invests in.

(ii) Engagement

Dragon Capital believes that it has a fiduciary responsibility

to actively monitor and engage with the investee

companies in which VEIL invests, as this engagement is

a primary and essential tool within the ESG framework

to promote positive steps towards improving ESG

practices and disclosures. The ESG core team regularly

communicates with all of VEIL’s investee companies

to assess their strategies, ensure they are meeting

expectations and objectives, and encourage them to

disclose material ESG issues and report on their actions.

Through frequent conversations and discussions with

senior management, Dragon Capital shares its expertise on

investee companies’ business strategy and development,

mergers and acquisitions, operational performance,

remuneration, ESG issues, and general risk management,

as well as addressing more specific issues such as climate

change.

For serious incidents requiring detailed engagement,

Dragon Capital may engage specialist service providers

who contribute their expertise. In such cases, Dragon

Capital sets engagement objectives based on the specific

issues and circumstances of the investee company. If an

investee company fails to meet appropriate standards

or represents a risk to shareholder value, Dragon Capital

works to encourage and guide improvement. Overall,

engagement is a critical component of Dragon Capital’s

approach to responsible investing and is integral to

promoting positive change within investee companies.

Climate change assessment

Regarding climate change assessment, Dragon Capital

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”) allows the ESG Working Group to directly,

independently and securely 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 investee companies in their portfolio. SaaS

asset level customisations feature also allows for greater

accuracy of the analysis and CVaR.

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 2023 are discussed in the sections

below.

Climate Assumption

A fundamental debate when it comes to climate change

risk and projected losses has been the projected pathway

of the impact of climate change under different scenarios.

Dragon Capital on behalf of VEIL assess the CvaR under six

climate scenarios and four time periods (2020, 2030, 2050,

2100) to beer understand the evolutions of the risks as

well as the spread of the potential losses under various

forward looking scenarios.

Shared Socioeconomic Pathways (“SSP”) and

Representative Concentration Pathways (“RCP”) are two

frameworks used to project future climate scenarios based

on different sets of assumptions about socioeconomic and

technological factors.

RCP scenarios were developed by the Intergovernmental

Panel on Climate Change (IPCC) in 2014, while SSP

scenarios were developed by a group of researchers in

2016. SSP scenarios are more recent and provide a more

comprehensive set of assumptions about socioeconomic

and technological developments.

One key difference between the two is that SSP scenarios

explicitly consider different possible pathways for

socioeconomic development, while RCP scenarios assume

a more linear progression of economic growth and energy

use.

Another difference is that SSP scenarios include a wider

range of possible outcomes for GHG emissions, while RCP

scenarios focus on four specific emissions trajectories,

labeled RCP2.6, RCP4.5, RCP6, and RCP8.5, which

correspond to different levels of radiative forcing by the

end of the 21st century.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

22

4.

ESG and Climate Change Report (Continued)

In general, SSP scenarios provide a more nuanced and

flexible set of assumptions for modeling future climate

scenarios, while RCP scenarios provide a more focused set

of emissions trajectories for comparison. Both frameworks

are widely used in climate modeling and research, and are

important tools for understanding the potential impacts of

climate change and the actions needed to mitigate it.

The scenarios that have been chosen for VEIL’s analysis are

presented as follows:

RCP

SSP

Description

RCP 8.5

SSP 8.5

BAU scenario without additional

efforts to constrain emissions,

resulting warming of more than 4°C

RCP 4.5

SSP 4.5

Intermediate scenario that declines

by 50% on 2050 levels by 2100,

expected to result in warming of more

than 2°C

RCP 2.6

SSP 2.6

Net zero pathway that aims to keep

global warming below 2°C

Transition Risk

Whilst Vietnam remains comfortably on track not to exceed

its disclosed Nationally Determined Contribution (NDCs),

due to its status as a developing country, the Vietnamese

Government (the “Government”) recognises the climate

change risks facing the country.

Thus, at the 26th and 27th 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.

In view of the limited availability of data, Dragon Capital

has utilised the Intensel’s SaaS platform to approximate

the TCFD’s suggested metrics of GHG emissions and WACI

for assessing Transition Risk. The SaaS platform employs

carbon sector intensity, measured in terms of tonnes of

CO

2

emied per one million dollars of revenue. Additionally,

the WACI for the local benchmark indexes of VN Index and

VN30 Index was calculated using the Intensel’s carbon

sector intensity and the calculation formula proposed by

Morgan Stanley Capital International (MSCI ESG Metrics

Calculation Methodology, December 2022).

4.

METRICS AND TARGETS

Notably, every year prior to the annual general meeting

(“AGM”) season, Dragon Capital works closely with its

investee companies, including those of VEIL, to offer

practical approaches that bridge the gap between

international best practices and most importantly, align

with shareholders’ benefits. The guiding moo of Dragon

Capital and VEIL is to embrace active engagement,

leveraging their expertise and resources to drive positive

change and unlock value for shareholders.

Dragon Capital and VEIL exercises the voting rights in 100%

of their listed investee companies with detailed voting

statistics provided below.

Given the aim of promoting active engagement with

investee companies, Dragon Capital on behalf of VEIL

engages with certain investee companies upon receiving

their proposals prior to their AGM. As a result of this

engagement, two investee companies accepted the

suggestions from Dragon Capital and VEIL, for example, the

case study of Company A mentioned below. Consequently,

there was no need to take action at the AGM and VEIL voted

for the management of these companies.

However, there was one occasion where VEIL had to take

action at an AGM by voting against the management.

This pertained to an investee company that presented

two proposals for an employee stock ownership plan

(“ESOP”) and employee bonuses at its 2023 AGM. The

programme represented a significant cost to shareholders

in comparison to the company’s net profit gained

during the reporting period. VEIL shared the view that

the ESOP programme was excessively large and lacked

proper structure, especially since it was not linked to

any performance measures. Despite expressing VEIL’s

concerns, both proposals were retained for the AGM,

leading VEIL to vote against them.

Engagement statistic in 2023

In

2023, VEIL had 15 ESG engagement cases directly

focused on investee companies from different sectors.

The charts below present these engagements classified

by sectors, engagement objectives and themes, and the

positions at which VEIL engaged.

The tables set out in the following pages provide some

examples of VEIL’s engagement with investee companies

in 2023.

4.

ESG and Climate Change Report (Continued)

27%

13%

13%

7%

40%

Engagement by sector

Material & Resources

Retail

Banking

Software & Services

Real Estate & Construction

28%

50%

22%

Engagement objectives

ESG Knowledge Sharing

ESG Follow Up/Asessment

ESG Incidents

21%

21%

9%

31%

9%

9%

Engagement by theme

Climate Change

Human Capital

E&S Management System

Biodiversity

Community Impact

32%

16%

28%

24%

Engagement by position

Investor Relations

Board Directors

Senior Executive

Operational Specialist

Source: Fund data

Sustainability Reporting

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

4.

ESG and Climate Change Report (Continued)

Advocacy and Engagement with research/public institutes and policy makers:

No.

Date

ESG Advocacy and Engagements

1

2 November 2023

EuroCham successfully organised the Green Economy Forum 2023 in Hanoi, following the

triumph of the Green Economy Forum & Exhibition 2022.

Vietnam’s micro, small, and medium-sized enterprises are increasingly embracing the ESG

framework, influenced by the country’s commitment at the COP26 conference and the global

shift towards sustainability.

As ESG reporting indicators and sustainable development metrics progressively become

essential benchmarks, foreign investors increasingly prioritise these criteria when making

investment decisions. Pham Nguyen Vinh emphasised the significance of leadership, team

commitment and the implementation method of ESG aligned investments.

2

16 November 2023

The Vietnam Circular Economy Forum 2023, themed “Developing a National Action Plan to

Implement a Circular Economy” took place in Hanoi, organised by the Ministry of Natural

Resources and Environment (“MoNRE”). Deputy Prime Minister Tran Hong Ha, along with

leaders from ministries, NGOs, international organisations, universities, businesses, and

experts aended the event.

Dominic Scriven O.B.E stressed integrating reduction, reuse, and recycling principles into

the financial system. He underscored adherence to economic cycles regulations and risk

management while exploring investment opportunities in emerging areas. Dominic discussed

global biodiversity measurement, collaborating with Institute of Strategy Policy on Natural

Resources and Environment for biodiversity credit research.

Around 100 countries, including Vietnam are exploring biodiversity credits as a financial tool for

biodiversity protection, appealing to environmentally conscious investors.

3

6 December 2023

Dragon Capital participated as a panel list in a conference of Decarbonizing Southeast Asia

– the role of business sector and developing financing institutions in materialising net zero

ambitions. This is the side event of COP28 in Dubai, UAE. The objective was to discuss among

financing institutions, private sector, banking institutions, and government officials from the

region to deep dive into in-country efforts currently being made, and collectively discuss the

following aspects of implementation.

During the conference, Nguyen Nhat Ha Chi, ESG Manager of Dragon Capital, shared insights

from Dragon Capital’s 20 years of journey in ESG, with a specific emphasis on initiatives related

to decarbonisation and biodiversity.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

25

4.

ESG and Climate Change Report (Continued)

Examples of engagement with investee companies:

Company A

Industry

Retail

Issue

Governance issue relating to ESOP programme

Details of

engagement

Many retail companies in Vietnam have implemented ESOP programmes. While this scheme has its

advantages, Dragon Capital recognised potential drawbacks and anticipated future accounting

policy changes that could impact business results. To address these concerns, Dragon Capital

and VEIL’s portfolio manager conducted in-depth case studies on stock options, presented to the

investee companies, including Company A, their applications, impact, and allocation policies to ensure

shareholders were not excessively diluted and that value creators and key personnel in the firm

received appropriate rewards.

In addition, Vietnamese companies predominantly distribute profits through cash payments,

disregarding the global practice of buying back treasury shares.

Recognising the potential benefits of this approach, Dragon Capital analysed its pros and cons and

introduced it to their investee companies which have the strongest recurring cash flow.

Decision and

outcome

Positive:

Company A adjusted the ESOP programme from the initial plan, minimising dilution by incorporating

operational and financial targets, and started experimenting with stock option mechanics.

Company A embraced Dragon Capital’s proposal on the global practice of buying back treasury shares

and included it in its AGM resolutions as an open option.

Company B

Industry

Material

Issue

E&S knowledge sharing and an ESG related incident

Details of

engagement

Multiple engagements were made with Company B, including E&S Knowledge sharing on the upcoming

mandate for the steel sector; i) CBAM; ii) GHG inventory disclosure; and iii) emission reduction plan.

Keep encouraging Company B to improve ESG practice.

March 2023:

Understand the corrective action to the inundation incident occurred in the community

near Company B’s largest factory.

