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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Aberdeen New Thai Investment Trust Plc | LSE:ANW | London | Ordinary Share | GB0000059971 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 398.00 | 396.00 | 400.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMANW
RNS Number : 4677D
Aberdeen New Thai Inv Trust PLC
27 April 2017
ABERDEEN NEW THAI INVESTMENT TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEARED 28 FEBRUARY 2017
STRATEGIC REPORT
Financial Highlights
Ordinary share price total Net asset value per Ordinary return share total return 2017 +27.8% 2017 +26.5% 2016 -9.2% 2016 -9.5% Stock Exchange of Thailand Earnings per Ordinary Index total return share (revenue) 2017 +36.5% 2017 10.31p 2016 -11.6% 2016 8.89p Dividend per Ordinary share 2017 10.30p 2016 8.50p
Overview
Launched in 1989, Aberdeen New Thai Investment Trust PLC (the "Company") is an investment trust with its Ordinary shares listed on the premium segment of the London Stock Exchange. The Company is an approved investment trust and aims to provide shareholders with a high level of long-term, above average capital growth through investment in Thailand.
The Company is governed by a board of directors, the majority of whom are independent, and has no employees. Like other investment companies, it outsources its investment management and administration to an investment management group, the Aberdeen Group, and other third party providers.
The Company does not have a fixed life but there is a discount monitoring period which operates annually during the last 12 weeks of the Company's financial year. In the 12 weeks ending 28 February 2017, the Ordinary shares traded at an average discount of 14.8% to the underlying net asset value per share (including income), therefore no special resolution to wind up the Company will be put to shareholders at the forthcoming AGM.
Management
The Company has appointed Aberdeen Fund Managers Limited ("AFML", " Manager", or "AIFM") as its alternative investment fund manager, which has in turn delegated certain responsibilities, including investment management, to Aberdeen Asset Management Asia Limited ("AAMAL" or "Investment Manager").
Financial Calendar
Hot Features
Premium
27 April 2017 Announcement of results for year ended
28 February 2017
1 June 2017 Ex-dividend date for proposed Final
Ordinary dividend
2 June 2017 Record date for proposed Final Ordinary
dividend
28 June 2017 Annual General Meeting at 11.30am at
Bow Bells House, 1 Bread Street, London
EC4M 9HH
3 July 2017 Payment date for proposed Final Ordinary
dividend
October 2017 Announcement of results for the six
months ending 31 August 2017
April 2018 Announcement of results for year ending
28 February 2018
CHAIRMAN'S STATEMENT
Background and Results
Thai equities fared remarkably well during the 12-month review period, comfortably outperforming most regional peers. Returns in sterling terms were further enhanced by sterling's sharp drop post-Brexit. While historically low interest rates compelled some of the more yield hungry local investors into equities, foreign buyers accounted for the lion's share of inflows, investing over US$2 billion into Thailand's markets in 2016. However, most of this was via passive vehicles, such as exchange-traded or index tracker funds, meaning the larger SET50 companies were the chief beneficiaries, regardless of their fundamentals. While the indiscriminate nature of such inflows over the last twelve months dampened relative performance, your Company still achieved strong absolute returns.
Against this backdrop, the Company's net asset value per Ordinary share rose by 26.5% on a total return basis to 600.2p, compared to the sterling-adjusted gain for the benchmark, the Stock Exchange of Thailand Index, of 36.5%. The Ordinary share price rose by 27.8% on a total return basis to 510.0p, reflecting a narrowing of the discount to the net asset value (including income) per Ordinary share from 15.5% to 15.0%.
Dividend
The revenue earnings per Ordinary share were 10.3p for the year ended 28 February 2017 (2016 - 8.9p) and the Board is proposing to shareholders an increased final dividend per Ordinary share of 10.3p (2016 - 8.5p), paying out the majority of the Company's earnings in keeping with its dividend policy. If approved at the Annual General Meeting ("AGM") on 28 June 2017, the final dividend will be paid on 3 July 2017 to shareholders on the register as at 2 June 2017. The ex-dividend date will be 1 June 2017.
Overview
The defining moment over the last year was the passing of King Bhumibol in October. While not unexpected, the King's demise had widespread ramifications, given the length of his reign and his subjects' deep respect for him. The government imposed a one-year mourning period on the state sector and many private firms chose to follow suit. In the month following his death, domestic activity largely ground to a halt. This weighed heavily on consumption, which was reflected in lacklustre fourth-quarter corporate earnings.
The mourning period was not the economy's sole challenge. In particular, sluggish exports were a recurrent bugbear, while domestic consumption continued to struggle amid high household debt. At above 80% of GDP, the unhealthy debt levels were partly induced by previous administrations, which encouraged consumption through borrowing in a bid to spur growth. A prime example was the first-car scheme, in which buyers received a 100,000 baht rebate on certain makes, as long as they kept the car for five years.
Against this soft backdrop, the Bank of Thailand stayed its hand, keeping interest rates at a record low of 1.5% over the past 12 months. Tourism remained a crucial support, while the government also chipped in, helping the economy to grow by a relatively respectable 3.2% in 2016. Stimulus measures, such as a one-off shopping tax break during the year-end festive period, also helped lift sagging consumer confidence.
Meanwhile, a series of headline-grabbing events overseas reverberated around the world. Concerns over Britain's historic vote to leave the European Union proved relatively short-lived for countries not directly affected. However, Donald Trump's surprise victory in the US Presidential election provoked longer-running fears, given his tough talk on trade relations, while uncertainty over the Federal Reserve's plans for interest rates caused intermittent market volatility. The oil price rebound sparked by OPEC's agreement to cut production proved a welcome relief to the Thai energy sector, which benefited from the significant rise in product prices.
Domestic politics remained steadfastly at a status quo, with democratic elections pushed out to 2018 to allow time to enact recommended changes to the constitution. The upshot was a prolonged and stable period of limbo, which seemed to reassure tourists and domestic businesses alike.
Outlook
Thailand's equity markets are unlikely to deliver the same heady returns seen over the last year. However, some investor restraint would not be entirely undesirable and arguably more realistic. After such a protracted rally, companies are beginning to look fully valued and, in many cases, earnings have a fair amount of catching up to do to justify the valuations.
Nonetheless, there is cause for measured optimism for the country's prospects. The smooth transfer of power to the Crown Prince, who has assumed the position of head of state as King Rama X, is reassuring from a stability perspective. And when elections are eventually held, albeit more than a year from now, the new government is unlikely to veer too far from the current regime's business-friendly, investment-driven approach.
In the meantime, the economy should benefit from a boost in public infrastructure spending. This might seem a familiar refrain, with previous attempts to pump prime the economy stymied by red-tape and bureaucracy. However, there are promising signs that the wheels might finally be in motion, with several projects having completed the bidding process. This bodes well for otherwise dormant private investment. Meanwhile, with public debt under 50% of GDP, the government still has plenty of ammunition to stimulate growth.
Elsewhere, decent rain after a couple of years of severe drought should benefit rural incomes and consumption, as better harvests prop up prices. Broader consumption trends should also gradually recover as personal debt eases, particularly relating to the first-car scheme. Encouragingly, monetary policy is likely to remain accommodative for the foreseeable future too.
Of course, sentiment will remain highly alert to global developments, particularly in the West. Further US interest rate hikes could prompt knee-jerk outflows from emerging markets as investors chase opportunities for higher returns. Meanwhile, there should be little direct risk to Thailand's US trade ties from Trump's apparent protectionist bent, given the Kingdom comprises only a small proportion of total US imports. However, any material restrictions on larger trading partners, like China, Korea or Japan could have unfavourable knock-on effects for other economies in the region; Thailand included.
Amid this, the disciplined and meticulous stock-picking approach favoured by your Manager remains more valuable than ever. The underlying holdings in your Company's portfolio are fundamentally sound, with decent cash flows and attractive dividend yields, as well as promising outlooks for long-term growth. Periods of market turbulence provide rich opportunities for your Manager to increase its exposure to these kinds of companies at attractive valuations. Further details about your portfolio are available in the Manager's review.
Discount
The Board continues to actively monitor the discount of the Ordinary share price to the NAV per Ordinary share (including income) and will continue to pursue a policy of selective buybacks of shares where to do so would be in the best interests of shareholders. During the year ended 28 February 2017 the Company bought back and cancelled 1,331,650 Ordinary shares (2016 - 903,143 Ordinary shares), representing 6.7% of the Company's issued share capital at the start of the year.
Promotional Activities
Your Board continues to promote the Company through the Manager's promotional activities and the Company contributed GBP63,000 (including VAT) during the year ended 28 February 2017 (2016 - GBP84,000). The Board reviews regularly these promotional activities.
Board Changes
Following a recruitment exercise undertaken by an independent search consultancy, I was delighted to welcome Sarah MacAulay to the Board in December 2016. Sarah brings to the Board 20 years of Asian investment experience as a fund manager in London and Hong Kong, including the management and marketing of Thai equity portfolios. More recently she has been involved with risk management, regulation, compliance and governance in the education sector.
After over 27 years as a Director, Hugh Young will be stepping down from the Board at the conclusion of the next AGM. The Company was launched in 1989 on Hugh's initiative as one of Aberdeen's earliest Asian equity investment trusts and as a forerunner to Aberdeen's widely-recognised Asian equities business. The current Board, as well as previous Directors, have benefited greatly from Hugh's particular interest in Thailand. Shareholders will be pleased to learn that Hugh will continue to contribute to the investment management of the Company led by Adithep Vanabriksha's team in Bangkok. The Board would like to place on record its thanks to Hugh for his considerable contribution to the Company's development since its launch in1989 and for his services as a Director.
Aberdeen
The Board notes the announcement of the proposed recommended merger between Aberdeen and Standard Life. This is subject to shareholder and regulatory approvals. Both companies have committed to set up a highly experienced and dedicated integration team, to ensure that our Manager remains focussed on the best interests of the Company and its shareholders. The Board will monitor developments closely and ensure that excellent client service is maintained.
AGM
The AGM, which will be held at Bow Bells House, 1 Bread Street, London EC4M 9HH from 11.30am on 28 June 2017, provides shareholders with an opportunity to meet the Board and to ask any questions that they may have of either the Board or the Manager. I look forward to meeting as many shareholders as possible at the AGM which will be followed by a buffet lunch.
Nicholas Smith
Chairman
26 April 2017
OVERVIEW OF STRATEGY
Business Model
The business of the Company is that of an investment company which qualifies as an investment trust for UK capital gains tax purposes. The Directors do not envisage any change in this activity in the foreseeable future.
Investment Objective
The Company aims to provide shareholders with a high level of long-term, above average capital growth through investment in Thailand.
Investment Policy
The Company's assets are invested in a diversified portfolio of securities (substantially in the form of equities or equity-related securities such as convertible securities and warrants) in companies, spread across a range of industries, which are quoted on the Stock Exchange of Thailand.
Risk Diversification
Delivering the Investment Policy
The Investment Manager follows a bottom-up investment process based on a disciplined evaluation of companies through direct visits by its fund managers and, accordingly, stock selection is usually the major source of added value. No stock is bought without the fund managers having first met management. The Investment Manager estimates a company's worth in two stages, quality then price. Quality is defined by reference to, amongst other factors, management, business focus, balance sheet strength and corporate governance. Price is calculated by reference to key financial ratios, the market, the peer group and business prospects. Top-down investment factors are secondary in the Manager's portfolio construction with diversification, rather than formal controls, guiding stock and sector weights. Investments are not limited as to market capitalisation or sector weightings within Thailand.
The Investment Manager is authorised to invest up to 10% of the Company's net assets in any single stock although circumstances may occasionally arise when it may be in shareholders' interests to make an investment that exceeds this level.
The Company complies with Section 1158 of the Corporation Tax Act 2010 and does not invest more than 15% of its assets in the shares of any one company. The Company invests no more than 15% of its gross assets in other listed investment companies (including listed investment trusts).
Gearing
The Company's gearing policy is that borrowings are short-term in nature and particular care is taken to ensure that any bank covenants permit maximum flexibility of investment policy. At the year end there was net gearing of 1.7% which compares with a maximum Board-imposed limit of 15%.
Benchmark
The Company's benchmark is the Stock Exchange of Thailand Index ("SET Index").
Key Performance Indicators ("KPIs")
The Board uses a number of financial performance measures to assess the Company's success in achieving its objective and determining the progress of the Company in pursuing its investment policy. The main KPIs identified by the Board in relation to the Company, which are considered at each Board meeting, are as follows:
KPI Description
Capital and total The Board considers the Company's NAV
return of the capital and total return figures, relative
Net Asset Value to the SET Index, to be the best indicator
("NAV") relative of performance over time. The figures
to SET Index for this year and for the past three
and five years and a graph showing NAV
(including income) capital return performance
against the SET Index over the past
10 years may be found in the Annual
Report.
Discount/premium The discount/premium at which the Company's
to NAV share price trades relative to the NAV
per share, including income, is closely
monitored by the Board. A graph showing
the discount/premium over the last five
years is shown in the Annual Report.
Ongoing charges The Board regularly monitors the Company's
operating costs and their composition
with a view to assessing value-for-money.
Ongoing charges for this year and the
previous year are disclosed in Results.
Principal Risks and Uncertainties
There are a number of risks which, if realised, could have a material adverse effect on the Company and its financial position, performance and prospects. The Board has carried out a robust assessment of these risks, which include those that would threaten its business model, future performance and solvency. The principal risks associated with an investment in the Company's shares are published monthly in the Company's factsheet or they can be found in the pre-investment disclosure document ("PIDD") published by the AIFM, both of which are available from the Company's website: newthai-trust.co.uk.
The principal risks and uncertainties faced by the Company are reviewed annually by the Audit and Management Engagement Committee in the form of a detailed risk matrix and heat map and they are described in the table below, together with any mitigating actions.
Description Mitigating Action
Discount volatility - being The Board has agreed with
the risk that the Company's Aberdeen certain parameters
share price may fluctuate within which Aberdeen may
and vary considerably from buy-back the Company's
the underlying NAV of the own shares bearing in mind
Ordinary shares. External that the Company's operating
factors which may influence costs would be spread across
the discount include market a reduced number of shares.
conditions, general investor These parameters are reviewed
sentiment and the interaction on an ongoing basis. Any
of supply and demand for shares repurchased may
the Ordinary shares. be either cancelled or
held in treasury.
Dividends - the Company will The Board monitors this
only pay a dividend on the risk by reviewing, at each
Ordinary shares to the extent meeting, short and longer-term
that it has profits or revenue income forecasts prepared
reserves available for that by the Manager covering
purpose. The ability of the portfolio investment yield
Company to pay a dividend, as well as the expected
and any future dividend growth, operating costs of the
will depend primarily on Company.
the level of income received
from its investments. Accordingly, The Company benefits from
the amount of the dividends revenue reserves which
paid to Ordinary shareholders may be drawn upon to smooth
may fluctuate. dividends payable to shareholders
where there is a shortfall
in revenue returns.
Financial and Regulatory The financial risks associated
- the financial risks associated with the Company include
with the portfolio could market risk, liquidity
result in losses to the Company. risk and credit risk, all
In addition, failure to comply of which are mitigated
with relevant regulation by the Investment Manager.
(including the Companies Further details of the
Act, the Financial Services steps taken to mitigate
and Markets Act, the Alternative the financial risks associated
Investment Fund Managers with the portfolio are
Directive, accounting standards, set out in note 15 to the
investment trust regulations financial statements. The
and the Listing Rules, Disclosure Board is responsible for
and Transparency Rules and ensuring the Company's
Prospectus Rules) may have compliance with applicable
an adverse impact on the regulations. Monitoring
Company. of this compliance, and
regular reporting to the
Any change in the Company's Board thereon, has been
tax status or in taxation delegated to the Manager.
legislation (including the The Board receives updates
tax treatment of dividends from the Manager and AIC
or other investment income briefings concerning industry
received by the Company) changes. From time to time,
could affect the value of the Company also employs
the investments held by the external advisers covering
Company and the Company's specific areas of compliance.
ability to provide returns
to shareholders or alter
the post-tax returns to shareholders.
Foreign Exchange Risks - The Company's multi-currency
the Company accounts for bank facility permits the
its activities and reports borrowings to be drawn
its results in Pounds Sterling down in non-sterling currencies
("sterling") while investments if required. The Board
are made and realised in monitors the Thai baht/sterling
Thai Baht; bank borrowings exchange rate at each meeting.
are presently denominated
in sterling. It is not the
Company's present intention
to engage in currency hedging
although it reserves the
right to do so. Accordingly,
the movement of exchange
rates between sterling, Thai
Baht and other currencies
in which the Company's borrowings
may be drawn down from time
to time may have a material
effect, unfavourable as well
as favourable, on the total
return otherwise experienced
on the investments made by
the Company.
Gearing - whilst the use The Board is responsible
of gearing should enhance for determining the gearing
the total return on the Ordinary strategy for the Company,
shares where the return on with day-to-day gearing
the Company's underlying decisions being made by
assets is rising and exceeds the Investment Manager.
the cost of borrowing, it
will have the opposite effect Borrowings are short term
where the underlying return in nature and particular
is less than the cost of care is taken to ensure
borrowing, further reducing that any bank covenants
the total return on the Ordinary permit maximum flexibility
shares. A fall in the value of investment policy. The
of the Company's investment Board has agreed certain
portfolio could result in gearing restrictions with
a breach of bank covenants the Manager and reviews
and trigger demands for early compliance with these guidelines
repayment. at each Board meeting.
Loan agreements are entered
into following review by
the Company's lawyers.
Investment objective - the The Board keeps the investment
setting of an unattractive objective and policy under
strategic proposition to regular review. An annual
the market and the failure strategy meeting is held
to adapt to changes in investor by the Board including
demand may lead to the Company the review of reports from
becoming unattractive to the Investment Manager's
investors, a decreased demand investor relations team
for its shares and a widening and updates on the market
discount. from the Company's broker.
Liquidity risk - this is Liquidity risk is not considered
the risk that the Company to be significant as, whilst
will encounter difficulty liquidity is limited in
in meeting obligations associated certain stocks which the
with financial liabilities. Company holds, the majority
of the Company's assets
In addition, the Company, comprise readily realisable
and/or its Investment Manager securities which can be
may accumulate investment sold to meet funding requirements
positions which represent if necessary.
more than normal daily trading
volumes which may make it The Board reviews, at each
difficult to realise investments meeting, the liquidity
quickly. profile of the Company's
investment portfolio.
Market risk - being the risk The Investment Manager
that the portfolio, managed seeks to diversify market
by the Investment Manager, risk by investing in a
suffers a fall in its market wide variety of companies
value which would have an with strong balance sheets
adverse effect on shareholders' and the earnings power
funds. The Company's investments to pay increasing dividends.
are subject to normal market In addition, investments
fluctuations and the risks are made in diversified
inherent in the purchase, sectors in order to reduce
holding or selling of equity the risk of a single large
securities and there can exposure; at present the
be no assurance that appreciation Investment Manager may
in the value of those investments not invest more than 10%
will occur. of the Company's net assets
in any single stock.
The Investment Manager's
investment process concentrates The Investment Manager
on a company's business strategy, believes that diversification
management, financial strength, should be looked at in
ownership structure as well absolute terms rather than
as corporate governance, relative to the SET Index.
with a view to seeking companies The performance of the
that it can invest in for portfolio relative to the
the long term. This quality SET Index and the underlying
test means that there are stock weightings in the
stocks listed on the Stock portfolio against their
Exchange of Thailand which index weightings are monitored
the Investment Manager will closely by the Board.
not invest in due to a perceived
lack of transparency or poor
corporate governance.
Operational - the Company The Board receives reports
has contracted with third from the AIFM throughout
parties for the provision the year on internal controls
of all systems and services and risk management and
(in particular, those of receives equivalent assurances
the Aberdeen Group) and any from all its other significant
control failures and gaps service providers on at
in these systems and services least an annual basis.
could result in a loss or This includes monitoring
damage to the Company. by the Manager, on behalf
of the Board, of service
providers' planning for
business continuity and
disaster recovery, together
with their policies and
procedures designed to
address the risk posed
to the Company's operations
by cyber-crime. Further
details of the internal
controls which are in place
are set out in the Audit
and Management Engagement
Committee's Report. The
depositary, BNP Paribas,
presents at least annually
on the Company's compliance
with AIFMD.
Political Risk and Exchange Given the nature of the
Controls - in common with risks to which the Company's
the majority of Asian stockmarkets, investments are subject,
investments in Thailand are which are those inherently
subject to a greater degree associated with a single-country
of political risk than that fund, there are limited
with which investors might options available to the
be familiar. Board for mitigating these
risks. Your Board believes
In addition, investments that mitigation is best
purchased by the Company effected by careful selection
may be subject, in the future, of the constituents of
to exchange controls or withholding the Company's portfolio
taxes in the Thai jurisdiction. with high-calibre, financially-sound
In the event that exchange companies, with good management
controls or withholding taxes and excellent growth potential.
are imposed with respect
to any of the Company's investments, Investment in Thai equities
the effect will generally involves a greater degree
be to reduce both the income of risk than that usually
received by the Company from associated with investment
its investments and/or the in major securities markets.
capital value of the affected Through regular interaction
investments. with the Manager and other
commentators, the Board
stays up-to-date with the
latest political and economic
news in Thailand.
Promoting the Company
The Board recognises the importance of promoting the Company to prospective investors both for improving liquidity and enhancing the value and rating of the Company's shares. The Board believes an effective way to achieve this is through subscription to, and participation in, the promotional programme run by the Aberdeen Group on behalf of a number of investment companies under its management. The Company's financial contribution to the programme is matched by the Aberdeen Group. The Aberdeen Group Head of Brand reports quarterly to the Board giving analysis of the promotional activities as well as updates on the shareholder register and any changes in the composition of that register.
The purpose of the programme is both to communicate effectively with existing shareholders and to gain new shareholders with the aim of improving liquidity and enhancing the value and rating of the Company's shares. Communicating the long-term attractions of the Company is key and therefore the Company also supports the Aberdeen Group's investor relations programme which involves regional roadshows, promotional and public relations campaigns.
Board Diversity
The Board recognises the importance of having a range of skilled and experienced individuals with sufficient and appropriate knowledge to allow the Board to fulfill its obligations. As at 28 February 2017 there were three male Directors and two female Directors.
Environmental, Social and Human Rights Issues
The Company has no employees as the Board has delegated day to day management and administrative functions to AFML. There are therefore no disclosures to be made in respect of employees. The Company's socially responsible investment policy is outlined below.
Due to the nature of the Company's business, being a company that does not offer goods and services to customers, the Board considers that it is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement. Notwithstanding this, the Board considers the Company's supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.