Decision and

outcome

Positive:

Company B understands the new mandate, e.g. CBAM, GHG inventory disclosure, and is engaging with

third parties to prepare data, roadmaps to fulfil the new requirements. And they expect the ESG report

will be published in 2024 with GHG emission disclosure.

Company B embraced Dragon Capital’s suggestion on ESG team establishment and is in the process to

set up an integrated team.

Regarding the inundation incident in March 2023, Company B cooperated with local government to solve

the problems. Further, Company B shared that their public relation management team is responsible for

social listening and frontier office to receive controversies/complaints.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

26

Climate change assessment in 2023

Physical risk metrics

Percentage loss compared to the portfolio’s NAV and CVaR

are the two metrics used in this section.

The NAV as of 31 December 2023 was used to estimate the

percentage of loss in three scenarios:

•

RCP 8.5 corresponding to BAU, without additional

efforts to constrain emissions.

•

RCP 4.5 corresponding to intermediate scenario that

declines by 50% on 2050 levels by 2100.

•

RCP 2.6 corresponding to the most stringent

scenario, i.e. net zero case pathway.

Physical CVaR measures the maximum amount of loss to be

co-incurred over a one-year period given that a one in one-

hundred-year extreme event occurs (across the climate

hazards in consideration).

The figure below shows that with the investment

portfolio as of 31 December 2023, VEIL’s physical CVaR

corresponding to the three scenarios of RCP 2.6, 4.5 and

8.5 in 2050 would be US$45.6 million, US$50.9 million, and

US$63.6 million, respectively. When interpreting into the

percentage loss to the NAV, the numbers would be 2.6%

in the net zero pathway scenario, 2.9% in the intermediate

scenario and 3.7% in the BAU scenario.

The physical risk assessment also delved deeper into

which types of climate hazards contribute the most to the

portfolio losses. The two pie charts below illustrate the

proportion of portfolio losses aributed to climate hazards

for the year 2030 and 2050 under the BAU scenario. In

2030, the portfolio loss, or physical CVaR, is predicted to

be US$54.6 million, and for 2050, it is expected to reach

US$63.6 million. Out of five key climate hazards considered,

rainfall flood accounts for the highest loss (56% in 2030

and 52% in 2050), followed by typhoon (wind related

damages), which contributes 13% and 15% to the losses

in 2030 and 2050, respectively. (Note: no asset-level

mitigations are considered on this analysis)

4.

ESG and Climate Change Report (Continued)

2.6%

2.9%

3.7%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

RCP 2.6

Net Zero Pathway

RCP 4.5

Intermediate

RCP 8.5

% Los s to VEIL's NAV i n 2050

BAU

Source: Fund data calculated from Intensel Ltd. SaaS platform

US$45.6m

US$63.6m

US$50.9m

Transition risk metrics

The four key metrics of GHG emission recommended by

TCFD were calculated for VEIL and are presented as follows:

•

WACI: portfolio’s exposure to carbon-intensive

companies, expressed in ton CO

2

e/$M revenue;

•

Total carbon emission for scope 1 and 2: the

absolute GHG emissions associated with VEIL

portfolio, expressed in ton CO

2

equivalent;

•

Carbon footprint: total carbon emission for VEIL

normalised by the market value of VEIL, expressed in

ton CO

2

e/$M invested;

•

Carbon intensity: volume of carbon emission per

million dollars of revenue, expressed in ton CO

2

e/$M

revenue; and

•

Transition CVaR: the maximum amount of loss to

be incurred if all the carbon emission scope 1 & 2 of

VEIL’s portfolio is subjected to a carbon tax equally

to EU ETS carbon price of US$82/tonne CO2 as of 31

December 2023. EU ETS carbon price is currently the

highest value across the carbon markets worldwide.

Values of these key metrics are presented for 2023:

Key metrics

Values

WACI

143 tonne CO

2

e/$M revenue

Total carbon

emission scope 1 &

2 of VEIL portfolio

193.798 tonne CO

2

e

Carbon footprint

112 tonne CO

2

e/$M invested

Carbon intensity

198 ton CO

2

e/$M revenue

Transition CVaR

US$15.9 million (0.9% of NAV)

A comparison WACI of VEIL against other local and regional

benchmarks, e.g. Emerging markets, VN Index, is an

important practice for evaluating performance, managing

risk, and gaining insights of the portfolio into the markets.

The figure below presents the WACI of VEIL against other

indexes in 2023.

4.

ESG and Climate Change Report (Continued)

279

263

209

143

0

50

100

150

200

250

300

MSCI EM

Index

MSCI EM

Climate

Change Index

VN Index

VEIL

WACI of VEI L vs . I ndexs i n 2023

4.

ESG and Climate Change Report (Continued)

Forward-looking target

Intentions

ESG scoring and screening:

Dragon Capital and VEIL aim to

develop the scorecard for banking and financial institutions

to ensure that ESG scoring will cover all investee

companies.

TCFD reporting:

Dragon Capital and VEIL aim to further

collaborate with regulatory bodies to encourage and

enable greater disclosure of carbon information by listed

companies. In addition, Dragon Capital and VEIL will explore

opportunities to establish a process and/or platform for

carbon credit certification and trading, in order to support

the transition to a low-carbon economy and drive positive

environmental impact.

Targets

In 2024, VEIL will set three main targets for the portfolio as

follows:

1)

Ensure that all investee companies, including

financial institutions, achieve an ESG scoring and

rating;

2)

Maintain a WACI for VEIL that is consistently lower

than the VN Index; and

3)

Engage with top 10% companies in VEIL portfolio

ranking the highest on climate risk on their climate

adaptation policy, strategy and ability to absorb the

losses.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Strategic Report

29

5.

Corporate Governance Statement

Introduction

The Board of Directors of the Company (the “Board”) is

commied 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 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 seing out additional Provisions on issues that

are of specific relevance to the Company.

The Board 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.

It is the Board’s view that the Company has complied with

the Principles and Provisions of the AIC Code during the

year ended 31 December 2023.

The AIC Code is available on the AIC website (www.theaic.

co.uk).

Table 1 at the end of this Corporate Governance Statement

describes how the Board has applied the 17 Principles of the

AIC Code in practice during the year ended 31 December

2023.

Section 172 of the UK Companies Act 2006

The Board of Directors 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 maers) 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.

(collectively, the “s.172 maers”).

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

maers 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 year ended 31 December 2023, 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 beer decisions by

systematically and explicitly integrating environmental,

social and governance (“ESG”) factors into the investment

process which aligns with the investment objectives of the

Company.

More information on the Company’s ESG management

system, governance and strategy, and risk management

can be found in the ESG and Climate Change Report on

pages 16 to 29.

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 under “Directors’ Interests in Contracts” in

the Report of the Board of Directors on pages 59 to 61.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

30

5.

Corporate Governance Statement (Continued)

Directors

The following were Directors during the year ended 31

December 2023 and to the date of this annual report:

•

Gordon Lawson: Chair

•

Vi Peterson: Independent Non-Executive Director

(until 31 October 2023), Senior Independent Non-

Executive Director (from 1 November 2023)

•

Entela Benz-Saliasi: Senior Independent Non-

Executive Director (until 31 October 2023).

Independent Non-Executive Director (from 1

November 2023)

•

Low Suk Ling: Independent Non-Executive Director

•

Sarah Arkle: Independent Non-Executive Director

•

Charles Cade: Independent Non-Executive Director

(from 1 October 2023)

•

Dominic Scriven O.B.E: Non-Executive Director

As at 31 December 2023, the Board consisted of seven

Non-Executive Directors, six 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.

The biographical details of the Directors are provided on

pages 55 to 57.

The Chair of the Board, Gordon Lawson, is non-executive

and independent of the Investment Manager.

The Chair of the Board leads and ensures the effectiveness

of the Board in all maers 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 various

Board Commiees (the Risk Management Commiee, the

Management Engagement Commiee, the Nomination and

Remuneration Commiee and the Audit and Compliance

Commiee), the Directors as a whole, the Investment

Manager and the Company’s other third-party service

providers.

Dominic Scriven O.B.E is the Director of Dragon Capital

Group Limited, the parent of the Investment Manager and

also acts as the Chairman of the Dragon Capital group

Dominic Scriven O.B.E is, therefore, not considered to be

independent of the Investment Manager.

There are no Executive Directors on the Board.

The Nomination and Remuneration Commiee 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 at 31 December 2023, two out of the seven Board

members originate from an Asian ethnic background

(Vietnam and Singapore) and four out of the seven Board

members are female.

Details of the individual board remuneration of Directors

and their beneficial interests in the Company as well

as details of the Commiees and their composition are

disclosed in this Corporate Governance Statement pages

30 to 50 and the Directors’ Remuneration Report on page

54.

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 of the Board

reviews and agrees with new Directors their training and

development needs covering specific Company maers as

well as industry issues.

The Board is supplied, via the Investment Manager and

other service providers, with sufficient 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.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

31

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 maers 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 and cost of service providers;

•

Act as a point of contact for shareholders,

independent of the Investment Manager; and

•

Other maers 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

aended by representatives from the Investment Manager.

Representatives from the Investment Manager also aend

relevant Commiee meetings if requested by the relevant

Commiee Chairs.

Open, constructive debate and discussion is encouraged

by the Chair of the Board and each Commiee’s Chair to

ensure that the best interests of the shareholders and the

Company are maintained.

The Board has standing agenda items for its quarterly

scheduled Board meetings and periodic Risk Management

Commiee, Management Engagement Commiee,

Nomination and Remuneration Commiee and Audit and

Compliance meetings to review the Investment Manager’s

performance, compliance, risk management, third party

services and other maers relating to the operations and

regulation of the Company.

This includes reviewing the portfolio performance,

aribution analysis, contributors and detractors to

performance, weightings and portfolio information

including purchases and sales, risks, fees, ESG and climate

change risk, 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 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 Board sets the overall Company strategy and regularly

reviews its progress to ensure that its goals and objectives

are being met.

All above maers are reviewed at each quarterly Board

meeting with the Directors receiving updates from the

Investment Manager, Corporate Broker, legal advisor, and

auditor.

Board and Commiees

For the period from 1 January 2023 to 31 October 2023,

there were three commiees:

•

Audit and Risk Commiee

•

Management Engagement Commiee

•

Nomination and Remuneration Commiee

On 1 November 2023, the Company announced the

separation of its existing Audit and Risk Commiee into

(i) an Audit and Compliance Commiee and (ii) a Risk

Management Commiee.

This separation reflects the increasing importance of risk

management (including ESG and climate change risks) as a

separate oversight function of the Board.

The Board has also reviewed and reconstituted the

membership of each of its commiees.

As at 31 December 2023, the Board has established four

commiees:

•

Risk Management Commiee

•

Management Engagement Commiee

•

Nomination and Remuneration Commiee

•

Audit and Compliance Commiee

5.