Socially Responsible Investment Policy
The Board acknowledges that there are risks associated with investment in companies which fail to conduct business in a socially responsible manner and has noted the Aberdeen Group's policy on socially responsible investment. The corporate responsibility programme of the AIFM's parent company, Aberdeen Asset Management PLC, including its environmental policy, can be found on http://www.aberdeen-asset.com/aam.nsf/groupCsr/home.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from the operations of its business, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.
Future
The Board expects the Company to continue to pursue its investment objective and accepts that this may involve divergence from the benchmark. The companies which make up the investment portfolio are considered by the Investment Manager to demonstrate resilience in the context of the complicated Thai political situation and to offer opportunities for investors to benefit from the development of the broader Thai economy.
In addition, many of the non-performance related trends likely to affect the Company in the future are common across all closed ended investment companies, such as the attractiveness of investment companies as investment vehicles, the impact of regulatory changes (including MiFID II and the Packaged Retail Investment and Insurance Products regulations) and the changes to the pensions and savings market in the UK. These factors need to be considered alongside likely future developments for the Company's investments and the Board's expectations in this regard can be found in the Chairman's Statement whilst the Investment Manager's views are included in its Report.
Nicholas Smith
Chairman
26 April 2017
INVESTMENT MANAGER'S REPORT
Overview
Thai equities rose over the year to 28 February 2017, despite heightened global uncertainty arising from external events, notably the EU referendum, Donald Trump's US election win and the Federal Reserve's plans to accelerate the pace of interest rate hikes. Meanwhile, oil prices rebounded as non-members joined OPEC in curbing output via a Saudi-brokered deal. Macroeconomic performance at home was mixed, although resilient tourism underpinned the economy. To stimulate consumption further, the government introduced tax deductions on purchases of specific community-based products, and tweaked personal income taxes to include larger deductions and widening income brackets to benefit the middle-class. The passing of King Bhumibol overshadowed all other domestic events towards the end of the period, with the prime minister declaring one year of official mourning. However, businesses were encouraged to continue operating within respectful bounds to mitigate the economic impact. Prince Maha Vajiralongkorn was named the Kingdom's 10(th) monarch, with his coronation to be held after the late king's cremation later in 2017.
Portfolio
Over the year ended 28 February 2017, the Thai stockmarket had a bullish run that saw the local benchmark rise by 36.5% in sterling terms. This was partly due to sterling weakness and increased foreign fund flows from passive investment vehicles as a result of Brexit, as well as a rally in the energy sector on the back of recovering oil prices. However, the portfolio lagged the benchmark and returned 26.5% in sterling terms, largely because of stock selection.
The portfolio was disadvantaged by a lack of exposure to mainstays of the benchmark that did well on the back of an influx of indiscriminate passive buying. Among these were energy giant PTT and convenience store operator CP All. PTT posted a substantial jump in net profits on the back of a rebound in oil prices, while CP All continued to perform well despite a scandal involving insider trading by top management. We do not hold both PTT and CP All, given transparency and corporate governance issues. Another non-holding was Group Lease, whose shares surpassed the benchmark after attracting funds from Japanese investor J-Trust Co, but subsequently faltered as news of accounting irregularities surfaced. The portfolio's non-exposure to PTT Global Chemical and Indorama also hurt returns as the global chemical sector continued to consolidate. Polyester value chain company Indorama has also been on an aggressive acquisition and expansion path globally.
Meanwhile, BEC World suffered from challenging operating conditions, exacerbated by the mourning period for the late King as spending by advertisers plunged. The portfolio continues to hold a relatively small position in the company because we continue to believe in the firm's well-established franchise and are confident that its earnings will start to recover in the near term.
Among the key contributors to the portfolio's performance was local mining giant Banpu, which benefited after a production cut in China pushed coal prices up, while its regional power generation operations and recently-launched US shale gas business helped profits. Similarly, utility provider Egco's shares were lifted by robust earnings from increased capacity both at home and abroad.
An improving domestic auto industry also had some positive impact on a few of your company's holdings. Thai Stanley Electric gained from better sales and prudent cost management, while Bangkok Insurance's revenue from its motor business, which contributes substantially to its profits, rose.
In the financial sector, Kiatnakin Bank did well as one-off divestment gains bolstered earnings, while Tisco Financial Group reported healthy profits, driven by higher margins and lower provisions. Separately, the market cheered its acquisition of Standard Chartered Thailand's consumer loan business for 5.5 billion baht. Another contributor to returns was Aeon Thana Sinsap, which enjoyed better commissions, a reduction in expenses, and good asset quality.
DIY retailer Home Product Center was aided by resilient same-store sales, as well as its ongoing expansion in the region. Hana Microelectronics benefited from a cyclical upturn and increased exports to announce decent income. Elsewhere, small-cap holding Alucon's stock rallied on the back of greater demand and efficient cost controls.
In portfolio activity, we participated in the initial public offering of Banpu subsidiary Banpu Power, a power-generation company with quality management, robust financials and a decent growth profile. We also introduced Land & Houses, one of Thailand's leading property developers. It has a good land bank, experienced management and seems attractively-valued, with a healthy dividend yield.
Against this, we sold Amarin Printing & Publishing, a long-held stock that has suffered from a tough operating environment in recent years. We also exited Ratchaburi Electricity Generating due to concerns over its business direction and strategy.
Outlook
Despite the volatility arising from a spate of events, both at home and abroad, Thai equities have largely remained resilient and its stockmarket one of the best-performing, relative to its peers in the region. While we think the protracted rally is likely to taper off and post more modest returns in the year ahead, we maintain our optimism on the country's prospects.
Improving exports, along with a robust tourism industry, continue to underpin Thailand's growth, whereas increased public spending should also bode well for the economy. With government debt still manageable, policymakers have the wherewithal to stimulate growth, should the need arise. Meanwhile, the central bank has kept interest rates stable, although it stands ready to loosen monetary policy where necessary, given potential market volatility from rising US rates.
On the trade front, we expect Thailand to remain largely unaffected by US president Donald Trump's protectionist trade stance. However, this could change if the US should impose restrictions on more significant trading partners such as China and Japan, which may have a secondary impact on the kingdom. That being said, the portfolio's holdings are mostly market leaders in their respective industries, and we are confident that they possess solid fundamentals that will help them weather any challenges that may arise in the year ahead.
Aberdeen Asset Management Asia Limited
Manager
26 April 2017
PERFORMANCE 1 year 3 year 5 year
return return return
% % %
Total return (capital return
plus dividends reinvested)
Share price +27.8 +53.4 +81.4
Net asset value (basic) +26.5 +51.0 +68.4
SET Index +36.5 +63.2 +77.4
Capital return
Share price +25.0 +44.2 +63.9
Net asset value (basic) +24.3 +43.4 +54.8
SET Index +32.2 +48.1 +50.6
Source: Aberdeen Group/Morningstar
& Lipper
FINANCIAL HIGHLIGHTS
28 February 28 February %
2017 2016 change
Total assets GBP113,862,000 GBP98,582,000 +15.5
Equity shareholders' funds
(net assets) GBP111,212,000 GBP95,932,000 +15.9
Market capitalisation GBP94,496,000 GBP81,030,000 +16.6
Ordinary share price (mid-market) 510.00p 408.00p +25.0
Net asset value per Ordinary
share 600.22p 483.03p +24.3
Discount to net asset value
(excluding current year income) 13.5% 13.9%
Discount to net asset value
(including current year income) 15.0% 15.5%
Stock Exchange of Thailand
("SET") Index 35.90 27.17 +32.1
(Sterling adjusted, capital
return)
Net gearing{A} 1.68% 2.20%
Dividends and earnings
Revenue return per share 10.31p 8.89p +16.0
Proposed final dividend per
share 10.30p 8.50p +21.2
Dividend cover 1.00 1.05
Revenue reserves (prior to GBP4,026,000 GBP3,702,000
payment of proposed final
dividend)
Operating costs
Ongoing charges ratio{B} 1.39% 1.45%
{A} Calculated in accordance with AIC guidance
"Gearing Disclosures post RDR".
{B} Ongoing charges ratio calculated in accordance
with guidance issued by the AIC as the total of
the investment management fee and administrative
expenses divided by the average cum income net
asset value throughout the year.
DIVIDS
Rate ex-dividend Record date Payment
date date
Proposed final 10.30p 01 June 02 June 3 July 2017
dividend 2017 2017 2017
Final dividend 8.50p 02 June 03 June 28 June
2016 2016 2016 2016
TEN YEAR FINANCIAL RECORD
Year to 28 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
February
Total revenue
(GBP'000) 1,726 1,845 1,766 2,652 2,961 2,934 3,715 3,546 3,573 3,894
Per share
(p)
Net revenue
return 3.92 4.86 5.15 8.28 8.87 7.39 8.73 8.20 8.89 10.31
Net dividends
proposed 2.75 3.50 5.10 8.00 8.00 7.00 8.00 8.20 8.50 10.30
Net asset
value - basic 196.18 139.67 222.99 306.57 387.73 569.58 418.64 542.49 483.03 600.22
Ordinary
share price 187.00 120.00 171.50 241.25 311.25 537.50 353.75 458.25 408.00 510.00
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____
Equity shareholders'
funds (GBP'000) 35,500 25,273 39,835 56,530 72,106 120,873 87,175 112,640 95,932 111,212
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____
INVESTMENT PORTFOLIO - TEN LARGEST INVESTMENTS
As at 28 February 2017
Valuation Total Valuation
2017 Assets 2016
Company Sector GBP'000 % GBP'000
{A}
Siam Cement
Thailand's largest industrial
conglomerate with operations
in petrochemicals, cement, Construction
paper and building materials. Materials 6,681 5.9 5,700
Big C Supercenter
One of the two leading
hypermarkets in Thailand,
a subsidiary of the French
Casino Group. Commerce 5,872 5.1 6,360
Advanced Info Service
Thailand's largest and
leading provider of wireless
communication services
with over 50% revenue Information
market share and 44 million & Communication
subscribers. Technology 5,742 5.0 3,473
Bangkok Insurance
One of the country's
largest non-life insurance
companies, affiliated
with Bangkok Bank. Insurance 5,698 5.0 5,149
Kasikornbank
Fourth largest commercial
bank in terms of assets,
founded by the Lamsam
family. Formerly known
as Thai Farmers Bank. Banking 5,470 4.8 5,084
Siam Commercial Bank
Third largest commercial
bank in terms of assets.
Crown Property Bureau
is a major shareholder. Banking 5,345 4.7 4,850
Aeon Thana Sinsap
Consumer financial services
provider offering hire
purchase and personal Finance
loans. & Securities 4,281 3.8 3,363
Home Product Center
Retailer of building
materials and home improvement
products. Commerce 4,033 3.5 3,132
PTT Exploration & Production
Exploration & production
company arm of PTT Plc
with reserves mainly Energy &
in Thailand. Utilities 3,967 3.5 3,697
Hana Microelectronics
Electronics manufacturing Electronic
service company. Components 3,883 3.4 3,062
Top ten investments 50,972 44.7
{A} Purchases and/or sales effected during the year
will result in 2016 and 2017 values not being directly
comparable.
INVESTMENT PORTFOLIO - OTHER INVESTMENTS
As at 28 February 2017
Valuation Total Valuation
2017 assets{A} 2016
Company Sector GBP'000 % GBP'000{B}
Thai Stanley Electric Automotive 3,594 3.2 2,471
Energy &
Electricity Generating Utilities 3,528 3.1 2,808
Property
Central Pattana Development 3,414 3.0 2,410
Energy &
Banpu{C} Utilities 3,367 3.0 2,147
Eastern Water Resources Energy &
Development & Management Utilities 3,126 2.7 2,935
Construction
Siam City Cement Materials 3,027 2.7 2,664
Tisco Financial Group Banking 2,954 2.6 2,708
Minor International{C} Food & Beverage 2,826 2.5 2,270
Bangkok Bank Banking 2,821 2.5 2,453
Construction
Dynasty Ceramic Materials 2,789 2.4 2,351
Top twenty investments 82,418 72.4
Alucon Packaging 2,698 2.4 1,610
Bangkok Dusit Medical Health Care
Services Services 2,462 2.2 1,870
Media &
BEC World Publishing 2,422 2.1 3,883
Kiatnakin Bank Banking 2,225 1.9 1,755
Tesco Lotus Retail Growth
Freehold & Leasehold
Property Fund (Local Property
market shares) Fund & REITS 2,168 1.9 2,024
Goodyear (Thailand) Automotive 1,998 1.7 1,804
Thai Reinsurance Insurance 1,992 1.7 2,386
Health Care
Bumrungrad Hospital Services 1,955 1.7 1,802
Property
Land & Houses{D} Development 1,785 1.6 -
Property
Sammakorn Development 1,675 1.5 1,592
Top thirty investments 103,798 91.1
Property
LPN Development Development 1,663 1.5 1,699
Muang Thai Insurance Insurance 1,555 1.4 1,590
Energy &
Banpu Power Utilities 1,406 1.2 -
Finance
MFC Asset Management{C} & Securities 1,330 1.2 1,344
Thaire Life Assurance Insurance 1,247 1.1 1,197
Media &
Prakit Holdings Publishing 1,143 1.0 1,065
Haad Thip Food & Beverage 1,022 0.9 863
Total investments 113,164 99.4
Net current assets{E} 698 0.6
Total assets{A} 113,862 100.0
{A} Total Assets defined as per the balance sheet
less current liabilities (before deducting prior charges)
{B} Purchases and/or sales effected during the year
will result in 2016 and 2017 values not being directly
comparable.
{C} Holding includes investment in both common and
warrant lines.
{D} Holding includes investment in both common stock
and non-voting depositary receipts.
{E} Excludes bank loans of GBP2,650,000.
Note: Unless otherwise stated, foreign stock is held.
DIRECTORS' REPORT
The Directors present their Report and the audited financial statements of the Company for the year ended 28 February 2017, taking account of any events between the year end and the date of approval of this Report.
Results and Dividend
The Directors recommend that a final dividend per share of 10.3p (2016 - 8.5p per share) is paid on 3 July 2017 to shareholders on the register on 2 June 2017. The ex-dividend date is 1 June 2017. A resolution in respect of the final dividend will be proposed at the forthcoming AGM.
Investment Trust Status and ISA Compliance
The Company is registered as a public limited company in England & Wales under registration number 02448580 and has been accepted by HM Revenue & Customs as an investment trust for accounting periods beginning on or after 1 March 2012, subject to the Company continuing to meet the eligibility conditions of s1158 of the Corporation Tax Act 2010 (as amended) and S.I. 2011/2099. In the opinion of the Directors, the Company's affairs have been conducted in a manner to satisfy these conditions and enable it to continue to qualify as an investment trust for the year ended 28 February 2017. The Company intends to manage its affairs so that its shares will be qualifying investments for the stocks and shares component of an Individual Savings Account.
Capital Structure and Voting Rights
During the year ended 28 February 2017 the Company bought back and cancelled 1,331,650 Ordinary shares (2016 - 903,143 Ordinary shares). As at 28 February 2017, the Company's issued share capital consisted of 18,528,632 Ordinary shares (2016 - 19,860,282 Ordinary shares) with each share holding one voting right in the event of a poll. An additional 164,500 Ordinary shares were bought back between 1 March 2017 and the date of approval of this Annual Report resulting in 18,364,132 Ordinary shares in issue, with voting rights.
Ordinary shareholders are entitled to vote on all resolutions which are proposed at general meetings of the Company. The Ordinary shares carry a right to receive dividends. On a winding up, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings. There are no restrictions on the transfer of Ordinary shares in the Company other than certain restrictions which may from time to time be imposed by law and regulation (for example, the UK Market Abuse Regime).
Manager and Company Secretary
The Company has appointed AFML, a wholly-owned subsidiary of Aberdeen Asset Management PLC, as its alternative investment fund manager ("AIFM"). AFML has been appointed to provide the Company with investment management, risk management, administration and company secretarial services as well as promotional activities. The Company's portfolio is managed by AAMAL by way of a group delegation agreement in place between AFML and AAMAL.
The management fee is charged to the Company on the following basis: a monthly fee, payable in arrears, calculated on an annual rate of 1.0% of total assets less current liabilities, with a rebate to the Company for any fees received in respect of any investments by the Company in investment vehicles managed by the Aberdeen Group. There is no performance fee payable to the Manager.
The management agreement is terminable by either party on not less than 12 months' notice. In the event of termination on less than the agreed notice period, compensation is payable in lieu of the unexpired notice period.
The fees payable to Aberdeen Group during the year ended 28 February 2017 are disclosed in Notes 4 and 5 to the financial statements. The investment management fees are charged 100% to revenue.
The terms and conditions of the Manager's appointment, including an evaluation of performance and fees, are reviewed by the Board on an annual basis. The Board believes that the continuing appointment of the Investment Manager (through the Manager) on the terms agreed is in the interests of shareholders as a whole. The Board also undertakes a review of the management fees in comparison with other funds and believes that the Company's current level of management fees remains competitive.
In addition, AFML has sub-delegated promotional activities to Aberdeen Asset Managers Limited ("AAM") and administrative and secretarial services to Aberdeen Asset Management PLC.
Corporate Governance
The Company is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and, as required by the Listing Rules of the UK Listing Authority, this statement describes how the Company applies the Main Principles identified in the UK Corporate Governance Code published in September 2014 (the "UK Code") and which first applied to the Company's year ended 28 February 2016. The UK Code is available on the Financial Reporting Council's ("the FRC") website: frc.org.uk.
The Board has also considered the principles and recommendations of the AIC Code of Corporate Governance as published in February 2015 ("the AIC Code") by reference to the AIC Corporate Governance Guide for investment Companies ("the AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to investment trusts. The AIC Code and AIC Guide are available on the AIC's website: theaic.co.uk
The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Code), will provide better information to shareholders.
The Board confirms that, during the year, the Company complied with the recommendations of the AIC Code and the relevant provisions of the UK Code, except as set out below.
The UK Code includes provisions relating to:
- the role of the chief executive (A.1.2); - executive directors' remuneration (D.1.1 and D.1.2); and - the need for an internal audit function (C.3.6).
For the reasons set out in the AIC Guide and UK Code, the Board considers that these provisions are not relevant to the position of the Company, being an externally managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions. The full text of the Company's Statement of Corporate Governance can be found on its website: newthai-trust.co.uk
Substantial Interests
As at 28 February 2017, the following were registered, or had notified the Company, as being interested in 3% or more of the Company's Ordinary share capital:
Shareholder Number of shares held % held Lazard Asset Management 4,332,907 23.3 Funds managed by Aberdeen Group 3,137,385 16.9 City of London 3,069,829 16.5 Aberdeen Investment Trust ISA and Share Plans (non-discretionary) 1,920,063 10.3 W H Ireland 1,197,923 6.4 Hargreaves Lansdown (non-discretionary) 661,990 3.6
The above share interests were unchanged as at the date of approval of this Report other than notifications to the Company by Lazard Asset Management of a holding of 4,227,907 shares, equivalent to 22.9% of the Company's issued share capital and by City of London of a holding of 3,134,729 shares, equivalent to 17.0% of the Company's issued share capital.
Directors
The Board consists of a non-executive Chairman and four non-executive Directors, all of whom held office throughout the year under review other than Sarah MacAulay, who was appointed on 7 December 2016, and James Robinson who retired on 23 June 2016. The Senior Independent Director is Clare Dobie who succeeded James Robinson with effect from 23 June 2016.
The names and biographies of each of the Directors are shown in the Annual Report and on the Company's website and indicate their range of experience as well as length of service. Each Director has the requisite high level and range of business and financial experience which enables the Board to provide clear and effective leadership and proper stewardship of the Company.
The Directors attended Board and Committee meetings during the year ended 28 February 2017 as follows (with their eligibility to attend the relevant meeting in brackets):
Director Board Meetings Audit and Management Nomination
Engagement Committee
Committee Meetings Meetings
Nicholas Smith 5 (5) 3 (3) 2 (2)
James Robinson
(A) 2 (2) 1 (1) 1 (1
Clare Dobie 5 (5) 3 (3) 2 (2)
Andy Pomfret 5 (5) 3 (3) 2 (2)
Sarah MacAulay n/a n/a n/a
(B)
Hugh Young (C) 4 (5) - -
(A) James Robinson retired as a Director on 23 June 2016
(B) Sarah MacAulay was appointed a Director on 7 December 2016
(C) Hugh Young is not a member of either the Audit and Management Engagement Committee or the Nomination Committee
One of the five Board Meetings held each year is devoted to strategic matters including review of longer term performance, the relevance to investors of the Company's investment objective and policy, consideration of feedback from retail and institutional shareholders and an assessment of the future prospects for the Company.
All of the Directors will retire at the AGM. Hugh Young is not seeking for re-election as a Director. Nicholas Smith, Clare Dobie and Andy Pomfret, being eligible, offer themselves for re-election as Directors of the Company. Sarah MacAulay offers herself for election as a Director of the Company. The Board as a whole believes that each Director standing for election or re-election remains independent of the AIFM and free of any relationship which could materially interfere with the exercise of his or her independent judgement on issues of strategy, performance, resources and standards of conduct and confirms that, following formal performance evaluations, the individuals' performance continues to be effective and demonstrates commitment to the role. The Board therefore has no hesitation in recommending the election of Sarah MacAulay and the re-election as Directors at the AGM of Nicholas Smith, Clare Dobie and Andy Pomfret.
Directors' Insurances and Indemnities
The Company maintains insurance in respect of Directors' and Officers' liabilities in relation to their acts on behalf of the Company. Furthermore, each Director of the Company is entitled to be indemnified out of the assets of the Company to the extent permitted by law against all costs, charges, losses, expenses and liabilities incurred by them in the actual or purported execution and/or discharge of their duties and/or the exercise or purported exercise of their powers and/or otherwise in relation to or in connection with their duties, powers or office. These rights are included in the Articles of Association of the Company and the Company has granted indemnities to each Director on this basis.
Management of Conflicts of Interest and Anti-Bribery Policy
The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, the Directors prepare a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his/her connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his/her wider duties is affected. Each Director is required to notify the Company Secretaries of any potential, or actual, conflict situations which will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.
No Director has a service contract with the Company although Directors are issued with letters of appointment upon taking up office. There were no contracts with the Company during, or at the end of the year, in which any Director was interested.
The Board takes a zero tolerance approach to bribery and has adopted appropriate procedures designed to prevent bribery. The Aberdeen Group also takes a zero tolerance approach and has its own detailed policy and procedures in place to prevent bribery and corruption.
Board Committees
The Directors have appointed a number of Committees as set out below. Copies of their terms of reference, which define the responsibilities and duties of each Committee, are available on the Company's website and from the Company Secretaries, on request.
Audit and Management Engagement Committee
The Audit and Management Engagement Committee's Report may be found in the Annual Report.