Corporate Governance Statement (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

32

Table 2 at the end of this Corporate Governance Statement

describes the composition of each committee from 1

January to 31 October 2023, from 1 November 2023 to 30

June 2024, and from 30 June 2024 on wards.

The responsibilities of the four Committees are described

below. 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.

Audit and Compliance Commiee

The Audit Commiee 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 Commiee was

expanded to become the Audit and Risk Commiee.

During the year ended 31 December 2023, the Board has

reviewed the Board Commiees and their function and on

1 November 2023, the Audit and Risk Commiee was split

into the Risk Management Commiee and the Audit and

Compliance Commiee.

Detailed information on the Audit and Compliance

Commiee can be found in the Report of the Audit and

Compliance Commiee on pages 51 to 53.

Risk Management Commiee

On 1 November 2023, in light of impending new legislation

seing higher standards for financial reporting of Financial

Times Stock Exchange (“FTSE”) 350 companies, the Board

announced the separation of its existing Audit and Risk

Commiee into (i) an Audit and Compliance Commiee

and (ii) a Risk Management Commiee. The laer change

reflects the increasing importance of risk management

(including ESG and climate change risks) as a separate

oversight function of the Board.

The Risk Management Commiee assists the Board in

fulfilling its oversight responsibilities by reviewing and

monitoring:

•

the Company’s aitude and appetite for risk and its

future risk strategy;

•

the Company’s and Investment Manager’s systems

of internal controls and risk management;

•

how risk is reported internally and externally; and

•

the process of identifying, assessing, and controlling

both the Company and portfolio risks to prevent,

mitigate or transfer such risks.

In particular, the Risk Management Commiee reviews and

challenges where necessary:

•

investment risks including but not limited to market,

credit, liquidity and leverage risk;

•

current and prospective risks faced by the Company

and its future strategy;

•

the Company’s strategies, goals and commitments

related to sustainability and ESG; and

•

business operational risks, including in relation to

the Investment Manager, comprising including but

not limited to:

-

middle and back office;

-

business Continuity;

-

information technology and cyber security;

-

human capital;

-

service providers;

-

legal/regulatory compliance.

The Risk Management Commiee reviews the adequacy

and effectiveness of the Company’s risk management

systems, looking in particular at how quantitative and

qualitative risks are reported to the Board, triggers for

reporting, and how risk management is considered in

decisions by the Board.

The Risk Management Commiee provides oversight and

guidance to the Board in relation to actual and potential

conflicts of interest between the Company and any related

parties or providers of services to the Company.

Actual or potential conflicts of interest regarding valuation

recommendations is generally overseen by the Audit and

Compliance Commiee of the Company.

The Risk Management Commiee meets at least twice a

year, and the Chair of the Risk Management Commiee

maintains dialogue with key individuals involved in the

Company’s governance, including the Chair of the Board,

the Investment Manager and other key service providers.

The Risk Management Commiee also reviews the ESG

market practice and climate change related risks during

the reporting year. In particular, the Company was asked

to switch from ESG score level to ESG key performance

indicators (KPI) disclosure. In addition, it will implement

benchmark transition risk to local and EM benchmarks.

5.

Corporate Governance Statement (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

33

Management Engagement Commiee

The Management Engagement, Nomination &

Remuneration Commiee was formed upon listing of

the Company’s

on the main market of the London Stock

Exchange on 5 July 2016.

With effect from 1 July 2018, the Management Engagement,

Nomination & Remuneration Commiee was split into the

Management Engagement Commiee and the Nomination

and Remuneration Commiee.

The Chair of the Management Engagement Commiee

reports to the Board after each meeting on all maers

within its duties and responsibilities.

The Management Engagement Commiee 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 Commiee 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

Commiee 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 year ended 31 December 2023, the Management

Engagement Commiee met twice to discuss and assess

service providers covering marketing and research, fund

administration, custody, corporate broker, Board platform,

auditor, legal counsel, and investment management of the

Company.

Nomination and Remuneration Commiee

The Nomination and Remuneration Commiee performs

an annual review of the skills, experience, length of service

and knowledge about the Company for each Director 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 55 to 57.

The selection policy of the Board is to appoint the best

qualified person for the job, by considering diversity of

the Board, 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 Commiee 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 Commiee

has access to independent research.

The policy of the Board 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 the

Directors’ Remuneration Report on page 54 and in Note

10 to the Financial Statements. The Directors’ interests

(including interests of connected persons) can be found in

the Report of the Board of Directors on pages 59 to 61.

The Nomination and Remuneration Commiee, which is

entirely comprised of Independent Directors, regularly

reviews the structure, size and composition of the Board

and makes recommendations to the Board with regard to

any adjustments that seem appropriate, considers the

rotation and renewal of the Board, approves candidate

specifications for all Board appointments, 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 year ended 31 December 2023, the Nomination

and Remuneration Commiee met three times to discuss

succession planning, monitor and review key person risk

and conduct ongoing review of the Board and Commiee

composition.

5.

Corporate Governance Statement (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

34

5.

Corporate Governance Statement (Continued)

Following the Commiee’s approved plan, Charles Cade,

Independent Non-Executive Director, was appointed on 1

October 2023.

On 1 November 2023, the Company has announced that

Gordon Lawson would step down as the Chair of the Board

and resign from the Board, both effective 30 June 2024.

Gordon Lawson has served as the Independent Non-

Executive Director of the Company since 8 July 2014, and as

the Chair of the Board since 1 July 2022.

The Board has elected Sarah Arkle, currently the

Independent Non-Executive Director, to replace Gordon

Lawson as the Chair of the Board after Gordon Lawson

steps down on 30 June 2024.

Also, with effect from 1 November 2023, Vi Peterson

replaced Entela Benz-Saliasi as the Senior Independent

Non-Executive Director of the Board.

All Directors will again offer themselves for re-election (or in

the case of Charles Cade, election) to the Board at the next

Annual General Meeting (“AGM”) of the Company in 2024 in

accordance with corporate governance best practice.

As at 31 December 2023, the independence of the Board

consisted of six

Non-Executive Directors who are

independent of the Investment Manager.

The Nomination and Remuneration Commiee also

confirms that the knowledge and experience of the

Directors is adequate to provide a balance of skills and

expertise which are relevant to the Company.

Board Independence, Composition and

Diversity

The Board supports the principle of boardroom diversity

and the Parker Review.

The recruitment 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, as well

as ethnic and gender diversity.

New appointments are identified against these

requirements and the need to achieve a balanced Board.

As at 31 December 2023, the Board consisted of six

Independent Non-Executive Directors and one Non-

Independent Non-Executive Director.

As at 31 December 2023, the Company has no employees

and no “senior management” and no “ExCo and ExCo minus

one” defined by Parker Review.

Targets pre-2027

The Company aims to have at least two directors from an

ethnic minority group. This target has been achieved since

2016 and as at 31 December 2023, the Company has two

directors with an ethnic minority background.

The Company also aims to have at least two female

directors. This target has been achieved since 2019 and

as at 31 December 2023, the Company has four female

Directors out of a total of seven Directors.

Targets post-2027

The Company aims to have at least two directors from an

ethnic minority group. This target has been achieved since

2016 and as at 31 December 2023, the Company has two

directors with an ethnic minority background.

The Company also aims to have at least two female

directors. This target has been achieved since 2019 and

as at 31 December 2023, the Company has four female

Directors out of a total of seven Directors.

Listing Rule 9.8.6

The Directors confirm that, as at 31 December 2023, the

Company has met the targets on board diversity set out

in Listing Rule 9.8.6(9)

(a), with 57.14% of the Board being

women (including the senior independent director) and

two out of seven directors being from minority ethnic

backgrounds.

Table 3 at the end of this Corporate Governance Statement

has been constructed using data provided by the Directors

on a voluntary basis. Each director received an email

containing the same table format as Table 3 and was asked

to tick the boxes applicable to them.

Directors’ Appointment and Policy on

Payment of Loss of Office

Each Director has an appointment leer with the Company.

The terms of the appointment provide that a Director will be

subject to re-election at each AGM.

A Director may resign from office with three months’ notice.

The Board does not have a formal policy requiring Directors

to stand down after a certain period. The Board has

established the Nomination and Remuneration Commiee

which regularly reviews structure, size, gender and

composition of the Board and makes recommendations

to the Board with regard to any adjustments that seem

appropriate.

Directors’ & Officers’ liability insurance cover is maintained

by the Company on behalf of the Directors.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

35

5.

Corporate Governance Statement (Continued)

Appointment

•

All the Directors are non-executive, appointed under

the terms of Leers 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 scale 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.

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 Commiee 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 maer

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 of the Board 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 acting in good faith in assessing

the materiality of the conflict in accordance with the

Company’s Restated and Amended Memorandum and

Articles of Association.

The Board believes that its powers of authorisation of

conflicts of interest have operated effectively.

The Board also confirms that its procedures for the

approval of conflicts of interest, if any, have been followed

by the Directors.

As at 31 December 2023, none of the Directors had a

material interest in any contract which is significant to the

Company’s business other than Dominic Scriven O.B.E in

relation to the investment management agreement dated

23 May 2016 between the Company and the Investment

Manager (the “Investment Management Agreement”) as

further detailed under “Directors’ Interests in Contracts” in

the Report of the Board of Directors on pages 59 to 61.

The Board notes that an affiliate of the Investment Manager

holds two convertible notes issued by Intensel Limited

(“Intensel”) (a Hong Kong company which provides climate

risk analysis) in an aggregate amount of US$400,000, as

disclosed by the Company in previous Annual Reports.

Entela Benz-Saliasi continues to have 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 2023, the Company had not engaged

Intensel to provide any services.

The Directors’ holdings in the Company can be found in the

Report of the Board of Directors on pages 59 to 61.

Performance Evaluation

The Board undertakes an annual evaluation of its own

performance and that of its Commiees and individual

Directors, including the Chair of the Board.

In May 2023, the Nomination and Remuneration Commiee,

on behalf of the Board, has engaged with Lintstock Limited,

a global third party advisor to the boards of a variety of

companies, including over 50 investment trusts, for two

year service contract. The purpose is for the Board to get

a concise and clear report on the perception of Board

performance, whilst ensuring that the anonymity of all

respondents is respected. Lintstock will also formulate

a number of key observations and recommendations for

improvement each year.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

36

The Lintstock Board evaluation was conducted through a

survey-based Board review in 2023, and a follow-up Board

review with Director interviews in 2024. The approach

in each year includes reviews of Chair and Commiee

performance, as well as individual Director evaluations.

Based on its recommendations, the Board will determine

what skill set/requirements they should develop for the

existing Directors and seek from new Directors.

The Board is satisfied that the performance of each

commiee and individual Director, including the Chair of the

Board, is effective and that 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 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, the Company’s external legal advisor,

and the Auditor.

Advisers to the Company also prepare reports for the Board

from time to time on relevant topics and issues.