Nomination Committee
All appointments to the Board of Directors are considered by the Nomination Committee which comprises the whole Board and was chaired during the year by Nicholas Smith.
The Committee's overriding priority in appointing new Directors to the Board is to identify the candidate with the optimal range of skills and experience to complement the existing Directors. The Board also recognises the benefits, and is supportive, of the principle of diversity in its recruitment of new Directors. As described in the Chairman's Statement, the Board engaged Nurole Limited, an independent search consultancy with no other connection to either the Company or the Manager, to assist with the recruitment of Sarah MacAulay.
As the Company has no employees and the Board is comprised wholly of non-executive Directors and, given the size and nature of the Company, the Board has not established a separate Remuneration Committee. Directors' remuneration is determined by the Nomination Committee.
Accountability and Audit
The responsibilities of the Directors, in connection with the financial statements, appear below.
The Directors who held office at the date of this Report each confirm that, so far as he or she is aware, there is no relevant audit information of which the Company's Auditor is unaware, and that he or she has taken all the steps that he or she could reasonably be expected to have taken as a Director in order to make him or her aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.
Additionally there have been no important events since the year end which warrant disclosure.
The Directors have reviewed the level of non-audit services provided by the Auditor during the year, together with the auditor's procedures in connection with the provision of such services, and remain satisfied that the Auditor's objectivity and independence is being safeguarded.
Going Concern
The Directors have undertaken a rigorous review and consider both that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate. The Company's assets consist entirely of equity shares in companies listed on the Stock Exchange of Thailand which are, in most circumstances, realisable within a short timescale.
The Board has set limits for borrowing and regularly reviews the level of any gearing, cash flow projections and compliance with banking covenants. On 28 October 2015, the Company entered into a three-year multi-currency revolving loan facility ("the Facility") with Scotiabank (Ireland) Limited for GBP10m. As at 28 February 2017, GBP2.65m had been drawn down under the Facility.
The Directors are mindful of the principal risks and uncertainties disclosed above and in Note 15 to the financial statements. After making enquiries, including a review of forecasts detailing revenue and liabilities, the Directors have a reasonable expectation that the Company possesses adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the financial statements.
Continuance of the Company
The Company does not have a fixed life. However, under Article 156 of the Articles of Association, if, in the 12 weeks preceding the Company's financial year-end (28 February), the Ordinary shares have been trading, on average, at a discount in excess of 15% to the underlying NAV per share over the same period, notice will be given of a special resolution to be proposed to wind up the Company. In the 12 weeks ended 28 February 2017, the Ordinary shares traded at an average discount of 14.8% to the underlying NAV per share (including income), therefore no such resolution will be put to the Company's shareholders at the forthcoming AGM. In October 2016 the Directors announced that, after consideration, the relevant NAV for these purposes would be calculated including undistributed net revenue for the period.
Viability Statement
The Company does not have a formal fixed period strategic plan but the Board does formally consider risks and strategy on at least an annual basis. The Board considers the Company, with no fixed life, to be a long term investment vehicle, but for the purposes of this viability statement has decided that a period of three years is an appropriate period over which to report. The Board considers that this period reflects a balance between looking out over a long term horizon and the inherent uncertainties of looking out further than three years.
Accordingly, taking into account the Company's current position and the potential impact of its principal risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of three years from the date of this report. In making this assessment, the Board has considered that matters such as a large economic shock, a period of significant stock market volatility, a significant reduction in the liquidity of the portfolio, or changes in regulations and investor sentiment, could have an impact on its assessment of the Company's prospects and viability in the future.
In particular the Board recognises that this assessment makes the assumption that the Company's average discount to the NAV per Ordinary share (including income) for the 12 weeks ended 28 February 2018 and 12 weeks ended 28 February 2019, individually, does not exceed 15% which negates the requirement to put to shareholders at the AGMs to be held in either 2018 or 2019, a special resolution to wind up the Company.
The Directors have also considered the maturity of the Company's 3-year, GBP10 million bank loan facility in October 2018. The Company will enter into negotiations with its bankers in advance of renewal in October 2018. If acceptable terms are available from the existing bankers, or any alternative, the Company would expect to continue to access the Facility. However, should these terms not be forthcoming, any outstanding borrowing will be repaid through the proceeds of equity sales.
Independent Auditor
The Directors will place resolutions before the Annual General Meeting to appoint Deloitte LLP as auditor for the year to 28 February 2018, replacing KPMG LLP, and to authorise the Directors to determine Deloitte LLP's remuneration.
UK Stewardship Code and Proxy Voting as an Institutional Shareholder
Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the AIFM which has sub-delegated that authority to the Investment Manager.
The Investment Manager is responsible for reviewing the annual reports, circulars and other publications issued by portfolio companies and for attending their company meetings. The Investment Manager, in the absence of explicit instruction from the Board, is empowered to use discretion in the exercise of the Company's voting rights. The Investment Manager's policy is to vote on all shares held by the Company. The Board recognises and supports the Aberdeen Group's policy of active engagement with investee companies and the voting of all of the shares held by the Company. The Board receives regular reports on the exercise of the Company's voting rights and discusses any issues arising with the Investment Manager.
In exercising the Company's voting rights, the Aberdeen Group follows a number of principles which set out the framework on corporate governance, proxy voting and shareholder engagement in relation to the companies in which the Aberdeen Group has invested or is considering investing. The Board has reviewed these principles together with the Aberdeen Group's Disclosure Response to the UK Stewardship Code, and is satisfied that the exercise of delegated voting powers by the Investment Manager is being properly executed. The Aberdeen Group's Corporate Governance Principles together with the Aberdeen Group's Disclosure Response to the UK Stewardship Code may be found on the Aberdeen Group's website, at: www.aboutus.aberdeen-asset.com/en/aboutus/expertise/equities/stewardship
Relations with Shareholders
The Directors place great importance on communication with shareholders. The Annual Report is widely distributed to other parties who have an interest in the Company's performance. Shareholders and investors may obtain up-to-date information on the Company through its website, newthai-trust.co.uk, or via the Aberdeen Group's Customer Services Department. The Company responds to letters from shareholders on a wide range of issues.
The Board's policy is to communicate directly with shareholders and their representative bodies without the involvement of the management group (either the Company Secretary or the Aberdeen Group) in situations where direct communication is required and representatives from the Board offer to meet with major shareholders on an annual basis in order to gauge their views.
In addition, members of the Board accompany the Manager when undertaking a series of meetings with institutional shareholders.
The Company Secretary only acts on behalf of the Board, not the Manager, and there is no filtering of communication. At each Board meeting the Board receives full details of any communication from shareholders to which the Chairman responds, as appropriate, on behalf of the Board.
The Notice of AGM included within the Annual Report is normally sent out at least 20 working days in advance of the meeting. All shareholders have the opportunity to put questions to the Board and Investment Manager at the Company's AGM.
Annual General Meeting
The AGM will be held on 28 June 2017 and the AGM Notice and related notes may be found in the Annual Report. Resolutions relating to the following items of business will be proposed at the forthcoming AGM:-
Authority to Allot Relevant Securities
Ordinary Resolution No. 11 in the Notice of AGM will renew the authority to allot the unissued share capital up to 10% of the Company's issued share capital as at the date of the passing of the resolution (equivalent to approximately 1.8m Ordinary shares). Such authority will expire on the date of the next AGM or on 22 August 2018, whichever is earlier. This means that the authority will have to be renewed at the next AGM.
Limited Disapplication of Pre-emption Provisions
Resolution 12, which is a Special Resolution, will, if passed, renew the Directors' existing authority to make limited allotments of shares for cash other than according to the statutory pre-emption rights which require all shares issued for cash to be offered first to all existing shareholders provided such allotments are made at a price per Ordinary share above the prevailing NAV per Ordinary share. This authority includes shares that the Company sells or transfers out of Treasury which have been previously bought back into Treasury (if any) pursuant to the authority conferred by Resolution 13 below. The Board will only consider buying in Ordinary shares for cancellation, or for holding in Treasury, at a price which represents a discount to their prevailing NAV. In line with the authority sought under Resolution 11, Resolution 12 will, if passed, give the Directors power to allot, for cash, securities up to 10% of the total issued share capital at the date of the passing of the resolution (equivalent to approximately 1.8m Ordinary shares) other than according to the statutory pre-emption rights.
The authorities being sought under Resolutions 11 and 12, which will expire on the date of the earlier of the next AGM in 2018 or 22 August 2018, will give the Board flexibility to take advantage of any opportunities to issue new Ordinary shares within a shorter period than would otherwise be the case.
Directors' Authority to Purchase the Company's Ordinary Shares
Resolution 13, a Special Resolution, will be proposed to renew the Directors' authority to make market purchases of the Company's Ordinary shares, in accordance with the provisions contained in the Companies Act and the Listing Rules of the UK Listing Authority.
Accordingly, the Company is seeking authority, under Resolution 13, to purchase up to a maximum of approximately 2.8m Ordinary shares, or if less, that number of Ordinary shares equivalent to 14.99% of the issued Ordinary share capital at the date of the passing of the Resolution at a minimum price of not less than 25p per Ordinary share (being the nominal value) and a maximum price of not more than the higher of (i) an amount equal to 5% above the average of the middle market quotation for an Ordinary share taken from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the Ordinary share is purchased; and (ii) the higher of the price of the last independent trade and the current highest independent bid on the stock market where the purchase is carried out.
If passed, Resolution 13 will permit the Company to purchase Ordinary shares under the guidelines described above. Any Ordinary shares purchased in this way will either be cancelled, and the number of Ordinary shares in issue reduced accordingly or, under the power granted by Resolution 13, may be held in Treasury. The authority sought under Resolution 13 will expire on the earlier of date of the next AGM in 2018 and 27 August 2018, whichever is earlier, unless renewed prior to such time.
Adoption of new Articles of Association
The Company does not have a fixed life. However, under the Articles of Association, if in the 12 weeks preceding the Company's financial year end (28 February) the ordinary shares have been trading, on average, at a discount in excess of 15% to the underlying net asset value over the same period, notice will be given of a special resolution to be proposed at the following Annual General Meeting that the Company be put into voluntary liquidation. In the Company's Half Yearly Report for the six months ended 31 August 2016 it was announced that after consideration, the Directors had determined that, for these purposes, the relevant net asset value will be calculated including undistributed net revenue for the period. After further consideration, the Directors have proposed that the basis for calculation of the relevant net asset value should be clarified in the Company's Articles of Association. Accordingly, Resolution 14 proposes the adoption of new Articles of Association to reflect that net asset value will be calculated on this basis. The proposed changes to the Articles of Association are in italics as follows:
"156. DURATION OF THE COMPANY
In each year the Directors shall procure that, in the event that the average of the mid-market closing prices of the ordinary shares for each day upon which the London Stock Exchange is open for business in the twelve weeks immediately preceding the Company's accounting reference date (as derived from the Daily Official List of the London Stock Exchange) is more than 15 per cent. below the average underlying net asset value per ordinary share over the same period (as certified by the Auditors), notice will be given of a special resolution to be proposed at the next following annual general meeting that the Company be unitised or put into voluntary liquidation. For these purposes, net asset value per ordinary share will be calculated taking into account the Company's undistributed net revenue for the period as part of the Company's assets. "Unitised" means an arrangement proposed by the Directors under which the Company is placed into voluntary liquidation and holders of ordinary shares in the Company become or may become participants in a collective investment scheme to which the surplus assets of the Company are transferred."