The Company has a clear policy and process on the

nomination, induction, and ongoing professional

development of new Directors. In addition, the Nomination

and Remuneration Commiee also issued a formal

recruitment policy paper for Independent Non-Executive

Directors (the “Policy”). The Policy establishes a framework

that sets a standard for recruitment practice, procedures,

and strategies for Non-Executive Directors of the Company

to ensure consistency and compliance with AIC Code and/

or Financial Reporting Council (“FRC”) Standard.

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 accordance with the Policy.

In addition, a new Director will also spend time with

representatives of the Investment Manager in order to learn

more about its operations, processes, and procedures.

Aendance at Scheduled Meetings of the

Board and its Commiees for the Year

Table 4 at the end of this Corporate Governance Statement

lists the number of Board and Commiee meetings

aended by each Director.

During the year ended 31 December 2023, there were four

Board meetings, two Audit and Risk Commiee meetings

(before the split on 1 November 2023), two Management

Engagement Commiee meetings and three Nomination

and Remuneration Commiee 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

Dragon Capital Management (HK) Limited is the Investment

Manager of the Company.

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 July 2024, the management fee shall be calculated

and accrued daily at a flat rate of 1.5% per annum of the

Company’s NAV.

On 1 December 2023, the Company announced a reduction

in the management fee with effect from 1 July 2024,

following a review of the annual management fee, and

discussions with the Investment Manager.

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.

5.

Corporate Governance Statement (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

37

The Company has the 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 7 to 15.

The Board, on the advice of the Management Engagement

Commiee, believes 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 best 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 the Investment Management

Agreement or in other policies such as the Company’s

discount control policy.

The Board is ultimately responsible for ensuring that

sound systems of internal control of the Company are

maintained to safeguard shareholders’ investments and

the Company’s assets.

The Risk Management Commiee undertakes an annual

review of the effectiveness of the Company’s systems

of internal control and the Directors believe that an

appropriate framework is in place to ensure that sound

systems of internal control are maintained 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.

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 Company’s activities

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 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, the liquidity and other financial 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 Company’s Legal Advisers aend Board

meetings as required, enabling the Directors to probe

further on maers 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 aendance to present verbal and wrien

reports covering local and global macro-economy, its

activity, the portfolio and investment performance over the

preceding period.

Ongoing communication with the Board is maintained by

formal meetings and ad-hoc conversations.

The Investment Manager ensures that Directors have

timely access to all relevant management, financial and

regulatory information to enable informed decisions to be

made.

5.

Corporate Governance Statement (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

38

The Investment Manager contacts the Board as required

for specific guidance on particular issues.

The Board has delegated the exercise of voting rights

aaching 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 maers 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 the Investment Manager’s reasonable judgment

of what will best serve the financial and governance

considerations of the Company.

So far as is practicable, and with the authorisation by the

Board, 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,

commiee structure, 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.

The Investment Manager has strictly integrated ESG

considerations throughout its investment process. The

screening and assessment on the ESG issues have been

applied on all investee companies, except for those in the

financial sector.

Administrator and Custodian

Custody and fund administration services are undertaken

by Standard Chartered Bank.

Company Secretary

The Company appointed Maples Secretaries (Cayman)

Limited as its 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 to engage

with shareholders.

Where appropriate, the Chair of the Board and other

Directors are available for discussion about governance

and strategy with shareholders and the Chair of the Board

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 2023, the Investment

Manager had periodic meetings with shareholders to

discuss aspects of the Company’s performance.

The Chair and other Board 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 100 or contact the Investment Manager using the

contact details also provided on page 101.

The Board believes that the AGM provides an appropriate

forum for investors to communicate with the Board and

encourages participation.

The AGM will be aended 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 Chair of the Board actively leads and other Directors

participate 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.

5.

Corporate Governance Statement (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

39

5.

Corporate Governance Statement (Continued)

This includes information contained within annual reports,

interim (semi-annual) reports, the packaged retail and

insurance-based investment products key information

document (PRIIP-KID), monthly reports, factsheets and

frequent webinars, as well as notices of any significant

event to registered shareholders.

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 have the latest Company information

downloaded from the website.

The Company also releases information through the

London Stock Exchange.

Annual General Meeting

The AGM took place at 2406, 24/F., 9 Queen’s Road,

Central, Hong Kong on 23 June 2023 at 4:00pm (Hong Kong

time). The result of the AGM can be found on page 58.

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 Controls and Risk Management

System

The Risk Management Commiee reviews 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.

The Board reviews the ongoing processes for identifying,

evaluating and monitoring the principal risks and

uncertainties faced by the Company.

Principal Risks and Uncertainties

The Risk Management Commiee oversees the process of

identifying, assessing, and controlling both the Company

and portfolio risks to prevent, mitigate or transfer such

risks.

In particular, the Risk Management Commiee reviews and

challenges where necessary:

•

Investment risks comprising, but not limited

to, market, credit, liquidity, leverage, political,

compliance risk and ESG and climate change-related

risks; and

•

Business operational risks.

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 the

Report of the Audit and Compliance Commiee on pages

51 to 53.

The Directors have not identified any other principal risk or

uncertainty during the year ended 31 December 2023.

Viability Statement

The Directors have assessed the prospects of the

Company over a three-year period to 31 December 2026.

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.

Following the detailed analysis of the Board, it has

concluded that, based on the Company’s current position,

the principal risks and uncertainties that the Company

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 2026.

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

recourses, 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.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

40

Authority for Share Buyback and Discount

Management

The shareholders approved at the Company’s AGM on 23

June 2023 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 2024 and the conclusion of the

Company’s next annual general meeting.

The intention of the Directors 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 2023. The

details of the share buyback programme in 2023 can be

found on the London Stock Exchange website

hps://

www.londonstockexchange.com/stock/VEIL/vietnam-

enterprise-investments-limited/analysis .

In total 5,698,692 Shares were bought back during the

year ended 31 December 2023, representing 2.58% of the

issued share capital, for an aggregate consideration of US$

40,272,632.

The Shares bought back are held in treasury. As at 31

December 2023, the Company held 19,893,760 Shares in

treasury.

Following the above buybacks, the total number of Shares

in issue was 201,026,986 (excluding Shares held in

treasury) as at 31 December 2023.

On 3 April 2024, the Company cancelled from treasury

19,893,760 ordinary shares. Following the cancellation,

the Company has 198,247,879 Ordinary Shares in issue

(excluding treasury shares) and holds 2,779,107 Ordinary

Shares in treasury as at 3 April 2024.

This number represents the total voting rights in the

Company 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

Disclosure Guidance and Transparency Rules (“DTR”) of

Financial Conduct Authority (“FCA”).

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 DTR and the authority granted by

shareholders at the Company’s AGM on 23 June 2023.

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 buybacks

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).

The 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).

The 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 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.

5.

Corporate Governance Statement (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

41

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 Shareholders

As at 31 December 2023, 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: 27,423,467

•

% of total Ordinary Shares in issue: 13.46%

Bill & Melinda Gates Foundation

•

Number of Ordinary Shares held: 24,670,745

•

% of total Ordinary Shares in issue: 12.28%

Shareholders need to comply with the notification and

disclosure requirements set out in Chapter 5 of the

Transparency Rules of the UK Financial Conduct Authority.

If it comes to the aention of the Directors that a

shareholder has not within the requisite period disclosed

their holding in the Company, the Company may, inter alia,

at the discretion of the Directors, notify the shareholder

that their shares in relation to the holding shall not be

entitled to a vote, either in person or in proxy, at any

general meeting of the Company.

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:

hps://

www.veil-dragoncapital.com/modern-slavery-statement/.

5.

Corporate Governance Statement (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

42

5.

Corporate Governance Statement (Continued)

Relations with Stakeholders

The Board recognises the benefits of engaging with the

shareholders of the Company and other key stakeholders

in order to ensure that the Board is aware, and can take

account, of their views during Board discussions and when

the Board makes decisions.

As a result, the following processes and initiatives are in

place:

Liaison With Investors

Dragon Capital group has hosted a series of webinars and in

coordination with the Board initiated face to face meetings

to keep clients and prospective investors informed of

developments in Vietnam.

These mainly focus on stock market, economy and key

investment themes, with Q&A where discussions usually

centre around the funds, particularly the Company.

Environment and Community

The Dragon Capital group has engaged in the following

activities during the year ended 31 December 2023:

•

With the aim of becoming one of the leaders

in promoting corporate sustainability and

environmental responsibility in Vietnam, Dragon

Capital group is conscious of its consumption of

natural resources, and it is commied to proactively

managing its environmental performance. As part of

that, Dragon Capital group continuously assesses

its carbon footprint and has been offseing

unavoidable operational emissions to maintain its

carbon-neutral status since 2008;

•

Implemented a 'Zero To Landfill' waste and recycling

policy;

•

Encouraged employees to take environmentally

friendly actions in the workplace to protect the

environment. These actions include initiatives

such as using paper tubes, adopting waste sorting

practices, and reducing the consumption of single-

use plastic boles for water;

•

Procurement of all electricity usage in the Dragon

Capital group’s property portfolio from renewable

sources;

•

Facilitated employees taking advantage of 'Give As

You Earn' for personal charitable donations;

•

Held various employee events to raise money for

designated charities;

•

Empowered young people in difficult circumstances

who show high learning potential, especially

young women, by paying tuition fees throughout

their studies. In addition to financial support,

these scholarships also focus on developing the

character, solidarity and mutual support mindset of

the students to motivate them to contribute to the

community after graduation;

•

Actively participated in sponsorship of students

of The Foreign Trade University, RMIT the next

generation of financial market participants; and

•

Under the moo of 'Giving The Best To The Children',

the Dragon Capital group, in collaboration with

charity organisations, awarded scholarships to

disadvantaged students to fully access their

education in the 2023 school year.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

43

Table 1: 17 Principles of the AIC Code in Practice During the Year Ended 31 December 2023

AIC Code Principle

VEIL’s application

A.

A successful company is led by an

effective board, whose role is to

promote the long-term sustainable

success of the company,

generating value for shareholders

and contributing to wider society

(Incorporates relevant content from

UK Code Principle A)

The Board meets at least quarterly to assess the Company’s performance,

viability, risk, and value over the short, medium and long term.

The effectiveness of the Board and the Chair of the Board is reviewed

regularly as part of the internal control process led by the Nomination and

Remuneration Commiee.

B.

The board should establish the

company’s purpose, values and

strategy, and satisfy itself that

these and its culture are aligned.

All

directors must act with integrity,

lead by example and promote the

desired culture. (UK Code Principle

B)

The Board holds quarterly strategy meeting during which it can discuss

important issues faced by the Company and the industry, and exchange ideas

about the future outlook of the business.

The Board agrees a strategy and monitors performance against this agreed

strategy on an ongoing basis.

The Board hires an external third party to conduct a formal evaluation on its

own performance every two or three years. The last Board evaluation report

was done in May 2023 by Lintstock Limited, a global third party advisor to the

boards of a variety of companies, including over 50 investment trusts, for two-

year service contract.

C.

The board should ensure that the

necessary resources are in place for

the company to meet its objectives

and measure performance against

them.

The board should also

establish a framework of prudent

and effective controls, which enable

risk to be assessed and managed.

(UK Code Principle C)

The Board considers that the Company is adequately resourced to meet its

objectives and is satisfied that it is able to effectively measure its performance

against them.

The Board has established a schedule of internal controls and key risks,

which enable it to plan, measure and manage how it mitigates threats to its

performance, and prioritises its resources in doing so.

These schedules are reviewed on a quarterly basis by the Risk Management

Commiee.

The Investment Manager also reports to the Board on the Company’s

performance when measured against its industry peers at each Board

meeting, from which the Board is able to determine whether or not its

performance is satisfactory, and what actions, if any, are needed to make

improvement.

5.

Corporate Governance Statement (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

44

* In accordance with the AIC Code, Principle E from the UK Code is not relevant for externally managed investment companies.

5.

Corporate Governance Statement (Continued)

AIC Code Principle

VEIL’s application

D.

In order for the company to meet

its responsibilities to shareholders

and stakeholders, the board should

ensure effective engagement with,

and encourage participation from,

these parties.

(UK Code Principle D)

The Board receives regular reports from the Investment Manager in relation

to shareholder engagement as part of an extensive investor relations

programme.

Shareholders are encouraged to aend the AGM, where the Board presents on

investment performance and strategy.

Whenever physical aendance is not possible, measures are put in place

for shareholders to submit any questions to the Board and the Investment

Manager in advance of the meeting.

Shareholders are invited to aend various webinars and presentations, where

the Investment Manager provides an update of the Company’s performance

and the stock market.

Stakeholders are also able to access and review all key Company literature on

its website (www.veil-dragoncapital.com).

Questions may be directed to the Board or the Investment Manager, via the

registered office or a dedicated email address ([email protected]).

The Investment Manager also reports to the Board regularly on its broader

stakeholder engagement.

E.

[Intentionally left blank]*

F.

The chair leads the board and

is responsible for its overall

effectiveness in directing the

company.

They should demonstrate

objective judgement throughout

their tenure and promote a culture

of openness and debate.

In addition,

the chair facilitates constructive

board relations and the effective

contribution of all non-executive

directors, and ensures that directors

receive accurate, timely and clear

information.

(UK Code Principle F)

The Chair of the Board encourages active participation at Board meetings,

including seing the agenda items for discussion.

The Board receives a comprehensive suite of regular information, including

in-depth reports from the Investment Manager of performance, aribution,

transactions and exposures on a monthly and quarterly basis.

The quarterly Board meetings also include detailed reports on the financial

and operational activities of the Investment Manager and the Dragon Capital

group, including costs, liquidity, risk, investor relations, PR, IT, regulatory, legal,

compliance, and HR maers.

At these meetings, the Investment Manager also provides a quarterly update

on ESG and climate change integration, which is a standing agenda item.

The Board also invites relevant service providers to present their activities and

insights including the Company’s broker, fund administrator, legal advisor, and

auditor.

Furthermore, Board meetings provide the opportunity for the Chairs of

each Commiee to present a summary of the activities of their respective

Commiees, with minutes from the meetings included in the Board papers.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

45

5.

Corporate Governance Statement (Continued)

AIC Code Principle

VEIL’s application

G.

The board should consist of an

appropriate combination of directors

(and, in particular, independent

non-executive directors) such that

no one individual or small group of

individuals dominates the board’s

decision making.

(Incorporates

relevant content from UK Code

Principle G)

The Board has delegated responsibility to key Commiees, as well as engaging

the Investment Manager under a formal investment management and services

agreement.

As at 31 December 2023, the Board comprised an Independent Non-Executive

Chair and five Independent Non-Executive Directors, each of whom is

independent of the Investment Manager, and one Non-Independent Non-

Executive Director.

There is a clear division of responsibilities between the Board and the

Investment Manager.

As such, the Board considers that its decision making is not dominated by an

individual or small group of individuals.

H.

Non-executive directors should have

sufficient time to meet their board

responsibilities. They should provide

constructive challenge, strategic

guidance, offer specialist advice and

hold third party service providers

to account.

(Incorporates relevant

content from UK Code Principle H)

The Directors consider they have sufficient time to meet their Board

responsibilities.

The Board meet quarterly to discuss the Company’s activities with the

Investment Manager.

At such meetings, the Board has the opportunity to constructively challenge

and provide strategic guidance in relation to both the Company’s and its

service providers’ performance and methods through direct communication

with the Investment Manager.

The Board carries out a formal review of its service providers’ performance

(including the Investment Manager) on an annual basis.

I.

The board, supported by the

company secretary, should ensure

that it has the policies, processes,

information, time and resources it

needs in order to function effectively

and efficiently.

(UK Code Principle I)

Maples Secretaries (Cayman) Limited provides company secretarial services

to the Company and, together with external specialist advisors, ensures that

Board of Directors procedures and any applicable rules and regulations are

observed.

Such services also include advice and support to the Board on all governance

maers and on the discharge of their duties as Directors.

The Directors are able to take independent external professional advice to

assist with the performance of their duties at the Company’s expense.

J.

Appointments to the board should

be subject to a formal, rigorous

and transparent procedure, and an

effective succession plan should be

maintained.

Both appointments and

succession plans should be based

on merit and objective criteria and,

within this context, should promote

diversity of gender, social and ethnic

backgrounds, cognitive and personal

strengths.

(Incorporates relevant

content from UK Code Principle J)

The Nomination and Remuneration Commiee is responsible for proposing

candidates for appointment to the Board and for overseeing the recruitment

process.

The Nomination and Remuneration Commiee comprises of only Independent

Directors.

The Nomination and Remuneration Commiee applies principles of

independence, transparency and objectivity in the recruitment of any new

Director, and promotes diversity and balance in terms of gender, ethnicity, and

professional backgrounds.

All appointments are based on merit, with a focus on identifying and seeking

the required skills, expertise and experience that is needed to supplement the

existing Board.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

46

5.

Corporate Governance Statement (Continued)

AIC Code Principle

VEIL’s application

K.

The board and its commiees

should have a combination of

skills, experience and knowledge.

Consideration should be given to

the length of service of the board as

a whole and membership regularly

refreshed.

(UK Code Principle K)

The varying backgrounds and wide-ranging experience of the Directors,

including in the investment and financial services sectors, commercial

businesses and academia, ensures broad cognitive diversity, which is viewed

as key in assisting effective challenge and discipline.

Biographies of the Board are set out on pages 55 to 57 and demonstrate the

strength of experience in the areas required to provide effective strategic

leadership and appropriate governance of the Company.

The Board seeks to ensure an appropriate balance between continuity and

experience, and the positive benefits of refreshing membership and the

development of a diverse Board.

During the year ended 31 December 2023, one new Independent Non-

Executive Director was appointed.

L.

Annual evaluation of the board

should consider its composition,

diversity and how effectively

members work together to achieve

objectives.

Individual evaluation

should demonstrate whether each

director continues to contribute

effectively.

(UK Code Principle L)

The Board conducts an annual review of its performance and that of its

individual Director at its year-end Board meeting.

During this annual review, evaluation is made of, and consideration is given to,

the effectiveness of the Board’s current methods of working, both with itself,

and with the Investment Manager.

Practical issues are highlighted and a collaborative approach is used with the

Investment Manager to seek improvement in areas where it is deemed to be

beneficial.

M.

The board should establish

formal and transparent policies

and procedures to ensure the

independence and effectiveness of

external audit functions and satisfy

itself on the integrity of financial and

narrative statements. (Incorporates

relevant content from UK Code

Principle M)

The Board has delegated the assessment of the external audit function and

the review of the integrity of the Annual Report and Interim Report to the Audit

and Compliance Commiee.

KPMG has been the Company’s external auditor since 2008 and the Audit

and Compliance Commiee has undertaken an assessment of KPMG’s

performance in respect of the annual statutory audit of the Company for the

year ended 31 December 2023, which concluded that KPMG had performed

satisfactorily (see “External Auditor” in the Report of the Audit and Compliance

Commiee on pages 51 to 53).

The Audit and Compliance Commiee also performed a detailed review of

this 2023 Annual Report, as well as reviewing supporting papers from the

Investment Manager and other service providers, in order to ensure the

integrity of the statements. The activities of the Audit and Compliance

Commiee can be found in the Report of the Audit and Compliance Commiee

on pages 51 to 53.

N.

The board should present a fair,

balanced and understandable

assessment of the company’s

position and prospects.

(UK Code

Principle N)

The Audit and Compliance Commiee reviewed the financial and narrative

statements in the 2023 Annual Report, as well as supporting papers and

evidence from the Investment Manager in relation to this area.

The Audit and Compliance Commiee concluded that the published reports

were consistent with the ‘fair, balanced and understandable’ requirement and

advised the Board accordingly.

The Board considered the Audit and Compliance Commiee’s advice and

performed its own review before reaching the same conclusion.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

47

5.

Corporate Governance Statement (Continued)

AIC Code Principle

VEIL’s application

O.

The board should establish

procedures to manage risk, oversee

the internal control framework, and

determine the nature and extent of

the principal risks the company is

willing to take in order to achieve its

long-term strategic objectives.

(UK

Code Principle O)

Day-to-day risk management is undertaken by the Investment Manager and

overseen by the Risk Management Commiee which receives detailed reports

quarterly on the risk management and internal control functions.

The Dragon Capital group’s systems of internal control are administered by the

Investment Manager and designed to manage as far as possible the principal

risks of the Company.

Further information can be found in the Principal Risks and Uncertainties and

Viability Statement sections in this Corporate Governance Statement on

pages 30 to 50.

P.

Remuneration policies and practices

should be designed to support

strategy and promote long-term

sustainable success.

(Incorporates

relevant content from UK Code

Principle P)

The Directors’ remuneration policy is in accordance with the provisions of the

UK Code for Non-Executive Directors’ remuneration.

The Directors receive fixed fees without any performance related elements.

The Nomination and Remuneration Commiee also has oversight of the

Company’s remuneration policies and practices and seeks to ensure these are

tied to the strategy and long-term sustainable success of the Company.

Further information can be found on the Directors’ Remuneration Report on

page 54.

Q

A formal and transparent

procedure for developing policy on

remuneration should be established.

No director should be involved in

deciding their own remuneration

outcome.

(Incorporates relevant

content from UK Code Principle Q)

As set out in the Directors’ Remuneration Report on page 54, the Directors

are paid on a fixed-fee basis, as recommended by the Nomination and

Remuneration Commiee, and approved by the Board.