As required by the Listing Rules, copies of the existing articles of association and as amended will be available for inspection at the Company's registered office at Bow Bells House, 1 Bread Street, London EC4M 9HH during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) from the date of this document until the conclusion of the Annual General Meeting and at the place of the Annual General Meeting for at least 15 minutes prior to, and during, the Annual General Meeting.
Recommendation
The Board considers each of the AGM Resolutions to be in the best interests of the Company and its members as a whole and is likely to promote the success of the Company for the benefit of its members as a whole. Accordingly, the Board unanimously recommends that shareholders should vote in favour of the resolutions to be proposed at the AGM, as they intend to do in respect of their own shareholdings, amounting to 71,264 Ordinary shares.
Nicholas Smith
Chairman
26 April 2017
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the financial statements, in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with UK Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the company for that period. In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the annual financial report
We confirm to the best of our knowledge, that:
- the financial statements have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
- the Strategic Report and Directors' Report include a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties that the Company faces.
We consider that the Annual Report and financial statements, 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.
For and on behalf of the Directors of Aberdeen New Thai Investment Trust PLC
Nicholas Smith
Chairman
26 April 2017
STATEMENT OF COMPREHENSIVE INCOME
Year ended 28 Year ended 28
February 2017 February
2016
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains/(losses) on
investments 10 - 21,390 21,390 - (13,001) (13,001)
Income 3 3,894 - 3,894 3,573 - 3,573
Management fee 4 (1,044) - (1,044) (943) - (943)
Administrative expenses 5 (427) - (427) (427) - (427)
Currency losses - (65) (65) - (126) (126)
______ ______ _____ ______ ______ ______
Net return on ordinary
activities before finance
costs and taxation 2,423 21,325 23,748 2,203 (13,127) (10,924)
Finance costs 6 (59) - (59) (75) - (75)
______ ______ _____ ______ ______ ______
Return on ordinary
activities before
taxation 2,364 21,325 23,689 2,128 (13,127) (10,999)
Taxation 7 (361) - (361) (332) - (332)
______ ______ _____ ______ ______ ______
Return on ordinary
activities after taxation 2,003 21,325 23,328 1,796 (13,127) (11,331)
______ ______ _____ ______ ______ ______
Return per Ordinary
share (pence) 9 10.31 109.78 120.09 8.89 (65.00) (56.11)
______ ______ _____ ______ ______ ______
The total column of this statement headed "Total"
represents the profit and loss account of the Company.
All revenue and capital items in the above statement
are derived from continuing operations.
The accompanying notes are an integral part of the
financial statements.
STATEMENT OF FINANCIAL POSITION
As at As at
28 February 28 February
2017 2016
Notes GBP'000 GBP'000
Non-current assets
Investments at fair value
through profit or loss 10 113,164 98,079
___________ ___________
Current assets
Debtors and prepayments 11 457 310
Money market funds 201 1
Cash at bank and in hand 578 432
___________ ___________
1,236 743
___________ ___________
Creditors: amounts falling
due within one year
Bank loans 12 (2,650) (2,650)
Other creditors 12 (538) (240)
___________ ___________
(3,188) (2,890)
___________ ___________
Net current liabilities (1,952) (2,147)
___________ ___________
Net assets 111,212 95,932
___________ ___________
Share capital and reserves
Called-up share capital 13 4,632 4,965
Share premium account 19,391 19,391
Capital redemption reserve 903 570
Capital reserve 82,260 67,304
Revenue reserve 4,026 3,702
___________ ___________
Equity shareholders' funds 111,212 95,932
___________ ___________
Net asset value per Ordinary
share (pence) 14 600.22 483.03
___________ ___________
STATEMENT OF CHANGES IN EQUITY
Year ended 28 February
2017
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 28 February
2016 4,965 19,391 570 67,304 3,702 95,932
Purchase of own shares
for cancellation (333) - 333 (6,369) - (6,369)
Return on ordinary
activities after
taxation - - - 21,325 2,003 23,328
Dividend paid (see
note 8) - - - - (1,679) (1,679)
_____ _______ ______ ______ ______ _____
Balance at 28 February
2017 4,632 19,391 903 82,260 4,026 111,212
_____ _______ ______ ______ ______ _____
Year ended 28 February
2016
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 28 February
2015 5,191 19,391 344 84,139 3,575 112,640
Purchase of own shares
for cancellation (226) - 226 (3,708) - (3,708)
Return on ordinary
activities after
taxation - - - (13,127) 1,796 (11,331)
Dividend paid (see
note 8) - - - - (1,669) (1,669)
_____ _______ ______ ______ ______ _____
Balance at 28 February
2016 4,965 19,391 570 67,304 3,702 95,932
_____ _______ ______ ______ ______ _____
The revenue reserve represents the amount of the
Company's reserves distributable by way of dividend.
The accompanying notes are an integral part of the
financial statements.
STATEMENT OF CASHFLOWS
Year ended Year ended
28 February 28 February
2017 2016
Notes GBP'000 GBP'000
Operating activities
Net return on ordinary activities
before finance costs and taxation 23,748 (10,924)
Adjustment for:
(Gains)/losses on investments (21,390) 13,001
(Increase)/decrease in accrued
dividend income (4) 16
Decrease in other debtors 4 4
Increase/(decrease) in other
creditors 29 (26)
Stock dividends included in
investment income - (48)
Overseas withholding tax (361) (334)
_______ _______
Net cash flow from operating
activities 2,026 1,689
Investing activities
Purchases of investments (8,057) (8,966)
Sales of investments 14,485 11,600
_______ _______
Net cash from investing activities 6,428 2,634
Financing activities
Interest paid (60) (75)
Equity dividends paid 8 (1,679) (1,669)
Buyback of Ordinary shares 13 (6,369) (3,708)
_______ _______
Net cash used in financing
activities (8,108) (5,452)
_______ _______
Increase/(decrease) in cash
and cash equivalents during
the year 346 (1,129)
_______ _______
Analysis of changes in cash
and cash equivalents during
the year
Opening balance 433 1,562
Increase/(decrease) in cash
and cash equivalents as above 346 (1,129)
_______ _______
Closing balances 779 433
_______ _______
NOTES TO THE FINANCIAL STATEMENTS:
1. Principal activity
The Company is a closed-end investment company,
registered in England & Wales No 02448580, with
its Ordinary shares being listed on the London
Stock Exchange.
2. Accounting policies
(a) Basis of accounting
The financial statements have been prepared
in accordance with Financial Reporting Standard
102 and with the Statement of Recommended
Practice 'Financial Statements of Investment
Trust Companies and Venture Capital Trusts'
(the "SORP"). The financial statements are
prepared in sterling which is the functional
currency of the Company and rounded to the
nearest GBP'000. They have also been prepared
on a going concern basis and on the assumption
that approval as an investment trust will
continue to be granted.
The Directors have, at the time of approving
the financial statements, a reasonable expectation
that the Company has adequate resources to
continue in operational existence for the
foreseeable future. Thus they continue to
adopt the going concern basis of accounting
in preparing the financial statements. Further
detail is included in the Statement of Corporate
Governance on the Company's website.
(b) Investments
Investments have been designated upon initial
recognition at fair value through profit
or loss. Investments are recognised and de-recognised
on the trade date at cost. Subsequent to
initial recognition, investments are valued
at fair value which for listed investments
is deemed to be the bid market price. Gains
and losses arising from changes in fair value
are included as a capital item in the Statement
of Comprehensive Income and are ultimately
recognised in the capital reserve.
(c) Income
Dividends (other than special dividends),
including taxes deducted at source, are included
in revenue by reference to the date on which
the investment is quoted ex-dividend. Special
dividends are reviewed on a case-by-case
basis and may be credited to capital, if
circumstances dictate. Dividends receivable
on equity shares where no ex-dividend date
is quoted are brought into account when the
Company's right to receive payment is established.
Fixed returns on non-equity shares are recognised
on a time apportioned basis so as to reflect
the effective yield on these shares. Other
returns on non-equity shares are recognised
when the right to return is established.
The fixed return on a debt security, if material,
is recognised on a time apportioned basis
so as to reflect the effective yield on each
security. Where the Company has elected to
receive its dividends in the form of additional
shares rather than cash, the amount of the
cash dividend is recognised as income. Any
excess in the value of the shares received
over the amount of the cash dividend is recognised
in capital reserves. Interest receivable
on bank balances is accounted for on an accruals
basis.
(d) Expenses
Expenses and interest payable are accounted
for on an accruals basis. Expenses are charged
through the revenue account except where
they directly relate to the acquisition or
disposal of an investment, in which case,
they are added to the cost of the investment
or deducted from the sale proceeds. Such
transaction costs are disclosed in accordance
with the SORP.
(e) Taxation
The tax payable is based on the taxable profit
for the year. Taxable profit differs from
net profit as reported in the Statement of
Comprehensive Income because it excludes
items of income or expenditure that are taxable
or deductible in other years and it further
excludes items that are never taxable or
deductible (see note 7 for a more detailed
explanation). The Company has no liability
for current tax.
Deferred taxation is provided on all timing
differences that have originated, but not
reversed, at the Statement of Financial Position
date, where transactions or events that result
in an obligation to pay more or a right to
pay less tax in future have occurred at the
Statement of Financial Position date, measured
on an undiscounted basis and based on enacted
tax rates. This is subject to deferred tax
assets only being recognised if it is considered
more likely than not that there will be suitable
profits from which the future reversal of
the underlying timing differences can be
deducted. Timing differences are differences
arising between the Company's taxable profits
and its results as stated in the accounts
which are capable of reversal in one or more
subsequent periods. Due to the Company's
status as an investment trust company, and
the intention to continue to meet the conditions
required to obtain approval for the foreseeable
future, the Company has not provided deferred
tax on any capital gains and losses arising
on the revaluation or disposal of investments.
(f) Nature and purpose of reserves
Share premium account
The balance classified as share premium includes
the premium above nominal value from the
proceeds on issue of any equity share capital
comprising ordinary shares of 25p.
Capital redemption reserve
The capital redemption reserve is used to
record the amount equivalent to the nominal
value of any of the Company's own shares
purchased and cancelled in order to maintain
the Company's capital.
Capital reserve
Gains and losses on realisation of investments
and changes in fair values of investments
which are readily convertible to cash, without
accepting adverse terms, are transferred
to the capital reserve.
Revenue reserve
This reserve reflects all income and costs
which are recognised in the revenue column
of the Statement of Comprehensive Income.
The revenue reserve represents the amount
of the Company's reserves distributable by
way of dividend.
(g) Foreign currency
Assets and liabilities in foreign currencies
are translated at the rates of exchange ruling
on the Statement of Financial Position date.
Transactions involving foreign currencies
are converted at the rate ruling on the date
of the transaction. Gains and losses on the
realisation of foreign currencies are recognised
in the Statement of Comprehensive Income
and are then transferred to the capital reserve.
The Company's investments are made in Thai
Baht, however the Board considers the Company's
functional currency to be Sterling. In arriving
at this conclusion, the Board considered
that the shares of the Company are listed
on the London Stock Exchange, it is regulated
in the United Kingdom, principally having
its shareholder base in the United Kingdom
and also pays dividends and expenses in Sterling.
Consequently, the Board also considers the
Company's presentational currency to be Sterling.
(h) Dividends payable
Final dividends are dealt with in the period
in which they are paid.