Dominic Scriven O.B.E has permanently waived his rights to receive Directors’

fees for his services as a Director.

R.

Directors should exercise

independent judgement and

discretion when authorising

remuneration outcomes,

taking account of company and

individual performance, and wider

circumstances.

(UK Code Principle

R)

The Directors are remunerated on the basis of a flat standard fee

supplemented by additional Commiee membership and chairship fees.

There are no performance-related aspects to Directors’ remuneration.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

48

5.

Corporate Governance Statement (Continued)

Table 2:

Board Commiee Composition

For the period from 1 January to 31 October 2023:

Commiee

Chair

Member

Member

Audit and Risk

Entela Benz-Saliasi

Sarah Arkle

Low Suk Ling

Management Engagement

Sarah Arkle

Gordon Lawson

Vi Peterson

Nomination and Remuneration

Vi Peterson

Entela Benz-Saliasi

Low Suk Ling

For the period from 1 November 2023 to 30 June 2024:

Commiee

Chair

Member

Member

Risk Management

Entela Benz-Saliasi

Vi Peterson

Low Suk Ling

Management Engagement

Sarah Arkle

Gordon Lawson

Charles Cade

Nomination and Remuneration

Vi Peterson

Entela Benz-Saliasi

Gordon Lawson

Audit and Compliance

Low Suk Ling

Charles Cade

Sarah Arkle

From 30 June 2024 onwards:

Commiee

Chair

Member

Member

Risk Management

Entela Benz-Saliasi

Vi Peterson

Low Suk Ling

Management Engagement

Charles Cade

Entela Benz-Saliasi

Sarah Arkle

Nomination and Remuneration

Vi Peterson

Sarah Arkle

-

Audit and Compliance

Low Suk Ling

Charles Cade

Entela Benz-Saliasi

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

49

5.

Corporate Governance Statement (Continued)

Table 4: Aendance of the Board and the Commiees Meetings

Director

Board meetings

Audit and Risk

Commiee**

meetings

Management

Engagement

Commiee

meetings

Nomination and

Remuneration

Commiee

meetings

Gordon Lawson

4/4

-

2/2

-

Vi Peterson

4/4

-

2/2

3/3

Entela Benz-Saliasi

4/4

2/2

-

3/3

Low Suk Ling

4/4

2/2

-

3/3

Sarah Arkle

4/4

2/2

2/2

-

Charles Cade*

1/4

-

-

-

Dominic Scriven O.B.E

4/4

-

-

-

* Charles Cade was appointed on 1 October 2023.

** Audit and Risk meetings were held twice before the separation on 1 November 2023.

Table 3:

Board Diversity Data Collection

Gender identity or sex:

Number of board

members

Percentage of

the board

Number of senior

positions on the

board (CEO, CFO,

SID and Chair)

Number in

executive

management*

Percentage

of executive

management*

Men

3

42.86%

1

N/A

N/A

Women

4

57.14%

1

N/A

N/A

Ethnic background:

Number of board

members

Percentage of

the board

Number of senior

positions on the

board (CEO, CFO,

SID and Chair)

Number in

executive

management*

Percentage

of executive

management*

White British or other

White (including

minority-white

groups)

5

71.43%

2

N/A

N/A

Mixed/Multiple

Ethnic Groups

-

-

-

-

-

Asian/Asian British

2

28.57%

0

N/A

N/A

Black/African/

Caribbean/Black

British

-

-

-

-

-

Other ethnic group,

including Arab

-

-

-

-

-

Not specified/ prefer

not to say

-

-

-

-

-

* There are no executive positions within the Company.

Overview

The Audit Commiee 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 Commiee was

expanded to become the Audit and Risk Commiee.

The Board of Directors of the Company (the “Board”) has

reviewed the Board Commiees and their functions and on

1 November 2023, the Audit and Risk Commiee was split

into the Risk Management Commiee and the Audit and

Compliance Commiee.

The Audit and Compliance Commiee consists of three

members, who were appointed by the Board on the

recommendation of the Nomination and Remuneration

Commiee in consultation with the Chair of the Board.

All members of the Audit and Compliance Commiee are

to be Independent Non-Executive Directors and at least

one member must have recent and relevant financial

experience.

The Board appoints the Chair of the Audit and Compliance

Commiee, who has the responsibility of liaising with the

Board.

Going forward from 2024, the Audit and Compliance

Commiee will meet at least thrice a year, held to coincide

with key dates within the financial reporting and audit cycle

of the Company.

Composition

As at 31 December 2023, the Audit and Compliance

Commiee has been chaired by Low Suk Ling and its

members include Sarah Arkle and Charles Cade, all of whom

are Independent Non-Executive Directors and at least one

of whom has recent and relevant financial experience.

The Audit and Compliance Commiee as a whole has

competency relevant to the sector in which the Company

operates in.

The Audit and Rick Commiee met twice during the

year ended 31 December 2023 (before the separation

into the Audit and Compliance Commiee and the

Risk Management Commiee). Table 4 at the end

of the Corporate Governance Statement shows the

aendees of the Audit and Risk Commiee meetings. The

Company’s External Auditors and Investment Manager’s

representatives were invited to aend meetings as

necessary.

In the opinion of the Board, the Audit and Compliance

Commiee of the Company complies with the

recommendations and requirements of the AIC Code of

Corporate Governance (the “AIC Code”).

Role and Responsibilities

The role and responsibilities of the Audit and Compliance

Commiee are set out in the formal Terms of Reference

that will be regularly reviewed. During the year ended 31

December 2023, the main duties undertaken included but

were not limited to:

Financial Reporting

The Audit and Compliance Commiee reviewed the actions

and judgments of the Investment Manager in relation to

the integrity of the financial statements of the Company,

including its annual and interim reports and financial

statements, interim management statements and any

other formal announcements relating to its financial

performance and reviews significant financial reporting

issues and judgments which they contain.

The Board was made fully aware of any significant financial

issue and judgments made in connection with the

preparation of the financial statements including valuation

of an unlisted investment as per Note 13(d)(iii) to Financial

Statements on page 97.

Having verified the financial statements and the disclosure

on the Notes to the financial statements are in accordance

with relevant laws and reporting standards, the Audit and

Compliance Commiee approved the financial statements

that were audited by the external auditor.

Compliance & Internal Controls

The Audit and Compliance Commiee oversees the

process of identifying, assessing, and controlling the

Company’s compliance with regulatory and corporate

compliance obligations, including but not limited to the

Listing Rules of the Financial Conduct Authority (FCA),

Disclosure Guidance and Transparency Rules (DTR), UK

Market Abuse Regulations, AIC Code, and the Articles of

Association of the Company. A compliance checklist has

been developed that covers key compliance requirements

of the Company, which is updated, reviewed and monitored

regularly.

The Board was made fully aware of any significant

compliance issue arising in connection with the Company

and engaged on upcoming

changes to corporate and

regulatory compliance obligations.

6.

Audit and Compliance Commiee Report

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

51

External Auditor Appointment and Tenure

The Audit and Compliance Commiee has primary

responsibility for the reappointment or removal of the

external auditor, which includes negotiating the fee and

scope of the audit, initiating a tender process, influencing

the appointment of an engagement partner.

The Audit and Compliance Commiee annually assesses

and reports to the Board, the qualification, expertise

and resources and independence and objectivity of the

external auditor and the effectiveness of the audit process,

taking into consideration relevant UK and other relevant

professional and regulatory requirements, including the AIC

Code and the Financial Reporting Council (“FRC”) Standard,

in order to satisfy itself that there are no relationships

between the external auditor and the Company and/or the

Investment Manager (other than in the ordinary course

of business) which could adversely affect the auditor’s

independence and objectivity.

During the year ended 31 December 2023, the Chair of the

Audit and Compliance Commiee requested a review of

the external auditor, KPMG. The Audit and Compliance

Commiee conducted a tender process in order to make

recommendations to the Board regarding which external

auditor should be appointed for the Company going

forward. The Audit and Compliance Commiee engaged

with four audit firms as potential replacement, however,

only one audit firm responded positively.

The Audit and Compliance Commiee noted that the

sole audit firm that responded positively did not have

a Vietnam office approved by the FRC. As a result, their

proposed audit process will involve at least two offices

in different jurisdictions, for which their combined fee

was approximately double the current audit fees that the

Company is paying. The Audit and Compliance Commiee

proposed, and the Board concluded, that the selection of

KPMG was the most appropriate external auditor for the

Company.

For the year ended 31 December 2023, the re-appointment

of KPMG was officially proposed during the AGM held on 23

June 2023 and the resolution was passed.

The Audit and Compliance Commiee reviews the

performance and qualification of KPMG every year as part

of good corporate governance. The conclusion remains

that there are limited choices for auditors in Vietnam with

relevant experience and that KPMG is the only FRC qualified

auditor in Vietnam.

KPMG Limited (“KPMG”) was first appointed as the

Company’s external auditor in 2008 and during the audit

tenure from 2008 to 2023, four audit partners have been

rotated to perform the service. For the year ended 31

December 2023, it was the second financial year for the

partner who was assigned to audit the Company’s financial

statements and processes. KPMG’s rotation policies are

consistent with the Code of Ethics of the International

Ethics Standards Board for Accountants (the “IESBA”).

which requires the firm to comply with any stricter

applicable rotation requirement.

The Audit and Compliance Commiee reviews the findings

of the audit with the external auditor, including discussing

the major issues that arise during the audit, the key

accounting and audit judgements, the levels of errors

identified during the audit and the effectiveness of the

audit process.

The Audit and Compliance Commiee meets with the

auditors at least once a year to discuss any key issues

arising from the audit and/or review.

The Audit and Compliance Commiee is responsible for

making recommendations on the level of remuneration of

the external auditor, including fees for audit and non-audit

services, to ensure that the level of fees is appropriate to

enable an effective and high-quality audit to be conducted.

Fees paid to KPMG for audit, audit-related, and non-audit

services (Tax advisory service for PFIC for US and equity

quote for German investors) are set out in Note 10 to the

financial statements and summarised below.

•

2023: US$ 80,000

•

2022: US$114,655 (including fees of FRC’s

inspection: US$32,400)

In order to safeguard the auditor’s independence and

objectivity, the Company 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.

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. In order to further safeguard the auditor’s

independence and objectivity, the Company 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.

6.

Audit and Compliance Commiee Report (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

52

Effectiveness of Audit

The Audit and Compliance Commiee reviewed the audit

planning and the standing, skills and experience of KPMG

and the audit team and considered the independence

of KPMG and the objectivity of the audit process. KPMG

has confirmed that it is independent of the Company

and has complied with relevant auditing standards. No

modifications were required to the external audit approach.