2017 2016
3. Income GBP'000 GBP'000
Income from investments
Overseas dividends 3,890 3,521
Stock dividends - 48
_______ _______
3,890 3,569
_______ _______
2017 2016
GBP'000 GBP'000
Other income
Deposit interest - 1
Interest from money market funds 4 3
_______ _______
4 4
_______ _______
Total income 3,894 3,573
_______ _______
2017 2016
Revenue Capital Total Revenue Capital Total
4. Management fee GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Management fee 1,044 - 1,044 943 - 943
_______ _______ _______ _______ _______ _______
For the year ended 28 February 2017 management
and secretarial services were provided by Aberdeen
Fund Managers Limited ("AFML").
The management fee is payable monthly in arrears
and was based on an annual amount of 1% of the
net asset value of the Company valued monthly.
The agreement is terminable on one year's notice.
The total of the fees paid and payable during
the year to 28 February 2017 was GBP1,044,000
(2016 - GBP943,000) and the balance due to AFML
at the year end was GBP184,000 (2016 - GBP155,000).
There were no commonly managed funds held in
the portfolio during the year to 28 February
2017 (2016 - none).
2017 2016
5. Administrative expenses GBP'000 GBP'000
Promotional activities 63 84
Directors' fees 104 114
Auditor's fees for:
- Statutory audit 19 19
- Other assurance services 1 1
Custody fees 62 56
Legal & professional fees 69 47
Listing fees 14 14
Directors' and officers' insurance 6 6
Printing and stationery 17 15
Registrar's fees 14 14
Savings scheme expenses 9 11
Other expenses 49 46
_______ _______
427 427
_______ _______
The management agreement with AFML also provides
for the provision of promotional activities.
The total fees paid and payable under the management
agreement in relation to promotional activities
were GBP63,000 (2016 - GBP84,000) with a balance
of GBP11,000 (2016 - GBP14,000) being payable
to AFML at the year end. The Company has an
agreement with AFML for the provision of company
secretarial services and administration services;
no separate fee is charged to the Company in
respect of this agreement.
2017 2016
Revenue Capital Total Revenue Capital Total
6. Finance costs GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
On bank loans and
overdrafts 59 - 59 75 - 75
______ ______ ______ ______ ______ ______
2017 2016
Revenue Capital Total Revenue Capital Total
7. Taxation on ordinary GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
activities
(a) Analysis of
charge for the
year
Overseas withholding
tax 361 - 361 332 - 332
_______ _______ _____ _______ ______ _______
Total tax charge 361 - 361 332 - 332
_______ _______ _____ _______ ______ _______
(b) Factors affecting tax charge for the year
The tax assessed for the year is lower than
the effective rate of corporation tax in the
UK.
2017 2016
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net return on
ordinary activities
before taxation 2,364 21,325 23,689 2,128 (13,127) (10,999)
Corporation
tax at standard
rate of 20%
(2016 - effective
rate of 20.08%) 473 4,265 4,738 427 (2,636) (2,209)
(Gains)/losses
on investments
not taxable - (4,278) (4,278) - 2,611 2,611
Currency losses
not taxable - 13 13 - 25 25
Non-taxable
overseas income (778) - (778) (717) - (717)
Overseas withholding
tax 361 - 361 332 - 332
Loan relationships
not utilised 11 - 11 15 - 15
Excess management
expenses not
utilised 294 - 294 275 - 275
_______ _______ _____ _______ ______ _______
Total tax charge 361 - 361 332 - 332
_______ _______ _____ _______ ______ _______
(c) Factors that may affect future tax charges
At the year end, the Company has an unrecognised
deferred tax asset of GBP1,848,000 (2016 -
GBP1,543,000) arising as a result of accumulated
unrelieved management expenses and loan relationship
deficits of GBP9,241,000 (2016 - GBP7,715,000).
A deferred tax asset in respect of this has
not been recognised and will only be utilised
if the Company has profits chargeable to corporation
tax in the future.
2017 2016
8. Dividends on equity shares GBP'000 GBP'000
Amounts recognised as distributions
to equity holders in the year:
Final dividend 2016 - 8.50p (2015
- 8.20p) 1,679 1,669
_______ _______
The proposed final dividend for 2017 is subject
to approval by shareholders at the Annual General
Meeting and has not been included as a liability
in these financial statements.
We set out below the final dividend proposed
in respect of the financial year, which is the
basis on which the requirements of Sections
1158-1159 of the Corporation Tax Act 2010 are
considered. The revenue available for distribution
by way of dividend for the year is GBP2,003,000
(2016 - GBP1,796,000).
2017 2016
GBP'000 GBP'000
Proposed final dividend 2017 -
10.30p (2016 - 8.50p) 1,892 1,679
_______ _______
Subsequent to the year end the Company has purchased
for cancellation a further 164,500 Ordinary
shares; therefore the amounts reflected above
for the cost of the proposed final dividend
for 2017 are based on 18,364,132 in issue, being
the number of Ordinary shares in issue at the
date of this Report.
2017 2016
9. Return per Ordinary GBP'000 p GBP'000 p
share
Revenue return 2,003 10.31 1,796 8.89
Capital return 21,325 109.78 (13,127) (65.00)
_______ _______ _____ _______
Total return 23,328 120.09 (11,331) (56.11)
_______ _______ _____ _______
Weighted average number
of Ordinary shares
in issue 19,424,811 20,194,907
_________ __________
2017 2016
10. Investments at fair value through GBP'000 GBP'000
profit or loss
Opening fair value 98,079 113,769
Opening investment holding gains (34,693) (53,833)
_______ _______
Opening book cost 63,386 59,936
Movements in the year:
Purchases at cost 8,329 9,013
Sales - proceeds (14,634) (11,702)
Sales - realised gains 5,532 6,139
_______ _______
Closing book cost 62,613 63,386
Closing investment holding gains 50,551 34,693
_______ _______
Closing fair value 113,164 98,079
_______ _______
Investments listed on a recognised
stock exchange 113,164 98,079
_______ _______
Gains/(losses) on investments
Realised gains on sales 5,532 6,139
Increase/(decrease) in investment
holding gains 15,858 (19,140)
_______ _______
Gains/(losses) on investments 21,390 (13,001)
_______ _______
Transaction costs
During the year expenses were incurred in acquiring
or disposing of investments classified as fair
value through profit or loss. These have been
expensed through capital and are included within
gains/(losses) on investments in the Statement
of Comprehensive Income. The total costs were
as follows:
2017 2016
GBP'000 GBP'000
Purchases 20 20
Sales 17 12
_______ _______
37 32
_______ _______
2017 2016
11. Debtors: amounts falling due within GBP'000 GBP'000
one year
Prepayments and accrued income 195 194
Amounts due from brokers 251 102
Other debtors 11 14
_______ _______
457 310
_______ _______
2017 2016
12. Creditors: amounts falling due GBP'000 GBP'000
within one year
Bank loans 2,650 2,650
Amounts due to brokers 272 -
Other creditors 266 240
_______ _______
3,188 2,890
_______ _______
In October 2015 the Company entered into a three
year GBP10,000,000 multi-currency revolving
credit facility with Scotiabank (Ireland) Limited.
At the year end, GBP2,650,000 (2016 - GBP2,650,000)
had been drawn down at an all-in rate of 1.28538%
(2016 - 1.53288%) which matured on 28 March
2017 (2016 - 29 March 2016). As of the latest
date prior to the signing of this Report the
GBP2,650,000 loan has been rolled over to 28
April 2017 at an all-in interest rate of 1.28238%.
The terms of the loan facility with Scotiabank
(Ireland) Limited contain a covenant that the
borrowings should not exceed 20% of the adjusted
net asset value of the Company, where borrowings
are defined as debt and other secured liabilities
plus net liabilities under all derivatives determined
on a mark to market basis. Adjusted net asset
value is defined as total net assets less the
aggregate value of all excluded assets, excluded
assets being, without double counting, the value
of any unquoted investments, all investments
issued by a single issuer in excess of 10% of
total net assets and the aggregate value of
all investments in any single MSCI industry
in excess of 30% of total net assets of the
Company. The loan facility agreement also contains
a covenant that the Net Asset Value will not
fall below GBP28 million. The Company met both
these covenants throughout the period for which
the loan facility was utilised with Scotiabank
(Ireland) Limited.
2017 2016
13. Called-up share capital GBP'000 GBP'000
Allotted, called up and fully
paid:
Opening balance of 19,860,282
(2016 - 20,763,425) Ordinary shares
of 25p each 4,965 5,191
Repurchase of 1,331,650 (2016
- 903,143) Ordinary shares of
25p each for cancellation (333) (226)
Closing balance of 18,528,632
(2016 - 19,860,282) 4,632 4,965
During the year ended 28 February 2017, the
Company bought back and cancelled 1,331,650
Ordinary shares of 25p each (2016 - 903,143)
for a total consideration of GBP6,369,000 (2016
- GBP3,708,000). This represented 7.2% of the
Company's issued Ordinary share capital as at
28 February 2017.
Subsequent to the year end the Company bought
back and cancelled a further 164,500 Ordinary
shares of 25p each for a total consideration
of GBP842,000.
14. Net asset value per share
The net asset value per share and the net assets
attributable to Ordinary shares at the end of
the year calculated in accordance with the Articles
of Association were as follows:
2017 2016
Net assets attributable (GBP'000) 111,212 95,932
Number of Ordinary shares in issue 18,528,632 19,860,282
Net assets per share (p) 600.22 483.03
15. Financial instruments
Risk management
The Company's investment activities expose it
to various types of financial risk associated
with the financial instruments and markets in
which it invests. The Company's financial instruments
comprise securities and other investments, cash
balances, loans and debtors and creditors that
arise directly from its operations; for example,
in respect of sales and purchases awaiting settlement,
and debtors for accrued income.
The Board has delegated the risk management
function to AFML under the terms of its management
agreement with AFML (further details of which
are included under note 4). The Board regularly
reviews and agrees policies for managing each
of the key financial risks identified with the
Manager. The types of risk and the Manager's
approach to the management of each type of risk,
are summarised below. Such approach has been
applied throughout the year and has not changed
since the previous accounting period. The numerical
disclosures exclude short-term debtors and creditors.
Risk management framework
The directors of Aberdeen Fund Managers Limited
collectively assume responsibility for AFML's
obligations under the AIFMD including reviewing
investment performance and monitoring the Company's
risk profile during the year.
AFML is a fully integrated member of the Aberdeen
Group, which provides a variety of services
and support to AFML in the conduct of its business
activities, including in the oversight of the
risk management framework for the Company. The
AIFM has delegated the day to day administration
of the investment policy to Aberdeen Asset Management
Asia Limited, which is responsible for ensuring
that the Company is managed within the terms
of its investment guidelines and the limits
set out in its pre-investment disclosures to
investors (details of which can be found on
the Company's website). The AIFM has retained
responsibility for monitoring and oversight
of investment performance, product risk and
regulatory and operational risk for the Company.
The Manager conducts its risk oversight function
through the operation of the Group's risk management
processes and systems which are embedded within
the Group's operations. The Group's Risk Division
supports management in the identification and
mitigation of risks and provides independent
monitoring of the business. The Division includes
Compliance, Business Risk, Market Risk, Risk
Management and Legal. The team is headed up
by the Group's Head of Risk, who reports to
the Chief Executive Officer of the Group. The
Risk Division achieves its objective through
embedding the Risk Management Framework throughout
the organisation using the Group's operational
risk management system ("SWORD").
The Group's Internal Audit Department is independent
of the Risk Division and reports directly to
the Group CEO and to the Audit Committee of
the Group's Board of Directors. The Internal
Audit Department is responsible for providing
an independent assessment of the Group's control
environment.