The Audit and Compliance Commiee received a

presentation of the audit plan from KPMG prior to the

commencement of the latest audit and a presentation of

the results of the audit with feedback from the KPMG Audit

Manager regarding the effectiveness of the external audit

process.

The Audit and Compliance Commiee is satisfied that

KPMG has provided effective independent challenge in

carrying out its responsibilities. After due consideration,

the Audit and Compliance Commiee recommended the

re-appointment of KPMG and their re-appointment will be

put to the Company’s shareholders at the 2024 AGM.

Fair, Balanced and Understandable

As a result of the work performed, the Audit and

Compliance Commiee has concluded that the Annual

Report for the year ended 30 June 2024, taken as a whole,

is fair, balanced and understandable and provides the

information necessary for shareholders to assess the

Company’s position and performance, business model and

strategy, and has reported on these findings to the Board.

Low Suk Ling

Chair of the Audit and Compliance Commiee

Vietnam Enterprise Investments Limited

29 April 2024

6.

Audit and Compliance Commiee Report (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

53

7.

Directors’ Remuneration Report

The Nomination and Remuneration Commiee is

responsible for determining the level of Directors’ fees.

The terms of reference are available on request. The Board

of Directors has prepared this Remuneration Report in

accordance with the recommendations of the AIC Code.

Remuneration Policy

The Company’s Remuneration Policy for the Directors of

the Company 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 Commiee.

Subject to the overall limit, the Remuneration Policy of

the Board of Directors 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 seing the

Remuneration Policy although any comments received from

shareholders would be considered on an on-going basis.

Directors’ Fees

All of the Directors of the Company are non-executive,

and their fees are set within the limits of the Company’s

Restated and Amended Memorandum and Articles of

Association which limit the aggregate fees payable to the

Board of Directors per annum to US$400,000.

The level of this cap may be increased by a resolution of the

shareholders from time to time.

Fee rates have been established by reference to current

market levels and are as follows:

•

Member of Board only: US$45,000 per annum;

•

Chair of the Board: +US$10,000 per annum;

•

Chair of the Risk Management Commiee:

+US$5,000 per annum;

•

Member of the Risk Management Commiee:

+US$2,500 per annum;

•

Chair of the Management Engagement Commiee:

+US$5,000 per annum;

•

Member of the Management Engagement

Commiee: +US$2,500 per annum;

•

Chair of the Nomination and Remuneration

Commiee: +US$5,000 per annum;

•

Member of the Nomination and Remuneration

Commiee: +US$2,500 per annum

•

Chair of the Audit and Compliance Commiee:

+US$5,000 per annum; and

•

Member of the Audit and Compliance Commiee:

+US$2,500 per annum.

Table below describes the Directors’ fee paid to the

Directors of the Company:

Director

Chairship as of 31 December 2023

2023

2022

US$

US$

Gordon Lawson

Chair of the Board of Directors

57,917

55,000

Vi Peterson

Chair of the Nomination and Remuneration Commiee

52,500

52,500

Entela Benz-Saliasi

Chair of the Risk Management Commiee

52,500

52,500

Low Suk Ling

Chair of Audit and Compliance Commiee

50,416

50,000

Sarah Arkle

Chair of the Management Engagement Commiee

52,500

48,750

Charles Cade*

N/A

12,083

-

Stanley Chou*

N/A

-

28,750

* Charles Cade was appointed on 1 October 2023 and Stanley Chou resigned on 30 June 2022.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

54

8.

Board of Directors

Chair & Independent Non-Executive Director

(Appointed July 2014 / Chair from July 2022)

Gordon Lawson

Gordon has many years of

experience in the City, latterly as head

of equity proprietary trading and EMEA equity, derivatives and

convertible bond risk at Salomon/Citigroup and then as the founder

of Pendragon Capital, a large event-driven hedge fund. Gordon is

an adviser to several funds, sits on the Advisory Boards of several

companies and funds, including Bridges Ventures and is Chair of

Parkwalk Advisors.

Vi Peterson

Vi is an international business consultant based in Melbourne

Australia, with extensive experience across a diverse range of senior

management roles and non-executive directorships in the private

sector, public sector (trade diplomacy) and not-for-profit / university

sector. She came back in 1993 to establish the ANZ Bank’s greenfield

operations in Vietnam. She later served as Australia’s Senior Trade

Commissioner to Vietnam until 1999. In 2000 she established a

consultancy firm specialising in the provision of strategic advice to

companies operating in emerging markets, helping them to navigate

the complex political, cultural and regulatory environment in Asia.

Concurrently until 2021, she was the co-founder and Executive

Director of The Alliance for Safe Children, a US not-for-profit

corporation with a global mission to reduce the rising toll of child

mortality arising from preventable injuries in Asia by advocating

and raising funds for prevention program with governments and

institutional donors.

Senior Independent Non-Executive Director

Chair of the Nomination and Remuneration Commiee

(Appointed April 2018 / Senior Independent Non-Executive

Director and Nomination and Remuneration Commiee Chair

from November 2023)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

55

8.

Board of Directors (Continued)

Independent Non-Executive Director

Chair of the Audit and Compliance Commiee

(Appointed July 2021 / Audit and Compliance Commiee Chair

from November 2023)

Low Suk Ling

Suk Ling currently serves as General Counsel for Marsh McLennan Asia, a

global professional services firm with business in risk management, insurance

and investment advising. In this role, she looks after legal and compliance at

Marsh and Mercer in Asia.

Independent Non-Executive Director

Chair of the Risk Management Commiee

(Appointed May 2019 / Risk Management Commiee Chair from

November 2023)

Entela Benz-Saliasi

Entela holds a PhD in Financial Asset Management and Engineering from Swiss

Finance and Banking Institute, a postgraduate degree from Linacre College, Oxford

and MPhil from IUHEI, Geneva, Switzerland. She has served as Adjunct Associate

Professor at Department of Finance, HKUST Business School in Hong Kong for

more than 16 years. Alongside teaching, she has been acting as a consultant for

Sustainable and Climate Investing since 2007. She has done extensive academic

and industry work on the value of Climate Risk on company financial performance

for leading financial institutions. She is also the founder and CEO of Intensel, a

global-award winning (COP28) company on AI and Climate Solutions leveraging ML/

Deep Learning, geospatial and satellite data for mapping climate-related financial

risk. She sits on various pro-bono boards in Hong Kong and the Philippines. As

a financial professional she worked in the Investment bank and hedge fund industry before moving into an academic

and entrepreneurship

role. Given the wealth of expertise spanning across academia and industry, she has acquired a

comprehensive experience in analyzing financial statements, accounting policies, practices, and governance. She is a

frequent speaker in large conference from The Economist to CLSA Forum etc.

Sarah Arkle

Sarah 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 positions

there, including ten years as Chief Investment Officer before retiring

in 2011. She was a non-Exec Director of F&C Investment Trust and

was Chair of JPMorgan Emerging Markets Investment Trust until

2022. Since 2011 Sarah has been a member of the Prince’s Trust

Women Supporting Women Group.

Independent Non-Executive Director

Chair of the Management Engagement Commiee

(Appointed January 2022 / Management Engagement Commiee

Chair from November 2023)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

56

8.

Board of Directors (Continued)

Non-Executive Director

(Appointed May 1995)

Dominic Scriven O.B.E

Born in Britain, Dominic is a graduate in Law and Sociology from Exeter

University. After spells in finance in London and Hong Kong, he has spent the

past 30 years at the head of Dragon Capital, Vietnam’s largest private asset

manager. He was appointed OBE by the British Queen in 2006, and received

a Labour medal from the Vietnamese President in 2014. In business, Dominic

is an active promoter of financial market development, good governance

and sustainability, with a particular focus on Natural Capital, that in 2019 led

to the endowment of the Dragon Chair in Biodiversity Economics at Exeter

University. Privately, his interests and passions range from Vietnamese art –

to biodiversity and eliminating the illegal trade in wildlife.

Independent Non-Executive Director

(Appointed October 2023)

Charles Cade

Mr. Cade is an investment professional with over 25 years’

experience in investment companies. He was among the leading

analysts throughout his career at Numis Securities, Winterflood

Securities, HSBC and Merrill Lynch. He joined the City following an

MBA, having previously worked for a consultancy firm and as an

economist in the UK government. He is currently a non-executive

director of Temple Bar Investment Trust, a member of the investment

committee of the Rank Foundation charity, and an independent

consultant to interactive investor.

Gordon Lawson

Gordon Lawson

Chair & Independent

Chair & Independent

Non-Executive Director

Non-Executive Director

Charles Cade

Charles Cade

Independent

Independent

Non-Executive Director

Non-Executive Director

Low Suk Ling

Low Suk Ling

Independent

Independent

Non-Executive Director

Non-Executive Director

Entela Benz-Saliasi

Entela Benz-Saliasi

Independent

Independent

Non-Executive Director

Non-Executive Director

Vi Peterson

Vi Peterson

Senior Independent

Senior Independent

Non-Executive Director

Non-Executive Director

Sarah Arkle

Sarah Arkle

Independent

Independent

Non-Executive Director

Non-Executive Director

Dominic Scriven O.B.E

Dominic Scriven O.B.E

Non-Executive Director

Non-Executive Director

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

9.

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 23 June

2023 (the “2023 AGM”), the resolutions numbered 1 to 9 in the notice of meeting for the 2023 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 par value 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 19 May 2023 (i.e.

30,798,803 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

Technical Standards referred to in Article

5 (6) of the UK Market Abuse Regulation;

and

iv)

the authority conferred by this resolution shall

expire on 31 December 2024 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.

Ordinary Resolutions

1)

To receive and adopt the audited financial

statements for the year ended 31 December 2022

together with the auditor’s and Directors’ reports

thereon.

2)

To re-appoint KPMG Limited of Vietnam as auditor of

the Company and to authorise the Board to fix their

remuneration.

3)

To re-elect Gordon Lawson as a Director of the

Company.

4)

To re-elect Vi Peterson as a Director of the

Company.

5)

To re-elect Entela Benz-Saliasi as a Director of the

Company.

6)

To re-elect Low Suk Ling as a Director of the

Company.

7)

To re-elect Sarah Arkle as a Director of the Company.

8)

To re-elect Dominic Scriven as a Director of the

Company.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

58

10.

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 2023

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 2023

and its financial position at that date are set out in the

aached financial statements. The Directors have taken

the decision not to pay a dividend in respect of the year

ended 31 December 2023 (2022: Nil).

Share Capital

Details of movements in the Company’s share capital

during the year are presented in Note 8. As at 31 December

2023, the Company had 201,026,986 Ordinary Shares and

1,000 Management Shares outstanding (31 December

2022: 206,725,678 Ordinary Shares and 1,000 Management

Shares).

According to the Resolution dated 22 March 2024, the

Board of Directors resolved to cancel 19,893,760 treasury

shares of the Company (“Share Cancellation”). The Share

Cancellation was completed on 3 April 2024.