The Group's corporate governance structure is
supported by several committees to assist the
board of directors of Aberdeen, its subsidiaries
and the Company to fulfil their roles and responsibilities.
The Group's Risk Division is represented on
all committees, with the exception of those
committees that deal with investment recommendations.
The specific goals and guidelines on the functioning
of those committees are described on the committees'
terms of reference.
Risk management
The main risks the Company faces from its financial
instruments are (i) market risk (comprising
interest rate risk, currency risk and price
risk), (ii) liquidity risk and (iii) credit
risk.
Market risk
The fair value of or future cash flows from
a financial instrument held by the Company may
fluctuate because of changes in market prices.
This market risk comprises three elements -
interest rate risk, foreign currency risk and
price risk.
Interest rate risk
Interest rate movements may affect:
- the level of income receivable on cash deposits;
- interest payable on the Company's variable
rate borrowings.
Management of the risk
The possible effects on fair value and cash
flows that could arise as a result of changes
in interest rates are taken into account when
making investment and borrowing decisions.
The Board imposes borrowing limits to ensure
gearing levels are appropriate to market conditions
and reviews these on a regular basis. Borrowings
comprise fixed rate, revolving, and uncommitted
facilities. The fixed rate facilities are used
to finance opportunities at low short-term fixed
rates and, the revolving and uncommitted facilities
to provide flexibility in the short-term. Current
bank covenant guidelines state that the total
borrowings will not exceed 20% of the adjusted
net assets of the Company as defined in note
12.
Interest risk profile
The interest rate risk profile of the Company's
financial assets and liabilities, excluding
equity holdings which are all non-interest bearing,
at the Balance Sheet date was as follows:
Weighted
average
period Weighted
for
which average Fixed Floating
rate
is fixed interest rate rate
rate
At 28 February Years % GBP'000 GBP'000
2017
Assets
Sterling - - - 578
_______ _______ _______ _______
Liabilities
Bank loans - Sterling 0.08 1.29 (2,650) -
_______ _______ _______ _______
Weighted
average
period Weighted
for
which average Fixed Floating
rate
is fixed interest rate rate
rate
At 28 February Years % GBP'000 GBP'000
2016
Assets
Sterling - 0.20 - 432
_______ _______ _______ _______
Liabilities
Bank loans - Sterling 0.09 1.53 (2,650) -
_______ _______ _______ _______
The weighted average interest rate is based
on the current yield of each asset, weighted
by its market value. The weighted average interest
rate on bank loans is based on the interest
rate payable, weighted by the total value of
the loans. The maturity date of the Company's
loan is shown in note 12.
The floating rate assets consist of cash deposits
on call earning interest at prevailing market
rates.
The Company's equity portfolio and short-term
debtors and creditors (excluding bank loans)
have been excluded from the above tables.
Interest rate sensitivity
Movements in interest rates would not have a
material direct impact on net assets attributable
to the Company's shareholders and total profit
due to the relatively low exposure to cash and
bank loans.
Foreign currency risk
All of the Company's investment portfolio is
invested in overseas securities and the Statement
of Financial Position, therefore, can be significantly
affected by movements in foreign exchange rates.
Management of the risk
It is not the Company's policy to hedge this
risk on a continuing basis but the Company may,
from time to time, match specific overseas investment
with foreign currency borrowings.
The revenue account is subject to currency fluctuation
arising on dividends paid in foreign currencies.
The Company does not hedge this currency risk.
Risk exposure by currency of denomination:
28 February 2017 28 February 2016
Net Total Net Total
Overseas monetary currency Overseas monetary currency
investments assets exposure investments assets exposure
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Thailand
Baht 113,164 17 113,181 98,079 102 98,181
Sterling - (1,969) (1,969) - (2,249) (2,249)
_______ _______ _______ _______ _______ _______
Total 113,164 (1,952) 111,212 98,079 (2,147) 95,932
_______ _______ _______ _______ _______ _______
Foreign currency sensitivity
There is no sensitivity analysis included as
the Company's significant foreign currency financial
instruments are in the form of equity investments,
which have been included within the price risk
sensitivity analysis so as to show the overall
level of exposure.
Price risk
Other price risks (ie changes in market prices
other than those arising from interest rate
or currency risk) may affect the value of the
quoted investments.
Management of the risk
It is the Board's policy to hold an appropriate
spread of investments in the portfolio in order
to reduce the risk arising from factors specific
to a sector. Both the allocation of assets and
the stock selection process act to reduce market
risk. The Manager actively monitors market prices
throughout the year and reports to the Board,
which meets regularly in order to review investment
strategy. The investments held by the Company
are all listed on the Stock Exchange of Thailand
("SET").
Price risk sensitivity
If market prices at the Statement of Financial
Position date had been 10% higher or lower while
all other variables remained constant, the return
attributable to Ordinary shareholders for the
year ended 28 February 2017 would have increased/(decreased)
by GBP11,316,000 (2016 - increased/(decreased)
by GBP9,808,000) and equity reserves would have
increased/(decreased) by the same amount.
Market prices may indirectly be affected by
political instability within Thailand from time
to time which constitutes political risk.
Liquidity risk
This is the risk that the Company will encounter
difficulty in meeting obligations associated
with financial liabilities.
Management of the risk
Liquidity risk is not considered to be significant
as, whilst liquidity is limited in certain stocks
the Company holds, the majority of the Company's
assets comprise readily realisable securities
which can be sold to meet funding requirements
if necessary.
Short-term flexibility is achieved through the
use of loan facilities, details of which can
be found in note 12. Under the terms of the
loan facility, the Manager provides the lender
with loan covenant reports on a monthly basis,
to provide the lender with assurance that the
terms of the facility are not being breached.
The Manager will also review the credit rating
of a lender on a regular basis.
The Board imposes borrowing limits to ensure
gearing levels are appropriate to market conditions
and reviews these on a regular basis. Borrowings
comprise a revolving multi-currency credit facility.
The Board has imposed a maximum gearing level,
after netting off cash equivalents, of 15% of
net assets. Details of borrowings at 28 February
2017 are shown in note 12.
Liquidity risk exposure
At each of 28 February 2017 and 28 February
2016 the Company's bank loan, amounting to GBP2,650,000
was due for repayment or roll-over within one
month.
Credit risk
This is the risk of a counterparty to a transaction
failing to discharge its obligations under that
transaction which could result in the Company
suffering a loss.
Management of the risk
- investment transactions are carried out with
a large number of brokers, whose credit-standing
is reviewed periodically by the Investment Manager,
and limits are set on the amount that may be
due from any one broker;
- the risk of counterparty exposure due to failed
trades causing a loss to the Company is mitigated
by the review of failed trade reports on a daily
basis. In addition, both stock and cash reconciliations
to the Custodian's records are performed on
a daily basis to ensure discrepancies are picked
up. The Manager's Compliance department carries
out periodic reviews of the Depositary's operations
and reports its findings to the Manager's Risk
Management Committee. This review will also
include checks on the maintenance and security
of investments held;
- the risk of counterparty exposure due to stock
lending (when conducted) is mitigated by the
review of collateral positions provided daily
by the various counterparties involved; and
- where cash is held on deposit, the institutions
concerned are reviewed regularly.
In summary, compared to the amounts in the Statement
of Financial Position, the maximum exposure
to credit risk at 28 February was as follows:
2017 2016
Balance Maximum Balance Maximum
Sheet exposure Sheet exposure
Current assets GBP'000 GBP'000 GBP'000 GBP'000
Loans and receivables 457 457 310 310
Money market funds 201 201 1 1
Cash at bank and in
hand 578 578 432 432
_______ _______ _______ _______
1,236 1,236 743 743
_______ _______ _______ _______
None of the Company's financial assets is past
due or impaired.
Fair values of financial assets and financial
liabilities
The fair value of the short term loan is shown
in note 12 to the financial statements. The
book value of cash at bank and bank loan included
in these financial statements approximate to
fair value because of their short-term maturity.
The carrying values of fixed asset investments
are stated at their fair values, which have
been determined with reference to quoted market
prices. For all other short-term debtors and
creditors, their book values approximate to
fair values because of their short-term maturity.
16. Fair value hierarchy
FRS 102 requires an entity to classify fair
value measurements using a fair value hierarchy
that reflects the significance of the inputs
used in making the measurements. The fair value
hierarchy has the following classifications:
Level 1: unadjusted quoted prices in an active
market for identical assets or liabilities that
the entity can access at the measurement date.
Level 2: inputs other than quoted prices included
within Level 1 that are observable (ie developed
using market data) for the asset or liability,
either directly or indirectly.
Level 3: inputs are unobservable (ie for which
market data is unavailable) for the asset or
liability.
The financial assets and liabilities measured
at fair value in the Statement of Financial
Position are grouped into the fair value hierarchy
at the reporting date as follows:
Level Level Level Total
1 2 3
As at 28 February 2017 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair
value through profit or
loss
Quoted equities 113,164 - - 113,164
_______ _______ _______ _______
Net fair value 113,164 - - 113,164
_______ _______ _______ _______
Level Level Level Total
1 2 3
As at 28 February 2016 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair
value through profit or
loss
Quoted equities 98,079 - - 98,079
_______ _______ _______ _______
Net fair value 98,079 - - 98,079
_______ _______ _______ _______
Quoted equities
The fair value of the Company's investments
in quoted equities has been determined by reference
to their quoted bid prices at the reporting
date. Quoted equities included in Fair Value
Level 1 are actively traded on recognised stock
exchanges.
17. Related party transactions
Directors' fees and interests
Fees payable during the year to the Directors
and their interest in shares of the Company
are disclosed within the Directors' Remuneration
Report in the Annual Report.
Hugh Young is a director of Aberdeen Asset Management
PLC, of which Aberdeen Fund Managers Limited
("AFML"), Aberdeen Asset Management Asia Limited
and Aberdeen Asset Managers Limited are wholly-owned
subsidiaries.
Transactions with the Manager
The Company has agreements with Aberdeen Fund
Managers Limited ("AFML" or the "Manager) for
the provision of investment management, secretarial,
accounting and administration and promotional
activity services. Details of transactions during
the year and balances outstanding at the year
end are disclosed in notes 4 and 5.
18. Capital management policies and procedures
The Company manages its capital to ensure that
it will be able to continue as a going concern
while maximising the return to shareholders
through the optimisation of the debt and equity
balance.
The Board monitors and reviews the broad structure
of the Company's capital on an ongoing basis.
This review includes:
- the planned level of gearing which takes account
of the views on the market;
- the level of equity shares in issue;
- the extent to which revenue in excess of that
which is required to be distributed should be
retained.
The Company does not have any externally imposed
capital requirements.
The Annual Financial Report announcement is not the Company's statutory accounts. The above results for the year ended 28 February 2017 are an abridged version of the Company's full statutory accounts which will be filed with the Registrar of Companies in due course.
The statutory accounts for the years ended 28 February 2016 and 28 February 2017 received unqualified reports from the Company's independent auditor and did not include any reference to matters to which the independent auditor drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498 of the Companies Act 2006. The financial information for the year ended 28 February 2016 is derived from the statutory accounts which have been filed with the Registrar of Companies.
The Annual Report, enclosing the Notice of Annual General Meeting, will be posted to shareholders in May 2017 and will also be available from the Company's website: newthai-trust.co.uk. The Company's Annual General Meeting will be held at 11.30am on 28 June 2017 at Bow Bells House, 1 Bread Street, London EC4M 9HH.
Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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