Directors

The Directors of the Company during the year were:

Non-Executive Director:

•

Dominic Scriven O.B.E

Independent Non-Executive Directors:

•

Gordon Lawson – Chair

•

Vi Peterson – Senior Independent Non-Executive

Director (from 1 November 2023)

•

Entela Benz–Saliasi – Senior Independent Non-

Executive Director (until 31 October 2023)

•

Low Suk Ling

•

Sarah Arkle

•

Charles Cade (from 1 October 2023)

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 of the Independent Non-Executive Directors were duly

re-appointed at the AGM held on 23 June 2023 following

the expiry of their respective terms. Dominic Scriven

O.B.E also submied 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 of the

Company, is a beneficial shareholder of the Company,

holding 178,423 Ordinary Shares of the Company as at

31 December 2023 (31 December 2022: 86,423 Ordinary

Shares).

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 Dragon Capital Management (HK)

Limited, which is the Investment Manager of the Company

and Dragon Capital Markets Limited. As at 31 December

2023, Dragon Capital Markets Limited beneficially held

1,685,359 Ordinary Shares of the Company for investment

and proprietary trading purposes (31 December 2022:

1,685,359 Ordinary Shares).

Gordon Lawson, Chair of the Company, is a beneficial

shareholder of the Company, holding 25,000 Ordinary

Shares of the Company as at 31 December 2023 (31

December 2022: 25,000 Ordinary Shares).

Sarah Arkle, an Independent Non-Executive Director, is

a beneficial shareholder of the Company, holding 9,696

Ordinary Shares of the Company as at 31 December 2023

(31 December 2022: 9,696

Ordinary Shares).

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

59

Charles Cade, an Independent Non-Executive Director, is

a beneficial shareholder of the Company, holding 15,000

Ordinary Shares of the Company as at 31 December 2023

(31 December 2022: 7,000).

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

There were no 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 2023, the following shareholders owned

more than 10 percent of the Company’s issued Ordinary

Share capital:

Inter Fund Management S.A.

•

Number of Ordinary Shares held: 27,423,467

•

% of total Ordinary Shares in issue: 13.64%

Bill & Melinda Gates Foundation

•

Number of Ordinary Shares held: 24,670,745

•

% of total Ordinary Shares in issue: 12.27%

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 2023 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”) Accounting

Standards as issued by the International Accounting

Standards Board (“IFRS Accounting Standards”) or,

if there have been any departures in the interest

of true and fair presentation, ensure that these

have been appropriately disclosed, explained and

quantified in the financial statements;

•

maintain adequate accounting records and an

effective system of internal controls;

•

prepare the financial statements on a going concern

basis unless it is inappropriate to assume that

the Company will continue its operations in the

foreseeable future; and

•

control and direct effectively the Company in all

material decisions affecting its operations and

performance and ascertain that such decisions and/

or instructions have been properly reflected in the

financial statements.

The Board of Directors is also responsible for ensuring that

proper accounting records are kept which disclose, with

reasonable accuracy at any time, the financial position of

the Company. It is also responsible for safeguarding the

assets of the Company and hence for taking reasonable

steps for the prevention and detection of fraud and other

irregularities.

The important events that have occurred during the year

ended 31 December 2023 are described in the Chair’s

Statement and the Corporate Governance Statement. A

detailed description of the principal risks and uncertainties

faced by the Company are set out in the Corporate

Governance Statement.

10.

Report of the Board of Directors (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

60

The Directors confirm to the best of their knowledge that:

•

the financial statements have been prepared in

conformity with IFRS Accounting Standards 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’s Disclosure Guidance

and Transparency Rules (“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 2023,

and of its financial performance and its cash flows for

the year then ended in accordance with IFRS Accounting

Standards.

Signed on behalf of the Board by:

Gordon Lawson

Chair

29 A

pril 2024

Vi Peterson

Senior Independent Non-Executive Director

29 A

pril 2024

10.

Report of the Board of Directors (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Governance

61

11.

Independent Auditors’ Report

Vietnam Enterprise Investments Limited - Annual Report 2023 - Financial Statements

62

11.

Independent Auditors’ Report (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Financial Statements

63

11.

Independent Auditors’ Report (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Financial Statements

64

11.

Independent Auditors’ Report (Continued)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Financial Statements

65

12.

Statement of Financial Position

As at 31 December 2023

Note

31 December 2023

31 December 2022

Change

US$

US$

in %

CURRENT ASSETS

Financial assets at fair value through profit or loss

5(a)

1,740,006,742

1,618,524,206

Other receivables

815,918

666,012

Balances due from brokers

3,705,746

1,883,932

Cash and cash equivalents

6

10,192,455

14,488,971

TOTAL ASSETS

1,754,720,861

1,635,563,121

7.29

CURRENT LIABILITIES

Balances due to brokers

8,597,381

10,230,853

Accounts payable and accruals

7

2,865,772

2,750,517

TOTAL LIABILITIES

11,463,153

12,981,370

(11.70)

EQUITY

Issued share capital

8

2,010,278

2,067,265

Share premium

8

408,590,156

448,805,801

Retained earnings

1,332,657,274

1,171,708,685

TOTAL EQUITY

1,743,257,708

1,622,581,751

7.44

TOTAL LIABILITIES AND EQUITY

1,754,720,861

1,635,563,121

7.29

NUMBER OF ORDINARY SHARES IN ISSUE

8

201,026,986

206,725,678

NET ASSET VALUE PER ORDINARY SHARE

9

8.67

7.85

10.45

Dominic Scriven O.B.E

Director

Vietnam Enterprise Investments Limited

Approved by the Board of Directors on

29 A

pril 2024

.

The accompanying notes are an integral part of these financial statements

13.

Statement of Comprehensive Income

For the year ended 31 December 2023

The accompanying notes are an integral part of these financial statements

Note

2023

2022

US$

US$

INCOME

Interest income

41,937

114,291

Dividend income

11,456,082

9,663,187

Net changes in fair value of financial assets at fair value

through profit or loss

5(b)

180,399,537

(891,697,124)

Gains on disposals of investments

7,942,565

4,865,100

TOTAL INCOME

199,840,121

(877,054,546)

EXPENSES

Administration fees

10

(1,196,736)

(1,282,084)

Custody fees

10

(898,497)

(1,005,938)

Directors’ fees

10

(277,916)

(287,500)

Management fees

10

(30,922,019)

(36,552,469)

Legal and professional fees

(678,965)

(669,043)

Brokerage fees

(100,000)

(100,000)

Finance costs

(3,758,462)

(1,827,256)

Withholding taxes

(5,382)

(5,119)

Other operating expenses

(196,319)

(122,697)

TOTAL EXPENSES

(38,034,296)

(41,852,106)

NET PROFIT/(LOSS) BEFORE EXCHANGE LOSSES

161,805,825

(918,906,652)

EXCHANGE LOSSES

Net foreign exchange losses

(857,236)

(4,384,796)

PROFIT/(LOSS) BEFORE TAX

160,948,589

(923,291,448)

Income tax

11

-

-

NET PROFIT/(LOSS) AFTER TAX FOR THE YEAR

160,948,589

(923,291,448)

OTHER COMPREHENSIVE INCOME FOR THE YEAR

-

-

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR

160,948,589

(923,291,448)

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR

ATTRIBUTABLE TO ORDINARY SHAREHOLDERS

160,948,589

(923,291,448)

BASIC EARNINGS/(LOSSES) PER ORDINARY SHARE

12

0.79

(4.42)

Vietnam Enterprise Investments Limited - Annual Report 2023 - Financial Statements

14.

Statement of Changes in Equity

For the year ended 31 December 2023

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 2022

2,135,347

509,842,442

2,095,000,133

2,606,977,922

Total comprehensive income for the year:

Net loss for the year

-

-

(923,291,448)

(923,291,448)

Transactions with shareholders,

recognised directly in equity:

Repurchase of Ordinary Shares

(68,082)

(61,036,641)

-

(61,104,723)

Balance at 1 January 2023

2,067,265

448,805,801

1,171,708,685

1,622,581,751

Total comprehensive income for the year:

Net profit for the year

-

-

160,948,589

160,948,589

Transactions with shareholders,

recognised directly in equity:

Repurchase of Ordinary Shares

(56,987)

(40,215,645)

-

(40,272,632)

Balance at 31 December 2023

2,010,278

408,590,156

1,332,657,274

1,743,257,708

Vietnam Enterprise Investments Limited - Annual Report 2023 - Financial Statements

68

15.

Statement of Cash Flows

For the year ended 31 December 2023

The accompanying notes are an integral part of these financial statements

Note

2023

2022

US$

US$

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(loss) for the year

160,948,589

(923,291,448)

Adjustments for:

Interest income

(41,937)

(114,291)

Interest expense

945,962

702,256

Dividend income

(11,456,082)

(9,663,187)

Net changes in fair value of financial assets at fair value

through profit or loss

(180,399,537)

891,697,124

Gains on disposals of investments

(7,942,565)

(4,865,100)

(37,945,570)

(45,534,646)

Net cash flows from subsidiaries and joint ventures carried

at fair value

107,033,597

46,610,750

Changes in other receivables and balances due from

brokers

(1,821,814)

(651,840)

Changes in balances due to brokers and accounts payable

and accruals

(1,518,217)

4,775,195

65,747,996

5,199,459

Proceeds from disposals of investments

321,852,003

715,502,831

Purchases of investments

(362,026,034)

(665,057,633)

Interest received

41,937

114,291

Interest paid

(945,962)

(702,256)

Dividends received

11,306,176

10,683,870

Net cash generated from operating activities

35,976,116

65,740,562

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings

50,000,000

160,000,000

Repayments of borrowings

(50,000,000)

(160,000,000)

Repurchase of Ordinary Shares

(40,272,632)

(61,104,723)

Net cash used in financing activities

(40,272,632)

(61,104,723)

NET (DECREASE)/INCREASE IN CASH AND CASH

EQUIVALENTS

(4,296,516)

4,635,839

Cash and cash equivalents at the beginning of the year

14,488,971

9,853,132

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

6

10,192,455

14,488,971

Vietnam Enterprise Investments Limited - Annual Report 2023 - Financial Statements

Notes to the Financial Statements

For the year ended 31 December 2023

16.

70

These notes form an integral part

of, and should be read in conjunction with, the accompanying financial statements.

As at 31 December 2023 and 31 December 2022, the Company had no employees.

concern basis.

Lack of Exchangeability – Amendment to IAS 21.

As at 31 December 2023, the broker fee payable to this broker was US$ 5,290 (31 December 2022: US$11,765).

16.

Vietnam Enterprise Investments Limited - Annual Report 2023 - Financial Statements

Notes to the Financial Statements (Continued)

For the year ended 31 December 2023

16.

84